Virginia Law

As used in this chapter, unless the context requires a different meaning:

"Board" means the members of the board of visitors, board of trustees, or other governing board of an institution.

"Bond" means any bond, note, or other evidence of indebtedness or obligation of an institution issued by an institution pursuant to this chapter.

"Erect" includes building, constructing, reconstructing, erecting, demolishing, extending, bettering, equipping, installing, modifying, and improving.

"Institution" means each public institution of higher education, as that term is defined in § 23.1-100, the Institute for Advanced Learning and Research, the New College Institute, the Roanoke Higher Education Authority, the Southern Virginia Higher Education Center, the Southwest Virginia Higher Education Center, the Virginia School for the Deaf and the Blind, and the Wilson Workforce and Rehabilitation Center.

"Project" means (i) any (a) building, facility, addition, extension, or improvement of a capital nature that is necessary or convenient to carry out the purposes of an institution, including administration and teaching facilities, lecture and exhibition halls, libraries, dormitories, student apartments, faculty dwellings, dining halls, cafeterias, snack bars, laundries, hospitals, laboratories, research centers, infirmaries, field houses, gymnasiums, auditoriums, student unions, recreation centers, stadiums, athletics facilities, garages, parking facilities, warehouses and storage buildings, and book and student supplies centers, or (b) building, land, appurtenance, furnishing, or equipment necessary or desirable in connection with or incidental to a project or (ii) any personal property at an institution.

1933, p. 83, § 23-15; 1946, p. 184; 1964, c. 635; 1996, cc. 672, 689; 2016, c. 588; 2023, cc. 756, 778.

The powers of each institution derived directly or indirectly from this chapter are vested in and may be exercised by a majority of the members of its board, and a majority of such board constitutes a quorum for the transaction of any business authorized by this chapter.

1933, p. 83, § 23-14; 1946, p. 183; 1956, c. 373; 1960, c. 180; 1962, c. 69; 1964, cc. 358, 440, 635; 1966, c. 616; 1972, cc. 550, 861; 1974, c. 317; 1975, c. 396; 1976, c. 189; 1977, cc. 296, 319, 668; 1979, cc. 136, 145; 1987, c. 329; 1992, c. 103; 1999, cc. 424, 437; 2000, cc. 108, 671; 2001, c. 578; 2002, cc. 87, 158, 257, 478; 2004, cc. 176, 195, 857; 2005, cc. 774, 799; 2006, cc. 808, 842; 2008, c. 56; 2013, c. 805; 2015, cc. 369, 542; 2016, c. 588.

In addition to any other purposes provided by law or otherwise, the purpose of every institution is to acquire, install, modify, and erect projects.

1933, p. 85, § 23-17; 1996, cc. 672, 689; 2016, c. 588.

Any institution may, in its proper corporate name and style:

1. Sue and be sued (i) on any bond, agreement, or other contractual or quasi-contractual obligation issued, made, or incurred pursuant to this chapter; (ii) on any duty, debt, evidence of debt, term, provision, condition, or covenant relating to any bond, agreement, or other contractual or quasi-contractual obligation issued, made, or incurred pursuant to this chapter; (iii) for the enforcement of any bond, agreement, or other contractual or quasi-contractual obligations issued, made, or incurred pursuant to this chapter; or (iv) for the enforcement of any contract or agreement with or liability to any federal agency or bondholder or any trustee or representative of such bondholder.

2. Adopt and alter a common seal.

3. Acquire and hold real or personal property or interests in such property in its own name.

4. Execute any instrument that it deems necessary or convenient to carry out the purposes of this chapter.

5. With the consent of the Governor, issue bonds and provide for and secure the rights of the bondholders.

6. Perform any act authorized by this chapter through its own officers, agents, or employees, or by contracts with private corporations, firms, or individuals.

7. Perform any act that it deems necessary or convenient to carry out the powers and purposes expressly provided in this chapter.

1933, p. 84, § 23-16; 2016, c. 588.

