Municipal Functions

Local Government Functions

Special Districts

Metropolitan Government

Chapter 1
Metropolitan Government—General Provisions

7-1-101. Definitions — Chapters 1-6.

As used in chapters 1-6 of this title, unless the context otherwise requires:

  1. “City governing body” means the city council or other public agency possessing power and authority usually possessed by a city council;
  2. “County governing body” means that body in a particular county that is vested with the power to levy property taxes;
  3. “General services district” means a service district within a metropolitan government whose geographical limits are coextensive with the total area in which the government functions;
  4. “Metropolitan government” means the political entity created by consolidation of all, or substantially all, of the political and corporate functions of a county and a city or cities;
  5. “Metropolitan government charter commission” or “charter commission” means a commission established to propose to the voters for adoption the charter for a metropolitan government;
  6. “Municipal corporation” means an incorporated city or town;
  7. “Principal city” means:
    1. That municipal corporation having the largest population of any municipality in a particular county; or
    2. If the municipal corporation having the largest population of any municipality in a county fails to adopt a consolidation resolution within ninety (90) days of the county's adoption of a consolidation resolution, the county seat of that county, if the county seat is an incorporated municipality;
  8. “Smaller city” means any municipal corporation other than the principal city; and
  9. “Urban services district” means a service district within a metropolitan government in which are furnished by the metropolitan government municipal services additional to those provided in the general services district.

Acts 1957, ch. 120, § 1; 1977, ch. 453, § 1; T.C.A., § 6-3701; Acts 2019, ch. 314, § 1.

Amendments. The 2019 amendment added (7)(B).

Effective Dates. Acts 2019, ch. 314, § 2. May 8, 2019.

Cross-References. Athletic competition leave, title 8, ch. 50, part 11.

Recording of deeds where metropolitan government effective, §§ 66-24-113, 66-24-114.

Transportation systems, ownership authorized, title 7, ch. 56.

Textbooks. Tennessee Jurisprudence, 8 Tenn. Juris., Counties, §§ 11, 22; 19 Tenn. Juris., Municipal Corporations, §§ 2, 3.

Law Reviews.

Constitutional Law — 1964 Tennessee Survey (James C. Kirby, Jr.), 18 Vand. L. Rev. 1103 (1965).

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

Attorney General Opinions. Voting under the Metropolitan Government Act, OAG 97-096, 1997 Tenn. AG LEXIS 107 (7/1/97).

Voting on metropolitan planning organization, OAG 00-015, 2000 Tenn. AG LEXIS 15 (1/26/00).

Voting under Charter Government Unification Act and Metropolitan Government Act.  OAG 10-51, 2010 Tenn. AG LEXIS 51 (4/15/10).

Annexation under metropolitan form of government.  OAG 10-109, 2010 Tenn. AG LEXIS 115 (10/28/10).

NOTES TO DECISIONS

1. Constitutionality.

Metropolitan charter for Nashville and Davidson County prepared by commission created by Private Acts 1961, ch. 404 did not violate the 1953 amendment to Tenn. Const., art. XI, § 9 as abridging terms of office of city and county officers by private act since abolishment of such offices was in accordance with the general law. Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449, 1962 Tenn. LEXIS 318 (1962); Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

Provisions of metropolitan charter for Nashville and Davidson County providing different rates of taxation for area of general service area embracing total area of county and for urban service area constituting total area of principal city did not violate provisions of Tenn. Const., art. II, § 28 as to equal and uniform taxation, nor Tenn. Const., art. II, § 29 giving general assembly authority to authorize counties and towns to impose taxes for county and corporate purposes respectively. Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449, 1962 Tenn. LEXIS 318 (1962).

This chapter does not amount to an unconstitutional delegation of the general assembly's duty to legislate and does not violate Tenn. Const., art. II, § 3. Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449, 1962 Tenn. LEXIS 318 (1962).

2. Nature and Effect of Chapter.

This chapter is a general law and permits transference of the duties and functions of the county and municipal corporation or the officers thereof. Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

The predominant intent of this chapter is to provide for consolidation of all or substantially all of the governmental and corporate functions of the county and city governments into one new metropolitan government and does not necessarily require that all functions or offices of the prior governments be abolished but leaves a large discretion in these matters to the discretion of the drafters of the metropolitan charter. Glasgow v. Fox, 214 Tenn. 656, 383 S.W.2d 9, 1964 Tenn. LEXIS 518, 1964 Tenn. LEXIS 519 (1964); Metropolitan Government of Nashville & Davidson County v. Poe, 215 Tenn. 53, 383 S.W.2d 265, 1964 Tenn. LEXIS 538 (1964), superseded by statute as stated in, Jenkins v. Loudon County, 736 S.W.2d 603, 1987 Tenn. LEXIS 1084 (Tenn. 1987).

3. Liability in Tort.

Suit in tort would lie against metropolitan government for personal injuries incurred as result of negligent construction of streets and sidewalks in general services district outside the urban services district. Metropolitan Government of Nashville & Davidson County v. Allen, 220 Tenn. 222, 415 S.W.2d 632, 1967 Tenn. LEXIS 401 (1967).

Whole of metropolitan area had the same liabilities attached to it as the various cities and municipalities formerly had. Metropolitan Government of Nashville & Davidson County v. Allen, 220 Tenn. 222, 415 S.W.2d 632, 1967 Tenn. LEXIS 401 (1967).

4. Municipal Services.

With respect to the metropolitan government of Nashville and Davidson County, the metro enabling legislation intended to merge the city and county governments, but did not intend to extend municipal services or municipal powers countywide; these services were intended to be limited to the urban services district. Templeton v. Metropolitan Government of Nashville & Davidson County, 650 S.W.2d 743, 1983 Tenn. App. LEXIS 699 (Tenn. Ct. App. 1983).

7-1-102. Legislative purpose and intent — Construction — Continuation of local functions and powers.

  1. It is hereby declared to be the legislative intent and purpose of chapters 1-3 of this title to provide for the consolidation of all, or substantially all, of the governmental and corporate functions now or hereafter vested in municipal corporations with the governmental and corporate functions now or hereafter vested in the counties in which such municipal corporations are located, and to provide for the creation of metropolitan governments, which may be used to fulfill the unique and urgent needs of a modern metropolitan area.
  2. Chapters 1-3 of this title are hereby declared to be remedial legislation to be liberally construed as a utilization of the constitutional power granted by Amendment No. 8 to article XI, § 9 of the Constitution of Tennessee approved at an election on November 3, 1953.
  3. After consolidation of a county and a municipal corporation or corporations under § 7-1-103, no functions of the governing bodies of the county and the municipal corporation, or of the officers thereof, shall be retained and continued, unless chapters 1-3 of this title or the charter of the metropolitan government expressly so provide, or unless such retention and continuation are required by the Constitution of Tennessee. After the consolidation, no officer or agency of the county or of the municipal corporation shall retain any right, power, duty or obligation, unless chapters 1-3 of this title or the charter of the metropolitan government expressly so provide, or unless such retention and continuation are required by the Constitution of Tennessee.
  4. Any municipal corporation that lies in two (2) or more counties, except those in counties excluded in § 7-1-112(d), may consolidate with the county in which the majority of its territory lies.

Acts 1957, ch. 120, § 2; T.C.A., § 6-3702; Acts 1988, ch. 911, § 1.

Cross-References. Hospital authority, charter amendment not necessary to form, § 7-57-106.

Law Reviews.

Local Government — 1962 Tennessee Survey (Gilbert Merritt, Jr.), 16 Vand. L. Rev. 800 (1963).

NOTES TO DECISIONS

1. Construction.

Charter provision that requires the trustee to remit daily all funds collected, relieves him of other functions and transfers the function of keeping and disbursing funds to the metropolitan treasurer, conflicts with the general law; however, being valid, it supersedes that law. Robinson v. Briley, 213 Tenn. 418, 374 S.W.2d 382, 1963 Tenn. LEXIS 490 (1963).

Sections of the metropolitan charter requiring employees other than deputies to be employed according to civil service regulations and permitting the transfer of these employees to the trustee's office are valid, although they conflict with the general law authorizing the county trustee to employ deputies and other employees. Robinson v. Briley, 213 Tenn. 418, 374 S.W.2d 382, 1963 Tenn. LEXIS 490 (1963).

The county trustee no longer may retain the fees accruing to his office, pay salaries and other expenses and remit surplus fees semiannually, as required by the general law, as the provision of the metropolitan charter requires that he turn over taxes collected daily, including the fees accruing to his office. Robinson v. Briley, 213 Tenn. 418, 374 S.W.2d 382, 1963 Tenn. LEXIS 490 (1963).

Metropolitan charter could properly provide for transfer of criminal law enforcement from sheriff to metropolitan police department and for giving sheriff charge of metropolitan jail as well as county jail. Metropolitan Government of Nashville & Davidson County v. Poe, 215 Tenn. 53, 383 S.W.2d 265, 1964 Tenn. LEXIS 538 (1964), superseded by statute as stated in, Jenkins v. Loudon County, 736 S.W.2d 603, 1987 Tenn. LEXIS 1084 (Tenn. 1987).

2. Nature and Effect of Statute.

This section is a part of the general law and the abolition of city and county offices or the transference of duties thereof is not subject to the infirmity against such abolishment thereof by private act. Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

The general assembly did not by the Consolidation Act of 1957 abolish the office of constable or any other constitutional office, nor did it authorize the charter commission to do so. Glasgow v. Fox, 214 Tenn. 656, 383 S.W.2d 9, 1964 Tenn. LEXIS 518, 1964 Tenn. LEXIS 519 (1964).

When construed with other parts of the statute this section does not evidence a legislative intent to abolish or destroy all offices of the former governments not expressly retained. Glasgow v. Fox, 214 Tenn. 656, 383 S.W.2d 9, 1964 Tenn. LEXIS 518, 1964 Tenn. LEXIS 519 (1964).

Under metropolitan charter for Nashville and Davidson County, sheriff was a metropolitan officer and bound by functional, budgetary and purchasing provisions of the charter and its personnel and civil service provisions, except that he was entitled to appoint such deputies and other employees as necessary to carry on his duties under § 8-8-201 in the regular manner provided by § 8-20-101, and superintendent of workhouse was subject to appointment by him at will. Metropolitan Government of Nashville & Davidson County v. Poe, 215 Tenn. 53, 383 S.W.2d 265, 1964 Tenn. LEXIS 538 (1964), superseded by statute as stated in, Jenkins v. Loudon County, 736 S.W.2d 603, 1987 Tenn. LEXIS 1084 (Tenn. 1987).

Charter commission for Nashville and Davidson County did not have authority to grant jurisdiction to municipal court to try offenses under general law of state relating to vehicular operation where general assembly had not provided for such jurisdiction by statute. Hill v. State, 216 Tenn. 503, 392 S.W.2d 950, 1965 Tenn. LEXIS 593 (1965).

7-1-103. Consolidation of functions.

  1. Each county in this state, without regard to population, and the municipal corporations within such county, may consolidate all, or substantially all, of their governmental and corporate functions in the manner and with the consequences provided in this chapter. The consolidation, when complete, shall result in the creation and establishment of a new metropolitan government to perform all, or substantially all, of the governmental and corporate functions previously performed by the county and by the municipal corporations, the voters of which approve the consolidation.
  2. Nothing contained in this section, or any other law, except § 7-1-112(d), shall be construed to prohibit a municipal corporation that lies in two (2) or more counties from consolidating its governmental and corporate functions with the county in which the majority of its territory lies.

Acts 1957, ch. 120, § 3; 1963, ch. 97, § 1; T.C.A., § 6-3703; Acts 1988, ch. 911, § 2.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 4.

Law Reviews.

Constitutional Law — 1962 Tennessee Survey (James C. Kirby, Jr.), 16 Vand. L. Rev. 649 (1963).

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

7-1-104. Creation of municipality or public service district after charter commission created.

When a metropolitan government charter commission is created, as provided in § 7-2-101, no municipality and no public service district, including, but not limited to, a utility district, sanitary district or school district, shall thereafter be created in the county proposed to be included in such consolidation, unless and until the proposed charter of metropolitan government shall have been rejected by voters in a referendum election as provided in § 7-2-106, or unless and until a charter has been adopted by the voters in a referendum election as provided in § 7-2-106 with provisions permitting such municipalities or public service districts as described in § 7-1-103.

Acts 1957, ch. 120, § 15; 1963, ch. 256, § 1; T.C.A., § 6-3716.

Cross-References. Special service districts authorized, § 7-2-108.

NOTES TO DECISIONS

1. Watershed Districts.

A watershed district, a quasi-governmental corporation, does not constitute a public service district within the meaning of the Metropolitan Government Charter Act, title 7, ch. 1, and, therefore, could be located within the boundaries of county metropolitan government. State ex rel. Metro. Government of Nashville v. Spicewood Creek Watershed Dist., 848 S.W.2d 60, 1993 Tenn. LEXIS 41 (Tenn. 1993).

7-1-105. Civil districts.

When a metropolitan government is created and established within a county, there shall then be and continue only two (2) civil districts, one (1) consisting of the area embraced in the urban services district and the other consisting of the area of the county other than the urban services district.

Acts 1957, ch. 120, § 20; T.C.A., § 6-3721.

Cross-References. Urban, general and special service districts, § 7-2-108.

7-1-106. Excluded smaller city — Inclusion within metropolitan government.

Any smaller city that has been excluded from a metropolitan government created and established under chapters 1-3 of this title may at any time surrender its municipal charter and become a part of that metropolitan government under such terms and conditions and by such methods and procedures as may be established in the charter of the metropolitan government; provided, that no such consolidation shall become effective until submitted to the registered voters residing within the smaller city and approved by a majority of those voting.

Acts 1957, ch. 120, § 17; 1972, ch. 740, § 4(62); T.C.A., § 6-3722.

Cross-References. Courts and judicial functions, § 7-3-311.

Smaller cities, inclusion in proposed consolidation, § 7-2-107.

Law Reviews.

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

7-1-107. Effect on local government simplification statutes.

Nothing in chapters 1-3 of this title shall be construed to alter, abridge or abrogate any provision of §§ 5-1-113 and 49-2-503 or any other law, practice, custom or tradition with respect to contractual, cooperative, unilateral or other devices for simplifying or expediting municipal or county government.

Acts 1957, ch. 120, § 22; T.C.A., § 6-3723.

7-1-108. Appointment of state officials to public utility boards.

Notwithstanding any law, including any municipal or metropolitan charter to the contrary, the appropriate appointing authority may appoint at least one (1) elected state official to serve as a member of the board of any public utility operated by a municipality or metropolitan government. This section shall only apply to those counties having a metropolitan form of government.

Acts 1981, ch. 292, §§ 1, 2.

7-1-109. Elected officials may decline salaries.

Any and all elected public officials in counties that have a metropolitan form of government are authorized to refuse or decline any and all salaries to which they may be entitled under the laws of this state or local ordinances.

Acts 1983, ch. 248, § 1.

7-1-110. Change by ordinance of local governmental entities or functions established by private act.

Any city or county office, department, board, commission, agency or function established by private act prior to the adoption of a metropolitan form of government may be altered, consolidated or abolished by ordinance of the chief legislative body of the metropolitan government if the charter of the metropolitan government does not otherwise provide for the office, department, board, commission, agency or function, and such alteration, consolidation or abolition is not otherwise prohibited by chapters 1-6 of this title or the Constitution of Tennessee.

Acts 1987, ch. 52, § 1.

7-1-111. Electric power boards — Removal of members of certain utility boards — Salary increase.

  1. Notwithstanding any law to the contrary, any electric power board having a customer service greater than two hundred thousand (200,000) active electric meters within a county having a metropolitan form of government shall be composed of at least seven (7) members.
  2. The initial term of office of the two (2) additional members of the electric power board appointed pursuant to this section shall be for a period of five (5) years and three (3) years respectively, with each such appointment to be effective July 1, 1988. Each successive term of office shall be for a period of five (5) years from the date of expiration of the preceding term of office.
  3. Any member of a utility board created under the charter of a metropolitan government that has a population in excess of four hundred thousand (400,000), according to the 1980 federal census or any subsequent federal census, may be removed from office upon a vote of three fourths (¾) of the members of the governing body of such metropolitan government, but only after the assertion of reasons for removal as set forth in a resolution passed by three fourths (¾) of the members of such governing body and only after the holding of a public hearing before such governing body.
  4. No officer of an electric system owned and operated by a metropolitan government shall receive any salary increase that exceeds ten percent (10%) of such officer's base salary for the previous year unless such increase is approved by a unanimous vote of the board.

Acts 1988, ch. 681, §§ 1, 2; 1991, ch. 390, § 1; 1991, ch. 517, § 2.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-1-112. Consolidation with county wherein majority of municipal territory lies.

  1. Notwithstanding § 7-2-106, or any other law to the contrary, whenever a municipal corporation that lies in two (2) or more counties is proposed for consolidation with the county in which the majority of its territory lies, any referendum held pursuant to § 7-2-106 shall also include all qualified voters of the municipal corporation, regardless of whether such voters reside or own property outside of the boundaries of the county in which the majority of the municipal corporation's territory lies. The respective county election commissions shall cooperate fully in order to implement this section in an effective, efficient, and timely manner.
  2. Notwithstanding § 2-2-107, or any other law to the contrary, whenever a municipal corporation that lies in two (2) or more counties consolidates its governmental and corporate functions with the county in which the majority of its territory lies, elections for consolidated government representation and school board representation, as well as all other referenda and elections pertaining to the affairs of such consolidated government, shall also include all qualified voters of such municipal corporation, regardless of whether such voters reside or own property outside of the boundaries of the county in which the majority of the municipal corporation's territory lies. The respective election commissions shall cooperate fully in order to implement this section in an effective, efficient, and timely manner.
  3. Whenever a municipal corporation that lies in two (2) or more counties consolidates its governmental and corporate functions with the county in which the majority of its territory lies, the urban services tax prescribed pursuant to § 7-2-108(a)(5) may be levied throughout the territory of the municipal corporation; however, the general services tax prescribed pursuant to § 7-2-108(a)(5) shall not be levied in any portion of the territory of the municipal corporation that lies outside of the boundaries of such county.
    1. This section and §§ 7-1-102(d) and 7-1-103(b) do not apply in counties with populations according to the 1980 federal census or any subsequent federal census of:

      not less than  nor more than

      19,650 19,725

      26,400 26,500

      28,250 28,300

      28,650 28,660

      32,760 32,800

      32,850 32,950

      37,000 37,100

      49,400 49,500

      58,075 58,175

      84,000 84,100

      85,725 85,825

    2. This section and §§ 7-1-102(d) and 7-1-103(b) do not apply in counties having a metropolitan form of government and a population in excess of four hundred fifty thousand (450,000), according to the 1980 federal census or any subsequent federal census.

Acts 1988, ch. 911, §§ 3-5, 7-12.

Compiler's Notes. For table of U.S. decennial populations of counties, see Volume 13 and its supplement.

Attorney General Opinions. Assuming that the majority of the territory of a city is in one county, that county can establish a metropolitan government to include the city and the remaining parts of the county, OAG 01-17, 2001 Tenn. AG LEXIS 17 (2/6/01).

A metropolitan government may levy an urban services tax, but not a general services tax, on parcels located within the largest city but outside the county, OAG 01-17, 2001 Tenn. AG LEXIS 17 (2/6/01).

Chapter 2
Metropolitan Government—Adoption and Provisions of Charter

7-2-101. Metropolitan government charter commission — Creation — Methods of selecting members.

The initial step in a consolidation under this chapter shall be the creation of a metropolitan government charter commission, sometimes called “charter commission” in this chapter, by one (1) of the following methods:

  1. The commission may be created by the adoption of a consolidation resolution by the governing body of a county and by the adoption of a substantially similar resolution by the governing body of the principal city in the county;
    1. The resolution may be adopted by a majority vote of the members of such governing body present and voting, a quorum being present, at any regular meeting or at any meeting specially called to consider the resolution. The resolution shall provide that a metropolitan government charter commission is established to propose to the people the consolidation of all, or substantially all, of the governmental and corporate functions of the county and its principal city and the creation of a metropolitan government for the administration of the consolidated functions;
    2. The resolution shall either:
      1. Authorize the county mayor to appoint ten (10) commissioners, subject to confirmation by the county governing body, and authorize the mayor of the principal city to appoint five (5) commissioners, subject to confirmation by the city governing body; or
      2. Provide that an election shall be held to select members of the metropolitan government charter commission;
    3. It is the legislative intent that the persons appointed to the charter commission shall be broadly representative of all areas of the county and principal city and that every effort shall be made to include representatives from various political, social, and economic groups within the county and principal municipality;
    4. Promptly after the adoption of the consolidation resolution by the governing body of a county, its clerk shall certify the fact of such adoption with a copy of the resolution to the clerk of the governing body of the principal city, and promptly after the adoption of a consolidation resolution by the governing body of the principal city, its clerk shall certify the fact of such adoption to the clerk of the governing body of the county;
    5. When the resolutions of the governing bodies of the county and of the principal city shall provide for the appointment of commissioners of the county and city, the metropolitan government charter commission shall be created and duly constituted after appointments have been made and confirmed;
    6. When the resolutions provide for an election to select members of the metropolitan government charter commission, copies of the resolution shall be certified by the clerks of the governing bodies to the county election commission, together with certificates as to the fact and date of adoption, and then an election shall be held as provided in § 7-2-102;
    7. In any county having a metropolitan form of government in existence on January 1, 1977, the metropolitan mayor or county mayor is authorized to appoint five (5) commissioners, subject to confirmation by the county governing body, and the mayor of the principal city is authorized to appoint five (5) commissioners, subject to confirmation by the city governing body;
    8. When the consolidation resolutions provide for the appointment of members of the metropolitan government charter commission, such appointments shall be made within thirty (30) days after the adoption of the resolution by the last governing body to do so, whether of the county or the principal city;
  2. In counties having a board of county commissioners, a charter commission may be created by the adoption of a consolidation resolution by either the governing body of the county or the board of county commissioners and by the adoption of a substantially similar resolution by the governing body of the principal city in the county;
    1. The resolution may be adopted by majority vote of the total number of members to which such governing body is entitled, or by a majority of the members of the board of county commissioners, at any regular or called meeting of such county governing body or board of county commissioners;
    2. The resolution and the procedures concerning its adoption and certification and the appointment or election of members of the charter commission pursuant thereto shall be governed by subdivision (1), except that if members of the charter commission are to be appointed, the resolution shall authorize the county mayor to appoint six (6) commissioners, and the board of county commissioners to appoint six (6) commissioners, and the mayor of the principal city to appoint eight (8) commissioners;
      1. The commissioners appointed by the mayor of the principal city shall be made subject to confirmation by the city governing body, and the commissioners appointed by the county mayor and by the board of county commissioners shall be made subject to confirmation by whichever of the county bodies first adopts a consolidation resolution, unless both bodies adopt a consolidation resolution on the same day, in which case, the commissioners appointed by the county mayor shall be confirmed by the county governing body and the commissioners appointed by the board of county commissioners shall not be subject to confirmation;
      2. It is the legislative intent that the persons appointed shall be broadly representative of all areas of the county and principal city and that every effort shall be made to include representatives from various political, social and economic groups within the county and principal municipality;
  3. The charter commission may be created in any county in the manner prescribed by private act of the general assembly; or
  4. The commission may be created upon receipt of a petition, signed by qualified voters of the county, equal to at least ten percent (10%) of the number of votes cast in the county for governor in the last gubernatorial election;
    1. The petition shall be delivered to the county election commission for certification. After the petition is certified, the county election commission shall deliver the petition to the governing body of the county and the governing body of the principal city in the county. The petition shall become the consolidation resolution of the county and the principal city in the county. The resolution shall provide that a metropolitan government charter commission is established to propose to the people the consolidation of all, or substantially all, of the government and corporate functions of the county and its principal city, and the creation of a metropolitan government for the administration of the consolidated functions;
    2. The resolution shall either:
      1. Authorize the county mayor to appoint ten (10) commissioners, subject to confirmation by the county governing body, and authorize the mayor of the principal city to appoint five (5) commissioners, subject to confirmation by the city governing body; or
      2. Provide that an election shall be held to select members of the metropolitan government charter commission; provided, that if the governing body of the county and the governing body of the principal city cannot agree on the method of selecting members of the metropolitan government charter commission within sixty (60) days of certification, then an election shall be held to select members of the metropolitan government charter commission as provided in § 7-2-102;
    3. It is the legislative intent that the persons appointed to the charter commission shall be broadly representative of all areas of the county and principal city and that every effort shall be made to include representatives from various political, social, and economic groups within the county and principal municipality;
    4. When such resolution provides for the appointment of commissioners of the county and city, the metropolitan government charter commission shall be created and duly constituted after appointments have been made and confirmed;
    5. When the resolution provides for an election to select members of the metropolitan government charter commission, copies of the resolution shall be certified by the clerks of the governing bodies to the county election commission, and then an election shall be held as provided in § 7-2-102;
    6. When the consolidation resolution provides for the appointment of members of the metropolitan government charter commission, the appointments shall be made within thirty (30) days after the resolution is submitted to the governing bodies of the county and the principal city; and
    7. If the referendum to approve consolidation fails, another commission may not be created by petition for three (3) years.

Acts 1957, ch. 120, § 4; 1961, ch. 199, § 1; modified; 1977, ch. 481, §§ 1-6; modified; T.C.A., § 6-3704; Acts 1989, ch. 576, §§ 1, 2, 7; 1998, ch. 1101, § 18; 2003, ch. 90, § 2.

Code Commission Notes.

Because of the limited applicability of Acts 1989, ch. 576, the amendments by that act have been placed in notes, rather than incorporated into the text of the section. However, the history line for the section has been updated to reflect the amendment by that act. Section 7 of that act provided that 1989 amendments shall only apply to counties having a population of more than two hundred thousand (200,000), according to the 1980 federal census or any subsequent census, and having only two (2) municipalities within the county.

Acts 1989, ch. 576, § 1, effective June 8, 1989, amended (1)(B)(i) to read: “Authorize the county executive [now county mayor] to appoint nine (9) commissioners, at least one (1) of whom must be of African American descent, subject to confirmation by the county governing body and authorize the mayor of the principal city to appoint six (6) commissioners, at least one (1) of whom must be of African American descent, subject to confirmation by the city governing body and authorize the mayor of any other municipality within the county to appoint one (1) commissioner, subject to confirmation by such municipality's governing body;”.

Acts 1989, ch. 576, § 2, effective June 8, 1989, amended (1)(D) to read: “(D) Promptly after the adoption of the consolidation resolution by the governing body of a county, its clerk shall certify the fact of such adoption with a copy of the resolution to the clerk of the governing body of the principal city and the governing body of the principal city shall act upon such resolution within sixty (60) days of the receipt thereof. Failure of the governing body to so act shall render this effort at consolidation void. Promptly after the adoption of a consolidation resolution by the governing body of the principal city, the clerk shall certify the fact of such adoption to the clerk of the governing body of the county.”

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code.

Law Reviews.

Constitutional Law — 1962 Tennessee Survey (James C. Kirby, Jr.), 16 Vand. L. Rev. 649 (1963).

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

Attorney General Opinions. Constitutionality, OAG 89-140, 1989 Tenn. AG LEXIS 140 (12/8/89).

Procedure for county adoption of a metropolitan form of government, OAG 98-0133, 1998 Tenn. AG LEXIS 133 (8/6/98).

NOTES TO DECISIONS

1. Constitutionality.

Metropolitan charter for Nashville and Davidson County prepared by commission created by Private Acts 1961, ch. 404 as authorized by this section did not violate the 1953 amendment to Tenn. Const., art. XI, § 9 as abridging terms of office of city and county officers by private act since abolishment of such offices was in accordance with the general law. Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449, 1962 Tenn. LEXIS 318 (1962); Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

The provisions of this section permitting the creation of the charter commission by private act are applicable to every county subject to this chapter and create a reasonable classification. Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449, 1962 Tenn. LEXIS 318 (1962).

7-2-102. Election of members.

  1. No less than forty-six (46) days nor more than sixty (60) days after the adoption of a consolidation resolution by the governing bodies of a county and of its principal city, which resolution providing for an election of the members of a metropolitan government charter commission, it shall be the duty of the county election commission to hold a special election to elect members of the charter commission.
  2. The cost of the election shall be paid out of county funds.
  3. The ten (10) candidates receiving the highest total vote in the election shall be elected as members of the metropolitan government charter commission.
  4. Any qualified voter of the county shall be eligible for election as a member of the charter commission.
  5. The deadline for filing nominating petitions for candidates for the charter commission is twelve o'clock (12:00) noon of the fortieth day before the election.

Acts 1963, ch. 260, § 1; 1972, ch. 740, § 4(60); impl. am. Acts 1972, ch. 740, § 7; T.C.A., § 6-3705.

7-2-103. Organization of charter commission — Officers and personnel — Compensation — Vacancies.

  1. The members of the charter commission shall hold an organizational meeting at the courthouse at ten o'clock a.m. (10:00 a.m.) on the fifth day following their appointment or election, or at such subsequent date and place as a majority of the members may assemble.
  2. The metropolitan government charter commission shall be authorized to elect a chair, a secretary, and such other officers as it may deem necessary.
  3. The charter commission shall be authorized to employ such staff as may be required to assist it in drafting a charter for a single metropolitan government, which shall consolidate county and city functions as provided in this chapter and which shall be proposed for adoption.
  4. Members of the charter commission shall not receive per diem or other compensation for their services, except reimbursement of actual expenses by members.
  5. The staff employed by the commission shall be paid compensation as determined by the charter commission within the limits of funds available to it under this chapter.
  6. Vacancies in the office of charter commission shall be filled by the remaining members.

Acts 1957, ch. 120, § 5; 1961, ch. 199, § 3; T.C.A., § 6-3706; Acts 1989, ch. 576, §§ 3, 4, 7.

Code Commission Notes.

Because of the limited applicability of Acts 1989, ch. 576, the amendments by that act have been placed in these Code Commission Notes, rather than incorporated into the text of the section. However, the history line for the section has been updated to reflect the amendment by that act. Section 7 of the act provided the amendments only apply to counties having a population of more than two hundred thousand (200,000) according to the 1980 federal census or any subsequent census, and having only two (2) municipalities within the county.

Acts 1989, ch. 576, § 3, effective June 8, 1989, amended (a) to read: “(a) The county clerk shall call and convene members of the charter commission to hold an organizational meeting at the courthouse at ten o'clock a.m. (10:00 a.m.) on the fifth day following their appointment or, if elected, on the fifth day following their certification.”

Acts 1989, ch. 576, § 4, effective June 8, 1989, amended (f) to read: “(f) Any vacancy occurring in the office of the charter commission of appointed members shall be filled in the same manner as the original appointment subject to approval by the local governing body. Any vacancy occurring in the office of the charter commission of elected members shall be filled by appointment of the county executive [now county mayor] subject to approval by the local governing body.”

7-2-104. Appropriation for charter commission — Disbursement — Cooperation from public officials.

  1. Whenever any charter commission is established as provided in this chapter, it shall be the duty of the governing body of the county to appropriate sufficient funds to defray the expenses of the commission, which appropriation shall be not less than twenty-five thousand dollars ($25,000) nor more than fifty thousand dollars ($50,000). Such funds shall be disbursed by the county mayor or other fiscal officer of the county upon vouchers or warrants signed by the chair and the secretary of the commission.
  2. All public officials shall, upon request, furnish the commission with all information and assistance necessary or appropriate for its work.

Acts 1957, ch. 120, § 6; 1961, ch. 199, § 4; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A., § 6-3707; Acts 1989, ch. 576, §§ 5, 7; 1997, ch. 261, § 1; 2003, ch. 90, § 2.

Code Commission Notes.

Because of the limited applicability of Acts 1989, ch. 576, the amendments by that act have been placed in these Code Commission Notes, rather than incorporated into the text of the section. However, the history line for the section has been updated to reflect the amendment by that act. Section 7 of the act provided the amendments only apply to counties having a population of more than two hundred thousand (200,000) according to the 1980 federal census or any subsequent census, and having only two (2) municipalities within the county.

Acts 1989, ch. 576, § 5, effective June 8, 1989, amended (a) by substituting “seventy-five thousand dollars ($75,000)” for “fifty thousand dollars ($50,000)”.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Creation of metropolitan government charter commissions, § 7-2-101.

Law Reviews.

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

7-2-105. Preparation and filing of proposed charter — Publication.

Any charter commission established under this chapter shall prepare and file the charter proposed by it not later than nine (9) months after the date of its initial meeting, or within such extended limit of time as may be authorized by resolution of the governing bodies of the county and principal city. Copies of the proposed charter shall be filed with the county clerk, with the city clerk of each incorporated municipality in the county and with the county election commission. The copies shall be public records, available for inspection or examination by any interested person. The charter commission shall also furnish or make available to every daily or weekly newspaper published in the county a complete copy of the charter. The charter commission shall take such other steps within the limitation of its available funds as it deems reasonable and appropriate to inform the public throughout the county of the contents of the proposed charter, and the proposed charter may be published or summarized in pamphlets and booklets to be made available for general distribution.

Acts 1957, ch. 120, § 7; impl. am. Acts 1972, ch. 740, § 7; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., § 6-3708.

Law Reviews.

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

Attorney General Opinions. Procedure for county adoption of a metropolitan form of government, OAG 98-0133, 1998 Tenn. AG LEXIS 133 (8/6/98).

7-2-106. Referendum on proposed charter.

  1. After a copy of the proposed charter has been certified to the county election commission, as provided in § 7-2-105, it shall be the duty of the county election commission to hold a special referendum election for the ratification or rejection of the proposed charter. The ballot shall be prepared so as to provide a choice for voters between:

    For Consolidation of   and                (Name of city)      (Name of county)  Against Consolidation of   and               (Name of city)      (Name of county)

    Click to view form.

  2. The special referendum election shall be held on a date fixed by the county election commission not less than eighty (80) days nor more than one hundred (100) days subsequent to the filing of the charter as provided in § 7-2-105. Notice of the referendum election shall be given as required in other elections on questions submitted to the vote of the people. The date of the election and the form of ballot shall be uniform throughout the entire county, but the county election commission shall canvass the returns and certify the results as if separate elections were being held for the principal city and for the area of the county outside of the principal city of the county. For the purpose of determining whether the proposed charter has been accepted or rejected, the county election commission shall canvass the returns and certify the results:
    1. For the principal city; and
    2. For the entire area of the county outside of the principal city, including in such area the smaller cities, if any, within the county.
  3. The proposed charter shall be deemed ratified and adopted if the proposed charter is approved by a majority of those voting within the principal city and also a majority of those voting in the county outside of the principal city.
  4. The proposed charter shall be deemed rejected and shall not become effective if it is disapproved by a majority of those voting in the principal city. The proposed charter shall also be deemed rejected and shall not become effective if it is disapproved by a majority of those voting in the county outside of the principal city.
  5. The returns of the referendum election shall be certified by the county election commission to the secretary of state, together with a copy of the charter previously filed with the county election commission by the charter commission. Thereupon, the secretary of state shall issue a proclamation showing the result of the election on the adoption or rejection of the proposed charter, one (1) copy of which proclamation shall be attached to the copy of the charter certified to the secretary of state and one (1) copy of which shall be delivered to the county clerk, who shall attach the proclamation to the copy of the charter certified to the county clerk. Whenever a charter for metropolitan government has been adopted, the two (2) certified copies with proclamations attached to the certified copies shall be deemed duplicate original copies of the charter of the metropolitan government. The certified copy of the charter and proclamation deposited with the county clerk shall subsequently be delivered by the county clerk to the officer of the metropolitan government that the metropolitan charter may direct.

Acts 1957, ch. 120, § 8; 1972, ch. 740, § 4(61); impl. am. Acts 1972, ch. 740, § 7; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., § 6-3709.

Law Reviews.

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

Attorney General Opinions. Procedure for county adoption of a metropolitan form of government, OAG 98-0133, 1998 Tenn. AG LEXIS 133 (8/6/98).

In a referendum on the question of whether to ratify or reject a metropolitan charter, a person who owns property in the principal city but who lives in the outlying county may not vote in both the election for the principal city and for the county outside of the principal city, OAG 05-115 (7/26/05), 2005 Tenn. AG LEXIS 117.

Voting under Charter Government Unification Act and Metropolitan Government Act.  OAG 10-51, 2010 Tenn. AG LEXIS 51 (4/15/10).

NOTES TO DECISIONS

1. Challenge to Procedure.

In a suit brought by voters challenging the validity of Tenn. Const. art. XI, § 9 and T.C.A. § 7-2-106, which govern procedures for the consolidation of city and county governments into one metropolitan government, the state of Tennessee defendants'  (state defendants' ) motion to dismiss the voters'  claim asserted under the Voting Rights Act, 42 U.S.C. § 1973, was denied because the voters sufficiently stated a claim for relief under the Voting Rights Act by asserting that the referendum vote's dual majority requirement violated the Voting Rights Act by diluting their votes based on interference with their ability to participate in the electoral process and they set forth explicitly allegations under the Gingles  factors, such as the history of racial discrimination in Tennessee, to allow the district court to discern factual support for each of the factors. Tigrett v. Cooper, 855 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 27938 (W.D. Tenn. Mar. 2, 2012).

In a suit brought by voters challenging the validity of Tenn. Const. art. XI, § 9 and T.C.A. § 7-2-106, which govern procedures for the consolidation of city and county governments into one metropolitan government, the state of Tennessee defendants'  (state defendants' ) motion to dismiss on the basis of sovereign immunity was denied because the complaint alleged prospective relief which would remedy an ongoing violation of federal law, thus, the Ex Parte Young  exception to sovereign immunity applied and, therefore, sovereign immunity did not protect the state defendants from being sued in the case. Tigrett v. Cooper, 855 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 27938 (W.D. Tenn. Mar. 2, 2012).

In a suit brought by voters challenging the validity of Tenn. Const. art. XI, § 9 and T.C.A. § 7-2-106, which govern procedures for the consolidation of city and county governments into one metropolitan government, the state of Tennessee defendants'  (state defendants' ) motion to dismiss on the basis of failure to state a claim under the Equal Protection Clause, U.S. Const. amend. XIV, was denied because the district court found that the voters stated a claim for residency-based vote dilution in violation of the Equal Protection Clause; the district court would evaluate the parties'  future briefing using a rational basis review. Tigrett v. Cooper, 855 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 27938 (W.D. Tenn. Mar. 2, 2012).

In a suit brought by voters challenging the validity of Tenn. Const. art. XI, § 9 and T.C.A. § 7-2-106, which govern procedures for the consolidation of city and county governments into one metropolitan government, the state of Tennessee defendants'  (state defendants' ) motion to dismiss on the basis of the Fifteenth Amendment, U.S. Const. amend. XV, claim was granted because vote dilution via the dual-majority voting requirement, as alleged by the voters, did not form a competent platform upon which to base an alleged violation of the Fifteenth Amendment. Tigrett v. Cooper, 855 F. Supp. 2d 733, 2012 U.S. Dist. LEXIS 27938 (W.D. Tenn. Mar. 2, 2012).

7-2-107. Smaller cities — Inclusion in proposed consolidation — Referendum.

  1. After a charter commission has been created, any smaller city within the county may by action of its legislative body appoint a representative to consult with the charter commission concerning the terms upon which the functions of such smaller city may be included in the proposed consolidation. Any terms proposed by the charter commission with respect to the smaller city shall be filed and published separately as an appendix to the metropolitan charter proposed with respect to the principal city, and shall be submitted independently in a special referendum election for ratification or rejection by the voters of the smaller city and by the voters of the county outside the smaller city in a manner similar to that provided in §§ 7-2-105 and 7-2-106 with respect to the proposed metropolitan charter for the principal city.
  2. The appendix shall be deemed ratified and adopted if it is approved by a majority of those voting within the smaller city and also by a majority of those voting in the county outside of such smaller city, but shall not become effective unless the proposed metropolitan charter with respect to the principal city and the county is ratified and adopted.
  3. The appendix shall be deemed rejected and shall not become effective if it is disapproved by a majority of those voting in the smaller city. It shall also be deemed rejected and shall not become effective if it is disapproved by a majority of those voting in the county outside of such smaller city.
  4. The returns of the referendum election on the proposed appendix shall be certified and proclaimed in a manner similar to that provided in § 7-2-106 with respect to the proposed metropolitan charter for the principal city.
  5. Where a proposed charter of metropolitan government is ratified by a majority of those voting in a principal city and of those voting in the county outside of the principal city, but a smaller city continues, either because a proposed appendix has been rejected or no such appendix has been proposed, the smaller city shall become a part of the general services district, but the smaller city may not thereafter be included within the urban services district by action of the metropolitan council.

Acts 1957, ch. 120, § 9; T.C.A., § 6-3710.

Cross-References. Excluded smaller cities, inclusion within metropolitan government, § 7-1-106.

Attorney General Opinions. Two cities contained in a metropolitan government cannot comprise two separate urban services districts subject to different property tax levies to accommodate the outstanding debt and assets of each city prior to the establishment of the metropolitan government, OAG 01-17, 2001 Tenn. AG LEXIS 17 (2/6/01).

7-2-108. Metropolitan charters — Contents — Removal of members of boards, commissions or authorities.

  1. The proposed metropolitan charter shall provide:
    1. For the creation of a metropolitan government vested with:
      1. Any and all powers that cities are, or may hereafter be, authorized or required to exercise under the Constitution and general laws of the state, as fully and completely as though the powers were specifically enumerated in the Constitution and general laws of the state, except only for such limitations and restrictions as are provided in chapters 1-6 of this title or in such charter; and
      2. Any and all powers that counties are, or may hereafter be, authorized or required to exercise under the Constitution and general laws of the state, as fully and completely as though the powers were specifically enumerated in the Constitution and general laws of the state, except only for such limitations and restrictions as are provided in chapters 1-6 of this title or in such charter;
    2. That the territory embraced in the metropolitan government shall be the total area of the county;
    3. The name of the metropolitan government, which name may be:
      1. The name of the principal city followed by the words “metropolitan government”;
      2. The name of the county followed by the words “metropolitan government”;
      3. A compound word consisting of the name of the principal city of the county, followed by the words “metropolitan government”; or
      4. Such other name as the charter commission shall deem historically and geographically appropriate;
    4. That the metropolitan government shall be a public corporation, with perpetual succession, capable of suing and being sued, and capable of purchasing, receiving and holding property, real and personal, and of selling, leasing or disposing of property, real and personal, to the same extent as other governmental entities;
    5. For two (2) service districts within the geographical limits of the metropolitan government, a general services district and an urban services district, as to both of which districts the metropolitan government shall have jurisdiction and authority. The general services district shall consist of the total area of the county. The urban services district shall consist originally of the total area of the principal city at the time of the filing of the proposed charter with the county election commission, together with such area of any smaller cities as may be specified in an appendix duly ratified and adopted under § 7-2-107. In the event additional territory has been added to the principal city by annexation, effective subsequent to the creation of a charter commission or subsequent to the time of the filing of the proposed charter, the metropolitan council is hereby authorized, and it shall be its duty to remove from the total area of the urban services district such areas of the principal city as to which the metropolitan government will not be able to provide substantial urban services within a reasonable period, that shall not be greater than one (1) year after ad valorem taxes in the annexed area become due, and which shall specifically include sanitary sewers within a period that shall not be greater than thirty-six (36) months after ad valorem taxes in the annexed area become due;
    6. That the area of the urban services district may be expanded and its territorial limits extended by annexation whenever particular areas of the general services district come to need urban services and the metropolitan government becomes able to provide such service within a reasonable period. The annexation shall be under provisions and limitations specified in the charter, consistent with those provided by §§ 6-51-101 — 6-51-106;
    7. For the functions of the metropolitan government that shall be performed throughout the entire general services district and the governmental services that shall be rendered in such district;
    8. That the tax levy for the general services district shall be set so as to be sufficient, with other available funds and grants, to defray the cost of all governmental services that are provided generally throughout or on behalf of such district;
    9. For the functions of the metropolitan government that shall be performed within the urban services district and the governmental services that shall be rendered in such district;
    10. That the tax levy for the urban services district shall be set so as to be sufficient, with other available funds and grants, to defray the cost of municipal-type governmental services that are provided within such district;
    11. For a metropolitan council, which shall be the legislative body of the metropolitan government and shall be given all the authority and functions of the governing bodies of the county and cities being consolidated, with such exceptions and with such additional authority as may be specified elsewhere in chapters 1-6 of this title;
    12. For the size, method of election, qualification for holding office, method of removal, term of office and procedures of the metropolitan council, with such other provisions with respect to the council as are normally related to the organization, powers and duties of governing bodies in cities and counties;
    13. For the assignment of administrative and executive functions to officers of the metropolitan government, which officers may be given, subject to such limitations as may be deemed appropriate, all or any part of the administrative and executive functions possessed by the county and cities being consolidated and such additional powers and duties, not inconsistent with general law, as may be deemed necessary or appropriate for the metropolitan government;
    14. For the names or titles of the administrative and executive officers of the metropolitan government, their qualifications, compensation, method of selection, tenure, removal, replacement and such other provisions with respect to such officers, not inconsistent with general law, as may be deemed necessary or appropriate for the metropolitan government;
    15. That the urban services district shall be and constitute a municipal corporation with a three-member urban council, whose sole function shall be a mandatory obligation to levy a property tax adequate with other available funds to finance the budget for urban services, as determined by the metropolitan council. The proposed metropolitan charter shall provide the method of selecting the urban council;
    16. For such administrative departments, agencies, boards and commissions as may be necessary and appropriate to perform the consolidated functions of city and county government in an efficient and coordinated manner and for this purpose for the alteration or abolition of existing city and county offices, departments, boards, commissions, agencies and functions, except where otherwise provided in chapters 1-6 of this title or prohibited by the Constitution of Tennessee;
    17. For the maintenance and administration of an effective civil service system, and also for the consolidation of county and city employees' retirement and pension systems and the regulation of such consolidated system; provided, that nothing in chapters 1-6 of this title or in a charter adopted pursuant to those provisions shall impair or diminish the rights and privileges of the existing employees under civil service or in the existing county and city employees' retirement and pension systems;
    18. For the consolidation of the existing school systems with the county and city or cities, including the creation of a metropolitan board of education, which board may be vested with power to appoint a director of schools, if there are no special school districts operating in the county. If one (1) or more special school districts operate within the county, then the metropolitan charter need not provide for the consolidation of the existing school systems. If the school districts are not consolidated, then any special school district shall continue to exist as a separate entity;
    19. For a determination, as between the general services district and the urban services district, of proportionate responsibility for the existing county bonded indebtedness, both countywide and district, and for the existing municipal indebtedness;
    20. For the method and procedure by which the charter may subsequently be amended; provided, that no such amendment shall be effective until submitted to the qualified voters residing within the general services district and approved by a majority of those voters voting on the amendment;
    21. For such procedures, methods and steps as are determined to be necessary or appropriate to effectuate a transition from separate county and city governments into a single metropolitan government in which the functions of county and of city have been consolidated; and
    22. Such terms and provisions as are contained in any private act or municipal charter with respect to any municipally owned utility supported by its own revenues and operated, administered and managed pursuant to the private act or municipal charter; provided, that such terms and provisions of the charter may subsequently be amended pursuant to subdivision (a)(20).
  2. The metropolitan charter may provide for annual assessments of real property.
  3. In each county in this state, without regard to population, the metropolitan charter may provide, in addition to the urban services district and general services district required by subdivision (a)(5), for one (1) or more special service districts within all or any part of the general services district outside the urban services district, for the purpose of furnishing in any part or all of the general services district one (1) or more services that are furnished within the urban services district. If the metropolitan charter provides for special service districts, the following provisions shall apply to the creation, alteration, and taxation of special service districts:
    1. The boundaries of special service districts shall be determined by the metropolitan council and shall become fixed by ordinance of the metropolitan council thirty (30) days or more after notice of the determination of the boundaries of a district has been given to the property owners of the district. Notice shall be given by mailing a description of the boundaries of the district to all of the property owners of record within the district, at their last known address. It shall not be necessary for the boundaries of any special service district to be contiguous with the boundaries of the urban services district. The boundaries of any special service district may be altered at any time by means of the same procedure by which it was created;
    2. The metropolitan council shall levy an annual ad valorem tax upon the property owners of each special service district. The tax shall be set at a rate sufficient to pay that special service district's share of the total budget of the metropolitan government for the particular service being rendered to the residents and property owners of the district. The tax shall be assessed in the same manner as the general services district tax and collected as an addition to the general services district tax;
    3. Each special service district may be given a name that the metropolitan council deems appropriate, and the boundaries of special service districts may overlap or be coextensive with boundaries of other special service districts;
    4. In the case of special service districts for sanitary sewers, the sanitary sewers shall be furnished to the residents and property owners of the special service districts within thirty-six (36) months after ad valorem taxes in the special service districts become due; and
    5. When substantial urban services are offered within an area served by special service districts, then that area shall become a part of the urban services district under the charter provisions and limitations established pursuant to subdivision (a)(6).
  4. Those counties with populations in excess of four hundred fifty thousand (450,000), according to the 1980 federal census or any subsequent federal census, and having a metropolitan form of government, shall provide that any member of a board, commission or authority created under the charter of a metropolitan government may be removed from office upon a vote of three fourths (¾) of the members of the governing body of the metropolitan government, but only for good cause shown as set forth in a resolution passed by a three-fourths (¾) majority vote of the members of the governing body, and only after the holding of a public hearing before the governing body.

Acts 1957, ch. 120, § 10; 1961, ch. 199, § 5; 1963, ch. 42, § 1; 1970, ch. 467, § 1; 1971, ch. 14, § 1; impl. am. Acts 1972, ch. 740, § 7; T.C.A., § 6-3711; Acts 1991, ch. 517, § 1; 1992, ch. 828, § 1; 1993, ch. 179, § 1; 2001, ch. 115, § 1; 2001, ch. 168, § 1; 2009, ch. 371, § 1.

Code Commission Notes.

Former § 7-2-108(a)(5)(B), concerning adoption of metropolitan governments in counties by September 1, 2001, was deemed obsolete and was deleted by the code commission in 2005.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Assessment of testing fee on driving while intoxicated convictions for use of testing unit, § 55-10-403.

Board of equalization sessions, duration, § 67-1-404.

Council members, minimum salaries in municipalities of over 170,000 population, § 7-51-302.

Hospital authority act is supplemental to powers conferred by other law, § 7-57-106.

Judges, municipal, minimum salary in municipalities of over 170,000 population, § 6-56-151.

Mayor, minimum compensation in municipalities of over 170,000 population, § 7-51-301.

Prisoner furloughs, §§ 41-2-142, 41-2-143.

Public service districts restricted, § 7-1-104.

Solid waste energy recovery facilities, construction authorized, title 68, ch. 211, part 5.

Transportation systems, ownership authorized, title 7, ch. 56.

Utilities, cut-off procedure, title 65, ch. 32.

Law Reviews.

Open Space Taxation and State Constitutions (David A. Myers), 33 Vand. L. Rev. 837 (1980).

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

Attorney General Opinions. Two cities contained in a metropolitan government cannot comprise two separate urban services districts subject to different property tax levies to accommodate the outstanding debt and assets of each city prior to the establishment of the metropolitan government, OAG 01-17, 2001 Tenn. AG LEXIS 17 (2/6/01).

A metropolitan charter must provide for the consolidation of the existing school systems with the county and city or cities, including the creation of a metropolitan board of education, OAG 01-17, 2001 Tenn. AG LEXIS 17 (2/6/01).

A metropolitan government charter could provide for a city manager, OAG 06-100 (6/12/06), 2006 Tenn. AG LEXIS 109.

A metropolitan charter provision limiting annexation to one of the methods set out by the general law (referendum) is permissible and complies with T.C.A. § 7-2-108(a)(6).  OAG 10-104, 2010 Tenn. AG LEXIS 110 (10/12/10).

Annexation under metropolitan form of government.  OAG 10-109, 2010 Tenn. AG LEXIS 115 (10/28/10).

NOTES TO DECISIONS

1. Construction.

Charter provision that requires the trustee to remit daily all funds collected, relieves him of other functions and transfers the function of keeping and disbursing funds to the metropolitan treasurer, conflicts with the general law; however, being valid, it supersedes that law. Robinson v. Briley, 213 Tenn. 418, 374 S.W.2d 382, 1963 Tenn. LEXIS 490 (1963).

Sections of the metropolitan charter requiring employees other than deputies to be employed according to civil service regulations and permitting the transfer of these employees to the trustee's office are valid, although they conflict with the general law authorizing the county trustee to employ deputies and other employees. Robinson v. Briley, 213 Tenn. 418, 374 S.W.2d 382, 1963 Tenn. LEXIS 490 (1963).

The county trustee no longer may retain the fees accruing to his office, pay salaries and other expenses and remit surplus fees semiannually, as required by the general law, as the provision of the metropolitan charter requires that he turn over taxes collected daily, including the fees accruing to his office. Robinson v. Briley, 213 Tenn. 418, 374 S.W.2d 382, 1963 Tenn. LEXIS 490 (1963).

Subdivision (a)(14) required the people of Nashville and Davidson County to provide in their charter for the removal of the director of law since he was an official of the metropolitan government. Sitton v. Fulton, 566 S.W.2d 887, 1978 Tenn. App. LEXIS 284 (Tenn. Ct. App. 1978).

2. Transfer and Consolidation of Functions.

Transfers of responsibility and duty of assessing and collecting merchants' ad valorem taxes from county court clerk (now county clerk), metropolitan (county) tax assessor (now assessor of property) and metropolitan (county) trustee respectively pursuant to this chapter were effective and constitutional transfers. Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

Where a metropolitan charter adopted pursuant to the provisions of this chapter provided that the metropolitan (county) tax assessor (now assessor of property) should make assessment of merchants' ad valorem taxes and an earlier general law provided that such assessments for counties should be made by the county court clerk (now county clerk), it was the duty of the metropolitan tax assessor to make such ad valorem assessments for the metropolitan government. Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

Where a metropolitan charter adopted pursuant to the provisions of this chapter provided that the metropolitan (county) trustee should collect merchants' ad valorem taxes and an earlier general law provided that such taxes should be collected by the county court clerk (now county clerk), it was the duty and responsibility of the metropolitan trustee to collect such taxes. Winter v. Allen, 212 Tenn. 84, 367 S.W.2d 785, 1963 Tenn. LEXIS 400 (1963).

Metropolitan charter could properly provide for transfer of criminal law enforcement from sheriff to metropolitan police department and for giving sheriff charge of urban jail as well as county jail. Metropolitan Government of Nashville & Davidson County v. Poe, 215 Tenn. 53, 383 S.W.2d 265, 1964 Tenn. LEXIS 538 (1964), superseded by statute as stated in, Jenkins v. Loudon County, 736 S.W.2d 603, 1987 Tenn. LEXIS 1084 (Tenn. 1987).

Under metropolitan charter for Nashville and Davidson County sheriff was a metropolitan officer and bound by functional, budgetary and purchasing provisions of the charter and its personnel and civil service provisions, except that he was entitled to appoint such deputies and other employees as necessary to carry on his duties under § 8-8-201 in the regular manner provided by § 8-20-101, and superintendent of workhouse was subject to appointment by him at will. Metropolitan Government of Nashville & Davidson County v. Poe, 215 Tenn. 53, 383 S.W.2d 265, 1964 Tenn. LEXIS 538 (1964), superseded by statute as stated in, Jenkins v. Loudon County, 736 S.W.2d 603, 1987 Tenn. LEXIS 1084 (Tenn. 1987).

3. Liability in Tort.

Suit in tort would lie against metropolitan government for personal injuries incurred as result of negligent construction of streets and sidewalks in general services district outside the urban services district. Metropolitan Government of Nashville & Davidson County v. Allen, 220 Tenn. 222, 415 S.W.2d 632, 1967 Tenn. LEXIS 401 (1967).

Whole of metropolitan area had the same liabilities attached to it as the various cities and municipalities formerly had. Metropolitan Government of Nashville & Davidson County v. Allen, 220 Tenn. 222, 415 S.W.2d 632, 1967 Tenn. LEXIS 401 (1967).

Collateral References.

Abstention from voting of member of municipal council present at session as affecting requisite voting majority. 63 A.L.R.3d 1072.

Chapter 3
Metropolitan Government—Operation and Powers

Part 1
General Provisions

7-3-101. Successor to rights and obligations of counties and cities.

Any metropolitan government created and established pursuant to chapters 1-3 of this title shall acquire and succeed to all rights, obligations, duties and privileges of the county and of the cities consolidating; and, without the necessity or formality of deed, bill of sale or other instrument of transfer, the metropolitan government shall be and become the owner of all property previously belonging to the county and cities.

Acts 1957, ch. 120, § 21; T.C.A., § 6-3720.

Cross-References. Taxation by counties and municipalities, §§ 67-5-102, 67-5-103.

Law Reviews.

Two Claims, Two Keys—Overcoming Tennessee's Dual-Majority Voting Mechanism to Facilitate Consolidation Between Memphis City and Shelby County (D. Eric Setterlund), 41 U. Mem. L. Rev. 933 (2011).

Attorney General Opinions. Municipalities have the authority to enact child curfew laws, OAG 00-158, 2000 Tenn. AG LEXIS 161 (10/17/00).

Unless and until the legislature enacts legislation implementing a state lottery, which would include authorization for the sale of lottery tickets statewide, a local government may enact an ordinance prohibiting the sale of lottery tickets within its jurisdiction, OAG 03-004, 2003 Tenn. AG LEXIS 4 (1/17/03).

Cities and counties lack statutory authority to regulate mortgage transactions, OAG 03-016, 2003 Tenn. AG LEXIS 19 (2/11/03).

Regulation of distribution of ephedrine and pseudoephedrine by local governments.  OAG 13-99, 2013 Tenn. AG LEXIS 102 (12/6/13).

NOTES TO DECISIONS

1. Effect of Charter.

Upon creation of metropolitan charter for Nashville and Davidson County a new government entity was created for the government of such city and county and the old governments of the city and county ceased to exist. Frazer v. Carr, 210 Tenn. 565, 360 S.W.2d 449, 1962 Tenn. LEXIS 318 (1962).

Collateral References.

Rights and remedies of creditor of municipal corporation that is dissolved or combined with another municipal body. 47 A.L.R. 267.

7-3-102. Federal and state aid.

  1. Any metropolitan government created and established pursuant to chapters 1-3 of this title shall be entitled to receive as state aid or as grant-in-aid from the state of Tennessee, from the United States or from any other agency, public or private, all funds to which a county is, or may hereafter be, entitled, and also all funds to which an incorporated city or municipality is or may hereafter be entitled and to receive the funds without diminution or loss by reason of a consolidation made as provided in chapters 1-3 of this title.
    1. The metropolitan government shall be deemed a county and shall also be deemed an incorporated city or municipality for the purpose of determining its right to receive, and for the purpose of receiving, state aid or grant-in-aid from the state of Tennessee, from the United States or from any other agency.
    2. When state aid or other grant-in-aid is distributed to any county on the basis of population or area, or both, then the entire population and the total area of the county in which such metropolitan government is established shall be considered in calculating and determining the basis of such distribution.
    3. When state aid or other grant-in-aid is distributed to any county on the basis of rural area, rural road mileage or rural population, or any combination thereof, then that area of the general services district outside of the urban services district shall be deemed to constitute rural area, its road mileage to constitute rural road mileage and its population to constitute rural population.
    4. When state aid or other grant-in-aid is distributed to any incorporated city or municipality on the basis of population or area, or both, then the population and the area of the urban services district shall be deemed the population and the area of the metropolitan government in calculating and determining the basis of such distribution.

Acts 1957, ch. 120, § 11; T.C.A., § 6-3712.

Attorney General Opinions. State-shared taxes and metropolitan governments, OAG 99-138, 1999 Tenn. AG LEXIS 170 (7/22/99).

7-3-103. Reapportionment.

    1. Notwithstanding any general law or metropolitan charter to the contrary, the planning commission of any county having a metropolitan form of government shall recommend to the metropolitan council that councilmanic districts or school districts or both be reapportioned for either or both of the following reasons:
      1. To more closely conform the boundary lines of such districts to the boundary lines of state senate and state house of representatives districts in order to minimize voter inconvenience, to avoid split precincts, and to substantially reduce the expense of conducting elections in the county; and
      2. To correct drafting or typographical errors appearing in a previously adopted ordinance of reapportionment.
    2. If the planning commission determines that such districts should be reapportioned for either or both of the reasons enumerated by subdivision (a)(1), then the commission shall submit a proposed ordinance designed to accomplish its recommendations. The metropolitan council shall then act upon such ordinance in the procedural manner prescribed by controlling general law or metropolitan charter for other duly presented ordinances of reapportionment.
  1. The authority to reapportion granted by subsection (a) shall not be exercised more than once in regard to any ordinance of reapportionment that was previously enacted in direct response to either a federal decennial census or a court order.

Acts 1982, ch. 615, § 1.

Law Reviews.

The First Amendment and Distributional Voting Rights Controversies (Emily M. Calhoun), 52 Tenn. L. Rev. 549 (1985).

7-3-104. Representation of county employees by employee organizations.

For any county with a metropolitan form of government that has adopted a labor policy establishing the right of its employees to join an employee organization and that has a procedure for establishing exclusive representation status of an employee organization, an employee may be represented before any board, agency, civil service commission, hearing officer, or other body empowered to impose discipline or otherwise deal with wages, hours, and working conditions of employees by a representative from the employee organization that has been designated as the exclusive representative for such employees. Any such employee shall be entitled to select a spokesperson or representative for the purpose of providing aid and assistance in any proceeding before any such board, agency, commission, hearing officer, or entity, notwithstanding any other code section to the contrary. Such assistance or representation by a member or employee of the exclusive representative for such employee shall not be considered “law practice” or “law business” as may be defined in the Tennessee Code Annotated. Such representation does not include representation in any court of law, or in any judicial proceeding. Nothing in this section prevents such employee from being represented by an attorney if the employee or the exclusive representative so chooses.

Acts 1996, ch. 1078, § 1.

Cross-References. “Law business,” “practice of law” defined, § 23-3-101.

Attorney General Opinions. Constitutionality of nonlawyer representation before civil service commission, OAG 97-164, 1997 Tenn. AG LEXIS 185 (12/16/97).

7-3-105. Guaranteed payment plan for superseded retirement systems.

  1. As used in this section, unless the context clearly requires otherwise:
    1. “Metropolitan board of public education” means the local board of education of a metropolitan government, as defined in subdivision (a)(2);
    2. “Metropolitan government” means any metropolitan government established under this title; and
    3. “Superseded system” means any closed local city or county retirement plan, except “superseded system” does not include any retirement plan closed after June 30, 1994. “Superseded system” further means any closed city teacher retirement plan, closed county teacher plan or closed local teacher retirement plan in existence prior to June 23, 2000.
    1. The local legislative body of a metropolitan government, as defined in subdivision (a)(2), and its local board of education may adopt a guaranteed payment plan for pension liabilities as follows:
      1. Adoption of a guaranteed payment plan must be approved by an ordinance approved by a two-thirds (2/3) vote of the local legislative body of the metropolitan government and by resolution approved by a two-thirds (2/3) vote of the metropolitan board of public education; and
      2. The guaranteed payment plan must cover all superseded systems of the metropolitan government and the metropolitan board of public education.
    2. Funding obligations of the superseded system, including the funding of any unfunded accrued liabilities of the superseded system, shall be determined in a manner so as to amortize the funding obligations over a period of time established by the local legislative body, such period not to exceed thirty (30) years from the beginning of the fiscal year in which the guaranteed payment plan is adopted by the metropolitan government. Any benefit improvements granted by the superseded system shall be fully funded over the same amortization period established by this subsection (b). Appropriations made by the local legislative body to fund the obligations of the superseded system pursuant to this section may not be reduced by any year until all of the pension obligations of the superseded system are fully amortized.
    3. The metropolitan board of public education shall fund in its annual budget the actuarial contribution attributable to the aggregate benefits of all teachers covered under the superseded systems established upon or after the establishment of the metropolitan government. The metropolitan government shall fund the actuarial contribution attributable to the aggregate benefits of all other superseded systems. The amounts necessary to fund such actuarial contributions shall be set forth in the annual budget adopted by the local legislative body.
  2. A metropolitan government establishing a guaranteed payment plan for pension liabilities pursuant to this section shall establish a guaranteed payment account, which shall be separate and apart from the pension trust funds of any superseded system. All funds appropriated by the local legislative body for funding the obligation of the superseded system shall be directly transferred to the guaranteed payment account by the chief accountant of the metropolitan government or, in the absence of a chief accountant, the person who otherwise performs the duties of a chief accountant for a metropolitan government. The chief accountant shall transfer such amounts as may be necessary to pay the current benefit distributions of the superseded system to each respective system and shall transfer all remaining balances to the credit of the trust funds of the respective superseded systems in such amounts as are required to ensure that all liabilities are fully amortized as required by this section.

Acts 2000, ch. 935, § 1.

Compiler's Notes. Acts 2000, ch. 935, § 2 provided that it is the legislative intent that this section shall not be interpreted to change the charter of any metropolitan government electing to come under its provisions.

Acts 2000, ch. 935, § 3 provided that no pension benefit granted prior to June 23, 2000, to any member of any superseded system shall be reduced as a result of a metropolitan government electing to come under the provisions of this section. Neither shall this section be construed to limit the authority of any superseded system to grant benefit improvements; provided, no benefit improvements shall be effective unless funded in accordance with the provisions of this section, by an additional appropriation made by the local legislative body prior to their effective date.

Part 2
Taxes

7-3-201. Privilege taxes.

  1. Any metropolitan government created and established pursuant to chapters 1-3 of this title shall be authorized and empowered to levy within its general services district any and every privilege tax that a county is now authorized to levy or may hereafter be authorized to levy. When the amount of the authorized privilege tax shall depend upon the population of the county, then the population of the general services district shall be determinative of the authorized levy.
  2. In addition to the privilege taxes authorized in subsection (a), any such metropolitan government by action of its metropolitan council shall be authorized and empowered to levy within its urban services district any and every privilege tax that an incorporated city or municipality is now authorized to levy or may hereafter be authorized to levy. When the amount of the authorized privilege tax shall depend upon population of the incorporated city or municipality, then the population of the urban services district shall be determinative of the authorized levy.

Acts 1957, ch. 120, § 12; T.C.A., § 6-3713.

NOTES TO DECISIONS

1. Municipal Services.

With respect to the metropolitan government of Nashville and Davidson County, the metro enabling legislation intended to merge the city and county governments, but did not intend to extend municipal services or municipal powers countywide; these services were intended to be limited to the urban services district. Templeton v. Metropolitan Government of Nashville & Davidson County, 650 S.W.2d 743, 1983 Tenn. App. LEXIS 699 (Tenn. Ct. App. 1983).

7-3-202. Municipal stadium seat privilege tax.

  1. As used in this section, unless the context otherwise requires:
    1. “Event” means any activity with a paid admission fee that takes place primarily on or directly above the playing surface at the municipal stadium;
    2. “Metropolitan government” means those counties and municipalities adopting the metropolitan form of government;
    3. “Municipal stadium” means a structure with seats for not less than thirty thousand (30,000) spectators, which is constructed after July 7, 1977, and which is used primarily for sporting events and other related activities and is currently financed or was financed by general obligation bonds, revenue bonds or other indebtedness issued by a metropolitan government or any public instrumentality of a metropolitan government; and
    4. “Promoter” means any person, and any agent or representative of the person, engaged in the sale or offering for sale of tickets to an event.
      1. There is authorized a privilege tax upon the privilege of attending any event at the municipal stadium in an amount not to exceed ten percent (10%) of the consideration charged for spectators attending the event.
      2. Subject to the limitation in subdivision (b)(1)(A), the amount of the tax shall be established from time to time by ordinance of the local legislative body of the metropolitan government; provided, however, that the tax as adopted by the local legislative body shall not be at a rate or in an amount that would create a reimbursement obligation to the primary tenant of the municipal stadium under any lease existing on January 1, 2009, so long as the lease is in effect.
    1. The privilege tax authorized in this section shall not apply to an event at a municipal stadium for the benefit of a public college or university where the public college or university utilizes the municipal stadium for a majority of its home football games in a particular season.
    2. The privilege tax authorized in this section shall not apply to:
      1. Non-ticketed or complimentary admissions credentials; or
      2. Tickets for which no monetary consideration is received to the extent the number of the tickets does not exceed the lesser of five percent (5%) of the total number of tickets offered for sale to the event or three thousand two hundred fifty (3,250).
    3. The privilege tax authorized in this section shall apply to the first, initial or original sale of tickets and shall not apply to re-sales or redistributions of the tickets.
    4. The privilege tax authorized in this section shall be in addition to all other taxes or fees levied or authorized to be levied on the sale of any event ticket, whether in the form of excise, license or privilege taxes and shall be in addition to all other fees and taxes now levied or authorized to be levied; provided, however, that the privilege tax authorized in this section shall not be subject to state or local option taxes under title 67, chapter 6.
    1. The privilege tax authorized in this section shall be added to the ticket price charged for admission to the municipal stadium by each promoter of the event. The promoter shall collect the privilege tax and remit it to the metropolitan government.
    2. By ordinance, the legislative body of the metropolitan government may authorize the promoter to deduct up to two percent (2%) of the privilege tax collected by the promoter to defray the cost of accounting and remitting the tax to the metropolitan government.
  2. The proceeds from the privilege tax authorized by this section and received by the metropolitan government shall be used by the metropolitan government exclusively to defray the cost of constructing, operating, renovating, expanding or improving the municipal stadium or for the payment of debt service on bonds or other indebtedness issued by the metropolitan government or any public instrumentality of the metropolitan government for the construction, operation, renovation, expansion or improvement of the municipal stadium.
  3. This section shall only apply to those counties having a metropolitan form of government.
  4. The privilege tax authorized by subdivision (b)(1) shall take effect upon the approval of the privilege tax by a two-thirds (2/3) vote of the local legislative body of the metropolitan government.

Acts 1977, ch. 491, §§ 1-7, 9; T.C.A., § 6-3738; Acts 2009, ch. 530, § 60.

Compiler's Notes. Acts 1977, ch. 491, compiled in this section, was passed by the metropolitan council of Nashville and Davidson County on November 15, 1977, and approved by the mayor on November 17, 1977.

7-3-203. Billing for taxes — Installment payments.

A metropolitan government, as defined in § 7-1-101, is hereby authorized by ordinance or resolution of its governing body to direct or permit its trustee, as a convenience to its taxpayers, to prepare and send to each owner of taxable property a bill for the amount of taxes due on the property. Where the property is located within the urban services district, the governing body may authorize the tax for the urban services district and the tax for the general services district to be consolidated into one (1) tax bill, computed on the combined tax rate of both of the taxing districts; provided, that the tax rate for each of such districts shall be shown plainly on the face of the consolidated tax bill. In any case where the taxpayer pays as much as one half (½) of the total amount of the combined tax bill not later than October 31 of the year for which the taxes are due, and the remaining one half (½) not later than February 28 of the following year, no interest or penalty shall be charged, notwithstanding any state law, charter or ordinance of the metropolitan government to the contrary.

Acts 1963, ch. 43, § 1; T.C.A., § 6-3724.

7-3-204. Municipal auditorium events — Privilege tax.

  1. As used in this section, unless the context otherwise requires:
    1. “Metropolitan government” means those counties and municipalities adopting the metropolitan form of government; and
    2. “Municipal auditorium” means a structure with seats for not less than ten thousand (10,000) spectators, which is constructed after July 7, 1977, and which is used primarily for public events and other related activities and financed either by general obligation bonds or revenue bonds by the metropolitan government.
    1. There is hereby authorized a privilege tax upon the privilege of attending any event at the municipal auditorium, in an amount not to exceed ten percent (10%) of the consideration charged for spectators attending the event. This authorization to levy tax shall expire on January 1 following the maturity and redemption of the indebtedness for the auditorium. The tax shall be approved by resolution of the metropolitan council.
    2. The tax levied in this section shall be in addition to all other taxes levied or authorized to be levied, whether in the form of excise, license, or privilege taxes, and shall be in addition to all other fees and taxes now levied or authorized to be levied.
  2. The tax shall be added by each promoter of the event to the ticket price charged for admission to the municipal auditorium. The tax shall then be remitted to the metropolitan government.
  3. The proceeds from the tax levied in this section shall be retained by the metropolitan government and utilized to defray the cost of operating and constructing the municipal auditorium.
  4. This section shall only apply to those counties having a metropolitan form of government.

Acts 1987, ch. 452, § 1.

Part 3
Enumerated Functions

7-3-301. Issuance of bonds.

Any metropolitan government created and established pursuant to chapters 1-3 of this title may issue bonds under such terms, conditions and limitations as may be prescribed by the metropolitan charter.

Acts 1957, ch. 120, § 13; T.C.A., § 6-3714; Acts 1988, ch. 750, § 11.

Collateral References.

Limitation of municipal indebtedness as affected by combination or merger of two or more municipalities. 103 A.L.R. 154.

7-3-302. Public service districts.

Any metropolitan government created and established pursuant to chapters 1-3 of this title may at any time:

  1. Assume and take over all public functions, rights, duties, property, assets and liabilities of any utility district, sanitary district, school district or other public service district, all of whose public functions, services or duties are performed within the geographical jurisdiction of the metropolitan government, notwithstanding § 7-82-301, or any other statute; except, that if the metropolitan charter did not provide for the consolidation of the existing school systems, then the metropolitan government shall not have the power or authority to assume any public function, right, duty, property, asset or liability of any special school district that was not included in the consolidation of the local governments; and
  2. Notify any utility district, sanitary district, school district or other public service district that performs some part of its public functions, services or duties within the geographical jurisdiction of such metropolitan government of its desire to assume responsibility for all or any part of such functions, services or duties. It shall then be the duty of such district and the metropolitan government to attempt to reach agreement in writing for the allocation to the metropolitan government of any such public functions, services or duties as the metropolitan government may desire to assume and all related rights, duties, property, assets and liabilities of such district that justice and reason may require in the circumstances. Such metropolitan government, if and to the extent that it may choose, shall have the exclusive right to perform or provide municipal and utility functions and services within its geographic jurisdiction, notwithstanding § 7-82-301, or any other statute. Subject to such exclusive right, any such matters upon which the respective parties are not in agreement in writing within sixty (60) days after a metropolitan government gives such notice shall be settled by arbitration in accordance with the laws of arbitration of the state of Tennessee effective at the time of submission to the arbitrators, except that § 29-5-101(2) shall not apply to any arbitration under this subdivision (2). The award so rendered shall be transmitted to the chancery court of the county in which the parties are situated, and then shall be subject to review in accordance with §§ 29-5-113, 29-5-115, and 29-5-118.

Acts 1957, ch. 120, § 14; T.C.A., § 6-3715; Acts 2009, ch. 371, § 2.

Cross-References. Utilities, cut-off procedure, title 65, ch. 32.

Attorney General Opinions. A metropolitan government may take over the functions and liabilities of any school district whose services are performed within the geographical jurisdiction of the government, OAG 01-17, 2001 Tenn. AG LEXIS 17 (2/6/01).

7-3-303. Alcoholic beverages.

  1. The creation and establishment of a metropolitan government under chapters 1-3 of this title shall not alter the status of the county involved as to legality of the manufacture, receipt, sale, storage, transportation, distribution and possession of alcoholic beverages.
  2. Local option elections previously held in the county pursuant to §§ 57-3-106 and 57-3-107 to fix such status shall continue to control until the status is subsequently altered by a local option election held pursuant to such law. Where a local option election under § 57-3-106 has previously permitted, or, subsequent to March 7, 1957, permits the sale of alcoholic beverages, then the urban services district, but not the general services district, shall be deemed a municipality within the meaning of the law.
  3. The metropolitan council shall have the power and authority:
    1. For the general services district, to regulate and tax the manufacture, distribution and sale of beer and other alcoholic beverages of less than five percent (5%) to the same extent that governing bodies of counties now possess, or may hereafter possess, such power and authority; and
    2. For the urban services district, to regulate and tax the manufacture, distribution and sale of beer and other alcoholic beverages of less than five percent (5%) and also the manufacture, receipt, sale, storage, transportation, distribution and possession of other alcoholic beverages to the same extent that governing bodies of cities now possess or may hereafter possess such power and authority.

Acts 1957, ch. 120, § 16; T.C.A., § 6-3717.

NOTES TO DECISIONS

1. Construction with Other Sections.

Only the urban services district, and not the entirety of Davidson County, is a municipality within the definition of § 57-3-101. Templeton v. Metropolitan Government of Nashville & Davidson County, 650 S.W.2d 743, 1983 Tenn. App. LEXIS 699 (Tenn. Ct. App. 1983).

2. Supremacy of State Regulation.

A regulation promulgated by the state government or its regulating agency, the alcoholic beverage commission, takes supremacy over local regulatory measures. Metropolitan Government of Nashville & Davidson County v. Shacklett, 554 S.W.2d 601, 1977 Tenn. LEXIS 640 (Tenn. 1977).

3. Segregated Zones for Retail Package Sale.

Real and substantial reasons for the existence of a segregated zone must be demonstrated by municipal authorities in order to make such a zone valid. Metropolitan Government of Nashville & Davidson County v. Shacklett, 554 S.W.2d 601, 1977 Tenn. LEXIS 640 (Tenn. 1977).

A municipal ordinance that created a segregated zone for the retail package sale of alcoholic beverages in the Urban Services District was arbitrary and unreasonable, and the decision of the alcoholic beverage commission not to enforce such ordinance was upheld by the court. Metropolitan Government of Nashville & Davidson County v. Shacklett, 554 S.W.2d 601, 1977 Tenn. LEXIS 640 (Tenn. 1977).

7-3-304. Zoning regulations.

The creation and establishment of a metropolitan government pursuant to chapters 1-3 of this title shall not alter or change zoning regulations effective in the county and in the city or cities consolidated, but the zoning regulations shall continue until modified or changed by the metropolitan council acting under authority granted in the charter of the metropolitan government.

Acts 1957, ch. 120, § 18; T.C.A., § 6-3718.

Cross-References. Local regulation of junkyards, § 54-20-122.

7-3-305. Authority to order demolition of certain unoccupied buildings.

In any county having a metropolitan form of government with a population of less than one hundred thousand (100,000), according to the 1990 federal census or any subsequent federal census, the governing body of any municipality that has a metropolitan form of government may authorize the demolition and removal of any unoccupied building or dwelling that is in such a state of disrepair that it constitutes a violation of one (1) or more municipal codes so as to render the building or dwelling unfit for human habitation, as determined by a court having jurisdiction of the case; provided, that the owner of any unoccupied building or dwelling has the right, within twelve (12) months of any final judicial determination adverse to such owner, to make such repairs as are necessary to bring the building or dwelling in compliance with the applicable codes of the municipality.

Acts 1979, ch. 372, § 1; T.C.A., § 6-3763; Acts 1992, ch. 758, §§ 1, 2.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-3-306. Competitive bidding.

Where the charter for a metropolitan government requires purchases in excess of one thousand dollars ($1,000) be made on the basis of competitive bidding, “competitive bidding” means:

Dollar amount of purchase: Requirement:

$1,000 to $3,999.99      Three (3) verbal, including telephone,   quotations required

$4,000 to $9,999.99      Three (3) written, including faxed,  quotations required

$10,000 and above      Competitive sealed bids or request for   proposals

Acts 1995, ch. 160, § 1.

7-3-307 — 7-3-310. [Reserved.]

  1. Chapters 1-3 of this title shall have no effect upon the chancery courts, circuit courts and criminal courts established for or functioning in the county affected by a consolidation under chapters 1-3 of this title and it shall have no effect upon the judicial functions formerly exercised by the county judge.
  2. The charter of a metropolitan government may provide that the powers and duties of the county mayor as accounting officer and as general agent of the county shall be exercised by such officer or agency of the metropolitan government and in such manner as the charter may provide.
  3. Municipal courts created by the charters of the principal city and smaller cities may be provided for, consolidated or abolished by the charter for metropolitan government as courts of such cities; provided, however, that the term of office of an incumbent judge of a municipal court shall not be terminated or abridged by the charter for metropolitan government at the end of the term of any incumbent judge of a municipal court ending after the adoption of the charter for metropolitan government. The municipal judge shall in no manner hold such office for a further term except by the approval of a majority of the voters voting in an election to be held for such purpose or in the next regular election.
  4. General sessions courts and juvenile courts established for the county shall be provided for and continued in the charter for metropolitan government as courts of the metropolitan government.
  5. For all purposes contained within the charter for a metropolitan government, judges of the general sessions court shall likewise be judges of the metropolitan court and shall not engage in the private practice of law.
  6. In counties where a general sessions court system exists prior to consolidation, the charter may consolidate municipal and general sessions courts by providing that judges of the municipal court of the principal city may become judges of the general sessions court, and that the general sessions court, in addition to the jurisdiction and powers previously vested in the general sessions court, shall also be vested with all the jurisdiction and powers vested in the municipal court of the principal city of the county prior to the creation of the metropolitan government, and jurisdiction to hear, try and dispose of all cases arising under the laws, ordinances and resolutions of the metropolitan government. It may also provide that jurisdiction and powers vested in the municipal courts of smaller cities that become a part of the urban services district at the time of the creation of a metropolitan government under chapters 1-3 of this title or that become a part of the metropolitan government later pursuant to § 7-1-106, shall be vested in the general sessions court, and that judges of such courts may become judges of the general sessions court. If the charter provides for consolidation of municipal and general sessions courts in such manner that municipal courts thus become general sessions courts and general sessions courts exercise all jurisdiction and powers previously exercised by municipal courts, then the charter may also provide that whenever a vacancy occurs in the office of judge of the general sessions court, it may be filled by appointment by the mayor of a judge to serve until the next general election occurring more than ninety (90) days after the occurrence of such vacancy. The charter may also provide that the metropolitan council may from time to time by ordinance increase the number of divisions of a general sessions court that has thus assumed the functions of municipal courts.
  7. In any county having a metropolitan form of government and a population of less than thirty thousand (30,000), according to the 1980 federal census or any subsequent federal census, the judge of the general sessions court shall be considered as a part-time judge, and shall not be prohibited from the practice of law or other gainful employment while serving as judge, except to the extent such practice or employment constitutes a conflict of interest.
    1. The legislative body of any county that has adopted a metropolitan form of government may, by ordinance, create not more than two (2) additional divisions of general sessions court and not more than two (2) additional judges and other essential personnel to staff such divisions.
    2. If the legislative body of such county creates such additional division or divisions, the judge or judges for the division or divisions shall be elected at the regular August election in 1998, and their term of eight (8) years shall begin on September 1, 1998.
    3. If the legislative body desires the judge or judges of such new division or divisions to hear, primarily or exclusively, only certain types of cases, it shall so designate in the ordinance. Otherwise, such new division or divisions shall have concurrent jurisdiction with the other courts of general sessions in such counties.
    4. The judge or judges of such new division or divisions shall have the same powers and duties and shall receive the same compensation, payable in the same manner, as other general sessions judges in such county.

Acts 1957, ch. 120, § 19; 1969, ch. 298, § 1; 1971, ch. 9, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A., § 6-3719; Acts 1989, ch. 457, § 1; 1993, ch. 324, § 1; 2003, ch. 90, § 2.

Compiler's Notes. Judicial functions formerly exercised by the county judge, referred to in the first sentence, are now exercised by the court of general sessions by authority of Acts 1978, ch. 934, § 36.

For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Judges, municipal, minimum salary in municipalities of over 170,000 population, § 6-56-151.

Time judge must devote to office, practice of law or other employment, § 16-15-5002.

Law Reviews.

The Tennessee Court System — Municipal Courts, 8 Mem. St. U.L. Rev. 431 (1978).

NOTES TO DECISIONS

1. Constitutionality.

The 1969 amendment providing that for the purposes of charter of a metropolitan government, judges of general sessions courts shall also be judges of the metropolitan court only increased the jurisdiction of general sessions courts of metropolitan government of Nashville and Davidson County and did not entitle sessions judges to extra compensation; therefore, it did not violate Tenn. Const., art. II, § 26, Tenn. Const., art. VI, § 7, or Tenn. Const., art. XI, § 9. State ex rel. Boone v. Torrence, 63 Tenn. App. 224, 470 S.W.2d 356, 1971 Tenn. App. LEXIS 218 (Tenn. Ct. App. 1971).

2. Court Clerks.

The criminal court clerk of Davidson County serves as clerk of so much of the docket of Metropolitan General Sessions Court as arises from cases originated by state warrants, and the circuit court clerk serves as clerk of so much of the docket as arises from cases originated by civil process and of all cases involving metropolitan warrants. Metropolitan Government of Nashville & Davidson County v. Allen, 529 S.W.2d 699, 1975 Tenn. LEXIS 585 (Tenn. 1975).

The cases represented by metropolitan warrants and procedure are civil actions and the clerk to handle such cases is the circuit court clerk of Davidson County. Metropolitan Government of Nashville & Davidson County v. Allen, 529 S.W.2d 699, 1975 Tenn. LEXIS 585 (Tenn. 1975).

3. Municipal Courts.

Charter commission for Nashville and Davidson County did not have authority to grant jurisdiction to municipal court to try offenses under the general laws of Tennessee relating to vehicular operation where general assembly had not provided for such jurisdiction by statute. Hill v. State, 216 Tenn. 503, 392 S.W.2d 950, 1965 Tenn. LEXIS 593 (1965).

7-3-312. Certain state offenses enumerated — Exclusive jurisdiction in state courts — Restrictions on ordinances.

  1. In all counties in this state that have adopted a metropolitan form of government, or that may subsequently adopt a metropolitan form of government, the offenses enumerated in subsection (b) are declared to be state offenses, and any person arrested for violation of the offenses shall be tried for violation of state law in state courts, in which the jurisdiction shall be exclusive. Any ordinance presently enacted to regulate any of the enumerated offenses or to be later enacted is hereby declared to be void and of no effect.
  2. The enumerated offenses are as follows:
    1. Driving while intoxicated or drugged, as forbidden by § 55-10-401;
    2. Failing to stop after a traffic accident, as forbidden by title 55, chapter 10;
    3. Driving while license is suspended or revoked, as forbidden by § 55-50-504; and
    4. Drag racing, as defined and forbidden by § 55-10-501.

Acts 1967, ch. 265, § 1; 1967, ch. 389, § 2; T.C.A., § 6-3725.

7-3-313. Airport noise mitigation programs.

  1. Counties with metropolitan forms of government in which a metropolitan airport authority has been created pursuant to § 42-4-104 are hereby authorized to establish airport noise mitigation programs to minimize the impact of noise from airport operations on surrounding properties located within the area of the metropolitan government. Such airport noise mitigation programs may include sound insulation programs, purchase assistance programs, grant or loan programs or payment of compensation to property owners whose properties are adversely affected by airport noise. Notwithstanding any law to the contrary, the expenditure of public funds to implement such a noise mitigation program shall be for the public purpose of protecting the health, safety and welfare of the citizens of the metropolitan government.
  2. No state funds shall be obligated or expended to implement this section.

Acts 1991, ch. 500, §§ 1, 3.

7-3-314. Financial assistance to nonprofit organizations.

  1. The legislative body of each county with a metropolitan form of government may appropriate funds for the financial aid of any nonprofit organization as defined in § 6-54-111(a)(2), or any organization otherwise meeting the definition of “nonprofit civic organization” set forth in § 6-54-111(a)(2)(B), except that it is exempt from taxation pursuant to § 501(c)(6) of the Internal Revenue Code of 1954 (26 U.S.C. § 501(c)(6)). Such appropriations shall be in accordance with the guidelines of the metropolitan government, which shall provide generally that any funds appropriated shall be used to promote the general welfare of the residents of the municipality.
  2. Any nonprofit organization that desires financial assistance from a county with a metropolitan form of government shall file with the clerk of the legislative body a statement of the proposed use of the funds and the program that serves the residents of the county and a copy of an annual audit. The report will be open for public inspection during regular business hours of the clerk's office. This subsection (b) does not apply to nonprofit organizations involved in the study, participation in and appreciation of the visual, performing or literary arts receiving grants from an arts commission or arts board created by the legislative body of the metropolitan government.
  3. Notwithstanding any state law or regulation to the contrary, where counties with a metropolitan form of government publish a budget document that includes the name of each nonprofit charitable or civic organization to which money is appropriated and the specific amount appropriated, and enter into a written agreement with any such organization, no additional resolutions approving such an appropriation shall be required. The clerk of the legislative body shall cause to be published, in a newspaper of general circulation, a list of all nonprofit charitable and civic organizations that are listed as receiving appropriations in the finally adopted budget ordinance.
  4. Notwithstanding any state law or regulation to the contrary, where counties with a metropolitan form of government establish an arts commission or arts board and appropriate funds to that entity in the annual budget, that entity may distribute money to nonprofit organizations involved in the study, participation in and appreciation of the visual, performing, or literary arts without obtaining additional approval from the legislative body. The arts commission or arts board shall provide an annual report to the legislative body prior to the adoption of the annual budget detailing the grant recipients, the moneys disbursed, and the purpose for which the money was disbursed.
  5. Upon the acquiring of real property pursuant to § 67-5-2507(a) or § 67-5-2508 by any county having a metropolitan form of government, and after the period of redemption has lapsed, the legislative body of the county having a metropolitan form of government may, by resolution, authorize the conveyance of the real property by grant to a nonprofit organization for the purpose of constructing affordable or workforce housing. The grant shall be in accordance with the regulations and guidelines of the county having a metropolitan form of government for the disposal of real property, which shall provide generally that any real property granted pursuant to this subsection (e) shall be used to construct affordable or workforce housing for residents of the county having a metropolitan form of government.

Acts 1995, ch. 121, § 1; 2015, ch. 410, § 2.

Amendments. The 2015 amendment added (e).

Effective Dates. Acts 2015, ch. 410, § 3. May 8, 2015.

Attorney General Opinions. Legislation providing that a metropolitan government may issue bonds and notes under the Local Government Public Obligations Act must provide for a referendum. OAG 16-07, 2016 Tenn. AG LEXIS 7 (2/24/2016).

7-3-315. Additional services that may be provided by water or sewer authority.

A municipality-owned water or sewer utility, operating within the boundaries of a metropolitan government, may participate with a local housing authority to provide services, which may include leak repairs, payment of certain water and sewer charges caused by the leak, water or sewer connections, and service line replacements for eligible low and moderate income persons.

Acts 1998, ch. 775, § 1.

7-3-316. Fees to be adjudged as part of costs — Disbursement of fees.

  1. As provided in § 38-6-103, the following fees shall be adjudged as a part of the costs in each case upon conviction of the following offenses:
    1. Controlled substances, narcotics, drugs  $20.00
    2. Driving a motor vehicle, or operating a boat while under the influence of intoxicants and/or drugs, except as provided in § 55-10-413(d)  17.50
    3. Certification of criminal histories and records  Amount fixed by the  federal bureau of investigation
    4. Upon the forfeiture of a cash bond or other surety entered as a result of a municipal traffic citation, whether considered a fine, a bond   or a tax  13.75.
  2. Such fees shall be in addition to and not in substitution for any and all fines and penalties otherwise provided for by law.
  3. Except when and as provided in this section, the appropriate clerk, after deducting five percent (5%) as compensation when applicable, shall identify those fees set out in subsection (a) that are dedicated for use by the Tennessee bureau of investigation and remit the fees to the state treasury to be expended by the Tennessee bureau of investigation as appropriated by the general assembly. These fees shall be transmitted by the clerk of the court to the state treasurer for deposit in a fund to be used by the Tennessee bureau of investigation for the purpose of employing personnel; for the purchase of equipment and supplies; to pay for the education, training and scientific development of employees; or for any other purpose to allow the bureau’s business to be done in a more efficient and expeditious manner. The moneys received in the fund shall be invested for the benefit of the fund by the state treasurer pursuant to § 9-4-603. Amounts in the fund shall not revert to the general fund of the state, but shall, together with interest income credited to the fund, remain available for expenditure in subsequent fiscal years.
  4. Upon approval of the director of the Tennessee bureau of investigation, local governing bodies which have the responsibility for providing funding for sheriffs' offices and police departments are authorized to purchase from state contracts approved for bureau purchases, scientific instruments designed to examine a person's breath and measure the alcohol content of a person's breath, for use as evidence in the trial of cases; provided, that prior to use of the scientific instruments, such instruments must be delivered to the forensic services division for testing and certification pursuant to § 38-6-103(g). The bureau shall continue to maintain and certify the instruments and operating personnel, pursuant to § 38-6-103(g), and furnish expert testimony in support of the use of the scientific instruments when required.

Acts 2012, ch. 1088, § 3; 2013, ch. 154, § 28.

Part 4
Metro Sheriffs' Restitution Act of 1978

7-3-401. Short title.

This part shall be known and may be cited as the “Metro Sheriffs' Restitution Act of 1978.”

Acts 1978, ch. 698, § 1; T.C.A., § 6-3739.

Cross-References. Restitution centers and industries, title 41, ch. 6.

7-3-402. Establishment of program.

The sheriff of any county having a metropolitan form of government is authorized to establish a residential restitution program for the purpose of allowing persons convicted of felony offenses and sentenced to the workhouse of such counties to reimburse the victim for the value of property stolen, or for damage caused by such offenses. The sheriff may promulgate rules and regulations necessary to administer the program, and the program shall be carried out using present facilities and administrative staff. Before any inmate is accepted into a restitution program, the inmate shall enter into an agreement to abide by the rules, regulations and special conditions established by the sheriff or the sheriff's designees. No inmate convicted of a felony for which the maximum punishment actually imposed is greater than five (5) years shall be eligible for such a program.

Acts 1978, ch. 698, § 2; T.C.A., § 6-3739.

7-3-403. Deposit of wages — Charges for board.

  1. When inmates are employed and participating in this program, the sheriff or the sheriff's designees shall require that inmates turn wages and salaries over to the sheriff or the sheriff's designees when received and the sheriff or the sheriff's designees shall deposit such money in trust accounts. Ledgers shall be maintained reflecting the status of individual accounts.
  2. Each inmate shall be liable for reasonable charges for board as fixed by law.

Acts 1978, ch. 698, § 3; T.C.A., § 6-3739.

7-3-404. Disbursement of wages.

After initial payment of board, the wages and salaries of inmates shall be disbursed for the following purposes in the order set forth:

  1. Reimbursement to the victims of the offense in the amounts and in the manner set forth in the contract executed between the inmate, victim and the sheriff of such county;
  2. Support of dependents, if any, in amounts fixed by the sheriff of such counties or the sheriff's designees;
  3. Payment of any outstanding court costs assessed against the inmate;
  4. Payment in full or ratably of the inmate's written obligations; and
  5. The balance, if any, to the inmate upon discharge from confinement.

Acts 1978, ch. 698, § 4; T.C.A., § 6-3739.

7-3-405. Selection of inmate participants.

Participating inmates shall be carefully screened and the committing courts shall be consulted before an inmate is placed in the restitution program.

Acts 1978, ch. 698, § 5; T.C.A., § 6-3739.

Part 5
Violation of Ordinances, Laws and Regulations

7-3-501. Enforcement of ordinances, laws or regulations — Citations and warrants.

When any person violates an ordinance, law or regulation of a metropolitan government, any police or peace officer of such metropolitan government or any employee of the metropolitan government authorized to enforce such ordinance, law or regulation, in whose presence the violation is committed or who determines after investigation that there is probable cause such a violation has been committed, may issue a citation or civil warrant, giving a copy to the violator, showing the ordinance, law or regulation violated and the date, time and place when the violator is to appear in court.

Acts 1993, ch. 335, § 1.

NOTES TO DECISIONS

1. Authority of Transportation and Licensing Commission Inspectors.

Livery drivers'  citations were not unauthorized because (1) Metro. Gov't Nashville & Davidson County, Tenn., Code Laws §§ 12.08.050(A) and 2.100.045 did not say only police officers could enforce traffic ordinances, (2) T.C.A. § 7-3-501 gave such authority, (3) Metro. Gov't Nashville & Davidson County, Tenn., Code Laws § 2.100.050 provided for the inspectors who issued the citations, and (4) Metro. Gov't Nashville & Davidson County, Tenn., Code Laws § 1.24.030(A) required the inspectors to enforce ordinances. Smith v. Metro. Gov't of Nashville & Davidson Cnty., — S.W.3d —, 2015 Tenn. App. LEXIS 219 (Tenn. Ct. App. Apr. 13, 2015), appeal denied, — S.W.3d —, 2015 Tenn. LEXIS 787 (Tenn. Sept. 16, 2015).

7-3-502. Notice on citation or warrant.

Each citation or civil warrant issued pursuant to this part shall have printed on it, in large, conspicuous block letters, the following:

NOTICE: FAILURE TO APPEAR IN COURT ON THE DATE ASSIGNED BY THIS CITATION/WARRANT CAN RESULT IN: THE COURT ORDERING YOU TO PAY A CIVIL FINE/PENALTY, COURT COSTS AND LITIGATION TAXES TO THE METROPOLITAN GOVERNMENT; THE ISSUANCE OF AN EXECUTION AND GARNISHMENT TO COLLECT THE FINE/PENALTY, COSTS AND TAXES; AND THE ISSUANCE OF A BENCH WARRANT FOR YOUR ARREST FOR CONTEMPT OF COURT, WITH A PENALTY OF UP TO FIVE (5) DAYS IN JAIL AND/OR A FINE OF UP TO TEN DOLLARS ($10.00).

Acts 1993, ch. 335, § 2.

7-3-503. Service of citation or warrant.

If the police or peace officer or employee of a metropolitan government authorized to enforce such ordinance, law or regulation is unable to serve the citation or civil warrant issued pursuant to § 7-3-501 at the time the ordinance, law or regulation is violated, the citation or civil warrant may be served by the police or peace officer or any employee of the metropolitan government authorized to enforce such ordinance, law or regulation or charged with the duty to serve civil or criminal process and who is at least eighteen (18) years of age. Service may be made by delivering a copy of the citation or civil warrant to the violator personally or, if the violator evades service, by leaving a copy of the citation or warrant at the violator's dwelling house or usual place of abode, with some person of suitable age and discretion then residing in the dwelling house or abode, whose name shall appear on the proof of service.

Acts 1993, ch. 335, § 3.

7-3-504. Service by mail.

Service by mail of a citation or civil warrant upon the violator may be made by any employee of a metropolitan government, by any additional plaintiff, or the violator's attorney, or by any person authorized by statute. The person serving the citation or civil warrant by mail shall send, postage prepaid, a copy of the citation or civil warrant to the violator by registered, return receipt, or by certified, return receipt mail. Service by mail shall not be the basis for the entry of a judgment by default unless the record contains a return receipt showing personal acceptance by the violator or by the violator's authorized agent.

Acts 1993, ch. 335, § 4.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

7-3-505. Failure to produce identification — Arrest — Release — Bond.

When any police or peace officer of a metropolitan government or any employee of a metropolitan government authorized to enforce ordinances, laws or regulations of the metropolitan government or charged with the duty to serve civil or criminal process, asks the violator for identification for the purpose of issuing a citation or civil warrant to that person, the failure to produce or give such identification shall be grounds for the violator to be arrested by an officer authorized to make arrests pursuant to title 40, chapter 7. In such event, the violator shall be arrested, transported to the police station or jail, booked, photographed and fingerprinted for identification purposes and, thereafter, shall be served with the citation or civil warrant and released from custody without being required to post a bond.

Acts 1993, ch. 335, § 5.

Attorney General Opinions. A municipal officer may arrest a person for violation of a city code or ordinance when that person fails to provide the officer with proper identification, OAG 06-167 (11/9/06), 2006 Tenn. AG LEXIS 187.

7-3-506. Injunctions and restraining orders.

Injunctions or restraining orders issued by any court of competent jurisdiction to enforce any ordinance, law or regulation of any metropolitan government or to restrain the violation of any ordinance, law or regulation of any metropolitan government shall not be stayed pending appeal, unless such stay is requested by motion in the court that issued the injunction and an appropriate bond approved by the court is posted. The court having issued the injunction or restraining order shall retain jurisdiction to consider such motion for a stay after an appeal has been filed. This section shall not be applicable in any proceeding where the procedure is governed by the Tennessee Rules of Civil Procedure or the Tennessee Rules of Criminal Procedure.

Acts 1993, ch. 335, § 6.

7-3-507. Penalties.

All metropolitan governments are empowered to set a penalty of up to five hundred dollars ($500) per day for each day during which the violation of ordinances, laws and regulations of such metropolitan government continues or occurs. No penalty in excess of one hundred fifty dollars ($150) may be imposed on any property owner who is charged with violating any ordinance, law or regulation relating to zoning or housing standards when the principal use of the property is for an owner-occupied residential dwelling and the appraised value of such property as shown on the records of the assessor of property does not exceed thirty thousand dollars ($30,000).

Acts 1993, ch. 335, § 7.

Attorney General Opinions. Municipal judge's imposition of penalty greater than $50 for ordinance violation, OAG 99-120, 1999 Tenn. AG LEXIS 120 (5/17/99).

City courts are limited to monetary penalties against a parent in enforcing curfew violations, OAG 00-158, 2000 Tenn. AG LEXIS 161 (10/17/00).

7-3-508. Powers deemed additional and supplemental.

The powers conferred by this part are in addition and supplemental to the powers conferred by any other laws, charter or home rule provision.

Acts 1993, ch. 335, § 8.

7-3-311. Courts and judicial functions.

Chapter 4
Metropolitan Government—Tourist Accommodation Tax

Part 1
General Provisions

7-4-101. Chapter definitions.

  1. As used in this chapter, unless the context otherwise requires:
    1. “Consideration” means the consideration charged, whether or not received, for the occupancy in a hotel valued in money whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, property and services of any kind or nature without any deduction therefrom whatsoever. Nothing in this definition shall be construed to imply that consideration is charged when the space provided to the person is complimentary from the operator and no consideration is charged to or received from any person;
    2. “Convention center” means any land, improvement, structure, building or part of a building comprised of facilities for conventions, public assemblies, conferences, trade exhibitions or other business, social, cultural, scientific and public interest events, along with any associated hotel accommodations; transportation infrastructure; tourism, theatre, retail business and commercial office space facilities; parking facilities or any other structure or facility constructed, leased, equipped, renovated or acquired for any of the purposes set forth in this chapter, and also includes, but is not limited to, parks, greenways, open spaces, roads, streets, highways, curbs, bridges, flood control facilities and utility services, such as water, sanitary sewer, electricity, gas and natural gas and telecommunications that are constructed, leased, equipped, renovated or acquired as a supporting system or facility for any of the purposes set forth in chapter 89 of this title; provided, that any such supporting system or facility is dedicated for public use;
    3. “Counties and municipalities” means the counties having a metropolitan form of government and municipalities with a population of five thousand (5,000) or more, according to the 1980 federal census or any subsequent federal census, located partly within such counties and partly within adjacent counties;
    4. “Hotel” means any structure, or any portion of any structure, that is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist court, tourist camp, tourist cabin, motel or any place in which rooms, lodgings or accommodations are furnished to transients for a consideration;
    5. “Occupancy” means the use or possession, or the right to the use or possession, of any room, lodgings or accommodations in a hotel for a period of less than thirty (30) continuous days;
    6. “Operator” means the person operating the hotel, whether as owner, lessee or otherwise;
    7. “Person” means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit;
    8. “Tax collection official” means the department of finance of the county or municipality, as applicable, or the county clerk, if so designated by ordinance of the legislative body of any municipality having a metropolitan form of government and a population of more than four hundred fifty thousand (450,000), according to the 1990 federal census or any subsequent federal census;
    9. “Tourism” means the planning and conducting of programs of information and publicity designed to attract to the county tourists, visitors and other interested persons from outside the area and also to encourage and coordinate the efforts of other public and private organizations or groups of citizens to publicize the facilities and attractions of the area for the same purposes. “Tourism” also means the acquisition, construction and remodeling of facilities useful in the attraction and promoting of tourist, convention and recreational businesses;
    10. “Tourist commission” means a seven-person body established subject to the same local organic law as other boards and commissions established by the charter of the metropolitan government; and
    11. “Transient” means any person who exercises occupancy or is entitled to occupancy for any rooms, lodgings or accommodations in a hotel for a period of less than thirty (30) days.
  2. Terms used in this chapter that are not otherwise defined shall have the same meaning ascribed to them in chapter 88 of this title.

Acts 1976, ch. 704, § 1; T.C.A., § 6-3726; Acts 1990, ch. 636, §§ 1, 2; 1994, ch. 758, § 3; 2007, ch. 461, § 1; 2009, ch. 474, § 2.

Compiler's Notes. For table of populations of Tennessee municipalities, see Volume 13 and its supplement.

Cross-References. Multiple taxation of same privilege, § 67-4-503.

Attorney General Opinions. Applicability, OAG 86-68, 1986 Tenn. AG LEXIS 159 (3/17/86); OAG 87-164, 1987 Tenn. AG LEXIS 35 (10/26/87).

Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).

7-4-102. Authorization, nature and levy of tax — Convention centers.

    1. There is hereby authorized a privilege tax upon the privilege of occupancy in any hotel of each transient in an amount not to exceed three percent (3%) of the consideration charged by the operator, except as provided in subsection (b). The tax so imposed is a privilege tax upon the transient occupying the room and is to be collected and distributed as provided in this chapter, and the tax shall be approved by ordinance of the metropolitan council.
    2. In addition to the tax authorized in subdivision (a)(1) and subsection (b), there is hereby authorized an additional privilege tax upon the privilege of occupancy in any hotel of each transient in an amount not to exceed one percent (1%) of the consideration charged by the operator in metropolitan counties having a population in excess of one hundred thousand (100,000), according to the 1990 federal census or any subsequent federal census. The tax so imposed is a privilege tax upon the transient occupying the room and is to be collected and distributed as provided in this chapter, and the tax shall be approved by ordinance of the metropolitan council.
    1. There is hereby authorized an additional one-percent increase to the privilege tax authorized pursuant to subsection (a) when the metropolitan government enters into a binding contract with a general contractor for the construction of a convention center, the additional one-percent increase to be used exclusively for the purpose of constructing, financing and operating a convention center. Such tax so imposed is a privilege tax upon the transient occupying the room of any hotel and shall be approved by ordinance of the metropolitan council. Such ordinance shall include provisions to reflect the intent and effect of this subsection (b). This subsection (b) only applies in counties having a metropolitan form of government that have a population of not less than four hundred thousand (400,000) and not more than five hundred thousand (500,000), according to the 1970 federal census or any subsequent federal census.
    2. The metropolitan council in a county having a metropolitan form of government which has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, is authorized to impose an additional one-percent increase to the privilege tax authorized pursuant to subdivision (b)(1). The additional one-percent increase to the privilege tax may be imposed throughout the county or only within a tourist development zone created within the county. Except as otherwise provided in subdivision (b)(3), the proceeds from the tax shall be retained by the metropolitan government and distributed in accordance with § 7-4-110(b). The tax so imposed is a privilege tax upon the transient occupying the room of a hotel located within the territory of the metropolitan government or a tourist development zone. The ordinance shall include provisions to reflect the intent and effect of this subdivision (b)(2).
    3. If there has been designated within a county described in subdivision (b)(2) a secondary tourist development zone, then all of the proceeds of the additional one-percent increase to the privilege tax authorized pursuant to subdivision (b)(2) which are derived from the secondary tourist development zone shall be deposited in the general fund of the county in which the secondary tourist development zone is located.
  1. A municipality with a population of five thousand (5,000) or more, according to the 1980 federal census or any subsequent federal census, lying partly within a county with a metropolitan form of government and partly within an adjacent county may levy a privilege tax on the privilege of occupancy in any hotel of each transient in an amount, set by the governing body of such municipality, in an amount not exceeding that set in subsection (a). The tax shall be collected and distributed as provided in this chapter.

Acts 1976, ch. 704, § 2; T.C.A., § 6-3727; Acts 1982, ch. 559, §§ 1, 2, 4; 1990, ch. 636, § 3; 1999, ch. 320, § 1; 2002, ch. 571, § 1; 2007, ch. 422, §§ 1, 2; 2007, ch. 461, §§ 2, 3.

Compiler's Notes. Acts 1999, ch. 320, § 3 provided that subdivision (a)(2) be repealed on June 30, 2002; however, Acts 2002, ch. 571, § 1 deleted the repeal provision in Acts 1999, ch. 320, § 3, effective April 7, 2002.

For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).

The use of proceeds of the tourist accommodation tax imposed by Moore County under T.C.A. § 7-4-102(a)(1) is limited only by Article II, Section 29, of the Tennessee Constitution, which requires that the proceeds be used for purposes of the county. OAG 16-02, 2016 Tenn. AG LEXIS 2 (1/12/2016).

7-4-103. Tax added to room invoice — Collection and remittance of tax.

The tax shall be added by each and every operator to each invoice prepared by the operator for the occupancy of the operator's hotel, such invoice to be given directly or transmitted to the transient, and the tax shall be collected by the operator from the transient and remitted to the tax collection official.

Acts 1976, ch. 704, § 3; modified; T.C.A., § 6-3728; Acts 1994, ch. 758, § 4.

Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).

7-4-104. When tax collected and remitted — Compensation to operator for administrative expenses.

  1. The tax levied by this chapter shall be remitted by all operators who lease, rent, or charge for any rooms to the metropolitan department of finance not later than the twentieth of each month next following collection from the transient. The operator is hereby required to collect the tax from the transient at the time of the presentation of the invoice for the occupancy whether prior to occupancy or not, as may be the custom of the operator; the obligation to the metropolitan government entitled to such tax shall be that of the operator.
  2. For the purpose of compensating the operator in accounting for and remitting the tax levied by this chapter, the operator shall be allowed two percent (2%) of the amount of tax due and accounted for and remitted to the tax collection official in the form of a deduction in submitting the operator's report and paying the amount due by the operator; provided, that the amount due was not delinquent at the time of payment.

Acts 1976, ch. 704, § 4; T.C.A., § 6-3729; Acts 1994, ch. 758, § 5.

Attorney General Opinions. Sales tax is due on short-term rentals of homes, apartments, and rooms in Tennessee that are arranged through websites. These rentals qualify as “hotels” subject to a hotel occupancy privilege tax. The property owner is ultimately responsible for collecting and paying the taxes. OAG 15-78, 2015 Tenn. AG LEXIS 79 (12/1/2015).

7-4-105. Prohibited representations.

No operator of a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part of the tax will be assumed or absorbed by the operator, or that it will be added to the rent, or that, if added, any part will be refunded.

Acts 1976, ch. 704, § 5; T.C.A., § 6-3730.

7-4-106. Violations and penalties — Delinquent taxes.

  1. Taxes collected by an operator that are not remitted to the tax collection official on or before the due dates are delinquent.
  2. An operator shall be liable for interest on such delinquent taxes from the due date at the rate of eight percent (8%) per annum, and in addition for penalty of one percent (1%) for each month or fraction of a month that such taxes are delinquent. Such interest and penalty shall become a part of the tax required in this chapter to be remitted.
  3. Willful refusal of an operator to collect or remit the tax or willful refusal of a transient to pay the tax imposed is a Class C misdemeanor.
  4. Any fine levied in this chapter shall be applicable to each individual transaction involving lodging services paid by a customer to the operator in those cases when the operator fails or refuses to pay the tax payable.

Acts 1976, ch. 704, § 6; T.C.A., § 6-3731; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

7-4-107. Records.

It is the duty of every operator liable for the collection and payment of any tax imposed by this chapter to keep and preserve for a period of three (3) years all records necessary to determine the amount of the tax, which records the tax collection official shall have the right to inspect at all reasonable times.

Acts 1976, ch. 704, § 7; T.C.A., § 6-3732.

7-4-108. Administration and enforcement — Taxpayer remedies.

  1. In administering and enforcing this chapter, the tax collection official shall have, as additional powers, those powers and duties with respect to collection of taxes provided in title 67 or otherwise provided by law; provided, that title 67, chapter 1, part 17, does not apply to any record, document, or other information pertaining to a tax on the privilege of occupancy in a hotel imposed pursuant to this chapter.
  2. Upon any claim of illegal assessment and collection, the taxpayer has the remedy provided in § 67-1-911, it being the intent of this chapter that the provisions of law that apply to the recovery of state taxes illegally assessed and collected be conformed to apply to the recovery of taxes illegally assessed and collected under the authority of this chapter; provided, that the tax collection official shall possess those powers and duties as provided in § 67-1-707, with respect to the adjustment and settlement with taxpayers of all errors of taxes collected by the tax collection official under the authority of this chapter and to direct the refunding of the adjustments and settlements. Notice of any tax paid under protest shall be given to the tax collection official, and suit for recovery shall be brought against the tax collection official.

Acts 1976, ch. 704, § 8; T.C.A., § 6-3733; Acts 2016, ch. 796, § 4.

Amendments. The 2016 amendment added the proviso at the end of (a).

Effective Dates. Acts 2016, ch. 796, § 6. April 14, 2016.

7-4-109. Tourist commission.

    1. For the purpose of promoting tourist, convention, and recreational activity, authorization is granted to establish, and there shall be established, a tourist commission of either seven (7) members or nine (9) members as provided in this section. This commission shall be comprised of persons selected by the mayor of the metropolitan government in the following manner:
      1. Three (3) commissioners from a list of five (5) persons submitted by the hotel and motel association, or if expanded pursuant to subdivision (a)(2), four (4) commissioners from a list of not less than six (6) persons submitted by the hotel and motel association;
      2. One (1) commissioner from a list of three (3) persons submitted by the area chamber of commerce; and
      3. Three (3) commissioners selected by the mayor of the metropolitan government from tourist related industries, or, if expanded pursuant to subdivision (2), four (4) commissioners selected by the mayor of the metropolitan government from tourist related industries.
    2. At least two (2) of the members of the commission shall be selected from minorities, as well as members of the sex that historically have been underrepresented on the tourist commission. If a county with a metropolitan form of government having a population of not less than four hundred seventy thousand (470,000) nor more than five hundred thousand (500,000), according to the 1980 federal census or any subsequent federal census, creates a tourist commission consisting of nine (9) members, at least two (2) of the members of the tourist commission shall be appointed consistent with this subdivision (a)(2).
  1. The commissioners shall be appointed for terms of three (3) years, and vacancies shall be filled in the same manner that original appointments are made but shall be for the duration of the unexpired term only; commencing in 1988, the terms of the commissioners shall be of such length and so arranged that the terms of one third (1/3) of the commission shall expire each year.
  2. As relating to budgetary and fiscal matters and expenditures, the commission shall be subject to the same provisions of the local organic law as the other boards and commissions established by the charter of the metropolitan government, and the commission shall be responsible for preparing and submitting a budget for all funds to be expendable pursuant to § 7-4-110(a)(1) and (2) for appropriate action by the metropolitan government.

Acts 1976, ch. 704, § 9; T.C.A., § 6-3734; Acts 1988, ch. 885, §§ 1-5.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-4-110. Additional privilege tax.

  1. Except as otherwise provided in subsection (f), until the metropolitan council in a county having a metropolitan form of government which has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, approves an ordinance to impose an additional one-percent increase to the privilege tax authorized pursuant to § 7-4-102(b)(2), the proceeds from the tax authorized to be levied in § 7-4-102(a)(1) shall be retained by the metropolitan government and distributed as follows:
    1. One third (1/3) shall be used for direct promotion of tourism;
    2. One third (1/3) shall be used for tourist related activities; and
    3. One third (1/3) shall be deposited in the general fund.
  2. Except as otherwise provided in subsection (f), when the metropolitan council in a county having a metropolitan form of government which has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, approves an ordinance to impose an additional one-percent increase to the privilege tax authorized pursuant to § 7-4-102(b)(2), the proceeds from the tax authorized to be levied pursuant to this chapter, other than the tax described in § 7-4-102(c), shall be retained by the metropolitan government and distributed as follows:
    1. One third (1/3) in its entirety shall be used for the direct promotion of tourism;
    2. One third (1/3) in its entirety shall be maintained in a reserve fund to be used exclusively for the purpose of modifying, constructing, financing and operating a convention center;
    3. One sixth (1/6) shall be used for tourist related activities which may include funding a convention center; and
    4. One sixth (1/6) shall be deposited in the general fund of the metropolitan government.
  3. If the total tax collections received pursuant to this section and dedicated to the purposes contained in subdivisions (b)(1), (2) and (3) exceed the amounts necessary to fund the obligations under those subdivisions, the excess shall be placed in a reserve fund and expended only for tourist related activities.
  4. Until the metropolitan council in a county having a metropolitan form of government which has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, approves an ordinance to impose an additional one-percent increase to the privilege tax authorized pursuant to § 7-4-102(b)(2), the proceeds from the tax authorized to be levied in § 7-4-102(a)(2) shall be retained by the metropolitan government having a population in excess of one hundred thousand (100,000), according to the 1990 federal census or any subsequent federal census, and shall be used solely for the direct promotion of tourism.
  5. The proceeds from the tax authorized by § 7-4-102(c) shall be retained by the collecting municipality and used exclusively for tourist related activities within the municipality.
  6. If there has been designated within the county a secondary tourism development zone, then one third (1/3) of the proceeds of the tax authorized to be levied in § 7-4-102(a)(1) and all of the proceeds of the tax authorized to be levied in § 7-4-102(a)(2) which are derived from the secondary tourism development zone shall be paid to the county for deposit in its general fund, but only to the extent that the same exceeds one third (1/3) of the proceeds of the tourist accommodation tax from the secondary tourism development zone for the fiscal year ending June 30, 2006, increased by three percent (3%) for each fiscal year thereafter (i.e., in fiscal year 2007, one hundred three percent (103%) of the proceeds for fiscal year 2006; in fiscal year 2008, one hundred three percent (103%) of the amount so calculated for fiscal year 2007; etc.).
  7. If there has been designated within the county a secondary tourism development zone, until the metropolitan council approves an ordinance to impose an additional one-percent increase to the privilege tax authorized pursuant to § 7-4-102(b)(2), the metropolitan council may by resolution authorize one third (1/3) of the proceeds of the tax authorized to be levied in § 7-4-102(a)(1) and all of the proceeds of the tax authorized to be levied in § 7-4-102(a)(2) which are derived from the secondary tourism development zone to be paid to the county for deposit in its general fund, but only to the extent that the same exceeds one third (1/3) of the proceeds of the tourist accommodation tax from the secondary tourism development zone for the fiscal year ending June 30, 2006, increased by three percent (3%) for each fiscal year thereafter (i.e., in fiscal year 2007, one hundred three percent (103%) of the proceeds for fiscal year 2006; in fiscal year 2008, one hundred three percent (103%) of the amount so calculated for fiscal year 2007, etc.).

Acts 1976, ch. 704, § 10; T.C.A., § 6-3735; Acts 1982, ch. 559, § 3; 1990, ch. 636, § 4; 1999, ch. 320, § 2; 2002, ch. 571, § 1; 2007, ch. 422, § 3; 2007, ch. 461, § 4.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-4-111. Tax additional to other taxes and fees.

The tax levied in this chapter shall be in addition to all other taxes levied or authorized to be levied whether in the form of excise, license, or privilege taxes, and shall be in addition to all other fees and taxes now levied or authorized to be levied.

Acts 1976, ch. 704, § 11; T.C.A., § 6-3736.

7-4-112. Applicability.

This chapter shall only apply to those counties having a metropolitan form of government.

Acts 1976, ch. 704, § 12; T.C.A., § 6-3737.

Part 2
The Convention Center Fund

7-4-201. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Metropolitan council” means the council of a county having a metropolitan form of government that has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census;
  2. “Metropolitan government” means any county having a metropolitan form of government that has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census;
  3. “Minority-owned business” means a business that is solely owned, or at least fifty-one  percent (51%) of the assets or outstanding stock of which is owned, by an individual who personally manages and controls the daily operations of the business and who is impeded from normal entry into the economic mainstream because of:
    1. Past practices of discrimination based on race, religion, ethnic background, or sex;
    2. A disability as defined in § 4-26-102; or
    3. Past practices of racial discrimination against African-Americans;
  4. “Person” means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, business organization, receiver, trustee, syndicate, or any other group or combination acting as a unit; and
  5. “Tax collection official” means the department of finance of the county or municipality, as applicable, or the county clerk, if so designated by ordinance of the legislative body of any municipality having a metropolitan government.

Acts 2007, ch. 422, §§ 4, 7.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Local tax for the convention center fund, § 67-4-1908.

7-4-202. Additional tax on hotel room occupancy. [For Expiration of Provisions in Subsection (a) on May 21, 2020, See Subdivision (d)(2).]

  1. In addition to any other tax or fee imposed pursuant to this chapter on the occupancy of a hotel room, upon the adoption of an ordinance by the metropolitan council in a county having a metropolitan government, there is authorized an additional privilege tax of up to two dollars and fifty cents ($2.50) upon the occupancy of each hotel room within the territory of that metropolitan government. The tax so imposed is a privilege tax upon each occupied room for each night of occupancy and is to be collected and distributed as provided in part 1 of this chapter.
  2. All revenues received by the metropolitan government from the privilege tax imposed pursuant to subsection (a) shall be deposited into a metropolitan government fund entitled “the convention center fund” and shall be used for the purpose of paying costs incurred in modification or construction of a publicly owned convention center in excess of four hundred million dollars ($400,000,000) in costs located within the territory of the metropolitan government. The revenues may also be used for the operation, promotion, management and marketing of such a convention center. If the revenues from the surcharge or tax in any fiscal year exceed the total of the debt service requirements from that year, the surplus revenue thus accruing shall be retained by the metropolitan government as a reserve fund for future convention center debt service requirements.
  3. In the event that the total bonded indebtedness incurred for the modification or construction of the convention center facility by the metropolitan government is paid in full as to bond principal and interest, including expenses of bond sale or sales, the metropolitan government's taxing resolution imposing taxes authorized by subsection (a) shall be repealed and this tax shall no longer be levied; provided, however, that any funds and interest remaining in the reserve fund after all obligations imposed under this part have been fulfilled shall be used by the governmental board or agency responsible for the operation of the convention center for use by it in the operation, promotion and advertisement of the convention center facilities.
    1. Upon the adoption of an ordinance by the metropolitan council in a county having a metropolitan government, all revenues received by the metropolitan government from the privilege tax imposed pursuant to subsection (a) and that exceed two dollars ($2.00) shall be deposited into a metropolitan government fund entitled the event and marketing fund. For administrative purposes, the event and marketing fund and the committee that approves expenditures shall be attached to a convention and visitors bureau in a county having a metropolitan government or a similar entity approved by the metropolitan council and the metropolitan government mayor. The fund will be governed by a six-person committee and a chair who votes only to break a tie. The committee and the chair shall be appointed by the mayor of the metropolitan government. Members of the committee shall include at least one (1) person nominated by a hotel and lodging association located in the county having a metropolitan government, one (1) person from the hospitality industry, one (1) representative from a hotel corporation that operates a single hotel in a county with a metropolitan government with an excess of two thousand nine hundred (2,900) rooms, two (2) members of the public, one (1) person who owns or operates a business within the central business improvement district, and a chair to be selected by the mayor. Expenditures from the event and marketing fund may be used for any purpose allowable under § 7-4-110(a)(1). All expenditures are subject to the approval of the finance director of the metropolitan government. An audited financial statement shall be supplied annually to the finance director and the council of the metropolitan government.
    2. The authority to charge the amount of the privilege tax imposed on hotel room occupancy by subsection (a) in excess of two dollars ($2.00) and the terms of the committee members shall expire six (6) years from May 21, 2020.

Acts 2007, ch. 422, § 4; 2008, ch. 1004, §§ 1, 2; 2013, ch. 340, § 1; 2014, ch. 806, § 1; 2019, ch. 426, § 1.

Amendments. The 2019 amendment substituted “May 21, 2020” for “May 21, 2014” in (d)(2).

Effective Dates. Acts 2019, ch. 426, § 2. May 21, 2019.

Cross-References. Local tax for the convention center fund, § 67-4-1908.

7-4-203. Privilege tax on contracted vehicles leaving public airports.

    1. There is authorized a privilege tax on the privilege of contracted vehicles exiting public airports located within the boundaries of a metropolitan government. The tax shall only be effective upon the adoption of an ordinance by the metropolitan council to impose this privilege tax.
    2. The tax shall be imposed only upon contracted vehicles that charge customers a separate fee for transportation from the airport, unless otherwise excluded in this part.
    3. The tax shall be two dollars ($2.00) each time a contracted vehicle meeting the requirements of subdivision (a)(2) exits the airport while transporting customers from the airport located within the territory of the metropolitan government, but shall exclude noncommercial vehicles and equipment operated by the metropolitan transit authority.
  1. The tax imposed by subsection (a) is a privilege tax upon the contracted vehicle exiting the airport and is to be collected and distributed as provided in this chapter.
  2. The privilege tax is due each time a contracted vehicle to which this section applies leaves the airport. The operator of the contracted vehicle shall be responsible for keeping accurate records to determine the amount of the tax due and payable. That information shall be transmitted daily by the operator of the contracted vehicle to a designated individual within the business organization that hired the operator of the contracted vehicle. The privilege tax shall be remitted to the metropolitan tax collection official by a designated individual within the business organization no later than the twentieth of each month.
  3. All revenues received by the metropolitan government from the privilege tax imposed pursuant to subsection (a) shall be deposited into a metropolitan government fund entitled “the convention center fund” and shall be used for the purpose of paying costs incurred in modification or construction of a publicly owned convention center in excess of four hundred million dollars ($400,000,000) in costs located within the territory of the metropolitan government. If the revenues from the surcharge or tax in any fiscal year exceeds the total of the debt service requirements from that year, the surplus revenue thus accruing shall be retained by the metropolitan government as a reserve fund for future debt service requirements.
  4. In the event that the total bonded indebtedness incurred for the modification or construction of the convention center facility by the metropolitan government is paid in full as to bond principal and interest, including expenses of bond sale or sales, the metropolitan government’s taxing resolution imposing the taxes authorized pursuant to subsection (a) shall be repealed and the taxes shall no longer be levied; provided, however, that any funds remaining in the reserve fund after all obligations imposed under this part have been fulfilled shall be used by the governmental board or agency responsible for the operation of the convention center for use by it in the promotion and advertisement of the convention center facilities.

Acts 2007, ch. 422, § 4.

Cross-References. Local tax for the convention center fund, § 67-4-1908.

7-4-204. Delinquency — Interest and penalties.

  1. Taxes due and payable that are not remitted to the tax collection official on or before the due dates are delinquent.
  2. The person owing the taxes shall be liable for interest on any delinquent taxes from the due date at the rate of eight percent (8%) per annum, and, in addition, for a penalty of one percent (1%) for each month or fraction of a month that the taxes are delinquent. The interest and penalties shall become a part of the tax required to be remitted in this chapter.
  3. Willful refusal of a person to collect or remit the tax or willful refusal of an operator of a contracted vehicle to keep accurate records of the tax due and payable is a Class C misdemeanor.
  4. Any fine levied in this chapter shall be applicable to each individual transaction involving an operator of a contracted vehicle for willful refusal to keep accurate records or the willful refusal of a person to collect or remit the tax due and owing.

Acts 2007, ch. 422, § 4.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

Local tax for the convention center fund, § 67-4-1908.

7-4-205. Wage rates and benefits for workers.

  1. During the construction of a new publicly owned convention center as provided in this part, any contractor entering into a contract with the metropolitan government for the performance of work on the convention center shall pay all workers performing work under those contracts not less than the mean wage for the applicable occupation under the “construction and extraction occupations” published in the Tennessee Occupational Wages Report, as defined in § 12-4-907. In addition, all such contractors shall provide health insurance coverage for all workers performing work under the contracts.
  2. After the construction of the convention center is completed, all persons employed to perform labor or services at the convention center shall be paid a wage that is not less than the mean wage for the applicable occupation under the “construction and extraction occupations” published in the Tennessee Occupational Wages Report, as defined in § 12-4-907. In addition, health insurance coverage shall be provided to all such employees.

Acts 2007, ch. 422, § 4; 2013, ch. 280, §§ 16, 17.

Compiler's Notes. Acts 2013, ch. 280, § 18 provided that the act, which amended this section, shall apply to contracts entered into or renewed on or after January 1, 2014.

Cross-References. Local tax for the convention center fund, § 67-4-1908.

7-4-206. Minority-owned businesses.

  1. A metropolitan government, in soliciting bids for the construction of a publicly owned convention center in excess of four hundred million dollars ($400,000,000) in costs located within the territory of that metropolitan government, shall actively solicit bids from minority-owned businesses. The metropolitan government shall strive to maximize participation of minority-owned businesses through both prime and second tier business contracting opportunities.
    1. The metropolitan council shall ensure that the funds that are deposited into the convention center fund created pursuant to this part, are expended in a nondiscriminatory manner.
    2. The metropolitan government shall monitor the expenditure of funds from the convention center fund to ensure that all contractors, vendors, suppliers and professional services providers receiving compensation from the fund do not discriminate in hiring, partnering, contracting or subcontracting on the basis of race, religion, ethnic background, or sex.
    3. The metropolitan government shall monitor the results of minority-owned business participation. The metropolitan government shall periodically investigate to ascertain whether minority-owned business participation is being achieved at a level contemplated pursuant to subsection (a) and shall report information to the comptroller of the treasury in the manner prescribed in subdivision (b)(4).
    4. The metropolitan government shall prepare and submit a quarterly report entitled “the convention center compliance report,” which shall be submitted to the comptroller of the treasury no later than twenty (20) business days after the end of any calendar quarter in which funds are expended from the convention center fund. The report shall include:
      1. Data on the race, religion, ethnic background and sex of the workforce of each person that receives funds from the convention center fund;
      2. Data on the actual expenditure of funds to minority-owned businesses from the convention center fund; and
      3. Data summarizing the findings of all periodic investigations conducted in accordance with subdivision (b)(3).
    5. The comptroller of the treasury shall, upon receipt of the report from the metropolitan government, transmit a synopsis of the report to the chairs and membership of the state and local government committee of the senate and the local government committee of the house of representatives.

Acts 2007, ch. 422, § 7; 2013, ch. 236, § 66.

Chapter 5
Metropolitan Governments' Port Authority Act

7-5-101. Short title.

This chapter shall be known and may be cited as the “Metropolitan Governments' Port Authority Act.”

Acts 1979, ch. 95, § 1; T.C.A., § 6-3750.

7-5-102. Declaration of purpose and necessity — Exemption from taxation.

It is hereby declared that a clear need exists in metropolitan areas of Tennessee for improved transportation and navigation for the movement and transportation of people, goods and merchandise, and for the creation of expanded employment opportunities through the promotion of commerce and industry, with minimal pollution, which requires that such metropolitan areas have the option of placing the central operation and financing of such metropolitan port and development agencies within metropolitan instrumentalities, and that such instrumentalities have the authority to acquire from the state, or other owners, real and personal property, and to develop, manage and operate the same for economic and industrial development. It is hereby declared that port authorities created pursuant to this chapter are public and governmental bodies acting as agencies and instrumentalities of the creating and participating municipalities; and that the acquisition, operation, financing and disposal of ports, lands, industrial and other related facilities are hereby declared to be for a public and governmental purpose and a matter of public necessity. The property and revenues of the authority or any interest in the property and revenues shall be exempt from all state, county and municipal taxation.

Acts 1979, ch. 95, § 2; T.C.A., § 6-3751.

7-5-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” means a metropolitan port authority created pursuant to this chapter;
  2. “Board” means the board of commissioners of an authority;
  3. “Bonds” includes notes, interim certificates or other obligations of an authority;
  4. “Contracting party” or “other contracting party” means any party to a sale contract, lease, or loan agreement except the authority;
  5. “Creating municipality” means any city or county having a metropolitan form of government and having a population of not less than one hundred thousand (100,000), that creates an authority pursuant to this chapter;
  6. “Enterprise” means the manufacturing, processing, assembling, and commercial service operations to be carried on with or otherwise using the facilities of a project;
  7. “Executive officer” means the mayor, county mayor, or other chief executive officer of any creating municipality;
  8. “Governing body” means the chief legislative body of any creating municipality;
  9. “Lease” includes a lease containing an option to purchase the project for a nominal sum upon payment in full or provision for the purchase of all bonds issued in connection with the project and all interest on the bonds and all other expenses in connection with the project, and a lease containing an option to purchase the project at any time, as provided in the option, upon payment of the purchase price, which shall be sufficient to pay all bonds issued in connection with the project and all interest on the bonds and all other expenses incurred in connection with the project, but which payment may be made in the form of one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of the lessee providing for time payments, including, without limitation, interest on the notes, debentures, bonds or other secured or unsecured debt obligations sufficient for such purposes and delivered to the corporation or to the trustee under the indenture pursuant to which the bonds were issued;
  10. “Loan agreement” means an agreement providing for an authority to loan the proceeds derived from the issuance of bonds pursuant to this chapter to one (1) or more contracting parties, to be used to pay the costs of one (1) or more projects and providing for the repayment of the loan by the other contracting party or parties, and which may provide for the loans to be secured or evidenced by one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of the contracting party or parties delivered to the authority or to the trustee under the indenture pursuant to which the bonds were issued;
  11. “Metropolitan government” means the political entity created by consolidation of all, or substantially all, of the political and corporate functions of a county and a city or cities;
  12. “Pollution” means the placing of any noxious or deleterious substances, including noise, in any air or water of or adjacent to the state of Tennessee or affecting the physical, chemical or biological properties of any air or waters of or adjacent to the state of Tennessee in a manner and to an extent that renders or is likely to render the air or waters inimical or harmful to the public health, safety or welfare, or to any animal, bird or aquatic life, or to the use of the air or waters for domestic, industrial, agricultural or recreational purposes;
  13. “Pollution control facilities” means any equipment, structure or facility or any land and any building, structure, and facility or other improvement of any kind, or any combination thereof, and all real and personal property deemed necessary therewith having to do with or the end purpose of which is the control, abatement or prevention of water, air, noise or general environmental pollution, including, but not limited to, any air pollution control facility, noise abatement facility, water management facility, wastewater collecting systems, wastewater treatment works, or solid waste disposal facility;
  14. “Port” means a terminal facility with all associated components necessary for the loading and unloading of goods and people involved in inland waterway transport and navigation;
    1. “Project” means all or any part of, or any interest in:
      1. Any land and building, including office building, and facility or other improvement on land, and all real and personal properties deemed necessary in connection therewith, whether or not now in existence, that shall be suitable for the following or by any combination of two (2) or more thereof:
  1. Any industry for the manufacturing, processing or assembling of any agricultural, mining, or manufactured products; any commercial enterprise in selling, providing, or handling any financial service or in storing, warehousing, distributing or selling any products of agriculture, mining, or industry;
  2. Any undertaking involving the use of ship canals, ports or port facilities, off-street parking facilities, docks or dock facilities, or harbor facilities, or of railroads, monorail or tramway, railway terminals, or railway belt lines and switches;
  3. All or any part of any office building or buildings for the use of such tenant or tenants as may be determined or authorized by the board, including, without limitation, any industrial, commercial, financial or service enterprise, any nonprofit domestic corporation or enterprise now or hereafter organized, whose purpose is the promotion, support and encouragement of either agriculture or commerce in this state or whose purpose is the promoting of the health, welfare and safety of the citizens of the state;
  4. Any office or other public building for any metropolitan government having a population of not less than one hundred thousand (100,000), or any board of public utilities, or any public authority, agency or instrumentality of the state of Tennessee or of the United States;
  5. Any buildings, structures and facilities, including the site thereof, machinery, equipment and furnishings, suitable for use by any metropolitan government having a population of not less than one hundred thousand (100,000) as health care or related facilities, including, without limitation, hospitals, clinics, nursing homes, research facilities, extended or long-term care facilities, and all buildings, structures and facilities deemed necessary or useful in connection therewith;
  6. Any nonprofit educational institution in any manner related to or in furtherance of the educational purposes of such institution, including, but not limited to, classroom, laboratory, housing, administrative, physical education, and medical research and treatment facilities;
  7. Any planetarium or museum; and
  8. Any facilities for any recreation or amusement park, public park or theme park suitable for use by any private corporation or any governmental unit of the state of Tennessee, including the state of Tennessee;

    Impl. am. Acts 1978, ch. 934, §§ 16, 36; Acts 1979, ch. 95, § 3; T.C.A., § 6-3752; Acts 2003, ch. 90, § 2.

    Compiler's Notes. For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Not included are facilities designed for the sale or distribution to the public of electricity, gas, water or telephone or other services commonly classified as public utilities, except such as are specifically included in this subdivision (15)(A); and

Any pollution control facilities that are suitable for use by any of the facilities listed in subdivision (15)(A)(i) or by any public utility whether publicly or privately owned, board of public utilities, public authority, or agency or instrumentality of the state of Tennessee or the United States, or by any combination of two (2) or more;

The board shall find with respect to any office building financed under this chapter that the acquisition and leasing or sale of such building, or the financing of the acquisition and leasing or sale by loan agreement, as the case may be, will develop trade and commerce in and adjacent to the municipality, will contribute to the general welfare and will alleviate conditions of unemployment, and such finding by the board shall be conclusive;

“Revenues” of a project, or derived from a project, include payments under a lease or sale contract and repayments under a loan agreement, or under notes, debentures, bonds and other secured or unsecured debt obligations of a lessee or contracting party delivered as provided in this chapter;

“Sale contract” means a contract providing for the sale of one (1) or more projects to one (1) or more contracting parties and includes a contract providing for payment of the purchase price in one (1) or more installments. If the sale contract permits title to the project to pass to the other contracting party or parties prior to payment in full of the entire purchase price, the sale contract shall also provide for the other contracting party or parties to deliver to the authority or to the trustee under the indenture pursuant to which the bonds were issued one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of such contracting party or parties providing for timely payments, including, without limitation, interest on the notes, debentures, bonds or other secured or unsecured debt obligations for the balance of the purchase price at or prior to the passage of such title; and

“State” means the state of Tennessee.

Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to ”county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

7-5-104. Creation of metropolitan port authority.

  1. Any metropolitan government having a population of not less than one hundred thousand (100,000) may create a metropolitan port authority in the manner provided in this chapter.
  2. The governing body of the creating municipality, if it shall determine the public convenience and necessity requires the creation of a metropolitan port authority, shall adopt, and the executive officer of the creating municipality shall approve, a resolution so declaring and creating an authority, which resolution shall designate the name and principal office address of the authority. A certified copy of the resolution shall be filed with the secretary of state and with the commissioner of transportation, and upon adoption and filing, the authority shall constitute a body politic and corporate, with all the powers provided in this chapter. A copy of the resolution shall also be filed with the department of community and economic development, or its functional successor.

Acts 1979, ch. 95, § 4; T.C.A., § 6-3753.

Cross-References. Creation without charter amendment, § 7-5-113.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-5-105. Board of commissioners.

  1. The governing power of the authority shall be vested in a board of commissioners of nine (9) persons, each of whom shall have no financial interest in the authority or its concessions, appointed by the executive officer of the creating municipality and confirmed by resolution of its governing body. All commissioners shall be of excellent character and reputation and any commissioners appointed from the fields of finance, industry or commerce, and real estate shall be eminently qualified in their fields of endeavor and shall possess all necessary licenses enabling them to practice their professions in Tennessee.
  2. Terms of office for the commissioners shall be as follows: the term of the first two (2) commissioners confirmed shall be one (1) year, for the second two (2) commissioners confirmed, two (2) years and for the last five (5) commissioners confirmed, three (3) years. The succeeding commissioners shall be appointed for a term of three (3) years. In the event of a failure to appoint or confirm a successor to any member of the board, the commissioner whose term has expired shall continue to serve until such commissioner's successor has been duly confirmed as provided in this section, but in no event for longer than one (1) year after such commissioner's term has expired. In the event of a vacancy on the board by reason of nonresidence, incapacity, resignation or death, a successor shall be appointed and confirmed as provided in this section, and within one (1) year after the vacancy occurs. A commissioner may be removed from office by a two-thirds (2/3) vote of the governing body of the creating municipality, but only after notice of the cause of such removal has been served upon the commissioner, and only after the commissioner has been granted an opportunity for a public hearing in such cause.
  3. Before entering upon their duties, all commissioners shall take and subscribe to an oath of office as provided by the Constitution of Tennessee and by law for municipal officers. Copies of the oath of each commissioner shall be filed with the clerk of the creating municipality.
  4. Any person of at least twenty-one (21) years of age and who has resided within the creating municipality for a period of at least one (1) year immediately preceding such person's confirmation by the governing body shall be eligible to serve as a member of the board. Any commissioner who ceases to reside within the creating municipality shall automatically be ineligible to serve in the office as of the date such commissioner ceases to reside within the municipality. Such cessation of residence within the creating municipality shall constitute a resignation from the board.
  5. The board shall elect from among its members a chair, vice chair and any other such officers it may in its bylaws determine are necessary. A majority of the commissioners shall constitute a quorum for the transaction of business. The board shall hold regular meetings at least once every three (3) months, and at such regular time and place as the commissioners may determine by resolution or bylaw; additional or special meetings may be held as determined by the board.
  6. Commissioners shall receive no salary, but shall be reimbursed for necessary expenses incurred in the performance of their official duties by the authority or by appropriation of the governing body.
  7. Except as expressly otherwise specified in this chapter, all power granted in this chapter to an authority shall be exercised by the board.

Acts 1979, ch. 95, § 5; T.C.A., § 6-3754; Acts 1984, ch. 556, § 1.

7-5-106. Officers and other employees.

The board shall appoint a port authority manager who shall be the chief executive and administrative officer of the authority, and shall enter into a contract with the manager establishing such port authority manager's salary and term of office. The manager shall appoint, subject to the approval of the board, all other officers and other employees subject to any civil service plan adopted by the board. The port authority manager shall prepare an annual operating budget of the authority and submit the budget to the board for approval at least sixty (60) days prior to the beginning of the fiscal year. If the budget shall not have been acted upon by the board on the first day of the fiscal year, it shall then automatically go into effect. The manager shall also submit periodic reports to the board as the board may direct. The manager shall attend all meetings of the board.

Acts 1979, ch. 95, § 6; T.C.A., § 6-3755.

7-5-107. General powers.

An authority has all powers necessary to accomplish the purposes of this chapter, excluding the power to levy and collect taxes and special assessments, including but not limited to, the power to:

  1. Have perpetual succession, sue and be sued, and adopt a corporate seal;
  2. Acquire, construct, purchase, operate, maintain, replace, repair, rebuild, extend, and improve within the boundaries of the creating municipality and in contiguous counties so long as the governing bodies of such counties grant their concurrence and agreement, ports and any and all other related facilities, equipment, projects and appurtenances necessary or convenient for the promotion of industrial development, commerce and recreation and for the improvement of the access to all channels of commerce, and make the facilities available to any firm, person, public or private corporation, to any other shipper, consignee, or carrier, and charge for their use and for any and all services performed by the authority; provided, that nothing in this chapter shall give the authority the power or the duty to construct, purchase, operate, maintain, replace, repair, rebuild, extend and improve any public-use freight port or terminal; and provided, further, that such powers granted by this subdivision (2) shall only be exercised over lands acquired by the authority pursuant to the powers granted in this chapter;
  3. Issue and sell bonds payable solely out of the revenue and receipts derived from the authority's projects or of any thereof as may be designated in the proceedings of the authority commissioners under which the bonds shall be authorized to be issued, including debt obligations of the lessee, devisee, or contracting party obtained from or in connection with the financing of a project;
  4. Borrow money from banks and other financial institutions by issuing its notes for the purpose of carrying out any of its powers;
  5. As security for the payment of the principal of and interest on any bonds or notes so issued and any agreements made in connection with the bonds or notes, mortgage and pledge any or all of its projects, or any part or parts of its projects, whether then owned or thereafter acquired, and pledge the revenues and receipts from its projects, or from any thereof, or assign and pledge all or any part of its interest in and rights under the leases, sale contracts or loan agreements relating to its projects or to any thereof;
  6. Apply to the proper authorities of the United States, pursuant to appropriate law, for the right to establish, operate, and maintain foreign-trade zones within the limits of the port authority and establish, operate, and maintain the foreign-trade zones;
  7. Authorize the application for and establishment, operation and maintenance of foreign-trade subzones outside the limits of the port authority through the authority's foreign-trade zone upon the request of any party and the approval of a majority of the legislative body in the county or municipality in which the requesting party is located;
  8. Accept donations to the authority of cash, lands or other property to be used in the furtherance of the purposes of this chapter;
  9. Accept grants, loans, or other financial assistance from any federal, state, county, or municipal agency, or in aid of the acquisition or improvement of the administration and operation of any of the facilities provided for in this chapter;
  10. Purchase, rent, lease or otherwise acquire and dispose of any and all kinds of property, real, personal or mixed, tangible or intangible, and whether or not subject to mortgages, liens, charges, or other encumbrances, that in the judgment of the commissioners, is necessary or convenient to carry out the powers granted in this section. The authority granted in this section to acquire property shall include, but not be limited to, the acquisition of lands in the vicinity of the port and terminal facilities provided for in this section, and to give priority for the use of such lands to projects requiring access to inland waterways in their operations;
  11. Make contracts and execute instruments containing such covenants, terms and conditions, as in the judgment of the commissioners, may be necessary, proper or advisable for the purpose of obtaining grants, loans, or other financial assistance from any federal or state agency, for or in aid of the acquisition or improvement of the facilities provided for in this chapter; make all other contracts and execute all other instruments including, without limitation, licenses, long-term or short-term leases, deeds, mortgages and deeds of trust, and other agreements relating to property and facilities under its jurisdiction, and the construction, operation, maintenance, repair, and improvement thereof, as in the judgment of the board, may be necessary, proper, or advisable for the furtherance of the purposes of this chapter, and the full exercise of the powers granted in this section; and carry out and perform the covenants, terms, and conditions of all such contracts or instruments;
  12. Enter upon any lands, waters, and premises for the purpose of making surveys, soundings, and examination in connection with the acquisition, improvement, operation, or maintenance of any of the facilities provided for in this chapter;
  13. Promulgate and enforce such rules and regulations as the board may deem proper for the orderly administration of the authority and the efficient operation of its facilities;
  14. Use in the performance of its functions the officers, agents, employees, services, facilities, records and equipment of the creating municipality, with the consent of any such municipality and subject to such terms and conditions as may be agreed upon; and
  15. Do all acts and things necessary, or deemed necessary or convenient, to carry out the powers expressly given in this chapter. None of the powers created in this section may be exercised either directly or indirectly by the municipality to provide real estate that had been condemned by eminent domain subsequent to March 29, 1979, while such real estate was in use as residential dwellings, it being the intent of this chapter that none of the power or authority created in this chapter and vested in either the creating municipality or the authority to be created shall be exercised in such a way that real estate utilized in creating or carrying out the purposes or functions of the authority provided in § 7-5-104 shall have been condemned or acquired by eminent domain after March 29, 1979, while it was in use as residential dwellings.

Acts 1979, ch. 95, § 7; T.C.A., § 6-3756; Acts 1981, ch. 295, § 1.

Cross-References. Foreign trade zones, title 7, ch. 85.

7-5-108. Real property interests.

Any creating municipality, upon the written recommendation of the board, may acquire any interest in land within the boundaries of the creating municipality by gift, purchase, lease, or condemnation and may transfer such interest to an authority by sale, lease or gift. Such transfer may be authorized by ordinance of the governing body of the creating municipality without submission of the question to the voters and without regard to the requirements, restrictions, or other provisions contained in any other general, special, or local law, with the exception of title 29, chapters 16 and 17, or as the same may be hereafter enacted. None of the foregoing interest in land transferred to an authority by any creating municipality shall have been acquired by eminent domain after March 29, 1979, while the land was in use as residential dwellings.

Acts 1979, ch. 95, § 8; T.C.A., § 6-3757.

7-5-109. Bonds.

  1. The authority has the power to issue negotiable bonds from time to time in order to accomplish any of the purposes authorized by this chapter, and it also has the power to issue refunding bonds for the purposes, and in the amounts and manner provided in title 9, chapter 21. All the bonds shall be payable solely from all or any part of the revenues, income and charges of the authority and the bonds shall not constitute an obligation of the creating municipality, and the bonds shall so state.
  2. The bonds shall be authorized by resolution of the board and shall bear such date, mature at such time or times, bear interest at such rate or rates payable annually or semiannually, be in such form and denominations, be subject to such terms of redemption with or without premium, carry such registration privileges, be payable in such medium and at such place or places, be executed in such manner, all as may be provided in the resolution authorizing the bonds. The bonds may be sold at public or private sale in such manner and for such amount as the board may determine.
  3. The resolution may include any covenants with the bondholders deemed necessary by the board to make the bonds secure and marketable, including, but not limited to, covenants regarding the application of the bond proceeds; the pledging, application and securing of the revenues of the authority; the creation and maintenance of reserves; the investment of funds; the issuance of additional bonds; the maintenance of minimum fees, charges and rental; the operation and maintenance of its port authority; insurance and insurance proceeds; accounts and audits; the sale of port authority properties; remedies of bondholders; the vesting in a trustee or trustees such powers and rights as may be necessary to secure the bonds and the revenues and funds from which they are payable; the terms and conditions upon which bondholders may exercise their rights and remedies; the replacement of lost, destroyed or mutilated bonds; the definition, consequences and remedies of an event of default; the amendment of such resolution; and the appointment of a receiver in the event of a default.
  4. Any holder of any such bonds, including any trustee for any bondholders, may enforce their rights against the authority, its board or any officer, agent or employee thereof by mandamus, injunction or other action in any court of competent jurisdiction, subject to the covenants included in the bond resolution.
  5. All sums received as accrued interest from the sale of any bonds shall be applied to the payment of interest on the bonds. All sums received as principal or premium from the sale shall be applied to the purpose for which the bonds were issued, and may include, but not limited to, expenses for fiscal, legal, engineering and architectural services, expenses for the authorization, sale and issuance of the bonds, expenses for obtaining an economic feasibility survey in connection with the bonds, and to create a reserve for the payment of not exceeding one (1) year's interest on the bonds.
  6. Bonds issued pursuant to this chapter executed by officers in office on the date of such execution shall be valid obligations of the authority, notwithstanding that before the delivery of the bonds any or all of the persons executing the bonds shall have ceased to be officers.
  7. Bonds issued pursuant to this chapter, and the income from the bonds, shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes.
  8. All public officers and bodies of the state, municipal corporations, political subdivisions, all insurance companies and associations, all savings banks and savings institutions, including savings and loan associations, all executors, administrators, guardians, trustees, and all other fiduciaries in the state may legally invest funds within their control in bonds of an authority.

Acts 1979, ch. 95, § 9; T.C.A., § 6-3758; Acts 1988, ch. 750, § 12.

Cross-References. State and local taxation, title 67.

7-5-110. Employees.

Employees other than independent contractors of the authority shall be considered employees of the creating municipality, and shall enjoy all rights and responsibilities as do other employees of the creating municipality, and shall be considered in classified or unclassified service as are all other employees of the creating municipality.

Acts 1979, ch. 95, § 10; T.C.A., § 6-3759.

7-5-111. Powers of creating municipalities.

Any creating municipality has all of the necessary powers in order to further the purposes of this chapter, including, without limitation, the following, any or all of which powers may be exercised by resolution of its governing body:

  1. Advance, donate or lend money, raised from any source and by any means, or real or personal property to the authority;
  2. Provide that any funds on hand or to become available to it for port purposes shall be paid directly to the authority;
  3. Cause water, sewer, gas, electric or other utility services to be provided to the authority;
  4. Open and improve streets, roads and alleys to the port;
  5. Provide police and fire protection services to the port; and
  6. Pledge the full faith and credit and unlimited taxing power of the municipality as surety for the payment of the authority's bonds in accordance with the procedure for industrial development corporations as set out in §§ 7-53-306 and 7-53-307. None of the foregoing powers may be exercised either directly or indirectly by the municipality to provide real estate that had been condemned by eminent domain subsequent to March 29, 1979, while such real estate was in use as residential dwellings, it being the intent of this chapter that none of the power or authority created in this chapter and vested in either the creating municipality or the authority to be created shall be exercised in such a way that real estate utilized in creating or carrying out the purposes or functions of the authority provided in § 7-5-104 shall have been condemned or acquired by eminent domain after March 29, 1979, while it was in use as residential dwellings.

Acts 1979, ch. 95, § 11; T.C.A., § 6-3760.

7-5-112. Dissolution — Disposition of property.

Whenever the governing body of the creating municipality by resolution determines that the purposes for which the authority was created have been substantially accomplished, that all of the bonds and other obligations of the authority have been fully paid, then the executive officer of the creating municipality shall execute and file for record with the secretary of state a certificate of dissolution reciting such facts and declaring the authority to be dissolved. Upon such filing, the authority shall be dissolved, and title to all funds and other properties of the authority at the time of the dissolution shall vest in and be delivered to the creating municipality.

Acts 1979, ch. 95, § 12; T.C.A., § 6-3761.

7-5-113. Supplemental nature of chapter.

  1. The powers conferred by this chapter shall be in addition and supplemental to the powers conferred by any other law, and are not in substitution for such powers, and the limitations imposed by this chapter shall not affect such powers.
  2. The powers granted in this chapter may be exercised without regard to requirements, restrictions or procedural provisions contained in any other law or charter, except as expressly provided in this chapter.
  3. Any metropolitan government authorized under this chapter to create a metropolitan port authority may do so without the necessity of a charter amendment, notwithstanding anything in its charter to the contrary.

Acts 1979, ch. 95, § 13; T.C.A., § 6-3762.

Chapter 6
Metropolitan Celebration Authority Act

7-6-101. Short title.

This chapter shall be known and may be cited as the “Metropolitan Celebration Authority Act.”

Acts 1979, ch. 389, § 1; T.C.A., § 6-3764.

7-6-102. Legislative declaration and purpose — Exemption from taxation.

  1. It is hereby declared that metropolitan celebration authorities created pursuant to this chapter shall be public and governmental bodies acting as agencies and instrumentalities of the creating municipality, and that the acquisition, construction, operation and financing of improvements by such authorities are hereby declared to be a public and governmental purpose and a matter of public necessity.
  2. The property and revenues of the authority or any interests in property and revenues shall be exempt from all state, county and municipal taxation.
  3. The authorities shall be created for the purpose of implementing projects to commemorate and celebrate the bicentennial anniversary of the principal city of any county adopting a metropolitan form of government.

Acts 1979, ch. 389, § 2; T.C.A., § 6-3765.

7-6-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” means a metropolitan celebration authority created pursuant to the authority of this chapter;
  2. “Board” means the board of commissioners of an authority;
  3. “Bonds” includes notes, interim certificates or other obligations of an authority;
  4. “Creating municipality” means any county having adopted a metropolitan form of government that creates an authority pursuant to this chapter;
  5. “Executive officer” means the mayor, county mayor or other chief executive officer of any creating municipality; and
  6. “State” means the state of Tennessee.

Acts 1979, ch. 389, § 3; T.C.A., § 6-3766; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

7-6-104. Creation of a metropolitan celebration authority.

  1. Any county having a metropolitan form of government may create a metropolitan celebration authority in the manner provided in this section.
  2. The governing body of the creating municipality shall adopt, and its executive officer shall approve, a resolution calling for a public hearing on the question of creating a metropolitan celebration authority. Notice of the date, hour, place and purpose of the hearing shall be published at least once each week for two (2) consecutive weeks in a newspaper of general circulation in the creating municipality, the last publication to be at least one (1) week prior to the date set for the hearing.
  3. The hearing shall be had before the governing body and all interested persons shall have an opportunity to be heard.
  4. After the hearing, if the governing body determines that the public convenience and necessity require the creation of an authority, it shall adopt, and its executive officer shall approve, a resolution so declaring and creating an authority, which resolution shall designate the name and principal office address of the authority. A certified copy of the resolution shall be filed with the secretary of state and with the Tennessee historical commission, along with the resolution approving the appointment of the board as provided for in § 7-6-105, and, upon the adoption and filing, the authority shall constitute a body politic and corporate, with all the powers provided in this chapter.

Acts 1979, ch. 389, § 4; T.C.A., § 6-3767.

7-6-105. Board of commissioners.

    1. The authority shall be governed by a board of commissioners composed of eleven (11) members. Three (3) members shall be officers of the state, who shall be appointed by the executive officer of the creating municipality after consultation with the governor, the speaker of the senate and the speaker of the house of representatives. The executive officer of the creating municipality or the executive officer's designee shall be a member. Seven (7) members shall be appointed by the executive officer of the creating municipality subject to confirmation by the governing body of the municipality. The executive officer or the executive officer's designee shall serve during the term of the executive officer. The three (3) members who shall be officers of the state shall serve while holding their respective offices. The seven (7) members appointed by the executive officer subject to confirmation by the governing body shall serve for terms of one (1), two (2), three (3), four (4), five (5), six (6) and seven (7) years, respectively.
    2. Nothwithstanding subdivision (a)(1), any member may be removed at the pleasure of the executive officer.
  1. The board shall elect from its members a chair and vice chair, each of whom shall be voting members, and shall adopt bylaws and rules of procedure.
  2. A majority of the commissioners shall constitute a quorum for the transaction of business.
  3. Except as expressly otherwise specified, all powers granted in this chapter to the authority shall be exercised by the board.
  4. Commissioners shall receive no salary, but shall be reimbursed for necessary expenses incurred in the performance of their official duties.

Acts 1979, ch. 389, § 5; T.C.A., § 6-3768.

7-6-106. Officers and employees.

  1. The board shall appoint an executive director who shall be the chief executive and administrative officer of the authority, and shall enter into a contract with the executive director establishing the executive director's salary and term of office.
  2. The executive director shall appoint, subject to confirmation by the board, the following additional officers: a secretary, an auditor, a legal counsel and a treasurer.
  3. All other officers and employees of the authority shall be appointed by the executive director.
  4. The executive director shall attend all meetings of the board.

Acts 1979, ch. 389, § 6; T.C.A., § 6-3769.

7-6-107. General powers.

An authority has all of the powers necessary to accomplish the purposes of this chapter, excluding the exercise of the power of eminent domain and the power to levy and collect taxes and special assessments, including, but not limited to, the power to:

  1. Have perpetual succession, sue and be sued, and adopt a corporate seal;
  2. Acquire real or personal property or any interest in real or personal property by gift, lease, or purchase, for any of the purposes provided in this chapter and sell, lease or otherwise dispose of any such property;
  3. Enter into contracts and agreements with any person or entity for any of the purposes provided for in this chapter; and
  4. Make application directly to the proper federal, state, county and municipal officials and agencies, or to any other source, public or private, for loans, grants, guarantees or other financial assistance in aid of the purposes provided for in this chapter.

Acts 1979, ch. 389, § 7; T.C.A., § 6-3770.

7-6-108. Bonds.

  1. The authority has the power to issue negotiable bonds from time to time in order to accomplish any of the purposes authorized by this chapter, and it also has the power to issue refunding bonds for the purposes, and in the amounts and manner provided in title 9, chapter 21. All the bonds shall be payable solely from all or any part of the revenues, income and charges of the authority and the bonds shall not constitute an obligation of the creating municipality, and the bonds shall so state.
  2. The bonds shall be authorized by resolution of the board and shall bear such date, mature at such time or times, bear interest at such rate or rates, payable annually or semiannually, be in such form and denominations, be subject to such terms of redemption with or without premium, carry such registration privileges, be payable in such medium and at such place or places, be executed in such manner, all as may be provided in the resolution authorizing the bonds. The bonds may be sold at public or private sale in such manner and for such amount as the board may determine.
  3. The resolution may include any covenants with the bondholders deemed necessary by the board to make the bonds secure and marketable, including, but not limited to, covenants regarding the application of the bond proceeds; the pledging, application and securing of the revenues of the authority; the creation and maintenance of reserves; the investment of funds; the issuance of additional bonds; remedies of bondholders; the vesting in a trustee or trustees such powers and rights as may be necessary to secure the bonds and the revenues and funds from which they are payable; the terms and conditions upon which the bondholders may exercise their rights and remedies; the replacement of lost, destroyed or mutilated bonds; the definition, consequences and remedies of an event of default; the amendment of such resolution; and the appointment of a receiver in the event of default.
  4. Any holder of any such bonds, including any trustee for any bondholders, may enforce their rights against the authority, its board or any officer, agent or employee thereof by mandamus, injunction or other action in any court of competent jurisdiction, subject to the covenants included in the bond resolution.
  5. All sums received as accrued interest from the sale of any bonds shall be applied to the payment of interest on such bonds. All sums received as principal or premium from the sale shall be applied to the purpose for which the bonds were issued, and may include, but not limited to, expenses for fiscal, legal, engineering and architectural services, expenses for the authorization, sale and issuance of the bonds, expenses for obtaining an economic feasibility survey in connection with the bonds, and to create a reserve for the payment of not exceeding one (1) year's interest on the bonds.
  6. Bonds issued pursuant to this chapter executed by officers in office on the date of the execution shall be valid obligations of the authority, notwithstanding that before the delivery of the bonds any and all of the persons executing bonds shall have ceased to be such officers.
  7. Bonds issued pursuant to this chapter, and the income from the bonds, shall be exempt from all state, county and municipal taxation except inheritance, transfer and estate taxes.
  8. All public officers and bodies of the state, municipal corporations, political subdivisions, all insurance companies and associations, all savings banks and savings institutions, including savings and loan associations, all executors, administrators, guardians, trustees, and all other fiduciaries in the state may legally invest funds within their control in bonds of the authority.

