                                 CODE OF VIRGINIA

REFUNDING ISSUES; PASS-THROUGH OF SAVINGS REALIZED (§ 22.1-167.1)

A. In the event the Authority refunds any bonds previously issued to finance the
purchase of local school bonds, the Authority shall pass-through to the issuers
of such local school bonds, an allocable share of any savings realized. Such
pass-through shall be accomplished, at the option of the Authority, by means of
a debt service reduction over the remaining term of the local school bonds, by a
lump sum payment of the present value of such allocable share of the savings, or
by such other method as the Authority shall determine to be in the mutual best
interests of the issuers of the local school bonds and the Authority.

B. For the purposes of this section, &#8220;savings&#8221; means the net
reduction in debt service, if any, to be realized by the Authority, after
subtracting the total costs, expenses, and equity contributions associated with
the refunding and with the pass-through of such savings to the issuers of the
local school bonds and of any Authority funds transferred, or required to be
transferred, by mandate of the General Assembly, other than to the issuers of
the local school bonds.
			Notwithstanding the provisions of this section, no savings shall be
passed-through to the issuers of local school bonds for which an interest rate
subsidy has been paid or which were issued at below market interest rates. The
savings in connection with the refunding of bonds issued by the Authority and
allocable to local school bonds for which an interest rate subsidy has been
paid, to the extent such subsidy was paid from the Literary Fund, shall be
transferred to the Literary Fund and used exclusively for Literary Fund loans to
local school boards pursuant to Chapter 10 (&#xA7; 22.1-142 et seq.) of Title
22.1.

C. This section shall have no application if it conflicts with a preexisting
trust indenture.

D. Whenever the Authority shall defease its bonds previously issued to finance
the purchase of local school bonds, the Authority may, consistent with the
provisions of this section respecting the return of savings to the issuers of
the related local school bonds, designate to such issuers of local school bonds
which issues, series and maturities with which interest rates shall be deemed by
the Authority to have been paid. Immediately upon such designation, the local
school bonds so designated shall likewise be deemed defeased and no longer
outstanding, the same as if the defeasance had occurred in accordance with the
provisions of &#xA7; 15.2-2623. Such defeasance shall not require any action by
the issuer of the affected local school bonds, shall be effective immediately,
and shall be duly noted on the records of the Authority which shall no longer
have any right to payment with respect to the issues, series and maturities so
deemed by the Authority to have been paid. The elected officials and financial
officers of the affected locality are hereby authorized to execute and deliver
such federal tax forms, certificates, and other documents as the Authority may
request in connection with the defeasance of its local school bonds and the
bonds of the Authority.

HISTORY: 1994, c. 272; 2006, c. 223.