                                 CODE OF VIRGINIA

PERIOD OF LOAN; INTEREST RATE; LOAN SHALL CONSTITUTE A LIEN (§ 10.1-643)

Any loan made pursuant to the provisions of § 10.1-638 A may be made for any
period not to exceed twenty years and shall bear interest at the rate of one
percent annually for the first ten years or until such time as water stored
under the provisions of this article is used by the borrower for the purpose
stated in the application for the loan, if such use occurs within the first ten
years. Interest on the loan for the second ten-year period plus the balance of
the first ten-year period during which water was used, if any, shall bear
interest at a rate set jointly by the Board and the State Treasury Board. Such
interest rate shall conform as nearly as possible to the interest on bonds sold
for water development or similar purposes within the Commonwealth within the
last six months prior to setting such interest rate, taking into consideration
any fluctuations of the money market which may have occurred subsequent to the
last sale of such bonds within the six-month period. If no such bonds have been
sold within the six-month period, the interest rate shall be set to conform as
nearly as possible with the rate charged by the commercial money market for such
or similar purposes. However, when the attendant facilities, such as but not
limited to a filtration plant, pumping station, and pipelines, necessary for the
use of the water stored cost the borrower more than $100,000, interest on the
loan for the second ten-year period or the ten-year period plus the balance of
the first ten-year period during which water was used, if any, shall be at the
rate of three percent annually. Any borrower receiving a loan under the
provisions of this article shall agree to repay the loan in equal annual
installments of principal together with interest at the applicable rate on the
unpaid balance of the loan. Payments of interest and principal shall be made to
the State Treasurer and credited to the revolving fund, and evidence of debt
taken for such loan shall be deposited with the State Treasurer and kept by him.
Whenever a loan is made in accordance with the provisions of this article, a
lien is hereby created against all of the funds and income of the borrower, as
well as upon any real or personal property acquired with loan proceeds.
Prepayment of the principal of any such loan, in whole or in part, may be made
by the borrower without penalty; however, the borrower shall be liable for
interest accrued on the principal at the time of prepayment.

HISTORY: 1970, c. 591, § 21-11.6; 1988, c. 891.