Acts 1979, ch. 389, § 8; T.C.A., § 6-3771; Acts 1988, ch. 750, § 13.

7-6-109. Certain powers of creating municipality.

  1. The creating municipality has all of the necessary power in order to further the purposes of this chapter, including, without limitation, any and all of which powers may be exercised by resolution of its governing body, the power to:
    1. Advance, donate or lend money or real or personal property to the authority;
    2. Provide that any funds on hand or to become available to it for celebration purposes shall be paid directly to the authority;
    3. Cause water, sewer, gas, electric or other utility services to be provided to the authority;
    4. Sell, lease, dedicate, donate or otherwise convey to the authority any of its interest in real or personal property, or grant easements, licenses or other rights or privileges therein to the authority; and
    5. Open and improve streets, roads and alleys at the request of the authority.
  2. None of the foregoing powers may be exercised either directly or indirectly by the municipality to provide real estate that had been condemned by eminent domain subsequent to May 30, 1979, while such real estate was in use as residential dwellings, it being the intent of this chapter that none of the power or authority created in this chapter and vested in either the creating municipality or the celebration authority to be created shall be exercised in such a way that real estate utilized in creating or carrying out the purposes or functions of the metropolitan celebration authority provided in § 7-6-104 shall have been condemned or acquired by eminent domain after May 30, 1979, while it was in use as residential dwellings.

Acts 1979, ch. 389, § 9; T.C.A., § 6-3772.

7-6-110. Dissolution — Disposition of property.

Whenever the governing body of a creating municipality shall by resolution determine that the purposes for which the authority was created have been substantially accomplished and that all the bonds and other obligations of the authority have been fully paid or secured and payment provided for, then the executive officer of the creating municipality shall execute and file for record with the secretary of state and the Tennessee historical commission a certificate of dissolution reciting such facts and declaring the authority to be dissolved. Upon filing, the authority shall be dissolved, and title to all funds and other properties of the authority, real, personal and mixed, at the time of the dissolution shall vest in and be delivered to such creating municipality.

Acts 1979, ch. 389, § 10; T.C.A., § 6-3773.

7-6-111. Supplemental nature of chapter.

  1. The powers conferred by this chapter are in addition and supplemental to the powers conferred by any other law, and are not in substitution for such powers, and the limitations imposed by this chapter shall not affect such powers.
  2. The powers granted in this chapter may be exercised without regard to requirements, restrictions or procedural provisions contained in any other law or charter, except as expressly provided for in this chapter.
  3. Any county having adopted a metropolitan form of government may create a metropolitan celebration authority as provided in this chapter without the necessity of a charter amendment, notwithstanding anything in its charter to the contrary.

Acts 1979, ch. 389, § 11; T.C.A., § 6-3774.

7-6-112. Construction — Chapter controlling.

This chapter shall be liberally construed to effect the purposes of this chapter, and insofar as this chapter may be inconsistent with any other law, this chapter shall be controlling.

Acts 1979, ch. 389, § 13; T.C.A., § 6-3775.

Chapter 7
Metropolitan Hearing Officer Act of 1983

7-7-101. Short title.

This chapter shall be known and may be cited as the “Metropolitan Hearing Officer Act of 1983.”

Acts 1983, ch. 346, § 1.

7-7-102. Appointment — Salary and benefits.

  1. The chief legislative body of any county having a metropolitan form of government is empowered to authorize the chief executive officer of the county to appoint a metropolitan hearing officer who shall serve at the pleasure of the chief executive officer.
  2. The metropolitan hearing officer shall receive such salary and other benefits as may be provided by the chief legislative body.

Acts 1983, ch. 346, § 2.

7-7-103. Qualifications.

The qualifications of a metropolitan hearing officer are as follows:

  1. A resident of the county, having been a resident for at least three (3) years immediately prior to appointment; and
  2. An attorney in good standing and licensed to practice law in the state of Tennessee for at least three (3) years immediately prior to appointment.

Acts 1983, ch. 346, § 3.

7-7-104. Powers and duties.

The powers, duties, obligations and responsibilities of a metropolitan hearing officer are to:

  1. Promptly hold a hearing on all matters appealed to appellate boards of the county;
  2. Issue subpoenas as requested by either party in such matters;
  3. Prepare a complete record of each hearing;
  4. Make written recommendations following each hearing; and
  5. Furnish each member of the appropriate appellate boards with a copy of the documents required in subdivisions (3) and (4) for their review.

Acts 1983, ch. 346, § 4.

7-7-105. Hearings by administrative law judges in certain counties.

  1. In lieu of appointing a hearing officer as authorized in this chapter, any county having a metropolitan form of government and a population of over four hundred fifty thousand (450,000), according to the 1990 census or any subsequent federal census, is empowered to contract with the secretary of state for use of administrative law judges, duly appointed pursuant to § 4-5-102(1), on a case-by-case basis to conduct hearings on any matters appealed to boards and commissions of the county.
  2. Any appeal conducted by an administrative law judge under this section shall be conducted substantially in accordance with the contested case provisions of the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, part 3. The board or commission that considers such appeals shall promulgate rules that specify the provisions of the Uniform Administrative Procedures Act applicable to such appeals.

Acts 1994, ch. 678, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Chapter 8
Metropolitan Government—Housing Trust Fund

7-8-101. Authorized.

  1. Any county having a metropolitan form of government may establish a housing trust fund for the purposes set out in this chapter, to be administered by the housing development agency of such county (herein referred to as “agency”) in accordance with this chapter. The cost of administering this fund shall be borne by the agency out of its administrative budget.
  2. The funds provided for by this chapter shall be used to provide low income persons with safe and affordable housing. Funds shall be loaned, or grants made available, from the housing trust fund for programs to include, but not be limited to, the following: bi-weekly mortgages; rehabilitation loans for substantial rehabilitation of existing residential real property; weatherization for existing single family residences, which shall be mandatory after the qualified individual has received assistance three (3) times from a low income energy program in the county; land acquisition in redevelopment areas; interest buy-down to enable a qualified individual to purchase a residence; and homeless shelters.

Acts 1987, ch. 411, § 1.

7-8-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Housing trust fund” means appropriations, reserves or dedications of any funds by the county;
  2. “Low income persons” means qualified persons or families who lack the amount of income that is necessary, as determined by the agency, to enable them, without low interest financial assistance, to live in decent, safe and affordable dwellings without overcrowding; and
  3. “Substantial rehabilitation” means improvements made to residential real property that exceed thirty-five percent (35%) of the proposed market value of the structure after rehabilitation.

Acts 1987, ch. 411, § 2.

7-8-103. Disposition of funds.

Any loans or grants to applicants by the county, including interest earned on investment of repayments of the loans, shall be used to benefit low income individuals or families residing within the county. All funds received for the purposes provided for in this chapter and all such interest repayments shall be added to the housing trust fund and deposited in an accredited financial institution located within the county to be designated by the county. The funds shall be deposited in a separate account earmarked to be used solely for programs established through and included in the housing trust fund pursuant to this chapter.

Acts 1987, ch. 411, § 3.

7-8-104. Design of program — Rules and regulations.

The agency shall design and tailor the program according to its needs and requirements and shall promulgate necessary rules and regulations to implement the effect and intent of this chapter.

Acts 1987, ch. 411, § 4.

7-8-105. Escrow account — Loan fund endowment — Contributions.

  1. Any county having a metropolitan form of government may create a special escrow account earmarked for the sole purpose of generating revenue to provide low income persons, as defined in § 7-8-102, with safe and affordable housing.
  2. Notwithstanding any other law to the contrary, the escrow account shall consist of amounts deposited voluntarily, including, but not limited to, funds that are held in escrow and represent earnest money in real estate transactions, mortgage reserve account deposits, and tenant security deposits.
  3. Any such county may establish a loan fund endowment in connection with the housing trust fund program, and may charge up to five dollars ($5.00) per month for the term of the loan as a participation fee in lieu of interest on loans made to qualified individuals. All proceeds from a loan fund endowment shall be used to support the housing trust fund and may be used as required under this chapter.
  4. The county may make “in-kind” contributions. Such in-kind contributions may include, but not be limited to, land, personnel costs, program support costs, such as accounting, audit, purchasing services, and other costs as established by a cost allocation plan that directly supports program operations.

Acts 1987, ch. 411, § 5.

7-8-106. Use of homebuyers' revolving loan fund pool funds.

The county may utilize any funds authorized by title 13, chapter 23, part 3, as provided by § 13-23-303(b) for any and all authorized purposes in the housing trust fund.

Acts 1987, ch. 411, § 6.

Chapters 9-20
[Reserved]

Chapter 21
Charter Government Unification Act

Part 1
General Provisions

7-21-101. Short title.

This chapter shall be known and may be cited as the “Charter Government Unification Act.”

Acts 1991, ch. 497, § 101.

Attorney General Opinions. Charter county or unified government may not impose civil service requirements on county school system teachers or employees, OAG 96-104, 1996 Tenn. AG LEXIS 114 (8/14/96).

Unified government with general and urban services districts, OAG 97-041, 1997 Tenn. AG LEXIS 40 (4/7/97).

Voting under the Charter Government Unification Act, OAG 97-096, 1997 Tenn. AG LEXIS 107 (7/1/97).

Adoption of metropolitan government, OAG 06-100 (6/12/06), 2006 Tenn. AG LEXIS 109.

Voting under Charter Government Unification Act and Metropolitan Government Act.  OAG 10-51, 2010 Tenn. AG LEXIS 51 (4/15/10).

7-21-102. Applicability.

This chapter shall apply to the consolidation and unification of the governmental and corporate functions of a county whose voters have adopted county charter government pursuant to article VII, § 1 of the Constitution of Tennessee, with one (1) or more of the municipalities within that county's boundaries.

Acts 1991, ch. 497, § 102.

7-21-103. Liberal construction — No effect on Metropolitan Government Act.

  1. It is hereby declared that this chapter is remedial and shall be liberally construed to achieve the purposes stated in this chapter by utilization of the constitutional power granted by the Constitution of Tennessee, Article XI, § 9 with respect to the consolidation of the governmental and corporate functions of a county charter government with one (1) or more of the municipalities within that county's boundaries.
  2. This chapter shall not be, or be construed as, an amendment to, or as a part of, the Metropolitan Government Act, compiled in chapters 1-8 of this title, but shall be an alternative method to consolidate the governmental and corporate functions of a county government whose charter vests in the county full and complete municipal powers exercisable by home rule, as provided in the Constitution of Tennessee, Article VII, § 1, with one (1) or more municipalities within that county's boundaries, as provided in the Constitution of Tennessee, Article XI, § 9.

Acts 1991, ch. 497, § 103.

7-21-104. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Charter” means a document containing a unified government structure, pursuant to this chapter, that constitutes the fundamental law of the unified government;
  2. “Charter commission” means a commission established to propose the charter to the voters for adoption as provided in this chapter;
  3. “Chief executive officer of the county” means the officer vested by either the county charter or general law with the executive powers of the county government;
  4. “City legislative body” means the city council, board of mayor and aldermen or other body possessing the legislative power and authority of the government of a municipality;
  5. “County” means any county whose voters have adopted a county charter government;
  6. “County legislative body” means that body vested by either the county charter or general law with the legislative powers of the county government;
  7. “Mayor” means such officer vested by either the city charter or general law with the executive powers of a municipality;
  8. “Municipality” means an incorporated city or town located within the boundaries of a county whose voters have adopted a county charter government;
  9. “Participating governmental unit” means a county whose voters have adopted a county charter government or a municipality located within that county's boundaries that has elected to participate in the preparation of a charter pursuant to this chapter;
  10. “Principal city” means that municipality having the largest population of any municipality in a particular county;
  11. “Smaller city” means any municipality within a county other than the principal city;
  12. “Unification” or “unified” means consolidation or consolidated pursuant to this chapter and that power granted by the Constitution of Tennessee, Article XI, § 9 to consolidate any or all of the governmental and corporate functions now, or hereafter, vested in a county government with one (1) or more municipalities located within that county's boundaries;
  13. “Unified government” means the governmental entity created by the unification of the governmental and corporate functions of a charter county government with the governmental and corporate functions of one (1) or more municipalities within that county's boundaries; and
  14. “Unified municipality” means a former municipality that has merged into a unified government pursuant to this chapter.

Acts 1991, ch. 497, § 104.

7-21-105. Unified government permitted — When — Effect of unification.

  1. Each county in this state whose voters have adopted a charter form of government and the principal city within its boundaries may create and establish a unified government to perform all of the governmental and corporate functions now, or hereafter authorized to be, performed by the county government and by the government of the principal city in the manner and with the consequences provided for in this chapter. The government of a smaller city within the county may initially or subsequently merge into the unified government by complying with § 7-21-107 or § 7-21-204(c). Any municipality lying in two (2) or more counties may unify with the county in which the majority of its territory lies.
  2. After unification of a charter county government with a municipality, no functions of the governing bodies of the county and the unified municipality, or of the officers of the governing bodies, shall be retained and continued, unless otherwise so provided either in the charter of the unified government or the Constitution of Tennessee.
  3. After the unification, no officer or agency of the county or the unified municipality shall retain any right, power, duty or obligation, unless so provided either in the charter of the unified government or the Constitution of Tennessee; provided, that nothing contained in this chapter shall impair the rights and obligations of notaries public commissioned according to law by the county prior to unification, and such notaries public shall continue to serve for the remainder of their terms as originally commissioned.

Acts 1991, ch. 497, § 105.

7-21-106. Creation of charter commission — Effect.

When a charter commission shall be created pursuant to this chapter, no municipality shall thereafter be created in the county, unless and until the proposed charter shall have been rejected by voters in a referendum election as provided in this chapter, or unless and until a charter with express provision permitting such municipality shall have been adopted by the voters in a referendum election as provided in this chapter.

Acts 1991, ch. 497, § 106.

7-21-107. Smaller cities — Election to become part of unified government.

Any smaller city that has elected not to be initially included in a unified government created and established under this chapter may at any time become a part of the unified government under such terms and conditions and by such methods and procedures as may be established in the charter of the unified government, so long as such unification is accomplished in accordance with the Constitution of Tennessee, Article XI, § 9.

Acts 1991, ch. 497, § 107.

Part 2
Unified Government

7-21-201. Charter commission — Creation — Procedure — Commissioners — Organizational meeting — Vacancies — Officers.

  1. The initial step in the creation of a unified government shall be the creation of a charter commission. The charter commission may be initiated either by a proclamation of the chief executive officer of the county or by resolution of the county legislative body. Such proclamation must be ratified by the county legislative body, or the resolution of the county legislative body must be adopted by a majority vote of all members constituting the county legislative body. The proclamation or resolution shall provide that a charter commission is established to propose to the people the unification of all governmental and corporate functions of the county and its principal city and the creation of a unified government for the administration of the unified functions. Any proclamation under this section shall also identify and appoint the eight (8) individual members of the charter commission pursuant to subsection (c). Any resolution under this section shall authorize or direct the chief executive officer of the county to appoint the eight (8) individual members of the charter commission pursuant to subsection (c) within a specified period of time, not to exceed thirty (30) days. The proclamation or resolution shall fix the time and place for the county clerk to convene the initial meeting of the charter commission, and shall fix the date by which the charter commission must certify and file copies of the proposed charter with the county clerk and the clerks of the city legislative body of each municipality in the county. Within five (5) days from the effective date of the proclamation or resolution, the clerk of the county legislative body shall certify a copy of the proclamation or resolution to the clerk of the city legislative body of the principal city within the county and to the clerk of the city legislative body of each smaller city within the county. The county proclamation or resolution shall become void unless the city legislative body of the principal city ratifies a substantially similar proclamation or adopts a substantially similar resolution within sixty (60) days of receipt of the certified county proclamation or resolution. The proclamation of the mayor of the principal city shall also identify and appoint the eight (8) individual members of the charter commission pursuant to subsection (c). The resolution of the principal city shall authorize or direct the mayor of the principal city to appoint the eight (8) individual members of the charter commission pursuant to subsection (c) within a specified period of time not to exceed thirty (30) days. The mayor and city legislative body of the principal city may also initiate the creation of a charter commission by complying with the provisions of this subsection (a) applicable to the chief executive officer of the county and the county legislative body. The county may validate the charter commission by complying with the provisions of this subsection (a) applicable to the mayor and the city legislative body of the principal city.
  2. Within thirty (30) days of ratification of a substantially similar proclamation or the adoption of a substantially similar resolution by the city legislative body of the principal city or by the county legislative body, as applicable, as set forth in subsection (a), the mayor of each smaller city within the county shall appoint one (1) member of the charter commission; provided, that the failure of the mayor of any smaller city to timely appoint such member shall not delay or prohibit the convening of the charter commission or in any way affect the right of the county and principal city to proceed in all respects under this chapter.
  3. The charter commission shall be composed of eight (8) charter commissioners appointed by the chief executive officer of the county, eight (8) charter commissioners appointed by the mayor of the principal city, and one (1) charter commissioner appointed by the mayor of any smaller city within the county electing to participate by the timely appointment of a charter commission member. At least one (1) charter commissioner from the principal city and at least one (1) charter commissioner from the county shall be an official or employee of the appointing participating governmental unit.
  4. The county clerk shall call and convene members of the charter commission to hold an organizational meeting at such time and place as are provided in the certified proclamations or resolutions adopted in accordance with this section.
  5. Any vacancy occurring in the office of a charter commissioner shall be filled by the governmental entity making the original appointment in the same manner as the original appointment.
  6. The charter commission shall elect from its membership a chair, a chair pro tempore, a secretary and such other officers as it may deem necessary.

Acts 1991, ch. 497, § 201.

Attorney General Opinions. Adoption of metropolitan government, OAG 06-100 (6/12/06), 2006 Tenn. AG LEXIS 109.

7-21-202. Expenses of charter commission — Funding — Staff — Compensation of staff and members.

  1. It is the duty of the county legislative body to appropriate sufficient funds to defray the expenses of the charter commission, which appropriation shall be not less than fifty thousand dollars ($50,000). Such funds shall be disbursed by the fiscal officer of the county upon appropriate documentation signed by the chair or the secretary of the charter commission.
  2. The charter commission is authorized to employ such staff as may be required to assist in performing its duties, which staff shall be paid compensation as determined by the charter commission within the limits of funds appropriated pursuant to subsection (a).
  3. Members of the charter commission shall not receive per diem or other compensation for their services except reimbursement of actual expenses authorized and approved by the charter commission.

Acts 1991, ch. 497, § 202.

7-21-203. Information and assistance from public officials.

All public officials shall, upon request, furnish the charter commission with all information and assistance necessary or appropriate for its work.

Acts 1991, ch. 497, § 203.

7-21-204. Meetings — Preparation and filing of proposed charter — Action by legislative bodies — Publication of proposed charter.

  1. All meetings of the charter commission shall be held in compliance with the open meetings law, compiled in title 8, chapter 44.
  2. The charter commission shall prepare and file the charter proposed by it not later than the date provided in the proclamations or resolutions creating the charter commission, or within such extended limit of time as may be authorized by resolutions of the respective legislative bodies of the county and principal city.
    1. The chair of the charter commission shall certify and file two (2) copies of such proposed charter with the county clerk and one (1) copy with the clerk of the city legislative body of each municipality in the county. Such copies shall be public records, available for inspection or examination by any interested person. Within sixty (60) days from the certifications and filings under this subdivision (c)(1), the county legislative body and the city legislative body of the principal city shall either endorse or disapprove the proposed charter. Failure to act within the required time shall be deemed to be a favorable endorsement by the subject legislative body.
      1. Within the sixty-day period provided in subdivision (c)(1), the city legislative body of each smaller city shall, by resolution, elect and determine whether or not to direct the county election commission to place on the ballots to be used only by voters within such smaller city a question for such voters, in addition to the question of consolidation of principal city and county governmental functions, which additional question shall be stated as follows:

        For the city (town) of  surrendering its charter, terminating its separate existence, thereby becoming a part of the home rule unified government.

        Against the city (town) of  surrendering its charter, terminating its separate existence, thereby becoming a part of the home rule unified government

      2. Failure of any smaller city legislative body to act within the required time shall be deemed to be a favorable determination to place such question upon the ballots to be used by voters within the smaller city at the time the issue of unification is presented to the voters of the county in which the smaller city is located.
    2. Within five (5) days following the favorable endorsement or disapproval by the city legislative body of the principal city, and within five (5) days following the passage of the resolution or resolutions to place or not to place the additional questions set forth in subdivision (c)(2) upon the ballot of the respective smaller city or cities, the clerk of the city legislative body of each respective municipality shall certify a copy of such legislative bodies' resolution or resolutions to the county clerk and shall cause a copy of such resolution or resolutions to be published in a newspaper of general circulation within the county.
    3. After action, if any, by the county legislative body and receipt of certifications, if any, from each of the clerks of the city legislative bodies of each of the principal city and smaller city or cities, or following the expiration of seventy (70) days from the receipt from the chair of the charter commission of the certified proposed charter, whichever shall first occur, the county clerk shall promptly file with the county election commission one (1) copy of such certified proposed charter, together with the certified resolutions of endorsement or disapproval, if any, of the county legislative body and of the city legislative body of the principal city and certified resolutions, if any, of the smaller city or cities directing or denying placement of the additional question on the ballot of the smaller city or cities.
  3. The charter commission shall furnish or make available to every daily or weekly newspaper published in the county a complete copy of the proposed charter. The charter commission shall take such other steps within the limitation of its available funds as it deems reasonable and appropriate to inform the public throughout the county of the contents of the proposed charter, and the same may be published or summarized in pamphlets and booklets to be made available for general distribution.

Acts 1991, ch. 497, § 204.

7-21-205. Referendum election — Ballots — Notice — Canvassing of returns — When charter deemed ratified and adopted — Certification of returns — Publication of election results — Copies of adopted charters.

  1. After a copy of the proposed charter has been certified to the county election commission and the proposed charter has been, in all respects, qualified to be submitted to the voters of the principal city and to the voters of the county outside the principal city, including any smaller city or cities, as provided in § 7-21-204, and, if applicable, to the voters of any smaller city or cities electing to proceed in accordance with § 7-21-204(c)(2), it is the duty of the county election commission to hold a referendum election for the ratification or rejection of the proposed charter and additional question, if applicable, at such regular county, state or federal election as shall be designated in the proposed charter.
  2. The ballots used in the election shall have printed on them a brief summary of the proposed charter as required by § 2-5-208(f). The ballots shall be prepared so as to provide a choice for voters as follows:

    For a Home Rule Unified Government Charter  .

    Against a Home Rule Unified Government Charter  .

  3. Notice of the referendum election shall be given as required in other elections on questions submitted to the vote of the people.
  4. The date of the election and the form of the ballot shall be uniform throughout the entire county on the issue as to whether there shall be a unified government between the principal city and the area within the county outside of the principal city, including any smaller cities within the county; provided, that the county election commission shall canvass the returns and certify the results as if separate elections were being held for the principal city and the area of the county outside of the principal city, including any smaller cities within the county. For the purpose of determining whether the proposed charter has been accepted or rejected, the county election commission shall canvass the returns and certify the results for:
    1. The principal city;
    2. The entire area of the county outside the principal city, including in such area the smaller cities, if any, within the county; and
    3. Any smaller city that has elected to include the additional question provided in § 7-21-204(c)(2) on the ballots for the voters of such smaller city.
  5. The proposed charter shall be deemed ratified and adopted if the same is approved by a majority of those voting within the principal city and a majority of those voting in the county outside the principal city. Any smaller city, if applicable, shall be included in the unified government only if inclusion is approved by majority vote of those voting within the smaller city.
  6. The returns of the referendum election shall be certified by the county election commission to the secretary of state, together with a copy of the charter previously filed with the county election commission by the county clerk.
  7. The secretary of state shall then issue a proclamation showing the result of the election on the adoption or rejection of the proposed charter, and the inclusion, if applicable, of any smaller city, one (1) copy of which proclamation shall be attached to the copy of the charter certified to the secretary of state and one (1) copy of which shall be delivered to the county clerk, who shall attach the proclamation to the remaining copy of the proposed charter certified to the county clerk.
  8. Whenever a unified government charter has been adopted, the two (2) certified copies with proclamations attached shall be deemed duplicate original copies of the charter of such government.
  9. The certified copy of the charter and proclamation deposited with the county clerk shall subsequently be delivered by the county clerk to such officer of the unified government as the charter may direct.

Acts 1991, ch. 497, § 205.

Attorney General Opinions. Voting under Charter Government Unification Act and Metropolitan Government Act.  OAG 10-51, 2010 Tenn. AG LEXIS 51 (4/15/10).

7-21-206. Unified government — Name — Effective date — Executive, legislative and judicial powers — Required provisions of charter.

  1. The name of the unified government shall be such name as the charter commission shall deem historically and geographically appropriate.
  2. The proposed charter shall provide for the effective date of the unified government.
  3. The proposed charter shall provide for a single government possessing three (3) branches of government, executive, legislative and judicial, with due regard for the doctrine of separation of powers as known and practiced in the American form of representative or republican government.
  4. All executive powers of the unified government shall be vested in a chief executive officer whose title shall be determined by the charter commission.
  5. All legislative powers of the unified government shall be vested in a legislative body whose title and size shall be determined by the charter commission; provided, that the members shall be elected by districts and shall be not less than nine (9) nor more than nineteen (19) members.
  6. The courts established by general law shall constitute the judicial branch, but the proposed charter may vest additional jurisdiction of local ordinances to the extent not prohibited by general law. Such courts as are established by private act or by public act having local application may be continued by charter provisions.
  7. Within the general restrictions contained in this section, the proposed charter may organize the executive and legislative branches as the charter commission deems necessary and appropriate for the efficient and economical delivery of public services befitting the particular county.
  8. Any functions of the governing bodies of the county, the principal city or any smaller city electing to be included, or functions of the officers of the governing bodies that the charter commission may deem feasible to carry forward into the unified government, to the extent that such functions are not set forth in the Constitution of Tennessee, shall be set forth in the charter.
  9. Any right, power, duty or obligation of any officer or agency of the county, the principal city or any smaller city electing to be included, deemed by the charter commission to be feasible to carry forward into the unified government, and not set forth in the Constitution of Tennessee, shall be set forth in the charter.
  10. The charter shall expressly provide the means, as determined to be necessary and appropriate by the charter commission, by which the indebtedness and contract obligations of the county and the principal city and any smaller city electing to be included shall not be impaired or diminished.
  11. The charter shall set forth the procedure for the subsequent merger of the government of any smaller city into the unified government.
  12. The date of such regular county, state or federal election at which the referendum election shall be held for the ratification or rejection of the proposed charter shall be set forth in the proposed charter.
  13. The charter shall designate the officer with whom the official copy of the charter of the unified government shall permanently repose.
  14. The charter shall provide for the consolidation of county and city employees' retirement and pension systems and the regulation of the retirement and pension systems; provided, that nothing in this chapter or in a charter adopted pursuant to these provisions shall impair or diminish the rights and privileges of the city and county employees in the existing city and county employees' retirement and pension systems in effect at the time of establishment of the unified government.
  15. The charter shall provide for the maintenance and administration of an effective consolidated civil service system and the regulation of a civil service system; provided, that nothing in this chapter or in a charter adopted pursuant to these provisions shall impair or diminish the rights and privileges of city and county employees as provided for in any city charter, county ordinance or general state law at the time of the establishment of the unified government.
  16. The charter shall contain or incorporate into the charter such terms and provisions as are contained in any private act or municipal charter with respect to any utility created, authorized or owned by the principal city that is supported by its own revenues and operated, administered and managed pursuant to the private act or municipal charter. Such terms and provisions as are required by this subsection (p) may be subsequently amended only pursuant to subsection (q).
  17. The charter shall provide for the method and procedure by which the charter may subsequently be amended; provided, that no such amendment shall be effective until submitted to the qualified voters residing within the geographical jurisdiction of the unified government and approved by a majority of those voters voting on the amendment.
  18. The charter shall provide for a determination of the proportionate responsibility for the existing bonded indebtedness, contract obligations and pension obligations of the county and any unified municipality, and shall provide for the creation and establishment of such taxing districts as are necessary and appropriate to fairly allocate such obligations.

Acts 1991, ch. 497, § 206.

Attorney General Opinions. A metropolitan government charter could provide for a city manager, OAG 06-100 (6/12/06), 2006 Tenn. AG LEXIS 109.

Part 3
Utility Services

7-21-301. Authority — Administration.

    1. Any unified government created and established under this chapter shall possess all powers, rights, obligations, duties and privileges to provide electricity, natural gas, water, wastewater, solid waste disposal, recycling, energy production or any other utility service as permitted by the charter, collectively referred to as “utility services”, or any combination thereof; but in no event shall any initial charter provision supersede or conflict with § 7-21-206(p).
    2. The powers granted to any unified government in this subsection (a) shall be the exclusive right to perform or provide such utility services within the boundaries of the county and without the boundaries of the county, as permitted by law.
    3. Notwithstanding subdivisions (a)(1) and (2), any utility district created pursuant to chapter 82 of this title or Private Acts of 1959, chapter 175, that is providing service on the effective date of the charter shall possess all powers, rights, obligations, duties and privileges as are granted to it by such public or private act, as may subsequently be amended.
    1. The powers, rights, obligations, duties and privileges granted in subsection (a) shall be exercised and administered through such board or boards, commission or commissions or franchise or franchises as are authorized or established under the charter.
    2. Any such utility board or commission not otherwise established under charter provisions required by § 7-21-206(p), that is created by the legislative body of the unified government, shall be composed of not less than five (5) nor more than nine (9) members who are appointed in accordance with procedures specified in the charter.
    3. The members must be, at a minimum, citizens of the jurisdiction or jurisdictions served by the utility, who are of legal age, and who are not elected officials or employees of any governmental unit or agency within the county. Upon the effective date of the charter, all existing members of utility boards or commissions established under charter provisions required by § 7-21-206(p) shall automatically be appointed to continue to serve the balance of their term of office as provided in such private act or municipal charter provision governing such utility immediately prior to the effective date of the charter.

Acts 1991, ch. 497, § 301.

7-21-302. Assumption of utility services provided within county — Procedure.

  1. Any unified government created and established pursuant to this chapter may at any time assume and take over the utility services provided within its county by any utility service provider created, authorized or owned by any private or public entity located outside such county, referred to as “outside utility service provider”.
  2. In exercising the powers granted in subsection (a), the unified government shall notify any outside utility service provider of its desire to assume responsibility for all or any part of the outside utility service provider's functions, services or duties within the county of the unified government. It shall then be the duty of the outside utility service provider and the unified government to attempt to reach agreement in writing for the allocation to the unified government of any such public functions, services or duties as the unified government may desire to assume, and all related rights, duties, property, assets and liabilities of the outside utility service provider that justice and reason may require under the circumstances. Any matters upon which the respective parties are not in agreement in writing within sixty (60) days after a unified government gives such notice shall be settled by arbitration in accordance with the law of arbitration of the state of Tennessee effective at the time of submission to the arbitrators, except that § 29-5-101(2) shall not apply to any arbitration under this section. The award so rendered shall be transmitted to the chancery court of the county of the unified government, and then shall be subject to review in accordance with §§ 29-5-113, 29-5-115 and 29-5-118.

Acts 1991, ch. 497, § 302.

Cross-References. Arbitration, Title 29, ch. 5.

7-21-303. Smaller cities — Utility services.

    1. Notwithstanding anything in this part to the contrary, no unified government may take over, assume or acquire any powers, rights, obligations, duties and privileges with respect to any utility service created, authorized or owned by a smaller city not electing to merge into the unified government, unless and until the legislative body of such smaller city expressly consents to the acquisition by the unified government.
    2. Express consent shall be evidenced by the execution by the smaller city of a franchise agreement granting to the service provider rights and authority within the boundary of the smaller city, subject to such terms and conditions as may mutually be agreed upon between the smaller city and service provider.
    1. Notwithstanding anything in this part to the contrary, in the event that a unified government shall take over, assume or acquire by any means the assets, property or rights of any utility district located within the county of the unified government and any of such assets, property or rights are located within or relate to any smaller city not electing to unify, the smaller city shall have the right and option to acquire such assets, property or rights as are located within or relate to, or that reasonably and economically cannot be separated from such assets and property, as are located within the smaller city upon assumption by the smaller city of the debts, obligations and liabilities reasonably incurred or related to such property, assets or rights.
    2. If the parties are not in agreement in writing within sixty (60) days after acquisition by the unified government, the matters upon which agreement have not been reached shall be settled by arbitration in accordance with the law of arbitration of the state of Tennessee effective at the time of submission to the arbitrators, except that § 29-5-101(2) shall not apply to any arbitration under this section.
    3. The award so rendered shall be transmitted to the chancery court of the county of the unified government and then shall be subject to review in accordance with §§ 29-5-113, 29-5-115 and 29-5-118.

Acts 1991, ch. 497, § 303.

Cross-References. Arbitration, Title 29, ch. 5.

Part 4
Powers and Duties

7-21-401. Powers and duties — Right to receive government funds — Application of funds.

  1. Any unified government created and established under this title shall possess all powers, rights, obligations, duties and privileges of county and municipal governments not prohibited by general law or its charter; and, without the necessity or formality of deed, bill of sale or other instrument of transfer, the unified government shall be and become the owner of all property previously belonging to the county and any unified municipality.
  2. Any unified government created and established pursuant to this chapter shall be entitled to receive as state aid or as grant-in-aid from the state of Tennessee or from the United States or from any other agency, public or private, all funds to which a county is, or may hereafter be, entitled and all funds to which each unified municipality is, or may hereafter be, entitled, and to receive the same without diminution or loss by reason of the unification of the governments as provided in this chapter. The application of such funds shall be made as follows:
    1. The unified government shall be deemed a county and shall also be deemed a municipality for the purpose of determining its right to receive, and for the purpose of receiving, state aid or grant-in-aid from the state of Tennessee or from the United States or from any other agency, public or private;
    2. When funds are distributed on the basis of population or area, or both, to any county that has a unified government in effect pursuant to this chapter, then the entire population and the total area of the county shall be considered in calculating and determining the basis of the distribution;
    3. When funds are distributed to any county on the basis of rural area, rural road mileage or rural population, or any combination thereof, then the area to which such funds shall be applied shall exclude such basis attributable to any smaller city located in part or entirely within such county that has not elected to become a part of the unified government; otherwise, such funds shall be applied as determined by the legislative branch of the unified government;
    4. When funds are distributed to any incorporated city or municipality on the basis of population or area, or both, and the unified government is to receive that portion or portions attributable to any unified municipality, the area or population within the county that is also within the boundaries of any smaller city that has not elected to become a part of the unified government shall not be included in determining such basis for the application of such funds; otherwise, the population or the area to be used in determining such basis or to which such funds shall be applied shall be as determined by the legislative branch of the unified government.

Acts 1991, ch. 497, § 401.

7-21-402. Legislative branch — Redistricting.

On or before December 31 of the first calendar year following a year of federal decennial census, it is the duty of the legislative branch of the unified government to reapportion or redistrict the seats of the legislative branch and the seats of the board of education of the unified government to comply with constitutional requirements. Districts reapportioned or redistricted under this section shall be relatively compact, undivided, representative of community interests, and as equal in population as reasonably practicable.

Acts 1991, ch. 497, § 402.

7-21-403. Taxing authority.

  1. Any unified government created and established pursuant to this chapter shall be authorized and empowered, through its legislative branch, to levy every tax that a county or municipality is now authorized to levy or may hereafter be authorized to levy.
  2. Any tax created, assessed, or levied prior to unification under this chapter by the county or any municipality shall continue unabated in favor of the unified government subsequent to unification of the county and such unified municipality.
  3. The act of unification shall not affect the assessment, levy or collection of any tax within the county adopting unified government under this chapter, unless and until specific action with respect to the assessment, levy or collection of any tax is taken by the legislative body of the unified government.
  4. When the amount of the authorized tax depends upon the population or area of the entire county, without regard to the exclusion of population or area that is or may have been within the boundaries of municipalities within the county, then the entire population and the total area of the county in which such unified government is established shall be determinative of the authorized levy.
  5. The legislative body may create and establish such taxing districts, as in its judgment, are necessary and appropriate to fairly allocate such taxes.

Acts 1991, ch. 497, § 403.

7-21-404. Special service districts.

The legislative branch of the unified government may establish and name such special service districts, as in its judgment, may be necessary or appropriate for the exercise within such district of any one (1) or more of the public corporation rights or powers of the unified government not then being exercised for the benefit of all citizens of the county. All tax levies in special service districts shall be made with due regard for services rendered in the special service districts. The boundaries of special service districts need not be contiguous and may overlap or be coextensive with the boundaries of other special service districts.

Acts 1991, ch. 497, § 404.

7-21-405. Bonds.

Any unified government created and established pursuant to this chapter may issue bonds under such terms, conditions and limitations as may be prescribed by general law and the charter.

Acts 1991, ch. 497, § 405.

7-21-406. Alcoholic beverages.

The creation and establishment of unified government under this chapter shall not alter the status of the county, any unified municipality or any smaller city not electing to be included in the unified government as to the legality of the manufacture, receipt, sale, storage, transportation, distribution and possession of alcoholic beverages. Local option elections previously held in the county or unified municipalities or such smaller city to fix such legal status shall continue to control the legal status of alcoholic beverages until the legal status is subsequently altered by a local option election held pursuant to such law. All local option elections with respect to unified governmental entities permitting such legal status of alcoholic beverages, the determination of the geographical areas of same and any other conditions and restrictions shall be as provided in the charter, notwithstanding any other law to the contrary. The unified government hereunder shall have the same power as the county and the unified municipalities previously possessed with respect to the regulation and taxation of the manufacture, distribution and sale of beer or any other alcoholic beverages.

Acts 1991, ch. 497, § 406.

7-21-407. Zoning regulations.

The creation and establishment of a unified government under this chapter shall not alter or change zoning regulations effective in the county and in the unified municipalities, but the zoning regulations shall continue until modified or changed by the legislative branch of the unified government acting under authority of its charter. The creation and establishment of a unified government under this chapter shall not alter or change zoning regulations effective in a smaller city that has not elected to merge with the unified government, but the zoning regulations shall continue until modified or changed by the legislative branch of the smaller city or until the smaller city shall elect to become a part of the unified government pursuant to § 7-21-107.

Acts 1991, ch. 497, § 407.

7-21-408. Applicability of chapter.

This chapter shall not apply to counties having a metropolitan form of government pursuant to chapters 1-8 of this title, or to counties having a county charter form of government, pursuant to title 5, chapter 1, part 2, where the county charter prohibits consolidated government.

Acts 1991, ch. 497, § 409.

Chapters 22-30
[Reserved]
Municipal Functions

Chapter 31
Streets and Other Public Improvements

7-31-101. Duty to maintain roads.

  1. It is the duty of all incorporated municipalities, when a public highway passes through the corporation, or to any public place within the incorporated municipality, to keep the road in good repair. Nothing in this subsection (a) shall be construed to apply to any railroads or their rights-of-way.
  2. It is the duty of the grand jury to make presentments as for misdemeanor against the mayor and governing body of any incorporated municipality that violate this section.

Acts 1859-1860, ch. 72, §§ 1, 2; Shan., §§ 1989, 1990; mod. Code 1932, §§ 3405, 3406; T.C.A. (orig. ed.), § 6-1001.

Cross-References. Bonds for improvements based on assessed values of benefited properties, title 7, ch. 33, part 3.

Bridges erected by county over river through county seat towns, § 54-11-220.

Highways, state funds for local aid, title 54, ch. 4, part 2.

Obstructing highway or other passageway, § 39-17-307.

Penalty for misdemeanor, §§ 39-11-114, 40-35-111.

Throwing glass or other dangerous substance on or near public highway, penalty, § 39-14-502.

Attorney General Opinions. Cities and counties lack statutory authority to regulate mortgage transactions, OAG 03-016, 2003 Tenn. AG LEXIS 19 (2/11/03).

Collateral References.

Constitutionality of statutory provisions as to political corporations or divisions that shall bear cost of establishing or maintaining highway. 2 A.L.R. 746, 123 A.L.R. 1462.

7-31-102. Duty to keep board functioning.

It is the duty of all incorporated municipalities to keep an organized governing board functioning, and if any incorporated municipalities fail so to do for six (6) consecutive months, the residents of the municipality shall be subject to work on the public roads for the space of twelve (12) months thereafter, and until a board is elected, organized and functioning.

Acts 1859-1860, ch. 72, § 3; Shan., § 1991; mod. Code 1932, § 3407; T.C.A. (orig. ed.), § 6-1002.

Law Reviews.

Easements in Tennessee, 24 Tenn. L. Rev. 219 (1956).

7-31-103. Notice of tort action based on condition of streets.

No suit shall be brought against any municipal corporation on account of injuries received by person or property on account of the negligent condition of any street, alley, sidewalk, or highway of the municipal corporation, unless within one hundred twenty (120) days after an injury to the person or property has been inflicted, a written notice shall be served upon the mayor or manager of the municipality, stating the time and place where the injury was received and the general nature of injury inflicted. The failure to give the notice prescribed in this section, within the time set out, shall be a valid defense against any liability of the municipality that might otherwise exist on account of the defective or negligent condition of the street, alley, sidewalk, or highway; provided, that proof of registered letter by registry receipt addressed to the mayor or manager setting forth the injury and place of injury complained of shall be a complete compliance with this section.

Acts 1913, ch. 55, § 1; Shan., § 4469a1; mod. Code 1932, § 8596; T.C.A. (orig. ed.), § 6-1003; Acts 1982, ch. 627, § 1.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

Textbooks. Tennessee Jurisprudence, 6 Tenn. Juris., Constitutional Law, § 66; 19 Tenn. Juris., Municipal Corporations, § 99; 23 Tenn. Juris., Streets and Highways, § 35.

Law Reviews.

Sovereign Immunity and The Tennessee Governmental Tort Liability Act (John C. Cook), 41 Tenn. L. Rev. 885 (1974).

7-31-104. Establishment of streets in extension.

When the limits of an incorporated municipality are enlarged by law, the mayor and board may establish such new streets, alleys, or parks as are deemed necessary by reason of the enlargement. When the improvement is made for its public utility, it shall be done at the expense of the corporation; but should improvement be done for individual convenience, the applicants shall pay the expenses.

Code 1858, §§ 1386, 1387; Shan., §§ 1979, 1980; mod. Code 1932, §§ 3394, 3395; T.C.A. (orig. ed.), § 6-1004.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, § 28.

NOTES TO DECISIONS

1. Railroad Relocation.

Under the authority of this section a municipality may properly expend funds for railroad relocation where such relocation becomes necessary to construct a public highway or street. Darwin v. Cookeville, 170 Tenn. 508, 97 S.W.2d 838, 1936 Tenn. LEXIS 22 (1936).

7-31-105. Construction of sidewalks authorized.

It is lawful for any person owning town lots, or lands adjoining the public highways or streets in any village or unincorporated town in the state, to construct suitable sidewalks on those highways or streets along the line of the lots or lands.

Acts 1897, ch. 99, § 1; Shan., § 1679a1; Code 1932, § 2807; T.C.A. (orig. ed.), § 6-1005.

Cross-References. Ramps at crosswalks required, § 7-31-114.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, § 28.

7-31-106. Unlawful use of sidewalks.

When any sidewalks are constructed, every person who rides or drives a horse, team or other vehicle on the sidewalks, except for the purpose of crossing the sidewalks when necessary to do so, or who hitches any horse or other animal to any tree growing on or adjacent to such sidewalks, commits a Class C misdemeanor.

Acts 1897, ch. 99, § 2; 1899, ch. 193, § 1; Shan., § 1679a2; Code 1932, § 2808; T.C.A. (orig. ed.), § 6-1006; Acts 1989, ch. 591, § 113.

Cross-References. Obstructing highway or other passageway, penalty, § 39-17-307.

Penalty for Class C misdemeanor, § 40-35-111.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, § 28.

7-31-107. Condemnation for streets.

Wherever any municipal corporation shall seek to condemn lands to be used in establishing, widening, extending, or otherwise improving its public streets, alleys, highways, parks, parkways, or boulevards, it shall have full power to condemn the fee of the land necessary to be taken, by paying the fair cash market value of the land to be fixed in the manner provided by law where private property is taken for public use.

Acts 1923, ch. 76, § 1; Shan. Supp., § 1981a1; Code 1932, § 3398; T.C.A. (orig. ed.), § 6-1007.

Cross-References. Acquisition of right-of-way, lands or easements for road purposes, title 29, ch. 17, part 8.

Condemnation by city manager-commission charter city, § 6-19-101.

Condemnation for school purposes, § 49-6-2002.

Rights and powers of section conferred upon all municipal corporations, § 7-35-102.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, § 28.

Law Reviews.

Easements in Tennessee, 24 Tenn. L. Rev. 219 (1956).

NOTES TO DECISIONS

1. Construction.

The procedure under the general municipal condemnation statute is cumulative and a municipality not restricted by its charter may elect between this mode and that provided in the general condemnation statutes. Chattanooga v. State, 151 Tenn. 691, 272 S.W. 432, 1924 Tenn. LEXIS 96 (1925).

Municipal condemnation laws are construed in pari materia with general condemnation laws. Nashville v. Dad's Auto Accessories, Inc., 154 Tenn. 194, 285 S.W. 52, 1925 Tenn. LEXIS 116 (1926), dismissed, Dad's Auto Accessories v. Nashville, 47 S. Ct. 20, 273 U.S. 770, 71 L. Ed. 883, 1926 U.S. LEXIS 333 (1926); Faulkner v. Nashville, 154 Tenn. 145, 285 S.W. 39, 1925 Tenn. LEXIS 115 (1926); Scruggs v. Sweetwater, 29 Tenn. App. 357, 196 S.W.2d 717, 1946 Tenn. App. LEXIS 74 (Tenn. Ct. App. 1946).

The municipal condemnation statutes are cumulative with the other condemnation laws of the state. Maryville v. Waters, 207 Tenn. 213, 338 S.W.2d 608, 1960 Tenn. LEXIS 449 (1960).

2. Jurisdiction and Power of Court.

In an action by a city to condemn for street purposes property belonging to the state and leased to a railroad company, where all that was sought was an easement over the property for state purposes, decree of the court vesting the fee in the city was erroneous. Georgia v. Chattanooga, 4 Tenn. App. 674, — S.W. —, 1927 Tenn. App. LEXIS 217 (Tenn. Ct. App. 1927).

A court of equity has no jurisdiction to interfere with or suspend an action at law for condemnation of property except where the legal remedy is inadequate and equitable relief is necessary to prevent destructive or irreparable injury. Scruggs v. Sweetwater, 29 Tenn. App. 357, 196 S.W.2d 717, 1946 Tenn. App. LEXIS 74 (Tenn. Ct. App. 1946).

Allegation that the proposed widening of a street was not necessary and was for the purpose of enhancing the value of privately owned property was a proper question for a court of law. Scruggs v. Sweetwater, 29 Tenn. App. 357, 196 S.W.2d 717, 1946 Tenn. App. LEXIS 74 (Tenn. Ct. App. 1946).

3. Parties.

Holder of verbal lease for one year was entitled to intervene and to recover moving expenses in proceeding to condemn real property upon which he operated machine shop. Morristown v. Sauls, 61 Tenn. App. 666, 457 S.W.2d 601, 1969 Tenn. App. LEXIS 300 (Tenn. Ct. App. 1969).

4. Power of Municipality.

A city cannot require a railroad company to construct ramps in connection with viaduct across tracks at a crossing where the construction of such ramps is not required by public necessity. Knoxville v. Southern R. Co., 149 Tenn. 291, 258 S.W. 143, 1923 Tenn. LEXIS 100 (1924).

If the extension of a street across a railroad would necessitate the destruction of a railroad trestle and the reconstruction of the railroad at the crossing, the city must resort to its police power in addition to its power of eminent domain. Memphis v. Southern R. Co., 167 Tenn. 181, 67 S.W.2d 552, 1933 Tenn. LEXIS 24 (1934).

5. Property Subject to Condemnation.

A street may be opened and extended across land already devoted to use by a railway. Georgia v. Chattanooga, 264 U.S. 472, 44 S. Ct. 369, 68 L. Ed. 796, 1924 U.S. LEXIS 2529 (1924).

Municipality has power to condemn land for street purposes even though the property is already held for a public use so long as the use to which the property is already devoted is not impaired thereby. Georgia v. Chattanooga, 4 Tenn. App. 674, — S.W. —, 1927 Tenn. App. LEXIS 217 (Tenn. Ct. App. 1927).

6. —Parks.

Procedure set out in this section and §§ 7-31-1087-31-111 was properly used by city in condemning land for a municipal golf course as part of a public park. Johnson City v. Cloninger, 213 Tenn. 71, 372 S.W.2d 281, 1963 Tenn. LEXIS 470 (1963).

7. Property Condemned in Excess of Amount Needed.

Where the city condemned strip of land for street purposes “together with a right-of-way necessary for the construction of the slopes and fills upon the land adjacent to the right-of-way above described,” but the street was constructed entirely within the strip condemned for street purposes, the land condemned for the right-of-way reverted to the owners. McGiffin v. Gatlinburg, 195 Tenn. 396, 260 S.W.2d 152, 1953 Tenn. LEXIS 355 (1953).

8. Location of Streets.

The city has the right to select and fix the location of a street regardless of any desire of the property owner. Georgia v. Chattanooga, 4 Tenn. App. 674, — S.W. —, 1927 Tenn. App. LEXIS 217 (Tenn. Ct. App. 1927).

9. Ordinance Authorizing Condemnation.

Land condemnation for alley was enjoined where town recorder testified that town board failed to read condemnation order as required by the town charter even though board's minutes recited in customary form that the ordinances were “passed.” Brumley v. Greeneville, 38 Tenn. App. 322, 274 S.W.2d 12, 1954 Tenn. App. LEXIS 122 (Tenn. Ct. App. 1954).

10. —Necessity.

Where a city charter referred to the general municipal condemnation statute by Code numbers an ordinance thereunder authorizing condemnation was not necessary in order for the city to condemn property. Quarles v. Sparta, 2 Tenn. Ch. App. 714 (1902).

11. —Right to be Heard.

The lack of opportunity to be heard before the passage of an ordinance providing for the taking of land by a city for a street furnishes no ground for complaint. Georgia v. Chattanooga, 264 U.S. 472, 44 S. Ct. 369, 68 L. Ed. 796, 1924 U.S. LEXIS 2529 (1924).

12. Contributions by Individuals — Effect.

The mere fact that some adjacent owners made contributions to assist the city in bearing the expense of widening a street was not ground for injunction restraining the improvement where it would not prevent the property owner from receiving just compensation for the property so taken. Scruggs v. Sweetwater, 29 Tenn. App. 357, 196 S.W.2d 717, 1946 Tenn. App. LEXIS 74 (Tenn. Ct. App. 1946).

13. Determination of Boundaries.

In municipal condemnation proceeding for street purposes, trial court could determine boundary line in order to properly apportion award. Maryville v. Waters, 207 Tenn. 213, 338 S.W.2d 608, 1960 Tenn. LEXIS 449 (1960).

Collateral References.

Injunction against exercise of power of eminent domain. 93 A.L.R.2d 465.

Widening of city street as local improvement justifying special assessment of adjacent property. 46 A.L.R.3d 127.

7-31-108. Assessment of damages by freeholders.

When the owner of the land through which any street, alley, or park is to be extended or established requires compensation or damages for the extension or establishment, the legislative body of such municipality shall, by ordinance or resolution, appoint freeholders, not exceeding seven (7) in number, who after first being duly sworn, shall examine the premises and assess the damages or compensation, and report the damages or compensation to the mayor and aldermen or the legislative body of the municipality, which body shall cause the report to be spread upon its minutes with its action on the assessment.

Code 1858, § 1388; Shan., § 1981; Acts 1925, ch. 31, § 1; mod. Code 1932, § 3397; T.C.A. (orig. ed.), § 6-1008.

Cross-References. Rights and powers of section conferred upon all municipal corporations, § 7-35-102.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, § 63.

Law Reviews.

Real Property — 1954 Tennessee Survey, 7 Vand. L. Rev. 921 (1954).

NOTES TO DECISIONS

1. Construction.

The statute allowing condemnation must be considered in connection with the established mode of estimating and assessing damages prescribed by § 29-16-114 (now § 29-16-203). Faulkner v. Nashville, 154 Tenn. 145, 285 S.W. 39, 1925 Tenn. LEXIS 115 (1926).

The statute awarding compensation to property owners is liberally construed in favor of the rights of the citizen affected when the suit is brought for damages. Scruggs v. Sweetwater, 29 Tenn. App. 357, 196 S.W.2d 717, 1946 Tenn. App. LEXIS 74 (Tenn. Ct. App. 1946).

2. Application of Statute.

A municipal corporation authorized by its charter “to take and appropriate ground for the widening of streets, or parts thereof, or for laying out new streets, … when the public convenience requires it,” had power under this section and §§ 7-31-1097-31-111 to condemn private property necessary to the construction of a viaduct and its approaches over and along an existing street. Woolard v. Mayor, etc. of Nashville, 108 Tenn. 353, 67 S.W. 801, 1901 Tenn. LEXIS 36 (1902).

This section and §§ 7-31-1097-31-111 could be resorted to in order to secure property for a park. Chattanooga v. State, 151 Tenn. 691, 272 S.W. 432, 1924 Tenn. LEXIS 96 (1925).

Neither this section nor § 7-31-109 were applicable to a case of closing a street. Knoxville Ice & Cold Storage Co. v. Knoxville, 153 Tenn. 536, 284 S.W. 866, 1925 Tenn. LEXIS 43 (1926), dismissed, 273 U.S. 776, 47 S. Ct. 332, 71 L. Ed. 887, 1927 U.S. LEXIS 932 (1927).

3. —Leasehold Estates.

A leasehold estate is property for which compensation must be paid when appropriated under the law of eminent domain. Mason v. Nashville, 155 Tenn. 256, 291 S.W. 1074, 1926 Tenn. LEXIS 44 (1927); Nashville v. Mason, 11 Tenn. App. 344, — S.W.2d —, 1930 Tenn. App. LEXIS 17 (Tenn. Ct. App. 1930).

4. Erosion Resulting from Street Construction.

Construction of wall of a cut widening a highway through a municipality at such an angle that erosion causes abutting land to cave in is a taking to the extent of such erosion entitling the owner to compensation, but the owner has the duty to curtail or minimize the damage from the erosion and the measure of damages is measured by the cost of such curtailment. Oneida v. Hail, 21 Tenn. App. 70, 105 S.W.2d 121, 1937 Tenn. App. LEXIS 8 (Tenn. Ct. App. 1937).

Collateral References.

Eminent domain: consideration of fact that landowner's remaining land will be subject to special assessment in fixing severance damages. 59 A.L.R.3d 534.

7-31-109. Opening of street on payment of damages.

Upon payment of the compensation or damages that have been assessed by the condemnation commission and approved by the municipal legislative body, into the office of the recorder or city clerk, for the benefit, or to the account and subject to the order of the owner of the land condemned, the administrative officer or officers of the municipality may order the owner of the land condemned to open the public streets, alleys, highways, parks, parkways, or boulevards, and give the municipality possession of the public streets, alleys, highways, parks, parkways, or boulevards, and fifteen (15) days after the date of the order such municipality may open and take possession of the public streets, alleys, highways, parks, parkways, or boulevards.

Code 1858, § 1389; Shan., § 1982; Acts 1925, ch. 31, § 1; Code 1932, § 3399; T.C.A. (orig. ed.), § 6-1009.

Cross-References. Rights and powers of section conferred upon all municipal corporations, § 7-35-102.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, §§ 28, 30; 23 Tenn. Juris., Streets and Highways, § 56.

NOTES TO DECISIONS

1. Provision for Payment.

When a municipality is condemnor, provision for bond or specific sum is not essential to the protection of the owner, since the taxable property in the municipality may be resorted to for payment. Nashville v. Dad's Auto Accessories, Inc., 154 Tenn. 194, 285 S.W. 52, 1925 Tenn. LEXIS 116 (1926), dismissed, Dad's Auto Accessories v. Nashville, 47 S. Ct. 20, 273 U.S. 770, 71 L. Ed. 883, 1926 U.S. LEXIS 333 (1926).

2. Obligation of Municipality to Pay On Obtaining Possession.

Where the city accepted the amounts of awards made to owners and lessee of condemned property and paid the amounts into the office of the city recorder and thereafter demanded the lessee vacate the premises and obtained possession of the premises notwithstanding the fact that owners had appealed to the circuit court, the recorder was obligated to pay the amount of the award to the lessee. Stapleton v. State, 195 Tenn. 144, 258 S.W.2d 736, 1953 Tenn. LEXIS 313 (1953).

3. Leased Property.

The municipality had the right to deal with a lessee separately from a lessor on the question of damages. Stapleton v. State, 195 Tenn. 144, 258 S.W.2d 736, 1953 Tenn. LEXIS 313 (1953).

7-31-110. Failure to open street on condemnation.

If any owner of land condemned refuses or fails to give possession of land to the municipality or to open the public streets, alleys, highways, parks, parkways, or boulevards, so condemned within fifteen (15) days after the order of the administrative officer or officers of such municipality, then such owner may be fined not less than five dollars ($5.00) nor more than fifty dollars ($50.00) for such failure and refusal, and each and every day of such failure and refusal is deemed a separate offense. If the owner of land condemned contests the right or legality of the condemnation, then the obligation to surrender possession to the municipality and the liability for the fine for failing so to do shall not obtain until the question of the right or legality of the condemnation shall be finally determined. Any municipal court shall have jurisdiction over such offenses. This remedy is not exclusive, but is in addition to the right of the municipality to take possession as owner of the condemned land and to open the public streets, alleys, highways, parks, parkways, or boulevards.

Code 1858, § 1390; Shan., § 1983; Acts 1925, ch. 31, § 1; mod. Code 1932, § 3400; T.C.A. (orig. ed.), § 6-1010.

Cross-References. Rights and powers of section conferred upon all municipal corporations, § 7-35-102.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, §§ 28, 59, 61.

NOTES TO DECISIONS

1. Right of Entry.

Protection against loss being afforded, the condemnor is entitled to immediate entry. Nashville v. Dad's Auto Accessories, Inc., 154 Tenn. 194, 285 S.W. 52, 1925 Tenn. LEXIS 116 (1926), dismissed, Dad's Auto Accessories v. Nashville, 47 S. Ct. 20, 273 U.S. 770, 71 L. Ed. 883, 1926 U.S. LEXIS 333 (1926).

2. Condemnation Contest — Effect on Duty to Surrender.

The property owner's obligation to surrender possession with liability to fine is suspended during pendency of legal contest of the right to condemn. Georgia Industrial Realty Co. v. Chattanooga, 163 Tenn. 435, 43 S.W.2d 490, 1931 Tenn. LEXIS 134 (1931).

3. Appeal — Effect on Duty to Surrender.

Appeal from the city's order of condemnation does not of itself vacate the order or postpone entry pending adjudication of incidental issues. But if the appeal involves a bona fide contest of the legality of condemnation, obligation to surrender is postponed. Georgia Industrial Realty Co. v. Chattanooga, 163 Tenn. 435, 43 S.W.2d 490, 1931 Tenn. LEXIS 134 (1931).

7-31-111. Appeal from order opening street.

Any owner aggrieved by the opening of the public streets, alleys, highways, parks, parkways, or boulevards may appeal to the circuit court within twenty (20) days after the administrative officer or officers of the municipality have ordered the public streets, alleys, highways, parks, parkways, or boulevards to be opened and possession delivered; provided, that any such appeal shall not operate to prevent the municipality from taking possession of the land condemned, nor stay the opening or extension of any such street, alley or other improvement.

Code 1858, § 1391; Shan., § 1984; Acts 1925, ch. 31, § 1; mod. Code 1932, § 3401; T.C.A. (orig. ed.), § 6-1011.

Cross-References. Rights and powers of section conferred upon all municipal corporations, § 7-35-102.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, §§ 59, 61.

Law Reviews.

The Tennessee Court System — Circuit Court (Frederic S. LeClercq), 8 Mem. St. U.L. Rev. 241 (1978).

NOTES TO DECISIONS

1. Implied Requirement of Notice.

The right of eminent domain can be constitutionally exercised only when the property owner is given reasonable notice of the effort to condemn his property, and a statute authorizing a condemnation of private property for public use must require such notice, either expressly or impliedly, or it will be void. The general municipal condemnation statute by necessary implication requires such notice, by the provision contained in this section that the property owner may appeal from the award made by the commissioners appointed to assess his damages. Woolard v. Mayor, etc. of Nashville, 108 Tenn. 353, 67 S.W. 801, 1901 Tenn. LEXIS 36 (1902).

2. Time for Appeal.

This statute contemplates that the 20 days permitted for appeal shall begin to run from the time of the officers ordering the opening and delivery, which means and includes not only the making of the order, but also the putting of that order into the channels of communication with the owner. Knoxville v. Roach, 204 Tenn. 246, 319 S.W.2d 225, 1958 Tenn. LEXIS 264 (1958).

The time in which to appeal begins to run from the date of the order and not from the date it was received by the landowner. Knoxville v. Roach, 204 Tenn. 246, 319 S.W.2d 225, 1958 Tenn. LEXIS 264 (1958).

3. Effect of Appeal on Right of Entry.

Appeal from a city's order of condemnation does not of itself vacate the order, or postpone the city's right to entry and possession pending final adjudication of incidental issues; but if the property owner's appeal involves a bona fide contest of the right or legality of the condemnation, his obligation to surrender possession under penalty of cumulative fines is postponed until final determination of such contest. Georgia Industrial Realty Co. v. Chattanooga, 163 Tenn. 435, 43 S.W.2d 490, 1931 Tenn. LEXIS 134 (1931).

4. Nature of Hearing on Appeal.

On appeal from a city's order of condemnation, the hearing is de novo and the city cannot succeed unless the judgment of the circuit court sustains the right to condemn the particular land or easement. Georgia Industrial Realty Co. v. Chattanooga, 163 Tenn. 435, 43 S.W.2d 490, 1931 Tenn. LEXIS 134 (1931).

5. Review of Circuit Court's Decision.

Where in condemnation proceedings under general municipal condemnation statute property owner obtained supersedeas from circuit court and such supersedeas was subsequently discharged on motion of the city but where the case had not been finally determined on the merits, the Supreme Court was without jurisdiction to grant certiorari and supersedeas superseding the order of the circuit court discharging the original supersedeas and application should have been made to the Court of Appeals. State v. Chattanooga, 153 Tenn. 349, 284 S.W. 359, 1925 Tenn. LEXIS 31 (1926).

If the writ of possession is awarded after adjudication of the right and legality of the condemnation, the action of the circuit court is subject to review by certiorari and supersedeas. Georgia Industrial Realty Co. v. Chattanooga, 163 Tenn. 435, 43 S.W.2d 490, 1931 Tenn. LEXIS 134 (1931).

7-31-112. Damage from change of grade or repair.

When any owner of real estate in any municipality sustains any damage to the owner's property by reason of any change made in the natural or established grade of any highway, street or alley, or by reason of the raising or lowering of the grades, or other acts done for the purpose of improving or repairing any highway, street or alley, the owner shall be paid all damages for the damage by such municipality, which damages may be recovered by suit brought at any time within one (1) year from the completion of or the cessation of such works, acts, or improvements; but all benefits accruing by reason of such improvements, acts, or works shall be allowed to affect, reduce, and offset the damages provided for in this section.

Acts 1891, ch. 31, §§ 1, 2; 1893, ch. 41, §§ 1, 2; Shan., § 1988; mod. Code 1932, § 3404; T.C.A. (orig. ed.), § 6-1012.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Eminent Domain, §§ 63, 64; 18 Tenn. Juris., Limitations of Actions, § 17; 20 Tenn. Juris., Nuisances, § 33; 23 Tenn. Juris., Streets and Highways, § 20.

Law Reviews.

Sovereign Immunity and The Tennessee Governmental Tort Liability Act (John C. Cook), 41 Tenn. L. Rev. 885 (1974).

NOTES TO DECISIONS

1. Construction.

This statute must be liberally construed in favor of the rights of the citizen affected. Knoxville v. Harth, 105 Tenn. 436, 58 S.W. 650, 1900 Tenn. LEXIS 88, 80 Am. St. Rep. 901 (1900); Knoxville v. Barton, 128 Tenn. 177, 159 S.W. 837, 1913 Tenn. LEXIS 37 (1913); Knoxville v. Phillips, 162 Tenn. 328, 36 S.W.2d 434, 1930 Tenn. LEXIS 94 (1931); McDonald v. Scott County, 169 Tenn. 374, 87 S.W.2d 1019, 1935 Tenn. LEXIS 58 (1935); Sharber v. Nashville, 27 Tenn. App. 625, 183 S.W.2d 777, 1944 Tenn. App. LEXIS 101 (Tenn. Ct. App. 1944).

2. Nature of Municipality's Right to Change Grade.

A change of grade for streets and sidewalks of a city is discretionary with the city. Stegall v. Chattanooga, 16 Tenn. App. 124, 66 S.W.2d 266, 1932 Tenn. App. LEXIS 41 (Tenn. Ct. App. 1932).

3. Liability for Damages.

A municipal corporation, together with railroad corporations occupying the street, on changing the grade of a street becomes liable for the resulting impairment of the right of ingress and egress to and from a lot abutting thereon, in an action for compensatory damages and not for the tort or trespass. Coyne v. Memphis, 118 Tenn. 651, 102 S.W. 355, 1907 Tenn. LEXIS 69 (1907).

Where the destruction of shade trees was not a necessary incident to grading under this section, which was negligently done, the wrongdoer cannot be justified under the statute in a tort action. Lebanon v. Dillard, 155 Tenn. 448, 295 S.W. 60, 1926 Tenn. LEXIS 65 (1927).

Only the city, and not a developer, is liable under this section. Knoxville v. Hunt, 156 Tenn. 7, 299 S.W. 789, 1927 Tenn. LEXIS 80 (1927).

Town is liable to property owner for damages due to grading of state highway routed through town if property owner at time of issuance of deed covering right-of-way is not advised that highway is to be graded. McDonald v. Scott County, 169 Tenn. 374, 87 S.W.2d 1019, 1935 Tenn. LEXIS 58 (1935).

Where city was incorporated after county had assumed liability for taking land for highway purposes and damages incident thereto, city was liable to landowners for value of land taken within corporate limits and damages incident thereto where it recognized its liability and agreed with county to make payments out of funds loaned by county although county was not thereby relieved of its liability to landowners. Charleston v. Ailey, 210 Tenn. 211, 357 S.W.2d 339, 1962 Tenn. LEXIS 426 (1962).

Flooding of land as a result of construction of highway amounted to a taking, the exclusive remedy for which was inverse condemnation, which was barred by the statute of limitations. Burchfield v. State, 774 S.W.2d 178, 1988 Tenn. App. LEXIS 624 (Tenn. Ct. App. 1988), appeal denied, 1989 Tenn. LEXIS 304 (Tenn. June 5, 1989).

4. —Liability for Acts of Others.

A municipal corporation may, by an ordinance, vest in its city engineer the power of establishing the grades of its streets, and, when the grades are established by him under such ordinance, the corporation will be bound by his acts, without any formal adoption or ratification of them by ordinance. Chattanooga v. Geiler, 81 Tenn. 611, 1884 Tenn. LEXIS 78 (1884).

A municipal corporation that permits a third person to grade its streets is liable for the damages resulting from the injury to the ingress and egress of the owners of abutting lots, although such grading was not authorized by any formal or valid ordinance or action of the city authorities. Knoxville v. Harth, 105 Tenn. 436, 58 S.W. 650, 1900 Tenn. LEXIS 88, 80 Am. St. Rep. 901 (1900).

City was liable for damage to plaintiff's property by virtue of removal of soil and trees from plaintiff's property in connection with widening of city street by contractor under contract with state. Wood v. Foster & Creighton Co., 191 Tenn. 478, 235 S.W.2d 1, 1950 Tenn. LEXIS 461 (1950).

5. Right to Compensation.

In the abutting landowner's action, damages for inconvenience resulting during the progress of the work cannot be recovered, but, it seems, this might be made the subject of an independent action. Acker v. Knoxville, 117 Tenn. 224, 96 S.W. 973, 1906 Tenn. LEXIS 42 (1906).

The abutting landowner, whose line extends only to the margin of the street, has the same right of ingress and egress in respect of his abutting property to and from the street, as one whose line extends to the middle of the street and is entitled to damages. Coyne v. Memphis, 118 Tenn. 651, 102 S.W. 355, 1907 Tenn. LEXIS 69 (1907).

The abutting landowner is entitled to compensation for the impairment of his easement of access to and from his abutting premises, resulting from the change of the grade, by lowering the street for the passage of ordinary traffic and by constructing an elevated railroad resting on supports, but at the level of the street before the change was made, notwithstanding such changes were made in the exercise of the police power. Coyne v. Memphis, 118 Tenn. 651, 102 S.W. 355, 1907 Tenn. LEXIS 69 (1907).

Abutting property owner is entitled to damages for the cutting off of ingress or egress by change of grade of existing highway, whether change be made from natural grade or an established grade. Knoxville v. Hunt, 156 Tenn. 7, 299 S.W. 789, 1927 Tenn. LEXIS 80 (1927).

Abutting owner may recover though the change of grade is not on the side of the street where his property is located, if it decreases the value of that property. Knoxville v. Phillips, 162 Tenn. 328, 36 S.W.2d 434, 1930 Tenn. LEXIS 94 (1931).

Abutting property owner is entitled to damages to portion of lot severed from main portion by the right-of-way of a railroad. Knoxville v. Phillips, 162 Tenn. 328, 36 S.W.2d 434, 1930 Tenn. LEXIS 94 (1931).

Landowners whose land was situated at street intersection could not recover additional damages against the city for raising the grade of one of the streets and the construction of a ramp intersecting street up to the raised street where it appeared that such damages were contemplated by the parties when they made a compromise settlement in condemnation proceedings by which the city obtained land for widening the street. Fuller v. Chattanooga, 22 Tenn. App. 110, 118 S.W.2d 886, 1938 Tenn. App. LEXIS 11 (Tenn. Ct. App. 1938).

When a portion of a street immediately adjacent to an owner's property is obstructed so as to destroy or substantially impair the owner's easement of access, such owner is entitled to compensation. Sharber v. Nashville, 27 Tenn. App. 625, 183 S.W.2d 777, 1944 Tenn. App. LEXIS 101 (Tenn. Ct. App. 1944).

This section did not authorize recovery of damages by property owner against city as result of city cutting limbs and branches from a tree standing between street curb and sidewalk so as to insure proper maintenance of city electric light poles, as use of street for light poles was a reasonable use and did not impose an additional burden on the fee of the property owner. Johnson v. Chattanooga, 183 Tenn. 123, 191 S.W.2d 175, 1945 Tenn. LEXIS 281 (1945).

6. —Property Not Abutting on Street.

Where plaintiff's property was near but did not actually abut on street on which the grade was changed but where there was evidence that her access to the property was damaged the court erred in directing a verdict for the city and the case should have been submitted to the jury. Sharber v. Nashville, 27 Tenn. App. 625, 183 S.W.2d 777, 1944 Tenn. App. LEXIS 101 (Tenn. Ct. App. 1944).

7. —Property Subject to Easements.

In assessing damages where it appears that plaintiff's property is intersected by a number of easements of rights-of-way, the property is to be treated as a single tract since the fee to same remained in plaintiff despite the easements. Polk v. Memphis, 15 Tenn. App. 73, — S.W.2d —, 1932 Tenn. App. LEXIS 76 (Tenn. Ct. App. 1932).

8. Measure of Damages.

The measure of damages is the difference between the market value of one's abutting property just before the grading and just afterwards, as for a permanent injury to his land. Acker v. Knoxville, 117 Tenn. 224, 96 S.W. 973, 1906 Tenn. LEXIS 42 (1906).

The measure of damages where an abutting property owner has suffered injury as a result of a change in the street is the depreciation in the market value of the property by reason of the change made. Knoxville v. Phillips, 162 Tenn. 328, 36 S.W.2d 434, 1930 Tenn. LEXIS 94 (1931).

9. —Consideration of Benefits.

Benefits and advantages and general increase in the value of property, shared in by a community as a whole, cannot be considered for the purpose of placing the same to the disadvantage of a particular owner who brings an action against a city for damages for change made in the grade of the street. Acker v. Knoxville, 117 Tenn. 224, 96 S.W. 973, 1906 Tenn. LEXIS 42 (1906).

To justify any deduction for the increased value of the property, the incidental benefits must be special and peculiar to that property, and not those common to all other property in the locality as incident to the improvements. Knoxville v. Barton, 128 Tenn. 177, 159 S.W. 837, 1913 Tenn. LEXIS 37 (1913).

The phrase “all benefits accruing” means accruing to the owner, as the owner of the particular property affected and not as taxpayer or resident of the vicinity sharing benefits common to all. Knoxville v. Barton, 128 Tenn. 177, 159 S.W. 837, 1913 Tenn. LEXIS 37 (1913).

10. Pleading and Practice.

Where, as late as May of 1999, property owner was told that flooding would be remedied once the project was completed, the one year statute of limitations in T.C.A. § 7-31-112 had not expired when the owner's complaint was filed on December 30, 1999; owner testified that he was told the flooding would go away once the road construction was completed, and the owner's girlfriend testified that, on May 6, 1999, the contractors told her that they were aware of the flooding in the owner's house and as soon as the project was done and they put in the permanent road and permanent driveway and the culverts, that the water problem would be fixed. Leonard v. Knox County, 146 S.W.3d 589, 2004 Tenn. App. LEXIS 178 (Tenn. Ct. App. 2004), review or rehearing denied, — S.W.3d —, 2004 Tenn. LEXIS 1237 (Tenn. Oct. 4, 2004).

11. —Parties.

Prior to the Married Women's Emancipation Act the common law rule pertaining to tenancy by the entirety prevailed in this state, and under such joint tenure a husband represented the entirety so that in an action to recover damages to such property, resulting from change in the grade of a street, the wife was not a proper or necessary party to the action. Stegall v. Chattanooga, 16 Tenn. App. 124, 66 S.W.2d 266, 1932 Tenn. App. LEXIS 41 (Tenn. Ct. App. 1932).

12. —Foreign Corporations.

A foreign corporation after filing its charter may maintain an action against a municipal corporation although the property was acquired before such filing of the charter. Louisville Property Co. v. Nashville, 114 Tenn. 213, 84 S.W. 810, 1904 Tenn. LEXIS 83 (1905).

13. —Statute of Limitations.

The right of action given landowners is barred if not brought within one year after the completion or cessation of the works, acts or improvements causing the damage. Mayor, etc., of Chattanooga v. Neely, 97 Tenn. 527, 37 S.W. 281, 1896 Tenn. LEXIS 176 (1896).

Action for damages resulting from widening of thoroughfare abutting plaintiff's property was not barred by statute of limitations where plaintiff's proof showed that work on thoroughfare was not completed one year prior to institution of suit. Oneida v. Hail, 21 Tenn. App. 70, 105 S.W.2d 121, 1937 Tenn. App. LEXIS 8 (Tenn. Ct. App. 1937).

14. — —Application.

Action arising out of interference by city with natural drainage of surface water did not arise out of this section so as to be barred because action was not brought within one year. Dixon v. Nashville, 29 Tenn. App. 282, 203 S.W.2d 178, 1946 Tenn. App. LEXIS 106 (Tenn. Ct. App. 1946).

The one-year statute of limitations set out in this section does not apply where a city creates and maintains a nuisance continuous in character, such as a road whose construction interferes with the natural drainage of the area and causes flooding of another's property. Butts v. South Fulton, 565 S.W.2d 879, 1977 Tenn. App. LEXIS 279 (Tenn. Ct. App. 1977).

15. — —Burden of Proof.

Upon pleading statute of limitations, burden of proof was upon municipality in action by property owner for damages resulting from widening of thoroughfare. Oneida v. Hail, 21 Tenn. App. 70, 105 S.W.2d 121, 1937 Tenn. App. LEXIS 8 (Tenn. Ct. App. 1937).

16. —Evidence.

In the abutting landowner's action, evidence of the cost of the building of a rock wall as a consequence of the grading, of the possible impairment of the right of ingress and egress, of the freedom of the property from the dirt and dust of the street as a result of the improvement, and of the rental value thereof, is admissible and should be considered in determining the damages, and a charge to that effect is proper. Acker v. Knoxville, 117 Tenn. 224, 96 S.W. 973, 1906 Tenn. LEXIS 42 (1906).

In an action by persons owning property abutting upon a street that is being improved by a city, to recover damages resulting from a change in the grade of the street and sidewalk, testimony in direct contradiction to written instrument of release of the city from liability in damages resulting from such change of grade is inadmissible. Stegall v. Chattanooga, 16 Tenn. App. 124, 66 S.W.2d 266, 1932 Tenn. App. LEXIS 41 (Tenn. Ct. App. 1932).

In an action by abutting owners of property on a street, against the city to recover damages resulting from a change in the grade of a street and sidewalk in front of their respective properties, a waiver agreement set up in special bill by defendant city, which was put in issue by the pleadings, was competent evidence, and should not have been excluded upon objection. Stegall v. Chattanooga, 16 Tenn. App. 124, 66 S.W.2d 266, 1932 Tenn. App. LEXIS 41 (Tenn. Ct. App. 1932).

In an action to recover damages from a city, resulting from the change of street and sidewalk grade, to the injury of plaintiff's property, testimony as to a new agreement between the city and plaintiff pertaining to the change in the grade of the street, was not admissible, since a municipal corporation speaks by its minute entry of the resolution adopted by the corporation, where no estoppel is relied upon. Stegall v. Chattanooga, 16 Tenn. App. 124, 66 S.W.2d 266, 1932 Tenn. App. LEXIS 41 (Tenn. Ct. App. 1932).

17. —Charge of Court.

In an action by the abutting landowner, the court's charge that if plaintiff did not own the waterpipes running from the water main in the street to his property line, then any injury to such pipes should not be considered, was not prejudicial to the plaintiff, where a railroad company permitted to occupy the street with its road employed the water company, which owned the pipes, to repair or restore the water connections at the railroad company's cost. Acker v. Knoxville, 117 Tenn. 224, 96 S.W. 973, 1906 Tenn. LEXIS 42 (1906).

18. Statutes Exempting Cities from Liability.

An act providing that certain cities were to be excepted from the provisions of this section was unconstitutional because it denied compensation for private property taken for public use. Coyne v. Memphis, 118 Tenn. 651, 102 S.W. 355, 1907 Tenn. LEXIS 69 (1907).

7-31-113. Maintenance guaranties in paving contracts.

  1. Municipalities have the power to provide in any contract made by them for paving any street, highway, alley, park, or public square, that the contractor shall guarantee to maintain and repair the street, highway, alley, park, or public square, for such time as the governing body or board of the municipality shall deem proper, the expense of which shall be included in the assessment for the construction, and no special or improvement assessment shall be affected or invalidated on account of the guaranty.
  2. The municipalities have the authority to provide the manner and time of payment for the guaranty of maintenance or repairs.

Acts 1919, ch. 121, § 1; Shan. Supp., § 1980a1; mod. Code 1932, § 3396; T.C.A. (orig. ed.), § 6-1013.

7-31-114. Installation of ramps at crosswalks.

  1. Every incorporated city and town shall install ramps at crosswalks, in both business and residential areas, when making new installations of sidewalks, curbs or gutters, or improving or replacing existing sidewalks, curbs or gutters, so as to make the transition from street to sidewalk easily negotiable for persons with disabilities in wheelchairs and for other persons who may have difficulty in making the required step up or down from curb level to street level.
  2. “Ramps,” as used in this section, means a sloping asphalt or concrete surface, from the level of the sidewalk or curb to the level of the street at curbside, extending outward and downward from the curb to the street for such a distance, at such an angle, and at such a width as will facilitate the movement up and down such ramps of persons in wheelchairs or persons who have difficulty in stepping up or down between curb level and street level.
  3. All such ramps shall be constructed or installed in accordance with design specifications for the ramps prepared by the department of transportation. The department shall make available to such municipalities design standards for such ramps.

Acts 1974, ch. 544, §§ 1, 2; T.C.A., § 6-1014; Acts 2011, ch. 47, § 4.

Compiler's Notes. Acts 2011, ch. 47, § 107 provided that nothing in the legislation shall be construed to alter or otherwise affect the eligibility for services or the rights or responsibilities of individuals covered by the provision on the day before the date of enactment of this legislation, which was July 1, 2011.

Acts 2011, ch. 47, § 108 provided that the provisions of the act are declared to be remedial in nature and all provisions of the act shall be liberally construed to effectuate its purposes.

Chapter 32
Improvements by Special Assessment

7-32-101. Chapter definitions — Powers of municipalities.

  1. As used in this chapter, unless the context otherwise requires:
    1. “Assessed value basis” means the apportionment of the applicable cost according to the ratio that the assessed value of the individual parcels of property bears to the total assessed value of all such properties at such time as is determined by the legislative body;
    2. “Benefits received basis” means the apportionment of the applicable costs according to an equitable determination by the legislative body of the municipality of the special benefit received by the individual parcel of property from the public facility, taking into account any of the following factors: square footage of parcels or anticipated improvements, or both, front footage, assessed value, type of use, business classification, property location, zones of benefit or a combination of such factors;
    3. “City clerk” or comparable official includes the clerk or other officer who maintains the records of a municipality;
    4. “Fair basis” means assessed value basis, square foot basis, or benefits received basis;
    5. “Public facility” means roads, streets, sidewalks, utilities, including electrical, gas, water and wastewater improvements, related improvements, parking facilities, parks and greenways and any improvements for public safety, including police and fire stations;
    6. “Mayor” of a municipality in this chapter includes the chief executive officer of any municipality;
    7. “Municipality” or “city” means any town, city, metropolitan government or county;
    8. “Square foot basis” means the apportionment of the applicable costs according to the ratio that the square footage of the individual parcels of property or the buildings expected to be constructed on the property bears to the square footage of all the property or the buildings expected to be constructed on the property; and
    9. “Treasurer” includes the finance director or other chief financial officer of the municipality.
  2. The municipalities whose charters do not contain specific provisions to the contrary, or otherwise, have the power to design, or cause to be designed, contract for, and execute, or cause to be executed, the construction and improvement or the reconstruction or reimprovement of any street, avenue, alley, highway, or other public place, by opening, extending, widening, grading, paving, macadamizing, curbing, guttering, draining, or otherwise improving any street, avenue, alley, highway, or other public place, in such manner and with such materials and with such culverts and drains as the legislative body of such municipality may prescribe, and to cause not less than two thirds (2/3) of the cost or expense of the work and improvements mentioned in this subsection (b) to be assessed against the property abutting or adjacent to the street, avenue, alley, or any other public place so improved.
  3. The municipalities described in subsection (b) shall also have the power to design, or cause to be designed, contract for, execute, or cause to be executed, improvements or alterations for flood control, water management, soil erosion, and disaster relief and to cause not less than two thirds (2/3) of the cost or expense of the work and improvements mentioned in this subsection (c) not paid by federal funds to be assessed against property within the flood plain in which the improvements or alterations are made.
    1. Notwithstanding any local charter provision or other law to the contrary, the legislative body of any municipality may approve the transfer to the municipality of a public facility or property to be improved as a public facility that has been acquired, improved or constructed by a third party, including a private entity, or enter into an agreement with a private entity under which the private entity agrees to pay all or a portion of the costs of a public facility being constructed by the municipality; provided, that, in either case, the municipality reasonably anticipates that private investment of not less than twenty-five million dollars ($25,000,000) will be made on property benefitted by the public facility.
      1. The transfer of any public facility or agreement for a third party to pay costs relating to a public facility shall be documented by written agreement between the municipality and the other party or parties thereto, and the agreement shall be approved in substantially final form by the legislative body of the municipality. The agreement may provide that payment of any amounts under the agreement by the municipality may be contingent upon the availability of funds from the proceeds of bonds issued pursuant to § 7-33-121, and the agreement may also provide that the obligation of a private entity to pay a portion of the cost of a public facility may be reduced to the extent proceeds of bonds issued pursuant to § 7-33-121 are available for such purpose. The mayor of the municipality shall submit the proposed form of the agreement to the legislative body for approval. As a condition to entering into an agreement, the legislative body shall determine that the municipality and the citizens of the municipality will receive a public benefit from entering into the agreement. Before approving any such agreement and the assessment of any portion of any costs to be incurred under the agreement pursuant to § 7-32-115, the legislative body of the municipality shall hold a public hearing relating to the proposed agreement and assessment.
      2. Notice of the public hearing shall be published by the mayor of the municipality in a newspaper of general circulation in the municipality at least two (2) weeks prior to the date of the public hearing. The notice shall include the time, place and purpose of the public hearing and notice of how the proposed form of the agreement and a map of the area that is proposed to be subject to assessment pursuant to § 7-32-115 can be viewed by the public and the date the documents will be available for review, which shall be no later than one (1) week prior to the date of the hearing. Additionally, the notice shall be mailed by the mayor of the municipality or the mayor's designee via certified mail to each owner of property proposed to be subject to assessment at the address of the owner on the records of the assessor of property of the county in which the property is located. The notice may be combined with the notice of assessment required by § 7-32-115(b).
    2. The municipality may pay consideration for any transfer of a public facility pursuant to this subsection (d). The amount of the consideration and the terms of payment for the consideration shall be set forth in the agreement described in subdivision (d)(2); however, the consideration may not exceed the cost documented by the transferring party of acquiring, improving or constructing the public facility, including any costs incurred in the acquisition of the land on which the public facility is or will be located; provided, however, that the municipality may pay the appraised value for the acquisition of real property to be used in connection with public facilities to be constructed or improved by the municipality or other governmental entity. The consideration shall be payable in the manner agreed upon between the municipality and the transferor or transferors of the public facilities and may be payable in the installments and at the times agreed upon by the municipality and the transferor or transferors. Additionally, a municipality may agree as additional consideration for the transfer of a public facility to reimburse the transferor or transferors or a public facility for expenditures made by the transferor or transferors to improve existing public facilities in order to facilitate the construction of the public facility being sold or to connect the public facility being sold to existing public facilities; however, the amount of the reimbursement may not exceed the actual documented cost of the expenditures.
    3. Notwithstanding any other provision to the contrary, §§ 7-32-102 — 7-32-114 shall not apply to the acquisition, improvement or construction of any public facilities pursuant to this subsection (d) or § 7-32-115(b) or any assessments relating to the acquisition, improvement or construction.
    4. The authority granted to municipalities by this subsection (d) shall not be construed to limit in any manner the authority of any municipality to acquire a public facility or any other property or enter into any agreement with another party in accordance with other law or any local charter.
    5. Any action taken by the legislative body under this chapter relating to any agreement entered into pursuant to this subsection (d) or any assessments under § 7-32-115 or any matters relating thereto may be by resolution, adopted at a meeting, regular or special, of the legislative body at which the resolution is introduced and shall take effect immediately upon adoption. Except as specifically provided in this subsection (d), the resolution need not be published or posted or be subject to veto by the municipality's mayor, nor shall the resolution require for its passage more than a majority vote of all members of the legislative body then in office. Any property that is subject to assessment pursuant to § 7-32-115 shall be specifically identified in the resolution that is adopted approving any such assessment. In approving the property that is to be subject to assessment, the legislative body may remove, but not add, any properties to those identified in the map of the properties that are subject to public view prior to the public hearing required as described in subdivision (d)(2).

Acts 1913 (1st Ex. Sess.), ch. 18, § 1; Shan., § 1991a1; mod. Code 1932, § 3408; T.C.A. (orig. ed.), § 6-1101; Acts 2001, ch. 267, § 1; 2007, ch. 493, § 1; 2008, ch. 971, § 1; 2009, ch. 489, §§ 1, 2.

Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.

Acts 2009, ch. 489, § 9 provided that the act, which amended §§ 7-32-101, 7-32-115, 7-32-129, 7-32-133, 7-32-138 and 7-33-121, shall apply to all agreements and assessments entered into or imposed pursuant to § 7-32-101(d) and § 7-32-115(b) on or after July 1, 2007.

Cross-References. Bonds for improvements based on assessed values of benefited properties, §§ 7-33-3017-33-305.

Improvements by city manager-commission charter city, § 6-19-101.

Flood control authorities, title 64, ch. 3.

Textbooks. Tennessee Jurisprudence, 22 Tenn. Juris., Special Assessments, §§ 3, 7.

Law Reviews.

Impact Fees in Tennessee, a Public and Private Partnership (Andrea C. Barach, Jane Pine Wood), 18 Mem. St. U.L. Rev. 685 (1988).

NOTES TO DECISIONS

1. Assessment.

The levy of a special assessment is similar to the levy of any ordinary tax, and is the exercise of governmental sovereignty. Carriger v. Morristown, 148 Tenn. 585, 256 S.W. 883, 1923 Tenn. LEXIS 45 (1923).

2. —Church and Charitable Property.

Property of charitable and religious institutions is subject to assessment. Athens v. Dodson, 154 Tenn. 469, 290 S.W. 36, 1926 Tenn. LEXIS 145 (1926).

Strictness of construction is not to be followed when considering an exemption from taxation in favor of religious, scientific, literary and educational institutions. Athens v. Dodson, 154 Tenn. 469, 290 S.W. 36, 1926 Tenn. LEXIS 145 (1926).

3. —Corner Lots.

Under a private act, corner lots were assessable for improvements on each street up to the statutory limit. Oneida v. Pemberton, 157 Tenn. 624, 12 S.W.2d 389, 1928 Tenn. LEXIS 230 (1928).

4. —County Property.

The property of a county is not liable for street improvement assessment unless power to assess is specially conferred by statute. Morristown v. Hamblen County, 136 Tenn. 242, 188 S.W. 796, 1916 Tenn. LEXIS 123 (1916); State use of Morristown v. Hamblen County, 161 Tenn. 575, 33 S.W.2d 73, 1930 Tenn. LEXIS 42 (1930), rehearing denied, 161 Tenn. 575, 34 S.W.2d 715 (1930).

5. —Homestead.

Under former Tenn. Const., art. XI, § 11 providing that the exemption of the homestead shall not operate against public taxes nor debts for purchase money or improvements, homestead is subject to assessment for street improvement. Reed v. Athens, 146 Tenn. 168, 240 S.W. 439, 1921 Tenn. LEXIS 11 (1921).

6. —Railroad Right-of-Way.

Where a right-of-way of a railroad company is used exclusively for the passage of trains it is not assessable because no benefit is conferred, but it may be assessed where the right-of-way is benefited. Alcoa v. Louisville & N. R. Co., 152 Tenn. 202, 274 S.W. 1110, 1925 Tenn. LEXIS 62 (1925); Rockwood v. Cincinnati, N. O. & T. P. R. Co., 160 Tenn. 31, 22 S.W.2d 237, 1929 Tenn. LEXIS 72 (1929).

7. —Remote Property.

Property remote and not abutting on the improvement is not subject to assessment. Memphis v. Hill, 141 Tenn. 250, 208 S.W. 613, 1919 Tenn. LEXIS 1 (1919).

8. —Estoppel to Question Validity.

Property owners of a street improvement district, by failing to object to the proposed improvement, and by signing a petition for creation of such district, did not thereby estop themselves from questioning the validity of improvement assessment made under an invalid procedure for such improvement (construing Private Acts 1907, ch. 276, §§ 12, 16, and § 2 as amended by Private Acts 1917, ch. 88). Johnson City v. Carnegie Realty Co., 166 Tenn. 655, 64 S.W.2d 507, 1933 Tenn. LEXIS 133 (1933).

Collateral References.

Exclusiveness of method prescribed by statute or ordinance for enforcement of special assessment for public improvement or service. 88 A.L.R.2d 1250.

Traffic, character or extent of, as affecting liability of abutting property to assessment for street paving. 73 A.L.R. 1295.

Unimproved strip or area separating property from improved portion of street as affecting assessability of property for street improvements. 166 A.L.R. 1083.

Widening of city street as local improvement justifying special assessment of adjacent property. 46 A.L.R.3d 127.

7-32-102. Ordinance for improvement.

When the legislative body of any municipality shall determine to construct any improvement authorized by § 7-32-101, it shall adopt an ordinance that such improvement or improvements shall be made, which ordinance shall describe the nature and extent of the work, the character of materials to be used, the location and the terminal points of the proposed improvements, and the flood plain, streets, alleys, highways, or other public places, or part or parts thereof, on which such improvements are to be made, and which shall direct that full details, drawings, plans, specifications, and surveys of the work and estimates be prepared by the city engineer, or such other person as may be designated in the ordinance; or the legislative body may adopt plans for such work already prepared.

Acts 1913 (1st Ex. Sess.), ch. 18, § 2; Shan., § 1991a2; mod. Code 1932, § 3409; T.C.A. (orig. ed.), § 6-1102; Acts 2001, ch. 267, § 2.

NOTES TO DECISIONS

1. Presumption of Compliance.

Where the evidence was clearly satisfactory to chancellor that the necessary jurisdictional steps for the creation of an improvement district and the assessment of the tax therefor had not been complied with by a city, the rule with regard to presumptions in favor of performance of duties by public officials had no application. Cox v. Bristol, 183 Tenn. 82, 191 S.W.2d 160, 1945 Tenn. LEXIS 275 (1945).

7-32-103. Filing of documents.

Details, drawings, plans, specifications, and estimates shall, when completed, be placed on file in the office of the city engineer, or other official designated in the ordinance, where the property owners who may be affected by such improvement may see and examine the details, drawings, plans, specifications, and estimates.

Acts 1913 (1st Ex. Sess.), ch. 18, § 2; Shan., § 1991a3; Code 1932, § 3410; T.C.A. (orig. ed.), § 6-1103.

7-32-104. Appointment of time to hear objections.

The ordinance shall appoint a time when the legislative body of the municipality shall meet, which shall not be less than two (2) weeks after the date of the first publication of notice of the ordinance, to hear any objections or remonstrances that may be made to the improvement, the manner of making objections, or the character of material to be used.

Acts 1913 (1st Ex. Sess.), ch. 18, § 2; Shan., § 1991a4; Code 1932, § 3411; T.C.A. (orig. ed.), § 6-1104.

NOTES TO DECISIONS

1. In General.

This section was not violated where property owners were given only 13 days' notice of hearing for objections to property assessments, as the two-week requirement of this section relates only to hearings on objections to an improvement project. Alcoa v. Ingram, 546 S.W.2d 809, 1976 Tenn. App. LEXIS 215 (Tenn. Ct. App. 1976).

7-32-105. Notice of ordinance and hearing of objections.

Notice of the adoption of an ordinance shall be given by publishing a notice once a week for two (2) consecutive weeks in some newspaper of general circulation in the municipality. It shall not be necessary to set out in full in the notice the ordinance, but the notice shall state the character of the improvement or improvements, the location and terminal points of the improvements, and also the time and place, not less than two (2) weeks from the date of first publication of the notice, at which the legislative body of the municipality shall meet to hear remonstrances or protests against the making of the improvement or improvements.

Acts 1913 (1st Ex. Sess.), ch. 18, § 2; Shan., §§ 1991a5, 1991a6; Acts 1921 Private, ch. 526, § 1; mod. Code 1932, §§ 3412, 3413; T.C.A. (orig. ed.), § 6-1105.

Collateral References.

“Owner,” scope and import of term in statutes as to giving notice of making of local improvements. 2 A.L.R. 790, 95 A.L.R. 1085.

7-32-106. Hearing of objections — Final action on ordinance.

At the time and place appointed, pursuant to § 7-32-105, the legislative body shall meet, and at the meeting, or at the time and place to which the meeting may be adjourned from time to time, all persons whose property may be affected by the improvement or improvements may appear in person or by attorney or by petition and protest against the making of such improvement or improvements, the material to be used, and the manner of making improvement or improvements; and the legislative body shall consider such objections and protests, if any, and may confirm, amend, modify, or rescind the original ordinance. Failure to object or protest at the time of confirmation of the original ordinance shall constitute a waiver of any and all irregularities, omissions, and defects in the proceedings taken prior to such a time.

Acts 1913 (1st Ex. Sess.), ch. 18, § 2; Shan., §§ 1991a7, 1991a8; Code 1932, §§ 3414, 3415; T.C.A. (orig. ed.), § 6-1106.

Cross-References. Waiver of objection to assessment, § 7-32-124.

7-32-107. Undertaking work — Construction contract.

Upon the confirmation of the ordinance, it shall be the duty of the legislative body to proceed to construct the improvements thus authorized, which may be done by contract with the lowest and best responsible bidder, in accordance with the charter of such city or town, or it may be done by the municipality, as it may elect.

Acts 1913 (1st Ex. Sess.), ch. 18, § 3; Shan., § 1991a9; Code 1932, § 3416; T.C.A. (orig. ed.), § 6-1107.

NOTES TO DECISIONS

1. Manner of Letting Contract.

This section does not require competitive bidding. Alcoa v. Ingram, 546 S.W.2d 809, 1976 Tenn. App. LEXIS 215 (Tenn. Ct. App. 1976).

2. —Effect of Irregular Procedure.

The requirement of a statute that paving improvements to be paid for by abutting property owners should be let under contract with the lowest bidder, competing on sealed bids after advertisement, is jurisdictional, and a failure on part of the city to comply renders the assessment unenforceable. Johnson City v. Carnegie Realty Co., 166 Tenn. 655, 64 S.W.2d 507, 1933 Tenn. LEXIS 133 (1933).

Where a contractor was let in to do paving under informal contract and had performed a substantial portion of the work the letting of a formal contract to him upon advertisement for bids at that stage, would not be a mere irregularity but in substance a culpable effort to avoid the mandate of the statute as the city authorities made it impossible for any other contractor to make a bona fide competitive bid for the work. Johnson City v. Carnegie Realty Co., 166 Tenn. 655, 64 S.W.2d 507, 1933 Tenn. LEXIS 133 (1933).

3. —Rights of Property Owners.

Abutting property owners were not estopped to rely upon the city's disregard of statutory mandate as to manner of letting contract where they knew nothing of its willful violation until a time when a protest would have been ineffectual. Johnson City v. Carnegie Realty Co., 166 Tenn. 655, 64 S.W.2d 507, 1933 Tenn. LEXIS 133 (1933).

7-32-108. Security required of bidders.

In case the work is let to the lowest and best responsible bidder, all bids submitted for the construction of an improvement shall be accompanied by a certified check or a suitable bond, with at least two (2) good and solvent sureties, who are citizens or residents of the city or town where the improvement is to be done; or in lieu of personal sureties, the bond of some surety company authorized to do business in this state may be given in a penal sum of at least ten percent (10%) of the entire cost of the work to be done or improvements to be made, computed on the basis of the bid submitted, and conditioned that the contractors named in the bid shall, in case the work is awarded to them, enter into a contract with the city or town within the time required and for the price named in their respective bids, and in accordance with the plans and specifications of the municipality and the ordinance providing for the improvement.

Acts 1913 (1st Ex. Sess.), ch. 18, § 3; Shan., § 1991a10; Code 1932, § 3417; T.C.A. (orig. ed.), § 6-1108.

7-32-109. Rejection of bids — Rebidding.

The legislative body has the power to reject any and all bids and to order new bids.

Acts 1913 (1st Ex. Sess.), ch. 18, § 3; Shan., § 1991a11; Code 1932, § 3418; T.C.A. (orig. ed.), § 6-1109.

7-32-110. Contractor's performance bond.

The successful bidder shall execute a bond to the city or town, in an amount equal to fifty percent (50%) of the entire contract price of the improvement, conditioned that the party shall well and truly perform all of the terms and conditions of the contract, in a good and workmanlike manner, and in accordance with the plans and specifications, which shall form part of the contract, and shall indemnify and hold the city harmless from all losses, costs, and expenses that it may sustain by reason of any negligence or default of such contractor.

Acts 1913 (1st Ex. Sess.), ch. 18, § 3; Shan., § 1991a12; mod. Code 1932, § 3419; T.C.A. (orig. ed.), § 6-1110.

7-32-111. Costs borne by railway.

Should there be a street, electric, interurban or steam railroad track or tracks on any street, alley, avenue, or highway improved under this chapter, the cost of such improvement between the rails and the spaces between such tracks and eighteen inches (18") beyond the outer rail, including switches and turnouts, shall be paid by the owners of such railroad, and shall be assessed and collected from such owner, and shall be a lien upon the railroad and the property used in connection with the railroad and the property; provided, that where any such railroad shall occupy any street, alley, or highway under ordinance or contract with the municipality, it shall pay or improve according to such ordinance or contract, as is provided in § 7-32-113.

Acts 1913 (1st Ex. Sess.), ch. 18, § 14; Shan., § 1991a62; mod. Code 1932, § 3469; T.C.A. (orig. ed.), § 6-1111.

Collateral References.

Liability of street railway that paves or is liable for paving occupied portion of street to assessment for improvement of remainder. 29 A.L.R. 679.

Parkway occupied by street railway company as assessable for street improvements. 10 A.L.R. 164.

7-32-112. Replacement of railway rails.

When any of the improvements authorized by this chapter have been directed to be done by ordinance, as provided in this chapter, the legislative body of such city has the power to require any street or other railroad company to replace the rails that such company may have in such streets with other rails of a kind to be specified by the legislative body, when, in the judgment of the legislative body, the rails ordered to be removed are not suitable to be used with paving that is about to be put down by the body. Should the company refuse to comply with the requirements of the notice, the legislative body has the right, and it shall be its duty, to institute suitable legal proceedings against the company to compel and require the company to lay and replace the rails as are thus specified; and if successful in such legal proceedings, the city shall be entitled to recover from such company any and all costs, expenses, and losses incurred by it because of such refusal and failure of such company to comply with such order.

Acts 1913 (1st Ex. Sess.), ch. 18, § 20; Shan., § 1991a68; mod. Code 1932, § 3475; T.C.A. (orig. ed.), § 6-1112.

7-32-113. Ascertainment of railway's intent.

When any street, highway, avenue, or alley to be improved has located in the street, highway, avenue, or alley the track or tracks of any street railway, interurban railway, or commercial railway company that has agreed to pave any portion of the street, highway, avenue, or alley, and by the terms of its agreement has the option of either doing the work of paving in accordance with the plans and specifications prepared by such city, or of permitting the city or town to do the work at a price to be paid to the city or town by the company, it is the duty of the legislative body, before enacting the ordinance or ordinances providing for the improvement, to ascertain whether the company desires to do its portion of the paving itself or that the same be done by the municipality.

Acts 1913 (1st Ex. Sess.), ch. 18, § 5; Shan., § 1991a17; mod. Code 1932, § 3424; T.C.A. (orig. ed.), § 6-1113.

7-32-114. Deduction of cost payable by railway.

If the company elects to have its portion of the paving done by the municipality, then, and before proceeding to apportion the cost of the improvement upon any lots or parcels of ground abutting on or adjacent to the highway, the board shall first deduct from the total of the improvement the amount that should be paid by such company; and after deducting the amount that is to be paid by such street or other railway company, the legislative body shall proceed to apportion two thirds (2/3) of the balance of the cost of such improvement upon the land abutting on and adjacent to such street, highway, avenue, or alley, as provided in this chapter.

Acts 1913 (1st Ex. Sess.), ch. 18, § 5; Shan., § 1991a18; Code 1932, § 3425; T.C.A. (orig. ed.), § 6-1114.

7-32-115. Apportionment by frontage among property owners.

  1. After the completion of the work or improvement, it shall be the duty of the legislative body, in conformity with the requirements of the ordinance, to apportion at least two thirds (2/3) of the cost of such improvement not paid by federal funds upon the land within the flood plain or abutting on or adjacent to the street, highway, avenue, alley, or other public place, which apportionment shall be made against the land, and the several lots or parcels of the land, according to the frontage of the lots or parcels on the street, highway, avenue, or alley.
    1. If a municipality enters into an agreement pursuant to § 7-32-101(d), the legislative body of the municipality may apportion the costs incurred by the municipality under the agreement and all other costs authorized by this subsection (b) among each parcel of property that is determined by the legislative body to directly benefit from the public facilities that are the subject of the agreement on a fair basis, as defined in § 7-32-101, and shall levy an assessment on each parcel of property of the amount so apportioned.
    2. In addition to amounts authorized to be apportioned and assessed pursuant to subdivision (b)(1), the municipality may also apportion and assess the following costs in connection with the assessment:
      1. Costs incurred by the municipality or other public entity at the request of the other party to the agreement entered into pursuant to § 7-32-101(d) to pay costs of public facilities that will benefit the property subject to assessment;
      2. All costs relating to the issuance of bonds or other obligations pursuant to § 7-33-121 including interest expense and such amounts as the municipality deems necessary to pay capitalized interest on the bonds to the extent permitted by applicable law and to fund reserve funds to secure the payment of the bonds or other obligations; and
      3. All other fiscal, legal and administrative expenses of the municipality relating to the agreement entered into pursuant to § 7-32-101(d), any assessment under this chapter or any related financing. A municipality's determination that public facilities benefit the property subject to assessment under this chapter shall be conclusive.
    3. If a municipality levies assessments with respect to parcels of properties pursuant to this subsection (b), the municipality shall also be authorized to levy an annual assessment as to those parcels, without any further authorization from the governing body of the municipality, in the same proportion as the assessments are levied pursuant to subdivision (b)(1) to pay the costs reasonably estimated by the municipality to be incurred in connection with the administration and collection of the assessments.
    4. The legislative body of the municipality is authorized to adopt such policies and procedures as the legislative body deems appropriate to administer assessments imposed under this subsection (b), including, but not limited to, policies relating to the rate and methodology governing the implementation of the assessment. The policies and procedures may also address such matters as the reapportionment of assessments upon the request of property owners, reallocation of assessments upon subdivision of property, credits against assessment payments based upon other available funds, including earnings on reserve funds, maintenance of an assessment roll and procedures for the prepayment of assessments.
    5. A municipality may levy a maximum assessment under this subsection (b) based upon the estimated cost of the public facilities and other permitted costs being assessed, and, in such case, the amount of the assessment shall be reduced by the municipality once the actual costs are established by the municipality and may provide that assessments may become effective at different periods of time to take into account when the costs being assessed will be incurred. The legislative body of the municipality may also provide that assessments shall only be effective upon any issuance of bonds or other obligations pursuant to § 7-33-121.
      1. Each person owning property affected by the levy of an assessment shall receive written notice of:
        1. The method of apportionment of the assessment; and
        2. The amount of the assessment allocated to the owner's parcel.
      2. The notice shall be delivered by certified mail to the address listed on the records of the assessor of property of the county in which the property is located.
    6. For purposes of apportioning and assessing costs pursuant to this subsection (b), §§ 7-32-116 — 7-32-118 and § 7-32-121(c) shall not be applicable.

Acts 1913 (1st Ex. Sess.), ch. 18, § 4; Shan., § 1991a13; Code 1932, § 3420; T.C.A. (orig. ed.), § 6-1115; Acts 2001, ch. 267, § 3; 2007, ch. 493, § 2; 2008, ch. 971, § 1; 2009, ch. 489, § 3.

Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.

Acts 2009, ch. 489, § 9 provided that the act, which amended §§ 7-32-101, 7-32-115, 7-32-129, 7-32-133, 7-32-138 and 7-33-121, shall apply to all agreements and assessments entered into or imposed pursuant to § 7-32-101(d) and § 7-32-115(b) on or after July 1, 2007.

Textbooks. Tennessee Jurisprudence, 22 Tenn. Juris., Special Assessments, § 8.

Collateral References.

Eminent domain: consideration of fact that landowner's remaining land will be subject to special assessment in fixing severance damages. 59 A.L.R.3d 534.

Widening of city street as local improvement justifying special assessment of adjacent property. 46 A.L.R.3d 127.

7-32-116. Limitation on aggregate amount of assessment.

  1. The aggregate amount of the levy or assessment made against any lot or parcel of land shall not exceed one half (½) of the cash value of the lot and improvements on the lot.
  2. By cash value, it is the intent of this section to mean the fair sale price of the lot and improvements on the lot if sold at a voluntary sale.
  3. The city or town shall pay any part of the levy or assessment against any such lot or parcel of land as may be in excess of one half (½) of the cash value of the lot or parcel of land.

Acts 1913 (1st Ex. Sess.), ch. 18, § 4; Shan., § 1991a14; Code 1932, § 3421; Acts 1951, ch. 94, § 1; T.C.A. (orig. ed.), § 6-1116.

Textbooks. Tennessee Jurisprudence, 22 Tenn. Juris., Special Assessments, § 8.

NOTES TO DECISIONS

1. Value of Lot.

The value of lot is not determined by the value of the naked lot, but by the value of the lot and improvements thereon. Drinnen v. Maryville, 9 Tenn. App. 151, — S.W. —, 1927 Tenn. App. LEXIS 223 (Tenn. Ct. App. 1927).

7-32-117. Apportionment of cost of intersection improvements.

Where intersections of any street, avenue, or other highway are improved, the municipality shall pay one third (1/3) of the cost of the improvement, and the balance shall be assessed against the property of the street improved and the intersecting street or streets for one half (½) a block in all directions according to the frontage of the property; provided, that the cost to be assessed against railways having tracks within such intersections shall be deducted from the cost of such intersections to be paid by the municipality and property owners.

Acts 1913 (1st Ex. Sess.), ch. 18, § 4; Shan., § 1991a15; Code 1932, § 3422; T.C.A. (orig. ed.), § 6-1117.

7-32-118. Property owners bearing entire cost.

In the event a petition is presented to the legislative body of the municipality averring the willingness of each of the signers to pay their pro rata share of the entire cost of any improvement such as is authorized by this chapter, and relieve the municipality from the payment of any part of the improvement as to any street, highway, or alley, or part or parts thereof, which petition is signed by the owners of at least seventy-five percent (75%) of the frontage of the lots or parcel of land abutting on such street, highway, or alley or part or parts thereof, proposed to be thus improved, such petition may be granted by the legislative body; and then proceedings may be had under this chapter and chapter 33 of this title, the same in all respects as if the improvement had been begun by the legislative body on its own initiative. Bonds may be issued and assessments shall be made, except that the assessments shall, in such event, be made for the entire cost of the improvement, and bonds may be issued for the entire cost instead of assessments being made and bonds being issued for only two thirds (2/3) of the cost of the improvements; provided, that no assessment under this section shall in any event exceed on any lot one half (½) of the assessed value of the lot for municipal taxes for the current year, and all other provisions of this chapter and chapter 33 of this title shall be applicable in respect of any improvement made under this section, except as in this section otherwise expressly provided.

Acts 1913 (1st Ex. Sess.), ch. 18, § 15; Shan., § 1991a63; Code 1932, § 3470; modified; T.C.A. (orig. ed.), § 6-1118.

7-32-119. Costs of improvements.

The cost of any improvement contemplated in this chapter shall include the expense of the preliminary and other surveys, the inspection and superintendence of the work, the preparation of plans and specifications, the printing and publishing of notices, resolutions, and ordinances required, including notice of assessment, preparing bonds, interest on bonds, and any other expense necessary for the completion of the improvement; provided, that the cost of any guaranty or maintenance of any work constructed under the terms of this chapter shall not be assessed against the property abutting on or adjacent to street or streets or other ways improved.

Acts 1913 (1st Ex. Sess.), ch. 18, § 4; Shan., § 1991a16; mod. Code 1932, § 3423; T.C.A. (orig. ed.), § 6-1119.

Collateral References.

Eminent domain: consideration of fact that landowner's remaining land will be subject to special assessment in fixing severance damages. 59 A.L.R.3d 534.

7-32-120. Water connections.

  1. Before making any of the improvements contemplated in this chapter, the legislative body shall have the power to order the owners of all abutting real estate to connect their several premises with water mains located in the streets or highways adjacent to their several premises; and upon default of the owners for thirty (30) days after such order to make connection, the city may contract for and make the connection aforementioned, at such distances, under such regulations, and in accordance with such specifications as may be prescribed by the legislative body; and the whole cost of each connection shall be assessed against the premises with which the connection is made.
  2. Any number of such connections may be included in one (1) contract, and the cost thereof shall be added to the final levy or assessment made against the property of each lot owner, as hereinbefore provided.

Acts 1913 (1st Ex. Sess.), ch. 18, § 17; Shan., § 1991a65; Code 1932, § 3472; T.C.A. (orig. ed.), § 6-1120.

Cross-References. Requiring sewer and water connections, § 7-35-201.

7-32-121. Notice of apportionment completion and hearing on objections.

  1. When the legislative body has completed apportionment, the city clerk, or such person as may be designated by the legislative body of the city, shall publish a notice that the assessment list has been completed, and that, on a day named, which shall be not less than ten (10) days after the date of publication of the notice, the city council or board will consider any and all objections to the apportionment that have been filed in the office of the city clerk or person designated.
  2. The notice shall further recite that the lists are in the office of the city clerk or person designated, and may be inspected within business hours and during the time specified by anyone interested.
  3. The notice shall also state the general character of the improvement and the terminal points of the improvement.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., §§ 1991a19, 1991a20; Code 1932, §§ 3426, 3427; T.C.A. (orig. ed.), § 6-1121.

Cross-References. Notice of new assessment replacing assessment set aside, § 7-32-127.

NOTES TO DECISIONS

1. Sufficiency of Compliance.

There was a substantial compliance with the law where assessment roll, which purported on its face to be an apportionment and assessment, was approved in a meeting by city council notice published, and roll duly entered in a well ruled book in city recorder's office even though roll was not copied into the minutes of the council meeting. Lenoir City v. Ellison, 10 Tenn. App. 37, — S.W.2d —, 1928 Tenn. App. LEXIS 7 (Tenn. Ct. App. 1928).

7-32-122. Filing objections to assessments.

All persons whose property it is proposed to assess for the cost of the improvement or any costs incurred pursuant to § 7-32-101(d) may, at any time on or before the date named in the notice, and before the meeting of the legislative body, file in writing with the city clerk or person designated any objections or defense to the proposed assessment or to the amount of the assessment.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., § 1991a21; mod. Code 1932, § 3428; T.C.A. (orig. ed.), § 6-1122; Acts 2007, ch. 493, § 3.

7-32-123. Hearing on assessments and objections.

On the date named in the notice, or at any day to which the meeting may be adjourned or to which consideration of the assessments and the objections to the assessment may be postponed, the legislative body shall hear and consider the assessment and objections to the assessment, and, after so doing, shall confirm, modify, or set aside the assessments as shall be deemed right and proper. If any objections to an assessment to pay costs pursuant to § 7-32-101(d) are made, the confirmation of the assessment shall require the unanimous approval of the members of the legislative body present at the meeting at which the objection is considered.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., § 1991a22; Code 1932, § 3429; T.C.A. (orig. ed.), § 6-1123; Acts 2007, ch. 493, § 4.

7-32-124. Failure to object to assessments.

  1. If no objection to the assessment or the amount of the assessment is filed, or if the property owners fail to appear in person or by attorney and present the objection, the assessment shall be confirmed and made final.
  2. Property owners who do not file objection in writing or protest against the assessment shall be held to have consented to the assessment and are forever barred to attack the regularity, validity, or legality of the assessment.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., §§ 1991a23, 1991a24; Code 1932, §§ 3430, 3431; T.C.A. (orig. ed.), § 6-1124; Acts 2007, ch. 493, § 5.

Cross-References. Waiver of objections to the improvement, § 7-32-106.

NOTES TO DECISIONS

1. Effect of Failure to Object.

One, not availing of method provided for objections or protests, cannot, in an action by the municipality to collect the assessment, be heard to protest that no benefit was received. Johnson City v. Carolina, C. & O. R. Co., 163 Tenn. 283, 43 S.W.2d 215, 1931 Tenn. LEXIS 113 (1931).

2. Enjoining Assessments.

The insistence of the city that the chancery court was without jurisdiction to entertain a bill to enjoin assessment for repaving street was not well taken. Edgington v. Memphis, 152 Tenn. 152, 274 S.W. 548, 1925 Tenn. LEXIS 56 (1925).

7-32-125. Final action on assessments.

  1. The confirmation and final action by the legislative body specified in § 7-32-124 shall be done at a single meeting of the body.
  2. It is hereby declared that the provisions of the charters of the cities in reference to the passage of ordinances shall not be applicable to the action of the bodies in levying such assessments, except that such levy or assessment shall be approved by the mayor, and in the event the mayor refuses to approve or vetoes the levies or assessments, which the mayor shall do as a whole, such levies or assessments shall be passed over the mayor's veto in like manner as ordinances or resolutions are passed over such vetoes.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., § 1991a25; Code 1932, § 3432; T.C.A. (orig. ed.), § 6-1125.

7-32-126. Appeal on assessments.

  1. When any owner or part owner of any of the lots of lands in the flood plain or abutting on or adjacent to any street, highway, avenue, or alley that is improved or about to be improved as provided in this chapter, and upon or against which lots or lands, levies or assessments have been made for the purpose of paying for such improvement, as has been provided in this chapter, shall be aggrieved by the action of the legislative body of such city in confirming the levies or assessments made by the legislative body as mentioned in this chapter, such owner or person shall have the right to appeal from the action of such legislative body to the circuit court of the county in which such city or town is located; provided, that the owner made objection or protest to the levies or assessments at the time provided for and appointed for objecting to the levies or assessments, such appeal shall be perfected by filing with the clerk of such circuit court a petition setting forth the facts in regard to such levies and assessments and the irregularities or illegal acts in the making of the levies or assessments; and such clerk shall then notify such city or town to deliver a copy of such levies or assessments, and all proceedings had in reference to the levies or assessments, to the clerk of the circuit court, and such case then be docketed for trial as other civil causes at law. The appeal of any individual shall not affect the legality of such levy or assessment as to other property involved in the levies or assessments. Such appeal shall be perfected within thirty (30) days after the final action of the legislative body making such levies or assessments, and if not perfected within this time, the levies or assessments shall be regarded as final, and shall not be reviewed by certiorari, injunctions, bills to quiet title or otherwise by any of the courts.
  2. Notwithstanding subsection (a), an owner of property subject to an assessment may irrevocably waive the owner's right to appeal in the contract for installment payments described in § 7-32-134 or by otherwise evidencing waiver in writing.

Acts 1913 (1st Ex. Sess.), ch. 18, § 19; Shan., § 1991a67; Code 1932, § 3474; T.C.A. (orig. ed.), § 6-1126; Acts 2001, ch. 267, § 4; 2007, ch. 493, § 6.

NOTES TO DECISIONS

1. Injunction.

Defense to bill in chancery for injunction against city from collecting paving assessment that exclusive remedy was at law under this section was waived where city elected to answer and filed a cross bill for collection of taxes other than special assessments. Cox v. Bristol, 183 Tenn. 82, 191 S.W.2d 160, 1945 Tenn. LEXIS 275 (1945).

7-32-127. New assessment to replace assessment set aside.

If in any court any final assessment made in pursuance of this chapter is set aside for irregularities, omissions, or defects in the proceedings, then the legislative body of such city may, upon recommendation and notice as required in the making of an original assessment, make a new assessment in accordance with this chapter.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., § 1991a28; Code 1932, § 3435; T.C.A. (orig. ed.), § 6-1127.

Cross-References. Notice of assessments, § 7-32-121.

7-32-128. Correction of errors.

Any error, mistake of name, number of lot, amount, or other irregularity may at any time be corrected; and no such levy or assessment shall ever be declared void or invalid by reason of any error, mistake, or irregularity, but the person aggrieved may have the error, mistake, or irregularity corrected by application to the legislative body of the city or town.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., § 1991a27; Code 1932, § 3434; T.C.A. (orig. ed.), § 6-1128.

7-32-129. Delivery of assessments to tax collector — Indexing of information.

  1. After the legislative body has levied the assessments against certain parcels of property, the city clerk or person designated shall deliver the assessments to the tax collector of the municipality, who shall enter the assessments into the tax collector's records, which shall include the following information:
    1. Name of owner of the property;
    2. The amount that has been assessed against the parcel of property; and
    3. Any other information deemed appropriate.
  2. The information in subsection (a) shall be indexed according to the names of the owners of the property.

Acts 1913 (1st Ex. Sess.), ch. 18, § 8; Shan., § 1991a34; Code 1932, § 3441; T.C.A. (orig. ed.), § 6-1129; Acts 2001, ch. 267, § 5; 2007, ch. 493, § 7; 2009, ch. 489, § 4.

Compiler's Notes. Acts 2009, ch. 489, § 9 provided that the act, which amended §§ 7-32-101, 7-32-115, 7-32-129, 7-32-133, 7-32-138 and 7-33-121, shall apply to all agreements and assessments entered into or imposed pursuant to 7-32-101(d) and 7-32-115(b) on or after July 1, 2007.

NOTES TO DECISIONS

1. Sufficiency of Compliance.

There was a substantial compliance with the law where assessment roll, which purported on its face to be an apportionment and assessment, was approved in a meeting by city council notice published, and roll duly entered in a well ruled book in city recorder's office even though roll was not copied into the minutes of the council meeting. Lenoir City v. Ellison, 10 Tenn. App. 37, — S.W.2d —, 1928 Tenn. App. LEXIS 7 (Tenn. Ct. App. 1928).

Assessment against property owner was not void for lack of sufficient description where record as a whole showed a substantial compliance with this section. Lenoir City v. Boggs, 15 Tenn. App. 98, — S.W.2d —, 1931 Tenn. App. LEXIS 117 (Tenn. Ct. App. 1931).

7-32-130. Entries in assessment book — Copies.

The special assessment book referred to in § 7-32-129 shall be a book of original entries for any and all purposes, and certified copies of the entries shall be competent evidence in all cases in all the courts.

Acts 1913 (1st Ex. Sess.), ch. 18, § 16; Shan., § 1991a64; Code 1932, § 3471; T.C.A. (orig. ed.), § 6-1130.

7-32-131. Lien of assessment — Tax sale.

  1. All such assessments shall constitute a lien on the respective lots or parcels of land upon which they are levied, superior to all other liens except those of the state, county and city for taxes.
  2. The enforcement by the state, county, and city of their liens for taxes on any lot or parcel of land upon which has been levied an assessment for any improvement authorized by this chapter shall not operate to discharge or in any manner affect the city's or town's lien for such assessment; however, a purchaser at a tax sale by the state, county, or city of any lot or parcel of land upon which the assessment has been levied shall take the same subject to the lien of such assessment, and if bought by the state, any conveyance of the title thus acquired or any redemption shall be subject to the lien of such assessment.

Acts 1913 (1st Ex. Sess.), ch. 18, § 6; Shan., § 1991a26; Code 1932, § 3433; T.C.A. (orig. ed.), § 6-1131.

NOTES TO DECISIONS

1. Statute of Limitations.

In suit by a city to enforce its lien for unpaid second and subsequent installments of street paving assessments, the rights of the parties are governed by § 28-3-110, as to the statute of limitations. Knoxville v. Gervin, 169 Tenn. 532, 89 S.W.2d 348, 1935 Tenn. LEXIS 80, 103 A.L.R. 877 (1936).

Assessments levied on land in an improvement district do not create a perpetual lien as against the statute of limitations. Knoxville v. Gervin, 169 Tenn. 532, 89 S.W.2d 348, 1935 Tenn. LEXIS 80, 103 A.L.R. 877 (1936).

2. Judgment.

When the statute provides for a lien on the property only, a money judgment against the owner is erroneous. Johnson City v. Carolina, C. & O. R. Co., 163 Tenn. 283, 43 S.W.2d 215, 1931 Tenn. LEXIS 113 (1931).

7-32-132. Warrant for and payment of assessments.

The tax collector shall issue the tax collector's receivable warrant to the individual or owner desiring to pay any of the assessments, which amount shall be paid to the treasurer of the city as other taxes and revenues of the city are now paid.

Acts 1913 (1st Ex. Sess.), ch. 18, § 8; Shan., § 1991a35; Code 1932, § 3442; T.C.A. (orig. ed.), § 6-1132.

7-32-133. Date assessments due — Installment payments.

  1. All assessments levied by virtue of this chapter shall be due and payable within thirty (30) days after the assessment is made final pursuant to § 7-32-125; but at the election of the property owner, to be expressed by notice as provided in § 7-32-134, the assessment may be paid in five (5) annual installments, and shall bear interest at the rate of six percent (6%) per annum, interest payable semiannually.
  2. For an assessment levied pursuant to § 7-32-115(b), the municipality may permit payment of the assessment in installments, made not more frequently than monthly and amortized for a period not to exceed thirty (30) years from the date of acquisition and accruing interest at a rate to be determined by the municipality; however, the interest rate shall not exceed the maximum rate of interest permitted by law. Property owners at the time of the initial assessment shall enter into a written agreement detailing the terms of the installment payments pursuant to § 7-32-134.

Acts 1913 (1st Ex. Sess.), ch. 18, § 7; Shan., § 1991a29; Acts 1921 Private, ch. 526, § 1; mod. Code 1932, § 3436; T.C.A. (orig. ed.), § 6-1133; Acts 2007, ch. 493, § 8; 2009, ch. 489, § 5.

Compiler's Notes. Acts 2009, ch. 489, § 9 provided that the act, which amended §§ 7-32-101, 7-32-115, 7-32-129, 7-32-133, 7-32-138 and 7-33-121, shall apply to all agreements and assessments entered into or imposed pursuant to § 7-32-101(d) and § 7-32-115(b) on or after July 1, 2007.

Textbooks. Tennessee Jurisprudence, 22 Tenn. Juris., Special Assessments, § 9.

7-32-134. Contract for installment payments.

  1. A property owner desiring to exercise the privilege of payment by installments shall, before the expiration of the thirty (30) days provided for in § 7-32-133, enter into an agreement in writing with the municipality that, in consideration of such privilege, the property owner will make no objection to any illegality or irregularity with regard to the assessment against such property owner's property, and will pay the assessment, as required by law, with the specified interest. Where an assessment is levied against a parcel of property that is subject to or becomes subject to a horizontal property regime, a condominium regime, a time-share regime or a vacation club regime, the officers of the organization representing the owners of interests in such parcel of property or managing such property on behalf of the owners of interests in such parcel of property may enter into such agreement to pay the assessment by installments and such agreement shall be binding upon all owners of interests in property represented in such organization or managed by such organization.
  2. The agreement shall be filed in the office of the city clerk or person designated by the municipality.

Acts 1913 (1st Ex. Sess.), ch. 18, § 7; Shan., § 1991a30; Code 1932, § 3437; T.C.A. (orig. ed.), § 6-1134; Acts 2010, ch. 958, § 1.

Textbooks. Tennessee Jurisprudence, 22 Tenn. Juris., Special Assessments, § 9.

NOTES TO DECISIONS

1. Failure to Enter into Agreement in Writing.

Under Public Acts 1913 (1st Ex. Sess.), ch. 18, § 7 as amended by Private Acts 1921, ch. 526, the failure or omission of the city of Jackson to require the making of a written agreement by the taxpayer not to contest the debt as a prerequisite to electing to pay the assessments in annual installments did not prejudice the rights of the taxpayer, and taxpayer who elected to make payment of the assessment in 10 annual installments as permitted by the Act of 1913 as amended by the Act of 1921 and who made three payments under such provisions was not entitled to maintain that upon the failure of the city to exact such a written agreement, the entire assessment became due 30 days after the assessment was final so that the unpaid assessments were barred by the statute of limitations at the time of suit. Jackson v. Willett, 178 Tenn. 605, 162 S.W.2d 367, 1942 Tenn. LEXIS 1, 140 A.L.R. 1437 (1942).

Collateral References.

Installment plan of payment as affecting duration of lien of special assessment. 114 A.L.R. 399.

7-32-135. Payment date without installment contract.

In all cases where an agreement pursuant to § 7-32-134 has not been signed and filed within the time limit, the entire assessment shall be payable in cash, without interest, before the expiration of thirty (30) days.

Acts 1913 (1st Ex. Sess.), ch. 18, § 7; Shan., § 1991a31; Code 1932, § 3438; T.C.A. (orig. ed.), § 6-1135.

7-32-136. Prepayment of installments.

  1. Any property owner who elects to pay the property owner's assessments in five (5) annual installments pursuant to § 7-32-134 shall have the right and privilege of paying the assessment in full at any installment period by paying the full amount of the installments, together with all accrued interest, and an additional sum equal to one half (½) the annual interest on the installments.
  2. Notwithstanding subsection (a), an owner of property subject to an assessment may irrevocably waive the owner's right to prepay the assessment in the contract for installment payments described in § 7-32-134 or by otherwise evidencing waiver in writing.

Acts 1913 (1st Ex. Sess.), ch. 18, § 7; Shan., § 1991a32; Code 1932, § 3439; T.C.A. (orig. ed.), § 6-1136; Acts 2007, ch. 493, § 9.

7-32-137. Default in installment payments.

If any property owner defaults in the payment of any installment and interest on the installments, all of the installments, with interest, and an additional sum equal to one half (½) the annual interest, shall become immediately due and payable.

Acts 1913 (1st Ex. Sess.), ch. 18, § 7; Shan., § 1991a33; Code 1932, § 3440; T.C.A. (orig. ed.), § 6-1137.

NOTES TO DECISIONS

1. Statute of Limitations.

Municipality by accepting payment after default waives the default and both obligor and obligee are estopped from relying upon first default to set up bar of the statute of limitations, in that when settlement has been made on all past due installments waiver would apply to both. Morristown v. Davis, 172 Tenn. 159, 110 S.W.2d 337, 1937 Tenn. LEXIS 65, 113 A.L.R. 1164 (1937).

7-32-138. Attachment on delinquency in payments — Sale of land.

  1. Whenever any installments of any assessments become past due for a period of sixty (60) days, it is the duty of the tax collector of the city to certify the installment and all other installments of the same assessment to the city attorney, whose duty it shall be to immediately enforce the collection of the installment or installments, by attachment levied upon the lot or parcel of ground upon which such assessment was levied. In case of any such delinquency, attachment shall be sued out and the lien under the attachment enforced in the chancery court of the county where the land is located. Alternatively, the municipality may collect any installments of any assessments that are past due in the same manner that the municipality is authorized to collect property taxes of the municipality.
  2. Any land so attached may be sold in the attachment proceedings in bar of the equity of redemption and all other rights, legal or equitable, belonging to the owners of the land.

Acts 1913 (1st Ex. Sess.), ch. 18, § 8; Shan., § 1991a36; Code 1932, § 3443; T.C.A. (orig. ed.), § 6-1138; Acts 2009, ch. 489, § 6.

Compiler's Notes. Acts 2009, ch. 489, § 9 provided that the act, which amended §§ 7-32-101, 7-32-115, 7-32-129, 7-32-133, 7-32-138 and 7-33-121, shall apply to all agreements and assessments entered into or imposed pursuant to 7-32-101(d) and 7-32-115(b) on or after July 1, 2007.

7-32-139. Purchase by city — Resale by city.

Whenever such proceedings taken by any such city or town result in the sale of any lot of ground to pay any installment or installments of such levies or assessments, the mayor of such city or town shall have the right to bid at such sale up to the amount of all of the assessments that are outstanding against the property. If the property is struck off to the mayor, the title of the property shall be taken in the name of the municipality. The mayor shall thereafter have the power to execute a quitclaim deed of such city to any individual who tenders in consideration of the quitclaim deed the amount of such special assessments that may have been levied against such property, together with all costs, interest, or charges that may have been incurred in the effort to collect such assessments.

Acts 1913 (1st Ex. Sess.), ch. 18, § 18; Shan., § 1991a66; Code 1932, § 3473; T.C.A. (orig. ed.), § 6-1139.

7-32-140. Power to borrow and pay for improvements.

The municipalities affected by this chapter shall have the authority and power to borrow money for the purpose of making payments for the improvements contemplated in this chapter in anticipation of realization of funds, either by the sale of bonds or special assessments. Such municipalities are further authorized to make payments out of any funds on hand or such funds as may be available for either that portion of the work to be assessed against the abutting property owners or owners of property in a flood plain or to be paid by the municipality itself. Nothing in this chapter or chapter 33 of this title shall be construed to prohibit the municipalities affected hereby from making payment of the entire cost of such improvements out of any funds that may be provided or available for such purposes.

Acts 1913 (1st Ex. Sess.), ch. 18, § 23; Shan., § 1991a84; Code 1932, § 3491; T.C.A. (orig. ed.), § 6-1140; Acts 2001, ch. 267, § 6.

7-32-141. Supplemental to other law.

This chapter and chapter 33 of this title shall not repeal, modify, or interfere with the operation of any special or local assessment or abutting property law enacted for the benefit of any particular city or cities; provided, that such chapters shall be additional and supplemental to the powers conferred by such local or special law, and any municipality may take advantage of any of the rights, powers, and authority conferred by such chapters, in addition to those which such cities now possess.

Acts 1913 (1st Ex. Sess.), ch. 18, § 25; Shan., § 1991a86; mod. Code 1932, § 3493; T.C.A. (orig. ed.), § 6-1141.

NOTES TO DECISIONS

1. Effect of Private Act.

This chapter and ch. 33 of this title were not repealed by Private Acts of 1917, ch. 374 insofar as it applied to town of Rockwood where such act provided another method for improvement of streets in such town by creation of “improvement districts,” since method approved in private act was not exclusive as it only covered improvements made within improvement district. Rockwood v. Rodgers, 154 Tenn. 638, 290 S.W. 381, 1926 Tenn. LEXIS 163 (1926).

7-32-142. Construction of chapter.

This chapter, being necessary to secure and preserve public health, safety, convenience and welfare, shall be liberally construed to effect its purposes.

Acts 2007, ch. 493, § 10.

Chapter 33
Improvement Bonds

Part 1
General Provisions

7-33-101. Power to issue bonds to pay improvement costs.

When the legislative body shall have ordered the construction of any improvement in accordance with the terms of chapter 32 of this title, the legislative body shall have the power, for the purpose of providing means to pay that portion of the cost of the improvement not chargeable to the municipality proper, to issue negotiable bonds of the municipality pursuant to the Local Government Public Obligations Law, compiled in title 9, chapter 21 to the amount in par value not exceeding two thirds (2/3) of the estimated cost of any such improvement or improvements, which cost shall, for this purpose, be estimated by the legislative body in the ordinance authorizing the issue of the bonds.

Acts 1913 (1st Ex. Sess.), ch. 18, § 9; Shan., § 1991a37; Code 1932, § 3444; T.C.A. (orig. ed.), § 6-1201; Acts 1988, ch. 750, § 14.

Cross-References. Bonds for improvements based on assessed values of benefited properties, title 7, ch. 33, part 3.

Borrowing authorized for improvements by special assessment, § 7-32-140.

Limitation on actions on bonds, § 28-3-113.

Provisions of chapter supplemental, § 7-32-141.

Special assessments, title 7, ch. 32.

NOTES TO DECISIONS

1. Constitutionality of Bond Issue.

The issuance of bonds was not the lending of the city's credit, in violation of Tenn. Const., art. II, § 29, for the benefit of particular individuals without submitting the issue to the vote of the people even though the abutting owners received a peculiar benefit and were especially assessed for it. Imboden v. Bristol, 132 Tenn. 562, 179 S.W. 147, 1915 Tenn. LEXIS 46 (1915).

2. Legislative Authority.

Where the credit of a city is to be used for the improvement of a certain part of its streets, it may issue its bonds therefor, if due authority is given by the general assembly, without a submission of the matter to a vote of the people. Imboden v. Bristol, 132 Tenn. 562, 179 S.W. 147, 1915 Tenn. LEXIS 46 (1915); Reed v. Athens, 146 Tenn. 168, 240 S.W. 439, 1921 Tenn. LEXIS 11 (1921).

3. Effect of Private Act.

This chapter and ch. 32 of this title were not repealed by Private Acts of 1917, ch. 374 insofar as it applied to town of Rockwood where such act provided another method for improvement of streets in such town by creation of “improvement districts,” since method approved in private act was not exclusive as it only covered improvements made within improvement district. Rockwood v. Rodgers, 154 Tenn. 638, 290 S.W. 381, 1926 Tenn. LEXIS 163 (1926).

7-33-102 — 7-33-113. [Repealed.]

Compiler's Notes. Former §§ 7-33-1027-33-113 (Acts 1913 (1st Ex. Sess.), ch. 18, § 9; 1921 Private, ch. 526, § 1; Code 1932, §§ 3445-3451, 3454-3460; Shan., §§ 1991a38-1991a44, 1991a47-1991a53; Acts 1980, ch. 601, § 3; T.C.A. (orig. ed.), §§ 6-1202 — 6-1213), concerning general provisions of improvement bonds, were repealed by Acts 1988, ch. 750, § 15.

7-33-114. Assessments set aside for payment of bonds.

The legislative body of the municipality shall provide by ordinance that the assessments levied upon the property abutting on the streets, alleys, or highways, or part or parts of the streets, alleys, or highways, in respect of which any such bonds are issued, shall be set apart as a fund for the payment of such bonds and interest.

Acts 1913 (1st Ex. Sess.), ch. 18, § 9; Shan., § 1991a45; Code 1932, § 3452; T.C.A. (orig. ed.), § 6-1214.

7-33-115. Tax levy to meet payments not met by assessments.

  1. It is the duty of the legislative body of the municipality to levy an ad valorem tax upon all of the taxable property in the municipality to pay the principal and interest of the bonds as they become due, or to pay such part or parts of the principal and interest of the bonds as are not provided for by the assessments levied and actually collected and in the treasury of the municipality set apart for the payment of such bonds and interest.
  2. Such tax shall be in addition to all other taxes that such municipality is by law authorized to levy.

Acts 1913 (1st Ex. Sess.), ch. 18, § 9; Shan., § 1991a46; Code 1932, § 3453; T.C.A. (orig. ed.), § 6-1215.

7-33-116. Legislative provisions to assure funds for payment.

  1. In the event of the issuance of bonds as in this part and part 2 of this chapter provided, it is the duty of the legislative body of the municipality to ascertain, in due season in advance of the time for the payment of the principal or interest, or both, of any and all such bonds, and in advance of the time for the payment of principal or interest, or both, of any such bonds, whether or not there is or will be sufficient moneys provided by the assessments levied and actually collected and in the treasury of the municipality set apart for the payment of the principal and interest of such bonds as the same from time to time become due.
  2. It is the duty of the legislative body of the municipality, in due season in advance, to levy an ad valorem tax upon all the taxable property in the municipality sufficient to pay the principal and interest of such bonds as they become due from time to time, or to pay such part or parts of the principal and interest of the bonds as are not or will not be fully provided for by the assessments levied and actually collected and in the treasury of the municipality in season for the payment of the principal and interest of such bonds as the same, from time to time, become due.

Acts 1913 (1st Ex. Sess.), ch. 18, § 10; Shan., § 1991a54; Code 1932, § 3461; modified; T.C.A. (orig. ed.), § 6-1216.

7-33-117. Collection of assessments notwithstanding tax levy.

In case the municipality levies and collects ad valorem taxes for the purpose of paying the principal and interest of any bonds, or any part of the principal and interest of the bonds, the municipality shall, nevertheless, have the power and authority to proceed with the levy and collection of assessments. Such assessments, or part of the assessments, sufficient for the purpose, shall be paid into the treasury of the municipality to reimburse the treasury for the amount thus paid out of such ad valorem taxes. Such money thus reimbursed to the treasury shall be used, under the direction of the legislative body of the municipality, for any lawful corporate purpose for which ad valorem taxes may legally be levied and collected.

Acts 1913 (1st Ex. Sess.), ch. 18, § 10; Shan., § 1991a55; Code 1932, § 3462; T.C.A. (orig. ed.), § 6-1217.

7-33-118. Assessments and bonds unaffected by irregularities.

Any failure on the part of any municipality to comply with any of the provisions of this part and part 2 of this chapter or chapter 32 of this title, and any failure in the existence or performance of any of the conditions precedent to the issuance of any bonds under such provisions, shall not affect the validity of such bonds or of the assessment made under the provisions, but shall be in all respects valid and binding.

Acts 1913 (1st Ex. Sess.), ch. 18, § 11; Shan., § 1991a56; Code 1932, § 3463; modified; T.C.A. (orig. ed.), § 6-1218.

7-33-119. Assessments pledged for payment of bonds.

The proceeds arising from the collection of assessments levied for improvements authorized by this part and part 2 of this chapter and chapter 32 of this title shall be and constitute a separate and distinct fund. Such fund, together with its accumulations, is hereby pledged for the payment of the bonds and interest coupons issued for the improvement or improvements from the assessments of which the fund arises, and shall be applied exclusively to the payment of the bonds and coupons.

Acts 1913 (1st Ex. Sess.), ch. 18, § 12; Shan., § 1991a57; Code 1932, § 3464; modified; T.C.A. (orig. ed.), § 6-1219.

7-33-120. Segregation and deposit of assessment collections.

All proceeds arising from the collection of assessments levied for such improvements shall, as soon as collected, be deposited by the city treasurer in some bank to be designated by the legislative body of the municipality. Such collections shall not be deposited with the general funds of the city, but shall be considered a separate deposit to the account of “Public Improvement,” and shall be drawn out on checks or orders directing the amount designated in the checks or orders to be paid out of the “Public Improvement” funds.

Acts 1913 (1st Ex. Sess.), ch. 18, § 12; Shan., § 1991a58; Code 1932, § 3465; T.C.A. (orig. ed.), § 6-1220.

7-33-121. Issuance of revenue bonds.

  1. Notwithstanding this chapter to the contrary, a municipality may issue revenue bonds in the manner provided in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, including part 3, or enter into a loan agreement pursuant to the Public Building Authorities Act of 1971, compiled in title 12, chapter 10, with a public building authority to finance all costs and expenses permitted to be assessed pursuant to § 7-32-115(b) and/or refund or refinance bonds or other obligations of the municipality that temporarily financed such costs and expenses. In such cases, all assessments received pursuant to chapter 32 of this title by the municipality shall be deemed revenues for purposes of the Local Government Public Obligations Act of 1986 or shall be deemed revenues of a project for purposes of the Public Building Authorities Act of 1971. In such cases, the revenue bonds or loan agreement may be, but are not required to be, additionally secured by the full faith and credit of the municipality, in the manner provided in the Local Government Public Obligations Act of 1986 or the Public Building Authorities Act of 1971 for the incurrence of indebtedness by the municipality that is secured by the full faith and credit of the municipality.
    1. Any municipality is also authorized to delegate to any industrial development corporation incorporated by the municipality or any other municipality in which the public facility is located the authority to issue the revenue bonds, in which case the municipality shall enter into an agreement with the industrial development corporation pursuant to which the municipality shall agree to promptly pay to the industrial development corporation the assessments including any interest on the assessments, as collected. The assessments shall be held in trust by the municipality for the benefit of the industrial development corporation when received. The municipality may direct any property owner that is required to pay assessments to make the payments directly to an industrial development corporation or its assignee. If an industrial development corporation issues such bonds, assessments imposed pursuant to chapter 32 of this title, and any interest collected on the assessments constitutes revenues, as defined in § 7-53-101, and public facilities and related expenses described in § 7-32-101(d), whether transferred to the industrial development corporation on behalf of the municipality or to the municipality itself, shall constitute a project as defined in § 7-53-101.
    2. Any municipality is authorized to delegate to an industrial development corporation the authority to acquire a public facility on behalf of the municipality in the manner described in § 7-32-101(d). All bonds issued by industrial development corporations pursuant to this section shall be issued in accordance with chapter 53 of this title.
    1. Any municipality is also authorized to delegate to any public building authority the authority to issue the revenue bonds, in which case the municipality shall enter into an agreement with the public building authority pursuant to which the municipality shall agree to promptly pay to the public building authority the assessments, including any interest on the assessments, as collected and the assessments shall be held in trust by the municipality for the benefit of the public building authority when received. The municipality may direct any property owner that is required to pay assessments to make the payments directly to a public building authority or its assignee. If a public building authority issues the bonds, assessments imposed pursuant to chapter 32 of this title, and any interest collected on the assessments shall constitute revenues, as defined in § 12-10-103, and public facilities and related expenses described in this chapter, whether transferred to the public building authority on behalf of the municipality or to the municipality itself shall constitute a project, as defined in § 12-10-103.
    2. Any municipality is authorized to delegate to a public building authority the authority to acquire an improvement described as a public facility on behalf of the municipality. All bonds issued by public building authorities pursuant to this section shall be issued in accordance with the Public Building Authorities Act of 1971.
  2. At least thirty (30) days prior to the issuance of any bonds or other obligations by any public entity acting pursuant to this chapter, the public entity shall give notice of the proposed issuance of the bonds or other obligations to the comptroller of the treasury or the comptroller's designee and shall also provide the comptroller of the treasury or the comptroller's designee with a copy of the ordinance or resolution authorizing the bonds or other obligations.
  3. A municipality is authorized to refund or refinance or otherwise cause the refunding or refinancing of any bonds or other obligations issued pursuant to this section in the manner provided in the Local Government Public Obligations Act of 1986, the Public Building Authorities Act of 1971, or chapter 53 of this title, as applicable. Without limiting this subsection (e), a municipality may refund or refinance any bonds or loan agreements secured by the full faith and credit of the municipality and revenues received from assessments with bonds or a loan agreement secured only by such revenues. Upon any such refunding, the amount of assessment payments may be adjusted pursuant to policies approved by the municipality; provided, that the amount of the assessment as adjusted does not exceed the maximum costs assessed by the municipality.
  4. For purposes of calculating the applicable formula rate under § 47-14-103 and the related provisions of title 47, chapter 14 to determine the maximum effective rate applicable to bonds or other obligations issued pursuant to this chapter by any municipality or other public entity, the language “four (4) percentage points above the average prime loan rate” in the definition of formula rate in § 47-14-102 shall be replaced with the language “seven (7) percentage points above the average prime loan rate”. This subsection (f) shall apply to bonds or other obligations issued on or before June 30, 2012.

Acts 2007, ch. 493, § 11; 2009, ch. 489, §§ 7, 8; 2010, ch. 868, § 16; 2010, ch. 958, § 2.

Compiler's Notes. Former §§ 7-33-1217-33-124 (Acts 1913 (1st Ex. Sess.), ch. 18, §§ 12, 13, 22; Code 1932, §§ 3466-3468, 3490; Shan., §§ 1991a59-1991a61, 1991a83; T.C.A. (orig. ed.), §§ 6-1221 — 6-1223, 6-1235), concerning general provisions of improvement bonds, were repealed by Acts 1988, ch. 750, § 15.

Acts 2009, ch. 489, § 9 provided that the act, which amended §§ 7-32-101, 7-32-115, 7-32-129, 7-32-133, 7-32-138 and 7-33-121, shall apply to all agreements and assessments entered into or imposed pursuant to 7-32-101(d) and 7-32-115(b) on or after July 1, 2007.

Part 2
General Improvement Bonds

7-33-201. General improvement bonds to pay costs chargeable to city.

For the purpose of raising funds with which to pay that portion of the cost of improvements chargeable against the municipalities authorized in this chapter, the municipality shall have the power and authority to issue its bonds pursuant to the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21 in an amount not exceeding one third (1/3) of the cost of any such improvement or improvements.

Acts 1913 (1st Ex. Sess.), ch. 18, § 21; Shan., § 1991a69; Code 1932, § 3476; T.C.A. (orig. ed.), § 6-1224; Acts 1988, ch. 750, § 16.

Cross-References. Assessments and bonds unaffected by irregularities, § 7-33-118.

Assessments pledged for payment of bonds, § 7-33-119.

Bonds for improvements based on assessed values of benefited properties, title 7, ch. 33, part 3.

Bonds for special assessments, title 7, ch. 32, part 1.

Legislative provisions to assure funds for payment, § 7-33-116.

Limitation of actions on bonds, § 28-3-113.

7-33-202 — 7-33-211. [Repealed.]

Compiler's Notes. Former §§ 7-33-2027-33-211 (Acts 1913 (1st Ex. Sess.), ch. 18, § 21; 1921 Private, ch. 526, § 1; Code 1932, §§ 3477-3489; Shan., §§ 1991a70-1991a82; Acts 1980, ch. 601, § 4; T.C.A. (orig. ed.), §§ 6-1225 — 6-1234), concerning general improvement bonds, were repealed by Acts 1988, ch. 750, § 17.

Part 3
Improvements by Assessed Value

7-33-301. Part definitions.

For the purpose of this part, unless the context otherwise requires:

  1. “Assessed value basis” means the plan for making annual improvement assessments according to the assessed values of benefited properties, as assessed for purposes of municipal property taxation, or as provided by this part. Such assessed values shall be the measure of benefits to benefited property or property to be benefited;
  2. “Benefited property” or “property to be benefited” means, as determined by the governing body, land, excluding improvement, that is within a reasonable distance from a sanitary sewer and to which is made available a means of drainage for sewage, or that abuts on a street or other public way to be improved;
  3. “Costs” means cost of labor, materials, equipment necessary to complete an improvement, land, easements, and other necessary expenses connected with an improvement, including preliminary and other surveys, inspections of the work, engineers' fees and costs, attorneys' fees, fiscal agents' fees, preparation of plans and specifications, publication expenses, interest that may become due on bonds before collection of the first improvement assessments, a reasonable allowance for unforeseen contingencies, and other costs of financing;
  4. “Governing body” means the board or body in which the general legislative powers of a municipality are vested;
  5. “Improvement” means the construction, installation or substantial reconstruction of sanitary sewers; construction, substantial reconstruction, or widening of streets, sidewalks and other public ways, including necessary storm drainage facilities; the undergrounding of electrical and other similar overhead utility cables, including streetscape improvements; or any combination of the foregoing; provided, that “improvement” does not include any improvement of a street, other than necessary drainage facilities, exceeding thirty-six feet (36') in width;
  6. “Improvement assessment” means an assessment made each year against benefited property to pay the costs of an improvement, in the proportion that the assessed value of each parcel or lot of benefited property bears to the total assessed value of all benefited property according to the latest assessments of such property for purposes of municipal property taxation or as provided by this part;
  7. “Municipality” means incorporated city or town; and
  8. “Sanitary sewer” means an underground conduit for the passage of a sewer, and pumping stations, pressure lines, and outlets where deemed necessary.

Acts 1961, ch. 311, § 1; T.C.A., § 6-1251; Acts 2004, ch. 541, § 1.

Law Reviews.

Impact Fees in Tennessee, a Public and Private Partnership (Andrea C. Barach, Jane Pine Wood), 18 Mem. St. U.L. Rev. 685 (1988).

7-33-302. Improvements authorized — Authority supplemental — Abandonment of alternative procedures — Limitations — Financing of improvements.

  1. Municipalities are authorized to provide for, construct, and finance improvements defined in § 7-33-301 according to the plan set forth in this part.
  2. The authority hereby conferred is not intended to be in derogation of any authority otherwise conferred upon any municipality, but is alternative and in addition to such authority.
  3. If a municipality has taken any step or steps under any other law to provide for, construct or finance such improvements, it may by resolution abandon the procedure under the other law and proceed under this part.
  4. The issuance of bonds under this part shall not be subject to any limitations on municipal indebtedness imposed by any city charter or public or private act.
  5. This part shall not require financing of improvements authorized in this part by the issuance of bonds. A municipality may pay for or finance improvements authorized to be made within this part by any other means authorized by charter or state law, and may recover the cost of payment or financing such improvements in the same manner set forth in this part for the issuance of bonds.

Acts 1961, ch. 311, § 2; T.C.A., § 6-1252; Acts 1987, ch. 81, § 1.

7-33-303. Resolution for improvement — Contents — Publication — Notice.

  1. When the governing body of a municipality shall determine to construct an improvement as authorized by this part, or when it is petitioned by the owners of property to be benefited having an assessed value of at least fifty-one percent (51%) of the total assessed value of all the property to be benefited from the proposed improvement, it shall adopt a resolution that such improvement shall be made. The resolution shall describe the geographical limits of the properties to be benefited, and the location, nature, scope and extent of the improvement. The resolution shall also include a preliminary estimate of the costs prepared by an engineer licensed by the state of Tennessee, a declaration that the improvement will be designed and construction will be supervised by an engineer licensed by the state of Tennessee, and a statement of the proportion of total costs to be assessed against benefited properties, which shall not exceed seventy-five percent (75%) of the total costs of the improvement; provided, that the total costs may be assessed against benefited properties if the governing body additionally pledges full faith and credit of the municipality to satisfy any deficiency in collections of improvement assessments. In all succeeding proceedings, the municipality shall be bound and limited by the resolution as it may be amended, except that the total costs assessed against benefited properties may exceed the preliminary estimate of costs by not more than ten percent (10%). The resolution shall provide for a public hearing before the governing body at a time and place specified in the resolution.
    1. The municipality shall publish the resolution and a notice of the hearing at least seven (7) days in advance of the hearing in a newspaper of general circulation in the municipality and by posting at the main office of the municipal government.
    2. The notice shall state that any owner of property to be benefited may appear to be heard as to:
      1. Whether the proposed improvement should be undertaken as planned, or abandoned;
      2. Whether the nature and scope of the improvement should be altered; and
      3. Whether the improvement should be financed through the issuance of bonds on the “assessed value basis” as authorized by this part.
    3. The notice should also be sent by first class mail to the owners of properties to be benefited or their agents of record, at the time of adoption of the resolution, at the addresses currently entered on the property assessment records.

Acts 1961, ch. 311, § 3; T.C.A., § 6-1253.

7-33-304. Public hearing — Final action of municipality — Petition for certiorari.

  1. At the public hearing required by § 7-33-303, or at the time and place to which the hearing may be adjourned from time to time, all persons whose property may be affected by such improvement may appear in person or by attorney or by petition.
  2. After the public hearing and after considering any objections, the governing body by resolution may confirm, amend or rescind the original resolution as its final action.
  3. Such final action shall be the final determination of the issues presented, unless the owner of property to be benefited files, within ten (10) days thereafter, a petition for certiorari in the circuit court having jurisdiction to review the action of the governing body. Failure to take such steps within the ten (10) days constitutes a waiver of all objections.

Acts 1961, ch. 311, § 4; T.C.A., § 6-1254.

7-33-305. Construction bids — Amount of bond issue — Performance bond — When bids binding — Construction by municipality's own forces.

  1. Proposals for the construction of an improvement shall be solicited as sealed competitive bids after public advertisement at least once in a newspaper having general circulation in the municipality not less than ten (10) days prior to the date set for receipt of bids.
  2. Upon or after the acceptance by the governing body of a bid, or combination of bids, the governing body may determine the principal amount of bonds to be issued for the proposed improvement, taking into account the amount of the accepted bid or bids, and all other costs of the improvement. These bonds shall be issued pursuant to the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21.
  3. Each contract shall be supported by a performance bond for the full amount of the contract, with good surety to be approved by the governing body.
  4. A bid shall not be binding on a contractor unless the governing body awards a contract within ninety (90) days after the date of opening bids.
  5. If the governing body determines that no bids are acceptable, it may direct that the improvement be accomplished by the municipality's own forces, in which event the costs of construction included in the total costs for purposes of determining improvement assessments shall not exceed the lowest construction bid or bids that conform to all bid requirements.

Acts 1961, ch. 311, § 5; T.C.A., § 6-1255; Acts 1988, ch. 750, § 18.

7-33-306 — 7-33-309. [Reserved.]

  1. Improvement assessments shall be assessed annually against the benefited property in the proportion that the assessed value of each lot or parcel bears to the whole assessed value of the benefited properties. Properties not assessed for taxation, such as public property or property exempt from taxation, except church-owned property located in cities as defined in § 67-6-103(a)(3)(B)(i), shall be specially assessed by the municipal assessor of property, by the county assessor of property if the municipality uses county property assessments, or by a special assessor of property appointed by the governing body for this purpose, for which compensation may be paid from the “(name of improvement) special fund” or from the general fund of the municipality. Any such special assessment shall be subject to the procedure for equalization and judicial review provided by the law for assessments made for purposes of property taxation.
  2. Improvement assessments authorized by this part shall not be levied against undeveloped or largely undeveloped areas, but shall be limited to areas in which a majority of the lots or parcels of land contain buildings or other structures.

Acts 1961, ch. 311, §§ 3, 10; T.C.A., § 6-1260; Acts 2006, ch. 557, § 1; 2008, ch. 971, § 1.

Compiler's Notes. Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.

7-33-311. Additional properties benefiting from improvement — Adjustments in assessments.

The governing body by resolution may authorize properties other than the properties originally benefited by an improvement to receive the benefits of the improvement, and may make equitable provisions, which may be adjusted from year to year as bonds are retired, whereby the owners of such later benefited properties will assume a fair proportionate share of the improvement assessments, or otherwise be placed as nearly as practicable on a basis of financial equity with the owners of properties initially subject to the improvement assessments.

Acts 1961, ch. 311, § 11; T.C.A., § 6-1261.

7-33-312. Benefited property subject to assessments.

Benefited property owned by the municipality, a county, the state of Tennessee, or the United States government or its agencies, if federal law makes such property subject to assessment, shall be subject to improvement assessments, the same as private property, and the amount of each annual improvement assessment shall be paid by the municipality, county, state of Tennessee, or United States government, as the case may be. In the case of the state of Tennessee, the amount of improvement assessment shall be certified by the municipality to the commissioner of finance and administration, who shall direct the state treasurer to pay the assessment to the municipality out of an appropriate appropriation or from any money in the state treasury not otherwise appropriated. No benefited property shall be exempt from improvement assessments. Improvement assessments against such public property shall be enforceable by writ of mandamus or other appropriate remedy.

Acts 1961, ch. 311, § 12; modified; T.C.A., § 6-1262.

7-33-313. Levy of assessments — Time for payment — Installments — Delinquency.

Annual improvement assessments for each improvement shall be made by the governing body when the levy of municipal property taxes is made; and such improvement assessments shall be due at the same time, or times, the municipal property taxes are due, and shall be subject to the same penalties and accrual of interest in the event of nonpayment as in the case of municipal property taxes. The governing body may permit owners of benefited property to pay improvement assessments in equal monthly installments, the first installment to be due and payable when the improvement assessment is due; in this event any monthly payment shall be delinquent thirty (30) days after it is due and payable, and the whole balance of the annual improvement assessment shall then become delinquent and be subject to all penalties and interest as provided in this part.

Acts 1961, ch. 311, § 13; T.C.A., § 6-1263.

7-33-314. Lien on benefited property.

Each improvement assessment, with any penalty or interest incident to the nonpayment of the assessment, shall constitute a lien upon the lot or parcel of benefited property against which it is assessed. The lien shall attach to each lot or parcel of benefited property at the time the annual improvement assessment is made, and then shall take precedence over all other liens, whether created prior to or subsequent to the making of such improvement assessment, except state, county and municipal property taxes, and prior special assessments. The lien shall not be defeated or postponed by any private or judicial sale, by any mortgage, or by any error or mistake in the description of the property or in the names of the owners, if the description is sufficient to identify the property subject to the assessment. No irregularity in the proceedings of the governing body shall exempt any benefited property from the lien for the improvement assessment, or from the payment of the assessment, or from the penalties or interest on the assessment.

Acts 1961, ch. 311, § 14; T.C.A., § 6-1264.

7-33-310. Assessments.

Chapter 34
Revenue Bond Law

7-34-101. Short title.

This chapter shall be known and may be cited as the “Revenue Bond Law.”

Acts 1935 (Ex. Sess.), ch. 33, § 1; C. Supp. 1950, § 4406.42 (Williams, § 4406.34); T.C.A. (orig. ed.), § 6-1301.

Cross-References. Bonds for municipal gas acquisition corporations, § 7-39-304.

Limitation of actions on bonds, § 28-3-113.

Power districts, title 7, ch. 83.

Utility districts, title 7, ch. 82.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal, State and County Securities, § 10.

Law Reviews.

Local Government Law — 1962 Tennessee Survey (Gilbert Merritt, Jr.), 16 Vand. L. Rev. 800 (1963).

Attorney General Opinions. Municipal electric systems as borrowers and re-lenders to third parties, OAG 93-05, 1993 Tenn. AG LEXIS 5 (1/14/93).

Sewer system installation subsidies, OAG 94-105, 1994 Tenn. AG LEXIS 104 (9/9/94).

NOTES TO DECISIONS

1. Constitutionality.

Acts of 1935 (1st Ex. Sess.), ch. 33 did not violate Tenn. Const., art II, § 17 on the ground that it did not mention in its caption or body that it repealed or amended charter of city of Knoxville, since if any repeal of the charter was intended it was by implication and charter did not have to be mentioned. State ex rel. Weaver v. Knoxville, 182 Tenn. 510, 188 S.W.2d 329, 1945 Tenn. LEXIS 246 (1945).

Acts 1937, ch. 230, which stated in its caption that it was amending specified sections of Acts 1935 (1st Ex. Sess.), ch. 33, was not unconstitutional on the ground that it contained the changes not within titles of the act of 1935 or the act of 1937 since it specified the sections it intended to alter or amend. State ex rel. Weaver v. Knoxville, 182 Tenn. 510, 188 S.W.2d 329, 1945 Tenn. LEXIS 246 (1945).

2. — Constitutionality of Private Acts.

Private Acts 1949, ch. 602, as amended, authorizing establishment of sewer system by city of Chattanooga, which did not contain provisions contrary to this chapter or ch. 36 (repealed) of this title, did not violate Tenn. Const., art. XI, § 8. Patterson v. Chattanooga, 192 Tenn. 267, 241 S.W.2d 291, 1951 Tenn. LEXIS 401 (1951).

