VPSA--General Stand Alone Policy of the Authority
This Policy is established pursuant to § 22.1-171 A(5) of the Code of Virginia.
This Policy establishes procedures of the Virginia Public School Authority (the "Authority") for the issuance of special obligation school financing bonds of the Authority ("Stand Alone Bonds") to purchase general obligation school bonds or notes ("Local School Bonds") issued by a single county, city, or town within the Commonwealth of Virginia ("Local Issuer").
This Policy is issued so there will be available to all counties, cities and towns of the Commonwealth attractive credit terms and financing arrangements for financing capital projects for primary and secondary public schools and that such terms and arrangements are in the best interests of the Commonwealth as a whole. This Policy is intended to supplement other policies, regulations, and directives issued by agencies and officers of the Commonwealth having administrative responsibilities for financing capital projects for primary and secondary public schools.
This Policy shall apply to all Local Issuers proposing to sell and issue Local School Bonds to the Authority for the purpose of financing capital projects for primary and secondary public schools.
The Virginia Constitution directs the General Assembly to "provide for a system of free public elementary and secondary schools for all children of school age throughout the Commonwealth, and [to] seek to ensure that an educational program of high quality is established and continually maintained." (Virginia Constitution, Article VIII, Section 1).
The Authority was established pursuant to §22.1-162 et seq. of the Code of Virginia (the “Enabling Act”) to help address the needs of counties, cities and towns of the Commonwealth with respect to the financing of public school capital projects and endeavors to take appropriate steps to meet localities' financing needs.
Stand Alone Bonds are payable solely from the payments of the principal and interest on Local Issuers' Local School Bonds purchased by the Authority with the proceeds of its Stand Alone Bonds and the proceeds from any sale of the Local School Bonds.
Stand Alone Bond issues, along with other local financing options of counties, cities and towns, provide an additional method of financing public school capital projects and do not adversely affect the Authority's Pooled Bond debt capacity.
The Authority will issue Stand Alone Bonds under resolutions separate from its 1997 and other Pooled Bond Resolutions. Stand Alone Bonds will be secured by payments on the underlying Local School Bonds and may be additionally secured by a credit enhancement. If any local issuer fails to make timely payment of debt service on its Local School Bonds and the application of the State Aid Intercept provisions mandated in §15.2-2659 of the Code of Virginia does not remedy the deficiency, absent the receipt of payments from a credit enhancer, the Authority will not have sufficient funds to pay timely debt service on its Stand Alone Bonds.
The Authority may choose not to approve a Stand Alone Bond issue with a principal amount less than $20 million. Amortization periods of up to 30 years may be considered as provided in the Enabling Act.
Stand Alone Bonds will have no lien on existing Authority funds or other funds held in trust by the Authority.
Although intended for use by a single Local Issuer, Stand Alone Bonds may be issued for two or more Local Issuers in a "Stand Alone Pool" as the Authority may determine.
Procedures for Stand Alone Issues
Requests for Inclusion in Sale
- Local Issuers contemplating a Stand Alone Bond financing for a public school capital project may apply to the Authority as though participating in a Pooled Bond financing. Local Issuers will have the opportunity to state in the application process a preference for either inclusion in a Pooled Bond financing or a Stand Alone Bond issue, subject to Authority approval.
- In order to be considered for a Stand Alone Bond issue, a Local Issuer's bonds must have at least an "A" category rating with or without a credit enhancement.
- The Local Issuer shall secure the services of a qualified bond counsel prior to submitting its application to the Authority. The Authority shall utilize its bond counsel and financial advisor in a Stand Alone Bond transaction.
- The Authority will accept applications from Local Issuers for Stand Alone Bond issues and may assign applicants for Pooled Bond issues to Stand Alone Bond issues, but will issue Stand Alone Bonds only if consistent with the Policy expressed herein. The minimum amount of any such application shall be $20,000,000 unless waived for good cause or the Virginia Department of Education has determined that an emergency exists for the project(s).
- Local School Bonds purchased by the Authority must constitute valid and binding general obligations of the respective Local Issuer for the payment of which its full faith and credit are irrevocably pledged, and all taxable property within the boundaries of the Local Issuer must be subject to the levy of an ad valorem tax, without limitation on rate or amount, for the payment of the Local School Bonds and the interest thereon.
