Chap. 386.—An ACT to enable counties, cities and towns to borrow money and
issue bonds therefor; prescribing the mode of procedure for, and regulating the
issuance of such bonds, and providing for the payment thereof; authorizing
agreements with the holders of such bonds and providing for the remedies of
such holders; also to secure the benefits of any agency of the United States of
America, now or hereafter created, delegating powers to contract debts; and
repealing inconsistent provisions of all laws, general or special, of the Com-
monwealth. [H B 378]

Approved April 1, 1940

Be it enacted by the General Assembly of Virginia, as follows:

1. The following terms wherever used or referred to in this act
shall have the following meaning unless a different meaning clearly
appears from the context:

(a) The term ‘‘project’’ shall mean the undertaking by counties,
cities or towns of any purpose or purposes not specifically prohibited
by the Constitution of the Commonwealth in aid of the financing of
which the President of the United States or any other Federal agency
is now or hereafter authorized and empowered to make grants or loans.

(b) The term “governing body” shall mean the board of super-
visors, council or other local legislative body, board, commission, or
other legislative authority having charge of the finances of any county,
city or town, and where the separate concurrence or approval of two
or more sets of such authorities is now required by law for the making
of appropriations, to the extent so required “‘governing body’”’ shall
mean and include both or all of them.

(c) The term “bonds” shall mean bonds, interim certificates, or
other obligations issued by the governing body of any county, city
or town.

(d) The term ‘law’ shall mean any act or statute, general or
special, of this State and shall include, without being limited to, the
charter of any city or town.

(e) The term “Federal agency’’ shall mean any agency or unit of
the Federal government, and shall include such agencies as may be
or have been designated or created to make grants or loans.

(f) The term ‘resolution’ shall mean an act of the governing
body of any county, city or town which, (1) must be reduced to
writing, (2) must be adopted by a majority of all the members of
such governing body, and where the separate concurrence or approval
of more than one branch of such governing body is required by law
for the making of appropriations, by a majority of all the members of
each branch of such governing body, and (3) may be finally adopted
at the meeting at which it is introduced.

2. The cities and towns of this Commonwealth shall have power
and are hereby authorized:

(a) To accept from any Federal agency grants for or in aid of
any project.

(b) To contract debts for any project, to borrow money for any
project, and to issue its negotiable bonds to finance any project; and
to provide for the rights of the holders of such bonds and to secure
the same as hereinafter further provided.
(c) To levy fees, rents, tolls, or other charges for the use of or
‘n connection with any project, subject to and in accordance with
such agreements with holders of bonds as may be made as hereinafter
provided.

(d) To assess, levy and collect unlimited ad valorem taxes on
all property subject to taxation, to pay the bonds, and interest thereon,
issued to finance any project subject to and in accordance with such
agreements with holders of bonds as may be made as hereinafter
provided.

(e) To acquire by purchase, gift or the exercise of the power of
eminent domain and to hold and dispose of, any real or personal
property, or interest therein, in connection with any project, subject
to mortgages or other liens or otherwise, and to lease either to or from
any Federal agency any real or personal property, or interest therein,
with or without the privilege of purchase.

(f) To acquire by purchase, gift or by the exercise of the power
of eminent domain and to construct, reconstruct, replace, repair,
operate, maintain, embellish, develop, better or improve any project;
and to perform any such acts and to do any such things under, through,
or by means of its own officers, agents and employees, or by contracts
with private corporations, firms or individuals.

(g) To make such contracts and execute such instruments con-
taining such terms, provisions and conditions as in the discretion of
the governing body of such county, city or town may be necessary,
proper or advisable for the purpose of obtaining or securing grants,
loans or other financial assistance from any Federal agency; and to
make such other, further or different contracts and execute all in-
struments necessary or convenient in or for the furtherance of any
project.

(h) To enter on any lands, waters and premises for the purpose
of making surveys, soundings and examinations in or for the further-
ance of any project.

(i) To do all things necessary or convenient to carry out the
powers expressly given in this act and to carry out any project.