3. Construction.

The provisions of this chapter authorizing issuance of revenue bonds for financing public works took precedence over prior provisions of city of Knoxville. State ex rel. Weaver v. Knoxville, 182 Tenn. 510, 188 S.W.2d 329, 1945 Tenn. LEXIS 246 (1945).

This chapter forms an exception to the general rule that a city cannot acquire land beyond its boundaries, or perform any lawful act beyond the same. Patterson v. Chattanooga, 192 Tenn. 267, 241 S.W.2d 291, 1951 Tenn. LEXIS 401 (1951).

This chapter should receive a liberal interpretation. Patterson v. Chattanooga, 192 Tenn. 267, 241 S.W.2d 291, 1951 Tenn. LEXIS 401 (1951).

4. Operation of Public Works System.

Board of aldermen of municipality had authority to authorize independent board of commissioners to operate utility system. State ex rel. Barr v. Selmer, 220 Tenn. 304, 417 S.W.2d 532, 1967 Tenn. LEXIS 413 (1967).

There is nothing in the Revenue Bond Law to prevent the governing body of a municipality from operating a public works system rather than vesting authority for such operation in an independent board. State ex rel. Barr v. Selmer, 220 Tenn. 304, 417 S.W.2d 532, 1967 Tenn. LEXIS 413 (1967).

Collateral References.

Power of municipality to sell, lease, or mortgage public utility plant or interest therein. 61 A.L.R.2d 595.

7-34-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Governing body” means bodies and boards, by whatsoever names they may be known, charged with the governing of a municipality;
  2. “Municipality” means any county or incorporated city or town of the state; and
  3. “Public works” means any one (1) or combination of two (2) or more of the following: water, sewerage, gas or electric heat, light or power works, plants and systems or parking facilities, together with all parts thereof and appurtenances thereto, including, but not limited to, supply and distribution systems, electrical power purchased from the Tennessee Valley authority or similar governmental agencies, on a current or long-term purchase basis, reservoirs, dams, sewage treatment and disposal works and generating plants.

Acts 1935 (Ex. Sess.), ch. 33, § 2; C. Supp. 1950, § 4406.43 (Williams, § 4406.35); T.C.A. (orig. ed.), § 6-1302; Acts 1981, ch. 260, § 1; 1996, ch. 614, § 1; 2003, ch. 20, § 1.

Compiler's Notes. Acts 2003, ch. 20, § 3 provided that the powers and authority conferred by the act shall be in addition and supplemental to, and the limitation imposed by the act shall not affect the powers conferred by any other general, special or local law or by any private act.

NOTES TO DECISIONS

1. Authority of Agency.

Memphis light gas and water division did not have authority, pursuant to a personnel policy that had been implemented and subsequently revoked, to execute an enhanced severance agreement with a former employee, because pursuant to its authority under the city charter and the requirements of T.C.A. § 7-34-102, the city council had limited the division's ability to enter into such contracts. Thompson v. Memphis Light, Gas and Water Div., 244 S.W.3d 815, 2007 Tenn. App. LEXIS 430 (Tenn. Ct. App. July 12, 2007).

7-34-103. Declaration of policy.

  1. It is declared to be the policy of this state that any municipality acquiring, purchasing, constructing, reconstructing, improving, bettering or extending any public works pursuant to this chapter shall manage such public works in the most efficient manner consistent with sound economy and public advantage, to the end that the services of the public works shall be furnished to consumers at the lowest possible cost.
  2. No municipality shall operate public works for gain or profit or primarily as a source of revenue to the municipality, but shall operate public works for the use and benefit of the consumers served by the public works and for the promotion of the welfare and for the improvement of the health and safety of the inhabitants of the municipality.
  3. No use of revenues authorized by this chapter shall be construed as being contrary to the policy declared in this section.

Acts 1935 (Ex. Sess.), ch. 33, § 3; C. Supp. 1950, § 4406.44 (Williams, § 4406.36); Acts 1969, ch. 335, § 1; T.C.A. (orig. ed.), § 6-1303.

Law Reviews.

Local Government Law — 1956 Tennessee Survey (Joseph Martin, Jr.), 9 Vand. L. Rev. 1032 (1956).

NOTES TO DECISIONS

1. Scope of Section.

This section refers only to municipalities operating power plants under this chapter and does not require any city to operate its plant under it. Special acts allowing municipalities to operate a power plant do not conflict with this section nor contravene Tenn. Const., art. XI, § 8. Nashville Electric Service v. Luna, 185 Tenn. 175, 204 S.W.2d 529, 1947 Tenn. LEXIS 317 (1947).

Declaration of policy stating that any municipality acquiring any public works pursuant to this chapter shall not operate such public works for gain or profit did not apply to operation of electric light system by city of Nashville, since city of Nashville acquired the system pursuant to Private Acts of 1939, ch. 262. Nashville Electric Service v. Luna, 185 Tenn. 175, 204 S.W.2d 529, 1947 Tenn. LEXIS 317 (1947).

Nothing in T.C.A. § 7-34-103 requires a municipality to operate public works property acquired by eminent domain. It simply declares that as a matter of state policy, municipalities must manage the public works in the manner most efficient and economical to the consumer, and to that end, the statute prohibits municipalities from operating public works for gain, profit, or primarily as a source of revenue. City of S. Fulton v. Hickman-Fulton Counties Rural Elec. Coop. Corp., 976 S.W.2d 86, 1998 Tenn. LEXIS 464 (Tenn. 1998), rehearing denied, — S.W.2d —, 1998 Tenn. LEXIS 572 (Tenn. Oct. 12, 1998).

2. Construction.

Legislature intended dual purposes under the Tennessee Revenue Bond Law, namely: (1) To operate the public utilities on sound business principles as self-sufficient entities so that services may be furnished to consumers at the lowest rate, and (2) To prevent municipalities from operating their public utilities as a source of gain or revenue for the municipality. T.C.A. §§ 7-34-103 and 7-34-115(a); the remedial scheme, as set out at § 7-34-115, achieves both of these purposes because the municipality is required to apply utility revenues to nine enumerated categories, T.C.A. § 7-34-115(a). Morrison v. City of Bolivar, — S.W.3d —, 2012 Tenn. App. LEXIS 382 (Tenn. Ct. App. June 14, 2012).

7-34-104. Powers of municipalities.

  1. In addition to powers that it may now have, any municipality has the power under this chapter to:
    1. Construct, acquire by gift, purchase, or exercise the right of eminent domain, reconstruct, improve, better or extend any public works, within or without the municipality, or partially within or partially without the municipality, and acquire by gift, purchase, or exercise the right of eminent domain, lands, rights in land or water rights in connection with lands, rights in land or water rights;
    2. Operate and maintain any public works for its own use or for the use and benefit of its inhabitants, and also operate and maintain such public works for the use and benefit of persons, firms, and corporations, including municipal corporations and inhabitants of municipal corporations whose residences or places of business are located outside the territorial boundaries of the municipality;
    3. Lease any public works to, or operate and maintain any public works, either wholly or partially, for the use and benefit of the United States or the state of Tennessee or any agency, instrumentality or authority of either the United States or the state of Tennessee, all under such terms and conditions as may be mutually agreed upon, including the transfer of title to such public works after all bonds issued to finance the acquisition or construction of such public works and the interest on all bonds have been paid or provision made for the payment of the bonds; provided, that any public works may, in the discretion of the governing body, be so leased or operated and maintained as a unit separate and distinct from any other public works of the municipality, and the governing body may pledge the revenues and rentals of the public works exclusively for the payment of the principal and interest of any bonds issued to finance the acquisition or construction of such public works, but nothing contained in this subdivision (a)(3) shall prohibit the governing body from pledging the revenues of other public works for the payment of the principal and interest of such bonds and it is hereby given full authority to do so;
    4. Issue its bonds to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any public works. The governing body of the municipality in determining the cost may include all cost and estimated cost of the issuance of the bonds, all engineering, inspection, fiscal and legal expenses, and interest that it is estimated will accrue during the construction period and six (6) months thereafter on money borrowed or that it is estimated will be borrowed pursuant to this chapter;
    5. Prescribe and collect rates, fees, and charges for the services, facilities and commodities furnished by such public works;
    6. Pledge to the punctual payment of the bonds and interest on the bonds an amount of the revenues of such public works, including improvements, betterments, or extensions to the public works thereafter constructed or acquired, or of any part of such public works, sufficient to pay the bonds and interest as the bonds and interest shall become due and create and maintain reasonable reserves for the payment of the bonds and interest. The amount may consist of all or any part or portion of such revenue;
    7. Contract with any person, municipality, the United States, the president of the United States, the Tennessee Valley authority, and any and all other authorities, agencies, and instrumentalities of the United States, and, in connection with any such contract, stipulate and agree to such covenants, terms and conditions as the governing body may deem appropriate, including, but not limited to, covenants, terms and conditions with respect to the resale rates, financial and accounting methods, services, operation and maintenance practices, and the manner of disposition of the revenues of the public works, operated and maintained by the municipality;
    8. Use any right-of-way, easement or other similar property right necessary or convenient in connection with the acquisition, improvement, operation or maintenance of a public works, held by the state or any other political subdivision of the state; provided, that the governing body of such other political subdivision shall consent to such use; and
    9. Issue bonds pursuant to this chapter to finance, in whole or in part, the cost of the acquisition of electrical power purchased from the Tennessee Valley authority or similar government agencies on a current or long-term prepaid purchase basis and pledge to the punctual payment of any such bonds and interest on the bonds its rights in such contracts and an amount of the revenues of its public works, including improvements, betterments, or extensions to such public works thereafter constructed or acquired, or of any part of such public works, sufficient to pay the bonds and interest as the bonds and interest become due and create and maintain reasonable reserves for the payment of the bonds and interest. The amount shall consist of all or any part or portion of such revenue. The governing body of the municipality, in determining the cost of the acquisition of electrical power under this subsection (a), may include all costs and estimated costs of the issuance of the bonds, all engineering, inspection, fiscal and legal expenses.
  2. Any municipality authorized by chapter 52, part 4 of this title, to provide any of the services described in chapter 52, part 4 shall have the power and is hereby authorized to borrow money, contract debts and issue its bonds or notes pursuant to the terms of this subsection (b) to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of a system or systems, or any part thereof, to provide any of such services, including the acquisition of land or rights in land and the acquisition and installation of all equipment necessarily incident to the provision of such services; provided, that:
    1. Notwithstanding any law to the contrary, such services shall not constitute “public works” as defined in § 7-34-102;
    2. For regulatory purposes, a municipality issuing bonds or notes for the purposes set forth in this subsection (b) shall allocate to the costs of providing any of the services authorized by § 7-52-401 payments of principal of, interest on and amortized costs incurred in connection with the issuance of such bonds or notes; provided, that if any of such bonds or notes are issued in such a way that interest on the bonds is excludable from gross income for federal income tax purposes, the municipality shall allocate to costs, in lieu of the actual interest being paid on such bonds or notes, an amount equal to interest that would be payable on the bonds or notes if the bonds or notes were bearing interest at rates equal to the average of the most recently published Moody's Long-Term Corporate Bond Yield Averages and Intermediate Corporate Bond Yield Averages for AAA Public Utilities;
    3. Nothing in this subsection (b) shall be read to diminish or alter the jurisdiction of the Tennessee public utility commission over municipalities that provide any of the services described in chapter 52, part 4 of this title;
    4. To the extent that they do not conflict with subdivisions (b)(1)-(3), the provisions of this chapter relating to the authorization, issuance and sale of bonds or notes, the use and application of revenues of the system or systems being financed, powers to secure such bonds and notes, covenants and remedies for the benefit of bond or note holders with respect to such bonds or notes, validity with respect to such bonds or notes, and powers to refund and refinance such bonds or notes shall apply to any bonds or notes issued for the purposes described in this subsection (b) and the system or systems financed by the issuance and sale of bonds or notes; and
    5. Section 7-52-402 shall apply to the use and application of revenues authorized and permitted by this section.

Acts 1935 (Ex. Sess.), ch. 33, § 4; 1937, ch. 230, § 2; 1949, ch. 211, § 1; C. Supp. 1950, § 4406.45 (Williams, § 4406.37); modified; Acts 1955, ch. 216, § 1; modified; 1975, ch. 5, § 1; T.C.A. (orig. ed.), § 6-1304; Acts 1987, ch. 158, § 3; 1998, ch. 1004, § 1; 2003, ch. 20, § 2; 2017, ch. 94, § 9.

Compiler's Notes. Acts 2003, ch. 20, § 3 provided that the powers and authority conferred by the act shall be in addition and supplemental to, and the limitation imposed by the act shall not affect the powers conferred by any other general, special or local law or by any private act.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in (b)(3).

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Cities and towns, mutual assistance in firefighting, title 6, ch. 54, part 6.

Extension of service beyond city limits, § 7-51-401.

Utility districts, title 7, ch. 82.

Attorney General Opinions. Home rule municipality's authority regarding the control of storm water, OAG 92-71, 1992 Tenn. AG LEXIS 69 (12/28/92).

Multi-county gas utility districts, OAG 93-56 (9/2/93).

Domestic nonprofit water cooperative merging with or transferring assets to municipality, OAG 06-176, 2006 Tenn. AG LEXIS 196 (12/19/06).

NOTES TO DECISIONS

1. Construction.

The authority conferred on incorporated cities and towns by this section to acquire by purchase or construct public works that specifically embraces electric light and power works are to be construed in harmony with former ch. 83 of this title (repealed) and title 65, ch. 23 (repealed) authorizing the creation of electric power districts and a Rural Electrification Authority. Winchester v. Franklin County, 178 Tenn. 290, 157 S.W.2d 820, 1941 Tenn. LEXIS 57 (1942).

2. Constitutionality of Private Acts.

Private acts authorizing establishment of sewer system by city, which did not contain provisions contrary to this chapter or ch. 36 (repealed) of this title, did not violate Tenn. Const., art. XI, § 8. Patterson v. Chattanooga, 192 Tenn. 267, 241 S.W.2d 291, 1951 Tenn. LEXIS 401 (1951).

3. Legislative Intent.

When the general assembly enacted T.C.A. § 7-34-104, it knew that it was authorizing municipalities to condemn low-grade public service utility operations engaged in supplying electric current to the public. Dandridge v. Patterson, 827 S.W.2d 797, 1991 Tenn. App. LEXIS 893 (Tenn. Ct. App. 1991), appeal denied, — S.W.2d —, 1992 Tenn. LEXIS 264 (Tenn. Mar. 16, 1992).

4. Powers and Duties.

Where town acquired properties and franchise rights of electric power company in town and surrounding area but that did not embrace all properties and franchise rights of the power company in the county, the town was not obligated to furnish free electricity to the former county courthouse under terms of franchise granted by county court (now general sessions court) to power company's predecessor as under the statute the town was not required to obtain a franchise from the county. Winchester v. Franklin County, 178 Tenn. 290, 157 S.W.2d 820, 1941 Tenn. LEXIS 57 (1942).

A city has the right to operate a sewer system beyond its corporate limits. Patterson v. Chattanooga, 192 Tenn. 267, 241 S.W.2d 291, 1951 Tenn. LEXIS 401 (1951).

A Tennessee municipality has the power to condemn the property of an electrical cooperative within its boundaries. Duck River Electric Membership Corp. v. Manchester, 529 S.W.2d 202, 1975 Tenn. LEXIS 577 (Tenn. 1975).

The Revenue Bond Law, compiled in title 7, chapter 34, authorizes a city to condemn facilities and service areas of an electric cooperative serving consumers within the city's municipal boundaries, and to grant to another county's electric system the right to operate those facilities and to provide service to consumers within those service areas. Moreover, T.C.A. § 7-34-104 provides a clear and complete remedy, and a court need not refer to any other statute. City of S. Fulton v. Hickman-Fulton Counties Rural Elec. Coop. Corp., 976 S.W.2d 86, 1998 Tenn. LEXIS 464 (Tenn. 1998), rehearing denied, — S.W.2d —, 1998 Tenn. LEXIS 572 (Tenn. Oct. 12, 1998).

5. Contracts Executed Under Authority of Section.

Where city entered into contract with the Tennessee Valley authority pursuant to authority granted it by this section whereby it agreed to devote surplus revenue from the resale of electric power to the purchase or retirement of bond issue before maturity, a city ordinance providing for the charging of rates sufficient to take care of an additional bond issue and a private act purporting to validate such ordinance violated U.S. Const., art. 1, § 10, cl. 1 prohibiting the impairment of contract by a state. Tennessee Valley Authority v. Lenoir City, 72 F. Supp. 457, 1947 U.S. Dist. LEXIS 2538 (D. Tenn. 1947).

Collateral References.

Boundaries, power of municipal corporation to extend its service beyond. 49 A.L.R. 1239, 98 A.L.R. 1001.

Construction and application of rule requiring public use for which property is condemned to be “more necessary” or “higher use” than public use to which property is already appropriated—state takings. 49 A.L.R.5th 769.

Municipal purchase, construction or repair of public utility, what are “public utilities” within provisions relating to. 9 A.L.R. 1033, 35 A.L.R. 592.

Right of municipality to refuse services provided by it to resident for failure of resident to pay for other unrelated services. 60 A.L.R.3d 714.

7-34-105. Works within other municipalities.

No municipality shall construct public works wholly or partly within the corporate limits of another municipality, other than to perform maintenance on or make improvements to its existing public works system in its service area, except with the consent of the governing body of the other municipality.

Acts 1935 (Ex. Sess.), ch. 33, § 13; C. Supp. 1950, § 4406.54 (Williams, § 4406.46); T.C.A. (orig. ed.), § 6-1305; Acts 2009, ch. 74, § 1.

Attorney General Opinions. A municipality is authorized to take and condemn lands to lay a sewer line through another municipality; however, if the utility is financed under the Revenue Bond Law or the Local Government Public Obligations Act of 1986, the municipality building the utility through the territory of another municipality must obtain the consent of the latter's governing body, OAG 01-098, 2001 Tenn. AG LEXIS 89 (6/13/01).

7-34-106. Exemption from utilities regulation.

It shall not be necessary for any municipality proceeding under this chapter to obtain any certificate of convenience or necessity, franchise, license, permit, or other authorization from any bureau, board, commission or other like instrumentality of the state in order to acquire, construct, purchase, reconstruct, improve, better, extend, maintain and operate any public works.

Acts 1935 (Ex. Sess.), ch. 33, § 16; C. Supp. 1950, § 4406.57 (Williams, § 4406.49); T.C.A. (orig. ed.), § 6-1306.

Cross-References. Municipal gas companies exempt, § 7-39-311.

Municipal utilities exemption not eliminated, § 7-34-117.

Collateral References.

Public utility acts, applicability of, to municipal corporations owning or operating a public utility. 10 A.L.R. 1432, 18 A.L.R. 946.

7-34-107. Deposit of revenues.

All moneys of a municipality derived from a public works shall be deposited in one (1) or more banks or trust companies in a special account or accounts.

Acts 1935 (Ex. Sess.), ch. 33, § 14; 1937, ch. 230, § 3; C. Supp. 1950, § 4406.55 (Williams, § 4406.47); T.C.A. (orig. ed.), § 6-1307.

7-34-108. Charges to municipality or department.

Charges shall be made for any service rendered by a public works to a municipality or to any department or works of the municipality, at the rate applicable to other customers taking service under similar conditions. Revenues derived from such service shall be treated as all other revenues.

Acts 1935 (Ex. Sess.), ch. 33, § 15; C. Supp. 1950, § 4406.56 (Williams, § 4406.48); T.C.A. (orig. ed.), § 6-1308.

Collateral References.

Advertising or promotional expenditures of public utility as part of operating expenses for ratemaking purposes. 83 A.L.R.3d 963.

Power of municipality to charge nonresidents higher fees than resident for use of municipal facilities. 57 A.L.R.3d 998.

7-34-109. Authorized projects — Bond issues — Resolutions — Interim certificates.

  1. The construction, acquisition, reconstruction, improvement, betterments or extension of any public works may be authorized under this chapter, and bonds may be authorized to be issued under this chapter to provide funds for such purpose or purposes by resolution or resolutions of the governing body, which may be adopted at the same meeting at which they are introduced by a majority of all members of the governing body then in office, and shall take effect immediately upon adoption.
  2. The bonds shall bear interest at a zero (0) rate or at rates that vary from time to time or at such rate or rates; payable at such time or times; may be in one (1) or more series; may bear such date or dates; may mature at such time or times, not exceeding forty (40) years from their respective dates; may be payable in such medium of payment, at such place or places; may carry such registration privileges; may be subject to such terms of redemption; may be executed in such manner; may contain such terms, covenants and conditions; and may be in such form, as such resolution or subsequent resolutions may provide.
  3. The bonds may be sold at public or private sale at such price as may be determined by the governing body.
  4. Pending the preparation of the definitive bonds, interim receipts or certificates in such form and with such provisions as the governing body may determine may be issued to the purchaser or purchasers of bonds sold pursuant to this chapter.
  5. The bonds and interim receipts or certificates shall be fully negotiable within the meaning of and for all purposes of the Uniform Commercial Code, compiled in title 47, chapters 1-9.
  6. With respect to all or any portion of any issue of bonds or notes issued or anticipated to be issued under this chapter, at any time during the term of the bonds or notes, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this subsection (f) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in subsection (h), a municipality by resolution may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, and other interest rate hedging agreements under such terms and conditions as the governing body of the municipality may determine, including, but not limited to, provisions permitting the municipality to pay to or receive from any person or entity any loss of benefits under such agreement upon early termination of the agreement or default under such agreement.
  7. The governing body of a municipality may enter into an agreement to sell its bonds and notes, other than its refunding bonds, under this chapter, providing for delivery of its bonds and notes on a date greater than ninety (90) days and not greater than five (5) years, or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement or to sell its refunding bonds under this chapter, providing for delivery of its refunding bonds on a date greater than ninety (90) days from the date of execution of the agreement and not greater than the first optional redemption date on which the bonds being refunded can be optionally redeemed resulting in cost savings or at par, whichever is earlier, only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the agreement or contract of a municipality to sell its bonds and notes as authorized in this subsection (g) is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with subsection (h). Agreements to sell bonds and refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement do not require a report of the comptroller of the treasury or the comptroller's designee.
    1. The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts referenced in subsections (f) and (g), which may include, but shall not be limited to, the following:
      1. The conditions under which such agreements or contracts can be entered into;
      2. The methods by which such contracts are to be solicited and procured;
      3. The form and content such contracts shall take;
      4. The aspects of risk exposure associated with such contracts;
      5. The standards and procedures for counterparty selection, including rating criteria;
      6. The procurement of credit enhancement, liquidity facilities, or the setting aside of reserves in connection with such contracts or agreements;
      7. The methods of securing the financial interest in such contracts;
      8. The methods to be used to reflect such contracts in the municipality's financial statements;
      9. Financial monitoring and periodic assessment of such contracts by the municipality;
      10. The application and source of nonperiodic payments; and
      11. Educational requirements for officials of any municipality responsible for approving any such contract or agreement.
    2. Prior to the adoption by the governing body of the municipality of a resolution authorizing such contract or agreement, a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that such contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report on such compliance to the municipality. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the municipality may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that such contract or agreement is not in compliance with the guidelines, rules or regulations, then the municipality is not authorized to enter into such contract or agreement. The guidelines, rules or regulations shall provide for an appeal process to a determination of noncompliance.
  8. When entering into any contracts or agreements facilitating the issuance and sale of bonds and notes, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating to the contracts or agreements, interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, other interest rate hedging agreements, and agreements with the purchaser of the bonds authorized under this section or with the purchaser of the notes authorized under § 7-34-111 evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the municipality may agree in the written contract or agreement that the rights and remedies of the parties to the contract or agreement shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over any municipality against which an action on such a contract or agreement is brought shall lie solely in a court in Tennessee that would otherwise have jurisdiction of actions brought in contract against such municipality.
  9. Prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations with respect to the contracts and agreements authorized in subsections (f) and (g), a municipality may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law notwithstanding subsections (f) and (g). Nothing in subsection (f), (g), (h) or (i) is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a municipality to enter into the contracts or agreements described in subsection (f), (g), (h) or (i) heretofore entered into or entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations.
  10. When entering into an interest rate agreement authorized by this section, a municipality may secure its obligations under the agreement, including its obligation for termination or other nonperiodic payments, with the revenues available to secure the bonds with respect to which such interest rate agreement is entered into.

Acts 1935 (Ex. Sess.), ch. 33, § 5; C. Supp. 1950, § 4406.46 (Williams, § 4406.38); Acts 1955, ch. 216, § 2; 1969, ch. 192, § 1; 1969, ch. 284, § 1; T.C.A. (orig. ed.), § 6-1309; Acts 1985, ch. 225, § 3; 1999, ch. 427, § 1; 2001, ch. 253, §§ 3-7; 2004, ch. 589, § 3.

Cross-References. Bonds exempt from taxation, § 7-34-116.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal, State and County Securities, § 10.

NOTES TO DECISIONS

1. Resolution.

Where bond resolution authorizing issuance of gas revenue bonds contained provision that gas system was to be under operation of independent board of commissioners such provision constituted contract between town and holders of gas revenue bonds and so long as the bonds remained outstanding mayor and board of aldermen had no authority to take control of system from board of commissioners and to vest it in themselves. State ex rel. Barr v. Selmer, 220 Tenn. 304, 417 S.W.2d 532, 1967 Tenn. LEXIS 413 (1967).

7-34-110. Covenants in resolutions — Bondholders' remedies.

  1. Any resolution authorizing the issuance of bonds under this chapter may contain covenants as to:
    1. The purpose or purposes to which the proceeds of sale of bonds may be applied and the use and disposition of the proceeds;
    2. The use and disposition of the revenue of the public works for which the bonds are to be issued, including the creation and maintenance of reserves;
    3. The transfer from the general funds of the municipality to the account or accounts of the public works an amount equal to the cost of furnishing such municipality or any of its departments, boards or agencies with the services, facilities and commodities of the public works;
    4. The issuance of other or additional bonds payable from the revenue of the public works;
    5. The operation and maintenance of such public works;
    6. The insurance to be carried on the bonds and the use and disposition of insurance moneys;
    7. Books of accounts and the inspection and audit of the books and as to accounting methods; and
    8. The terms and conditions upon which the holders of the bonds or any proportion of them or any trustees for the holders shall be entitled to the appointment of a receiver by the chancery court, which court shall have jurisdiction in such proceedings, and which receiver may enter and take possession of the public works, operate and maintain the public works, prescribe rates, fees or charges, and collect, receive and apply all revenue thereafter arising from the public works in the same manner as the municipality itself might do.
  2. This chapter and any such resolution or resolutions shall be a contract with the holder or holders of the bonds, and the duties of the municipality and of its governing body and officers under this chapter and any such resolution or resolutions shall be enforceable by any bondholder by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction.

Acts 1935 (Ex. Sess.), ch. 33, § 6; C. Supp. 1950, § 4406.47 (Williams, § 4406.39); T.C.A. (orig. ed.), § 6-1310.

7-34-111. Revenue anticipation notes — Bonds and notes not general obligations.

  1. The governing body, or any board or commission of a municipality having jurisdiction, control and management of the public works of a municipality, may borrow money in anticipation of the collection of revenues from such public works and issue negotiable notes to evidence such borrowing, the proceeds from the sale of such notes to be used for the purpose of paying the cost of construction of additions, betterments and improvements to and extensions of the public works, the revenues of which are pledged to the payment of such notes.
  2. Such notes shall be payable not later than five (5) years from the date of the notes, and shall be sold in such manner and upon such terms and conditions as may be determined by the governing body, board or commission issuing the notes.
  3. The governing body may issue bonds in the manner provided by § 7-34-109, for the funding of notes issued pursuant to subsection (a), and for the purpose of refunding at or prior to maturity bonds theretofore issued pursuant to § 7-34-109.
  4. The governing body, or any board or commission of a municipality having jurisdiction, control and management of an electric power distribution system or a natural gas distribution system, may borrow money in anticipation of the collection of revenues from such system and issue negotiable notes to evidence such borrowing for the purpose of financing electrical power or gas purchases, including storage costs and pipeline capacity costs. Any such notes shall be secured solely by a pledge of and lien on the revenues of such system. The principal amount of notes that may be issued during any twelve-month period shall not exceed sixty percent (60%) of total electrical power or gas purchases for the same period, and all notes issued during such period shall be retired and paid in full on or before the end of such period. The notes shall be sold in such manner, at such price and upon such terms and conditions as may be determined by the governing body, board or commission issuing such notes. No notes shall be issued under this subsection (d) unless the electric system or gas system for which the notes are to be issued has positive retained earnings as shown in the most recent audited financial statements of the system, and the system has produced positive net income in at least one (1) fiscal year out of the three (3) fiscal years next preceding the issuance of the notes as shown on the audited financial statements of the system. No notes shall be issued without first being approved by the comptroller of the treasury or the comptroller's designee. If the revenues of such system are insufficient to pay all such notes at maturity, any unpaid notes may be renewed one (1) time for a period not to exceed one (1) year or may be retired with funding bonds issued pursuant to the Cash Basis Law of 1937, compiled in title 9, chapter 11, or may be otherwise liquidated as approved by the comptroller of the treasury or the comptroller's designee.
  5. This chapter for the payment and security of bonds issued pursuant to this chapter shall be equally applicable to notes issued pursuant to this section.
  6. No holder or holders of any bonds or notes issued under this chapter shall have the right to compel any exercise of the taxing powers of the municipality to pay the bonds or notes, or the interest on the bonds or notes, and each bond or note issued under this chapter shall recite in substance that the bond or note, as the case may be, including the interest on the bond or note, is payable solely from the revenues pledged to the payment of the bond or note, and that the bond or note does not constitute a debt of the municipality within the meaning of any statutory limitation.

Acts 1935 (Ex. Sess.), ch. 33, § 9; C. Supp. 1950, § 4406.50 (Williams, § 4406.42); Acts 1957, ch. 196, § 1; T.C.A. (orig. ed.), § 6-1311; Acts 1996, ch. 794, §§ 1, 2; 2010, ch. 868, § 17.

Collateral References.

Revenue bonds or other bonds not creating indebtedness as within constitutional or statutory requirement of prior approval by electors of issuance of bonds or incurring indebtedness by municipality. 146 A.L.R. 604.

7-34-112. Validity of bonds.

The bonds bearing the signatures of officers in office on the date of the signing of the bonds shall be valid and binding obligations, notwithstanding that before delivery of, and payment for, the bonds any or all the persons whose signatures appear on the bonds have ceased to be officers of the municipality issuing the bonds. The validity of the bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of the public works for which the bonds are issued. The resolution authorizing the bonds may provide that the bonds shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Acts 1935 (Ex. Sess.), ch. 33, § 7; C. Supp. 1950, § 4406.48 (Williams, § 4406.40); T.C.A. (orig. ed.), § 6-1312.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal, State and County Securities, § 10.

7-34-113. Lien on public works revenue.

  1. All bonds of the same issue shall, subject to the prior and superior rights of outstanding bonds, claims or obligations, have a prior and paramount lien on the revenue of the public works for which the bonds have been issued, over and ahead of all bonds of any issue payable from the revenue that may be subsequently issued, and over and ahead of any claims or obligations of any nature against the revenue subsequently arising or subsequently incurred; provided, that the proceedings authorizing any issue of bonds may provide for the issuance of additional bonds on a parity with the bonds.
  2. All bonds of the same issue shall be equally and ratably secured without priority by reason of number, date of bonds, of sale, or execution, or of delivery, by a lien on the revenue in accordance with this chapter and the resolution or resolutions authorizing the bonds.

Acts 1935 (Ex. Sess.), ch. 33, § 8; C. Supp. 1950, § 4406.49 (Williams, § 4406.41); Acts 1967, ch. 256, § 1; T.C.A. (orig. ed.), § 6-1313.

7-34-114. Rates sufficient to support plant — Consumer use of auxiliary energy sources.

  1. The governing body of a municipality issuing bonds pursuant to this chapter shall prescribe and collect reasonable rates, fees or charges for the services, facilities and commodities of such public works, and shall revise such rates, fees or charges, from time to time, whenever necessary so that such public works shall be and always remain self-supporting. The rates, fees or charges prescribed shall be such as will produce revenue at least sufficient to:
    1. Pay when due all bonds and interest on the bonds, for the payment of which such revenue is or shall have been pledged, charged or otherwise encumbered, including reserves for the payment of the bonds and interest; and
    2. Provide for all expenses of operation and maintenance of such public works, including reserves for the expenses and maintenance.
  2. When such public works supplies its services to consumers who use solar or wind powered equipment as a source of energy, such public works shall not discriminate against such consumers by its rates, fees or charges or by altering the availability or quality of energy.
  3. Any consumer who uses solar power, wind power, or other auxiliary source of energy shall install and operate the equipment, property, or appliance for such energy source in compliance with any state or local code or regulation applicable to the safe operation of such equipment, property, or appliance.

Acts 1935 (Ex. Sess.), ch. 33, § 10; C. Supp. 1950, § 4406.51 (Williams, § 4406.43); T.C.A. (orig. ed.), § 6-1314; Acts 1980, ch. 756, § 1.

Cross-References. Discrimination by public utilities against consumers using auxiliary energy sources, §§  65-4-105, 65-5-104.

Attorney General Opinions. Municipal authority to charge residents never connected to water system, OAG 98-0152, 1998 Tenn. AG LEXIS 152 (8/12/98).

Discount rates for charitable organizations not authorized, OAG 99-026, 1999 Tenn. AG LEXIS 25 (2/16/99).

Collateral References.

Advertising or promotional expenditures of public utility as part of operating expenses for ratemaking purposes. 83 A.L.R.3d 963.

Validity of “fuel adjustment” or similar clauses authorizing electric utility to pass on increased cost of fuel to its customers. 83 A.L.R.3d 933.

7-34-115. Operation of utility systems — Disposition of revenue.

    1. Notwithstanding any other law to the contrary, as a matter of public policy, municipal utility systems shall be operated on sound business principles as self-sufficient entities. User charges, rates and fees shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue to a governmental entity, but shall operate for the use and benefit of the consumers served by such public works and for the improvement of the health and safety of the inhabitants of the area served. Nothing in this section shall preclude a municipal utility system from operating water and sewer systems as individual or combined entities. Nothing in this section shall preclude a municipal utility system from operating a public works system as a special revenue fund when the governing body of the municipality determines that it is in the best interest of the customers of the public works system and the citizens of the municipality. All water systems and wastewater facilities must utilize an enterprise fund for accounting and reporting its operations. Any water system or wastewater facility currently not operating as an enterprise fund must be doing so by July 1, 2016. To the extent of any conflict between this section and the Wastewater Facilities Act of 1987, compiled in title 68, chapter 221, part 10, the latter statute shall control. Any municipality shall devote all revenues derived from a public works to or for:
      1. The payment of all operating expenses;
      2. Bond interest and retirement or sinking fund payments, or both;
      3. The acquisition and improvement of public works;
      4. Contingencies;
      5. The payment of other obligations incurred in the operation and maintenance of the public works and the furnishing of services;
      6. The redemption and purchase of bonds, in which case such bonds shall be cancelled;
      7. The creation and maintenance of a cash working fund;
      8. The payment of an amount to the general fund of the municipality not to exceed a cumulative return of six percent (6%) per annum of any equity invested from the general fund, if any, of the municipality. Equity investment includes any contributions or purchases made by the municipality from the general fund, including, but not limited to, cash contributions, retirement of debt service and purchases of equipment, so long as these contributions are reflected in the utility's financial statement; provided, that such definition of equity investment shall not change the status under this section of any payments made pursuant to any city charter in existence on or before July 1, 1993; and
      9. If the governing body of the municipality by resolution so requests, payments to the municipality in lieu of ad valorem tax on the property of the public works within the corporate limits of the municipality not to exceed the amount of taxes payable on privately owned property of similar nature.
    2. Notwithstanding subdivision (a)(1) or any other law to the contrary, if the municipal utility system is a natural gas utility system, the municipal utility board with management responsibility for the municipal utility system or, if there is no such board, the municipal governing body, may also devote revenues derived from the system to funding chambers of commerce and economic and community organizations in accordance with an ordinance or resolution adopted by the governing body of the municipality. A municipal utility system whose revenues are devoted pursuant to this subdivision (a)(2) shall not raise rates on customers to cover contributions targeted for economic development efforts. The authorization provided in this subdivision (a)(2) shall only apply to municipal natural gas utility systems that are located in counties having a population of less than three hundred thirty-six thousand four hundred (336,400) according to the 2010 federal census, and the authorization provided in this subdivision (a)(2) is in addition to such authorization as may be provided to municipal utility systems under otherwise applicable law.
  1. Any surplus remaining, after establishment of proper reserves, if any, shall be devoted solely to the reduction of rates.
  2. In the event a municipality establishes a pension plan for employees of public works, expenditures incident to inaugurating and maintaining such plan shall be deemed an operating expense for purposes of this section.
  3. In computing the equity investment of the municipality, the value of the public works shall be taken as its historical cost. The payment of bonds or the acquisition or improvement of property from the receipts derived from a public works or any other operation of the public works as such shall not be considered to increase the equity investment of the municipality.
  4. Nothing in this section shall be construed to limit the power of the municipality to make contracts with the purchasers of bonds:
    1. As to the use and disposition of the revenues otherwise than as set forth in subsection (a);
    2. As to the order of application of such revenues; or
    3. As to limitations on the amount of payments to the municipality either as a return on the equity investment of the municipality, if any, or as a payment in lieu of taxes.
  5. If a municipality violates this section, it must repay any funds illegally transferred. If the municipality does not have sufficient funds to repay any funds illegally transferred, the municipality is required to submit a plan covering a period not to exceed five (5) years in which to repay the funds. The plan shall be submitted to and approved by the comptroller of the treasury or the comptroller's designee. Upon discovery of such violation through an audit, any city official in violation of this section is subject to ouster under title 8, chapter 47.
  6. Nothing in this section shall preclude a local government from being entitled to receive from a utility the amount of direct and properly allocated and disclosed indirect operating expenses incurred by the municipality on behalf of the utility.
  7. To the extent of any conflict between this section and § 7-39-404, or chapter 52, part 3 of this title, § 7-39-404, or chapter 52, part 3 of this title shall control.
    1. In addition to the authority granted under otherwise applicable law, a municipality operating a municipal utility system may, acting through the authorization of the board or supervisory body having responsibility for the municipal utility system, accept and distribute excess receipts for bona fide charitable purposes pursuant to programs approved by the board or supervisory body, which programs may include, but are not limited to, programs in which utility bills are rounded up to the next dollar when the amount of any excess receipt due to rounding is shown as a separate line on the utility bill.
    2. Excess receipts accepted by a municipal utility system pursuant to programs authorized by subdivision (i)(1) are not considered revenue to the municipal utility system, and the municipality may only use the excess receipts for charitable purposes.
    3. For purposes of this subsection (i):
      1. “Charitable purpose” means a purpose that provides relief to the poor or underprivileged, advances education or science, addresses community deterioration, provides community assistance, assists in economic development, provides for the erection of public buildings, monuments, or works, assists in historic preservation, or promotes social welfare through nonprofit or governmental organizations designed to accomplish any of the purposes listed in this subdivision (i)(3); and
      2. “Opt-out basis” means automatically enrolling customers in a program and requiring notice from the customer of a desire to be removed from the program in order to cease participation in the program.
      1. A municipal utility system that establishes a program authorized by subdivision (i)(1) on or after January 1, 2021, shall not enroll any customer into the program without the express consent of the customer.
      2. A customer who is enrolled in a program authorized by subdivision (i)(1) may opt out of the program by providing notice to the utility of the customer's desire to cease participation in the program.
      3. Upon receiving an opt-out notice from a customer, the utility shall remove the customer from enrollment in the program no later than the first day of the customer's next regular billing cycle that begins no fewer than thirty (30) days after the date of the customer's opt-out notice.
      1. Any municipal utility system that on June 3, 2019, utilizes a program authorized by subdivision (i)(1) and operates the program on an opt-out basis shall send a written notice to each municipal utility system customer no later than November 1, 2020, that contains, but is not limited to, the following information:
        1. A statement that the municipal utility system utilizes a program authorized by subdivision (i)(1), the program is operated on an opt-out basis, and a description of the program;
        2. Notification that a customer whose bill is currently rounded up by the utility has the right to opt out of participation in the program; and
        3. Contact information for the utility and instructions on how the customer may contact the utility to opt out of participation in the program.
      2. The written notice required by this subdivision (i)(5) may be provided to the customer by electronic means and may accompany a regular billing statement, at the discretion of the municipal utility system.
      3. A municipal utility system that on June 3, 2019, utilizes a program authorized by subdivision (i)(1) and operates the program on an opt-out basis that fails to send the notice required by this subdivision (i)(5) shall, on and after January 1, 2021, cease operating the program on an opt-out basis and shall not operate a program unless operated in compliance with subdivision (i)(4).
    4. Any municipal utility system that utilizes a program authorized by subdivision (i)(1) and that maintains a website that is accessible by the general public shall publish in a conspicuous location on the website by November 1, 2020, and throughout the duration of the municipal utility system's utilization of the program, the following information:
      1. A statement that the municipal utility system utilizes a program authorized by subdivision (i)(1) and a description of the program;
      2. Notification that a customer whose bill is currently rounded up by the utility has the right to opt out of participation in the program; and
      3. Contact information for the utility and instructions on how the customer may contact the utility to opt into or out of participation in the program.
    1. The governing body of a municipal utility system subject to this section that supervises, controls, or operates a public water or public sewer system, including, but not limited to, those systems using a separate utility board pursuant to any public or private act, must meet the training and continuing education requirements in this subsection (j).
    2. All members of the municipal utility board of commissioners shall, within one (1) year of initial appointment or election to the board of commissioners or within one (1) year of reappointment or reelection to the board of commissioners, attend a minimum of twelve (12) hours of training and continuing education in one (1) or more of the subjects listed in subdivision (j)(4).
      1. In each continuing education period after the initial training and continuing education required by subdivision (j)(2), a municipal utility board commissioner shall attend a minimum of twelve (12) hours of training and continuing education in one (1) or more of the subjects listed in subdivision (j)(4).
      2. For the purposes of this subsection (j) and subsection (k), “continuing education period” means a period of three (3) years beginning January 1 after the calendar year in which a municipal utility board commissioner completes the training and continuing education requirements set forth in subdivision (j)(2) and each succeeding three-year period thereafter.
    3. The subjects for the training and continuing education required by this subsection (j) shall include, but not be limited to, board governance, financial oversight, policy-making responsibilities, and other topics reasonably related to the duties of the members of the board of commissioners of a municipal utility.
    4. Any association or organization with appropriate knowledge and experience may prepare a training and continuing education curriculum for municipal utility board commissioners covering the subjects set forth in subdivision (j)(4) to be submitted to the comptroller of the treasury for review and approval prior to use. The comptroller shall file a copy of approved training and continuing education curriculum with the water and wastewater financing board. Changes and updates to the curriculum must be submitted to the comptroller for approval prior to use. Any training and continuing education curriculum approved by the comptroller must be updated every three (3) years and resubmitted to the comptroller for review and approval.
    5. For purposes of this subsection (j), a municipal utility board commissioner may request a training and continuing education extension of up to six (6) months from the comptroller of the treasury or the comptroller's designee. The request shall only be granted upon a reasonable showing of substantial compliance with this subsection (j). If the extension is granted, the municipal utility board commissioner must complete any additional required training hours necessary to achieve full compliance for only the relevant continuing education period within the extension period. The municipal utility board commissioner shall file copies of any extension request letters and corresponding comptroller of the treasury determination letters with the water and wastewater financing board.
      1. Beginning no later than March 1, 2019, the comptroller of the treasury shall offer online training and continuing education courses for purposes of compliance with this subsection (j).
      2. Any association or organization with appropriate knowledge and experience may prepare an online training and continuing education curriculum for municipal utility board commissioners covering the subjects set forth in subdivision (j)(4) to be submitted to the comptroller of the treasury for review and approval prior to use.
      3. The comptroller of the treasury shall file a copy of approved online training and continuing education curriculum with the water and wastewater financing board. Changes and updates to the curriculum must be submitted to the comptroller of the treasury for approval prior to use. Any online training and continuing education curriculum approved by the comptroller of the treasury must be updated every three (3) years and resubmitted to the comptroller of the treasury for review and approval.
      4. Any person required to complete training and continuing education under this subsection (j) may take one (1) or more of such online courses in lieu of attending training and continuing education courses in person.
      5. The online training and continuing education provider shall provide a certificate of completion or attendance that shall be submitted by the municipal utility board commissioner to the municipality. Each municipality shall keep the certificate of completion or attendance for six (6) years after the calendar year in which the certificate of completion or attendance is submitted.
  8. If any member of a municipal utility board of commissioners fails to meet the training and continuing education requirements set forth in subsection (j) before the end of the continuing education period or before the end of any extension approved by the comptroller of the treasury or the comptroller's designee, then the water and wastewater financing board shall have full discretion to order reasonable sanctions against the municipality, including, but not limited to, the municipality being ineligible to receive assistance from the Tennessee local development authority under § 68-221-1206(a)(3).
  9. Notwithstanding any other law to the contrary, a municipal utility system providing water, sewer, or natural gas service has the power to enter into agreements with companies to provide water, sewer, or natural gas leak protection bill coverage, insurance, or service agreements for customers and to offer their customers water line, sewer line, or natural gas line damage protection coverage, insurance, or service agreements for customer-owned water, sewer, or natural gas lines. The municipal utility system may include the costs for the coverage, insurance, or service agreements on the monthly utility bills of their customers.

Acts 1935 (Ex. Sess.), ch. 33, § 11; 1949, ch. 43, § 1; C. Supp. 1950, § 4406.52 (Williams, § 4406.44); Acts 1969, ch. 335, § 2; T.C.A. (orig. ed.), § 6-1315; Acts 1986, ch. 533, § 1; 1993, ch. 509, § 1; 1998, ch. 763, § 1; 2003, ch. 181, § 1; 2010, ch. 868, § 18; 2014, ch. 628, §§ 1-4; 2017, ch. 118, § 1; 2018, ch. 956, § 1; 2018, ch. 1003, § 1; 2019, ch. 41, § 1; 2019, ch. 228, § 1; 2019, ch. 508, § 1.

Amendments. The 2017 amendment added (j) and (k).

The 2018 amendment by ch. 956, added (j)(7).

The 2018 amendment by ch. 1003, added (a)(2).

The 2019 amendment by ch. 41, rewrote (j)(7)(E), which read: “Beginning no later than March 1, 2019, the comptroller of the treasury shall offer online training and continuing education courses for purposes of compliance with this subsection (j).”

The 2019 amendment by ch. 228, added (l ).

The 2019 amendment by ch. 508, rewrote (i), which read: “(1) In addition to the authority granted under otherwise applicable law, a municipality operating a municipal utility system has the power and is authorized, acting through the authorization of the board or supervisory body having responsibility for the municipal utility system, to accept and distribute voluntary contributions for bona fide charitable purposes pursuant to programs approved by the board or supervisory body, which programs may include, but shall not be limited to, programs in which utility bills are rounded up to the next dollar when such contribution is shown as a separate line on the utility bill. (2)  Contributions accepted by a municipal utility system pursuant to programs authorized by subdivision (i)(1) shall not be considered revenue to the municipal utility system, and such contributions shall be used only for charitable purposes. (3)  For purposes of this subsection (i), a “charitable purpose” is one that provides relief to the poor or underprivileged, advances education or science, addresses community deterioration, provides community assistance, assists in economic development, provides for the erection of public buildings, monuments or works, assists in historic preservation, or promotes social welfare through nonprofit or governmental organizations designed to accomplish any of the purposes listed in this subdivision (i)(3).”

Effective Dates. Acts 2017, ch. 118, § 6. April 12, 2017.

Acts 2018, ch. 956, § 2. May 15, 2018.

Acts 2018, ch. 1003, § 2. May 21, 2018.

Acts 2019, ch. 41 § 2. March 22, 2019.

Acts 2019, ch. 228, § 4. April 30, 2019.

Acts 2019, ch. 508, § 6. June 3, 2019.

Cross-References. Powers in carrying out purposes, § 7-82-304.

Attorney General Opinions. Discount utility rates to charitable organizations, OAG 97-127, 1997 Tenn. AG LEXIS 160 (9/08/97).

Municipal authority to charge residents never connected to water system, OAG 98-0152, 1998 Tenn. AG LEXIS 152 (8/12/98).

Discount rates for charitable organizations not authorized, OAG 99-026, 1999 Tenn. AG LEXIS 25 (2/16/99).

7-34-116. Exemption from taxation.

  1. So long as a municipality owns any public works, the property and revenue of such public works shall be exempt from all state, county and municipal taxation.
  2. Bonds and the income from bonds issued pursuant to this chapter shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes.

Acts 1935 (Ex. Sess.), ch. 33, § 12; C. Supp. 1950, § 4406.53 (Williams, § 4406.45); T.C.A. (orig. ed.), § 6-1316.

7-34-117. Exemption from Tennessee public utility commission jurisdiction.

No requirements or provisions of this chapter shall be construed so as to deprive any municipality issuing bonds pursuant to this chapter of the exemption previously granted to municipalities from the jurisdiction of the Tennessee public utility commission.

Acts 1935 (Ex. Sess.), ch. 33, § 17; 1937, ch. 230, § 4; C. Supp. 1950, § 4406.58 (Williams, § 4406.50); impl. am. Acts 1955, ch. 69, § 1; T.C.A. (orig. ed.), § 6-1317; Acts 1995, ch. 305, § 74; 2017, ch. 94, § 10.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” at the end of the section.

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Municipal gas companies exempt, § 7-39-311.

Municipalities exempt from regulation, §§ 7-34-106, 7-39-311.

Law Reviews.

Symposium – Memphis in The Law: The Process of Determining What Process is Due: The Continuing Saga of Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1 (1978) (Donna Harkness), 41 U. Mem. L. Rev. 745 (2011).

Collateral References.

Public utility acts, applicability of, to municipal corporations owning or operating a public utility. 10 A.L.R. 1432, 18 A.L.R. 946.

7-34-118. Supplemental nature of chapter.

The powers conferred by this chapter shall be in addition and supplemental to, and the limitations imposed by this chapter shall not affect, the powers conferred by any other general, special or local law. Public works may be acquired, purchased, constructed, reconstructed, improved, bettered, and extended, and bonds may be issued under this chapter for such purposes, notwithstanding that any general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of like public works, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law, including, but not limited to, any requirement for the approval by the voters of any municipality.

Acts 1935 (Ex. Sess.), ch. 33, § 18; C. Supp. 1950, § 4406.59 (Williams, § 4406.51); T.C.A. (orig. ed.), § 6-1318.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal, State and County Securities, § 10.

Chapter 35
Sewers and Waterworks

Part 1
Eminent Domain

7-35-101. Power of eminent domain.

All municipal corporations are empowered to take and condemn lands, property, property rights, privileges and easements of others for the purpose of constructing, laying, repairing, or extending sewers, water system or drainage ditches, both within and beyond the corporate limits, and of acquiring ingress and egress in the construction, repair or maintenance of sewers, water system or drainage ditches, and in making connection to sewers, water system or drainage ditches. Such property or interest in such property may be so acquired whether or not the property or interest in property is owned or held for public use by corporations, associations or persons having the power of eminent domain, or otherwise held or used for public purpose; provided, that such prior public use will not be interfered with by this use.

Acts 1917, ch. 31, § 1; Shan. Supp., § 1880a27b1; mod. Code 1932, § 3366; T.C.A. (orig. ed.), § 6-1401; Acts 2000, ch. 726, § 1.

Cross-References. Extension of service beyond city limits, § 7-51-401.

Loans to local governmental entities for waterworks construction, title 68, ch. 221, part 5.

Vandalism, § 39-14-408.

Law Reviews.

Equity — Condemnation — Statutory Remedy Excludes Equitable Relief, 33 Tenn. L. Rev. 235 (1966).

Attorney General Opinions. Sewer system installation subsidies, OAG 94-105, 1994 Tenn. AG LEXIS 104 (9/9/94).

A municipality is authorized to take and condemn lands to lay a sewer line through another municipality; however, if the utility is financed under the Revenue Bond Law or the Local Government Public Obligations Act of 1986, the municipality building the utility through the territory of another municipality must obtain the consent of the latter's governing body, OAG 01-098, 2001 Tenn. AG LEXIS 89 (6/13/01).

Collateral References.

Construction and application of rule requiring public use for which property is condemned to be “more necessary” or “higher use” than public use to which property is already appropriated—state takings. 49 A.L.R.5th 769.

Incidental private benefit, effect of. 53 A.L.R. 21.

Municipality's liability arising from negligence or other wrongful act in carrying out construction or repair of sewers and drains. 61 A.L.R.2d 874.

7-35-102. Determination and payment of damages.

The compensation for damages in such taking shall be paid by the municipalities, and shall be determined in the mode provided by §§ 7-31-1077-31-111; and the rights and powers contained in those sections are conferred upon all of the municipal corporations, as specifically as if enacted into this section.

Acts 1917, ch. 31, § 2; Shan. Supp., § 1880a27b2; mod. Code 1932, § 3367; T.C.A. (orig. ed.), § 6-1402.

Collateral References.

Compensation for diminution in value of the remainder of property resulting from taking or use of adjoining land of others for the same undertaking. 59 A.L.R.3d 488.

Eminent domain: consideration of fact that landowner's remaining land will be subject to special assessment in fixing severance damages. 59 A.L.R.3d 534.

Part 2
Requirement of Sewer Connection

7-35-201. Owners required to connect to municipal sewer — Maintenance of sewer connections — Combined water and sewer charges — Security deposit — Delinquencies.

In order to protect the public health of persons residing within congested areas, and in order to assure the payment of bonds issued for sewer purposes, the governing body of every city, town and utility district that has issued or, subsequent to March 10, 1955, issues bonds payable in whole or in part from revenues from sewer services provided within or without its borders is authorized by appropriate resolution:

  1. To require the owner, tenant or occupant of each lot or parcel of land that abuts upon a street or other public way containing a sanitary sewer and upon which lot or parcel a building exists for residential, commercial or industrial use, to connect the building with the sanitary sewer and to cease to use any other means for the disposal of sewage, sewage waste or other polluting matter; in addition to any other method of enforcing such requirement, a city, town or utility district also providing water services to such property may, within or without its borders, refuse water service to such owner, tenant or occupant until there has been compliance and may discontinue water service to an owner, tenant or occupant failing to comply within thirty (30) days after notice to comply;
  2. To require the owner, tenant or occupant of each lot or parcel of land who is responsible for any connection to the sanitary sewer required under this section to properly maintain that portion of the connection that is located on the property of the owner, tenant or occupant; and in addition to any other method of enforcing such requirement, a city, town or utility district also providing water service to such property may, within or without its border, refuse water service to such owner, tenant or occupant until there has been compliance and may discontinue water service to an owner, tenant or occupant failing to comply within thirty (30) days after notice to comply;
  3. If any city, town or utility district also operates a water system, and can do so without the impairment of contract rights vested in the holders of any bonds payable from the revenues of such water system, to combine charges for sewer and water services in one (1) statement and to bill the beneficiary of such services for sewer and water services in such manner as to require the payment of both charges as a unit, and to enforce the payment of such charges by discontinuing either the water service or the sewer service, or both;
  4. To require the owner, tenant or occupant of each lot or parcel of land who is obligated to pay the charges made for the services furnished by any sewer system or sewage disposal system, to make a reasonable deposit in advance to ensure the payment of such charges;
  5. To proceed to recover the amount of any delinquent charges owed by any such owner, tenant or occupant, with interest on the delinquent charges at the maximum legal rate, in an action ex contractu; and
    1. To enter into contracts for the collection of such sewer charges with any public or private corporation or municipal utilities board or commission operating a water system, and any public corporation or municipal utilities board or commission is authorized and empowered to make contracts with any other city, town or utility district:
      1. To meter, bill and collect sewer service charges as an added designated item on its water service bills, or otherwise;
      2. To discontinue water service to sewer users who fail or refuse to pay sewer service charges;
      3. Not to accept payment of water service charges from any customer without receiving at the same time payment of any sewer service charges owed by such customer; and
      4. Not to reestablish water service for any customer until such time as all past due sewer service charges owed by such customer have been paid.
    2. Such public corporation or municipal utilities board or commission is hereby authorized to perform all acts and discharge all obligations required by any such contract or contracts.

Acts 1947, ch. 222, § 1; C. Supp. 1950, § 3695.25 (Williams, § 3340.1); Acts 1955, ch. 144, § 2; 1968, ch. 524, §§ 1, 2; T.C.A. (orig. ed.), § 6-1403; Acts 1991, ch. 252, § 2.

Cross-References. Requiring connection before improvement, § 7-32-120.

Textbooks. Tennessee Jurisprudence, 10 Tenn. Juris., Drains and Sewers, § 13.

7-35-202. Action for unpaid sewer or wastewater utility fees or assessments.

  1. In addition to § 7-35-201, upon approval by a two-thirds (2/3) vote of the legislative body, any municipality having a municipal sanitary sewer system may enforce the payment of fees or assessments charged for sewer or wastewater disposal utility services by filing an action in the same manner and with the same penalties and interest attached as provided for the enforcement of unpaid taxes pursuant to title 67, including the sale or execution of such property as provided in title 26, chapter 5, and the redemption provisions of title 66, chapter 8. Such action may be taken only once every calendar year by the municipal sanitary sewer system for unpaid sewer or wastewater utility fees or assessments. The municipal sanitary sewer system shall be required to give notice to the property owner, if different from the service user, not less than ninety (90) days prior to the filing of any action, which would include levying on the real property. Such notice shall be mailed to the last known address of the property owner as contained on the tax records of the county where the property is located, and shall include the amount of the unpaid fee or assessment for sewer or wastewater disposal services, together with penalties and interest. The notice shall also contain a statement to the effect that, unless the payments are brought up to date, a lien will attach to the property and an action will be filed pursuant to title 67. The municipal sanitary sewer system shall bear the reasonable costs incurred by a property owner in defending such an action due to an error in the records or fees of the system for the provision of such sewer or wastewater disposal services.
  2. As used in this section, “municipality” means a municipality having a population of:
    1. Not less than eight hundred ninety (890) nor more than nine hundred (900), according to the 1990 federal census or any subsequent federal census; and
    2. Not less than five hundred thirty (530) nor more than five hundred forty (540) that is located in a county having a population of not less than thirty-one thousand seven hundred one (31,701) nor more than thirty-one thousand eight hundred seven (31,807), according to the 2010 federal census or any subsequent federal census.

Acts 1992, ch. 882, § 1; 2018, ch. 762, §§ 1, 2.

Compiler's Notes. For table of populations of Tennessee municipalities see Volume 13 and its supplement.

Acts 2018, ch. 762, § 3 provided that the act, which amended this section, applies only to fees, assessments, and charges that become due and owing on or after April 19, 2018.

Amendments. The 2018 amendment added (b); and deleted “having a population of not less than eight hundred ninety (890) nor more than nine hundred (900), according to the 1990 federal census or any subsequent federal census,” preceding “any municipality having a municipal sanitary sewer system” in the first sentence of present (a).

Effective Dates. Acts 2018, ch. 762, § 3. April 19, 2018.

Part 3
Contracts Between Municipalities

7-35-301. Contracts authorized.

Municipalities to which this part may apply are authorized to contract with each other for the use by one (1) of the municipalities of the sewer or water pipes and system belonging to the other.

Acts 1897, ch. 76, § 1; Shan., § 1924a1; mod. Code 1932, § 3337; T.C.A. (orig. ed.), § 6-1404.

Cross-References. Service contracts between cities or towns, § 7-35-416.

7-35-302. Applicability of part — Consolidated systems.

This part shall apply to municipalities that adjoin one another, or that are in such proximity to one another as to make it of the interest to both that such system of each be in substance consolidated and unified, the question of the mutual advantages to accrue to such municipalities, respectively, to be determined by the municipalities, and their determination of the advantages by entering into such contract or contracts to be conclusive.

Acts 1897, ch. 76, § 2; Shan., § 1924a2; mod. Code 1932, § 3338; T.C.A. (orig. ed.), § 6-1405.

Cross-References. Extension of service beyond corporate limits, § 7-51-401.

7-35-303. Construction between contracting municipalities.

When such municipalities do not adjoin but lie in such proximity to one another as to make such contract to their mutual advantage, then either of the municipalities may, from the public funds of either of the municipalities, build such lines of main sewer or water pipes over the intermediate territory, using any streets, roads, or public ways for the sewers or water pipes that may be necessary, so as to enable the pipes and systems of the two (2) or more municipalities to be joined together and consolidated into one.

Acts 1897, ch. 76, § 3; Shan., § 1924a3; mod. Code 1932, § 3339; T.C.A. (orig. ed.), § 6-1406.

Cross-References. Extension of service beyond corporate limits, § 7-51-401.

7-35-304. Enforcement of contracts.

Any contract or contracts made by the municipalities under the authority conferred by this chapter shall be binding and obligatory upon the municipalities, respectively, and may be enforced against the municipalities, or either of the municipalities, as any other contract obligation might be enforced.

Acts 1897, ch. 76, § 4; Shan., § 1924a4; Code 1932, § 3340; T.C.A. (orig. ed.), § 6-1407.

Part 4
Authority to Own and Operate System

7-35-401. Authority granted — Part definitions.

  1. Every incorporated city and town in this state is authorized and empowered to own, acquire, construct, extend, equip, operate and maintain within or without the corporate limits of such city or town a waterworks system or a sewerage system, to provide water or sewerage service and to charge for such service.
  2. As used in this part, unless the context otherwise requires:
    1. “Sewerage system” means all or any part of the following:
      1. The collecting system;
      2. Intercepting and outflow sewers;
      3. Pumping stations;
      4. Treatment, purification and disposal plants; and
      5. The installation of green infrastructure practices within areas containing collecting systems designed to convey both sanitary sewage and storm water. Green infrastructure practices include, but are not limited to: trees, tree boxes, vegetated roofs, infiltration strips, rain gardens, cisterns, dry wells, permeable pavement, soil amendments, pocket wetlands, and vegetated swales. Green infrastructure practices may be implemented on both public and private property at the discretion of the incorporated city or town;
    2. “Waterworks system” means all or any part of the following:
      1. Source of supply;
      2. Pumping facilities;
      3. Purification works;
      4. Storage facilities;
      5. Distribution system; and
      6. All necessary parts and appurtenances for proper operation; and
    3. “Works” means the waterworks or sewerage system.
    1. The power to own, acquire, construct, extend, equip, operate and maintain water or sewerage service shall not include the power to bid on or construct any project for a private purpose. As used in this subsection (c):
      1. “Municipal corporation” means any incorporated city or town in this state and any utility district created pursuant to chapter 82 of this title;
        1. “Project for a private purpose” includes, but is not limited to:
          1. Any commercial project, commercial subdivision, private residence or residential subdivision that is owned by a nonpublic entity;
          2. The construction of individual water or sewerage lines beyond a meter that measures service or consumption, or onto private property, unless such water or sewerage line is owned by, or a utility easement has been obtained by, the municipal corporation; and
          3. Any other projects that are not part of the normal operation of a municipal corporation in providing water or sewerage services and which projects are otherwise constructed by private contractors who are subject to the sales tax, the business tax and other tax laws and licensure laws of this state;
        2. “Project for a private purpose” does not include the renewal or replacement of any existing water or sewerage lines that are owned by the municipal corporation; and
        3. “Project for a private purpose” does not include the renewal or replacement of individual water or sewage lines behind a meter or onto private property when such rehabilitative maintenance or construction is deemed necessary by the municipal corporation because excessive infiltration and inflow from groundwater or rainwater is resulting in sanitary sewer overflows or other serious health or system capacity issues. Municipal corporations are authorized, but not required, to maintain or construct individual lines for this purpose if the property owner consents and agrees to hold the municipal corporation harmless for the work.
    2. This subsection (c) shall not apply in any county having a population of not less than two hundred eighty-seven thousand seven hundred (287,700) nor more than two hundred eighty-seven thousand eight hundred (287,800), according to the 1980 federal census or any subsequent federal census.

Acts 1933, ch. 68, § 1; C. Supp. 1950, § 3695.1; modified; T.C.A. (orig. ed.), § 6-1408; Acts 1988, ch. 738, §§ 1-3; 2007, ch. 123, §§ 1, 2; 2016, ch. 792, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2016 amendment added (1)(E) in the definition of “sewerage system” in (b).

Effective Dates. Acts 2016, ch. 792, § 2. April 12, 2016.

Cross-References. Extension of service beyond corporate limits, § 7-51-401.

Loans to municipalities from state for waterworks construction, title 68, ch. 221, part 5.

Attorney General Opinions. Authority of city utility system to repair privately owned lines, OAG 06-030 (2/13/06), 2006 Tenn. AG LEXIS 30.

Domestic nonprofit water cooperative merging with or transferring assets to municipality, OAG 06-176, 2006 Tenn. AG LEXIS 196 (12/19/06), 2006 Tenn. AG LEXIS 196.

Provisions of T.C.A. § 7-35-401(c) eliminate the need for a utility easement when the objective is to reduce sanitary sewer overflows on private property, OAG 08-185 (12/12/08), 2008 Tenn. AG LEXIS 230.

Provisions of T.C.A. § 7-35-401(c)(2) do not apply to the Hamilton County water and wastewater treatment authority, OAG 08-185 (12/12/08), 2008 Tenn. AG LEXIS 230.

The fact that a city imposes a water and sewage rate on customers outside its corporate limits that is twice the rate charged to customers within its corporate limits does not by itself establish that the higher rate is invalid. The rate is presumptively valid, and a party seeking to challenge it bears the heavy burden of proving that the rate is not just and equitable. OAG 14-46, 2014 Tenn. AG LEXIS 49 (4/14/14).

NOTES TO DECISIONS

1. Constitutionality.

Acts 1933, ch. 68 was not violative of Tenn. Const., art. II, § 17, relating to embodying in an act more than one subject, and recital of acts amended. Selmer v. Allen, 166 Tenn. 476, 63 S.W.2d 663, 1933 Tenn. LEXIS 103 (1933).

2. Construction of Part.

This part is not amendatory, but provides an additional remedy complete within itself not dependent upon any other statute. Selmer v. Allen, 166 Tenn. 476, 63 S.W.2d 663, 1933 Tenn. LEXIS 103 (1933).

3. Sinking Fund.

City ordinance placing 75 cents of monthly service charge collected by city from customers of municipal waterworks in a sinking fund for use in paying bonded indebtedness of city did not violate Tenn. Const., art XI, § 8 since city operated waterworks in proprietary capacity; hence, it was entitled to use profits in any manner it desired in absence of showing that city acquired municipal waterworks under provisions of this section. Killion v. Paris, 192 Tenn. 446, 241 S.W.2d 524, 1951 Tenn. LEXIS 286 (1951).

Collateral References.

Liability of governmental entity for issuance of permit for construction which caused or accelerated flooding. 62 A.L.R.3d 514.

7-35-402. Purchase and combining of works.

One (1) or more waterworks or sewerage systems, owned by one (1) or more persons or corporations, may be acquired under authority of this part as a single enterprise, and the governing body of a city or town shall be and is empowered to enter into agreement with the owners as to the value of the waterworks or sewerage systems, and to purchase the waterworks or sewerage systems at an agreed price to be fixed by resolution passed by the governing body of the city or town upon three (3) separate readings on three (3) separate days. The city or town shall be understood to have all authority necessary to combine new works acquired under this part by purchase, construction or otherwise with any similar existing works owned by the city or town, all to be a part of the same single enterprise under the same supervision and control.

Acts 1933, ch. 68, § 4; C. Supp. 1950, § 3695.4; T.C.A. (orig. ed.), § 6-1409.

7-35-403. Condemnation or purchase of necessary property.

Any city or town proceeding under this part is authorized and empowered to condemn property for any and all purposes necessary for the proper completion of the works and the proper operation of the works. Where condemnation proceedings are employed, they shall be in accordance with the established laws of the state in title 29, chapter 16. The cities and towns are authorized to acquire by purchase any existing works, lands, rights, easements, franchises and any other property, real or personal, necessary to the proper completion and operation of the works. Title to property so condemned or purchased shall be taken in the name of the city or town. Where title to any property necessary to the completion or operation of the works is defective, authority is conferred to cure the defects by proper court proceedings. Where a condemnation proceeding becomes necessary, right of possession may issue immediately upon filing proceedings for condemnation, upon the posting of a bond for the value of the property with the clerk of the court.

Acts 1933, ch. 68, § 5; mod. C. Supp. 1950, § 3695.5; T.C.A. (orig. ed.), § 6-1410.

Cross-References. Condemnation for municipal sewers and conduits, title 29, ch. 17, part 2.

Condemnation for municipal sewers and waterworks, § 7-35-101.

NOTES TO DECISIONS

1. Constitutional Provisions.

Sewer and water lines taken by municipality fall within the provisions of Tenn. Const., art. I, § 21 prohibiting taking without just compensation. Zirkle v. Kingston, 217 Tenn. 210, 396 S.W.2d 356, 1965 Tenn. LEXIS 535 (1965).

2. Taking Without Compensation.

Owner of sewer and water lines taken without just compensation is not entitled to enjoin such taking in chancery or to maintain suit for unjust enrichment since adequate remedy is provided at law under reverse condemnation procedure provided by § 29-16-123. Zirkle v. Kingston, 217 Tenn. 210, 396 S.W.2d 356, 1965 Tenn. LEXIS 535 (1965).

7-35-404. Elements included in cost of works.

The costs of the works shall be deemed to include all the costs of acquisition or construction of the works, the costs of all property, rights, easements, and franchises deemed necessary or convenient for the works, and for the improvements determined upon as provided in § 7-35-420; interest upon bonds prior to and during construction or acquisition and for six (6) months after the completion of construction or acquisition of the improvements; engineering and legal expenses; expense for estimates of cost and of revenues; expense for plans, specifications and surveys; other expenses incident or necessary to determining the feasibility or practicability of the enterprise; administrative expense; and such other expenses as may be necessary to the financing authorized in this part and the construction or acquisition of the works and the placing of the works in operation and the performance of the things required in this part or permitted in connection with any of the provisions of this part.

Acts 1933, ch. 68, § 10; C. Supp. 1950, § 3695.10; T.C.A. (orig. ed.), § 6-1411.

7-35-405. Payment of preliminary expense.

  1. All necessary expenses actually incurred by the governing body of any city or town in the making of surveys, estimates of costs and revenues, employment of engineers or other employees, the giving of notices, taking of options and all other expenses of whatever nature, necessary to be paid prior to the issuance and delivery of the revenue bonds pursuant to this part, may be met and paid in the following manner:
    1. The governing body may from time to time certify such items of expenses to the proper fiscal agent of the city or town, directing the fiscal agent to pay the several amounts of the expenses; and
    2. The expenses shall be paid out of the general fund of such city or town not otherwise appropriated, or from any other available fund without a special appropriation being made for the payments by the governing body of the city or town.
  2. All such payments from the general or other funds shall be considered as temporary loans and shall be repaid immediately upon sale and delivery of the bonds, and claim for such repayment shall have priority over all other claims against the proceeds derived from the sale of the bonds.

Acts 1933, ch. 68, § 8; C. Supp. 1950, § 3695.8; T.C.A. (orig. ed.), § 6-1412.

7-35-406. Board of commissioners — Authorized — Governing body may perform duties of board — Jurisdiction over gas systems.

  1. Every incorporated city and town in this state acquiring a waterworks or sewerage system under this part shall be required and is hereby authorized and empowered to appoint a board of waterworks and/or sewerage commissioners to have supervision and control of construction and operation of such works. “Board,” as used in this part, means a board of waterworks and/or sewerage commissioners as required and authorized in this section, constituted and appointed as provided in §§ 7-35-407 — 7-35-409. The governing body of any incorporated city or town may, by proper ordinance, elect to perform the duties required of the boards under this part, in which event the governing body shall have all the powers, duties and responsibilities imposed upon the board, and all references to the board shall refer to such governing body acting in the capacity of such board.
  2. Municipalities now or hereafter owning or operating a gas system shall have the power and are hereby authorized to transfer to and confer upon the board of waterworks and sewerage commissioners the jurisdiction over such gas system.

Acts 1933, ch. 68, § 2; C. Supp. 1950, § 3695.2; Acts 1963, ch. 232, § 1; 1968, ch. 465, § 1; T.C.A. (orig. ed.), § 6-1413.

Cross-References. Compensation when gas system jurisdiction transferred to board, § 7-35-409.

NOTES TO DECISIONS

1. Performance of Board Functions.

Mayor and board of aldermen of town had authority to perform functions of board of commissioners and operate water and sewerage system. State ex rel. Barr v. Selmer, 220 Tenn. 304, 417 S.W.2d 532, 1967 Tenn. LEXIS 413 (1967).

On a certified question to it, the supreme court concluded that neither utility board had the authority to enter into multiyear contracts with the employee, the former superintendent of the two utilities, or to obligate the city for the payment of salary and benefits as provided by the terms. T.C.A. §§ 7-35-406(a) and (b) and 7-35-412 did not negate the requirement that the employee was to serve at the will and pleasure of the board. Allmand v. Pavletic, 292 S.W.3d 618, 2009 Tenn. LEXIS 519 (Tenn. Aug. 26, 2009).

7-35-407. Board of commissioners — Provided — Jurisdiction — Creation — First board.

Any city or town acquiring a waterworks or sewerage system under this part shall provide a board of waterworks or sewerage commissioners, to consist of five (5) members, who shall have custody, administration, operation, maintenance and control of such works. The board of commissioners shall be created in the following manner: at the time the governing body of the city or town passes the ordinance authorizing the acquisition of a waterworks or sewerage system, the governing body shall appoint five (5) members from among the property holders, who are and have been residents of the city or town for not less than one (1) year next preceding the date of appointment. The governing body of the municipality may, in its discretion, appoint as one (1) of the five (5) members a member from such governing board of the municipality, but in that event, the term of the member shall never extend beyond the member's term of office in the governing body of the municipality.

Acts 1933, ch. 68, § 19; C. Supp. 1950, § 3695.19; Acts 1968, ch. 465, § 2; T.C.A. (orig. ed.), § 6-1414.

7-35-408. Board of commissioners — Appointment — Terms.

Commissioners shall be appointed by majority vote of the governing body of the city or town, the original appointees to serve from the date of appointment for one (1), two (2), three (3), four (4) and five (5) years, respectively, from the next succeeding July 1, unless a member of the governing body of the city is appointed to serve on the board, and in that event, the original appointees to serve from the date of appointment for one (1), two (2), three (3), and four (4) years, respectively, from the next succeeding July 1. Each successor to a retired member of the board shall be appointed for a term of five (5) years in the same manner, at the next regular meeting of the governing body of the city in June next preceding the expiration of the term of office of the retiring member. Appointments to complete unexpired terms of office, vacant for any cause, shall be made in the same manner as the original appointments.

Acts 1933, ch. 68, § 19; C. Supp. 1950, § 3695.19; Acts 1968, ch. 465, § 3; T.C.A. (orig. ed.), § 6-1415.

7-35-409. Board of commissioners — Bond — Oath — Officers of board — Meetings — Compensation.

  1. Each member shall give such bond, if any, as may be required by ordinance, and shall qualify by taking the same oath of office as required for governing officials of the city or town. Within ten (10) days after appointment and qualification of members, the board shall hold a meeting to elect a chair, and designate a secretary and treasurer, or a secretary-treasurer, who need not be a member or members of the board, and fix the amount of the surety bond that shall be required of such treasurer and shall fix such person's compensation. The board shall hold public meetings at least once per month, at such regular time and place as the board may determine. Changes in the time and place of meeting shall be made known to the public as far in advance as practicable. Except as otherwise expressly provided, the board shall establish its own rules of procedure.
  2. All members of the board shall serve without compensation, but they shall be allowed necessary traveling and other expenses while engaged in the business of the board, including an allowance not to exceed one hundred dollars ($100) per month for attendance at meetings. Such expenses, as well as the salaries of the secretary and treasurer, or secretary-treasurer, shall constitute a cost of operation and maintenance.
  3. All members of the board shall receive an additional allowance, not to exceed twenty-five dollars ($25.00), per month for attendance at meetings when the municipalities have thereby authorized to transfer to and confer upon the board of waterworks or sewerage commissioners the jurisdiction over the gas system. Such additional allowances shall constitute a cost of operation and maintenance of the utility systems.

Acts 1933, ch. 68, § 19; C. Supp. 1950, § 3695.19; Acts 1979, ch. 229, § 1; T.C.A. (orig. ed.), § 6-1416.

Cross-References. Transfer of gas system jurisdiction to board, § 7-35-406.

7-35-410. Removal of commissioners.

Any member of the board may be removed from office for cause, but only after preferment of formal charges and trial before a court of proper jurisdiction. Charges may be preferred by resolution of the governing body of the city or town by any member of the board, or by a petition signed by two percent (2%) or more, but no fewer than twenty-five (25) in number, of the owners of property served by the works.

Acts 1933, ch. 68, § 19; C. Supp. 1950, § 3695.19; T.C.A. (orig. ed.), § 6-1417.

7-35-411. Use of existing boards.

The provisions of this part requiring any city or town acquiring a waterworks or sewerage system to create a board of waterworks or sewerage commissioners, defining their duties, qualifications, method of appointment or election, term of office, compensation, time of meetings, organization, removal from office and powers, shall not apply to any city or town having in existence on April 11, 1933, a department, board or commission, invested with similar duties and powers, and, in its discretion, any such city or town may substitute for the board of waterworks or sewerage commissioners provided for in this part such department, board or commission as is in existence on April 11, 1933, which shall be clothed with all powers and duties given to the board of waterworks or sewerage commissioners by this part, but shall be required to qualify by giving bond or taking oath as provided in this part.

Acts 1933, ch. 68, § 24; C. Supp. 1950, § 3695.24; modified; T.C.A. (orig. ed.), § 6-1418.

7-35-412. Powers and duties of board.

  1. The board of waterworks or sewerage commissioners, constituted and appointed as provided in this part and referred to in this part as the “board”, has the power to take all steps and proceedings and to make and enter into all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers under this part, subject only to limitations on matters requiring approval by the governing body of the city or town in question.
  2. From and after its first meeting, the board shall act in an advisory capacity to the governing body of the city or town in all matters pertaining to the financing of the enterprise and the acquisition of any or all parts of the proposed works or extensions to the works by purchase, condemnation or construction, and it is the board's duty to collect and furnish all necessary data and information, and to recommend such appropriate action by the governing body as may appear to the board to be necessary from time to time.
  3. Subject to and after approval by the governing body of the city or town, the board shall have the power, and it shall be the board's duty, to proceed with all matters pertaining to construction, extensions, improvements and repairs necessary to proper completion of the works. After completion and acceptance of the works by the board, and approval of such acceptance by the governing body of the city or town, the board shall have the power, and it shall be its duty, to proceed with all matters and perform everything necessary to the proper operation of the works and collection of charges for service rendered, subject only to the limitation of funds available for operation and maintenance. To this end, the board may employ such employees as in its judgment may be necessary and may fix their compensation, all of whom shall do such work as the board shall direct. The board shall have power to employ engineers and attorneys whenever in its judgment such services are necessary.

Acts 1933, ch. 68, § 20; C. Supp. 1950, § 3695.20; T.C.A. (orig. ed.), § 6-1419.

NOTES TO DECISIONS

1. Contracts.

Suburban residents' contracts with city did not prevent the city from raising water rates, but merely ensured that the residents' increases would be at “prevailing rate” for out-of-city users; therefore, contracts were enforceable even though executed by its board of public works. Maury County Bd. of Pub. Utils. v. City of Columbia, 854 S.W.2d 890, 1993 Tenn. App. LEXIS 44 (Tenn. Ct. App. 1993).

On a certified question to it, the supreme court concluded that neither utility board had the authority to enter into multiyear contracts with the employee, the former superintendent of the two utilities, or to obligate the city for the payment of salary and benefits as provided by the terms. T.C.A. §§ 7-35-406(a) and (b) and 7-35-412 did not negate the requirement that the employee was to serve at the will and pleasure of the board. Allmand v. Pavletic, 292 S.W.3d 618, 2009 Tenn. LEXIS 519 (Tenn. Aug. 26, 2009).

7-35-413. Records and reports.

The board shall keep a complete and accurate record of all meetings and actions taken, receipts and disbursements, and shall make reports of the records to the governing body of the city or town, at stated intervals, not to exceed one (1) year. The reports shall be in writing, and in open meeting of the governing body of the city or town, and a copy filed with the city or town clerk.

Acts 1933, ch. 68, § 22; C. Supp. 1950, § 3695.22; T.C.A. (orig. ed.), § 6-1420.

7-35-414. Rates and charges — Minimum base rate charge considered a local tax.

  1. The governing body of any city or town acquiring and operating a waterworks or sewerage system under this part has the power, and it is the governing body's duty, by ordinance, to establish and maintain just and equitable rates and charges for the use of and the service rendered by the waterworks or sewerage system, to be paid by the beneficiary of the service. The rates and charges shall be adjusted so as to provide funds sufficient to pay all reasonable expenses of operation, repair, and maintenance, provide for a sinking fund for payment of principal and interest of bonds when due, and maintain an adequate depreciation account, and the rates and charges may be readjusted as necessary from time to time by amendment to the ordinance establishing the rates then in force. Any upward adjustment of rates and charges for sewage services shall not be granted solely on the basis of increases of rates and charges for water services, but shall be made only after a finding by the governing body that such an adjustment is reasonable and justified; provided, that this restriction on any upward adjustment of rates and charges for water services shall not apply to counties with a metropolitan form of government. A copy of the schedule of the rates and charges so established shall be kept on file in the office of the board having charge of the operation of such works, and also in the office of the city or town clerk, and shall be open to inspection by all interested parties.
  2. If any municipality in Tennessee adopts a sewer fee ordinance which includes a minimum base rate charge payable by all sewer users, it is declared the public policy of the state that such minimum base rate charge shall be considered to be a local tax upon sewer users in the same manner that local property taxes are so considered. However, user fees paid in excess of the minimum base rate charge that are related to the volume or strength of sewage discharged shall be considered as user fees in the same manner in which electrical, gas, or water consumption is related to actual use.

Acts 1933, ch. 68, § 11; C. Supp. 1950, § 3695.11; Acts 1977, ch. 63, § 1; 1979, ch. 245, §§ 1, 3; T.C.A. (orig. ed.), § 6-1421.

Attorney General Opinions. Discount utility rates to charitable organizations, OAG 97-127, 1997 Tenn. AG LEXIS 160 (9/08/97).

Payment of costs of water and sewer line relocation, OAG 97-161, 1997 Tenn. AG LEXIS 188 (12/11/97).

Municipal authority to charge residents never connected to water system, OAG 98-0152, 1998 Tenn. AG LEXIS 152 (8/12/98).

Requirements for utility rates, OAG 05-165 (10/25/05), 2005 Tenn. AG LEXIS 167.

Authority of city utility system to repair privately owned lines, OAG 06-030 (2/13/06).

Domestic nonprofit water cooperative merging with or transferring assets to municipality, OAG 06-176, 2006 Tenn. AG LEXIS 196 (12/19/06), 2006 Tenn. AG LEXIS 196.

The fact that a city imposes a water and sewage rate on customers outside its corporate limits that is twice the rate charged to customers within its corporate limits does not by itself establish that the higher rate is invalid. The rate is presumptively valid, and a party seeking to challenge it bears the heavy burden of proving that the rate is not just and equitable. OAG 14-46, 2014 Tenn. AG LEXIS 49 (4/14/14).

Textbooks. Tennessee Jurisprudence, 25 Tenn. Juris., Water Companies and Waterworks, § 6.

NOTES TO DECISIONS

1. Construction with § 7-35-416.

Section 7-35-416 empowering the city to contract with the district may not be construed to defeat the specific obligation with regard to rates imposed by this section. Parsons v. Perryville Utility Dist., 594 S.W.2d 401, 1979 Tenn. App. LEXIS 377 (Tenn. Ct. App. 1979).

2. Continuing Duty to Revise Rates.

The city had no power to bind itself to a rate for years that was not subject to increase to reflect the costs of increased capitalization of the system. The legislature imposed upon the city a continuing duty to revise rates to enable the system to be financially self-sufficient while maintaining an equitable rate structure. Parsons v. Perryville Utility Dist., 594 S.W.2d 401, 1979 Tenn. App. LEXIS 377 (Tenn. Ct. App. 1979).

3. Action Through Appointed Boards.

Suburban residents' contracts with city did not prevent the city from raising water rates, but merely ensured tht the residents' increases would be at “prevailing rate” for out-of-city users; therefore, contracts were enforceable even though executed by its board of public works. Maury County Bd. of Pub. Utils. v. City of Columbia, 854 S.W.2d 890, 1993 Tenn. App. LEXIS 44 (Tenn. Ct. App. 1993).

Collateral References.

Validity and construction of regulation by municipal corporation fixing sewer-use rates. 61 A.L.R.3d 1236.

7-35-415. Charges to municipality.

The reasonable cost and value of any service rendered to a city or town by a waterworks or sewerage system shall be charged against the city or town, and shall be paid when due as the service accrues from the current funds or proceeds of taxes that the city or town is authorized and required to levy in an amount sufficient for the purpose. The funds so paid shall be deemed to be a part of the revenues of the works and shall be applied only as provided in this part for the application of such revenues.

Acts 1933, ch. 68, § 12; C. Supp. 1950, § 3695.12; T.C.A. (orig. ed.), § 6-1422.

7-35-416. Service contracts.

Any city or town operating a waterworks or sewerage system under this part is authorized and empowered to contract with one (1) or more other cities or towns or with corporations, firms, or individuals to furnish service by such works, and to collect charges for the service, and such other cities, towns, corporations, firms and individuals are authorized to enter into such contracts for such service, but only to the extent of the capacity of the works, without impairing the usefulness of the works to the owners. Cities or towns entering into contracts with owners of waterworks or sewerage systems under this part are authorized to establish, charge, and adjust by ordinance, rates and charges for the service rendered by such system or systems. Revenues derived from this source shall be used to meet the obligations of the contract. The income received by the owner of the works under any such contract shall be deemed to be a part of the revenues of the works, and shall be applied only as provided in this part for the application of such revenues.

Acts 1933, ch. 68, § 13; C. Supp. 1950, § 3695.13; T.C.A. (orig. ed.), § 6-1423.

Cross-References. Contracts between municipalities, title 7, ch. 35, part 3.

NOTES TO DECISIONS

1. Construction with § 7-35-414.

This section empowering the city to contract with the district may not be construed to defeat the specific obligation with regard to rates imposed by § 7-35-414. Parsons v. Perryville Utility Dist., 594 S.W.2d 401, 1979 Tenn. App. LEXIS 377 (Tenn. Ct. App. 1979).

7-35-417 — 7-35-419. [Reserved.]

For the purpose of defraying the cost of acquiring a waterworks or sewerage system or any extensions to the waterworks or sewage system either by purchase or construction, or both, any municipal corporation may borrow money and issue its bonds and notes pursuant to the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21.

Acts 1933, ch. 68, § 3; C. Supp. 1950, § 3695.3; Acts 1969, ch. 284, § 2; T.C.A. (orig. ed.), § 6-1427; Acts 1988, ch. 750, § 21.

Cross-References. Limitation of actions on bonds, § 28-3-113.

7-35-421 — 7-35-431. [Reserved.]

This part shall be deemed to create an additional and alternate method for the acquisition of waterworks or sewerage system by any incorporated city or town, and shall not be deemed to include, amend, alter or repeal any other statute. No proceedings shall be required for the acquisition of any waterworks or sewerage system under this part, or for the issuance of any bonds under this part, except such as are provided by this part, notwithstanding any general or private laws of the state or the charter of any city or town to the contrary.

Acts 1933, ch. 68, § 23; C. Supp. 1950, § 3695.23; T.C.A. (orig. ed.), § 6-1439.

NOTES TO DECISIONS

1. Construction of Statute.

This part is not amendatory statutes but provides an additional remedy complete within themselves, not dependent upon any other statute. Selmer v. Allen, 166 Tenn. 476, 63 S.W.2d 663, 1933 Tenn. LEXIS 103 (1933).

The purpose of this part is to create an additional or alternate method for the acquisition of waterworks and sewerage systems by any incorporated city or town and it is not the purpose of this part to include, amend, alter or repeal any other statute. Zirkle v. Kingston, 217 Tenn. 210, 396 S.W.2d 356, 1965 Tenn. LEXIS 535 (1965).

7-35-420. Borrowing and bonds authorized.

7-35-432. Supplemental to other laws.

Chapter 36
Municipal Energy Authority Act

7-36-101. Short title.

This chapter shall be known and may be cited as the “Municipal Energy Authority Act”.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-102. Chapter definitions.

As used in this chapter:

  1. “Acquire” means to construct or to acquire by purchase, lease, lease-purchase, devise, gift, exercise of the power of eminent domain, or exercise of any other mode of acquisition;
  2. “Associated municipality” means a municipality that is located in a county having a population of three hundred thirty-five thousand (335,000) or less, according to the 2010 federal census or any subsequent federal census, and that, as of the date an authority is formed under this chapter, operates an electric system under the authority of chapter 52 of this title; the municipality's charter; or otherwise applicable law;
  3. “Authority” means an authority created pursuant to this chapter;
  4. “Board” means the board of directors of the authority;
  5. “Bonds” means bonds, interim certificates, notes, debentures, lease-purchase agreements, and all other evidences of indebtedness either issued by or the payment of which has been assumed by the authority;
  6. “Dispose” means to sell, lease, convey, or otherwise transfer any property or any interest in property of the authority;
  7. “Electric service” means the furnishing of electric power and energy for lighting, heating, power, or any other purpose for which electric power and energy can be used;
  8. “Energy” means any and all forms of energy no matter how or where generated or produced;
  9. “Federal agency” means the United States, the president of the United States, the Tennessee Valley authority, and any other authority, agency, instrumentality, or corporation of the United States;
  10. “Governing body” means the legislative body of the associated municipality creating an authority pursuant to this chapter or, as applicable in § 7-36-110, the legislative body of another municipality;
  11. “Improve” means to construct, reconstruct, repair, extend, enlarge, or alter;
  12. “Improvement” means any extension, betterment, or addition to any system;
  13. “Municipal bonds” means bonds of the associated municipality issued to finance or refinance any of the systems;
  14. “Municipal electric system” means the electric system division or department of the associated municipality;
  15. “Municipality” means any county or incorporated city or town within or outside this state;
  16. “Person” means any natural person, firm, association, corporation, limited liability company, business trust, partnership, or governmental entity;
  17. “Refunding bonds” means bonds of the authority issued to refund all or any part of bonds of the authority or the municipal bonds;
  18. “Supervisory board” means the board of public utilities or other similar body of the associated municipality, as such board is constituted as of the date an authority is formed pursuant to this chapter;
  19. “System” means any plant, works, facility, property, or parts thereof, together with all appurtenances thereto, used or useful in connection with the furnishing of any of the services and commodities authorized to be provided in this chapter, including generation or production facilities, transmission facilities, storage facilities, and distribution facilities, and all real and personal property of every nature comprising part of or used or useful in connection with a “system”, and all appurtenances, contracts, leases, franchises, and other intangibles relating to a “system”;
  20. “Telecommunications service” means telephone, cable television, voice, data, or video transmissions, video programming, Internet access and related services, load control, meter reading, appliance monitoring, power exchange, and billing, or any other telecommunications services or similar or component service that may be provided, as allowed by law, including servicing and repairing related equipment, regardless of the facilities used;
  21. “Wastewater service” means the collection, transportation, and treatment of water discharged from residential, commercial, industrial, or other processes for final discharge to the environment; and
  22. “Water service” means the procurement, treatment, and distribution of water for domestic use or any other purpose for which water can be used.

Acts 2016, ch. 995, § 1; 2017, ch. 446, §§ 1-3.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Compiler's Notes. For U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

2017 Amendments.  The 2017 amendment, in the definition of “Associated municipality”, deleted “has adopted home rule, that” preceding “is located in”, substituted “three hundred thirty-five thousand (335,000)” for “one hundred fifty thousand (150,000)” following “population of”, and substituted “this title; the municipality's charter;” for “this title, the municipality's home rule charter,” following “chapter 52 of”; in the definition of “System”, inserted “storage facilities,” preceding “and distribution facilities”; and added definitions of “Wastewater service”; and “Water service”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-103. Formation of authority.

  1. If the governing body of an associated municipality, by appropriate resolution, duly adopted by a two-thirds (2/3) or greater vote, finds and determines that it is wise, expedient, necessary, or advisable that an authority be formed, it shall authorize the mayor of the associated municipality or other person to proceed to form an authority, and shall approve the form of certificate of incorporation proposed to be used in organizing the authority, and then the mayor or other person authorized by the resolution shall execute, acknowledge, and file a certificate of incorporation for the corporation as provided in this chapter.
  2. No authority may be formed pursuant to this chapter unless the governing body has adopted a resolution as provided in this section.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-104. Certificate of incorporation.

  1. The certificate of incorporation shall set forth:
    1. The name of the authority;
    2. A recital that permission to organize the authority has been granted by resolution duly adopted by the governing body of the associated municipality and the date of the adoption of the resolution;
    3. The location of the principal office of the authority;
    4. The purposes for which the authority is proposed to be organized;
    5. The number of directors of the authority;
    6. The period for the duration of the authority, if other than perpetual; and
    7. Any other matter that the governing body of the associated municipality may choose to insert in the certificate of incorporation, which shall not be inconsistent with this chapter or with the laws of this state. It shall not be necessary to set forth in the certificate of incorporation the powers enumerated in this chapter.
  2. The certificate of incorporation shall be acknowledged by the mayor of the associated municipality or other person authorized by the resolution described in § 7-36-103 before an officer authorized by the laws of this state to take acknowledgments of deeds.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-105. Filing and approval of certificate of incorporation — Creation of authority — Corporate name.

  1. When executed and acknowledged in conformity with § 7-36-104, the certificate of incorporation shall be filed with the secretary of state. The secretary of state shall examine the certificate of incorporation and, if the secretary of state finds that the recitals contained in the certificate of incorporation are correct, that the requirements of § 7-36-104 have been complied with, and that the name is not identical with or so nearly similar to that of another entity already in existence in this state as to lead to confusion and uncertainty, then the secretary of state shall approve the certificate of incorporation and record it in an appropriate book of record in the secretary of state's office.
  2. When the certificate has been made, filed, and approved, the corporate existence shall begin, and the certificate shall be conclusive evidence that the authority has been formed pursuant to this chapter.
  3. Upon its formation, a governmental authority shall be created and constituted. The authority shall be a public corporation under the corporate name set forth in its certificate of incorporation, and shall under that name be a political subdivision of this state and a body politic and corporate. The authority shall be for the purpose of planning, acquiring, constructing, improving, furnishing, equipping, financing, owning, operating, and maintaining electric, water, and wastewater systems, and telecommunications systems as are specified in its certificate of incorporation. The authority may provide such services within or outside the corporate limits of the associated municipality and within or outside this state.
  4. An authority may elect to adopt one (1) or more assumed corporate names other than its true corporate name. Before conducting affairs in this state under an assumed corporate name or names, the authority shall, for each assumed corporate name, pursuant to resolution by its board of directors, execute and file an application with the secretary of state setting forth the true corporate name of the authority as stated in its certificate of incorporation, that the authority intends to transact business under an assumed corporate name, and the assumed corporate name which it proposes to use. An authority may, by resolution of its board of directors, amend or withdraw any of its assumed corporate names by filing notice of such amendment or withdrawal with the secretary of state.

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 4.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments.  The 2017 amendment, in (c), substituted “electric, water, and wastewater systems,” for “electric utility” preceding “and telecommunications systems” and inserted “as are specified in its certificate of incorporation. The authority may provide such services” preceding “within or outside”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016; Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-106. Amendment of certificate of incorporation.

  1. The certificate of incorporation may, at any time, be amended so as to make any changes in the certificate of incorporation and add any provisions to the certificate of incorporation that might have been included in the original certificate of incorporation.
  2. An amendment to the certificate of incorporation shall be effected in the following manner:
    1. The members of the board of directors of the authority shall file with the governing body of the associated municipality an application in writing seeking permission to amend the certificate of incorporation, specifying in such application the amendment proposed to be made;
    2. The governing body shall consider the application and, if it shall, by appropriate resolution, duly find and determine that it is wise, expedient, necessary, or advisable that the proposed amendment be made and shall authorize the amendment to be made and shall approve the form of the proposed amendment, then the persons making application shall execute an instrument embodying the amendment specified in the application, and shall file the application with the secretary of state;
    3. The proposed amendment shall be subscribed and acknowledged by each member of the board of directors before an officer authorized by the laws of this state to take acknowledgments to deeds; and
    4. The secretary of state shall examine the proposed amendment and, if the secretary of state finds that the requirements of this section have been complied with and the proposed amendment is within the scope of what might be included in an original certificate of incorporation pursuant to § 7-36-104, then the secretary of state shall approve the amendment and record it in an appropriate book in the secretary of state's office.
  3. When an amendment has been made, filed, and approved, it shall become effective and the certificate of incorporation shall be amended pursuant to subsection (b) to the extent provided in the amendment.
  4. No certificate of incorporation shall be amended except in the manner provided in this section.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-107. Powers of authority.

  1. The authority is authorized, effective immediately upon the effective date of its formation, either singly or jointly with one (1) or more persons, municipalities, or federal agencies, or with this state, or with one (1) or more agencies or instrumentalities of this state or any municipality:
    1. To sue and be sued;
    2. To have a seal and alter the same at pleasure;
    3. To acquire, construct, improve, furnish, equip, finance, own, operate, and maintain within or outside the corporate limits of the associated municipality, a system for the furnishing of electrical service and to provide electric service to any person, governmental entity, or other user or consumer of electric services within or outside the associated municipality. The system shall be operated as a financially separate system independent of, and financially separate from, the other utility systems of the authority, and, except to the extent the authority succeeds to the rights and powers of the municipal electric system, the authority shall not exercise any of the powers granted in this subdivision (a)(3) wholly or partly within the legal boundaries of an incorporated city or town or electric cooperative, except as allowed by law;
    4. To acquire, construct, improve, furnish, equip, finance, own, operate, and maintain, within or outside the corporate limits of the associated municipality, a system for the furnishing of water service and to provide water service to any person, governmental entity, or other user or consumer of water services within or outside the associated municipality; provided, the system shall be operated as a financially separate system independent of, and financially separate from, the other utility systems of the authority and managed by the water division of the authority; and provided, further, the authority shall not exercise any of the powers granted in this subdivision (a)(4) wholly or partly within the legal boundaries of a utility district incorporated pursuant to the Utility District Act of 1937, compiled in chapter 82 of this title, or any other municipality, except to the extent the authority succeeds to the rights and powers of a municipal water system or except as allowed by law, without the consent of the governing body of such utility district or municipality;
    5. To acquire, construct, improve, furnish, equip, finance, own, operate, and maintain within or outside the corporate limits of the associated municipality, a system for providing wastewater service to any person, governmental entity, or other user or consumer of wastewater services within and outside the associated municipality; provided, the system shall be operated as a financially separate system independent of, and financially separate from, the other utility systems of the authority and managed by the wastewater division of the authority; and provided, further, the authority shall not exercise any of the powers granted in this subdivision (a)(5) wholly or partly within the legal boundaries of a utility district incorporated pursuant to the Utility District Act of 1937, or any other municipality, except to the extent the authority succeeds to the rights and powers of the municipal wastewater system or except as allowed by law, without the consent of the governing body of such utility district or municipality;
    6. To acquire, construct, improve, furnish, equip, finance, own, operate, and maintain within and outside the corporate limits of the associated municipality, a system for the furnishing of telecommunications service and to provide telecommunications service to any person, governmental entity, or other user or consumer of telecommunications services within or outside the associated municipality. The system shall be operated as a financially separate system independent of, and financially separate from, the other utility systems of the authority; provided:
      1. To the extent that the authority, or any joint venture, partnership, or cooperative arrangement of which the authority is a party, or any limited liability company or not-for-profit corporation of which the authority is a member provides telephone or telegraph services, the authority, or such other entity, shall be subject to regulation by the Tennessee public utility commission in the same manner and to the same extent as other certified providers of such services, including, but not limited to, rules or orders governing anticompetitive practices, and shall be considered as and have the duties of a public utility, as defined in § 65-4-101, but only to the extent necessary to effect such duties and only with respect to the authority's provision of telephone and telegraph services;
      2. The authority shall have all the powers and authority conferred upon municipalities by §§ 7-52-401; 7-52-402; 7-52-403; 7-52-405; 7-52-406; 7-52-601 — 7-52-605, but excluding any requirement under § 7-52-603(a)(1)(A) to create multiple divisions for telecommunications services; and §§ 7-52-609 — 7-52-611. In the exercise of such powers, the authority shall be subject to all the obligations, restrictions, and limitations imposed upon municipalities by those sections and imposed upon providers of the services described in those sections by federal law. All actions authorized by those sections to be taken by the board or supervisory body having responsibility for a municipal electric plant shall be authorized to be taken by the board of directors of the authority and all powers granted to a municipal electric system under those statutes shall be exercised by the electric division of the authority;
      3. Nothing in this subdivision (a)(6) operates to restrict or impair in any way the ability of the authority to acquire, construct, improve, furnish, equip, finance, own, operate, and maintain a telecommunications system or to offer or provide telecommunications services through one (1) or more other systems of the authority, if such system and services are related to the provision of services of such system or the operation of the system, including, without limitation, load control, meter reading, appliance monitoring, power exchange, billing, or any other similar or component service; and
      4. Notwithstanding this chapter to the contrary, the authority shall be subject to the territorial limitations set forth in § 7-52-601 in the same manner and to the same extent as such limitations apply from time to time to a municipal electric system providing services pursuant to § 7-52-601;
    7. To fix, levy, charge, and collect fees, rents, tolls, or other charges for the use of, or in connection with, any system of the authority as shall be consistent with the provision of the services pursuant to this chapter or sale or other disposition of the commodities provided by the various utilities authorized in this section based on cost, sound economy, public good, and prudent business operations, which fees, rents, tolls, or charges shall be established by the board without the necessity of review or approval by any other municipality, the state, or any commission or authority thereof or any federal agency other than as provided in federal statutes or contracts and other than as provided in subdivision (a)(6). Whenever any fees, rents, tolls, or other charges for telephone or telegraph services regulated pursuant to subdivision (a)(6) are to change, such fees, rents, tolls, or charges shall be established by the board and be subject to review and approval by the Tennessee public utility commission in the same manner and to the same extent as other certified providers of such services;
    8. To acquire, hold, own, and dispose of property, real and personal, tangible and intangible, or interests therein, in its own name, subject to mortgages or other liens or otherwise and to pay for property in cash or on credit through installment payments, and to secure the payment of all or any part of any installment obligations in connection with any acquisition;
    9. To have complete control and supervision of any system of the authority and to make such rules governing the rendering of service thereby as may be just and reasonable;
    10. To contract debts, borrow money, issue bonds, and enter into lease-purchase agreements to acquire, construct, improve, furnish, equip, extend, operate, or maintain any system, or any part thereof, or to provide the authority's share of the funding for any joint undertaking or project, and to assume and agree to pay any indebtedness incurred for any of the purposes described in this subdivision (a)(10);
    11. To accept gifts or grants of money or property, real or personal, and voluntary and uncompensated services or other financial assistance from any person, state agency, federal agency, or municipality, for, or in aid of, the acquisition or improvement of any system;
      1. To accept and distribute excess receipts for bona fide economic development or community assistance purposes pursuant to programs approved by the board, which programs may include, but are not limited to, programs in which bills to customers are rounded up to the next dollar when the amount of any excess receipt due to rounding is shown as a separate line on the bill, and excess receipts accepted pursuant to such programs are not considered revenue to the authority, and the authority may only use the excess receipts for economic development or community assistance purposes;
        1. An authority that establishes a program authorized by subdivision (a)(12)(A) on or after January 1, 2021, shall not enroll any customer into the program without the express consent of the customer;
        2. A customer who is enrolled in a program authorized by subdivision (a)(12)(A) may opt out of the program by providing notice to the authority of the customer's desire to cease participation in the program;
        3. Upon receiving an opt-out notice from a customer, the authority shall remove the customer from enrollment in the program no later than the first day of the customer's next regular billing cycle that begins no fewer than thirty (30) days after the date of the customer's opt-out notice;
        1. Any authority that on June 3, 2019, utilizes a program authorized by subdivision (a)(12)(A) and operates the program on an opt-out basis shall send a written notice to each customer of the authority no later than November 1, 2020, that contains, but is not limited to, the following information:
          1. A statement that the authority utilizes a program authorized by subdivision (a)(12)(A), the program is operated on an opt-out basis, and a description of the program;
          2. Notification that a customer whose bill is currently rounded up by the authority has the right to opt out of participation in the program; and
          3. Contact information for the authority and instructions on how the customer may contact the authority to opt out of participation in the program;
        2. The written notice required by this subdivision (a)(12)(C) may be provided to the customer by electronic means and may accompany a regular billing statement, at the discretion of the authority;
        3. A municipal utility system that on June 3, 2019, utilizes a program authorized by subdivision (a)(12)(A) and operates the program on an opt-out basis that fails to send the notice required by this subdivision (a)(12)(C) shall, on and after January 1, 2021, cease operating the program on an opt-out basis and shall not operate a program unless operated in compliance with subdivision (a)(12)(B); and
        4. For purposes of this subdivision (a)(12), “opt-out basis” means automatically enrolling customers in a program and requiring notice from the customer of a desire to be removed from the program in order to cease participation in the program; and
      2. Any authority that utilizes a program authorized by subdivision (a)(12)(A) and that maintains a website that is accessible by the general public shall publish in a conspicuous location on the website by November 1, 2020, and throughout the duration of the authority's utilization of the program, the following information:
        1. A statement that the authority utilizes a program authorized by subdivision (a)(12)(A) and a description of the program;
        2. Notification that a customer whose bill is currently rounded up by the authority has the right to opt out of participation in the program; and
        3. Contact information for the utility and instructions on how the customer may contact the utility to opt into or out of participation in the program;
    12. To condemn either the fee or such right, title, interest, or easement in property as the board may deem necessary for any of the purposes mentioned in this chapter, and such property or interest in such property may be so acquired whether or not the same is owned or held for public use by corporations, associations, or persons having the power of eminent domain, or otherwise held or used for public purposes, and such power of condemnation may be exercised in the method of procedure prescribed by title 29, chapter 16, or in the method of procedure prescribed by any other applicable statutory provisions for the exercise of the power of eminent domain; provided, however, that where title to any property sought to be condemned is defective, it shall be passed by decree of court. Where condemnation proceedings become necessary, the court in which such proceedings are filed shall, upon application by the authority and upon the posting of a bond with the clerk of the court in such amount as the court may deem commensurate with the value of the property, order that the right of possession shall issue immediately or as soon and upon such terms as the court, in its discretion, may deem proper and just;
    13. To make and execute any contract and instrument necessary or convenient for the full exercise of the powers granted in this section, and in connection therewith to stipulate and agree to such covenants, terms, and conditions, and such term or duration as shall be appropriate, including, without limitation, contracts for the purchase or sale of any of the commodities or services authorized in this section to be provided by the authority, and carry out and perform the covenants, terms, and conditions of such contracts and instruments. In connection with any contract to acquire or sell any of the commodities or services authorized in this section, the authority may enter into commodity price exchange or swap agreements, agreements establishing price floors or ceilings, or both, or other price hedging contracts with any person or entity under such terms and conditions as the authority may determine, including, without limitation, provisions permitting the authority to indemnify or otherwise pay any person or entity for any loss of benefits under such agreement upon early termination thereof or default thereunder. When entering into any such contract or arrangement or any such swap, exchange, or hedging agreement evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the authority may agree in the written contract or agreement that the rights and remedies of the parties thereto shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over the authority shall lie solely in the courts sitting in the county where the authority's principal office is located. Nothing in the selection of laws of another state or nation shall alter, impair, or modify the rights, privileges, and obligations of the authority as a governmental entity under this chapter and under the laws of this state;
    14. To sell, exchange, or interchange any of the commodities or services authorized to be provided in this section either within or outside this state and to establish prices to be paid for such commodities or services, and establish pricing structures with respect thereto, including provision for price rebates, discounts, and dividends; and, in connection with any such sales, exchanges, or interchanges, to act as agent for such consumers, to secure contracts and arrangements with other entities or persons, to make contracts for the sale, exchange, interchange, pooling, transmission, storage, or distribution of any of the commodities or services authorized to be provided in this section, inside or outside this state, and to transmit, transport, and distribute any such commodities or services both for itself and on behalf of others;
    15. To make contracts and execute instruments containing such covenants, terms, and conditions as may be necessary, proper, or advisable for the purpose of obtaining loans from any source, or grants, loans, or other financial assistance from the state or any federal agency, and to carry out and perform the covenants and terms and conditions of all such contracts and instruments;
    16. To enter on any lands, waters, and premises for the purpose of making surveys, soundings, and examinations in connection with the acquisition, improvement, operation, or maintenance of any system and the furnishing of any of the services authorized to be provided in this section;
    17. To use any right-of-way, easement, or other similar property right necessary or convenient in connection with the acquisition, improvement, operation, or maintenance of one (1) or more systems, held by this state, the associated municipality, or any other municipality; provided, that such other municipality shall consent to such use;
    18. To provide to any municipality, person, federal agency, this state, or any agency or instrumentality thereof, transmission, storage, or transportation capacity for any of the commodities or services authorized in this section, and management and purchasing services associated therewith;
    19. To employ, engage, retain, and pay compensation to such officers, agents, consultants, professionals, and employees of the authority as shall be necessary to operate the systems, manage the affairs of the authority, and otherwise further the purposes of the authority and the exercise of the powers thereof, and to fix their compensation and to establish a program of employee benefits, including a retirement system;
    20. To establish a retirement system for all employees of the authority and to maintain all rights and benefits of employees as they existed under the retirement system of the municipal electric system without diminution;
    21. To enter into joint ventures and cooperative arrangements with one (1) or more persons, including the formation of a partnership, limited liability company, or not-for-profit corporation to accomplish any of the purposes set forth in this section or to exercise any of the powers set forth in this section;
    22. Upon proper action by the associated municipality, to commence operating the systems and to exercise exclusive control and direction of the systems and, upon proper action by the associated municipality, to accept title to the assets and assume the liabilities of the systems, and upon such action to hold all the rights as existed with the municipal electric system without diminution;
    23. To do business under one (1) or more assumed corporate names pursuant to § 7-36-105(d);
    24. To manage and operate utility systems owned by other persons. Such management or operating agreements shall be consistent with subdivision (a)(3), as applicable;
    25. To enter into mutual aid agreements with other utility systems and other persons;
    26. To assist persons to whom the authority sells electric power, energy, water, wastewater, or telecommunications in installing fixtures, appliances, apparatus, and equipment of all kinds and character and, in connection therewith, to purchase, acquire, lease, sell, distribute, make loans, provide service contracts, and repair such fixtures, appliances, apparatus, and equipment and sell, assign, transfer, endorse, pledge, and otherwise dispose of notes or other evidences of indebtedness any and all types of security therefor;
    27. To have such powers as are now or hereafter authorized for municipal electric, water, and wastewater utilities within this state; and
    28. To do any act authorized in this section or necessary or convenient to carry out the powers expressly given in this chapter under, through, or by means of its own officers, agents, and employees, or by contracts with any person, federal agency, or municipality.
  2. The authority's water and wastewater systems shall have all the powers, authority, duties, obligations, requirements, and oversight that are conferred and imposed upon municipalities and a municipality's water and wastewater system in title 68, chapter 221. All actions authorized and required by title 68, chapter 221 to be taken by the board or supervisory body having responsibility for a municipality's water or wastewater system shall be authorized to be taken by the board of directors of the authority, and all powers, authority, duties, obligations, requirements, and oversight granted to and required of a municipality's water and wastewater system under title 68, chapter 221 shall be exercised by the water and wastewater divisions of the authority.

Acts 2016, ch. 995, § 1; 2017, ch. 94, §§ 11, 79; 2017, ch. 446, §§ 5-11; 2019, ch. 508, § 2.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Amendments. The 2017 amendment by ch. 94, substituted “Tennessee public utility commission” for “Tennessee regulatory authority” near the middle of (4)(A); and in the second sentence of (5).

The 2017 amendment by ch. 446, designated the existing language as (a); added present (a)(4) and (a)(5); redesignated former (4) through (27) as present (a)(6) through (a)(29); in present (a)(6)(C), substituted “operates” for “shall operate” preceding “to restrict”, “one (1) or more other systems of the authority” for “its electric system” following “through”, “services of such system or the operation of the system” for “electric service or the operation of the electric system” following “the provision of”; in present (a)(7), substituted “subdivision (6)” for “subdivision (4)” twice; in present (a)(15), inserted “storage,” preceding “or distribution”; in present (a)(19), inserted “storage,” preceding “or transportation”; in present (a)(27), inserted “the authority sells” following “to whom”, “water, wastewater, or telecommunications” for “or telecommunications is sold” preceding “in installing”, and “types” for “type” preceding “of security”; in present (28), substituted “municipal electric, water, and wastewater utilities” for “electric systems of municipalities,” following “authorized for”; and added (b).

The 2019 amendment rewrote (a)(12) which read, “To accept and distribute voluntary contributions for bona fide economic development or community assistance purposes pursuant to programs approved by the board, which programs may include, but shall not be limited to, programs in which bills to customers are rounded up to the next dollar when such contribution is shown as a separate line on the bill, and contributions accepted pursuant to such programs shall not be considered revenue to the authority and such contributions shall be used only for economic development or community assistance purposes;”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 94, § 83. April 4, 2017.

Acts 2017, ch. 446, § 19. May 25, 2017.

Acts 2019, ch. 508, § 6. June 3, 2019.

7-36-108. Independent operation of utility system.

Each system of the authority shall operate independently of the others and shall be self-sustaining, except insofar as the board may by resolution combine any of the systems which, in the opinion of the board, shall be advisable and economical and which by the general laws of the state or any federal laws or any contracts or indentures are not required to be operated separately. Telecommunications service shall continue to be maintained as a separate division pursuant to § 7-36-107(a)(6).

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 12.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments. The 2017 amendment deleted “utility” preceding “system” and substituted “insofar as the board may by resolution combine any of the systems which, in the opinion of the board, shall be advisable and economical and which by the general laws of the state or any federal laws or any contracts or indentures are not required to be operated separately. Telecommunications service shall continue to be maintained as a separate division pursuant to § 7-36-107(6)” for “as otherwise provided in this chapter” at the end.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-109. Powers of board of directors.

  1. The affairs of the authority and the exercise of the powers of the authority shall be vested in the board of directors. The following powers shall be exercised directly by the board by resolution of the board:
    1. Selection and employment of the president, who shall serve as the chief executive officer of the authority, who shall serve at the pleasure of the board, and whose compensation shall be set by the board. Nothing in this chapter shall prevent the board from entering into an employment contract with the president. The president shall select, employ, and discharge all employees and fix their duties and compensation;
    2. Issuance of bonds of the authority and the encumbering of assets of the authority, to the extent authorized in this chapter, to secure any such bonds;
    3. Approval of rates of each of the systems;
    4. Approval of the annual budget of each of the systems;
    5. Adoption of bylaws for the conduct of the business of the board;
    6. Selection of any certified public accountant to perform audits of the books and affairs of the authority; and
    7. Adoption of a purchasing policy for the authority and the approval of purchases and disposition of property in accordance with the terms thereof.
  2. All other powers of the authority shall be exercised by the president of the authority and the officers, agents, and employees of the authority, except as otherwise provided in this chapter.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-110. Appointment of directors — Chair and vice chair — Meetings — Removal from office.

  1. The initial board of directors of the authority shall be composed of the members of the board of directors of the supervisory board, who shall serve as directors for the unexpired terms of their appointment to the board of directors of the supervisory board and who shall take office and begin exercising the powers granted in this section immediately upon the registration date of the certificate of incorporation.
  2. All subsequent appointments shall be for four-year terms, or such other term length as may be set forth in the certificate of incorporation, commencing upon the expiration of the prior director's specific term. Except as otherwise provided in the certificate of incorporation, the board of directors shall fill vacancies, subject to the approval of the governing body of the associated municipality, or such governing body of another municipality having appointment power for a member of the supervisory board at the time the authority is formed. In the event the applicable governing body does not approve the person thus appointed by the board of directors, the board of directors shall appoint some other person, subject to the approval of the applicable governing body. The composition and manner of the appointment for members of the board of directors set forth in this section may be modified pursuant to the certificate of incorporation or an amendment to the certificate of incorporation; provided, that the applicable governing body having a power of appointment shall approve any provision of the certificate of incorporation or amendment that eliminates its power of appointment. The associated municipality shall, at all times, have authority to approve no less than a majority of the members of the board of directors.
  3. The board of directors and the applicable governing body shall, as applicable and in accordance with this section, within ninety (90) days, fill each vacancy created by the death, resignation, or removal of any director and gain approval of the applicable governing body, and such director shall serve for the remaining unexpired term of the former director.
  4. Except as provided in subsection (g), each director shall hold office until the director's successor is appointed, approved, and qualified, and each director shall be eligible for reappointment unless otherwise provided in the certificate of incorporation.
  5. Immediately upon their qualification as a board, and at least annually thereafter, the board of directors shall select from the board's membership a chair and a vice chair. No additional compensation shall be paid to a director for serving as a chair or vice chair. The board shall have a recording secretary, who need not be a member of the board and who shall be appointed by the president, subject to the approval of the board. The recording secretary shall record all minutes of the board, keep and maintain all books and records of the board, and perform other duties as the president shall determine.
  6. The board shall hold regular monthly meetings and special meetings as may be necessary for the transaction of the business of the authority. Special meetings of the board may be called by the chair or, in the absence or disability of the chair, by any board member. No meeting of the board shall be held unless a majority of the directors are present. All acts of the board shall be by a vote of at least a majority of the directors eligible to vote on a matter. Resolutions of the board shall be effective upon adoption after one (1) reading and may be adopted at the same meeting at which the resolutions are introduced. The time and place of all meetings will be set by the board. The board of directors shall be allowed necessary traveling and other expenses while engaged in the business of the board, plus an allowance for attendance at meetings in the same manner and to the same extent as is provided for directors of municipal electric systems under § 7-52-110(e). Such expenses shall constitute a cost of operation and maintenance of the authority.
  7. Any director may be removed from office for cause upon a vote of two-thirds (2/3) of the members of the governing body of the applicable approving governing body, but only after preferment of formal charges by resolution of a majority of the members of the governing body.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-111. President.

  1. The board shall appoint a president, as provided in § 7-36-109(a)(1), who shall be chief executive officer of the authority. The salary of the president shall be fixed by the board, and the board may enter into an employment contract with the president for a term of no more than five (5) years containing such terms as the board may deem advisable. The president may be removed by the board, subject to any provisions contained in an employment contract with the president.
  2. Within the limits of the funds available, and subject to exercise by the board of the powers reserved to it pursuant to § 7-36-109, all powers of the authority granted in this chapter shall be exercised by the president and the various officers and employees of the authority.
  3. The president shall have charge of the management and operation of the systems and the enforcement and execution of all rules, regulations, programs, plans, and decisions made or adopted by the board.
  4. The president shall appoint each system division head and all officers of the authority, and the president or the president's designee shall hire all employees of the authority. All officers and employees of the authority shall serve at the pleasure of the president, and the president shall be responsible for maintaining an adequate workforce for the authority.
  5. Subject to §§ 7-36-109 and 7-36-112, the president is authorized to acquire and dispose of all property, real and personal, necessary to effectuate this chapter. The title of such property shall be taken in the name of the authority.
  6. All contracts, agreements, indentures, trust agreements, and other instruments necessary or proper in carrying out the purposes and powers of the authority or in conducting the affairs of the authority or in operating the systems of the authority shall be executed by the president, the president's designee, or such other officer or person as may be authorized by the board, the signature thereof to be binding upon the authority. The execution by the president, the president's designee, or such other officer or person as may be authorized by the board of any such contract, agreement, indenture, trust agreement, or instrument implementing or evidencing the exercise of powers reserved to the board pursuant to § 7-36-109 shall first be approved by resolution of the board.
  7. The president shall cause to be kept full and proper books and records of all operations and affairs of the authority and shall cause to be kept separate books and accounts for each system, so that these books and accounts will reflect the financial condition of each division separately, and may require that the moneys and securities of each division be placed in separate funds to the end that each division shall be self-sustaining. All divisions shall be audited annually by an independent certified public accountant selected by the board.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-112. Policy governing purchases of services or property, leases and lease-purchases, and disposition of property — Power to dispose of electric plant.

  1. The board shall adopt a policy governing all purchases of services or property, whether real or personal, all leases and lease-purchases, and the disposition of all property of the authority. The policy shall authorize the president, the president's designee, or such other officer or person as may be authorized by the board, to enter into contracts and agreements for the purchase of services or property, real or personal, leases and lease-purchases, disposition of property of the authority with a value not exceeding an amount from time to time established by the board but not less than fifty thousand dollars ($50,000), and providing for board approval for such purchases, leases, lease-purchases, and dispositions in excess of such amount. Subject to the terms of the purchasing policy relating to board approval, the president, the president's designee, or such other officer or person as may be authorized by the board, on behalf of the authority, shall be authorized to execute all contracts, purchase orders, and other documents necessary in connection with the purchase of property or services and the disposition of property of the authority, including deeds of conveyance of real property. The policy authorized by this subsection (a) shall provide for competitive bidding, but may provide exceptions to any competitive bidding requirements where exceptions are provided to municipalities, municipal electric systems, municipal utilities, or energy acquisition corporations under the general law. The purchasing policy may also provide procedures for documentation of compliance with purchasing procedures and such other provisions and terms as the board deems necessary.
  2. Notwithstanding this chapter to the contrary, the authority does not have any power to dispose of all or substantially all of the electric, water, or wastewater system of the authority, as applicable, except upon the concurrence and consent of the governing body of the associated municipality and, in the case of the disposition of the electric plant of the authority, except upon the further approval of a majority of those voting in a referendum called by the governing body of the associated municipality in accordance with § 7-52-132. For purposes of establishing compliance with § 7-52-132, the board is deemed the “supervisory body,” the electric plant of the authority is deemed an “electric plant,” and such compliance shall be determined in the same manner and to the same extent as if the authority were operated as the electric system of the associated municipality.

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 13.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments. The 2017 amendment, in (b), substituted “does” for “shall” preceding “not have”, “electric, water, or wastewater system of the authority, as applicable,” for “electric plant of the authority” preceding “except upon the concurrence”, substituted “and, in the case of the disposition of the electric plant of the authority, except upon the further” for “and upon” preceding “approval”, and twice substituted “is” for “shall be” preceding “deemed”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-113. Issuance of bonds — Proceeds of sale of bonds.

  1. The authority shall have power and is authorized to issue its bonds for the construction, acquisition, reconstruction, improvement, betterment, or extension of any system of the authority or to assume and to agree to pay any indebtedness incurred for any of the foregoing purposes. The proceeds of the sale of any bonds may be applied to:
    1. The payment of the costs of such construction, acquisition, reconstruction, improvement, betterment, or extension;
    2. The payment of the costs associated with any such construction, acquisition, reconstruction, improvement, betterment, or extension, including engineering, architectural, inspection, legal, and accounting expenses;
    3. The payment of the costs of issuance of such bonds, including underwriter's discount, financial advisory fee, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement, and legal, accounting, fiscal, and other similar expenses;
    4. The payment of interest during the period of construction and for six (6) months thereafter on any money borrowed or estimated to be borrowed;
    5. Reimbursement of the authority for moneys previously spent by the authority for any of the purposes described in subdivisions (a)(1)-(4);
    6. The establishment of reasonable reserves for the payment of debt service on such bonds, or for repair and replacement to the system of the authority for whose benefit the financing is being undertaken, or for such other purposes as the board deems necessary in connection with the issuance of any bonds and operation of the system for whose benefit the financing is being undertaken;
    7. The contribution of the authority's share of the funding for any joint undertaking for the purposes set forth in this subsection (a); and
    8. The contribution by the authority to any subsidiary or separate entity controlled by the authority for the purposes set forth in this subsection (a).
  2. The authority shall have the power and is authorized to issue its bonds to refund and refinance outstanding bonds of the authority hereafter issued or lawfully assumed by the authority. The proceeds of the sale of the bonds may be applied to:
    1. The payment of the principal amount of the bonds being refunded and refinanced;
    2. The payment of the redemption premium thereon, if any;
    3. The payment of unpaid interest on the bonds being refunded, including interest in arrears, for the payment of which sufficient funds are not available, to the date of delivery or exchange of the refunding bonds;
    4. The payment of interest on the bonds being refunded and refinanced from the date of delivery of the refunding bonds to maturity or to, and including, the first or any subsequent available redemption date or dates on which the bonds being refunded may be called for redemption;
    5. The payment of the costs of issuance of the refunding bonds, including underwriter's discount, financial advisory fee, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement, and legal, accounting, fiscal, and other similar expenses, and the costs of refunding the outstanding bonds, including the costs of establishing an escrow for the retirement of the outstanding bonds, trustee, and escrow agent fees in connection with any escrow, and accounting, legal, and other professional fees in connection therewith; and
    6. The establishment of reasonable reserves for the payment of debt service on the refunding bonds, or for repair and replacement to the system of the authority for whose benefit the financing is being undertaken, or for such other purposes as shall be deemed necessary in connection with the issuance of the refunding bonds and operation of the system for whose benefit the financing is being undertaken. Refunding bonds may be issued to refinance and refund more than one (1) issue of outstanding bonds, notwithstanding that such outstanding bonds may have been issued at different times. Refunding bonds may be issued jointly with other refunding bonds or other bonds of the authority. The principal proceeds from the sale of refunding bonds may be applied either to the immediate payment and retirement of the bonds being refunded or, to the extent not required for the immediate payment of the bonds being refunded, to the deposit in escrow with a bank or trust company to provide for the payment and retirement at a later date of the bonds being refunded.
  3. The authority shall have the power and is authorized to issue its bonds to retire all bonds of the associated municipality issued to finance or refinance any of the systems, and, to the extent permitted by contracts with any of the owners of the municipal bonds, to assume and agree to pay when due the municipal bonds, retire the municipal bonds, or deposit in escrow funds sufficient, together with earnings thereon, to retire the municipal bonds at maturity or upon redemption. The proceeds of such bonds may be used in the same manner and to the same extent as permitted under subsection (b).
  4. The authority has the power and is authorized to issue notes in anticipation of the collection of revenues from the system for whose benefit the financing is undertaken for the purpose of financing electrical power purchases, including transmission costs, storage costs, and pipeline capacity costs. Any such notes must be secured solely by a pledge of, and lien on, the revenues of the system for whose benefit the financing is undertaken. The principal amount of notes that may be issued during any twelve-month period must not exceed sixty percent (60%) of total electrical power purchases for the same period, and all notes issued during such period must be retired and paid in full on, or before, the end of such period. The notes must be sold in such manner, at such price, and upon such terms and conditions as may be determined by the board. No notes shall be issued under this subsection (d) unless the electric system has positive retained earnings as shown in the most recent audited financial statements of the system, and the system has produced positive net income in at least one (1) fiscal year out of the three (3) fiscal years next preceding the issuance of the notes as shown on the audited financial statements of the system. No notes issued under this subsection (d) shall be issued without first being approved by the comptroller of the treasury. If revenues of such system are insufficient to pay all such notes at maturity, any unpaid notes may be renewed one (1) time for a period not to exceed one (1) year or otherwise liquidated as approved by the comptroller of the treasury.
  5. The authority shall have the power and is authorized to issue its bonds to finance in whole or in part the cost of the acquisition of electrical power purchased from the Tennessee Valley authority on a current or long-term prepaid purchase basis and pledge to the punctual payment of any such bonds and interest thereon its rights in such contracts and an amount of the revenues from its electric system, or of any part of such system, sufficient to pay the bonds and interest as the same shall become due and create and maintain reasonable reserves therefor. Such amount shall consist of all or any part or portion of such revenue; and the board in determining the cost of the acquisition of electrical power under this subsection (e) may include all costs and estimated costs of the issuance of the bonds, and all engineering, inspection, fiscal, and legal expenses.
  6. Bonds issued under this section as a part of an issue the last maturity of which is not later than five (5) years following the date of issue shall be issued, and referred to, as notes.

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 14.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments. The 2017 amendment, in (d), in the first sentence, substituted “has the power and is authorized” for “shall have the power” preceding “to issue” and substituted “transmission costs, storage costs, and pipeline capacity costs” for “transmission costs” at the end; in the second sentence, substituted “must for “shall”  preceding “be secured” and “ system. for whose benefit the financing is undertaken” for “electric system” at the end; in the third sentence, substituted “that” for “which” preceding “may be issued”; and in the fourth sentence, substituted “The notes must” for “The notes shall”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-114. Resolution authorizing issuance or assumption of bonds — Repurchase of bonds — Temporary bonds — Contract or agreement facilitating issuance and sale of bonds.

  1. No bonds shall be issued or assumed under this chapter unless authorized to be issued or assumed by resolution of the board, which resolution may be adopted at the same meeting at which it is introduced by a majority of all members then in office, and shall take effect immediately upon adoption. Bonds authorized to be issued under this chapter may be issued in one (1) or more series, may bear such date, mature at such time, not exceeding forty (40) years from their respective dates, bear interest at such rate, payable at such time, be in such denominations, be in such form, either coupon or registered, be executed in such manner, be payable in such medium of payment, at such place, and be subject to such terms of redemption, with or without premium, as such resolution may provide. Bonds may be issued for money or property at competitive or negotiated sale for such price as the board, or its designee, shall determine.
  2. Bonds may be repurchased by the authority out of any available funds at a price not to exceed the principal amount of the outstanding bonds and accrued interest, and all bonds so repurchased shall be cancelled or held as an investment of the authority as the board may determine.
  3. Pending the preparation or execution of definitive bonds, interim receipts or certificates or temporary bonds may be delivered to the purchasers of bonds.
    1. With respect to all or any portion of any issue of bonds issued under this chapter, at any time during the term of the bonds, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this subsection (d) are in compliance with the guidelines or rules promulgated by the state funding board, as set forth in § 7-34-109(h), the authority, by resolution of the board, may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, and other interest rate hedging agreements under such terms and conditions as the board may determine, including, without limitation, provisions permitting the authority to pay to, or receive from, any person or entity any loss of benefits under such agreement upon early termination thereof or default under such agreement.
    2. The authority may enter into an agreement to sell bonds, other than its refunding bonds, under this chapter providing for delivery of its bonds on a date greater than ninety (90) days and not greater than five (5) years, or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement or to sell its refunding bonds providing for delivery thereof on a date greater than ninety (90) days from the date of execution of the agreement and not greater than the first optional redemption date on which the bonds being refunded can be optionally redeemed resulting in cost savings or at par, whichever is earlier, only upon receipt of a report of the comptroller of the treasury, or the comptroller's designee, finding that the agreement or contract of the authority to sell its bonds as authorized in this subsection (d) is in compliance with rules promulgated by the state funding board in accordance with § 7-34-109(h). Agreements to sell bonds and refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement do not require a report of the comptroller of the treasury or the comptroller's designee.
    3. Prior to the adoption by the board of a resolution authorizing a contract or agreement described in subdivision (d)(1) or (d)(2), a request shall be submitted to the comptroller of the treasury, or the comptroller's designee, for a report finding that such contract or agreement is in compliance with the guidelines or rules of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury, or the comptroller's designee, shall determine whether the contract or agreement substantially complies with the guidelines or rules and shall report such compliance to the authority. If the report of the comptroller of the treasury, or the comptroller's designee, finds that the contract or agreement complies with the guidelines or rules of the state funding board, or the comptroller of the treasury, or the comptroller's designee, fails to report within the fifteen-day period, then the authority may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines or rules of the state funding board. If the report of the comptroller of the treasury, or the comptroller's designee, finds that such contract or agreement is not in compliance with the guidelines or rules, then the authority is not authorized to enter into such contract or agreement. The rules shall provide for an appeal process upon a determination of noncompliance.
    4. When entering into any contract or agreement facilitating the issuance and sale of bonds, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating thereto, interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, other interest rate hedging agreements, and agreements with the purchaser of the bonds, evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the authority may agree in the written contract or agreement that the rights and remedies of the parties thereto shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over the authority shall lie solely in the courts sitting in the county where the authority's principal office is located. Nothing in the selection of laws of another state or nation shall alter, impair, or modify the rights, privileges, and obligations of the authority as a governmental entity under this chapter and under the laws of this state.
    5. Prior to the adoption or promulgation by the state funding board of rules with respect to the contracts and agreements authorized in subdivisions (d)(1) and (d)(2), the authority may enter into such contracts or agreements to the extent otherwise authorized by the laws of this state.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-115. Power to secure bonds and to covenant as to bonds.

  1. In order to secure the payment of the principal and interest on the bonds issued under this chapter, or in connection with such bonds, the authority has the power to secure such bonds and to covenant as to the bonds as set forth in §§ 9-21-306 and 7-34-110.
  2. In connection with the issuance of bonds and in order to secure the payment of its bonds, the authority shall have power:
    1. To pledge all or any part of its revenues;
    2. To vest in any trustee the right to enforce any covenant made to secure, to pay, or in relation to its bonds, to provide for the powers and duties of such trustee, to limit the liabilities thereof, and to provide the terms and conditions upon which the trustee or the holders of bonds or any amount or proportion of them may enforce any such covenant; and
    3. To make such covenants and to do such acts as may be necessary in order to secure its bonds or which, in the absolute discretion of the board, tend to make the bonds more marketable, notwithstanding that such covenants and acts may restrict or interfere with the exercise of the powers granted in this chapter. The authority shall be given the power to do all things in the issuance of bonds, and for their security, that a private business corporation can do under the laws of this state.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-116. Rights and remedies of bondholders.

In addition to all other rights and remedies, any holders of bonds of the authority, including a trustee for bondholders, shall have the right:

  1. By mandamus or other suit, action, or proceeding at law or in equity, to enforce the bondholder's rights against the authority and the board of the authority, including the right to require the authority and such board to fix and collect rates and charges adequate to carry out any agreement as to, or pledge of, the revenues produced by such rates or charges, and to require the authority and such board to carry out any other covenant and agreement with such bondholders and to perform their duties under this chapter;
  2. By action or suit in equity, to enjoin any acts which may be unlawful or a violation of the rights of such holder of bonds;
  3. By suit, action, or proceeding in the chancery court sitting in the county in which the authority's principal office is located, to obtain an appointment of a receiver of any system of the authority or any part thereof. If such receiver be appointed, such receiver may enter and take possession of such system or part thereof and operate and maintain same, and collect and receive all fees, rents, tolls, or other charges arising therefrom in the same manner as the authority itself might do and shall dispose of such money in a separate account and apply the same in accordance with the obligations of the authority as the court shall direct; and
  4. By suit, action, or proceeding in the chancery court sitting in the county in which the authority's principal office is located, to require the board of the authority to account as if it were the trustee of an express trust.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-117. Bond not debt of state, municipality, or other political subdivision of state.

No owner of any bonds issued under this chapter shall have the right to compel any exercise of the taxing powers of this state, the associated municipality, or any other municipality or political subdivision of this state to pay such bonds or the interest thereon. Each bond issued under this chapter shall recite in substance that such bond, including the interest thereon, is payable solely from the revenues pledged to the payment thereof, and that the bond does not constitute a debt of this state, any municipality, or any other political subdivision of this state.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-118. Validity of bonds.

Bonds issued under this chapter bearing the signature of the president or other authorized officer in office on the date of the signing thereof shall be valid and binding obligations; provided, that before the delivery thereof and payment therefor, any person whose signature appears thereon shall have ceased to be an officer. The validity of any bonds shall not be dependent on, or affected by, the validity or regularity of any proceedings relating to the acquisition or improvement of the system for which such bonds are issued. The resolution authorizing bonds may provide that the bonds shall contain a recital that the bonds are issued pursuant to this chapter, which recital shall be conclusive evidence of the bonds' validity and of the regularity of the bonds' issuance.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-119. Rates, fees, or other charges for services, facilities, and commodities.

  1. The authority shall not be operated for gain or profit or primarily as a source of revenue to the associated municipality or any other person or entity. The authority shall, however, prescribe and collect rates, fees, or charges for the services, facilities, and commodities made available by the authority, and shall revise such rates, fees, or charges from time to time whenever necessary so that each system, or any combined systems as authorized in this chapter, shall be and always remain self-supporting, and shall not require appropriations by the associated municipality or any other municipality, this state, or any political subdivision of this state to carry out the authority's purpose. Any one (1) system of the authority shall not subsidize any other system, unless the systems are operated as a combined system in accordance with the terms of this chapter, in which case the combined system shall be self-supporting. The authority shall keep books and records as may be required to properly account for the reasonable distribution of joint or common expenses between the systems of the authority.
  2. The rates, fees, or charges prescribed for each system shall be such as will produce revenue at least sufficient:
    1. To provide for the payment of all expenses of operation and maintenance of such system;
    2. To pay when due principal of, and interest on, all bonds of the authority payable from the revenues of such system;
    3. To pay any payments in lieu of taxes authorized to be paid pursuant to this chapter; and
    4. To establish proper reserves for the system.

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 15.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments. The 2017 amendment, in (a), inserted “from time to time” preceding “whenever necessary”, inserted “, or any combined systems as authorized in this chapter” following “each system”, inserted “be and always” preceding “remain”, and substituted “unless the systems are operated as a combined system in accordance with the terms of this chapter, in which case the combined system shall be self-supporting. The authority shall keep” for “and the authority shall keep such” preceding “books and records”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-120. Pledge of, or lien on, revenues, fees, rents, tolls, or other charges.

  1. Any pledge of, or lien on, revenues, fees, rents, tolls, or other charges received or receivable by the authority to secure the payment of any bonds of the authority, and the interest thereon, shall be valid and binding from the time that the pledge or lien is created or granted and shall inure to the benefit of any owner of any such bonds until the payment in full of the principal thereof and premium and interest thereon. The priority of any pledge or lien with respect to competing pledges or liens shall be determined by the date such pledge or lien is created or granted. Neither the resolution nor any other instrument granting, creating, or giving notice of the pledge or lien need be filed or recorded to preserve or protect the validity or priority of such pledge or lien.
  2. If a conflict arises between this section and the Perfection, Priority and Enforcement of Public Pledges and Liens Act, compiled in title 9, chapter 22, the Perfection, Priority and Enforcement of Public Pledges and Liens Act shall control.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-121. Tax exemption.

So long as the authority owns any of the systems, the property and revenue of such system shall be exempt from all state, county, and municipal taxation. Any bonds issued by the authority pursuant to this chapter, and the income therefrom, shall be exempt from all state, county, and municipal taxation, except inheritance, transfer and estate taxes, and except as otherwise provided by the laws of this state.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-122. Payments in lieu of taxes.

The authority is authorized to pay or cause to be paid from the revenues of each of the systems for each fiscal year payments in lieu of taxes to the associated municipality or such other municipality as shall properly receive said payments. Payments from the electric system revenues must be made and computed in accordance with the Municipal Electric Plant Law of 1935, compiled in chapter 52, part 1 of this title, and payments made from revenues of the telecommunication system must be made in accordance with §§ 7-52-404 and 7-52-606. Payments made from revenues of the water and wastewater systems must be made by agreement with the affected municipality. The authority shall make payments in lieu of taxes to the associated municipality, accruing from and after the effective date of the transfer of such system or systems from the associated municipality, from such system's revenues on the same basis as payments are currently being made by the supervisory body. The authority shall provide the associated municipality with a copy of its annual audited financial statements at the time each such annual payment is made and shall provide access to such financial information of the authority as is necessary for the associated municipality to review the basis for and amounts of payments required pursuant to this section. To the extent not otherwise addressed in chapter 52, parts 4 and 6 of this title, in connection with the provision of telecommunications service, the authority is subject to all other state and local fees and charges imposed upon private providers of telecommunications services.

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 16.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments. The 2017 amendment, in the second sentence, substituted “must” for “shall” twice, deleted “, part 1” following “chapter 52”, and substituted “telecommunication” for “telecommunications” preceding “system”; added the present third sentence; in the present fourth sentence, substituted “such system or systems” for “the electric system” following “transfer of”, “such system's” for “the electric system” preceding “revenues on”, and “body” for “board” at the end; and, in the last sentence, substituted “is” for “shall be” preceding “subject to” and “telecommunications” for “such” preceding “services”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

7-36-123. Deposit of moneys.

All moneys of the authority, from whatever source derived, shall be deposited in one (1) or more banks or trust companies and, to the extent required of political subdivisions of this state, such accounts shall be continuously insured by an agency of the federal government or secured by a pledge of direct obligations of the United States or of this state having an aggregate market value, exclusive of accrued interest, at all times at least equal to the balance on deposit in any such account. Such securities shall either be deposited with the authority or held by a trustee or agent satisfactory to the authority. In lieu of any pledge of such securities, the deposits may be secured by a surety bond, which shall be in form, sufficiency, and substance satisfactory to the authority.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-124. Investment of funds.

All funds of the authority are authorized to be invested as follows:

  1. Direct obligations of the United States government or any of its agencies;
  2. Obligations guaranteed as to principal and interest by the United States government or any of its agencies;
  3. Certificates of deposit and other evidences of deposit at state and federally chartered banks, savings and loan institutions, or savings banks deposited and collateralized as described in § 7-36-123;
  4. Repurchase agreements entered into with the United States or its agencies or with any bank, broker-dealer, or other such entity so long as the obligation of the obligated party is secured by a perfected pledge of full faith and credit obligations of the United States or its agencies;
  5. Guaranteed investment contracts or similar agreements providing for a specified rate of return over a specified time period with entities rated, at the time of investment, in one (1) of the two (2) highest rating categories of a nationally recognized rating agency;
  6. The local government investment pool created by title 9, chapter 4, part 7;
  7. Direct general obligations of a state of the United States, or a political subdivision or instrumentality thereof, having general taxing powers and rated, at the time of investment, in either of the two (2) highest rating categories by a nationally recognized rating agency of such obligations;
  8. Obligations of any state of the United States or a political subdivision or instrumentality thereof, secured solely by revenues received by, or on behalf of, the state or political subdivision or instrumentality thereof irrevocably pledged to the payment of the principal and interest on such obligations, rated, at the time of investment, in the two (2) highest rating categories by a nationally recognized rating agency of such obligations;
  9. The authority's own bonds or notes; or
  10. Any additional investments authorized to be made by a municipal electric system in this state.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-125. Assets after cessation of existence of authority.

If the authority ceases to exist, or in the event of the sale of all or substantially all of the assets of the electric system of the authority, all of its assets remaining after all of its obligations and liabilities have been satisfied or discharged shall pass to, and become the property of, the associated municipality.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-126. Authority as political subdivision for purposes of regulation of public utilities.

The authority is and shall be considered a political subdivision for purposes of title 65, chapter 4.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-127. Board as governing body for purposes of Open Meetings Act.

The board shall be considered a governing body for purposes of the open meetings act, compiled in title 8, chapter 44.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-128. Authority as governmental entity for purposes of Governmental Tort Liability Act.

The authority shall be considered a governmental entity for purposes of the Tennessee Governmental Tort Liability Act, compiled in title 29, chapter 20.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-129. Authority as public agency for purposes of Interlocal Cooperation Act.

The authority shall be considered a public agency for purposes of the Interlocal Cooperation Act, compiled in title 12, chapter 9.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-130. Authority as municipality, associated municipality, and governing body for purposes of Energy Acquisition Corporations Act.

The authority shall be considered a municipality for the purposes of the Energy Acquisition Corporations Act, compiled in chapter 39 of this title and may be an associated municipality of an energy acquisition corporation under such act, and the board shall be a governing body for purposes of such act.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-131. Powers conferred by chapter additional to other powers.

The powers conferred by this chapter shall be in addition, and supplemental, to the powers conferred by any other law.

Acts 2016, ch. 995, § 1.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

7-36-132. Transfer from associated municipality to authority.

  1. The associated municipality is authorized to transfer to an authority created pursuant to this chapter all of the associated municipality's right, title, and interest in and all the assets of the municipal electric, water, wastewater, and telecommunications systems, or any one (1) or more of such systems, including all real and personal property, tangible or intangible, and any right or interest in any such property, whether or not subject to mortgages, liens, charges, or other encumbrances, and all appurtenances, contracts, leases, franchises, and other intangibles must be transferred to the authority. The transfer must be authorized by resolution of the governing body of the associated municipality adopted on one (1) reading and must be accomplished through documents and instruments authorized by the resolution and executed by the officers of the associated municipality as designated by the resolution. A transfer of an associated municipality's electric or telecommunications system to an authority in accordance with this subsection (a) is not a disposition of assets for purposes of § 7-52-132.
  2. Upon formation of an authority pursuant to this chapter, a franchise is granted to the authority to provide within the corporate limits of the associated municipality any and all of the services that it is authorized to provide under applicable law and as set forth in its certificate of incorporation, subject to payment in lieu of taxes pursuant to § 7-36-122. Consistent with § 7-36-107(a)(6), the associated municipality may require such franchise or franchises for the provision of telecommunications services as are permitted under state or federal law.
  3. Upon transfer of an electric, water, or wastewater system from an associated municipality to an authority and the assumption or satisfaction of all obligations of the supervisory board, the jurisdiction and control of the associated municipality and the supervisory board over such system must be transferred to the authority, and the supervisory board having oversight over such system shall cease to exist.
  4. It is a condition of the transfer of a system from the associated municipality to the authority that upon the transfer the authority must either retire the associated municipality's bonds associated with such system by the payment of the bonds in full upon transfer, defease such associated municipality's bonds by depositing funds in irrevocable escrow for the payment of these bonds, or assume and agree to pay in full principal of and interest on such bonds of the associated municipality. Upon the assumption by the authority of the associated municipality bonds and its agreement to pay those bonds when due, the authority shall be fully obligated to pay when due, principal, premium, and interest with respect to those bonds with the same force and effect as if those bonds were issued by the authority. Bonds issued pursuant to this section must be secured by, and payable from, the revenues of the respective system in the same way as other bonds of the authority issued pursuant to this chapter. The transfer of each of the systems must be accomplished in such a manner as not to impair the obligations of contract with reference to the associated municipality's bonds and other legal obligations of the associated municipality and to preserve and protect the contract rights vested in the owners of such bonds and other obligations.

Acts 2016, ch. 995, § 1; 2017, ch. 446, § 17.

Code Commission Notes.

Acts 2016, ch. 995, § 1 enacted a new chapter 41, §§ 7-41-1017-41-132,  but the chapter has been redesignated as chapter 36, §§ 7-36-1017-36-132 by authority of the Code Commission.

2017 Amendments. The 2017 amendment substituted “must” for “shall” wherever it appears; in (a), in the first sentence, substituted “electric, water, wastewater, and telecommunications systems, or any one (1) or more of such systems” for “electric system and the telecommunications system, if any”, in the next to last sentence, substituted “the officers” for “such officers” following “executed by”, and in the last sentence, inserted “of an associated municipality's electric or telecommunications system” following “A transfer” and substituted “is not a” for “shall not be deemed” preceding “a disposition”; in (b), deleted “electric” following “any and all of the”, inserted “and as set forth in its certificate of incorporation” following “applicable law”, and substituted “§ 7-36-107(7)” for “§ 7-36-107(4)” following “Consistent with”; in (c), substituted “an electric, water, or wastewater system” for “the electric system” following “Upon transfer of” and inserted “having oversight over such system”; and, in (d), substituted “It is” for “It shall be”, “the transfer” for “such transfer” following “that upon”, and “of the bonds” for “thereof” following “by the payment”.

Effective Dates. Acts 2016, ch. 995, § 3. April 27, 2016.

Acts 2017, ch. 446, § 19. May 25, 2017.

Chapter 37
Industrial Building Revenue Bond Act of 1951

7-37-101. Short title.

This chapter shall be known and may be cited as the “Industrial Building Revenue Bond Act of 1951.”

Acts 1951, ch. 137, § 1 (Williams, § 4406.53a); T.C.A. (orig. ed.), § 6-1701.

Cross-References. Lease of buildings and facilities authorized, title 12, ch. 2, part 3.

Limitation of actions on bonds, § 28-3-113.

Textbooks. Tennessee Jurisprudence, 8 Tenn. Juris., Counties, § 26; 19 Tenn. Juris., Municipal, State and County Aid, § 2.

Law Reviews.

Financing Industrial Development in the South, 14 Vand. L. Rev. 621 (1961).

NOTES TO DECISIONS

1. Constitutionality.

This chapter is constitutional in that it does not authorize expenditure of public funds for private purposes or extension of credit to private corporations without approval of voters. Holly v. Elizabethton, 193 Tenn. 46, 241 S.W.2d 1001, 1951 Tenn. LEXIS 331 (1951).

There is no constitutional barrier to legislation that results in the promotion of and gain to a private corporation where such corporation serves an incidental public purpose and the legislation does not authorize the use of moneys raised by taxation for the accomplishment of the incidental public purpose intended. Holly v. Elizabethton, 193 Tenn. 46, 241 S.W.2d 1001, 1951 Tenn. LEXIS 331 (1951).

This chapter is a valid enactment. Springfield Tobacco Redryers Corp. v. Springfield, 41 Tenn. App. 254, 293 S.W.2d 189, 1956 Tenn. App. LEXIS 166 (Tenn. Ct. App. 1956).

2. Purpose.

The promotion of industry authorized by this chapter is at least incidentally for a public purpose, though it results in the promotion of and gain to a private corporation. Holly v. Elizabethton, 193 Tenn. 46, 241 S.W.2d 1001, 1951 Tenn. LEXIS 331 (1951).

This chapter is designed to bring industries to the cities of Tennessee. Springfield Tobacco Redryers Corp. v. Springfield, 41 Tenn. App. 254, 293 S.W.2d 189, 1956 Tenn. App. LEXIS 166 (Tenn. Ct. App. 1956).

7-37-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Governing body” means bodies and boards, by whatsoever names they may be known, charged with the governing of a municipality;
  2. “Industrial building” means any one (1) or combination of buildings, structures or facilities leased, or to be leased, to an industrial or commercial concern by the municipality and used, or to be used, as a factory, mill, shop, assembly plant, processing plant, fabricating plant, ship canal, port or port facility, dock or dock facility, harbor facility, railroad, railway terminal, railway belt line, railway switching facility or office building or buildings for the use of such concern, including the industrial building site and any warehouse building or facility incidental to such industrial building, which may include any manufacturing, processing or building equipment or machinery necessary to the operation conducted, or to be conducted, in such industrial building by an industrial concern; provided, that the industrial building need not be, nor have been acquired, pursuant to this chapter. “Industrial building” does not include any office building or buildings constituting a single project and not connected to or combined with any other building, structure or facility defined in this subdivision (2) as an “industrial building”, unless such office building or buildings are leased to an industrial or commercial concern that, at the time of the issuance of bonds under this chapter, for the purpose of acquiring or constructing such office building or buildings, does not have in the municipality an existing office employing more than five (5) persons, and it is found by the governing body that the acquisition or construction and leasing of such office building or buildings will result in the creation of new employment for a substantial number of people residing in and around the municipality; and
  3. “Municipality” means any incorporated city or town, county or a metropolitan government in this state.

Acts 1951, ch. 137, § 2 (Williams, § 4406.53b); 1955, ch. 344, § 1; 1957, ch. 257, § 1; 1959, ch. 152, § 1; 1961, ch. 129, § 1; 1965, ch. 198, § 1; T.C.A. (orig. ed.), § 6-1702; Acts 1988, ch. 750, § 23.

NOTES TO DECISIONS

1. Industrial Building.

An “industrial building” within the reasonable meaning of this chapter is a building with such fixtures and machinery attached to, and becoming a part of, the building as will create a building that is equipped for the conduct of a manufacturing, milling, processing or fabricating business. Holly v. Elizabethton, 193 Tenn. 46, 241 S.W.2d 1001, 1951 Tenn. LEXIS 331 (1951).

7-37-103. Purpose of chapter.

It is determined and declared that the purpose of this chapter is to relieve conditions of unemployment, to aid in the rehabilitation of returning veterans, and to encourage the increase of industry and commerce within this state, thereby reducing the evils attendant upon unemployment.

Acts 1951, ch. 137, § 3 (Williams, § 4406.53c); 1959, ch. 152, § 2; T.C.A. (orig. ed.), § 6-1703.

7-37-104. Powers of municipalities.

In addition to powers that it may now have, any municipality has the power under this chapter to:

  1. Construct, acquire by gift or purchase, reconstruct, improve, better or extend any industrial building within or without the municipality or partially within or partially without the municipality, but in no event farther than ten (10) miles from the territorial boundaries of such municipality, and to acquire by gift, purchase or the exercise of the right of eminent domain lands or rights in land in connection with the industrial building; provided, that no county or metropolitan government has the power to construct, acquire by gift or purchase, reconstruct, improve, better or extend any industrial building outside the territorial limits of the county or metropolitan government;
  2. Issue bonds to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any industrial building. The governing body of the municipality in determining such cost may include all cost and estimated cost of the issuance of such bonds, all engineering, inspection, fiscal and legal expenses, and interest that it is estimated will accrue during the construction period and for six (6) months thereafter on money borrowed or that it is estimated will be borrowed pursuant to this chapter;
  3. Rent or lease such industrial buildings to industrial or commercial concerns in such manner that rents to be charged for the use of the industrial buildings shall be fixed and revised from time to time so as to produce income and revenues sufficient to provide for the prompt payment of interest upon all bonds issued under this chapter and create a sinking fund to pay the principal of such bonds when due;
  4. Pledge to the punctual payment of bonds authorized under this chapter and interest on the bonds the income and revenues to be received from such industrial buildings, including improvements, betterments, or extensions to the industrial buildings thereafter constructed or acquired, sufficient to pay the bonds and interest, as the bonds, and interest shall become due and to create and maintain reasonable reserves for the payment of the bonds and interest;
  5. Mortgage or convey in trust any industrial building or buildings as defined in this chapter in favor of the holder or holders of bonds issued under this chapter;
  6. Sell and convey such industrial buildings, including, but not limited to, the sale and conveyance of the industrial buildings subject to a mortgage as provided in this chapter, for such price and at such time as the governing body of the municipality may determine; no sale or conveyance of such industrial buildings shall ever be made in such manner as to impair the rights or interests of the holder or holders of any bonds secured by the industrial buildings;
  7. Issue its bonds to refund in whole or in part, bonds theretofore issued by such municipality under authority of this chapter; and
  8. Enter upon any lands, waters or premises, through its agents, servants, or employees, for the purpose of making surveys, soundings, or examinations, when necessary in order to carry out the purpose and objects of this chapter, doing no unnecessary damage. In the event any person is damaged by reason of any such entry, the municipality shall be liable to the person to the extent of damages actually sustained.

Acts 1951, ch. 137, § 4 (Williams, § 4406.53d); 1955, ch. 344, § 2; 1959, ch. 152, § 3; 1968, ch. 581, §§ 1, 2; T.C.A. (orig. ed.), § 6-1704; Acts 1988, ch. 750, § 24.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 39.

NOTES TO DECISIONS

1. Effect of Unconstitutional Subdivision.

If subdivision (1) should be declared unconstitutional as impliedly authorizing municipalities to levy taxes for the purpose of acquiring industrial buildings, that feature of such subdivision may be elided without affecting the constitutionality of the remainder of the chapter. Holly v. Elizabethton, 193 Tenn. 46, 241 S.W.2d 1001, 1951 Tenn. LEXIS 331 (1951).

2. Payment of Indebtedness Arising from Ownership.

This chapter is sufficiently broad to authorize the municipalities to provide for payment out of the rents of any taxes or other such indebtedness for which the city might become liable by reason of its ownership and rental of an industrial building and it would not be unlawful for the municipality to provide in the lease for the payment by the lessee of such possible debts of a municipality as a part of the rentals to be paid. Holly v. Elizabethton, 193 Tenn. 46, 241 S.W.2d 1001, 1951 Tenn. LEXIS 331 (1951).

3. Contract for Purchase of Property.

Where under the provisions of this chapter city contracted to purchase industrial property from corporation upon condition that bond issue was approved by voters and that city could contract with specified manufacturer for lease of the property at a rate sufficient to pay for and retire the bonds and where both of these conditions were met, city could not avoid performance of the contract by refusing to enforce its agreement with the manufacturer. Springfield Tobacco Redryers Corp. v. Springfield, 41 Tenn. App. 254, 293 S.W.2d 189, 1956 Tenn. App. LEXIS 166 (Tenn. Ct. App. 1956).

4. Lease with Option to Purchase.

Contract by county leasing property to company for certain period of years with option on part of company to purchase property after a specified time was valid. Darnell v. Montgomery County, 202 Tenn. 560, 308 S.W.2d 373, 1957 Tenn. LEXIS 441 (1957).

Collateral References.

Governmental borrowing or expenditure for purposes of acquiring, maintaining, or improving stadium for use of professional athletic team. 67 A.L.R.3d 1186.

7-37-105. Exemption from state regulation.

  1. It is not necessary for any municipality proceeding under this chapter to obtain any certificate of convenience or necessity, franchise, license, permit, or other authorization from any bureau, board, commission, or other lay instrumentality of the state in order to acquire, construct, purchase, reconstruct, improve, better, or extend any industrial building or for the issuance of bonds in connection with the acquisition, construction, purchase, reconstruction, improvement, betterment, or extension of any industrial building.
  2. No later than sixty (60) days after the date of any bond sale, pursuant to the provisions of the bond sale, the chief administrative officer of the municipality shall file with the office of the commissioner of economic and community development, industrial development division, the following information:
    1. The name of issuing municipality;
    2. The name of lessee;
    3. The total amount of the bond issue;
    4. The bond interest and maturity schedule; and
    5. The identity of the fiscal agent.

Acts 1951, ch. 137, § 13 (Williams, § 4406.53m); 1967, ch. 108, § 1; impl. am. Acts 1972, ch. 852, § 12; T.C.A. (orig. ed.), § 6-1705; Acts 1980, ch. 536, § 1.

7-37-106. Improvements and bonds authorized.

The construction, acquisition, reconstruction, improvement, betterment, or extension of any industrial buildings may be authorized under this chapter, and bonds may be authorized to be issued under this chapter to provide funds for such purpose or purposes or for the refunding of bonds theretofore issued under this chapter, by resolution or resolutions of the governing body, which may be adopted at the same meeting at which the bonds are introduced by a majority of all the members of the governing body then in office, and shall take effect immediately upon adoption. The bonds shall bear interest at such rate or rates, payable semiannually, may be in one (1) or more series, may bear such date or dates, may mature at such time or times not exceeding forty (40) years from their respective dates, may be payable in such medium of payment at such place or places, may carry such registration privileges, may be subject to such terms of redemption, may be executed in such manner, may contain such terms, covenants, and conditions, and may be in such form, coupon or registered, as such resolution or subsequent resolutions may provide.

Acts 1951, ch. 137, § 5 (Williams, § 4406.53e); 1969, ch. 152, § 1; 1969, ch. 284, § 6; T.C.A. (orig. ed.), § 6-1706.

7-37-107. Covenants permissible in bonds — Mortgage or deed of trust.

  1. Any resolution authorizing the issuance of bonds under this chapter may contain covenants as to:
    1. The use and disposition of the rentals from the industrial building for which the bonds are to be issued, and from any other industrial buildings owned by the municipality at the time, including the creation and maintenance of reserves;
    2. The issuance of other or additional bonds payable from the income and revenues from such industrial building;
    3. The maintenance and repair of such industrial building;
    4. The insurance to be carried on the industrial building and the use and disposition of insurance moneys; and
    5. The terms and conditions upon which the holders of the bonds, or any portion of the bonds or any trustees for the bonds shall be entitled to the appointment of a receiver by the chancery court, which court shall have jurisdiction in such proceedings, and which receiver may enter and take possession of the industrial building and lease and maintain the building, prescribe rentals and collect, receive, and apply all income and revenues thereafter arising from the rentals, in the same manner and to the same extent as the municipality itself might do.
  2. Any resolution authorizing the issuance of bonds under this chapter may provide that the principal of and interest on any bonds issued under this chapter shall be secured by a mortgage or deed of trust covering the industrial building for which the bonds are issued and from any other industrial building owned by the municipality at the time, and may include any improvements or extensions thereafter made. Such mortgage or deed of trust may contain such covenants and agreements to properly safeguard the bonds as may be provided for in the resolution authorizing the bonds, but not inconsistent with this chapter and shall be executed in the manner as may be provided for in the resolution. The provisions of this chapter and any such resolution or resolutions and any such mortgage or deed of trust shall be a contract with the holder or holders of the bonds and shall continue in effect until the principal of and the interest on the bonds so issued shall have been fully paid, and the duties of the municipality and its governing body and officers under this chapter, and any such resolution or resolutions and any such mortgage or deed of trust shall be enforceable by any bondholder by mandamus, foreclosure of any such mortgage or deed of trust or other appropriate suit, action or proceedings in any court of competent jurisdiction.

