62.1-216.1 - Investigation by Governor of alleged defaults; withholding state funds from defaulting locality; payment of funds withheld; receipts, reports, etc.
§ 62.1-216.1. Investigation by Governor of alleged defaults; withholdingstate funds from defaulting locality; payment of funds withheld; receipts,reports, etc.
Whenever it appears to the Governor from an affidavit filed with him by theAuthority as the purchaser, holder, or credit enhancer of local obligations(regardless of the security therefor) issued by any county, city or town thatthe county, city or town has defaulted in its payment of the principal of orpremium, if any, or interest on any of its outstanding local obligationspurchased, held, or credit enhanced by the Authority, the Governor shallimmediately make a summary investigation into the facts set forth in theaffidavit. The Authority may, but shall not be required to, file such anaffidavit unless the Authority has otherwise contracted to make such filingfor the benefit of the holders of any of its bonds or the local obligationscredit enhanced by it. The affidavit described in this section may be filedby a trustee to which the Authority has assigned the local obligations assecurity for bonds of the Authority under a resolution or trust indenture orotherwise.
If it is established to the satisfaction of the Governor that the county,city or town is in default in the payment of such local obligations or theinterest on them, the Governor shall immediately make an order directing theComptroller to withhold all further payment to the county, city or town ofall funds, or of any part of them, appropriated and payable by theCommonwealth to the county, city or town for any and all purposes, until thedefault is cured. The Governor shall, while the default continues, direct inwriting the payment of all sums withheld by the Comptroller, or as much ofthem as is necessary, to the Authority, so as to cure, or cure insofar aspossible, the default as to the local obligations or interest on them.
The Governor shall, as soon as practicable, give notice of the default and ofthe availability of funds with the Comptroller in writing to the Authority.Any payment so made by the Comptroller to the Authority shall be credited asif made directly by the county, city or town and shall be charged by theComptroller against the first appropriations otherwise payable to the county,city or town as if paid to the county, city or town. The Authority, at thetime of payment or at the time of each payment shall receipt for the paymentand deliver to the Comptroller all local obligations or other instruments ordocuments, in a form satisfactory to the Comptroller, evidencing theAuthority's right to receive the amounts satisfied by the payment. TheComptroller shall report each payment made to the governing body of thedefaulting county, city or town and deliver or send by registered mail to thegoverning body all local obligations, or other instruments or documentsreceived by the Comptroller under the provisions of this section.
Nothing in this section shall be construed to create any obligation on thepart of the Comptroller or the Commonwealth to make any payment on behalf ofthe defaulting county, city or town other than from funds appropriated andpayable to the defaulting county, city or town.
(1998, c. 399; 2003, c. 561.)