3. The governing body of any city or town shall have power and
is hereby authorized from time to time to issue its negotiable bonds
for the purpose of financing any project. Said bonds shall be au-
thorized by resolution of the governing body and shall be issued in
one or more series, shall bear such date or dates, mature at such time
or times, not exceeding forty years from their respective dates, beat
interest at such rate or rates, not exceeding six per centum (6%) pe!
annum, payable at such time, be in such denomination, be in suck
form, either coupon or registered, carry such registration privileges
be executed in such manner, be payable in such medium of payments
at such place or places, and be subject to such terms of redemption.
with or without premium, as such resolution or subsequent resolution:
may provide. The bonds may be sold at public or private sale, fo:
such price or prices, as the governing body shall determine, providec
that the interest cost to maturity of the money received for any issue
of bonds shall not exceed six per centum (6%) per annum.
4. The counties of this Commonwealth shall have all the powers
granted by section two of this act to cities and towns of this Com-
monwealth, excepting that no county shall have power to contract a
debt for any project, to borrow money for any project, or issue its
negotiable bonds to finance any project, unless the qualified voters of
such county shall approve by a majority vote of the qualified voters
voting in an election the contracting of the debt, the borrowing of
the money and the issuance of the bonds. Whenever the governing
body of any county shall determine by resolution that it is advisable
to contract a debt for any project, borrow money for any project and
issue negotiable bonds of the county to finance any project, such
resolution shall be certified to the judge of the circuit court of said
county who shall thereupon make an order requiring the judges of
election on the day fixed in his order, not less than ten nor more than
thirty days from the date of such order, to open a poll and take the
sense of the qualified voters of the county on the question of con-
tracting the debt, borrowing the money and issuing the bonds for
such project. The regular election officers of said county, at the time
designated in such order authorizing such vote, shall open the polls
at the various voting places in said county and shall conduct such
election in such manner as is provided by law for other elections. At
such election each qualified voter who shall approve contracting the
debt, borrowing the money, and issuing the bonds for such project,
shall deposit a ticket or ballot on which shall be written or printed
the words “‘For the Project” and each qualified voter who shall dis-
approve contracting the debt, borrowing the money, and issuing the
bonds for such project, shall deposit a ticket or ballot on which shall
be written or printed the words ‘‘Against the Project’. The votes
shall be counted, returns made and canvassed, as in other special
elections, and the results certified by the commissioners of election to
the said circuit court. If it shall appear by the report of the com-
missioners of election that a majority of the qualified voters of the
county voting on the question approve contracting the debt, borrowing
the money and issuing the bonds for such project, the circuit court
shall forthwith enter an order authorizing the governing body of the
county to proceed to carry out the wishes of the voters. The govern-
ing body of any county, upon such proceedings being had and not
otherwise, shall thereupon have, with reference to contracting the
debt, borrowing the money, and issuing the bonds for such project,
so approved, all the powers granted by this act to the governing bodies
of cities and towns to contract debts for any project, to borrow money
for any project, and to issue negotiable bonds to finance any project.
The tenor of such bonds and all matters relating thereto shall be de-
termined by resolution or resolutions of the governing body of any
county and such governing body shall have all the powers with
reference to bonds of the county which are conferred upon the gov-
erning bodies of cities and towns by section three of this act with
reference to bonds of cities and towns.

5. Any resolution or resolutions of the governing body of any
city or town authorizing any bonds, or any resolution or resolutions
of the governing body of any county determining that it is advisable
to contract a debt for any project, borrow money for any project, and
issue negotiable bonds of the county to finance any project, or de-
termining the tenor of such bonds or other matters relating thereto,
or any subsequent resolution or resolutions of the governing body of
any county, city, or town, may contain provisions which shall be a
part of the contract with the holders of the bonds as to:

(a) The payment of the principal of and interest on such bonds
exclusively from the fees, rents, tolls or other charges or revenues or
receipts of the project; and the pledging of such fees, rents, tolls,
charges, revenues and receipts of the project to secure payment
thereof, and the pledging or not pledging of the full faith and credit
of the county, city or town;

(b) The payment of principal of and interest on such bonds from
unlimited ad valorem taxes on all property subject to taxation, and
the pledging of the full faith and credit of the county, city or town to
secure the payment thereof;

(b-1) The payment of the principal of and interest on such bonds
may be secured by any deed of trust, mortgage, conditional sales
contract, chattel mortgage, or any other known form of securities, on
the project;

(c) The payment of the principal of and interest on such bonds
from any one or more of the foregoing sources of funds, or any com-
bination thereof, and the pledging of any one or more of the foregoing
sources of funds or any combination thereof to secure the payment
of the bonds, and interest thereon;

(d) The fees, rents, tolls, charges, taxes and other revenues or
receipts of the project and the amounts to be raised in each year
thereby, and the use and disposition of such fees, rents, tolls, charges,
taxes and other revenues and receipts of the project;

(e) The setting aside of reserves or sinking funds and the regula-
tion and disposition thereof;

(f) Limitations on the right of the county, city or town to re-
strict and regulate the use of the project;

(g) Limitations on the purpose to which the proceeds of sale of
any issue of bonds then or thereafter to be issued may be applied;

(h) Limitations on issuance of additional bonds;