Acts 1951, ch. 137, § 7 (Williams, § 4406.53g); 1955, ch. 344, § 4; T.C.A. (orig. ed.), § 6-1707.

NOTES TO DECISIONS

1. Trustee as Representative of Bondholders.

Declaratory judgment action to determine proper disposition of proceeds of sale of bonds could lie against bank as representative of holders of bonds issued under Industrial Building Revenue Bond Act of 1951, § 7-37-101 et seq., and Industrial Building Bond Act of 1955, § 7-55-101 et seq., where bank was trustee under mortgage and deed of trust document and in such capacity could represent the interests of the bondholders. Jack's Cookie Corp. v. Giles County, 219 Tenn. 131, 407 S.W.2d 446, 1966 Tenn. LEXIS 512 (1966).

2. Use and Disposition of Funds.

Resolution authorizing issuance of bonds, lease by county to corporation of building constructed and equipped as result of bond issue, and indentures of mortgage and deed of trust were to be construed together in determining intent of parties as to disposition of sum set aside to pay interest during construction period but not needed for that purpose. Jack's Cookie Corp. v. Giles County, 219 Tenn. 131, 407 S.W.2d 446, 1966 Tenn. LEXIS 512 (1966).

7-37-108. Lien on rentals.

All bonds issued under this chapter shall have a lien upon the rentals from the industrial building for which the bonds have been issued, and from any other industrial building securing the bonds pursuant to resolution, mortgage or deed of trust as provided in this chapter, and the governing body may provide in the resolution or resolutions authorizing such bonds for the issuance of additional bonds to be equally and ratably secured by a lien upon such rentals, or may provide that the lien upon such rentals for future bonds shall be subordinate.

Acts 1951, ch. 137, § 9 (Williams, § 4406.53i); 1955, ch. 344, § 5; T.C.A. (orig. ed.), § 6-1708.

7-37-109. Bonds not general obligation.

No holder or holders of any bonds issued under this chapter shall ever have the right to compel any exercise of taxing power of the municipality to pay the bonds or the interest on the bonds and the bonds shall not constitute an indebtedness of the municipality or a loan of credit of the bond within the meaning of any constitutional or statutory provision. It shall be plainly stated on the face of each bond that it has been issued under this chapter, and that it does not constitute an indebtedness of the municipality or a loan of credit of the bond within the meaning of any constitutional or statutory provision.

Acts 1951, ch. 137, § 10 (Williams, § 4406.53j); T.C.A. (orig. ed.), § 6-1709.

7-37-110. Election — Questions submitted — Declaration of result.

Prior to the delivery of and payment for any bonds authorized under this chapter, a three-fourths (¾) majority of the registered voters of such municipality voting at an election on the question of issuing such bonds shall approve of such bond issue; provided, that no such election shall be necessary in connection with the authorization of refunding bonds under this chapter. The governing body of the municipality shall, by resolution, direct the county election commission to hold the election and state the proposition to issue the bonds as it is to appear on the ballots. It shall not be necessary to submit to the voters any question other than the maximum amount of bonds to be issued and the purpose for the bonds, except that, if such bonds are to be secured by an industrial building, its rental or income, other than the industrial building for which the bonds are proposed to be issued, then the question of whether bonds so secured are to be issued shall be submitted to the voters. Upon receipt of the statement of the votes in the election from the county election commission, the governing body of the municipality, at or before its regular meeting, shall again canvass the returns and determine and declare the results of the election. The governing body shall enter upon its minutes the results and returns in the election, and the entry shall, after the delivery of and payment for any bonds voted upon at the election, be conclusive evidence of the result of the election, and no suit, action or other proceeding contesting the validity of such election shall be entertained in any of the courts of this state thereafter.

Acts 1951, ch. 137, § 6 (Williams, § 4406.53f); Acts 1955, ch. 344, § 3; 1972, ch. 740, § 4(25); T.C.A. (orig. ed.), § 6-1710.

Cross-References. General municipal elections, §§ 6-53-1016-53-107.

7-37-111. Sale of bonds.

Bonds may be sold in such manner and upon such terms as may be deemed advisable by the governing body; provided, that bonds for refunding purposes shall not be sold at less than ninety-seven percent (97%) of par value and accrued interest.

Acts 1951, ch. 137, § 5 (Williams, § 4406.53e); 1969, ch. 152, § 2; 1969, ch. 284, § 7; T.C.A. (orig. ed.), § 6-1711; Acts 1988, ch. 750, § 25.

7-37-112. Interim financing — Certificates.

Pending the preparation of the definitive bonds, interim receipts or certificates in such form and with such provisions as the governing body may determine, may be issued to the purchaser or purchasers of bonds sold pursuant to this chapter. The bonds and interim receipts or certificates shall be fully negotiable within the meaning of and for all purposes of the Uniform Commercial Code, compiled in title 47, chapters 1–9.

Acts 1951, ch. 137, § 5 (Williams, § 4406.53e); modified; T.C.A. (orig. ed.), § 6-1712.

7-37-113. Validity of bonds.

Bonds bearing the signatures of officers in office on the date of the signing of the bonds shall be valid and binding obligations, notwithstanding that before the delivery of the bonds and payment for the bonds any or all the persons whose signatures appear on the bonds shall have ceased to be officers of the municipality issuing the bonds. The validity of the bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of the industrial building for which the bonds are issued. The resolution authorizing the bonds may provide that the bonds shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Acts 1951, ch. 137, § 8 (Williams, § 4406.53h); T.C.A. (orig. ed.), § 6-1713.

7-37-114. Tax exemption of bonds.

All bonds and the income from the bonds issued pursuant to this chapter shall be exempt from all state, county, and municipal taxation, except inheritance, transfer and estate taxes, except as otherwise provided in this code.

Acts 1951, ch. 137, § 12 (Williams, § 4406.53l ); T.C.A. (orig. ed.), § 6-1714; Acts 1988, ch. 750, § 26.

7-37-115. Rentals sufficient to pay bonds.

The governing body of a municipality issuing bonds pursuant to this chapter shall prescribe and collect rentals for industrial buildings, and shall revise the rentals from time to time whenever necessary so that the income and revenues to be derived from such rentals will always be sufficient to pay when due all bonds and interest on the bonds for the payment of which such revenues are pledged, including reserves for the payment of the bonds and interest on the bonds.

Acts 1951, ch. 137, § 11 (Williams, § 4406.53k); 1959, ch. 152, § 4; T.C.A. (orig. ed.), § 6-1715.

NOTES TO DECISIONS

1. Revision of Rental.

The words “shall revise same from time to time whenever necessary” as used in this section in reference to rentals mean revision either up or down as the payment of the bonds and interest thereon require. County of Giles v. First U. S. Corp., 223 Tenn. 345, 445 S.W.2d 157, 1969 Tenn. LEXIS 420 (1969).

2. Parties in Interest.

In suit against fiscal agent of county that engaged in preparation and marketing of bonds issued under this chapter wherein it was alleged that agent illegally retained certain funds, corporation that rented building constructed as result of such bond issue had an interest in the rent cost of the building and could join the county in suit against the fiscal agent. County of Giles v. First U. S. Corp., 223 Tenn. 345, 445 S.W.2d 157, 1969 Tenn. LEXIS 420 (1969).

7-37-116. Supplemental nature of chapter.

The powers conferred by this chapter shall be in addition and supplemental to, and the limitations imposed by this chapter shall not affect the powers conferred by, any other general, special or local law. Industrial buildings may be acquired, purchased, constructed, reconstructed, improved, bettered, and extended, and bonds may be issued under this chapter for such purposes, notwithstanding that any general, special, or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like industrial building, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitation or other provisions contained in any other general, special or local law.

Acts 1951, ch. 137, § 14 (Williams, § 4406.53n); T.C.A. (orig. ed.), § 6-1716.

Chapter 38
Private Fire Companies

7-38-101. Formation.

Any number of persons, resident within a municipality, may form themselves into a company for the purpose of extinguishing fires, by having their names and objective recorded in the register's office of the county.

Code 1858, § 1706 (deriv. Acts 1831, ch. 27, § 1); Shan., § 3019; mod. Code 1932, § 5244; T.C.A. (orig. ed.), § 6-2401.

Cross-References. Commission on fire fighting personnel standards and education, title 4, ch. 24, part 1.

Rural fire protection equipment, title 4, ch. 31, part 5.

Attorney General Opinions. Requirement of local governments to provide police, fire, and medical services.  OAG 10-03, 2010 Tenn. AG LEXIS 3 (1/19/10).

7-38-102. Rules and regulations — Fines.

A company may make rules and regulations for their government, and may impose fines for nonattendance or other delinquencies, not exceeding twenty dollars ($20.00), upon their members, to be recovered in the name adopted for such company before any judge of the court of general sessions.

Code 1858, § 1707 (deriv. Acts 1831, ch. 27, § 1); Shan., § 3020; Code 1932, § 5245; impl. am. Acts 1979, ch. 68, §§ 2, 3; T.C.A. (orig. ed.), § 6-2402.

7-38-103. Property.

The company may also procure fire engines, buckets, hooks, ladders, and all implements necessary for working such engines and carrying out the objectives of its formation, and may hold property, real or personal, sufficient for its purposes, and as a place for the keeping of the implements and meetings of its members.

Code 1858, § 1708 (deriv. Acts 1831, ch. 27, § 1); Shan., § 3021; Code 1932, § 5246; T.C.A. (orig. ed.), § 6-2403.

7-38-104. Exemption from military service.

The members of these companies, and the fire companies of any incorporated town or city are exempt from military duty in time of peace.

Code 1858, § 1709 (deriv. Acts 1831, ch. 27, § 2); Acts 1877, ch. 52, § 1; Shan., § 3022; Code 1932, § 5247; T.C.A. (orig. ed.), § 6-2404; Acts 2008, ch. 1159, § 2.

Chapter 39
Energy Acquisition Corporations Act

Part 1
General Provisions

7-39-101. Short title — Legislative intent — Construction of chapter.

  1. This chapter shall be known and may be cited as the “Energy Acquisition Corporations Act.”
  2. It is recognized by the general assembly that the provision of dependable, economical sources of energy to the citizens and residents of the state of Tennessee is vital to the health, welfare and economic well-being of the citizens and residents of the state of Tennessee and that the primary sources of energy in Tennessee are natural gas and electrical power. The general assembly further recognizes that both the market for natural gas and the market for electrical power have undergone major changes in recent years. In order to ensure that the municipal distributors of natural gas and electricity have the flexibility and power to compete for and obtain natural gas and electrical power for redistribution on terms that will result in continuing availability of these energy sources at reasonable rates to the citizens and residents of the state of Tennessee, it is the intent of the general assembly by this chapter to authorize the incorporation of public corporations in the several municipalities of this state to:
    1. Finance, acquire, own, operate, lease and dispose of rights, titles and interest of every kind and nature in natural gas properties located within or outside of the state, including gas in reservoirs or in storage, and including facilities of every kind and nature, both real and personal, for the drilling of wells, extraction of liquids and transportation of gas and liquids;
    2. Contract for the purchase of supplies of natural gas or any substitute for natural gas, including synthetic natural gas, liquefied natural gas, coal gas or other substance useable in lieu of natural gas, from any supplier located inside or outside the state;
    3. Finance, acquire, own, operate, lease and dispose of rights, titles and interest of every kind and nature in electrical production, distribution and transmission facilities located within or outside of the state, including electrical materials and supplies and including facilities of every kind and nature, both real and personal, for the procurement of raw materials for the production of electrical energy;
    4. Contract for the purchase of supplies of electrical power or any substitute for supplies of electricity from any supplier located inside or outside the state; and
    5. Vest such corporations with all powers necessary to enable them to accomplish such purposes.
  3. This chapter shall be liberally construed in conformity with such intent, it being hereby determined and declared that the means provided by this chapter are needed to provide for the continued availability to the citizens and residents of the state of natural gas and electrical power at reasonable rates.

Acts 1977, ch. 299, § 1; T.C.A., § 6-4201; Acts 1997, ch. 93, § 1; 1999, ch. 345, § 2; 2007, ch. 263, § 1.

Cross-References. Gas companies, title 65, ch. 26.

7-39-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Associated municipality” means the municipality for the benefit of which an energy acquisition corporation is organized;
  2. “Bonds” means bonds, notes, interim certificates or other obligations of a corporation issued pursuant to this chapter;
  3. “Corporation” or “energy acquisition corporation” means a public corporation formed under this chapter, which shall be a public instrumentality of its associated municipality and of the state of Tennessee;
  4. “Energy distribution system” means a system for the distribution of natural gas or electric power that is owned or operated by a municipality or any board or agency of the municipality;
  5. “Governing body” means, with respect to a municipality that is an associated municipality of, or purchaser of gas from, an acquisition corporation established to exercise the powers described in this chapter with respect to natural gas and natural gas substitutes, any board, commission or other instrumentality of such municipality having jurisdiction, control and management of the gas distribution system of that municipality, and, with respect to a municipality that is an associated municipality of, or purchaser of electrical power from, an acquisition corporation established to exercise the powers described in this chapter with respect to electrical power, any board, commission or other instrumentality of such municipality having jurisdiction, control and management of the electrical power distribution system of that municipality. With respect to any action permitted or required to be taken under this chapter by any such board, commission or instrumentality of a county or incorporated city, town or metropolitan government, if such board, commission or instrumentality by resolution waives its right to take such action or if no such board, commission or instrumentality exists, the power to take such action shall be vested in the body in which the general legislative powers of the county or incorporated city, town or metropolitan government are vested. The governing body of a utility district or gas, electric or energy authority shall be the board of commissioners of the utility district or gas, electric or energy authority or such other board or body as shall be vested by statute or private act with jurisdiction, control and management of the energy distribution system of the district or authority. The governing body of an energy acquisition corporation shall be the board of directors of the energy acquisition corporation;
  6. “Municipality” means any county, incorporated city, town or metropolitan government, utility district, energy acquisition corporation or gas, electric or energy authority in this state; and
  7. “Municipally-owned” means owned by a municipality as defined in this chapter.

Acts 1977, ch. 299, § 2; T.C.A, § 6-4202; Acts 1997, ch. 93, § 2; 1999, ch. 345, §§ 3-5; 2007, ch. 263, §§ 2, 3.

Code Commission Notes.

Former § 7-39-102(b) (Acts 1977, ch. 299, § 2; T.C.A. § 6-4202; Acts 1997, ch. 93, § 2; 1999, ch. 345 §§ 3-5), concerning qualifications for an incorporator or a director of an energy acquisition corporation, was transferred to § 7-39-103 by the code commission in 2005.

7-39-103. Qualfications of incorporator or director of energy acquisition corporation.

An incorporator or a director of an energy acquisition corporation must be a natural person who meets any of the following qualifications:

  1. With respect to a natural person seeking to act as an incorporator or director of an energy acquisition corporation organized or proposed to be organized with respect to and for the benefit of a county or incorporated city, town or metropolitan government, a duly qualified elector of and taxpayer in the county or incorporated city, town or metropolitan government;
  2. With respect to a natural person seeking to act as an incorporator or director of an energy acquisition corporation organized or proposed to be organized with respect to and for the benefit of a utility district or gas, electric or energy authority, a resident and landowner within the boundaries of the utility district or gas, electric or energy authority;
  3. A member of the governing body of the municipality with respect to and for the benefit of which the energy acquisition corporation is organized or proposed to be organized; or
  4. An employee of the energy distribution system of the municipality with respect to which and for the benefit of which the energy acquisition corporation is organized or proposed to be organized.

Acts 1977, ch. 299, § 2; T.C.A, § 6-4202; Acts 1997, ch. 93, § 2; 1999, ch. 345, §§ 3-5; T.C.A. § 7-39-102(b); Acts 2007, ch. 263, § 4.

Part 2
Incorporation

7-39-201. Application for incorporation — Qualifications of applicants — Resolution — Certificate.

  1. Whenever any number of natural persons, no fewer than three (3), each of whom shall meet any one (1) of the qualifications for an incorporator as set forth in § 7-39-103, files with the governing body of the municipality with respect to which the corporation is proposed to be organized and for the benefit of which the corporation will function, an application in writing seeking permission to apply for the incorporation of an energy acquisition corporation of the municipality, the governing body shall proceed to consider the application.
  2. If the governing body, by appropriate resolution, duly adopted, finds and determines that it is wise, expedient, necessary or advisable that the corporation be formed, and shall authorize the persons making such application to proceed to form a corporation, and shall approve the form of certificate of incorporation proposed to be used in organizing the corporation, then the person making application shall execute, acknowledge and file a certificate of incorporation for the corporation as provided in this part.
  3. No corporation may be formed unless the application has first been filed with the governing body of the municipality and the governing body has adopted a resolution as provided in this section.

Acts 1977, ch. 299, § 5; T.C.A., § 6-4205; Acts 1997, ch. 93, § 3; 1999, ch. 345, § 6.

7-39-202. Requisites of certificate of incorporation — Subscription and acknowledgment.

  1. The certificate of incorporation shall set forth:
    1. The names and residences of the applicants, together with a recital that each of the applicants meets the qualifications for an incorporator as set forth in § 7-39-103;
    2. The name of the corporation;
    3. A recital that permission to organize the corporation has been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of the resolution;
    4. The location of the principal office of the corporation;
    5. The purposes for which the corporation is proposed to be organized;
    6. The number of directors of the corporation;
    7. The period for the duration of the corporation, if other than perpetual; and
    8. Any other matter that the applicants may choose to insert in the certificate of incorporation, which shall not be inconsistent with this chapter or with the laws of the state of Tennessee; provided, that it shall not be necessary to set forth in the certificate of incorporation the powers enumerated in this chapter.
  2. The certificate of incorporation shall be subscribed and acknowledged by each of the applicants before an officer authorized by the laws of Tennessee to take acknowledgments to deeds.

Acts 1977, ch. 299, § 6; T.C.A., § 6-4206; Acts 1997, ch. 93, § 4; 1999, ch. 345, § 7.

7-39-203. Approval of certificate by secretary of state — Recording — Beginning of corporate existence.

  1. When executed and acknowledged in conformity with § 7-39-201, the certificate of incorporation shall be filed with the secretary of state. The secretary of state shall examine the certificate of incorporation and, if the secretary of state finds that the recitals contained in the certificate of incorporation are correct, that the requirements of § 7-39-201 have been complied with and that the name is not identical with or so nearly similar to that of another corporation already in existence in this state as to lead to confusion and uncertainty, the secretary of state shall approve the certificate of incorporation and record it in an appropriate book of record in the secretary of state's office.
  2. When the certificate has been so made, filed and approved, the corporate existence shall begin, and the certificate shall be conclusive evidence that the energy acquisition corporation has been formed pursuant to this chapter.

Acts 1977, ch. 299, § 7; T.C.A., § 6-4207; Acts 1997, ch. 93, § 5.

7-39-204. Amendment of certificate.

  1. The certificate of incorporation may, at any time, and from time to time, be amended so as to make any changes in the certificate of incorporation and add any provisions to the certificate of incorporation that might have been included in the original certificate of incorporation.
  2. Any such amendment shall be effected in the following manner:
    1. The members of the board of directors of the corporation shall file with the governing body of the associated municipality an application in writing seeking permission to amend the certificate of incorporation, specifying in such application the amendment proposed to be made.
    2. The governing body shall consider the application and, if it shall, by appropriate resolution, duly find and determine that it is wise, expedient, necessary or advisable that the proposed amendment be made and shall authorize the amendment to be made and shall approve the form of the proposed amendment, then the persons making application shall execute an instrument embodying the amendment specified in the application, and shall file the application with the secretary of state.
    3. The proposed amendment shall be subscribed and acknowledged by each member of the board of directors before an officer authorized by the laws of Tennessee to take acknowledgments to deeds.
    4. The secretary of state shall examine the proposed amendment and, if the secretary of state finds that the requirements of this section have been complied with and the proposed amendment is within the scope of what might be included in an original certificate of incorporation, the secretary of state shall approve the amendment and record it in an appropriate book in the secretary of state's office.
  3. When an amendment has been so made, filed and approved, it shall become effective and the certificate of incorporation shall be amended to the extent provided in the amendment.
  4. No certificate of incorporation shall be amended except in the manner provided in this section.

Acts 1977, ch. 299, § 8; T.C.A., § 6-4208.

Part 3
Operation and Powers

7-39-301. Directors — Qualifications — Number — Expenses — Term — Removal.

  1. The corporation shall have a board of directors in which all of the powers of the corporation shall be vested and which shall consist of any number of directors, no fewer than three (3), each of whom shall meet the qualifications for a director as set forth in § 7-39-103.
  2. The directors shall serve without compensation, except that they shall be reimbursed for their actual expenses incurred in and about the performance of their duties under this part.
  3. If the corporation is formed by a board, commission or other instrumentality of a municipality having jurisdiction, control and management of an energy distribution system as provided in §§ 7-39-102(4) and 7-39-201, the directors shall be appointed by the creating board, commission or instrumentality, or its successor, unless the board, commission or instrumentality waives the right to do so, and, if such waiver occurs or the corporation is formed by the body in which the general legislative powers of the municipality are vested, the directors shall be nominated by the mayor or other chief executive officer and elected by the governing body of the associated municipality. If a corporation is formed by another energy acquisition corporation, the directors shall be appointed by the board of directors of the creating energy acquisition corporation. Directors shall be elected so that they shall hold office for staggered terms. At the time of the election of the first board of directors, the governing body of the municipality shall divide the directors into three (3) groups containing as near equal whole numbers as may be possible. The first term of the directors included in the first group shall be two (2) years, the first term of the directors included in the second group shall be four (4) years, the first term of the directors included in the third group shall be six (6) years, and thereafter the terms of all directors shall be six (6) years. If, at the expiration of any term of office of any director, a successor has not been elected, then the director whose term of office shall have expired shall continue to hold office until the director's successor shall be so elected.
  4. The governing body of the associated municipality may remove a director for cause, and may appoint a director to serve out the term of any office that becomes vacant for any reason.

Acts 1977, ch. 299, § 9; T.C.A., § 6-4209; Acts 1997, ch. 93, § 6; 1999, ch. 345, § 8; 2007, ch. 263, § 5.

7-39-302. Corporate powers.

Every energy acquisition corporation has the following powers, unless expressly limited by the terms of the certificate of incorporation, together with all powers incidental to the powers stated in this section or necessary for the performance of those stated in this section, to:

  1. Have succession by its corporate name for the period specified in the certificate of incorporation, unless sooner dissolved;
  2. Sue and be sued and prosecute and defend at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
  3. Acquire, hold, deal in and dispose of property of all kinds, or any interest in property, for the purposes of the corporation, including, but not limited to, acquiring any kind of interest, alone or jointly with others, in any lands or interests in lands productive of natural gas and other hydrocarbons, or deemed to be potentially productive of natural gas and other hydrocarbons, and any contract rights relative to the production of natural gas and other hydrocarbons, including drilling rights, operating rights, royalties, overriding royalties and other rights, titles and interests;
  4. Engage in the acquisition of natural gas and natural gas substitutes by any means, including:
    1. Exploration for and development of natural gas reservoirs, alone or in conjunction with others, including geological surveys, the drilling of wells and all activities related to exploration for and development of natural gas reservoirs;
    2. Acquisition of supplies of natural gas or natural gas substitutes by purchase from natural gas producers, pipeline companies and others; and
    3. Acquisition of any other hydrocarbons or other minerals that may be found incidentally to the acquisition of natural gas or natural gas substitutes;
  5. Acquire or construct, own, lease to or from others and operate pipelines, natural gas processing plants, underground and aboveground storage reservoirs for natural gas, pumping stations, terminal facilities and liquefied natural gas facilities, facilities for the handling or processing of natural gas substitutes and other hydrocarbons acquired in the course of the operations of the corporation, and all other facilities necessary or convenient for carrying out the purposes of the corporations;
  6. Acquire, hold, deal in and dispose of property of all kinds, or any interest in property, for the purposes of the corporation, including, but not limited to, acquiring, owning, operating, leasing and disposing of rights, titles and interest of every kind and nature in electrical power production, distribution and transmission facilities located within or outside the state, including facilities of every kind and nature, both real and personal, for the procurement of raw materials for the production of electrical energy;
  7. Enter into any contract or arrangement with any gas producer, pipeline company or other seller of natural gas or natural gas substitutes, whether within or outside the state, providing for the acquisition of natural gas and natural gas substitutes containing such terms, covenants, representations, warranties and provisions and being for such period or duration as shall be determined by the board of directors of the corporation. In connection with any contract to acquire natural gas or natural gas substitutes, the corporation may enter into commodity price exchange or swap agreements, agreements establishing price floors or ceilings, or both, or other price hedging contracts with any person or entity under such terms and conditions as the board of directors of the corporation may determine, including, but not limited to, provisions permitting the corporation to indemnify or otherwise pay any person or entity for any loss of benefits under such agreement upon early termination of the agreement or default under the agreement. When entering into any such contract or arrangement or any such swap, exchange or hedging agreement evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the corporation may agree in the written contract or agreement that the rights and remedies of the parties to the contract or agreement shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over any corporation against which an action on such a contract or agreement is brought shall lie solely in a court located in Tennessee that would otherwise have jurisdiction of an action brought in contract against such corporation;
  8. Acquire electrical power by any contract or arrangement from the Tennessee Valley authority or any similar governmental agency or any other person or entity whether within or outside the state, and acquire any kind of interest, alone or with others, in any electrical power production or transmission facilities, including all substations and other facilities necessary for electric power production or transmission or related to electric power production or transmission, whether inside or outside the state, and enter into any contract or arrangement in connection with electric power production or transmission. Any such contracts authorized in this subdivision (8) shall contain such terms, covenants, representations, warranties and provisions and be for such period or duration as shall be determined by the board of directors of the corporation. In connection with any contract to acquire electrical power, the corporation may enter into commodity price exchange or swap agreements, agreements establishing price floors or ceilings, or both, or other price hedging contracts with any person or entity under such terms and conditions as the board of directors of the corporation may determine, including, but not limited to, provisions permitting the corporation to indemnify or otherwise pay any person or entity for any loss of benefits under such agreement upon early termination of the agreement, or default under the contract. When entering into any such contract or arrangement or any such swap, exchange or hedging agreement evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the corporation may agree in the written contract or agreement that the rights and remedies of the parties to the contract or agreement shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over any corporation against which an action on such a contract or agreement is brought shall lie solely in a court located in Tennessee that would otherwise have jurisdiction of an action brought in contract against such corporation;
  9. Sell, exchange or interchange natural gas or natural gas substitutes and to provide by sale or otherwise, an adequate, dependable and economical gas supply to the corporation's associated municipalities; the state and its departments, agencies, instrumentalities and political subdivisions; gas utility systems either privately or publicly owned; the United States government; other energy acquisition corporations established pursuant to this chapter or under the laws of another jurisdiction; and private persons and entities, whether any of such consumers are inside or outside this state; to establish prices to be paid for such gas or gas substitutes and pricing structures with respect to gas or gas substitutes, including provision for price rebates, discounts, and dividends; and, in connection with any such sales, exchanges or interchanges, to act as agent for such consumers, to secure gas contracts and arrangements with other entities or persons, to make contracts for the sale, exchange, interchange, pooling, transmission, distribution, or storage of gas and fuel of any kind for any such purposes, inside or outside this state, and to transmit gas both for itself and on behalf of others;
  10. Sell, exchange or interchange electrical power and to provide by sale or otherwise, an adequate, dependable and economical electrical power supply to the corporation's associated municipalities; the state and its departments, agencies, instrumentalities and political subdivisions; electrical power utility systems either privately or publicly owned; the United States government; other energy acquisition corporations established pursuant to this chapter or under the laws of another jurisdiction; and private persons and entities, whether any of such consumers are inside or outside this state; to establish prices to be paid for such electrical power and pricing structures with respect to electrical power, including provision for rebates, discounts, and dividends; and, in connection with any such sales, exchanges or interchanges, to act as agent for such consumers, to secure electrical power contracts and arrangements with other entities or persons, to make contracts for the sale, exchange, interchange, pooling, transmission, and distribution of electrical power for any such purposes, inside or outside this state, and to transmit electrical power both for itself and on behalf of others;
  11. Conduct its meetings by telephonic, electronic or other means of communication, in accordance with the requirements of § 8-44-108 as if the corporation were an agency of state government;
  12. Provide to an associated municipality, any entity purchasing gas or electrical energy from the corporation, or any other energy acquisition corporation, transportation and storage capacity, and management services associated therewith, energy supply development and management, technical, financial, informational, promotional, engineering and educational services related to the provision of gas and electrical energy; notwithstanding any provision of this chapter to the contrary, any engineering services will be provided in compliance with title 62, chapter 2;
  13. Issue bonds and notes for the borrowing of money;
  14. As security for the payment of principal of and interest on any bonds or notes so issued, and any agreements made in connection with the payment of principal of and interest on any bonds or notes, and as security for the obligations of the corporation in connection with the acquisition of supplies of natural gas or electric power by purchase from producers, distributors or others, grant liens upon or otherwise encumber any or all of its property and assets, whether then owned or thereafter acquired, and pledge the revenues and receipts from the property and assets, or from any part of the property and assets, and assign and pledge all or any part of its interest in and rights under any leases, sale contracts or other contracts relating to the leases or sale contracts, so long as gas assets are not pledged or encumbered to secure bonds, notes or obligations for the acquisition of electrical power and electric assets are not pledged or encumbered to secure bonds, notes or obligations for the acquisition of natural gas and natural gas substitutes;
  15. Employ and pay compensation to such employees and agents, including engineers, geologists, attorneys and other special consultants or other agents as the board of directors shall deem necessary for the business of the corporation;
  16. Exercise all powers expressly given in its certificate of incorporation and establish bylaws and make all rules and regulations not inconsistent with the certificate of incorporation or the provisions of this chapter, deemed expedient for the management of the corporation's affairs; and
  17. Install, read, maintain and remove water meters for an associated municipality or a municipality.

Acts 1977, ch. 299, § 3; T.C.A., § 6-4203; Acts 1997, ch. 93, §§ 7-10; 1999, ch. 345, §§ 9, 10; 2001, ch. 185, § 1; 2005, ch. 110, § 1.

7-39-303. Condemnation — Right-of-way for pipelines — Underground reservoirs — Land for pumping stations and other facilities — Use of public ways in municipalities.

  1. An energy acquisition corporation has the right and power pursuant to title 29, chapter 17 to take and condemn lands, property, property rights, privileges and easements of others for:
    1. The purpose of constructing, laying, repairing or extending its pipelines;
    2. The development, construction and operation of underground and aboveground storage reservoirs for natural gas and natural gas substitutes;
    3. Pumping stations, terminal facilities and other facilities reasonably necessary for carrying out the purposes of the corporation;
    4. The construction of electrical power distribution, transmission and production facilities and all other facilities reasonably necessary or related to the purchase, distribution, or transmission of electrical power for use by electrical power distributors or any other person or entity; and
    5. Access to any properties owned or used by such corporation.
  2. None of the public streets, alleys, squares or highways within the corporate limits of any municipality in the state shall be entered upon or used by any such corporation for laying pipelines or electrical power transmission lines, or otherwise, until the consent of the legislative body of such municipality has been obtained, prescribing the terms on which the public streets, alleys, squares or highways may be entered upon or used.

Acts 1977, ch. 299, § 4; T.C.A., § 6-4204; Acts 1997, ch. 93, §§ 11-13.

Attorney General Opinions. Multi-county gas utility districts, OAG 93-56, 1993 Tenn. AG LEXIS 56 (9/2/93).

7-39-304. Loan — Guarantees and revenue bonds of a municipality.

  1. Any associated municipality or any municipally-owned energy distribution system acting by resolution of the governing body of its associated municipality is hereby authorized and empowered to:
    1. Make loans to its energy acquisition corporation;
    2. Guarantee or assume the payment of the principal of and interest on any bonds or notes issued by such corporation or the payment or performance of any obligations of the corporation incurred in connection with the purchase of gas or electrical power by the corporation;
    3. Pledge the revenues of its energy distribution system to secure the payment of the principal of and interest on any bonds or notes of the corporation or to secure its guaranty of such bonds or notes;
    4. Pledge the revenues of its energy distribution system to secure the payment of obligations incurred in connection with the purchase of gas or electrical power, as appropriate, by the corporation or to secure its guaranty of any such obligations.
    1. Any loan, or payment under such guarantee or pledge, shall be made solely out of the funds otherwise available to the energy distribution system for the benefit of which the bonds or notes were issued or the obligations were incurred and shall not be a general obligation of the associated municipality. Any loan, guarantee or pledge of revenues shall be subject to any contractual limitations undertaken by the associated municipality or energy distribution system for the incurrence of indebtedness or the lending of its credit to others.
    2. Any pledge of, or lien on, revenues of the energy distribution system to secure the payment of any bonds, notes or obligations of such corporation pursuant to this chapter shall be valid and binding from the time the pledge or lien is created or granted and shall inure to the benefit of the holder or holders of such bonds or notes or the obligee under any such obligation until the payment or satisfaction in full of the obligation. The priority of any pledge or lien with respect to competing pledges or liens shall be determined by the date such pledge or lien is created or granted. Neither the resolution, the indenture, nor any other instrument granting, creating or giving notice of the pledge or lien need be filed or recorded to preserve or protect the validity or priority of such pledge or lien.
    3. Any pledge or lien created or granted pursuant to the terms of this section shall not be subject to the mortgage tax imposed by § 67-4-409(b) and any other tax that is imposed upon the privilege of recording any instrument giving notice of the creation of a lien, security interest or pledge, and such exemption shall apply to any transaction to which the municipality is a party pursuant to this chapter, whether as the secured party or the debtor.
  2. Any associated municipality is hereby authorized to issue its revenue bonds in the manner provided by title 9, chapter 21 for the purpose of raising funds to lend to its energy acquisition corporation, such revenue bonds to be payable solely from the revenues derived from the energy distribution system owned by such associated municipality.
  3. An associated municipality shall not have the power to assume or guarantee bonds, notes or other obligations of a corporation in such a way as to pledge the full faith and credit and taxing power of the associated municipality to the payment of the obligations.

Acts 1977, ch. 299, § 10; T.C.A. § 6-4210; Acts 1988, ch. 750, § 27; 1997, ch. 93, §§ 14, 15; 1999, ch. 345, §§ 11-14.

7-39-305. Issuance of bonds — Restrictions on payment — Additional issues — Refunding — Construction — Interest rates — Sale of bonds — Contracts and agreements — Liability — Calculating applicable formula rate.

  1. All bonds issued by the corporation shall be payable solely out of the revenues and receipts derived from the corporation's activities pursuant to the powers and purposes set forth in this part; provided, that notes issued in anticipation of the issuance of bonds may be retired out of the proceeds of such bonds. Such bonds may be executed and delivered by the corporation, at any time and from time to time, may be in such form and denominations and of such terms and maturities, may be in registered or bearer form, either as to principal or interest, or both, may be payable in such installments and at such time or times not exceeding forty (40) years from the date of issuance, may be payable at such place or places whether within or without the state of Tennessee, may bear interest at such rate or rates payable at such time or times and at such place or places and evidenced in such manner, may be executed by such officers of the corporation, and may contain such provisions not inconsistent with this part, as shall be provided in the proceedings of the board of directors whereunder the bonds shall be authorized to be issued. If deemed advisable by the board of directors, there may be retained in the proceedings under which any bonds of the corporation are authorized to be issued an option to redeem all or any part of the bonds as may be specified in such proceedings, at such price or prices and after such notice or notices and on such terms and conditions as may be set forth in such proceedings and as may be briefly recited in the face of the bonds, but nothing contained in this section shall be construed to confer on the corporation any right or option to redeem any bonds except as may be provided in the proceedings under which they shall be issued. Any bonds of the corporation may be sold at public or private sale in such manner, at such price and from time to time as may be determined by the board of directors of the corporation to be most advantageous, and the corporation may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds. Issuance by the corporation of one (1) or more series of bonds for one (1) or more purposes shall not preclude it from issuing other bonds in connection with the same project or any other project, but the proceedings under which any subsequent bonds may be issued shall recognize and protect any prior pledge or mortgage made for any prior issue of bonds. Proceeds of bonds issued by the corporation may be used for the promotion of any of the purposes of the corporation as set forth in this chapter, including the establishment of a reasonable reserve fund for the payment of principal of and interest on such bonds in the event of a deficiency in the revenues and receipts available for the payment. Any bonds of a corporation may be issued bearing a fixed interest rate or a rate that varies from time to time or a rate that is established from time to time during the term of the bonds and may be issued granting to the owners of the bonds put rights and such other rights as the board of directors of the corporation shall determine. In connection with the issuance of its bonds, a corporation is authorized to enter into such additional agreements as shall be necessary to facilitate the issuance and sale of the bonds or establishment of the interest rate or rates, including agreements providing for liquidity and credit enhancement, and reimbursement agreements relating to the bonds.
  2. Any bonds or notes of the corporation at any time outstanding may, at any time and from time to time, be refunded by the corporation by the issuance of its refunding bonds in such amount as the board of directors may deem necessary, but not exceeding:
    1. The principal amount of the obligations being refinanced;
    2. Applicable redemption premiums on the refunding bonds;
    3. Unpaid interest of such obligations to the date of delivery or exchange of the refunding bonds;
    4. In the event the proceeds from the sale of the refunding bonds are to be deposited in trust as provided in subdivision (d)(2), interest to accrue on such obligations from the date of delivery to the date of maturity or to the first redemption date, whichever shall be earlier; and
    5. Expenses, premiums and commissions of the corporation deemed by the board of directors to be necessary in connection with the issuance of the refunding bonds.
  3. Any such refunding may be effected whether the obligations to be refunded shall have then matured or shall thereafter mature, either by the exchange of the refunding bonds for the obligations to be refunded by the refunding bonds with the consent of the holders of the obligations so to be refunded, or by sale of the refunding bonds and the application of the proceeds of the sale to the payment of the obligations to be refunded by the refunding bonds, and regardless of whether or not the obligations to be refunded were issued in connection with the same projects or separate projects, and regardless of whether or not the obligations proposed to be refunded shall be payable on the same date or different dates or shall be due serially or otherwise.
  4. The principal proceeds from the sale of any refunding bonds shall be applied only as follows either to:
    1. The immediate payment and retirement of the obligations being refunded; or
    2. The extent not required for the immediate payment of the obligations being refunded, then the proceeds shall be deposited in trust to provide for the payment and retirement of the obligations being refunded, and to pay any expenses incurred in connection with such refunding, but may also be used to pay interest on the refunding bonds prior to the retirement of the obligations being refunded. Money in any such trust fund may be invested in direct obligations of or obligations the principal of and interest on which are guaranteed by the United States government, or obligations of any agency or instrumentality of the United States government, or in certificates of deposit issued by a bank or trust company located in the state of Tennessee, if such certificates shall be secured by a pledge of any of such obligations having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. Nothing in this subdivision (d)(2) shall be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refunded but which shall not have matured and which shall not be presently redeemable.
  5. All bonds, refunding bonds and the interest coupons applicable to the bonds are hereby made and shall be construed to be negotiable instruments.
  6. With respect to all or any portion of any issue of bonds issued or anticipated to be issued under this section, at any time during the term of the bonds, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this section are in compliance with the guidelines, rules or regulations as set forth in subsection (i), a corporation by resolution may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings, or both, and other interest rate hedging agreements under such terms and conditions as the board of directors of the corporation may determine, including, but not limited to, provisions permitting the corporation to pay to or receive from any person or entity any loss of benefits under such agreement upon early termination of the agreement or default under such agreement.
  7. The governing body of a corporation may enter into an agreement to sell its bonds under this part providing for delivery of its bonds on a date greater than ninety (90) days and not greater than five (5) years, or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that such an agreement or contract of a corporation to sell its bonds as authorized in this subsection (g) is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with subsection (i). Agreements to sell bonds for delivery ninety (90) days or less from the date of execution of the agreement to sell the bonds do not require a report of the comptroller of the treasury or the comptroller's designee.
  8. Prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations with respect to the contracts and agreements authorized in subsections (f) and (g), a corporation may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law, notwithstanding subsections (f) and (g). Nothing in this section is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a corporation to enter into the contracts or agreements described in subsections (f) and (g) heretofore entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations.
    1. The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts authorized in subsections (f) and (g), which may include, but shall not be limited to, the following:
      1. The conditions under which such agreements or contracts can be entered into;
      2. The methods by which such contracts are to be solicited and procured;
      3. The form and content such contracts shall take;
      4. The aspects of risk exposure associated with such contracts;
      5. The standards and procedures for counterparty selection, including rating criteria;
      6. The procurement of credit enhancement, liquidity facilities, or the setting aside of reserves in connection with such contracts or agreements;
      7. The methods of securing the financial interest in such contracts;
      8. The methods to be used to reflect such contracts in the corporation's financial statements;
      9. Financial monitoring and periodic assessment of such contracts by the corporation;
      10. The application and source of nonperiodic payments; and
      11. Educational requirements for officials of any corporation responsible for approving any such contract or agreement.
    2. Prior to the adoption by the board of directors of the corporation of a resolution authorizing such contract or agreement, a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that such contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report on the compliance to the corporation. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the corporation may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that such contract or agreement is not in compliance with the guidelines, rules or regulations, then the corporation is not authorized to enter into such contract or agreement. The guidelines, rules or regulations shall provide for a process for the appeal of a determination of noncompliance.
  9. Neither an associated municipality nor any municipality, acquisition corporation or other entity purchasing natural gas or electrical power from the corporation shall in any event be liable for the payment of the principal of or interest on any bonds, notes or other obligations of the corporation, or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the corporation and none of the bonds, notes or other obligations of the corporation nor any of its agreements or obligations shall be construed to constitute an indebtedness of any associated municipality, acquisition corporation or other entity purchasing natural gas or electrical power from the acquisition corporation, within the meaning of any constitutional or statutory provision whatsoever, except to the extent the associated municipality, acquisition corporation, or other entity shall have guaranteed or assumed the payment of any bonds, notes or other obligations of such corporation or pledged its revenues to the payment of any bonds, notes or obligations of the corporation pursuant to the terms of § 7-39-304 or of any other provision of applicable law.
  10. When entering into an interest rate agreement authorized by this section, a corporation may secure its obligations under the agreement, including its obligation for termination or other nonperiodic payments, with the revenues available to secure the bonds with respect to which such interest rate agreement is entered into.
  11. For purposes of calculating the “applicable formula rate” under § 47-14-103 and the related provisions of title 47, chapter 14, to determine the maximum effective rate applicable to bonds or other obligations issued by energy acquisition corporations, the language “four (4) percentage points above the average prime loan rate” in the definition of “formula rate” in § 47-14-102 shall be replaced with the language “seven (7) percentage points above the average prime loan rate.” This subsection (l ) shall apply to any bonds or other obligations issued by energy acquisition corporations on or before June 30, 2012.

Acts 1977, ch. 299, § 11; T.C.A., § 6-4211; Acts 1999, ch. 345, §§ 15-17; 2004, ch. 589, § 4; 2010, ch. 693, § 1.

Compiler's Notes. For the preamble to the act clarifying and increasing the maximum rate that may be charged on debt issues by energy acquisition corporations, please refer to Acts 2010, ch. 693.

7-39-306. Security for payment of bonds — Default — Bondholders' remedies.

  1. The principal of and interest on any bonds issued by the corporation shall be secured by a pledge of the revenues and receipts out of which the principal and interest shall be made payable, and may be secured by a mortgage or deed of trust covering all or any part of the properties of the corporation, or by an assignment and pledge of all or any part of the corporation's real or personal assets.
  2. The resolution under which the bonds are authorized to be issued and any such mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered by the resolution, the fixing and collecting of rents or payments with respect to any projects or portions of projects covered by such resolution, mortgage or deed of trust, the creation and maintenance of special funds from such revenues and from the proceeds of such bonds, and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this section.
  3. Each pledge, agreement, mortgage and deed of trust made for the benefit or security of any of the bonds of the corporation shall continue effective until the principal of and interest on the bonds for the benefit of which the pledge, agreement, mortgage and deed of trust were made shall have been fully paid.
  4. In the event of default in such payment or in any agreements of the corporation made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage and deed of trust executed as security for the bonds, such payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity, or by foreclosure of any such mortgage and deed of trust, or any one (1) or more of such remedies.

Acts 1977, ch. 299, § 12; T.C.A., § 6-4212.

7-39-307. Exemption from taxation — Securities.

  1. The corporation is hereby declared to be performing a public function in behalf of the municipality with respect to which the corporation is organized and to be a public instrumentality of such municipality. Accordingly, the corporation and all properties at any time owned by it, except as provided in subsection (b), and the income and revenues from the properties and all bonds issued by it and the income from the bonds shall be exempt from all taxation in the state, including the mortgage tax imposed by § 67-4-409(b) and any other tax that is imposed upon the privilege of recording any instrument giving notice of the creation of a lien, security interest or pledge, and such exemption shall apply to any transaction to which the corporation is a party whether as the secured party or the debtor. Also, for purposes of the Tennessee Securities Act of 1980, compiled as title 48, chapter 1, part 1, bonds issued by the corporation shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state.
    1. Notwithstanding any other law to the contrary, an energy acquisition corporation, established pursuant to this chapter, that acquires an ongoing concern engaged in the sale and distribution of liquefied petroleum gas (propane) may enter into agreements for payments in lieu of taxes, referred to as “tax equivalents”, with any local government to which the acquired concern formerly paid ad valorem property tax.
    2. The amount of such payments shall be fixed at the amount of ad valorem taxes that would be otherwise due and payable by the business based upon the assessed value of the property that would be subject to tax if such business had not been acquired by the energy acquisition corporation. Such payments shall only be used in the same manner and for the same purposes as ad valorem taxes collected by the recipient local government.

Acts 1977, ch. 299, § 13; T.C.A., § 6-4213; Acts 1999, ch. 345, § 18; 2010, ch. 1134, §§ 50, 51.

7-39-308. Validity of bonds.

  1. Bonds bearing the signature of officers in office on the date of the signing of the bonds shall be valid and binding obligations, notwithstanding that before the delivery of the bonds and payment for the bonds any or all the persons whose signatures appear on the bonds shall have ceased to be officers of the energy acquisition corporation issuing the bonds.
  2. The validity of the bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of any properties for which the bonds are issued.
  3. The resolution authorizing the bonds may provide that the bonds shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Acts 1977, ch. 299, § 14; T.C.A., § 6-4214; Acts 1997, ch. 93, § 16.

7-39-309. Lien of bonds.

  1. All bonds of the same issue shall, subject to the prior and superior rights of outstanding bonds, claims or obligation, have a prior and paramount lien on the revenue of the properties for which the bonds have been issued, over and ahead of all bonds of any issue payable from the revenue that may be subsequently issued, and over and ahead of any claims or obligations of any nature against the revenue subsequently arising or subsequently incurred; provided, that the proceedings authorizing any issue of bonds may provide for the issuance of additional bonds on a parity with the bonds.
  2. All bonds of the same issue shall be equally and ratably secured without priority by reason of number, date of bonds, of sale, or execution, or of delivery, by a lien on the revenue in accordance with this chapter and the resolution or resolutions authorizing the bonds.
  3. Any pledge of, or lien on, revenues and receipts of the corporation to secure the payment of any bonds, notes or obligations of the corporation issued pursuant to this chapter shall be valid and binding from the time the pledge or lien is created or granted and shall inure to the benefit of the holder or holders of such bonds or notes or the obligee under any such obligation until the payment or satisfaction in full of the pledge or lien. The priority of any pledge or lien with respect to competing pledges or liens shall be determined by the date such pledge or lien is created or granted. Neither the resolution, the indenture, nor any other instrument granting, creating or giving notice of the pledge or lien need be filed or recorded to preserve or protect the validity or priority of such pledge or lien.

Acts 1977, ch. 299, § 15; T.C.A., § 6-4215; Acts 1999, ch. 345, § 19.

7-39-310. Nonprofit corporation — Net earnings.

The corporation shall be a nonprofit corporation and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors of the corporation shall determine that sufficient provision has been made for the full payment of the expenses, bonds or other obligations of the corporation, then any net earnings of the corporation thereafter accruing from gas properties or rights shall be paid to the municipal gas distribution system or systems for the benefit of which the corporation was organized, and any net earnings of the corporation thereafter accruing from electrical power properties or rights shall be paid to the municipal electrical power distribution system or systems for the benefit of which the corporation was organized.

Acts 1977, ch. 299, § 16; T.C.A., § 6-4216; Acts 1997, ch. 93, § 17.

7-39-311. Exemption from Tennessee public utility commission jurisdiction.

The exemption heretofore granted to municipalities from the jurisdiction of the Tennessee public utility commission is hereby granted to any energy acquisition corporation.

Acts 1977, ch. 299, § 17; T.C.A., § 6-4217; Acts 1995, ch. 305, § 75; 1997, ch. 93, § 18; 2017, ch. 94, § 12.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority”.

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Municipalities exempt from regulation, §§ 7-34-106, 7-34-117.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 2.

7-39-312. Incorporation — Names — Board of directors — Associated municipalities.

Notwithstanding any other provision of this chapter or the Interlocal Cooperation Act, compiled in title 12, chapter 9, to the contrary, the following provisions shall apply to any energy acquisition corporation:

  1. An energy acquisition corporation is deemed to be a “public agency,” as defined in § 12-9-103, for all purposes of the Interlocal Cooperation Act. Specifically, but not limited to, one (1) or more energy acquisition corporations may act jointly with each other or with other public agencies in the exercise of their powers as provided in § 12-9-104. In addition, an energy acquisition corporation may, pursuant to § 12-9-108, contract with other public agencies, whether within or outside this state, to perform any service, activity or undertaking authorized by this chapter, and in such event any such other public agency shall be deemed to be the corporation's “associated municipality” for purposes of § 7-39-304, but not for any other purposes of this chapter, and may also contract with any other person or entity, either within or outside this state, to perform any service, activity or undertaking authorized by this chapter;
  2. An energy acquisition corporation may be incorporated under § 7-39-201 to act on behalf of two (2) or more municipalities, each of which shall be deemed to be the “associated municipality” for all purposes of this chapter, and all provisions of this chapter, as nearly as may be practicable, shall be made applicable to such corporation and each associated municipality, subject to the following:
    1. The persons filing the application for incorporation under § 7-39-201 must include at least one (1) applicant who meets the qualifications of an incorporator as set forth in § 7-39-103 from each municipality, and such application must be approved by the governing body of each municipality;
    2. The name of the corporation need not include the name of each associated municipality, or any of them; and
    3. The board of directors may, but shall not be required to, include a member who meets the qualifications of a director as set forth in § 7-39-103 for each associated municipality; provided, that each board member shall meet the qualifications of a director as set forth in § 7-39-103 in one (1) or more of such municipalities; and members of the board may be nominated and elected, and may be removed for cause, in any manner provided in the certificate of incorporation or bylaws of the corporation or by resolution of the board of directors of the corporation; and
  3. An energy acquisition corporation may be joined by any one (1) or more municipalities, each of which shall be deemed to be an “associated municipality” for purposes of this chapter, and all provisions of this chapter shall, as nearly as may be practicable, be made applicable to such corporation and each such associated municipality, subject to the requirements of subdivision (2) and subject to the following:
    1. Each municipality seeking to become an “associated municipality” of such corporation must make application in writing to the board of directors of such corporation to become an “associated municipality,” following approval of such application by resolution of the governing body of such municipality; and
    2. The board of directors of such corporation must approve the application of such municipality to become an “associated municipality” of such corporation.

Acts 1995, ch. 336, § 1; 1997, ch. 93, §§ 19-24; 1997, ch. 307, § 1; 1999, ch. 345, §§ 20-23.

7-39-313. Deposit and investment of funds.

  1. All funds of a corporation shall be deposited in accordance with title 9, chapter 4, parts 1, 4 and 5; provided, that any bank, savings and loan institution or savings bank located outside the state of Tennessee that is under the supervision of the United States comptroller of the currency or the office of thrift supervision, may act as a depository, trustee, registration agent or paying agent in connection with any bonds or notes issued by a corporation, notwithstanding title 9, chapter 4, parts 1, 4 and 5.
  2. Funds of a corporation are authorized to be invested in the following:
    1. Direct obligations of the United States government or any of its agencies;
    2. Obligations guaranteed as to principal and interest by the United States government or any of its agencies;
    3. Certificates of deposit and other evidences of deposit at state and federally chartered banks, savings and loan institutions or savings banks deposited and collateralized as described in subsection (a);
    4. Repurchase agreements entered into with the United States or its agencies or with any bank, broker-dealer or other such entity, so long as the obligation of the obligated party is secured by a perfected pledge of full faith and credit obligations of the United States or its agencies;
    5. Guaranteed investment contracts or similar agreements providing for a specified rate of return over a specified time period with entities rated in one (1) of the three (3) highest rating categories of a nationally recognized rating agency;
    6. The local government investment pool created by title 9, chapter 4, part 7;
    7. Direct general obligations of a state of the United States, or a political subdivision or instrumentality of a state, having general taxing powers and rated in either of the three (3) highest rating categories by a nationally recognized rating agency of such obligations; or
    8. Obligations of any state of the United States or a political subdivision or instrumentality of any state, secured solely by revenues received by or on behalf of the state or political subdivision or instrumentality of the state irrevocably pledged to the payment of the principal of and interest on such obligations, rated in the three (3) highest rating categories by a nationally recognized rating agency of such obligations.

Acts 1999, ch. 345, § 24; 2014, ch. 522, § 1.

Compiler's Notes. Former § 7-39-313, relating to power to purchase natural gas or electric power, was transferred to § 7-39-316 in 1999.

7-39-314. Audits.

Any corporation formed pursuant to this chapter shall be audited in the manner provided in title 6, chapter 56.

Acts 1999, ch. 345, § 24.

Compiler's Notes. Former § 7-39-314, concerning restrictions or limitations on corporate powers, was transferred to § 7-39-318 in 1999.

7-39-315. Board of directors is a governing body.

The board of directors of a corporation formed pursuant to this chapter shall be considered a governing body for purposes of title 8, chapter 44.

Acts 1999, ch. 345, § 24.

7-39-316. Power to purchase natural gas or electrical power.

Any municipality has the power, together with all powers incidental thereto or necessary for the performance thereof, exercisable alone or jointly with any other public agency, acting by resolution of its governing body, to purchase, by contract or other agreement, natural gas or electrical power, or both, from an energy acquisition corporation. Any municipality has the power to enter into any contract or arrangement with a corporation for the acquisition of natural gas or natural gas substitutes or electrical power, containing such terms, covenants, representations, warranties and provisions and for such period or duration as the governing body of the municipality shall determine, including contracts containing the agreement of the municipality to take or pay for any gas, gas substitutes or electrical power provided by the corporation to the municipality.

Acts 1997, ch. 93, § 25; Acts 1999, ch. 345, § 24.

7-39-317. Competitive bidding requirements waived.

Notwithstanding any law to the contrary, a corporation may enter into any contract authorized by this chapter without complying with competitive bidding requirements.

Acts 1999, ch. 345, § 24.

7-39-318. Restrictions or limitations on corporate powers.

Neither this chapter nor anything contained in this chapter shall be construed as a restriction or limitation upon any powers that a corporation might otherwise have under any laws of this state, but shall be construed as cumulative of any such powers; however, to the extent this chapter conflicts with any other law or is inconsistent with any other law, this chapter shall prevail. The authority and powers granted pursuant to this chapter may be exercised in accordance with the terms of this chapter, notwithstanding any other requirements, restrictions or procedural provisions contained in any general law, private act or home rule charter, and notwithstanding any other provisions to the contrary contained in any general law, private act or home rule charter.

Acts 1997, ch. 93, § 25; 1999, ch. 345, § 24.

7-39-319. Option of energy acquisition corporation to be governed by this section.

  1. Notwithstanding this chapter or the Interlocal Cooperation Act, compiled in title 12, chapter 9, to the contrary, subdivisions (a)(1)-(4) shall apply to any energy acquisition corporation that elects, either in its certificate of incorporation or in its bylaws, to be governed by this section:
    1. An energy acquisition corporation operating pursuant to this section shall have a board of directors of not less than three (3) nor more than twenty-one (21) members;
    2. Not less than two thirds (2/3) of the members shall meet the qualifications to serve as director pursuant to § 7-39-103, including directors serving on behalf of one (1) or more municipalities that have become associated municipalities pursuant to §  7-39-312. Up to one third (1/3) of the members need not meet the qualifications to serve as director pursuant to §  7-39-103; provided, that each such member is a natural person and is either an employee of a municipal utility, an employee of an electric cooperative or an employee or member of the governing body of a G&T cooperative;
    3. Members of the board may be nominated and elected, and may be removed for cause, in any manner provided in the certificate of incorporation or bylaws of the corporation; provided, that the terms of office of directors nominated and elected pursuant to this subdivision (a)(3) shall be distributed evenly, as nearly as may be practicable, among all terms of office of the directors of the corporation; and
    4. No more than one (1) person per associated municipality, one (1) person per municipal utility that is not an associated municipality, one (1) person per electric cooperative and one (1) person per G&T cooperative shall serve on the board of directors of the corporation at any one time.
  2. As used in this section:
    1. “Electric cooperative” means an electric cooperative or electric membership corporation, whether organized or operating under title 48, chapter 25, or similar statutes of any other state, that, as of June 23, 2009, distributes electric power purchased from the Tennessee Valley authority;
    2. “G&T cooperative” means a generation and transmission cooperative, organized or operating under the Electric G&T Cooperative Act, compiled in title 48, chapter 69; and
    3. “Municipal utility” means any governmental entity having a system for the distribution of electricity, whether operated under the authority of a board of the governmental entity, a department of the governmental entity or under the authority of a board created pursuant to chapter 52 of this title or by the authority of any other public or private act of the general assembly or pursuant to the charter of a municipality, and that operates an electric generation or distribution system that, as of June 23, 2009, distributes electricity purchased from the Tennessee Valley authority and also includes any municipality, county or other political subdivision of another state, whether operated under a board or as a county or municipal department that, as of June 23, 2009, distributes electricity purchased from the Tennessee Valley authority.

Acts 2009, ch. 475, § 2.

Part 4
Municipal Gas System Tax Equivalent Law of 1987

7-39-401. Short title.

This part shall be known and may be cited as the “Municipal Gas System Tax Equivalent Law of 1987.”

Acts 1987, ch. 220, § 2.

7-39-402. Legislative intent — Construction.

The purpose of this part is to provide the complete law of this state with respect to payments in lieu of taxes on the property and operations of all gas systems owned and operated by incorporated cities or towns, by counties, and by metropolitan governments, and to repeal the specific provisions of any private act, home rule charter or metropolitan government charter, or any part of any private act, home rule charter or metropolitan government charter, relating to payments in lieu of taxes, except for provisions relating to the distribution of any such payments, but not to repeal any other provisions of such private acts or charters or parts of the private acts or charters. This part is remedial in nature and this part shall be liberally construed to effectuate the purpose of this part.

Acts 1987, ch. 220, § 3.

Cross-References. Payments in lieu of taxes, title 67, ch. 9.

7-39-403. Part definitions.

  1. As used in this part, unless the context otherwise requires:
    1. “Assessment ratio in effect” means that assessment ratio being applied by the comptroller of the treasury in assessing gas system property of private gas corporations for ad valorem taxation or, if such assessment function ceases to be performed by the comptroller of the treasury, that assessment ratio applied by any authorized department, agency, or official of the state empowered to so apply such an assessment ratio in assessing gas system property;
      1. “Average of revenue less power cost from gas system operations for the preceding three (3) fiscal years” means an amount derived by:
        1. Determining for each of the three (3) fiscal years immediately preceding the beginning of the current fiscal year, the gas system's total operating revenues for the year, less any operating revenue amounts deemed uncollectible and written off for the year, net of any such amounts reinstated during the year that had been written off in any prior fiscal year, and taking into account any extraordinary items attributable to any prior fiscal year's total operating revenue or uncollectible amounts, and totaling the three (3) yearly amounts so determined;
        2. Determining for each of the same three (3) fiscal years described in subdivision (a)(2)(A)(i) the total costs of purchased gas, excluding any charges for facilities' rentals and taking into account any extraordinary items attributable to any prior fiscal year's purchased gas costs or facilities' rental charges, and totaling the three (3) yearly amounts so determined; and
        3. Subtracting the total in subdivision (a)(2)(A)(ii) from the total in subdivision (a)(2)(A)(i) and dividing the resulting remainder by three (3);
      2. For purposes of subdivision (a)(2)(A), “any prior fiscal year” means any fiscal year beginning on or after July 1, 1984. Also, for purposes of subdivision (a)(2)(A), all amounts described are those attributable only to gas system operations within Tennessee;
    2. “Equalized property tax rate” of any taxing jurisdiction means the actual ad valorem property tax rate in effect multiplied by the applicable state, county, or municipal appraisal ratio for such taxing jurisdiction as determined by the state board of equalization, known as “state board” in this part. “Appraisal ratio” means the ratio of appraised values of record to one hundred percent (100%) of current values that are to be derived in accordance with applicable state law for use in ad valorem property tax determinations each tax year. For purposes of this part, the equalized property tax rate that is in effect for any taxing jurisdiction as of the beginning of any gas system fiscal year shall be the same as an equalized property tax rate calculated for such taxing jurisdiction for that tax year, which is the calendar year, in which the fiscal year begins, using the actual property tax rate in effect for, and the appraisal ratio applicable for, such taxing jurisdiction for such tax year;
    3. “Fiscal year” means the year beginning July 1 of each calendar year;
    4. “Gas operations” means all activities associated with the establishment, development, and administration of a gas system and the business of supplying gas and associated services to the public, including, but not limited to, the generation, purchase, and sale of gas energy and the purchase, use, and consumption of gas energy by ultimate consumers;
    5. “Gas system” means all tangible and intangible property and resources of every kind and description used or held for use in the purchase, generation, transmission, distribution, and sale of gas energy;
    6. “Municipality” means any incorporated city or town, metropolitan government, or county that now or hereafter owns and operates a gas system;
    7. “Net plant value of the gas system plant” means the depreciated original cost of the gas plant, in service and held for future use, and the book value of construction work in progress, all as shown on the books of the gas system and all of which are for use in the transmission, and the distribution of gas;
    8. “Private act” includes, without limitation, the charter and any amendments to the charter of any home rule municipality or any metropolitan government;
    9. “Supervisory body” means any board or other agency of a municipality established to supervise the management and operation of its gas system and operations, or, in the absence of a board or other agency, the governing body of the municipality; and
    10. “Taxing jurisdiction” means any county, incorporated city or town, or metropolitan government in Tennessee having the power to levy taxes, or any special taxing district in Tennessee on behalf of which ad valorem property taxes may be levied, for the support of governmental and related activities and services.
  2. Terms appearing in this section, except where specifically defined, have the meanings defined or ascribed to them in the uniform system of accounts applicable to local governments.

Acts 1987, ch. 220, § 4; 1995, ch. 305, § 76.

Cross-References. Uniform accounting system applicable to local governments, § 9-2-102.

Attorney General Opinions. Providing natural gas within city limits.  OAG 14-42, 2014 Tenn. AG LEXIS 43 (4/1/14).

7-39-404. Tax equivalents authorized — Conditions.

Notwithstanding any law to the contrary in this code or in any private act, every municipality may pay or cause to be paid from its gas system revenues for each fiscal year an amount for payments in lieu of taxes, referred to as “tax equivalents”, on its gas system and gas operations, which, in the judgment of the municipality's governing body, shall represent the fair share cost of government properly to be borne by the municipality, subject, however, to the following conditions and limitations:

  1. The total amount so paid as tax equivalents for each fiscal year shall not exceed a maximum amount equal to the sum of the following:
    1. With respect to each of the respective taxing jurisdictions in which the municipality's gas system is located, the equalized property tax rate, determined as provided in this section, for the taxing jurisdiction as of the beginning of such fiscal year, multiplied by the net plant value of the gas system and the book value of materials and supplies within the taxing jurisdiction as of the beginning of such fiscal year, multiplied by the assessment ratio in effect as of the beginning of such fiscal year; and
    2. Four percent (4%) of the average of revenue less cost of gas from gas operations for the preceding three (3) fiscal years;
  2. Such tax equivalent payments shall be made only from gas system revenues remaining after payment of, or making reasonable provision for payment of:
    1. Current gas system operating expenses, including salaries, wages, cost of materials and supplies, power at wholesale, and insurance;
    2. Current payments of interest on indebtedness incurred or assumed by a municipality for the acquisition, extension, or improvement of the gas system, and the payment of principal amounts of such indebtedness, including sinking fund payments, when due;
    3. Reasonable reserves for renewals, replacements, and contingencies; and
    4. Cash working capital adequate to cover operating expenses for a reasonable number of weeks;
  3. The total amount to be paid as tax equivalents for each fiscal year shall be in lieu of all state, county, city, and other local taxes or charges on the municipality's gas system and gas operations except as provided in subdivision (6);
  4. The total amount to be paid as tax equivalents, including that to be paid for the municipality and any other taxing jurisdiction, for each fiscal year, determined in accordance with and subject to this part, shall be set forth in a resolution adopted by the municipality's governing body after consultation with the supervisory body, if different from the governing body, and the municipality's gas system shall pay to the municipality and any other specified taxing jurisdictions amounts as provided in that resolution. Such determination shall be made as early in such fiscal year as possible and shall become final at the end of such year;
  5. Notwithstanding subdivisions (1)-(4), until the first fiscal year in which the aforementioned maximum amount for tax equivalents, calculated as provided in subdivision (1), exceeds the tax equivalent amount for the twelve (12) months ended June 30, 1987, the maximum tax equivalent amount that may be paid for any fiscal year shall not be less than the maximum tax equivalent amount for the twelve (12) months ended June 30, 1987. Thereafter, such maximum amount for any fiscal year shall not exceed the maximum amount calculated as provided in subdivision (1). All such maximum amounts shall be subject to the conditions and limitations of subdivisions (2)-(4); and
  6. Notwithstanding anything in subdivisions (1)-(5) that might be construed to the contrary, properly authorized retail sales or use taxes on gas energy at the same rates applicable generally to sales or use of personal property or services shall not be considered a tax or charge on the municipality's gas system or its gas operations or properties for purposes of this part.

Acts 1987, ch. 220, § 5.

NOTES TO DECISIONS

1. Generally.

T.C.A. § 7-39-404(4) simply requires the amount of tax equivalents to be paid to the municipality and any other taxing jurisdiction after being determined in accordance with and subject to this part to be set forth in a resolution, and the tax equivalents are to be paid to the municipality and any other specified taxing jurisdictions as provided in that resolution. T.C.A. § 7-39-404(4) does not mandate a payment to any other taxing jurisdiction, whether a county or other municipality, unless it has been determined in accordance with the other provisions of the Municipal Gas System Tax Equivalent Law of 1987, T.C.A. § 7-39-401 et seq.City of Memphis v. Shelby County, 469 S.W.3d 531, 2015 Tenn. App. LEXIS 77 (Tenn. Ct. App. Feb. 20, 2015), appeal denied, City of Memphis v. Shelby Cnty., — S.W.3d —, 2015 Tenn. LEXIS 634 (Tenn. Aug. 14, 2015).

Nothing in the language of T.C.A. § 7-39-404(1) indicates that counties must receive a portion of the gas utility's tax equivalent payment, even if the municipality's governing body decides to set the amount of the tax equivalent payment at the maximum cap established by § 7-39-404(1), which was set by considering the tax rate of other taxing jurisdictions. City of Memphis v. Shelby County, 469 S.W.3d 531, 2015 Tenn. App. LEXIS 77 (Tenn. Ct. App. Feb. 20, 2015), appeal denied, City of Memphis v. Shelby Cnty., — S.W.3d —, 2015 Tenn. LEXIS 634 (Tenn. Aug. 14, 2015).

7-39-405. Payment of tax equivalents.

  1. The municipality's governing body, in the resolution provided for in § 7-39-404(4), shall direct payment of the amounts to be paid as tax equivalents to the taxing jurisdictions in which its gas plant in service is located in accordance with and subject to any terms, conditions, contracts or agreements now in effect.
  2. Notwithstanding any private act or home rule charter, or any part thereof, relating to the distribution of payments in lieu of taxes, unless a written agreement was executed prior to April 2012, or becomes effective on the first day of any fiscal year thereafter, by another taxing jurisdiction and a municipality, located in any county having a charter form of government, that owns and operates a gas system, and such written agreement provides for a different payment, then each taxing jurisdiction shall receive a payment that is equal to that portion of the total tax equivalent payment that is calculated using each such taxing jurisdiction’s tax rate pursuant to § 7-39-404(1)(A).

Acts 1987, ch. 220, § 6; 2012, ch. 984, § 1.

Attorney General Opinions. Constitutionality of amendments by Acts 2012, ch. 984.  OAG 12-72, 2012 Tenn. AG LEXIS 77 (7/18/12).

7-39-406. Conflicting provisions repealed.

Except as otherwise expressly provided in this part, all acts or parts of acts, including parts of any private act, or home rule, or metropolitan government charter, in conflict with this part, are to the extent of such conflict herewith repealed.

Acts 1987, ch. 220, § 7.

Chapter 40
Border Region Retail Tourism Development District Act

7-40-101. Short title.

This chapter shall be known and may be cited as the “Border Region Retail Tourism Development District Act.”

Acts 2011, ch. 420, § 2.

Attorney General Opinions. The use of these sales tax funds in accordance with the Border Region Retail Tourism Development District Act constitutes a public purpose. Thus Article II, Sections 24 and 31, of the Tennessee Constitution do not prohibit the distribution of sales tax revenue as provided by the Act.  OAG 12-07, 2012 Tenn. AG LEXIS 4 (1/13/12).

7-40-102. Purpose.

The purpose of this chapter is to increase tourism and the competitiveness of this state with bordering states by empowering local governments to encourage the development of extraordinary retail or tourism facilities, including shopping, recreational, and other activities.

Acts 2011, ch. 420, § 3.

7-40-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Base tax revenues” means the revenues generated from the collection of state sales and use taxes from all businesses within the applicable border region retail tourism development district as of the end of the fiscal year of this state immediately prior to the year in which the municipality or industrial development corporation is entitled to receive an allocation of tax revenue pursuant to this chapter. In no event shall the apportionment pursuant to this chapter be adjusted to reduce the economic benefit to the municipality as is provided in this chapter;
  2. “Best interests of the state” means a determination by the commissioner of revenue, with approval by the commissioner of economic and community development, that:
    1. The economic development project or extraordinary retail or tourism facility within the district is a result of the special allocation and distribution of state sales tax provided for in § 7-40-106; and
    2. The district is a result of the project or extraordinary retail or tourism facility;
  3. “Border region retail tourism development district” or “district” means one (1) or more parcels of real property located within a municipality, some part of whose corporate limits borders a neighboring state, and which some boundary of a district is no more than one-half (½) mile from an existing federally-designated interstate exit, is no more than twelve (12) miles from a state border as measured by straight line, is no larger than a total area of nine hundred fifty (950) acres, and designated as a border region retail tourism development district by a municipal ordinance and certified by the commissioner;
  4. “Commissioner” means the commissioner of revenue;
  5. “Cost” means all cost of an economic development project in a district incurred by the municipality or industrial development corporation during the investment period, including, but not limited to, the cost of developing the district, as well as acquisition, design, construction, renovation, improvement, demolition, and relocation of any improvements; the cost of labor, materials, and equipment; the cost of all lands, property rights, easements and franchises required; financing charges, interest, and debt service prior to, during, or after construction; the cost of issuing bonds in connection with any financing, cost of plans and specifications, services and estimates of costs and of revenue; cost of direct or indirect assistance, including funds for location assistance; cost of site preparation, engineering, accounting, and legal services; all expenses necessary or incident to determining the feasibility or practicability of such acquisitions or constructions; salaries, overhead, and other costs of the municipality or industrial development corporation allocated to the project, including new development or subsequent phases of the project to be completed within the thirty-year period established in § 7-40-104(d), and administrative, legal, and engineering expenses and such other expenses as may be necessary or incident to such acquisition, design, construction, renovation, demolition, relocation, or the financing thereof, including any such costs incurred by a municipality or industrial development corporation relating to the development of an extraordinary retail or tourism facility within two (2) years prior to the municipality's designation of the proposed border region retail tourism development district for such project;
  6. “Economic development project” or “project” means the provision of direct or indirect financial assistance, including funds for location assistance, to an extraordinary retail or tourism facility and other retail or tourism facilities developed to accompany the extraordinary retail or tourism facility in a border region retail tourism development district by a municipality or an industrial development corporation including, but not limited to, the purchase, lease, grant, construction, reconstruction, improvement, or other acquisition or conveyance of land, buildings or equipment, or other infrastructure; public works improvements essential to the location of an extraordinary retail or tourism facility and other retail or tourism facilities developed to accompany the extraordinary retail or tourism facility; payments for professional services contracts necessary for a municipality or industrial development corporation to implement a plan or project; the provision of direct loans or grants for land, buildings, or infrastructure; and loan guarantees securing the cost of land, buildings, location assistance, or infrastructure in an amount not to exceed the revenue that may be derived from the sales and use tax transferred to the municipality as provided in this chapter. It also includes development of parks, plazas, sidewalks, access ways, roads, drives, bridges, ramps, landscaping, signage, parking lots, parking structures, and other public improvements constructed or renovated by the municipality or an industrial development corporation in connection with the project in the district and any related infrastructure and utility improvements for public or private peripheral development for the district and which is constructed, renovated, or installed by the municipality or an industrial development corporation;
  7. “Extraordinary retail or tourism facility” means a single store, series of stores, or other public tourism facility or facilities located within a border region retail tourism development district, or any combination of a single store, series of stores, or public tourism facility or facilities, and shall include retail or other public tourism facilities, or any combination of such retail and public tourism facilities that are reasonably anticipated to draw at least one million (1,000,000) visitors a year upon completion. The extraordinary retail or tourism facility shall reasonably be expected to require a capital investment of at least twenty million dollars ($20,000,000) including land, buildings, site preparation costs, and is reasonably anticipated to remit at least two million dollars ($2,000,000) in state sales and use tax, annually, when completed. The thresholds set forth in this subdivision (7) shall be met based on the performance or reasonably anticipated performance of the projects in the district as a whole, and the commissioner does not have the discretion to exclude consideration of the cost to develop any business in a district;
  8. “Industrial development corporation” means a corporation created or authorized by a municipality or county pursuant to chapter 53 of this title;
  9. “Investment period” means a period beginning two (2) years prior to the municipality's designation of the proposed border region retail tourism development district for the project and ending fifteen (15) years after certification of the district pursuant to § 7-40-104(a)(4);
  10. “Municipal governing body” means the city council, city commission, or board of mayor and aldermen of a city; and
  11. “Municipality” means an incorporated city located in this state.

Acts 2011, ch. 420, § 4; 2012, ch. 1092, §§ 1, 2; 2018, ch. 804, § 1; 2019, ch. 511, §§ 2, 5.

Compiler's Notes. Acts 2012, ch. 1092, § 5 provided that §§ 1-3 of the act, which amended  §§ 7-40-103 and 7-40-104, shall apply to every border region retail tourism development district, whether certified by the commissioner of revenue before or after May 21, 2012.

Acts 2019, ch. 511, § 9 provided that the act shall apply retroactively to any district certified prior to June 3, 2019. No such certified district shall be decertified as a result of the amendments to the Border Region Retail Tourism evelopment District Act, compiled in Title 7, Chapter 40, made by the act.

Amendments. The 2018 amendment substituted “fifteen (15) years” for “ten (10) years” in the definition of “investment period”.

The 2019 amendment, in (7), inserted “or any combination of a single store, series of stores, or public tourism facility or facilities,” following “development district,” inserted “, or any combination of such retail and public tourism facilities” following “tourism facilities”, and added the third sentence.

Effective Dates. Acts 2018, ch. 804, § 2. April 24, 2018.

Acts 2019, ch. 511, § 10. June 3, 2019.

7-40-104. Requirements for apportionment of state sales and use taxes.

  1. To be entitled to receive the apportionment of state sales and use taxes as provided in this chapter, the requirements set forth in subdivisions (a)(1)-(4) shall be met.
    1. A municipal legislative body shall adopt an ordinance designating the boundaries of the border region retail tourism development district; provided, however, that no municipality shall contain more than one (1) such district.
    2. The municipality shall then file a certified copy of the ordinance with the commissioner along with a request for certification of the district. The request shall include a master development plan for the proposed district containing such information as may be reasonably required by the commissioner. No change to, or deviation from, a master development plan for a district, once the district is certified, or change in, or deviation from, a project in a district that has been certified, shall result in a district losing its certification, or disqualification of any cost, so long as the district is reasonably anticipated to attain the thresholds set forth in § 7-40-103(7) based on objective professional standards. In order to support decertification or disqualification of cost, the commissioner bears the burden of establishing that such change or deviation has caused the district to not be reasonably anticipated to attain the requisite thresholds set forth in § 7-40-103(7).
    3. The commissioner shall promptly review the request to confirm that the proposed boundaries of the proposed border region retail tourism development district do not exceed the maximum size set forth in this chapter. If the commissioner determines that the boundaries of the proposed border region retail tourism development district exceeds the area allowed by this chapter, then the commissioner may adjust or reduce the boundaries of the proposed district in consultation with the municipality. In reviewing the request, the commissioner shall inform the commissioners of economic and community development and tourist development of the pending request.
    4. If the commissioner, with approval by the commissioner of economic and community development, determines that the special allocation of state sales tax, as authorized by § 7-40-106, is reasonably anticipated to attain the goals set forth in § 7-40-103(7) based on applicable objective professional standards, then the commissioner shall approve the request and certify the district. Upon certification of the district, the commissioner shall provide prompt notice of the certification to the commissioner of economic and community development, the commissioner of tourist development, and the requesting municipal governing body.
  2. Upon certification of the district, state sales and use taxes shall be apportioned and distributed to the municipality as provided in this chapter.
  3. The apportionment and distribution of state sales and use taxes shall commence with the first fiscal year after the certification of the district for which the municipality has submitted a cost certification for that fiscal year as provided in this subsection (c). The base tax revenues shall be determined in accordance with the definition in § 7-40-103, irrespective of whether a municipality filed a cost certification for the first year for which the municipality was entitled to receive an allocation of tax revenue. Within thirty (30) days after the end of each fiscal year for which a municipality is requesting an allocation of sales and use tax revenues, the municipality may submit to the commissioner a summary of the cost of the economic development project through the end of that fiscal year with supporting documentation certified by the chief financial officer of the municipality. The certification by the chief financial officer of the municipality shall be deemed an official act of that officer on behalf of the municipality, and that officer shall not be personally liable for any incorrect information in the certification. The commissioner shall review the cost certification to confirm that state sales and use taxes, in the amount determined by the commissioner, should be apportioned and distributed to the municipality pursuant to this chapter and shall notify the department of economic and community development of such.
  4. The certified district shall be dissolved following the expiration of thirty (30) years, or upon the date on which the cost of the project has been fully paid, whichever is sooner; provided, that the thirty-year period in this subsection (d) shall be concurrent with the time limitation established in § 7-40-106.
  5. Not later than June 30, 2019, any municipality in which a district has been certified may exclude, on a one-time basis, from the district for the remainder of the term that the district is certified, any property or properties initially included in the certified district by designating the exclusion of the property or properties by resolution of the legislative body of the municipality. A certified copy of the resolution shall be filed with the commissioner not later than sixty (60) days after adoption by the legislative body of the municipality. Upon exclusion, and except as provided in this subsection (e), the excluded property or properties shall be treated as if the property or properties were never included in the district for all purposes, including the calculation of base tax revenues, commencing with the fiscal year ending June 30, 2019, and the municipality shall not be entitled to receive any future incremental increases in tax revenues relating to businesses located on the excluded property or properties. Notwithstanding this subsection (e), the adoption of the resolution shall not affect any prior distribution relating to the district for any fiscal year ending on or before June 30, 2018.
  6. For purposes of determining whether a business is located in the district, the commissioner shall rely on the address of the business as shown on the business's tax return.
  7. If a municipality elects to remove properties from the certified district by designating the exclusion of the property or properties pursuant to subsection (e) other adjacent property or properties may become eligible to be included in the certified district in a total acreage amount less than or equal to the total acreage of those properties excluded. Inclusion of such property or properties must be designated by resolution of the legislative body of the municipality. A certified copy of the resolution shall be filed with the commissioner not later than sixty (60) days after adoption by the legislative body of the municipality. Upon inclusion, and except as provided in subsection (e) the included property or properties shall be treated as if the property or properties were included in the district for all purposes, including the calculation of base tax revenues, commencing with the fiscal year ending June 30, 2018, and the municipality shall be entitled to receive future incremental increases in tax revenues relating to businesses located on the included property or properties. Notwithstanding this subsection (g), the adoption of the resolution shall not affect any prior distribution relating to the district for any fiscal year ending on or before June 30, 2018.

Acts 2011, ch. 420, § 5; 2012, ch. 1092, § 3; 2015, ch. 405, §§ 1, 2; 2019, ch. 390, §§ 1-3; 2019, ch. 511, §§ 3, 4, 6.

Compiler's Notes. Acts 2012, ch. 1092, § 5 provided that §§ 1-3 of the act, which amended  §§ 7-40-103 and 7-40-104, shall apply to every border region retail tourism development district, whether certified by the commissioner of revenue before or after May 21, 2012.

Acts 2019, ch. 511, § 9 provided that the act  shall apply retroactively to any district certified prior to June 3, 2019. No such certified district shall be decertified as a result of the amendments to the Border Region Retail Tourism Development District Act, compiled in Title 7, Chapter 40, made by the act.

Amendments. The 2015 amendment, in (c), substituted the first four sentences for the former first sentence, which read:  “The apportionment and distribution of state sales and use taxes to the municipality as provided in this chapter shall commence at the beginning of the fiscal year after the certification of the district; provided, that prior to the beginning of such fiscal year and on an annual basis thereafter, the municipality shall submit to the commissioner a summary of the cost of the economic development project with supporting documentation, certified by the chief financial officer of the municipality.”; and added (e) and (f).

The 2019 amendment by ch. 390, in (e), substituted “June 30, 2019” for “June 30, 2015”, twice, and “June 30, 2018” for “June 30, 2014” in the last sentence; and added (g).

The 2019 amendment by ch. 511, in (a)(2), added the third and fourth sentences; in (a)(4), substituted “is reasonably anticipated to attain the goals set forth in §  7-40-103(7) based on applicable objective professional standards” for “is in the best interests of the state”; and in (c), substituted “may” for “shall” preceding “submit to the” in the third sentence.

Effective Dates. Acts 2015, ch. 405, § 5. May 8, 2015.

Acts 2019, ch. 390, § 4. May 10, 2019.

Acts 2019, ch. 511, § 10. June 3, 2019.

7-40-105. Annual adjustments.

Annual adjustments to the sales and use tax revenues collected in the district shall be made by the department of revenue within ninety (90) days of the end of each fiscal year and shall be effective immediately upon notification of such adjustment from the department of revenue to the municipality or industrial development corporation.

Acts 2011, ch. 420, § 6.

7-40-106. Conditions for and duration of apportionment and distribution of state sales and use taxes.

  1. Notwithstanding the allocations provided for in § 67-6-103(a), if a municipality or industrial development corporation finances, constructs, leases, equips, renovates, assists, incents, or acquires an extraordinary retail or tourism facility or a project in a certified district, then seventy-five percent (75%) of state sales and use tax collected in the district in excess of base tax revenues shall be apportioned and distributed to the municipality in an amount equal to the incremental increase in state sales and use taxes derived from the sale of goods, products, and services within the district in excess of base tax revenues.
  2. Apportionment and distribution of such taxes shall continue for a period of thirty (30) years, or until the date on which all the cost of the economic development project, including any principal and interest on indebtedness, including refunding indebtedness of the municipality or industrial development corporation related to the development of the project have been fully paid, whichever is sooner. Following the expiration of this thirty-year period, or upon the date on which such cost has been fully paid, whichever is sooner, all amounts that would have otherwise been distributed to the municipality or retained in lieu of distribution shall be allocated as provided elsewhere without regard to this chapter.
  3. Tax revenue distributed to the municipality pursuant to this chapter shall be for the exclusive use of the municipality or the industrial development corporation formally designated by the municipality for payment of the cost of the economic development project, including principal and interest on indebtedness, including refunding indebtedness of the municipality or industrial development corporation related to the development of the project. The apportionment and payment shall be made by the department of revenue to the municipality within ninety (90) days of the end of each fiscal year for which the municipality is entitled to receive an allocation and payment pursuant to this chapter. If the commissioner determines that any cost included in a certification of a municipality submitted pursuant to § 7-40-104(c) is not a qualifying cost within the meaning of § 7-40-103, the commissioner shall promptly give notice of the determination to the municipality. Upon receipt of the notice, the municipality may contest the determination following the procedures set forth in § 4-5-223. If the commissioner determines that any cost is not a qualifying cost, the commissioner may not recoup, on such basis, any payment that has already been made by the commissioner to the municipality or industrial development board. However, the amount of the unqualified cost shall offset and reduce the amount of any future distribution of tax revenues to the municipality or industrial development board. The chief financial officer of the municipality may rely on certifications and documentation of third parties in connection with making any certification under this chapter unless the chief financial officer has actual knowledge that the certification or documentation by the third party is false. Once the commissioner has approved any cost, whether incurred by the municipality or, as a result of delegation, by an industrial development board or any developer acting by agreement with the municipality or industrial development board, such approval shall be deemed conclusive that the district is being developed for an extraordinary retail or tourism facility as described in § 7-40-103(7).

Acts 2011, ch. 420, § 7; 2015, ch. 405, § 3; 2019, ch. 511, § 7.

Compiler's Notes. Acts 2019, ch. 511, § 9 provided that the act  shall apply retroactively to any district certified prior to June 3, 2019. No such certified district shall be decertified as a result of the amendments to the Border Region Retail Tourism development District Act, compiled in Title 7, Chapter 40, made by the act.

Amendments. The 2015 amendment added the last five sentences in (c).

The 2019 amendment added the eighth sentence to (c).

Effective Dates. Acts 2015, ch. 405, § 5. May 8, 2015.

Acts 2019, ch. 511, § 10. June 3, 2019.

7-40-107. Delegation to industrial development corporation.

An eligible municipality in which a district is located is authorized to delegate to any industrial development corporation within the county or counties where the municipality is located the authority to carry out all or part of the project and to issue revenue bonds to finance a project within a district and to incur cost for the project; provided, that the municipality may enter into an agreement with an industrial development corporation in which the municipality shall agree to promptly pay to the industrial development corporation the tax revenues received pursuant to this chapter sufficient to service the repayment of such bonds and costs incurred by the industrial development corporation for the project. Upon receipt, that portion of such tax revenues shall be held in trust by the municipality for the benefit of the industrial development corporation.

Acts 2011, ch. 420, § 8.

7-40-108. Indebtedness.

Any bonds, notes, refunding bonds, or other indebtedness relative to the cost of an economic development project shall not be issued for a term longer than thirty (30) years and the municipality or industrial development corporation is authorized to pledge all proceeds or taxes received by it pursuant to this chapter to the payment of principal of and interest on such bonds, notes, or other indebtedness; provided, that the thirty-year period in this section shall be concurrent with the time limitation established in § 7-40-106.

Acts 2011, ch. 420, § 9.

7-40-109. Issuance of bonds.

Prior to the issuance of any bonds to finance the cost of an economic development project that will be repaid in whole or part from apportionments under this chapter, the municipality or industrial development corporation issuing such bonds shall submit a proposed debt amortization schedule for such bonds to the commissioner for approval. Such schedule shall show the anticipated contribution to be made to the annual debt service for such bonds from the apportionment of sales and use taxes pursuant to this chapter and all other sources. After the date of issuance of such bonds, the municipality shall continue to contribute each year thereafter until such bonds are retired or a sufficient sinking fund has been established for their retirement.

Acts 2011, ch. 420, § 10.

7-40-110. Incentives and financial support.

A municipality may, including through an industrial development corporation, limit, condition, or provide incentives or financial support in the district as it deems appropriate, including the requirement that the benefited property owners participate in the repayment of such in an amount equal to twenty-five percent (25%) of the property tax for the real property owned by the property owner in the district each year, for such length of time as the municipality receives an appropriation of sales and use tax in accordance with this chapter and the property owner provides a lien on the property for such repayment; provided, however, that a municipality may not provide financial assistance to the location or relocation of existing retailers located within a fifteen-mile radius of the district, provided such existing location is inside the borders of this state, unless the sales floor space is increased by thirty-five percent (35%) or greater from such existing store. Furthermore, a municipality may allocate some or all of the incremental increase in property tax revenue directly as a result of the development within the district to pay for some costs associated with the district formation as well as economic development projects or extraordinary retail or tourism projects within the district.

Acts 2011, ch. 420, § 11.

7-40-111. Exercise all powers and rights — Standing — Remedies.

Notwithstanding any law to the contrary, the municipality and the industrial development corporation are authorized to exercise all power and rights, express or implied, granted by this chapter. Any developer of a project within a district who has entered into an agreement with a municipality or industrial development board related to such project or any proposed project or district has standing, with respect to such project and district, to seek remedies to enforce this chapter or any rights created by this chapter, including specifically the remedy to appeal the commissioner's determination that a cost is not a qualifying cost under § 7-40-106(c).

Acts 2011, ch. 420, § 12; 2019, ch. 511, § 8.

Acts 2019, ch. 511, § 9 provided that the act  shall apply retroactively to any district certified prior to June 3, 2019. No such certified district shall be decertified as a result of the amendments to the Border Region Retail Tourism development District Act, compiled in Title 7, Chapter 40, made by the act.

Amendments. The 2019 amendment added the second sentence.

Effective Dates. Acts 2019, ch. 511, § 10. June 3, 2019.

7-40-112. Application of chapter to certain border region retail tourism development districts.

This chapter shall only apply to border region retail tourism development districts for which a certified copy of the ordinance required by § 7-40-104(a)(1), along with the request for certification required by § 7-40-104(a)(2), has been filed with the commissioner before January 1, 2012.

Acts 2012, ch. 1092, § 4.

7-40-113. Application of chapter to certain costs.

The benefits of this chapter shall apply to any cost incurred in connection with developing a project as a whole, even if:

  1. The cost includes development of portions of the district or business in the district, or both, that do not, by themselves, generate state sales and use tax revenue, visitors, or sufficient state sales and use tax revenue, by themselves, to meet the standards set forth in § 7-40-103(7), including a retail store, or series of stores, or other attractions or facilities open to the public, that do not or will not, by themselves, generate state sales and use tax revenue; or
  2. The sequence of development results in development of businesses or attractions, or both, to attract or stimulate interest in the project by retail businesses or retail tourism facilities to be developed at a later time.

Acts 2019, ch. 511, § 1.

Acts 2019, ch. 511, § 9 provided that the act shall apply retroactively to any district certified prior to June 3, 2019. No such certified district shall be decertified as a result of the amendments to the Border Region Retail Tourism development District Act, compiled in Title 7, Chapter 40, made by the act.

Effective Dates. Acts 2019, ch. 511, § 10. June 3, 2019.

Chapter 41
Regional Retail Tourism Development District Act

7-41-101. Short title.

This chapter shall be known and may be cited as the “Regional Retail Tourism Development District Act.”

Acts 2019, ch. 498, § 2.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-102. Purpose of chapter.

The purpose of this chapter is to increase tourism and the competitiveness of this state with bordering states by empowering local governments to encourage the development of extraordinary retail or tourism facilities, including shopping, recreational, and other activities.

Acts 2019, ch. 498, § 3.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Base tax revenues” means the revenues generated from the collection of state sales and use taxes from all businesses within the applicable regional retail tourism development district as of the end of the fiscal year of this state immediately prior to the year in which the municipality or industrial development corporation is entitled to receive an allocation of tax revenue pursuant to this chapter. In no event shall the apportionment pursuant to this chapter be adjusted to reduce the economic benefit to the municipality as is provided in this chapter;
  2. “Best interests of the state” means a determination by the commissioner of revenue, with approval by the commissioner of economic and community development, that:
    1. The economic development project or extraordinary retail or tourism facility within the district is a result of the special allocation and distribution of state sales tax provided for in §  7-41-106; and
    2. The district is a result of the project or extraordinary retail or tourism facility;
  3. “Commissioner” means the commissioner of revenue;
  4. “Cost” means all costs of an economic development project in a district incurred by the municipality or industrial development corporation, including, but not limited to, the cost of developing the district, as well as acquisition, design, construction, renovation, improvement, demolition, and relocation of any improvements; the cost of labor, materials, and equipment; the cost of all lands, property rights, easements, and franchises required; financing charges, interest, and debt service prior to, during, or after construction; the cost of issuing bonds in connection with any financing; cost of plans and specifications, services, and estimates of costs and of revenue; cost of direct or indirect assistance, including funds for location assistance; cost of site preparation, engineering, accounting, and legal services; all expenses necessary or incident to determining the feasibility or practicability of such acquisitions or construction; salaries, overhead, and other costs of the municipality or industrial development corporation allocated to the project, including new development or subsequent phases of the project to be completed within the thirty-year period established in §  7-41-104(d), and administrative, legal, and engineering expenses and such other expenses as may be necessary or incident to such acquisition, design, construction, renovation, demolition, relocation, or the financing thereof, including the costs incurred by a municipality or industrial development corporation relating to the development of an extraordinary retail or tourism facility within two (2) years prior to the municipality's designation of the proposed regional retail tourism development district for such project;
  5. “Economic development project” or “project” means the provision of direct or indirect financial assistance, including funds for location assistance, to an extraordinary retail or tourism facility and other retail or tourism facilities developed to accompany the extraordinary retail or tourism facility in a regional retail tourism development district by a municipality or an industrial development corporation, including, but not limited to, the purchase, lease, grant, construction, reconstruction, improvement, or other acquisition or conveyance of land, buildings, equipment, or other infrastructure; public works improvements essential to the location of an extraordinary retail or tourism facility and other retail or tourism facilities developed to accompany the extraordinary retail or tourism facility; payments for professional services contracts necessary for a municipality or industrial development corporation to implement a plan or project; the provision of direct loans or grants for land, buildings, or infrastructure; and loan guarantees securing the cost of land, buildings, location assistance, or infrastructure in an amount not to exceed the revenue that may be derived from the sales and use tax transferred to the municipality as provided in this chapter. It also includes development of parks, plazas, sidewalks, access ways, roads, drives, bridges, ramps, landscaping, signage, parking lots, parking structures, and other public improvements constructed or renovated by the municipality or an industrial development corporation in connection with the project in the district and any related infrastructure and utility improvements for public or private peripheral development for the district that is constructed, renovated, or installed by the municipality or an industrial development corporation;
  6. “Extraordinary retail or tourism facility” means a single store, series of stores, or other public tourism facility or facilities located within a regional retail tourism development district, and includes retail or other public tourism facilities that are reasonably anticipated to draw at least one million (1,000,000) visitors a year upon completion. The extraordinary retail or tourism facility must reasonably be expected to require a capital investment of at least twenty million dollars ($20,000,000), including land, buildings, and site preparation costs, and must reasonably be anticipated to remit at least two million dollars ($2,000,000) in state sales and use tax annually when completed;
  7. “Industrial development corporation” means a corporation created or authorized by a municipality or county pursuant to chapter 53 of this title;
  8. “Municipal governing body” means the city council, city commission, or board of mayor and aldermen of a city;
  9. “Municipality” means an incorporated city located in this state; and
  10. “Regional retail tourism development district” or “district” means one (1) or more parcels of real property located within a county having a population of not less than one hundred twenty-two thousand nine hundred (122,900) nor more than one hundred twenty-three thousand (123,000), according to the 2010 federal census or any subsequent census, and which some boundary of the district is no more than one-half (1/2) mile from an existing federally designated interstate exit, is no more than twenty (20) miles from the state border of two (2) neighboring states as measured by straight line, is no larger than a total area of nine hundred fifty (950) acres, and is designated as a regional retail tourism development district by a municipal ordinance and certified by the commissioner.

Acts 2019, ch. 498, § 4.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-104. Requirements to receive apportionment of state sales and use taxes — Certification of district — Apportionment and distribution of state sales and use taxes to municipality.

  1. To receive the apportionment of state sales and use taxes as provided in this chapter, the following requirements must be met:
    1. A municipal legislative body must adopt an ordinance designating the boundaries of the regional retail tourism development district. A municipality shall not contain more than one (1) such district;
    2. The municipality must file a certified copy of the ordinance with the commissioner along with a request for certification of the district. The request must include a master development plan for the proposed district containing such information as may be reasonably required by the commissioner;
    3. The commissioner shall promptly review the request to confirm that the proposed boundaries of the proposed regional retail tourism development district do not exceed the maximum size set forth in this chapter. If the commissioner determines that the boundaries of the proposed regional retail tourism development district exceed the area allowed by this chapter, then the commissioner may adjust or reduce the boundaries of the proposed district in consultation with the municipality. In reviewing the request, the commissioner shall inform the commissioners of economic and community development and tourist development of the pending request; and
    4. If the commissioner, with approval by the commissioner of economic and community development, determines that the special allocation of state sales tax, as authorized by § 7-41-106, is in the best interests of the state, then the commissioner shall approve the request and certify the district. Upon certification of the district, the commissioner shall provide prompt notice of the certification to the commissioner of economic and community development, the commissioner of tourist development, and the requesting municipal governing body.
  2. Upon certification of the district, state sales and use taxes must be apportioned and distributed to the municipality as provided in this chapter.
  3. The apportionment and distribution of state sales and use taxes to the municipality as provided in this chapter must commence at the beginning of the fiscal year after the certification of the district. Prior to the beginning of that fiscal year, and on an annual basis thereafter, the municipality shall submit to the commissioner a summary of the cost of the economic development project with supporting documentation, certified by the chief financial officer of the municipality, which must include the cost of any new phases or additional development of the project to be completed within the thirty-year time limitation established in subsection (d). The commissioner shall review the cost certification to determine whether state sales and use taxes, in the amount determined by the commissioner, must be apportioned and distributed to the municipality pursuant to this chapter and shall notify the department of economic and community development of the determination.
  4. Additional development or new phases of a project within a certified district shall not be initiated after the expiration of twenty (20) years following certification of the district. The certified district must be dissolved following the expiration of thirty (30) years, or upon the date on which the cost of the project has been fully paid, whichever occurs first. The thirty-year period in this subsection (d) runs concurrently with the time limitation established in § 7-41-106.

Acts 2019, ch. 498, § 5.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-105. Annual adjustments to sales and use tax revenues collected in district.

The department of revenue shall make annual adjustments to the sales and use tax revenues collected in the district within ninety (90) days of the end of each fiscal year. The annual adjustments are effective immediately upon notification of the adjustment from the department of revenue to the municipality or industrial development corporation.

Acts 2019, ch. 498, § 6.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-106. Apportionment and distribution if extraordinary retail or tourism facility or project in certified district.

  1. Notwithstanding the allocations provided for in § 67-6-103(a), if a municipality or industrial development corporation finances, constructs, leases, equips, renovates, assists, incents, or acquires an extraordinary retail or tourism facility or a project in a certified district, then seventy-five percent (75%) of state sales and use tax collected in the district in excess of base tax revenues must be apportioned and distributed to the municipality in an amount equal to the incremental increase in state sales and use taxes derived from the sale of goods, products, and services within the district in excess of base tax revenues.
  2. Apportionment and distribution according to subsection (a) must continue for a period of thirty (30) years, or until the date on which the entire cost of the economic development project, including any principal and interest on indebtedness, including refunding indebtedness of the municipality or industrial development corporation related to the development of the project, are fully paid, whichever occurs first. Following the expiration of this thirty-year period, or upon the date on which such cost has been fully paid, whichever is sooner, all amounts that would have otherwise been distributed to the municipality or retained in lieu of distribution shall be allocated as provided elsewhere without regard to this chapter.
  3. Tax revenue distributed to the municipality pursuant to this chapter is for the exclusive use of the municipality or the industrial development corporation formally designated by the municipality for payment of the cost of the economic development project, including principal and interest on indebtedness, including refunding indebtedness of the municipality or industrial development corporation related to the development of the project. The department of revenue shall apportion the payment to the municipality within ninety (90) days of the end of each fiscal year for which the municipality is entitled to receive an allocation and payment pursuant to this chapter.

Acts 2019, ch. 498, § 7.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-107. Delegation to industrial development corporation.

An eligible municipality in which a district is located is authorized to delegate to any industrial development corporation within the county or counties where the municipality is located the authority to carry out all or part of the project, to issue revenue bonds to finance a project within a district, and to incur cost for the project. The municipality may enter into an agreement with an industrial development corporation in which the municipality agrees to promptly pay to the industrial development corporation the tax revenues received pursuant to this chapter sufficient to service the repayment of the bonds and costs incurred by the industrial development corporation for the project. Upon receipt, that portion of tax revenues must be held in trust by the municipality for the benefit of the industrial development corporation.

Acts 2019, ch. 498, § 8.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-108. Bonds, notes, refunding bonds, or other indebtedness relative to cost of economic development project.

Any bonds, notes, refunding bonds, or other indebtedness relative to the cost of an economic development project must not be issued for a term longer than thirty (30) years, and the municipality or industrial development corporation may pledge all proceeds or taxes it receives pursuant to this chapter to the payment of principal and interest on the bonds, notes, or other indebtedness. The thirty-year period in this section runs concurrently with the time limitation established in § 7-41-106.

Acts 2019, ch. 498, § 9.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-109. Debt amortization schedule for bonds.

Prior to the issuance of any bonds to finance the cost of an economic development project that will be repaid in whole or part from apportionments under this chapter, the municipality or industrial development corporation issuing the bonds shall submit a proposed debt amortization schedule for the bonds to the commissioner for approval. The schedule must show the anticipated contribution to be made to the annual debt service for the bonds from the apportionment of sales and use taxes pursuant to this chapter and all other sources. After the date of issuance of the bonds, the municipality shall continue to contribute each year thereafter until the bonds are retired or a sufficient sinking fund has been established for their retirement.

Acts 2019, ch. 498, § 10.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-110. Limitations, conditions, or provision of incentives or financial support in district.

A municipality may, including through an industrial development corporation, limit, condition, or provide incentives or financial support in the district as it deems appropriate, including the requirement that the benefited property owners participate in the repayment of indebtedness due to district formation in an amount equal to twenty-five percent (25%) of the property tax for the real property owned by the property owner in the district each year, for the length of time as the municipality receives an appropriation of sales and use tax in accordance with this chapter and the property owner provides a lien on the property for such repayment. A municipality shall not provide financial assistance for the location or relocation of existing retailers located within a fifteen-mile radius of the district, if the existing location is within this state, unless the sales floor space is increased by thirty-five percent (35%) or more from that of the existing store. A municipality may allocate some or all of the incremental increase in property tax revenue directly as a result of the development within the district to pay for costs associated with the district formation, economic development projects, or extraordinary retail or tourism projects within the district.

Acts 2019, ch. 498, § 11.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

7-41-111. Exercise of powers and rights granted by chapter.

Notwithstanding any law to the contrary, the municipality and the industrial development corporation may exercise all power and rights, express or implied, granted by this chapter.

Acts 2019, ch. 498, § 12.

Effective Dates. Acts 2019, ch. 498, § 15. July 1, 2019.

Chapters 42-50
[Reserved]
Local Government Functions

Chapter 51
Miscellaneous Governmental and Proprietary Functions

Part 1
Emergency Government Relocation

7-51-101. Emergency location of local government.

Whenever, due to an emergency resulting from the effects of enemy attack, or the anticipated effects of a threatened enemy attack, it becomes imprudent, inexpedient or impossible to conduct the affairs of local government at the regular or usual place or places of the conduct of the affairs of government, the governing body of each political subdivision of this state may meet at any place within or without the territorial limits of such political subdivisions on the call of the presiding officer or any two (2) members of such governing body, and shall proceed to establish and designate by ordinance, resolution or other manner, alternate or substitute sites or places as the emergency temporary location or locations of government where all or any part of the public business may be transacted and conducted during the emergency situation. Such sites or places may be within or without the territorial limits of such political subdivision and may be within or without this state.

Acts 1961, ch. 319, § 1; T.C.A., § 5-115.

Attorney General Opinions. Cities and counties lack statutory authority to regulate mortgage transactions, OAG 03-016, 2003 Tenn. AG LEXIS 19 (2/11/03).

7-51-102. Power to act at emergency location.

During the period when the public business is being conducted at the emergency temporary location or locations, the governing body and other officers of a political subdivision of this state shall have and possess and shall exercise, at such location or locations, all of the executive, legislative and judicial powers and functions conferred upon such body and officers by or under the laws of this state. Such powers and functions may be exercised in the light of the exigencies of the emergency situation without regard to or compliance with time consuming procedures and formalities prescribed by law and pertaining thereto, and all acts of such body and officers shall be as valid and binding as if performed within the territorial limits of their political subdivision.

Acts 1961, ch. 319, § 2; T.C.A., § 5-116.

7-51-103. Provisions control other laws.

This part shall control and be supreme in the event it shall be employed, notwithstanding any statutory, charter or ordinance provision to the contrary or in conflict herewith.

Acts 1961, ch. 319, § 3; T.C.A., § 5-117.

Cross-References. Retirement benefits upon death in line of duty, § 8-36-108.

Part 2
Employee Compensation and Indemnification

7-51-201. Law enforcement officers and firefighters — Compensation for injury or death — Certain disabilities presumed to have been suffered in course of employment.

    1. Whenever the state of Tennessee, or any municipal corporation or other political subdivision of the state that maintains a regular law enforcement department manned by regular and full-time employees and has established or hereafter establishes any form of compensation to be paid to such law enforcement officers for any condition or impairment of health that results in loss of life or personal injury in the line of duty or course of employment, there shall be and there is hereby established a presumption that any impairment of health of such law enforcement officers caused by hypertension or heart disease resulting in hospitalization, medical treatment or any disability, shall be presumed, unless the contrary be shown by competent medical evidence, to have occurred or to be due to accidental injury suffered in the course of employment. Any such condition or impairment of health that results in death shall be presumed, unless the contrary be shown by competent medical evidence, to be a loss of life in line of duty, and to have been in the line and course of employment, and in the actual discharge of the duties of such officer's position, or the sustaining of personal injuries by external and violent means or by accident in the course of employment and in line of duty. Such law enforcement officer shall have successfully passed a physical examination prior to such claimed disability, or upon entering governmental employment and such examination fails to reveal any evidence of the condition of hypertension or heart disease.
    2. For purposes of this subsection (a), “law enforcement officer” includes correctional security job classification employees of the departments of correction and children's services, and full-time county law enforcement officers, including county deputy sheriffs employed in correctional security positions. If such inclusion of full-time county law enforcement officers, including county deputy sheriffs employed in correctional security positions, in the definition of “law enforcement officer” mandates increased liability to a county under the Tennessee consolidated retirement system, or a local retirement system, then such full-time county law enforcement officers, including county deputy sheriffs employed in correctional security positions in such county, shall not be included in such definition for purposes of the Tennessee consolidated retirement system or a local retirement system unless the county legislative body of such county advises the retirement division of its desire to apply such definition to such personnel.
    1. Whenever the state of Tennessee, or any municipal corporation or other political subdivision of the state maintains a regular fire department manned by regular and full-time employees and has established or hereafter establishes any form of compensation, other than workers' compensation, to be paid to such firefighters for any condition or impairment of health that results in loss of life or personal injury in the line of duty or course of employment, there shall be and there is hereby established a presumption that any impairment of health of such firefighters caused by disease of the lungs, hypertension or heart disease resulting in hospitalization, medical treatment or any disability, shall be presumed, unless the contrary is shown by competent medical evidence, to have occurred or to be due to accidental injury suffered in the course of employment. Any such condition or impairment of health which results in death shall be presumed, unless the contrary is shown by competent medical evidence, to be a loss of life in line of duty, and to have been in the line and course of employment, and in the actual discharge of the duties of such firefighter's position, or the sustaining of personal injuries by external and violent means or by accident in the course of employment and in the line of duty. Such firefighter shall have successfully passed a physical examination prior to such claimed disability, or upon entering upon governmental employment, and such examination fails to reveal any evidence of the condition or disease of the lungs, hypertension or heart disease.
    2. It is hereby declared to be the legislative intent that this section is to be remedial in character and to permit and require any municipal corporation maintaining any permanent fire department to be covered by its provisions.
    1. Whenever any county having a population greater than four hundred thousand (400,000), according to the 1980 federal census or any subsequent federal census, or any municipal corporation within such county, maintains within its fire department, and has established or hereafter establishes any form of compensation, other than workers' compensation, to be paid to a person employed by such division as an emergency medical technician or emergency medical technician advanced or paramedic, for any condition or impairment of health that shall result in loss of life or personal injury in the line of duty or course of employment, there shall be and there is hereby established a presumption that any impairment of health of such person caused by hypertension or heart disease resulting in hospitalization, medical treatment or any disability shall be presumed, unless the contrary is shown by competent medical evidence, to have occurred or to be due to accidental injury suffered in the course of employment. Any such condition or impairment of health which results in death shall be presumed, unless the contrary is shown by competent medical evidence, to be a loss of life in line of duty, and to have been in the line and course of employment, and in the actual discharge of the duties of the position, or the sustaining of personal injuries by external and violent means or by accident in the course of employment and in the line of duty. Such person shall have successfully passed a physical examination prior to such claimed disability, or upon entering governmental employment, and such examination fails to reveal any evidence of the condition of hypertension or heart disease.
    2. It is hereby declared to be the legislative intent that this section is to be remedial in character and to permit and require any such municipal corporation or political subdivision of the state maintaining such division to be covered by its provisions.
    1. Whenever this state, any municipal corporation, or other political subdivision of the state that maintains a fire department has established or establishes any form of compensation to be paid to firefighters for any condition or impairment of health that results in loss of life or personal injury in the line of duty or course of employment, there is a presumption that any condition or impairment of health of firefighters caused by all forms of Non-Hodgkin's Lymphoma cancer, colon cancer, skin cancer, or multiple myeloma cancer resulting in hospitalization, medical treatment, or any disability, has arisen out of employment, unless the contrary is shown by competent medical evidence. Any such condition or impairment of health that results in death is presumed to be a loss of life in the line of duty, to have arisen out of employment, and to have been in the actual discharge of the duties of the firefighter's position, unless the contrary is shown by a physician board certified in oncology. Secondary employment or lifestyle habits may be considered when determining whether the presumption established in this subsection (d) applies.
      1. Any firefighter employed by a fire department before July 1, 2019, and desiring to utilize the presumption established in this subsection (d), must obtain a physical medical examination before July 1, 2020, and the examination must include a cancer screening that fails to reveal any evidence of the cancers listed in this subsection (d). Any firefighter employed by a fire department on or after July 1, 2019, and desiring to utilize the presumption established in this subsection (d) must successfully pass a pre-employment physical medical examination, and the examination must include a cancer screening that fails to reveal any evidence of the cancers listed in this subsection (d).
      2. In order to be eligible to utilize the presumption established in this subsection (d), a firefighter shall obtain annual physical medical examinations that include cancer screenings for the specific types of cancer listed in this subsection (d).
      3. Any physical medical examination required by this subsection (d) shall be paid by the employer's health benefits plan at no cost to the employee.
    2. In order to be eligible to utilize the presumption established in this subsection (d), a firefighter must have been exposed to heat, smoke, and fumes, or carcinogenic, poisonous, toxic, or chemical substances, while performing the duties of a firefighter in the firefighter's capacity as an employee and must have completed five (5) or more consecutive years in service with an eligible fire department. A firefighter may utilize the presumption established in this subsection (d) for up to five (5) years after the firefighter's most recent date of exposure as contemplated herein.
    3. As used in this subsection (d):
      1. “Fire department” means a department recognized by the state fire marshal's office pursuant to the Fire Department Recognition Act, compiled in title 68, chapter 102, part 3, and manned by full-time, paid employees; and
      2. “Firefighter” means any full-time, paid employee of a fire department of the state or a political subdivision of the state.
    4. This subsection (d) does not affect a person's rights under § 7-51-205 and does not limit any benefit in effect in the state.

Acts 1965, ch. 299, § 1; 1970, ch. 593, § 1; modified; T.C.A., § 6-639; Acts 1982, ch. 599, § 1; 1985, ch. 345, § 1; 1985 (1st E.S.), ch. 5, § 18; 1986, ch. 590, § 1; 1989, ch. 278, § 25; 1996, ch. 1079, § 26; 2015, ch. 313, § 1; 2019, ch. 490, § 2.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2019, ch. 490, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Barry Brady Act.”

Amendments. The 2015 amendment deleted “within four (4) months of March 24, 1986.” at the end of (a)(2).

The 2019 amendment added (d).

Effective Dates. Acts 2015, ch. 313, § 2. April 28, 2015.

Acts 2019, ch. 490, § 3. July 1, 2019.

Cross-References. Accidental disability retirement allowances, § 8-36-502.

Retirement benefits upon death in line of duty, § 8-36-108.

NOTES TO DECISIONS

1. Causation.

A causal connection between a police officer's work and his coronary heart disease was not shown where medical evidence established that the disease was primarily cause by hypertension, cigarette smoking, and hyperlipidemia. Krick v. City of Lawrenceburg, 945 S.W.2d 709, 1997 Tenn. LEXIS 254 (Tenn. 1997).

Finding that the employee failed to prove substantial causation between his occupation and his coronary artery disease was proper because the city rebutted the presumption under T.C.A. § 7-51-201 and the employee failed to demonstrate that his occupation caused his coronary artery disease. Coronary artery disease could be caused by family history, nicotine use, hyperlipidemia and obesity, in addition to hypertension, and several of those factors were present in the employee's case. Pittman v. City of Memphis, 360 S.W.3d 382, 2011 Tenn. App. LEXIS 448 (Tenn. Ct. App. Aug. 18, 2011), appeal denied, — S.W.3d —, 2011 Tenn. LEXIS 1197 (Tenn. Dec. 13, 2011).

City's autopsy policy shifted the initial burden to show causation to the claimant/employee, and the policy requirement removed the statutory presumption by creating an additional requirement, an autopsy, before the presumption of causation attaches; thus the city's requirement that a claimant procure an autopsy before he would be entitled to death benefits was purely an administrative policy and was unenforceable. Pryor v. City of Memphis, — S.W.3d —, 2020 Tenn. App. LEXIS 41 (Tenn. Ct. App. Jan. 31, 2020).

Statute presumes causation so long as the firefighter suffered from one of the health conditions in the statute and the condition was not present at the time of employment. Pryor v. City of Memphis, — S.W.3d —, 2020 Tenn. App. LEXIS 41 (Tenn. Ct. App. Jan. 31, 2020).

2. Presumption Rebutted.

Competent medical expert's testimony that police officer's coronary heart disease was not job-related but attributable to officer's smoking two packs of cigarettes daily was sufficient to rebut presumption of T.C.A. § 7-51-201(a)(1) and remove the analysis of the officer's disability from the purview of T.C.A. § 7-51-201. Benton v. City of Springfield, 973 S.W.2d 936, 1998 Tenn. LEXIS 351 (Tenn. 1998).

Award of 18 percent permanent partial disability to the body as a whole to an employee was reversed, because the employer rebutted the statutory presumption of causation by presenting the testimony of a doctor that the employee's hypertension was not the result of his employment with the police department, but of multiple factors, including progressive weight gain and a sedentary lifestyle, and the employee conceded that he could not prevail if the statutory presumption was overcome. Bohanan v. City of Knoxville, 136 S.W.3d 621, 2004 Tenn. LEXIS 553 (Tenn. 2004).

3. Construction.

Legislature intended to give firefighters the presumption of causation contingent on the presence of an impairment of health caused by disease of the lungs, hypertension or heart disease, and on death resulting from such condition; although this presumption may be rebutted by competent medical evidence, there is no statutory requirement that the claimant procure an autopsy to receive the benefit of such presumption. Pryor v. City of Memphis, — S.W.3d —, 2020 Tenn. App. LEXIS 41 (Tenn. Ct. App. Jan. 31, 2020).

4. Policy Conflicted With Statute.

Because the city's policy requiring an autopsy usurped the statute by placing a greater burden on the claimant, the policy was in conflict with the statute and was unenforceable; the trial court's decision to remand the case to the administrative law judge to try the case on its merits was not an abuse of discretion or otherwise erroneous. The trial court had such discretion under the Uniform Administrative Procedures Act. Pryor v. City of Memphis, — S.W.3d —, 2020 Tenn. App. LEXIS 41 (Tenn. Ct. App. Jan. 31, 2020).

7-51-202. Compensation for death of correctional employee or community services employee killed in the line of duty.

  1. For the purposes of this section, “in the line of duty” means in the course of employment and in the actual discharge of the duties of the position.
  2. The estate of any correctional employee or community services employee of the state who is killed in the line of duty shall be entitled to receive the sum of twenty-five thousand dollars ($25,000). Payment shall be made from the general fund after receipt by the department of finance and administration of a certified death certificate and an affidavit from the decedent's employer that the decedent was killed in the line of duty.

Acts 2014, ch. 1003, § 1.

Code Commission Notes.

Acts 2014, ch. 1003, § 1 purported to enact this section as § 7-51-210.  It has been designated as  § 7-51-202 by authority of the code commission.

Compiler's Notes. Former § 7-51-202 (Acts 1967, ch. 374, § 1; 1972, ch. 782, §§ 1, 2; T.C.A., § 6-640), concerning state employees sued for damages in the course of their employment, defense counsel, indemnification, exceptions, and limits of liability, was repealed by Acts 1987, ch. 405, § 3.

7-51-203. Liability insurance for employee protection.

All municipal corporations or other political subdivisions of the state of Tennessee are hereby authorized to contract at governmental expense for policies of liability insurance to protect employees in the course of their employment.

Acts 1967, ch. 374, § 2; T.C.A., § 6-641.

NOTES TO DECISIONS

1. Insurance Coverage.

Former § 7-51-202 (repealed) did not require a municipality to procure insurance coverage, although this section authorizes it to do so, leaving it to the city to determine whether it will be insured or self-insured. Memphis v. Roberts, 528 S.W.2d 201, 1975 Tenn. LEXIS 623 (Tenn. 1975).

Collateral References.

Scope of provision in liability policy issued to municipal corporation or similar governmental body limiting coverage to injuries arising out of construction, maintenance, or repair work. 30 A.L.R.5th 699.

Validity and construction of statute authorizing or requiring governmental unit to indemnify public officer or employee for liability arising out of performance of public duties. 71 A.L.R.3d 90.

7-51-204. Fire department employee association dues.

    1. Any municipal corporation or other political subdivision of the state that maintains a regular fire department with regular full-time employees shall, upon the written request of any such employee, make monthly deductions of membership dues for an employee association if the chief administrative officer of the employee association has previously certified to the chief executive officer of the municipality or political subdivision that the association's current membership is not less than forty percent (40%) of all the employees of the municipality or political subdivision who qualify for membership.
    2. Such deductions shall be made by the municipality or other political subdivision from each regular paycheck and shall be remitted to the employee association within thirty (30) days after the deduction is made.
    3. Authorization for such payroll deduction shall continue in effect until the next regular pay period following the thirtieth day after receipt by the municipality or other political subdivision of a written revocation signed by the employee.
  1. If any provision of this section or the application of this section to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the section that can be given effect without the invalid provision or application, and to that end the provisions of this section are declared to be severable.

Acts 1987, ch. 223, §§ 1-4; 1989, ch. 130, § 1; 2001, ch. 411, § 1.

7-51-205. Firefighters — Disease, cancer or death — Presumptions.

  1. For the purposes of this section, “firefighter” means any regular and full-time employee of a county with a metropolitan government with a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census, who is required to extinguish and control fires or fire-related incidents and other employees of fire departments who are required to perform their duties under and in a toxic environment.
  2. Any county with a metropolitan form of government with a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census, that maintains a regular fire department manned by regular and full-time employees, and has established or hereafter establishes any form of compensation, other than workers' compensation, to be paid to such firefighters for any condition or impairment of health that results in loss to life or personal injury in the line of duty or course of employment, may establish by ordinance a presumption that any impairment of health of such firefighter caused by disease or cancer resulting in hospitalization, medical treatment or any disability, shall be presumed, unless the contrary is shown by competent medical evidence, to have occurred or to be due to accidental injury suffered in the course of employment. Any such condition or impairment of health that results in death shall be presumed, unless the contrary is shown by competent medical evidence, to be a loss of life in the line of duty, and to have been in the line and course of employment, and in the actual discharge of the duties of such firefighter's position, or the sustaining of personal injuries by external and violent means or by accident in the course of employment and in the line of duty; provided, that such firefighter shall have successfully passed a physical examination prior to such claimed disability, or upon entering upon such firefighter's metropolitan government employment, and such examination fails to reveal any evidence of the condition of cancer.

Acts 1991, ch. 465, §§ 2, 3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-51-206. [Repealed.]

Acts 2004, ch. 878, § 1; 2005, ch. 314, § 1; 2006, ch. 912, § 1; repealed by Acts 2017, ch. 445, § 2, effective July 1, 2017.

Compiler's Notes. Former section 7-51-206 concerned compensation for death of firefighter killed in the line of duty.

7-51-207. [Repealed.]

Acts 2005, ch. 450, § 1; repealed by Acts 2017, ch. 445, § 3, effective July 1, 2017.

Compiler's Notes. Former section 7-51-207 concerned compensation for death of volunteer rescue squad worker killed in the line of duty.

7-51-208. [Repealed.]

Acts 2006, ch. 912, § 2; 2012, ch. 532, § 1; repealed by Acts 2017, ch. 445, § 4, effective July 1, 2017.

Compiler's Notes. Former section 7-51-208 concerned compensation for death of law enforcement officer killed in the line of duty.

7-51-209. Presumptive disability in acquiring human immunodeficiency virus in the line of duty by emergency rescue workers.

  1. As used in this section, unless the context otherwise requires:
      1. “Body fluids” means blood and body fluids containing visible blood and other fluids to which universal precautions for prevention of occupational transmission of blood-borne pathogens, as established by the centers for disease control and prevention, apply;
      2. For purposes of potential transmission of human immunodeficiency virus and hepatitis C virus, “body fluids” includes salivary and sinus fluids, including droplets, sputum, and saliva, mucous and other fluids through which human immunodeficiency virus and hepatitis C virus can be transmitted between persons;
      1. “Emergency rescue worker” means any person employed full-time by the state or any political subdivision of the state, including any county having a metropolitan form of government as a firefighter, paramedic, emergency medical technician or emergency medical technician advanced;
      2. “Emergency rescue worker” does not include any person employed by a public hospital or any person employed by a subsidiary thereof;
    1. “High risk of occupational exposure” means risk that is incurred because an emergency rescue worker, in performing the basic duties associated with such worker's employment:
      1. Provides emergency medical treatment in a non-healthcare setting where there is a potential for transfer of body fluids between persons; or
      2. At the site of an accident, fire or other rescue or public safety operation, or in an emergency rescue or public safety vehicle, handles body fluids in or out of containers or works with or otherwise handles needles or other sharp instruments exposed to body fluids;
    2. “Infectious disease” means human immunodeficiency virus and hepatitis C virus; and
    3. “Occupational exposure” in the case of infectious diseases, means an exposure that occurs during the performance of job duties that may place a worker at risk of infection.
    1. The general assembly finds that an emergency rescue worker, in the course of employment, runs a high risk of occupational exposure to infectious disease.
    2. For reasons stated in subdivision (b)(1), any emergency rescue worker who suffers a condition or impairment of health that is caused by human immunodeficiency virus or hepatitis C virus, and that results in total or partial disability or death shall be presumed to have a disability suffered in the line of duty, unless the contrary is shown by a preponderance of the evidence. However, in order to be entitled to the presumption, the emergency rescue worker must verify by written declaration that, to the best of the emergency rescue worker's knowledge and belief: In case of a medical condition caused by or derived from human immunodeficiency virus or hepatitis C virus, the emergency rescue worker has not:
      1. Been exposed outside the scope of the worker's employment, through transfer of bodily fluids, to any person known to have any sickness or medical condition derived from an infectious disease;
      2. Had a transfusion of blood or blood components, other than a transfusion arising out of an accident or injury happening in connection with the worker's present employment, or received any blood products for the treatment of a coagulation disorder since last undergoing medical tests for infectious disease, which tests failed to indicate the presence of any infectious disease;
      3. Engaged in unsafe sexual practices or other high-risk behavior, as identified by the centers for disease control and prevention or the surgeon general of the United States, or had sexual relations with a person known to the worker to have engaged in such unsafe sexual practices or other high-risk behavior; or
      4. Used intravenous drugs not prescribed by a physician.
  2. Whenever any standard, medically-recognized vaccine or other form of immunization exists for the prevention of an infectious disease for which a presumption is granted under this section, if medically indicated in the given circumstances pursuant to immunization policies established by the advisory committee on immunization practices of the United States public health service, an emergency rescue worker may be required by such worker's employer to undergo the immunization, unless the worker's physician determines in writing that the immunization or other prophylaxis would pose a significant risk to the worker's health. Absent such written declaration, failure or refusal by an emergency rescue worker to undergo such immunization disqualifies the worker from the benefits of the presumption established by this section.
  3. This section does not apply to benefits payable under or granted in a noncompulsory policy of life insurance or disability insurance, unless the insurer and insured have negotiated for such additional benefits to be included in the policy contract. However, the state or any political subdivision of the state, including any county having a metropolitan form of government, may negotiate a policy contract for life and disability insurance that includes accidental death benefits or double indemnity coverage for any condition or impairment of health suffered by an emergency rescue worker, which condition or impairment is caused by an infectious disease and results in total or partial disability or death.
  4. An emergency rescue worker shall file an incident or accident report with the emergency rescue worker's employer of each instance of known or suspected occupational exposure to infectious disease as such is defined in subdivision (a)(4). The employer shall maintain a record of the incident or accident report so filed. Such report must be filed by the employee within seven (7) days of the incident or accident occurring.
    1. In order to be entitled to the presumption established by this section, an emergency rescue worker must, prior to diagnosis, have undergone standard, medically-acceptable tests for evidence of the infectious disease for which the presumption is sought, or evidence of medical conditions derived therefrom, which tests fail to indicate the presence of infection.
      1. On or after July 1, 2012, an emergency rescue worker may be required to undergo a preemployment physical examination that tests for any evidence of human immunodeficiency virus. In order to be entitled to the presumption established by this section, the test shall be negative for evidence of human immunodeficiency virus.
      2. On or after July 1, 2015, an emergency rescue worker may be required to undergo a preemployment physical examination that tests for any evidence of infectious disease. In order to be entitled to the presumption established by this section, the test shall be negative for evidence of infectious disease.
  5. This section does not apply to the Tennessee consolidated retirement system.
  6. This section shall apply to any emergency rescue worker following termination of service for a period of one (1) year commencing with the last actual date of service.
  7. This section shall not apply to cases involving a death of an emergency rescue worker in the line of duty.
  8. The presumption established in this section shall not apply to the state death benefit.
  9. This section shall not apply to full-time or part-time instructors of the department of commerce and insurance.

Acts 2012, ch. 958, §§ 2, 3; 2015, ch. 289, §§ 1-4.

Amendments. The 2015 amendment in (a)(1)(B), added “and hepatitis C virus” following “human immunodeficiency virus” twice; in (a)(4), added “and hepatitis C virus” following “human immunodeficiency virus”; in (b)(2), added “or hepatitis C virus” following “human immunodeficiency virus” twice; and rewrote (f)(2), which read: “On or after July 1, 2012, an emergency rescue worker may be required to undergo a pre-employment physical examination that tests for any evidence of infectious disease. In order to be entitled to the presumption established by this section, the test shall be negative for evidence of infectious diseases.”

Effective Dates. Acts 2015, ch. 289, § 5. July 1, 2015.

7-51-210. Compensation for death of emergency responder in line of duty.

  1. For the purposes of this section, unless the context otherwise requires:
    1. “Emergency responder” means a firefighter, a volunteer rescue squad worker, or law enforcement officer;
    2. “Firefighter” means any regular or full-time employee of a fire department as defined in § 68-102-302, or any unpaid volunteer member of a municipal or nonprofit fire department who is registered and recognized by the state fire marshal and who is required to extinguish and control fires or fire-related incidents;
    3. “In the line of duty” means in the course of employment and in the actual discharge of the duties of the position;
    4. “Law enforcement officer” means the sheriff, sheriff's deputies, or any police officer employed, commissioned, or appointed by this state, a municipality, or political subdivision of this state whose primary responsibility is the prevention and detection of crime and the apprehension of offenders; and
    5. “Volunteer rescue squad worker” means any person who is trained in emergency and rescue work and who performs such work without compensation in a unit that is equipped to address such situations.
  2. The estate of any emergency responder who is killed in the line of duty shall be entitled to receive a two-hundred-fifty-thousand-dollar annuity, with the estate receiving an annual installment of fifty thousand dollars ($50,000) for five (5) years. The emergency responder must have been current in any required training and physical exams at the time the death occurred for the estate to receive the payment. Payment shall be made from the general fund after receipt by the department of finance and administration of a certified death certificate, letters testamentary or letters of administration for the estate of the deceased from a probate court, and an affidavit from the decedent's employer or volunteer unit that the decedent was killed in the line of duty.
  3. A claim for payment of an annuity pursuant to this section must be filed with the department of finance and administration no later than three (3) years after the date of death of the decedent.
  4. A person's estate is only entitled to receive one (1) two-hundred-fifty-thousand-dollar annuity, regardless of the person being in more than one (1) category of emergency responder.
  5. A denial of a claim made under this section by the estate of a law enforcement officer shall be subject to review by the Tennessee peace officer standards and training commission within ninety (90) days of the denial. The commission has the authority to review the claim and issue a final order which is binding upon this state. The commission shall cause copies of the final order to be delivered to the claimant's estate and the department of finance and administration.

Acts 2017, ch. 445, § 1; 2019, ch. 395, §§ 1, 2.

Amendments. The 2019 amendment substituted “employed, commissioned, or appointed by this state” for “employed by this state” following “or any police officer” in (a)(4); and added (e).

Effective Dates. Acts 2017, ch. 445, § 5. July 1, 2017.

Acts 2019, ch. 395, § 3. May 10, 2019.

Part 3
Minimum Compensation for Local Officials

7-51-301. Minimum compensation of chief elected executive of certain municipalities.

  1. The minimum compensation payable to the chief elected executive of all municipalities or metropolitan governments having a population greater than one hundred seventy thousand (170,000), according to the 1970 federal census or any subsequent federal census, shall be twenty-five thousand dollars ($25,000) per annum, payable in equal monthly installments.
  2. Any municipality or metropolitan government may provide for greater compensation for the chief elected executive.

Acts 1971, ch. 345, § 1; T.C.A., § 6-808.

Compiler's Notes. For table of populations of Tennessee municipalities, see Volume 13 and its supplement.

7-51-302. Minimum salary of council members in certain municipalities.

The minimum salary payable to city and metropolitan council members in all municipalities having a population greater than one hundred seventy thousand (170,000), according to the 1970 federal census or any subsequent federal census, shall be three hundred dollars ($300) per month.

Acts 1971, ch. 345, § 3; T.C.A., § 6-810.

Compiler's Notes. For table of populations of Tennessee municipalities, see Volume 13 and its supplement.

Part 4
Utility Service Extension, Collection Agreements

7-51-401. Extension of utility services.

  1. Except as provided in § 7-82-302, each county, utility district, municipality or other public agency conducting any utility service specifically including waterworks, water plants and water distribution systems and sewage collection and treatment systems is authorized to extend such services beyond the boundaries of such county, utility district, municipality or public agency to customers desiring such service.
  2. Any such county, utility district, municipality or public utility agency shall establish proper charges for the services so rendered so that any such outside service is self-supporting.
  3. No such county, utility district, municipality or public utility agency shall extend its services into sections of roads or streets already occupied by other public agencies rendering the same service, so long as such other public agency continues to render such service.

Acts 1949, ch. 23, §§ 1-3; C. Supp. 1950, § 3695.47 (Williams, §§ 3695.45-3695.47); Acts 1959, ch. 166, § 3; T.C.A. (orig. ed.), § 6-604.

Cross-References. Contracts between municipalities, title 7, ch. 35, part 3.

Cooperative agreements with counties, § 5-1-113.

Extension of utility service beyond municipal limits authorized, § 7-34-104.

Extension of water and sewer service beyond corporate limits, § 7-35-401.

Powers of municipalities, § 7-52-103.

Attorney General Opinions. Flat rate billing for sewer service outside municipal boundaries, OAG 98-0108, 1998 Tenn. AG LEXIS 108 (6/11/98).

A town is not authorized to extend sewer service into areas outside its boundaries that are already being served by another town's system, OAG 01-125, 2001 Tenn. AG LEXIS 116 (8/7/01).

Domestic nonprofit water cooperative merging with or transferring assets to municipality, OAG 06-176, 2006 Tenn. AG LEXIS 196 (12/19/06), 2006 Tenn. AG LEXIS 196.

NOTES TO DECISIONS

1. Occupation by Other Public Agency.

Possession by city of water lines outside city without franchise, along with possession of recorded owner where city gradually takes over repair but allows tap fees to owner and negotiates for purchase, was not notice of claim against ownership to a water district given exclusive franchise as a purchaser, or as against its bondholders as encumbrancers. Johnson City v. Milligan Utility Dist., 38 Tenn. App. 520, 276 S.W.2d 748, 1954 Tenn. App. LEXIS 138 (Tenn. Ct. App. 1954).

2. Enforcement of Rights to Provide Service.

Where utility district knowingly allowed city and county to construct sewer projects within its boundaries with full knowledge of its exclusive right to provide such services within its boundaries and delayed bringing suit for eight years, utility district's suits seeking exclusive right to provide utility services within its boundaries was barred by laches. Whitehaven Utility Dist. v. Ramsay, 215 Tenn. 435, 387 S.W.2d 351, 1964 Tenn. LEXIS 531 (1964).

Trial court properly granted a neighboring utility district summary judgment on a water provider's claim seeking to enjoin it from entering into a contract for water services with another provider where the contract between the water provider and the district specified a permanent termination date unless the parties entered another agreement, and thus, T.C.A. § 7-51-401(c) (2011) did not apply. Reelfoot Util. Dist. v. Samburg Util. Dist., — S.W.3d —, 2014 Tenn. App. LEXIS 523 (Tenn. Ct. App. Aug. 27, 2014), appeal denied, — S.W.3d —, 2015 Tenn. LEXIS 95 (Tenn. Jan. 20, 2015).

3. Necessity for Franchise.

Before any corporation may furnish electricity within the territory of a municipality it must have the permission of that municipality in the form of a franchise even where the corporation has been serving the area before it became a part of the municipality. Franklin Power & Light Co. v. Middle Tennessee Electric Membership Corp., 222 Tenn. 182, 434 S.W.2d 829, 1968 Tenn. LEXIS 421 (1968).

7-51-402. Collection agreements between governmental units.

  1. Counties, municipalities, utility districts, and cooperatives of this state billing and collecting user's fees, rates or charges for a utility service, including, but not limited to, water, sanitary sewer and electricity, or for garbage and refuse collection and disposal service, are authorized by resolution to enter into agreements with each other to provide for such billing and collection to be done by one for the other on such terms as may be agreed upon, including appropriate compensation. The county legislative body shall act for the county in making such agreements, except where billing and collection of such fees, rates or charges are performed by a board, commission or other agency of the county; provided, that such agreements entered into by a board, commission or other agency of the county shall be subject to approval by the county legislative body. The governing body of a municipality shall act for the municipality in making such agreements except where billing and collection of such fees, rates or charges are performed by a board, commission or other agency of the municipality; provided, that such agreements entered into by a board, commission or other agency of the municipality shall be subject to approval by the governing body of the municipality.
  2. Nothing in this section shall affect the authority of counties, county clerks, municipalities, utility districts and cooperatives to enter into agreements or contracts under any other statute or charter.

Acts 1976, ch. 693, §§ 1, 3; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; T.C.A., § 6-1336.

Part 5
Appropriations to Safety Councils

7-51-501. Appropriations to safety councils.

Any county or municipality in this state may make appropriations from its general revenues for the purpose of aiding the work of any local county or city safety council, located in such county or city, which local council has been approved by the Tennessee safety council.

Acts 1951, ch. 221, § 1 (Williams, § 844.5); T.C.A. (orig. ed.), § 6-605.

Part 6
Private Clubs

7-51-601 “Private club” defined.

As used in this part, “private club” means a club or organization that operates for the purpose of providing members of the club with the opportunity to engage in or view live specified sexual activities, as defined in § 7-51-1401.

Acts 2015, ch. 130, § 1.

Compiler's Notes.  For the Preamble to the act concerning the reasons private clubs are subject to state regulation despite label as private club, see Acts 2015, ch. 130.

Effective Dates. Acts 2015, ch. 130, § 3.  April 9, 2015.

7-51-602. Restrictions on location — Measurements.

  1. A private club shall not locate within one thousand feet (1,000') of a child care center, private school, public school, charter school, public park, or place of worship.
  2. For the purposes of subsection (a), measurements shall be made in a straight line in all directions, without regard to intervening structures or objects, from the nearest point on the property line of a parcel containing a private club to the nearest point on the property line of a parcel containing a child care center, private school, public school, charter school, public park, or place of worship.

Acts 2015, ch. 130, § 1.

Compiler's Notes.  For the Preamble to the act concerning the reasons private clubs are subject to state regulation despite label as private club, see Acts 2015, ch. 130.

Effective Dates. Acts 2015, ch. 130, § 3.  April 9, 2015.

7-51-603. Sexual offenders and violent sexual offenders excluded from membership.

A private club shall not extend membership or offer access to the club to a person who must comply with the Tennessee Sexual Offender and Violent Sexual Offender Registration, Verification and Tracking Act of 2004, compiled in title 40, chapter 39, part 2, as a sexual offender or violent sexual offender.

Acts 2015, ch. 130, § 1.

Compiler's Notes.  For the Preamble to the act concerning the reasons private clubs are subject to state regulation despite label as private club, see Acts 2015, ch. 130.

Effective Dates. Acts 2015, ch. 130, § 3.  April 9, 2015.

7-51-604. Application of part — Enforcement of part.

  1. This part shall apply only in a county having a metropolitan form of government with a population of more than five hundred thousand (500,000), according to the 2010 federal census or any subsequent federal census, upon the adoption of a resolution by two-thirds (2/3) vote of the county legislative body.
  2. Upon the adoption of the resolution, the county legislative body is authorized to deny a building permit, use and occupancy permit, or other zoning permit applicable to a private club determined to be in violation of this part.

Acts 2015, ch. 130, § 1.

Compiler's Notes.  For the Preamble to the act concerning the reasons private clubs are subject to state regulation despite label as private club, see Acts 2015, ch. 130.

Effective Dates. Acts 2015, ch. 130, § 3.  April 9, 2015.

7-51-605. Part not applicable to “adult-oriented establishments”.

Nothing in this part shall apply to an adult-oriented establishment as defined in parts 11 and 14 of this chapter.

Acts 2015, ch. 130, § 1.

Compiler's Notes.  For the Preamble to the act concerning the reasons private clubs are subject to state regulation despite label as private club, see Acts 2015, ch. 130.

Effective Dates. Acts 2015, ch. 130, § 3.  April 9, 2015.

Part 7
Motor Vehicles—Junkyards, Fees

7-51-701. Automobile graveyards or junkyards — Licensing and control.

  1. For the purposes of this section, “automobile graveyard” means any lot or place that is exposed to the weather and upon which more than five (5) motor vehicles of any kind, incapable of being operated, and that it would not be economically practical to make operative, are placed, located or found. “Automobile graveyard” or “automobile junkyard” shall not be construed to mean an establishment having facilities for processing iron, steel or nonferrous scrap and whose principal produce is scrap iron, steel or nonferrous scrap for sale for remelting purposes only.
  2. The governing body of each county, by resolution, and the governing body of each city, town or metropolitan government, by ordinance, may regulate and license the maintenance of automobile graveyards as defined in subsection (a), and may prescribe fines and other punishment for violations of such resolutions or ordinances.
  3. No such ordinance shall be adopted until after notice of intention to propose the ordinance for adoption shall have been published prior to its adoption once a week for two (2) successive weeks in some newspaper published in such county or municipality or, if there is no newspaper published in the county or municipality, then in some newspaper having general circulation in such county or municipality, and no ordinance shall become effective until it has been published in full for two (2) successive weeks in a newspaper.

Acts 1965, ch. 197, §§ 1-3; T.C.A., § 6-741.

Compiler's Notes. This section (Acts 1965, ch. 197, §§ 1-3) was declared unconstitutional as applied to counties in State v. Toole, 224 Tenn. 491, 457 S.W.2d 269 (1970), in that by giving counties authority to regulate and license automobile graveyards and to prescribe fines and other punishments for violations, the statute violated requirements of Tenn. Const., art. I, § 8, that law of land be general.

Cross-References. Records of dealers of used parts and accessories, § 55-14-104.

NOTES TO DECISIONS

1. Constitutionality.

The section (Acts 1965, ch. 197, §§ 1-3) giving counties and municipalities authority to regulate and license automobile graveyards by resolution or ordinance and to prescribe fines and other punishments for violations was unconstitutional as applied to counties as violating requirements of Tenn. Const., art. I, § 8, that law of land be general. State v. Toole, 224 Tenn. 491, 457 S.W.2d 269, 1970 Tenn. LEXIS 347 (1970).

7-51-702. Nonresident motorists not charged fee or tax for motor vehicle related privileges.

  1. Except as may be provided by general law, it is unlawful for the governing body of any county, municipality or metropolitan government to require any person who is not a resident of such county, or of the county in which such municipality is located, or of the area governed by such metropolitan government, to pay to such county, municipality or metropolitan government any license fee or tax or any regulatory license fee or tax of whatever nature for the privilege of driving a motor vehicle on the roads, streets or highways in such county, municipality or metropolitan government or for the maintenance or operation of any traffic control device or the regulation and control of motor vehicle traffic on the roads, streets, or highways in any county, municipality or metropolitan government.
  2. This section shall apply and shall be controlling, notwithstanding any provisions to the contrary of any private act or of any resolution or ordinance of any local governing body and regardless of the legal description or designation of any such fee or tax.
  3. This section shall not prohibit the collection of fees authorized for county clerks in connection with the registration and licensing of motor vehicles under title 55.

Acts 1969, ch. 240, §§ 1-3; 1971, ch. 17, §§ 1, 2; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., § 6-742.

Cross-References. Motor vehicle license tax on nonresidents prohibited, § 6-55-502.

Attorney General Opinions. Application of county wheel tax, OAG 99-065, 1999 Tenn. AG LEXIS 65 (3/16/99).

7-51-703. Collection of municipal motor vehicle fees by county clerk — Issuance of wheel tax license or motor vehicle regulatory license.

    1. The county clerk of any county and any municipality located wholly or in part in such county by resolution of its governing body may enter into an agreement with such terms as may be agreed upon, including appropriate compensation, providing for the county clerk to collect for such municipality motor vehicle regulatory fees imposed by such municipality; provided, that such agreement shall be subject to the approval of the county legislative body. Before any collections may be made under such agreement, the municipality shall file with the county clerk a certified copy of its ordinance imposing such regulatory fee.
    2. Nothing in this section shall affect the authority of counties, county clerks, municipalities, utility districts and cooperatives to enter into agreements or contracts under any other statute or charter.
  1. In those counties having a metropolitan form of government, the county clerk shall issue any required wheel tax license or motor vehicle regulatory license at the same time the clerk's office is selling a state license, subject to such terms and conditions as may be established by the metropolitan government's chief financial officer and approved by the county governing body.
  2. The county clerk shall issue any required wheel tax license or motor vehicle regulatory license at the same time the clerk's office is selling a state license, subject to such terms and conditions as may be established by the county or municipal government's chief financial officer and approved by the applicable governing body.

Acts 1976, ch. 693, §§ 2, 3; impl. am. Acts 1978, ch. 934, §§ 7, 22, 36; Acts 1979, ch. 351, § 1; T.C.A., § 6-743; Acts 1981, ch. 72, § 1; 1981, ch. 518, § 1; 1984, ch. 727, § 1; 1984, ch. 773, § 2.

Cross-References. Motor vehicle license tax on nonresidents prohibited, § 6-55-502.

Motor vehicle privilege tax, § 5-8-102.

Registration and renewal of registration of motor vehicles by county clerk, title 55, ch. 4, part 1.

Part 8
Ordinances Affecting Railroad Operations

7-51-801. Filing with commissioner of transportation.

All incorporated cities and towns, as well as any areas adopting a metropolitan government within the state, shall file with the commissioner of transportation certified copies of all ordinances adopted by the governing body of such city, town or metropolitan government after July 1, 1983, that affect the operation of trains within the limits, or newly extended limits, when any such ordinances enlarge the municipal boundaries of such city, town or metropolitan government.

Acts 1983, ch. 54, § 2; 1995, ch. 305, § 77.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

Attorney General Opinions. Transfer of railroad authority to department of transportation, OAG 97-026, 1997 Tenn. AG LEXIS 25 (3/31/97).

7-51-802. Service of ordinances on railroads.

Upon receipt of copies of all such ordinances, the commissioner of transportation shall within seven (7) days cause to be mailed copies of the ordinances to the registered agent for service of process for each railroad operating trains within the state. A copy of the letter transmitting any such ordinance to the various railroads shall be furnished to the chief executive officer of the city, town or metropolitan government adopting such ordinance in question as proof of compliance with this part.

Acts 1983, ch. 54, § 3; 1995, ch. 305, § 77.

7-51-803. Railroad's agent for service of process.

Every railroad operating trains within the state shall notify the commissioner of transportation of the name and address of its registered agent for service of process.

Acts 1983, ch. 54, § 4; 1995, ch. 305, § 77.

7-51-804. Effective date of ordinances.

  1. No ordinance required to be filed with the commissioner of transportation shall be effective as to the operation of any train until fifteen (15) days after the service of a copy of such ordinance upon the registered agent of the railroad operating such train.
  2. As to any railroad failing to furnish to the commissioner the name and address of its registered agent for service of process, any ordinance affecting the operation of the trains of such railroad shall become effective upon receipt of the certified copy thereof by the commissioner.

Acts 1983, ch. 54, § 5; 1995, ch. 305, §§ 77, 78.

Part 9
Contracts, Leases and Lease-Purchase Agreements

7-51-901. Part definitions.

Whenever used in this part, unless the context otherwise requires:

  1. “Capital improvement property” means any real or tangible property needed for a governmental purpose and having a useful life of one (1) year or more, and any real or tangible personal property with respect to which capital outlay notes can be legally authorized and issued by a municipality;
  2. “Contracting party” means any party to a contract, lease or lease-purchase agreement other than a municipality, and can include individuals, corporations, partnerships, other government agencies, and other business entities;
  3. “Governing body” means the board or body in which the general legislative powers of the municipality are vested;
  4. “Municipality” means any county or incorporated city or town of the state of Tennessee;
  5. “Notice of meeting” means the notice of meeting referred to in this part; and
  6. “Resolution” means any resolution duly adopted by a governing body pursuant to this part.

Acts 1983, ch. 186, § 1.

Cross-References. Debts of local boards of education, § 49-2-204.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

NOTES TO DECISIONS

1. Applicability.

Title 7, ch. 51, part 9 does not govern disputes involving contracts that have been executed prior to the effective date of this part. Washington County Bd. of Education v. MarketAmerica, Inc., 693 S.W.2d 344, 1985 Tenn. LEXIS 604 (Tenn. 1985).

2. Legislative Intent.

Title 7, ch. 51, part 9 was intended to eliminate any distinction in contractual capacity between the “governmental” and “proprietary” functions of local government as it relates to contractual capacity of local governments. Washington County Bd. of Education v. MarketAmerica, Inc., 693 S.W.2d 344, 1985 Tenn. LEXIS 604 (Tenn. 1985).

The legislature never intended that title 49, ch. 2 serve as a limitation upon the authority of counties to enter into long-term contracts. Washington County Bd. of Education v. MarketAmerica, Inc., 693 S.W.2d 344, 1985 Tenn. LEXIS 604 (Tenn. 1985).

7-51-902. Capital improvement property.

Any municipality is authorized to enter into, with any contracting party or parties, contracts, leases or lease-purchase agreements with respect to capital improvement property for terms not to exceed forty (40) years or the useful life of the subject capital improvement property, whichever is less.

Acts 1983, ch. 186, § 2.

7-51-903. Long-term contracts.

Except as otherwise authorized or provided by law, municipalities are hereby authorized to enter into long-term contracts for such period or duration as the municipality may determine for any purpose for which short-term contracts not extending beyond the term of the members of the governing body could be entered; provided, that § 7-51-902 shall govern the periods or terms of contracts, leases, and lease-purchase agreements with respect to capital improvement property.

Acts 1983, ch. 186, § 3.

NOTES TO DECISIONS

1. Legislative Intent.

The general assembly never intended that title 49, ch. 2 serve as a limitation upon the authority of counties to enter into long-term contracts. Washington County Bd. of Education v. MarketAmerica, Inc., 693 S.W.2d 344, 1985 Tenn. LEXIS 604 (Tenn. 1985).

2. Teacher Contracts.

Employment contracts in education fall outside the reach of T.C.A. § 7-51-903, because the legislature specifically addresses issues relating to employment within the educational system, pursuant to T.C.A. § 49-1-101, et seq.Arnwine v. Union County Bd. of Educ., 120 S.W.3d 804, 2003 Tenn. LEXIS 1087 (Tenn. 2003).

7-51-904. Approval by governing body — Notice of meeting.

  1. Whenever the period or term, including any renewal term or extension period, of any contract, lease, or lease-purchase agreement for any real property is to be for less than five (5) years, under the authority of § 7-51-902 or § 7-51-903, or for tangible personal property, regardless of the period or term, such contract, lease or lease-purchase agreement shall first be approved by resolution or ordinance duly adopted by the governing body of the municipality, and no such contract, lease, or lease-purchase agreement shall be entered into by a municipality without such approval.
  2. Whenever the period or term, including any renewal term or extension period, of any contract, lease or lease-purchase agreement for any real property is to be for five (5) years or more under the authority of § 7-51-902 or § 7-51-903, a notice of meeting shall be published relative to the meeting at which such contract, lease or lease-purchase agreement will be considered by the governing body of the municipality at least seven (7) days prior to the date set for such meeting. Such notice of meeting shall identify the real property to be considered, the term or terms of such contract, lease or lease-purchase agreement and the contracting party. Such contract, lease or lease-purchase agreement shall be approved by resolution or ordinance adopted by the governing body of the municipality, and no such contract, lease or lease-purchase agreement shall be entered into by a municipality without such approval.
  3. No other or further approval shall be required for any contract, lease or lease-purchase agreement entered into pursuant to this part.

Acts 1983, ch. 186, § 4.

7-51-905. Construction with other laws.

  1. This part shall in no manner repeal, modify, change, or interfere with any general or special statutes pertaining to municipal or county contracts or leases, including, but not limited to, those statutes pertaining to competitive bidding, conflicts of interest, public building authorities, purchasing, issuance of bonds, borrowing of money and incurring of debts, and appropriations.
  2. The authorization provided by this part shall be additional and supplemental to, and the limitations provided in this part shall not affect the powers or authorizations provided by any other law, and is not in substitution for the powers or authorizations conferred by any other law.

Acts 1983, ch. 186, § 5.

7-51-906. Proprietary contracts unaffected.

This part shall not affect the powers of any municipality to contract in its proprietary capacity.

Acts 1983, ch. 186, § 6.

7-51-907. Sewage treatment works and public water systems.

Pursuant to the terms of this part, any municipality is hereby authorized to lease, lease-purchase and/or contract for the construction operation or management of capital improvement property that is all or part of “sewage treatment works” as defined in § 68-221-201, or a “public water system” as defined in § 68-221-703.

Acts 1983, ch. 186, § 7.

7-51-908. Contracts concerning education.

Municipalities, counties, or school systems may contract among themselves for matters concerning education.

Acts 1983, ch. 186, § 8.

7-51-909. Tax exemption for capital improvement property.

Any contract, lease or lease-purchase agreement with respect to capital improvement property entered into under the authority of this part and the income from the property shall be exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes, and except as otherwise provided in this code.

Acts 1988, ch. 750, § 29.

7-51-910. Contracts for purchase of natural gas, propane gas or electric power.

Notwithstanding any law to the contrary, any contract for the purchase for resale or municipal use of natural gas, propane gas or electric power may be made without complying with competitive bidding requirements.

Acts 1993, ch. 232, § 2; 1999, ch. 345, § 25.

7-51-911. Contracts for purchase of gasoline and diesel fuel.

Notwithstanding any other law to the contrary, a municipality may, with the approval of its governing body, enter into a negotiated contract or contracts, including a joint contract or contracts, with other municipalities, with a bank, investment bank or other similar financial institution for the purpose of stabilizing the net expense of the municipality incurred in the purchase of gasoline, diesel or both gasoline and diesel fuel actually purchased by the municipality. Any contract entered into under this section must be for a term of no more than twenty-four (24) months. The authority granted under this section is in addition to, and supplemental to, any existing authority granted a municipality under any other law.

Acts 2008, ch. 1088, § 1; 2009, ch. 107, § 1; 2010, ch. 897, § 1.

Part 10
Tennessee Passenger Transportation Services Act

7-51-1001. Short title.

This part shall be known and cited as the “Tennessee Passenger Transportation Services Act.”

Acts 1985, ch. 380, § 1.

Cross-References. Transportation systems, title 7, ch. 56.

7-51-1002. Governmental entity — Defined.

As used in this part, “governmental entity” means any political subdivision of the state of Tennessee and any municipality, metropolitan government, county or airport authority.

Acts 1985, ch. 380, § 2.

7-51-1003. Scope of authority.

  1. Every municipality, or other governmental entity, is hereby expressly authorized and empowered to protect the public health, safety, and welfare by licensing, controlling, and regulating by ordinance or resolution each private passenger-for-hire vehicle providing transportation services operated within the jurisdiction of the municipality or other governmental entity.
  2. Every municipality or other governmental entity is empowered to regulate the following:
    1. Entry into the business of providing passenger transportation service, including taxicab service, within the jurisdiction of that municipality or governmental entity;
    2. The rates charged for the provision of such passenger transportation service;
    3. The establishment of safety and insurance requirements even if they reduce the number of such private passenger vehicles for hire that otherwise would operate within the jurisdiction of the municipality or other governmental entity;
    4. The establishment of stands to be employed by one (1) or a limited number of firms providing passenger transportation;
    5. Limited or exclusive access by such passenger transportation service, including taxicab service, to airports or other facilities operated by or within the jurisdiction of the municipality or other governmental entity;
    6. The drivers of private passenger vehicles for hire;
    7. The routes and stops of fixed route private passenger vehicles for hire; and
    8. Any other requirement adopted to ensure safe and reliable passenger transportation service.

Acts 1985, ch. 380, § 3.

7-51-1004. Action on behalf of state — Immunity.

  1. Any municipality or other governmental entity is authorized to carry out this part as acts of government on behalf of the state as sovereign, to the extent the governmental entity deems necessary or appropriate, even if it is anticompetitive in effect.
  2. All immunity of the state of Tennessee from liability under state and federal antitrust law is hereby extended to any municipality or other governmental entity within the scope of authority contained in this part, and, when so doing, a municipality or other governmental entity shall be presumed to be acting in furtherance of state policy.

Acts 1985, ch. 380, § 4.

7-51-1005. Authority of department of safety unaffected.

  1. Except as provided in § 7-51-1007(c), this part shall not apply to any motor vehicles operating passenger services that are subject to the authority of the department of safety pursuant to title 65, chapter 15.
  2. Except as provided in § 7-51-1007(c), nothing in this part shall be construed as limiting or in any way interfering with the jurisdiction of the department of safety to regulate passenger operations in accordance with title 65, chapter 15.

Acts 1985, ch. 380, § 5; 1995, ch. 305, § 79; 1999, ch. 262, §§ 2, 3.

7-51-1006. Exemption.

This part shall not apply to any governmental entity of a county having a population of not less than two hundred eighty-seven thousand seven hundred (287,700) nor more than two hundred eighty-seven thousand eight hundred (287,800), according to the 1980 federal census or any subsequent federal census.

Acts 1985, ch. 380, § 6.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. Constitutionality, OAG 85-270, 1985 Tenn. AG LEXIS 24 (10/30/85).

7-51-1007. Regulation of entry into the business of providing passenger transportation service — Limousine, sedan, shuttle and taxicab service.

  1. In addition to exercising all the authority granted by all other provisions of this part, every governmental entity in any county having a population in excess of five hundred thousand (500,000), according to the 1990 federal census or any subsequent federal census, is empowered to regulate entry into the business of providing passenger transportation service, including, but not limited to, limousine, sedan, shuttle and taxicab service.
  2. As used in this section, unless the context otherwise requires:
    1. “Limousine” means any motor vehicle except a taxicab or sedan designed or constructed to accommodate and transport passengers for hire, with an extended wheel base and expanded seating capacity designed for the transport of persons. The vehicle will have additional rear seating capacity, area, and comforts; and shall be designed to transport not more than fourteen (14) in number, exclusive of the chauffeur/driver, and the principal operation of which is confined to the area within the corporate limits of cities and suburban territory adjacent to the cities;
    2. “Sedan” means any motor vehicle, except a limousine or taxicab, designed or constructed to accommodate and transport passengers for hire, that does not have an extended wheel base or an expanded seating capacity designed for the transport of persons. The vehicle will have no additional rear seating capacity, area or comforts; shall be designed to transport not more than five (5) passengers, exclusive of the chauffeur/driver, and the principal operation of which is confined to the area within the corporate limits of cities and suburban territory adjacent to the cities, and not operated on a fixed route or schedule;
    3. “Shuttle” means any motor vehicle designed or constructed to accommodate and transport passengers for hire, not more than fifteen (15) in number, exclusive of the driver, and the principal operation of which is confined to the area within the corporate limits of cities and suburban territory adjacent to the cities, and operated on a fixed route or schedule;
    4. “Taxicab” means any motor vehicle except a limousine or sedan designed or constructed to accommodate and transport passengers for hire, not more than nine (9) in number, exclusive of the driver, and the principal operation of which is confined to the area within the corporate limits of cities and suburban territory adjacent to the cities, and not operated on a fixed route or schedule.
  3. In any county to which this section applies, limousines, sedans, shuttles and taxicabs, as defined in this section, shall comply with the safety rules and regulations and the liability insurance requirements contained in title 65, chapter 15.

Acts 1999, ch. 262, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Part 11
Adult-Oriented Establishment Registration Act of 1998

7-51-1101. Short title.

This part shall be known and may be cited as the “Adult-Oriented Establishment Registration Act of 1998.”

Acts 1987, ch. 432, § 1; 1998, ch. 1090, § 1.

Compiler's Notes. Part contingent upon local referendum. See § 7-51-1120.

Cross-References. Adult-oriented establishments, title 7, ch. 51, part 14.

Massage registration, title 63, ch. 18.

Sale, loan or exhibition of material to minors, § 39-17-911.

Attorney General Opinions. Constitutionality, OAG 87-70, 1987 Tenn. AG LEXIS 131 (4/15/87).

NOTES TO DECISIONS

1. Constitutionality.

The Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., is constitutional, with the exception of § 7-51-1113(i) [deleted by 2001 amendment] that requires the posting of a sign that prohibits the collection of fees during a performance; there is no prohibition of such conduct in the Act. American Show Bar Series v. Sullivan County, 30 S.W.3d 324, 2000 Tenn. App. LEXIS 156 (Tenn. Ct. App. 2000), appeal denied, American Show Bar Series, Inc. v. Sullivan County, — S.W.3d —, 2000 Tenn. LEXIS 543 (Tenn. Sept. 25, 2000).

Claim that the Tennessee Adult-Oriented Establishment Registration Act, T.C.A. § 7-51-1101 et seq., facially imposed an unconstitutional prior restraint on protected expression because it did not afford prompt judicial review of adverse licensing decisions was rejected. However, an ordinance related to the Act was overbroad under first amendment intermediate scrutiny, where the definition of “public place” was so broad that it was effectively all-encompassing, and the ordinance made no attempt to regulate only activities associated with harmful secondary effects. Odle v. Decatur County, 421 F.3d 386, 2005 FED App. 368P, 2005 U.S. App. LEXIS 18412 (6th Cir. Tenn. 2005).

Although certain adult entertainment establishments might have sustained harm from the adoption of the Tennessee Adult-Oriented Establishment Registration Act in the county, the establishments had not shown a substantial likelihood of success on the merits; public interest was served by minimizing the adverse secondary effects of sexually oriented businesses. Entertainment Prods., Inc. v. Shelby County, 545 F. Supp. 2d 734,  2008 U.S. Dist. LEXIS 47423 (W.D. Tenn. Apr. 23, 2008), aff'd, Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009).

