The governing body of any locality is authorized to provide by resolution or ordinance for the defeasance of any bonds of the locality now or hereafter outstanding, to the extent that the defeasance of such bonds is not otherwise provided for in the resolution, ordinance, indenture or other document governing the issuance of such bonds. Bonds to be defeased pursuant to this section shall be deemed defeased and no longer outstanding when there has been established with a bank or trust company designated by the locality 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 will be sufficient to pay all bonds to be defeased either at maturity or upon redemption; however, if such bonds are to be defeased either at maturity or upon redemption, notice of the redemption of such bonds shall have been duly given or irrevocable instructions to redeem such bonds shall have been given by the locality.
Any escrow fund established pursuant to this section shall be irrevocably pledged to the payment of the bonds to be defeased and shall be used solely to pay such bonds at maturity or upon earlier redemption. It is the intent that any escrow fund established pursuant to this section shall constitute a special fund for the payment of the defeased bonds and that the defeased bonds 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 bonds to be defeased shall be divested of all rights and security relating to the bonds, except the right to payment due to principal, premium, if any, and interest, which shall be paid solely from the escrow fund.
1994, c. 714, § 15.1-227.24:1; 1997, c. 587.
Structure Code of Virginia
Title 15.2 - Counties, Cities and Towns
Chapter 26 - Public Finance Act
§ 15.2-2603. Disposition of unclaimed funds due on matured bonds or coupons
§ 15.2-2606. Public hearing before issuance of bonds
§ 15.2-2608. Bonds for revenue-producing undertakings
§ 15.2-2609. Covenants relating to issuance of revenue bonds
§ 15.2-2610. Request for referendum filed with court; order for election; notice
§ 15.2-2611. Holding of election; order authorizing bonds; authority of governing body
§ 15.2-2612. Dating; rate of interest; maturity; denomination; place of payment
§ 15.2-2613. Form and manner of execution; signature of person ceasing to be officer
§ 15.2-2614. Bearer, registered or book entry form
§ 15.2-2615. Bonds deemed negotiable instruments
§ 15.2-2616. Interim receipts or temporary bonds exchangeable for definitive bonds
§ 15.2-2618. Disposition of proceeds; separate fund
§ 15.2-2619. Investment of proceeds pending application to authorized purpose
§ 15.2-2620. Bonds made legal investments
§ 15.2-2621. Bonds mutilated, lost or destroyed
§ 15.2-2622. Destruction of bonds and coupons after payment in full
§ 15.2-2623. Defeasance of indebtedness; rights of owners
§ 15.2-2624. Tax to pay principal and interest
§ 15.2-2625. Deposit of funds; security; investment of funds
§ 15.2-2626. Contracts concerning interest rates, currency, cash flow or other basis
§ 15.2-2627. Time for contesting validity of proposed bond issue; when bonds presumed valid
§ 15.2-2628. Notes in anticipation of bond issue
§ 15.2-2629. Loans to meet appropriations for current year
§ 15.2-2630. Loans in anticipation of federal and state funds
§ 15.2-2631. Terms of temporary loans
§ 15.2-2632. Certain debts that may be contracted by city on transition from town
§ 15.2-2633. Borrowing by certain cities to pay expenses
§ 15.2-2634. Limitation on amount of outstanding bonds
§ 15.2-2635. What indebtedness not included in determining limitation
§ 15.2-2636. Ordinance or resolution to provide for issue of bonds
§ 15.2-2637. Danville to incur indebtedness only in accordance with charter
§ 15.2-2638. Powers of counties generally; approval of voters required
§ 15.2-2639. County may elect to be treated as city for issuing bonds
§ 15.2-2640. Resolution for bond issue; contents; request for bonds for school purposes
§ 15.2-2641. Subsequent resolutions
§ 15.2-2642. School district bonds
§ 15.2-2643. Authority for issuance; resolutions or ordinances
§ 15.2-2646. Participation in funds donated by the Commonwealth
§ 15.2-2647. Expenses of authorization and issuance; agent to assist in refunding transaction
§ 15.2-2648. Purchase in open market
§ 15.2-2649. District refunding bonds
§ 15.2-2650. Article controlling as to proceedings involving validity
§ 15.2-2651. Proceeding by political subdivision to establish validity; procedure; parties defendant
§ 15.2-2652. Service by publication of motion for judgment; parties defendant
§ 15.2-2655. Consolidation of actions or proceedings
§ 15.2-2657. Decree validating bonds binding and conclusive
§ 15.2-2658. Bonds invalidated only for substantial defects, etc.; matters of form disregarded
§ 15.2-2660. Bonds not affected by project undertaken
§ 15.2-2661. Provisions of chapter controlling; powers conferred are additional