                                 CODE OF VIRGINIA

ISSUANCE OR EXCHANGE FOR INDEBTEDNESS TO BE RETIRED; SALE AND DISPOSITION OF
PROCEEDS; RIGHTS OF OWNERS (§ 15.2-2644)

Any refunding bonds may be issued or exchanged for the indebtedness to be
retired by them, including indebtedness not matured, redeemable or surrendered
for retirement. Unless so exchanged, any locality may sell refunding bonds
authorized under the provisions of this article in such manner, either at public
or private sale, and for such price as the governing body of the locality may
determine. The proceeds of any refunding bonds may be applied to (i) the payment
of matured or redeemable indebtedness, including any redemption premium, (ii)
the payment of unmatured indebtedness the evidences of which are on deposit with
a bank or trust company designated by the locality for surrender to the locality
upon receipt of payment in an amount not exceeding the amount of the
indebtedness, or (iii) the establishment of an escrow or sinking fund consisting
of cash and noncallable obligations of, or unconditionally guaranteed by, the
United States of America or noncallable obligations of, or unconditionally
guaranteed by, the Commonwealth in an amount which together with interest to be
earned on such obligations shall be sufficient to pay all indebtedness to be
refunded either at maturity or upon redemption as provided for upon the creation
of the escrow or sinking fund. Any escrow or sinking fund established, in whole
or in part, from the proceeds of the sale of refunding bonds shall be
irrevocably pledged to the payment of the indebtedness to be refunded and shall
be used solely to pay the indebtedness at maturity or upon redemption or for the
purchase of not less than all of the indebtedness to be refunded. It is the
intent that any escrow or sinking fund established pursuant to this section
shall constitute a special fund for the payment of the refunded indebtedness and
that the refunded indebtedness shall not be included for the purpose of
determining any limitation upon the amount of indebtedness of the locality which
is imposed by law.
		The owners of any outstanding indebtedness to be refunded shall be divested of
all rights and security relating to the indebtedness, except the right to
payment when due of principal, premium, if any, and interest, which shall be
paid solely from the escrow or sinking fund; provided that, in the case of debt
issued before March 27, 1977, the governing body of the locality may provide
that if the escrow or sinking fund is in any respect insufficient to make
payment of principal, premium, if any, and interest, the original rights and
security relating to the indebtedness shall be restored to the extent necessary
to provide full payment.

HISTORY: Code 1950, § 15-666.34; 1958, c. 640; 1962, c. 623, § 15.1-193; 1977,
c. 442; 1985, c. 196; 1991, c. 668, § 15.1-227.45; 1994, c. 714; 1997, c. 587.