7-51-1102. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Adult bookstore” means a business that offers, as its principal or predominate stock or trade, sexually oriented material, devices, or paraphernalia, whether determined by the total number of sexually oriented materials, devices or paraphernalia offered for sale or by the retail value of such materials, devices or paraphernalia, specified sexual activities, or any combination or form thereof, whether printed, filmed, recorded or live, and that restricts or purports to restrict admission to adults or to any class of adults. The definition specifically includes items sexually oriented in nature, regardless of how labeled or sold, such as adult novelties, risqué gifts or marital aids;
  2. “Adult cabaret” means an establishment that features as a principal use of its business, entertainers, waiters, or bartenders who expose to public view of the patrons within such establishment, at any time, the bare female breast below a point immediately above the top of the areola, human genitals, pubic region, or buttocks, even if partially covered by opaque material or completely covered by translucent material, including swim suits, lingerie, or latex covering. “Adult cabaret” includes a commercial establishment that features entertainment of an erotic nature, including exotic dancers, strippers, male or female impersonators, or similar entertainers;
  3. “Adult entertainment” means any exhibition of any adult-oriented motion picture, live performance, display or dance of any type, that has as a principal or predominant theme, emphasis, or portion of such performance, any actual or simulated performance of specified sexual activities or exhibition and viewing of specified anatomical areas, removal of articles of clothing or appearing unclothed, pantomime, modeling, or any other personal service offered customers;
  4. “Adult mini-motion picture theater” means an enclosed building with a capacity of fewer than fifty (50) persons regularly used for presenting material distinguished or characterized by an emphasis on matter depicting, describing or relating to specified sexual activities or specified anatomical areas as defined in this section, for observation by patrons in the building;
  5. “Adult motion picture theater” means an enclosed building with a capacity of fifty (50) or more persons regularly used for presenting material having as a dominant theme or presenting material distinguished or characterized by an emphasis on matter depicting, describing or relating to specified sexual activities or specified anatomical areas as defined in this section, for observation by patrons in the building;
  6. “Adult-oriented establishment” includes, but is not limited to, an adult bookstore, adult motion picture theater, adult mini-motion picture establishment, adult cabaret, escort agency, sexual encounter center, massage parlor, rap parlor, sauna; further, “adult-oriented establishment” means any premises to which the public patrons or members are invited or admitted and that are so physically arranged as to provide booths, cubicles, rooms, compartments or stalls separate from the common areas of the premises for the purpose of viewing adult-oriented motion pictures, or wherein an entertainer provides adult entertainment to a member of the public, a patron or a member, when such adult entertainment is held, conducted, operated or maintained for a profit, direct or indirect. “Adult-oriented establishment” further includes, without being limited to, any adult entertainment studio or any premises that is physically arranged and used as such, whether advertised or represented as an adult entertainment studio, rap studio, exotic dance studio, encounter studio, sensitivity studio, model studio, escort service, escort or any other term of like import;
  7. “Board” means the adult-oriented establishment board, or, if there is in existence in the county a massage registration board appointed by the county mayor, such board may be substituted for the board;
  8. “County,” as used in this part, means either a Class A county or a Class B county as classified in § 57-5-103(b). When county legislative body or county mayor is used in this part, it means metropolitan council or metropolitan mayor when applicable to a Class B county;
    1. “Employee” means a person who performs any service on the premises of an adult-oriented establishment on a full-time, part-time, or contract basis, whether or not the person is denominated an employee, independent contractor, agent or otherwise, and whether or not such person is paid a salary, wage, or other compensation by the operator of such business;
    2. “Employee” does not include a person exclusively on the premises for repair or maintenance of the premises or equipment on the premises, or for the delivery of goods to the premises, nor does it include an independent accountant, attorney, or other similar professional incidentally visiting the premises solely to perform accounting, legal or other similar professional services; provided, that the accountant, attorney or other similar professional is not a manager, owner, operator, entertainer, or escort connected with the adult-oriented establishment or the providing of adult entertainment;
  9. “Entertainer” means any person who provides entertainment within an “adult-oriented establishment” as defined in this section, whether or not a fee is charged or accepted for entertainment and whether or not entertainment is provided as an employee, escort or an independent contractor;
  10. “Escort” means a person who, for monetary consideration in the form of a fee, commission, salary or tip, dates, socializes, visits, consorts with, accompanies, or offers to date, socialize, visit, consort or accompany to social affairs, entertainment or places of amusement or within any place of public resort or within any private quarters of a place of public resort;
  11. “Escort service” means a “person” as defined in this section, who, for a fee, commission, profit, payment or other monetary consideration, furnishes or offers to furnish escorts or provides or offers to introduce patrons to escorts;
  12. “Massage parlor” means an establishment or place primarily in the business of providing massage or tanning services where one (1) or more of the employees exposes to public view of the patrons within such establishment, at any time, the bare female breast below a point immediately above the top of the areola, human genitals, pubic region, or buttocks, even if partially covered by opaque material or completely covered by translucent material;
  13. “Notice” means, when required by this part, placing the document in the United States mail with sufficient first-class postage to carry it to its destination to the address of the person being notified as contained in their application, unless such person has notified the board in writing of such person's new address. “Receipt of notification” is presumed three (3) days after the mailing of a notice as provided in this subdivision (14);
  14. “Open office” means an office at the escort service from which the escort business is transacted and that is open to patrons or prospective patrons during all hours during which escorts are working, which is managed or operated by an employee, officer, director or owner of the escort service having authority to bind the service to escort and patron contracts and adjust patron and consumer complaints;
  15. “Operator” means any person, partnership, or corporation operating, conducting or maintaining an adult-oriented establishment;
  16. “Person” means an individual, partnership, limited partnership, firm, corporation or association;
  17. “Rap parlor” means an establishment or place primarily in the business of providing nonprofessional conversation or similar service for adults;
  18. “Sauna” means an establishment or place primarily in the business of providing:
    1. A steam bath; or
    2. Massage services;
  19. “Service-oriented escort” is an escort that:
    1. Operates from an open office;
    2. Does not employ or use an escort runner;
    3. Does not advertise that sexual conduct will be provided to the patron or work for an escort bureau that so advertises; and
    4. Does not offer or provide sexual conduct;
  20. “Service-oriented escort bureau” is an escort bureau that:
    1. Maintains an open office at an established place of business;
    2. Employs or provides only escorts who possess valid permits issued under this part;
    3. Does not use an escort bureau runner; and
    4. Does not advertise that sexual conduct will be provided to a patron;
  21. “Sexual conduct” means the engaging in or the commission of an act of sexual intercourse, oral-genital contact, or the touching of the sexual organs, pubic region, buttocks or female breast of a person for the purpose of arousing or gratifying the sexual desire of another person;
  22. “Sexual encounter center” means a business or commercial enterprise that, as one of its primary business purposes, offers for any form of consideration:
    1. Physical contact in the form of wrestling or tumbling between persons of the opposite sex; or
    2. Physical contact between male and female persons or persons of the same sex when one (1) or more of the persons exposes to view of the persons within such establishment, at any time, the bare female breast below a point immediately above the top of the areola, human genitals, pubic region, or buttocks, even if partially covered by opaque material or completely covered by translucent material;
  23. “Sexual gratification” means sexual conduct as defined in this section;
  24. “Sexual stimulation” means to excite or arouse the prurient interest or to offer or solicit acts of sexual conduct as defined in this section;
  25. “Sexually-oriented escort” is an escort that:
    1. Employs as an employee, agent, or independent contractor an escort bureau runner;
    2. Works for, as an agent, employee, contractor, or is referred to a patron by a sexually-oriented escort bureau;
    3. Advertises that sexual conduct will be provided, or works for, as an employee, agent or independent contractor or is referred to a patron by an escort bureau that so advertises;
    4. Solicits, offers to provide or does provide acts of sexual conduct to an escort patron, or accepts an offer or solicitation to provide acts of sexual conduct for a fee in addition to the fee charged by the escort bureau;
    5. Works as an escort without having a current valid permit issued under this part in such person's possession at all times while working as an escort; or
    6. Accepts a fee from a patron who has not first been delivered a contract;
  26. “Sexually-oriented escort bureau” is an escort bureau that:
    1. Does not maintain an open office;
    2. Employs as an employee, agent, or independent contractor, uses an escort bureau runner;
    3. Advertises that sexual conduct will be provided, or that escorts that provide such sexual conduct will be provided, referred, or introduced to a patron;
    4. Solicits, offers to provide or does provide acts of sexual conduct to an escort patron;
    5. Employs, contracts with or provides or refers escorts who do not possess valid permits issued under this part;
    6. Does not deliver contracts to every patron or customer; or
    7. Employs or contracts with a sexually-oriented escort, or refers or provides to a patron, a sexually-oriented escort;
  27. “Specified anatomical areas” means:
    1. Less than completely and opaquely covered:
      1. Human genitals;
      2. Pubic region;
      3. Buttocks; and
      4. Female breasts below a point immediately above the top of the areola; and
    2. Human male genitals in a discernibly turgid state, even if completely opaquely covered;
  28. “Specified criminal acts” means the following criminal offenses as defined by the Tennessee Code Annotated or the corresponding violation of another state or country:
    1. Aggravated rape;
    2. Rape;
    3. Rape of a child;
    4. Aggravated sexual battery;
    5. Sexual battery by an authority figure;
    6. Sexual battery;
    7. Statutory rape;
    8. Public indecency;
    9. Prostitution;
    10. Promoting prostitution;
    11. Distribution of obscene materials;
    12. Sale, loan or exhibition to a minor of material harmful to minors;
    13. The display for sale or rental of material harmful to minors;
    14. Sexual exploitation of a minor;
    15. Aggravated sexual exploitation of a minor; and
    16. Especially aggravated sexual exploitation of a minor;
  29. “Specified services” means massage services, private dances, private modeling, acting as an escort as defined in this part, and any other live adult entertainment as defined in this section; and
  30. “Specified sexual activities” means:
    1. Human genitals in a state of sexual stimulation or arousal;
    2. Acts of human masturbation, sexual intercourse or sodomy; or
    3. Fondling or erotic touching of human genitals, pubic region, buttocks or female breasts.

Acts 1987, ch. 432, § 2; 1998, ch. 1090, § 1; 2003, ch. 47, § 1; 2003, ch. 90, § 2; 2005, ch. 79, § 1; 2006, ch. 943, §§ 1, 2; 2008, ch. 1085, § 1.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Sale, loan or exhibition of material to minors, § 39-17-911.

Attorney General Opinions. Constitutionality of disqualification provisions, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

“Adult-oriented establishment” construed, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

Proposed amendment clarifying the scope of the definition of “adult bookstore” in T.C.A. § 7-51- 1102(1) is constitutionally defensible, OAG 05-030 (3/29/05), 2005 Tenn. AG LEXIS 30.

NOTES TO DECISIONS

1. Constitutionality.

Where nightclub operators challenged the constitutionality of the Tennessee Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., a preliminary injunction was properly denied because, the definitions of the terms “adult cabaret,” “adult entertainment,” and “adult-oriented establishment” did not render the Act overly broad since the Act was readily susceptible to a narrowing construction that would clearly except mainstream artistic venues from the licensing and regulatory scheme. Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009), cert. denied, 562 U.S. 835, 131 S. Ct. 141, 178 L. Ed. 2d 36, 2010 U.S. LEXIS 5875 (U.S. 2010).

2. Construction.

There is no explicit requirement that adult entertainment be regularly presented by or constitute a principal use of an establishment, in order for an establishment to be subject to the Tennessee Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., under the second part of the “adult-oriented establishment” definition. Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009), cert. denied, 562 U.S. 835, 131 S. Ct. 141, 178 L. Ed. 2d 36, 2010 U.S. LEXIS 5875 (U.S. 2010).

Certain activities constitute “adult entertainment” only when they implicate “specified sexual activities” or “specified anatomical areas.” Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009), cert. denied, 562 U.S. 835, 131 S. Ct. 141, 178 L. Ed. 2d 36, 2010 U.S. LEXIS 5875 (U.S. 2010).

3. Video Rental Store.

The definitions of “adult book store” and “adult-oriented establishment” contained in this section exclude a video rental store business from coverage under this act. Price v. State, 806 S.W.2d 179, 1991 Tenn. LEXIS 124 (Tenn. 1991).

4. Bookstores.

Since all adult bookstores restricted admission to adults, as defined in T.C.A. § 7-51-1102(1), restricted access was a reliable indicator of adult materials and was a rational way to identify those likely to produce the adverse secondary effects the Tennessee Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., targeted; plaintiff bookstore was properly denied a preliminary injunction on an equal protection challenge against defendant county. East Brooks Books, Inc. v. Shelby County, 588 F.3d 360, 2009 U.S. App. LEXIS 25806, 2009 FED App. 407P (6th Cir. Nov. 25, 2009).

7-51-1103. Adult-oriented establishment board — Massage registration board as substitute.

  1. There is created in any county in which this part is adopted as provided in § 7-51-1120, an adult-oriented establishment board.
  2. The board shall consist of five (5) members appointed by the county mayor of such counties. If there exists a massage registration board appointed by the county mayor, such board may be used for the adult-oriented establishments, as determined by the county mayor.
  3. If the board consists of the massage registration board, the terms of the board members shall be coextensive with the terms of the massage registration board with no member serving after the expiration of the member's term or removal from the massage registration board. If the board consists of five (5) members appointed by such county mayor, the terms of the board members shall be for four (4) years.
  4. A majority of the members to which the board is entitled shall constitute a quorum.
  5. The board shall serve without compensation, but the members shall receive their actual expenses for attending adult-oriented establishment board meetings.
  6. The board shall select a chair from among its members and the chair shall notify interested persons and members of board meetings.
  7. The board shall meet as often as required to carry out this part.
  8. To further the purposes of this part, the board shall have authority to promulgate procedural rules and any substantive rules consistent with this part that are constitutionally valid and are promulgated in such a way that the board's discretion about whether to grant, deny, revoke, or suspend a license or permit is not unbridled.

Acts 1987, ch. 432, § 3; 1998, ch. 1090, § 1; 2001, ch. 183, § 1; 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Attorney General Opinions. Appointments to county adult-oriented establishment board.  OAG 10-16, 2010 Tenn. AG LEXIS 26 (2/17/10).

7-51-1104. License to operate — Required.

  1. Except as provided in subsection (e), from and after July 1, 1998, no adult-oriented establishment shall be operated or maintained in any applicable county without first obtaining a license to operate issued by the county adult-oriented establishment board.
  2. A license may be issued only for one (1) adult-oriented establishment located at a fixed and certain place. Any person, partnership or corporation that desires to operate more than one (1) adult-oriented establishment must have a license for each. No building, premises, structure or other facility that contains any adult-oriented establishment shall contain any other kind of adult-oriented establishment.
  3. No license or interest in a license may be transferred to any person, partnership or corporation.
  4. It is unlawful for any entertainer, employee, escort or operator to knowingly work in or about or to knowingly perform any service directly related to or at the request of the operation of any unlicensed adult-oriented establishment or escort service.
  5. All existing adult-oriented establishments, entertainers, employees, escorts, or operators, at the time this part is given local effect pursuant to § 7-51-1120, must submit an application for an appropriate license or permit within one hundred twenty (120) days of this part becoming effective in such county. All existing adult-oriented establishments, entertainers, employees, escorts, or operators, at the time this part is given local effect pursuant to § 7-51-1120, who timely submit an application for an appropriate license or permit, as set forth in this subsection (e), shall be granted a conditional license or permit maintaining the status quo, pending final judicial review by the trial court. If no timely application is filed within the one-hundred-twenty-day period, or no license or permit is issued by the board or granted through judicial review by the trial court, then the adult-oriented establishment, entertainer, employee, escort, or operator shall cease to operate or to perform such services or entertainment.
  6. No license shall be issued by the board unless the applicant certifies, by proof satisfactory to the board, that the applicant has satisfied the rules, regulations and provisions of the applicable zoning requirements in the county. Any zoning requirement shall be in addition to and not an alternative to any requirement of this part.

Acts 1987, ch. 432, § 4; 1998, ch. 1090, § 1; 2001, ch. 183, § 2; 2006, ch. 943, § 3.

Attorney General Opinions. Constitutionality of limitation on number of adult-oriented establishments in one location, OAG 90-02, 1990 Tenn. AG LEXIS 18 (1/8/90).

Prohibition of multiple adult-oriented establishments in the same building or structure.  OAG 10-15, 2010 Tenn. AG LEXIS 25 (2/17/10).

7-51-1105. License to operate — Application.

  1. Any person, partnership, or corporation desiring to secure a license shall make application to the adult-oriented establishment board. A copy of the application shall be distributed promptly to the county sheriff's department.
  2. The application for a license shall be upon a form provided by the board. An applicant for a license shall furnish the following information under oath:
    1. Name and address, including all aliases;
    2. Written proof that the individual is at least eighteen (18) years of age;
    3. The business, occupation or employment of the applicant in an adult- oriented establishment for five (5) years immediately preceding the date of the application;
    4. The adult-oriented establishment or similar business license history of the applicant; whether such applicant, in previously operating in this or any other county, city or state under license, has had such license revoked or suspended, the reason therefor, and the business activity or occupation subject to such action of suspension or revocation;
    5. Any conviction for or plea of nolo contendere to a specified criminal act, as defined in § 7-51-1102;
    6. The address of the adult-oriented establishment to be operated by the applicant;
      1. If the applicant is a corporation, the application shall specify the name, address, and telephone number of the corporation, the date and the state of incorporation, the name and address of the registered agent for service of process of the corporation, and the names and addresses of the officers and directors of the corporation, and the names and addresses of any persons holding fifty percent (50%) or more of the stock of the corporation;
      2. If the applicant is a partnership, the application shall specify the name and address of the partnership, and the name and address of all general partners of the partnership;
      3. If the partnership is a limited partnership, the application shall specify the name and address of all general partners who have a controlling interest in the partnership; and
    7. A statement by the applicant that the applicant is familiar with this part and is in compliance with this part.
  3. Within ten (10) days of receiving the results of the investigation conducted by the board or the sheriff's department, pursuant to § 7-51-1106(4), the board shall notify the applicant that the application is granted, denied or held for further investigation. Such additional investigation shall not exceed an additional thirty (30) days unless otherwise agreed to by the applicant. Upon the conclusion of such additional investigation, the board shall advise the applicant in writing whether the application is granted or denied.
  4. Failure or refusal of the applicant to give any information relevant to the investigation of the application, or the applicant's refusal or failure to appear at any reasonable time and place for examination under oath regarding the application or the applicant's refusal to submit to or cooperate with any investigation required by this part constitutes an admission by the applicant that the applicant is ineligible for such license and shall be grounds for denial of the license by the board.

Acts 1987, ch. 432, § 5; 1998, ch. 1090, § 1.

Attorney General Opinions. Constitutionality of disclosure requirements, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1106. License to operate — Qualifications.

To receive a license to operate an adult-oriented establishment, an applicant must meet the following standards:

    1. If the applicant is an individual:
      1. The applicant shall be at least eighteen (18) years of age;
      2. The applicant shall not have had a license revoked within five (5) years immediately preceding the date of the application;
      3. The applicant shall not have been convicted of or pleaded nolo contendere to any violation of this part within five (5) years immediately preceding the date of the application; and
      4. The applicant shall not have been convicted of a specified criminal act, as defined in § 7-51-1102, for which:
  1. Less than two (2) years have elapsed since the date of conviction if the conviction is for a misdemeanor offense;
  2. Less than five (5) years have elapsed since the date of conviction if the conviction is for a felony offense;
  3. Less than five (5) years have elapsed since the date of conviction for two (2) or more misdemeanor offenses occurring within any twelve-month period;

The fact that a conviction is being appealed shall have no effect on disqualification of the applicant;

(A)  If the applicant is a corporation:

All officers, directors and stockholders required to be named under § 7-51-1105(b) shall be at least eighteen (18) years of age;

No officer, director and stockholder required to be named under § 7-51-1105(b) shall have had an adult-oriented establishment license revoked within five (5) years immediately preceding the date of the application;

No officer, director or stockholder required to be named under § 7-51-1105(b) shall have been convicted of or pleaded nolo contendere to any violation of this part within five (5) years immediately preceding the date of the application; and

The applicant or officer, director or stockholder required to be named under § 7-51-1105(b) shall not have been convicted of a specified criminal act, as defined in § 7-51-1102, for which:

Less than two (2) years have elapsed since the date of conviction if the conviction is for a misdemeanor offense;

Less than five (5) years have elapsed since the date of conviction if the conviction is for a felony offense; and

Less than five (5) years have elapsed since the date of conviction for two (2) or more misdemeanor offenses occurring within any twelve-month period;

The fact that a conviction is being appealed shall have no effect on disqualification of the applicant;

(A)  If the applicant is a partnership, joint venture or any other type of organization where two (2) or more persons have a financial interest:

All persons having a financial interest in the partnership, joint venture or other type of organization shall be at least eighteen (18) years of age;

All persons having a financial interest in the partnership, joint venture or other type of organization shall not have had a license revoked within five (5) years immediately preceding the date of the application;

No applicant or person having a financial interest in the partnership, joint venture or other type of organization shall have been convicted of or pleaded nolo contendere to any violation of this part within five (5) years immediately preceding the date of the application; and

The applicant or any person having a financial interest required to be disclosed shall not have been convicted of a specified criminal act, as defined in § 7-51-1102, for which:

Less than two (2) years have elapsed since the date of conviction if the conviction is for a misdemeanor offense;

Less than five (5) years have elapsed since the date of conviction if the conviction is for a felony offense;

Less than five (5) years have elapsed since the date of conviction for two (2) or more misdemeanor offenses occurring within any twelve-month period;

The fact that a conviction is being appealed shall have no effect on disqualification of the applicant;

No license shall be issued unless the board or sheriff's department has investigated the applicant's qualifications to be licensed. The results of that investigation shall be filed in writing with the board no later than twenty (20) days after the date of the application. The board shall only deny an application for a license for reasons set forth in this part;

An applicant who has been convicted of any “specified criminal activities” may not be denied a permit based on those convictions once the time period required in this section has elapsed.

Acts 1987, ch. 432, § 6; 1998, ch. 1090, § 1; 2001, ch. 183, § 3.

Attorney General Opinions. Constitutionality of disqualification provisions, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1107. Inspections — Notice of results.

  1. In order to effectuate this part, the board, its authorized representative or sheriff is empowered to conduct investigations of persons engaged in the operation of any adult-oriented establishment and inspect the license of the operators and establishment for compliance. Refusal of an operation or establishment to permit inspections shall be grounds for revocation, suspension or refusal to issue licenses provided by this part.
  2. Within ten (10) days of receiving the results of the investigation conducted pursuant to § 7-51-1106(4), the board shall notify the applicant that the application is granted, denied or held for further investigation. Such additional investigation shall not exceed an additional thirty (30) days, unless otherwise agreed to by the applicant. Upon the conclusion of such additional investigation, the board shall advise the applicant in writing whether the application is granted or denied.
  3. If an additional investigation is held and is not a result of actions by the applicant, upon the expiration of the thirtieth day from the filing of the application, the applicant shall be permitted to operate the business for which the license is sought, unless or until the board or its authorized representative notifies the applicant of a denial of the application and states the reasons for that denial.

Acts 1987, ch. 432, § 7; 1998, ch. 1090, § 1; 2001, ch. 183, § 4.

7-51-1108. Injunctions — Contempt.

  1. The board has the power and authority to enter into any court of the state of Tennessee having proper jurisdiction to seek an injunction against any person or adult-oriented establishment not in compliance with this part, and is further empowered to enter into any such court to enforce this part in order to ensure compliance with such provisions.
  2. Any violation of an injunction obtained under this section is contempt with a fine of fifty dollars ($50.00).
  3. Each day in contempt of such injunction is considered a separate offense.
  4. The circuit, chancery, or criminal courts of this state and the chancellors and judges of the courts shall have full power, authority, and jurisdiction, upon application by sworn detailed petition filed by the board within their respective jurisdictions, to issue any and all proper restraining orders, temporary and permanent injunctions, and any other writs and processes appropriate to carry out and enforce this part.

Acts 1987, ch. 432, § 8; 1998, ch. 1090, § 1.

Attorney General Opinions. Prompt judicial review requirements, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1109. Revocation, suspension or annulment of licenses.

  1. The board shall revoke, suspend or annul a license or permit for any of the following reasons:
    1. Discovery that false or misleading information or data was given on any application or material facts were omitted from any application;
    2. The operator, entertainer, employee, or any escort violates any provision of this part; provided, that an operator has a duty to supervise conduct on the premises of the adult-oriented establishment and shall be deemed responsible for the conduct of an entertainer, employee, or escort, if the operator knew, or should have known, of the violation and authorized, approved, or, in the exercise of due diligence, failed to take reasonable efforts to prevent the violation;
    3. The operator, entertainer, employee, or escort becomes ineligible to obtain the appropriate license or permit;
    4. Any cost or fee required to be paid by this part is not paid;
    5. Any intoxicating liquor or malt beverage is served or consumed on the premises of the adult-oriented establishment, when an operator, employee, entertainer, or escort knew, or should have known, of the violation and authorized, approved, or, in the exercise of due diligence, failed to take reasonable efforts to prevent the violation;
    6. An operator who, with actual or constructive knowledge, employs an employee who does not have a permit or provides space on the premises, whether by lease or otherwise, to an independent contractor who performs or works as an entertainer without a permit;
    7. Any operator, employee or entertainer sells, furnishes, gives or displays, or causes to be sold, furnished, given or displayed to any minor any adult- oriented entertainment or adult-oriented material;
    8. Any operator, employee or entertainer denies access of law enforcement personnel to any portion of the licensed premises wherein adult-oriented entertainment is permitted or to any portion of the licensed premises wherein adult-oriented material is displayed or sold;
    9. An operator, who with actual or constructive knowledge, fails to maintain the licensed premises in a sanitary condition by allowing continuing violations of the published health code, rules, or regulations specifically applicable in that jurisdiction, based upon an inspection by the appropriate health authority for that jurisdiction; and
    10. Any operator, employee or entertainer is convicted of a specified criminal act, as defined in § 7-51-1102, provided that such violation occurred on the licensed premises.
    1. Notwithstanding anything in this part to the contrary, before revoking or suspending any license or permit, the chair shall give the license holder or permit holder not less than ten (10) nor more than twenty (20) days' written notice of the charges against such license holder or permit holder and of the revocation of such license or permit, or of the period of time such license or permit is to be suspended; such notice shall also advise the license holder or permit holder of the license holder's or permit holder's right to request a hearing before the board. In the event the license holder or permit holder does not request in writing a hearing before the board within the time set forth in such notice, the suspension or revocation shall be effective beginning the date set forth in such notice.
    2. If the license holder or permit holder desires to request a hearing before the board to contest the suspension or revocation, such request shall be made in writing to the county mayor of such county within ten (10) days of the license holder's or permit holder's receipt of the notification from the board. If the license holder or permit holder timely requests such a hearing, the effective date of a suspension or hearing shall be stayed pending the final outcome of judicial proceedings to determine whether such license or permit has been properly revoked or suspended under the law.
    3. If the license holder or permit holder timely requests such a hearing, a public hearing shall be held within fifteen (15) days of the county mayor's receipt of such request before the board, at which time the license holder or permit holder may present evidence contrary to this part. The board shall hear evidence concerning the basis for such suspension or revocation and shall affirm or reverse the suspension or revocation at the conclusion of such hearing; any such hearing shall be concluded no later than twenty-two (22) days after the license holder's or permit holder's receipt of the notification of the suspension or revocation, unless an extension beyond such time period is requested by the license holder or permit holder and granted by the board.
    1. If the board affirms the suspension or revocation, the county attorney for such county shall institute suit for declaratory judgment in a court of record in such county, within five (5) days of the date of any such affirmation seeking an immediate judicial determination of whether such license or permit has been properly revoked or suspended under the law.
    2. Any operator whose license is revoked shall not be eligible to receive a license for five (5) years from the date of revocation.
    3. The applicant shall be entitled to judicial determination of the issues within two (2) days after joinder of issue, and a decision shall be rendered by the court within two (2) days of the conclusion of the hearing.
    4. The board shall have the burden of showing that a revocation or suspension of a license under this section is not arbitrary or capricious. If a board decision is found by the court to be clearly erroneous, the court may overturn the decision as being arbitrary or capricious.
    5. This subsection (c) shall apply in any county that, pursuant to § 7-51-1120, adopts this part as being applicable in its county, unless the county legislative body of that county elects to have subsection (d) apply.
    1. In any county in which the legislative body, in accordance with subdivision (d)(3), elects to make this subsection (d) applicable in its county, if the board affirms the suspension, revocation, or annulment of the license or permit of the holder, the license or permit holder may appeal the decision to a court of record in the county, within ten (10) days of any such affirmation, by common-law writ of certiorari. The appellant shall have the burden of showing to the court that the revocation, suspension, or annulment is illegal, arbitrary or capricious. If a court finds the board decision is clearly erroneous, the court may overturn the decision as being illegal, arbitrary or capricious.
    2. Any operator whose license is revoked shall not be eligible to receive a license for five (5) years from the date of revocation.
    3. The legislative body of any county that, pursuant to § 7-51-1120, adopts this part as being applicable in its county, shall also have the option of electing to make this subsection (d) applicable in its county. Any action by the county may be rescinded by the legislative body, in which case subsection (c) shall apply.

Acts 1987, ch. 432, § 9; 1998, ch. 1090, § 1; 2001, ch. 183, § 5; 2003, ch. 90, § 2; 2006, ch. 943, §§ 4-9; 2008, ch. 1085, §§ 2, 3.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Sale, loan or exhibition of material to minors, § 39-17-911.

Attorney General Opinions. Constitutionality of 1998 amendments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

Constitutionality of one-year license disqualification after revocation, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

Prompt judicial review requirements, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

NOTES TO DECISIONS

1. Constitutionality.

The United States Supreme Court has long upheld ordinances prohibiting an establishment from offering both alcohol and adult-oriented entertainment; thus, there is no constitutional infirmity in this provision. American Show Bar Series v. Sullivan County, 30 S.W.3d 324, 2000 Tenn. App. LEXIS 156 (Tenn. Ct. App. 2000), appeal denied, American Show Bar Series, Inc. v. Sullivan County, — S.W.3d —, 2000 Tenn. LEXIS 543 (Tenn. Sept. 25, 2000).

Plaintiff bookstore's claim that T.C.A. § 7-51-1109' s prohibition on the sale, use, or consumption of alcoholic beverages in adult bookstores violated the due process clause failed because § 7-51-1109(a)(2) of the Tennessee Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., provided for a revocation or suspension of an operator's license on the basis of an employee's actions only if an operator had a duty to supervise conduct on the premises, and knew, or should have known, of the violation and authorized, approved, or, in the exercise of due diligence, failed to take reasonable efforts to prevent the violation; the Act did not punish operators of adult establishments on the basis of strict liability. East Brooks Books, Inc. v. Shelby County, 588 F.3d 360, 2009 U.S. App. LEXIS 25806, 2009 FED App. 407P (6th Cir. Nov. 25, 2009).

Plaintiff bookstore's claim against defendant county that the penalties provided in T.C.A. §§ 7-51-1109, 7-51-1119, suppressed future protected speech unconnected to the negative secondary effects the county cited as justification Tennessee Adult-Oriented Establishment Registration Act of 1998 , T.C.A., § 7-51-1101 et seq., failed because punitive revocation of a license under § 7-51-1119 complied with the two requirements of prompt judicial review, and maintenance of status quo, and § 7-51-1109(b), (c), provided for administrative proceedings for revocations and challenges. East Brooks Books, Inc. v. Shelby County, 588 F.3d 360, 2009 U.S. App. LEXIS 25806, 2009 FED App. 407P (6th Cir. Nov. 25, 2009).

7-51-1110. Hearings on disciplinary actions — Judicial review — Prohibition on operation of business.

  1. As used in this section, “application” means:
    1. An application for a license;
    2. An application for a permit;
    3. An application for a license renewal; and
    4. An application for a permit renewal.
  2. Whenever an application is denied, the chair shall notify the applicant in writing of the reasons for such action; such notice shall also advise the applicant of the applicant's right to request a hearing before the board. All adult-oriented establishments, entertainers, employees, escorts, or operators who timely submit an application for renewal of an appropriate license or permit shall be granted a conditional license or permit maintaining the status quo pending review by the board and final judicial review by the trial court. If the applicant desires to request a hearing before the board to contest the denial of an application, such request shall be made in writing to the county mayor of such county within ten (10) days of the applicant's receipt of the notification of the denial of the application. If the applicant timely requests such a hearing, a public hearing shall be held within fifteen (15) days of the county mayor's receipt of such request before the board, at which time the applicant may present evidence as to why the application should not be denied. The board shall hear evidence concerning the basis for denial of the application and shall affirm or reverse the denial of an application at the conclusion of such hearing; any such hearing shall be concluded no later than twenty-two (22) days after the applicant's receipt of notification of denial of an application, unless an extension beyond such time period is requested by the applicant and granted by the board.
    1. If the board affirms the denial of an application, the office of the county attorney for such county shall institute suit for declaratory judgment in a court of record in such county, within five (5) days of the date of any such denial seeking an immediate judicial determination of whether such application has been properly denied under the law.
    2. The applicant shall be entitled to judicial determination of the issues within two (2) days after joinder of issue, and a decision shall be rendered by the court within two (2) days of the conclusion of the hearing. The applicant shall cooperate in expediting completion of service of process by the board when initiating a declaratory action under this part.
    3. The board shall have the burden of showing that the denial of an application under this section is not arbitrary or capricious. If a denial of the application by the board is found by the court to be clearly erroneous, the court may overturn the action as being arbitrary or capricious.
    4. The provisions of this part mandating judicial review shall control over general provisions for declaratory judgment actions in the event of any conflict.
    5. This subsection (c) shall apply in any county that, pursuant to § 7-51-1120, adopts to make this part applicable in its county, unless the county legislative body of that county elects to have subsection (d) apply.
    1. In any county in which the legislative body, in accordance with subdivision (d)(2), elects to make this subsection (d) applicable in its county, if the board affirms the denial of an application, the applicant may appeal the decision to a court of record in the county, within ten (10) days of any such affirmation, by common-law writ of certiorari. The applicant shall have the burden of showing to the court that the denial is illegal, arbitrary or capricious. If a court finds the board decision is clearly erroneous, the court may overturn the decision as being illegal, arbitrary or capricious.
    2. The legislative body of any county that, pursuant to § 7-51-1120, adopts this part as being applicable in its county, shall also have the option of electing to make this subsection (d) applicable in its county. Any action by the county may be rescinded by the legislative body, in which case subsection (c) shall apply.

Acts 1987, ch. 432, § 10; 1998, ch. 1090, § 1; 2001, ch. 183, §§ 6-8; 2003, ch. 90, § 2; 2006, ch. 943, § 10; 2008, ch. 1085, §§ 4, 5.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Attorney General Opinions. Constitutionality of 1998 amendments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1111. Termination and renewal of licenses — Applications — Fees.

  1. Every license issued under this part will terminate at the expiration of one (1) year from the date of issuance, unless sooner revoked, and must be renewed before operation is allowed in the following year. Any operator desiring to renew a license shall make application to the board. The application for renewal must be filed not later than sixty (60) days before the license expires. The application for renewal shall be filed in triplicate with and dated by the board. A copy of the application for renewal shall be distributed promptly by the chair of the board to the applicable county sheriff. The application for renewal shall contain such information and data relevant to the renewal request, including information related to the applicant's qualifications or whether there are grounds for denial of renewal, and shall be given under oath or affirmation, as may be required by the board, but not less than the information contained in the original application.
  2. A license renewal fee of one hundred dollars ($100) shall be submitted with the application for renewal. In addition to the renewal fee, a late penalty of fifty dollars ($50.00) shall be assessed against the applicant who files for a renewal less than thirty (30) days before the license expires. If the application is denied, one half (½) of the fee shall be returned.
  3. If the sheriff's department is aware of any information bearing on the operator's qualifications, the information shall be filed in writing with the board not later than ten (10) days after the date of the application for renewal.
  4. Every permit issued under this part will terminate at the expiration of one (1) year from the date of issuance, unless sooner revoked, and must be renewed before an entertainer is allowed to provide entertainment in an adult-oriented establishment in the following calendar year. Any entertainer desiring to renew a permit shall make application to the board. The application for renewal must be filed not later than thirty (30) days before the permit expires. The application for renewal shall be filed in triplicate with and dated by the board. A copy of the application for renewal shall be distributed promptly by the board to the sheriff. The application for renewal shall be upon a form provided by the board and shall contain such information and data relative to the renewal request, such as the applicant's qualifications, or whether there are grounds for denying the renewal, given under oath or affirmation, as may be required by the board.
  5. A permit renewal fee of fifteen dollars ($15.00) shall be submitted with the application for renewal. In addition to the renewal fee, a late penalty of five dollars ($5.00) shall be assessed against the applicant who files for renewal less than thirty (30) days before the license expires. If the application is denied, one half (½) of the fee shall be returned.
  6. If the sheriff's department is aware of any information bearing on the entertainer's qualifications, that information shall be filed in writing with the board not later than ten (10) days after the date of the application for renewal.
  7. Notwithstanding anything in this part to the contrary, any application for renewal of a license or for renewal for a permit shall be handled, investigated, and approved or denied within the same time periods as those established in this part for original license applications and permit applications. In the event a license renewal application or permit renewal application is denied, the applicant shall have all rights of appeal to the board as set forth in § 7-51-1110.

Acts 1987, ch. 432, § 11; 1998, ch. 1090, § 1; 2001, ch. 183, §§ 9, 10.

7-51-1112. Hours open for inspection.

The public portion of all adult-oriented establishments shall be open to inspection at all reasonable times by the applicable sheriff's department or such other persons as the board may designate.

Acts 1987, ch. 432, § 12; 1998, ch. 1090, § 1.

Attorney General Opinions. Constitutionality of 1998 amendments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1113. Duties and responsibilities of operators, entertainers and employees.

  1. The operator shall maintain a register of all employees, entertainers, or escorts, showing for each person the name, permit number issued under this part, any aliases used, home address, age, birth date, sex, height, weight, color of hair and eyes, telephone number, social security number, driver license number, date of employment and termination, and duties associated with the adult-oriented establishment. This information on each employee shall be maintained in the register on the premises for a period of three (3) years following termination.
  2. The operator shall make the register of employees available immediately for inspection by the board or sheriff's department upon demand of a member of the board or sheriff's department at all reasonable times.
  3. Every act or omission by an employee constituting a violation of this part shall be deemed the act or omission of the operator if such act or omission occurs either with the authorization, knowledge, or approval of the operator, or as a result of the operator's negligent failure to supervise the employee's conduct, and the operator shall be punishable for such act or omission in the same manner as if the operator committed the act or caused the omission.
  4. An operator shall be responsible for supervising the conduct of all entertainers and employees while on the licensed premises, and shall exercise due diligence in taking reasonable efforts to prevent acts or omissions of any entertainers or employees constituting a violation of this part, with the operator's failure to reasonably fulfill this duty constituting a ground for determining whether the operator's license shall be revoked, suspended or renewed.
  5. No employee of an adult-oriented establishment shall allow any minor to loiter around or to frequent an adult-oriented establishment or to allow any minor to view adult entertainment as defined in this part.
  6. Every adult-oriented establishment shall be physically arranged in such a manner that the entire interior portion of the booths, cubicles, rooms or stalls, wherein adult entertainment is provided, shall be visible from the common area of the premises. Visibility shall not be blocked or obscured by doors, curtains, partitions, drapes or any other obstruction whatsoever.
  7. The operator shall be responsible for and shall provide that any room or area used for the purpose of viewing adult-oriented motion pictures or other types of live adult entertainment shall be readily accessible at all times and shall be continuously opened to view in its entirety.
  8. The license shall be conspicuously displayed in the common area of the premises at all times.
  9. The permit shall be kept by an employee, entertainer, or escort so that it is readily available for display immediately upon request by any member of the county sheriffs department or other appropriate law enforcement official, any board member, or any person designated by the board to assist it in enforcing this part. Each employee, entertainer, or escort shall immediately display or disclose the employee, entertainer, or escort's valid permit number to any customer upon request.

Acts 1987, ch. 432, § 13; 1998, ch. 1090, § 1; 2001, ch. 183, § 11; 2006, ch. 943, §§ 11-13.

Attorney General Opinions. Constitutionality of 1998 amendments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

Constitutionality of operator liability for employee conduct, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

NOTES TO DECISIONS

1. Constitutionality.

Despite evidence that showed that hundreds of entertainers performed in plaintiffs' establishments every year, sometimes for only a few days, and in some instances, only one night, because the registry required by T.C.A. § 7-51-1114(a) is necessary to determine what entertainers toured there, when, and whether they have proper permits, the provision is not more burdensome than necessary in furthering that interest; accordingly this provision is constitutional. American Show Bar Series v. Sullivan County, 30 S.W.3d 324, 2000 Tenn. App. LEXIS 156 (Tenn. Ct. App. 2000), appeal denied, American Show Bar Series, Inc. v. Sullivan County, — S.W.3d —, 2000 Tenn. LEXIS 543 (Tenn. Sept. 25, 2000).

Former T.C.A. § 7-51-1113(i) was unconstitutional and should be struck from the Adult-Oriented Establishment Registration Act, compiled in title 7, ch. 51, part 11, because the required sign advised that the collection of fees during a performance was prohibited and there was no prohibition of such conduct in the act. American Show Bar Series v. Sullivan County, 30 S.W.3d 324, 2000 Tenn. App. LEXIS 156 (Tenn. Ct. App. 2000), appeal denied, American Show Bar Series, Inc. v. Sullivan County, — S.W.3d —, 2000 Tenn. LEXIS 543 (Tenn. Sept. 25, 2000) (decision under prior law).

Where nightclub operators challenged the constitutionality of the Tennessee Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., a preliminary injunction was properly denied because the prohibitions contained in T.C.A. § 7-51-1114(b) and (c) were not overbroad since: (1) The Act included prophylactic measures that diminished the opportunities for the occurrence of prohibited sexual contact, and (2) Section 7-51-1114(b) does not effect any additional prohibitions on physical contact beyond what is already prohibited in other sections. Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009), cert. denied, 562 U.S. 835, 131 S. Ct. 141, 178 L. Ed. 2d 36, 2010 U.S. LEXIS 5875 (U.S. 2010).

7-51-1114. Prohibited activities.

  1. No operator, entertainer or employee of an adult-oriented establishment, either on the premises or in relation to the person's role as an operator, entertainer, or employee of an adult-oriented establishment, shall permit to be performed, offer to perform, perform, or allow patrons to perform sexual intercourse or oral or anal copulation or other contact stimulation of the genitalia.
  2. No operator, entertainer or employee of an adult-oriented establishment shall encourage or permit any person upon the premises to touch, caress or fondle the breasts, buttocks, anus or genitals of any operator, entertainer or employee.
  3. No entertainer, employee, or customer shall be permitted to have any physical contact with any other on the premises during any performance and all performances shall only occur upon a stage at least eighteen inches (18") above the immediate floor level and removed at least six feet (6') from the nearest entertainer, employee, or customer.
    1. No employee or entertainer, while on the premises of an adult-oriented establishment, may:
      1. Engage in sexual intercourse;
      2. Engage in deviant sexual conduct;
      3. Appear in a state of nudity; or
      4. Fondle such person's own genitals or those of another.
    2. For the purpose of this section, “nudity” means the showing of the human male or female genitals or pubic area with less than a fully opaque covering, the showing of the female breast with less than a fully opaque covering of any part of the nipple, or the showing of the covered male genitals in a discernibly turgid state.
  4. If the license holder operates an escort bureau, such bureau shall not be operated as a sexually-oriented escort bureau as defined in this part.
  5. No permit holder of an escort bureau shall conduct oneself as a sexually-oriented escort as defined in this part.
  6. No license holder shall advertise that such license holder offers sexual stimulation or sexual gratification as defined in this part.

Acts 1987, ch. 432, § 14; 1998, ch. 1090, § 1; 2001, ch. 183, § 12.

Cross-References. Massage or exposure of erogenous areas, § 39-17-918.

Attorney General Opinions. Constitutionality of 1998 amendments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

NOTES TO DECISIONS

1. Constitutionality.

The six foot buffer zone contained in T.C.A. § 7-51-1114(c) is not constitutionally infirm; although it is true that a patron's experience of the dancer's message is more intense, more personal, more erotic if the dancer is close, it remains also true that there is nothing in constitutional jurisprudence to suggest that patrons are entitled to the maximum erotic experience possible. American Show Bar Series v. Sullivan County, 30 S.W.3d 324, 2000 Tenn. App. LEXIS 156 (Tenn. Ct. App. 2000), appeal denied, American Show Bar Series, Inc. v. Sullivan County, — S.W.3d —, 2000 Tenn. LEXIS 543 (Tenn. Sept. 25, 2000).

Where nightclub operators challenged the constitutionality of the Tennessee Adult-Oriented Establishment Registration Act of 1998, T.C.A. § 7-51-1101 et seq., a preliminary injunction was properly denied because the prohibitions contained in T.C.A. § 7-51-1114(b) and (c) were not overbroad since the Act included prophylactic measures that diminished the opportunities for the occurrence of prohibited sexual contact. Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009), cert. denied, 562 U.S. 835, 131 S. Ct. 141, 178 L. Ed. 2d 36, 2010 U.S. LEXIS 5875 (U.S. 2010).

2. Construction.

There is no good reason to suppose that the direct and unambiguous prohibitions in T.C.A. § 7-51-1114(d) are not exhaustive. T.C.A. § 7-51-1114(b) is read as an enactment of vicarious liability for operators or employees who encourage or permit patrons or entertainers to touch other entertainers, perhaps without the latter's explicit consent. Entm't Prods., Inc. v. Shelby County, 588 F.3d 372, 2009 U.S. App. LEXIS 25808, 2009 FED App. 406P (6th Cir. Nov. 25, 2009), cert. denied, 562 U.S. 835, 131 S. Ct. 141, 178 L. Ed. 2d 36, 2010 U.S. LEXIS 5875 (U.S. 2010).

7-51-1115. Entertainers or escorts — Permits — Required.

No person shall be an entertainer, employee, or escort in an adult-oriented establishment without a valid permit issued by the board.

Acts 1987, ch. 432, § 15; 1998, ch. 1090, § 1.

7-51-1116. Entertainers or escorts — Permits — Application.

  1. Any person desiring to secure a permit as an entertainer, employee, or escort shall make application to the board. The application shall be filed in triplicate with and dated by the board. A copy of the application shall be distributed promptly by the board to the sheriff's department.
  2. The application for a permit shall be upon a form provided by the board. An applicant for a permit shall furnish the following information under oath:
    1. Name and address, including all aliases;
    2. Written proof that the individual is at least eighteen (18) years of age;
    3. The applicant's height, weight, color of eyes and hair;
    4. The adult-oriented establishment or similar business permit history of the applicant; whether such person, in previously operating in this or any other city or state under permit, has had such permit revoked or suspended, the reason for the revocation or suspension, and the business activity or occupation subject to such action of suspension or revocation;
    5. Any conviction for or plea of nolo contendere to a specified criminal act, as defined in § 7-51-1102;
    6. Two (2) portrait photographs at least two inches by two inches (2" x 2") of the applicant; and
    7. A statement by the applicant that the applicant is familiar with this part and is in compliance with  this part.
  3. Within ten (10) days of receiving the results of the investigation conducted by the board or sheriff's department, the board shall notify the applicant that the applicant's application is granted, denied or held for further investigation. Such additional investigation shall not exceed an additional thirty (30) days unless otherwise agreed to by the applicant. Upon the conclusion of such additional investigations, the board shall advise the applicant in writing whether the application is granted or denied.
  4. If an additional investigation is held that is not caused by actions of the applicant, upon the expiration of the thirtieth day from the filing of the application, the applicant shall be permitted conditionally to work as an entertainer, employee, or escort pending final judicial review by the trial court of a decision by the board to deny the application.
  5. Failure or refusal of the applicant to give any information relevant to the investigation of the application, or the applicant's refusal or failure to appear at any reasonable time and place for examination under oath regarding the application, or the applicant's refusal to submit to or cooperate with any investigation required by this part, constitutes an admission by the applicant that the applicant is ineligible for such permit, and is grounds for denial thereof by the board.

Acts 1987, ch. 432, § 16; 1998, ch. 1090, § 1; 2001, ch. 183, § 13; 2006, ch. 943, §§ 14, 15.

Attorney General Opinions. Constitutionality of required disclosure of criminal convictions, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1117. Entertainers, employees or escorts — Permits — Qualifications — Investigations.

  1. To receive a permit as an entertainer, employee or escort, an applicant must meet the following standards:
      1. The applicant shall be at least eighteen (18) years of age;
      2. The applicant shall not have had a permit revoked within two (2) years immediately preceding the date of the application;
      3. The applicant shall not have been convicted of a specified criminal act, as defined in § 7-51-1102, for which:
        1. Less than two (2) years have elapsed since the date of conviction if the conviction is for a misdemeanor offense;
        2. Less than five (5) years have elapsed since the date of conviction if the conviction is for a felony offense; and
        3. Less than five (5) years have elapsed since the date of conviction for two (2) or more misdemeanor offenses occurring within any twelve-month period;
    1. The fact that a conviction is being appealed shall have no effect on disqualification of the applicant;
    2. An applicant who has been convicted of any specified criminal activities may not be denied a permit based on those convictions once the time period required in subdivision (a)(1)(C) has elapsed.
  2. No permit shall be issued until the board or sheriff's department has investigated the applicant's qualifications to receive a permit. The results of that investigation shall be filed in writing with the board no later than thirty (30) days after the date of the application. The board shall only deny a permit application for reasons set forth in this part.

Acts 1987, ch. 432, § 17; 1998, ch. 1090, § 1; 2001, ch. 183, § 14; 2006, ch. 943, § 16.

7-51-1118. Entertainers and escorts — Permits — Fees.

  1. A license fee of five hundred dollars ($500) shall be submitted with the application for a license.
  2. A permit fee of one hundred dollars ($100) shall be submitted with the application for a permit.

Acts 1987, ch. 432, § 18; 1998, ch. 1090, § 1.

7-51-1119. Penalties for violation of part.

    1. A violation of this part shall, for a first offense, be a Class B misdemeanor, punishable by a fine only of five hundred dollars ($500), and shall result in the suspension or revocation of any license.
    2. A second or subsequent violation of this part is a Class A misdemeanor, and shall result in the suspension or revocation of any license.
  1. Each violation of this part shall be considered a separate offense, and any violation continuing more than one (1) hour of time shall be considered a separate offense for each hour of violation.

Acts 1987, ch. 432, § 19; 1998, ch. 1090, § 1; 2005, ch. 439, § 1.

Cross-References. Penalties for Class A and B misdemeanors, § 40-35-111.

NOTES TO DECISIONS

1. Constitutionality.

Plaintiff bookstore's claim against defendant county that the penalties provided in T.C.A. §§ 7-51-1109, 7-51-1119, suppressed future protected speech unconnected to the negative secondary effects the county cited as justification Tennessee Adult-Oriented Establishment Registration Act of 1998 failed because punitive revocation of a license under § 7-51-1119 complied with the two requirements of prompt judicial review and maintenance of status quo. East Brooks Books, Inc. v. Shelby County, 588 F.3d 360, 2009 U.S. App. LEXIS 25806, 2009 FED App. 407P (6th Cir. Nov. 25, 2009).

7-51-1120. Local approval required.

This part shall be local in effect and shall become effective in a particular county upon the contingency of a two-thirds (2/3) vote of the county legislative body adopting this part.

Acts 1987, ch. 432, § 21; 1998, ch. 1090, § 1.

Attorney General Opinions. Authority of state legislature to regulate adult-oriented establishments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

7-51-1121. Part not exclusive or preemptory of local laws or regulations.

  1. Nothing in this part shall preempt or prevent political subdivisions in this state from enacting and enforcing other lawful and reasonable restrictions, regulations, licensing, zoning, and other criminal, civil or administrative provisions concerning the location, configuration, code compliance, or other business operations or requirements of adult-oriented establishments and sexually-oriented businesses. Except as specified in this part, such other lawful and reasonable restrictions, regulations, licensing, and other criminal, civil, or administrative provisions shall not be a basis for the board's denying, revoking, or suspending a license or permit under this part.
  2. Notwithstanding subsection (a) or any other law to the contrary, if a city or other political subdivision in this state chooses to enact and enforce its own regulatory scheme for adult-oriented establishments and sexually-oriented businesses, then this part shall not apply within the jurisdiction of such city or other political subdivision.

Acts 1998, ch. 1090, § 1; 2001, ch. 183, § 15.

7-51-1122. Criminal conviction record check.

  1. The general assembly hereby declares that conducting a criminal conviction record check of an applicant desiring a license to operate an adult-oriented establishment is for a law enforcement purpose and that conducting a criminal conviction record check of applicants desiring a permit to perform as an entertainer at an adult-oriented establishment is also for a law enforcement purpose. Notwithstanding § 7-51-1121(b), or any other law to the contrary, those counties, cities or other political subdivisions that choose to license and regulate adult-oriented establishments and sexually-oriented businesses, either by adopting this part or by enacting and enforcing their own regulatory scheme that disqualifies an applicant for the conviction of a criminal act, shall require that all applicants for a license or permit to operate an adult-oriented establishment or to perform as an entertainer at an adult-oriented establishment shall submit a full set of fingerprints to the county, city or other political subdivision for positive identification of the applicant and the county, city or other political subdivision shall conduct a criminal conviction records check of the applicant.
    1. Upon receipt of an application, the county, city or other political subdivision that licenses or permits operators or entertainers shall:
      1. Conduct a criminal conviction record check through such computer terminals available to it or other means of access to criminal convictions that are maintained by the county, city or other political subdivision, the Tennessee bureau of investigation and the federal bureau of investigation; and
      2. Forward the applicant's fingerprints to the Tennessee bureau of investigation, which shall verify the identity of the applicant and shall conduct its own criminal conviction record check itself and forward the results of that investigation to the requesting county, city or other political subdivision.
    2. If no disqualifying criminal conviction is identified by the county, city or other political subdivision or by the Tennessee bureau of investigation, the Tennessee bureau of investigation shall forward a set of the applicant's fingerprints to the federal bureau of investigation for verification of the applicant's identity and request the federal bureau of investigation to conduct a criminal conviction record check investigation using the fingerprints.
    3. The results of criminal conviction record investigations shall be used for the limited purpose of determining the applicant's qualifications for a license to operate an adult-oriented establishment or for a permit to perform as an entertainer at an adult-oriented establishment.
  2. Fingerprints shall be submitted on authorized fingerprint cards or by electronic, machine-readable data, or other means approved by the Tennessee bureau of investigation and the federal bureau of investigation.
  3. Any cost incurred in conducting such criminal conviction records investigations shall be paid by the county, city or other political subdivision making the request of the Tennessee bureau of investigation or the federal bureau of investigation. The county, city or other political subdivision may include such cost as part of any fee it charges for processing the applicant's license or permit.

Acts 2000, ch. 897, § 1.

Part 12
Demolition of Historic Structures

7-51-1201. Restrictions on demolition of residential structures — Approval of demolition.

No owner may demolish any residential structure that meets all of the following criteria, unless the county or municipal legislative body, as provided in this part, approves by majority vote such demolition:

  1. The residential structure was originally constructed before 1865;
  2. The residential structure is reparable at a reasonable cost; and
  3. The residential structure has an historical significance besides age itself, including, but not limited to, uniqueness of architecture, occurrence of historical events, notable former residents, design by a particular architect, or construction by a particular builder.

Acts 1989, ch. 416, § 1.

7-51-1202. Jurisdiction.

  1. If such property is located within the boundaries of a municipality, the municipal legislative body shall approve the demolition and no county approval shall be required.
  2. If such property is located outside the boundaries of a municipality, the county legislative body shall approve the demolition.

Acts 1989, ch. 416, § 1.

7-51-1203. Approval not granted — Condemnation or purchase.

If approval is not granted, the county or municipality shall proceed with a condemnation proceeding as provided in title 29, chapter 17, or purchase the property in question within a reasonable period of time, which shall not exceed ninety (90) days.

Acts 1989, ch. 416, § 1.

7-51-1204. Applicability of part.

This part shall apply in any county having a population of more than three hundred thousand (300,000), according to the 1980 federal census or any subsequent federal census, and shall be inapplicable to such residential structures within the right-of-way of projects administered by the department of transportation whenever a determination has been made that such structures are of historical significance and plans for their disposition or preservation have been coordinated with and concurred in by the state historic preservation officer of the Tennessee historical commission.

Acts 1989, ch. 416, § 2.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Part 13
Civil Service Notice

7-51-1301. Notice of examinations.

  1. For civil service employment, notices shall be posted for any examinations given by any municipal government or any county government or any metropolitan government to establish promotion eligibility for civil service employment.
  2. Such notice shall be posted at least thirty (30) days prior to the examination.
  3. The chief executive officer of any local government may, upon written notice to an affected department head, waive the posting requirement of this section.

Acts 1989, ch. 203, § 1.

Part 14
Adult-Oriented Establishments

7-51-1401. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Adult” means a person who has attained eighteen (18) years of age;
  2. “Adult cabaret” means a cabaret that features topless dancers, go-go dancers, exotic dancers, strippers, male or female impersonators, or similar entertainers;
  3. “Adult entertainment” means any exhibition of any adult-oriented motion picture, live performance, display or dance of any type, that has as a significant or substantial portion of such performance, any actual or simulated performance of specified sexual activities, including removal of articles of clothing or appearing unclothed;
  4. “Adult-oriented establishment” means any commercial establishment, business or service, or portion thereof, that offers, as its principal or predominant stock or trade, sexually-oriented material, devices, or paraphernalia or specified sexual activities, or any combination or form thereof, whether printed, filmed, recorded or live and that restricts or purports to restrict admission to adults or to any class of adults. “Adult-oriented establishment” includes, but is not limited to:
    1. “Adult book stores” means any corporation, partnership or business of any kind that has as its principal or predominant stock or trade, books, magazines or other periodicals and that offers, sells, provides or rents for a fee:
      1. Is available for viewing by patrons on the premises by means of the operation of movie machines or slide projectors; or
      2. Has a substantial portion of its contents devoted to the pictorial depiction of sadism, masochism or bestiality; or
      3. Has as its principal theme the depiction of sexual activity by, or lascivious exhibition of, the uncovered genitals, pubic region or buttocks of children who are or appear to be under eighteen (18) years of age;
    2. “Adult motion picture theatres” means an enclosed building used for presenting film presentations that are distinguished or characterized by an emphasis on matter depicting, describing or relating to specified sexual activities for observation by patrons therein; and
    3. “Adult shows” or “adult peep shows” means all adult shows, exhibitions, performances or presentations that contain acts or depictions of specified sexual activities;
  5. “Bestiality” means sexual activity, actual or simulated, between a human being and an animal;
  6. “Family recreation center” means any facility, which is oriented principally toward meeting the athletic or recreational needs of families and whose targeted customer is a minor child, including, but not limited to, the provision of one (1) or more of the following:
    1. Ice skating;
    2. Roller skating;
    3. Skateboarding;
    4. Paintball;
    5. Mini-golf;
    6. Bowling;
    7. Go-carts;
    8. Climbing facilities;
    9. Athletic fields or courts; or
    10. Other similar athletic or recreation activities;
  7. “Masochism” means sexual gratification achieved by a person through, or the association of sexual activity with, submission or subjection to physical pain, suffering, humiliation, torture or death;
  8. “Person” means an individual, partnership, limited partnership, firm, corporation or association;
  9. “Sadism” means sexual gratification achieved through, or the association of sexual activity with, the infliction of physical pain, suffering, humiliation, torture or death upon another person or animal;
  10. “Sexually-oriented material” means any book, article, magazine, publication or written matter of any kind, drawing, etching, painting, photograph, motion picture film or sound recording that depicts sexual activity, actual or simulated, involving human beings or human beings and animals, that exhibits uncovered human genitals or pubic region in a lewd or lascivious manner, or that exhibits human male genitals in a discernibly turgid state, even if completely covered; and
  11. “Specified sexual activities” means activities, services or performances that include the following sexual activities or the exhibition of the following anatomical areas:
    1. Human genitals in a state of sexual stimulation or arousal;
    2. Acts of human masturbation, sexual intercourse, sodomy, cunnilingus, fellatio or any excretory function, or representation thereof; or
    3. Fondling or erotic touching of human genitals, pubic region, buttocks or female breasts.

Acts 1995, ch. 421, § 2; 2012, ch. 1062, § 1.

Compiler's Notes. For the preamble to the act concerning certain regulations on a state-wide basis concerning hours of operation, prohibited acts, and permitting regulations for employees and entertainers of adult-oriented establishments and adult cabarets, please refer to Acts 2012, ch. 1062.

Cross-References. Registration of adult-oriented establishments, title 7, ch. 51, part 11.

Attorney General Opinions. Authority of state legislature to regulate adult-oriented establishments, OAG 98-096, 1998 Tenn. AG LEXIS 96 (4/29/98).

NOTES TO DECISIONS

1. Constitutionality.

Plaintiff's equal protection claim did not implicate fundamental first amendment rights because plaintiff offered no evidence that the expressive content of live cabarets was different in any meaningful respect from that of the adult bookstores subject to the operating-hour restrictions imposed by the Adult-Oriented Establishment Act of 1995, T.C.A. § 7-51-1401 et seq.; because the expressive content of the regulated live cabarets was virtually identical to that of adult bookstores, the act could not be said to discriminate against the expressive content of the bookstores and in favor of that of the live cabarets. Richland Bookmart Inc. v. Nichols, 278 F.3d 570, 2002 FED App. 30P, 2002 U.S. App. LEXIS 879 (6th Cir. Tenn. 2002), rehearing denied, Richland Bookmart, Inc. v. Nichols, — F.3d —, 2002 U.S. App. LEXIS 6473 (6th Cir. Mar. 28, 2002) , cert. denied, Richland Bookmart, Inc. v. Nichols, 537 U.S. 823, 123 S. Ct. 109, 154 L. Ed. 2d 33, 2002 U.S. LEXIS 6031 (2002).

The history behind the passage of the Adult-Oriented Establishment Registration Act, T.C.A. § 7-51-1401 et seq., and the virtually identical expressive content as between live adult cabarets and adult bookstores, belies the notion that the Tennessee legislature made an impermissible distinction on the basis of content or that the operating-hours exemption of the live cabarets was invidious. Richland Bookmart Inc. v. Nichols, 278 F.3d 570, 2002 FED App. 30P, 2002 U.S. App. LEXIS 879 (6th Cir. Tenn. 2002), rehearing denied, Richland Bookmart, Inc. v. Nichols, — F.3d —, 2002 U.S. App. LEXIS 6473 (6th Cir. Mar. 28, 2002) , cert. denied, Richland Bookmart, Inc. v. Nichols, 537 U.S. 823, 123 S. Ct. 109, 154 L. Ed. 2d 33, 2002 U.S. LEXIS 6031 (2002).

Collateral References.

Validity of statutes and ordinances restricting hours of “adult entertainment” or sex-oriented businesses. 121 A.L.R.5th 427.

7-51-1402. Hours of operation for adult-oriented establishment.

  1. No adult-oriented establishment shall open to do business before eight o'clock a.m. (8:00 a.m.), Monday through Saturday; and no such establishment shall remain open after twelve o'clock (12:00) midnight, Monday through Saturday. No adult-oriented establishment shall be open for business on any Sunday or a legal holiday as designated in § 15-1-101.
  2. A local ordinance, resolution or private act may establish opening hours for adult-oriented establishments that are later than eight o'clock a.m. (8:00 a.m.) and closing hours that are earlier than twelve o'clock (12:00) midnight, but in no event may such ordinances, resolutions or private acts extend the opening hours to earlier than eight o'clock a.m. (8:00 a.m.) or the closing hours to later than twelve o'clock (12:00) midnight.

Acts 1995, ch. 421, § 3.

Attorney General Opinions. When an adult-oriented establishment is offering lap, couch, table, and other non-stage adult entertainment in close proximity to patrons, it is not within the scope of the exemption in T.C.A. § 7-51-1405 and must comply with the hours of operation restrictions in T.C.A.§ 7-51-1402, OAG 08-170 (11/5/08), 2008 Tenn. AG LEXIS 192.

Current precedent in the United States Court of Appeals for the Sixth Circuit upholds the constitutionality of Tennessee's hours-of-operation restrictions for adult-oriented establishments. OAG 14-92, 2014 Tenn. AG LEXIS 95 (10/24/14).

NOTES TO DECISIONS

1. Constitutionality.

T.C.A. § 7-51-1402 does not violate first amendment principles governing the regulation of sex literature because reducing crime, open sex and solicitation of sex and preserving the character of a neighborhood are substantial government interests, the act leaves open alternative avenues of communication and it does not unduly restrict access to adult establishments. Richland Bookmart, Inc. v. Nichols, 137 F.3d 435, 1998 FED App. 70P, 1998 U.S. App. LEXIS 3161 (6th Cir. Tenn. 1998).

2. Courts of Equity.

General rule that courts of equity lacked jurisdiction to enjoin enforcement of a criminal statute, T.C.A. § 7-51-1402, that was alleged to be unconstitutional, equally applied to the circuit court; the supreme court refused to presume that the state would harass the businesses and their employee by continuing to prosecute them under the statute if it was found to be invalid or inapplicable during the first prosecution brought to trial; the businesses did not present evidence demonstrating that absent the injunction, the value of their property would be destroyed or it would deteriorate. Clinton Books, Inc. v. City of Memphis, 197 S.W.3d 749, 2006 Tenn. LEXIS 313 (Tenn. 2006), rehearing denied, 197 S.W.3d 749, 2006 Tenn. LEXIS 642 (Tenn. 2006).

Collateral References.

Validity of statutes and ordinances restricting hours of “adult entertainment” or sex-oriented businesses. 121 A.L.R.5th 427.

7-51-1403. Physical design of premises.

No person shall own, operate, manage, rent, lease or exercise control over any commercial building, structure, premises or portion or part of any commercial building, structure or premises that is an adult-oriented establishment and that contains:

  1. Partitions between subdivisions of a room, portion or part of a building, structure or premises having an aperture that is designed or constructed to facilitate sexual activity between persons on either side of the partition; or
  2. Booths, stalls, or partitioned portions of a room or individual rooms, used for the viewing of motion pictures or other forms of entertainment, having doors, curtains or portal partitions, unless such booths, stalls, partitioned portions of a room or individual rooms so used shall have at least one (1) side open to adjacent public rooms so that the area inside is visible to persons in adjacent public rooms. Such areas shall be lighted in a manner that the persons in the areas used for viewing motion pictures or other forms of entertainment are visible from the adjacent public rooms, but such lighting shall not be of such intensity as to prevent the viewing of motion pictures or other offered entertainment.

Acts 1995, ch. 421, § 4.

7-51-1404. Penalty.

A first offense for a violation of this part is a Class B misdemeanor, punishable only by a fine of five hundred dollars ($500); and a second or subsequent such offense is a Class A misdemeanor.

Acts 1995, ch. 421, § 5.

Cross-References. Penalties for Class A and B misdemeanors, § 40-35-111.

7-51-1405. Hours of operation for live, stage adult entertainment.

The opening and closing time limitations placed on adult-oriented establishments in § 7-51-1402 shall not apply to an establishment or the portion of an establishment that offers only live, stage adult entertainment in a theatre, adult cabaret, or dinner show type setting.

Acts 1995, ch. 421, § 6.

Attorney General Opinions. When an adult-oriented establishment is offering lap, couch, table, and other non-stage adult entertainment in close proximity to patrons, it is not within the scope of the exemption in T.C.A. § 7-51-1405 and must comply with the hours of operation restrictions in T.C.A.§ 7-51-1402, OAG 08-170 (11/5/08), 2008 Tenn. AG LEXIS 192.

7-51-1406. Local laws not preempted.

Nothing in this part shall preempt an ordinance, regulation, restriction or license that was lawfully adopted or issued by a political subdivision prior to the enactment of Acts 2007, ch. 541, or prevent or preempt a political subdivision in this state from enacting and enforcing in the future other lawful and reasonable restrictions, regulations, licensing, zoning or other civil or administrative provisions concerning the location, configuration, code compliance or other business operations or requirements of adult-oriented establishments and sexually-oriented businesses.

Acts 1995, ch. 421, § 7; 2007, ch. 541, § 2.

Compiler's Notes. For the Preamble to the act regarding adult oriented businesses, please refer to Acts 2007, ch. 541.

NOTES TO DECISIONS

1. Applicability.

This section clearly allows a county to enact and enforce restrictions concerning business operations of adult-oriented establishments and sexually-oriented businesses; Knox County, Tenn., Ordinance O-05-2-102 is consistent with and is not preempted by this section. Richland Bookmart, Inc. v. Knox County,  555 F.3d 512, 2009 FED App. 52P, 2009 U.S. App. LEXIS 2729 (6th Cir. Feb. 12, 2009).

7-51-1407. Restrictions on locations of adult-oriented businesses.

    1. An adult-oriented establishment or adult cabaret shall not locate within one thousand feet (1,000') of a child care facility, a private, public, or charter school, a public park, family recreation center, a residence, or a place of worship.
    2. For the purposes of subdivision (a)(1), measurements shall be made in a straight line in all directions, without regard to intervening structures or objects, from the nearest point on the property line of a parcel containing an adult-oriented establishment to the nearest point on the property line of a parcel containing a child care facility, a private, public, or charter school, a public park, family recreation center, a residence, or a place of worship.
  1. Subsection (a) shall not apply to an adult-oriented business located in an otherwise prohibited location in operation on July 1, 2007, and the business activity shall be deemed an existing use of the property; provided, that the business remains in continuous operation as an adult-oriented business regardless of change of ownership.

Acts 2007, ch. 541, § 1; 2012, ch. 1062, § 2.

Compiler's Notes. For the Preamble to the act regarding adult oriented businesses, please refer to Acts 2007, ch. 541.

For the preamble to the act concerning certain regulations on a state-wide basis concerning hours of operation, prohibited acts, and permitting regulations for employees and entertainers of adult-oriented establishments and adult cabarets, please refer to Acts 2012, ch. 1062.

Attorney General Opinions. Constitutionality of 1000 foot buffer for adult-oriented establishments, OAG 07-080 (5/24/07), 2007 Tenn. AG LEXIS 80.

Part 15
Employees' Political Freedoms

7-51-1501. Rights guaranteed to local government employees.

Notwithstanding any county, municipal, metropolitan, or other local governmental charter to the contrary, and notwithstanding any resolution or ordinance adopted by any such county, municipality or other local governmental unit to the contrary, every employee of every such local governmental unit shall enjoy the same rights of other citizens of Tennessee to be a candidate for any state or local political office, the right to participate in political activities by supporting or opposing political parties, political candidates, and petitions to governmental entities; provided, further, the city, county, municipal, metropolitan or other local government is not required to pay the employee's salary for work not performed for the governmental entity; and provided, further, that unless otherwise authorized by law or local ordinance, an employee of a municipal government or of a metropolitan government shall not be qualified to run for elected office in the local governing body of such local governmental unit in which the employee is employed.

Acts 1996, ch. 678, § 1.

Attorney General Opinions. Employee of city electric system may not run for city council, OAG 96-106, 1996 Tenn. AG LEXIS 116 (8/20/96).

City employee may not run for office of alderman, OAG 96-122, 1996 Tenn. AG LEXIS 147 (9/19/96).

Utility board employee serving as mayor or city council member, OAG 98-0130, 1998 Tenn. AG LEXIS 129 (7/27/98).

Payment for simultaneous employment as alderman and full-time town employee, OAG 98-0134, 1998 Tenn. AG LEXIS 134 (8/6/98).

Political campaigning by sheriffs’ employees, OAG 06-093 (5/17/06), 2006 Tenn. AG LEXIS 102.

City or county mayor running for state legislature.  OAG 10-37, 2010 Tenn. AG LEXIS 37 (3/24/10).

Local employee running for elective office.  OAG 10-94, 2010 Tenn. AG LEXIS 100 (8/27/10).

Teacher elected to serve on local school board by which teacher is employed may not retain employment as a teacher.  OAG 14-53, 2014 Tenn. AG Lexis 55 (5/1/14).

7-51-1502. Rights under § 5-5-102.

The rights granted to county employees under § 5-5-102(c)(1) are preserved.

Acts 1996, ch. 678, § 1.

7-51-1503. Time off for political activities limited.

Any time off from work used by the employee for participation in political activities shall be limited to earned days off, vacation days, or by any other arrangements worked out between the employee and the municipal or county governmental body.

Acts 1996, ch. 678, § 1.

Part 16
Natural Disaster Relief

7-51-1601. Definitions — Assistance to private residential property owners.

  1. As used in this section, unless the context otherwise requires:
    1. “Natural disaster” means a disaster that has caused widespread devastation in an area and includes an area that has been declared by the governor to be a disaster area; and
    2. “Private residential property” means real property, and the improvements to such real property, that is not owned by the federal government or a state agency and is used as a dwelling.
  2. When a natural disaster occurs, a municipality or county shall have access to and may spend public funds to assist in cleaning up debris and fallen trees on private residential property, if a request is made by the owner of the property for such assistance.
  3. The municipality or county shall by ordinance or resolution, as appropriate, adopt a plan for providing assistance for natural disaster relief to private residential property as authorized by this section. A county highway department may perform work as part of a plan adopted under this subsection (c) if the plan specifically authorizes the county highway department to perform the work and the plan provides for the reimbursement of the costs incurred by the county highway department.

T.C.A. § 58-2-111(c)(10); Acts 2004, ch. 743, § 3; 2017, ch. 275, §§ 1, 2.

Amendments. The 2017 amendment rewrote (a)(2) which read: “ ‘Private residential property’ means the property of a person who qualifies for property tax relief under §§ 67-5-70267-5-704.”; and, in (c), inserted “as” preceding “authorized” in the first sentence, and added the second sentence.

Effective Dates. Acts 2017, ch. 275, § 3. May 4, 2017.

Part 17
Leave Policy for Arrested Employees

7-51-1701. Leave policy for arrested employee — Restoring back pay.

If a municipality or county has or implements a personnel policy that places an employee on leave for any period of time immediately following any arrest of the employee, the municipality or county must also implement a policy of restoring back pay to the employee if the charges are dropped or the employee is found not guilty of the charges. This requirement shall not apply if the employee pleads guilty to the charges or enters into a plea agreement on the charges.

Acts 2008, ch. 1105, § 1.

Part 18
Equal Access to Intrastate Commerce Act

7-51-1801. Short title — Part definitions.

  1. This part shall be known and may be cited as the “Equal Access to Intrastate Commerce Act.”
  2. As used in the part, the term:
    1. “County” includes any county having a metropolitan form of government; and
    2. “Local government” means a municipality or county.

Acts 2011, ch. 278, § 3.

Compiler's Notes. Acts 2011, ch. 278, § 1, which enacted this part, also amended § 4-21-102; therefore the amendments to that section shall also be known and may be cited as the “Equal Access to Intrastate Commerce Act.”

7-51-1802. Local government authority regarding civil rights, leave policies, and health insurance.

    1. No local government shall by ordinance, resolution, or any other means impose on or make applicable to any person an anti-discrimination practice, standard, definition, or provision that shall deviate from, modify, supplement, add to, change, or vary in any manner from:
      1. The definition of “discriminatory practices” in § 4-21-102 or deviate from, modify, supplement, add to, change, or vary any term used in such definition and also as defined in such section; or
      2. Other types of discrimination recognized by state law but only to the extent recognized by the state.
    2. Any such practice, standard, definition, or provision imposed or made applicable to any person by a local government prior to May 23, 2011, shall be null and void.
      1. No local government shall by ordinance, resolution, contract or any other means authorize or mandate, as a condition of a doing business within the jurisdictional boundaries of a local government or contracting with a local government, that employers establish a leave policy that deviates from, modifies, supplements, adds to, changes, or varies in any manner from state statutorily imposed or recognized requirements such as those authorized pursuant to § 4-21-408.
      2. Subdivision (b)(1)(A) shall not apply if the local government is entering into a contract with the federal government and the federal government requirements are different from those imposed pursuant to state law.
  1. Except to the extent specifically required pursuant to any federal law, no local government shall by ordinance, resolution, contract or any other means, mandate or require, as a condition of doing business within the jurisdictional boundaries of the local government or contracting with the local government, that employers must provide health insurance benefits to persons employed by such employer.
  2. Except as otherwise provided by state or federal law, a local government shall not, as a condition of doing business within the jurisdictional boundaries of the local government or contracting with the local government, prohibit an employer from requesting any information on an application for employment or during the process of hiring a new employee.
  3. Subsections (a), (b), (c), and (d) shall not apply with respect to employees of a local government.
  4. Except as otherwise provided by state or federal law, a local government shall not adopt or enforce any ordinance, regulation, resolution, policy, or any other legal requirement that regulates or imposes a requirement upon an employer pertaining to employee scheduling except when necessary to avoid creating a public or private nuisance.

Acts 2011, ch. 278, § 3; 2013, ch. 91, § 2; 2016, ch. 606, §§ 1, 2; 2017, ch. 107, § 1.

Compiler's Notes. Acts 2013, ch. 91, § 5 provided that the act, which amended this section, shall apply to contracts entered into or renewed on or after April 11, 2013.

Amendments. The 2016 amendment added present (d); redesignated former (d) as (e); and in present (e), substituted “(b), (c), and (d)” for “(b) and (c)”.

The 2017 amendment added (f).

Effective Dates. Acts 2016, ch. 606, § 3. March 17, 2016.

Acts 2017, ch. 107, § 2. April 7, 2017.

NOTES TO DECISIONS

1. Standing to Challenge.

Trial court properly dismissed the equal protection claims brought by a city council member, equality organizations, and others for lack of standing where their allegations that the changes adopted in T.C.A. § 7-51-1802 (2011), inter alia, prevented them from achieving beneficial local legislation, stripped LGBT individuals of antidiscrimination protections, exposed LGBT individuals to increased risk of discrimination, and deprived transgender individuals of previously available antidiscrimination protections did not state a cognizable injury. Howe v. Haslam, — S.W.3d —, 2014 Tenn. App. LEXIS 716 (Tenn. Ct. App. Nov. 4, 2014).

Part 19
Grants for Development of Blighted Properties

7-51-1901. Public policy — Purpose.

  1. It is the public policy of this state that a mechanism should be created to enable local governments to provide grants which would encourage housing development or encourage the repair, rebuilding and renovations of existing facilities and structures in neighborhoods whose stability depends upon the elimination of blight and the upgrading of structural needs of a facility.
  2. Remodeling and eliminating blight serves a valid public purpose for the stabilization of the value of the neighborhood and increases the value of the facility being rehabilitated.

Acts 2012, ch. 832, § 2.

7-51-1902. Part definitions — Authority to develop grant programs.

  1. As used in this part:
    1. “Blighted” has the meaning ascribed to that term in title 13, chapters 20 and 21; and
    2. “Local government” means a municipality, county or county having a metropolitan form of government.
  2. Local governments are authorized to develop grant programs to be paid from the general fund of the local government to homeowners and developers who invest in blighted property for the purpose of stabilizing the value of the neighborhood and increasing the value of the facilities being constructed or rehabilitated which are located on blighted property.

Acts 2012, ch. 832, § 3.

7-51-1903. Submission of grant program to attorney general and reporter for review and approval.

Prior to offering any grants under a program developed by the local government, the local government shall submit the grant program to the attorney general and reporter for the review and approval of the attorney general and reporter to ensure the grants will not be offered in an arbitrary and capricious manner and in no way violate:

  1. Constitutional requirements of Tennessee Constitution, Article II, § 28 requiring equal and uniform taxation of property; and
  2. Section 29-17-102(2).

Acts 2012, ch. 832, § 4.

Part 20
State Exclusive Regulator of Auxiliary Food and Drink Containers

7-51-2001. Part definitions.

As used in this part, unless the context requires otherwise:

  1. “Auxiliary container” means a bag, cup, bottle, can, device, eating or drinking utensil or tool, or other packaging, whether reusable or single use, which is:
    1. Made of cloth, paper, plastic, including foamed or expanded plastic, cardboard, corrugated material, aluminum, glass, post-consumer recycled material, or similar material or substrates, including coated, laminated, or multilayer substrates; and
    2. Designed for transporting, consuming, or protecting merchandise, food, or a beverage to or from, or at, a food service, manufacturing, distribution or processing facility, or retail facility; and
  2. “Local government” means a county, municipality, or county with a metropolitan form of government.

Acts 2019, ch. 158, § 1.

Effective Dates. Acts 2019, ch. 158, § 5. April 12,  2019.

7-51-2002. Prohibited regulation of auxiliary containers.

  1. A local government shall not adopt or enforce a resolution, ordinance, policy, or regulation that:
    1. Regulates the use, disposition, or sale of an auxiliary container;
    2. Prohibits or restricts an auxiliary container; or
    3. Enacts a fee, charge, or tax on an auxiliary container.
  2. Subsection (a) must not be construed to restrict:
    1. A curbside recycling program;
    2. A designated residential or commercial recycling location;
    3. A commercial recycling program;
    4. The use of an auxiliary container on property owned by a local government; or
    5. The regulation of auxiliary containers at an event, concert, or sports venue owned by a private or public entity or at an event managed by a local government.

Acts 2019, ch. 158, § 1.

Effective Dates. Acts 2019, ch. 158, § 5. April 12,  2019.

Chapter 52
Municipal Electric Plants

Part 1
Municipal Electric Plant Law of 1935

7-52-101. Short title.

This part shall be known and may be cited as the “Municipal Electric Plant Law of 1935.”

Acts 1935, ch. 32, § 1; C. Supp. 1950, § 3708.1; T.C.A. (orig. ed.), § 6-1501.

Cross-References. Collection or reimbursement for underpayments or overpayments for electrical service, § 28-3-301.

Tax equivalent payments authorized, title 7, ch. 52, part 3.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 41.

Attorney General Opinions. Operation of telephone and cable television service by city, OAG 95-097, 1995 Tenn. AG LEXIS 110 (9/18/95).

Advertising and competitive bidding requirements for Lewisburg electrical system purchases, OAG 96-043, 1996 Tenn. AG LEXIS 42 (3/13/96).

Organization of the Clarksville electric power board.  OAG 11-29, 2011 Tenn. AG LEXIS 31 (3/25/11).

“Growth and Development Fees” and “Impact Fees” levied by local utilities.  OAG 12-11, 2012 Tenn. AG LEXIS 11 (2/3/12).

NOTES TO DECISIONS

1. Constitutionality.

The Municipal Electric Plant Law, T.C.A. § 7-52-101 et seq., is valid and constitutional in its entirety and the provisions as to appointment of board members when applied to county systems are not violative of Tenn. Const., art. XI, § 17, prohibiting the filling of county offices other than by the people or county court (now county legislative body). Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

2. Purpose of Statute.

One of the fundamental purposes of this part was to segregate revenues derived from electric service for the purpose of paying operating expenses and indebtedness incurred in the construction or purchase of the plant. Tennessee Electric Power Co. v. Fayetteville, 173 Tenn. 111, 114 S.W.2d 811, 1937 Tenn. LEXIS 17 (1938).

3. Application of Statute.

Where there was sufficient authority under Private Acts 1923, ch. 412, which granted a charter to the city of Knoxville to allow such city to acquire and operate an electric distribution system, it was unnecessary to determine any question as to the application of this part to such electric system or as to the constitutionality of this part. Tennessee Public Service Co. v. Knoxville, 170 Tenn. 40, 91 S.W.2d 566, 1935 Tenn. LEXIS 106 (1936).

The Municipal Electric Plant Law, T.C.A. § 7-52-101 et seq., is a general law applicable to the entire state. Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

General powers under Tennessee Municipal Electric Plant Law, T.C.A. § 7-52-101 et seq., to perform all functions necessary and convenient for the furnishing of electric power did not imply that a municipality could engage in collective bargaining with a plant's employees; thus, such agreements were ultra vires and void at their inception. Simerly v. City of Elizabethton, — S.W.3d —, 190 L.R.R.M. 2165, 2011 Tenn. App. LEXIS 1 (Tenn. Ct. App. Jan. 5, 2011), appeal denied, — S.W.3d —, 2011 Tenn. LEXIS 366 (Tenn. Apr. 13, 2011).

4. Strike Against System.

County electric system organized under Municipal Electric Plant Law, T.C.A. § 7-52-101 et. seq., had no authority to enter into collective bargaining agreement with its employees and could enjoin strike against system for such purpose. Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

5. Nature of Utility.

Municipal utility created under Municipal Electric Plant Law, T.C.A. § 7-52-101 et seq., was not a separate legal entity but was a department of the city. Keeble v. Loudon Utilities, 212 Tenn. 483, 370 S.W.2d 531, 1963 Tenn. LEXIS 442 (1963).

6. Suits Concerning Utility.

The Municipal Electric Plant Law, T.C.A. § 7-52-101 et seq., does not make any provision for the institution of suits against the municipality in any county other than the county where the municipality is located and suit cannot be maintained in another county. Keeble v. Loudon Utilities, 212 Tenn. 483, 370 S.W.2d 531, 1963 Tenn. LEXIS 442 (1963).

7-52-102. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Acquire” means to purchase, lease, construct, reconstruct, replace, or acquire by gift;
  2. “Dispose” means to sell, lease, or otherwise transfer any interest in property;
  3. “Electric plant” means generating, transmission, or distribution systems, together with all other facilities, equipment and appurtenances necessary or appropriate to any such systems for the furnishing of electric power and energy for lighting, heating, power or any other purpose for which electric power and energy can be used;
  4. “Electric service” means the furnishing of electric power and energy for lighting, heating, power or any other purpose for which electric power and energy can be used;
  5. “Federal agency” includes the United States, the president of the United States, the department of housing and urban development, Tennessee Valley authority, or any other similar agency, instrumentality or corporation of the United States, that has heretofore been or may hereafter be created by or pursuant to any act or acts of the congress of the United States;
  6. “Governing body” means the county legislative body, board, body or commission having general charge of the municipality;
  7. “Improve” means to acquire any improvement;
  8. “Improvement” means any improvement, extension, betterment, or addition to any electric plant;
  9. “Law” means any act or statute, general, special or local, of the state of Tennessee, including, but not limited to, the charter of any municipality; and
  10. “Municipality” means any county, metropolitan government, incorporated city or town in the state of Tennessee.

Acts 1935, ch. 32, § 2; C. Supp. 1950, § 3708.2; modified; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), § 6-1502; Acts 1997, ch. 531, § 8.

7-52-103. Powers of municipalities.

  1. Every municipality has the power and is authorized to:
    1. Acquire, improve, operate and maintain within or without the corporate or county limits of such municipality, and within the corporate or county limits of any other municipality, with the consent of such other municipality, an electric plant and to provide electric service to any person, firm, public or private corporation, or to any other user or consumer of electric power and energy, and charge for the electric service;
    2. Acquire, improve or use jointly with any other municipality a transmission line or lines together with all necessary and appropriate facilities, equipment and appurtenances for the purpose of transmitting power and energy or connecting their respective electric plants with a wholesale source of supply and, to this end, such municipality may provide by contract for the method of holding title, for the allocation of responsibility for operation and maintenance and for the allocation of expenses and revenues;
    3. Accept grants, loans or other financial assistance from any federal agency, for or in aid of the acquisition or improvement of any electric plant;
    4. Contract debts for the acquisition or improvement of any electric plant, borrow money, and issue bonds and notes pursuant to the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, to finance such acquisition or improvements;
    5. Assess, levy and collect unlimited ad valorem taxes on all property subject to taxation to pay such bonds, and the interest on the bonds;
    6. Acquire, hold and, subject to the applicable provisions of any bonds or contracts, dispose of any property, real or personal, tangible or intangible, or any right or interest in any such property in connection with any electric plant, and whether or not subject to mortgages, liens, charges or other encumbrances, but no municipality shall dispose of all or substantially all of its electric plant, except as provided in § 7-52-132;
    7. Make contracts and execute instruments containing such covenants, terms and conditions as in the discretion of the municipality may be necessary, proper or advisable for the purpose of obtaining loans from any source, or grants, loans or other financial assistance from any federal agency; make all other contracts and execute all other instruments as in the discretion of the municipality may be necessary, proper or advisable in or for the furtherance of the acquisition, improvement, operation and maintenance of any electric plant and the furnishing of electric service; and carry out and perform the covenants and terms and conditions of all such contracts and instruments;
    8. Enter on any lands, waters and premises for the purpose of making surveys, soundings and examinations in connection with the acquisition, improvement, operation or maintenance of any electric plant and the furnishing of electric service; and
    9. Do all acts and things necessary or convenient to carry out the powers expressly given in this part.
  2. In addition to the powers listed in subsection (a), each municipality has the power and is authorized to promote economic and industrial development through participation both as a borrower and a lender in the rural economic development loan and grant program established and administered by the rural development administration or its successor.
  3. In addition to the authority granted under otherwise applicable law, each municipality operating an electric plant has the power and is authorized within its service area and on behalf of its municipality, acting through the authorization of the board or supervisory body having responsibility for the municipal electric plant, to contract to establish a joint venture or other business relationship with one (1) or more third parties to provide the services authorized by § 7-52-601; provided, that, with respect to cable services, at least one (1) such third party shall be a current franchise holder that has been providing services in any state, either itself or its predecessor or predecessors, for not less than three (3) years at the time of the establishment of the joint venture or other business relationship. Any such joint venture or other business relationship shall be subject to §§ 7-52-602 — 7-52-609.
  4. In addition to the authority granted under otherwise applicable law, each municipality operating an electric plant has the power and is authorized on behalf of its municipality, acting through the authorization of the board or supervisory body having responsibility for the municipal electric plant, to establish a joint venture or any other business relationship with one (1) or more third parties to provide related services, subject to §§ 7-52-402 — 7-52-407. No contract or agreement between a municipal electric system and one (1) or more third parties for the provision of related services that provides for the joint ownership or joint control of assets, the sharing of profits and losses, or the sharing of gross revenues shall become effective or enforceable until the Tennessee public utility commission approves such contract or agreement on petition, and, after notice and opportunity to be heard, has been extended to interested parties. Notwithstanding § 65-4-101(6)(B) or any other provision of this code or of any private act, to the extent that any such joint venture or other business relationship provides related services, such joint venture or business relationship and every member of such joint venture or business relationship shall be subject to regulation by the Tennessee public utility commission in the same manner and to the same extent as other certified providers of telecommunications services, including, but not limited to, rules or orders governing anti-competitive practices, and shall be considered as and have the duties of a public utility, as defined in § 65-4-101, but only to the extent necessary to effect such regulation and only with respect to the provision of related services. This provision shall not apply to any related service or transaction that is not subject to regulation by the Tennessee public utility commission.
    1. In addition to the authority granted under otherwise applicable law, a municipality operating an electric plant may, acting through the authorization of the board or supervisory body having responsibility for the municipal electric plant, accept and distribute excess receipts for bona fide economic development or community assistance purposes pursuant to programs approved by the board or supervisory body, which programs may include, but are not limited to, programs in which utility bills are rounded up to the next dollar when the amount of any excess receipt due to rounding is shown as a separate line on the utility bill.
    2. Excess receipts accepted by a municipal electric plant pursuant to programs authorized by subdivision (e)(1) are not considered revenue to the municipal electric plant or the municipality's other utility systems, and the municipality may only use the excess receipts for economic development or community assistance purposes.
      1. A municipality that establishes a program authorized by subdivision (e)(1) on or after January 1, 2021, shall not enroll any customer into the program without the express consent of the customer.
      2. A customer who is enrolled in a program authorized by subdivision (e)(1) may opt out of the program by providing notice to the municipality of the customer's desire to cease participation in the program.
      3. Upon receiving an opt-out notice from a customer, the municipality shall remove the customer from enrollment in the program no later than the first day of the customer's next regular billing cycle that begins no fewer than thirty (30) days after the date of the customer's opt-out notice.
      1. Any municipality that on June 3, 2019, utilizes a program authorized by subdivision (e)(1) and operates the program on an opt-out basis shall send a written notice to each municipal electric plant customer no later than November 1, 2020, that contains, but is not limited to, the following information:
        1. A statement that the municipality utilizes a program authorized by subdivision (e)(1), the program is operated on an opt-out basis, and a description of the program;
        2. Notification that a customer whose bill is currently rounded up by the municipality has the right to opt out of participation in the program; and
        3. Contact information for the municipality and instructions on how the customer may contact the municipality to opt out of participation in the program.
      2. The written notice required by this subdivision (e)(4) may be provided to the customer by electronic means and may accompany a regular billing statement, at the discretion of the municipality.
      3. A municipality that on June 3, 2019, utilizes a program authorized by subdivision (e)(1) and operates the program on an opt-out basis that fails to send the notice required by this subdivision (e)(4) shall, on and after January 1, 2021, cease operating the program on an opt-out basis and shall not operate a program unless operated in compliance with subdivision (e)(3).
      4. For purposes of this subsection (e), “opt-out basis” means automatically enrolling customers in a program and requiring notice from the customer of a desire to be removed from the program in order to cease participation in the program.
    3. Any municipality that utilizes a program authorized by subdivision (e)(1) and that maintains a website that is accessible by the general public shall publish in a conspicuous location on the website by November 1, 2020, and throughout the duration of the municipality's utilization of the program, the following information:
      1. A statement that the municipal utility system utilizes a program authorized by subdivision (e)(1) and a description of the program;
      2. Notification that a customer whose bill is currently rounded up by the utility has the right to opt out of participation in the program; and
      3. Contact information for the utility and instructions on how the customer may contact the utility to opt into or out of participation in the program.
  5. For purposes of this section, “related services” means those services authorized by § 7-52-401.
  6. In addition to the authority granted under otherwise applicable law, each municipal electric system and each other governmental utility system established by private act that operates an electric plant have the power and are authorized, acting through the authorization of the board or supervisory body having responsibility for the municipal electric system or governmental utility system, to enter into an employment contract for a term not to exceed five (5) years with the superintendent, general manager or chief executive officer of the electric plant. Any such contract must be terminable for cause, as more specifically defined in the contract, and the term of the contract may be renewed. If the board or supervisory body also has responsibility for other utility systems, and if the superintendent, general manager or chief executive officer is also the superintendent, general manager or chief executive officer for such other systems, then the contract may address all rights and responsibilities of such superintendent, general manager or chief executive officer. This subsection (g) shall only apply where, by private act or general law, the board or supervisory body having responsibility for the municipal electric system or governmental utility system is directly responsible for making decisions regarding the employment of the superintendent, general manager or chief executive officer of the electric plant.
  7. In addition to authority granted under otherwise applicable law, the utility of a municipality providing electric service operating pursuant to this part or other applicable law has the power to assist its utility customers in installing or maintaining fixtures, devices, appliances, apparatus, and equipment of all kinds and character and, in connection therewith, to purchase, acquire, lease, sell, distribute, incentivize, insure, make loans, provide service contracts, enter into agreements, contract with third parties, and repair such fixtures, devices, appliances, apparatus, and equipment and sell, assign, transfer, endorse, pledge, and otherwise dispose of notes or other evidences of indebtedness. Transactions with customers may provide for periodic payments to be added to customer monthly service billing statements. The utility may terminate utility service upon non-payment of these transactions in accordance with policies adopted by the utility's governing board.

Acts 1935, ch. 32, § 3; C. Supp. 1950, § 3708.3; T.C.A. (orig. ed.), § 6-1503; Acts 1988, ch. 750, § 30; 1993, ch. 444, § 1; 1999, ch. 481, § 3; 2003, ch. 60, § 1; 2012, ch. 748, § 1; 2013, ch. 2, § 1; 2017, ch. 94, § 13; 2019, ch. 228, § 2; 2019, ch. 508, § 3.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” throughout (d).

The 2019 amendment by ch. 228, added (h).

The 2019 amendment by ch. 508, rewrote (e), which read: “(1)  In addition to the authority granted under otherwise applicable law, a municipality operating an electric plant has the power and is authorized, acting through the authorization of the board or supervisory body having responsibility for the municipal electric plant, to accept and distribute voluntary contributions for bona fide economic development or community assistance purposes pursuant to programs approved by the board or supervisory body, which programs may include, but shall not be limited to, programs in which utility bills are rounded up to the next dollar when such contribution is shown as a separate line on the utility bill. (2)  Contributions accepted by a municipal electric plant pursuant to programs authorized by subdivision (e)(1) shall not be considered revenue to the municipal electric plant or the municipality's other utility systems, and such contributions shall be used only for economic development or community assistance purposes.”

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Acts 2019, ch. 228, § 4. April 30, 2019.

Acts 2019, ch. 508, § 6. June 3, 2019.

Cross-References. Contracts with TVA or similar agency, powers, title 7, ch. 52, part 2.

Disposition of electric plant, § 7-52-132.

Extension of service beyond city limits, § 7-51-401.

General control of plant, supervisory body, superintendent, § 7-52-114.

Tax equivalent payments authorized, title 7, ch. 52, part 3.

Tennessee regulatory authority, title 65, ch. 1.

NOTES TO DECISIONS

1. Constitutionality.

The title of Acts 1935, ch. 32 authorizing a city to issue bonds to acquire and operate an electric power plant, was sufficiently broad to include subdivision (7) (now subdivision (a)(7)) of this section, and did not violate constitutional provision requiring subject matter to be expressed in the title, since all municipal obligations are commonly known as bonds. Tennessee Electric Power Co. v. Fayetteville, 173 Tenn. 111, 114 S.W.2d 811, 1937 Tenn. LEXIS 17 (1938).

2. Board of Public Utilities.

A municipal corporation can abolish a board of public utilities created by it under authority of this part, “Municipal Electric Plant Law of 1935,” and return control of the utility to the governing board of the municipality. State ex rel. Patton v. Lexington, 626 S.W.2d 5, 1981 Tenn. LEXIS 514 (Tenn. 1981).

Collateral References.

Right of municipality to refuse services provided by it to resident for failure of resident to pay for other unrelated services. 60 A.L.R.3d 714.

Taxation for purchase or construction of lighting plant as within constitutional provisions prohibiting legislature from imposing taxes for city and corporate purposes, or providing that legislature may invest power to levy such taxes in local authorities. 46 A.L.R. 706, 106 A.L.R. 906.

7-52-104. Rights-of-way over public lands.

Any municipality may use any right-of-way, easement, or other similar property right necessary or convenient in connection with the acquisition, improvement, operation or maintenance of an electric plant, held by the state or any other municipality; provided, that such other municipality shall consent to such use.

Acts 1935, ch. 32, § 20; C. Supp. 1950, § 3708.20; T.C.A. (orig. ed.), § 6-1504.

7-52-105. Eminent domain.

Any municipality proceeding under this part is authorized and empowered to condemn any land, easement or rights-of-way, either on, under or above the ground, for any and all purposes necessary in connection with the construction, operation and maintenance of an electric plant or improvements to the electric plant. Title to property so condemned shall be taken in the name of the municipality. Such condemnation proceeding shall be pursuant to and in accordance with title 29, chapter 16; provided, that, where title to any property sought to be condemned is defective, it shall be passed by decree of court; provided, further, that, where condemnation proceedings become necessary, the court in which such proceedings are filed shall, upon application by the municipality and upon the posting of a bond with the clerk of the court in such amount as the court may deem commensurate with the value of the property, order that the right of possession shall issue immediately or as soon and upon such terms as the court, in its discretion, may deem proper and just.

Acts 1935, ch. 32, § 21; C. Supp. 1950, § 3708.21; T.C.A. (orig. ed.), § 6-1505.

NOTES TO DECISIONS

1. Applicability.

This statute applies only to real estate. Duck River Electric Membership Corp. v. Manchester, 529 S.W.2d 202, 1975 Tenn. LEXIS 577 (Tenn. 1975).

7-52-106. Preliminary expenses.

  1. All expenses actually incurred by the governing body of any municipality in the making of surveys, estimates of cost and of revenues, employment of engineers, attorneys or other employees, the giving of notices, taking of options, selling of bonds, and all other preliminary expenses of whatever nature, that such governing body deems necessary in connection with or precedent to the acquisition or improvement of any electric plant and that it deems necessary to be paid prior to the issuance and delivery of the bonds issued pursuant to this part, may be met and paid out of the general fund of the municipality not otherwise appropriated, or from any other available fund.
  2. All such payments from the general or other funds shall be considered as temporary loans and shall be repaid immediately upon sale and delivery of the bonds, and claim for such repayment shall have priority over all other claims against the proceeds derived from the sale of such bonds.

Acts 1935, ch. 32, § 12; C. Supp. 1950, § 3708.12; T.C.A. (orig. ed.), § 6-1506.

7-52-107. Board of public utilities — Creation.

  1. Any municipality, except those that employ a city-manager or that have a population of less than two thousand (2,000), issuing bonds under this part for the acquisition of an electric plant shall, and any municipality now or hereafter owning or operating an electric plant under this part or any other law may, appoint a board of public utilities, referred to as the “board” in this part.
  2. The board shall be created in the following manner: at the time the governing body of a municipality issuing bonds under this part determines that a majority of the qualified voters voting on the election resolution have assented to the bond issue for the acquisition of an electric plant, the chief executive officer of the municipality shall, or if no such bonds are issued, or if the municipality employs a city-manager or has a population of less than two thousand (2,000), then at any time the chief executive officer may, with the consent of the governing body of the municipality, appoint two (2) or four (4) persons from among the property holders of such municipality who are residents of the municipality and have resided therein for not less than one (1) year next preceding the date of appointment to such board. The board of a municipal electric system may consist of two (2) or four (4) persons who have been for not less than one (1) year preceding the appointment both a customer of the municipal electric system and a resident of the county wherein such municipality is located. No regular compensated officer or employee of a municipality shall be eligible for such appointment until at least one (1) year after the expiration of the term of such person's public office.

Acts 1935, ch. 32, § 13; C. Supp. 1950, § 3708.13; T.C.A. (orig. ed.), § 6-1507; Acts 1990, ch. 664, § 1.

Compiler's Notes. Acts 1990, ch. 664, § 2 provided that nothing in the amendment by that act shall be construed to abridge the term of any present member of a municipal electric board.

For table of populations of Tennessee municipalities, see Volume 13 and its supplement.

Attorney General Opinions. Residency requirement for membership on city's board of public utilities, OAG 98-0158, 1998 Tenn. AG LEXIS 158 (8/24/98).

In the context of this section, the term “chief executive officer” refers to the mayor of a city, not the city manager, OAG 03-119, 2003 Tenn. AG LEXIS 137 (9/24/03).

Organization of the Clarksville electric power board.  OAG 11-29, 2011 Tenn. AG LEXIS 31 (3/25/11).

NOTES TO DECISIONS

1. Validity of Appointment.

Board members of county electric systems organized under Municipal Electric Plant Law, T.C.A. § 7-52-101 et seq., are not county officers and the provisions of the law as to appointment of board members are not violative of Tenn. Const., art. XI, § 17, prohibiting filling of county offices other than by the people or county court when applied to county systems. Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

Even if members of board of county municipal electric system were to be considered officers and not employees and were to be considered to be irregularly appointed in that Tenn. Const., art. XI, § 17, prohibiting filling of county offices other than by the people or county court was not complied with, such officers would be de facto officers in the same manner as irregularly appointed members of city or town boards since regularly appointed city or town board members would be de jure members. Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

2. Private Acts.

Provision of Private Acts 1949, ch. 856 applying to Washington County alone on basis of population classification enumerated therein and providing for members of board from county and town served by power board in addition to members appointed under this chapter, was based on a reasonable classification and is constitutional even though contrary to the provisions of this chapter. Johnson City v. Allison, 50 Tenn. App. 532, 362 S.W.2d 813, 1962 Tenn. App. LEXIS 160 (Tenn. Ct. App. 1962).

3. Abolishment of Board.

A municipal corporation can abolish a board of public utilities created by it under authority of this part and return control of the utility to the governing board of the municipality. State ex rel. Patton v. Lexington, 626 S.W.2d 5, 1981 Tenn. LEXIS 514 (Tenn. 1981).

7-52-108. Terms of board members — Official representative.

  1. The original appointees, if two (2) are appointed, shall serve two (2) and four (4) years respectively, or if four (4) are appointed, shall serve for one (1), two (2), three (3) and four (4) years respectively, from July 1 next succeeding the date of appointment, as the chief executive officer shall designate.
  2. Successors to retiring members so appointed shall be appointed for a term of four (4) years in the same manner, prior to the expiration of the term of office of the retiring member.
  3. In addition to the members so appointed, such chief executive officer shall also, with the consent of the governing body of the municipality, designate a member of such governing body, or, in the chief executive officer's discretion, the city manager, to serve as a third or fifth member of the board, as the case may be. The term of such member shall be for such time as the appointing officer may fix, but in no event to extend beyond the member's term of office in such governing body or the member's employment as city manager, as the case may be. Appointments to complete unexpired terms of office shall be made in the same manner as original appointments.

Acts 1935, ch. 32, § 13; C. Supp. 1950, § 3708.13; T.C.A. (orig. ed.), § 6-1508.

Attorney General Opinions. In the context of this section, the term “chief executive officer” refers to the mayor of a city, not the city manager, OAG 03-119, 2003 Tenn. AG LEXIS 137 (9/24/03).

Organization of the Clarksville electric power board.  OAG 11-29, 2011 Tenn. AG LEXIS 31 (3/25/11).

7-52-109. Bond and oath of board members.

Each member shall give such bond, if any, as may be required by resolution of the governing body, and shall qualify by taking the same oath of office as required for members of such governing body.

Acts 1935, ch. 32, § 13; C. Supp. 1950, § 3708.13; T.C.A. (orig. ed.), § 6-1509.

NOTES TO DECISIONS

1. County Officers.

Fact that this section required board members of county electric system organized under Municipal Electric Plant Law to take same oath as quarterly county court (now county legislative body) did not indicate that such members were county officers. Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

7-52-110. Organization and meetings of board — Compensation of members and officers.

  1. A majority of the board shall constitute a quorum and the board shall act by vote of majority present at any meeting attended by a quorum, and vacancies in the board shall not affect its power and authority so long as a quorum remains.
  2. Within ten (10) days after appointment and qualification of members, the board shall hold a meeting to elect a chair. The board shall, at the same time, designate a secretary and treasurer, or secretary-treasurer, who need not be members of the board, and fix the amount of the surety bond that shall be required of such secretary and treasurer, or secretary-treasurer, and shall fix the compensation for such person or persons.
  3. The board shall hold public meetings at least once per month, at such regular time and place as the board may determine. Changes in such time and place of meeting shall be made known to the public as far in advance as practicable.
  4. The board shall establish its own rules of procedure, except as otherwise expressly provided.
  5. All members of the board shall serve as such without compensation, but they shall be allowed necessary traveling and other expenses while engaged in the business of the board, including an allowance not to exceed two hundred dollars ($200) per month for attendance at meetings. On or after July 1, 2011, the allowance may be increased to an amount not to exceed three hundred dollars ($300) per month for attendance at meetings. Such expenses, as well as the salaries of the secretary and treasurer, or secretary-treasurer, shall constitute a cost of operation and maintenance of the electric plant.
  6. All members of the board shall receive an additional allowance not to exceed twenty-five dollars ($25.00) per month for attendance at meetings for each additional utility system over which the board has jurisdiction as provided in §§ 7-52-111, 7-52-401 and 7-52-601 and the total allowances provided in this subsection (f) shall not exceed a maximum allowance of one hundred dollars ($100) per month. On or after July 1, 2011, the additional allowance may be increased to an amount not to exceed fifty dollars ($50.00) for each additional utility system and a maximum allowance not to exceed one hundred fifty dollars ($150) per month. Such additional allowances shall constitute a cost of operation and maintenance of the utility systems.
  7. Additionally, the municipality may provide health insurance coverage for each member of the board and may pay the health insurance premiums for such coverage in the same manner as if the member were a municipal employee. Payment of such premiums on behalf of such members shall constitute a cost of operation and maintenance of the electric plant.

Acts 1935, ch. 32, § 13; C. Supp. 1950, § 3708.13; Acts 1955, ch. 294, § 1; 1968, ch. 559, § 1; 1973, ch. 171, § 1; 1974, ch. 805, § 1; T.C.A. (orig. ed.), § 6-1510; Acts 1994, ch. 781, § 1; 1999, ch. 246, §§ 1, 2; 2011, ch. 163, §§ 1-3.

Attorney General Opinions. Payment of board members' health insurance premiums, OAG 94-005 , 1994 Tenn. AG LEXIS 33 (1/13/94).

7-52-111. Jurisdiction of board over waterworks, sewerage works or gas system.

  1. Municipalities now or hereafter owning or operating a waterworks, sewerage works, or gas system have the power and are hereby authorized to transfer to and confer upon the board the jurisdiction over such waterworks, sewerage works, or gas system now or hereafter vested in any other board, commission, or in the governing body of such municipalities.
  2. If the board is given jurisdiction over such works, it shall keep separate accounts for the electric plant and each works, making due and proper allocation of all joint expenses, revenues and property valuations.

Acts 1935, ch. 32, § 13; C. Supp. 1950, § 3708.13; Acts 1959, ch. 261, § 1; T.C.A. (orig. ed.), § 6-1511.

NOTES TO DECISIONS

1. Constitutionality.

The title of Acts 1935, ch. 32, reciting “to provide for supervision, management and control of such electric system,” was sufficient to cover this section, and the section did not violate the provisions of Tenn. Const., art. II, § 17, requiring subject matter to be expressed in the title. Tennessee Electric Power Co. v. Fayetteville, 173 Tenn. 111, 114 S.W.2d 811, 1937 Tenn. LEXIS 17 (1938).

2. Purpose.

The purpose of this section is to safeguard electric plant revenues and it does not empower municipalities to give to the board of public utilities jurisdiction over water and sewerage plants, but if the municipality has or acquires the power to transfer such jurisdiction to such board, the legislature consents, in this section, to the transfer, on the condition that electric plant revenues be segregated. Tennessee Electric Power Co. v. Fayetteville, 173 Tenn. 111, 114 S.W.2d 811, 1937 Tenn. LEXIS 17 (1938).

7-52-112. Removal of board members.

Any member of the board may be removed from office for cause upon a vote of three fourths (¾) of the members of the governing body of the municipality, but only after preferment of formal charges by resolution of a majority of the members of such governing body at a public hearing before such governing body.

Acts 1935, ch. 32, § 13; C. Supp. 1950, § 3708.13; T.C.A. (orig. ed.), § 6-1512.

7-52-113. Records and reports of board.

  1. The board shall keep a complete and accurate record of all meetings and actions taken, and of all receipts and disbursements, and shall make reports of the same to the governing body of the municipality at stated intervals, not to exceed one (1) year.
  2. Such reports shall be in writing, shall be filed in open meeting of the governing body of the municipality, at stated intervals, not to exceed one (1) year, and a copy shall be filed with the municipal clerk or recorder.

Acts 1935, ch. 32, § 19; C. Supp. 1950, § 3708.19; T.C.A. (orig. ed.), § 6-1513.

7-52-114. General control of plant — Supervisory body — Superintendent.

    1. The general supervision and control of the acquisition, improvement, operation and maintenance of the electric plant shall be in charge of the following agency, referred to as the “supervisory body” in this part:
      1. The board; or if there be no board, then
      2. The governing body of the municipality.
    2. If the governing body of the municipality has charge of the supervision and control of the electric plant, such governing body may by resolution delegate all or any of its powers or duties as supervisory body to the city-manager, if any.
  1. The supervisory body shall appoint an electric plant superintendent, referred to as “superintendent” in this part, who shall be qualified by training and experience for the general superintendence of the acquisition, improvement and operation of the electric plant. The superintendent need not be a resident of the state at the time of appointment. The superintendent's salary shall be fixed by the person or agency appointing such superintendent. The superintendent shall serve at the pleasure of the supervisory body and may be removed by such body at any time.
  2. Subject only to an employment contract entered into pursuant to § 7-52-103(g), within the limits of the funds available, all powers to acquire, improve, operate and maintain, and to furnish electric service, and all powers necessary or convenient to furnishing electric service, conferred by this part shall be exercised on behalf of the municipality by the supervisory body and the superintendent, respectively.

Acts 1935, ch. 32, § 14; C. Supp. 1950, § 3708.14; T.C.A. (orig. ed.), § 6-1514; Acts 2012, ch. 748, § 2.

Attorney General Opinions. Hiring superintendent under T.C.A. § 7-52-114(b).  OAG 11-14, 2011 Tenn. AG LEXIS 16 (2/8/11).

NOTES TO DECISIONS

1. Status of Superintendent.

Even if members of board of county electric system were to be considered as neither de jure nor de facto officers nor even as employees, superintendent of system would be employee of county and could maintain suit against striking employees of system and against labor union to enjoin picketing of system. Weakley County Municipal Electric System v. Vick, 43 Tenn. App. 524, 309 S.W.2d 792, 1957 Tenn. App. LEXIS 135 (Tenn. Ct. App. 1957).

2. Employment Contracts.

On a certified question to it, the supreme court concluded that neither utility board had the authority to enter into multiyear contracts with the employee, the former superintendent of the two utilities, or to obligate the city for the payment of salary and benefits as provided by the terms. The superintendent was to serve at the pleasure of the supervisory body and could be removed by such body at any time pursuant to T.C.A. § 7-52-114(b). Allmand v. Pavletic, 292 S.W.3d 618, 2009 Tenn. LEXIS 519 (Tenn. Aug. 26, 2009).

3. Municpal Disposal of Electric System.

Trial court properly granted a city electric power board (EPB) summary judgment in a qui tam action filed by a citizen and the city under the Tennessee False Claims Act because the city could not sue EPB since such a lawsuit would constitute an impermissible case of the city suing itself; the city was statutorily precluded from disposing of its electric system without following a strictly prescribed procedure to obtain a majority vote of the citizens, but the city followed no such procedure. City of Chattanooga ex rel. Lepard v. Elec. Power Bd. of Chattanooga, — S.W.3d —, 2016 Tenn. App. LEXIS 777 (Tenn. Ct. App. Oct. 20, 2016).

7-52-115. Powers of supervisory body — Users of auxiliary energy sources.

  1. Subject to applicable bonds or contracts, the supervisory body shall determine programs and make all plans for the acquisition of the electric plant, shall make all determinations as to improvements, rates and financial practices, may establish such rules and regulations as it may deem necessary or appropriate to govern the furnishing of electric service, and may disburse all moneys available in the electric plant fund established for the acquisition, improvement, operation and maintenance of the electric plant and the furnishing of electric service. A copy of the schedule of the current rates and charges in effect from time to time and a copy of all rules and regulations of the supervisory body relating to electric service shall be kept on public file at the main and all branch offices of the electric plant and also in the office of the municipal clerk or recorder.
  2. When such municipal electric plant supplies its services to consumers who use solar or wind-powered equipment as a source of energy, such electric plant shall not discriminate against such consumers by its rates, fees or charges or by altering the availability or quality of energy.
  3. Any consumer who uses solar, wind power, or other auxiliary source of energy shall install and operate the equipment, property, or appliance for such energy source in compliance with any state or local code or regulation applicable to the safe operation of such equipment, property, or appliance.

Acts 1935, ch. 32, § 14; C. Supp. 1950, § 3708.14; T.C.A. (orig. ed.), § 6-1515; Acts 1980, ch. 756, § 6.

Cross-References. Tax equivalent payments authorized, title 7, ch. 52, part 3.

7-52-116. Charges to municipality.

The supervisory body shall charge the municipality and all departments and works of the municipality for any electric service furnished to the municipality, at the rates applicable to other customers taking service under similar conditions. Revenues derived from such service shall be treated as all other revenues.

Acts 1935, ch. 32, § 18; C. Supp. 1950, § 3708.18; T.C.A. (orig. ed.), § 6-1516.

7-52-117. Powers of superintendent.

  1. The superintendent shall have charge of all actual construction, the immediate management and operation of the electric plant and the enforcement and execution of all rules, regulations, programs, plans and decisions made or adopted by the supervisory body.
  2. The superintendent shall appoint all employees and fix their duties and compensation, excepting that the appointment of all technical consultants and advisers and legal assistants shall be subject to the approval of the supervisory body.
  3. Subject to § 7-52-132, the superintendent, with the approval of the supervisory body, may acquire and dispose of all property, real and personal, necessary to effectuate the purposes of this part. The title of such property shall be taken in the name of the municipality.
  4. The superintendent shall let all contracts, subject to the approval of the supervisory body, but may, without such approval, obligate the electric plant on purchase orders up to an amount to be fixed by the supervisory body, but not to exceed fifty thousand dollars ($50,000). Any work or construction exceeding in cost the amount specified in this subsection (d) shall, before any contract is let or work done, be advertised by the superintendent for bids, but the supervisory body shall have power to reject any and all bids.
  5. The superintendent shall make and keep full and proper books and records, subject to the supervision and direction of the supervisory body.

Acts 1935, ch. 32, § 14; C. Supp. 1950, § 4708.14; Acts 1969, ch. 179, § 1; T.C.A. (orig. ed.), § 6-1517; Acts 1989, ch. 286, § 1; 1997, ch. 531, § 7.

Cross-References. Disposition of plant by governing body, § 7-52-132.

NOTES TO DECISIONS

1. Scope.

T.C.A. § 7-52-117 does not confer authority for a general manager of a utility to enter into a fixed-term employment contract with an employee without approval of the utility board. Smith v. Harriman Util. Bd., 26 S.W.3d 879, 2000 Tenn. App. LEXIS 78 (Tenn. Ct. App. 2000).

2. Application.

A supervisor's authority to make purchase orders under T.C.A. § 7-52-117(d) has absolutely no application to an employment contract with an employee for an annual salary of $46,000; besides the obvious inapplicability of purchase order authority to an employment contract, the argument fails in that the five-year term of the proferred agreement multiplied by plaintiff's salary would far exceed the $50,000 statutory limitation. Smith v. Harriman Util. Bd., 26 S.W.3d 879, 2000 Tenn. App. LEXIS 78 (Tenn. Ct. App. 2000).

7-52-118. Additional board members for certain municipal utilities providing electric service in multiple counties.

    1. Notwithstanding any other law to the contrary, when a municipal utility provides electric service in multiple counties and one (1) of the counties outside of the county in which the principal office of the utility is located has in excess of sixty percent (60%) of the customers residing in it, then such municipal utility shall create and install two (2) additional board members from the county that has in excess of sixty percent (60%) of the utility customers. The county mayor of the county that has in excess of sixty percent (60%) of the customers shall recommend persons to fill the new board member positions. The city council or chief legislative body of the city that owns the municipal utility shall accept or reject the recommendation or recommendations at a public meeting by a simple majority vote. If the recommended person or persons are not accepted or rejected within thirty (30) days following the date of the recommendation, the person or persons shall be deemed accepted. If rejected, the county mayor shall recommend another person or persons until the city council or chief legislative body of the city accepts the recommendation or recommendations. Such board members shall not be considered city council persons or employees of the municipality, nor shall they receive any insurance benefits. The terms of such board members shall be four (4) years and each shall serve until their successor is selected and assumes office. In the event a vacancy occurs, the county mayor shall initiate the procedure described in this section to appoint a successor to fill the vacancy for the remainder of the unexpired term.
    2. For implementation purposes, one (1) board member shall assume office on July 1, 2005, and the other shall assume office on July 1, 2006.
    3. Such appointees shall be customers of the municipal utility for not less than one (1) year and shall not be an employee or board member of any other utility.
    4. This section shall in no way affect or change the in lieu of tax payment procedure or recipient in effect prior to May 17, 2005, and further ratifies such procedure.
  1. This section shall only apply to municipal utilities that are wholly located within the state and otherwise subject to this section.

Acts 2005, ch. 178, § 1.

Compiler's Notes. Former §§ 7-52-1187-52-131 (Acts 1935, ch. 32, §§ 4-11,15-17; C. Supp. 1950, §§ 3708.4-3708.11, 3708.15-3708.17; Acts 1969, ch. 284, § 4; 1972, ch. 740, §§ 4(16)-4(18); T.C.A. (orig. ed.), §§ 6-1518 — 6-1531), concerning bond issues, were repealed by Acts 1988, ch. 750, § 31.

Acts 2005, ch. 178, § 2, provides that if any provision of that act or the application thereof to any person or circumstance is held invalid, then all provisions and applications of that act are declared to be invalid and void.

7-52-119 — 7-52-131. [Reserved.]

The governing body of the municipality may dispose of all or substantially all of the electric plant acquired by means of bonds issued under this part, but only with the approval of the supervisory body and a majority of those voting in an election held as follows:

  1. The governing body of the municipality shall adopt a resolution, which shall state in substance:
    1. That the supervisory body has approved the proposed disposition;
    2. A full description of the property to be disposed of;
    3. The purchaser or purchasers of the property;
    4. The purchase price;
    5. The terms or conditions of sale if such disposition is not for cash, payable in full at the time of such disposition;
    6. The date on which such election will be held;
    7. The place or places where votes may be cast; and
    8. The hours between which such voting places may be open; and
  2. At such election the ballot shall contain the words “For the disposition of the electric plant” and “Against the disposition of the electric plant.”

Acts 1935, ch. 32, § 22; C. Supp. 1950, § 3708.22; T.C.A. (orig. ed.), § 6-1532.

Cross-References. Power of superintendent to dispose of property, § 7-52-117.

NOTES TO DECISIONS

1. Municpal Disposal of Electric System.

Trial court properly granted a city electric power board (EPB) summary judgment in a qui tam action filed by a citizen and the city under the Tennessee False Claims Act because the city could not sue EPB since such a lawsuit would constitute an impermissible case of the city suing itself; the city was statutorily precluded from disposing of its electric system without following a strictly prescribed procedure to obtain a majority vote of the citizens, but the city followed no such procedure. City of Chattanooga ex rel. Lepard v. Elec. Power Bd. of Chattanooga, — S.W.3d —, 2016 Tenn. App. LEXIS 777 (Tenn. Ct. App. Oct. 20, 2016).

Trial court did not err in declining to find that a professor's declaration raised a genuine issue of material fact precluding summary judgment in favor of a city electric power board (EPB) because the appellate record did not indicate whether the professor considered the requirements of the Electric Plant Law of 1935 providing that any transfer of EPB's assets had to be voted upon in an election. City of Chattanooga ex rel. Lepard v. Elec. Power Bd. of Chattanooga, — S.W.3d —, 2016 Tenn. App. LEXIS 777 (Tenn. Ct. App. Oct. 20, 2016).

7-52-133. Supplemental nature of law.

The powers conferred by this part shall be in addition and supplemental to the powers conferred by any other law. Bonds may be issued under this part for the acquisition or improvement of an electric plant, notwithstanding that any other law may provide for the issuance of bonds for like purposes and without regard to the requirements, restrictions or procedural provisions contained in any other law.

Acts 1935, ch. 32, § 23; C. Supp. 1950, § 3708.23; modified; T.C.A. (orig. ed.), § 6-1533.

7-52-134. Purpose of part — Liberal construction.

  1. This part is for the public purpose of promoting the increased use of electricity in the urban and rural areas of this state, and to enable all counties, as well as cities and towns, to secure the benefit of the surplus power generated or to be generated by the Tennessee Valley authority at Wilson Dam in the state of Alabama and Norris Dam in the state of Tennessee, or the power generated at any other works or dams.
  2. This part is remedial in nature and the powers hereby granted shall be liberally construed to effectuate the purpose of this part, and, to this end, every municipality shall have power to do all things necessary or convenient to carry out the purposes of this part in addition to the powers expressly conferred in this part.

Acts 1935, ch. 32, § 24; C. Supp. 1950, § 3708.24; T.C.A. (orig. ed.), § 6-1534.

NOTES TO DECISIONS

1. Municpal Authority.

Trial court properly granted a city electric power board (EPB) summary judgment in a qui tam action filed by a citizen and the city under the Tennessee False Claims Act because the city could not sue EPB since such a lawsuit would constitute an impermissible case of the city suing itself; the city was statutorily precluded from disposing of its electric system without following a strictly prescribed procedure to obtain a majority vote of the citizens, but the city followed no such procedure. City of Chattanooga ex rel. Lepard v. Elec. Power Bd. of Chattanooga, — S.W.3d —, 2016 Tenn. App. LEXIS 777 (Tenn. Ct. App. Oct. 20, 2016).

7-52-135. Public records having commercial value — Fees for copies.

  1. If a request is made for a copy of a public record that has commercial value, and such request requires the reproduction of all or a portion of a computer generated map that was developed by an electric system, the board of directors of any such system may establish and impose reasonable fees for the reproduction of such map, in addition to any fees or charges that may lawfully be imposed pursuant to § 10-7-506. The additional fees authorized by this subsection (a) may not be assessed against individuals who request copies of such maps for themselves or when the map requested does not have commercial value.
  2. The additional fees authorized by subsection (a) shall relate to the actual development costs of such maps and may include:
    1. Labor costs;
    2. Costs incurred in design, development, testing, implementation and training; and
    3. Costs necessary to ensure that the map is accurate, complete and current, including the cost of adding to, updating, modifying and deleting information.
  3. The total collections for the additional fees authorized by subsection (a) shall not exceed the total development costs of the system producing the maps. Once such additional fees have paid the total development costs of the system, such fees shall be adjusted to generate only the amount necessary to maintain the data and ensure that it is accurate, complete and current for the life of the particular system.
  4. As used in subsection (a), “commercial value” means a record that may be used for commercial real estate development or related activities and for which a monetary profit may be realized.

Acts 1991, ch. 428, § 1; 1994, ch. 670, §§ 1, 2.

Cross-References. Reproduction of public records having commercial value, § 10-7-506.

Part 2
Agreements with Governmental Agencies

7-52-201. Agreements with governmental agencies.

Any municipal corporation, county, city or town, called “municipality” in this part, owning or operating or authorized to acquire or operate any electric generation, transmission or distribution system, is authorized, in any contract or arrangement with the Tennessee Valley authority or any similar governmental agency for the acquisition of any such system or part of a system or the purchase of electric power and energy, to stipulate and agree to such covenants, terms and conditions as the governing body of the municipality may deem appropriate, including, but not limited to, covenants, terms and conditions in respect to the resale rates, financial and accounting methods, services, operation and maintenance practices and the manner of disposing of the revenues, of any such system, and to comply therewith, and any such covenants, terms or conditions heretofore stipulated or agreed to are hereby expressly validated.

Acts 1935, ch. 37, § 1; C. Supp. 1950, § 3708.90 (Williams, § 3708.96); T.C.A. (orig. ed.), § 6-1535.

7-52-202. Agreement power as supplemental.

Nothing contained in this part shall be construed as a restriction or limitation upon any authority, power or right that any municipality may have in the absence of this part. These sections shall be construed as cumulative and shall be in addition and supplemental to any power, authority or right conferred by any other law.

Acts 1935, ch. 37, § 2; C. Supp. 1950, § 3708.91 (Williams, § 3708.97); T.C.A. (orig. ed.), § 6-1536.

7-52-203. Law as remedial.

This part is remedial in nature and any power, authority or right hereby conferred shall be liberally construed, and, to this end, every municipality shall have the power, authority and right, in addition to those expressly conferred by this part, to do all things necessary or convenient in carrying out the purposes of this part.

Acts 1935, ch. 37, § 3; C. Supp. 1950, § 3708.92 (Williams, § 3708.98); T.C.A. (orig. ed.), § 6-1537.

Part 3
Municipal Electric System Tax Equivalent Law of 1987

7-52-301. Short title.

This part shall be known and may be cited as the “Municipal Electric System Tax Equivalent Law of 1987.”

Acts 1987, ch. 84, § 2.

Compiler's Notes. Former part 3, §§ 7-52-3017-52-306 (Acts 1969, ch. 237, §§ 1-6; T.C.A., §§ 6-1538 — 6-1543; Acts 1981, ch. 457, § 1), which concerned tax equivalent payments for municipal electric plants, was repealed by Acts 1987, ch. 84, § 1.

Attorney General Opinions. A generation facility constructed by the McMinnville Electric System (MES) to maintain and perform contractual obligations under agreements with the Tennessee Valley authority should be included in the calculation of the “net plant value” of MES for purposes of determining the amount of payments in lieu of taxes on property and operations owed to McMinnville and Warren County by MES pursuant to T.C.A. § 7-52-301 et seq.; and MES was not entitled to a credit from McMinnville and Warren County for the amounts already paid, OAG 02-080, 2002 Tenn. AG LEXIS 84 (7/15/02).

7-52-302. Purpose — Construction.

  1. The purpose of this part is to provide the complete law of this state with respect to payments in lieu of taxes on the property and operations of all electric systems owned and operated by incorporated cities or towns, by counties, and by metropolitan governments, and to repeal the specific provisions of any private act, home rule charter or metropolitan government charter, or any part thereof, relating to payments in lieu of taxes, including certain provisions relating to the distribution of any such payments, but not to repeal any other provisions of such private acts or charters or parts of private acts or charters.
  2. This part is remedial in nature and this part shall be liberally construed to effectuate the purpose of this part.

Acts 1987, ch. 84, § 3.

Compiler's Notes. Former part 3, §§ 7-52-3017-52-306 (Acts 1969, ch. 237, §§ 1-6; T.C.A., §§ 6-1538–6-1543; Acts 1981, ch. 457 § 1), which concerned tax equivalent payments for municipal electric plants, was repealed by Acts 1987, ch. 84, § 1.

NOTES TO DECISIONS

1. Repealer Provisions.

T.C.A. § 7-52-309 does have the effect of repealing the allocation provisions in private acts and charter provisions, but only those that “direct that the tax equivalent amount to be distributed to each taxing district is to be an amount arrived at by applying the current ad valorem tax rate in that district to the depreciated original cost of the electric system's tangible property …” It was this qualified repealer provision to which the legislature had reference in this section when it stated an attempt to repeal “certain provisions” of private acts affecting distribution, “but not to repeal any other provisions of such private acts.” Because Private Acts 1970, ch. 205 does not utilize the formula proscribed in T.C.A. § 7-52-309, its validity is not affected by the repealer provision in this section. Knox County ex rel. Kessel v. Lenoir City, 837 S.W.2d 382, 1992 Tenn. LEXIS 505 (Tenn. 1992).

7-52-303. Part definitions.

  1. As used in this part, unless the context otherwise requires:
    1. “Assessment ratio in effect” means that assessment ratio being applied by the comptroller of the treasury in assessing electric system property of electric cooperatives and electric membership corporations for ad valorem taxation or, if such assessment function ceases to be performed by the comptroller of the treasury, that assessment ratio applied by any authorized department, agency, comptroller of the treasury, or official of the state empowered to so apply such an assessment ratio in assessing electric system property of electric cooperatives and electric membership corporations;
      1. “Average of revenue less power cost from electric operations for the preceding three (3) fiscal years” means an amount derived by:
        1. Determining for each of the three (3) fiscal years immediately preceding the beginning of the current fiscal year the electric system's total operating revenues for the year less any operating revenue amounts deemed uncollectible and written off for the year, net of any such amounts reinstated during the year that had been written off in any prior fiscal year, and accounting for any extraordinary items attributable to any prior fiscal year's total operating revenue or uncollectible amounts, and totaling the three (3) yearly amounts so determined;
        2. Determining for each of the same three (3) fiscal years described in subdivision (a)(2)(A)(i) the total costs of purchased power excluding any charges for facilities' rental and accounting for any extraordinary items attributable to any prior fiscal year's purchased power costs and totaling the three (3) yearly amounts so determined; and
        3. Subtracting the total in subdivision (a)(2)(A)(ii) from the total in subdivision (a)(2)(A)(i) and dividing the resulting remainder by three (3);
      2. For purposes of subdivision (a)(2)(A), “any prior fiscal year” means any fiscal year beginning on or after July 1, 1984. Also, for purposes of subdivision (a)(2)(A), all amounts described are those attributable only to electric system operations within Tennessee;
    2. “Electric operations” means all activities associated with the establishment, development, and administration of an electric system and the business of supplying electricity and associated services to the public, including, but not limited to, the generation, purchase, and sale of electric energy and the purchase, use and consumption of electric energy by ultimate consumers;
    3. “Electric system” means all tangible and intangible property and resources of every kind and description used or held for use in the purchase, generation, transmission, distribution, and sale of electric energy;
    4. “Equalized property tax rate” of any taxing jurisdiction means the actual ad valorem property tax rate in effect for the calendar year in which the fiscal year begins multiplied by the applicable state, county, or municipal appraisal ratio for such taxing jurisdiction as determined, adopted, or applied by the state board of equalization, referred to in this part as “state board”, or, in the absence of such action by the state board, by any authorized department, agency, commission, or official of the state empowered to determine, adopt, or apply an appraisal ratio for such taxing jurisdiction;
      1. “Appraisal ratio” means the ratio of appraised values of record to one hundred percent (100%) of current values that are to be derived in accordance with applicable state law for use in ad valorem property tax determinations each tax year. However, if no appraisal ratio is determined, adopted, applied, as provided in this subdivision (a)(5)(A), “appraisal ratio” shall, for purposes of this part, have the numerical value of one (1);
      2. For purposes of this part, the equalized property tax rate that is in effect for any taxing jurisdiction as of the beginning of any electric system fiscal year shall be the same as an equalized property tax rate calculated for such taxing jurisdiction for that tax year, which is the calendar year, in which the fiscal year begins, using the actual property tax rate in effect for, and the appraisal ratio applicable for, such taxing jurisdiction for such tax year;
    5. “Fiscal year” means the year beginning July 1 of each calendar year;
    6. “Municipality” means any incorporated city or town, metropolitan government, or county that now or hereafter owns and operates an electric system and buys all or part of its power requirements for resale and distribution from the Tennessee Valley authority;
      1. “Net plant value of the electric plant” means the depreciated original cost of the electric plant, in service and held for future use, and the book value of construction work in progress, all as shown on the books of the electric system and all of which are for use in the generation, transmission, and distribution of electricity;
      2. For purposes of subdivision (a)(8)(A):
        1. “Electric plant” does not include that portion of any electric system properties that a municipality owns, operates, and maintains to perform contractual obligations, under agreements with the Tennessee Valley authority, requiring the municipality to:
          1. Take the net output of a specified electric generating facility of the Tennessee Valley authority into the municipality's electric system; and
          2. Deliver all or portions of such net output to the transmission system of the Tennessee Valley authority or to other electric facilities as specified by the Tennessee Valley authority; and
        2. The account, “electric plant purchased or sold,” as prescribed by the federal energy regulatory commission's uniform system of accounts, shall be excluded;
    7. “Private act” includes, without limitation, the charter and any amendments to the charter of any home rule municipality or any metropolitan government;
    8. “Supervisory body” means any board or other agency of a municipality established to supervise the management and operation of its electric system and electric operations, or, in the absence of a board or other agency, the governing body of the municipality; and
    9. “Taxing jurisdiction” means any county, incorporated city or town, or metropolitan government in Tennessee having the power to levy taxes, or any special taxing district in Tennessee on behalf of which ad valorem property taxes may be levied, for the support of governmental and related activities and services.
  2. Terms appearing in this part, except where specifically defined, have the meanings defined or ascribed to them in the federal energy regulatory commission's uniform system of accounts applicable to electric system operations.

Acts 1987, ch. 84, § 4; 1995, ch. 305, § 80.

Compiler's Notes. Former part 3, §§ 7-52-3017-52-306 (Acts 1969, ch. 237, §§ 1-6; T.C.A., §§ 6-1538–6-1543; Acts 1981, ch. 457 § 1), which concerned tax equivalent payments for municipal electric plants, was repealed by Acts 1987, ch. 84, § 1.

7-52-304. Tax equivalents authorized — Conditions and limitations.

Notwithstanding any provision to the contrary appearing in § 7-34-115 or in the provisions of any private act, home rule or metropolitan government charter, every municipality may pay or cause to be paid from its electric system revenues for each fiscal year an amount for payments in lieu of taxes, called “tax equivalents” in this part, on its electric system and electric operations, which, in the judgment of the municipality's governing body after consultation with the supervisory body, shall represent the fair share of the cost of government properly to be borne by the municipality, subject, however, to the following conditions and limitations:

  1. The total amount so paid as tax equivalents for each fiscal year shall not exceed a maximum amount equal to the sum of the following:
    1. With respect to each of the respective taxing jurisdictions in which the municipality's electric system is located, the equalized property tax rate, determined as provided in this part, for the taxing jurisdiction as of the beginning of such fiscal year, multiplied by the net plant value of the electric plant and the book value of materials and supplies within the taxing jurisdiction as of the beginning of such fiscal year, multiplied by the assessment ratio in effect as of the beginning of such fiscal year; and
    2. Four percent (4%) of the average of revenue less power costs from electric operations for the preceding three (3) fiscal years;
  2. Such tax equivalent payments shall be made only from electric system revenues remaining after payment of, or making reasonable provision for payment of:
    1. Current electric system operating expenses, including salaries, wages, cost of materials and supplies, power at wholesale and insurance;
    2. Current payments of interest on indebtedness incurred or assumed by the municipality for the acquisition, extension, or improvement of the electric system, and the payment of principal amounts of such indebtedness, including sinking fund payments, when due;
    3. Reasonable reserves for renewals, replacements and contingencies; and
    4. Cash working capital adequate to cover operating expenses for a reasonable number of weeks;
  3. The total amount to be paid as tax equivalents for each fiscal year shall be in lieu of all state, county, city and other local taxes or charges on the municipality's electric system and electric operations, except as provided in subdivision (6). Accordingly, after initial determination of such total tax equivalent amount to be paid in the absence of any such taxes or charges, such total tax equivalent amount shall be reduced by the aggregate amount of any such taxes or charges imposed for such fiscal year on the municipality's electric system or electric operations by or for the benefit of the respective taxing jurisdictions, including the municipality, in which the municipality's electric system is located and in which such electric operations are conducted, whether or not such taxes or other charges were imposed by the respective taxing jurisdictions receiving the benefit of such taxes or charges. Any amount allocated to any such taxing jurisdiction other than a municipality, as provided in § 7-52-306 or § 7-52-307, shall be reduced by the aggregate amount of any such taxes or charges imposed for that fiscal year for the benefit of that taxing jurisdiction. Only the respective amounts remaining after the allocated amounts provided for in this subdivision (3) have been so reduced shall be actually paid to the municipality and to such respective taxing jurisdictions;
  4. The total amount to be paid as tax equivalents, including that to be paid for a municipality and any other taxing jurisdiction, for each fiscal year, determined in accordance with and subject to this part, shall be set forth in a resolution adopted by the municipality's governing body after consultation with the supervisory body, and the municipality's electric system shall pay to the municipality and any other taxing jurisdictions the amounts as provided in the resolution. Such determination shall be made as early in such fiscal year as possible and shall become final at the end of such fiscal year; provided, that if no such determination is made by the municipality by the end of such fiscal year, the total amount actually expensed, consistent with this part, by the electric system as of the end of such fiscal year shall constitute a final determination; provided, further, that any reductions in such amount required by subdivision (3), to the extent not made during such fiscal year, shall be made as early as possible in the succeeding fiscal year until the full adjustments are completed;
    1. Notwithstanding subdivisions (1)-(4), until the first fiscal year in which the aforementioned maximum amount for equivalents, calculated as provided in subdivision (1), exceeds the tax equivalent amount for the twelve (12) months ended June 30, 1987:
      1. The maximum tax equivalent amount that may be paid for any fiscal year shall not be less than the tax equivalent amount for the twelve (12) months ended June 30, 1987; and
      2. Notwithstanding any provision to the contrary in any private act, home rule or metropolitan government charter, or in the provisions of § 7-52-309, any distribution payment to a taxing jurisdiction for any fiscal year shall not be greater than the amount paid to such taxing jurisdiction for the twelve (12) months ended June 30, 1987;
    2. For purposes of subdivision (5)(A), “tax equivalent amount for the twelve (12) months ended June 30, 1987” means the tax equivalent amount actually expensed for, and applicable to such twelve (12) months, consistent with the power contract, in effect during such twelve (12) months, between the municipality and the Tennessee Valley authority. Thereafter, such maximum amount for any fiscal year shall not exceed the maximum amount calculated as provided in subdivision (1). All such maximum amounts shall be subject to the conditions and limitations of subdivisions (2), (3) and (4); and
  5. Notwithstanding anything in subdivisions (1)-(5) that might be construed to the contrary, properly authorized retail sales or use taxes on electric power or energy at the same rates applicable generally to sales or use of personal property or services, including natural or artificial gas, coal, and fuel oil, as well as electric power or energy, imposed upon the vendees or users of electric power or energy by the state, a county, or a city, including a municipality, on a statewide, countywide, or citywide basis, respectively, shall not be considered a tax or charge on the municipality's electric system or its electric operations or properties for purposes of this part.

Acts 1987, ch. 84, § 5.

Compiler's Notes. Former part 3, §§ 7-52-3017-52-306 (Acts 1969, ch. 237, §§ 1-6; T.C.A., §§ 6-1538–6-1543; Acts 1981, ch. 457 § 1), which concerned tax equivalent payments for municipal electric plants, was repealed by Acts 1987, ch. 84, § 1.

NOTES TO DECISIONS

1. Generally.

Trial court properly held that Memphis, Tenn., City Charter § 693(4), was repealed by T.C.A. § 7-52-304 to the extent it applied to the calculation of electric tax equivalents where § 693(4) mandated a certain tax equivalent payment to the city without regard to the calculation provision of the Municipal Electric System Tax Equivalent Law of 1987, T.C.A. § 7-52-301 et seq.City of Memphis v. Shelby County, 469 S.W.3d 531, 2015 Tenn. App. LEXIS 77 (Tenn. Ct. App. Feb. 20, 2015), appeal denied, City of Memphis v. Shelby Cnty., — S.W.3d —, 2015 Tenn. LEXIS 634 (Tenn. Aug. 14, 2015).

Court of Appeals of Tennessee agrees that T.C.A. § 7-52-304 permits a municipality to pay (or cause to be paid) tax equivalents for each fiscal year in an amount determined by the municipality's governing body after consultation with the supervisory body, notwithstanding (or despite) any provision to the contrary in a home rule charter or in T.C.A. § 7-34-115, provided that the tax equivalent amount does not exceed the cap set forth in T.C.A. § 7-52-304(1) or conflict with the other conditions in the following subsections. City of Memphis v. Shelby County, 469 S.W.3d 531, 2015 Tenn. App. LEXIS 77 (Tenn. Ct. App. Feb. 20, 2015), appeal denied, City of Memphis v. Shelby Cnty., — S.W.3d —, 2015 Tenn. LEXIS 634 (Tenn. Aug. 14, 2015).

Court of Appeals of Tennessee agrees that the calculation provision in T.C.A. § 7-52-304 would allow the governing body of the municipality to establish for each fiscal year the amount of payments in lieu of taxes which, in the judgment of the municipality's governing body after consultation with the supervisory body, shall represent the fair share of the cost of government properly to be borne by the municipality. City of Memphis v. Shelby County, 469 S.W.3d 531, 2015 Tenn. App. LEXIS 77 (Tenn. Ct. App. Feb. 20, 2015), appeal denied, City of Memphis v. Shelby Cnty., — S.W.3d —, 2015 Tenn. LEXIS 634 (Tenn. Aug. 14, 2015).

7-52-305. Execution of amendatory contracts.

If the Tennessee Valley authority tenders to a municipality, as described in this part, a contract to amend an existing power contract consistent with this part, the governing body of the municipality and the supervisory body shall promptly execute such amendatory contract on behalf of the municipality.

Acts 1987, ch. 84, § 6.

Compiler's Notes. Former part 3, §§ 7-52-3017-52-306 (Acts 1969, ch. 237, §§ 1-6; T.C.A., §§ 6-1538–6-1543; Acts 1981, ch. 457 § 1), which concerned tax equivalent payments for municipal electric plants, was repealed by Acts 1987, ch. 84, § 1.

7-52-306. Contracts for distribution of tax equivalent amounts.

Any municipality acting in its capacity as a taxing jurisdiction and any other taxing jurisdiction within the boundaries of which any part of such municipality's electric system is located are hereby authorized to, on and after July 1, 1987, from time to time, make and perform contracts for distribution among them of the tax equivalent amounts provided for in this part. Any such contract may provide for such distribution on any basis that is satisfactory to the contracting parties; provided, that the contract shall be consistent in all respects with this section and § 7-52-304. Nothing in this part shall have the effect of impairing in any way the obligations of the parties under any existing contract for such distribution in effect on July 1, 1987, or invalidating any established arrangement for such distribution in effect on July 1, 1987, and all such contracts and established arrangements are hereby expressly validated. For purposes of this part, an established arrangement is one under which the municipality has made a distribution payment to another taxing jurisdiction by general understanding, and the payment has been accepted by the taxing jurisdiction for the fiscal year or calendar year immediately preceding the fiscal year beginning July 1, 1987.

Acts 1987, ch. 84, § 7.

Compiler's Notes. Former part 3, §§ 7-52-3017-52-306 (Acts 1969, ch. 237, §§ 1-6; T.C.A., §§ 6-1538–6-1543; Acts 1981, ch. 457 § 1), which concerned tax equivalent payments for municipal electric plants, was repealed by Acts 1987, ch. 84, § 1.

NOTES TO DECISIONS

1. Private Acts.

Insofar as Private Acts 1970, ch. 205 may have conflicted with the 1969 tax equivalents law, it was not subject to constitutional challenge under Tenn. Const., art. XI, § 8 because, by its own terms, the 1969 statute was not intended to have mandatory, statewise application. Knox County ex rel. Kessel v. Lenoir City, 837 S.W.2d 382, 1992 Tenn. LEXIS 505 (Tenn. 1992).

7-52-307. Payments to taxing jurisdictions.

The municipality's governing body, in the resolution provided for in § 7-52-304(4), except to the extent otherwise provided in any contract, established arrangement authorized or validated under § 7-52-306, or distribution provisions of any private act, home rule or metropolitan government charter, shall direct payment of the tax equivalent amounts to the taxing jurisdictions in which its electric plant in service is located on the following basis and subject to the following terms and conditions:

  1. For each fiscal year, the municipality shall allocate twenty-two and one-half percent (22.5%) of the total tax equivalent paid for that fiscal year as provided in § 7-52-304(1), or § 7-52-304(5) where applicable, to payments in lieu of all taxes or other charges for the benefit of county taxing jurisdictions. The municipality shall divide the amount so allocated among such county taxing jurisdictions in proportion to the ratios of the net plant values of the electric plant and the book values of materials and supplies within the boundaries of the respective county taxing jurisdictions to the total net plant value and the total book value of materials and supplies, and make such reductions as may be required under § 7-52-304(3) and (4). If the municipality is, itself, a county taxing jurisdiction, it shall be entitled to retain for itself, in addition to any other tax equivalents, its respective proportionate share of the twenty-two and one-half percent (22.5%) amount;
  2. For each fiscal year, the municipality shall allocate to each city taxing jurisdiction, other than itself, in lieu of all taxes or other charges for the benefit of that city taxing jurisdiction, an amount equal to the equalized property tax rate of such other city taxing jurisdiction multiplied by the net plant value of the electric plant, plus the book value of materials and supplies located within the boundaries of such other city taxing jurisdiction multiplied by the assessment ratio, and make such reductions as may be required under § 7-52-304(3) and (4);
  3. The maximum to be paid into the municipality's general fund shall be the balance of the total tax equivalent, after deducting the amounts determined under subdivisions (1) and (2); and
  4. Notwithstanding subdivisions (1)-(3), until the first fiscal year in which the maximum amount for tax equivalents, calculated as provided in § 7-52-304(1), exceeds the tax equivalent amount for the twelve (12) months ended June 30, 1987, any distribution payment to a taxing jurisdiction for any fiscal year shall not be greater than the amount paid to such taxing jurisdiction for the twelve (12) months ended June 30, 1987.

Acts 1987, ch. 84, § 8.

7-52-308. Operations in adjacent states.

In the event a municipality conducts electric system operations outside the state, the maximum tax equivalent specified in this part shall not preclude the municipality's collecting from the electric system the additional amounts necessary to make appropriate tax or tax equivalent payments to taxing jurisdictions in the adjacent state or states in which the electric system operations are conducted in accordance with the applicable statutory requirements of such adjacent state or states.

Acts 1987, ch. 84, § 9.

7-52-309. Distribution by private act or home rule or metropolitan government charter.

Notwithstanding § 7-52-307, in the event any tax equivalent distribution provisions of any private act, home rule or metropolitan government charter direct that the tax equivalent amount to be distributed to each taxing district is to be an amount arrived at by applying the current ad valorem tax rate in that district to the depreciated original cost of the electric system's tangible property, including materials and supplies, used or usable in electric operations in that district, such distribution provisions, which are subject to § 7-52-304(5), shall continue in effect until such time as § 7-52-304(5) ceases to be applicable, and shall then be repealed. Thereafter, in the absence of any contract as provided in § 7-52-306, the municipality shall allocate the total tax equivalent paid for each fiscal year, to each taxing jurisdiction, in proportion to the ratio of:

  1. The value arrived at by adding the net plant value of the electric plant and the book value of materials and supplies within the boundaries of such taxing jurisdiction and multiplying that sum by the equalized property tax rate of such taxing jurisdiction; to
  2. The total of such values calculated for all taxing jurisdictions, and make such reductions as may be required under § 7-52-304(3) and (4).

Acts 1987, ch. 84, § 10.

NOTES TO DECISIONS

1. Repealer Provisions.

T.C.A. § 7-52-309 does have the effect of repealing the allocation provisions in private acts and charter provisions, but only those which “direct that the tax equivalent amount to be distributed to each taxing district is to be an amount arrived at by applying the current ad valorem tax rate in that district to the depreciated original cost of the electric system's tangible property …” It was this qualified repealer provision to which the legislature had reference in T.C.A. § 7-52-302, when it stated an attempt to repeal “certain provisions” of private acts affecting distribution, “but not to repeal any other provisions of such private acts.” Because Private Acts 1970, ch. 205 does not utilize the formula proscribed in this section, its validity is not affected by the repealer provision in T.C.A. § 7-52-309. Knox County ex rel. Kessel v. Lenoir City, 837 S.W.2d 382, 1992 Tenn. LEXIS 505 (Tenn. 1992).

7-52-310. Repeal of conflicting provisions.

Except as otherwise expressly provided in this part, all acts or parts of acts, including parts of any private act, or home rule, or metropolitan government charter, in conflict with this part are, to the extent of such conflict with this part, repealed.

Acts 1987, ch. 84, § 11.

NOTES TO DECISIONS

1. Generally.

T.C.A. § 7-52-310 expressly repeals provisions of home rule charters in conflict with the Municipal Electric System Tax Equivalent Law of 1987, T.C.A. § 7-52-301 et seq.City of Memphis v. Shelby County, 469 S.W.3d 531, 2015 Tenn. App. LEXIS 77 (Tenn. Ct. App. Feb. 20, 2015), appeal denied, City of Memphis v. Shelby Cnty., — S.W.3d —, 2015 Tenn. LEXIS 634 (Tenn. Aug. 14, 2015).

Part 4
Telecommunications Services

7-52-401. Authority in relation to telecommunications equipment and services.

Every municipality operating an electric plant, whether pursuant to this chapter, any other public or private act or the provisions of the charter of the municipality, county or metropolitan government, has the power and is authorized, on behalf of its municipality acting through the authorization of the board or supervisory body having responsibility for the municipal electric plant, to acquire, construct, own, improve, operate, lease, maintain, sell, mortgage, pledge or otherwise dispose of any system, plant or equipment for the provision of telephone, telegraph, telecommunications services, or any other like system, plant, or equipment within or without the corporate or county limits of such municipality, and, with the consent of such other municipality, within the corporate or county limits of any other municipality, in compliance with title 65, chapters 4 and 5, and all other applicable state and federal laws, rules and regulations. A municipality shall only be authorized to provide telephone, telegraph or telecommunications services through its board or supervisory body having responsibility for the municipality's electric plant. A municipality providing any of the services authorized by this section may not dispose of all or substantially all of the system, plant and equipment used to provide such services except upon compliance with the procedures set forth in § 7-52-132. Notwithstanding § 65-4-101(6)(B) or any other provision of this code or of any private act, to the extent that any municipality provides any of the services authorized by this section, such municipality shall be subject to regulation by the Tennessee public utility commission in the same manner and to the same extent as other certificated providers of telecommunications services, including, but not limited to, rules or orders governing anti-competitive practices, and shall be considered as and have the duties of a public utility, as defined in § 65-4-101, but only to the extent necessary to effect such regulation and only with respect to such municipality's provision of telephone, telegraph and communication services.

Acts 1997, ch. 531, § 2; 2017, ch. 94, § 14.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in the last sentence.

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Tennessee regulatory authority, title 65, ch. 1.

Attorney General Opinions. Authority of municipal electric boards to provide telecommunications services.  OAG 12-34, 2012 Tenn. AG LEXIS 34 (3/12/12).

7-52-402. Subsidies — Municipal costs.

A municipality providing any of the services authorized by § 7-52-401 shall not provide subsidies for such services. Notwithstanding that limitation, a municipality providing such services shall be authorized to:

  1. Dedicate a reasonable portion of the electric plant to the provision of such services, the costs of which shall be allocated to such services for regulatory purposes; and
  2. Lend funds, at a rate of interest not less than the highest rate then earned by the municipality on invested electric plant funds, to acquire, construct, and provide working capital for the system, plant, and equipment necessary to provide any of the services authorized under § 7-52-401; provided, that such interest costs shall be allocated to the cost of such services for regulatory purposes. Any loan of funds made pursuant to this section shall be approved in advance by the comptroller of the treasury or the comptroller's designee and shall contain such provisions as are required by the comptroller of the treasury or the comptroller's designee.

Acts 1997, ch. 531, § 3; 2010, ch. 868, § 19.

Attorney General Opinions. Authority of municipal electric boards to provide telecommunications services.  OAG 12-34, 2012 Tenn. AG LEXIS 34 (3/12/12).

7-52-403. Applicability to municipalities — Municipalities subject to regulatory laws and rules.

  1. To the extent that it provides any of the services authorized by § 7-52-401, a municipality has all the powers, obligations and authority granted entities providing telecommunications services under applicable laws of the United States or the state of Tennessee. To the extent that such authority and powers do not conflict with title 65, chapter 4 or 5, and any rules, regulations, or orders issued under title 65, chapter 4 or 5, a municipality providing any of the services authorized by § 7-52-401 has all the authority and powers with respect to such services as are enumerated in this chapter.
  2. Notwithstanding the authorization granted in subsection (a), a municipal electric system shall not provide any of the services authorized by § 7-52-401 unrelated to its electric services within the service area of an existing telephone cooperative with fewer than one hundred thousand (100,000) total lines organized and operating under title 65, chapter 29, and therefore shall adhere to those regulations of the 1995 Tennessee Telecommunications Act and rules of the Tennessee public utility commission that are applicable to the telephone cooperatives, and specifically §§ 65-4-101 and 65-29-130.

Acts 1997, ch. 531, §§ 4, 9; 2017, ch. 94, § 15.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” near the end of (b).

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Tennessee regulatory authority, title 65, ch. 1.

Attorney General Opinions. Authority of municipal electric boards to provide telecommunications services.  OAG 12-34, 2012 Tenn. AG LEXIS 34 (3/12/12).

7-52-404. Tax equivalent payments.

A municipality providing any of the services authorized by § 7-52-401 shall make tax equivalent payments with respect to such services in the manner established for electric systems under part 3 of this chapter. For purposes of the calculation of such tax equivalent payments only, the system, plant, and equipment used to provide such services, shall be considered an electric plant, and the revenues received from such services shall be considered operating revenues. For regulatory purposes, a municipality shall allocate to the costs of any services authorized by § 7-52-401 an amount equal to a reasonable determination of the state, local, and federal taxes that would be required to be paid for each fiscal year by a nongovernmental corporation that provides the identical services.

Acts 1997, ch. 531, § 5.

7-52-405. Allocation of costs by municipalities.

For regulatory purposes, a municipality shall allocate to the costs of providing any of the services authorized by § 7-52-401:

  1. An amount for attachments to poles owned by the municipality equal to the highest rate charged by the municipality to any other person or entity for comparable pole attachments; and
  2. Any applicable rights-of-way fees, rentals, charges, or payments required by state or local law of a nongovernmental corporation that provides the identical services.

Acts 1997, ch. 531, § 6.

7-52-406. Licensing laws not superseded — Applicability to cable services.

  1. Nothing in this part or in § 7-52-102(10) or § 7-52-117(d), as amended by chapter 531 of the Public Acts of 1997, shall be construed to allow a municipality to provide any service for which a license, certification, or registration is required under title 62, chapter 32, part 3.
  2. Nothing in this part and § 7-52-102(10) or § 7-52-117(d), as amended by chapter 531 of the Public Acts of 1997, or any private act, charter, metropolitan charter, or amendments to any private act, charter or metropolitan charter, shall allow a municipality, county, metropolitan government, department, board or other entity of local government to provide any service for which a license, certification, or registration is required under title 62, chapter 32, part 3 or to provide pager service.

Acts 1997, ch. 531, §§ 10, 12; 1999, ch. 481, § 4.

7-52-407. Supersession of conflicting laws.

This part and § 7-52-102(10) or § 7-52-117(d), as amended by chapter 531 of the Public Acts of 1997, supersede any conflicting provisions of general law, private act, charter or metropolitan charter provisions.

Acts 1997, ch. 531, § 11.

7-52-408. [Repealed.]

Acts 2005, ch. 413, § 2; 2007, ch. 164, § 2; repealed by Acts 2013, ch. 204, § 1, effective April 23, 2013.

Compiler's Notes. Former § 7-52-408, concerned the Tennessee broadband task force.

7-52-409. [Repealed.]

Acts 2005, ch. 413, § 2; repealed by Acts 2013, ch. 204, § 2, effective April 23, 2013.

Compiler's Notes. Former § 7-52-409, concerned the quorum and the appointment of co-chair and meetings.

7-52-410. [Repealed.]

Acts 2005, ch. 413, § 3; repealed by Acts 2013, ch. 204, § 3, effective April 23, 2013.

Compiler's Notes. Former § 7-52-410, concerned the baseline assessment of broadband deployment.

7-52-411. [Repealed.]

Compiler's Notes. Former § 7-52-411 (Acts 2005, ch. 413, § 1), concerning the deadline for completion of baseline assessment, was repealed by Acts 2007, ch. 164, § 4, effective May 15, 2007.

Part 5
Separate Retirement Systems

7-52-501. Municipal electric plants authorized to maintain prior retirement system.

Every municipality operating a utility system that includes an electric plant, whether pursuant to this part or any other public or private act or the provisions of the charter of the municipality, county or metropolitan government, that acquires an existing utility system from a municipality, electric cooperative or utility district, has the power and is authorized, but is not obligated, by action of the board or supervisory body having responsibility for such municipality's utility system, to retain and continue to operate as a separate retirement system any retirement system that was in effect on the date of such acquisition for the employees and retirees of the acquired utility system. Any such municipality shall also have the power and authority to modify, consolidate, amend, open, close and terminate the plans constituting such separate retirement system, and to establish such associated trusts as are necessary and prudent for the proper administration, operation and maintenance of such separate retirement system. Upon the effective date of the acquisition of a utility system in which an election is made to continue the operation of a separate retirement system, as provided for in this section, the assets and liabilities of the separate retirement system shall be transferred to the acquiring municipal utility system and, from and after such date, such assets and liabilities shall be the sole obligation and responsibility of the acquiring municipal utility system and the separate retirement system, but shall not be the obligation of any general retirement system that was in effect for the acquiring municipal utility system prior to the acquisition date. All such assets shall be segregated from the assets of the retirement system of the acquiring utility system and shall be accounted for separately. Such funds may be managed in the same manner as the assets of the retirement system of such acquiring utility system. Nothing in this section shall be construed to impair or diminish the vested rights of any participant in the separate retirement system of the acquired utility system.

Acts 1998, ch. 625, § 2.

7-52-502. Preemption of conflicting laws.

This part supersedes any conflicting provisions of general law, private act, charter or metropolitan charter.

Acts 1998, ch. 625, § 3.

Part 6
Cable Television, Internet and Related Services

7-52-601. Authority to operate services.

