Sec. 10-289g. Defaults in payment. Withholding of state aid.
Sec. 10-289g. Defaults in payment. Withholding of state aid. The loan obligation of the private academy and the bonds or notes issued to finance such loan shall be
secured by all school construction grants committed by the state to the private academy
for the school building project. In the event of any default by the private academy under
its loan agreement, the qualifying municipalities shall have the right to set off any tuition
payments to the private academy to the extent of all loan payments due by the private
academy under its loan agreement during each twelve-month period following such
default and make such tuition payments directly to the trustee for the bonds or notes.
Whenever it is established that a qualifying municipality or private academy has defaulted in the payment of the principal or redemption premium or interest on its bonds
or notes or on any payment obligation due under any loan agreement authorized by
sections 10-289d to 10-289g, inclusive, or any other event of default under any such
loan agreement or guaranty agreement or the trust indenture for the bonds or notes
occurs, the payment of state aid and assistance to such qualifying municipality or private
academy pursuant to any statute in existence at the time the default is established shall
be withheld by the state. If the trustee, on behalf of a holder or owner of any such
bond or note or of such qualifying municipality or private academy, files with the State
Comptroller a verified statement describing such default, the Comptroller may investigate the circumstances of the alleged default, prepare and file in his office a certificate
setting forth his finding with respect to the default and serve a copy of such finding, by
registered or certified mail, upon the treasurer or chief fiscal officer of each such qualifying municipality and the private academy and the indenture trustee. Upon the filing of
such a verified statement in the office of the Comptroller, the Comptroller shall deduct
and withhold from all succeeding payments of state aid or assistance otherwise due each
such qualifying municipality or private academy such amounts as are necessary to pay
the principal and redemption premium of and interest on such bonds and notes of such
a qualifying municipality until such time as the indenture trustee files a verified statement
with the Comptroller that all defaults have been cured. Payments of state aid or assistance
so deducted and withheld shall be forwarded promptly by the Comptroller and the Treasurer to the paying agent or agents for the bonds and notes for the sole purpose of payment
of principal and redemption premium of and interest on such bonds or notes. The Comptroller shall promptly notify the treasurer or the chief fiscal officer of each such qualifying municipality and the private academy of any payment or payments made to any
paying agent or paying agents pursuant to this section. The state of Connecticut hereby
covenants with the purchasers, holders and owners from time to time of bonds and
notes issued by a qualifying municipality for school purposes that it will not repeal the
provisions of this section or amend or modify the same so as to limit or impair the rights
and remedies granted by this section, provided nothing in this section shall be deemed
or construed as requiring the state to continue the payment of state aid or assistance to
any qualifying municipality or private academy or as limiting or prohibiting the state
from repealing or amending any law relating to state aid or assistance, the manner and
time of payment or apportionment thereof or the amount thereof.
(P.A. 87-461, S. 4, 7.)