With the prior consent of the Governor, any institution may acquire any project by purchase, gift, or otherwise, erect any project, or refinance the cost of acquiring or erecting any project, and in connection with any such acquisition, erection, or refinancing, any institution may borrow money; make, issue, and sell its bonds as provided in this chapter; and enter into and perform all lawful contracts and agreements, do all lawful acts necessary or proper, and make such lawful contracts and agreements and perform all such lawful acts as may be necessary, proper, or advisable for the purpose of obtaining or securing grants, loans, or financial assistance of any kind under any act of Congress or the Commonwealth.

1933, p. 85, § 23-18; 1946, p. 184; 1966, c. 572; 2016, c. 588.

A. Any institution may, with the approval of the Governor and upon the affirmative vote of at least two-thirds of its board, borrow sums that it deems necessary for and in the name of the institution and secure payment of such sums by the pledge of any stock, note, bond, and other asset held by such institution as a part of its endowment funds or unrestricted gifts from private sources.

B. Any institution may issue bonds pursuant to this section in one or more series, and such bonds shall bear such date, mature at such time, bear interest at such rate or rates not exceeding the rate specified in § 23.1-1112 that is payable at such time, be in such denomination, be in such form, either coupon or registered, carry such registration privilege, be executed in such manner, be payable in such medium of payment and at such place, and be subject to such terms of redemption, with or without premium, as the board of such institution may provide by resolution.

C. Any bonds issued pursuant to this section may be sold at public or private sale for such price or prices as the board determines. The interest cost to maturity of the moneys received for any such issue of bonds shall not exceed the rate specified in § 23.1-1112. Bonds so issued and the interest thereon (i) is payable only out of the sale or liquidation of the endowment investments, investments of unrestricted gifts from private sources, and interest accruing on such sale, liquidation, or investment that is pledged to secure the bonds so issued and (ii) is not a general obligation of such institution, the Commonwealth, the Governor, the members of the board of such institution, or any person executing the bonds so issued.

D. All moneys received or derived from the sale of any bonds issued pursuant to this section are a part of the local funds of the institution and are not state funds.

E. Each institution may use funds available for such purpose to purchase any bond issued pursuant to this section at a price not more than the sum of the principal amount of such bond and accrued interest thereon. Any bond so purchased shall be canceled unless purchased as an endowment fund investment. This subsection shall not apply to the redemption of bonds.

F. Any bond issued pursuant to this section is a security in which all public officers and bodies of the Commonwealth and its political subdivisions, insurance companies and associations, and savings banks and savings institutions, including savings and loan associations, in the Commonwealth may properly and legally invest funds under their control.

G. Any bond issued pursuant to this section, the transfer of such bond, and the income from such bond, including any profit derived from the sale of such bond, is exempt from taxation by the Commonwealth or by any locality or political subdivision of the Commonwealth.

H. Any resolution of the board authorizing the issuance of bonds pursuant to this section may contain any provision that is authorized pursuant to this chapter in connection with the issuance of bonds by institutions. Such provision shall be part of the contract with the holders of such bonds.

§ 23-30.01; 2016, c. 588.

A. The Treasury Board is designated as the paying agent of institutions for the purposes of this chapter and shall approve the terms and structure of bonds executed pursuant to this chapter.

B. Any institution may execute its bonds in an aggregate principal amount determined by its board, approved by the Governor, and approved by the Treasury Board pursuant to § 2.2-2416. Such aggregate principal amount may include any cost associated with the development and management of the project, legal or accounting expenses incurred by the institution in connection with the project for which such bonds are issued, and the cost of issuing the bonds, including printing, engraving, advertising, legal, and other similar expenses.

C. Bonds issued pursuant to this chapter shall:

1. Be subject to approval by the Governor and authorization by resolution of the board, and any such resolution may contain provisions, which shall be part of the contract with the bondholders, relating to:

a. Fixing, revising, charging, and collecting fees, rents, and charges for or in connection with the use, occupation, or services of the project or pledging such fees, rents, and charges and any increase in revenues derived from any existing facilities at such institution resulting from any increase in such fees, rents, or charges to the payment of the principal of and the interest on such bonds;

b. Fixing, revising, charging, and collecting fees, rents, and charges for or in connection with the use, occupation, or services of any existing facility at such institution and pledging such fees, rents, and charges to the payment of the principal of and the interest on such bonds;