  1. Each municipality operating an electric plant described in § 7-52-401 has the power and is authorized within its service area, under this part and on behalf of its municipality acting through the authorization of the board or supervisory body having responsibility for the municipal electric plant, sometimes referred to as “governing board” in this part, to acquire, construct, own, improve, operate, lease, maintain, sell, mortgage, pledge or otherwise dispose of any system, plant, or equipment for the provision of cable service, two-way video transmission, video programming, Internet services, or any other like system, plant, or equipment within or without the corporate or county limits of such municipality, and, with the consent of such other municipality, within the corporate or county limits of any other municipality. A municipality may only provide cable service, two-way video transmission, video programming, Internet services or other like service through its board or supervisory body having responsibility for the municipality's electric plant. A municipality providing any of the services authorized by this section may not dispose of all or substantially all of the system, plant, and equipment used to provide such services, except upon compliance with the procedures set forth in § 7-52-132.
  2. The services permitted by this part do not include telephone, telegraph, and telecommunications services permitted under part 4 of this chapter.
  3. Notwithstanding subsection (a), a municipality shall not have any power or authority under subsection (a) in any area where a privately-held cable television operator is providing cable service over a cable system and in total serves six thousand (6,000) or fewer subscribers over one (1) or more cable systems.
  4. Notwithstanding subsection (a), a municipality shall not have any power or authority under subsection (a) in any area of any existing telephone cooperative that has been providing cable service for not less than ten (10) years under the authority of the federal communications commission.
    1. Notwithstanding this section, the comptroller of the treasury shall select, not later than August 1, 2003, a municipal electric system providing services in accordance with this part to provide, as a pilot project, the services permitted under this section beyond its service area but not beyond the boundaries of the county in which such municipal electric system is principally located; provided, that:
      1. The municipal electric system receives a resolution from the legislative body of the county regarding service in unincorporated areas of the county, or any other municipality within such county regarding service within such municipality, requesting the municipal electric system to provide such services to its residents; and
      2. The municipal electric system obtains the consent of each electric cooperative or other municipal electric system in whose territory the municipal electric system will provide such services.
    2. The comptroller shall expand the pilot project established in subdivision (e)(1) to include one (1) municipal electric system located in the eastern grand division of the state that proposes to provide services in accordance with this part. Not later than August 1, 2004, the comptroller shall select the municipal electric system pilot project pursuant to this subdivision (e)(2), subject to the requirements of subdivisions (e)(1)(A) and (e)(1)(B).
    3. The comptroller shall report to the general assembly, not later than January 31, 2008, with recommendations regarding whether the pilot projects permitted by this part should be continued or expanded to other systems. The comptroller shall evaluate the efficiency and profitability of the pilot project services of the municipal electric system in making such recommendation; provided, that the comptroller shall not so evaluate a pilot project system that is not providing service in competition with another cable service provider.
    4. There shall be no other municipal electric system selected to provide pilot project services until the comptroller issues the recommendation required by subdivision (e)(3).

Acts 1999, ch. 481, § 1; 2003, ch. 59, § 1; 2004, ch. 587, § 1.

Cross-References. Grand divisions, title 4, ch. 1, part 2.

Attorney General Opinions. Interlocal agreements to provide cable services.  OAG 12-15, 2012 Tenn. AG LEXIS 15 (2/15/12).

Municipal electric system providing internet and video programming. OAG 12-70, 2012 Tenn. AG LEXIS 70 (7/11/12).

7-52-602. Business plan — Public notice and hearing — Referendum.

To provide the services authorized under this part, the governing board of the municipal electric system shall comply with the following procedure:

  1. Upon the approval and at the direction of the governing board, the municipal electric system shall file a detailed business plan with the office of the comptroller of the treasury that includes a three-year cost benefit analysis and that identifies and discloses the total projected direct cost and indirect cost of and revenues to be derived from providing the proposed services. The plan shall also include a description of the quality and level of services to be provided, pro forma financial statements, a detailed financing plan, marketing plan, rate structure and any other information requested by the comptroller of the treasury or the comptroller's designee;
  2. After review of the plan, the comptroller of the treasury shall provide a written analysis of the feasibility of the proposed business plan to the chief legislative body of the municipality in which the municipal electric system is located and the governing board within sixty (60) days; provided, that the calculation of the time to file the comptroller's written analysis shall not commence until the business plan is complete. Upon expiration of the sixty-day period, the governing board may proceed without the written analysis of the comptroller;
  3. If the governing board determines to proceed, it shall publish, in a newspaper of general circulation within that area, a notice of its intent to proceed with the offering of additional services. The notice shall include a general description of the business plan and a summary of the governing board's findings on such plan. The notice shall also specify a date on which the governing board shall conduct a public hearing on the provision of such services;
  4. The governing board shall conduct a public hearing on the provision of such services. No sooner than fourteen (14) days after such public hearing, the governing board may consider authorizing the provision of additional services. A municipal electric system may provide additional services only after approval by a two-thirds (2/3) majority vote of the chief legislative body of the municipality in which the municipal electric system is located or by a public referendum held pursuant to subdivision (5); and
  5. Upon a majority vote by the chief legislative body of the municipality in which the municipal electric system is located that a public referendum should be held on the question of whether the municipal electric system may provide additional services, the chief legislative body of such municipality may direct the county election commission to hold a referendum on such question. In order for the question to be placed on the ballot, the chief legislative body shall so direct not less than sixty (60) days before a regular general election. Upon receipt of such direction from the chief legislative body, the county election commission shall place the question on the ballot. The referendum shall only be held in conjunction with a regular general election being held in the municipality and only registered voters of such municipality may participate in the referendum. The question to appear on the ballot shall be:

    “FOR THE MUNICIPAL ELECTRIC SYSTEM PROVIDING ADDITIONAL SERVICES” and “AGAINST THE MUNICIPAL ELECTRIC SYSTEM PROVIDING ADDITIONAL SERVICES.”

Acts 1999, ch. 481, § 1; 2010, ch. 868, § 20.

7-52-603. Separate division to provide services — Costs and charges.

      1. A municipal electric system shall establish a separate division to deliver any of the services authorized by this part. The division shall maintain its own accounting and record-keeping system. A municipal electric system may not subsidize the operation of the division with revenues from its power or other utility operations.
      2. A municipal electric system may lend funds, at a rate of interest not less than the highest rate then earned by the municipal electric system on invested electric plant funds, to acquire, construct, and provide working capital for the system, plant, and equipment necessary to provide any of the services authorized by this part; provided, that such interest costs shall be allocated to the cost of such services.
    1. The division shall be subject to the terms and conditions of those types of provisions generally provided in existing or future pole attachment agreements, including without limitation, allocation of costs for rates, insurance, and other related costs, and the responsibility for make-ready provisions, that are applicable to private providers of services provided by the division under this part.
    2. In response to facility installation, maintenance, or relocation requests made under a pole attachment agreement by a private provider of services provided by the division under this part, the municipal electric system shall provide the same response times and service quality as the municipal electric system provides for requests of the division for such services and shall provide nondiscriminatory access to these facilities. Nothing in this subsection (a) shall impair the rights of a municipal electric system under its pole attachment agreement with the private provider of services.
  1. A municipal electric system providing any of the services authorized by this part shall fully allocate any costs associated with the services provided under this part to the rates for those services.
  2. A municipal electric system providing any of the services authorized by this part shall establish and charge rates that cover all costs related to the provision of such services.
  3. A municipal electric system shall charge or allocate as costs to the division the same pole rate attachment fee as it charges any other franchise holder providing the same service.
  4. Any fee imposed by the municipality on a private provider of cable services, shall also be allocated to the division.

Acts 1999, ch. 481, § 1.

7-52-604. Guidelines for accounting — Audits — Financial reports.

  1. The comptroller of the treasury shall adopt, after consideration of written comments submitted by any interested party, guidelines or procedures to establish appropriate accounting principles applicable to the division's affiliated transactions and cost allocation. The development of such guidelines or procedures shall not be deemed a rule-making proceeding under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
  2. A municipal division providing the services authorized by this part is subject to a finance and compliance audit under § 6-56-105, which audit shall be conducted in accordance with enterprise fund accounting principles under generally accepted accounting principles.
  3. On or before June 30, 2005, the office of the comptroller of the treasury shall prepare a report to the general assembly evaluating the operations of municipal electric systems offering services permitted by this part, which shall include a recommendation as to whether the authority to provide such services should be expanded, restricted or terminated.
  4. Except for two (2) municipal electric systems located in the middle grand division of the state, no additional municipal electric system shall apply or be granted authorization to provide the services described in § 7-52-601 until February 1, 2006, at which time the general assembly shall receive and consider the comptroller's report described in subsection (c); provided, however, that municipal electric systems presently operating pursuant to § 7-52-601 on June 7, 2005, or having received approval pursuant to § 7-52-602 as of June 7, 2005, shall not be subject to the requirements of this subsection (d).

Acts 1999, ch. 481, § 1; 2005, ch. 362, § 1.

Cross-References. Grand divisions, title 4, ch. 1, part 2.

Reporting requirements satisfied by notice to general assembly members of publication of report, § 3-1-114.

7-52-605. Powers and obligations of service providers.

To the extent that it provides any of the services authorized by this part, a municipal electric system shall have all the powers, obligations, and authority granted entities providing similar services under applicable laws of the United States, the state of Tennessee or applicable municipal ordinances.

Acts 1999, ch. 481, § 1.

Attorney General Opinions. Municipal electric system providing internet and video programming. OAG 12-70, 2012 Tenn. AG LEXIS 70 (7/11/12).

7-52-606. Tax payments — Payments in lieu of taxes.

  1. A municipal electric system providing any of the services authorized by this part shall make tax equivalent payments with respect to such services in the manner established for electric systems under part 3 of this chapter; provided, that such payments shall not include amounts based on net system revenues as provided in § 7-52-304(1)(B). For purposes of the calculation of such tax equivalent payments only, the system, plant, and equipment used to provide such services shall be considered an electric plant, and the revenues received from such services shall be considered operating revenues. The amount payable pursuant to this subsection (a) shall not exceed the amount that would otherwise be due from a municipality were it a private provider of such services paying ad valorem taxes.
  2. In addition to the requirement of subsection (a), and notwithstanding any other law to the contrary, a division of the municipal electric system providing the cable services, Internet services, two-way video transmission or video programming services authorized by this part, is subject to payment to the appropriate units of government of an amount in lieu of the following taxes on that part of its revenues, plant and facilities dedicated or allocated to those services described in § 7-52-601(a), to the same extent as if it were a private provider of such services:
    1. Excise and franchise tax law under title 67, chapter 4, parts 20 and 21;
    2. Sales tax law under title 67, chapter 6; and
    3. Local privilege tax law under title 67, chapter 4, part 7.

Acts 1999, ch. 481, § 1.

7-52-607. Financing powers of service providers.

Any municipality authorized by this part to provide any of the services described in this part shall have the power and is hereby authorized to borrow money, contract debts and issue its bonds or notes to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of a system or systems, or any part of the system or systems, to provide any of such services, including the acquisition of land or rights in land and the acquisition and installation of all equipment necessarily incident to the provision of such services. Any bonds or notes authorized to be issued pursuant to this section shall be issued only in accordance with the procedures, requirements and limitations set forth in chapter 34 of this title, or the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, as elected by the municipality issuing the bonds or notes. All provisions of chapter 34 of this title, or the Local Government Public Obligations Act of 1986, relating to the authorization, issuance and sale of bonds or notes, the use and application of revenues of the system or systems being financed, powers to secure such bonds and notes, covenants and remedies for the benefit of bond or note holders with respect to such bonds or notes, validity and tax exemption with respect to such bonds or notes, and powers to refund and refinance such bonds or notes shall apply to any bonds or notes authorized hereunder and the system or systems financed thereby with the same effect as if such system or systems were a “public works” if proceeding under chapter 34 of this title, or a “public works project” if proceeding under the Local Government Public Obligations Act of 1986.

Acts 1999, ch. 481, § 1.

Cross-References. Local government public obligations law, title 9, chapter 21.

Municipal utilities, title 7, chapter 34.

7-52-608. Conflicting law or provisions.

This part supersedes any conflicting provisions of general law, private act, charter or metropolitan charter provisions.

Acts 1999, ch. 481, § 1.

7-52-609. Civil actions.

A franchisee under chapter 59 of this title operating in the service area of the municipal electric division providing services under this part may bring a civil action for injunctive or declaratory relief for a violation under this part, and may recover actual damages upon a showing of a willful violation under this part. Jurisdiction and venue for such action shall be in the chancery court in the county where the alleged violation is occurring or will occur. Such actions shall be scheduled for hearing as a priority by the court.

Acts 1999, ch. 481, § 1.

7-52-610. Liability of service providers.

A division established by a municipal electric system to deliver any of the services authorized by this part shall not be considered a governmental entity for the purposes of the Tennessee Governmental Tort Liability Act, compiled in title 29, chapter 20.

Acts 1999, ch. 481, § 1.

7-52-611. Customer right to action for damages.

A customer of a municipal electric system shall have a right of action to recover damages against such system pursuant to this part.

Acts 1999, ch. 481, § 6.

7-52-132. Disposition of plant — Election resolution — Notice — Ballot — Election.

Chapter 53
Industrial Development Corporations

Part 1
General Provisions

7-53-101. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Applicable ad valorem taxes” means any ad valorem taxes that, but for ownership of a project by a corporation, would have been due and payable pursuant to §§ 67-5-102 and 67-5-103;
  2. “Bonds” means bonds, notes, interim certificates or other obligations of a corporation issued pursuant to this chapter;
  3. “Contracting party” or “other contracting party” means any party to a sale contract or loan agreement except the corporation;
  4. “Corporation” means any corporation organized pursuant to this chapter;
  5. “Eligible headquarters facility” means a facility, located in a county with a population in excess of eight hundred thousand (800,000), according to the 2000 federal census or any subsequent federal census, that houses an international, national or regional headquarters facility of an entity that agrees, at a minimum, to make payments to the municipality in lieu of any special assessments or other fees or charges that would be levied on the project pursuant to chapter 84 of this title if the project were privately owned;
  6. “Enterprise” means the manufacturing, processing, assembling, commercial, service and agricultural operations to be carried on with or otherwise using the facilities of the project;
  7. “Governing body” means the board or body in which the general legislative powers of the municipality are vested;
  8. “Lease” includes a lease containing an option to purchase the project for a nominal sum upon payment in full, or provision for payment in full, of all bonds issued in connection with the project and all interest on the bonds and all other expenses in connection with the project, and a lease containing an option to purchase the project at any time, as provided in the lease, upon payment of the purchase price, which shall be sufficient to pay all bonds issued in connection with the project and all interest on the bonds and all other expenses incurred in connection with the project, but which payment may be made in the form of one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of the lessee providing for timely payments, including, without limitation, interest on the obligations sufficient for such purposes and delivered to the corporation or to the trustee under the indenture pursuant to which the bonds were issued;
  9. “Loan agreement” means an agreement providing for a corporation to loan the proceeds derived from the issuance of bonds pursuant to this chapter to one (1) or more contracting parties to be used to pay the cost of one (1) or more projects and providing for the repayment of such loan by the other contracting party or parties, and that may provide for such loans to be secured or evidenced by one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of the contracting party or parties, delivered to the corporation or to the trustee under the indenture pursuant to which the bonds were issued;
  10. “Mayor,” as used in § 7-53-314, means the chief executive officer of any county having a metropolitan form of government and having a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, with respect to which a corporation has been organized;
  11. “Municipality” means any county or incorporated city or town in this state with respect to which a corporation may be organized and in which it is contemplated the corporation will function;
  12. “Payments in lieu of taxes” means any amount negotiated separately from rent in lieu of applicable ad valorem taxes;
  13. “Pollution” means the placing of any noxious or deleterious substances, including noise, in any air or water of or adjacent to the state of Tennessee affecting the physical, chemical or biological properties of any air or waters of or adjacent to the state of Tennessee in a manner and to an extent that renders or is likely to render such air or waters inimical or harmful to the public health, safety or welfare, or to animal, bird or aquatic life, or to the use of such air or waters for domestic, industrial, agricultural or recreational purposes;
  14. “Pollution control facilities” means any equipment, structure or facility or any land and any building, structure, facility or other improvement on the land, or any combination thereof, and all real and personal property deemed necessary therewith having to do with or the end purpose of which is the control, abatement or prevention of water, air, noise or general environmental pollution, including, but not limited to, any air pollution control facility, noise abatement facility, water management facility, waste water collecting systems, waste water treatment works or solid waste disposal facility;
  15. “Project” means all or any part of, or any interest in:
    1. Any land and building, including office building, any facility or other improvement on the land, and all real and personal properties deemed necessary in connection therewith, whether or not now in existence, that shall be suitable for the following or by any combination of two (2) or more thereof:

      not less than  nor more than

      14,940 15,000

      49,400 49,500

      56,000 56,100

      74,500 74,600

      85,725 85,825

      477,000 500,000

      1. Any industry for the manufacturing, processing or assembling of any agricultural, mining, or manufactured products;
      2. Any commercial enterprise in selling, providing, or handling any financial service or in storing, warehousing, distributing or selling any products of agriculture, mining or industry;
      3. Any undertaking involving the use of ship canals, ports or port facilities, off-street parking facilities, docks or dock facilities, or harbor facilities, or of railroads, monorail or tramway, railway terminals, or railway belt lines and switches;
      4. All or any part of any office building or buildings for the use of such tenant or tenants as may be determined or authorized by the board of directors of the corporation, including, without limitation, any industrial, commercial, financial or service enterprise, any nonprofit domestic corporation or enterprise now or hereafter organized, whose purpose is the promotion, support and encouragement of either agriculture or commerce in this state or whose purpose is the promoting of the health, welfare and safety of the citizens of the state;
      5. Any office or other public building for any city, county or metropolitan government of the state of Tennessee or any board of public utilities, or any public authority, agency, or instrumentality of the state of Tennessee or of the United States;
      6. Any buildings, structures and facilities, including the site of the buildings, structure and facilities, machinery, equipment and furnishings, suitable for use by any city, county or metropolitan government of the state of Tennessee or any for profit corporation operating buildings, structures and facilities, including the site of the buildings, structures and facilities, machinery, equipment and furnishings, under contract with any city, county or metropolitan government of the state of Tennessee as health care or related facilities, including, without limitation, hospitals, clinics, nursing homes, research facilities, extended or long-term care facilities, and all buildings, structures and facilities deemed necessary or useful in connection therewith;
      7. Any nonprofit educational institution in any manner related to or in furtherance of the educational purposes of such institution, including, but not limited to, classroom, laboratory, housing, administrative, physical education, and medical research and treatment facilities;
      8. Any planetarium or museum;
      9. Any facilities for any recreation or amusement park, public park or theme park suitable for use by any private corporation or any governmental unit of the state of Tennessee, including the state of Tennessee;
      10. Any multifamily housing facilities to be occupied by persons of low or moderate income, elderly, or handicapped persons as may be determined by the board of directors, which determination shall be conclusive;
      11. (a)  Any undertaking involving the operation or management of the Job Training Partnership Act program pursuant to 29 U.S.C. § 1501 et seq. [repealed]. It is the legislative intent to include such project in order to increase employment opportunities pursuant to § 7-53-102;
        1. (xi)  (a)  Any undertaking involving the operation or management of the Job Training Partnership Act program pursuant to 29 U.S.C. § 1501 et seq. [repealed]. It is the legislative intent to include such project in order to increase employment opportunities pursuant to § 7-53-102;
        2. Subdivision (15)(A)(xi)(a ) shall not apply in any county having a population, according to the 1980 federal census or any subsequent federal census of:
      12. Any land, buildings, structures and facilities, including the site of the building, structure and facilities, machinery, equipment and furnishings that constitute “recovery zone property” as in § 1400U-3(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 1400U-3(c)); and
      13. Facilities or expenditures paid or incurred for “qualified conservation purposes” as defined in § 54D of the Internal Revenue Code of 1986 (26 U.S.C. § 54D), in connection with the issuance of “qualified energy conservation bonds”, as defined in § 54D of the Internal Revenue Code of 1986 (26 U.S.C. § 54D);
      1. In any municipality in which there has been created a central business improvement district pursuant to chapter 84 of this title, “project” also means any hotel, motel or apartment building located within an area designated by appropriate resolution or ordinance by the municipality as the center-city area; and, in any municipality, “project” also means any hotel, including any conference or convention center facilities related to the hotel, or motel within an area that could provide substantial sources of tax revenues or economic activity to the municipality;
      2. In counties with a metropolitan form of government, “project” also means any hotel, motel or apartment building located on property owned by or leased from an airport authority created pursuant to title 42, chapter 3 or 4, but this subdivision (15)(B)(ii) shall not apply in any county having a population of not less than one hundred twenty thousand (120,000) nor more than one hundred thirty thousand (130,000), according to the 1970 federal census or any subsequent federal census;
      3. In the county seat of any county having a population of not less than nineteen thousand six hundred fifty (19,650) or more than nineteen thousand seven hundred fifty (19,750), according to the 1980 federal census or any subsequent federal census, “project” also means the purchase, acquisition, leasing, construction and equipping of hotels, motels, and apartments in any area within the county seat of such county;
      4. In any municipality in which there is a closed or substantially downsized facility, including, but not limited to, a facility formerly operated by the United States department of defense or department of energy, “project” also means the purchase, acquisition, leasing, construction and equipping of hotels, motels, conference centers and apartments, on or adjacent to the site of the closed or substantially downsized federal facility;
      5. In any municipality with a population of at least fifteen thousand (15,000) or more, according to the 2010 federal census or any subsequent federal census, located partly within a county having a metropolitan form of government and partly within an adjacent county, “project” also means the purchase, acquisition, leasing, construction, and equipping of hotels and motels within any such municipality’s corporate boundaries;
    2. Pollution control facilities, coal gasification facilities, and energy production facilities, as defined in § 7-54-101, and any buildings, structures and facilities, including the site of any buildings, structures and facilities, machinery, equipment and furnishings, for the production of electricity, that shall be suitable for use by any person including any public utility whether publicly or privately owned, board of public utilities, public authority, municipality, or agency or instrumentality of the state of Tennessee or the United States, or by any combination of two (2) or more. The board of directors of the corporation shall find, with respect to any office building or any hotel, motel or apartment building financed under this chapter that the acquisition and leasing or sale of such building, or the financing of the building by loan agreement, as the case may be, will develop trade and commerce in and adjacent to the municipality, will contribute to the general welfare and will alleviate conditions of unemployment, and with regard to any apartment building that the construction of an apartment building will increase the quantity of housing available in the municipality, and such finding by the board of directors shall be conclusive;
    3. Land or buildings or other improvements to land or buildings, or any combination thereof, and any breeding stock and machinery or equipment necessary or suitable for use in farming, ranching, the production of agricultural commodities, including the products of agriculture and silviculture, or necessary and suitable for treating, processing, storing or transporting raw agricultural commodities;
    4. A tourism attraction involving an aggregate investment of public and private funds in excess of seventy-five million dollars ($75,000,000) that is designed to attract tourists to the state, including a cultural or historical site, a museum or visitors center, a recreation or entertainment facility, and all related hotel or hotels, convention center facilities, administrative facilities and offices, mixed use facilities, restaurants and other tourism amenities constructed or acquired as a part of the attraction;
    5. In any municipality in which there has been created a central business improvement district pursuant to chapter 84 of this title, “project” also means any public infrastructure, public improvement, public facilities, or combination thereof, located within an area designated by appropriate resolution or ordinance by the municipality as the center city area, including without limitation, any alleys, auditoriums, bridges, culverts, curbs, drainage systems, including storm water sewers and drains, garages, parks, parking facilities, parkways, playgrounds, plazas, public art, roads, sewers, sidewalks, stadiums, streets, street equipment, tunnels, and viaducts;
    6. Any economic development project as defined in § 7-40-103;
    7. Land or buildings or other improvements to land or buildings, or any combination thereof, and any machinery or equipment necessary or suitable for use in the production of biofuels, biopower, biochemicals, biomaterials, synthetic fuels and/or petroleum products, or necessary and suitable for treating, processing, storing or transporting raw materials used in such production or in storing and transporting the finished product, intermediate products or co-products; and
    8. Any economic development project as defined in the Regional Retail Tourism Development District Act, compiled in chapter 41 of this title;
  16. “Rent” means a charge for use of property, including the lessee's obligation to repay debt issued or assumed by a lessor, or rent implied by the lessee's stated obligation to construct improvements;
  17. “Retail business” means a retail establishment providing general retail sales or services to consumers;
  18. “Revenues” of a project, or derived from a project, include payments under a lease or sale contract and repayments under a loan agreement, or under notes, debentures, bonds and other secured or unsecured debt obligations of a lessee or contracting party delivered as provided in this chapter;
  19. “Sale contract” means a contract providing for the sale of one (1) or more projects to one (1) or more contracting parties and includes a contract providing for payment of the purchase price in one (1) or more installments. If the sale contract permits title to the project to pass to the other contracting party or parties prior to payment in full of the entire purchase price, it shall also provide for the other contracting party or parties to deliver to the corporation or to the trustee under the indenture pursuant to which the bonds were issued one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of such contracting party or parties providing for timely payments, including, without limitation, interest on the obligations for the balance of the purchase price at or prior to the passage of such title; and
  20. “Waiver” means an agreement that does not require the payment of any payments in lieu of taxes for a period of time.

Acts 1955, ch. 210, § 1; 1957, ch. 287, § 1; 1959, ch. 222, § 1; 1961, ch. 285, § 1; 1965, ch. 210, § 1; 1965, ch. 307, § 1; 1965, ch. 344, § 1; 1969, ch. 55, § 1; 1971, ch. 304, § 1; 1971, ch. 357, § 1; 1972, ch. 779, § 1; 1973, ch. 304, § 1; 1974, ch. 587, § 1; 1974, ch. 661, § 1; 1976, ch. 515, § 1; 1978, ch. 739, §§ 1, 2; T.C.A., § 6-2801; Acts 1980, ch. 918, § 1; 1981, ch. 515, §§ 1, 2; 1981, ch. 529, § 1; 1982, ch. 587, § 1; 1982, ch. 841, §§ 1, 2; 1982, ch. 896, §§ 1-3; 1983, ch. 150, § 1; 1985, ch. 67, § 1; 1989, ch. 83, § 1; 1989, ch. 581, §§ 1-4; 1995, ch. 364, § 1; 1998, ch. 983, § 1; 2007, ch. 461, § 5; 2007 ch. 524 § 1; 2008, ch. 694, § 1; 2008, ch. 770, § 2; 2009, ch. 180, § 1; 2009, ch. 608, § 5; 2010, ch. 800, § 1; 2011, ch. 420, § 13; 2012, ch. 944, § 1; 2014, ch. 748, § 1; 2014, ch. 962, § 1; 2016, ch. 777, § 5; 2018, ch. 1064, § 1; 2019, ch. 498, § 13.

Compiler's Notes. For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

The Job Training Partnership Act Program, compiled in 29 U.S.C. § 1501 et seq., referred to in this section, was repealed effective July 1, 2000.

Acts 2008, ch. 770, § 3 provided that the act, which added the definition of “mayor,” shall apply to all economic impact plans submitted on or July 1, 2008.

Amendments. The 2016 added the definitions of “applicable ad valorem taxes”, “payments in lieu of taxes”, “rent”, and “waiver”.

The 2018 amendment, effective October 1, 2018, added the definition of “‘Retail business’”.

The 2019 amendment added (15)(I).

Effective Dates. Acts 2016, ch. 777, § 6. April 12, 2016.

Acts 2018, ch. 1064, § 3. October 1, 2018.

Acts 2019, ch. 498, § 15. July 1, 2019.

Cross-References. Allocation plan for private activity bonds, title 9, ch. 20.

Corporate franchise tax, valuation of property, § 67-4-2108.

Industrial Building Revenue Bond Act, title 7, ch. 37.

Industrial development, title 4, ch. 14.

Industrial parks, title 13, ch. 16, part 2.

Local enterprise zones, title 13, ch. 28, part 2.

Tennessee River four-county port authority as industrial development corporation, § 64-4-105.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal Corporations, § 25; 19 Tenn. Juris., Municipal, State and County Aid, § 2.

Attorney General Opinions. Appropriating county tax funds for use by a county industrial development corporation, OAG 92-67, 1992 Tenn. AG LEXIS 65 (11/23/92).

Loan by municipality to county industrial development corporation, OAG 93-18, 1993 Tenn. AG LEXIS 18 (3/4/93).

Authority of industrial development corporations to extend existing lease terms but with continuing payment obligation in lieu of taxes, OAG 97-049, 1997 Tenn. AG LEXIS 58 (4/15/97).

County approval of industrial development board expenditures, OAG 97-170, 1997 Tenn. AG LEXIS 204 (12/22/97).

A “duly qualified elector of the municipality” means a person qualified to vote in an election of the “municipality,” as that term is defined in T.C.A. § 7-53-101(10).  Improperly appointed members of boards are generally viewed as de facto officers, and acts of such officers are considered valid.  Nevertheless, as a precaution, the board, once all of its members are appropriately appointed, may wish to review the actions taken by the earlier board and vote to ratify, confirm, modify, or reject such actions.   OAG 15-72, 2015 Tenn. AG LEXIS 73 (11/3/2015).

NOTES TO DECISIONS

1. Constitutionality.

This act is not in violation of Tenn. Const., art. II, § 17 or § 28. West v. Industrial Development Board, 206 Tenn. 154, 332 S.W.2d 201, 1960 Tenn. LEXIS 355 (1960).

Acts 1965, ch. 344, which amended this section by adding “any planetarium and/or museum” to definition of project and whose title referred to the code section amended, did not violate Tenn. Const., art. II, § 17. Industrial Development Board v. First United States Corp., 219 Tenn. 156, 407 S.W.2d 457, 1966 Tenn. LEXIS 514 (1966).

Planetariums and museums were public purposes under Tenn. Const., art. II, § 28 and Acts 1965, ch. 344 adding those terms to definition of “project” in this section did not violate such constitutional provision. Industrial Development Board v. First United States Corp., 219 Tenn. 156, 407 S.W.2d 457, 1966 Tenn. LEXIS 514 (1966).

An inducement contract between the local industrial development corporation and a department store engaged in selling merchandise at retail is covered by this chapter and does not violate Tenn. Const., art. I, § 8, art. II, § 28 or art. XI, § 8. Small World, Inc. v. Industrial Development Board, 553 S.W.2d 596, 1976 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1976).

Because the proposed issuance of industrial revenue bonds to the university is part of a neutral program to benefit education, including that provided by sectarian institutions, and confers at best only an indirect benefit to the school, the issuance of the bonds does not violate the First Amendment. Steele v. Indus. Dev. Bd. of Metro. Gov't Nashville, 301 F.3d 401, 2002 FED App. 274P, 2002 U.S. App. LEXIS 16375 (6th Cir. Tenn. 2002), cert. denied, 537 U.S. 1188, 123 S. Ct. 1254, 154 L. Ed. 2d 1020, 2003 U.S. LEXIS 1120 (2003), cert. denied, 537 U.S. 1188, 123 S. Ct. 1273, 154 L. Ed. 2d 1020, 2003 U.S. LEXIS 1121 (2003).

The nature of the institution is not the relevant inquiry in the special type of aid at issue; the nature of the aid conferred by the tax free revenue bonds is not direct aid, but instead, it is analogous to an indirect financial benefit conferred by a religiously neutral tax or charitable deduction: (1) The funding vehicle is available on a neutral basis; (2) No government funds will be expended, nor does any holder of a bond have recourse against the board or the city in the event of nonpayment; (3) The benefit to be obtained by the university is the same provided to private companies that create identical economic opportunities; (4) The conduit financing advances a clear governmental, secular interest in promoting economic opportunity; and finally, (5) The revenue bond program does not present the perception of government endorsement of religion. Steele v. Indus. Dev. Bd. of Metro. Gov't Nashville, 301 F.3d 401, 2002 FED App. 274P, 2002 U.S. App. LEXIS 16375 (6th Cir. Tenn. 2002), cert. denied, 537 U.S. 1188, 123 S. Ct. 1254, 154 L. Ed. 2d 1020, 2003 U.S. LEXIS 1120 (2003), cert. denied, 537 U.S. 1188, 123 S. Ct. 1273, 154 L. Ed. 2d 1020, 2003 U.S. LEXIS 1121 (2003).

Industrial revenue board's issuance of tax-exempt bonds under T.C.A. § 7-53-101(11)(A)(vii) (now (15) (A) (vii))  to finance a redevelopment project at a sectarian university did not violate the Establishment Clause because issuance of the bonds did not provide direct aid to the university, but instead was an indirect benefit that was neutrally available and that presented no perception of government endorsement of religion. Steele v. Indus. Dev. Bd. of Metro. Gov't Nashville, 301 F.3d 401, 2002 FED App. 274P, 2002 U.S. App. LEXIS 16375 (6th Cir. Tenn. 2002), cert. denied, 537 U.S. 1188, 123 S. Ct. 1254, 154 L. Ed. 2d 1020, 2003 U.S. LEXIS 1120 (2003), cert. denied, 537 U.S. 1188, 123 S. Ct. 1273, 154 L. Ed. 2d 1020, 2003 U.S. LEXIS 1121 (2003).

2. Scope of Industrial Development Board's Duties.

An industrial development board does not have the duty or the power to inquire into the various municipal or state problems that a project for which it sells the bonds may create. Yearwood v. Industrial Dev. Bd., 648 S.W.2d 944, 1982 Tenn. App. LEXIS 448 (Tenn. Ct. App. 1982).

7-53-102. Legislative intent and findings — Purposes of chapter — Construction.

  1. It is the intent of the general assembly by the passage of this chapter to authorize the incorporation in the several municipalities in this state of public corporations to finance, acquire, own, lease, or dispose of properties, to the end that such corporations may be able to maintain and increase employment opportunities, increase the production of agricultural commodities, and increase the quantity of housing available in affected municipalities by promoting industry, trade, commerce, tourism and recreation, agriculture and housing construction by inducing manufacturing, industrial, governmental, educational, financial, service, commercial, recreational and agricultural enterprises to locate in or remain in this state and further the use and production of its agricultural products and natural resources, and to vest such corporations with all powers that may be necessary to enable them to accomplish such purposes. It is further the intent of the general assembly to promote the control and elimination of all types of pollution that may result from the existence, development or expansion of commerce and industry within the state and that are essential to the economic growth of the state and to the full employment and prosperity of its citizens, but are accompanied by the increased use of processes and facilities and the increased production and discharge of noise, and gaseous, liquid and solid waste that threaten and endanger the health, welfare and safety of the citizens of the state by polluting the air, land and waters of the state. Therefore, the general assembly finds and determines that in order to reduce, control and prevent such environmental pollution, it is imperative that action be taken at various levels of government to require acquisition and installation of devices, equipment and facilities for the collection, reduction, treatment, and disposal of such wastes and pollutants, and that such actions heretofore or hereafter taken be effectively coordinated; that the cost of such acquisition and installation, if required to be assumed and paid by private enterprises without public assistance, would be unduly burdensome and would discourage or prevent their location in the state and would jeopardize their continued operation in the state; and that the assistance provided in this chapter, especially with respect to financing, is therefore in the public interest and serves a public purpose of the state in promoting the health, welfare and safety of the citizens of the state, not only physically by reducing, controlling and preventing environmental pollution but also economically by the securing and retaining of private enterprises and the resulting maintenance of a higher level of employment and economic activity and stability, and to vest such corporations with all powers that may be necessary to accomplish such purposes. It is not intended by this chapter that any such corporation shall itself be authorized to operate any such manufacturing, industrial, governmental, educational, commercial or agricultural enterprise, hotel, motel or apartment building or pollution control facility.
  2. This chapter shall be liberally construed in conformity with such intention.
  3. The statement of public policy set forth in Acts 1955, chapter 209, § 3 is hereby incorporated into and made a part of this chapter, and it is hereby determined and declared that the means provided by this chapter are needed to relieve the emergency created by the continuing migration from Tennessee of a large number of its citizens in order to find employment elsewhere and to control and eliminate all types of pollution within the state.
  4. The findings of the general assembly set forth in § 4-31-202 are hereby incorporated into and made a part of this chapter, and it is hereby determined and declared that the means provided by this chapter are needed to make financial means available to farmers and farm-related enterprises that private industry alone would be otherwise unable to serve, at interest rates lower than would otherwise be obtainable.

Acts 1955, ch. 210, § 2; 1959, ch. 222, § 2; 1961, ch. 285, § 2; 1969, ch. 55, § 2; 1971, ch. 304, § 2; 1973, ch. 304, § 2; 1974, ch. 587, § 2; 1976, ch. 515, § 2; 1978, ch. 739, §§ 3, 4; T.C.A., § 6-2802; Acts 1982, ch. 896, §§ 4-6.

Compiler's Notes. Acts 1955, ch. 209, § 3, referred to in this section, is set forth as a note to § 7-55-101.

Attorney General Opinions. Persons qualified to petition for the establishment of industrial development board, OAG 99-142, 1999 Tenn. AG LEXIS 166 (7/27/99).

City’s Use of Payments Received Through Industrial Development Corporation to Fund Workforce Training Programs. OAG 15-43, 2015 Tenn. AG LEXIS 66 (4/30/15).

NOTES TO DECISIONS

1. Public Purpose.

The issuance of first mortgage revenue bonds for construction and lease of a retail department store in order to increase business activity within the city concerned was valid, even though it resulted in the promotion of a private corporation. Small World, Inc. v. Industrial Development Board, 553 S.W.2d 596, 1976 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1976).

2. —Taxation Exemption.

Property held pursuant to this chapter falls within the exception to the taxation requirement of Tenn. Const., art. II, § 28, since the city holds the property concerned for a public purpose, that of promoting industry and developing trade to provide against low wages and unemployment. Small World, Inc. v. Industrial Development Board, 553 S.W.2d 596, 1976 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1976).

7-53-103. Dissolution — Disposition of property.

Whenever the board of directors of the corporation shall by resolution determine that there has been substantial compliance with the purposes for which the corporation was formed and all bonds issued and all obligations theretofore incurred by the corporation have been fully paid, the then members of the board of directors of the corporation shall then execute and file for record in the office of the secretary of state a certificate of dissolution reciting such facts and declaring the corporation to be dissolved. Such certificate of dissolution shall be executed under the corporate seal of the corporation. Upon the filing of such certificate of dissolution, the corporation shall stand dissolved, the title to all funds and properties owned by it at the time of such dissolution shall vest in the municipality, and possession of such funds and properties shall forthwith be delivered to such municipality.

Acts 1955, ch. 210, § 16; T.C.A., § 6-2815.

7-53-104. Corporations acting jointly.

  1. The authorities and powers conferred in this chapter upon corporations created under this chapter may be exercised by two (2) or more such corporations acting jointly.
  2. Two (2) or more municipalities may, by acting jointly, incorporate a public corporation to effectuate the purposes of this chapter. When two (2) or more municipalities incorporate such a public corporation, each and every requisite pertaining to the application for incorporation, qualifications of applicants, certificate of incorporation, amendment of certificate and the manner of pledging municipal credit through the submission by referendum election shall be incumbent in like manner upon each municipality joining in the creation of this public corporation. An officer of a municipality or the city manager or other comparable chief administrative officer of a municipality, but not any other employee, may serve as a director of a corporation that is jointly incorporated by two (2) or more municipalities. Notwithstanding § 7-53-301, the term of office of any director of the corporation who is an officer or employee of a municipality may be coextensive with the period of time that the director serves as an officer or employee of the municipality.

Acts 1955, ch. 210, § 18; 1968, ch. 625, § 1; T.C.A., § 6-2817; Acts 2009, ch. 84, § 1.

Attorney General Opinions. Ability of county executive (now county mayor) and mayor to serve as directors, OAG 97-160, 1997 Tenn. AG LEXIS 189 (12/11/97).

7-53-105. Provisions cumulative.

Neither this chapter nor anything contained in this chapter shall be construed as a restriction or limitation upon any powers the corporation might otherwise have under any laws of this state, but shall be construed as cumulative of any such powers. No proceedings, notice or approval shall be required for the organization of the corporation or the issuance of any bonds or any instrument as security for the bonds, except as provided in this chapter, any other law to the contrary notwithstanding; provided, that nothing herein shall be construed to deprive the state and its governmental subdivisions of their respective police powers over properties of the corporation, or to impair any power over the properties of the corporation of any official or agency of the state and its governmental subdivisions that may be otherwise provided by law.

Acts 1955, ch. 210, § 19; T.C.A., § 6-2818.

7-53-106. Powers supplementary — Provisions severable.

  1. The powers conferred by this chapter shall be in addition and supplementary to, and the limitations by this chapter shall not affect the powers conferred by any other general, special or local law. Projects may be acquired, purchased, constructed, reconstructed, improved, bettered and extended and bonds may be issued under this chapter for such purposes, notwithstanding that any other general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like project, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.
  2. If any one (1) or more sections or provisions of this chapter, including, without limitation, the provisions of § 7-53-310 authorizing the transfer of a project site by a municipality to a corporation, the provisions of § 7-53-305 exempting the corporation and its properties from taxation, and the provisions of § 7-53-306 authorizing the pledge of municipal credit, or the application of the sections or provisions to any person or circumstance, are ever held by any court of competent jurisdiction to be invalid, the remaining provisions of this chapter and the application of this chapter to persons or circumstances other than those to which it is held to be invalid, shall not be affected thereby, it being the intention of this general assembly to enact the remaining provisions of this chapter, notwithstanding such invalidity.

Acts 1959, ch. 222, § 6; T.C.A., § 6-2820.

Part 2
Incorporation

7-53-201. Application for incorporation — Qualifications of applicants — Certificate.

Whenever any number of natural persons, not less than three (3), each of whom shall be a duly qualified elector of and taxpayer in the municipality, files with the governing body of the municipality an application in writing seeking permission to apply for the incorporation of an industrial development board or corporation of such municipality, the governing body shall proceed to consider such application. If the governing body, by appropriate resolution duly adopted, finds and determines that it is wise, expedient, necessary or advisable that the corporation be formed and authorizes the persons making such application to proceed to form such corporation and approves the form of certificate of incorporation proposed to be used in organizing the corporation, then the persons making such application shall execute, acknowledge and file a certificate of incorporation for the corporation provided in this part. No corporation may be formed unless such application shall have first been filed with the governing body of the municipality and the governing body shall have adopted a resolution as provided in this section.

Acts 1955, ch. 210, § 3; T.C.A., § 6-2803.

Cross-References. Joint action to form industrial development corporations by eligible municipalities, § 7-53-104.

Attorney General Opinions. Persons qualified to petition for the establishment of industrial development board, OAG 99-142, 1999 Tenn. AG LEXIS 166 (7/27/99).

7-53-202. Requisites of certificate of incorporation — Acknowledgment.

  1. The certificate of incorporation shall set forth:
    1. The names and residences of the applicants, together with a recital that each of them is an elector of and taxpayer in the municipality;
    2. The name of the corporation, which shall be The Industrial Development Board of the  of  , the blank spaces to be filled in with the name of the municipality, including the proper designation of the municipality as a city or town, if such name shall be available for use by the corporation and, if not available, then the incorporators shall designate some other similar name that is available;
    3. A recital that permission to organize the corporation had been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of such resolution;
    4. The location of the principal office of the corporation, which shall be in the municipality;
    5. The purposes for which the corporation is proposed to be organized;
    6. The number of directors of the corporation;
    7. The period, if any, for the duration of the corporation; and
    8. Any other matter the applicants may choose to insert in the certificate of incorporation, which shall not be inconsistent with this chapter or with the laws of the state of Tennessee.
  2. The certificate of incorporation shall be subscribed and acknowledged by each of the applicants before an officer authorized by the laws of Tennessee to take acknowledgments to deeds.

Acts 1955, ch. 210, § 4; T.C.A., § 6-2804.

7-53-203. Approval of certificate by secretary of state — Recording.

When executed and acknowledged in conformity with § 7-53-202, the certificate of incorporation shall be filed with the secretary of state. The secretary of state shall then examine the certificate of incorporation and, if the secretary of state finds that the recitals contained in the certificate are correct, that there has been compliance with the requirements of § 7-53-202, the secretary of state shall approve the certificate of incorporation and record it in an appropriate book or record in the secretary of state's office. When such certificate has been so made, filed and approved, the applicants shall constitute a public corporation under the name set out in the certificate of incorporation.

Acts 1955, ch. 210, § 5; T.C.A., § 6-2805; Acts 1995, ch. 364, § 2.

7-53-204. Amendment of certificate.

The certificate of incorporation may at any time and from time to time be amended so as to make any changes in the certificate of incorporation and add any provisions to the certificate of incorporation that might have been included in the certificate of incorporation in the first instance. Any such amendment shall be effected in the following manner: the members of the board of directors of the corporation shall file with the governing body of the municipality an application in writing seeking permission to amend the certificate of incorporation, specifying in such application the amendment proposed to be made. Such governing body shall consider such application and, if it shall by appropriate resolution duly find and determine that it is wise, expedient, necessary or advisable that the proposed amendment be made and shall authorize the same to be made, and shall approve the form of the proposed amendment, then the persons making such application shall execute an instrument embodying the amendment specified in such application, and shall file the instrument with the secretary of state. The proposed amendment shall be subscribed and acknowledged by each member of the board of directors before an officer authorized by the laws of Tennessee to take acknowledgments to deeds. The secretary of state shall then examine the proposed amendment and, if the secretary of state finds that there has been compliance with the requirements of this section and the proposed amendment is within the scope of what might be included in an original certificate of incorporation, the secretary of state shall approve the amendment and record it in an appropriate book in the secretary of state's office. When such amendment has been so made, filed and approved, it shall then become effective and the certificate of incorporation shall then be amended to the extent provided in the amendment. No certificate of incorporation shall be amended except in the manner provided in this section.

Acts 1955, ch. 210, § 6; T.C.A., § 6-2806.

Part 3
Operation and Powers

Compiler's Notes. Acts 2017, ch. 431, § 1 provided, in part, that the  Tennessee advisory commission on intergovernmental relations (TACIR) is directed to perform a study of the payment in lieu of ad valorem tax agreements and leases entered into by industrial development corporations organized by municipalities, and specifically, whether economic benefits are derived from limiting the length of term of an agreement or lease in the absence of county approval or an agreement by the corporation or municipality to pay the county a sum equal to the amount of real property tax that would have been assessed in the absence of the agreement or lease following the expiration of the initial term.

7-53-301. Board of directors.

The corporation shall have a board of directors in which all powers of the corporation shall be vested and which shall consist of any number, not less than seven (7), all of whom shall be duly qualified electors of and taxpayers in the municipality. The directors shall serve as such without compensation, except that they shall be reimbursed for their actual expenses incurred in and about the performance of their duties, unless otherwise authorized by local ordinance or resolution. No director shall be an officer or employee of the municipality. The directors shall be elected by the governing body of the municipality, and they shall be so elected that they shall hold office for staggered terms. At the time of the election of the first board of directors, the governing body of the municipality shall divide the directors into three (3) groups containing as near equal whole numbers as may be possible. The first term of the directors included in the first group shall be two (2) years, the first term of the directors included in the second group shall be four (4) years, the first term of the directors included in the third group shall be six (6) years, and thereafter the terms of all directors shall be six (6) years; provided, that if at the expiration of any term of office of any director a successor to the director shall not have been elected, then the director whose term of office shall have expired shall continue to hold office until a successor shall be so elected. Except for corporations acquiring any hotel, motel or apartment building in the center-city areas of a municipality that has created a central business improvement district pursuant to chapter 84 of this title, if at the time of the election of any directors there shall be in existence in the municipality a chamber of commerce, board of trade, or other similar civic organization, the directors elected shall be chosen by the governing body from the membership of any one (1) or more of such organizations, unless, in the judgment of the governing body, there are no members of such organizations who are both suitable and available to serve as directors of the corporation; provided, that if the municipality has within its boundaries a closed or substantially downsized federal facility, including, but not limited to, a facility formerly operated by the United States department of defense or department of energy, a minority of the directors may be chosen from persons who are not residents of the municipality.

Acts 1955, ch. 210, § 7; 1978, ch. 739, § 5; T.C.A., § 6-2807; Acts 1998, ch. 983, § 2; 2001, ch. 125, § 1.

Cross-References. Board of commissioners of Tennessee River four-county port authority as board of directors of industrial development corporation, § 64-4-105.

Attorney General Opinions. Election of directors in home rule municipalities, OAG 97-097, 1997 Tenn. AG LEXIS 106 (7/1/97).

Persons qualified to petition for the establishment of industrial development board, OAG 99-142, 1999 Tenn. AG LEXIS 179 (7/27/99).

A “duly qualified elector of the municipality” means a person qualified to vote in an election of the “municipality,” as that term is defined in T.C.A. § 7-53-101(10).  Improperly appointed members of boards are generally viewed as de facto officers, and acts of such officers are considered valid.  Nevertheless, as a precaution, the board, once all of its members are appropriately appointed, may wish to review the actions taken by the earlier board and vote to ratify, confirm, modify, or reject such actions.   OAG 15-72, 2015 Tenn. AG LEXIS 73 (11/3/2015).

NOTES TO DECISIONS

1. Power to Acquire Property.

Trial court properly granted an industrial development corporation's motion to dismiss because nothing in the statutory scheme precluded it from procuring property outside the city's corporate limits to establish an industrial park as a joint venture between the city and the county; pursuant to the Industrial Park Act and the Industrial Development Corporations Act, the city and corporation could purchase or hold property, both within and without the city, for economic development projects. Burks v. Savannah Indus. Dev. Corp., — S.W.3d —, 2018 Tenn. App. LEXIS 621 (Tenn. Ct. App. Oct. 24, 2018).

7-53-302. Corporate powers — Meetings public.

  1. The corporation has the following powers, together with all powers incidental to such powers or necessary for the performance of those powers, to:
    1. Have succession by its corporate name for the period specified in the certificate of incorporation, unless sooner dissolved;
    2. Sue and be sued and prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
    3. Have and use a corporate seal and alter the corporate seal at pleasure;
    4. Acquire, whether by purchase, exchange, gift, lease, or otherwise, and improve, maintain, equip and furnish one (1) or more projects, including all real and personal properties the board of directors of the corporation may deem necessary in connection with the projects and regardless of whether or not any such projects shall then be in existence; provided, that no hotel, motel or apartment building shall be purchased or otherwise acquired by a corporation under this subdivision (a)(4) after July 1, 1988, except that this proviso shall not affect the development or financing of any project that is located in a center city area or in a central business improvement district and that involves an apartment or residential building, hotel, motel or of any project acquired prior to July 1, 1988, regardless of when such project is completed, nor shall this proviso be construed to impair, limit, abrogate or modify the contractual rights and obligations that any such corporation assumes with the issuance of any bonds, notes or other forms of indebtedness or any other contract, nor shall this proviso apply to any hotel listed in the National Register of Historic Places acquired by the corporation prior to December 31, 1989, nor shall this proviso apply to any hotel that contains conference or convention center facilities containing at least seventy-five thousand square feet (75,000 sq. ft.), nor shall this proviso apply to any hotel or hotels, and related conference, mixed use or convention center facilities, if any, constructed in connection with a project or series of related projects involving an aggregate investment of public and private funds in excess of two hundred million dollars ($200,000,000), nor shall this proviso apply to any project located in a county having a population greater than nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census;
    5. Lease to others one (1) or more projects and charge and collect rent for the projects and terminate any such lease upon the failure of the lessee to comply with any of the obligations of such lease; and include in any such lease, if desired, a provision that the lessee of the projects shall have options to purchase any or all of its projects or that upon payment of all of the indebtedness of the corporation it may lease or convey any or all of its projects to the lessee of the projects with or without consideration, and to enter into amendments to such leases, which amendments, among other things, may provide for extending the terms of such leases, amending or extending any payments in lieu of taxes due under the leases, subject to any applicable limitations provided in § 7-53-305(b), and amending or extending any rents or other payments due under the leases;
    6. Sell to others one (1) or more projects for such payments and upon such terms and conditions as the board of directors of the corporation may deem advisable, in accordance with sale contracts entered into pursuant to this chapter;
    7. Enter into loan agreements with others with respect to one (1) or more projects for such payments and upon such terms and conditions as the board of directors of the corporation may deem advisable, in accordance with this chapter;
    8. Sell, exchange, donate and convey any or all of its properties, including, without limitation, all or any part of the rents, revenues and receipts of the corporation from its projects, whenever its board of directors shall find any such action to be in furtherance of the purposes for which the corporation was organized;
    9. Issue its bonds, and otherwise borrow money from banks or other financial institutions by issuing its notes for the purpose of carrying out any of its powers;
    10. Borrow money from a municipality through a loan agreement executed with a municipality for the purpose of carrying out any of its powers;
    11. As security for the payment of the principal of and interest on any bonds or notes so issued and any agreements made in connection with the bonds or notes, or to secure any indebtedness or obligations of any lessee of the corporation, mortgage and pledge any or all of its projects or any part or parts of the projects, whether then owned or thereafter acquired, and pledge the revenues and receipts from any projects, or assign and pledge all or any part of its interest in and rights under the leases, sale contracts or loan agreements relating to the projects, including, without limitation, the pledging and/or assignment and pledging of all or any part of the rents, revenues and receipts of any project as security for payment of any bonds or notes of the corporation issued with respect to the project, or any other project or projects of the corporation and any agreements made in connection with the projects, or procure or pledge municipal bond insurance, letters of credit, lines of credit or other liquidity facilities as additional security and liquidity for the bonds or notes;
    12. Employ and pay compensation to such employees and agents, including attorneys, as the board of directors shall deem necessary for the business of the corporation; and
    13. Exercise all powers expressly given in its certificate of incorporation and establish bylaws and make all rules and regulations not inconsistent with the certificate of incorporation or this chapter, deemed expedient for the management of the corporation's affairs.
  2. The corporation does not have the power to operate any project financed under this chapter as a business or in any manner except as specifically provided in this chapter, nor does it have the power to pledge at any time or in any manner the general credit or taxing power of the municipality except as provided in § 7-53-306.
  3. Any meeting held by the board of directors for any purpose whatsoever shall be open to the public.
  4. In addition to the powers specified in subsection (a) and upon the adoption of a resolution of the county legislative body, a corporation in any county having a population of over nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census:
    1. Has the following powers, together with all powers incidental to such powers or necessary for the performance of those powers, to:
      1. Enter into loan agreements with others with respect to one (1) or more projects or for activities, costs, debt restructuring or working capital associated with projects for such payments or deferrals and upon such terms and conditions as the board of directors of the corporation may deem advisable in accordance with this chapter; and
      2. Sell, exchange, donate, forgive debt, grant and convey any or all of its assets or properties, including, without limitation, all or any part of the rents, revenues and receipts of the corporation from its projects, whenever its board of directors shall find any such action to be in furtherance of the purposes for which the corporation was organized; and
    2. Shall not enter into a loan agreement, accept a note or issue any indebtedness, or otherwise provide financing for working capital that:
      1. Exceeds two hundred fifty thousand dollars ($250,000) in principal amount to any project or borrower; or
      2. Provides for a term in excess of five (5) years, including any renewals or extensions of such financing.

Acts 1955, ch. 210, § 8; 1959, ch. 222, § 3; 1970, ch. 587, §§ 1-3; 1976, ch. 515, § 3; 1978, ch. 739, § 7; T.C.A., § 6-2808; Acts 1989, ch. 180, § 1; 1990, ch. 1089, § 1; 1993, ch. 197, § 2; 1998, ch. 828, §§ 1-3; 2007, ch. 461, § 6; 2007, ch. 524, § 2; 2009, ch. 84, § 2; 2014, ch. 752, § 1; 2018, ch. 728, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2018 amendment added “, nor shall this proviso apply to any project located in a county having a population greater than nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census” at the end of (a)(4).

Effective Dates. Acts 2018, ch. 728, § 2. April 18, 2018.

Cross-References. Credit against excise tax on corporate earnings, § 67-4-2009.

Sales and use taxes, title 67, ch. 6.

Attorney General Opinions. An industrial development corporation lacked statutory authority to establish an incentive loan program to benefit private for-profit entities make a loan unless it was for a “project” as defined and, even if the loan was for a project, it lacked authority to forgive the debt if a certain number of new jobs should be created by the borrower, OAG 03-147, 2003 Tenn. AG LEXIS 169 (11/17/03).

City’s Use of Payments Received Through Industrial Development Corporation to Fund Workforce Training Programs. OAG 15-43, 2015 Tenn. AG LEXIS 66 (4/30/15).

NOTES TO DECISIONS

1. Power to Acquire Property.

Trial court properly granted an industrial development corporation's motion to dismiss because nothing in the statutory scheme precluded it from procuring property outside the city's corporate limits to establish an industrial park as a joint venture between the city and the county; pursuant to the Industrial Park Act and the Industrial Development Corporations Act, the city and corporation could purchase or hold property, both within and without the city, for economic development projects. Burks v. Savannah Indus. Dev. Corp., — S.W.3d —, 2018 Tenn. App. LEXIS 621 (Tenn. Ct. App. Oct. 24, 2018).

7-53-303. Issuance of bonds — Restrictions on payment — Delivery — Additional issues — Redemption.

  1. Except as otherwise expressly provided in this chapter, all bonds issued by the corporation shall be payable solely out of the revenues and receipts derived from the corporation's projects or of any of the projects as may be designated in the proceedings of the board of directors under which the bonds shall be authorized to be issued, including debt obligations of the lessee or contracting party obtained from or in connection with the financing of a project; provided, that notes issued in anticipation of the issuance of bonds may be retired out of the proceeds of such bonds. Such bonds may be executed and delivered by the corporation at any time and from time to time, may be in such form and denominations and of such terms and maturities, may be in registered or bearer form either as to principal or interest, or both, may be payable in such installments and at such time or times not exceeding forty (40) years from the date of execution, may be payable at such place or places whether within or without the state of Tennessee, may bear interest at such rate or rates payable at such time or times and at such place or places and evidenced in such manner, may be executed by such officers of the corporation and may contain such provisions not inconsistent with this chapter, all as shall be provided in the proceedings of the board of directors whereunder the bonds shall be authorized to be issued. If deemed advisable by the board of directors, there may be retained in the proceedings under which any bonds of the corporation are authorized to be issued an option to redeem all or any part of the bonds as may be specified in such proceedings, at such price or prices and after such notice or notices and on such terms and conditions as may be set forth in such proceedings and as may be briefly recited in the face of the bonds, but nothing contained in this subsection (a) shall be construed to confer on the corporation any right or option to redeem any bonds except as may be provided in the proceedings under which they shall be issued. Any bonds of the corporation may be sold at public or private sale in such manner, at such price and from time to time as may be determined by the board of directors of the corporation to be most advantageous, and the corporation may pay all expenses, premiums and commissions the corporation's board of directors may deem necessary or advantageous in connection with the issuance of the bonds. Issuance by the corporation of one (1) or more series of bonds for one (1) or more purposes shall not preclude the corporation from issuing other bonds in connection with the same project or any other project, but the proceedings whereunder any subsequent bonds may be issued shall recognize and protect any prior pledge or mortgage made for any prior issue of bonds. Proceeds of bonds issued by the corporation may be used for the purpose of constructing, acquiring, reconstructing, improving, equipping, furnishing, bettering, or extending any project or projects, including the payment of interest on the bonds during construction of any such project and for two (2) years after the estimated date of completion, and payment of engineering, fiscal, architectural and legal expenses incurred in connection with such project and the issuance of the bonds, and the establishment of a reasonable reserve fund for the payment of principal of and interest on such bonds in the event of a deficiency in the revenues and receipts available for such payment.
  2. Any bonds or notes of the corporation at any time outstanding may at any time and from time to time be refunded by the corporation by the issuance of its refunding bonds in such amount as the board of directors may deem necessary, but not exceeding the sum of the following:
    1. The principal amount of the obligations being refinanced;
    2. Applicable redemption premiums on the bonds;
    3. Unpaid interest on such obligations to the date of delivery or exchange of the refunding bonds;
    4. In the event the proceeds from the sale of the refunding bonds are to be deposited in trust as provided in subdivision (f)(2), interest to accrue on such obligations from the date of delivery to the first or any subsequent available redemption date or dates selected, in its discretion, by the board of directors, or to the date or dates of maturity, whichever shall be determined by the board of directors to be most advantageous or necessary to the corporation;
    5. A reasonable reserve for the payment of principal of and interest on such bonds or a renewal and replacement reserve;
    6. If the project to be constructed from the proceeds of the obligations being refinanced has not been completed, an amount sufficient to meet the interest charges on the refunding bonds during the construction of such project and for two (2) years after the estimated date of completion, but only to the extent that interest charges have not been capitalized from the proceeds of the obligations being refinanced; and
    7. Expenses, premiums and commissions of the corporation, including bond discounts, deemed by the board of directors to be necessary for the issuance of the refunding bonds. A determination by the board of directors that any refinancing is advantageous or necessary to the corporation, or that any of the amounts provided in the preceding sentence should be included in such refinancing, or that any of the obligations to be refinanced should be called for redemption on the first or any subsequent available redemption date or permitted to remain outstanding until their respective dates of maturity, shall be conclusive.
  3. Any such refunding may be effected whether the obligations to be refunded has then matured or thereafter matures, either by the exchange of the refunding bonds for the obligations to be refunded by the refunding bonds with the consent of the holders of the obligations so to be refunded, or by sale of the refunding bonds and the application of the proceeds of the refunding bonds to the payment of the obligations to be refunded by the refunding bonds, and regardless of whether or not the obligations to be refunded were issued in connection with the same projects or separate projects, and regardless of whether or not the obligations proposed to be refunded shall be payable on the same date or different dates or shall be due serially or otherwise.
  4. If, at the time of delivery of the refunding bonds, the obligations to be refunded will not be retired or a valid and timely notice of redemption of the outstanding obligations is not given in accordance with the resolution, indenture or other instrument governing the redemption of the outstanding obligations, then, prior to the issuance of the refunding bonds, the board of directors shall cause to be given a notice of its intention to issue the refunding bonds. The notice shall be given either by mail to the owners of all of the outstanding obligations to be refunded at their addresses shown on the bond registration records for the outstanding obligations or given by publication one (1) time each in the newspaper having a general circulation in the municipality with respect to which the corporation was organized and in a financial newspaper published in New York, New York, having a national circulation. The notice shall set forth the estimated date of delivery of the refunding bonds and identify the obligations, or the individual maturities of the obligations, proposed to be refunded; provided, that if portions of individual maturities are proposed to be refunded, the notice shall identify the maturities subject to partial refunding in the aggregate principal amount to be refunded within each maturity. If the issuance of the refunding bonds does not occur as provided in the notice, the board of directors shall cause notice to be given as provided in this subsection (d). Except as otherwise set forth in this section, the notice required pursuant to this section shall be given whether or not any of the obligations to be refunded are to be called for redemption.
  5. If any of the obligations to be refunded are to be called for redemption, the board of directors shall cause notice of redemption to be given in the manner required by the proceedings authorizing such outstanding obligations.
  6. The principal proceeds from the sale of any refunding bonds shall be applied only as follows, either:
    1. To the immediate payment and retirement of the obligations being refunded; or
    2. To the extent not required for the immediate payment of the obligations being refunded, then such proceeds shall be deposited in trust to provide for the payment and retirement of the obligations being refunded, and to pay any expenses incurred in connection with such refunding, but provision may be made for the pledging and disposition of any surplus, including, without limitation, provision for the pledging of any such surplus to the payment of the principal of and interest on any issue or series of refunding bonds. Money in any such trust fund may be invested in direct obligations of, or obligations the principal of and interest on which are guaranteed by the United States government, or obligations of any agency or instrumentality of the United States government, or in certificates of deposit issued by a bank or trust company located in the state of Tennessee, if such certificates shall be secured by a pledge of any of such obligations having any aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. Nothing in this subdivision (f)(2) shall be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refunded but which shall not have matured and which shall not be presently redeemable or, if presently redeemable, shall not have been called for redemption.
  7. All such bonds, refunding bonds and the interest coupons applicable to the bonds are hereby made and shall be construed to be negotiable instruments.
  8. For purposes of calculating the “applicable formula rate” under § 47-14-103 and the related provisions of title 47, chapter 14, to determine the maximum effective rate applicable to bonds or other obligations designated as “recovery zone facility bonds” pursuant to the American Recovery and Reinvestment Act of 2009 (ARRA), P.L. 111-5, the language “four (4) percentage points above the average prime loan rate” in the definition of “formula rate” in § 47-14-102 shall be replaced with the language “seven (7) percentage points above the average prime loan rate”. This subsection (h) shall apply to any such bonds or other obligations issued by a corporation on or before June 30, 2012, and designated as recovery zone facility bonds for purposes of the American Recovery and Reinvestment Act of 2009.

Acts 1955, ch. 210, § 9; 1967, ch. 109, § 1; 1972, ch. 779, § 2; impl. am. Acts 1972, ch. 852, § 12; 1973, ch. 309, § 3; 1976, ch. 515, § 4; 1977, ch. 229, § 1; T.C.A., § 6-2809; Acts 1980, ch. 536, § 2; 1989, ch. 402, § 2; 1994, ch. 806, § 3; 2010, ch. 1134, § 59.

Cross-References. Bonds and income therefrom exempt from taxation retroactive to date of issue, § 7-53-305.

Public entities, information concerning debt obligation issuances, § 9-21-151.

NOTES TO DECISIONS

1. Constitutionality.

The issuance of bonds pursuant to this chapter to a developer who has contracted to build a retail store in the city concerned does not violate Tenn. Const., art. I, § 8, since the local retailers are not deprived of any property right. Small World, Inc. v. Industrial Development Board, 553 S.W.2d 596, 1976 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1976).

Since all potential developers have the same right to petition for industrial funds from the local industrial development board pursuant to this chapter, the issuance of bonds to reimburse the construction project of a developer does not benefit a particular individual in violation of Tenn. Const., art. XI, § 8. Small World, Inc. v. Industrial Development Board, 553 S.W.2d 596, 1976 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1976).

7-53-304. Security for payment of bonds — Default — Bondholders' remedies — Maintenance of aggregate listing of debt.

  1. The principal of and interest on any bonds issued by the corporation shall be secured by a pledge of the revenues and receipts out of which the bonds shall be made payable, and may be secured by a mortgage or deed of trust covering all or any part of the projects from which the revenues or receipts so pledged may be derived, including any enlargements of and additions to any such projects thereafter made, or by an assignment and pledge of all or any part of the corporation's interest in and rights under the leases, sale contracts or loan agreements relating to such projects, or any thereof. The resolution under which the bonds are authorized to be issued and any such mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered by the resolution, the fixing and collection of rents or payments with respect to any projects or portions of the projects covered by such resolution, mortgage or deed of trust, the creation and maintenance of special funds from such revenues and from the proceeds of such bonds, and the rights and remedies available in the event of default, all as the board of directors shall deem advisable not in conflict with this section. Each pledge, agreement, mortgage and deed of trust made for the benefit or security of any of the bonds of the corporation shall continue effective until the principal of and interest on the bonds for the benefit of which the pledge, agreement, mortgage and deed of trust were made shall have been fully paid. In the event of default in such payment or in any agreements of the corporation made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage and deed of trust executed as security for the bonds, such payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity, or by foreclosure of any such mortgage and deed of trust, or any one (1) or more of such remedies.
  2. The corporation shall maintain an aggregate listing of its current debt, including conduit debt obligations, in accordance with guidelines approved by the state funding board. At the end of each fiscal year, the corporation shall file the listing, and any other information required by the guidelines, with the state funding board. The corporation shall file with the board notice of default on any of its debt obligations within fifteen (15) days of the event. As used in this subsection (b), “conduit debt obligations” means those debt obligations issued by the corporation to provide capital financing for a public or private entity.

Acts 1955, ch. 210, § 10; 1976, ch. 515, § 5; T.C.A., § 6-2810; Acts 2018, ch. 529, § 1.

Amendments. The 2018 amendment added (b).

Effective Dates. Acts 2018, ch. 529, § 2. March 7, 2018.

NOTES TO DECISIONS

1. Constitutionality.

Where money is borrowed through a bond issue, the payment for which is the sole obligation of the industrial development board, the use of such funds for the purchase of property and the leasing of such property to an industrial lessee, the funds from such lease to be used to pay the bonds, does not constitute using the credit of the city for the aid of person, company, association, or corporation in violation of Tenn. Const., art. II, § 29. West v. Industrial Development Board, 206 Tenn. 154, 332 S.W.2d 201, 1960 Tenn. LEXIS 355 (1960).

7-53-305. Exemption from taxation — Payments in lieu of ad valorem taxes — Securities.

    1. The corporation is hereby declared to be performing a public function in behalf of the municipality with respect to which the corporation is organized and to be a public instrumentality of such municipality. Accordingly, the corporation and all properties at any time owned by it, and the income and revenues from the properties, and all bonds issued by it, and the income from the bonds, shall be exempt from all taxation in the state of Tennessee. Also for purposes of the Securities Act of 1980, compiled as title 48, chapter 1, part 1, bonds issued by the corporation shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state of Tennessee.
      1. Notwithstanding this section to the contrary, and unless the municipality adopts an ordinance or resolution requiring that any agreement with respect to the payments in lieu of taxes entered into pursuant to this subdivision (a)(2) be approved by the municipality, a corporation may negotiate and receive from any lessee of the corporation, without any delegation from the municipality, payments in lieu of taxes with respect to a tax-credit housing project; provided, that:
        1. The payments in lieu of taxes are payable to all applicable taxing jurisdictions in which the project is located and are not less than the taxes that would have been paid to each such taxing jurisdiction for the tax year prior to the year the project became a tax-credit housing project; and
        2. The chief executive officer of the municipality has executed a letter supporting the project that is filed with the corporation.
      2. The corporation is declared to be serving a public purpose by negotiating and receiving from any lessee of the corporation payments in lieu of taxes with respect to a tax-credit housing project.
      3. As used in this subdivision (a)(2), “tax-credit housing project” or “project” means a project that has received an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. § 42), or any successor provision, from the Tennessee housing development agency or is otherwise eligible for the tax credits as the result of the issuance of bonds, the interest on which is not subject to federal income taxation.
      4. The corporation may acquire and lease a tax-credit housing project as authorized in this chapter, notwithstanding any limitations in this chapter on the power of the corporation to purchase or otherwise acquire apartments.
      1. The corporation has the authority to negotiate, accept, or waive from any of the corporation's lessees payments in lieu of taxes only upon receipt of a formal delegation of such authority from the municipality or municipalities that formed the corporation. Any such authorization shall be granted only upon a finding by the municipality or municipalities that the payments or waiver of the payments are deemed to be in furtherance of the corporation's public purposes. The legislative body of the municipality or municipalities making the delegation may require the corporation to submit for approval any agreement with any of the corporation's lessees providing for the acceptance or waiver of payments in lieu of taxes.
      2. No agreement providing for the acceptance or waiver of payments in lieu of taxes, including any renewal or extension of such agreement, entered into by a municipality or corporation to which such authority has been delegated shall result in a corporation's lessee making payments in lieu of taxes in an amount less than the applicable ad valorem taxes for a period that is greater than twenty (20) years plus a reasonable construction or installation period not to exceed three (3) years, unless both the commissioner of economic and community development and the comptroller of the treasury have made a written determination that the agreement is in the best interest of the state.
      3. The corporation shall attach to each agreement an analysis of the costs and benefits of the agreement, in such manner and under such conditions as shall be prescribed by the commissioner of economic and community development or the commissioner's designee.
    1. With regard to any project located within an area designated as the center-city area by a municipality in which there has been created a central business improvement district pursuant to the Central Business Improvement District Act of 1971, compiled in chapter 84 of this title, the amount of such payments shall not be fixed below the lesser of:
      1. Ad valorem taxes otherwise due and payable by a tax-paying entity upon the current fair market value of the leased properties; or
      2. Ad valorem taxes that were or would have been due and payable on the leased properties for the period immediately preceding the date of their acquisition by the corporation.
    2. The minimum payments in subdivisions (b)(2)(A) and (B) shall not be applicable to an eligible headquarters facility.
  1. This section shall apply, from the date of their issuance, to all bonds heretofore or hereafter issued under this chapter and the income from such bonds whether heretofore or hereafter received.
    1. Payments in lieu of taxes and any lease payments payable to a corporation, to the extent such payments in lieu of taxes and lease payments in the aggregate do not exceed ad valorem taxes otherwise due and payable where the leased property is owned by an entity subject to taxation, shall become and remain a first lien upon the fee interest in the leased property from January 1 of the year in which such payment in lieu of taxes on lease payments is due. The corporation may enforce such lien, and also obtain interest at ten percent (10%) per annum from the date due and reasonable attorneys' fees, by suit filed in the circuit or chancery court.
    2. Subdivision (d)(1) shall apply with equal force to all such subleases and their sublessees.
    3. To the extent lease payments or payments in lieu of taxes exceed the amount necessary to defray debt service on project bonds or other financing, any payments not timely made as agreed may be collected by or on behalf of the city or county in the same manner as delinquent property taxes.
    1. On or before October 1 of each year, the corporation lessee shall submit to the comptroller of the treasury an annual report containing:
      1. A list of all the real and personal property owned by the corporation and its associated entities and subsidiaries;
      2. The value of each listed property as estimated by the lessee;
      3. The date and term of the lease for each listed property;
      4. The amount of payments made in lieu of property taxes for each listed property;
      5. The date each listed property is scheduled to return to the regular tax rolls;
      6. [Deleted by 2016 amendment.]
      7. The property address and parcel identification number of the property assigned by the assessor of property;
      8. The amount of rents paid;
      9. The amount of any property taxes paid on the leasehold assessment under § 67-5-502(d);
      10. Any changes in the name since the last filing;
      11. How the payments in lieu of taxes are allocated between the city and county according to the economic development agreement; and
      12. Identification of project type according to definitions provided in this chapter.
    2. A copy of the filing made pursuant to subdivision (e)(1) shall be filed with the assessor of property in the county where the property is located on or before October 15 of the year in which the filing is made with the comptroller of the treasury. The assessor of property may audit or review, or both, the data report on all payment in lieu of tax agreements and conduct comparative analysis to ensure that all agreements are reported to the assessor of property.
    3. Each lessee of the corporation shall be responsible for the timely completion and filing of the report. Failure to timely complete and file the report shall subject the lessee to a late filing fee of fifty dollars ($50.00) payable to the comptroller of the treasury. In addition, any lessee failing to file the report with the comptroller of the treasury or the assessor within thirty (30) days after written demand for the report, shall owe an additional payment in lieu of tax in the amount of five hundred dollars ($500). This payment shall be collectable by the trustee for the benefit of the county, in the same manner as property taxes, on certification from the comptroller of the treasury or the assessor.
  2. The corporation to which authority has been delegated to create pilot leaseholds and payments in lieu of ad valorem taxes shall prepare biannual reports detailing the lessee's compliance with the terms and conditions of the pilot lease agreement or any other agreement whereby ad valorem taxes are substituted in favor of a payment in lieu of taxes. Such report shall detail the lessee's compliance and noncompliance where applicable, and its fiscal impact on revenues generated from ad valorem taxes in each municipality affected by such payment in lieu of taxes. This subsection (f) shall apply only to counties with populations of eight hundred thousand (800,000) or more, according to the 1990 federal census or any subsequent federal census, and to municipalities within such counties.
    1. An industrial development corporation may not negotiate any payment in lieu of tax agreement for less than the county ad valorem taxes otherwise due unless:
      1. The corporation is a joint corporation organized by the county and one or more of the municipalities in the county;
      2. The corporation has entered into an interlocal agreement with the county in regard to payments in lieu of ad valorem taxes; or
      3. The corporation has received written approval from the county mayor and the legislative body of the county regarding payments in lieu of ad valorem taxes.
    2. Subdivision (g)(1) shall apply to any county having a population of not less than eight hundred ninety-seven thousand four hundred (897,400) nor more than eight hundred ninety-seven thousand five hundred (897,500) and at least five (5) industrial development corporations formed under title 7, chapter 53, according to the 2000 federal census or any subsequent federal census.
  3. Notwithstanding this section or any other law to the contrary, an industrial development corporation organized solely by a municipality that does not impose a real property tax may only enter into a payment in lieu of ad valorem tax agreement or lease if:
    1. The county in which the municipality is located has approved the entering into a payment in lieu of ad valorem tax agreement or lease with respect to the property at issue; or
    2. Either the industrial development corporation or the municipality which organized the industrial development corporation agrees to pay to the county in which the municipality is located an amount equal to the amount of real property tax that would have been assessed to the property at issue for each year in which the payment in lieu of ad valorem tax agreement or lease is effective were the property not owned by the industrial development corporation during such time period.
    1. An industrial development corporation may negotiate a payment in lieu of tax agreement for less than the ad valorem taxes otherwise due for a retail business for a period longer than ten (10) years, plus a reasonable construction or installation period not to exceed three (3) years, if:
      1. The corporation is a joint industrial development corporation with representation of all affected taxing jurisdictions within the county;
      2. The corporation has entered into an interlocal agreement with other taxing jurisdictions to establish criteria for any payment in lieu of tax agreements that might affect shared tax bases;
      3. The corporation has received written approval from each affected local governmental entity. As used in this subdivision (i)(1)(C), “affected local governmental entity” means a county or local special school district which will suffer an actual loss of tax revenue under a payment in lieu of tax agreement; or
      4. The corporation pays the other affected local governments the amount of ad valorem taxes those governments would otherwise receive for the affected property based on its assessed value after the initial ten (10) years of the agreement.
    2. The requirements under this subsection (i) shall not apply to payment in lieu of tax agreements affecting only the municipality that created the corporation and the beneficiary making the agreement.
    3. This subsection (i) does not apply in any county having a population of not less than nine hundred thousand (900,000), according to the 2010 or any subsequent federal census.
  4. Before an industrial development corporation approves a payment in lieu of tax agreement, the corporation shall hold a public meeting relating to the proposed agreement after notice is provided by the corporation or governing body, as may be required by law, at least five (5) days prior to the date of such public meeting. Such notice must include the time, place, and purpose of the public meeting.

Acts 1955, ch. 210, § 11; 1959, ch. 222, § 4; 1969, ch. 55, § 3; 1969, ch. 244, § 1; 1971, ch. 304, §§ 3, 4; 1976, ch. 515, § 6; 1978, ch. 739, § 6; T.C.A., § 6-2811; Acts 1986, ch. 724, § 1; 1997, ch. 243, § 1; 1997, ch. 398, § 1; 1998, ch. 828, §§ 4-6; 2000, ch. 914, § 1; 2000, ch. 961, § 1; 2001, ch. 339, §§ 1, 2; 2002, ch. 605, § 1; 2002, ch. 712, § 1; 2003, ch. 90, § 2; 2003, ch. 405, § 1; 2004, ch. 813, § 1; 2007, ch. 449, § 1; 2008, ch. 694, § 2; 2008, ch. 1013, §§ 2, 3; 2013, ch. 302, § 1; 2015, ch. 519, § 2; 2016, ch. 588, §§ 1, 2; 2016, ch. 777, §§ 1-4; 2018, ch. 1064, § 2.

Compiler's Notes. Acts 2000, ch. 914, § 3 provided that the act shall apply to reports due for tax year 2000.

Acts 2001, ch. 339, § 3, provided that nothing in the amendments by that act to this section shall apply to any agreement finalized prior to January 1, 2002.

Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Acts 2003, ch. 405, § 2, provided that any provision of that act or the application thereof to any person or circumstance is held invalid, then all provisions and applications of that act are declared to be invalid and void.

For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2015 amendment added (a)(2).

The 2016 amendment by ch. 588, substituted “comptroller of the treasury” for “state board of equalization” in (e)(1) following “submit to the”; at the end of the first sentence of (e)(2);  and at the end of the first sentence of (e)(3);  and substituted “comptroller of the treasury” for “board” preceding “or the assessor” in the second sentence of (e)(3) and at the end of the last sentence of (e)(3). The 2016 amendment by ch. 777, in (b), redesignated the former last sentence of (1) as (2) and rewrote the remainder of (1) which read: “The municipality has the power to delegate to the corporation the authority to negotiate and accept from the corporation's lessees, payments in lieu of ad valorem taxes; provided, that any such authorization shall be granted only upon a finding that such payments are deemed to be in furtherance of the corporation's public purposes as defined in this section; provided, further, that no contract, lease, understanding, or other agreement of any kind, including any renewal or extension of the agreement, entered into by a municipality or corporation to which such authority has been delegated shall permit payment in lieu of taxes to be waived or otherwise not assessed for a period of greater than twenty (20) years from the date of such contract, lease, understanding or other agreement, unless both the commissioner of economic and community development and the comptroller of the treasury have made a written determination that such agreement is in the best interest of the state. The corporation shall attach to each agreement an analysis of the costs and benefits of the agreement, in such manner and under such conditions as shall be prescribed by the commissioner of economic and community development or the commissioner's designee. The legislative body of the municipality making such delegation may, in its sole discretion, require the corporation to submit any such agreement to such legislative body for its approval.”, inserted “the Central Business Improvement District Act of 1971, compiled in” in the present introductory language of (2), redesignated former (2) as present (3),  and substituted “in subdivisions (b)(2)(A) and (B)” for “in subdivisions (b)(1)(A) and (B)” in present (3); and, in (e)(1), deleted former (F) which read: “(F) A calculation of the taxes that would have been due for each listed property if the properties were privately owned or otherwise subject to taxation;”, deleted “to the governing body” from the end of (H), and inserted “between the city and county” in (K).

The 2018 amendment, effective October 1, 2018, added (i) and (j).

Effective Dates. Acts 2015, ch. 519, § 3. July 1, 2015.

Acts 2016, ch. 588, § 7. March 10, 2016.

Acts 2016, ch. 777, § 6. April 12, 2016.

Acts 2018, ch. 1064, § 3. October 1, 2018.

Cross-References. Credit against excise tax on corporate earnings, § 67-4-2009.

Sales tax and use tax, title 67, ch. 6.

Law Reviews.

Selected Tennessee Legislation of 1986, 54 Tenn. L. Rev. 457 (1987).

Attorney General Opinions. Industrial development corporation's use of payments in lieu of ad valorem taxes, OAG 96-083, 1996 Tenn. AG LEXIS 93 (6/5/96).

Authority of industrial development corporations to extend existing lease terms but with continuing payment obligation in lieu of taxes, OAG 97-049, 1997 Tenn. AG LEXIS 58 (4/15/97).

Constitutionality of exemption from taxation, OAG 98-0110, 1998 Tenn. AG LEXIS 110 (6/11/98).

A proposed amendment to T.C.A. § 7-53-305, which would allow an industrial development board in a certain county to agree with a lessee to accept in lieu of tax payments that are less than the taxes that would be payable if the property were owned by a private owner, but only if certain conditions are met, was constitutionally suspect in the absence of a rational basis for the different treatment of an industrial development board's power to negotiate in lieu of tax payments in a single county, OAG 02-044, 2002 Tenn. AG LEXIS 40 (4/9/02).

The caption of Acts 2003, ch. 405, amending T.C.A. § 7-53-305(g), does not violate Tenn. Const., art. II, § 17, OAG 03-123, 2003 Tenn. AG LEXIS 141 (9/25/03).

Absent a rational basis for the different treatment of an industrial development board's power to negotiate in lieu of tax payments in counties within two narrow population brackets, Acts 2003, ch. 405, amending T.C.A. § 7-53-305(g), is constitutionally suspect under Tenn. Const., art. XI, § 8, OAG 03-123, 2003 Tenn. AG LEXIS 141 (9/25/03).

Under T.C.A. § 7-53-305(g), if a municipal industrial development corporation negotiates payments in lieu of taxes in an amount equal to or exceeding the county ad valorem taxes otherwise due, it may do so without involvement or approval of the county, OAG 04-040, 2004 Tenn. AG LEXIS 40 (3/12/04).

NOTES TO DECISIONS

1. Public Purpose.

Property held pursuant to this chapter falls within the exception to the taxation requirement of Tenn. Const., art. II, § 28, since the city holds the property concerned for a public purpose, that of promoting industry and developing trade to provide against low wages and unemployment. Small World, Inc. v. Industrial Development Board, 553 S.W.2d 596, 1976 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1976).

7-53-306. Municipal liability — Submission to voters — Remedies of bondholders.

The municipality shall not, in any event, be liable for the payment of the principal of or interest on any bonds of the corporation, or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the corporation, and none of the bonds of the corporation or any of its agreements or obligations shall be construed to constitute an indebtedness of the municipality within the meaning of any constitutional or statutory provision whatsoever. The municipality may pledge its full faith and credit as surety to the payment of the principal of and interest on the bonds in the following manner:

  1. The governing body of the municipality may by resolution propose the pledging of the full faith and credit and unlimited taxing power of the municipality as surety to the payment of the principal of and interest on the bonds. After securing a certificate of public purpose and necessity as provided in § 7-53-307, the governing body may direct the county election commission to hold an election for the registered voters of the municipality to determine whether the full faith and credit of the municipality shall be so pledged. Should three fourths (¾) of the voters cast their vote in favor of lending the municipality's credit by pledging the full faith and credit of the municipality to the payment, as surety, of the principal and interest of such bonds, according to the certificate of the county election commission, the municipality, through its governing board, would be authorized to so pledge its full faith and credit as surety and so indicate by the signature of the mayor or other chief executive official of the municipality on the bonds; and
  2. In the event such pledge of full faith and credit and unlimited taxing power of the municipality is given, any holder or holders of the bonds, including a trustee or trustees for holders of such bonds, shall have the right, in addition to all other rights, by mandamus or other suit, action or proceeding in any court of competent jurisdiction to enforce such person's rights against the municipality, and the governing body of the municipality and any officer, agent or employee of the municipality, including, but not limited to, the right to require the municipality and governing body and any proper officer, agent or employee of the municipality, to assess, levy and collect taxes and other revenues and charges adequate to carry out any agreement as to, or pledge of, such taxes, revenues and charges. The taxes authorized to be pledged in this section shall be levied without limit as to rate or amount upon all taxable property within the municipality, and all such taxes to be levied are hereby declared to have been levied for county and corporation purposes, respectively, within the meaning of the Constitution of Tennessee, Article II, § 29.

Acts 1955, ch. 210, § 12; 1972, ch. 740, § 4(46); T.C.A., § 6-2812.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal, State and County Aid, § 2.

7-53-307. Certificate for pledge of municipal credit — Regulation by finance committee.

  1. The building finance committee in the industrial development division of the department of economic and community development is hereby authorized and empowered to determine whether any municipality shall have the right to pledge the full faith and credit of the municipality as surety to the payment of principal and interest of bonds as authorized in § 7-53-306. Each municipality within this state shall have the right to apply to the committee for a certificate of public purpose and necessity from the committee as to whether the general welfare requires that such municipality be authorized to execute any such pledge.
  2. In determining whether such certificate shall be issued, the committee may hold public hearings, or private hearings, make investigations as may be desired, and shall have power to summon witnesses, administer oaths, hear testimony and make a record of all things had and done at such hearing or investigation, and to order issued such certificate of public purpose and necessity as the committee may deem advisable.
    1. In considering and determining whether or not such certificate shall issue, the committee shall find and determine affirmatively the following, that:
      1. There are sufficient natural resources readily and economically available for the use and operation of the particular project and enterprise for at least ten (10) years, but in no event less than the period of time for which any bonds may be issued for acquiring or constructing such project;
      2. There is available a labor supply to furnish at least one and one half (1½) workers for each operative job in the enterprise within an area of twenty-five (25) miles from the proposed location; and
      3. There are adequate property values and suitable financial conditions, so that the total pledge of full faith and credit of the municipality, solely for the purpose authorized by this chapter, shall not exceed ten percent (10%) of the total assessed valuation of all the property in the municipality ascertained by the last completed assessment at the time of issuance of such bonds.
    2. In no event shall the committee authorize any municipality actually to pledge its full faith and credit to the payment of bonds for any such enterprise, unless the committee shall further find and determine that the enterprise to be carried on in the project is well conceived, has a reasonable prospect for success, will provide proper economic development and employment, and that the project will not become a burden upon the taxpayers of the municipality.
  3. If and when the certificate is issued, the committee therein shall fix and determine in the certificate:
    1. The extent and the amount of the bonds to which the municipality may pledge its full faith and credit;
    2. The purposes for which the bonds shall be expended; and
    3. The method of lease, rental and operation of the project if the project is to be leased to a lessee. If the governing board of the municipality fails or refuses to follow the requirements made by the board in the certificate, then the members of the governing board of the municipality voting for such failure or refusal shall be individually and personally liable, and liable for their official bonds for any loss that the municipality may sustain by reason of such failure or refusal to follow the requirements, and in addition may be compelled by injunction to comply with such requirements.
  4. The committee is hereby authorized and empowered to adopt and put into effect all reasonable rules and regulations that it may deem necessary to carry out this chapter, not inconsistent with this chapter.

Acts 1955, ch. 210, § 14; impl. am. Acts 1963, ch. 169, § 2; impl. am. Acts 1972, ch. 852, § 12; Acts 1975, ch. 311, § 1; 1976, ch. 515, § 7; T.C.A., § 6-2813.

Cross-References. Organization of building finance committee, § 4-14-109.

7-53-308. Corporation nonprofit — Net earnings — Transfer of assets.

  1. The corporation shall be a nonprofit corporation and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors of the corporation shall determine that sufficient provision has been made for the full payment of the expenses, bonds, and other obligations of the corporation, then any net earnings of the corporation thereafter accruing shall be paid to the municipality with respect to which the corporation was organized; provided, that nothing contained in this section shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease, sale contract, loan agreement, mortgage or deed of trust entered into by the corporation.
    1. Notwithstanding any provision of this chapter to the contrary, nothing in this section shall prevent the board of directors from transferring all or any part of its assets in accordance with the terms of any lease, sale contract, loan agreement, mortgage or deed of trust entered into by the corporation.
    2. This subsection (b) shall apply to any county having a population of over nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census.

Acts 1955, ch. 210, § 15; 1959, ch. 222, § 5; 1976, ch. 515, § 8; T.C.A., § 6-2814; Acts 2014, ch. 752, § 2.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. City’s Use of Payments Received Through Industrial Development Corporation to Fund Workforce Training Programs. OAG 15-43, 2015 Tenn. AG LEXIS 66 (4/30/15).

7-53-309. Bonds as legal investments and lawful security.

Bonds issued under the authority of this chapter and secured by a pledge of full faith and credit shall be and are hereby declared to be legal and authorized investments for banks, savings banks, trust companies, savings and loan associations, insurance companies, fiduciaries, trustees, guardians and for all public funds of the state, including, but not limited to, the sinking funds of cities, towns, villages, counties, school districts, or other political corporations, or subdivisions of the state. Such bonds shall be eligible to secure the deposit of any and all public funds of the state, and any and all public funds of cities, towns, villages, counties, school districts or other political corporations or subdivisions of the state, and such bonds shall be lawful and sufficient security for the deposits to the extent of their value when accompanied by all unmatured coupons appertaining to the bonds.

Acts 1955, ch. 210, § 17; impl. am. Acts 1978, ch. 708, § 5.25; T.C.A., § 6-2816.

7-53-310. Acquisition and transfer of project sites.

Any municipality may acquire a project site by gift, purchase, lease, or condemnation, and may transfer any project site to a corporation by sale, lease, or gift. Such transfer may be authorized by a resolution of the governing body of the municipality without submission of the question to the voters, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law. Such project site may be within or without the municipality or partially within and partially without the municipality.

Acts 1959, ch. 222, § 6; T.C.A., § 6-2819.

7-53-311. Lease or lease-purchase agreement with municipality authorized — Tax levy.

Any city, county or metropolitan government is authorized to enter into any lease or lease-purchase agreement of a project from a corporation, for such term or terms and upon such conditions as may be determined by the governing body of such city, county or metropolitan government, notwithstanding and without regard to the restrictions, prohibitions or requirements of any other law, whether public or private, and to levy and collect a direct annual tax sufficient with any other moneys available and pledged to pay the rental payable under such lease or lease-purchase agreement as and when it becomes due and payable, such tax to be in addition to all other taxes of such city, county or metropolitan government and shall be in addition to all other taxes now or hereafter authorized to be levied, and such tax shall not be included within any statutory or other limitation in rate or amount, but shall be excluded and be in addition thereto, notwithstanding the prohibitions, restrictions or requirements of any other law, whether public or private, and the obligations assumed and undertaken pursuant to such lease or lease-purchase agreement, including any unconditional or other obligation to levy such tax and to pay rentals for the project for a fixed term or terms, shall not be deemed or construed as constituting a debt of the city, county or metropolitan government within the terms, provisions or limitations of any constitutional, statutory, charter or other limitation.

Acts 1973, ch. 304, § 2; T.C.A., § 6-2821.

7-53-312. Preparation and submission of economic impact plan for counties other than those with a metropolitan government and a population exceeding 500,000.

  1. The corporation is authorized to prepare and submit to the municipality for approval an economic impact plan in the manner described in this section.
  2. An economic impact plan shall be a written document and shall specifically identify the area to be included in the plan. The area to be included in the plan must be located in the municipality and must also include an industrial park within the meaning of § 13-16-102, or a project that is either owned by the corporation or with respect to which the corporation has loaned or will loan funds or has otherwise provided or will provide financial assistance. In addition to such industrial park or project, the area that is the subject of the economic impact plan may also include such other properties that the corporation determines will be directly improved or benefited due to the undertaking of the industrial park or project. The economic impact plan shall:
    1. Identify the boundaries of the area subject to the plan;
    2. Identify the industrial park or project located within the area subject to the plan;
    3. Discuss the expected benefits to the municipality from the development of the area subject to the plan, including anticipated tax receipts and jobs created; and
    4. Provide that the property taxes imposed on the property, including the personal property, located within the area subject to the plan will be distributable in the manner described in subsection (c) for a period of time specified in the plan.
  3. Upon the approval by the municipality of an economic impact plan with respect to an area, all property taxes levied upon property located within such area by any taxing agency after the effective date of the plan shall be divided as follows:
    1. That portion of the taxes that is equal to the amount of taxes, if any, that were payable with respect to the property for the year prior to the date the economic impact plan was approved, the “base tax amount”, by the municipality shall be allocated to and, when collected, shall be paid to the respective taxing agencies as taxes levied by such taxing agencies on all other property are paid; provided, that in any year in which the taxes on any property are less than the base tax amount, there shall be allocated and paid to the respective taxing agencies only those taxes actually imposed; and
    2. Any excess of taxes over the base tax amount shall be allocated to and, when collected, shall be paid into a separate fund of the corporation established to hold such payments until applied for the purposes described in subsection (h).
  4. Notwithstanding subsection (a) to the contrary, the corporation may prepare, and the municipality may approve, an economic impact plan that allocates an amount greater than the base tax amount to the taxing agencies.
  5. An economic impact plan shall not provide for an allocation of taxes to the corporation for a period in excess of thirty (30) years.
  6. The governing body of a municipality may approve an economic impact plan by resolution, notwithstanding any local charter provision or other provision to the contrary. If the area subject to an economic impact plan is located within the corporate limits of a city or town, the taxes that would otherwise be payable to the city, town or county that is not the municipality that created the corporation shall not be paid to the corporation unless such city, town or county has also approved the economic impact plan.
  7. Before the corporation submits an economic impact plan for approval to the municipality that created such corporation or to any other city or county, the corporation shall hold a public hearing relating to the proposed plan after publishing a notice of such public hearing in a newspaper of general circulation in the municipality at least two (2) weeks prior to the date of such public hearing. Such notice shall include the time, place and purpose of the public hearing, and notice of how a map of the area subject to the plan can be viewed by the public.
  8. All taxes allocated to the corporation pursuant to this section shall only be applied by the corporation to pay expenses of the board in furtherance of promoting economic development in the municipality, to pay the cost of projects, or to pay debt service on bonds or other obligations issued by the corporation to pay the cost of the projects. The corporation is authorized to pledge any or all amounts received by the corporation pursuant to this section to the payment of such bonds or other obligations.
  9. After the approval by a municipality of an economic impact plan, the clerk or other recording official of such municipality shall transmit to the appropriate assessor of property and to each taxing agency to be affected, a copy of the description of all property within the area subject to the economic impact plan and a copy of the resolution approving that plan. If the plan is approved by any taxing agency other than the municipality, the clerk or other recording official of that taxing agency shall also provide a copy of the resolution approving the plan to such assessor of property and taxing agencies. A copy of the plan and any resolutions approving the plan shall be filed with the comptroller of the treasury, and an annual statement of amounts allocated in excess of the base tax amount shall be filed with the state board of equalization.
  10. Notwithstanding anything to the contrary in this section, taxes levied upon property within an economic impact area by any taxing agency for the payment of principal of and interest on all bonds, loans, or other indebtedness of such taxing agency, and taxes levied by or for the benefit of the state, shall not be subject to allocation as provided in subsection (c), but may still be levied against such property and, when collected, paid to such taxing agency as taxes levied by such taxing agency on all other property are paid and collected.
  11. This section shall not apply to any county having a metropolitan form of government and having a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census. With respect to a county with a metropolitan form of government and having a population in excess of five hundred thousand (500,000), § 7-53-314 shall apply.
  12. In the event of any conflict between this section and the Uniformity in Tax Increment Financing Act of 2012, compiled in title 9, chapter 23, title 9, chapter 23 shall control.

Acts 2004, ch. 662, § 1; 2008, ch. 770, § 1; 2008, ch. 1013, § 4; 2010, ch. 940, § 1; 2012, ch. 605, § 3.

Compiler's Notes. Former § 7-53-312, relating to information concerning debt obligation issuances, was transferred to § 9-21-151 in 1990.

Acts 2008, ch. 770, § 3 provided that the act, which added subsection (k), shall apply to all economic impact plans submitted on or July 1, 2008.

For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2010, ch. 940, § 1 provided that former subsection (l ) shall cease to be effective July 1, 2012.

Acts 2012, ch. 605, § 6 provided that the CRA Act, which is the Community Redevelopment Act of 1998, as amended, being chapter 987 of the Public Acts of 1998, which act has not been codified, is hereby amended to add the following as a new section: “In the event of any conflict between the provisions of this act and title 9,  chapter 23,  the provisions of title 9,  chapter 23 shall control.”

Acts 2012, ch. 605, § 8 provided that the act shall not apply to a plan, or any amendment to such plan, for which required public hearings were conducted prior to March 21, 2012, without the concurrence of the tax increment agency, all affected taxing agencies, and the holders of any indebtedness secured by the tax revenues allocable pursuant to the plan.

7-53-313. Purpose.

  1. Notwithstanding any provision of this chapter or any other law to the contrary, this chapter shall be liberally construed to carry out the following purposes and objectives:
    1. The policies and practices of industrial development corporations shall ensure that minority-owned and other disadvantaged businesses share more fully in the American economic system of private enterprise through free and vigorous competition;
    2. Such competition shall be fostered through encouragement and support of minority-owned and other disadvantaged businesses; and
    3. Industrial development corporations aid, counsel and assist in every practical manner minority-owned and other disadvantaged businesses in order to preserve free competition on equal terms with those businesses constituting the major portion of the state's business community.
  2. To assist industrial development corporations in achieving such purposes and objectives, the department of economic and community development and the office of business enterprise, established by § 4-26-101, shall be available to provide technical assistance and consultation.

Acts 1999, ch. 298, § 1.

7-53-314. Preparation and submission of economic impact plan for counties with a metropolitan government and a population exceeding 500,000.

  1. The corporation is authorized to prepare and submit to the governing body of the municipality for approval an economic impact plan in the manner described in this section.
  2. An economic impact plan shall be a written document and shall specifically identify the area to be included in the plan. The area to be included in the plan shall be located in the municipality and shall also include an industrial park within the meaning of § 13-16-102, or a project that is either owned by the corporation or with respect to which the corporation has loaned or will loan funds or has otherwise provided or will provide financial assistance. In addition to the industrial park or project, the area that is the subject of the economic impact plan may also include other properties that the corporation determines will be directly improved or benefited due to the undertaking of the industrial park or project. The economic impact plan shall:
    1. Identify the boundaries of the area subject to the plan;
    2. Identify the industrial park or project located within the area subject to the plan;
    3. Discuss the expected benefits to the municipality from the development of the area subject to the plan, including anticipated tax receipts and jobs created; and
    4. Provide that the property taxes imposed on the property, including the personal property, located within the area subject to the plan will be distributable in the manner described in subsection (c) for a period of time specified in the plan.
  3. Upon the approval of the governing body of the municipality of an economic impact plan with respect to an area, all property taxes levied upon property located within the area by any taxing agency after the effective date of the plan shall be divided as follows:
    1. That portion of the taxes that is equal to the amount of taxes, if any, that were payable with respect to the property for the year prior to the date the economic impact plan was approved, the base tax amount, by the municipality shall be allocated to and, when collected, shall be paid to the respective taxing agencies as taxes levied by the taxing agencies on all other property are paid; provided, that, in any year in which the taxes on any property are less than the base tax amount, there shall be allocated and paid to the respective taxing agencies only those taxes actually imposed; and
    2. Any excess of taxes over the base tax amount shall be allocated to and, when collected, shall be paid into a separate fund of the corporation established to hold the payments until applied for the purposes described in subsection (h).
  4. Notwithstanding subsection (c) to the contrary, an economic impact plan may be approved that allocates an amount greater than the base tax amount to the taxing agencies.
  5. An economic impact plan shall not provide for an allocation of taxes to the corporation for a period in excess of thirty (30) years.
  6. The governing body of a municipality may approve an economic impact plan by resolution, notwithstanding any local charter provision or other provision to the contrary. Prior to approval by the governing body of the municipality, the economic impact plan shall be submitted to the mayor of the municipality. If the area subject to an economic impact plan is located within the corporate limits of a city or town, the taxes that would otherwise be payable to the city, town or county that is not the municipality that created the corporation shall not be paid to the corporation unless the city, town or county has also approved the economic impact plan.
  7. Before the corporation submits an economic impact plan for approval to the governing body of the municipality that created the corporation or to any other city or county, the corporation shall hold a public hearing relating to the proposed plan after publishing a notice of the public hearing in a newspaper of general circulation in the municipality at least two (2) weeks prior to the date of the public hearing. The notice shall include the time, place and purpose of the public hearing, and notice of how a map of the area subject to the plan can be viewed by the public.
  8. All taxes allocated to the corporation pursuant to this section shall only be applied by the corporation to pay expenses of the board in furtherance of promoting economic development in the municipality, to pay the cost of projects, or to pay debt service on bonds or other obligations issued by the corporation to pay the cost of the projects. The corporation is authorized to pledge any or all amounts received by the corporation pursuant to this section to the payment of the bonds or other obligations.
  9. After the approval by the governing body of a municipality of an economic impact plan, the clerk or other recording official of the municipality shall transmit to the appropriate assessors of property and to each taxing agency to be affected, a copy of the description of all property within the area subject to the economic impact plan and a copy of the resolution approving that plan. If the plan is approved by any taxing agency other than the municipality, the clerk or other recording official of that taxing agency shall also provide a copy of the resolution approving the plan to the assessors of property and taxing agencies.
  10. Notwithstanding any other provision of this section to the contrary, taxes levied upon property within an economic impact area by any taxing agency for the payment of principal of and interest on all bonds, loans, or other indebtedness of the taxing agency, and taxes levied by or for the benefit of this state, shall not be subject to allocation as provided in subsection (c), but may still be levied against the property and, when collected, paid to the taxing agency as taxes levied by the taxing agency on all other property are paid and collected.
  11. This section shall only apply to any county having a metropolitan form of government and having a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census.
  12. In the event of any conflict between this section and the Uniformity in Tax Increment Financing Act of 2012, compiled in title 9, chapter 23, title 9, chapter 23 shall control.

Acts 2008, ch. 770, § 2; 2008, ch. 971, § 1; 2011, ch. 239, §§ 1, 2; 2012, ch. 605, § 4.

Compiler's Notes. Acts 2008, ch. 770, § 3 provided that the act, which enacted this section, shall apply to all economic impact plans submitted on or after July 1, 2008.

Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.

Acts 2012, ch. 605, § 6 provided that the CRA Act, which is the Community Redevelopment Act of 1998, as amended, being chapter 987 of the Public Acts of 1998, which act has not been codified, is hereby amended to add the following as a new section: “In the event of any conflict between the provisions of this act and title 9,  chapter 23,  the provisions of title 9,  chapter 23 shall control.”

Acts 2012, ch. 605, § 8 provided that the act shall not apply to a plan, or any amendment to such plan, for which required public hearings were conducted prior to March 21, 2012, without the concurrence of the tax increment agency, all affected taxing agencies, and the holders of any indebtedness secured by the tax revenues allocable pursuant to the plan.

For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-53-315. Authority for municipality to aid or provide assistance for certain projects.

Notwithstanding §§ 7-53-306 and 7-53-307, in any municipality in which there has been created a central business improvement district pursuant to chapter 84 of this title, the municipality is authorized to aid or otherwise provide assistance, including without limitation, granting, contributing or pledging to, or for the benefit of the corporation, revenues derived from any source except revenues derived from ad valorem property taxes, for those projects, or portions thereof, that consist of public infrastructure, public improvements or other public facilities, including without limitation, one (1) or more parking or sports facilities, located within an area designated by appropriate resolution or ordinance by the municipality as the center city area, for such term or terms and upon such conditions as may be determined by the governing body of the municipality.

Acts 2010, ch. 800, § 2.

7-53-316. Redevelopment of brownfield sites in economically disadvantaged areas.

  1. It is the intent of the general assembly to encourage the redevelopment of brownfield sites in economically disadvantaged areas within this state. In addition to the authorization provided in § 7-53-312, a corporation located in a municipality in which an urban brownfield redevelopment project is located is also authorized to prepare and submit to the municipality for approval an economic impact plan with respect to an urban brownfield redevelopment project in the manner provided in this section. Except to the extent modified under this section, § 7-53-312 shall apply to an economic impact plan for an urban brownfield redevelopment project.
  2. An economic impact plan submitted for approval under this section shall provide that the property taxes imposed on the property, including the personal property located within the area subject to the plan, the sales taxes imposed upon sales within the area subject to the plan, the sales taxes imposed upon construction and related development or redevelopment activity in the area subject to the plan, or any combination and amount of such property and sales taxes, will be distributable in the manner described in subsection (c) and § 7-53-312(c), as applicable, and used for the purposes permitted by subsection (e).
  3. In addition to the allocation of property taxes provided in § 7-53-312, an economic impact plan may further provide that the non-school portion of the local sales tax increment shall be allocated to and, when received, shall be paid into a separate fund of the corporation established to hold such payments, along with any other amounts received by the corporation pursuant to this section or § 7-53-312, until applied for the purposes described in subsection (e) pursuant to the economic impact plan. In calculating the non-school portion of the local sales tax increment, the plan may also include any new local sales taxes received from construction or related redevelopment activity occurring within the area subject to the plan. Upon the approval by a municipality of an economic impact plan containing all or any portion of the permitted excess local sales taxes, the local sales taxes received by the municipality shall be divided and allocated as so provided.
  4. Notwithstanding § 7-53-312 to the contrary, the corporation may prepare, and the municipality may approve, an economic impact plan that allocates an amount greater than the base tax amount and the base sales tax amount to the taxing agencies.
  5. All sales and property taxes allocated for an economic impact plan approved pursuant to this section shall only be applied by the corporation to pay expenses of the corporation in furtherance of economic development in the municipality, to pay or reimburse qualified costs or to pay debt service on bonds or other obligations issued by the corporation to finance any of the foregoing. The corporation shall cease to receive allocations described in this section and § 7-53-312(c) upon the maturity of the original bond or obligation used to finance the project, whose maximum amount of debt maturity must be no longer than thirty (30) years.
  6. As used in this section, unless the context otherwise requires:
    1. “Base sales tax amount” means the revenues received by the municipality from local sales taxes, excluding that portion of the local sales tax dedicated for school purposes, from the area subject to the plan for the fiscal year of the municipality immediately prior to the year in which the plan is adopted. “Local sales taxes” means taxes received by the municipality pursuant to the 1963 Local Option Revenue Act, compiled in title 67, chapter 6, part 7, excluding that portion of the local sales taxes dedicated for school purposes;
    2. “Brownfield site” means a parcel or adjacent or related parcels of real property that is currently, or at any time since January 1, 2000, has been the subject of an investigation or remediation as a brownfield project under a voluntary agreement or consent order pursuant to § 68-212-224;
    3. “Non-school portion of the local sales tax increment” means any excess of local sales taxes, after deducting the portion that is statutorily designated for school purposes, over the base sales tax amount that is received by each municipality that has approved the economic impact plan from the specified sales and development activity in the area that is subject to the plan;
    4. “Qualified costs” include:
      1. Costs for all roads, streets, sidewalks, access ways, ramps, bridges, landscaping, signage, utility facilities, grading, drainage, parks, plazas, greenways, public parking facilities, public recreational facilities, public educational facilities, public meeting facilities, and similar improvements that are necessary for or otherwise useful for the urban redevelopment project or for the redevelopment of the area subject to the economic impact plan;
      2. All administrative, architectural, legal, engineering, and other expenses as may be necessary or incidental to the development and implementation of the economic impact plan or the financing of expenses under this section; and
      3. Costs that are directly related to the investigation, remediation, or mitigation of a brownfield project located in an urban redevelopment project as required by a voluntary agreement or consent order pursuant to § 68-212-224;
    5. “Qualified opportunity zone” means census tracts identified as qualified opportunity zones as certified under the federal Tax Cuts and Jobs Act of 2017 (Public Law 115-97);
    6. “Redevelopment zone” means:
      1. An area in this state designated as of January 1, 2009, as a renewal community by the federal department of housing and urban development;
      2. An area in this state designated as of January 1, 2009, as a low-income community for purposes of the federal new markets tax credits program; or
      3. A qualified opportunity zone in this state;
    7. “Urban brownfield redevelopment project”:
      1. Means the development or redevelopment, in one (1) or more phases as specified in the economic impact plan, of all or any portion of a parcel or parcels of contiguous, adjacent, or related properties. The parcel or parcels must be located in a redevelopment zone and must contain:
        1. At least one (1) brownfield site; or
        2. Contain a site of at least ten (10) acres that has remained vacant or substantially unoccupied for at least five (5) years and, at any time within twenty (20) years prior to June 1, 2011, included manufacturing, industrial, distribution, or retail facilities, in total, containing at least one million square feet (1,000,000 sq. ft.); and
      2. Includes any project as defined in § 7-53-101 and any publicly or privately owned or operated retail, commercial, industrial, or mixed-use facility, including a visitor center, recreation, or entertainment facility and all related hotels, convention center facilities, administrative facilities, offices, restaurants, and other amenities constructed or acquired as part of the project.
  7. An urban brownfield redevelopment project shall be a project for purposes of § 7-53-101 and for all other purposes under this chapter.

Acts 2011, ch. 384, § 1; 2019, ch. 257, §§ 1-7.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2019 amendment, in (a), deleted “large” following “redevelopment of” and substituted “this state” for “large and mid-size counties within the state” in the first sentence; added the last sentence in (e); and, in (f), deleted “containing at least five (5) acres” following “real property” in the definition of “brownfield site”;  rewrote the definitions of “qualified costs”, “redevelopment zone” and “urban brownfield redevelopment project” which read: “‘Qualified costs’ include costs for all roads, streets, sidewalks, access ways, ramps, bridges, landscaping, signage, utility facilities, grading, drainage, parks, plazas, greenways, public parking facilities, public recreational facilities, public educational facilities, public meeting facilities and similar improvements that are necessary for or otherwise useful for the urban redevelopment project or for the redevelopment of the area subject to the economic impact plan. “Qualified redevelopment costs” shall also include all administrative, architectural, legal and engineering expenses and such other expenses as may be necessary or incident to the development and implementation of the economic impact plan or the financing of expenses under this section;“‘Redevelopment zone’ means either an area designated as of January 1, 2009, as a renewal community by the federal department of housing and urban development or an area designated as of January 1, 2009, as a low income community for purposes of the federal new markets tax credits program. A redevelopment zone must also be located in a county having a population of eighty thousand (80,000) or more according to the 2000 federal census or any subsequent federal census;“‘Urban brownfield redevelopment project’ means the development or redevelopment, in one (1) or more phases as specified in the economic impact plan, of all or any portion of a parcel or parcels of contiguous, adjacent or related properties totaling at least one hundred (100) acres. The parcel or parcels must be located in a redevelopment zone and must either contain at least one (1) brownfield site or contain a site of at least ten (10) acres that has remained vacant or substantially unoccupied for at least five (5) years and, at any time within twenty (20) years prior to June 1, 2011, included a manufacturing, industrial, distribution or retail facility containing at least one million square feet (1,000,000 sq. ft.). An urban brownfield redevelopment project may include any project as defined in § 7-53-101 and may further include any publicly or privately owned or operated retail, commercial, industrial or mixed use facility, including a visitor center, recreation or entertainment facility and all related hotels, convention center facilities, administrative facilities, offices, restaurants and other amenities constructed or acquired as part of the project.”; and added the definition of “qualified opportunity zone”.

Effective Dates. Acts 2019, ch. 257, § 8. April 30, 2019.

7-53-317. Parcels of property located on remediation site.

  1. As used in this section:
    1. “Local government” means any home rule municipality; and
    2. “Remediation site” means a site containing at least one thousand three hundred (1,300) acres that have been held by the United States department of energy due to an extended period of environmental remediation and conveyed by the United States department of energy to a nonprofit entity that is recognized as tax exempt by the internal revenue service and engaged in economic development.
  2. Upon receiving all authorizations required by this chapter, on or after July 1, 2017, any and all parcels of property located on a remediation site in a local government may be transferred to the industrial development board of the local government consistent with the terms of the conveyance. The industrial development board is authorized to sell, lease, dispose of, or contract for the operation of the property in furtherance of the public purpose of promoting economic development in that area.
  3. Upon transfer of the parcels to the industrial development board as provided in subsection (b), a lawful management or lease agreement shall be executed between the industrial development board and the nonprofit entity described in subdivision (a)(2), in which the United States department of energy's intent is clearly memorialized, including a provision that the nonprofit entity shall manage the remediation site and shall market the parcels to potential buyers in order to provide substantial sources of tax revenue or economic activity to the local government and to induce private enterprises to locate or remain in the area.

Acts 2017, ch. 219, § 1.

Effective Dates. Acts 2017, ch. 219 § 2. April 28, 2017.

Chapter 54
Energy Production Facilities

7-54-101. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Construct” or “construction” means the erection, building, acquisition by purchase or condemnation, alteration, reconstruction, improvement, or extension of energy production facilities, the engineering, architectural designs, plans, working drawings, specifications, procedures, and other action necessary in the construction of such facilities, and the inspection and supervision of the construction of such facilities;
  2. “Energy production facility” means a facility for the production, conversion or transmission of energy from the controlled processing of fossil or other fuels or other sources of energy and the production of electricity, steam or other forms of energy for heating, cooling, manufacturing processes and other uses, and includes “energy recovery facilities” as defined in § 68-211-501 and includes “qualified renewable energy facilities” as defined in § 54C(d)(1) of the Internal Revenue Code of 1986 (26 U.S.C. § 54C(d)(1)); provided, that the municipality proposing to provide the financing for the qualified renewable energy facility constitutes a “qualified issuer” under § 54C(d)(6) of the Internal Revenue Code of 1986 (26 U.S.C. § 54C(d)(6)), and may include “resource recovery facilities” as defined in § 68-211-501 to the extent that the resource recovery facilities are constructed in connection with energy recovery facilities;
  3. “Governing body” means the board or body charged by law with governing the municipality;
  4. “Municipality” means any town, city, metropolitan government, county or power district of this state, and for all purposes except in § 7-54-103(g), means a not-for-profit corporation authorized by the laws of Tennessee to act for the benefit or on behalf of any one (1) or more of such local governmental entities;
  5. “Person” means any and all persons, natural or artificial, including any individual, firm or association, business trust, partnership, joint venture, municipality, and public, municipal, nonprofit, or private corporation organized or existing under the laws of this state or any other state, and any governmental agency or county of this state and any department, agency, or instrumentality of the executive, legislative, and judicial branches of the federal government; provided, that as to any business trust, partnership, or joint venture in which any federal government corporation has direct, equitable or beneficial ownership, such business trust, partnership or joint venture shall not be included in the definition of “person”; and
  6. “Solid waste” means all municipal, commercial, or industrial solid waste, garbage, rubbish, refuse, and other such similar and related materials, including, without limitation, recyclable materials when they become discarded, except those excluded by the department of environment and conservation, which will designate as “special waste” any hazardous or other waste it determines should not be processed in an energy production facility for reasons of public health or safety or because the nature of the waste is such that it is not suitable for processing in an energy production facility. In the case of any municipality operating a waste water treatment or processing facility, “solid waste” also means sludge originating from such facility to the extent such sludge is not designated as “special waste.”

Acts 1975, ch. 204, § 1; T.C.A., § 6-1331; Acts 1981, ch. 204, § 1; 1982, ch. 624, §§ 1, 2; 1983, ch. 226, § 1; 1987, ch. 250, §§ 1, 2; 2009, ch. 608, § 4.

Cross-References. Operation of energy production facilities by utility districts, § 7-82-302.

Sales and use tax exemption, § 67-6-322.

7-54-102. Construction, purchase, improvement and operation authorized.

A municipality has the power to construct, own, operate, or maintain within its corporate limits or within the limits of the county wherein it is located, an existing or planned energy production facility or facilities. The construction of such facility or facilities may include all necessary real and personal property, any land that may be required for an alternate means for the disposal of solid waste, rights-of-way, easements, buildings, and all other appurtenances usual to such facilities, as well as the building of all necessary means of transportation or transmission of energy and including obtaining all necessary rights-of-way or easements as necessary. A municipality also has the power to acquire, hold, use, lease, as lessor or lessee, sell or otherwise dispose of any energy production facility and to enter into agreements with any person for the operation of such facility.

Acts 1975, ch. 204, § 2; T.C.A., § 6-1332; Acts 1981, ch. 204, § 2; 1982, ch. 624, § 3.

7-54-103. Powers of municipalities — Delegation of municipal authority.

  1. The municipality shall charge for the production of any energy for such heating, cooling or processing and may combine it with any other energy produced. In no case shall the rates charged to electric or other power utility subscribers not receiving energy from the energy production facility be increased to provide revenue for the repayment of its bonds issued for such purposes.
    1. For the purposes of this chapter, any municipality may issue bonds for the construction of energy production facilities in the manner and subject to § 7-54-106, the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, or in accordance with any other law applicable to the issuer of such bonds for such purposes; provided, that, notwithstanding any contrary provisions of any such laws, bonds issued as authorized in this subsection (b) for energy production facilities may be sold at public sale or at private sale without advertisement as the issuer of such bonds shall determine.
    2. If such bonds or refunding bonds are issued by a not-for-profit corporation acting for the benefit of or on behalf of any one (1) or more counties, cities, towns, or local governments under this chapter, such bonds shall be sold at competitive bid or at a negotiated sale pursuant to this section. Prior to the adoption of any resolution of the board of the not-for-profit corporation authorizing the sale of bonds, notes, or other obligations or entering into any contract or other arrangement in the planning or preparation for the sale of bonds, notes, or other obligations, any such resolution or any such proposed contracts or other arrangements shall be subject to the approval of the comptroller of the treasury or the comptroller's designee and shall be subject to review by the state funding board. Any resolution of the not-for-profit corporation authorizing the sale of bonds, notes, or other obligations shall only become effective upon receiving the approval of the comptroller of the treasury or the comptroller's designee and the legislative bodies of the city and the county in which such city is located for whom or on whose behalf such not-for-profit corporation is acting. This subdivision (b)(2) shall not apply to any county with a metropolitan form of government and having a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census.
  2. With respect to the construction, financing, operation, or maintenance of an energy production facility or any contract authorized by § 7-54-105(a)(3), a municipality has the power to enter into such contracts or agreements, as it shall determine to be necessary or beneficial, with any person, relating to the collection, delivery, sale, purchase, or disposal of solid waste and the output from an energy production facility, including, without limitation, output in the form of electricity, steam, fuel, residue, or otherwise. Notwithstanding any other law, any municipality or county has the power to enter into contracts or agreements with municipalities proceeding under this chapter providing for the collection, delivery, sale, purchase, or disposal of solid waste or the output from an energy production facility.
  3. In connection with the construction, financing, operation or maintenance of an energy production facility or any contract authorized by § 7-54-105(a)(3), a municipality other than a power district is authorized to exercise exclusive jurisdiction and exclusive right to control the collection and disposal of solid waste within its boundaries. In furtherance of this subsection (d) and the energy and environmental objectives of this chapter, and title 68, chapter 211, any municipality, other than a power district, constructing, financing, operating or maintaining an energy production facility or entering into any contract authorized by § 7-54-105(a)(3), or contracting with another municipality for the disposal of solid waste in whole or in part through, or by means of, such an energy production facility, is authorized to exercise exclusive jurisdiction and exclusive right to control the collection and disposal of solid waste within its boundaries and to take all necessary action to displace competition with regulation or a monopoly public service; provided, that no county shall be authorized to exercise such jurisdiction and right within the corporate limits of any incorporated city or town or metropolitan government; and provided, further, that manufacturing firms that hold state permits to dispose of or utilize their own solid wastes on plant property on April 27, 1981, shall not be subject to this chapter except by mutual agreement between plant management and the municipality. Such jurisdiction and right to control by a municipality may be exercised by ordinance, resolution, contract or otherwise.
  4. A municipality is authorized to establish, levy, and collect fees, rates, or charges in connection with:
    1. The collection, delivery, sale, purchase, or disposal, whether at the site of an energy production facility, a landfill, or otherwise, of solid waste; and
    2. The output from an energy production facility.
  5. A municipality may pledge as security for the payment of the bonds authorized to be issued pursuant to this chapter, any revenues derived from or in connection with the construction, ownership, operation, financing, leasing or sale of any energy production facility, or the execution of any contract authorized by § 7-54-105(a)(3), including, without limitation, revenues derived from or in connection with any fees, rates, charges, contracts, or agreements in connection with the collection, delivery, sale, purchase, or disposal, whether at the site of an energy production facility, a landfill, or otherwise, of solid waste and the output from an energy production facility and may also pledge the revenues from the sale of energy to pay bonds or loans issued under any municipal or other bond authority or any other state legislation permitting energy production facilities.
  6. Notwithstanding the limitations contained in any general statutory provisions granting municipalities the right of eminent domain or condemnation, for the purposes of this chapter, any municipality proceeding with the construction, operation, maintenance or management of an energy production facility, or executing any contract authorized by § 7-54-105(a)(3) is authorized and empowered, within its boundaries, to condemn any land, easement or rights-of-way, either on, under or above the ground, for any and all purposes necessary in connection with the construction, operation and maintenance of an energy production facility or improvement to such facility. Title to property so condemned shall be taken in the name of the municipality and may be thereafter conveyed to any not-for-profit corporation acting for or on behalf of such municipality. For purposes of this subsection (g), no county shall be authorized to exercise such right of eminent domain or condemnation within the corporate limits of any town, city or metropolitan government.
  7. The term of any contract or agreement authorized by this chapter may extend beyond the elected term of the members of the governing body of the municipality or county involved, but in no event may such term exceed forty (40) years.
  8. The construction, operation, jurisdiction, control, and management of any facility constructed as authorized in this section may be delegated by the municipality to any of its agencies, divisions, boards, or departments as it shall determine, and such agencies, divisions, boards, or departments are authorized, notwithstanding any of the provisions of the municipality's charter, to accept such delegation of jurisdiction, control, and management. Such functions may also be delegated by the municipality to any not-for-profit corporation acting for or on behalf of such municipality; provided, that, except in any county with a metropolitan form of government and having a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census, the site selection for an energy production facility may be delegated to any such not-for-profit corporation, but shall be subject to the approval by a two-thirds (2/3) vote of the legislative bodies of the city and the county in which such city is located for whom or on whose behalf such not-for-profit corporation is acting prior to the purchase of any such site.
  9. Any municipality or county exercising, whether jointly or severally, any authority conferred upon it by this chapter, as amended, is hereby declared to be acting in furtherance of a public or governmental purpose.
  10. Provided, that such separation and disposition neither creates a public nuisance nor is otherwise injurious to the public health, welfare, and safety, nothing in this chapter shall prevent a person or business entity that generates or produces solid waste upon property owned, leased, or rented by such person or business entity to separate or cause to be separated recyclable materials from the solid waste while the solid waste is on such property and either to:
    1. Maintain title to such recyclable materials for such person's or business entity's own use; or
    2. Dispose of such recyclable materials by sale or gift.
  11. Nothing in this chapter shall prevent a person from purchasing or receiving by gift recyclable materials for processing or other use separated and disposed of in strict accordance with subsection (k).
    1. If such functions are delegated by the municipality to any not-for-profit corporation acting for or on behalf of such municipality, such corporation shall develop a uniform accounting system conforming to generally accepted accounting principles, which system shall be subject to approval by the comptroller of the treasury.
    2. The annual report, including financial statements, and all books of account and financial records of such not-for-profit corporation shall be subject to audit by the comptroller of the treasury. The board of such corporation may, with the prior approval of the comptroller of the treasury, engage licensed independent public accountants to perform the audits. The audit contract between the corporation and the independent public accountant shall be on contract forms prescribed by the comptroller of the treasury. The corporation shall be responsible for reimbursement of the costs of audits prepared by the comptroller of the treasury and the payment of fees for audits prepared by licensed independent public accountants. Audits and working papers prepared by independent public accountants shall be subject to review and approval by the comptroller of the treasury prior to payment. Copies of such audits shall be provided to each member of the board, the legislative bodies of the city and the county in which such city is located for whom or on whose behalf such not-for-profit corporation is acting, and the comptroller of the treasury, and shall be made available to the press.
    3. The board of directors of the not-for-profit corporation shall develop purchasing, contracting, and personnel procedures, which shall be subject to approval by the comptroller of the treasury and the commissioner of finance and administration prior to implementation.
    4. This subsection (m) shall not apply to any county with a metropolitan form of government and having a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census.

Acts 1975, ch. 204, § 3; T.C.A., § 6-1333; Acts 1981, ch. 204, §§ 3-5; 1982, ch. 624, §§ 4, 5; 1983, ch. 226, §§ 2, 6, 8; 1987, ch. 82, §§ 1-3; 1987, ch. 250, §§ 3-6; 1988, ch. 750, §§ 32, 33; 1988, ch. 908, §§ 1, 5, 7, 8; 2010, ch. 868, § 21.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

NOTES TO DECISIONS

1. Restraint of Trade.

The city was authorized to impose and collect tipping fees upon the disposal of solid waste, and there is no statutory language to suggest that the tipping fees are intended to create or function as a restraint of trade. Gray's Disposal Co. v. Metro. Gov't of Nashville, 122 S.W.3d 148, 2002 Tenn. App. LEXIS 927 (Tenn. Ct. App. 2002), rehearing denied, Gray's Disposal Co. v. Metro. Gov't of Nashville County, — S.W.3d —, 2003 Tenn. App. LEXIS 71 (Tenn. Ct. App. Jan. 28, 2003), appeal denied, — S.W.3d —, 2003 Tenn. LEXIS 656 (Tenn. 2003).

Collateral References.

Construction and application of rule requiring public use for which property is condemned to be “more necessary” or “higher use” than public use to which property is already appropriated—state takings. 49 A.L.R.5th 769.

7-54-104. Procedure for option — Use of Tennessee resources.

  1. Any municipality wishing to bring itself under any one (1) or more of the provisions of this chapter may do so by resolution or ordinance of the governing body of such municipality. Such action may be taken during any stage of the construction, acquisition, development or financing of an energy production facility and shall not be impaired or prejudiced by any previous action taken by or on behalf of such municipality.
  2. Any not-for-profit corporation acting by or on behalf of a municipality during any stage of the construction, acquisition, development, or operation of an energy production facility is encouraged to utilize Tennessee labor, products and materials to the greatest extent possible and practical so as to promote or enhance the employment opportunities in or provide economic benefits to such municipality.

Acts 1975, ch. 204, § 4; T.C.A., § 6-1334; Acts 1987, ch. 250, §§ 7, 13.

7-54-105. Loan agreements — Contracts for leases.

  1. In addition to the powers granted to municipalities under any other provision of this chapter and any other law, either general, special or local, a municipality other than a power district has the power to:
    1. Enter into loan agreements with any person or persons providing for the municipality to loan the proceeds derived from the issuance of bonds pursuant to this chapter to such person or persons, to be used to pay all or part of the cost of construction of an energy production facility or facilities, and providing for the repayment and securing of such loan upon such terms and conditions as the municipality shall determine;
    2. Issue its bonds pursuant to this chapter to make such loan or loans;
    3. Enter into contracts or leases with any person or persons, including any other municipality owning or operating an energy production facility or executing any contract authorized by this subdivision (a)(3), for the disposal of solid waste at an energy production facility or facilities or for the lease of an energy production facility or facilities, which contracts or leases shall contain such terms and conditions as the municipality shall determine, including, without limitation, provisions whereby the municipality is obligated to make payments under such contract or lease, whether or not use or services pursuant to the contract or lease are rendered, whether or not the related energy production facility or facilities are completed, operable or operating and notwithstanding suspension, interruption, interference, reduction or curtailment of the use or services of such energy production facility or facilities; and
    4. Indemnify and hold harmless any person in connection with the financing of an energy production facility, including, without limitation, indemnification against taxation.
  2. Prior to entering into any loan agreement or any contract for the lease by a municipality of an energy production facility or for the disposal of solid waste at an energy production facility, such municipality shall find and determine that:
    1. There is reasonable assurance that such person or persons have adequate resources to complete payment of the estimated cost of construction of the related energy production facility or facilities; and
    2. Arrangements have been made for a qualified operator or operators of such energy production facility or facilities.
  3. It is hereby found and declared that substantial benefits are to be derived from the financing by municipalities of energy production facilities. Such financings will promote the construction of energy production facilities, thereby providing a safe and sanitary means of disposing of solid waste and producing significant savings in cost of disposing of solid waste in a safe and sanitary manner.

Acts 1982, ch. 624, § 6; 1987, ch. 250, § 8.

Compiler's Notes. Provisions concerning the supplemental nature of this chapter, formerly compiled in this section, have been transferred to § 7-54-109.

7-54-106. Issuance of bonds — Application of U.C.C. — Exemption from taxation.

  1. Any municipality may, from time to time, issue its bonds under this section in such principal amounts as it deems necessary to provide sufficient funds to carry out any of the purposes of this chapter, including the establishment or increase of reserves, interest accrued during construction and for such period after the estimated date of commencement of operation, but not to exceed ten (10) years, as determined to be reasonably necessary by the consulting engineer of record for the financial feasibility of the municipality's undertaking, and the payment of all other costs or expenses of the municipality incident to and necessary or convenient to carry out the purposes of this chapter. As used in this section, “bonds” means and includes bonds, bond anticipation notes, and all other evidences of indebtedness.
  2. Neither the members of the governing body of the municipality nor any person executing the bonds shall be liable personally on the bonds.
  3. Bonds of the municipality shall be authorized by resolution of its governing body and may be issued under such resolution or under a trust indenture or other security instrument in one (1) or more series and shall bear such date or dates, mature at such time or times, bear interest at such rate or rates, be in such denomination or denominations, be in such form, either coupon or registered, carry such conversion or registration privileges, have such rank or priority, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium, as such resolution, trust indenture or other security instrument may provide, and without limitation as to amounts, maturities or interest rates.
  4. The bonds may be sold at public or private sale as the municipality may provide and at such price or prices as the municipality shall determine.
  5. In the event that any of the officers whose signatures appear on any bonds or coupons shall cease to be such officers before the delivery of such bonds or coupons, such signatures shall, nevertheless, be valid and sufficient for all purposes, as if such officers had remained in office until such delivery.
  6. Any municipality has the power in connection with the issuance of its bonds under this section to:
    1. Covenant as to the use of any or all of its property, real or personal;
    2. Redeem the bonds, covenant for their redemption and provide the terms and conditions of the redemption;
    3. Covenant as to the establishment, levy and collection of rates, fees, and charges in such amounts as the municipality shall determine;
    4. Covenant and prescribe as to events of default and terms and conditions upon which any or all of its bonds shall become or may be declared due before maturity, as to the terms and conditions upon which such declaration and its consequences may be waived and as to the consequences of default and the remedies of bondholders;
    5. Provide for and covenant as to:
      1. The pledge of or the grant of a security interest in all or any part of the revenues derived in connection with an energy production facility;
      2. The mortgage and pledge of any property, real or personal, constituting part of an energy production facility; or
      3. The custody, collection, securing, investment and payment of any revenues, assets, moneys, funds or property relating to an energy production facility;
    6. Provide for, and covenant as to, the vesting in a trustee or trustees, within or outside the state, of such properties, rights, powers and duties in trust as the municipality may determine; or
    7. Take any other action and do all other things as may be necessary or convenient or desirable in order to secure its bonds, or, in the absolute discretion of the municipality, may tend to make the bonds more marketable, notwithstanding that such covenants, acts or things may not be enumerated in this subsection (f); it being the intention of this subsection (f) to give the municipality power to do all things in the issuance of bonds and in the provisions for security of the bonds that are consistent with this chapter and the constitution of this state.
  7. Any municipality may issue refunding bonds for the purpose of paying, or making an exchange for, any of its bonds issued under this chapter, at or prior to maturity or upon acceleration or redemption. Refunding bonds may be issued at such time prior to the maturity or redemption of the refunded bonds as the municipality deems to be in the public interest. The refunding bonds may be issued in amounts sufficient to pay or provide for, whether in payment or exchange, the principal of the bonds being refunded, together with any redemption premium on the bonds, any interest accrued or to accrue to the date of payment of such bonds, the expenses of issuing of the refunding bonds, the expenses of redeeming the bonds being refunded, and such reserves for debt service or other capital or current expenses from the proceeds of such refunding bonds as may be required by the resolution, trust indenture or other security instruments, under which such refunding bonds are issued. The issue of refunding bonds, the maturities and other details for the refunding bonds, the security of the refunding bonds, the rights of the holders and the rights, duties and obligations of the agency in respect of the bonds shall be governed by the provisions of this chapter relating to the issue of bonds other than refunding bonds insofar as the same may be applicable.
  8. Whether or not any bonds issued under this section or interest coupons, if any, appertaining to the bonds would otherwise so qualify, such bonds and coupons are hereby made investment securities within the meaning and for all purposes of article 8 of the Uniform Commercial Code, compiled in title 47, chapter 8.
  9. Article 9 of the Uniform Commercial Code, compiled as title 47, chapter 9, shall not apply to any pledge or security interest created or granted in connection with bonds issued under this section, nor otherwise with respect to any pledge or security interest created under this section by a municipality.
  10. Any pledge or security interest created or granted under this section by a municipality shall be valid and binding from the time when the pledge or security interest is made; moneys or property that are the subject of such pledge or security interest and then held or thereafter received by a municipality shall immediately be subject to such pledge or security interest without any physical delivery of the pledge or security interest or further act; and such pledge or security interest shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the agency, irrespective of whether or not such parties have notice of the claims. Neither the resolution, trust indenture or security instrument nor any other instrument relating to any bonds or otherwise creating or granting any such pledge or security interest need be filed or recorded in any office other than with the records of the municipality.
  11. Bonds issued under this section, their transfer and the income from the bonds, including any gain made on the sale of the bonds, shall at all times be free from taxation by the state or any political subdivision or any department, division, commission, board, bureau, agency or instrumentality of the state or any political subdivision of the state, except for inheritance and gift taxes.

Acts 1982, ch. 624, § 7.

7-54-107. Competitive bidding laws — Exemptions.

All contracts for the construction, operation or maintenance of an energy production facility and all contracts authorized by § 7-54-105(a)(3) shall be exempted from any applicable competitive bidding laws of this state that shall be applicable to a municipality, and such ordinances or resolutions of any municipality that require competitive bidding, whenever:

  1. The governing body of a municipality shall find and determine:
      1. It is unlikely that such exemption will encourage favoritism in the awarding of such contracts or substantially diminish competition for such contracts;
      2. The awarding of such contracts pursuant to the exemption will result in substantial cost savings to the contracting municipality. In making such finding, the governing body of a municipality may consider the type, cost, amount of the contract, number of persons available to bid and such other factors the governing body of a municipality may deem appropriate;
    1. That such exemption will preserve or increase employment within its boundaries or otherwise promote the local economy; or
    2. Emergency conditions, as so determined by the governing body of a municipality, require the prompt execution of such contracts; and
  2. The governing body of a municipality shall find and determine that the following alternative procedure should be used:
    1. Quotations and other relevant information pertaining to the proposed contract shall be solicited through a request for proposals prepared by the municipality, which shall be spread upon the minutes and be made a public record of the municipality;
    2. The award of such contract may be made to a responsive and responsible vendor whose proposal is determined by the proposing municipality to be the best evaluated offer resulting from negotiation and taking into consideration the relative importance of price and other evaluation factors set forth in the request for proposals;
    3. If provided in the request for proposals, the responding proposal shall be opened so as to avoid disclosure of contents to competing offerors and kept secret during the process of negotiation. However, all proposals that have been submitted shall be open for public inspection after the contract is awarded, except for trade secrets and confidential information contained in the proposals and identified as such; and
    4. As provided in the request for proposals and under rules adopted by the municipality, discussions may be conducted with responsible offerors who submit proposals determined to be reasonably susceptible of being selected for award. Offerors must be accorded fair treatment with respect to any opportunity for discussion and revision of proposals, and revisions may be permitted after submission and before award for the purpose of obtaining the best and final offers.

Acts 1982, ch. 624, § 8; 1983, ch. 226, § 3; 1987, ch. 82, § 4; 1987, ch. 250, § 9.

Cross-References. Confidentiality of public records, § 10-7-504.

7-54-108. Bond issues and loan agreements — Referendum.

  1. In the event that the issuance of any series of bonds or the entering into of any contract by a municipality, other than a power district, pursuant to this chapter, would constitute the giving or loaning of the credit of such municipality to or in aid of any person, company, association or corporation, or would constitute such municipality becoming a stockholder with others in any company, association or corporation, then such bonds shall not be issued or such contract shall not be entered into unless the governing body of the municipality shall, by resolution spread upon its minutes, declare its intention of issuing such bonds or entering such contract and prior to the delivery and payment for any such bonds or entering into such contract, a three-fourths (¾) majority of the registered voters of such municipality voting at an election on the special question of issuing such bonds or entering into such contract shall approve of such bond issue or contract; provided, that no such election shall be necessary in connection with the authorization of refunding bonds.
  2. The governing body shall, by resolution, direct the county election commission to hold an election on the question of issuing the bonds or entering into such contract.
  3. It is not necessary to submit to the voters any questions other than the maximum amount of bonds to be issued and the purpose for the bonds or the nature of the contract and the purpose for the contract, as the case may be.
  4. It is the duty of the governing body of such municipality to enter upon its minutes the results and returns of such election, and thereafter such entry upon its minutes shall be conclusive evidence of the result of such election, and no suit, action or other proceeding contesting the validity of such election shall thereafter be entertained in any of the courts of the state.
  5. If such election results unfavorably to the proposition, then no second or other election shall be ordered or held until the governing body shall, by resolution, determine that such election may be held.
  6. Nothing contained in this section or other laws of the state shall be construed to prohibit or restrict municipalities from contracting with one another according to such terms as such municipalities shall agree are reasonable, necessary and appropriate to implement the purposes and intent of this chapter and other laws of the state pertaining to the collection and disposal of solid waste and the construction, operation and maintenance of energy production facilities.

Acts 1982, ch. 624, § 9; 1987, ch. 250, § 11.

7-54-109. Supplemental provisions.

This chapter shall be in addition and supplemental to any other law providing for energy facilities and shall not be deemed to amend or repeal any other law.

Acts 1975, ch. 204, § 5; T.C.A., §§ 6-1335, 7-54-105; Acts 1982, ch. 624, § 6.

Compiler's Notes. This section was formerly compiled as § 7-54-105.

7-54-110. Filing of proposed ordinance or resolution — Determination by department — Report concerning implementation — Enforcement.

  1. Any municipality, as defined in § 7-54-101, and any county that, as a part of the construction, financing, operation or maintenance of an energy production facility, or of an energy recovery facility or resource recovery facility as defined in § 68-211-501, or of a solid waste disposal system as defined in § 68-211-103, or in connection with any contract authorized by § 7-54-105(a)(3), proposes to displace competition with regulation or monopoly public service shall file with the department of environment and conservation a certified copy of its proposed ordinance or resolution and of the plans for the construction, financing, operation and maintenance of the proposed project, not less than one hundred twenty (120) days before the ordinance or resolution becomes effective.
  2. The commissioner of environment and conservation or the commissioner's authorized representative shall, upon submission in final form, review such implementing ordinance or resolution and such plans, and, based solely upon the record before the municipality or before the county, shall determine, in the commissioner's discretion, whether they are reasonably necessary in order to achieve the energy and environmental policy objectives of this chapter and of title 68. Any such determination shall be issued before the scheduled effective date of the ordinance, resolution or plan, and absent a determination entered on or before that date declaring the ordinance, resolution or plan to be in violation of this chapter or of title 68, the ordinance, resolution or plan shall be conclusively presumed to be valid under this chapter and consistent with the policy of title 68, chapter 211.
  3. One (1) year after the effective date of any ordinance or resolution in accordance with subsection (b) and each year thereafter during the operation of the project, the municipality or county shall file a report with the commissioner describing its implementation and administration of the ordinance or resolution. In the event that the municipality or county proposes changes to the ordinance, resolution or plans for the project, any such changes that may significantly affect the project shall be submitted to the commissioner in advance in accordance with the procedures set forth in subsections (a) and (b).
  4. The commissioner shall interpret, apply and enforce this section on behalf of the state and may promulgate such regulations as the commissioner deems to be appropriate for its implementation.
  5. The determination made pursuant to subsection (b) shall not exempt any facility or site from regulation by the commissioner or the Tennessee solid waste disposal control board pursuant to title 68, chapter 211 and other applicable statutes. Further, such determination shall not be construed as warranting the economic or technological feasibility of the project.

Acts 1983, ch. 226, § 7; 1987, ch. 82, § 5.

7-54-111. Solid waste recovery disposal systems — Participation by not-for-profit corporations.

Any not-for-profit corporation authorized by the laws of Tennessee to act for the benefit or on behalf of any one (1) or more counties, cities and towns pursuant to this chapter is authorized to participate in applicable approved local, joint or regional solid waste recovery disposal systems pursuant to chapter 58 of this title. When acting pursuant to chapter 58 of this title, such corporation shall have and exercise all authority granted to counties, cities, towns and local governments by the terms and provisions of such chapter.

Acts 1987, ch. 250, § 12.

7-54-112. Meetings of board — Conflicts of interest.

The members of the board of directors of a not-for-profit corporation when acting pursuant to this chapter or chapter 58 of this title are deemed to be within title 12, chapter 4, part 1, relative to conflicts of interest, and the meetings of such board shall be subject to title 8, chapter 44. This section shall not apply to any county with a metropolitan form of government and having a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census.

Acts 1988, ch. 908, §§ 2, 5.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-54-113. Appointment of local directors.

  1. Notwithstanding any other law or charter to the contrary, the board of directors of any not-for-profit corporation acting for the benefit or on behalf of any one (1) or more counties, cities, towns or governmental entities pursuant to this chapter or chapter 58 of this title shall include two (2) directors to be appointed by the respective chief executive officer of any municipality, county, or other local government on whose behalf such corporation is acting. One (1) of such appointees shall be black. This section shall not apply to any county with a metropolitan form of government and having a population of four hundred thousand (400,000) or more, according to the 1980 federal census or any subsequent federal census.
  2. The persons appointed pursuant to this section shall be confirmed by the appropriate local legislative body.

Acts 1988, ch. 908, §§ 5, 6.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-54-114. Director as employee prohibited.

No member of the board of directors of a not-for-profit corporation acting for the benefit or on behalf of any one (1) or more of counties, cities, towns, and local governments under this chapter may, during such member's term, be an employee of such corporation.

Acts 1988, ch. 567, § 1.

Chapter 55
Industrial Building Bond Act of 1955

7-55-101. Short title.

This chapter shall be known and may be cited as the “Industrial Building Bond Act of 1955.”

Acts 1955, ch. 209, § 1; T.C.A., § 6-2901.

Compiler's Notes. Section 3 of Acts 1955, ch. 209, reads as follows:

“That it is hereby determined and declared that the purpose of this act is to do that which the state welfare demands, and the state public policy requires:

“(a)  That the migration and loss of the people of Tennessee, who are compelled to leave the territorial limits of the state, daily, weekly, monthly and yearly to obtain employment and earn a livelihood be retarded and reduced.

“(b)  That the conditions of unemployment existing statewide in Tennessee be relieved thereby reducing the evils attendant thereto.

“(c)  That the average family income in Tennessee be raised and increased as much as possible, but to an amount at least the average over the United States.

“(d)  That a means be provided for the citizens of communities to promote and develop industry in their areas, when it is possible for them to do so in their separate and individual capacities.

“(e)  That a balanced economic development highly essential to the welfare of this state be promoted.

“(f)  That the reconversion from war time and civil defense economy to peace time pursuits be expedited by a program for readjustment of employment to accord with employment problems necessarily arising from changed conditions.

“(g)  That the present and prospective health, safety, morals, pursuit of happiness, right to gainful employment and the general welfare of the citizens demand as a public purpose, the development within Tennessee of commercial, industrial, agricultural and manufacturing enterprises by the several municipalities.

“(h)  That the means and measures herein authorized to promote such enterprises are, as a matter of public policy, for the public purposes of the several municipalities, and the state of Tennessee.

“(i)  That the present and prospective promotion of health, safety, morals, pursuit of happiness, right to gainful employment, and the general welfare of the state requires the measures that are herein and hereby authorized, and to that end will afford ready and attractive markets for farm and garden products, for the development of natural resources, and for the conversion of raw materials of farm, mine and forest into finished products for the general welfare of each of such municipalities, and the entire people of the state.

“(j)  That the accomplishment of the things herein authorized to be done by the several municipalities will give to them local benefits peculiar to each, and general benefits to the entire state.”

Cross-References. Industrial Building Revenue Bond Act of 1951, title 7, ch. 37.

Industrial parks, title 13, ch. 16, part 2.

Limitation of actions on bonds, § 28-3-113.

Textbooks. Tennessee Jurisprudence, 19 Tenn. Juris., Municipal, State and County Aid, § 2.

NOTES TO DECISIONS

1. Constitutionality of Purpose.

Because of the change in the agricultural economy resulting from the mechanization of farm operations, causing country people to move to towns and cities where work is available and causing emigration to other states where industrial jobs are available, the issuance of bonds under this act for the purpose of encouraging industry is for a corporate purpose and not in violation of Tenn. Const., art. II, § 29. McConnell v. Lebanon, 203 Tenn. 498, 314 S.W.2d 12, 1958 Tenn. LEXIS 328 (1958). See also Fayetteville v. Wilson, 212 Tenn. 55, 367 S.W.2d 772, 1963 Tenn. LEXIS 397 (1963).

7-55-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Enterprise” means the industrial operation or operations to be carried on in an industrial building;
  2. “Governing body” includes bodies and boards, by whatsoever names they may be known, charged with the governing of a municipality;
  3. “Industrial building” means any one (1) or combination of two (2) or more buildings, structures, or facilities to be used as a factory, mill, shop, processing plant, assembly plant, fabricating plant, ship canal, port or port facility, dock or dock facility, harbor facility, and railroads, railway terminals, railway belt lines and switches, to be rented or leased to an industrial concern by the municipality; and
  4. “Municipality” includes any county, or incorporated city or town of the state.

Acts 1955, ch. 209, § 2; 1957, ch. 269, § 1; T.C.A., § 6-2902.

NOTES TO DECISIONS

1. Use by Private Industry.

To provide against low wages and unemployment, the county had the authority to construct an industrial building that was used by private industry and employed local citizens. Copley v. County of Fentress, 490 S.W.2d 164, 1972 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1972).

7-55-103. Powers of municipality — Restrictions and limitations.

In addition to powers that it may otherwise have in its charter or the laws of this state, any municipality has the power under this chapter, subject to the conditions, limitations and restrictions provided in this chapter, to:

  1. Construct, acquire by gift or purchase, reconstruct, improve, better or extend any industrial building within or without the municipality or partially within or partially without the municipality, but in no event farther than ten (10) miles from the territorial boundaries of such municipality, and acquire by gift or purchase lands or rights in land in connection with the industrial building;
  2. Issue its bonds to finance in whole or in part the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any industrial buildings, including the acquisition of lands or rights in land in connection with the industrial buildings. The governing body of the municipality in determining such cost may include all costs and estimated cost of the issuance of such bonds, all engineering, inspection, fiscal and legal expenses, and interest that it is estimated will accrue during the construction period and for six (6) months thereafter on money borrowed or that it is estimated will be borrowed pursuant to this chapter;
  3. Rent or lease such industrial buildings to industrial concerns in such manner that rents to be charged for the use of the industrial buildings shall be fixed and revised from time to time, so as to produce income and revenues sufficient to provide for the prompt payment of interest upon all bonds issued under this chapter and create a sinking fund to pay the principal of such bonds when due, and provide for the operation and maintenance of such industrial buildings and for an adequate depreciation account in connection with the industrial buildings;
  4. Pledge to the punctual payment of bonds authorized under this chapter and interest on the bonds the income and revenues to be received from such industrial buildings, including improvements, betterments, or extensions to the buildings thereafter constructed or acquired, sufficient to pay the bonds and interest as they become due and create and maintain reasonable reserves for the bonds and interest;
  5. Further make certain the punctual payment of bonds authorized under this chapter, and interest on the bonds, by pledging the full faith and credit of the municipality under the conditions, restrictions and limitations set forth in this chapter; and
  6. Issue its bonds to refund in whole or in part, bonds theretofore issued by such municipality under authority of this chapter.

Acts 1955, ch. 209, § 4; T.C.A., § 6-2903.

NOTES TO DECISIONS

1. Use by Private Industry.

To provide against low wages and unemployment, the county had the authority to construct an industrial building that was used by private industry and employed local citizens. Copley v. County of Fentress, 490 S.W.2d 164, 1972 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1972).

Collateral References.

Governmental borrowing or expenditure for purposes of acquiring, maintaining, or improving stadium for use of professional athletic team. 67 A.L.R.3d 1186.

7-55-104. Construction of industrial buildings — Bonds.

The construction, acquisition, reconstruction, improvement, betterment, or extension of any industrial buildings may be authorized under this chapter, and bonds may be authorized to be issued under this chapter to provide funds for such purpose or purposes or for the refunding of bonds theretofore issued under this chapter, by resolution or resolutions of the governing body, which may be adopted at the same meeting at which they are introduced by a majority of all the members of the governing body then in office and shall take effect immediately upon adoption. The bonds shall bear interest at such rate or rates, payable semiannually, may be in one (1) or more series, may bear such date or dates, may mature at such time or times not exceeding forty (40) years from their respective dates, may be payable in such medium of payment at such place or places, may carry such registration privileges, may be subject to such terms of redemption with or without premium, may be executed in such manner, may contain such terms, covenants, and conditions, and may be in such form, either coupon or registered, as such resolution or subsequent resolutions may provide. The bonds may be sold in such manner and upon such terms as may be deemed advisable by the governing body; provided, that bonds for refunding purposes shall not be sold at less than par, but may be delivered in exchange for bonds to be refunded by the refunding bond. Pending the preparation of the definitive bonds, interim receipts or certificates in such form and with such provisions as the governing body may determine may be issued to the purchaser or purchasers of bonds sold pursuant to this chapter. The bonds and interim receipts or certificates shall be fully negotiable within the meaning of and for all purposes of the Uniform Commercial Code, compiled in title 47, chapters 1-9.

Acts 1955, ch. 209, § 5; 1969, ch. 284, § 8; T.C.A., § 6-2904.

7-55-105. Right of municipality to privileges of chapter — Certificate of public purpose and necessity.

  1. The building finance committee in the industrial development division of the department of economic and community development is charged with the duty of making effective the declared public policy of the state and municipalities as set forth in this chapter, and for that purpose is hereby authorized and empowered to determine whether the public welfare demands, and sound state public policy requires, that any municipality shall have the right to engage in any or all of the rights and privileges enumerated in this chapter. Each municipality within this state has the right to apply to the committee for a certificate of public purpose and necessity from the committee as to whether the general welfare requires that such municipality enter into a given enterprise.
  2. In determining whether such certificate shall be issued, the committee may hold public hearings or private hearings, make investigations as may be desired, and shall have power to summon witnesses, administer oaths, hear testimony and make a record of all things had and done at such hearing or investigation, and to order issued such certificate of public purpose and necessity as the committee may deem advisable.

Acts 1955, ch. 209, § 7; impl. am. Acts 1963, ch. 169, § 2; impl. am. Acts 1972, ch. 852, § 12; T.C.A., § 6-2905.

Cross-References. Organization of building finance committee, § 4-14-109.

7-55-106. Elements necessary before issuance of certificate — Regulation by committee — Consequences of governing body's failure to follow requirements.

  1. The committee shall investigate, find and determine upon application of any municipality for a certificate of public purpose and necessity, as to whether a certificate shall be issued to such municipality to engage in any of the enterprises deemed essential under declared public policy for the economic development and advancement of the municipality, and in considering and determining whether or not such certificate shall issue, the committee shall find and determine affirmatively that:
    1. There are sufficient natural resources readily and economically available for the use and operation of the particular industrial building and enterprise for at least ten (10) years, but in no event less than the period of time for which any bonds may be issued for acquiring or constructing the industrial building;
    2. There is available a labor supply to furnish at least one and one-half (1½) workers for each operative job in the enterprise within an area of twenty-five (25) miles from the proposed location; and
    3. There are adequate property values and suitable financial conditions, so that the total bonded indebtedness of the municipality, solely for the purposes authorized by this chapter, shall not exceed ten percent (10%) of the total assessed valuation of all the property in the municipality ascertained by the last completed assessment at the time of the issuance of such bonds.
  2. When the committee shall have determined the facts favorably, it is authorized and empowered, having due regard to the promotion of the public policy and the general welfare, to issue or refuse to issue a certificate of public purpose and necessity to the municipality to engage in providing the industrial building. If and when such certificate is issued, it shall authorize the particular municipality to do all of the things authorized under § 7-54-103, but the certificate shall expire in twelve (12) months from its date, unless within that time such industrial building and enterprise shall have been established, subject, however, to any delays necessitated by any litigation or acts of God, delaying the establishment of the enterprise. In no event shall the committee authorize any municipality actually to provide any such industrial building, unless the committee shall further find and determine that the industrial building and enterprise is well conceived, has a reasonable prospect of success, will provide proper economic development and employment, and will not become a burden upon the taxpayers of the municipality.
    1. If and when the certificate is issued, the committee shall fix and determine in the certificate:
      1. The extent and the amount to which the municipality may issue bonds or make expenditures for such industrial building;
      2. What property may be acquired for the industrial building;
      3. The terms upon which such acquisition may be had;
      4. What expenditures may be made, in the construction of buildings, and of equipment with its installation; and
      5. The method of lease, rental and operation of the industrial building by the municipality.
    2. The committee shall further require as a condition of the certificate that any lessee of such industrial building agree to make payments in lieu of taxes to the municipality in amounts equivalent to the ad valorem property taxes that would have been levied on the industrial building were it owned by the lessee and subject to property taxation. The committee shall also require as a condition of the certificate the use of energy conserving design and construction that includes solar heating systems and solar hot water heaters to the maximum extent feasible economically.
  3. If the governing body of the municipality fails or refuses to follow the requirements made by the committee in the certificate, then the members of the governing body of the municipality voting for such failure or refusal shall be individually and personally liable, and liable on their official bonds for any loss that the municipality may sustain by reason of such failure or refusal to follow the requirements, and in addition may be compelled by injunction to comply with such requirements.
  4. The committee is hereby authorized and empowered to adopt and put into effect all reasonable rules and regulations that it may deem necessary to carry out this chapter, not inconsistent with this chapter.

Acts 1955, ch. 209, § 8; 1975, ch. 311, § 2; T.C.A., § 6-2906; Acts 1980, ch. 532, § 1.

7-55-107. Submission to voters — Election.

The governing body of any municipality desiring to enter into the plan authorized in this chapter, after receiving a certificate of public purpose and necessity from the committee, as provided by this chapter, by resolutions spread upon its minutes, shall declare its intention of entering into such plan, and prior to the delivery and payment for any bonds authorized under this chapter a three-fourths (¾) majority of the registered voters of such municipality voting at an election on the special question of issuing such bonds shall approve of such bond issue; provided, that no such election shall be necessary in connection with the authorization of refunding bonds under this chapter. The governing body shall, by resolution, direct the county election commission to hold an election on the question of issuing the bonds. It shall not be necessary to submit to the voters any question other than the maximum amount of bonds to be issued and the purpose for the bonds. It is the duty of the governing body of such municipality to enter upon its minutes the results and returns of such election, and, after the delivery of any bonds voted upon at such election and payment for the bonds, such entry upon its minutes shall be conclusive evidence of the result of such election, and no suit, action or other proceeding contesting the validity of such election shall be entertained in any of the courts of the state thereafter. If such election results unfavorably to the proposition, then no second or other election shall be ordered or held until the committee shall determine that such election may be held.

Acts 1955, ch. 209, § 9; 1972, ch. 740, § 4(47); T.C.A., § 6-2907.

7-55-108. Bond resolution — Contents and covenants — Receivers — Recourse.

  1. Any resolution authorizing the issuance of bonds under this chapter may contain covenants as to the:
    1. Use and disposition of the rentals from the industrial building for which the bonds are to be issued, including the creation and maintenance of reserves;
    2. Issuance of other or additional bonds payable from the income and revenues from such industrial building;
    3. Maintenance and repair of such industrial building;
    4. Insurance to be carried on the industrial building and the use and disposition of insurance moneys; and
    5. Terms and conditions upon which the holders of the bonds, or any portion of the bonds or any trustees for the bonds, shall be entitled to the appointment of a receiver by the chancery court, which court shall have jurisdiction in such proceedings, and which receiver may enter and take possession of the industrial building and lease and maintain the industrial building, prescribe rentals and collect, receive, and apply all income and revenues thereafter arising from the rentals in the same manner and to the same extent as the municipality itself might do.
  2. This chapter and any such resolution or resolutions shall be a contract with the holder or holders of the bonds and shall continue in effect until the principal of and the interest on the bonds so issued shall have been fully paid, and the duties of the municipality and its governing body and officers under this chapter, and any such resolution or resolutions shall be enforceable by a bondholder by mandamus, or other appropriate suit, action or proceedings in any court of competent jurisdiction.

Acts 1955, ch. 209, § 10; T.C.A., § 6-2908.

NOTES TO DECISIONS

1. Use and Disposition of Funds.

Resolution authorizing issuance of bonds, lease by county to corporation of building constructed and equipped as result of bond issue, and indentures of mortgage and deed of trust were to be construed together in determining intent of parties as to disposition of sum set aside to pay interest during construction period but not needed for that purpose. Jack's Cookie Corp. v. Giles County, 219 Tenn. 131, 407 S.W.2d 446, 1966 Tenn. LEXIS 512 (1966).

Collateral References.

Disposition of revenues from operation of revenue-producing enterprise owned by municipal corporation. 103 A.L.R. 579, 165 A.L.R. 854.

7-55-109. Validity in bond issues — Recital.

Bonds bearing the signatures of officers in office on the date of the signing of the bonds shall be valid and binding obligations, notwithstanding that before the delivery of the bonds and payment for the bonds, any or all the persons whose signatures appear on the bonds shall have ceased to be officers of the municipality issuing the bonds. The validity of the bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of the industrial building for which the bonds are issued. The resolution authorizing the bonds may provide that the bonds shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Acts 1955, ch. 209, § 11; T.C.A., § 6-2909.

7-55-110. Lien on rentals.

All bonds issued under this chapter shall have a lien upon the rentals from the industrial building for which the bonds have been issued, and the governing body may provide in the resolution or resolutions authorizing such bonds for the issuance of additional bonds to be equally and ratably secured by a lien upon such rentals or may provide that the lien upon such rentals for future bonds shall be subordinate.

Acts 1955, ch. 209, § 12; T.C.A., § 6-2910.

7-55-111. Securing bonds — Enforcement by bondholders — Tax levy — Restrictions.

In order to secure the payment of any of the bonds issued pursuant to this chapter, and interest on the bonds, or in connection with such bonds, any municipality has the power as to such bonds to pledge, in addition to all other revenues and funds provided for in this chapter, the full faith and credit and unlimited taxing power of the municipality to the punctual payment of the principal of and interest on such bonds, subject to this chapter. In the event such pledge of full faith and credit and unlimited taxing power of the municipality is given, any holder or holders of the bonds, including a trustee or trustees for holders of such bonds, shall have the right, in addition to all other rights, by mandamus or other suit, action or proceedings in any court of competent jurisdiction to enforce such holder's or holders' rights against the municipality, and the governing body of the municipality, and any officer, agent or employee of the municipality, including, but not limited to, the right to require the municipality and governing body and any proper officer, agent or employee of the municipality, to assess, levy and collect taxes and other revenues and charges adequate to carry out any agreement as to, or pledge of, such taxes, revenues and charges. The taxes authorized to be pledged in this section shall be levied without limit as to rate or amount upon all taxable property within the municipality, and all such taxes to be levied are hereby declared to have been levied for county and corporation purposes, respectively, within the meaning of Constitution of Tennessee, Article II, § 29.

Acts 1955, ch. 209, § 13; T.C.A., § 6-2911.

NOTES TO DECISIONS

1. Trustee as Representative of Bondholders.

Declaratory judgment action to determine proper disposition of proceeds of sale of bonds could lie against bank as representative of holders of bonds issued under Industrial Building Revenue Bond Act of 1951, compiled in title 7, chapter 37, and Industrial Building Bond Act of 1955, compiled in title 7, chapter 55, where bank was trustee under mortgage and deed of trust document and in such capacity could represent the interests of the bondholders. Jack's Cookie Corp. v. Giles County, 219 Tenn. 131, 407 S.W.2d 446, 1966 Tenn. LEXIS 512 (1966).