- For so long as the Authority is the registered owner of a Local Issuer's Local School Bonds:
- the paying agent and registrar shall be a qualified bank or trust company; and
- all payments of principal and interest shall be made in immediately available funds to the Authority on or before 11:00 A.M. on the applicable debt service payment date or redemption date; or, if the scheduled date is not a business day for banks in Virginia or for the Commonwealth, then on or before 11:00 A.M. on the preceding business day. Overdue payments shall bear interest at the Local School Bond rates.
- Localities participating in the Authority's financings will covenant not to sell, without the Authority's consent, any general obligation bonds, which are part of the same common plan of financing as the Local School Bonds, during a 15-day period before and after the sale of the Authority's bonds.
- Local School Bonds purchased under the Stand Alone Bond program shall not be subject to redemption at the option of the Local Issuer's governing body without the prior written consent of the Authority.
- The Authority will review the form(s) of the legal opinion(s) of the Local Issuer's bond counsel to determine that they are satisfactory to the Authority as to:
- the validity of, and exclusion from gross income for federal and Virginia income tax purposes of the interest on, the Local School Bonds, if applicable;
- the conformity of the terms and provisions of the Local School Bonds to the agreed upon terms; and,
- the due authorization, execution and delivery of the Local School Bonds.
- The Authority may require Local Issuers participating in Stand Alone Bond issues to invest their bond proceeds in the Virginia State Non-Arbitrage Program or other investment vehicle which the Authority may deem appropriate and to provide on a timely basis financial documents, continuing disclosure, and other information requested by the Authority.
- Each Local Issuer will be required to authorize, execute and deliver to the Authority a Continuing Disclosure Agreement in a form satisfactory to the Authority. By the terms of its Continuing Disclosure Agreement, any Local Issuer that issues and sells Local School Bonds to the Authority in a Stand Alone Bond issue will be deemed to be an obligated person required to make certain filings prescribed by the Securities and Exchange Commission Rule 15c2-12.
Fee and Penalties
- Local Issuers are solely responsible for paying all direct and indirect costs and expenses of administrative and staff support provided by the Authority and the Department of the Treasury as well as fees and expenses for professionals associated with the financing including but not limited to bond counsel, financial advisor, underwriter, preliminary and final official statement printer, rating agencies and other costs directly related to selling the Stand Alone Bonds, either through a lump sum charge assessed at closing or by a basis point premium on each coupon maturity or a combination of both as determined by the Authority in its sole discretion in each individual case.
- The Local Issuer will also pay all fees and expenses associated with defeasance and redemption, including distribution of notices, verification agent fees, escrow agent fees and rating agency fees for re-rating of the Authority's Stand Alone Bonds.
- All fees and charges related to any credit enhancement will be paid by the Local Issuer.
- The Local Issuer will also be responsible for all costs associated with arbitrage rebate compliance.
- A Local Issuer failing to close on its bonds after acceptance of its application by the Authority must pay all costs incurred by the Authority and other professionals as defined above.
- The principal amount of Local School Bonds and the description of the project(s) in the resolutions adopted by the Local Issuer's governing body and school board shall be consistent.
- If a Local Issuer has had substantially the same project(s) considered at a referendum, the Authority will take into account the referendum results but is not bound by the results and may approve or reject the application for the project(s). Any project(s) that is the subject of a failed referendum which has not been reversed by a subsequent successful referendum, may be eligible for consideration only if both the Local Issuer's governing body and school board have approved resolutions stating that the project(s) is essential, and that one of the following has occurred:
- the resolutions have been unanimously approved by both the Local Issuer's governing body and school board, or
- at least two years have passed since the referendum, or
- the Virginia Department of Education has determined that an emergency exists for the project(s).
- The Authority may approve or reject applications for Stand Alone Bond issues, taking into consideration the merits of the Local Issuers' project(s) and the recommendations of the Virginia Department of Education.
Exceptions and Additions
The Authority may, in its sole discretion, exempt from or add to the procedures set forth in this Policy, any specific applications, or portions thereof, that it deems to be in the best interests of the Commonwealth and the Authority.
The Authority may from time to time amend this Policy.
The requirements and procedures established by this Policy are effective immediately upon adoption by the Authority.
Adopted September 8, 2005