c. Fixing, revising, charging, and collecting student building fees and other student fees from students enrolled at such institution and pledging all or part of such fees to the payment of the principal of and the interest on such bonds;

d. Pledging to the payment of the principal of and the interest on such bonds any moneys available for the use of such institution, including moneys appropriated to such institution from the general fund of the Commonwealth or from nongeneral funds that are not required by law or by previous binding contract to be devoted to some other purpose, without regard to the source of such moneys but subject to Treasury Board guidelines and approval pursuant to § 2.2-2416;

e. Paying the cost of operating and maintaining any project and any such existing facilities from any revenue source mentioned in subdivision a, b, c, or d, creating reserves for such purposes, and providing for the use and application of such reserves;

f. Creating sinking funds for the payment of the principal of and the interest on such bonds, creating reserves for such purposes, and providing for the use and application of such reserves;

g. Limiting the right of the institution to restrict and regulate the use, occupation, and services of the project and such other existing facilities or the services rendered in such project or other existing facilities;

h. Limiting the purposes to which the proceeds of sale of any issue of bonds may be applied;

i. Limiting the issuance of additional bonds;

j. Setting forth the procedure by which the terms of any contract with the bondholders may be amended or abrogated and the manner in which such bondholders may give consent to any such amendment or abrogation; and

k. Setting forth such other conditions precedent as may be required by the United States or any federal agency to obtain a direct grant or loan to erect or defray the cost of labor and material to erect any project from the United States or any federal agency, subject to the approval of the Governor;

2. Bear such date, mature at such time, bear interest at such rate not exceeding the rate specified in § 23.1-1112 payable at such times, be in such denomination, be in such form, either coupon or registered, carry such registration privilege, be executed in such manner, be payable in such medium of payment and at such place, and be subject to such terms of redemption, with or without premium, as the resolution of the board provides;

3. Be issued to finance only those projects approved by the General Assembly in the general appropriation act;

4. Be pledged pursuant to a resolution of the board and payable only from the revenue sources set forth in subdivisions 1 a, b, c, and d;

5. Not constitute an indebtedness of the institution, except to the extent of the collection of such revenues. Institutions are not liable to pay such bonds or the interest on such bonds from any other funds. No contract entered into by an institution pursuant to this chapter shall be construed to require the costs or expenses to operate and maintain a project for which bonds are issued and any other existing facilities to be paid out of any funds other than the revenues derived and pledged from the sources set forth in subdivisions 1 a, b, c, and d; and

6. Be fully negotiable within the meaning and for all the purposes set forth in Title 8.3A.

D. Bonds issued pursuant to this chapter may be:

1. Sold at public or private sale for such price or prices as the board determines and the Governor approves, provided that (i) the interest cost to maturity of the money received for any issue of such bonds shall not exceed the rate specified in § 23.1-1112; (ii) the General Assembly shall approve the issuance of bonds to finance projects; and (iii) biennially, on or before September 1 of each odd-numbered year, each institution shall submit to the Governor each proposed project and the estimated cost of each such project that the institution desires to have financed under the provisions of this chapter, and the Governor shall consider such projects and make his recommendation to the General Assembly in the budget submitted in accordance with the provisions of § 2.2-1508;

2. Issued to finance only those projects approved by the General Assembly in the general appropriation act, which projects need not be limited to the projects recommended by the Governor;

3. Issued to finance all or a portion of the cost of any project plus amounts to fund issuance costs, reserve funds, and capitalized interest for a period not to exceed one year following completion of the project; and

4. Issued for the purpose set forth in § 23.1-1102 or to carry out the powers conferred on the institution by § 23.1-1104.

E. Neither the Governor nor the members of the board nor any person executing bonds pursuant to this chapter are liable personally on the bonds or subject to any personal liability or accountability by reason of the issuance of such bonds.

F. Any institution may purchase with funds available for such purchase any bond that it has issued at a price not more than the sum of the principal amount and accrued interest. All bonds so purchased shall be cancelled unless purchased as an endowment fund investment. Nothing in this subsection shall be construed to apply to the redemption of bonds.