7-55-112. Collection and revision of rent — Separation of funds.

The governing body of a municipality issuing bonds pursuant to this chapter shall prescribe and collect rentals for industrial buildings and shall revise such rentals from time to time whenever necessary so that the income and revenues to be derived from such rentals will always be sufficient to pay when due all bonds and interest on the bonds for the payment of which such revenues are pledged, including reserves for the payment of the bonds and interest, and to provide for all expenses of operation, maintenance, and depreciation charges of such industrial buildings. All funds arising under this chapter shall be kept separately and apart from other funds of the county, city or town, as the case may be.

Acts 1955, ch. 209, § 14; T.C.A., § 6-2912.

NOTES TO DECISIONS

1. Revision of Rental.

The words “shall revise same from time to time whenever necessary” as used in this section in reference to rentals mean revision either up or down as the payment of the bonds and interest thereon require. County of Giles v. First U. S. Corp., 223 Tenn. 345, 445 S.W.2d 157, 1969 Tenn. LEXIS 420 (1969).

2. Parties in Interest.

In suit against fiscal agent of county that engaged in preparation and marketing of bonds issued under this chapter wherein it was alleged that agent illegally retained certain funds, corporation that rented building constructed as result of such bond issue had an interest in the rent cost of the building and could join county in suit against fiscal agent. County of Giles v. First U. S. Corp., 223 Tenn. 345, 445 S.W.2d 157, 1969 Tenn. LEXIS 420 (1969).

7-55-113. Exemption from taxation.

All bonds issued pursuant to this chapter and the income from the bonds shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes.

Acts 1955, ch. 209, § 15; T.C.A., § 6-2913.

7-55-114. Bonds as investments.

Bonds issued under the authority of this chapter and secured by a pledge of full faith and credit shall be and are hereby declared to be legal and authorized investments for banks, savings banks, trust companies, building and loan associations, insurance companies, fiduciaries, trustees, guardians and for all public funds of the state, including, but not limited to, the sinking funds of cities, towns, villages, counties, school districts, or other political corporations or subdivisions of the state. Such bonds shall be eligible to secure the deposit of any and all public funds of the state and any and all public funds of cities, towns, villages, counties, school districts or other political corporations or subdivisions of the state, and such bonds shall be lawful and sufficient security for such deposits to the extent of their value when accompanied by all unmatured coupons appertaining thereto.

Acts 1955, ch. 209, § 16; T.C.A., § 6-2914.

7-55-115. Joint exercise of powers.

Counties and municipalities may exercise jointly the powers and authorities conferred upon them in this chapter individually.

Acts 1955, ch. 209, § 17; T.C.A., § 6-2915.

7-55-116. Powers supplemental.

The powers conferred by this chapter shall be in addition and supplemental to, and the limitations imposed by this chapter shall not affect the powers conferred by any other general, special or local law. Industrial buildings may be acquired, purchased, constructed, reconstructed, improved, bettered, and extended, and bonds may be issued under this chapter for such purposes, notwithstanding that any general, special, or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like industrial building, or the issuance of bonds for like purposes, and without regard to the requirement, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 1955, ch. 209, § 18; T.C.A., § 6-2916.

Chapter 56
Transportation Systems

Part 1
General Provisions

7-56-101. Authority of municipality or county — Establishment of management entity — Transit authorities.

  1. Any municipality or county incorporated or existing under the laws of Tennessee, or any combination of any municipality or county incorporated or existing under the laws of Tennessee, intrastate or interstate, has authority to establish, acquire, purchase, construct, extend, improve, maintain, operate or franchise a public transportation system, including the acquisition of any type of vehicles necessary, car barns, terminals, garages, repair shops, buildings, lands, accessory apparatus, rights-of-way and easements, and all other appurtenances necessary, usual or proper to such a public transportation system for hire of passengers in the municipalities, counties, and the metropolitan area of the municipalities and counties, including the right to extend such service beyond county lines in the state, and upon compliance with the laws of other states, into foreign states. Such a system for the transportation of passengers may be under the direct jurisdiction, control and management of such municipality, county, or combination of municipality and county, or any such municipality, county, or combination of municipality and county, is hereby authorized to create a transit authority or other operating or management entity by ordinance or resolution, for the purpose of managing such a public transportation system, and to prescribe the qualifications and eligibility of members of such a transit authority, their terms of office, powers and duties.
  2. Regardless of any private acts to the contrary, the municipality, county, or combination of municipality and county, may dissolve any existing transit authority under such private act, and establish by ordinance a transit authority as authorized in this part with the right of the legislative body of the municipality or county to approve the budget and set the rates of fare. The municipality, county, or combination of municipality and county, shall have the right pursuant to the approval of the governing body of the municipality, county, or combination of municipality and county, to contract with a private management firm to operate the transit authority, or to employ its own personnel for the purpose of operating the transit authority.

Acts 1970, ch. 515, § 1; 1971, ch. 160, § 5; 1973, ch. 246, § 1; T.C.A., § 6-3801.

Cross-References. Gasoline tax for local transportation funding, title 67, ch. 3, part 10.

Passenger transportation services, title 7, ch. 51, part 10.

Attorney General Opinions. Union rights of county department of education's custodial employees, OAG 98-0168, 1998 Tenn. AG LEXIS 168 (8/27/98).

Public access to board members' names, addresses and phone numbers, OAG 99-011, 1999 Tenn. AG LEXIS 3 (1/25/99).

7-56-102. Powers and authority of municipality, county or transit authority.

  1. Any such municipality, county, or combination of municipality and county, or a transit authority created by it under this part, has the power and authority to establish, acquire, purchase, construct, extend, improve, maintain, operate or franchise a public transportation system, including the acquisition of any type of vehicles necessary, car barns, terminals, garages, repair shops, buildings, lands, accessory apparatus, rights-of-way and easements, and all other appurtenances necessary, usual or proper to such a public transportation system for hire of passengers. The municipality, county, or combination of municipality and county, or a transit authority created under this part, has the power to make any and all contracts, including franchises, with any persons, partnerships, firms or corporations, public or private, necessary and incident to carry out this purpose. Such municipality, county, or combination of municipality and county, or a transit authority created by it has final authority to make a schedule of rates, fares and tolls for transportation services. The municipality, county, or combination of municipality and county, or a transit authority created by it, has the power and authority to promulgate and enforce such reasonable rules and regulations governing the operation of a public transportation system as may be reasonably necessary. Any municipality, county, or combination of municipality and county, additionally has the power to vest in a transit authority created by it full power and authority to license and regulate all forms of public transportation, including, but not limited to, taxicabs, airport limousines, and all other local carriers of passengers for hire. The transit authority, when so authorized, shall fix rates of fares for persons and baggage, routes, and all other services, and has final authority to issue or deny licenses, and to revoke or suspend for cause licenses previously issued.
  2. This part shall not be construed as allowing a municipality, county, metropolitan government, or combination of municipality, county, and metropolitan government, to regulate any motor vehicle engaged primarily in the hauling of fifteen (15) or fewer passengers to and from their regular places of employment, taxicabs and airport limousines excepted, or to regulate the organizers, sponsors, or promoters of motor vehicles engaged primarily in the hauling of passengers to and from their regular places of employment; provided, however, that regulation by the appropriate government shall be permitted if the motor vehicles excluded from regulation, and the organizers, sponsors, and promoters of such vehicles are specifically defined and regulated as a class separate and distinct from other existing common carriers and contract carriers. This subsection (b) shall not apply in any county having a metropolitan form of government.
    1. Any municipality, county, or combination of municipality and county, intrastate or interstate, or a transit authority created under this part has the power and authority to make fair and equitable arrangements for the protection of employees of existing public transportation systems for hire of passengers and their personal baggage in any of the municipalities, counties and the metropolitan area of municipalities and counties. Such protections shall include, but not be limited to, such provisions as may be necessary for:
      1. The preservation of rights, privileges, and benefits, including continuation of pension rights and benefits, under existing collective bargaining agreements or otherwise;
      2. The continuation of collective bargaining rights;
      3. The protection of individual employees against a worsening of their positions with respect to their employment, to the extent provided by § 13(c) of the former Urban Mass Transportation Act (former 49 U.S.C. § 5333(b));
      4. Assurances of employment to employees of acquired mass transportation systems and priority of reemployment of employees terminated or laid off; and
      5. Paid training or retraining programs.
    2. Such protections shall be specified by the municipality, county, or combination of municipality and county, or transit authority, in any contract or lease for the acquisition or operation of any such public transportation system.
  3. The municipality, county, or combination of municipality and county, or a transit authority created under this part, has the power and authority to bargain collectively with labor organizations representing employees and may enter into agreements with such organizations relative to wages, salaries, hours, working conditions, health benefits, pensions and retirement allowances of such employees.
  4. In the case of any labor dispute involving such employees where collective bargaining does not result in a settlement, the same shall be submitted at the written request of either party to final and binding arbitration, pursuant to the provisions of any agreement entered into so providing, or in the absence of such provisions, with the written consent of both parties to an arbitration board composed of three (3) persons, one (1) appointed by the employer, one (1) appointed by the labor organization representing the employees, and the third member to be agreed upon by the employer and the labor organization, or, if no such third member is mutually acceptable, selected from a list of five (5) persons to be furnished by the American Arbitration Association at the request of either party, by alternately striking one (1) name until only one (1) name remains. The determination of the majority of the board of arbitration thus established shall be final and binding on all matters in dispute.
  5. Notwithstanding any other law to the contrary, no local government or any transit authority created by any local government shall construct, maintain or operate any bus rapid transit system using a separate lane, or other separate right-of-way, dedicated to the use of such bus rapid transit system on any state highway or state highway right-of-way unless the project to construct, maintain or operate such bus rapid transit system on the state highway or state highway right-of-way is approved by the governing body of the local government and by the commissioner of transportation. Prior to approval of the project, the commissioner of transportation shall provide written notice of any such proposed project to the speakers of the senate and the house of representatives, the chairs of the finance, ways and means committees of the senate and the house of representatives, the chair of the transportation and safety committee of the senate, and the chair of the transportation committee of the house of representatives. In addition, any bus rapid transit system using a separate lane, or other separate right-of-way, dedicated to the use of such bus rapid transit system on any state highway or state highway right-of-way shall be subject to the approval of the general assembly in the annual appropriations act if any state agency proposes to assist in funding the project with state or federal-aid funds; or, in the absence of any such proposed funding, the project shall be subject to approval by the general assembly as evidenced by the passage of a joint resolution originating in either house.

Acts 1970, ch. 515, § 2; 1971, ch. 160, § 1; 1976, ch. 823, §§ 1, 4; T.C.A., § 6-3802; Acts 2014, ch. 998, § 1.

Cross-References. “Strike” defined and prohibited, § 7-56-109.

Collateral References.

Liability of municipality for tort in construction or operation of municipally owned railroad or street railway. 31 A.L.R. 1306.

Validity and construction of statutes or ordinances providing for arbitration of labor disputes involving public employees. 68 A.L.R.3d 885.

7-56-103. Federal and state aid — Contracts to operate — Employment of personnel.

Any such municipality, county, or combination of municipality and county, or a transit authority created by it, has the right to make any and all agreements with or applications to any person, firm, federal or state agency, municipality, or public or private corporation, relating to the acquisition, construction, maintenance and operation of all or any part of a public transportation system, and contracts for loans, grants or other financial assistance from any state or federal agency. Such municipality, county, or combination of municipality and county, or a transit authority created by it, is expressly granted the right to contract with any person, partnership or corporation, to manage and operate the transit system and to employ the necessary personnel under the direction and supervision of the municipality, county, or combination of municipality and county, or a transit authority created by it. Any such contracts made by the municipality, county, or combination of municipality and county, or a transit authority created by it, shall be entered into and executed in such manner as may be prescribed by the charter of the municipality, or the general laws of the state.

Acts 1970, ch. 515, § 3; T.C.A., § 6-3803.

7-56-104. Bonds or notes.

Any municipality, county, or combination of municipality and county, or a transit authority created by it, has the authority to issue general obligation or revenue bonds or municipal notes, or a combination of revenue bonds and municipal notes, for the creation, purchase or establishment of a public transportation system, to such extent and in such manner as may now or hereafter be authorized by any applicable private or public act or general law of the state, including, but not limited to, the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21.

Acts 1970, ch. 515, § 4; T.C.A., § 6-3804; Acts 1988, ch. 750, § 34.

7-56-105. Interlocal and intergovernmental cooperation — Joint agreements.

Any municipality, county, or combination of municipality and county, or a transit authority created by it, has the power to enter into such agreements with other municipalities and counties within the state for the joint establishment, purchase and operation of public transportation systems in a metropolitan area. Such municipality, county, or combination of municipality and county, or a transit authority created by it, or a combination of municipalities, counties, or other political subdivisions, likewise has the authority to enter into agreements with other states and the counties and municipalities of other states, by interstate compact, or by agreement under the Interlocal Cooperation Act, compiled in title 12, chapter 9.

Acts 1970, ch. 515, § 5; T.C.A., § 6-3805.

7-56-106. Eminent domain — Injunction.

Any municipality, county, or combination of municipality and county, pursuant to this part, is hereby authorized and empowered to condemn, in the name of such municipality, county, or combination of municipality and county, any or all of the existing transportation systems, franchises and properties of any local public carrier, and any lands, easements or rights-of-way, either on, under or above the ground, for any and all purposes in connection with the acquisition, construction, operation, improvement or maintenance of such transportation system. Title to any such property so condemned shall be taken in the name of the municipality, county, or combination of municipality and county, and such entity is empowered, immediately upon the filing of a petition for condemnation, to enter upon and take possession of the property described in the petition; provided, that a resolution of the governing body of the municipality, county, or combination of municipality and county, shall provide that reasonable compensation for the property taken will be a proper charge against, and paid out of the general fund of the municipality, county, or combination of municipality and county, or the funds derived from the sale of general obligation or revenue bonds, or any combination of general obligation and revenue bonds, issued for the purpose of financing the acquisition or creation of a transportation system. No bond shall be required to be given in any such condemnation suit. Writs of injunction may be sought and obtained without the necessity of posting a bond, against any and all persons interfering in any way with the municipality, county, or combination of municipality and county, its officers, agents or servants, in taking possession of, operating and using such property for the purposes for which it is condemned. Any such municipality, county, or combination of municipality and county, has all the powers granted in title 29, chapter 16, including the right to condemn personal or intangible property devoted to public transportation use.

Acts 1970, ch. 515, § 6; 1971, ch. 160, § 6; T.C.A., § 6-3806.

7-56-107. Subsidy of public or private transportation companies.

Any municipality, county, or combination of municipality and county, incorporated or existing under the laws of Tennessee, additionally has the power and authority to pay unto public or private transportation companies for the local carriage of passengers a reasonable subsidy of their operation, the amount of the subsidy to be wholly in the discretion of the governing body of any such municipality, county, or combination of municipality and county, to ensure continued operation of a public transportation system in any such municipality, county or intrastate or interstate metropolitan area.

Acts 1970, ch. 515, § 7; 1970, ch. 519, § 1; 1971, ch. 160, § 4; T.C.A., § 6-3807.

7-56-108. Part deemed part of municipal charter.

This part shall form a part of the charters of all incorporated municipalities in the state and shall be authority for any of the counties of Tennessee to provide public transportation or to join with any municipality or combination of municipalities, either in this state or in other states, for the purpose of providing such public transportation.

Acts 1970, ch. 515, § 8; T.C.A., § 6-3808.

7-56-109. “Strike” defined — Prohibited practice.

  1. It is a prohibited practice and evidence of bad faith to engage in a strike.
  2. As used in this section, “strike” means the failure with others to report for duty, the willful absence from one's position, the stoppage of work, or the abstinence in whole or in part from the full, faithful, and proper performance of the duties of employment, and without the lawful approval of one's superior, or in any manner interfering with the operation of any public agency or public employer, for the purpose of inducing, influencing, or coercing the recognition of any employee organization or a change in the conditions or compensation or the rights, privileges, or obligations of employment.

Acts 1971, ch. 160, § 2; T.C.A., § 6-3809.

Cross-References. Arbitration of labor disputes mandatory and binding, § 7-56-102.

Part 2
Rail Service

7-56-201. Establishment of authority — General powers.

  1. Any municipality or any county or any combination of municipalities and counties may establish an authority to provide for the continuation of rail service within the area of the governments establishing the authority.
  2. An authority shall come into existence under the terms of this part when any government or combination of governments specified in subsection (a) vote by majority vote of its governing body to establish an authority. Evidence of such authorization shall be proclaimed and countersigned by the presiding officer of each participating county or city and certified by such officer to the secretary of state. The governing bodies of all governments voting to become members of an authority shall indicate their willingness to appropriate sufficient funds to provide for the initial administration of the authority as a part of the authorization process.
  3. Within the region of the authority, it may acquire, construct, operate, maintain, and dispose of railroad facilities, properties, and equipment, and may, in addition to continuing railroad service, provide any other rail service in the region as it is needed and feasible.

Acts 1983, ch. 221, § 1.

Compiler's Notes. The rail service authorities, created by this section, terminates June 30, 2020. See §§ 4-29-112, 4-29-241.

Acts 2015, ch. 146, § 3 provided that the representatives of the Rail Service Authorities and related state rail authorities shall appear before the Government Operations Joint Evaluation Committee on Commerce, Labor, Transportation and Agriculture no later than November 1, 2015, in order to update the Committee regarding the status of pending litigation related to the state’s Short Line Equity Fund.

Cross-References. Assessment of property for tax purposes, title 67, ch. 5, part 13.

Situs of property for tax purposes, § 67-5-502.

Textbooks. Tennessee Jurisprudence, 5 Tenn. Juris., Carriers, § 58; 23 Tenn. Juris., Street Railroads, § 2.

Law Reviews.

Public Utilities — Municipal Corporations — Extraterritorial Control of Street Railways, 1 Vand. L. Rev. 464 (1947).

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

NOTES TO DECISIONS

1. Status of Authority.

A county rail authority is not a governmental entity entitled to sovereign immunity, even though it is subject to the Governmental Entity Review Law, compiled in title 4, chapter 29. National Advertising v. McCormick Ashland City, 936 S.W.2d 256, 1996 Tenn. App. LEXIS 305 (Tenn. Ct. App. 1996).

7-56-202. Nature of powers.

The acquisition, construction, operation and maintenance of such properties and facilities are hereby declared to be public and governmental functions with the authorities acting as agencies and instrumentalities of the creating and participating counties and municipalities. The powers granted in this part, in connection with this part, are declared to be public and corporate purposes and matters of public necessity.

Acts 1983, ch. 221, § 2; 1996, ch. 599, § 1.

7-56-203. Organization of authority.

  1. The organization of the authority shall be as follows:
    1. The authority shall be governed by a board of directors;
      1. Membership of the board of directors shall consist of:
        1. The county mayor or the mayor in a county with a metropolitan form of government or their designees of each county becoming a member of the authority;
        2. The mayor or the mayor's designee of each city not already a member of the authority under subdivision (a)(2)(A) becoming a member of the authority; and
        3. One (1) member to be selected by the governing body of each county and city becoming a member of the authority;
      2. The term of each selected member shall be prescribed by the governing body making the selection;
      3. In the event that a single governmental jurisdiction in counties having a population of not less than twenty-seven thousand one hundred (27,100) nor more than twenty-seven thousand four hundred (27,400), according to the 1990 federal census or any subsequent federal census, establishes an authority, then the membership of the board of directors shall include those persons serving pursuant to subdivision (a)(2)(A) and shall also include three (3) additional members. Such additional three (3) members shall be selected by the governing body of the respective city or county; and
      1. In the event any county with a metropolitan form of government with a population of more than one hundred thousand (100,000), according to the 1990 federal census or any subsequent federal census, participates in an authority, the county shall have five (5) members on the board of directors of the authority. The members shall be the mayor or the designee of the mayor; one (1) member selected by the county legislative body; one (1) member from the county department of public works administration; and two (2) members appointed by the mayor, one (1) of whom shall be a representative of an industry served by the authority;
      2. Subdivision (a)(3)(A) does not apply to any railroad authority in which a county with a population of not less than twenty-seven thousand one hundred (27,100) nor more than twenty-seven thousand four hundred (27,400), according to the 1990 federal census or any subsequent federal census, participates;
    2. In the event that a single governmental jurisdiction in counties having a population of not less than twenty-seven thousand one hundred (27,100) nor more than twenty-seven thousand four hundred (27,400), according to the 1990 federal census or any subsequent federal census, establishes or participates in an authority, then the membership of the board of directors shall include those persons serving pursuant to subdivision (a)(2)(A) and shall also include three (3) additional members. The three (3) additional members shall be selected as follows:
      1. One (1) member shall be selected by each person serving pursuant to subdivision (a)(2)(A)(i) from a list of entities located in the official's county who are members of an association representing the entities utilizing the rail services provided by the authority; and
      2. One (1) member shall be selected jointly by both persons serving pursuant to subdivision (a)(2)(A)(i) from a list of a minimum of two (2) persons submitted by the chair of the association representing the entities utilizing the rail service provided by the authority; and
    3. The board of director positions created by subdivision (a)(4) shall not be subject to the residency requirement of subsection (c).
    1. In the event of failure to elect a successor to any member of the board, the member whose term has expired shall continue to serve until such member's successor has been duly elected as provided in subdivision (b)(2).
    2. In the event of the death or resignation of a member of the board, or the member's inability to serve prior to the expiration of the member's term, the member's successor shall be elected for the unexpired term by the remaining members of the board within thirty (30) days of the event.
  2. Any person at least twenty-five (25) years of age who has resided within the boundaries of the authority for a period of at least one (1) year immediately preceding such person's election shall be eligible to serve as a member of the board. Any director who ceases to regularly reside within the boundaries of the authority shall automatically become ineligible to serve in such office.
  3. Before entering upon their duties, all directors shall take and subscribe to an oath of office, as provided by the constitution and law for county and city officers. Copies of the oath of each director shall be filed with the county clerk of the applicable county.
  4. A majority of the directors shall constitute a quorum and the directors shall act by vote of a majority present at any meeting attended by a quorum, and vacancies among the directors shall not affect their power and authority so long as a quorum remains. Within thirty (30) days after their election as provided in subsection (a), the directors shall hold a meeting to elect a chair.
  5. The directors shall hold meetings at such times and places as the directors may determine. Special meetings may be called and held upon such notice and in such manner as the board of directors may, by resolution, determine.
  6. Save as otherwise expressly provided, the board of directors shall establish its own rules of procedure.
    1. The directors shall designate a secretary and a treasurer, or one (1) person as secretary-treasurer, and such person need not be a director. The secretary shall attend all regular and special meetings and keep minutes of such meetings. The minutes of meetings shall be available for inspection by the public at the office of the authority, at all reasonable times.
    2. The board of directors, by resolution, shall require the treasurer or the secretary-treasurer to execute a bond with an approved corporate surety, in such amount as the board may specify, for the faithful performance of the treasurer's or secretary-treasurer's duties and the accounting of all moneys and revenues that may come into the treasurer's or secretary-treasurer's hands. Such bond shall be filed with the secretary of state.
    3. The board of directors, by resolution, may require all other subordinate officers, or employees, to execute such fidelity bonds for the faithful performance of their duties and the accounting of funds that may come to their hands, in such an amount, with such conditions and such sureties, as the board of directors may determine.
  7. All members of the board of directors shall serve without compensation except by specific authorization by the board, upon vote by two-thirds (2/3) of the board; provided, however, that the members may receive any per diem allowance that may be appropriated for such director by the governing body of the county or city electing a director. Reasonable expenses incurred by members of the board while engaged in the business of the authority are subject to reimbursement by the authority. The board of directors may set reasonable compensation for officers of the authority consistent with their respective responsibilities, which may take into consideration such officer's responsibilities relating to financing of projects and facilities of the authority, in addition to other responsibilities.
  8. The directors shall be indemnified by the authority for any liability they might incur while acting in such capacity, other than for culpable negligence.
  9. Except as otherwise provided in this section, the directors shall be removable only for good cause, and after preferment of charges, as provided by law for county officers.

Acts 1983, ch. 221, § 3; 1987, ch. 177, § 1; 1994, ch. 944, §§ 1, 2; 1996, ch. 938, §§ 1-4; 2004, ch. 672, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Removal of county officers, Tenn. Const., art. VII, § 1.

7-56-204. Employment of assistance and advisors.

The directors shall be authorized to employ and fix the compensation of architects, attorneys, engineers, superintendents, consultants, professional advisors, and other subordinate officers and employees, as may be necessary for the efficient management and operation of the authority and its facilities. Such persons shall continue in the employment of the authority at the will and pleasure of the board of directors. Such employment or contracts shall conform to the statutes, regulations and procedures to which counties must generally adhere in making such transactions.

Acts 1983, ch. 221, § 4.

7-56-205. Powers and duties of directors.

The directors have the following duties and powers, and in exercising such duties and powers, except as otherwise specifically authorized in this section, shall abide by all statutes, regulations and procedures to which counties must generally adhere in making such transactions, to:

  1. Acquire, construct, purchase, operate, maintain, replace, repair, rebuild, extend, and improve within the boundaries of the authority the properties and facilities described in § 7-56-201, and make such properties and facilities available to any firm, person, public or private corporation, to any other shipper, consignee, or carrier, and charge for their use and for any and all services performed by the authority;
  2. Accept donations to the authority of cash, lands or other property to be used in the furtherance of the purpose of this part;
  3. Accept grants, loans or other financial assistance from the state, any county or municipality and any federal, state, county or municipal agency or authority, or other aid for the operation, acquisition or improvement of the properties and facilities of the authority;
  4. Purchase, rent, lease, or otherwise acquire any and all kinds of property, real, personal or mixed, tangible or intangible, whether or not subject to mortgages, liens, charges, or other encumbrances, for the authority, that, in the judgment of the authority directors, is necessary or convenient to carry out the purpose of the authority. In exercising the powers granted in this subdivision (4), the directors shall abide by all statutes, regulations and procedures to which counties must conform in such matters;
  5. Acquire property that is suitable for use by industries requiring access to any railroad track owned, operated, or subsidized by the authority;
  6. Notwithstanding any law to the contrary, the directors may make contracts and execute instruments containing such covenants, terms, and conditions as, in the judgment of the directors, may be necessary, proper or advisable for the purpose of issuing bonds and notes, and entering into leases and lease-purchase agreements, for or in aid of the acquisition or improvement of the authority's property and facilities; and may make all other contracts and execute all other contracts and execute all other instruments, including, but not limited to, licenses, long or short term leases, lease-purchase agreements, bonds, notes, reimbursement agreements, mortgages and deeds of trust and other agreements relating to property and facilities under its jurisdiction, and involving the financing, construction, operation, maintenance, repair and improvement of the property and facilities, or the acquisition of property for railroad purposes, as in the judgment of the board of directors may be necessary, proper, or advisable for the furtherance of the authority's business and in the full exercise of the powers granted in this section; and the directors are authorized to carry out and perform the covenants, terms, and conditions of all such contracts or instruments;
  7. Establish schedules of tolls, fees, rates, charges, and rentals for the use of the properties and facilities under its jurisdiction, and for services that it may render;
  8. Enter upon any lands and premises for the purpose of making surveys, soundings, and examination in connection with the acquisition, improvement, operation or maintenance of any of the facilities of the authority;
  9. Promulgate and enforce such rules and regulations as the board of directors may deem proper for the orderly administration of the authority and the efficient operation of its facilities. In exercising the powers granted in this subdivision (9), the directors shall abide by all statutes, regulations and procedures to which counties must conform in such matters;
  10. Do all acts and things necessary or deemed necessary or convenient to carry out the powers expressly given in this part. This subdivision (10) shall not be construed to authorize the directors, in doing all things necessary and convenient, to conduct the administrative and business affairs of the authority in a manner inconsistent with the statutes, regulations and procedures governing such matters in county government;
  11. Make grants or loans to public or private rail common carrier operators to ensure continued rail service, subject, if such grant or loan is made from public funds, to the approval of the funding entity; provided, that no revenues generated from the transportation equity fund, which is described in § 67-6-103(b), other than revenues generated from taxes on fuels used for railways, shall be used for grants or loans to private or public rail common carrier operators. No state funds shall be used for this purpose without a finding by the commissioner of transportation that such funds are needed in the public interest, and that sufficient conditions shall be imposed on the recipients to protect the public interest and investment. Such conditions shall include, but not necessarily be limited to, provisions to ensure continuation of service, adequate maintenance, minimum levels of service, and in the case of grants, repayment of a proportionate share of state funds if the railroad is ever sold or service is discontinued;
  12. Notwithstanding any law to the contrary, acquire, hold, own and dispose of property, real and personal, tangible and intangible, or interests in property, in its own name, subject to mortgages, deeds of trust, or other liens or otherwise and to pay for the property in cash or on credit through installment payments, and to secure the payment of all or any part of any installment obligations in connection with any acquisition with property, tangible or intangible or revenues of the authority, in accordance with the provisions set forth in this section and without regard to the statutes, regulations and procedures to which counties must generally adhere;
  13. Notwithstanding any law to the contrary, contract debts, borrow money, issue bonds, notes and other evidences of indebtedness, and enter into lease-purchase agreements to acquire, construct, improve, furnish, equip, extend, operate or maintain the properties and facilities described in § 7-56-201, or any part of the properties and facilities, or to provide the authority's share of the funding for any joint undertaking or project, and to assume and agree to pay any indebtedness incurred for any of the purposes listed in this subdivision (13), in accordance with the provisions set forth in this section and without regard to the statutes, regulations and procedures to which counties must generally adhere; and
  14. Notwithstanding any law to the contrary, enter into joint ventures and cooperative arrangements with one or more natural persons, firm, association, corporation, other governmental agency, limited liability company, business trust or partnership, including the formation of a partnership, limited liability company or not-for-profit corporation to accomplish any of the purposes set forth in this section or to exercise any of the powers set forth in this section without regard to the statutes, regulations and procedures to which counties must generally adhere.

Acts 1983, ch. 221, § 5; 1988, ch. 844, §§ 1, 2; 1994, ch. 1006, § 2; 2004, ch. 672, §§ 2-5.

Code Commission Notes.

The following former last two sentences of subdivision (11) were deemed obsolete by the code commission in 2005: “Such funds as may be available from the tax revenues allocated to the department of transportation not to exceed two million eight hundred thousand dollars ($2,800,000) after July 1, 1995, shall be deposited in the transportation equity trust fund and shall be used by the department of transportation for the purpose of constructing, repairing, rebuilding, replacing and improving bridges and spans on public railways. This provision earmarking and allocating all sales tax revenues from all railway carriers for the purpose of public railway bridge rehabilitation shall begin on July 1, 1995, and expire on June 30, 1999;”.

7-56-206. Administration of properties and facilities.

Except as otherwise expressly provided in this part, the directors shall have full and exclusive control of and responsibility for the administration of properties and facilities constructed or acquired pursuant to this part; provided, that the authority may lease or license lands or facilities under its jurisdiction for operation by private persons or corporations. This section shall not be construed to authorize the directors to exercise such authority in a manner inconsistent with the statutes, regulations and procedures governing such matters in county government.

Acts 1983, ch. 221, § 6.

7-56-207. Condemnation.

The authority is hereby authorized and empowered to condemn, in the name of the authority, any land, easements, or rights-of-way in the boundaries of the authority that, in the opinion of the board of directors, are necessary or convenient to carry out the purposes of this part; provided, that condemnation of any land, easements, or rights-of-way in which railroad lines are located shall be limited to such lines that are abandoned or proposed for abandonment by operating railroads in Tennessee as were contained in the previous provisions in Category I, 49 CFR 1121.20, as of 1983. Title to property so condemned shall be taken by and in the name of the authority, and the property shall thereafter be entrusted to the authority for the purposes of this chapter. Such condemnation proceedings shall be in accordance with title 29, chapters 16 and 17. Where title to any property sought to be condemned is defective, it shall be passed by the judgment or decree of the court. Where condemnation proceedings become necessary, the court in which any such proceedings are filed shall, upon application by the authority, and upon posting of a bond with the clerk of the court in such amount as the court may deem commensurate with the value of the property, order that a writ of possession shall issue immediately, or as soon and upon such terms as the court, in its discretion, may deem proper and just.

Acts 1983, ch. 221, § 7.

7-56-208. Financing.

  1. The authority shall have the power and is authorized to issue bonds and notes and to enter into lease-purchase agreements and loan agreements for the construction, acquisition, reconstruction, improvement, betterment or extension of any of the properties and facilities described in § 7-56-201 or to assume and agree to pay any indebtedness incurred for any of the foregoing purposes and to enter into interest rate floors or ceilings or both with respect to such bonds, notes, lease-purchase agreements and loan agreements. The proceeds of the sale of such bonds, notes, lease-purchase agreements and loan agreements may be applied to:
    1. Payment of the costs of such construction, acquisition, reconstruction, improvement, betterment or extension;
    2. Payment of the costs associated with any such construction, acquisition, reconstruction, improvement, betterment or extension, including engineering, architectural, inspection, legal and accounting expenses;
    3. Payment of the costs of issuance of such bonds, notes, lease-purchase agreements and loan agreements, including underwriter's discount, financial advisory fee, preparation of the definitive instruments, preparation of all public offering and marketing materials, advertising, liquidity, remarketing, credit enhancement, and legal, accounting, fiscal and other similar expenses;
    4. Payment of interest during the period of construction and for six (6) months thereafter on any money borrowed or estimated to be borrowed;
    5. Reimbursement of the authority for moneys previously spent by the authority for any of the purposes set forth in subdivisions (a)(1)-(4);
    6. Payment of fees, including termination fees associated with interest rate floors and ceilings;
    7. Establishment of reasonable reserves for the payment of debt service on such bonds, notes, lease-purchase agreements and loan agreements, or for repair and replacement to the property and facilities of the authority for whose benefit the financing is being undertaken, or for such other purposes as the board of directors shall deem necessary and proper in connection with the issuance of the bonds, notes, lease-purchase agreements and loan agreements and operation of the facilities and properties for whose benefit the financing is being undertaken;
    8. Contribution of the authority's share of the funding for any joint undertaking for the purposes set forth in this section; and
    9. Contribution by the authority to any subsidiary or separate entity controlled by the authority for the purposes set forth in this subsection (a).
  2. The authority shall have the power and is authorized to issue bonds and notes and to enter into lease-purchase agreements or loan agreements to refund and refinance any outstanding bonds, notes, lease-purchase agreements and loan agreements of the authority heretofore or hereafter issued or lawfully assumed by the authority and to enter into interest rate floors or ceilings or both with respect to such bonds, notes, lease-purchase agreements and loan agreements. The proceeds of the sale of the refunding bonds, notes, lease-purchase agreements or loan agreements may be applied to:
    1. Payment of the principal amount of the bonds, notes, lease-purchase agreements or loan agreements being refunded and refinanced;
    2. Payment of the redemption premium on bonds, notes, lease-purchase agreements or loan agreements, if any;
    3. Payment of unpaid interest on the bonds, notes, lease-purchase agreements or loan agreements being refunded, including interest in arrears, for the payment of which sufficient funds are not available, to the date of delivery or exchange of the refunding bonds, notes, lease-purchase agreements or loan agreements;
    4. Payment of interest on the bonds, notes, lease-purchase agreements or loan agreements being refunded and refinanced from the date of delivery of the refunding bonds, notes, lease-purchase agreements or loan agreements to maturity or to and including the first or any subsequent available redemption date or dates on which the bonds, notes, lease-purchase agreements or loan agreements being refunded may be called for redemption;
    5. Payment of the costs of issuance of the refunding bonds, notes, lease-purchase agreements or loan agreements, including underwriter's discount, financial advisory fee, preparation of the definitive instruments, preparation of all public offering and marketing materials, advertising, credit enhancement, liquidity, remarketing, and legal, accounting, fiscal and other similar expenses, and the costs of refunding the outstanding bonds, notes, lease-purchase agreements or loan agreements, including the costs of establishing an escrow for the retirement of the outstanding bonds, notes, lease-purchase agreements or loan agreements, trustee and escrow agent fees in connection with the escrow, and accounting, legal and other professional fees in connection therewith;
    6. Payment of fees, including termination fees associated with interest rate floors and ceilings; and
    7. Establishment of reasonable reserves for the payment of debt service on the refunding bonds, notes, lease-purchase agreements or loan agreements, or for repair, improvement and replacement to the properties or facilities of the authority for whose benefit the financing is being undertaken, or for such other purposes as shall be deemed necessary and proper in connection with the issuance of the refunding bonds, notes, lease-purchase agreements or loan agreements and operation of the properties and facilities for whose benefit the financing is being undertaken. Refunding bonds, notes, lease-purchase agreements or loan agreements may be issued to refinance and refund any issue and more than one issue of outstanding bonds, notes, lease-purchase agreements or loan agreements, notwithstanding that such outstanding bonds, notes, lease-purchase agreements or loan agreements may have been issued at different times and regardless of whether the prior issue was a bond, note, lease-purchase agreement or loan agreement. The principal proceeds from the sale of refunding bonds, notes, lease-purchase agreements or loan agreements may be applied either to the immediate payment and retirement of the bonds, notes, lease-purchase agreements or loan agreements being refunded or, to the extent not required for the immediate payment of the bonds, notes, lease-purchase agreements or loan agreements being refunded, to the deposit in escrow with a bank or trust company to provide for the payment and retirement at a later date of the bonds, notes, lease-purchase agreements or loan agreements being refunded.
  3. The authority shall have the power and is authorized to issue revenue anticipation notes in anticipation of the collection of revenues from the properties and facilities described in § 7-56-201 and issue negotiable notes to evidence such borrowing, the proceeds from the sale of such notes to be used for the purpose of paying the cost of construction of additions, betterments and improvements to and extensions of the properties and facilities. The revenues, including rates, fees and charges for the services, facilities and commodities of the authority, and grants, loans and other assistance received from the state, any county and municipality and any federal, state, county or municipal agency, may be, together with a mortgage or deed of trust on the property financed, pledged to the payment of such notes. Such notes shall be sold in such manner and upon such terms and conditions as may be determined by the board of directors. The governing body may issue bonds for the funding of such notes.
  4. No bonds, notes, lease-purchase agreements or loan agreements, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, shall be issued or assumed under this subsection (d) unless authorized to be issued or assumed by resolution of the board of directors, which resolution may be adopted at the same meeting at which it is introduced by a majority of all members of the board then in office, and shall take effect immediately upon adoption. Bonds, notes, lease-purchase agreements and loan agreements authorized to be issued under this subsection (d), including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, may be issued in one or more series, may bear such date or dates, mature at such time or times, not exceeding forty (40) years from their respective dates, bear interest at such rate or rates, which may vary from time to time, payable at such time or times, be in such denominations, be in such form, either coupon or registered, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium, as such resolution or resolutions may provide. These bonds, notes, lease-purchase agreements and loan agreements, including instruments to refund or finance the bonds, notes, lease-purchase agreements or loan agreements, may be issued for money or property at competitive or negotiated sale for such price or prices as the board of directors shall determine. Pending the preparation or execution of definitive bonds or notes, interim receipts, certificates or temporary bonds may be delivered to the purchaser or purchasers of those bonds or notes.
  5. Bonds, notes, lease-purchase agreements and loan agreements, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, may be repurchased by the authority out of any available funds at a price not to exceed the principal amount of the bonds, notes, lease-purchase agreements or loan agreements, and accrued interest, and if so repurchased shall be canceled or held as an investment of the authority as the board of directors may determine.
  6. When entering into any contracts or agreements facilitating the issuance and sale of bonds, notes, lease-purchase agreements or loan agreements, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, and contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating to the bonds, notes, lease-purchase agreements or loan agreements, agreements establishing interest rate floors or ceilings or both, evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the authority may agree in the written contract or agreement that the rights and remedies of the parties to the contract or agreement shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over the authority shall lie solely in a court of Tennessee that would otherwise have jurisdiction of actions brought in contract against the authority.
  7. No owner or owners of any bonds, notes, lease-purchase agreements and loan agreements issued under this section, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, shall ever have the right to compel any exercise of the taxing powers of the state or any municipality, county or other political subdivision of the state to pay those bonds, notes, lease-purchase agreements and loan agreements or the interest on the bonds, notes, lease-purchase agreements or loan agreements. Each bond, note, lease-purchase agreement and loan agreement issued under this section by the authority shall recite in substance that the bond, note, lease-purchase agreement and loan agreement, including the interest on the bonds, notes, lease-purchase agreements or loan agreements, is payable solely from the revenues pledged to the payment of the bonds, notes, lease-purchase agreements or loan agreements, and that the bond, note, lease-purchase agreement and loan agreement does not constitute a debt of the state, any municipality, county or other political subdivision.
  8. Bonds, notes, lease-purchase agreements and loan agreements issued under this section, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, bearing the signature of the chair in office on the date of the signing shall be valid and binding obligations, notwithstanding that before the delivery and payment any or all the persons whose signatures appear on the bonds, notes, and agreements shall have ceased to be officers. The validity of such bonds, notes, lease-purchase agreements and loan agreements shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the acquisition or improvement of the facilities or properties for which those bonds, notes, lease-purchase agreements and loan agreements are issued. The resolution or resolutions authorizing bonds, notes, lease-purchase agreements and loan agreements under this section may provide that the bonds, notes, lease-purchase agreements and loan agreements shall contain a recital that they are issued pursuant to this section, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.
  9. In connection with the issuance of bonds, notes, lease-purchase agreements and loan agreements, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, and in order to secure the payment of the bonds, notes, lease-purchase agreements or loan agreements and other contracts entered into relating to the foregoing, the authority shall have power to:
    1. Secure and covenant, as set forth in §§ 9-21-306 and 7-34-110, as such provisions shall from time to time be amended, excluding provisions relating solely to water, sewer and parking systems;
    2. Pledge all or any part of its revenues, fees, rates, rentals, tolls, and charges it receives for the services of the facilities and from any grants, loans and other assistance received from the state, any county or municipality, and any state, federal, county or municipal agency;
    3. Pledge all or any part of its property, real or personal, tangible or intangible, including granting mortgages and entering into deeds of trust, in connection therewith;
    4. Vest in a trustee or trustees the right to enforce any covenant made to secure, to pay, or in relation to its bonds, notes, lease-purchase agreements and loan agreements, to provide for the powers and duties of such trustee or trustees, to limit the liabilities thereof, and to provide the terms and conditions upon which the trustee or trustees or the holders of bonds or any amount or proportion of them may enforce any such covenant; and
    5. Make such covenants and do any and all such acts and things as may be necessary, convenient or desirable in order to secure its bonds or that, in the absolute discretion of the board of directors, tend to make the bonds, notes, lease-purchase agreements and loan agreements more marketable, notwithstanding that such covenants, acts and things may restrict or interfere with the exercise of the powers granted in this section; it being the intention of this section to give the authority power to do all things in the issuance of such instruments, and for their security, that a private business corporation can do under the general laws of the state.
  10. In addition to all other rights and all other remedies, any holders of bonds, notes, lease-purchase agreements and loan agreements, including instruments to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, including a trustee for bondholders or noteholders, shall have the right, by:
    1. Mandamus or other suit, action or proceeding at law or in equity, to enforce the holder's rights against the authority and the board of the authority, including the right to require the authority and such board to fix and collect rates and charges adequate to carry out any agreement as to, or pledge of, the revenues produced by such rates or charges, to take all actions permitted under any deed of trust related to the instruments, and to require the authority and such board to carry out any other covenants and agreements with such bondholders and to perform its and their duties under this section;
    2. Action or suit in equity to enjoin any acts or things that may be unlawful or a violation of the rights of such holder or holders of bonds, notes, lease-purchase agreements and loan agreements;
    3. Suit, action or proceeding in a court in the state having jurisdiction over the authority to obtain an appointment of a receiver of any system or systems of the authority or any part or parts of the system or systems. If such receiver be appointed, such receiver may enter and take possession of such system or systems or part or parts of the system or systems and operate and maintain those systems or parts, and collect and receive all fees, rents, tolls or other charges thereafter arising from the systems or parts in the same manner as the authority might do and shall dispose of such money in a separate account or accounts and apply the same in accordance with the obligations of the authority as the court shall direct; and
    4. Suit, action or proceeding in a court in the state having jurisdiction over the authority to require the board of the authority to account as if it were the trustee of an express trust.
  11. The authority shall, however, prescribe and collect reasonable rates, fees or charges for the services, facilities and commodities made available by it, and shall revise such rates, fees or charges from time to time whenever necessary so that facilities and properties authorized in this section shall be and always remain self-supporting. The rates, fees, or charges shall be such as will produce revenue at least sufficient to:
    1. Provide for the payment of all expenses of operation and maintenance of such facilities and properties;
    2. Pay when due principal and interest on all bonds, notes, lease-purchase agreements and loan agreements, including instruments of the authority issued to refund or refinance the bonds, notes, lease-purchase agreements or loan agreements, payable from the revenues of such facilities and properties;
    3. Pay any other contracts and agreements of the authority; and
    4. Establish proper reserves.
  12. Any pledge of, or lien on, revenues, fees, rents, tolls, governmental grants, loans and other assistance, or other charges received or receivable by the authority to secure the payment of any bonds, notes, lease-purchase agreements or loan agreements of the authority, and the interest on the bonds, notes, lease-purchase agreements or loan agreements, shall be valid and binding from the time that the pledge or lien is created or granted and shall inure to the benefit of the owner or owners of any such bonds, notes, lease-purchase agreements and loan agreements until the payment in full of the principal and premium and interest. The priority of any pledge or lien with respect to competing pledges or liens shall be determined by the date such pledge or lien is created or granted; provided, that the proceedings authorizing any issue of bonds, notes or delivery of lease-purchase agreements or loan agreements may provide for the issuance of additional obligations on a parity of lien with the bonds, notes, lease-purchase agreements or loan agreements. Neither the resolution nor any other instrument granting, creating, or giving notice of the pledge or lien need be filed or recorded to preserve or protect the validity or priority of such pledge or lien.
  13. Any bonds, notes, lease-purchase agreements and loan agreements issued by the authority pursuant to this section, and the income from the bonds, notes, lease-purchase agreements or loan agreements, shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes, and except as otherwise provided by the general laws of the state.
  14. All funds of the authority shall be invested in accordance with the requirements for investments for cities and counties, including proceeds of bonds, notes, lease-purchase agreements and loan agreements and refunding bonds, notes, lease-purchase agreements and loan agreements.
  15. The state, any county or municipality and any federal, state, county or municipal agency or authority is authorized to agree to subordinate any interests it may have for repayment of funds received from any such grants and loans, including repayment of funds received from the state department of transportation, referenced in § 7-56-205(11), to the repayment of bonds, notes, lease-purchase agreements or loan agreements of the authority authorized in this section.
  16. Any county or municipality participating in an authority is authorized to issue bonds or notes for the purposes in this section authorized pursuant to the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, and to grant or loan the proceeds of such bonds or notes to the authority. The authority is authorized to enter into a loan agreement with or issue its bond or note to any city or county, or both, for the purpose of receiving or repaying, or both, such grants or loans, or both, in accordance with this section. Such county or municipality is authorized to pledge its full faith and credit and unlimited ad valorem taxing power to the repayment of such bonds and notes. Such county or municipality is further authorized to pledge any payments it receives from the authority under such loan agreement to the repayment of such city or county's bonds or notes.
  17. Section 9-11-108 shall apply for the purpose of issuing funding bonds.
  18. Title 9, chapter 19 shall apply to the registration and execution of registered bonds and notes of the authority.
  19. The authority may borrow money and create security interests only if approved in writing by the commissioner of transportation after the department receives assurances satisfactory to the commissioner that the authority's ability to fulfill its obligations to the state shall not be impaired.

Acts 1983, ch. 221, § 8; 1988, ch. 750, § 35; 2004, ch. 672, § 6.

7-56-209. Annual report and audit.

  1. The board of directors of the authority shall report annually to the governing bodies of the various counties and cities within the boundaries of the authority. Such reports shall include statements of financial receipts and expenditures and a summary of activities and accomplishments for the period and proposed plans for the next year and for subsequent years.
  2. The board of directors annually shall require an audit to be performed of the authority's operations. Such audits shall meet the requirements placed on county offices by § 4-3-304(4). When applicable, the cost of such audits shall be borne in the same manner and paid at the same rates established for county government in § 9-3-210.

Acts 1983, ch. 221, § 9.

7-56-210. Application of revenues and proceeds.

  1. The revenues derived from the operation of the properties and facilities authorized, and the proceeds derived from the sale, transfer, lease or other disposition of any land or other facilities, shall be applied and used as provided in this section. All revenues shall be received, deposited and accounted for and all financial transactions shall be handled consistent with the requirements of statutes, regulations and procedures affecting county government.
  2. Revenues and proceeds shall be applied as follows:
    1. The payment of all operating and maintenance expenses of the authority, except that the proceeds derived from the sale, transfer, or other disposition of any land or other facilities shall not be used for operations of the authority;
    2. Payment when due of all bonds, notes, loan agreements, lease-purchase agreements and related contracts to the bonds, notes, loan agreements, lease-purchase agreements for the payment of which such revenue is or shall have been pledged, charged, or otherwise encumbered, including reasonable reserves for the payment of the bonds, notes, loan agreements, lease-purchase agreements;
    3. Payment of all other contracts and agreements of the authority; and
    4. Any revenue or proceeds remaining after all the items in subdivisions (b)(1)-(3) have been provided for shall be held and used for the further development of and for additions to the authority's facilities and for the acquisition or construction of new facilities that may become necessary or desirable to further the purposes of this part. None of such revenue shall go into the general funds of the participating counties, except as may be directed by the directors of the authority.

Acts 1983, ch. 221, § 10; 2004, ch. 672, § 7.

7-56-211. Contract procedure — Applicability.

  1. All contracts of the authority shall be entered into and executed in such manner as may be prescribed by statutes, regulations and procedures governing contracting by county governments; but no contract or acquisition by purchase of equipment, apparatus, materials or supplies involving more than five hundred dollars ($500), or for construction, installation, repair or improvement of the property or facilities involving more than five hundred dollars ($500), shall be made except after such contract has been advertised for bids; provided, that advertisement shall not be required when an emergency arises and requires immediate delivery of the supplies or performance of the service.
  2. Notwithstanding any law to the contrary, all contracts of the authority to perform maintenance or improvements on railroads that are funded, in whole or in part, with funds administered by the Tennessee department of transportation shall be awarded pursuant to competitive bidding requirements as approved by the department.
  3. In the alternative to subsection (b), the authority may negotiate the labor portion of rehabilitation contracts with the railroad company that provides rail service on the facilities to be improved by the authority. Such negotiated labor costs shall reflect the average unit costs to perform typical functions associated with rail rehabilitation work and shall be subject to audit by the comptroller of the treasury. It is the intent of the general assembly that labor and associated costs shall be reimbursable pursuant to this provision. All other costs of rehabilitation contracts, including, but not limited to, materials and equipment, shall be subject to competitive bidding requirements as approved by the department to ensure that the contracts are performed on a break-even basis and that the state does not reimburse the profits to the railroad company.

Acts 1983, ch. 221, § 11; 1991, ch. 56, § 1; 1999, ch. 450, § 1; 2015, ch. 300, § 1.

Compiler's Notes. Acts 2015, ch. 300, § 2 provided that the act, which amended (c), shall apply to all contracts entered into or renewed on or after April 24, 2015.

Amendments. The 2015 amendment deleted “non-bridge” preceding “labor” near the beginning of (c).

Effective Dates. Acts 2015, ch. 300, § 2. April 24, 2015.

Collateral References.

Power to require street railways to permit use of tracks in street by other companies. 28 A.L.R. 969.

7-56-212. Use of rights-of-way and easements.

The authority may use any property, right-of-way, easement or other similar property right necessary or convenient in connection with the acquisition, improvement, operation or maintenance of the facilities authorized in this part, held by the state or any county or municipality in the state; provided, that such governmental agency shall consent to such use. There must be compliance with all of the statutes, regulations and procedures regulating the use, management, and disposition of state property.

Acts 1983, ch. 221, § 12.

Cross-References. Eminent domain, title 29, ch. 16.

Collateral References.

Duration of street franchise without fixed term, beyond life of grantee. 71 A.L.R. 121.

State highway, power as to use by public utility of street or road constituting part of. 144 A.L.R. 320.

Use of streets and highways by cooperative utility. 172 A.L.R. 1020.

7-56-213. Construction of part.

  1. The powers, authority and rights conferred by this part shall be in addition and supplemental to, and the limitations imposed by this part shall affect the powers conferred by, any other general, special or local law.
  2. This part is remedial in nature and shall be liberally construed to effect its purposes of promoting the movement and transfer of people, goods and merchandise to, from and through the boundaries of the authority, encouraging utilization of the natural resources in the authority, and promoting the growth and development of commerce and industry in the counties and cities. Such liberal construction shall not work to override the application of the general statutes, regulations or procedures to the administrative or financial management practices of the authority in the same manner as they apply to county governments.

Acts 1983, ch. 221, §§ 13, 14; 1994, ch. 1006, § 3.

Chapter 57
Metropolitan Hospital Authority Act

Part 1
General Provisions

7-57-101. Short title.

This chapter shall be known and may be cited as the “Metropolitan Hospital Authority Act.”

Acts 1971, ch. 316, § 1; T.C.A., § 6-4001.

7-57-102. Purpose and policy.

  1. It is hereby determined and declared that the present and projected rapid growth of the demand for health care, the need for health care facilities in the metropolitan regions of the state, the realization that the optimum in health care is preventive by nature, and the great demand for capital and operating funds, all require that local governments in metropolitan areas have the option of placing the control and operation of metropolitan hospitals and other health care activities in regional and metropolitan instrumentalities.
  2. It is hereby further declared that hospital authorities created pursuant to this chapter shall be public and governmental bodies acting as agencies and instrumentalities of the creating and participating municipalities and that the acquisition, operation, and financing of hospitals and related facilities by such hospital authorities are hereby declared to be for a public and governmental purpose and a matter of public necessity.

Acts 1971, ch. 316, § 2; T.C.A., § 6-4002.

7-57-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” or “hospital authority” means a public body and a body corporate and public organized in accordance with this chapter for the purposes, with the powers, and subject to the restrictions set forth in this chapter;
  2. “Board” means the board of trustees of an authority;
  3. “Creating municipality” means any city or metropolitan government having a population of not less than two hundred thousand (200,000), according to the 1970 federal census or any subsequent federal census, or any county in which any such city shall be situated, that shall create an authority pursuant to this chapter;
  4. “Executive officer” means the mayor, county mayor, or other chief executive officer of any creating or participating municipality;
  5. “Federal government” includes the United States or any agency or instrumentality, corporate or otherwise, of the United States;
  6. “Governing body” means the chief legislative body of any creating or participating municipality; in counties having the commission form of government “chief legislative body” means the county legislative body;
  7. “Hospital” and “hospital project” means and includes any one (1) or more hospitals and related facilities, including, but not limited to, land and interests in land, facilities and equipment for the treatment of all classes of patients, laboratories, clinics, treatment centers, nursing homes, rehabilitation centers, extended care facilities, dormitories, training facilities for medical students, doctors, nurses and all other medical or paramedical personnel, administration and office buildings, garages, parking lots and such other structures, facilities and improvements necessary or convenient to the development and maintenance of hospitals, and for the provision of health care;
  8. “Ordinance” means any ordinance adopted by governing bodies pursuant to this chapter;
  9. “Participating municipality” means any city, town or county, which city, town or county, pursuant to a resolution of its governing body and an agreement with the creating municipality, shall have sold, leased, dedicated, donated or otherwise conveyed its hospitals to the authority for operation by the authority in order to make such hospital an operational part of its health care system;
  10. “Resolution” means any resolution adopted by governing bodies pursuant to this chapter;
  11. “State” means the state of Tennessee; and
  12. “Trustee” means one (1) of the members of the board of an authority appointed in accordance with this chapter.

Acts 1971, ch. 316, § 3; impl. am. Acts 1978, ch. 934, §§ 7, 16, 36; T.C.A., § 6-4003; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-57-104. Duty of the authority and trustees of the authority.

The authority and its trustees shall be under a statutory duty to comply or to cause compliance strictly with all provisions of this chapter and the laws of the state, and, in addition, with each and every term, provision and covenant in any contract of the authority on its part to be kept or performed.

Acts 1971, ch. 316, § 7; T.C.A., § 6-4007.

7-57-105. Dissolution — Disposition of property.

Whenever the governing body or bodies of the creating municipality or municipalities and the participating municipality or municipalities shall each, by resolution, determine that the purposes for which the authority was created have been substantially accomplished, that all of the obligations of the authority have been fully paid, or provided for, and that such municipalities have agreed on the distribution of the funds and other properties of the authority, then the chief executive officer or officers of such municipality or municipalities shall execute and file for record with the secretary of state a joint certificate of dissolution reciting such facts and declaring the authority to be dissolved. Upon such filing, the authority shall be dissolved, and title to all funds and other properties of the authority at the time of such dissolution shall vest in and be delivered to such municipalities in accordance with the terms of their agreement.

Acts 1971, ch. 316, § 20; T.C.A., § 6-4023.

7-57-106. Supplemental nature of chapter.

The powers conferred by this chapter shall be in addition and supplemental to the powers conferred by any other law, and are not in substitution for such powers, and the limitations imposed by this chapter shall not affect such powers. The powers granted in this chapter may be exercised without regard to requirements, restrictions or procedural provisions contained in any other law or charter, except as expressly provided in this chapter. Any metropolitan government or any home rule municipality authorized under this chapter to create a metropolitan hospital authority may do so without the necessity of a charter amendment, notwithstanding anything in its charter to the contrary.

Acts 1971, ch. 316, § 21; T.C.A., § 6-4024.

7-57-107. Liberal construction.

This chapter shall be liberally construed to effect the purposes of this chapter, and insofar as this chapter may be inconsistent with any other law, this chapter shall be controlling.

Acts 1971, ch. 316, § 23; T.C.A., § 6-4025.

Part 2
Organization and Officers

7-57-201. Creation of hospital authorities.

  1. The governing body of the creating municipality may establish a metropolitan hospital authority in the manner provided for in this part.
  2. The governing body of the creating municipality shall adopt, and its executive officer shall approve, a resolution calling a public hearing on the question of creating a metropolitan hospital authority. Notice of the date, hour, place and purpose of such hearing shall be published at least once each week for two (2) consecutive weeks in a newspaper of general circulation in the creating municipality, the last such publication to be at least one (1) week prior to the date set for the hearing.
  3. Such hearing shall be had before the governing body and all interested persons shall have an opportunity to be heard.
  4. After such hearing, if the governing body determines that the public convenience and necessity requires the creation of a metropolitan hospital authority, it shall adopt, and its executive officer shall approve, a resolution so declaring and creating an authority, which resolution shall also designate the name and principal office address of the authority. A certified copy of such resolution shall be filed with the secretary of state and with the commissioner of health, together with the resolution approving the appointment of the board of trustees as provided for in § 7-57-203, and upon such adoption and filing, the authority shall constitute a body politic and corporate, with all the powers pursuant to this chapter, and the secretary of state shall make and issue to the board of trustees a certificate of incorporation pursuant to this chapter, under the seal of the state, and shall record the certificate of incorporation, together with the resolution of the governing body of the municipality creating the authority.
  5. The boundaries of any authority created under this chapter shall be coextensive with the boundaries of the creating or participating municipality, whichever is inclusive of the other.
  6. In any suit, action or proceeding involving the validity or enforcement of or related to any contract of an authority, the authority shall be conclusively deemed to have been established in accordance with this chapter upon proof of the issuance of the certificate of incorporation by the secretary of state. A copy of such certificate, duly certified by the secretary of state, shall be admissible in evidence in any such suit, action or proceeding, and shall be conclusive proof of the filing and contents of the certificate.
  7. Whenever an authority shall be created under this chapter, the creating municipality and any participating municipality may enter into an agreement with the authority for the orderly transfer to the authority of the hospital properties, functions, and outstanding obligations of such municipalities in connection with the authority. Such agreement may include provisions for the reimbursement of any such municipality for its obligations issued for hospital purposes, and such agreement may also include provisions for the payment to the creating or participating municipalities of tax equivalents by the authority and its lessees on all or any part of the properties and improvements conveyed to or owned by the authority or its lessees.

Acts 1971, ch. 316, § 4; T.C.A., § 6-4004; Acts 1991, ch. 442, § 1.

Cross-References. Payment of tax equivalents, § 7-57-307.

7-57-202. Change of name.

An authority created and existing pursuant to this chapter may, at any time, by resolution adopted by a majority of its board of trustees, change its name. A copy of such resolution, duly verified by the chair and secretary of the board of trustees before an officer authorized by the laws of this state to administer oaths, shall be delivered to the secretary of state, together with a conformed copy of the resolution. If the secretary of state determines that the proposed name is not identical with that of any other corporation of this state, or so nearly similar as to lead to confusion and uncertainty, the secretary of state shall receive and file it and record it in an appropriate book of record in the secretary of state's office, and thereupon return to the authority the conformed copy, together with a certificate stating that attached to the certificate is a true copy of the document filed in the secretary of state's office and showing the date of such filing.

Acts 1971, ch. 316, § 5; T.C.A., § 6-4005.

7-57-203. Board of trustees.

  1. The governing body of an authority shall be a board of trustees to consist of no fewer than five (5) nor more than fifteen (15) members. All powers granted to an authority in this chapter shall be exercised by its board of trustees. The governing body of the creating municipality, or if two (2) or more creating municipalities act in concert to create a hospital authority, then the governing bodies of the several creating municipalities, by agreement between themselves and subject to the approval of their executive officers, are hereby authorized, within the limitations imposed by this chapter, to establish the number of members of the board of trustees, their method of nomination and appointment, their tenure of service, and such other qualifications in addition to those set forth in this section as the creating municipality or municipalities may desire to impose. The agreement shall be evidenced by a resolution passed by the governing body or bodies of the creating municipality or municipalities acting together in the creation of an authority. A creating municipality may likewise enter into similar agreements with participating municipalities concerning the number, appointment, tenure of service, and qualifications of the board of trustees of an authority. In each and every case, a trustee shall be nominated by the executive officer and approved by the governing body of the municipality that appoints such person to the board of trustees, and such person shall be a resident of such municipality.
  2. The trustees shall receive no compensation for their services, but shall be entitled to be reimbursed for necessary expenses, including travel expenses incurred in the discharge of their duties.
  3. The board shall elect from among its members, by a majority vote of the entire board, a chair and vice chair, each of whom shall continue to be voting members.
  4. The board shall adopt its own bylaws. Notice of any meeting to adopt or amend the bylaws must be sent by registered mail to each of the trustees at least ten (10) days prior to the date of such meeting, such notice to contain the time, place and purpose of the meeting. Bylaws may be adopted or amended only upon the affirmative vote of two thirds (2/3) of the members of the board.

Acts 1971, ch. 316, § 6; T.C.A., § 6-4006.

Cross-References. Certified mail instead of registered mail, § 1-3-111.

7-57-204. Pecuniary interest of trustees or employees in hospital facilities or contracts.

No trustee or employee of an authority shall, during such person's tenure as such trustee or employee, acquire any interest, direct or indirect, in any hospital facility or in any property included or planned to be included in any hospital facility; nor shall such person have any interest, direct or indirect, in any contract or proposed contract for materials or services to be furnished or used in connection with any hospital facility. If any trustee or employee of an authority owns or controls an interest, direct or indirect, in any property included or planned to be included in any hospital facility, such person shall immediately disclose the interest in writing to the authority, and such disclosure shall be entered upon the minutes of the authority. Failure to so disclose such interest shall constitute misconduct in office, for which the trustee or employee may be removed by the governing bodies of the appropriate creating and participating municipalities.

Acts 1971, ch. 316, § 8; T.C.A., § 6-4008.

Part 3
Operation and Powers

7-57-301. Powers of authority.

An authority shall constitute a public body and a body corporate and politic, exercising public powers, and having all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this chapter, including, but not limited to, the powers to:

  1. Investigate hospital, medical and health conditions and into the means and methods of improving such conditions;
  2. Study and make recommendations concerning the plan of any city or municipality located within its boundaries in relation to the provision of adequate hospital, medical and nursing facilities;
  3. Prepare, carry out and operate hospital projects;
  4. Provide and operate outpatient departments, maternity clinics, decentralized primary health care facilities, and any other clinics customarily operated in or by hospitals in metropolitan centers;
  5. Provide the clinical setting for the teaching and instruction programs of schools for medical students, interns and physicians; and provide teaching and instruction programs for nurses, and all other medical or paramedical personnel;
  6. Provide and maintain continuous resident physician, intern and other medical services;
  7. Establish rates, fees, charges and other compensation to be paid by patients for any services rendered in its hospital facilities;
  8. Participate in any governmental programs, such as medicare and medicaid, and obtain reimbursement under medicare and medicaid for services rendered to patients;
  9. Appoint all administrative, professional, technical and other employees; appoint legal counsel and an auditor; enter into contracts of employment with such employees and appointees and fix their compensation and terms of employment, subject to the budget controls of the creating and participating municipalities; and remove such employees or appointees;
  10. Enter into agreements with the creating municipality and participating municipalities with respect to the manner of transfer of hospital employees of such municipalities to the authority and with respect to the retention by such employees of existing civil service status and accrued pension, disability, hospitalization, death, or other fringe benefits;
  11. Enter into a plan for pension, disability, hospitalization and death benefits for the officers and employees of the authority, either by contract with the creating municipality and participating municipalities, or otherwise;
  12. Adopt necessary rules and regulations for the governance of the authority and its employees, and appoint such committees or subcommittees as it shall deem advisable, and fix their duties and responsibilities;
  13. Subject to the provisions for letting of public contracts as provided in the charter or governing law of the creating municipality, enter into contracts for necessary supplies, equipment or services incident to the operation of its business;
  14. Do all things necessary in connection with the construction, repair, reconstruction, management, supervision, and control of its operation and facilities, including, but not limited to, the hospital and all departments of the hospital;
  15. Accept donations of money, personal property or real estate for the benefit of the authority and take title to the donations from any person, firm, corporation or society desiring to make such donations;
  16. Determine and regulate the conditions under which the privilege of practicing within any hospital operated by the authority may be available to physicians, and promulgate reasonable rules and regulations governing the conduct of physicians and nurses while on duty in the hospital;
  17. Make rules and regulations governing the admission of patients to, and the care, conduct, and treatment of patients in, the hospital;
  18. Determine whether and to what extent patients presented to the hospital for treatment are subjects for financial subsidy because of their income level, family size or other established criteria;
  19. Maintain and operate isolation wards for the care and treatment of mental, contagious or other similar diseases;
  20. Provide for the construction, reconstruction, improvement, alteration or repair of any hospital project or any part of a hospital project, subject to the budget limitations that may be imposed by the creating municipality or any participating municipality;
  21. Act as agent for the federal government in connection with the acquisition, construction, operation or management of a hospital project, or any part of a hospital project;
  22. Arrange with any city or municipality located in whole or in part within its boundaries or with a government for the planning, replanning, furnishing, installing, opening or closing of streets, roads, roadways, alleys, sidewalks, other places or facilities and utilities, or for the acquisition by such city, municipality, or a government of property options or property rights or for the furnishing of property or services in connection with a project;
  23. Arrange with the state, its subdivisions and agencies, and any county, city or municipality of the state, to the extent that it is within the scope of each of their respective functions:
    1. Cause the services customarily provided by each of them to be rendered for the benefit of such hospital authority; and
    2. Lease or rent any of the dwellings or other accommodations or any of the lands, buildings, structures or facilities embraced in any hospital project and establish and revise the rents or charges for the lease or rental;
  24. Purchase, lease, improve, obtain options upon, acquire by gift, grant, bequest, devise, or otherwise any personal property, or any interest in personal property from any person, firm, corporation, city, municipality, or government, for any of the purposes provided for in this chapter;
  25. Sell, exchange, transfer, assign, or pledge any personal property, or any interest in personal property to any person, firm, corporation, municipality, city, or government;
  26. Self-insure or provide for the insurance of the property or operations of the authority against such risks as the authority may deem advisable;
  27. In connection with any loan by a government, agree to limitations upon the exercise of any powers conferred upon the authority by this chapter;
  28. Invest any funds held in reserves or sinking funds, or any temporarily excess funds not required for immediate disbursement, in property or securities in which trustees, guardians, executors, administrators, and others acting in a fiduciary capacity may legally invest funds subject to their control;
  29. Sue and be sued;
  30. Have a seal and alter the seal;
  31. Have perpetual succession; and
  32. Make and execute contracts and other instruments necessary or convenient to the exercise of the powers of the authority.

Acts 1971, ch. 316, § 9; T.C.A., § 6-4009.

Cross-References. Federal and state grants and contracts, powers, § 7-57-310.

NOTES TO DECISIONS

1. Construction With Other Law.

Metropolitan governmental entity was a proper party to an administratrix's action under the Health Care Liability Act because the administratrix alleged: (1) the entity had indirect control over the nursing home facility at issue; (2) the entity's control had direct consequences upon the services provided at the facility; (3) the entity knew of the existence of federal and state regulations; and (4) the entity retained control over the “purse strings.” Banks v. Bordeaux Long Term Care, 465 S.W.3d 141, 2014 Tenn. App. LEXIS 786 (Tenn. Ct. App. Dec. 4, 2014), appeal denied, — S.W.3d —, 2015 Tenn. LEXIS 298 (Tenn. Apr. 10, 2015).

7-57-302. Exercise of powers through agents — Corporate agents.

An authority may exercise any or all of the powers conferred upon it in this chapter, either generally or with respect to any specific hospital project or projects, through or by an agent or agents that it may designate, including any corporation or corporations that are or shall be formed under the laws of this state, and for such purposes an authority may cause one (1) or more corporations to be formed under the laws of this state or may acquire the capital stock of any corporation or corporations. Any corporate agent, all of the stock of which shall be owned by the authority or its nominee or nominees, may, to the extent permitted by law, exercise any of the powers conferred upon the authority in this chapter.

Acts 1971, ch. 316, § 9; T.C.A., § 6-4010.

7-57-303. Implied powers — Limitations.

In addition to all of the other powers conferred upon it in this chapter, an authority may do all things necessary and convenient to carry out the powers expressly given in this part. No authority shall have or exercise any governmental powers or authority other than those specifically granted in this chapter. No authority shall have any taxing powers, any right or authority to pledge, encumber or obligate the general credit of any of its creating or participating municipalities for its bonds or debts, nor any power of eminent domain or condemnation.

Acts 1971, ch. 316, § 9; T.C.A., § 6-4011.

7-57-304. Additional powers.

With the approval of the governing bodies of the creating and participating municipalities, the authority has the following additional powers, to:

  1. Issue its bonds and notes in the manner provided in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, and secure the same by pledges of its revenues;
  2. Enter into a plan for civil service for employees of the authority, either by contract with the creating municipality and participating municipalities, or otherwise;
  3. Take over by contract, purchase, lease or otherwise any hospital project located within its boundaries undertaken by any government, or by any city or municipality located in whole or in part within its boundaries;
  4. Purchase, lease, improve, obtain options upon, acquire any real property, or any interest in real property from any person, firm, corporation, city, municipality, or government, for any of the purposes provided for in this chapter; and
  5. Sell, exchange, transfer, assign, or pledge any real property, or any interest in real property to any person, firm, corporation, municipality, city, or government.

Acts 1971, ch. 316, § 9; T.C.A., § 6-4012; Acts 1988, ch. 750, § 36.

Attorney General Opinions. County hospital board of trustees' authority to sell hospital, OAG 98-0119 (7/2/98).

7-57-305. Acquisition and transfer of real property interests.

Any creating or participating municipality may acquire any interest in land within the boundaries of the creating or participating municipality by gift, purchase, lease or condemnation, and may transfer such interest to an authority by sale, lease or gift. Such transfer may be authorized by resolution of the governing body of the municipality without submission of the question to the voters and without regard to the requirements, restrictions, limitations, or other provisions contained in any other general, special or local law.

Acts 1971, ch. 316, § 10; T.C.A., § 6-4013.

7-57-306. Zoning and building laws.

All hospital projects and facilities of an authority shall be subject to the planning, zoning, sanitary, safety and building laws, ordinances, resolutions and regulations applicable to the locality in which the hospital project or any of its facilities are situated.

Acts 1971, ch. 316, § 11; T.C.A., § 6-4014.

7-57-307. Tax exemption — Exceptions — Tax equivalents.

The authority shall be exempt from the payment of any taxes or fees to the state or any subdivisions of the state, or to any officer or employee of the state or any subdivision of the state, except as provided in this section. The property of an authority shall be exempt from all county and municipal taxes, and for the purposes of such tax exemption, it is hereby declared as a matter of legislative determination that an authority is and shall be deemed to be a municipal corporation; provided, that the authority shall pay all county and municipal fees. An authority may, however, agree to the payment of tax equivalents to the creating or participating municipalities, as provided in § 7-57-201(g).

Acts 1971, ch. 316, § 12; T.C.A., § 6-4015.

Cross-References. Certain hospital authorities to pay tax equivalents on realty leased for commercial purposes, § 67-9-201.

7-57-308. Powers of creating or participating municipalities.

Any creating municipality and any participating municipality has all necessary powers in order to further the purposes of this chapter, including, but not limited to, the following, any or all of which powers may be exercised by ordinance or resolution of its governing body:

  1. The governing body of any creating or participating municipality in which the authority is located may appropriate each year such sums from its general fund as the governing body deems to be necessary for the construction, improvement, maintenance, or operation of any public hospital or hospital project or other facility constructed, maintained or operated by an authority, and money so appropriated and paid to a hospital authority shall be deemed a necessary expense of such creating or participating municipality. The governing body of any such creating or participating municipality shall also be authorized to advance or lend money, or real or personal property, to the authority for use in carrying out its purposes as set forth in this chapter;
  2. The governing body of any creating or participating municipality in which the authority is located may appropriate each year such sums from its capital funds as the governing body deems to be necessary for the purchase, construction, expansion, or improvement of any public hospital or hospital project or other facility constructed, maintained or operated by an authority, and money so appropriated and paid to a hospital authority shall be deemed a necessary expense of such creating or participating municipality. The governing body of any such creating or participating municipality shall also be authorized to advance or lend money, or real or personal property, to the authority for use in carrying out its purposes as set forth in this chapter;
  3. The governing body of any creating or participating municipality may borrow money against its general credit on such terms and for such period as it shall deem appropriate and sell revenue or general obligation bonds and advance, lend, grant, donate or appropriate the funds to the authority for the construction or improvement of any hospital project or other facility constructed, maintained or operated by the authority;
  4. The governing body of any creating or participating municipality may borrow money against its general credit on such terms and for such period as it shall deem appropriate and advance, lend, grant, donate or appropriate the funds to the authority for the maintenance and operation of any hospital project or other facility constructed, maintained or operated by the authority;
  5. To provide that any funds on hand or made available to it for hospital purposes shall be paid directly to the authority;
  6. To cause water, sewer, gas, electric or other utility services to be provided to the hospital authority;
  7. To sell, lease, dedicate, donate or otherwise convey to the authority any of its interest in any existing hospital or other related property, either real or personal, or grant easements, licenses or other rights or privileges in the existing hospital or other related property to the authority;
  8. To open and improve streets, roads and alleys to the hospitals;
  9. To provide police and fire protection services to the hospitals; and
  10. To enter into agreements with the authority with regard to the transfer of its hospital employees to the authority with the retention by such employees of any civil service status and accrued rights in pension, disability, hospitalization and death, and other fringe benefits.

Acts 1971, ch. 316, § 13; T.C.A., § 6-4016.

7-57-309. Operation of property.

Any property, real or personal, conveyed or leased to an authority by a creating or participating municipality shall be operated by the authority to which the property is conveyed, together with other facilities of the authority, in accordance with and under this chapter and the contracts entered into between the authority and the governing body or bodies of the creating or participating municipality or municipalities.

Acts 1971, ch. 316, § 14; T.C.A., § 6-4017.

7-57-310. Borrowing — Federal and state grants and contracts.

  1. In addition to the powers conferred upon authorities by other provisions of this chapter, authorities are also empowered to:
    1. Borrow money or accept grants from the federal or state governments for or in aid of the construction of any hospital project that such authority is authorized by this chapter to undertake;
    2. Take over any land acquired by the federal or state governments for the construction of a hospital project, with the approval of the governing bodies of the creating and participating municipalities;
    3. Take over, lease or manage any hospital project constructed or owned by the federal or state government; and
    4. Enter into such contracts, mortgages, trust indentures, leases or other agreements that the federal or state government shall have the right to supervise and approve the construction, maintenance and operation of such hospital project.
  2. It is the purpose and intent of this chapter to authorize every authority to do any and all things necessary to secure the financial aid and the cooperation of the federal and state governments in the construction, maintenance and operation of any hospital project that the authority is empowered by this chapter to undertake.

Acts 1971, ch. 316, § 19; T.C.A., § 6-4022.

Part 4
Financial Matters

7-57-401. Annual report by trustees — Budgets, preparation, hearings and approvals.

The board of trustees of each authority created under this chapter shall file an annual report with the governing body or bodies of the creating and participating municipalities of the authority for the fiscal year. The board shall also prepare and submit to the creating and participating municipalities at such times and in such form as they shall specify an annual operating budget, a capital budget, and a five-year capital improvement program. The creating and participating municipalities shall hold a public hearing on such budgets, and representatives of the board of trustees shall be present. After such hearing, the creating and participating municipalities in accordance with their contract with the authority shall determine the amount of appropriation they shall make for the operation of the authority's hospital facilities and for any capital expenditures for the purchase, construction, expansion or improvement of any hospital project or other facility constructed, maintained and operated by the authority, and shall approve an annual operating budget, a capital budget, and a five-year capital improvement program. If a creating or participating municipality makes no contribution to the annual operating budget or to the capital budget, then its approval of the budgets shall no longer be required pursuant to this section.

Acts 1971, ch. 316, § 15; T.C.A., § 6-4018.

Cross-References. Audit of financial affairs required at end of each fiscal year, § 7-57-402.

7-57-402. Annual audit.

Any hospital authority created by and under this chapter shall conduct an annual audit of the financial affairs, books and records of such authority, the audit to be at the end of each fiscal year. Each hospital authority shall obtain either a certified public accountant or a firm of certified public accountants to conduct such audit. The auditor so appointed shall make the audit provided for in this section in accordance with generally accepted accounting principles, and shall submit the complete and final report and audit to such authority not later than ninety (90) days after the close of the fiscal year. All audits provided for in this section shall be certified to and shall include, but in no way be limited to, a full and complete audit containing a balance sheet, profit and loss statement and statement of receipts and disbursements, and shall certify whether or not the authority has operated within its approved annual operating budget and capital budget.

Acts 1971, ch. 316, § 16; T.C.A., § 6-4019.

Cross-References. Failure to comply with audit requirements, § 7-57-404.

7-57-403. Publication of audits.

All final audits as provided for in § 7-57-402 shall be reproduced in sufficient numbers and copies, and shall be submitted to and filed with the governing bodies of each creating and participating municipality of the authority not later than ninety (90) days after the close of the fiscal year of the authority.

Acts 1971, ch. 316, § 17; T.C.A., § 6-4020.

7-57-404. Failure to conduct audit — Court order — Contempt.

In the event any hospital authority shall fail or refuse to provide for an annual audit and have such audit prepared and filed as set forth in §§ 7-57-402 and 7-57-403, or should such audit fail to certify whether or not the hospital authority has operated within its approved annual operating budget and capital budget, the governing body or governing bodies of any creating or participating municipality of such authority may petition the circuit or chancery court of the county wherein the authority operates a hospital to require the authority to have such audit and certification prepared and filed as provided in §§ 7-57-402 and 7-57-403. The judge of the court shall set a time for the hearing of such petition and after notice to the authority shall hear and determine the petition. In the event it is determined that the authority has failed to comply with the provisions relative to the preparation and filing of the audit and certification, the judge shall pass such orders as are necessary to effectuate compliance with the provisions. In the event the authority fails to have an audit and certification prepared and filed as required by the court order, the members of the authority shall be subject to contempt proceedings by the court as provided by law.

Acts 1971, ch. 316, § 18; T.C.A., § 6-4021.

Cross-References. Contempt of court, title 29, ch. 9.

Part 5
Private Act Metropolitan Hospital Authorities

7-57-501. Purpose and policy.

  1. The public purpose and policy set forth in § 7-57-102(a) is also declared to be applicable to any hospital authority created by private act of the general assembly, sometimes referred to in this part as a “private act metropolitan hospital authority”, the principal hospital facilities of which are located in a county in this state with a population greater than two hundred fifty thousand (250,000), according to the 1990 federal census or any subsequent federal census. For purposes of this part, “hospital authority” means hospital authorities, hospital districts, and hospitals owned and operated by one (1) or more local governments, directly or through an elected or appointed governing board.
  2. The general assembly hereby finds that the demand for hospital, medical and health care services is rapidly changing, as is the way and manner in which such services are purchased and delivered; that the market for hospital and health care services is becoming increasingly competitive; and that the hospital and other health care providers need flexibility to be able to respond to changing conditions by having the power to develop efficient and cost-effective methods to provide for hospital, medical and health care needs. The general assembly also finds that the increasing competition and changing conditions force hospitals and other health care providers to develop market strategies and strategic plans to effectively compete. The general assembly further finds that public hospitals in metropolitan areas are presently at a competitive disadvantage, and that significant investments in the public assets of private act metropolitan hospital authorities could be jeopardized by inability to compete with private hospitals because of legal constraints upon the scope of their operations and limitations upon the power granted to public hospitals under existing law.

Acts 1995, ch. 119, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. County hospital board of trustees' authority to sell hospital, OAG 98-0119, 1998 Tenn. AG LEXIS 119 (7/2/98).

NOTES TO DECISIONS

1. Constitutionality.

The Constitution of Tennessee does not prohibit a hospital district from operating a preferred provider organization simply because such entities are also operated by private businesses. Eye Clinic, P.C. v. Jackson-Madison County Gen. Hosp., 986 S.W.2d 565, 1998 Tenn. App. LEXIS 488 (Tenn. Ct. App. 1998).

2. Due Process.

Quasi-governmental hospital district did not deprive doctors of their due process or equal protection rights by denying and revoking former membership in provider networks. Eye Clinic, P.C. v. Jackson-Madison County Gen. Hosp., 986 S.W.2d 565, 1998 Tenn. App. LEXIS 488 (Tenn. Ct. App. 1998).

7-57-502. Powers granted.

  1. In addition to the powers granted to it by any private act of the general assembly, a private act metropolitan hospital authority has as supplemental and additional powers, all those powers of a hospital authority granted in:
    1. Section 7-57-301; provided, that no provision of that section pertaining to the relationship of a participating municipality to the operations of a metropolitan hospital authority shall limit or reduce any power that is granted to a private act metropolitan hospital authority by a private act of the general assembly; and
    2. Sections 7-57-302, 7-57-304, 7-57-305, and 7-57-310.
  2. In addition to powers otherwise granted by this part or any other public or private act of this state, or by any state regulation or federal law or regulation, and to the extent at the time not prohibited by the Constitution of Tennessee, a private act metropolitan hospital authority has, together with all powers incidental thereto or necessary to discharge the powers granted specifically in this part, the following powers:
    1. Participate as a shareholder in a corporation, as a joint venturer in a joint venture, as a general partner in a general partnership, as a limited partner in a limited partnership or a general partnership, as a member in a nonprofit corporation or as a member of any other lawful form of business organization, that provides hospital, medical or health care or engages in any activity supporting or related to the exercise of any power granted to a private act metropolitan hospital authority;
    2. Make or arrange for loans, contributions to capital and other debt and equity financing for the activities of any corporation of which such authority is the sole shareholder or sole member, and to guarantee loans and any other obligations for such purposes;
    3. Elect all or any of the members of the board of directors of any nonprofit corporation of which the private act metropolitan hospital authority is a member and has the power to so elect under the nonprofit corporation charter and bylaws;
    4. Create, establish, acquire, operate or support subsidiaries and affiliates, either for profit or nonprofit, to assist such private act metropolitan hospital authority in fulfilling its purposes;
    5. Create, establish or support nonaffiliated for profit or nonprofit corporations or other lawful business organizations that operate and have as their purposes the furtherance of such private act metropolitan hospital authority's purposes;
    6. Without limiting the generality of subdivisions (b)(4) and (5), accomplish and facilitate the creation, establishment, acquisition, operation or support of any such subsidiary, affiliate, nonaffiliated corporation or other lawful business organization, by means of loans of funds, acquisition or transfer of assets, leases of real or personal property, gifts and grants of funds or guarantees of indebtedness of such subsidiaries, affiliates and nonaffiliated corporations;
    7. Indemnify any person, including for purposes of this subdivision (b)(7) such person's estate and personal representatives, made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that that person is or was a board member or officer of such private act metropolitan hospital authority, or by reason of the fact that that person serves or served any other corporation or other entity or organization, whether for profit or not for profit, in any capacity at the request of the private act metropolitan hospital authority, against all judgments, fines, amounts paid in settlement and reasonable expenses, including, but not limited to, attorneys' fees actually and necessarily incurred, as a result of any such action or proceeding, or any appeal in an action or proceeding; provided, that nothing in this subdivision (b)(7) shall be construed as permitting indemnification of any person:
      1. In connection with any malpractice or health care liability action or proceeding arising out of or in any way connected with such person's professional practice;
      2. In connection with an action or proceeding by such private act metropolitan hospital authority in which a person is adjudged liable to such private act metropolitan hospital authority; or
      3. In connection with any other action or proceeding in which such person is adjudged liable on the basis that personal benefit was improperly received by such person;
    8. Make any other indemnification now or hereafter authorized by law;
    9. Exercise in any other county either within or without this state any power that may be exercised in the county in which the private act metropolitan hospital authority's principal hospital, medical and health care facilities and programs are located, notwithstanding any other statute to the contrary, whenever in the judgment of its board of trustees the operation of the hospital authority's hospital, medical and health care or program facilities, or the quality of medical or health care for its citizens in the county of its principal hospital operations shall be enhanced through economic interest in or contractual arrangements with hospital, medical and health care facilities or programs located outside the county; and
    10. Have and exercise all powers necessary or convenient to effect any or all the purposes for which a private act metropolitan hospital authority is organized.
  3. In the exercise of its powers, including, but not limited to, the powers in this section, any other provision of this part and of any other law, a private act metropolitan hospital authority may acquire, manage, lease, purchase, sell, contract for or otherwise participate solely or with others in the ownership or operation of hospital, medical or health program properties and facilities and properties, facilities, and programs supporting or relating thereto of any kind and nature whatsoever and in any form of ownership whenever the board of trustees in its discretion shall determine it is consistent with the purposes and policies of this part or any private act applicable to it, and may exercise such powers regardless of the competitive consequences of the exercise of such powers.

Acts 1995, ch. 119, § 2; 2012, ch. 798, § 1.

Attorney General Opinions. Powers of board of trustees of city hospital, OAG U97-037, 1997 Tenn. AG LEXIS 36 (7/28/97).

County hospital board of trustees' authority to sell hospital, OAG 98-0119, 1998 Tenn. AG LEXIS 119 (7/2/98).

NOTES TO DECISIONS

1. Application.

Where radiologists applied for a certificate of need to perform outpatient diagnostic imaging services in competition with hospital, and the hospital authority's board of trustees opposed the certificate of need application and filed an action for declaratory judgment seeking a declaration of the right of the hospital to close the staff of its imaging department by means of an exclusive provider contract, the trial court properly granted the hospital authority's motion for summary judgment, determining that the hospital authority had the right to close the staff of the hospital's imaging department because: (1) T.C.A. §§ 7-57-502(c) and  7-57-603 and the medical staff bylaws permitted the hospital authority to close the staff of the hospital's imaging department by means of an exclusive provider contract; and (2) Radiologists were not legally or constitutionally entitled to a hearing if their clinical privileges were terminated upon the execution of such a contract.  City of Cookeville v. Humphrey, 126 S.W.3d 897, 2004 Tenn. LEXIS 130 (Tenn. 2004).

2. Protection From Antitrust Claims.

District court properly dismissed a private hospital's antitrust claims against a hospital district as the language and circumstances surrounding T.C.A. § 7-57-502 constituted the authorization necessary to invoke the state action doctrine. Jackson, Tenn. Hosp. Co. v. W. Tenn. Healthcare, Inc., 414 F.3d 608, 2005 FED App. 292P, 2005 U.S. App. LEXIS 13799 (6th Cir. Tenn. 2005), rehearing denied, — F.3d —, 2005 U.S. App. LEXIS 22937 (6th Cir. Oct. 19, 2005).

7-57-503. Bidding.

  1. Any private act of the general assembly to the contrary notwithstanding, a private act metropolitan hospital authority shall not be required to bid the purchase or procurement of any goods or services that:
    1. Are not required to be bid by a county under the County Purchasing Law of 1983, compiled in title 5, chapter 14, part 2;
    2. Are not required to be bid by a municipality under the Municipal Purchasing Law of 1983, compiled in title 6, chapter 56, part 3;
    3. Are of a nature that is exempt or otherwise not required to be bid by any municipality or county under any other law of general application of this state.
  2. A private act metropolitan hospital authority shall not be subject to provisions for the letting of public contracts that may be provided in the charter or governing law of a creating municipality.

Acts 1995, ch. 119, § 3.

7-57-504. Implied powers — Construction.

In addition to all of the powers conferred upon it by this part or any other law, a private act metropolitan hospital authority may do any and all things necessary and convenient to carry out the powers expressly granted by this part or any other law. This part shall be construed consistent with § 7-57-107.

Acts 1995, ch. 119, § 4.

Part 6
Private Act Hospital Authority Act of 1996

7-57-601. Short title.

This part shall be known and may be cited as the “Private Act Hospital Authority Act of 1996.”

Acts 1996, ch. 778, § 1.

Cross-References. Property tax exemption for private act hospital authorities, § 67-5-209.

Attorney General Opinions. Board of trustees of a hospital district may mortgage property to secure a line of credit, and it may place a second mortgage on the property for the benefit of cities and county, OAG 08-197 (12/31/08), 2008 Tenn. AG LEXIS 242.

7-57-602. “Private act hospital authority” defined.

For the purpose of this part, “private act hospital authority” is any hospital owned or operated by one (1) or more local governments or any hospital, hospital authority or hospital district created or authorized by a private act of the general assembly.

Acts 1996, ch. 778, § 1.

Attorney General Opinions. County hospital board of trustees' authority to sell hospital, OAG 98-0119, 1998 Tenn. AG LEXIS 119 (7/2/98).

7-57-603. Rights and powers of authority — Procurement.

A private act hospital authority, as defined in this part, in addition to the rights and powers granted to such authority by any private act of the general assembly or its charter of incorporation, has as supplemental and additional rights and powers, all powers granted to private act metropolitan hospital authorities in part 5 of this chapter. Any powers granted under this part to a private act hospital authority shall not limit or reduce any power granted to a private act hospital authority by a private act of the general assembly or its charter of incorporation. The rights and powers granted to a private act hospital authority by this part shall not be applicable to any hospital that ceases to be either owned or operated by the governing authority or entity established under the hospital's private act. Nothing in this part shall require a private act hospital authority to bid the purchase or procurement of any goods or services that are not required to be bid by the private act creating such private act hospital authority or its charter of incorporation.

Acts 1996, ch. 778, § 1.

Attorney General Opinions. Powers of board of trustees of city hospital, OAG U97-037, 1997 Tenn. AG LEXIS 36 (7/28/97).

County hospital board of trustees' authority to sell hospital, OAG 98-0119, 1998 Tenn. AG LEXIS 119 (7/2/98).

Management and sale of Bradley County Memorial Hospital, OAG 00-045, 2000 Tenn. AG LEXIS 45 (3/13/00).

NOTES TO DECISIONS

1. Constitutionality.

A city-county hospital district, an autonomous quasi-governmental entity created by private act, was not a “county, city or town” nor “state” within the meaning of Article II, §§ 29 and 31 of the Tennessee Constitution; therefore, the district's co-owning shares of a health provider network with private entities did not violate those sections. Eye Clinic, P.C. v. Jackson-Madison County Gen. Hosp., 986 S.W.2d 565, 1998 Tenn. App. LEXIS 488 (Tenn. Ct. App. 1998).

2. Application.

Where radiologists applied for a certificate of need to perform outpatient diagnostic imaging services in competition with hospital, and the hospital authority's board of trustees opposed the certificate of need application and filed an action for declaratory judgment seeking a declaration of the right of the hospital to close the staff of its imaging department by means of an exclusive provider contract, the trial court properly granted the hospital authority's motion for summary judgment, determining that the hospital authority had the right to close the staff of the hospital's imaging department because: (1) T.C.A. §§ 7-57-502(c) and 7-57-603 and the medical staff bylaws permitted the hospital authority to close the staff of the hospital's imaging department by means of an exclusive provider contract; and (2) Radiologists were not legally or constitutionally entitled to a hearing if their clinical privileges were terminated upon the execution of such a contract. City of Cookeville v. Humphrey, 126 S.W.3d 897, 2004 Tenn. LEXIS 130 (Tenn. 2004).

3. Due Process.

Quasi-governmental hospital district did not deprive doctors of their due process or equal protection rights by denying and revoking former membership in provider networks. Eye Clinic, P.C. v. Jackson-Madison County Gen. Hosp., 986 S.W.2d 565, 1998 Tenn. App. LEXIS 488 (Tenn. Ct. App. 1998).

7-57-604. Sale of hospital — Referendum.

With respect to the sale of hospital property, this part shall not be construed or implemented in any manner that abolishes or diminishes the public's opportunity to require a public referendum as authorized by a municipal charter.

Acts 1996, ch. 778, § 2.

Chapter 58
Resource Recovery and Solid Waste Disposal

7-58-101. Chapter definitions — Approval of systems.

  1. As used in this chapter, unless the context otherwise requires:
    1. “Approved system” means a solid waste disposal facility that has as its primary purpose the creation and recovery of energy from solid waste, as defined in subdivision (a)(4), and has as a secondary or incidental purpose the recovery of recyclable commodities, and which facility has been approved by the department of environment and conservation under authority granted to it by title 68, chapter 211;
    2. “Department” means the department of environment and conservation;
    3. “Resource recovery” means the recovery of material physically and economically suitable for further processing, recycling, and ultimate reuse; and
    4. “Solid waste” means all municipal, commercial, or industrial solid waste normally collected and disposed of by local governments, such as garbage, rubbish, refuse, and other such similar and related materials, except those excluded by the department, which shall designate as “special waste” any hazardous or other waste it determines should not be processed in an approved system for reasons of public health or safety, or because the nature of the waste is such that it is not suitable for processing in an approved system, and such materials as are normally collected or accepted by private industry for the purpose of recycling and are not normally collected or accepted by local governments.
  2. The department shall approve, under the terms of this chapter, any system that:
    1. Is planned to handle solid waste in a manner compatible with the public health and safety;
    2. Converts a substantial percentage of solid waste into fuel; and
    3. Conserves resources.

Acts 1976, ch. 488, § 8; T.C.A., § 6-4108.

Compiler's Notes. Acts 1992, ch. 693, § 1 provided that throughout this chapter, former references to the commissioner or the department of health, health and environment, or public health, were to be amended to become references to the commissioner or department of environment and conservation.

Cross-References. Authority of not-for-profit corporations acting under energy production facilities law and this chapter, § 7-54-111.

7-58-102. Authority to participate.

The counties, cities, and towns of Tennessee are hereby authorized to participate in applicable approved local, joint or regional solid waste recovery disposal systems.

Acts 1976, ch. 488, § 1; T.C.A., § 6-4101.

Cross-References. Solid waste disposal, title 68, ch. 211.

7-58-103. Contracting with operators of approved systems.

  1. Whenever the operator of an approved system proposes to take the solid wastes collected by the counties, cities and towns of Tennessee for the purpose of resource and fuel recovery, such counties, cities and towns are authorized, wherever the resource and fuel recovery is found to be desirable by the governing body of such political subdivision, to contract for the delivery of solid wastes to such operator at a designated processing plant or transfer station, including a transfer station constructed and operated by local government or private industry.
  2. The term of any contract authorized by this section may extend beyond the elected term of the members of the governing body of such political subdivision, but in no event may such term exceed forty (40) years.

Acts 1976, ch. 488, § 2; 1979, ch. 266, § 2; T.C.A., § 6-4102.

Code Commission Notes.

Section 4 of Acts 1979, ch. 266, which was effective May 9, 1979, provided that all existing contracts heretofore entered into in compliance with this section or § 7-58-104, as amended by sections 2 and 3 of that act, were thereby ratified, validated and affirmed.

7-58-104. Contracting with other counties, cities and towns.

  1. The counties, cities and towns of Tennessee in any combination are authorized to contract with each other for purposes of cooperative solid waste operations under the terms of this chapter.
  2. The term of any contract authorized by this section may extend beyond the elected term of the members of the governing body of the counties, cities or towns involved, but in no event may such term exceed forty (40) years.

Acts 1976, ch. 488, § 3; 1979, ch. 266, § 3; T.C.A., § 6-4103.

Code Commission Notes.

Section 4 of Acts 1979, ch. 266, which was effective May 9, 1979; provided, that all existing contracts heretofore entered into in compliance with § 7-58-103 or this section, as amended by sections 2 and 3 of that act, were thereby ratified, validated and affirmed.

7-58-105. Out-of-state hauling — Regulations applying to inbound waste.

Wherever the location of processing plants shall require local governments to haul solid wastes across state lines, such out-of-state hauling is hereby declared to be authorized and to be a valid exercise of the authority of the local governments involved, and likewise solid wastes from out-of-state may be brought into the state of Tennessee for processing in approved systems, such inbound solid waste to be subject to the same handling standards and regulations as solid waste produced within the state.

Acts 1976, ch. 488, § 4; T.C.A., § 6-4104.

7-58-106. Property rights in waste.

The solid wastes involved shall become the lawful property of the local governments involved at the point of collection, and in the absence of contractual provisions to the contrary, shall become the property of the operator of an approved system upon delivery to such operator, whether delivery be at a transfer station or at a processing plant.

Acts 1976, ch. 488, § 5; T.C.A., § 6-4105.

7-58-107. Construction and operation of transfer stations.

The participating local governments may agree to, build and operate the required transfer stations of such types and at such locations within the state as may be agreed upon by the local governments involved and by the department, and that state solid waste grant-in-aid funds made available to local governments by title 68, chapter 211, are authorized to be used for the construction of such approved transfer stations.

Acts 1976, ch. 488, § 6; T.C.A., § 6-4106.

7-58-108. Assistance of department.

The department is authorized to assist any operator or potential operator of an approved system and the local governments involved in the design and location of required transfer stations, and in the design and location of sanitary landfills or other disposal facilities in connection with the transfer stations to dispose of special waste.

Acts 1976, ch. 488, § 7; T.C.A., § 6-4107.

7-58-109. Construction — Supplementary nature of chapter.

Nothing in this chapter shall be construed to prohibit local governments or private enterprise from the construction or operation of approved sanitary landfills, or of any other heretofore or hereafter approved solid waste disposal system, it being the intent of this chapter that its provisions shall be supplementary to, and not restrictive of, any previously authorized solid waste disposal system, facility, or operation, nor of any other such system, facility or operation that may be authorized in the future. Nor shall this chapter be interpreted as granting any regulatory authority to the department that is not otherwise granted in other statutes.

Acts 1976, ch. 488, § 9; T.C.A., § 6-4109.

7-58-110. Construction — Activities not prohibited.

Nothing in this chapter shall be construed to prohibit private enterprise or other agencies from the construction or operation of recycling plants, or to prohibit the sale or gift of solid wastes to private enterprise or other agencies by local governments.

Acts 1976, ch. 488, § 10; T.C.A., § 6-4110.

Chapter 59
Cable Television

Part 1
Cable Television Act of 1977

7-59-101. Short title.

This part shall be known and may be cited as the “Cable Television Act of 1977.”

Acts 1977, ch. 334, § 1; T.C.A., § 6-4301.

Cross-References. Film, entertainment and music commission, title 4, ch. 3, part 50.

Law Reviews.

Constitutional Law — First Amendment — Municipal Franchising of Cable Television, 53 Tenn. L. Rev. 179 (1985).

Attorney General Opinions. Authority of telephone cooperatives to provide single or two (2) way television services to subscribers, OAG 92-65, 1992 Tenn. AG LEXIS 62 (10/19/92).

Operation of telephone and cable television service by city, OAG 95-097, 1995 Tenn. AG LEXIS 110 (9/18/95).

Collateral References.

Cable television equipment or services as subject to sales or use tax. 5 A.L.R.4th 754.

7-59-102. Part definitions — Franchise licenses.

    1. For purposes of this part, unless the context otherwise requires:
      1. “Cable service” has the same meaning as defined in § 7-59-303;
      2. “Cable service provider” has the same meaning as defined in § 7-59-303;
      3. “Department” has the same meaning as defined in § 7-59-303;
      4. “Video service” has the same meaning as defined in § 7-59-303; and
      5. “Video service provider” has the same meaning as defined in § 7-59-303.
    2. Except with respect to a cable or video service provider that is issued a state-issued certificate of franchise authority by the department pursuant to part 3 of this chapter, the governing body of each municipality in each county in this state has the power and authority to regulate the operation of any cable television company, cable service provider or video service provider that serves customers within its territorial limits, by the issuance of franchise licenses after public notice and showing the terms of any proposed franchise agreement and public initiation for fees and not inconsistent with any rules and regulations of the federal communications commission or § 7-59-304.
  1. Cable television systems shall not serve customers in any unincorporated area without obtaining a franchise from the county or the department, unless the systems were serving those areas under franchises applied for at least ninety (90) days prior to May 18, 1977.
  2. A county shall not issue a franchise that is within any municipality.
  3. A franchise shall not be required for line extensions of a cable television system that do not serve any customers in the unincorporated area through which such lines are extended, or where such line extensions are constructed upon public lands or with easements not obtained from any public body.
  4. The governing body of a county shall not deny any cable television system a franchise for any area in which such cable television system was in place on May 18, 1977, or held a certificate of compliance from the federal communications commission.
  5. Franchises issued by a municipality or a county shall not be inconsistent with the rules and regulations of the federal communications commission.
  6. Nothing in this part shall be construed as prohibiting any county or municipal government from withdrawing a locally issued franchise from a cable television company, cable service provider or video service provider for cause.
  7. A franchise shall not be required of a cable television system to erect any tower or transmission cable in an unincorporated area for the purpose of providing service for an incorporated area.
  8. Any municipal electric system permitted to operate under the authority of chapter 52, part 6 of this title, before delivering any cable services, two-way video transmission or video programming shall obtain a franchise from the appropriate municipal governing body or county governing body.
  9. The franchising authority shall not employ terms more favorable or less burdensome upon a municipal electric system operating under the authority of chapter 52, part 6 of this title than those imposed by the franchising authority upon any private provider's providing the same services within the franchising authority's jurisdiction. The franchising authority shall not impose or enforce any local franchise requirement on any such private provider that is not also made applicable to such a municipal electric system, nor shall the franchising authority discriminate between such providers.
  10. Nothing contained in this section shall be interpreted to limit the authority of a municipality or county to collect franchise fees, control and regulate its streets and public ways, or enforce its powers to provide for the public health, safety, and welfare.

Acts 1977, ch. 334, § 4; T.C.A., § 6-4302; Acts 1999, ch. 481, § 2; 2008, ch. 932, § 20.

Attorney General Opinions. Cable companies' collection of franchise fees, OAG 98-0165, 1998 Tenn. AG LEXIS 165 (8/24/98).

Collateral References.

Community antenna television systems (CATV) as subject to jurisdiction of state public utility or service commission. 61 A.L.R.3d 1150.

Standing to contest award of, or acquisition of right to operate, cable TV certificate, license, or franchise in state court action. 78 A.L.R.3d 1255.

7-59-103. Above and below ground cables — Permits.

Any cable television company, cable service provider or video service provider incorporated under the laws of this state and any other such company incorporated or operating under the laws of any other state, upon complying with the laws of this state regulating the doing of business in this state by foreign corporations or foreign businesses, may, upon approval of the governing body of the city, county or department construct, maintain and operate its cable over or beneath any of the public lands of this state, but not including the freeway system, which is defined as a fully-controlled access facility, or over or beneath or along any of the highways or public roads of the state or over or beneath any of the waters of the state. The cable television company, cable service provider or video service provider shall, unless previously covered by court decree, where possible and practical, enter into an agreement with the telephone company or electric power distribution company whereby the cable television company, cable or video service provider has a right to attach its cable to the poles owned by the telephone company or electric power company or to bury its cables beneath the ground; provided, that the cable is constructed so as not to endanger the safety of persons or to interfere with the use of the public lands, highways or public roads or the navigation of such waters. The agency charged with the maintenance of the public lands, highways, or along the public lands, highways, public roads or waters of the state shall provide that the cable television company, cable or video service provider obtain a permit prior to placing its cables over, under or along the public lands, highways, public roads or waters. If both electrical and telephone facilities in an area are underground, then the cable television, cable service or video service lines in that area shall also be placed underground. If the cable is located in such a manner so as to contribute to interference with the right of ingress or egress to land that is subject to any easement, the cable television company, cable service or video service provider shall obtain the consent of the landowner, the landowner's heirs or assigns from which the original easement was obtained.

Acts 1977, ch. 334, § 2; 1978, ch. 629, § 1; T.C.A., § 6-4303; Acts 2008, ch. 932, § 21.

7-59-104. Relocation of cables and apparatus — Damage to public property.

Whenever the agency charged with the maintenance of such public lands, highways or public roads or waters of the state deems it necessary to move or remove the poles or underground conduit of the telephone company or electric power distribution company, the cable television company, cable service or video service provider and its apparatus shall be moved or removed at the cost of the cable television company, cable or video service provider. Whenever damage results to the public highways or roads as a result of operation by a cable television company, cable service or video service provider, the company or provider shall repair the highway or road according to department standards and all costs shall be borne by the cable television company, cable service or video service provider.

Acts 1977, ch. 334, § 3; T.C.A., § 6-4304; Acts 2008, ch. 932, § 22.

7-59-105. Damage to private property — Underground installation on private property.

  1. No cable television company, cable service provider or video service provider may damage private property on which the utility pole is located without just compensation to the landowner for the damage suffered to the landowner's property.
  2. No cable television company, cable service provider or video service provider may install underground wires or underground equipment on private property without the written consent of the property owner. A violation of this subsection (b) is a Class A misdemeanor.

Acts 1977, ch. 334, § 5; T.C.A., § 6-4305; Acts 1989, ch. 591, §§ 1, 6; 2008, ch. 932, § 23.

Cross-References. Penalty for Class A misdemeanor, § 40-35-111.

7-59-106. Fees payable by companies operating under grandfather clauses.

Any cable television company that shall receive the benefits of operating under the grandfather clauses contained in this part shall pay the county governing body or municipality the same fees as would be charged to a new franchise company by the county or municipality. These fees shall not be inconsistent with the requirements and regulations of the federal communications commission.

Acts 1977, ch. 334, § 6; T.C.A., § 6-4306.

7-59-107. Customer complaints — Records.

Any cable television company, cable service provider or video service provider locally franchised and operating in this state shall maintain a complete service for the purpose of receiving customer complaints concerning service or any other matter relating to its operations. These companies shall keep written records of complaints received, including the name of the complaining party, the nature of the complaint, and the disposition of the complaint. The records shall be subject to inspection by the governing body granting the franchise.

Acts 1977, ch. 334, § 7; T.C.A., § 6-4307; Acts 2008, ch. 932, § 24.

7-59-108. Prohibited activities — Penalties.

  1. It is unlawful for any person, firm, or corporation to make or use any unauthorized connection, whether physically, electrically, acoustically, inductively or otherwise, with any part of a franchised cable television system for the purpose of enabling such person, firm, or corporation, or others, to receive or use any television signal, radio signal, picture, program or sound, without payment to the owner of the system.
  2. It is unlawful for any person, without the consent of the franchise owner, to willfully transfer with, remove, or injure in any manner, cables, wires, or equipment used for the distribution of television signals, radio signals, pictures, programs or sound.
  3. Any person who willfully violates this section commits a Class C misdemeanor.
  4. Nothing in this section shall be construed to apply to licensed and certified electrical contractors while performing usual and ordinary service in accordance with recognized standards.

Acts 1977, ch. 334, § 8; T.C.A., § 6-4308; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

7-59-109. [Repealed.]

Compiler's Notes. Former § 7-59-109 (Acts 1991, ch. 290, §§ 1, 2; 1996, ch. 720, §§ 1, 2), concerning theft of cable television service, is repealed by Acts 2004, ch. 770, § 2, effective July 1, 2004. For provisions concerning communication theft, see § 39-14-149.

Part 2
Overlapping Franchises

7-59-201. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Cable service” means:
    1. The one-way transmission to subscribers of video programming or other programming service; and
    2. Subscriber interaction, if any, that is required for the selection of such video programming or other programming service;
  2. “Cable system” means a facility consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service that includes video programming and that is provided to multiple subscribers within a community; but “cable system” does not include:
    1. A facility that serves only to retransmit the television signals of one (1) or more television broadcast stations;
    2. A facility that serves only subscribers in one (1) or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities use any public right-of-way;
    3. A facility of a common carrier, except that such facility shall be considered a cable system to the extent such facility is used in the transmission of video programming directly to subscribers; or
    4. Any facilities of any electric utility used solely for operating its electric utility system;
  3. “Franchise” means an initial authorization or renewal of an authorization issued by a franchising authority, whether such authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, that authorizes the construction or operation of a cable system;
  4. “Franchising authority” means any governmental entity empowered by federal, state, or local law to grant a franchise;
  5. “Person” means an individual, partnership, association, joint stock company, trust, corporation, or governmental entity; and
  6. “Video programming” means programming provided by, or generally considered comparable to programming provided by, a television broadcast station or cable system.

Acts 1988, ch. 675, § 1.

7-59-202. [Repealed.]

Compiler's Notes. Former § 7-59-202 (Acts 1988, ch. 675, § 1), concerning public notices and hearings for the granting of franchises for cable service, was repealed by Acts 2008, ch. 932, § 25, effective July 1, 2008.

7-59-203. More favorable terms prohibited.

No municipality or county shall grant any overlapping franchises for cable or video service within its jurisdiction on terms or conditions more favorable or less burdensome than those in any existing cable or video franchise within the municipality or county.

Acts 1988, ch. 675, § 1; 2008, ch. 932, § 26.

7-59-204. [Repealed.]

Compiler's Notes. Former § 7-59-204 (Acts 1988, ch. 675, § 1), concerning the applicability of certain provisions of title 59, chapter 7, part 2, was repealed by Acts 2008, ch. 932, § 27, effective July 1, 2008.

7-59-205. [Repealed.]

Compiler's Notes. Former § 7-59-205 (Acts 1988, ch. 675, § 1), concerning the ability of municipalities and counties to impose additional terms and conditions upon the granting of cable franchises, was repealed by Acts 2008, ch. 932, § 28, effective July 1, 2008.

7-59-206. Existing franchises.

All cable service franchises in existence on July 1, 1988, shall remain in full force and effect according to their terms.

Acts 1988, ch. 675, § 1.

7-59-207. Renewal of franchises.

Nothing in this part shall be construed to alter or amend the process or procedure for renewal of franchises in existence on July 1, 1988.

Acts 1988, ch. 675, § 1.

7-59-208. Franchise requests.

This part shall not affect any franchise request filed in an area with an existing franchise prior to July 1, 1988.

Acts 1988, ch. 675, § 2.

Part 3
Competitive Cable and Video Services Act

7-59-301. Short title.

This part shall be known and may be cited as the “Competitive Cable and Video Services Act.”

Acts 2008, ch. 932, § 2.

7-59-302. Scope of part — Construction.

This part creates a fair franchising process for cable and video services and codifies the terms of the franchise in state law. This part does not alter existing state law regarding local control of public rights-of-way or the police powers of local government. This part does not alter or restrict the right of any municipality or county to impose ad valorem taxes, sales taxes, or other taxes of general applicability. This part does not alter or restrict in any manner the application of the Broadband Business Certainty Act of 2006, compiled in title 65, chapter 5, part 2. This part does not alter in any manner the provisions contained in chapter 52, part 6 of this title. This part does not alter or apply in any manner to wholesale telecommunications access by competitive local exchange carriers. It is the intent of this part to confer a limited role on the Tennessee public utility commission, referred to in this part as the “department”, which will be ministerial and narrowly construed, except to the extent otherwise specifically provided for in this part, and no rulemaking authority is provided by this part.

Acts 2008, ch. 932, § 3; 2017, ch. 94, § 16.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in the last sentence.

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

7-59-303. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Access” means that a provider is capable of providing cable service or video service at the household address regardless of whether any customer has ordered service or whether the owner or landlord or other responsible person has granted access to the household;
  2. “Broadband Internet service” means an asymmetrical connection to the Internet from a home computer with an expected download data transfer rate of at least one and one half megabits per second (1.5 Mbps), or, after January 1, 2012, a data transfer rate equal to the speed that thirty percent (30%) or more of the provider's Internet service subscribers actually purchase, and shall not include direct-to-home satellite service or direct broadcast satellite service;
  3. “Cable service” has the meaning set forth in 47 U.S.C. § 522(6); provided, however, that “cable service” does not include any video programming provided by a commercial mobile service provider as defined in 47 U.S.C. § 332(d) or video programming provided as part of, and via, a service that enables end users to access content, information, electronic mail or other services offered over the public Internet;
  4. “Cable service provider” means a provider of cable service;
  5. “Cable system” has the meaning set forth in 47 U.S.C. § 522(7);
  6. “Days” means calendar days. For purposes of any act to be taken pursuant to this part, if an act is to be taken on a day that falls on a weekend or holiday, then the act shall be required on the next day that is not a weekend or holiday;
  7. “Department” means the Tennessee public utility commission;
  8. “Franchise” has the meaning set forth in 47 U.S.C. § 522(9), and additionally includes the authorization to construct and operate a cable or video service provider's facility within the public rights-of-way used to provide cable or video service;
  9. “Franchise area” means, with respect to a large telecommunications provider that is a holder of a state-issued certificate of franchise authority, the aggregate geographic area containing its basic local exchange wire-line telephone service areas within the state. “Franchise area,” for all other holders of a state-issued certificate of franchise authority, means the geographical area described in the application for a state-issued certificate of franchise authority within which a holder of a state-issued certificate of franchise authority is seeking authority to deliver cable or video services;
  10. “Franchise authority” means “franchising authority” as set forth in 47 U.S.C. § 522(10) or other governmental entity empowered by federal, state, or local law to grant a franchise. With regard to the holder of a state-issued certificate of franchise authority within the areas covered by the certificate, the department is the sole franchising authority. With respect to a franchise agreement with a municipality or county governing authority, that municipality or county is the sole franchising authority within the service area governed by that franchise agreement;
  11. “Gross revenues” means:
    1. With respect to a holder of a state-issued certificate of franchise authority, all revenues received from subscribers in the applicable municipality or unincorporated county area for providing cable or video services, and all revenues received from nonsubscribers in the applicable municipality or unincorporated county area for advertising services and as commissions from home shopping services, as allocated pursuant to subdivision (11)(B); provided, that the advertising or home shopping services are disseminated through cable or video services. Gross revenues shall be determined according to generally accepted accounting principles. “Gross revenues” does not include any:
      1. Tax, surcharge, or governmental fee, including franchise fees; provided, however, that, upon the adoption of a resolution by the governing authority of the municipality or county, and notice of the resolution sent to the department, gross revenues may include the franchise fees; the governing authority of the municipality or county may likewise, by adopting a resolution, rescind such action;
      2. Revenue not actually received, even if billed, such as bad debt;
      3. Revenue received by any affiliate or any other person in exchange for supplying goods or services to the service provider;
      4. Amounts attributable to refunds, rebates, or discounts;
      5. Revenue from services provided over the cable system or video service system that are associated with or classified as non-cable or non-video services under federal law, including, but not limited to, revenues received from providing telecommunications services, information services other than cable or video services, Internet access services, directory or Internet advertising services, including, but not limited to, yellow pages, white pages, banner, and electronic publishing advertising. Where the sale of any such non-cable or non-video service is bundled with the sale of any cable or video service or services and sold for a single non-itemized price, the term “gross revenues” shall include only those revenues that are attributable to cable or video services based on the provider's books and records;
      6. Revenue attributable to financial charges, such as returned check fees, late fees or interest;
      7. Revenue from the sale or rental of property, except such property the consumer is required to buy or rent exclusively from the service provider;
      8. Revenues from providing or maintaining an inside wiring plan;
      9. Revenue from sales for resale with respect to which the purchaser is required to pay a franchise fee, and the purchaser certifies in writing that it will resell the service and pay a franchise fee with respect thereto; and
      10. Amounts attributable to a reimbursement of costs, including, but not limited to, the reimbursements by programmers of marketing costs incurred for the promotion or introduction of video programming; and
    2. With regard to gross revenues attributable to advertising revenues, or video home shopping services, the amount that is allocable to a municipality or unincorporated area of a county is equal to the total amount of a holder of a state-issued certificate of franchise authority's revenue received from the advertising and home shopping services multiplied by the ratio of the number of the provider's subscribers located in the municipality or in the unincorporated area of the county to the total number of the provider's subscribers. The ratio shall be based on the number of the provider's subscribers as of January 1 of the preceding year or more current subscriber count at the provider's discretion, except that, in the first year in which services are provided, the ratio shall be computed as of the earliest practical date;
  12. “Household” means an apartment, a house, a mobile home, or any other structure or part of a structure intended for residential occupancy as separate living quarters;
  13. “Incumbent cable service provider” means any cable service provider who provided cable service in a municipality or in an unincorporated area of a county on July 1, 2008, under a franchise whether or not the franchise had expired on July 1, 2008;
  14. “Large telecommunications provider” means a cable or video service provider using telecommunications facilities to provide cable or video service that, as of January 1, 2008, directly or through any subsidiary or affiliate, had more than one million (1,000,000) telecommunications access lines in this state. The basic local exchange footprint of a large telecommunications provider is that geographic area in which the carrier provides wire-line local telephone exchange service as of January 1, 2008;
  15. “Low-income household” with respect to a large telecommunications provider means a household with an average annual income of less than thirty-five thousand dollars ($35,000) as of July 1, 2008; provided, that, for determining low-income households, the most recent decennial census estimates of household income shall be adjusted by the consumer price index to estimate annual household incomes in prior years or subsequent years; provided further, that for determining low-income households after January 1, 2011, estimates from the most recent release of the American community survey five-year estimates shall be used. With respect to all other holders of a state-issued certificate of franchise authority, “low-income household” means, at the option of the holder with respect to each franchise area, either:
    1. A household meeting the standard provided in this subdivision (15) for large telecommunications providers; or
    2. A household below the estimated median household income within the holder's franchise area according to the most recent decennial census estimates of household income or, to the extent available, more recent estimates from the small area income estimates provided by the United States census bureau or, after January 1, 2011, estimates from the most recent release of the American community survey five-year estimates for such areas;
  16. “Public right-of-way” means the area on, along, below, or above a public roadway, highway, street, sidewalk, alley, bridge or waterway that is not private property;
  17. “Qualified cable operator” means a cable service provider that, on the date that it applies for a state-issued certificate of franchise authority, individually or together with its affiliates or parent company, has at least seven hundred thousand (700,000) cable or video service customers in the United States as determined by data collected and reported by the federal communications commission, referred in this part as the FCC, or determined by information available to the public through a national trade association representing cable operators;
  18. “Video programming” means programming provided by, or generally considered comparable to programming provided by a television broadcast station, as set forth in 47 U.S.C. § 522(20);
  19. “Video service” means the provision of video programming through wireline facilities located, at least in part, in the public rights-of-way without regard to delivery technology, including Internet protocol technology or any other technology. “Video service” does not include any video programming provided by a commercial mobile service provider as defined in 47 U.S.C. § 332(d) or video programming provided as part of, and via, a service that enables end users to access content, information, electronic mail or other services offered over the public Internet. “Video service” does not include cable service; and
  20. “Video service provider” means a provider of video service.

Acts 2008, ch. 932, § 4; 2010, ch. 961, § 1; 2017, ch. 94, § 17.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in (7).

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

7-59-304. Cable, video service or network facility — Certificate of franchise authority — Application — Transfer and termination.

    1. Any entity, person or joint venture, as authorized under this part, seeking to provide cable or video service over a cable system or video service network facility in this state after July 1, 2008, at the discretion of the cable service provider or video service provider, may elect from among the franchise options as set forth in this section. A cable or video service provider shall not provide cable service or video service without a franchise obtained pursuant to this part, except as in accordance with § 7-59-102.
    2. A person seeking to provide cable service or video service may elect to negotiate a local cable service or video service franchise agreement with a municipal or county franchise authority and may enter into a negotiated cable television franchise agreement in accordance with Title VI of the Communications Act of 1934 (47 U.S.C. § 521 et seq.), or a video service franchise agreement in accordance with any applicable state or federal law that establishes the terms and conditions for the franchise agreement within the jurisdictional limits of that municipality or county, including parts 1 and 2 of this chapter. A local cable service or video service franchise agreement entered into after July 1, 2008, shall remain in force and effect through its expiration date notwithstanding the provision for terminating a local franchise agreement established in subsection (b).
    3. A person seeking to provide cable or video service, including any incumbent cable service provider, may elect to adopt the terms of a negotiated franchise agreement entered into between a cable service provider or video service provider and a municipal or county franchise authority in the service area in which the provider desires to provide service. The municipal or county franchise authority shall be required to enter into any such negotiated franchise agreement upon the same terms and conditions with any requesting provider of cable service or video service. A local cable service or video service franchise agreement that is adopted by a cable service provider or provider of video service after July 1, 2008, shall remain in force and effect through its expiration date notwithstanding the provision for terminating a local franchise agreement established in subsection (b).
    4. A cable or video service provider may elect to file an application with the department for a state-issued certificate of franchise authority for one (1) or more specified service areas in accordance with the procedures set forth in this part.
      1. The state-issued certificate of franchise authority issued by the department is fully transferable to any successor in interest in accordance with the requirements in this subdivision (a)(5). Notice of the transfer shall be provided to the department and to the governing authority of the affected local government at least ten (10) days prior to the consummation of the transaction. No later than forty-five (45) days following the consummation of the transaction, the transferor shall be required to pay any franchise fees or other amounts owed to any municipality or county. No later than ninety (90) days following the consummation of the transaction, the transferee shall apply to the department for a state-issued certificate of franchise authority. The transferee shall have interim authority to provide cable or video service pending the receipt of a state-issued certificate of franchise authority from the department. Notwithstanding this subdivision (a)(5)(A):
        1. Subject to § 7-59-305(d), if the successor entity already holds a state-issued certificate of franchise authority, it may amend that certificate to add the transferred service area; and
        2. Any intra-company transfer of a state-issued certificate of franchise authority may be accomplished by providing the notice described in subdivision (a)(5)(A).
      2. Except to the extent permitted by applicable local permitting rules, transfer of a state-issued certificate of franchise authority does not transfer any interest or right under any local public permits for construction or work in public rights-of-way obtained by or in the name of the transferor and in no event shall a transfer of a state-issued certificate of franchise authority provide authority to a transferee to construct, maintain, or conduct any work in a public right-of-way until such time that the transferee obtains the required permits from, or is otherwise in compliance with the permitting requirements of, all applicable governmental authorities.
    1. An incumbent cable service provider or an entity or person providing video service on July 1, 2008, under a franchise previously granted by a municipality or county may elect to terminate one (1) or more of its municipal or county franchises at its option and seek a state-issued certificate of franchise authority by filing an application for a state-issued certificate of franchise authority for one (1) or more specified service areas with the department in accordance with the procedures set forth in this part. The municipal or county franchise is terminated on the date the department issues the state-issued certificate of franchise authority and no provision of the terminated local franchise is enforceable thereafter, except that until the date upon which the local franchise would have naturally expired, an incumbent cable service provider or entity or person providing cable or video services under a local franchise agreement that is terminated pursuant to this part shall not reduce or otherwise diminish access to cable or video services of any subscriber as of the date of termination if the subscriber does not have access to cable or video services from another local franchise holder or a holder of a state-issued certificate of franchise authority.
    2. An incumbent cable service provider may elect to continue to operate under one (1) or more local franchises at its option and to apply to the department for a state-issued certificate of franchise authority to continue to operate with respect to one (1) or more other service areas not covered by the local franchises. Any incumbent cable service provider providing service under an expired local franchise, including a local franchise that expires at any time prior to July 1, 2008, shall follow the procedure set forth in § 7-59-307(a) to obtain either a local or state-issued certificate of franchise authority.
      1. If an incumbent cable service provider or entity or person who chooses to terminate its local franchise agreement to obtain a state-issued certificate of franchise authority as provided in subdivision (b)(1) is providing to a municipality or county an institutional data network funded pursuant to the local franchise agreement, however defined or referenced in the local incumbent franchise, but generally including private line data network capacity for noncommercial purposes that is in existence as of January 1, 2008, and is funded via a line item per subscriber charge, then the incumbent cable service provider shall continue to provide the data network and a holder of a state-issued certificate of franchise authority serving the municipality or county is required to remit to the affected municipality or county the same per subscriber charge collected by the incumbent cable provider until the natural termination date of the local franchise.
      2. All cable and video service providers, including a holder of a state-issued certificate of franchise authority, may designate that portion of the subscriber's bill attributable to any payment required under this subdivision (b)(3) as a separate item on the bill for recovery of such amount from the subscriber. The fees shall be collected by the cable or video service provider or holder of a state-issued certificate of franchise authority and paid to the municipality or county. The municipality or county shall then remit or otherwise provide credit to the incumbent cable provider in a manner consistent with the local franchise agreement.
    3. For any other institutional data networks in existence and provided by an incumbent cable provider on January 1, 2008, the incumbent cable provider shall continue to provide and fund the institutional network as set forth in its local franchise agreement and may petition the department for an order requiring all cable and video service providers and holders of state-issued certificates of franchise authority whose service area includes the affected municipality or county to contribute to the funding of the institutional network on a per subscriber basis in the municipality or county and to approve the appropriate per subscriber charge. To obtain such an order, the incumbent cable provider shall demonstrate to the department that it had the right to recover its costs on a per subscriber basis under its local franchise agreement and shall also demonstrate the reasonable recovery cost, consistent with its local franchise agreement and consistent with applicable federal law, relating to the institutional network. The department shall review and establish the accuracy of the information provided by the incumbent cable provider after notice and an opportunity for any provider or holder who may, under this subdivision (b)(4), be required to contribute, to challenge the information before the department.

Acts 2008, ch. 932, § 5.

7-59-305. State-issued certificate of franchise authority — Application and fees.

  1. To receive a state-issued certificate of franchise authority, a cable or video service provider shall file an application with the department. A copy of the application shall be provided simultaneously to the governing authority of any affected municipality or county for services provided in unincorporated areas within a county. A parent company may file a single application covering itself and all, or some, of its subsidiaries and affiliates intending to provide cable or video service in the service areas throughout the state as described in subsection (c). The parent company shall include the names of the subsidiaries and affiliates and the service areas each intends to serve on its application to the department. The subsidiary or affiliate actually providing the service in the defined service area shall otherwise be considered the holder of the state-issued certificate of franchise authority under this part.
  2. The department shall impose a fee in accordance with the following schedule:
    1. With respect to applications for a state-issued certificate of franchise authority, the fee shall be based on the population of the service area or areas applied for in accordance with the most recent decennial census as follows:
      1. Up to and including 50,000 —  $500;
      2. Over 50,000, up to and including 100,000 —  $1,000;
      3. Over 100,000, up to and including 500,000 —  $2,000;
      4. Over 500,000, up to and including 1,000,000 —  $5,000;
      5. Over 1,000,000, up to and including 2,000,000 —  $10,000;
      6. Over 2,000,000 —  $15,000.
    2. With respect to amendments, the fee shall be based upon the populations of the service area or areas in accordance with the most recent decennial census as follows:
      1. Up to and including 50,000 —  $250;
      2. Over 50,000, up to and including 1,000,000 —  $500;
      3. Over 1,000,000 —  $1,000.
  3. The application for a state-issued certificate of franchise authority shall consist of an affidavit signed by an officer or partner. No other application form or materials shall be required. The affidavit shall provide the following information and affirm:
    1. That the applicant agrees to comply with all applicable federal and state laws and regulations to the extent that the state laws and regulations are not in conflict with or superseded by this part or other applicable law and will timely file with the FCC all forms required by the FCC in advance of offering video services or cable services;
    2. A written description of the municipalities and unincorporated areas within counties to be served, in whole or in part, by the applicant, which description shall be sufficiently detailed so as to allow a local government to respond to subscriber inquiries, including the name of each municipality or county governing authority within the service area. For purposes of this subdivision (c)(2), an applicant may, as a supplement to a written description, provide a map on eight and one half inch by eleven inch (8½" by 11") paper that is clear and legible and that fairly depicts the service area by making reference to the municipal or county governing authority to be served. If the geographical area is less than an entire municipality or county, a map shall describe the boundaries of the geographic area to be served in clear and concise terms;
    3. That the applicant/service provider intends to begin to offer video service or cable service for purchase or provide new broadband Internet service in accordance with § 7-59-311(d) in each of the municipalities and the unincorporated areas of each county described in subdivision (c)(2) within twenty-four (24) months of the date of the issuance of a state-issued certificate of franchise authority. If the holder of a state-issued certificate of franchise authority fails to begin to offer the services within twenty-four (24) months in any such municipality or unincorporated area of a county, the certificate shall become null and void with regard to the municipality or unincorporated area of a county; provided, however, that the holder of a state-issued certificate of franchise authority shall provide the department with an explanation of the reason for the delay and whether or not it intends to subsequently amend its certificate to reinclude such areas. A holder of a state-issued certificate of franchise authority may seek a waiver of the time period within which service must be offered as set forth in § 7-59-311(e);
    4. That the applicant agrees to indemnify and hold harmless, in accordance with § 7-59-318, the state, municipality, county and any employee or representative of the state, municipality or county, as well as any political subdivision of the state and any employee or representative of the political subdivision, individually and collectively, referred to in § 7-59-318 as the indemnitee;
    5. The location and telephone number of the principal place of business, the names of the principal executive officers of the applicant and the names of any persons authorized to represent the applicant before the department;
    6. That the applicant has the managerial, financial and technical qualifications to provide cable or video service;
    7. A description of the applicant's customer service complaint handling process, including policies on addressing customer service issues, billing adjustments and communication with government officials regarding customer complaints, and a local or toll-free telephone number at which a customer may contact the applicant. An applicant may satisfy this requirement by including the terms and conditions relating to customer complaints applicable to its customers, and the department shall conduct no review of the complaint handling process;
    8. That notice has been provided to the affected local governing authority of its right to receive a franchise fee consistent with this part. Notice will be provided to other entities with facilities in the rights-of-way, consistent with any nondiscriminatory and generally applicable local ordinance or resolution requiring the notice prior to performing any installation in the right-of-way;
    9. The applicant agrees to comply with the requirements of this part, expressly including the applicable nondiscrimination and service deployment requirements of § 7-59-311, and further, that the applicant acknowledges the provisions of § 7-59-312 relative to enforcement of nondiscrimination and deployment requirements;
    10. The applicant agrees to provide notice to an affected local governing authority ten (10) days prior to providing service in that jurisdiction; and
    11. That the application includes a minority-owned business participation plan and the applicant agrees to comply with the provisions of such plan in accordance with § 7-59-313. The minority-owned business participation plan shall be attached to and become a part of the application when the application is submitted.
    1. No later than fifteen (15) days after the filing of an application, the department shall notify the applicant in writing as to whether the application is complete and, if the department has determined that the application is not complete, the department shall state the reasons for the determination in writing.
    2. After the filing of an application that the department has determined is complete, the department shall determine whether an applicant has the managerial, financial and technical qualifications to provide cable or video service. In connection with that review the department may require the applicant to submit its plan to comply with the requirements of § 7-59-311. The department shall consider the plan to be sufficient if it includes a clear statement that the applicant has evaluated its deployment plans and reasonably concludes that the plan will result in the required deployment. The plans are confidential and are not subject to the open records laws, compiled in title 10, chapter 7. If the department determines that an applicant is managerially, financially and technically qualified to provide cable or video service and, if applicable, that its plan to comply with § 7-59-311 is sufficient, the department shall issue a state-issued certificate of franchise authority to the applicant. If the department determines that an applicant is not managerially, financially and technically qualified to provide cable or video service or, its plan to comply with § 7-59-311 is not sufficient, the department shall reject the application and shall state the reasons for the determination.
    3. Notwithstanding subdivision (d)(2), large telecommunications providers, qualified cable operators and incumbent cable service providers, including their subsidiaries and affiliates, are deemed by operation of law to have the managerial, financial and technical qualifications to obtain a state-issued certificate of franchise authority; provided, however, that the department shall be authorized, but not required, to conduct a review of an incumbent cable service provider's financial and technical qualification if the incumbent is seeking a new service area that would double its current size of operations and the incumbent does not have cable or video service assets of at least ten million dollars ($10,000,000) in the state. For the purpose of this subdivision (d)(3), “operations,” relevant to whether size has doubled, shall include either the number of additional households to be served or the actual proposed service area.
    4. The failure of the department to issue a state-issued certificate of franchise authority within forty-five (45) days of receipt of a completed application from any of the entities set forth in subdivision (d)(3) shall constitute issuance of the requested state-issued certificate of franchise authority without further action required by the applicant. The failure of the department to issue a state-issued certificate of franchise authority within one hundred eighty (180) days of receipt of a completed application from any other applicant shall constitute temporary issuance of the requested state-issued certificate of franchise authority to the applicant subject to final approval or rejection of the application by the department.
  4. The state-issued certificate of franchise authority issued by the department shall contain the following and no other items:
    1. A nonexclusive grant of authority to provide cable or video service in the areas set forth in the application;
    2. A nonexclusive grant of authority to construct, maintain and operate facilities through, along, upon, over and under any public rights-of-way, subject to the laws of this state, including the lawful exercise of police powers of the municipalities and counties in which the service is delivered;
    3. A statement that the grant of authority is subject to lawful operation of the cable or video service by the applicant or its successor in interest; and
    4. A statement that the grant of authority does not confer upon the holder of the state-issued certificate of franchise authority the right to place facilities on private property without the owner's consent to such placement, except that nothing in this part shall alter the condemnation authority provided pursuant to § 65-21-204 for internal improvements or as provided in title 29, chapter 16.
    1. The state-issued certificate of franchise authority issued by the department shall be for a term of ten (10) years. Upon the expiration of the initial term, the holder of a state-issued certificate of franchise authority may reapply pursuant to the process set forth in this section.
      1. The holder of a state-issued certificate of franchise authority shall, as a condition of maintaining the franchise authority, pay an annual fee as provided in this subdivision (f)(2) to cover the direct costs of the department in administering §§ 7-59-308 and 7-59-312 regarding the resolution of any complaints filed with the department. The holder of a state-issued certificate of franchise authority may designate that portion of the subscriber's bill attributable to the fee established by this subsection (f) and recover such amount from the subscriber as a separate item on the bill.
      2. For the fiscal year ending on June 30, 2009, the annual fee shall be collected in the aggregate from all holders of a state-issued certificate of franchise authority and shall not exceed one hundred seven thousand dollars ($107,000). In order to fairly assess the fee, the department shall calculate the total number of subscribers obtaining service from holders of a state-issued certificate of franchise authority based on quarterly franchise fee statements as of the end of the second quarter each year provided pursuant to § 7-59-306. Based on such calculation, the department shall assess each holder of a state-issued certificate of franchise authority a percentage of the amount established in this subdivision (f)(2) for the fiscal year ending on June 30, 2009, to be paid to the department by each holder within thirty (30) days of the date the department notifies the holder of the holder's share of the annual fee. The annual fees for 2009 shall be assessed on July 31, 2009. The percentage shall be calculated by dividing the holder's number of cable or video subscribers served under a state-issued certificate of franchise authority by the total number of cable or video subscribers of all holders served under all state-issued certificates of franchise authority. Notwithstanding such provisions, any payments collected from the state-issued certificate of franchise authority application fees and amendment fees shall be applied to reduce the annual fee required by this subsection (f). In addition, no holder of a state-issued certificate of franchise authority shall be assessed any amounts attributable to enforcement actions directed against another holder of a state-issued certificate of franchise authority other than those arising under § 7-59-308.
        1. For subsequent fiscal years, by September 15 of each year, the comptroller shall review the amount assessed in the previous fiscal year and make a determination as to whether the annual fee should be increased or decreased based on the following factors:
          1. The actual administrative costs incurred by the department in connection with the reasonable performance of its duties established in §§ 7-59-308 and 7-59-312;
          2. The actual number of cable or video-related complaints handled by the department;
          3. The complexity of cable or video-related complaints handled by the department;
          4. The amount of application and amendment fees collected by the department;
          5. The amount of personnel time necessary to accomplish the functions of the department relating to holders of state-issued certificates of franchise authority; and
          6. Any other factors deemed essential by the comptroller to certify a fair annual assessment amount.
        2. The comptroller shall certify the annual fee for each fiscal year and notify the department of the maximum annual fee that may be assessed to all holders of a state-issued certificate of franchise authority based on the calculation established in subdivision (f)(2)(B), which fee, if an increase as certified by the comptroller, shall in no event increase by more than five percent (5%) from the previous year's annual fee.
  5. Any successor in interest to the holder of a state-issued certificate of franchise authority shall apply for a state-issued certificate of franchise authority as provided for in this section and consistent with § 7-59-304(a)(5).
  6. The state-issued certificate of franchise authority issued pursuant to this part may be terminated by the cable or video service provider by submitting written notice of the termination to the department with a copy to the governing authority of the affected municipality or county. The department is neither required nor authorized to act upon the notice. Terminating state-issued certificate of franchise authority holders shall provide all existing customers with ninety (90) days written notice of the termination prior to actual termination and shall refund to the customers any payments or deposits for which service has not been provided. A holder's decision to terminate its state-issued certificate of franchise authority does not relieve the holder of its obligations with respect to the payment of any franchise fees or other funds owed to a municipality or county or the removal of its facilities within the public right-of-way, consistent with local rights-of-way ordinances or resolutions.
    1. A cable or video service provider shall file an application to amend its state-issued certificate of franchise authority to reflect any change in information required under subsection (c); provided, however, that the department may not deny the issuance of an amended state-issued certificate of franchise authority unless it has determined, in response to a complaint authorized by this part, that the holder of a state-issued certificate of franchise authority has:
      1. Acted in bad faith in its failure to comply with its obligations and representations made in its original application or any prior amendment to the application; or
      2. Acted in bad faith in its withdrawal of service from areas within which there is no access to other cable or video service.
    2. The applicant must file a copy of any amendment with the governing authority of the affected municipality or county. If the amendment includes new areas within the holder's franchise area, the applicable provisions and requirements of subdivisions (c)(3) and (9) shall be met. Notice must be provided to other entities with facilities in the rights-of-way, consistent with any nondiscriminatory and generally applicable local ordinance or resolution requiring the notice prior to performing any installation in the right-of-way of the affected municipality or county.
  7. Unless otherwise provided for in this section, the state-issued certificate of franchise authority issued pursuant to this part supersedes and is in lieu of any franchise authority or approval required by state or local law as of July 1, 2008.
  8. A large telecommunications provider shall apply for an initial state-issued certificate of franchise authority within one (1) year after July 1, 2008. A large telecommunications provider may apply for a local franchise at any time.
  9. A holder of a state-issued certificate of franchise authority shall comply with all applicable FCC requirements involving the distribution and notification of emergency messages over the emergency alert system consistent with the enforcement of the rules, and any waivers to the rules, as determined by the FCC. To the extent that a local government has the capacity, pursuant to an existing unexpired local franchise, to locally override the cable or video system, that capability shall remain active from the incumbent provider until the natural expiration of the franchise so long as the local emergency override capability is not in conflict with applicable state regulations concerning emergency communications. Notwithstanding an election by a cable provider or video service provider to terminate a local franchise, until the date the franchise would have naturally terminated, an incumbent cable or video service provider shall continue to provide emergency override capabilities that existed as of July 1, 2008, so long as the local emergency override capability is not in conflict with applicable state regulations concerning emergency communications.

Acts 2008, ch. 932, § 6.

Cross-References. Confidentiality of public records, § 10-7-504.

7-59-306. Franchise fee — Audits — Confidentiality of records.

    1. Except as otherwise provided in this section, a holder of a state-issued certificate of franchise authority shall be required to pay a franchise fee equal to five percent (5%) of the holder's gross revenues derived from:
      1. The provision of cable or video service to subscribers located within the municipality or unincorporated areas of the county; and
      2. Nonsubscribers for cable and video advertising services and as commissions for cable and video home shopping services as allocated under subsection (b).
    2. An incumbent cable or video service provider that terminates its existing local franchise by obtaining a state-issued certificate of franchise authority shall, unless otherwise provided by ordinance or resolution duly adopted by the legislative body of a municipality or county, continue to pay the franchise fee required under the terminated local franchise until the date upon which the local franchise would have naturally expired; provided, however, that the cable or video service provider shall be required to comply with access and deployment or build-out requirements, if any, under the terms of the terminated local franchise until the date upon which the local franchise would have naturally expired.
    3. Notwithstanding subdivision (a)(2), a municipality or county, pursuant to a duly adopted resolution, may require the holder of a state-issued certificate of franchise authority to pay the franchise fee enumerated in subdivision (a)(1). No change to the franchise fee shall be effective earlier than forty-five (45) days after the municipality or county provides the holder or the department with a copy of the resolution adopting the rate change. The adoption of such a resolution by the legislative body of a municipality or county shall relieve the provider of cable or video service from any access and deployment or build-out requirements not otherwise required by law including the provisions contained in § 7-59-304(b)(1).
  1. The amount of a holder of a state-issued certificate of franchise authority's nonsubscriber revenues from cable or video home shopping services that is allocable to a municipality or unincorporated area of a county is equal to the total amount of the holder's revenue received from such advertising and home shopping services multiplied by the ratio of the number of the holder's subscribers located in the municipality or in the unincorporated area of the county to the total number of the holder's subscribers. The ratio shall be based on the number of the holder's subscriber's as of January 1 of the preceding year or more current subscriber data at the provider's option, except that in the first year in which service is provided the ratio shall be computed as of the earliest practicable date.
    1. A franchise fee imposed pursuant to this section shall be paid to the municipality or county within forty-five (45) days after the end of the quarter to which the payment relates. The payment shall be considered complete if accompanied by a statement showing, for the quarter covered by the payment:
      1. The aggregate amount of the holder of a state-issued certificate of franchise authority's gross revenues attributable to the municipality or unincorporated areas of the county;
      2. The franchise fee rate for the municipality or county;
      3. The amount of the franchise fee payment due to the municipality or county; and
      4. A breakdown of the franchise fee by category of product or service revenues, and a designation of revenue attributable to subscribers versus nonsubscribers, and the total number of subscribers in the relevant county or municipality, but only if and to the extent that the provider's billing or accounting systems already provide a breakdown of the revenue on a location jurisdictional basis for other business or reporting purposes. At a minimum, any provider shall provide a designation of revenue attributable to subscribers versus nonsubscribers and the total number of subscribers in the relevant county or municipality.
    2. Any supporting statements submitted pursuant to subdivision (c)(1) shall be confidential and not subject to the open records law, compiled in title 10, chapter 7.
    1. The municipality or county may audit the business records of the holder of a state-issued certificate of franchise authority no more than once annually to the extent necessary to ensure compliance with this section. The audits may address a given period of time no more than once. The audits may not address any period less recent than three (3) years from the date the audit is commenced. The relevant business records shall be available for inspection by the employees or agents of the municipality or county at the location where the records are kept by the holder; provided, however, that insofar as practical as determined by the holder, a holder shall make the records available in the service area within which the audit relates. Any records obtained by or disclosed to a municipality or county by a holder of a state-issued certificate of franchise authority or any other cable or video service provider for the purpose of an audit or review, shall be confidential and not subject to the open records laws, compiled in title 10, chapter 7.
      1. A municipality or county or a holder of a state-issued certificate of franchise authority may bring a complaint relating to payments of franchise fees for any quarter to the department.
      2. A holder of a state-issued certificate of franchise authority seeking a refund of franchise fees paid with respect to any quarter may file a complaint with the department within five (5) years of the end of the quarter.
      1. An action may be brought in a court of competent jurisdiction by either party to determine the correct amount of the franchise fee due to a municipality or county under this section. Any such action must be brought within the later of:
        1. Six (6) months after a final determination by the department; or
        2. One (1) year after the complaint was filed with the department; provided, however, that no such action shall be brought more than six (6) years following the end of the quarter to which the disputed amount relates.
      2. Any such action shall be tried by the court de novo.
    2. Any of the time periods set forth in subdivision (d)(1) or (d)(2) may be extended by written agreement between the holder of a state-issued certificate of franchise authority and the municipality or county, and any extension of a time period in subdivision (d)(3)(A)(i) and (ii) shall automatically extend any subsequent time periods by the same amount of time.
    3. Each party shall bear the party's own costs incurred in connection with any such audit or review or dispute, except that in the event that an audit or review of a holder's records by a county or municipality that takes place out-of-state due to the impracticality to the holder of making the records available within the state, results in a final and unappealable determination by the department that the holder underpaid the franchise fee by more than ten percent (10%) for the period audited or reviewed, then the holder shall be obligated to reimburse the travel costs incurred by the auditors or reviewers. The amount of travel costs reimbursed pursuant to this subdivision (d)(5) shall not exceed amounts that would be allowed under the comprehensive travel regulations as promulgated by the department of finance and administration and approved by the attorney general and reporter.
    1. An action may be brought in a court of competent jurisdiction by either party appealing a final determination by the department of the amount of the franchise fee due to a municipality or county under this section; provided, however, that any such action must be brought within six (6) years following the end of the quarter to which the disputed amount relates. This time period may be extended by written agreement between the holder of a state-issued certificate of franchise authority and the municipality or county.
    2. Except as provided in subdivision (e)(3), each party shall bear the party's own costs incurred in connection with any such audit or review, or both the audit and review, or dispute.
    3. In the event that an audit or review of a holder's records by a county or municipality that takes place out-of-state due to the impracticality to the holder of making the records available within the state, results in a final and unappealable determination by the department that the holder underpaid the franchise fee by more than ten percent (10%) for the period audited or reviewed, then the holder shall be obligated to reimburse the travel costs incurred by the auditors or reviewers. The amount of travel costs reimbursed pursuant to this subdivision (e)(3) shall not exceed amounts that would be allowed under the comprehensive travel regulations as promulgated by the department of finance and administration and approved by the attorney general and reporter.
  2. A municipality or county may contract with the comptroller of the treasury or a third party for the audit or review of records or for the collection of the franchise fees and enforcement of this part; provided, however, that neither the comptroller nor a third party shall be compensated on a contingency fee basis with regard to any such activities.
  3. Notwithstanding any provision of this section to the contrary, upon a credible indication or allegation that the holder of a state issued certificate of franchise authority has engaged in accounting fraud, the comptroller of the treasury, with the concurrence of the attorney general and reporter, may conduct an audit of the business records of the holder of a state-issued certificate of franchise authority to determine compliance with this section without regard to the limitations included in subsection (d). The relevant business records shall be available for inspection by the employees or agents of the comptroller at the location where the records are kept by the holder. Any information obtained by or disclosed to the comptroller shall be considered working papers of the comptroller and, therefore, are confidential and are not subject to the open records laws compiled in title 10, chapter 7.
  4. The cable or video service provider may designate that portion of a subscriber's bill attributable to any franchise fee imposed pursuant to this section, and recover such amount from the subscriber as a separate item on the bill.
  5. No municipality or county may levy any additional tax or revenue enhancement measure or impose any additional fee on a cable or video service provider or its subscribers not authorized under state law, other than a franchise fee provided either under this part or under a local franchise agreement, that is intended as a form of compensation for the provider's occupancy of the public rights-of-way within a municipality or county.
    1. Nothing in this part shall be construed to limit any authority of the municipality or county to impose any tax, fee, or assessment of general applicability. The franchise fee payments required by this part shall be in addition to any and all taxes or fees of general applicability.
    2. A holder of a state-issued certificate of franchise authority shall not have or make any claim for any deduction or other credit of all or any part of the amount of the franchise fee payments from or against any municipal or county taxes or other fees of general applicability, except as expressly permitted by applicable law.
    3. A holder of a state-issued certificate of franchise authority shall not apply nor seek to apply all or any part of the amount of the franchise fee payments as a deduction or other credit from or against any municipal or county taxes or fees of general applicability, except as expressly permitted by applicable law.
    4. A holder of a state-issued certificate of franchise authority shall not apply or seek to apply all or any part of the amount of any municipal or county taxes or fees of general applicability as a deduction or other credit from or against any of its franchise fee obligations, except as expressly permitted by law.

Acts 2008, ch. 932, § 7; 2012, ch. 651, § 1.

Cross-References. Confidentiality of public records, § 10-7-504.

7-59-307. Restrictions to specified entities concerning negotiating cable or video services — Retail interconnected voice over Internet protocol service.

  1. Nothing in this part confers authority upon a municipality or county to require any cable or video service provider to negotiate a local cable or video service franchise agreement with a municipality or county.
    1. The decision to choose whether to utilize either a state-issued certificate of franchise authority or a local franchise is within the sole discretion of the cable or video service provider.
      1. In the event an entity or person is providing cable or video service on July 1, 2008, under a local franchise previously granted by a municipality or county that has expired, the entity or person shall, as a condition of continuing to provide cable or video service within the municipality or county, either negotiate a renewal of an expired local franchise agreement or apply for a state-issued certificate of franchise authority.
      2. In the event that a municipality or county is unable to successfully negotiate a renewal of an expired local franchise with an incumbent provider within one hundred eighty (180) days after July 1, 2008, a municipality or county may require the incumbent provider to seek a state-issued certificate of franchise authority. The submission of an application for a state-issued certificate of franchise authority shall constitute interim authority to continue to provide service pending action by the department.
  2. Part 1 of this chapter is specifically preserved for providers who seek a local franchise. Parts 1 and 2 of this chapter, including, but not limited to, the provisions prohibiting more favorable terms in § 7-59-203, shall have no application to the state-issued certificate of franchise authority established in this part, and parts 1 and 2 of this chapter shall not apply in any manner or impose restrictions or obligations upon the holder operating under a state-issued certificate of franchise authority.
  3. No municipality, county, franchising authority, state agency, or political subdivision of the state may impose any additional requirements or request anything of value not provided under this part or any other state law on the provision of cable or video service by any cable or video service provider operating under a state-issued certificate of franchise authority within its jurisdiction, including, but not limited to, any requirement regulating rates charged by the cable or video service provider or any requirement to deploy any facility or equipment.
  4. No franchising authority, state agency, municipality, county or political subdivision of the state is authorized to regulate the provision of retail interconnected voice over Internet protocol service.

Acts 2008, ch. 932, § 8.

7-59-308. Customer complaint handling process — Customer service requirements.

  1. In addition to the customer complaint handling process described in the application for a state-issued certificate of franchise authority, a holder of a state-issued certificate of franchise authority must comply with the customer service requirements found in 47 CFR 76.309(c), which customer service requirements shall be the sole customer service requirements applicable to a holder of a state-issued certificate of franchise authority. Each holder of a state-issued certificate of franchise authority shall identify the department as the applicable franchise authority and include its telephone number on customer invoices.
  2. With regard to providers of cable or video service under the terms of local franchises, the municipal or county government shall handle customer inquiries or complaints, for customers located in the municipality or county, in accordance with the terms of the local franchise governing a cable service provider or provider of video services.
    1. With regard to holders of state-issued certificates of franchise authority, customer complaints shall be handled in accordance with the terms of the service agreement between the holder and the customer. To the extent that a complaint remains unresolved following the procedures in the service agreement, a complaint may be brought to the department. A municipality or county that receives a customer complaint may refer the complaint to the department. If the department determines that the provider has violated the customer service requirements made applicable in this part, it shall order the provider to:
      1. Cure the violation within a reasonable period of time; or
      2. Issue a service credit equal to the charges for the period of time that the customer's service was affected by the provider's failure to comply with the applicable service requirement, which shall not exceed a maximum credit of three (3) months, and the affected period shall not include the time during which the complaint is considered by the department.
    2. If the department determines that no violation has occurred, then it shall dismiss the complaint.
    3. Except as provided for in this subsection (c), the department is not empowered to award remedies or to impose penalties of any kind for any customer service complaint that is not expressly provided for by the FCC's customer service requirements. The department is not empowered to initiate investigations or to review or regulate the general compliance of a provider with the customer service standards and is instead limited to addressing only the specific customer complaints brought to the department. Nothing in this part alters, limits, or expands any existing remedy available to any customer, or any power available to the attorney general and reporter, pursuant to the Tennessee Consumer Protection Act of 1977, compiled in title 47, chapter 18.

Acts 2008, ch. 932, § 9.

7-59-309. Notice of authorized and activated public, educational, and governmental access channels — Additional channels — Operation and content — Access support fees.

    1. A county or municipality shall, within ten (10) days following the receipt of an application for a state-issued certificate of franchise authority from a cable or video service provider seeking approval to provide cable or video service to the county or municipality, provide notice to the department regarding the number of public, educational, and governmental access channels, “PEG” channels, that have been activated and are authorized to be activated and the amount of any fee or other payment for PEG access support required under the terms of the franchise agreement with the incumbent cable service provider with the most subscribers in the municipality or county on January 1, 2008, whether or not the agreement has expired.
    2. For purposes of this section, a PEG channel is deemed activated if it is being utilized for PEG programming within the municipality or county.
    3. For purposes of this section, “PEG programming” means noncommercial local interest programming that may include meetings of local governing bodies, boards and commissions, community events, community sporting events, community school programs, arts programs, educational programming provided by departments or agencies of the federal or state government, cultural and history programs, classroom and instructional programs, community news and information programs, programs for children and seniors, or other similar programs.
  1. If a municipality or county has provided the notice required under subsection (a), then within ninety (90) days after beginning to offer cable or video service for purchase in a municipality or county, or, in the case such notice has not occurred, within ninety (90) days after the date the notice occurs, a holder of a state-issued certificate of franchise authority shall designate the same number of PEG channels for PEG programming that a municipality or county has activated as described in the notice provided pursuant to subsection (a). If access to PEG facilities or appropriate PEG personnel is not reasonably available to the holder during the ninety-day period, the period shall be extended proportionately day for day for up to ninety (90) additional days unless the party controlling access to the facility where the PEG programming is produced unreasonably denies the provider with access to the facility. The channels shall be provided notwithstanding whether the applicable incumbent cable service provider has terminated its franchise in favor of a state-issued certificate of franchise authority and no interruption in PEG programming distribution shall occur as a result of the termination.
    1. In the event a municipality or county has not utilized the maximum number of PEG channels as described in the notice provided pursuant to subsection (a), access to the additional channel or channels shall be provided upon one hundred twenty (120) days' request to the holder of a state-issued certificate of franchise authority or incumbent cable service provider. PEG channels shall be subject to the utilization standards contained in the unexpired franchise until the expiration date of the franchise even if terminated for a state-issued certificate of franchise authority. In all cases following the expiration date of existing franchises, “substantial utilization” shall be determined as follows:
      1. For the first PEG channel activated on a system, eight (8) hours of PEG programming per day is programmed on average for each calendar quarter, which programming may include character-generated programming that is not outdated and is of interest to the local community; and
      2. For each additional activated PEG channel, ten (10) hours of PEG programming per business day, other than character-generated programming, is programmed for each calendar quarter.
    2. For purposes of measuring compliance with the minimum programming per day as provided in this subsection (c), the broadcast of any one (1) program in excess of two (2) times within any twenty-four-hour period or in excess of six (6) times in a business week shall not count toward the minimum requirement. An incumbent cable service provider or holder of a state-issued certificate of franchise authority may give notice of its intent to recover for its own use any PEG channel that is not substantially utilized; provided, that, if within ninety (90) days of the giving of the notice the county or municipality begins substantially utilizing the PEG channel, it shall remain a PEG channel. If at the end of such period the channel is not being substantially utilized, the incumbent cable service provider or holder of a state-issued certificate of franchise authority may recover the channel for its own use.
  2. After July 1, 2008, the maximum number of PEG channels to which a municipality or county has access with regard to a cable or video service provider shall be the number, if any, provided for in any local franchise agreement in effect as of January 1, 2008, notwithstanding the subsequent expiration of the agreement or termination of the agreement for a state-issued certificate of franchise authority.
  3. If a municipality or county did not have PEG channels under the incumbent cable service provider's franchise agreement as of July 1, 2008, the cable or video service provider shall designate upon written request a sufficient amount of capacity on its cable system or video service network to support up to three (3) PEG channels for a municipality or county with a population of fifty thousand (50,000) or more households; up to two (2) PEG channels for a municipality or county with less than fifty thousand (50,000) but not more than twenty-five thousand (25,000) households; and one (1) PEG channel for a municipality or county with less than twenty-five thousand (25,000) households. If a provider serves more than one (1) municipality or county from a single headend, then the number of households served over the entire system shall be aggregated for purposes of calculating the maximum number of channels that must be provided over the system under this subsection (e). The municipalities or counties served over a system shall determine how the channel or channels provided will be shared. To qualify for the first PEG channel on a system under this subsection (e), a municipality or county shall affirm its intent to substantially utilize the channel as provided for in this subsection (e). With regard to the first PEG channel, the substantial utilization standard shall not be reviewed until nine (9) months after the channel is activated by the municipality or county. Where one (1) or more PEG channels are authorized over a system, an additional channel, up to the maximum number of PEG channels allowed under this subsection (e), may be requested upon a showing that existing PEG channel or channels are being substantially utilized as provided for in this subsection (e).
    1. The operation and content of any PEG channel provided pursuant to this section shall be the responsibility of the municipality or the county receiving the benefit of the channel and the cable or video service provider bears only the responsibility for the transmission of the channel. A holder of a state-issued certificate of franchise authority must transmit a PEG channel by one (1) of the following methods:
      1. Interconnection, which may be accomplished by direct cable, microwave link, satellite or other method of connection. Upon request, if technically feasible, an incumbent cable service provider must interconnect its network for the provision of PEG programming with a holder of a state-issued certificate of franchise authority. The terms of the interconnection shall be as mutually agreed and shall require the requesting holder to pay the reasonable costs of establishing the interconnection. It is declared to be the legislative intent that an incumbent cable service provider should not incur any additional cost as a result of an interconnection required pursuant to this subdivision (f)(1)(A). In the event a holder of a state-issued certificate of franchise authority and the incumbent cable service provider cannot agree upon the terms under which the interconnection is to be made or the costs of the interconnection, either party may request the department to determine the terms under which the interconnection shall be made and the costs of the interconnection. The determination of the department shall be final. Upon notice to the governing authority of the county or municipality, the time for the holder of a state-issued certificate of franchise authority to begin providing PEG programming as required in this section shall be tolled during the time the department is making its determination; or
      2. Transmission of the signal from each PEG channel programmer's local origination point, at the holder's expense, such expense to include any equipment necessary for the holder to transmit the signal from PEG channels activated as of July 1, 2008, if the origination point is in the holder's service area.
    2. All PEG channel programming provided to a cable or video service provider for transmission must meet the federal national television system committee standards or the advanced television committee standards. If a PEG channel programmer complies with these standards and the holder does not provide transmission of the programming without altering the transmission signal, then the holder must do one (1) of the following:
      1. Alter the transmission signal to make it compatible with the technology or protocol the holder uses to deliver its service; or
      2. Provide to the municipality or county, at the holder's expense, in the case of PEG channels activated as of July 1, 2008, the equipment needed to accomplish such alteration.
    3. If accessibility to PEG programming or a subscriber's ability to utilize PEG programming transmitted by a holder of a state-issued certificate of franchise authority is materially different than that provided by an incumbent cable provider, then the holder shall make available a description of the differences on a publicly accessible web site and within the holder's marketing materials and customer service agreements.
  4. The provision of PEG content to the provider shall constitute authorization for the provider to carry the content, including, at the provider's option, beyond the jurisdictional boundaries of the municipality or county; provided, that the municipality or county can acquire the rights at no additional cost. If the municipality or county cannot acquire the rights, then the municipality or county shall be responsible for not transmitting the content to any provider that is unable to restrict the content to a jurisdictional boundary.
    1. All PEG channels provided by either an incumbent cable or video service provider or by a holder of a state-issued certificate of franchise authority may be provided in a digital format at the provider's or holder's option; provided, that the availability to subscribers of the PEG programming provided by an incumbent cable provider or a holder of a state-issued certificate of franchise authority shall be in accordance with the terms of any applicable local franchise agreement, except as provided in this section.
    2. PEG channels may be provided as follows:
      1. If, as of July 1, 2008, a county or municipality has activated more than three (3) channels:
  5. One (1) such channel may, upon one hundred twenty (120) days' notice to the county or municipality, be moved to any tier of service to which at least fifty percent (50%) of the subscribers served by the cable or video service provider in the area served by the PEG channel actually subscribe;
  6. Municipalities and counties shall be eligible for state-authorized PEG access support fees as follows:
    1. A holder of a state-issued certificate of franchise authority shall, immediately upon beginning to offer cable or video service for purchase in a municipality or county, be required to make state-authorized PEG access support payments that are equivalent to any PEG access support payments required to be made by the incumbent cable service provider in accordance with the notice required by subsection (a). The obligation shall continue until the natural expiration date of the incumbent cable service provider's local franchise that was in existence as of January 1, 2008, or, in the case of a local franchise that has expired but the terms of which are still in effect, until a new local franchise agreement or a state-issued certificate of franchise authority for the provider becomes effective, referred to in this section as the initial PEG support period. The payment obligation shall be as follows:
      1. If the incumbent cable service provider provides PEG access support in the form of periodic payments to the municipal or county governing authority that are equal to a percentage of gross revenue or a specified per-subscriber amount, the holder of a state-issued franchise shall make state-authorized PEG support payments to the governing authority equal to the same percentage of gross revenue or per-subscriber amount; or
      2. If the incumbent cable service provider provides PEG access support to the municipal or county governing authority in the form of a lump-sum payment or a series of fixed payments, then to the extent that the incumbent cable service provider's obligation to make the payments remains unsatisfied as of January 1, 2008, the holder of a state-issued certificate of franchise authority shall pay to the municipality or county a state-authorized PEG support payment amount equal to the portion of the incumbent cable service provider's remaining obligation due during the calendar year multiplied by a fraction, the numerator of which is the total number of the holder's subscribers in the municipality or county thirty (30) days prior to the payment due date and the denominator of which is the total number of cable service and video service subscribers of all providers of cable and video service in the municipality or county as of the same date.
    2. Following the initial PEG support period, a municipality or county that had received initial PEG access support shall, upon written notification to all cable and video service providers serving the municipality or county, be entitled to continue to receive state-authorized PEG access support equal to the same percentage of gross revenues, not to exceed one percent (1%), as it was receiving at the end of the initial PEG support period; provided, however, that no municipality or county shall receive less on a per subscriber basis than it received from the initial PEG support payments. If such a municipality or county is receiving state-authorized PEG support in an amount that is less than one percent (1%), then a municipality or county may, pursuant to a duly adopted ordinance or resolution, increase its state-authorized PEG support to an amount not to exceed one percent (1%) of gross revenue for the sole purposes of paying any category of costs that were being covered by initial PEG support payments. The right of a municipality or county to require a state-authorized PEG support payment following the initial PEG support period under this subsection (j) is discretionary with the municipality or county and nothing shall prohibit a reduction of the payments.
    3. A municipality or county not receiving initial PEG support payments, may, pursuant to a duly adopted ordinance or resolution, require that a holder of a state-issued certificate of franchise authority pay state-authorized PEG support payments to the county or municipality in an amount not to exceed one percent (1%) of gross revenue, for the sole purpose of paying capital costs of equipment in connection with the operation of PEG channels; provided, that the aggregate amount of state-authorized PEG support payments pursuant to this subdivision (j)(3) together with any franchise fees required to be paid under § 7-59-306 shall not exceed five percent (5%) of gross revenues.
    4. Notwithstanding any provision of this part or state law to the contrary, amounts received by a municipality or county for PEG support may not be used for other purposes.
    5. All payments due under this section shall be remitted with the franchise fee payment, and the administrative provisions of § 7-59-306 and the definitions of § 7-59-303 shall apply.
    6. All cable and video service providers may designate that portion of the subscriber's bill attributable to any payment required under this section as a separate item on the bill and recover the amount from the subscriber.
    1. Notwithstanding § 7-59-307(c), an incumbent cable service provider that provides free cable service to schools or government offices in a municipality or county on July 1, 2008, shall be required to continue to provide the free service to those locations until the natural termination date of the local franchise agreement; provided, that the municipality or county provides the incumbent with a list of locations where the free service is provided as of July 1, 2008. Any other cable or video service provider or holder of a state-issued certificate of franchise authority that serves the same municipality or county as an incumbent cable service provider that is offering free cable service as provided for in this subsection (k) shall provide a comparable level of free cable or video service to the same locations as listed by the municipality or county until the natural termination date of the incumbent's local franchise agreement.
    2. Notwithstanding the requirements of subdivision (k)(1), all cable or video service providers providing cable or video services in a municipality or county, including all holders of a state-issued certificate of franchise authority providing services under the state-issued certificate, and the municipality or county are authorized to negotiate any other arrangement agreed to by all parties other than meeting the requirements of subdivision (k)(1).

