62.1-229 - Loans to local governments or other entities.
§ 62.1-229. Loans to local governments or other entities.
Except as otherwise provided in this chapter, money in the Fund shall be usedsolely to make loans to local governments or other entities as permitted byfederal law to finance or refinance the cost of any project. The localgovernments or other entities to which loans are to be made, the purposes ofthe loan, the amount of each such loan, the interest rate thereon and therepayment terms thereof, which may vary between loan recipients, shall bedesignated in writing by the Board to the Authority following consultationwith the Authority. No loan from the Fund shall exceed the total cost of theproject to be financed or the outstanding principal amount of theindebtedness to be refinanced plus reasonable financing expenses. Loans mayalso be made from the Fund, in the Board's discretion, to a local governmentwhich has developed a low-interest loan program to provide loans or otherincentives to facilitate the correction of onsite sewage disposal problems(small water facility projects), provided that the moneys may be used onlyfor the program and that the onsite sewage disposal systems to be repaired orupgraded are owned by individual citizens of the Commonwealth where (i)public health or water quality concerns are present and (ii) connection to apublic sewer system is not feasible because of location or cost.
Except as set forth above, the Authority shall determine the terms andconditions of any loan from the Fund, which may vary between loan recipients.Each loan shall be evidenced by appropriate bonds or notes of the localgovernment or other entity payable to the Fund. The bonds or notes shall havebeen duly authorized by the local government or other entity and executed byits authorized legal representatives. The Authority is authorized to requirein connection with any loan from the Fund such documents, instruments,certificates, legal opinions and other information as it may deem necessaryor convenient. In addition to any other terms or conditions which theAuthority may establish, the Authority may require, as a condition to makingany loan from the Fund, that the local government or other entity receivingthe loan covenant to perform any of the following:
A. Establish and collect rents, rates, fees and charges to produce revenuesufficient to pay all or a specified portion of (i) the costs of operation,maintenance, replacement, renewal and repairs of the project; (ii) anyoutstanding indebtedness incurred for the purposes of the project, includingthe principal of and premium, if any, and interest on the loan from the Fundto the local government or other entity; and (iii) any amounts necessary tocreate and maintain any required reserve, including any rate stabilizationfund deemed necessary or appropriate by the Authority to offset the need, inwhole or part, for future increases in rents, rates, fees or charges;
B. With respect to local governments, levy and collect ad valorem taxes onall property within the jurisdiction of the local government subject to localtaxation sufficient to pay the principal of and premium, if any, and intereston the loan from the Fund to the local government;
C. Create and maintain a special fund or funds for the payment of theprincipal of and premium, if any, and interest on the loan from the Fund tothe local government or other entity and any other amounts becoming due underany agreement entered into in connection with the loan, or for the operation,maintenance, repair or replacement of the project or any portions thereof orother property of the local government or other entity, and deposit into anyfund or funds amounts sufficient to make any payments on the loan as theybecome due and payable;
D. Create and maintain other special funds as required by the Authority; and
E. Perform other acts, including the conveyance of, or the granting of lienson or security interests in, real and personal property, together with allrights, title and interest therein, to the Fund, or take other actions as maybe deemed necessary or desirable by the Authority to secure payment of theprincipal of and premium, if any, and interest on the loan from the Fund andto provide for the remedies of the Fund in the event of any default in thepayment of the loan, including, without limitation, any of the following:
1. The procurement of insurance, guarantees, letters of credit and otherforms of collateral, security, liquidity arrangements or credit supports forthe loan from any source, public or private, and the payment therefor ofpremiums, fees or other charges;
2. The combination of one or more projects, or the combination of one or moreprojects with one or more other undertakings, facilities, utilities orsystems, for the purpose of operations and financing, and the pledging of therevenues from such combined projects, undertakings, facilities, utilities andsystems to secure the loan from the Fund made in connection with suchcombination or any part or parts thereof;
3. The maintenance, replacement, renewal and repair of the project; and
4. The procurement of casualty and liability insurance.
All local governments or other entities borrowing money from the Fund areauthorized to perform any acts, take any action, adopt any proceedings andmake and carry out any contracts that are contemplated by this chapter. Suchcontracts need not be identical among all local governments or otherentities, but may be structured as determined by the Authority according tothe needs of the contracting local governments or other entities and the Fund.
Subject to the rights, if any, of the registered owners of any of the bondsof the Authority, the Authority may consent to and approve any modificationin the terms of any loan subject to guidelines adopted by the Board.
(1986, c. 415; 1996, c. 20; 1999, c. 1012.)