G. In any case in which an institution obtains a loan from the United States or any federal agency to erect any project that requires the establishment of a debt service reserve, the institution, with the consent of the Governor, may deposit securities in a separate collateral account in an amount equal to the required debt service reserve and pledge such securities to meet the debt service requirements if the revenues derived from any source set forth in subdivision C 1 a, b, c, or d and pledged for the payment of such loan become insufficient for such purpose. The face value of United States government securities and the market value of all other securities is the value of any securities so deposited. Nothing in this subsection shall be construed to prohibit repayment of any portion of such loan from income derived from the securities so deposited. No securities shall be deposited in any such collateral account unless such securities are purchased with funds whose use is in no way limited or restricted or are donated to such institution for the purpose of establishing such debt service reserve.

1933, p. 85, § 23-19; 1936-7, p. 28; 1946, p. 184; 1950, p. 366; 1954, c. 397; 1958, cc. 17, 486; 1959, Ex. Sess., c. 61; 1962, c. 373; 1964, c. 635; 1970, c. 609; 1990, cc. 54, 856; 1996, cc. 636, 656, 672, 689; 2016, c. 588.

A. The provisions of this section shall apply to an issuance of bonds only if the resolution authorizing such bonds provides that the bondholders are entitled to all the benefits of and subject to the provisions of this section.

B. If any institution (i) defaults on the payment of principal of or interest on any series of its bonds after the payment becomes due, whether at maturity or upon call for redemption, and such default continues for a period of 30 days; (ii) fails or refuses to comply with the provisions of this chapter; or (iii) defaults on any agreement made with the bondholders of any series, the holders of 25 percent of the aggregate principal amount of the bonds of such series then outstanding, by instrument filed with the Governor and proved or acknowledged in the same manner as a deed to be recorded, may appoint a trustee to represent the bondholders of such series for the purposes provided in this section.

C. The trustee may, and upon written request of the holders of 25 percent of the aggregate principal amount of the bonds of such series then outstanding shall, in his own name:

1. By mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the bondholders of such series, including the right to require such institution and its board to (i) collect fees, rents, charges, or other revenues adequate to carry out any agreement as to, or pledge of, such revenues or (ii) carry out and perform any other agreements with the bondholders of such series and their duties under this chapter;

2. Bring suit upon such bonds;

3. By action or suit in equity, require such institution to account as if it were the trustee of an express trust for the bondholders; and

4. By action or suit in equity, enjoin any acts that may be unlawful or in violation of the rights of the bondholders.

D. If the resolution that authorizes any bond contains the provision required by subsection A and provides that any trustee appointed by the bondholders pursuant to this section has the powers provided by this subsection, then any such trustee, whether or not all such bonds have been declared due and payable, is entitled to the appointment of a receiver who may (i) enter and take possession of any property of the institution from which any of the revenues are pledged for the security of the bonds of the holders that are represented by such trustee, (ii) operate and maintain such property, and (iii) collect and receive all fees, rents, charges, and other revenues arising from such property in the same manner as the institution is permitted to do and shall deposit all such moneys in a separate account and apply all such moneys in such manner as the court directs. In any suit, action, or proceeding by the trustee, any fees, counsel fees, and expenses of the trustee and receiver shall constitute taxable costs and disbursements and all costs and disbursements allowed by the court shall be a first charge on any fees, rents, charges, and other revenues of the institution that are pledged for the security of the bonds.

E. Each trustee appointed pursuant to subsection B has all of the powers necessary or appropriate for the exercise of any functions specifically set forth in this section or incident to the general representation of the bondholders he represents in the enforcement and protection of their rights.

1933, p. 87, § 23-20; 1946, p. 186; 2016, c. 588.

If any bond issued by an institution is mutilated, lost, or destroyed, the board may execute and deliver a new bond of like date, number, and tenor in exchange and substitution for, and upon cancellation of a mutilated bond and its interest coupons or in lieu of and in substitution for a lost or destroyed bond and its unmatured interest coupons. Such new bond or coupon shall not be executed or delivered until the holder of the mutilated, lost, or destroyed bond (i) has paid the reasonable expense and charges in connection with the execution and delivery; (ii) in the case of a lost or destroyed bond, has filed with the board and the State Treasurer satisfactory evidence that such bond was lost or destroyed and that the bondholder was the owner of the bond; and (iii) has furnished indemnity satisfactory to the State Treasurer.