(i) The procedure, if any, by which the terms of any contract
with bondholders may be amended or abrogated, the amount of bonds
the holders of which must consent thereto, and the manner in which
such consent may be given;

(j) Conferring upon the bondholders the following remedies:

In the event that any county, city or town shall default in the
payment of principal of or interest on any of the bonds after the same
shall become due, and such default shall continue for a period of thirty
days, or in the event that any county, city or town shall fail or refuse
to comply with the provisions of this act, or shall default in any agree-
ment made with the holders of the bonds, the holders of twenty-five
per centum in aggregate principal amount of the bonds then out-
standing, by instrument or instruments filed with the Secretary of
the Commonwealth and acknowledged by them before an officer
authorized by the laws of this State to take acknowledgments of deeds,
may appoint a trustee to represent the bondholders for the purposes
herein provided. Such trustee may, and upon written request of the
holders of twenty-five per centum in aggregate principal amount of
the bonds then outstanding, shall, in his or its own name

(1) By mandamus, or other suit, action or proceeding at law or
in equity, enforce all rights of the bondholders and require the county,
city or town, and the governing body thereof, to carry out any agree-
ment with the bondholders, and to perform its and their duties under
this act;

(2) Bring suit upon the bonds;

(3) By action or suit in equity, enjoin any acts or things which
may be unlawful or in violation of the rights of the bondholders;

(4) Declare all bonds due and payable, and if all defaults shall be
made can then, with the consent of the holders of twenty-five per
centum of the principal amount of the bonds then outstanding, annul
such declaration and its consequences; provided, however, that before
declaring the principal of all bonds due and payable, the trustee shall
first give thirty days’ notice in writing to the county, city or town by
filing said notice in the office of the clerk of the county or the mayor
of the city or town.

In any suit, action or proceeding by the trustee, the fees, counsel
fees, and expenses of the trustee shall constitute taxable disburse-
ments, and all costs and disbursements allowed by the court shall be
a first charge on any fees, rents, tolls, or other charges, taxes, or other
revenues and receipts derived from, levied for, or obtained in connec-
tion with the project. Said trustees shall in addition to the powers
granted in this section, of this act, have and possess all of the powers
necessary or appropriate for the exercise of any functions specifically
set forth herein, or incident to the general representation of the bond-
holders represented by such trustee, in the enforcement and protec-
tion of their rights.

(5) Any other matter required by any Federal agency as a con-
dition precedent to the obtaining of a direct grant or grants of moneys
for or in aid of any project, or to defray or partially to defray the cost
of the labor and materials employed upon any project, or to obtain
loan or loans of moneys for or in aid of any project, from any Federal
agency.

6. Any city or town shall have the power, in addition to, and as
supplemental to, any other powers conferred by this act to authorize
the contracting of a debt, the borrowing of money, and the issuance
of bonds for any project, by an ordinance enacted in accordance with
section one hundred and twenty-three of the Constitution of Virginia;
and to submit the question of the issuance of such bonds to the
qualified voters of such city or town at the general election next suc-
ceeding the enactment of such ordinance, or at a special election
held for that purpose, in the manner or mode of procedure prescribed
by chapter one hundred and twenty-two of the Code of Virginia, as
amended, for the holding of such an election on the question of the
issuance of bonds for any specific undertaking from which the city or
town may derive a revenue. If the qualified voters shall at such
election approve contracting the debt, borrowing the money, and
issuing the bonds, the governing body of such city or town shall
thereupon authorize and issue such bonds in accordance with the
provisions of this act applicable to the authorization and issuance of
bonds by cities and towns.

7. All proceeds received from the sale of the bonds of any county,
city or town issued under this act, and all fees, rents, tolls, charges,
revenues or other receipts derived from any project, and any moneys
received from any Federal agency shall be paid to the treasurer or
other financial officer of the county, city or town, who shall not com-
mingle said moneys with any other moneys. Said moneys shall be
deposited in a separate bank account or accounts in the name of the
county, city or town. The governing body of any county, city or
town may by resolution, provide that all deposits of such fees, rents,
tolls, charges, revenues or other receipts derived from any project,
and any moneys received from any Federal agency shall, if required
by any contract made with any Federal agency be secured by obliga-
tions of the United States or of the Commonwealth of Virginia of a
market value equal at all times to the amount of such deposits and
all banks and trust companies are authorized to give such security for
such deposits; and the governing body of any county, city or town
be, and the same is hereby, authorized to enter into any contract with
any Federal agency containing such requirement. In lieu of any such
contractual requirement such deposits shall be secured as now pro-
vided by law.