1962, c. 205, § 23-20.1; 2016, c. 588.

All moneys derived from the sale of bonds pursuant to § 23.1-1106 and all revenues derived from any source set forth in subdivision C 1 a, b, or c of § 23.1-1106, except those moneys that are exempt from deposit into the state treasury, shall be paid into the state treasury, set aside in special funds, and devoted solely to the payment of (i) the cost of erecting the project for which such bonds have been issued, (ii) the principal of and the interest on such bonds, and (iii) the cost of maintenance and operation of such project and any other existing facilities for which any revenue is pledged either in whole or in part to the payment of the principal of and the interest on such bonds, respectively, and are specifically appropriated for such purposes to be paid out by the State Treasurer on warrants of the Comptroller to be issued on vouchers of the treasurer or other fiscal officer of the board of such institution.

1933, p. 88, § 23-21; 1946, p. 187; 1962, c. 373; 1964, c. 635; 1997, c. 308; 2016, c. 588.

Any bonds issued pursuant to this chapter are securities in which all public officers and bodies of the Commonwealth and its political subdivisions, insurance companies and associations, and savings banks and savings institutions, including savings and loan associations, in the Commonwealth may properly and legally invest funds in their control.

1933, p. 90, § 23-23; 2016, c. 588.

The bonds and other obligations of an institution are not a debt of the Commonwealth, do not create or constitute any indebtedness or obligation of the Commonwealth, legal, moral, or otherwise, and are not payable out of any funds other than those of the institution. Nothing in this chapter shall be construed to authorize any institution to incur any indebtedness on behalf of the Commonwealth or in any way to obligate the Commonwealth.

1933, p. 91, § 23-24; 2016, c. 588.

No bond issued by an institution pursuant to this chapter shall (i) bear interest at an annual percentage rate exceeding the greater of the rates authorized under § 6.2-303 or 15.2-2612 or (ii) be sold at public or private sale such that the interest cost to maturity exceeds the greater of such annual percentage rates authorized under § 6.2-303 or 15.2-2612.

1970, c. 609, § 23-30.03; 2016, c. 588.

When any institution fully meets and discharges its bonds, interest thereon, interest on any unpaid installments of interest on its bonds, and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders and pays in full or otherwise discharges all of its liabilities incurred pursuant to this chapter, such institution shall pay into the state treasury all such sums of money it receives pursuant to the provisions of this chapter or that are derived from any project erected pursuant to this chapter as may be in its possession or control.

1933, p. 91, § 23-28; 2016, c. 588.

The board of each institution shall keep and preserve complete and accurate accounts of all sums of money received and disbursed to acquire, erect, lease, operate, or maintain any project and any other existing facilities, including a complete and accurate record of all revenues derived from any source set forth in subdivision C 1 a, b, c, or d of § 23.1-1106 and all sums disbursed for the payment of the principal of or interest on or other debt service with respect to any bonds issued pursuant to this chapter. The annual portion of such revenues that are not required to discharge any obligation, liability, or debt of the institution incurred in connection with the project or other existing facilities, including the creation of reserves for such purposes, shall be paid into the state treasury as provided in § 23.1-1109.

1933, p. 89, § 23-22; 1962, c. 373; 1964, c. 635; 1984, c. 734; 2016, c. 588.

The acquisition, erection, leasing, operation, and maintenance of any project authorized by this chapter are for the benefit of the citizens of the Commonwealth, for the increase of their pleasure, knowledge, and welfare, and for the dissemination of education among them. Each institution performs a governmental function and is an incorporated institution of learning in carrying out its purposes and exercising its powers pursuant to this chapter and, so far as may be consistent with the Constitution of Virginia, is not required to pay taxes or assessments of any kind upon any project that it (i) acquires, erects, or leases and (ii) operates and maintains. Any such project is exempt from taxation and, insofar as may be permitted under the Constitution of Virginia, the bonds of such institution are exempt from taxation except for inheritance taxes.