8. The bonds are hereby made securities in which all public
officers and bodies of this State and all counties, cities and towns and
municipal subdivisions, all insurance companies and associations, all
savings banks and savings institutions, including savings and loan
associations, trust companies, beneficial and benevolent associations,
administrators, guardians, executors, trustees and other fiduciaries in
the State may properly and legally invest funds under their control.

9, Pending the preparation, execution and delivery of the defi-
nitive bonds, interim certificates or other obligations may be issued
by any county, city, or town to the purchaser of such bonds. Such
interim certificates or obligations shall be in such form and contain
such terms, conditions and provisions as the governing body of the
county, city or town issuing the same may determine. Any provision
of any law to the contrary notwithstanding, any bonds, interim
certificates or other obligations issued pursuant to this act shall be
fully negotiable within the meaning and for all the purposes of chapter
two hundred and thirty-three of the Code of Virginia, as amended.
In determining the cost of any project to be financed under this act,
the following items may be charged as a part of the cost of such project,
and be financed by the issuance of bonds under this act: (a) engineering
and inspection costs, accounting and legal expenses, in which may be
included a reasonable proportion of the compensation and the en-
gineering and legal expenses of any county, city or town; (b) the cost
of issuance of the bonds, including printing, advertising, accounting,
legal and other similar expenses.

10. The authorization and issuance of the bonds under this act
shall not be dependent on or affected in any way by proceedings taken,
contracts made, acts performed or done in connection with, or in
furtherance of, any project undertaken by the county, city or town
authorizing and issuing the bonds.

10-a. In the event that any city or town shall hereafter annex
any land in or upon which improvements have been made under the
provisions of this act and paid for, in whole or in part, by funds ob-
tained from or expended by the United States of America, and the
tax rate upon the land annexed shall be increased during the period
of five years, or less, after such annexation, under the provisions of
section twenty-nine hundred and fifty-eight of the Code of Virginia
(1919), as amended, then such city or town shall be relieved of the
burden and the necessity of setting apart a sum equal to twelve per
centum of the assessed value at the time of annexation of the land so
annexed, and expending the same upon public improvements in the
said annexed area, as provided by said section twenty-nine hundred
and fifty-eight, to the extent of the amount of money which was
obtained from or expended by the government of the United States
of America, and expended in and for the benefit of the annexed terri-
tory in public improvements, prior to annexation, less depreciation of
such improvements calculated from the date of construction to the
date of such annexation, provided that such city or town, at the time
of the obtaining of such funds from the government of the United
States, became the lessee of such public improvements and obligated
itself to repay such funds so obtained from the government of the
United States, out of net revenues accruing to such city or town from
the use by persons living in such territory, of such public improve-
ments.

11. It is the purpose of this act to enable counties, cities, and
towns to encourage public works, to reduce unemployment and thereby
to assist in the national recovery and promote the public welfare, and
to these ends counties, cities and towns shall have power to do all
things necessary or convenient to carry out said purpose in addition
to the express powers conferred in this act; this act is remedial in
nature and the powers hereby granted shall be liberally construed.

12. In so far as the provisions of this act are inconsistent with
the provisions of any other law, the provisions of this act shall be con-
trolling. The powers conferred by this act shall be in addition and
supplemental to the powers conferred by any other law; and bonds,
interim certificates or other obligations may be issued hereunder for
any project notwithstanding that other law may provide for the
issuance of bonds for like purposes and without regard to the require-
ments, restrictions or other provisions contained in any other law,
and except as provided as to counties in section four, and as to cities
and towns in section one hundred and twenty-seven of the Constitu-
tion of Virginia, without regard to any requirement for the approval
by vote of the qualified voters of any county, city or town, of the
contracting of a debt, the borrowing of money or the authorizing or
issuing of bonds or other obligations. Bonds may be issued under
this act notwithstanding any debt or other limitation prescribed by
any other law, and the mode and method of procedure for the issuance
of bonds under this act need not conform to the provisions of any
other law.

13. In the cities of Roanoke and Danville no money shall be bor-
rowed and no bonds issued and no indebtedness incurred hereunder
until and unless the proposal so to do shall have been submitted to the
qualified voters of such city at a special election and approved by a
majority of the qualified voters who vote in such special election.
Said special election shall be ordered by the Corporation Court of
such city upon request of the city council and shall be held according
to the general laws applying to special elections.

14. If any section, clause or provision of this act shall be uncon-
stitutional or be ineffective in whole or in part, to the extent that it is
not unconstitutional or ineffective it shall be valid and effective and
no other section, clause or provision shall on account thereof be
deemed invalid or ineffective.

15. An emergency existing, this act shall be in force from its
passage.