1933, p. 91, § 23-25; 2016, c. 588.

The Commonwealth shall not (i) limit or alter the rights vested in any institution to establish, collect, and pledge fees, rents, and charges, including student building fees and other student fees, as provided for in subdivision C 1 a, b, c, or d of § 23.1-1106 that the institution deems necessary or convenient to produce sufficient revenues to meet the expense of maintenance and operation of such project and such other existing facilities and fulfill the terms of any agreement made with the bondholders or (ii) in any way impair the rights and remedies of such bondholders until the bonds, the interest thereon, the interest on any unpaid installments of interest on the bonds, and all costs and expenses in connection with any action or proceedings by or on behalf of such bondholders are fully met and discharged.

1933, p. 91, § 23-26; 1962, c. 373; 1964, c. 635; 2016, c. 588.

A. Any institution may, with the approval of the Governor and upon the affirmative vote of at least two-thirds of its board, (i) borrow for and in the name of the institution such sums as it determines necessary for the acquisition of improved or unimproved real estate whether such acquisition is for the purpose of erecting a project and (ii) secure payment of such debts by a lien on such real estate or the pledge of any endowment funds or unrestricted gifts from private sources available for the use of such institution that are not required by law or by previous binding contract to be devoted to some other purpose.

B. Bonds issued by an institution pursuant to this section and the interest thereon shall be paid only from the real estate, endowment funds, or unrestricted gifts from private sources pledged to secure the bonds so issued or the proceeds from the sale or liquidation of such real estate, funds, or gifts, and shall not constitute a general obligation of such institution, the Commonwealth, the Governor, the members of the board, or any person executing the bonds so issued.

C. Any bonds issued by an institution pursuant to this section are securities in which all public officers and bodies of the Commonwealth and its political subdivisions, insurance companies and associations, and savings banks and savings institutions, including savings and loan associations, in the Commonwealth may properly and legally invest funds under their control.

D. Any bonds issued pursuant to this section, the transfer of such bonds, or the income from such bonds, including any profit derived from the sale of such bonds, is exempt from taxation by the Commonwealth or any locality or political subdivision of the Commonwealth.

E. Any board resolution authorizing the issuance of bonds pursuant to this section may contain any provision authorized by this chapter in connection with the issuance of bonds by institutions. Such provision shall be part of the contract with the holders of such bonds.

1970, c. 609, § 23-30.02; 1981, c. 505; 2016, c. 588.

The Governor is vested with absolute discretion with respect to withholding or granting any consent or approval made pursuant to this chapter.

1933, p. 91, § 23-27; 2016, c. 588.

The Comptroller shall draw upon the state treasury in favor of the proper authorities of any public institution of higher education or private institution of higher education for all accrued interest, upon all obligations of the Commonwealth or the James River and Kanawha Company guaranteed by the Commonwealth that are held by or for such institution. No interest shall be paid upon any such bonds.

Code 1919, § 990, § 23-5; 2016, c. 588.

The following sections of the Code of Virginia of 1919 are continued in effect:

1. Section 991, relating to the exchange of consol coupon bonds held by colleges, etc., for funded registered consol bonds; and

2. Section 992, relating to the cancellation of such bonds surrendered in exchange.

Code 1919, §§ 991, 992, § 23-6; 2016, c. 588.

Chapter 489 of the Acts of Assembly of 1926, approved March 25, 1926, and codified as §§ 992(1)-992(13) of Michie Code 1942, authorizing the governing boards of certain public institutions of higher education to issue certificates of indebtedness to raise funds for dormitory construction purposes, and Chapter 61 of the Acts of Assembly of 1928, approved February 28, 1928, relating to similar certificates, are continued in effect.

§ 23-30; 2016, c. 588.

Insofar as the provisions of this chapter are inconsistent with the provisions of any other general or special law or the charter or other organic law of any institution, the provisions of this chapter control.

1933, p. 92, § 23-29; 1962, c. 577; 1964, c. 90; 1997, c. 310; 2016, c. 588.