Not earlier than two (2) years following July 1, 2008, an additional channel may be moved as provided in subdivision (h)(2)(A)(i); and

Not earlier than three (3) years after July 1, 2008, one (1) additional channel may be moved as provided in subdivision (h)(2)(A)(i);

If, as of July 1, 2008, a county or municipality has activated three (3) channels:

One (1) such channel may, upon one hundred twenty (120) days' notice to the county or municipality, be moved to any tier of service to which at least fifty percent (50%) of the subscribers served by the cable or video service provider in the area served by the PEG channel actually subscribe; and

Not earlier than two (2) years following July 1, 2008, an additional channel may be moved as provided in subdivision (h)(2)(B)(i);

If, as of July 1, 2008, a county or municipality has activated two (2) channels, one (1) such channel may, upon one hundred twenty (120) days' notice to the county or municipality, be moved to any tier of service to which at least fifty percent (50%) of the subscribers served by the cable or video service provider in the area served by the PEG channel actually subscribe; or

Notwithstanding any provision in this section to the contrary, up to three (3) PEG channels of a municipality or county may, upon one hundred twenty (120) days' notice to the county or municipality, be provided on any tier of service if the channels are available to subscribers that only subscribe to a cable or video service provider's lowest cost tier. If additional equipment is required for such a subscriber to have access to the PEG channels provided on the tier of service, then the monthly cost for the equipment shall not exceed the greater of three dollars ($3.00), adjusted annually to reflect inflation commencing after the effective date in accordance with the consumer price index, or ten percent (10%) of the cost of the tier. The cable or video service provider may seek a waiver from the department of the foregoing price limitation if it can show that under the circumstances, the limitation is unreasonable. In addition to the PEG channel relocation rights under subdivisions (h)(2)(A), (B) and (C), following October 1, 2009, to the extent that a provider makes at least three (3) PEG channels available to subscribers as described in this subdivision (h)(2)(D), then upon at least sixty (60) days' notice to the county or municipality, any additional PEG channels may be moved to any tier of service to which at least fifty percent (50%) of the subscribers served by the cable or video service provider in the area served by the PEG channel actually subscribe.

Any PEG channels activated after April 1, 2008, may be provided on any tier of service to which at least fifty percent (50%) of the subscribers served by the cable or video service provider in the area served by the PEG channel actually subscribe.

The determination as to whether a particular PEG channel or channels are to be moved pursuant to this subsection (h) shall be subject to the approval of the governing authority of the affected county or municipality.

A holder of a state-issued certificate of franchise authority is not required to interconnect for or otherwise transmit PEG content that is branded with the logo, name, or other identifying marks of another cable or video service provider.

Acts 2008, ch. 932, § 10.

Compiler's Notes. For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-59-310. Effect of part on powers of municipalities relative to installation of cable facilities — Notice to cable providers of availability of open trenching — Use of conduits.

    1. Nothing in this part precludes the exercise of police powers by municipalities or counties, including the adoption and enforcement of any proper ordinances or resolutions not in conflict with this part.
    2. Nothing in this part diminishes or derogates from the ordinances or resolutions duly adopted by the governing body of a municipality or county and applicable to occupants or users of the public rights-of-way.
    3. Cable and video service providers must abide by the rights-of-way ordinances and resolutions of the municipality or county of general applicability in which the service is provided as well as any applicable state laws or rules.
    4. Nothing in this part diminishes or derogates from the existing powers promoting the health, safety and welfare of a community and its citizens, including the authority to regulate, during the permitting process, the installation and placement of video or cable facilities for the purpose of addressing the aesthetic concerns of the community.
    1. Notwithstanding any provision in this part to the contrary, in cases of new construction or property development where utilities are to be placed underground, each municipality, county or other relevant permitting authority shall establish as a condition to issuing each permit for open trenching to any developer or property owner that the developer or property owner give all providers of cable or video service serving the applicable municipality or county at least sixty (60) days' prior notice of the construction or development, and of the particular dates on which open trenching will be available for the providers' installation of conduit, pedestals or vaults, and laterals, referred to in this subsection (b) as equipment, to be provided at each such provider's expense.
    2. In the event a developer or property owner fails to give the required notice, the developer or property owner shall be responsible for the cost of new trenching for the installation of the cable or video service provider's equipment.
    3. Each provider shall also provide specifications as needed for trenching. Costs of trenching and easements required to bring service to the development shall be borne by the developer or property owner; except that, if any cable or video service provider fails to install its equipment within the dates during which the trenches are scheduled to be open, as designated in the notice given by the developer or property owner, then should the trenches be closed after such time period, the cost of new trenching is to be borne by the cable or video service provider.
    4. In the event the relevant permitting rules of a municipality, county or other relevant permitting authority require less than sixty (60) days' advance notice to all providers of cable or video service providers service, then the required notice shall be the lesser of sixty (60) days or the number of days prior to construction that the relevant rules require for the advance notice, but in no event less than ten (10) days. If a municipality, county or other relevant permitting authority's rules do not specify any minimum advance notice of construction requirements, then the required notice shall be sixty (60) days.
  1. The grant of authority provided holders of a state-issued certificate of franchise authority pursuant to § 7-59-305(e) does not expressly or implicitly authorize such a holder to use publicly or privately owned conduits without a separate agreement with the owners of the conduits.

Acts 2008, ch. 932, § 11.

7-59-311. Prohibited discrimination — Low-income households — Affirmative defenses — Measuring compliance — Waiver or extension.

    1. A holder of a state-issued certificate of franchise authority shall not discriminate among residential subscribers or potential subscribers. For purposes of this section, “discrimination” means the denial of access to cable or video service to any individual or group of residential subscribers or potential subscribers because of the race, income, gender, or ethnicity of the residents in the local area in which the individual or group resides.
    2. Within forty-two (42) months after the date it receives a state-issued certificate of franchise authority, twenty-five percent (25%) of the households with access to a holder of a state-issued certificate of franchise authority's cable or video service shall be low-income households. Compliance with this requirement shall be an affirmative defense to any allegations of discrimination pursuant to subdivision (a)(1). With respect to an incumbent cable service provider that obtains a state-issued certificate of franchise authority, the affirmative obligation to provide access to low-income households as specified in this subsection (a) shall be measured based upon the percentage of low-income households that exist only in new areas that are not covered, or were not previously covered, by a local franchise, referred to in this section as the new areas. An incumbent cable service provider that obtains a state-issued certificate of franchise authority will be deemed to satisfy its affirmative obligation if the provider certifies to the department in its application for a state-issued certificate of franchise authority that it will deploy its cable or video system to all the households located within the proposed service area. An incumbent cable service provider that obtains a state-issued certificate of franchise authority and satisfies its affirmative obligation as provided for in this subsection (a) shall have an affirmative defense to an allegation of discrimination pursuant to subdivision (a)(1) with respect to new areas. With respect to areas served under a state-issued certificate of franchise authority by such a holder other than new areas, the holder shall have an affirmative defense to a subdivision (a)(1) complaint with respect to any municipality or county to the extent that the holder can establish that twenty-five percent (25%) of the households with access to its cable or video service in the applicable municipality or county are low-income households.
    3. After the forty-two (42) months has elapsed, except as provided in this subdivision (a)(3), all holders of a state-issued certificate of franchise authority shall prepare an annual report on the estimated percentage of low-income households with access to its service. This report shall contain information demonstrating the estimated percentage share of low-income households with access to its video or cable service compared with the total number of all customers with access to its video or cable service anywhere within the area served under its state-issued certificate of franchise authority. The report need not be broken out into percentages based on geographic subdivisions, counties, or municipalities. The report shall be provided to all counties and municipalities in which the provider offers video or cable service and to the department. With respect to incumbent cable providers that obtain a state-issued certificate of franchise authority, no annual report shall be required with respect to any service areas that are, or have been subject to, a local franchise. To the extent that such a holder expands cable or video service to new areas pursuant to a state-issued certificate of franchise authority, the incumbent shall file the annual report limited to the new areas. In cases involving new areas where the annual report is required for the holders, if the holder certifies in its application to the department that it will provide cable or video service to all homes within the proposed new area that have at least a density of twenty (20) homes per mile measured from the holder's existing distribution plant, then no additional reports shall be required with respect to such areas.
  1. Except as otherwise provided in this section, a holder of a state-issued certificate of franchise authority shall provide access to its cable or video service, or to broadband Internet service as provided in subsection (d), to a number of households equal to at least thirty percent (30%) of the households in its franchise area within forty-two (42) months after the date it receives a state-issued certificate of franchise authority. With respect to incumbent cable service providers that obtain a state-issued certificate of franchise authority, the deployment thresholds provided for in this subsection (b) shall not be measured with respect to any service areas that are, or have been, subject to the provisions of a local franchise. To the extent that such a holder expands cable or video service to new areas pursuant to a state-issued certificate of franchise authority, the deployment thresholds shall apply to the new areas only.
  2. For purposes of determining whether a holder of a state-issued certificate of franchise authority has violated subsection (a) or (b), a holder of a state-issued certificate of franchise authority may satisfy the requirements of this section through the use of alternate technology, except for direct-to-home satellite service or direct broadcast satellite service, that offers service, functionality, and content that is demonstrably similar to that provided through the holder's video service network and may include a technology that does not require the use of any public rights-of-way or other alternative technology that, in the opinion of the department, is sufficiently similar to satisfy the obligations of this section. The technology utilized to comply with the requirements of this section shall include local public, education and government channels and messages over the emergency alert system as required by this part.
    1. For purposes of calculating whether a holder of a state-issued certificate of franchise authority has met the requirements of subsection (b), each household to which the holder provides access to broadband Internet service that did not have access to such service from the holder prior to the date of application to the department for a state-issued certificate of franchise authority, shall count as two (2) households for measurement purposes. A household to which the holder of a state-issued certificate of franchise authority provides access to broadband Internet service that did not have broadband Internet access from any provider prior to the date of application to the department for a state-issued certificate of franchise authority, shall count as four (4) households for measurement purposes.
    2. It is the legislative intent that in measuring compliance with this section, the department may rely upon verification provided by Connected Tennessee, as to the expansion of access to broadband Internet service to households by a holder of a state-issued certificate of franchise authority.
    3. To qualify for any broadband Internet service credit provided for in this section, a holder must have submitted to the verifier on the date of its application for a state-issued certificate of franchise authority a base line report identifying all zip codes in the state where the holder provides broadband Internet service to all households. If the holder provides broadband Internet service to fewer than all households in a zip code the holder shall identify the geographic area within the zip code where broadband Internet service is provided. The base line report shall be certified as true and correct by an officer of the holder. In providing a recommendation to the department as to whether a credit should be provided to a holder, the verifier shall provide the department with an explanation on what basis a credit should be provided supported by a sworn certification by an officer of the verifier that the holder is eligible for the specific credit that is recommended. The attorney general and reporter shall have the authority upon reasonable cause to investigate the request for or award of any credit under this section. Upon such an investigation, the attorney general and reporter shall have access to all information relied upon by the verifier with regard to the application for or award of a credit under this part.
    4. For the purposes of this subsection (d), households to which a holder extends access to broadband Internet service as described in this section shall be counted toward the deployment requirements of subsection (b), notwithstanding that the households may or may not have access to cable or video services from the holder. Any information submitted to, or obtained by the verifier or attorney general and reporter pursuant to this subsection (d) shall be considered proprietary information and therefore is confidential and not subject to the open records laws, compiled in title 10, chapter 7.
    1. A holder of a state-issued certificate of franchise authority may apply to the department for a waiver of or an extension of time to meet the requirements of subsection (a) or (b) or for an extension of time for deployment as set forth in § 7-59-305(c)(3) if one (1) or more of the following conditions materially impaired the ability of the holder to meet the requirements:
      1. The inability to obtain access to public and private rights-of-way under reasonable terms and conditions;
      2. Developments or buildings not being subject to competition because of existing exclusive service arrangements;
      3. Developments or buildings being inaccessible using reasonable technical solutions under commercially reasonable terms and conditions;
      4. Natural disasters; or
      5. Factors beyond the control of the holder of a state-issued certificate of franchise authority.
    2. The department may grant the waiver or extension only if the holder has made substantial and continuous effort to meet the requirements of subsection (a) or (b) or of § 7-59-305(c)(3). If an extension is granted, the department shall establish a new compliance deadline. Absent a complaint brought as provided in § 7-59-312, the department is not authorized to make any determination regarding a provider's compliance with this section.
  3. Notwithstanding any other provision of this part to the contrary, a holder of a state-issued certificate of franchise authority shall not be obligated to provide service outside the holder's franchise area; provided, however, that a holder of a state-issued certificate of franchise authority that is a large telecommunications provider shall not be obligated to provide service to customers within its franchise area for whom the holder does not offer wireline broadband Internet service.
  4. Except as otherwise provided in this part, a holder of a state-issued certificate of franchise authority shall not be required to comply with, and no entity may impose or enforce, any mandatory build-out or deployment provisions, schedules, or requirements except as required by this section.

Acts 2008, ch. 932, § 12; 2013, ch. 204, § 4.

Cross-References. Confidentiality of public records, § 10-7-504.

7-59-312. Personal claims — Findings of noncompliance — Civil penalties — Revocation of certificate.

  1. Individuals possess standing to bring claims as established in this part only for personal claims and not on behalf of other individuals. A municipality or county possesses standing to pursue claims on behalf of citizens residing within the county or municipality. In addition to all other remedies available under the law, upon receipt of a complaint from an individual, or upon receipt of a complaint brought by a municipality or county alleging a violation of § 7-59-311(a) or (b) concerning nondiscrimination and deployment of services, § 7-59-304(a)(1) requiring a franchise, § 7-59-305(c)(8) and (10) concerning notice requirements, § 7-59-305(h) concerning terminations of franchises, § 7-59-305(i) concerning amendments to state-issued certificates of franchise authority, § 7-59-309 concerning public, educational and governmental access channels, and § 7-59-313 concerning minority-owned business participation plans by a holder of a state-issued certificate of franchise authority, the department shall investigate the complaint and make a determination as to whether a violation has occurred. Except as expressly provided by this section or other specific provisions of this part, the department has no authority to regulate cable or video service provided by a holder of a state-issued certificate of franchise authority in this state, including, but not limited to, the rates, terms, or conditions of that service, and except to the extent that complaint authority is explicitly provided for in this section, the department has no general complaint authority to hear matters related to cable or video service or franchising.
  2. Upon receipt of the complaint, except as otherwise provided by this part, the department shall serve a copy of the complaint on the subject holder of a state-issued certificate of franchise authority who shall have thirty (30) days after receipt to submit a written response and any other relevant information the holder wishes to submit in response to the complaint.
  3. Upon a finding by the department that a violation of § 7-59-311(a) has occurred, the holder of a state-issued certificate of franchise authority shall have a reasonable period of time, as determined by the department, to cure the noncompliance. If the holder of a state-issued certificate of franchise authority fails to cure within the specified time as determined by the department, the department may assess a civil penalty of not more than five thousand dollars ($5,000) for each such violation or noncompliance. For purposes of this section, discrimination against each individual member of a group constitutes a separate violation and is subject to a separate penalty as set forth in this section.
    1. Upon a finding by the department that a violation of any provision enumerated in subsection (a), other than a violation of § 7-59-311(a) or (b) or a violation of § 7-59-313, has occurred, the holder of a state-issued certificate of franchise authority shall have a reasonable period of time, as determined by the department, to cure the noncompliance. If the holder of a state-issued certificate of franchise authority fails to cure within the specified time as determined by the department, the department may assess a civil penalty of not more than one thousand dollars ($1,000) for each day of the violation or noncompliance, not to exceed a total of ten thousand dollars ($10,000), counting all subscribers as a single violation or act of noncompliance; provided, however, that if the violation or noncompliance arises from the failure of the holder to meet the requirements of § 7-59-311(b), then the department may assess a civil penalty of not more than ten thousand dollars ($10,000) for each day of the violation or noncompliance, not to exceed a total of two million dollars ($2,000,000).
    2. Upon a finding by the department that a violation of § 7-59-313 has occurred, the holder of a state-issued certificate of franchise authority shall have a reasonable period of time, as determined by the department, to cure the noncompliance. If the holder of a state-issued certificate of franchise authority fails to cure within the specified time as determined by the department, the department may assess a civil penalty of not less than ten thousand dollars ($10,000) and not more than one hundred thousand dollars ($100,000), per violation.
  4. In determining whether a civil penalty is appropriate, the department shall consider all of the following factors:
    1. The seriousness of the noncompliance;
    2. The good faith efforts of the holder to comply;
    3. The holder's history of noncompliance;
    4. The financial resources of the holder; and
    5. Any other circumstances as determined by the department.
  5. The department may revoke, in whole or in part, a state-issued certificate of franchise authority if the department finds that a holder has acted in bad faith by repeatedly and knowingly failing to comply with a final department order requiring it to remedy violations of and noncompliance with § 7-59-311(a) and (b). A determination to revoke a state-issued certificate of franchise authority shall take into account each of the factors enumerated in subdivisions (e)(1)-(5).
  6. Imposition of any civil penalty or a determination to revoke a franchise may be appealed by the holder within forty-five (45) days of the issuance of the penalty. Appeals shall be filed in any court of competent jurisdiction, which shall review the underlying decision de novo. The filing of an appeal shall not automatically stay a monetary penalty or order to cure, but an appeal shall automatically stay any order of revocation. Upon a showing of cure after the imposition of any penalty or revocation, the department may, but is not required to, reduce the penalty or rescind the revocation.
  7. Any penalties assessed under subsection (c) or (d) shall be paid to the state treasurer for deposit into the Tennessee broadband accessibility fund, created pursuant to § 4-3-708.

Acts 2008, ch. 932, § 13; 2017, ch. 228, § 4.

Compiler's Notes. Acts 2017, ch. 228, § 1 provided that the act, which amended this section,  shall be known and may be cited as the “Tennessee Broadband Accessibility Act.”

Amendments. The 2017 amendment substituted “Tennessee broadband accessibility fund, created pursuant to § 4-3-708” for “Tennessee broadband deployment fund, created pursuant to § 7-59-315” at the end of (h).

Effective Dates. Acts 2017, ch. 228, § 16.  April 24, 2017.

7-59-313. Minority-owned business participation plan — Compliance report.

  1. For the purposes of this section, unless the context otherwise requires:
    1. “Minority-owned business” means a business that is solely owned, or at least fifty-one percent (51%) of the assets or outstanding stock of which is owned, by an individual who personally manages and controls the daily operations of the business and who is impeded from normal entry into the economic mainstream because of:
      1. Past practices of discrimination based on race, religion, ethnic background or sex, including, but not limited to, women;
      2. A disability as defined in § 4-26-102, including, but not limited to, disabled veterans; or
      3. Past practices of racial discrimination against African-Americans; and
    2. “Minority-owned business participation plan” means a business plan for actively soliciting bids from minority-owned businesses and letting contracts to such businesses when establishing, providing or expanding cable or video services and related support facilities. The plan shall include the following information:
      1. A proposal for purchasing goods and services from minority-owned businesses;
      2. Information on programs to provide technical assistance to such businesses; and
      3. A statement of intent to follow its minority-owned business participation plan.
  2. A minority-owned business participation plan shall strive to maximize participation of minority-owned businesses through both prime and second tier business contracting opportunities and shall strive to achieve a level of minority-owned business participation representative of the population demographics of this state.
  3. Notwithstanding any provision of this part to the contrary, a state-issued certificate of franchise authority shall not be issued by the department to any applicant that fails to include a minority-owned business participation plan in the applicant's application. The department shall review each application to confirm that the minority-owned business participation plan includes all information required pursuant to this section.
  4. Notwithstanding any provision of this part to the contrary, the department shall annually review each holder of a state-issued certificate of franchise authority to determine compliance with the holder's minority-owned business participation plan. In conjunction with the review, by January 31 of each year, each holder of a state-issued certificate of franchise authority shall prepare and submit an annual report to the department concerning the holder's minority-owned business participation plan and compliance with the plan. The department shall annually prepare a compliance report to be delivered to the governor and the clerks of the senate and the house of representatives. The compliance report shall also be posted on the web site of the department.
  5. Notwithstanding any provision of this part to the contrary, a holder of a state-issued certificate of franchise authority determined by the department not to be in compliance with the holder's minority business participation plan shall be found in violation of this section and shall be subject to § 7-59-312(d)(2).

Acts 2008, ch. 932, § 14.

7-59-314. Duties of department — Report.

    1. Beginning on March 1, 2009, the department shall file a report on March 1 of each year until 2011 with the speaker of the senate, the speaker of the house of representatives, the governor, the chair of the commerce and labor committee of the senate and the chair of the commerce committee of the house of representatives. The report shall be compiled by the department. The report shall contain the following information:
      1. The number of applications made for state-issued certificates of franchise authority and amendments to the applications during the prior year;
      2. The number of applications or amendments approved;
      3. The number of applications or amendments denied and the reason for the denials;
      4. The service areas covered by each holder of a state-issued certificate of franchise authority;
      5. The number of customer complaints and a description of the efficacy of the department's complaint resolution process;
      6. The number of municipalities or counties in which two (2) or more cable or video service providers are serving customers; and
      7. The department's aggregated summary of low-income households' access reports submitted by holders of state-issued certificates of franchise authority.
    2. In preparing this report, the department shall rely on information filed with the department or available as public information, but the department shall not issue mandatory data requests or subpoenas to collect the information. The department may invite all cable or video service providers to submit voluntary reports supplying information relating to the services and products offered in this state, and any other information the cable or video services providers volunteer regarding future plans for deployment, new services, new technology, or the impact of competition. All such reports received shall be appended to the department's report.
    1. Upon receipt of an application to obtain a state-issued certificate of franchise authority, the department shall notify all municipalities or counties identified as part of the applicant's service area to obtain the following information:
      1. The number of activated PEG channels for the municipality or county; and
      2. The terms of any PEG support being provided by the incumbent cable provider.
    2. The department shall compile and keep current the information for the use of holders of state-issued certificates of franchise authority. If a municipality or county fails to provide this information after being requested to do so by the department, the holder of a state-issued certificate of franchise authority shall not be held in violation or noncompliance with § 7-59-309 with regard to the municipality or county until such time as the department has received the information and the holder has been given adequate time to comply with § 7-59-309.

Acts 2008, ch. 932, § 15.

7-59-315. [Repealed.]

Acts 2008, ch. 932, § 16; 2013, ch. 204, § 5; repealed by Acts 2017, ch. 228, § 5, effective April 24, 2017.

Compiler's Notes. Acts 2017, ch. 228, § 1 provided that the act, which repealed this section,  shall be known and may be cited as the “Tennessee Broadband Accessibility Act.”

Former § 7-59-315 concerned the Tennessee broadband deployment fund.

7-59-316. Telecommunications joint venture — Application.

    1. Except as otherwise provided in this section, notwithstanding chapter 52 of this title and title 65, chapter 25, or any other state law to the contrary, a county or municipality, or any entity otherwise authorized by law to act on a county or municipality's behalf, or a cooperative is authorized to participate in a telecommunications joint venture that is created to provide broadband services to areas within the jurisdiction of the municipality, county or cooperative that has been determined to be an historically unserved area, meaning that the area does not have access to broadband Internet services, has been an area developed for residential use for more than five (5) years, and is outside the service area of a video or cable service local franchise holder or the franchise area of a holder of a state-issued certificate of franchise authority.
    2. For purposes of this section, a “telecommunications joint venture” means a joint venture or other business relationship with one (1) or more third parties to provide broadband services that may include broadband Internet services, voice over Internet protocol telephonic services, video over Internet protocol services and similar services provided over broadband facilities.
    3. A telecommunications joint venture authorized by this section shall only be authorized to provide broadband services in historically unserved areas.
    1. A telecommunications joint venture created and operated pursuant to the authority granted in this section may be subsidized by one (1) or more of the participants as may be determined by the participants; provided, however, that electric cooperatives and municipal electric systems shall comply with:
      1. Any applicable provisions of contracts with suppliers of electricity prohibiting or otherwise limiting cross-subsidies of services with electricity revenues;
      2. Chapter 52, part 6 of this title; and
      3. Title 65, chapter 25, part 2.
    2. It is the legislative intent that any joint venture established under this section shall not be subsidized by revenues from power or other utility operations.
    1. Until July 1, 2018, unless such date is extended by the general assembly, notwithstanding § 65-21-105, in any area of the state determined by the department, in accordance with subsection (d), to be an historically unserved area where there is no access to broadband Internet services, a municipality or cooperatively owned utility shall not receive or request in exchange for new pole attachments any pole attachment charge from a cable or video service provider, or a telecommunications joint venture seeking to provide new broadband Internet services to the area that exceeds fifty percent (50%) of the highest pole attachment rate charged by the municipality or cooperatively owned utility to a cable service provider on January 1, 2008. For purposes of the discounted pole attachment charge for new pole attachments in historically unserved areas, no increase in the underlying pole attachment rate shall raise the discounted rate until July 1, 2018, unless such date is extended by the general assembly. This subdivision (c)(1) does not apply to any pole attachment charges for poles where, as of January 1, 2008, the cable or video service provider or a telecommunications joint venture is paying a pole attachment charge.
    2. A municipality or cooperatively owned utility shall provide access to its poles and conduit located in public rights-of-way to any entity listed in subdivision (c)(1) that requests a pole attachment agreement on terms and conditions consistent with this section and other applicable law in the historically unserved area.
  1. Any municipality or county government seeking to establish a joint venture as provided in this part shall apply to the department for a finding that the area is historically unserved and that no private provider intends to serve that area. The applicant shall provide a copy of the application to all telecommunications providers offering service in the area applied for and to all holders of state-issued certificates of franchise authority or local franchises in areas within fifty (50) miles of the area applied for, referred to in this subsection (d) as area broadband providers, at the same time it submits its application to the department. The application shall include proof that the municipality or county has publicly advertised its intent to establish a joint venture to provide service pursuant to this section. The municipality or county shall demonstrate that it has provided notice of its intent to all area broadband providers at least sixty (60) days prior to its submission of its application to the department. All area broadband providers shall have the right to submit comments regarding any application to the department. All records of a telecommunications joint venture shall be available for disclosure and public inspection pursuant to title 10, chapter 7. All meetings of or pertaining to a telecommunications joint venture shall be open meetings in accordance with title 8, chapter 44.
  2. The comptroller of the treasury in cooperation with the department shall provide a report to the general assembly not later than January 31, 2011, and thereafter on January 31 annually, on the status of the provision of broadband services in accordance with this section.

Acts 2008, ch. 932, § 17.

Attorney General Opinions. Authority of electric cooperative to provide broadband internet service.  OAG 14-33, 2014 Tenn. AG LEXIS 35 (3/18/14).

7-59-317. Notices to affected local governments.

A holder of a state-issued certificate of franchise authority shall provide affected local governments with notices as provided in this section, which notices shall include at a minimum:

  1. Notice of filing of an application for a state-issued certificate of franchise authority, contemporaneously with the filing of the application;
  2. Notice of offering service for purchase in an affected county or municipality, ten (10) days prior to providing service;
  3. Notice of filing of an amendment to its application or its previously granted state-issued certificate of franchise authority, contemporaneously with the filing of the amendment with the department;
  4. Notice of its intent to transfer its state-issued certificate of franchise authority to a successor in interest at least ten (10) days prior to the consummation of the transaction; and
  5. Notice of termination of a state-issued certificate of franchise authority, contemporaneously with the filing of the notice with the department.

Acts 2008, ch. 932, § 18.

7-59-318. Obligation to indemnify and hold harmless — Exceptions.

  1. The holder of a state-issued certificate of franchise authority agrees to indemnify and hold harmless the state, municipality, county and any employee or representative of the state, municipality or county, individually and collectively referred to in this section and § 7-59-305(c)(4) as the indemnitee, as well as any political subdivision of the state and any employee or representative of the political subdivision, from all claims, demands, causes of action, liability, judgments, costs and expenses or losses for injury or death to persons or damage to property owned by, and workers' compensation claims, collectively referred to in this section as claims, against any parties indemnified in accordance with this section, arising out of, caused by, or as a result of the holder's exercising its authority granted under a state-issued certificate of franchise authority, except for claims related to public, educational or governmental channels controlled by an indemnitee or other third-party designated by the indemnitee; provided, that the indemnitee shall give the holder written notice of the holder's obligation to indemnify the indemnitee within ten (10) business days of receipt of a claim. Should the indemnitee determine that it is necessary for it to employ separate counsel, the costs for the separate counsel shall be the responsibility of the indemnitee. If the indemnitee determines in good faith that its interests cannot be represented by the holder, the holder shall be excused from any obligation to defend that indemnitee and shall have standing to intervene in any proceeding relating to such claims, but shall remain obligated to indemnify the indemnitee as provided in this section and shall retain the right to participate in the relevant proceeding to protect its own interests.
  2. Notwithstanding subsection (a), a holder of a state-issued certificate of franchise authority shall not be required to indemnify or hold harmless any indemnitee whose negligence or willful misconduct caused the claims.
  3. No indemnitee shall settle any claim for which a holder is responsible without the written consent of the holder.

Acts 2008, ch. 932, § 19.

Chapter 60
Tennessee Home Mortgage Act

Part 1
General Provisions

7-60-101. Short title.

This chapter shall be known and may be cited as the “Tennessee Home Mortgage Act.”

Acts 1979, ch. 439, § 1; T.C.A., § 6-4401.

Cross-References. Housing development agency bonds and notes, mortgage revenue bonds, § 13-23-121.

7-60-102. Legislative declaration — Local powers to raise and use funds — Use of state loan ceiling.

  1. It is hereby found and declared that there continues to exist throughout the state a seriously inadequate supply of decent, safe and sanitary dwelling accommodations, primarily accommodations for persons and families of lower and moderate income. This condition is contrary to the public interest and threatens the health, safety, welfare, comfort and security of the people of the state and is inimical to the sound growth and the development of its communities. An adequate supply of housing of a variety of housing types serving persons and families of all income levels and properly planned and related to public transportation, public facilities, public utilities and sources of employment and service is essential to the orderly growth and prosperity of the state and the state's communities. Present patterns and methods of providing housing unduly limit the housing options for many persons in the state.
  2. It is further found and declared that one (1) major cause of this condition has been recurrent, cyclical shortages of funds in private banking channels available for residential mortgages. Such shortages contribute to reductions in construction starts of new residential units. In addition, these cyclical shortages make the sale and purchase of existing residential units difficult in many parts of the state, especially by those persons of lower and moderate income. The ordinary operations of private enterprise have not in the past corrected these conditions.
  3. It is further found and declared that the reduction in residential construction starts associated with such shortages causes a condition of substantial unemployment and underemployment in the construction industry that results in hardships to many individuals and families, wastes human resources, increases the public assistance burdens of the state, counties, and municipalities, impairs the security of family life, impedes the economic and physical development of counties, cities and communities and adversely affects the welfare and prosperity of all the people of the state. A stable supply of adequate funds for residential mortgages is required to spur new housing starts in an orderly and sustained manner and thereby to reduce the hazards of unemployment and underemployment in the construction industry. The unaided operations of private enterprise, especially during periods of cyclical shortages of capital, have not always been able to meet and cannot always meet the need for a stable supply of adequate funds for residential mortgage financing.
  4. It is further found and declared that these conditions associated with such recurrent shortages of residential mortgage funds contribute to the persistence of slums and blight and to the deterioration of the quality of the environment and living conditions of a large number of persons residing in the state of Tennessee, have adversely affected the economy of the state as a whole and of the counties, cities and communities in the state, and are contrary to the declared policy of the state to promote a vigorous and growing economy, to prevent economic stagnation, to increase revenues to the state and to its counties, cities and other communities, and to achieve stable local economies.
  5. Based upon the experience of the past, shortages of funds for residential mortgages in the private investment system can be expected to recur from time to time in varying degrees of severity with the adverse consequences described in subsections (a)-(d). To bring greater stability to the residential construction industry and related industries, and thus to assure a steady flow of production of new housing units, counties or metropolitan governments having a population of two hundred thousand (200,000) or more, according to the 1980 federal census or any subsequent federal census, shall be given the power to raise funds from private investors through issuance of bonds and notes to:
    1. Make funds available for permanent mortgage financing of housing for lower and moderate income persons and families;
    2. Purchase existing mortgages from lending institutions within the state and direct an amount equal to the proceeds from the liquidated mortgage investments into new mortgages on residential housing for lower and moderate income persons and families;
    3. Enter into advance commitments with lending institutions to purchase mortgage loans for housing for lower and moderate income persons and families made to such persons and families;
    4. Make loans to lending institutions that require that substantially all of the proceeds of the loans be used for the making of mortgages for housing for lower and moderate income persons and families;
    5. Make “qualified home improvement loans” not to exceed fifteen thousand dollars ($15,000) per dwelling unit to finance alterations, repairs and improvements on or in connection with the existing residence by the owner of the residence, but only if such items substantially protect or improve the basic livability or energy efficiency of the property; and
    6. Make funds available for housing loans for veterans who qualify as persons and families of low and moderate income by including in each issue of bonds sold under this chapter a United States department of veterans' affairs guaranteed loan program.
  6. The general assembly hereby finds that the interests of the citizens of the state and the purposes of this chapter shall be best served by, and it is hereby determined that the state ceiling, as defined in the federal law, applicable to the state for any calendar year pursuant to the federal law shall be allocated among the governmental units in the state in accordance with title 9, chapter 20.
  7. The general assembly further finds that the authority and powers conferred under this chapter and the expenditure of public moneys pursuant to this chapter constitute a serving of a valid public purpose and that the enactment of the provisions set forth in this chapter is in the public interest and is hereby so declared to be such as a matter of express legislative determination.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4402; Acts 1981, ch. 504, §§ 1-4; 1984, ch. 799, § 2; 1984, ch. 800, §§ 2, 4; 1989, ch. 201, § 4.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Powers granted to counties, § 7-60-201.

7-60-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Bonds” or “notes” means the bonds and notes respectively authorized to be issued by counties under this chapter;
  2. “County” means any county or any metropolitan form of government in this state having a population of two hundred thousand (200,000) or more, according to the 1980 federal census or any subsequent federal census, that by resolution has made the findings and determinations required by § 7-60-202, and that shall exercise all powers granted and make all findings and determinations required under this chapter by means of resolution;
  3. “Federal law” means the Mortgage Subsidy Bond Tax Act of 1980 (26 U.S.C. § 103);
  4. “Home” means residential housing, including real property and improvements on real property, consisting of one (1) or more dwelling units, including, but not limited to, condominium units, owned by one (1) person or family of lower or moderate income that occupies or intends to occupy one (1) of such units; provided, that the total number of units financed by a single home mortgage may not exceed two (2);
    1. “Home mortgage” means an interest-bearing loan to a person or family of lower or moderate income for the purpose of purchasing or improving a home, constituting a first lien on real property and evidenced by a promissory note and secured by a mortgage, deed of trust or other security instrument on such home, but does not include a loan primarily for the purpose of refinancing an existing loan; provided, that such mortgage, deed of trust or other security instrument shall be guaranteed or insured by the United States, or any agency, department or instrumentality of the United States, or by any private mortgage insurance or surety company approved by the county, to the extent that such loan exceeds eighty percent (80%) of the lesser of:
      1. The appraised value of the home at the time of its making; or
      2. The sales price of such home;
    2. “Home mortgage” shall not be construed to encompass any loan made under the “qualified home improvement loan” provisions of this chapter;
  5. “Housing for lower and moderate income persons and families” means modest housing that is decent, safe, sanitary and adequate for the needs of the size of the family within sales price limits that do not exceed the sales price limits established and published by the Tennessee housing development agency for each county or metropolitan government having a population of two hundred thousand (200,000) or more by the 1980 federal census or any subsequent federal census;
  6. “Lending institution” means any bank, trust company, savings bank, national banking association, federal national mortgage association approved mortgage banker, savings and loan association, building and loan association, credit union, mortgage banker or other financial institution or governmental agency that customarily provides service or otherwise aids in the financing of mortgages on residential housing in the state or any holding company for any of the lending institutions and that is located in the state;
  7. “Persons and families of low and moderate income” means persons and families, regardless of race, creed, national origin, age or sex, deemed to require such assistance as is made available by this chapter with the income limits established for each county by the governing body of such county, except that the income limits cannot exceed the income limits set by the Tennessee housing development agency for its programs. In establishing these income limits, the governing body of the county acting under this chapter shall be required to take into consideration, without limitation, such factors that will ensure for the citizens of such county the opportunity to live in equal quality housing relative to their needs, including the following:
    1. The amount of the total income of such persons and families available for housing needs;
    2. The size of the family;
    3. The cost and condition of housing facilities available, including consideration of the following:
      1. The cost of a typical dwelling lot;
      2. The cost of materials;
      3. The cost of labor;
      4. The cost of real estate taxes; and
      5. The cost of home owners' or renters' insurance;
    4. The eligibility of such persons and families for federal housing assistance of any type predicated upon a lower income basis; and
    5. The ability of such persons and families to compete successfully in the private housing market and to pay the amounts prevailing in such market for decent, safe and sanitary housing;
  8. “Purposes of this chapter” means ameliorating the deterioration of counties by preserving and expanding employment opportunities in the construction and related industries and the tax base of counties by undertaking or assisting in the financing of home mortgages for persons and families of lower and moderate income;
  9. “Qualified home improvement loan” means an interest-bearing loan to a person of lower or moderate income for the purpose of improving a home, constituting either a first or second lien on real property and evidenced by a promissory note. No such loan shall be made for the sole purpose of refinancing an existing loan. Such loans must be with respect to a single-family residence. Such loans may be made for home improvements, including, but not limited to, renovation of plumbing or electric systems, installations of improved heating or air conditioning systems, the addition of additional living space, and the renovation of the kitchen area. However, no such loan shall be applied to the addition of swimming pools, tennis courts, saunas, or other recreation or entertainment facilities. “Qualified home improvement loans,” to the extent practicable as determined by the underwriters of any bond issue, shall only be made in counties or metropolitan governments having a population of two hundred thousand (200,000) or more, according to the 1980 federal census or any subsequent federal census; and
  10. “State” means the state of Tennessee.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4403; Acts 1980, ch. 878, § 1; 1981, ch. 410, § 1; 1981, ch. 504, §§ 5-9; 1984, ch. 799, § 3; 1984, ch. 800, §§ 1, 3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-60-104. Powers conferred as additional and supplemental — Limitations imposed — Effect.

The powers conferred by this chapter are in addition and supplemental to, and the limitations imposed by this chapter shall not affect, the powers conferred by any other general statute, special act, charter or ordinance of this state or any county. Home mortgages may be acquired, purchased and financed, and bonds or notes may be issued under this chapter for such purposes, notwithstanding that any other general statute, special act, charter or ordinance may provide for the acquisition, purchase and financing of like home mortgages or the issuance of bonds or notes for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other such law.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4420; Acts 1981, ch. 504, § 10.

7-60-105. Construction — Grandfather clause.

  1. This chapter is necessary for the health, welfare and safety of this state and its inhabitants; therefore, it shall be liberally construed to effect its purposes.
  2. Any proceedings of the governing body of any county under this chapter prior to June 12, 1981, are hereby validated, ratified, approved and confirmed, and may be continued as adopted or may be readopted or recommenced by such governing body.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4422; Acts 1981, ch. 504, § 32.

Part 2
Operation and Powers

7-60-201. Powers granted to counties.

  1. In furtherance of the purposes of this chapter, which are hereby determined to be county purposes for which county funds may be expended, each county shall, in addition to those powers otherwise conferred by any general statute, special act, charter or ordinance, have the following powers, except as otherwise limited by this chapter, and provided the exercise of such powers by a county shall be in accordance with the procedures established by this chapter:
    1. Acquire, and contract and enter into advance commitments to acquire, by assignment or otherwise, home mortgages owned by lending institutions or participations or other interests in home mortgages at such purchase prices and upon such other terms and conditions as shall be determined by the county or other person as it may designate as its agent, make and execute contracts with lending institutions for the origination and servicing of home mortgages and pay the reasonable value of services rendered under those contracts; provided, that such home mortgages shall be originated and serviced by lending institutions. In the administration of this program, the county shall ensure the reasonable opportunity of equal participation to every lending institution situated within the county as mortgage originators and servicers regardless of the size of such institution or of its share of any market area. Such commitments and contracts, together with all necessary forms, shall be made with and available to any and all lending institutions desiring to make such home mortgages available to persons and families of lower and moderate income. Each county shall include in its contracts and commitments any lending institution situated within the county owned or controlled by minority groups if such lending institution elects to participate in such program;
    2. Make loans to lending institutions under terms and conditions that, in addition to other provisions as determined by the county, shall require the lending institutions to use substantially all of the net proceeds of the loans, directly or indirectly, for the making of home mortgages in an aggregate principal amount substantially equal to the amount of such net proceeds; provided, that each county shall make available loans to any lending institution situated within the county owned or controlled by minority groups;
    3. Borrow money and issue its negotiable bonds and notes, and fund or refund the same, to defray, in whole or in part, the costs of purchasing or funding the making of home mortgages, including, but not limited to, the costs of studies and surveys, insurance premiums, underwriting fees and legal, accounting and financial advisory fees incurred in connection with the issuance and sale of such bonds and notes, including reserve funds and accounts and trustee, custodian and rating agency fees, interest on the bonds and notes for a period not exceeding two (2) years from their date, and designate appropriate names for such bonds and notes, and provide for the rights of the holders of the bonds and notes;
    4. Sell or otherwise dispose of or enter into commitments for the sale or other disposal of any home mortgages, in whole or in part, or loan sufficient funds to defray, in whole or in part, the costs of purchasing home mortgages or participations in home mortgages, so that the revenues to be derived with respect to the home mortgages, together with any insurance proceeds, reserve funds and accounts and earnings on reserve funds and accounts, shall be designated to produce revenues and receipts at least sufficient to provide for the prompt payment at maturity of principal, interest and redemption premiums, if any, upon all bonds and notes issued to finance such costs;
    5. Make qualified home improvement loans to persons or families who meet the criteria established under this chapter and who agree to abide by the proper rules and regulations promulgated for the administration of the loan program; and enter into any contract, with any person or institution, reasonably necessary to effect the purposes of this chapter;
    6. Pledge home mortgages, notes or other property and any revenues and receipts to be received from home mortgages, notes or other property to the punctual payment of bonds and notes as issued under this chapter and the interest and redemption premiums, if any, on the bonds and notes;
      1. Make and publish rules and regulations respecting its financial assistance programs and such other rules and regulations as are necessary to effectuate the purposes of this chapter, including, but not limited to:
        1. The time within which lending institutions must make commitments and disbursements for home mortgages or qualified home improvement loans;
        2. The location and other characteristics of homes to be financed by home mortgages or qualified home improvement loans;
        3. The terms and conditions of home mortgages or qualified home improvement loans to be acquired;
        4. The amounts and types of insurance coverage required on homes, home mortgages or qualified home improvement loans and bonds;
        5. The representations and warranties of lending institutions confirming compliance with such standards and requirements;
        6. Restrictions as to interest rates and other terms of home mortgages or qualified home improvement loans or the return realized from the mortgages or loans by lending institutions;
        7. The type and amount of collateral security to be provided to assure repayment of any loans from the county and to assure repayment of bonds;
        8. The classes of persons who may be eligible for mortgages or qualified home improvement loans under such program;
        9. The maximum purchase price of homes for which mortgages or qualified home improvement loans may be originated under such program; and
        10. Any other matters related to the purchase of home mortgages or qualified home improvement loans or the making of loans to lending institutions as shall be deemed relevant by the county;
      2. Following the date of issuance of any bonds or notes under this chapter, there shall be reserved from the lendable proceeds of the bonds or notes, for persons and families in targeted area, as defined in the federal law, not less than the percentage of such proceeds required by the federal law for not less than the period required by the federal law;
    7. Establish and revise from time to time and charge and collect fees and charges in connection with making, purchasing and servicing any of its loans, notes, commitments and other evidences of indebtedness;
    8. Employ financial advisors, engineers, attorneys, real estate counselors, appraisers and such other consultants and employees as may be required in the judgment of the county and fix and pay their reasonable compensation and expenses from moneys available to such county for their employment;
    9. Make, enter into and enforce all contracts, including contracts for the servicing of mortgages or qualified home improvement loans necessary, convenient or desirable for the purposes of the county or to the performance of its powers under this chapter, including contracts with any person, firm, agency, governmental agency or other entity, and all Tennessee governmental agencies are hereby authorized to enter into contracts, and otherwise cooperate with a county to facilitate the purposes of the chapter;
    10. Accept gifts, grants or loans of funds, property or services from any source, public or private, and comply, subject to this chapter and to any agreements with bondholders and noteholders, with the terms and conditions of the acceptance;
    11. Sue and be sued and plead and be impleaded with respect to any action taken pursuant to powers granted by this chapter; and
    12. To the extent required by the federal law, pay or credit arbitrage and investment gains to the mortgagors, to the United States or to such other party or parties as may be designated by the federal law.
  2. Bonds shall not be issued under the powers granted in this chapter, unless such bonds are rated “A” or higher by one (1) of the two (2) major nationally recognized rating agencies, or unless such bonds are sold in a transaction not involving any public offering within the meaning of § 4(2) of the Securities Act of 1933 (15 U.S.C. § 77d), and the rules and regulations promulgated under the Securities Act.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4404; Acts 1981, ch. 504, §§ 11-17.

Cross-References. Homebuyers' revolving loan fund pool, title 13, ch. 23, part 3.

Purposes of loans, § 7-60-102.

7-60-202. Prerequisites to exercising powers.

  1. No power granted to a county under this chapter may be exercised unless and until the county shall have found and determined by resolution that conditions substantially as described in § 7-60-102 exist in the county, are continuing and may be ameliorated by the exercise of the powers granted under this chapter.
  2. Such resolution shall include the following findings:
    1. Persons and families of lower and moderate income in the county are subject to hardship in finding and financing through private banking channels decent, safe and sanitary housing;
    2. Private enterprise is not adequately meeting the need for providing and financing decent, safe and sanitary housing for such persons and families and the reduction of blight and deterioration;
    3. There exist in the county conditions of blight and the deterioration of the quality of the environment and living conditions in the county;
    4. Conditions of unemployment and underemployment exist in the construction industry in the county; and
    5. The conditions of unemployment and underemployment and the need for decent, safe and sanitary housing shall be diminished and the blight and the deterioration of the quality of the environment and living conditions in the county shall be alleviated by the exercise and full implementation of the powers granted under this chapter.
    1. The resolution shall not pass final consideration until after a public hearing on the preliminary findings and determinations on the conditions in such county.
    2. Not less than thirty (30) days prior to such public hearing, a notice of public hearing shall be published in a newspaper of general circulation in the county.
    3. Such notice shall include the preliminary findings and determinations on which such resolution was adopted.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4405; Acts 1981, ch. 504, §§ 18, 19.

Cross-References. Purposes of loans, § 7-60-102.

7-60-203. Issuance of bonds and notes.

  1. Notwithstanding any general statute, special act, charter or ordinance to the contrary, a county has the power and is hereby authorized to issue from time to time its bonds and notes in such principal amounts as the county shall determine to be necessary to provide sufficient funds for achieving the purposes of this chapter.
  2. A county has the power, from time to time, to issue:
    1. Notes to renew notes; and
    2. Bonds to pay notes, including the interest on the notes and, whenever the county deems refunding expedient, to refund any bonds by the issuance of new bonds, whether the bonds to be refunded have or have not matured, and to issue bonds partly to refund bonds then outstanding for any of the purposes of this chapter. The refunding bonds may be exchanged for the bonds to be refunded or sold and the proceeds applied to the purchase, redemption or payment of such bonds.
  3. The bonds and notes shall be authorized by resolution of the county, shall bear such date or dates and shall mature at such time or times not exceeding forty (40) years from the date of the bonds or notes as such resolution may provide. The bonds may be issued as serial bonds or as term bonds or as a combination of serial bonds and term bonds. The bonds and notes shall bear interest at such rate or rates, be in such denominations, be in such form, either bearer or registered, carry such exchange, transfer and registration privileges, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, as such resolution may provide. Such bonds and notes may be sold by the county at public or private sale, at such price or prices as the governing body of the county shall determine.
  4. Any resolution authorizing bonds or notes or any issue of bonds or notes may contain provisions, which shall be a part of the contract or contracts with the holders of the bonds or notes:
    1. To pledge all or any part of the revenues or receipts derived by the county from the home mortgages or qualified home improvement loans to the punctual payment of bonds or notes issued for such home mortgages or qualified home improvement loans and interest on the mortgages and loans, and covenant against thereafter pledging any such revenues or receipts to any other bonds or notes of the county for any other purpose, except as otherwise provided in the resolution for the issuance of additional bonds or notes to be equally and ratably secured by a lien upon such revenues and receipts;
    2. To covenant as to limitations on the use and purposes and disposition of the proceeds from the sale of such bonds or notes and the pledging of such proceeds to secure the bonds or notes or of any issue of the bonds or notes;
    3. To covenant as to the rates or charges fixed in connection with the home mortgages or qualified home improvement loans for which such bonds or notes are to be issued and as to the use and disposition to be made of the mortgages or loans, including the maximum interest rate payable on any home mortgage;
    4. To provide for the replacement of lost, destroyed or mutilated bonds or notes;
    5. To provide limitations on the issuance of additional bonds or notes; the terms upon which additional bonds or notes may be issued and secured; and the refunding of outstanding or other bonds or notes;
    6. The procedure, if any, by which the terms of any contract with bondholders or noteholders may be amended or abrogated, the amount of bonds or notes the holders of which must consent to the amendment or abrogation, and the manner in which such consent may be given;
    7. Limitations on the amount of moneys to be expended by the county for its operating expenses with respect to home mortgage loans;
    8. Vesting in a trustee or trustees property, rights, powers and duties in trust as the county may determine, which may include any or all of the rights, powers and duties of the trustee appointed by the bondholders or noteholders pursuant to this chapter, and limiting or abrogating the right of the bondholders or noteholders to appoint a trustee under this chapter or limiting the rights, powers and duties of such trustee;
    9. To covenant to set aside or pay over reserves and sinking funds for such bonds or notes and as to the regulation and disposition of the reserves and sinking funds;
    10. To redeem such bonds or notes, and to covenant for their redemption and to provide the terms and conditions of redemption;
    11. To covenant and prescribe as to what happenings or occurrences shall constitute “events of default” as to such bonds or notes and to provide for the rights and remedies of the holders of the bonds or notes in the event of such default, including the right to appointment of a receiver; provided, that such rights and remedies are not inconsistent with the general laws of the state and the other provisions of this chapter;
    12. To covenant as to the terms and conditions upon which any or all of such bonds or notes shall become or may be declared due before maturity and as to the terms and conditions upon which such declaration and its consequences may be waived;
    13. To covenant as to the rights, liabilities, powers and duties arising upon the breach by it of any covenant, conditions or obligation;
    14. To vest in a trustee or trustees the right to receive all or any part of the revenues and receipts pledged and assigned to, or for the benefit of, the holder or holders of bonds or notes issued under this chapter, and to hold, apply and dispose of the revenues and receipts, including the investment of the revenues and receipts, and the right to enforce any covenant made to secure or pay in relation to the bonds or notes; to execute and deliver a trust agreement or trust agreements that may set forth the powers and duties and the remedies available to such trustee or trustees, and limiting the liabilities of the trustee or trustees, and describing what happenings or occurrences shall constitute events of default, and prescribing the terms and conditions upon which such trustee or trustees or the holder or holders of bonds or notes of any specified amount or percentage of such bonds or notes may exercise such rights and enforce any and all such covenants and resort to such remedies as may be appropriate;
    15. To execute all instruments necessary or convenient in the exercise of the powers granted in this chapter, or in the performance of its covenants and duties; and
    16. To make such covenants and do any and all such acts and things as may be necessary or convenient or desirable in order to protect and secure such bonds or notes and the holders of the bonds or notes, or in the discretion of the governing body of the county, tend to make such bonds or notes more marketable, notwithstanding that such covenants, acts or things may not be enumerated in this chapter, it being the purpose of this chapter to give each county power to do all things in the issuance of the bonds or notes and for their security that may be consistent with the Constitution of Tennessee.
  5. Any pledge made by the county shall be valid and binding from the time when the pledge is made, and the revenues or property so pledged and thereafter received by the county shall immediately be subject to the lien of such pledge without any physical delivery of the revenues or property or further act. The lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the county, without regard to whether such parties have notice of the lien. Neither the resolution nor any other instrument by which a pledge is created need be recorded.
  6. No bonds shall be issued pursuant to this chapter until after a public hearing on the issuance of such bonds. Not less than thirty (30) days prior to such public hearing, a notice of public hearing shall be published in a newspaper of general circulation in the county.
  7. Any county issuing bonds or notes under this chapter and any official of the county is empowered to take such action as may be necessary from time to time to preserve the exemption from federal income taxation of the interest on such bonds or notes.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4406; Acts 1981, ch. 504, §§ 20-24, 31.

7-60-204. Procedure for adoption of resolutions.

All action required or authorized to be taken under this chapter by the governing body of any county may be by resolution, which resolution may be adopted at the meeting, regular or special, of the governing body at which such resolution is introduced, and shall take effect immediately upon such adoption. Except as otherwise provided in this chapter, no resolution under this chapter need be published or posted, nor shall any such resolution be subject to veto by the chief executive officer of a county or presiding officer of the governing body. Any such resolution shall require for its passage not less than a two-thirds (2/3) vote of the governing body present at the meeting, regular or special, in which such resolution shall be introduced for passage.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4407; Acts 1981, ch. 504, § 25.

7-60-205. Recital of issuance pursuant to chapter.

Any resolution authorizing bonds or notes under this chapter may provide that such bonds or notes shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and the regularity of their issuance.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4408.

7-60-206. Interim certificates — Temporary obligations.

Pending the preparation or delivery of the definitive bonds or notes, interim certificates or other temporary obligations may be issued by a county to the purchaser of the bonds or notes. Such interim certificates or other temporary obligations shall be in such form and contain such terms, conditions and provisions as the governing body of such county issuing the interim certificates or other temporary obligations may determine.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4409; Acts 1981, ch. 504, § 25.

7-60-207. Validity of bonds or notes.

The validity of the authorization and issuance of the bonds or notes authorized under this chapter shall not be dependent on or affected in any way by proceedings relating to home mortgages or qualified home improvement loans for which the bonds or notes are issued. Bonds or notes issued under this chapter bearing the signatures of officers in office on the date of the signing of the bonds or notes shall be valid and binding obligations, notwithstanding that before the delivery of the bonds or notes any or all of the persons whose signatures appear on the bonds or notes have ceased to be officers of the county issuing the bonds or notes.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4410; Acts 1981, ch. 504, §§ 25, 26.

7-60-208. Deposit and payment of funds — Security — Accounting — Audit.

    1. All moneys of a county derived in furtherance of the purposes of this chapter, except as otherwise authorized or provided in this chapter, shall be deposited as soon as practicable in a separate account or accounts in banks or trust companies doing business in or out of the state.
    2. The moneys in such accounts shall be paid out on checks signed by such officer or employee of the county as the county shall authorize.
    3. All deposits of such moneys shall, if required by the county, be secured by obligations of the United States or of the state or of the county of a market value equal at all times to the amount of the deposit, and all banks and trust companies are authorized to give such security for such deposits.
    4. Notwithstanding this section, a county shall have power to contract with the holders of any of its bonds or notes as to the custody, collection, securing, investment and payment of any moneys of the county derived in furtherance of the purposes of this chapter, and of any moneys held in a trust or otherwise for the payment of bonds or notes, and to carry out such contract.
    5. Moneys held in trust or otherwise for the payment of bonds or notes or in any way to secure bonds or notes and deposits of such moneys may be secured in the same manner as moneys of the county, and all banks and trust companies are authorized to give such security for such deposits.
  1. Subject to any contract with bondholders and noteholders, a county issuing bonds or notes pursuant to this chapter shall prescribe a system of accounts. All such accounts shall be kept separate from other accounts of the county and shall be used for the purposes of this chapter and for no other purpose.
  2. All accounts of a county established in furtherance of the purposes of this chapter shall be annually audited by the comptroller of the treasury, an independent public accountant or independent certified public accountant, selected by the county and approved by the comptroller of the treasury, and a report of such audit and the books and records of the county kept with respect to any action taken or account established under this chapter, including books and records pertaining to its receipts, disbursements, contracts, reserve funds, sinking funds and investments, shall be open to public inspection.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4411; Acts 1981, ch. 504, §§ 25, 27.

7-60-209. Liability for bonds or notes.

  1. All bonds and notes issued under this chapter shall be limited obligations of the county issuing the bonds or notes payable solely out of the revenues and receipts derived from the home mortgages or from any notes or other obligations of lending institutions with respect to which such bonds or notes are issued.
  2. No holder of any bonds or notes issued under this chapter shall have the right to compel any exercise of taxing power of a county to pay the bonds or notes, the interest or redemption premium, if any, on the bonds or notes, and the bonds or notes shall not constitute an indebtedness of any county or a loan of credit of the county within the meaning of any constitutional or statutory provisions, nor shall the bonds or notes be construed to create any moral obligation on the part of any county, the state, or any political subdivision of the county or state, with respect to the payment of such bonds or notes.
  3. It shall be plainly stated on the face of each bond or note that it has been issued under this chapter and that it does not constitute an indebtedness of the county issuing the bonds or notes or a loan of credit of the county within the meaning of any constitutional or statutory provision.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4412; Acts 1981, ch. 504, § 25.

7-60-210. Bonds and notes made securities.

  1. The bonds and notes of counties are hereby made securities in which all public officers and bodies of this state and all counties, municipalities and municipal subdivisions, all insurance companies and associations and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, building and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries, and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or in other obligations of the state, may properly and legally invest funds, including capital, in their control or belonging to them.
  2. The bonds and notes are also hereby made securities, which may be deposited with and may be received by all public officers and bodies of the state and all counties and municipalities for any purpose for which the deposit of bonds or other obligations of the state is now or may hereafter be authorized.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4413; Acts 1981, ch. 504, § 28.

7-60-211. Exemption from taxation.

It is hereby determined that the powers conferred upon counties by this chapter are in all respects for the benefit of the people of the state and for the improvement of their health, safety, welfare, comfort and security, and that the purposes of this chapter are public purposes and that counties are performing an essential governmental function in the exercise of the powers conferred upon them by this chapter. The state covenants with the purchasers and all subsequent holders and transferees of bonds and notes issued by a county pursuant to this chapter, in consideration of the acceptance of and payment for the bonds and notes, that any such bonds and notes of the county and the income from the bonds and notes shall at all times be free from taxation, except for inheritance, transfer and estate taxes. Counties are authorized to include this covenant of the state in any agreement with the holder of such bonds or notes.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4414; Acts 1981, ch. 504, § 25.

Cross-References. Tax exemption for participating county, § 7-60-215.

7-60-212. Agreement with bond and noteholders.

The state does hereby pledge to and agree with the holders of any bonds or notes issued pursuant to this chapter that the state will not limit or alter the rights vested by this chapter in a county to fulfill the terms of any agreements made with the holders of the bonds or notes, or in any way impair the rights and remedies of such holders until such bonds and notes, together with the interest on the bonds and notes, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully met and discharged. A county is authorized to include this pledge and agreement of the state in any agreement with the holders of bonds or notes.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4415; Acts 1981, ch. 504, § 25.

7-60-213. Filings with state funding board.

Any county issuing bonds under authority of this chapter shall file with the state funding board such information concerning any issue as the funding board may request.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4416; Acts 1981, ch. 504, § 25.

7-60-214. Exemption from bidding or restrictive requirements, and from antitrust laws.

  1. Any requirement of competitive bidding or restriction imposed on the procedure for award of contracts for the sale or other disposition of public property is not applicable to any action taken under authority of this chapter.
  2. The transactions undertaken pursuant to this chapter shall not be subject to any antitrust law now or hereafter in effect in this state.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4417.

7-60-215. Tax exemption for participating county.

All home mortgages and notes or other obligations of lending institutions executed pursuant to this chapter and held by or on behalf of the county and the revenues and receipts derived by such county from the mortgages, notes and other obligations shall be exempt from all taxation in this state. The exemption contained in this section shall not be construed as an exemption from the payment of any mortgage recording or registration fees otherwise required by law.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4418; Acts 1981, ch. 504, § 25.

Cross-References. Exemption from taxation, § 7-60-211.

7-60-216. Energy conservation.

  1. When loans are made for the purchase of new houses, such preference in making loans as may be determined by the governing body of the county shall go to those houses incorporating energy-conserving design, construction or other energy-saving features, including solar heating or solar water heating. With houses incorporating such design, construction, or features, the amount of permissible loan may be increased to cover any extra cost such elements represent over the cost of a similar house without such elements.
  2. When loans are made for the purchase of older houses, such preference in making loans as may be determined by the governing body of the county shall go to those houses incorporating energy-conserving design, construction, or other energy-saving features, including solar heating or solar water heating. With houses incorporating such design, construction, or features, the amount of permissible loan may be increased to cover any extra costs such elements represent over the cost of a similar house without such elements.
  3. A reasonable percentage of new houses financed through this chapter shall be equipped with solar water heating units to supply all or substantially all of the heated water requirement of that household, the determination of the governing body of the county with respect to the reasonableness of such percentage to be conclusive. The applicable amount of mortgage money available to a person through this chapter shall be increased by an amount necessary to cover any added costs of such heater. Each county acting under this chapter shall determine the percentage of houses to be so equipped.

Acts 1979, ch. 439, § 1; T.C.A., § 6-4419; Acts 1981, ch. 504, § 29.

7-60-217. Interlocal cooperation.

  1. The governing bodies of any two (2) or more counties, whether or not contiguous, are empowered to enter into such agreements, contractual arrangements or compacts as they may deem necessary and desirable in order to provide for the joint conducting or financing of any of the functions or the services authorized by this chapter, including the joint issuance of bonds or notes by any two (2) or more such counties, and including the issuance of bonds or notes by any one (1) or more such counties and the allocation of the proceeds of the bonds or notes to one (1) or more other counties, and in conjunction with the joint issuance of bonds or notes, to exercise all the powers granted by § 5-1-114.
  2. In the event of the issuance of bonds or notes by any county and the allocation of a portion of the proceeds of the bonds or notes to any other county, the issuance of such bonds or notes shall be approved in general terms by the governing body of such other county, including the approval of the maximum interest rate and the maximum term of such bonds or notes.
  3. In the event of the joint issuance of bonds or notes, the proceeds of the bonds or notes, after the payment of all expenses in connection with the issuance of the bonds or notes, including particularly those costs and expenses enumerated in § 7-60-201(a)(3), may be allocated to each of the counties jointly issuing such bonds or notes in the manner that such counties may agree upon, but in no event shall the share of such bond or note proceeds allocated to any county, together with the proceeds of any other bonds or notes issued under this chapter and allocated to such county, exceed in any year that proportion, including such proportion as may have resulted from the agreement of counties, of the state ceiling for such year to which that county is entitled pursuant to § 7-60-102(f).

Acts 1979, ch. 439, § 1; T.C.A., § 6-4421; Acts 1981, ch. 504, § 30.

Cross-References. Interlocal cooperation generally, title 12, ch. 9.

Chapter 61
Ambulance Services

7-61-101. “Ambulance service” defined.

For the purpose of this chapter, “ambulance service” means the use of any privately or publicly owned motor vehicle for the transportation of injured or infirm persons on an emergency or nonemergency basis.

Acts 1967, ch. 71, § 1; T.C.A., § 6-642.

Attorney General Opinions. Ambulance service fees.  OAG 13-09, 2013 Tenn. AG LEXIS 9 (2/4/13).

NOTES TO DECISIONS

1. Service Franchise.

Where municipal corporation has been authorized by the general assembly to grant an ambulance service franchise, the exercise of discretion of the municipal authorities in making the grant cannot be reviewed unless such exercise of discretion is fraudulent or manifestly abusive or oppressive. Morristown Emergency & Rescue Squad, Inc. v. Volunteer Dev. Co., 793 S.W.2d 262, 1990 Tenn. App. LEXIS 251 (Tenn. Ct. App. 1990), appeal denied, — S.W.2d —, 1990 Tenn. LEXIS 272 (Tenn. July 2, 1990).

7-61-102. Provided by county or city as a public service.

The governing body of any county or city of the state of Tennessee may provide and maintain and do all things necessary to provide ambulance service as a public service.

Acts 1967, ch. 71, § 2; T.C.A., § 6-643.

NOTES TO DECISIONS

1. Service Franchise.

Where municipal corporation has been authorized by the general assembly to grant an ambulance service franchise, the exercise of discretion of the municipal authorities in making the grant cannot be reviewed unless such exercise of discretion is fraudulent or manifestly abusive or oppressive. Morristown Emergency & Rescue Squad, Inc. v. Volunteer Dev. Co., 793 S.W.2d 262, 1990 Tenn. App. LEXIS 251 (Tenn. Ct. App. 1990), appeal denied, — S.W.2d —, 1990 Tenn. LEXIS 272 (Tenn. July 2, 1990).

7-61-103. Provision of private or nonprofit ambulance service — Regulations.

The governing body of any county or city may license, franchise, or contract for private operators or nonprofit general welfare corporations to provide ambulance service. In order to protect the public health and welfare, any county or city may adopt and enforce reasonable regulations to control the provision of private or nonprofit ambulance service.

Acts 1967, ch. 71, § 3; T.C.A., § 6-644.

Attorney General Opinions. Ambulance service fees.  OAG 13-09, 2013 Tenn. AG LEXIS 9 (2/4/13).

NOTES TO DECISIONS

1. Service Franchise.

Where municipal corporation has been authorized by the general assembly to grant an ambulance service franchise, the exercise of discretion of the municipal authorities in making the grant cannot be reviewed unless such exercise of discretion is fraudulent or manifestly abusive or oppressive. Morristown Emergency & Rescue Squad, Inc. v. Volunteer Dev. Co., 793 S.W.2d 262, 1990 Tenn. App. LEXIS 251 (Tenn. Ct. App. 1990), appeal denied, — S.W.2d —, 1990 Tenn. LEXIS 272 (Tenn. July 2, 1990).

7-61-104. Interlocal cooperation.

  1. No county may provide and maintain, license, franchise, or contract for ambulance service within the boundaries of a city or another county, and no city may provide and maintain, license, franchise, or contract for ambulance service outside its corporate boundaries, without the approval of the governing body of the area to be served.
    1. Except as provided in subdivision (b)(2), any two (2) or more counties and municipalities may enter into agreements with each other and with persons providing both emergency and nonemergency ambulance service for a county or counties on a county-wide basis, for joint or cooperative action to provide for ambulance service as authorized in this chapter.
    2. In any county having a metropolitan form of government and a population in excess of five hundred thousand (500,000), or in any county having a population of not less than eight hundred twenty-five thousand (825,000) nor more than eight hundred thirty thousand (830,000), according to the 1990 federal census or any subsequent federal census, any two (2) or more counties and municipalities may enter into agreements for joint or cooperative action to provide for ambulance service as authorized in this chapter.

Acts 1967, ch. 71, § 4; T.C.A., § 6-645; Acts 1998, ch. 660, §§ 1-3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Interlocal cooperation generally, title 12, ch. 9.

Attorney General Opinions. Authority of county to provide ambulance service for city under T.C.A. § 7-61-104, OAG 03-073, 2003 Tenn. AG LEXIS 89  (6/10/03).

Ambulance service fees.  OAG 13-09, 2013 Tenn. AG LEXIS 9 (2/4/13).

Chapter 62
Residential Building and Maintenance Contractors

Part 1
Licensing

7-62-101. Types of buildings defined.

As used in this chapter, unless the context otherwise requires:

  1. “Assembly building” means a building where a number of persons congregate for amusement, civic, educational, recreational, religious or social purposes;
  2. “Commercial building” means a building used for the conduct of a business, having financial profit as the primary aim; and
  3. “Residential building” means a house or building used or designed to be used as the abode or home of a person, family or household exclusively as a residence.

Acts 1963, ch. 317, § 2; T.C.A., § 6-735.

Attorney General Opinions. Monetary limitations in Tennessee Contractor's Liability Act, OAG 93-12, 1993 Tenn. AG LEXIS 12 (2/11/93).

7-62-102. Residential builders or contractors construed.

“Residential builder” or “residential maintenance and alteration contractor” shall be construed to mean any person, firm or corporation who, for a fixed sum, price, percentage, consideration or other compensation other than wages, contracts with another for the erection, construction, repair, replacement, alteration or addition to, subtraction from or demolition of a residential or residential-commercial combination building.

Acts 1963, ch. 317, § 2; T.C.A., § 6-736.

7-62-103. Authorization to require licensing.

The several cities, towns and counties of this state are hereby authorized and empowered to enact laws or ordinances to safeguard and protect the home owner or prospective home owner, commercial property owner or assembly building property owner, by requiring the licensing of the residential, commercial or assembly builders and residential, commercial and assembly maintenance and alteration contractors as defined in § 7-62-102 in accordance with the provisions set forth in such law or ordinance.

Acts 1963, ch. 317, § 1; T.C.A., § 6-734.

7-62-104. Exceptions from licensing requirements.

This chapter shall not apply to:

  1. An authorized representative of the United States government, the state of Tennessee or any county, city, town or other political subdivision of this state;
  2. Owners of property with reference to structures on the property for their own use and occupancy;
  3. Officers of courts acting within the terms of their office;
  4. Any person who shall engage or be engaged solely in the business of performing work and services under contract with a builder under this chapter;
  5. The sale of any products or materials or the sale or the installation of articles of merchandise that are not actually fabricated into and do not become a permanently fixed part of the structure;
  6. Any work or operation on one (1) undertaking or project or one (1) or more contracts, the aggregate contract price for which labor, materials and all other items is less than one hundred dollars ($100), such work or operations being considered as a casual, minor or inconsequential nature. This exemption does not apply in any case wherein the work or construction is only part of a larger or major operation, whether undertaken by the same or a different residential, commercial or assembly builder or residential, commercial or assembly maintenance and alteration contractor, or in which a division of the operation is made in contracts of amounts of less than one hundred dollars ($100) for the purpose of evasion of this chapter; or
  7. Any contractor licensed and qualified under the state contractors' laws.

Acts 1963, ch. 317, § 3; T.C.A., § 6-737.

Cross-References. Licensing of contractors, § 62-6-111.

7-62-105. Licensing by building department — Performance bond — Revocation or suspension — Hearing — Appeal.

Provision shall be made for licensing the residential, commercial and assembly builders and residential, commercial and assembly maintenance and alteration contractors with the building department of the town, city or county by law or ordinance, providing for the identification of the party, for a license fee and renewal of same, for a performance bond in such amount as the city or county may determine, for the revocation or suspension of licenses after proper hearing before an appeal board of private citizens, and for further appeal to the governing body of the town, city or county.

Acts 1963, ch. 317, § 4; T.C.A., § 6-738.

Cross-References. Bond requirements for unlicensed contractors, § 7-62-203.

Unlicensed contractors, limit on building permits, § 7-62-202.

7-62-106. Administration of licensing provisions.

The law or ordinance may provide for the administration of same under a board that may be established or under a proper officer of the governing body.

Acts 1963, ch. 317, § 5; T.C.A., § 6-739.

7-62-107. Unlicensed acts — Misdemeanors — Nuisance.

  1. Provision may be made that no person, firm, partnership or corporation shall attempt to do any of the matters set forth in § 7-62-102, unless duly licensed and, if not licensed, such person or entity shall be punished for violation of the law or ordinance as a Class C misdemeanor.
  2. Continuing or aggravating violations may constitute a nuisance and be punishable as such.

Acts 1963, ch. 317, § 6; T.C.A., § 6-740; Acts 1989, ch. 591, § 113.

Cross-References. Abatement of nuisances, title 29, ch. 3.

Penalty for Class C misdemeanor, § 40-35-111.

Part 2
General Home Repairs and Improvements Contractors

7-62-201. Building permits.

Subject to the local approval provisions of § 7-62-205, building permits for general home repairs and improvements shall be issued only in accordance with §§ 7-62-202 and 7-62-203.

Acts 1986, ch. 688, § 1.

7-62-202. Number of building permits.

  1. An unlimited number of building permits for general home repairs and improvements may be issued to contractors licensed by the state of Tennessee.
  2. Not more than ten (10) active building permits for general home repairs and improvements may be issued to an unlicensed contractor who on April 8, 1986, is in the business of general home repairs and maintenance.

Acts 1986, ch. 688, § 1.

7-62-203. Bonding of unlicensed contractors.

Any person who enters into a contracting business of general home repairs and maintenance after April 8, 1986, if such person is an unlicensed contractor by the state of Tennessee, shall, for a period of not less than two (2) years, be required to post a cash bond in an amount sufficient to cover the cost of all services, labor, and materials used by such contractor or any immediate or remote subcontractor under such person for all such permits. The bond so given shall be filed with the appropriate governmental office issuing such permit and shall remain filed with such office until a copy is submitted to such office on the form required by § 66-11-205, notifying the owner that no claims have been made to the contractor by, nor is any suit pending on behalf of, any contractors, subcontractors, laborers or materialmen, and that no chattel mortgages or conditional bills of sale have been given or are now outstanding as to any materials, appliances, fixtures or furnishings placed upon or installed in the premises for which such permit was issued. The governing body may extend this period based on the number of outstanding complaints or judgments obtained against such contractor for breach of contract or failing to comply with applicable laws and regulations.

Acts 1986, ch. 688, § 1.

7-62-204. Notice of building permit applicants.

If an individual makes application for a building permit for general home repairs and maintenance, the issuing authority shall advise the individual of this part, especially as it relates to the protection provided to the general public in requiring a cash bond for unlicensed contractors under § 7-62-203.

Acts 1986, ch. 688, § 1.

7-62-205. Local approval.

This part shall apply in any county that by resolution of its county legislative body, or in any incorporated municipality that, by ordinance of its governing body, elects to come under this part. Such governing body shall also provide the mechanism to ensure that no more than ten (10) active permits are in force at any one (1) time under § 7-62-202(b), for the filing and releasing of bonds under § 7-62-203, and for the notification provisions of § 7-62-204.

Acts 1986, ch. 688, § 1.

Chapter 63
Actions in Lieu of Arrest

Part 1
Traffic Citations in Lieu of Arrest

7-63-101. Municipal violations — Citation or complaint in lieu of arrest.

When any person violates any traffic, or other ordinance, law or regulation of any municipal, metropolitan or city government in the presence of a:

  1. Law enforcement officer of such government;
  2. Member of the fire department or building department who is designated as a special police officer of the municipality; or
  3. Transit inspector employed by a public transportation system or transit authority organized pursuant to chapter 56, part 1 of this title;

    such officer or inspector may issue, in lieu of arresting the offender and having a warrant issued for the offense, a citation or complaint for such offense. A copy of such citation, which shall contain the offense charged and the time and place when such offender is to appear in court, shall be given to the offender.

Acts 1969, ch. 208, § 8; 1973, ch. 101, § 1; T.C.A., § 6-651; Acts 1993, ch. 101, § 1.

Compiler's Notes. This section may be affected by Tenn. R. Crim. P. 3.5 concerning criminal citations.

NOTES TO DECISIONS

1. Practice and Procedure.

Traffic citation issued to defendant by a municipal police officer, which charged defendant with speeding in violation of Tennessee's statutory prohibition on speeding, was insufficient to provide defendant with reasonable notice of the municipal ordinance which defendant was charged with violating, even though the municipal code adopted by reference the state traffic statutes. The city could have moved to amend the citation to specify a violation of the municipal ordinance and allowing defendant further time to prepare a defense. City of La Vergne v. LeQuire, — S.W.3d —, 2016 Tenn. App. LEXIS 778 (Tenn. Ct. App. Oct. 19, 2016).

7-63-102. Agreement by offender to appear.

In order to prevent the offender's arrest and the issuance of the warrant against the offender, the offender must sign an agreement to appear at the time and place indicated, and to waive the issuance and service of a warrant upon the offender.

Acts 1969, ch. 208, § 2; T.C.A., § 6-652.

7-63-103. Duty of court — Treatment of citation or warrant.

When the offender has signed the agreement and waiver provided for in § 7-63-102, it is the duty of the court having jurisdiction to try the case, to try the same upon the citation or complaint, without the issuance or service of a warrant upon the defendant, and the citation or complaint shall in all respects be deemed and treated as though it were a warrant properly served upon the defendant.

Acts 1969, ch. 208, § 3; T.C.A., § 6-653.

7-63-104. Arrest when offender refuses to sign agreement to appear.

In the event the offender refuses to sign the agreement to appear in court and to waive the issuance and service upon the offender of a warrant, then it shall be the duty of the officer, in whose presence the offense is committed, forthwith to place the offender under arrest and take the offender before the proper authority, procure a warrant, serve the warrant upon the offender and book the offender as in other cases of violations. The authority issuing the warrant shall take bail from the accused for appearance in court for trial, or in lieu of bail, commit the offender to jail.

Acts 1969, ch. 208, § 4; T.C.A., § 6-654.

Attorney General Opinions. Authority to arrest for municipal violations, OAG 94-069, 1994 Tenn. AG LEXIS 72 (5/17/94).

A municipal officer may constitutionally arrest a person who refuses to sign a citation for a city code or ordinance violation, OAG 06-167 (11/9/06), 2006 Tenn. AG LEXIS 187.

A municipal officer may arrest a person for violation of a city code or ordinance when that person fails to provide the officer with proper identification, OAG 06-167 (11/9/06), 2006 Tenn. AG LEXIS 187.

7-63-105. Failure of offender to appear after signing agreement — Additional warrant.

In the event that the offender signs the agreement and waiver as provided in § 7-63-102, and then fails to appear for trial at the time and place designated, then the court having jurisdiction of the case shall immediately issue a warrant against the offender for the offense, and an additional warrant for the offense of violating the agreement to appear; provided, that the municipal, metropolitan or city government has made the failure so to appear an offense, or has adopted the state law creating such offense. The warrant or warrants shall then be served upon the offender and the procedure followed as set out in § 7-63-104 regarding the service of warrants, booking the defendant, and taking appearance bail or committing to jail.

Acts 1969, ch. 208, § 5; T.C.A., § 6-655.

Law Reviews.

The Tennessee Court System — Municipal Courts, 8 Mem. St. U.L. Rev. 431 (1978).

7-63-106. Issuance of citation or complaint after investigation at scene of accident or place of violation.

All the procedures enumerated in this part as to giving citations or complaints in lieu of making arrests and taking out warrants shall also apply when the officer, as designated in § 7-63-101, makes a personal investigation at the scene of a traffic accident, or makes a personal investigation at the place of violation, as a result of which the officer has reasonable and probable grounds to believe that the driver of any vehicle involved in the accident has violated any traffic ordinance, law or regulation of any municipal, metropolitan or city government in this state; or in the case of violations other than traffic accidents, the officer has reasonable and probable grounds to believe that the owner or occupant of property involved in a violation has violated any ordinance, law or regulation of any municipal, metropolitan or city government in this state.

Acts 1969, ch. 208, § 6; 1973, ch. 101, § 2; T.C.A., § 6-656.

7-63-107. Part inapplicable — Driving under influence — Nonresidents.

None of the provisions of this part shall apply when it appears that the offending party is guilty of driving while under influence of intoxicants or drugs, or if the offender is a nonresident of the state of Tennessee.

Acts 1969, ch. 208, § 7; T.C.A., § 6-657.

Cross-References. Driving under the influence, title 55, ch. 10, part 4.

7-63-108. Application to certain counties.

This chapter shall also apply to counties with populations of less than five hundred thousand (500,000), according to the 1990 federal census or any subsequent federal census, that have adopted a charter form of government pursuant to title 5, chapter 1, part 2.

Acts 1995, ch. 475, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Part 2
Ordinance Summons

7-63-201. Sanitation, litter control and animal control — Issuance of summons — Copies.

Notwithstanding § 7-63-101, any municipal, metropolitan or city government may designate by ordinance or resolution certain municipal enforcement officers in the areas of sanitation, litter control, and animal control who may not arrest or issue citations in lieu of arrests pursuant to part 1 of this chapter, but who, upon witnessing a violation of any ordinance, law or regulation of that municipal, metropolitan or city government, may issue an ordinance summons, leaving a copy with the offender, showing the offense charged and the time and place when such offender is to appear in court.

Acts 1986, ch. 832, § 2.

Law Reviews.

Selected Tennessee Legislation of 1986, 54 Tenn. L. Rev. 457 (1987).

7-63-202. Treatment as citation in lieu of arrest.

Such ordinance summons shall be treated as a citation in lieu of arrest as provided for in §§ 7-63-102 and 7-63-103.

Acts 1986, ch. 832, § 3.

7-63-203. Refusal to sign agreement to appear in court — Arrest.

In the event the offender refuses to sign the ordinance summons agreement to appear in court, the municipal enforcement officer in whose presence the violation is committed may have a summons issued by the clerk of the municipal, metropolitan, or city court, or the municipal enforcement officer may seek the assistance of a police or peace officer to witness the violation, who may issue a citation in lieu of arrest for the violation or make arrest for failure to sign the citation in lieu of arrest, as provided in § 7-63-104.

Acts 1986, ch. 832, § 4.

7-63-204. Failure of offender to appear for trial.

Failure of the offender to appear for trial after signing of the ordinance summons agreement shall cause the court having jurisdiction to issue a warrant against the offender, as provided for in § 7-63-105.

Acts 1986, ch. 832, § 5.

Chapter 64
Real Property Tax Deferral

Part 1
Chapter 831 Deferral

7-64-101. Eligibility for deferral. [For contingent amendment, see the Compiler's Notes.]

  1. The legislative body of any county or municipality may provide by resolution that any single person age sixty-five (65) years of age or older, or any married couple of which both are sixty-five (65) years of age or older, or any person who is totally and permanently disabled, who owns real property, and who uses and occupies such property as a place of residence, may apply to the county trustee of the county where such residence is located for a deferral of payment of all real property taxes on such residence.
  2. [For contingent amendment, see the Compiler's Notes.] This part shall not apply to any single person age sixty-five (65) years of age or older, or to any married couple of which both are sixty-five (65) years of age or older or to any family group that has more than one (1) person residing permanently in the principal residence, whose combined gross income, as defined by the Internal Revenue Code (26 U.S.C.) is greater than twelve thousand dollars ($12,000) a year.

Acts 1980, ch. 831, § 1; 1998, ch. 803, § 1.

Compiler's Notes. Acts 1998, ch. 803, § 1 amended this section by substituting “twenty-five thousand dollars ($25,000)” for “twelve thousand dollars ($12,000)” in (b). However, as provided in § 5 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

Cross-References. Real property tax relief, title 67, ch. 5, part 7.

7-64-102. Limitations on property eligible for deferral. [For contingent amendment, see the Compiler's Notes.]

  1. In the event the taxpayer's principal residence is on a farm or a parcel of land greater than one (1) acre, the tax deferral granted by this part shall only apply to the principal residence and no more than one (1) acre of land.
  2. [For contingent amendment, see the Compiler's Notes.] The tax deferral granted by this part shall apply to no more than sixty thousand dollars ($60,000) of the appraised fair market value, as determined from the records of the county assessor of property.

Acts 1980, ch. 831, § 1; 1998, ch. 803, § 2; 2008, ch. 971, §  1.

Compiler's Notes. Acts 1998, ch. 803, § 2 amended this section by deleting subsection (b). However, as provided in § 5 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

Acts 2008, ch. 971, § 1 provided that the code commission is directed to change all references to “tax assessor”, wherever such references appear, to “assessor of property”, as such sections are amended or volumes are replaced. See § 1-1-116.

7-64-103. Application process. [For contingent amendment, see the Compiler's Notes.]

  1. Applications for deferral of real property taxes shall be made annually on or before March 1 of each year, unless a later date for applications is provided by resolution of the legislative body of the county or municipality authorizing the program. Any applications received by the county trustee after this date shall be considered for deferral of real property taxes for the following tax year.
  2. The state division of property assessments shall prepare an application form to be approved by the state board of equalization for such deferrals, which shall contain the following information and such additional information as may be required by the state board of equalization:
    1. Name and address of the applicant or applicants;
    2. Date and place of birth of the applicant or applicants;
    3. Relationship between the applicants;
    4. Description and location, by civil district, of the property;
    5. Name of the person or persons holding title to the property;
    6. Name and address of any mortgagee or lienholder;
    7. The amount of any mortgage or lien against such property; and
    8. Oath or verification of the information and disclosure by the applicant or applicants.
  3. [For contingent amendment, see the Compiler's Notes.] Such application shall be accompanied by a fee in the amount of five dollars ($5.00) to be used to defray any expenses in the processing of such application.
  4. The trustee or appropriate municipal official shall furnish the county assessor of property a copy of each application for deferral of property taxes. Whenever application for deferral of real property taxes is made, the county assessor of the county where the residence is located shall, within ninety (90) days, reassess such property claimed for deferral and forthwith notify the county trustee or the appropriate municipal official of the amount of the reassessment and value for tax purposes.
  5. Such applications shall be available for public inspection during the normal business hours of the trustee's office.
  6. After the trustee determines that the applicant meets the provisions of this part, the trustee shall approve such application only after receiving written approval from the holder of a note secured by any mortgage or deed of trust on such residence.
  7. Notice of each approved application for deferral of taxes shall be furnished to the register of deeds by the trustee.

Acts 1980, ch. 831, § 1; 1998, ch. 803, § 3; 2001, ch. 454, § 1.

Compiler's Notes. Acts 1998, ch. 803, § 3 amended this section by substituting “six dollars ($6.00)” for “five dollars ($5.00)” in (c). However, as provided in § 5 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

Cross-References. Applicability of provisions, § 7-64-107.

7-64-104. Deferral — Lien for unpaid taxes. [For contingent amendment, see the Compiler's Notes.]

  1. Whenever a deferral of real property taxes is granted, assessment of such taxes shall continue on an annual basis; however, they shall not become due and payable until the deferral is terminated.
  2. The unpaid balance of assessed real property taxes shall constitute a lien against such property, and shall be subject to interest at the rate of ten percent (10%) a year. Such accrued taxes and such interest shall be a lien of the first priority on the property in the particular local government. Such a lien shall remain in effect until the taxes and interest are paid.
  3. The tax deferrals created by this part shall not be subject to the statutory penalties imposed on delinquent taxes, and the lien created in the local government shall not be subject to any applicable statute of limitation.

Acts 1980, ch. 831, § 1; 1998, ch. 803, § 4.

Compiler's Notes. Acts 1998, ch. 803, § 4 amended this section by rewriting the first sentence of subsection (b) to read:

“The unpaid balance of assessed real property taxes shall constitute a lien against such property, and shall be subject to simple interest at the rate of six percent (6%) a year.”

However, as provided in § 5 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

7-64-105. Termination of deferral.

  1. Deferrals on payment of real property taxes granted under the terms of this part shall be terminated:
    1. Upon the death of the person to whom the deferral was granted and that person's surviving spouse if such spouse meets the terms and conditions of this chapter; or
    2. When the residence is sold.
  2. When such termination is by death, such taxes and interest shall be due and payable within eighteen (18) months of such termination or the settlement of the estate, whichever occurs first.
  3. When such termination occurs as a result of the sale of the property, all unpaid taxes and interest on the taxes shall become due and payable within sixty (60) days. A deed for the sale of such property shall not be accepted for recordation in the office of the county register of deeds until all taxes and interest have been paid.

Acts 1980, ch. 831, § 1.

7-64-106. Powers of state board of equalization.

  1. The state board of equalization is authorized to promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, for the administration of this part, and such rules and regulations shall be administered by the state division of property assessments.
  2. Such board shall have jurisdiction to conduct through its hearing examiner a hearing regarding the complaint and appeal of any person or official arising under this chapter; provided, that notice of the complaint and appeal is received in the office of the executive secretary for the state board of equalization within forty-five (45) days of the date written notice is sent of the action that is the subject of the appeal.
  3. Any action by the state board of equalization shall be final and conclusive, subject to judicial review.

Acts 1980, ch. 831, § 1; 2001, ch. 454, § 2.

7-64-107. Applicability of provisions — Filing and approval of applications.

  1. If this part is applicable only in a municipality, application may be made to the appropriate municipal official in accordance with subsections (b) and (c), and, upon approval of the application, a deferral of payment of real property taxes on such residence shall be granted as provided in this part.
  2. When the property is within the boundaries of any municipality, the deferral of real property taxes may also apply to municipal real property taxes, and the trustee shall furnish a copy of each approved application to the appropriate official of such municipality.
  3. If the deferral of real property taxes is effective in a municipality, the application shall be filed with and approved by the appropriate municipal official in the same manner as the trustee until this part is also effective in the county, after which the approval of the trustee shall be for both county and municipality.

Acts 1980, ch. 831, § 1.

Cross-References. Application process, § 7-64-103.

7-64-108. Construction of part.

It is the legislative intent that this part be strictly construed so that the benefits of this part shall be extended only as specifically provided for in this part.

Acts 1980, ch. 831, § 1.

Part 2
Chapter 659 Deferral

7-64-201. Localities authorized to provide deferrals.

  1. The legislative body of any county or municipality may provide by resolution that:
    1. Any taxpayer or spouse who is sixty-five (65) years of age or older and who owns residential property as such person's principal place of residence shall pay taxes on such property as any other taxpayer, but taxes on the property in the amount that exceeds such person's property tax for the year 1979 may be deferred at the interest rate provided for in this part, with such deferred taxes to remain a lien upon the property as provided in this part;
    2. Any taxpayer who reaches sixty-five (65) years of age on or before March 27, 1980, who owns residential property as such person's principal place of residence shall thereafter pay taxes on such property in the same amount as other taxpayers, but that any taxes in excess of the 1979 taxes may be deferred until the date of sale of such property or the date of death of the taxpayer, or the death of the surviving spouse, and that any taxpayer who reaches sixty-five (65) years of age after March 27, 1980, may defer any taxes in excess of the amount in effect in the year such person becomes sixty-five (65) years of age subject to the other provisions of this part; and
    3. Any taxpayer who is sixty-five (65) years of age or older who purchases residential property as such person's principal place of residence after such person's sixty-fifth birthday may defer taxes in excess of the amount of tax in the year such person purchased the property subject to this part.
  2. Whenever the fair market value of such property is increased as the result of improvements to such property after March 27, 1980, then the assessed value of such property shall be adjusted to include such increased value, and the taxes shall also be increased proportionally with the increased value, which increased value shall not be subject to the benefits of the tax deferment provided for in this part.
  3. In the event the taxpayer's principal place of residence is on a farm or plot of ground larger than one (1) acre, the benefits of this part shall be limited to the principal residence and not in excess of one (1) acre of ground.

Acts 1980, ch. 659, § 1.

7-64-202. Taxpayer income — Limitation on eligibility. [For contingent amendment, see the Compiler's Notes.]

No taxpayer or taxpayers whose income exceeds twelve thousand dollars ($12,000) annually shall be eligible for the tax deferral provided for in this part.

Acts 1980, ch. 659, § 2; 1998, ch. 802, § 1.

Compiler's Notes. Acts 1998, ch. 802, § 1 amended this section to read:

“No taxpayer or taxpayers whose income exceeds twenty-five thousand dollars ($25,000) annually shall be eligible for the tax deferral provided herein.”

However, as provided in § 6 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

7-64-203. Determining income limitation. [For contingent amendment, see the Compiler's Notes.]

Any taxpayer who owns residential property as such taxpayer's principal place of residence, whose combined annual income from all sources is less than twelve thousand dollars ($12,000), or in the event of a married couple or in the event more than one (1) person is living permanently in the principal residence, this limitation of twelve thousand dollars ($12,000) on income from all sources shall apply to the combined income of both the husband and wife and/or all family members residing in the residence.

Acts 1980, ch. 659, § 3; 1998, ch. 802, § 2.

Compiler's Notes. Acts 1998, ch. 802, § 2 amended this section by substituting “twenty-five thousand dollars ($25,000)” for “twelve thousand dollars ($12,000)” in two places. However, as provided in § 6 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

7-64-204. Other laws superseded.

The tax deferrals referred to in this part shall not be subject to penalties as provided for in Tennessee statutes for delinquent taxes and shall not be subject to the statutes of limitations and collection of delinquent taxes as opposed to deferred taxes, as it is declared the legislative intent of this part to extend these benefits only to the extent of the deferral specifically provided for in this part and to suspend the operation of §§ 67-1-701 and 67-5-1804 to the extent necessary to accomplish the purposes of this part.

Acts 1980, ch. 659, § 4.

7-64-205. Claim by surviving spouse.

In the event of the death of one (1) spouse of a married couple who has qualified under this part, if the surviving spouse is over fifty (50) years of age, that spouse can continue to claim the deferral benefits subject to the tax lien already accumulated against the property.

Acts 1980, ch. 659, § 5.

7-64-206. Limitation on value of principal residence. [For contingent repeal of this section, see the Compiler's Notes.]

The limitation on value of the principal place of residence shall be under fifty thousand dollars ($50,000) and shall be determined by the appraised fair market value as it appears on the records of the county assessor and not the reduced assessment.

Acts 1980, ch. 659, § 6.

Compiler's Notes. Acts 1998, ch. 802, § 3 repealed this section. However, § 5 of the act provided that the act shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Its approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

7-64-207. Applications — Fee — Determination of eligibility.

  1. The state division of property assessments shall prepare an application form to be approved by the state board of equalization for such deferrals, which shall contain the following information and such additional information as may be required by the state board of equalization:
    1. Name and address of the applicant or applicants;
    2. Date and place of birth of applicant or applicants;
    3. Relationship between the applicants;
    4. Description and location, by civil district, of the property;
    5. Name of the person or persons holding title to the property;
    6. Name and address of any mortgage or lien holder;
    7. The amount of any mortgage or lien against such property; and
    8. Oath or verification of the information and disclosure by the applicant or applicants.
  2. Such application shall be accompanied by a fee in the amount of six dollars ($6.00) to be used to defray any expenses in the processing of such application.
  3. The trustee or municipal collector of taxes shall make a final determination of eligibility of the applicant.

Acts 1980, ch. 659, § 7.

7-64-208. Rules and regulations — Hearings by state board of equalization.

  1. The state board of equalization is authorized to promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, for the administration of this part, and such rules and regulations shall be administered by the state division of property assessments.
  2. The state board of equalization shall have jurisdiction to conduct through its hearing examiner a hearing regarding the complaint and appeal of any person or official arising under this part; provided, that notice of the complaint and appeal is received in the office of the executive secretary for the state board of equalization within forty-five (45) days of the date written notice is sent of the action that is the subject of the appeal. Any action by the state board of equalization shall be final and conclusive, subject to judicial review.

Acts 1980, ch. 659, § 8; 2001, ch. 454, § 3.

7-64-209. Interest — Lien for unpaid taxes. [For contingent amendment, see the Compiler's Notes.]

In the event of a sale of the property, the deferred taxes shall not be submitted to penalty as provided for delinquent taxes, but shall be subject to interest at the rate of ten percent (10%) per annum, and the accrued taxes and interest at ten percent (10%) per annum shall remain a first lien on the property in favor of the local government involved until paid and without being subject to the statutes of limitations.

Acts 1980, ch. 659, § 9; 1998, ch. 802, § 4.

Compiler's Notes. Acts 1998, ch. 802, § 4 amended this section to read:

“In the event of a sale of the property, the deferred taxes shall not be submitted to penalty as provided for delinquent taxes but shall be subject to simple interest at the rate of six percent (6%), and the accrued taxes and simple interest at six percent (6%) shall remain a first lien on the property in favor of the local government involved until paid and without being subject to the statutes of limitations.”

However, as provided in § 6 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

7-64-210. Termination of deferral. [For contingent amendment, see the Compiler's Notes.]

The deferred payments shall not only become due and payable at the time of sale of the residence and at time of death of the beneficiary hereunder, but shall also become due and payable in the event of change of use of the property from the principal place of residence of the beneficiary or beneficiaries.

Acts 1980, ch. 659, § 10; 1998, ch. 802, § 5.

Compiler's Notes. Acts 1998, ch. 802, § 5 amended this section by redesignating the existing section as subsection (d) and adding the following new subsections (a), (b), and (c):

“(a)  Deferrals on payment of real property taxes granted under the terms of this part shall be terminated:

“(1)  Upon the death of the person to whom the deferral was granted and that person's surviving spouse if such spouse meets the terms and conditions of this chapter; or

“(2)  When the residence is sold.

“(b)  When such termination is by death, such taxes and interest shall be due and payable within eighteen (18) months of such termination or the settlement of the estate, whichever occurs first.

“(c)  When such termination occurs as a result of the sale of the property, all unpaid taxes and interest thereon shall become due and payable within sixty (60) days. A deed for the sale of such property shall not be accepted for recordation in the office of the county register of deeds until all taxes and interest have been paid.”

However, as provided in § 6 of that act, the amendment shall have no effect unless approved by a two-thirds (2/3) vote of the governing body of any county or municipality to which it may apply. Approval or nonapproval shall be proclaimed by the presiding officer of the governing body and so certified to the secretary of state.

7-64-211. Disabled persons and veterans — Eligibility.

The deferral benefits provided for in this part shall also be extended to totally and permanently disabled taxpayers, as defined by § 67-5-703, and disabled veterans as defined in § 67-5-704.

Acts 1980, ch. 659, § 11.

7-64-212. Application deadline.

Applications for deferral of real property taxes shall be made annually on or before March 1 of each year, unless a later date for applications is provided by resolution of the legislative body of the county or municipality authorizing the program. Any applications received by the county trustee or collector of municipal taxes after the appropriate date shall be considered for deferral of real property taxes for the following tax year.

Acts 1980, ch. 659, § 12; 2001, ch. 454, § 4.

Chapter 65
Parking Authority Act

7-65-101. Short title.

This chapter shall be known and may be cited as the “Parking Authority Act.”

Acts 1980, ch. 826, § 1.

7-65-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” or “parking authority” means any public corporation organized pursuant to this chapter;
  2. “Board” means the governing body of any authority created pursuant to this chapter;
  3. “Bonds” means bonds, notes, interim certificates or other obligations of an authority issued by its board of directors pursuant to this chapter;
  4. “Executive officer” means, with respect to a city or town, the mayor or other officer of the city or town exercising similar executive powers, and with respect to a county, means the county mayor or other officer of the county exercising similar executive powers;
  5. “Existing parking authority” means any public corporation or body politic and corporate or agency of the state of Tennessee or of any city or town in the state created by special or private act primarily for the purpose of planning, constructing, financing or operating parking facilities;
  6. “Governing body” means the body in which the general legislative powers of a municipality, county, or counties having a metropolitan form of government are vested;
  7. “Municipality” means any county or incorporated city or town in this state with respect to which an authority may be organized; and
  8. “Project” means a lot or lots, buildings and structures above, at or below the surface of the earth, including, but not limited to, rights-of-way, equipment, entrances, exits, driveways, approaches, ramps, garages, meters, pedestrian ways, fencing, landscaping and all other facilities and accessories necessary or desirable for or in connection with the parking or storing of vehicles of any kind, and ancillary spaces, uses, and structures related to, located within or adjacent to the facilities and accessories.

Acts 1980, ch. 826, § 2; 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

7-65-103. Purpose of chapter — Liberal construction.

  1. It is hereby determined and declared that the free circulation of traffic of all kinds through the streets and roads of counties, cities and towns in this state is necessary to the health, safety and general welfare of the public. It is further determined and declared that the greatly increased use of motor vehicles of all kinds by the public has caused serious traffic congestion in certain areas of this state, and that inadequate parking facilities for vehicles have contributed to this congestion, not only to the point of seriously interfering with the primary use of such thoroughfares, but also of impeding rapid and effective firefighting and the disposition of police matters.
  2. It is the intention of the general assembly to authorize the incorporation in the several municipalities in this state of public corporations to acquire, by purchase or otherwise, own, operate, lease and dispose of properties, to the end that such public corporations may be able to reduce this parking crisis by providing sufficient off-street parking facilities and to further incorporate such facilities within projects encompassing the full range of transportation modes relating to off-street parking, including, but not limited to, pedestrian ways, public transit and other modes of public and private transportation properly located in residential, commercial and industrial areas of the several municipalities in this state, and to vest such public corporations with all powers that may be necessary to enable them to accomplish such purposes.
  3. This chapter shall be liberally construed in conformity with such intention.

Acts 1980, ch. 826, § 3.

7-65-104. Application — Approval — Existing authorities.

  1. Whenever any number of natural persons, not fewer than three (3), a majority of whom are duly qualified electors of and taxpayers in the municipality, files with the governing body of the municipality an application in writing seeking permission to apply for the incorporation of a parking authority of such municipality, the governing body shall proceed to consider such application. If the governing body, by appropriate resolution duly adopted, finds and determines that it is wise, expedient, necessary or advisable that the authority be formed, authorizes the persons making such application to proceed to form such authority, approves the form of certificate of incorporation proposed to be used in organizing the authority, then the persons making such application shall execute, acknowledge and file a certificate of incorporation for the authority as provided in § 7-65-106.
  2. Any existing parking authority may elect to be governed by this chapter upon application as provided in this section; provided, that provision has been made for the dissolution of such existing parking authority in accordance with the private or special act creating or authorizing the creation of the parking authority. Any such dissolution pursuant to this subsection (b) shall become finally effective only upon the approval of the certificate of incorporation of the authority by the secretary of state and the recording of the certificate of incorporation in the secretary of state's office as provided in § 7-65-106. The authority shall assume the operation of any facilities of the existing parking authority and shall account for any revenues from the existing parking authority in such a manner as not to impair the obligations of contract with reference to any bond issue or other legal obligation of the existing parking authority, and the authority shall fully preserve and protect the contract rights vested in the owners of any such bonds, obligations or contractual interests. The board of directors of such existing parking authority shall be qualified to act as applicant for the creation of an authority, notwithstanding any other provision of this section.
  3. No authority may be formed unless such application shall have first been filed with the governing body of the municipality and the governing body shall have adopted a resolution as provided in this section.

Acts 1980, ch. 826, § 4.

7-65-105. Certificate of incorporation.

  1. The certificate of incorporation shall set forth:
    1. The names and residences of the applicants, together with a recital that a majority of them are electors of and taxpayers in the municipality;
    2. The name of the authority, which shall be the parking authority of the  of  , the blank spaces to be filled in with the name of the municipality, if such name shall be available for use by the authority and, if not available, then the incorporators shall designate some other similar name that is available;
    3. A recital that permission to organize the authority has been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of such resolution;
    4. The location of the principal office of the authority, which shall be in the municipality;
    5. The purposes for which the authority is proposed to be organized;
    6. The number or minimum number of directors of the authority;
    7. The period for the duration of the authority, which may be for a fixed term of years, may expire at the end of a period of six (6) years, unless by resolution of the governing body a renewal of the term is approved, or may be perpetual; and
    8. Any other matter that the applicants may choose to insert in the certificate of incorporation, which shall not be inconsistent with this chapter or with the laws of the state.
  2. The certificate of incorporation shall be subscribed and acknowledged by each of the applicants before an officer authorized by the laws of Tennessee to take acknowledgments to deeds.
  3. In the event an existing parking authority elects to be governed by this chapter, the certificate of incorporation shall contain such of the recitals set out in subsection (a) as may be appropriate under the circumstances.

Acts 1980, ch. 826, § 5; 1982, ch. 762, § 2.

7-65-106. Filing with and approval by secretary of state — Corporate existence.

  1. When executed and acknowledged in conformity with § 7-65-105, the certificate of incorporation shall be filed with the secretary of state.
  2. The secretary of state shall then examine the certificate of incorporation. If the secretary of state finds that the recitals contained in the certificate of incorporation are correct, that there has been compliance with the requirements of § 7-65-105, and that the name is not identical with or so nearly similar to that of another authority already in existence in this state as to lead to confusion and uncertainty, the secretary of state shall approve the certificate of incorporation and record it in an appropriate book or record in the secretary of state's office.
  3. When such certificate has been so made, filed and approved, the applicants shall constitute a public corporation under the name set out in the certificate of incorporation.

Acts 1980, ch. 826, § 6.

7-65-107. Amendment of certificate of incorporation.

  1. The certificate of incorporation may at any time and from time to time be amended so as to make changes in the certificate of incorporation and make and add any provisions to the certificate of incorporation that might have been included in the certificate of incorporation in the first instance.
  2. An amendment to the certificate of incorporation shall be effected in one (1) of the following means:
    1. The members of the board of directors of the authority shall file with the governing body of the municipality an application, in writing, seeking permission to amend the certificate of incorporation, specifying in such application the amendment proposed to be made. Such governing bodies shall consider such application and, if it shall by appropriate resolution duly find and determine that it is wise, expedient, necessary or advisable that the proposed amendment be made and shall authorize the amendment to be made, and shall approve the form of the appropriate amendment, then the persons making such application shall execute an instrument embodying the amendment specified in such application, and shall file the amendment with the secretary of state. The proposed amendment shall be subscribed and acknowledged by each member of the board of directors before an officer authorized by the laws of Tennessee to take acknowledgments to deeds. The secretary of state shall thereupon examine the proposed amendment and, if the secretary of state finds that there has been compliance with the requirements of this section and the proposed amendment is within the scope of what might be included in the original certificate of incorporation, the secretary of state shall approve the amendment and record it in an appropriate book in the secretary of state's office. When such amendment has been so made, filed and approved, it shall thereupon become effective and a certificate of incorporation shall thereupon be amended to the extent provided in the amendment; or
    2. The governing body of a municipality may amend the certificate of incorporation by the adoption of an appropriate resolution that finds that it is wise, expedient, necessary or advisable that the amendment be made. The resolution shall approve the form of the proposed amendment, and upon adoption, the governing body shall authorize the chief executive officer to execute an instrument embodying the amendment specified in the resolution and file the amendment with the secretary of state. The proposed amendment shall be subscribed and acknowledged by the chief executive officer before an officer authorized by the laws of Tennessee to take acknowledgment of deeds. The secretary of state shall thereupon examine the proposed amendment and, if the secretary of state finds that there has been compliance with the requirements of this section and the proposed amendments are within the scope of what might be included in the original certificate of incorporation, the secretary of state shall approve the amendment and record it in an appropriate book in the secretary of state's office. When such amendment has been so made, filed and approved, it shall thereupon become effective and a certificate of incorporation shall thereupon be amended to the extent provided in the amendment.
  3. No certificate of incorporation shall be amended except in the manner provided in this section.

Acts 1980, ch. 826, § 7; 1982, ch. 762, § 1.

7-65-108. Board of directors.

  1. The authority shall have a board of directors in which all powers of the authority shall be vested and that shall consist of any number of directors, no fewer than five (5), a majority of whom shall be duly qualified electors of and taxpayers in the municipality. The directors shall serve as such without compensation, except that they shall be reimbursed for their actual expenses incurred in and about the performance of their duties under this chapter. No director shall be an officer or employee of the municipality. The directors shall be appointed by the executive officer of the municipality with the approval of the governing body of the municipality, and they shall be so appointed that they shall hold office for staggered terms. At the time of the appointment of the first board of directors, the executive officer of the municipality shall divide the directors into three (3) groups containing as near equal whole numbers as possible. The first term of the directors included in the first group shall be two (2) years, the first term of the directors included in the second group shall be four (4) years, the first term of the directors included in the third group shall be six (6) years, and thereafter the terms of all directors shall be six (6) years; provided, that, if at the expiration of any term of office of any director, a successor has not been appointed, then the director whose term shall have expired shall continue to hold office until such director's successor shall have been so appointed.
  2. In the event that an existing parking authority shall elect to be governed by this chapter, the executive officer of the municipality, with the approval of the governing body of the municipality, may appoint as directors of the authority the members of the board of directors of the existing parking authority serving immediately prior to its dissolution, and such directors shall thereafter serve in accordance with this section.
  3. The directors shall meet and organize as a board and shall elect one (1) of their members as chair, one (1) as vice chair, one (1) as treasurer and one (1) as secretary, and such officers shall annually be elected thereafter in a like manner. The duties of secretary and treasurer may be performed by the same director. Any action taken by the directors under this chapter may be authorized by resolution at any regular or special meeting, and such resolution shall take effect immediately and need not be published or posted.

Acts 1980, ch. 826, § 8.

7-65-109. Purpose and powers of authority.

  1. Authorities are authorized to be created to conduct necessary research activity; to maintain current data leading to efficient operation of off-street parking facilities, for the fulfillment of public needs for parking and the relation of parking to public transit and other public and private transportation modes, and to pedestrian ways; to promote safe and efficient access to and circulation within certain congested areas; to establish a permanent coordinated system of parking facilities and planning, designing, locating, financing, acquiring, holding, constructing, improving, maintaining and operating, owning, leasing, either in the capacity of lessor or lessee, land and facilities to be devoted to the parking of vehicles of any kind and the integration with related transportation systems and facilities.
  2. The authority may exercise all powers necessary or convenient for performing the purposes set forth in subsection (a), including, but not limited to, the following:
    1. Have succession in its corporate name for the period specified in the certificate of incorporation, unless sooner dissolved as provided in § 7-65-119;
    2. Sue and be sued and prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
    3. Have and use a corporate seal and alter the seal at pleasure;
    4. Make contracts of every name and nature, including property and liability insurance, and execute all instruments necessary or convenient for the carrying on of its business;
    5. Acquire, whether by purchase, construction, exchange, gift, or otherwise, lease as lessee, and improve, maintain, extend, equip and furnish one (1) or more projects, which projects may be either within or without the corporate limits of the municipality with respect to which the authority was organized, including all real, personal, mixed, tangible or intangible properties or any interest in those properties that the board of directors of the authority may deem necessary in connection with the projects, and regardless of whether or not any such projects shall then be in existence;
    6. Apply for, receive and accept grants for or in aid of any of its proper purposes from the United States or any agency of the United States, and from the state, any department or agency of the state, and any political subdivision of the state, and receive and accept money, property, labor or other things of value from any source whatever;
    7. Maintain and operate any or all projects of the authority as provided in § 7-65-110;
    8. Lease to any individual, partnership, firm, corporation or municipality any or all of its projects upon such terms and conditions as the board of directors shall deem proper and charge and collect rent for the lease and terminate any such lease upon the failure of the lessee to comply with any of the obligations of the lease, and include in any such lease, if desired, provisions that the lessee shall have options to renew the term of the lease for such period or periods and at such rent as shall be determined by the board of directors of the authority or purchase any or all of the projects of the authority or that upon payment of all the indebtedness of the authority it may lease or convey any or all of its projects to the lessees of the projects, with or without consideration;
    9. Enter into contracts with the state, municipalities, corporations or authorities for the use of any project of the authority and fixing the amount to be paid for the use of the project;
    10. Sell, exchange, donate, and convey any or all of its properties to the municipality or to any other municipality or public body or instrumentality or agency of the state or any county or incorporated city or county in the state, whenever its board of directors shall find any such action to be in furtherance of the purposes for which the authority was organized, or, except as provided in subdivision (b)(8), convey any such properties to any private person, corporation, or other private entity at not less than the appraised value of the property;
    11. Borrow money and issue bonds for the purposes of carrying out any of its powers;
    12. As security for the payment of the principal of and interest on any bonds so issued and any agreements made in connection with the bonds, mortgage and pledge any or all of its projects or any part or parts of the projects, whether then owned or thereafter acquired, and pledge all or any part of the revenues and receipts from the bonds or from any thereof, or funds received by the authority from any other sources;
    13. Enter into contracts with any individual, partnership, firm, corporation or municipality pursuant to which such other party shall manage the operation of any or all of the projects of the authority, and agree to such terms and conditions as are determined to be expedient by the board of directors;
    14. Enter into contracts with any individual, partnership, firm, corporation or municipality by which the authority is to manage and maintain, and collect fees, charges and other revenues from parking facilities owned by such other party, including contracts whereby the authority manages, maintains and collects the revenues from on-street parking meters or other facilities owned or controlled by municipalities of this state;
    15. Employ and pay compensation to such employees and agents, including attorneys, as the board of directors shall deem necessary for the business of the authority;
    16. Enter into contracts of group insurance for the benefit of its employees, and set up a retirement or pension fund for such employees, similar to that existing in the municipality with respect to which the authority is created;
    17. Cooperate with the state, any county, city, town, public corporation, agency, department, or political subdivision of the state, and make such contracts with them as the board of directors may deem advisable to accomplish its corporate purposes; and
    18. Exercise all powers expressly given in its certificate of incorporation or necessarily incident to those powers, and establish bylaws and make all rules and regulations not inconsistent with the certificate of incorporation or this chapter, deemed expedient for the management of the authority's affairs.
  3. Any meeting held by the board of directors for any purpose whatsoever shall be open to the public upon notice being duly given in accordance with the laws of this state.
  4. Any lease of a project entered into pursuant to this chapter shall provide for rentals that, with other revenue derived from the project or otherwise available to the authority will be adequate to pay principal of and interest on such bonds as the same falls due, and pay such expenses of operating and maintaining the project as the board of directors shall determine to be necessary.
  5. Notwithstanding any law to the contrary, no provision of this chapter shall be construed to permit or to authorize any parking authority to exercise the power of eminent domain.

Acts 1980, ch. 826, § 9.

7-65-110. Operation of projects.

  1. The authority, while operating any or all of its projects, has the power to make and enforce rules and regulations governing the use of any project and to fix, alter, charge and collect rents and other charges for the use of its facilities, at reasonable rates, to be determined exclusively by its board of directors, for the purpose of providing for the payment of the expenses of the authority, the construction, improvement, repair, maintenance and operation of its projects, the payment of the principal of and interest on its bonds, and to fulfill the terms and provisions of any agreements made with the purchasers or holders of any such bonds or with the municipality with respect to which the authority was created.
  2. The authority has the power to lease adjunct portions of any project for commercial use, public or private, by the lessee, when, in the opinion of the board of directors, such leasing is desirable and feasible in order to assist in defraying the expenses of the authority. When, in the opinion of the board of directors, the space above any project is not needed for parking purposes, the authority may lease the right to develop the air space above any project for commercial uses other than parking, together with the right to use and occupy such space within the project as may be necessary for the purposes of access to and support of structures occupying the space above such project.

Acts 1980, ch. 826, § 10.

7-65-111. Bonds and notes.

  1. Except as otherwise expressly provided in this chapter, all bonds issued by the authority shall be payable solely out of the revenues and receipts derived from the leasing, operation or sale by the authority of its projects or any thereof or from income received by the authority from its operation of other parking facilities or from such funds as the authority may receive from other sources as are legally available for such purpose, all as may be designated in the proceedings of the board of directors under which the bonds shall be authorized to be issued; provided, that notes issued in anticipation of the issuance of bonds may be retired out of the proceeds of such bonds. Such bonds may be executed and delivered by the authority at any time and from time to time, may be in such form and denomination and of such terms and maturities, may be in fully registered form or in bearer form registrable either as to principal or interest, or both, may bear such conversion privileges and be payable in such installments and at such time or times, not exceeding forty (40) years, from the date of the bonds, may be payable at such place or places whether within or without the state, may bear interest at such rate or rates payable at such time or times and at such place or places and evidenced in such manner, may be executed by such officers of the authority, and may contain such provisions not inconsistent with this section, all as shall be provided in the proceedings of the board of directors whereunder the bonds shall be authorized to be issued. If deemed advisable by the board of directors, there may be retained in the proceedings under which any bonds of the authority are authorized to be issued an option to redeem all or any part of the bonds as may be specified in such proceedings, at such price or prices and after such notice or notices and on such terms and conditions as may be set forth in such proceedings and as may be briefly recited on the face of the bonds, but nothing contained in this section shall be construed to confer on the authority any right or option to redeem any bonds except as may be provided in the proceedings under which they shall be issued. Any bonds of the authority may be sold at public or private sale for such price and in such manner and from time to time as may be determined by the board of directors of the authority to be most advantageous, and the authority may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds. Issuance by the authority of one (1) or more series of bonds for one (1) or more purposes shall not preclude it from issuing other bonds in connection with the same project or any other project, but the proceedings whereunder any subsequent bonds may be issued shall recognize and protect any prior pledge or mortgage made for any prior issue of bonds.
  2. Any bonds or notes of the authority at any time outstanding may at any time and from time to time be refunded by the authority by the issuance of its refunding bonds in such amount as the board of directors may deem necessary, but not exceeding:
    1. The principal amount of the obligations being refinanced;
    2. Applicable redemption premiums on the bonds or notes;
    3. Unpaid interest on such obligations to the date of delivery or exchange of the refunding bonds;
    4. In the event the proceeds from the sale of the refunding bonds are to be deposited in trust as provided in subdivision (d)(2), interest to accrue on such obligations from the date of delivery to the date of maturity or to the first redemption date, whichever shall be earlier; and
    5. Expenses, premiums and commissions of the authority deemed by the board of directors to be necessary in connection with the issuance of the refunding bonds.
  3. Any such refunding may be effected whether the obligations to be refunded shall have then matured or shall thereafter mature, either by the exchange of the refunding bonds for the obligations to be refunded by the refunding bonds, with the consent of the holders of the obligations so to be refunded, or by sale of the refunding bonds and the application of the proceeds of the sale to the payment of the obligations to be refunded by the refunding bonds, and regardless of whether or not the obligations to be refunded were issued in connection with the same projects or separate projects, and regardless of whether or not the obligations proposed to be refunded shall be payable on the same date or different dates or shall be due serially or otherwise.
  4. The principal proceeds from the sale of any refunding bonds shall be applied only as follows, either to:
    1. The immediate payment and retirement of the obligations being refunded; or
    2. The extent not required for the immediate payment of the obligations being refunded, then such proceeds shall be deposited in trust to provide for the payment and retirement of the obligations being refunded, and to any expenses incurred in connection with such refunding, but may also be used to pay interest on the refunding bonds prior to the retirement of the obligations being refunded. Money in any such trust fund may be invested in direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States government, or obligations of any agency or instrumentality of the United States government, or in certificates of deposit issued by a bank and trust company located in the state, if such certificates shall be secured by a pledge of any of such obligations having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. Nothing in this subdivision (d)(2) shall be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refunded, but which shall not have matured and which shall not be presently redeemable.

Acts 1980, ch. 826, § 11.

7-65-112. Security for bonds.

The principal of and interest on any bonds issued by the authority shall be secured by a pledge of the revenues and receipts out of which the principal and interest shall be made payable, and may be secured by a mortgage or deed of trust covering all or any part of the projects from which the revenues or receipts so pledged may be derived, including any enlargements of and additions to any such projects thereafter made. The resolution under which the bonds are authorized to be issued and any such mortgage or deed of trust may contain any agreements and provisions respecting the maintenance or operation of the projects covered by the resolution, the fixing and collection of rents for any portions of the projects leased by the authority to others, the creation and maintenance of special funds from such revenues, limitations on the issuance of additional bonds and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this section. Each pledge, agreement, mortgage and deed of trust made for the benefit or security of any of the bonds of the authority shall continue effective until the principal of and interest on the bonds for the benefit of which the pledge, agreement, mortgage and deed of trust were made shall have been fully paid or adequate provision shall be made for the payment of the principal and interest. In the event of default in such payment or in any agreements of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage and deed of trust executed as security for the bonds, the payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity or by foreclosure of any such mortgage and deed of trust or any one (1) or more of the remedies.

Acts 1980, ch. 826, § 12.

7-65-113. Pledge of on-street parking revenues.

  1. Any authority operating a project financed from the proceeds of bonds issued pursuant to this chapter may pledge to the payment of the bonds, in addition to all other revenues, all or any portion of such moneys as may be received from on-street parking meters pursuant to an agreement with the municipality within which such project shall be situated.
  2. Upon adoption of an ordinance or resolution by its governing body, determining that a project financed and operated or proposed to be financed and operated within the municipality by an authority will be of benefit to the municipality in connection with its program of regulating and expediting vehicular traffic, and that the making available of on-street parking meter revenues to the authority will make the financing and operation of such project by the authority more feasible, resulting in increased benefits to the municipality and a more orderly flow of traffic, the municipality is authorized to enter into an agreement with the authority whereby the municipality shall pay over to the authority, as received, such portion of the revenues derived from its on-street parking meters as may be determined in such resolution; provided, that such revenues shall be used by the authority for the purpose of retiring indebtedness incurred in relation to the project. The municipality may covenant and agree in any such agreement to maintain its existing parking meters at their present locations and to maintain the charges for on-street metered parking at a rate at least equal to the rate in effect on the date of the agreement, and any such agreement may provide that the terms of the agreement may be enforced by the holder of any outstanding bonds of the authority to be affected by the agreement; provided, that all such provisions shall be subject to the right of the municipality to make changes and alterations pursuant to its police powers in regulating the flow of traffic.
  3. It is hereby determined that, in financing, acquiring and operating any such project, the authority is performing a vital public function and that the use of parking meter revenues for such purpose and the payment of the parking meter revenues to the authority constitutes a proper public purpose of the municipality.

Acts 1980, ch. 826, § 13.

7-65-114. Use of bond proceeds.

Proceeds of bonds other than refunding bonds issued by the authority may be used solely for the purpose of constructing, acquiring, reconstructing, improving, equipping, furnishing, bettering, or extending any project or projects, including the payment of interest on the bonds during construction of any such project and for six (6) months after the estimated date of completion, the payment of engineering, fiscal, architectural and legal expenses incurred in connection with such project and the issuance of the bonds, and the establishment of a reasonable reserve fund for the payment of principal of and interest on such bonds in the event of a deficiency in the revenues and receipts available for such payment.

Acts 1980, ch. 826, § 14.

7-65-115. Exemption from taxation.

The authority is hereby declared to be performing a public function in behalf of the municipality with respect to which the authority is organized and to be a public instrumentality of such municipality. Accordingly, the authority and all properties at any time owned by the authority and the income from the properties, and all bonds issued by the authority and the income from the bonds shall be exempt from all taxation in the state. Also, for purposes of the Tennessee Securities Act of 1980, compiled in title 48, chapter 1, part 1, bonds issued by the authority shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state.

Acts 1980, ch. 826, § 15.

7-65-116. Nonliability of municipality.

The municipality shall not, in any event, be liable for the payment of principal of or interest on any bonds of the authority, or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the authority, and none of the bonds of the authority or any of its agreements or obligations shall be construed to constitute an indebtedness of the municipality within the meaning of any constitutional or statutory provision whatsoever. In the event bonds of the authority are issued for a term greater than the life of the authority, the creating municipality shall assume the obligation of the bonds from and after the expiration of the period of duration of the authority.

Acts 1980, ch. 826, § 16; 1982, ch. 762, § 3.

7-65-117. Municipal leases and contracts with authorities — Tax.

  1. Any municipality is authorized to enter into such leases or projects, or parts of projects, from an authority, for such term or terms and upon such conditions as may be determined by the governing body of such municipality, notwithstanding and without regard to the restrictions, prohibitions, or requirements of any other law, whether public or private; provided, that any such project or part of a project is situated within the municipality.
  2. Whenever, and as often as a municipality enters into a lease with an authority under this chapter, the governing body of such municipality shall provide by ordinance or resolution, as the case may be, for the levy and collection of a direct annual tax sufficient to pay the annual rent payable under such lease as and when it becomes due and payable, and to pay any expenses of maintaining and operating the project required to be paid by the municipality under the terms of such lease or by instrument collateral to the lease; provided, that the ordinance or resolution may provide that the tax levy in each year shall be abated to the extent that there are on hand revenues from the operation of the leased project or any other funds of the municipality that are legally available for the making of rental payments under the lease. Such tax shall be assessed, levied, collected and paid in like manner as other taxes of the municipality and shall be in addition to all other taxes now or hereafter authorized to be levied by the municipality. Such tax shall not be included within any statutory or other limitation of rate or amount for such municipality, but shall be excluded from any statutory or other limitation of rate or amount and be in addition to any statutory or other limitation of rate or amount and in excess of any statutory or other limitation of rate or amount, notwithstanding and without regard to the prohibitions, restrictions or requirements of any other law, whether public or private. There shall be set aside from such tax levy into a special fund an amount sufficient for the payment of the annual rent, and the money in such fund shall be used exclusively for such purpose and shall not be used for any other purpose until the annual rent has been paid in full.

Acts 1980, ch. 826, § 17.

7-65-118. Nonprofit corporation — Disposition of earnings.

The authority shall be a nonprofit corporation and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors of the authority shall determine that sufficient provision has been made for the full payment of the expenses, bonds, and other obligations of the authority, then any net earnings of the authority thereafter accruing shall be paid to the municipality with respect to which the authority was organized; provided, that nothing contained in this section shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease entered into by the authority.

Acts 1980, ch. 826, § 18.

7-65-119. Completion of corporate purpose — Dissolution.

Whenever the board of directors of the authority, by resolution, determines that there has been substantial compliance with the purposes for which the authority was formed, and all bonds theretofore issued and all obligations theretofore incurred by the authority have been fully paid, then the members of the board of directors shall thereupon execute and file for record in the office of the secretary of state a certificate of dissolution reciting such facts and declaring the authority to be dissolved. Such certificate of dissolution shall be executed under the corporate seal of the authority. Upon the filing of such certificate of dissolution, the authority shall stand dissolved, the title to all funds and properties owned by it at the time of such dissolution shall vest in the municipality, and possession of such funds and properties shall forthwith be delivered to such municipality.

Acts 1980, ch. 826, § 19.

7-65-120. Joint operation.

The powers conferred upon authorities created under this chapter may be exercised by two (2) or more such authorities acting jointly. Two (2) or more municipalities may, by acting jointly, incorporate an authority to effectuate the purposes of this chapter. When two (2) or more municipalities incorporate such an authority, each and every requisite pertaining to the application for incorporation, qualifications of applicants, certificate of incorporation and amendment of certificate shall be incumbent, in like manner, upon each municipality joining in the creation of such authority.

Acts 1980, ch. 826, § 20.

7-65-121. Law complete in itself.

No proceedings, notice, filing or approval shall be required for the organization of the authority or the issuance of any bonds or any instrument as security for the bonds, except as provided in this chapter, notwithstanding any other law to the contrary; provided, that nothing in this chapter shall be construed to deprive the state and its governmental subdivisions of their respective police powers over properties of the authority, or to impair any power over the authority of any official or agency of the state and its governmental subdivisions that may be otherwise provided by law.

Acts 1980, ch. 826, § 21.

7-65-122. Project sites.

Any municipality may acquire a project site by gift, purchase, eminent domain or lease, and may transfer any project site to an authority by sale, lease or gift. Such transfer may be authorized by resolution of the governing body of the municipality without submission of the question to the voters, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law. Such project site may be within or without the municipality or partially within and partially without the municipality.

Acts 1980, ch. 826, § 22.

7-65-123. Powers additional to those granted by other laws.

The powers conferred by this chapter shall be in addition and supplementary to, and the limitations in this chapter shall not affect the powers conferred by, any other general, special or local law. Projects may be acquired, purchased, constructed, reconstructed, improved, bettered and extended and bonds may be issued under this chapter for such purposes, notwithstanding that any other general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like project, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local laws.

Acts 1980, ch. 826, § 23.

7-65-124. Applicability of chapter.

  1. This chapter shall only apply to counties having a population of more than fifty thousand (50,000), according to the 1970 federal census or any subsequent federal census.
  2. This chapter shall not apply to counties having a metropolitan form of government.
  3. This chapter shall apply to those counties having a population of six hundred thousand (600,000) or more, according to the 1970 federal census or any subsequent federal census.

Acts 1980, ch. 826, §§ 25-27; 1981, ch. 454, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Chapter 66
Tennessee Homestead Act

7-66-101. Short title.

This chapter shall be known and may be cited as the “Tennessee Homestead Act.”

Acts 1985, ch. 281, § 1.

Cross-References. Homestead exemptions, Tenn. Const., art. XI, § 11; title 26, ch. 2, part 3.

Homesteads, title 30, ch. 2, part 2.

7-66-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Administering agency” or “agency” means that organization that has been designated pursuant to the terms of this chapter to administer the Tennessee homestead program;
  2. “Conveyance property” means that real property that shall be subject to conveyance by sale or by lease upon compliance with certain conditions and terms;
  3. “Homestead agreement” or “agreement” means that contract between the homesteader and the administering agency relative to participation in the homestead program;
  4. “Homesteader” means that person, corporation, partnership, or joint venture that has been designated pursuant to this chapter to receive, lease, occupy, rehabilitate or renovate real properties declared to be held for the program as provided in this chapter; and
  5. “Program,” “homestead program,” or “Tennessee homestead program” means the plan of procedure as provided in this chapter by the Tennessee Homestead Act.

Acts 1985, ch. 281, § 2.

7-66-103. Purpose of chapter — Property affected.

This chapter shall provide for an alternative method for the acquisition and the disposition of real property owned by units of local government. This property shall include, but shall not be limited to, the following:

  1. Real property brought in by units of local government at delinquent tax sales;
  2. Other real property purchased by units of local government;
  3. Real property made available by other local, state or federal governmental agencies; and
  4. Real property made available to the local units of government by a private party.

Acts 1985, ch. 281, § 3.

7-66-104. Election to participate in program.

  1. The local governing body of any county or municipality may, by resolution or by ordinance, elect to participate in this program.
  2. In the event a local governing body shall not elect to participate in this program, then acquisitions and dispositions of real property within the jurisdiction of such local governing body shall be governed under existing laws.

Acts 1985, ch. 281, § 4.

7-66-105. Implementation plan.

Upon election to participate in the program, the executive of the local unit of government shall develop an implementation plan, which shall be subject to majority approval by the local legislative body and shall include the following:

  1. Designation of the agency that shall administer the program. Such agency may be an existing agency or a new agency created for purposes of administering the program;
  2. A description of the method of selection of the properties that are to be assigned to participate under this chapter;
  3. A description of the conditions and criteria that shall be used to select homesteaders for participation in multi-family housing development;
  4. A description of the conditions and criteria that shall be used to select homesteaders for participation in single family housing units;
  5. A description of the conditions and criteria for conveyance of property to homesteaders, whether by deed or by lease;
  6. A description of building standards and codes that shall apply to the designated properties and the methods of monitoring these standards;
  7. A description of the approach that shall be taken to coordinate the homesteading program with state and federal agencies;
  8. A description of technical and financial assistance and incentives that shall be available to homesteaders;
  9. A description of the methods by which property shall be acquired and disposed of; and
  10. Other conditions and criteria as deemed to be in the public interest.

Acts 1985, ch. 281, § 5.

7-66-106. Properties assigned to program — Notice — Removal.

  1. Declaration of properties that shall be assigned to the program must be made by public notice.
  2. Properties declared to be in the program shall remain in such program until removed by the administering agency and public notice of such removal is given.

Acts 1985, ch. 281, § 6.

7-66-107. Provisions governing assigned property.

  1. Properties that have been assigned to the program shall be governed exclusively by the terms of this chapter.
  2. Properties assigned to the program originating from federal governmental agencies shall be administered, conveyed, and disposed of in the manner prescribed by the laws, rules and regulations pertaining to such properties.

Acts 1985, ch. 281, § 7.

7-66-108. Conveyance or leasing of real property.

  1. The administering agency shall convey or lease the real property acquired for purposes of this chapter to those persons who have been designated as homesteaders, subject to such terms and conditions as shall be established by the agency.
    1. Upon compliance with such terms and conditions, that property that is designated as conveyance property shall be conveyed to the homesteader by fee simple title.
    2. Prior to the vesting of a fee simple title in the homesteader, any material failure by the applicant to carry out the homesteader's homestead agreement entered into pursuant to the terms of this chapter nullifies such agreement; the use and enjoyment of the property terminates; and all rights, title and interest in and to the property shall revert to the agency, except that the agency may grant the homesteader a specified period of time, not to exceed two (2) years, to come into compliance with the terms of the homestead agreement.
    1. Any taxes, penalties, interest, and other fees assessed any property designated as homestead property under this chapter, and conveyed in accordance with the chapter, and title transferred in accordance with the terms and conditions as set forth by the local administering agency, shall be forgiven upon such transfer, if such forgiveness has been authorized by the legislative body of the affected municipality, or county, or both.
    2. Upon transfer, the property shall no longer be deemed homestead property and shall be subject to any and all taxes and assessments as prescribed by all other sections of the code.

Acts 1985, ch. 281, § 8; 1986, ch. 914, § 1.

7-66-109. Rules and regulations.

The director of the agency shall prescribe such rules and regulations, including rules and regulations establishing standards and methods for the inspection of the building, the measure of rehabilitation progress, and such other rules and regulations as may be necessary to carry out this chapter.

Acts 1985, ch. 281, § 9.

7-66-110. Exemption from taxation.

Any property held under this chapter with retention of the deed by the local governmental unit is deemed to be the property of the local governing unit held for public purposes and is exempt from property taxation.

Acts 1985, ch. 281, § 10.

7-66-111. Applicability of chapter.

This chapter shall only apply to any county having a population greater than seven hundred fifty thousand (750,000), according to the 1980 federal census or any subsequent federal census.

Acts 1985, ch. 281, § 11.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Chapter 67
Sports Authorities Act of 1993

7-67-101. Short title.

This chapter shall be known and may be cited as the “Sports Authorities Act of 1993.”

Acts 1993, ch. 378, § 1.

Cross-References. Local option revenue act, allocation of receipts, § 67-6-701.

Sales and use taxes, allocation of receipts, § 67-6-103.

Attorney General Opinions. Legality of stadium and relocation agreement, OAG 96-011, 1996 Tenn. AG LEXIS 10 (2/6/96).

NOTES TO DECISIONS

1. Functional Equivalent of Government Agency.

Private company that managed a city sports arena under a contract with a metropolitan government sports authority acted as the functional equivalent of that government agency because it assumed responsibility for the day to day operation, management, maintenance, repair, use, advertising, and marketing of the arena. Allen v. Day, 213 S.W.3d 244, 2006 Tenn. App. LEXIS 542 (Tenn. Ct. App. 2006), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 1211 (Tenn. Dec. 27, 2006).

Although the trial court properly concluded that a private company that managed a city sports arena for a metropolitan government sports authority acted as the functional equivalent of a government agency in the management of the arena, and as such was subject to the public records act, the court erred in ordering that a confidential mediated settlement agreement between the company and the cheerleaders for a sports team had to be publicly disclosed and filed with the clerk's office instead of merely providing the newspaper reporter with a copy of the document. Allen v. Day, 213 S.W.3d 244, 2006 Tenn. App. LEXIS 542 (Tenn. Ct. App. 2006), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 1211 (Tenn. Dec. 27, 2006).

7-67-102. Legislative findings — Purpose of chapter — Liberal construction.

  1. It is hereby found and determined that:
    1. There is an immediate need to promote and further develop recreational opportunities in this state, by facilitating and equipping the acquisition, construction, and rehabilitation of sports complexes, stadiums, arenas and other recreational facilities, for the holding of professional and amateur athletic events;
    2. The development of such facilities will provide a means to attract and locate major professional team franchises in the state, enhance the state's image as a sports center, and encourage and foster economic development and prosperity;
    3. An authority is needed in individual communities to prepare comprehensive, long-range master plans for the orderly development of sports and recreational facilities and to promote sports and sports-related activities; and
    4. In many instances, effective cooperation between various units of government has been hampered because of inadequate statutory authority.
  2. It is the purpose of this chapter to address these findings by providing for the establishment of sports authorities to plan, promote, finance, construct, acquire, renovate, equip and enlarge buildings, sports complexes, stadiums, arenas, structures and facilities for public participation and enjoyment of professional and amateur sports, fitness, health and recreational activities. The primary purpose of any and all such facilities shall be the conduct of sports events, but use of these facilities need not be limited to those events.
  3. This chapter shall be liberally construed in conformity with its purpose.

Acts 1993, ch. 378, § 2.

NOTES TO DECISIONS

1. Functional Equivalent of Government Agency.

Private company that managed a city sports arena under a contract with a metropolitan government sports authority acted as the functional equivalent of that government agency because it assumed responsibility for the day to day operation, management, maintenance, repair, use, advertising, and marketing of the arena. Allen v. Day, 213 S.W.3d 244, 2006 Tenn. App. LEXIS 542 (Tenn. Ct. App. 2006), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 1211 (Tenn. Dec. 27, 2006).

2. Public Records.

Although the trial court properly concluded that a private company that managed a city sports arena for a metropolitan government sports authority acted as the functional equivalent of a government agency in the management of the arena, and as such was subject to the public records act, the court erred in ordering that a confidential mediated settlement agreement between the company and the cheerleaders for a sports team had to be publicly disclosed and filed with the clerk's office instead of merely providing the newspaper reporter with a copy of the document. Allen v. Day, 213 S.W.3d 244, 2006 Tenn. App. LEXIS 542 (Tenn. Ct. App. 2006), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 1211 (Tenn. Dec. 27, 2006).

7-67-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” or “sports authority” means any public corporation organized pursuant to this chapter;
  2. “Bonds” or “revenue bonds” means bonds, notes, interim certificates or other obligations of an authority issued pursuant to this chapter, or pursuant to any other law, as supplemented by, or in conjunction with, this chapter;
  3. “Contracting party” or “other contracting party” means any party, including a municipality, to a sale contract, lease agreement or loan agreement, other than the authority;
  4. “Cost”, as applied to any sports and recreational facility, means and includes the cost of acquisition or construction, the cost of labor, materials, and equipment, the cost of all lands, property rights, easements and franchises required; financing charges, interest and debt service prior to and during construction and up to one (1) year thereafter; costs of plans and specifications, services and estimates of costs and of revenues; costs of engineering and legal services; all expenses necessary or incident to determining the feasibility or practicability of such acquisitions or constructions; and administrative, legal and engineering expenses and such other expenses as may be necessary or incident to the acquisition or construction or the financing authorized in this chapter;
  5. “Governing body” means the body in which the general legislative powers of a municipality are vested, and in the case of counties means the legislative body of any county;
  6. “Loan agreement” means an agreement providing for an authority to loan the proceeds derived from the issuance of revenue bonds pursuant to this chapter to one (1) or more contracting parties to be used to pay the cost of one (1) or more projects and providing for the repayment of such loan by the other contracting party or parties, and which may provide for such loans to be secured by or evidenced by one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of the contracting party or parties, delivered to the authority or to a trustee under the indenture pursuant to which the bonds were issued;
  7. “Municipality” means any county, metropolitan government or incorporated city or town in this state with respect to which an authority may be organized;
  8. “Project” means any building, sports complex, stadium, arena, sports and recreational facility, or any other structure or facility constructed, leased, equipped, renovated or acquired for any of the purposes set forth in this chapter, and also includes, but is not limited to, roads, streets, highways, curbs, bridges, flood control facilities, and utility services, such as water, sanitary sewer, electricity, gas and natural gas, and telecommunications that are constructed, leased, equipped, renovated or acquired as a supporting system or facility for any of the purposes set forth in this chapter; provided, that such supporting system or facility is dedicated for public use;
  9. “Revenues” of a project means all revenues derived from and on account of a project, directly or indirectly, including payments under a lease or sale contract and repayments under a loan agreement, or under notes, debentures, bonds and other secured or unsecured debt obligations of a lessee or contracting party delivered as provided in this chapter, and any revenues pledged by a municipality;
  10. “Sale contract” means a contract providing for the sale of one (1) or more projects to one (1) or more contracting parties and includes a contract providing for payment of the purchase price in one (1) or more installments. If the sale contract permits title to the project to pass to the other contracting party or parties prior to payment in full of the entire purchase price, it shall also provide for the other contracting party or parties to deliver to the authority or to the trustee under the indenture pursuant to which the bonds were issued one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of such contracting party or parties providing for timely payments, including, but not limited to, interest on notes, debentures, bonds or other secured or unsecured debt obligations for the balance of the purchase price, at or prior to the passage of such title;
  11. “Sports and recreational facilities” means and includes facilities for any and all types of sports and recreational pursuits, including, but not limited to, football, basketball, baseball, soccer, track and field meets, swimming and diving meets, and any and all other sports, games, events or exhibitions that add to the recreational enrichment of the community; and
  12. “State” means the state of Tennessee and, unless otherwise indicated by the context, any agency, authority, branch, bureau, commission, corporation, department or instrumentality of the state, now or hereafter existing.

Acts 1993, ch. 378, § 3; 1999, ch. 18, § 3.

7-67-104. Application for incorporation to governing body of municipality.

Any number of natural persons, not fewer than three (3), each of whom are duly qualified voters of the municipality, may file with the governing body of the municipality an application in writing seeking permission to apply for the incorporation of a sports authority of such municipality. If the governing body, by appropriate resolution duly adopted, finds and determines that it is wise, expedient, necessary or advisable that the authority be formed, authorizes the persons making such application to proceed to form such authority and approves the form of corporate charter proposed to be used in organizing the authority, then the persons making such application shall execute, acknowledge and file a charter for the authority as provided in § 7-67-106. No authority may be formed unless such application has first been filed with the governing body of the municipality and the governing body has adopted a resolution as provided in this section.

Acts 1993, ch. 378, § 4.

7-67-105. Charter contents.

  1. The charter shall set forth:
    1. The names and residences of the applicants, together with a recital that each of them is a voter in the municipality;
    2. The name of the authority, which shall be the sports authority of the city, or county, of  , where the blank is to be filled in with the name of the city or county, if such name is available for use by the authority, and if not available, then the incorporators shall designate some other similar name that is available;
    3. A recital that permission to organize the authority has been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of such resolution;
    4. The location of the principal office of the authority;
    5. The purposes for which the authority is proposed to be organized;
    6. The number of directors of the authority;
    7. The period, which may be perpetual, for the duration of the authority;
    8. A provision addressing conflicts of interest of members of the boards of directors of the sports authority; and
    9. Any other matter that the applicants may choose to insert in the charter that is not inconsistent with this chapter or with the laws of the state.
  2. The charter shall be subscribed and acknowledged by each of the applicants.

Acts 1993, ch. 378, § 5.

Attorney General Opinions. Methods for dissolution of county sports authority, OAG 96-128, 1996 Tenn. AG LEXIS 156 (11/12/96).

7-67-106. Filing of charter.

When executed and acknowledged in conformity with § 7-67-105, the charter shall be filed with the secretary of state. The secretary of state shall examine the charter and, if the secretary of state finds that the recitals contained in the charter are correct, that the requirements of § 7-67-104 have been complied with, and that the name is not identical with or so nearly similar to that of another authority already in existence in this state as to lead to confusion and uncertainty, the secretary of state shall approve the charter and accept it for filing. When such charter has been so made, filed and approved, the authority shall constitute a public corporation under the name set out in the charter.

Acts 1993, ch. 378, § 6.

7-67-107. Amendment of charter.

The charter may, at any time and from time to time, be amended in a manner not inconsistent with § 7-67-105. Any such amendment shall be adopted in the following manner: the board of directors of the authority shall file with the governing body of the municipality with which the application for the creation of the authority was filed an application in writing seeking permission to amend the charter, setting forth the proposed amendment to be made. If that sovereign body, by appropriate resolution, finds and determines that it is wise, expedient, necessary or advisable that the proposed amendment be made and authorizes the amendment to be made, approving the form of the proposed amendment, then the chair of the board of directors of the authority shall execute an instrument embodying the amendment, and shall file the amendment with the secretary of state. The secretary of state shall examine the proposed amendment and, if the secretary of state finds that the requirements of this section have been complied with, the secretary of state shall approve the amendment and accept it for filing in an appropriate book in the secretary of state's office. When such amendment has been so made, filed and approved, it shall become effective.

Acts 1993, ch. 378, § 7.

7-67-108. Board of directors — Officers — Meetings public.

    1. The authority shall have a board of directors in which all corporate powers of the authority shall be vested. The board shall consist of no fewer than seven (7) directors, all of whom shall be duly qualified voters of the municipality. A director shall serve without compensation, except that the authority may reimburse a director for actual expenses incurred in the performance of a director's duties. A director may not be an elected official or employee of the municipality. The governing body of the municipality shall appoint the directors. The directors shall have staggered terms.
    2. When the initial board of directors is appointed, the governing body of the municipality shall divide the directors into three (3) groups containing substantially equal numbers. The initial term of the directors included in the first group shall be two (2) years; the initial term of the directors included in the second group shall be four (4) years; the initial term of the directors included in the third group shall be six (6) years. All subsequent terms of directors shall be six (6) years; provided, that if at the expiration of any term of office of any director a successor has not been appointed, the director whose term of office has expired shall continue to hold office until the director's successor is appointed.
    3. In the case of authorities created pursuant to the approval of two (2) or more municipalities acting jointly, as provided in § 7-67-120, the number of directors appointed by the governing body of each municipality shall be as nearly equal as practicable.
      1. In counties having a metropolitan form of government, there shall be no more than thirteen (13) directors. Nine (9) of such members of the board of directors shall be appointed based on residency, with at least one (1) director being appointed from each metropolitan public school district. Of the remaining four (4) members, one (1) director shall be a resident of each of the four (4) state senatorial districts. This subdivision (a)(4)(A) shall not affect the terms of the current members of the sports authority board of directors, but appointments shall be made for the new positions created by this subdivision (a)(4)(A), so as to meet the residency requirements established in this subdivision (a)(4)(A), as terms expire and vacancies occur.
      2. In counties having a metropolitan form of government and in municipalities having a population of more than six hundred thousand (600,000) or not less than forty-seven thousand three hundred (47,300) nor more than fifty thousand (50,000), according to the 1990 federal census or any subsequent federal census, the chief executive officer shall appoint the directors. The governing body of the metropolitan government or of such municipality shall by resolution confirm the appointments of the chief executive officer. When the chief executive officer makes the initial appointments, the chief executive officer shall designate which directors serve an initial term of two (2), four (4) and six (6) years, respectively. At least one (1) director shall be a female and at least one (1) director shall be of a racial minority.
    4. If a vacancy occurs in the position of director, the vacancy shall be filled in the same manner as the original term for the remainder of the unexpired term.
  1. The directors shall meet and organize as a board and shall elect one (1) of its members as chair, one (1) as vice chair, one (1) as secretary, and one (1) as treasurer, and such offices shall annually be filled in like manner. The duties of secretary and treasurer may be performed by the same director. In the event of the resignation or death of the chair, vice chair, secretary or treasurer, another member may be elected to fill the vacancy for the anticipated term of the chair, vice chair, secretary or treasurer.
  2. Any meeting of the board of directors for any purpose whatsoever shall be open to the public. Any action taken by the directors under this chapter may be authorized by resolution at any regular or special meeting. A majority of the board shall constitute a quorum for the transaction of business. The concurring vote of a majority of the directors voting at a meeting at which a quorum is present shall be necessary for the exercise of any of the powers granted by this chapter.

Acts 1993, ch. 378, § 8; 1995, ch. 414, § 2; 1996, ch. 741, §§ 1, 2; 1996, ch. 953, § 1; 1997, ch. 382, § 1.

Compiler's Notes. For table of populations of Tennessee municipalities, see Volume 13 and its supplement.

7-67-109. Powers of the authority.

Each sports authority created pursuant to this chapter shall be a public nonprofit corporation and a public instrumentality of the municipality with respect to which the authority is organized. The authority shall have the following powers, together with all powers incidental to the following powers or necessary for the performance of those powers, to:

  1. Have succession by its corporate name for the period specified in the charter, unless sooner dissolved as provided in § 7-67-119;
  2. Sue and be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
  3. Have and use a corporate seal and alter the seal at pleasure;
  4. Acquire, whether by purchase, construction, exchange, gift, lease, or otherwise, and to improve, repair, extend, equip, furnish, operate and maintain one (1) or more projects, which projects shall be within at least one (1) of the municipalities with respect to which the authority shall have been created, including all real and personal properties that the board of directors of the authority may deem necessary in connection with the projects and regardless of whether or not any such projects shall then be in existence, and including the power to demolish such existing structures as may be on sites acquired when such structures are not needed for the project;
  5. Operate, maintain, manage, and enter into contracts for the operation, maintenance and management of any project undertaken, and to make rules and regulations with regard to such operation, maintenance and management;
  6. Employ, contract with, fix the compensation of, and discharge engineering, architectural, legal and financial experts, and such consultants, agents and employees, as may be necessary to carry out the purposes of this chapter and to provide for the proper construction, operation and maintenance of any project;
  7. Lease, rent and contract for the operation of all or any part of any project for sports and recreational facilities, and charge and collect rent for the project and terminate any such lease upon the failure of the lessee to comply with any of the obligations of the lease; and include in or exclude from any such lease provisions that the lessee shall have the option to renew the term of the lease for such period or periods and at such rent as shall be determined by the board of directors;
  8. Lease such space in a project as from time to time may not be needed for sports and recreational purposes to any other person, corporation, partnership or association for such purposes as the board of directors may determine are in the best interest of the authority or will help facilitate the purposes for which the authority was created, and upon such terms and in such manner as the board may determine;
  9. Fix and collect rates, rentals, fees and charges for the use of any and all of the sports and recreational facilities of the authority;
  10. Contract for the operation of concessions on or in any of the sports and recreational facilities of the authority;
  11. Advertise within or without the state any of the sports and recreational facilities of the authority;
  12. Sell, exchange, donate, and convey any or all of its properties, whenever the board of directors shall find any such action to be in furtherance of the purposes for which the authority was organized;
  13. Procure and enter into contracts for any type of insurance or indemnity against loss or damage to property from any cause, including loss of use and occupancy, against death or injury of any person, against employer's liability, against any act of any member, officer or employee of the authority in the performance of the duties of such person's office or employment or any other insurable risk, as the board of directors, in its discretion, may deem necessary;
  14. Accept donations, contributions, revenues, capital grants or gifts from any individuals, associations, public or private corporations, and municipalities, the state or the United States, or any agency or instrumentality of the state or the United States, for or in aid of any of the purposes of this chapter and enter into agreements in connection with the donations, contributions, revenues, capital grants or gifts;
  15. Borrow money from time to time and, in evidence of any obligation incurred, issue and sell its revenue bonds in accordance with this chapter and the applicable provisions of title 9, chapter 21, in such form and upon such terms as its board of directors may determine and as approved by the governing body of the creating municipality, payable out of any revenues of the authority, including grants or contributions or other revenues specifically provided to the authority, for the purpose of acquiring, erecting, extending, improving, equipping, renovating or repairing any project or for any combination of such purposes, and demolishing structures on the project site and acquiring a site or sites necessary and convenient for such project, including, but without in any way limiting the generality of the foregoing, architectural, engineering, legal, consulting and financing expenses, and including an amount sufficient to meet the interest charges on such revenue bonds during such estimated period or periods as may elapse prior to the time when the project or projects may become revenue producing and for one (1) year in addition to the estimated period; refund and refinance, from time to time, revenue bonds so issued and sold, as often as may be deemed to be advantageous by the board of directors; and, pending the issuance of its revenue bonds for the purposes in this chapter authorized, issue its interim certificates or notes or other temporary obligations;
  16. Enter into any agreement or contract with any lessee who, pursuant to the terms of this chapter, is renting or is about to rent from the authority all or part of any building or buildings or facilities, whereby, under such agreement or contract, such lessee obligates itself to pay all or part of the cost of maintaining and operating the premises so leased, and such agreement may be included as a provision of any lease entered into pursuant to the terms of this chapter or may be made the subject of a separate agreement or contract between the authority and such lessee;
  17. Mortgage and pledge as security for the payment of the principal of and interest on any revenue bonds so issued and any agreements made in connection with the bonds, any or all of the projects or any part or parts of the projects, whether then owned or thereafter acquired, and pledge the revenues and receipts from the bonds or from any of the bonds;
  18. Enter into any contract to facilitate the location of a professional sports team in a project located in a metropolitan government or in any county having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, make any payments required under the contract and borrow funds for the purpose of making any such payment as provided in this chapter funded from revenues other than tax revenues;
  19. Exercise all powers expressly given in its charter and establish bylaws and make all rules and regulations not inconsistent with the charter or the provisions of this chapter, deemed expedient for the management of the affairs of the authority; and
  20. Acquire, whether by purchase, construction, exchange, gift, lease or otherwise, and improve, repair, extend, equip, furnish, operate and maintain any roads, streets, highways, curbs, bridges, flood control facilities, utility services such as water, sanitary sewer, electricity, gas and natural gas, and telecommunications that the board of directors of the sports authority deems to be necessary, expedient or advisable in connection with the development or operation of any project; dedicate any such highways, roads or services to the public use; enter into any contract to facilitate these purposes and make any payments required under such contracts; borrow funds for the purpose of making any payment authorized by this subdivision (20); and pledge and otherwise use the revenues of the sports authority to repay such borrowed funds.

Acts 1993, ch. 378, § 9; 1995, ch. 414, § 1; 1999, ch. 18, § 2.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. Methods for dissolution of county sports authority, OAG 96-128, 1996 Tenn. AG LEXIS 156 (11/12/96).

NOTES TO DECISIONS

1. Authority to Issue Bonds.

Sports authority created by the city and county was not prohibited by Tenn. Const. art. II, § 29 from issuing bonds for the construction of a sports arena in cooperation with a private company. Ragsdale v. City of Memphis, 70 S.W.3d 56, 2001 Tenn. App. LEXIS 612 (Tenn. Ct. App. 2001).

2. Functional Equivalent of Government Agency.

Private company that managed a city sports arena under a contract with a metropolitan government sports authority acted as the functional equivalent of that government agency because it assumed responsibility for the day to day operation, management, maintenance, repair, use, advertising, and marketing of the arena. Allen v. Day, 213 S.W.3d 244, 2006 Tenn. App. LEXIS 542 (Tenn. Ct. App. 2006), appeal denied, — S.W.3d —, 2006 Tenn. LEXIS 1211 (Tenn. Dec. 27, 2006).

7-67-110. Audit.

  1. The board of directors of each authority shall cause an annual audit to be made of the books and records of its authority. The comptroller of the treasury, through the department of audit, shall be responsible for determining that such audits are prepared in accordance with generally accepted governmental auditing standards and that such audits meet the minimum standards prescribed by the comptroller of the treasury.
  2. Such audits shall be prepared by certified public accountants or by the department of audit. In the event the governing body of the authority shall fail or refuse to have the audit prepared, then the comptroller of the treasury may appoint a certified public accountant, or direct the department of audit, to prepare the audit, the cost of such audit to be paid by the authority.
  3. Each authority shall prepare an annual report of its business affairs and transactions. A copy of such report shall be filed with the municipality granting permission to the authority to organize.

Acts 1993, ch. 378, § 10.

7-67-111. Donations of services and property — Reversion of property to donor.

  1. For the purpose of aiding and cooperating with an authority, the municipality authorizing such authority may assign or loan any of its employees, including its engineering staff and facilities, and may provide necessary office space, equipment, and other facilities for the use of such authority, as the governing body of such municipality shall approve.
  2. The governing body of such municipality, entering into a lease of any project, or part or parts of a project, may make donations of property, real or personal, or cash grants to the authority, in such amount or amounts as it may deem proper and appropriate in aiding the authority to accomplish its purpose.
  3. Any municipality authorizing an authority that enters into a lease with an authority may convey real property or personal property to the authority and may include a provision in such conveyance for the reversion of such property to the transferor at such time as all revenue bonds or other obligations of the authority incident to the real property so conveyed shall have been paid in full, and any authority created pursuant to this chapter is authorized to accept such a conveyance.

Acts 1993, ch. 378, § 11.

7-67-112. Bonds of authority.

  1. All bonds issued by the authority shall be issued in accordance with the applicable provisions of title 9, chapter 21, and shall be payable solely out of the revenue and receipts derived from any projects, or of any portion of projects owned, operated or leased to or from the authority, as may be designated by the board of directors of the authority, when the bonds shall be authorized to be issued or from any revenues to be derived directly or indirectly by the authority from such projects, including revenues from concessions, endorsements, ticket sales and souvenir sales, or from any revenues derived directly or indirectly by the authority from the allocation, transfer, contribution or pledge of tax revenues of any nature by a municipality having taxing power, other than tax revenues derived from ad valorem property taxes that shall not be contributed or pledged by a municipality in payment of or collateral for any revenue bonds of the authority. Such bonds may be issued in one (1) or more series, may be executed and delivered by the authority, at any time and from time to time, may be in such form and denomination and of such terms and maturities, may be subject to redemption prior to maturity, either with or without premium, may bear such conversion privileges and be payable in such installments and at such time or times not exceeding forty (40) years from the date of the bonds, may be payable at such place or places whether within or without the state, may bear interest at such rate or rates payable at such time or times and at such place or places and evidenced in such manner, and may contain such provisions not inconsistent with this chapter, all as shall be provided in the proceedings of the board of directors whereunder the bonds shall be authorized to be issued.
  2. Bonds of the authority shall be executed in the name of the authority by such officers of the authority and in such manner as the board of directors may direct, and shall be sealed with the corporate seal of the authority. If so provided in the proceedings authorizing the bonds, the facsimile signature of any of the officers executing such bonds and a facsimile of the corporate seal of the authority may appear on the bonds in lieu of the manual signature of such officer and the manual impress of such seal.
  3. Any bonds of the authority may be sold at public or private sale, for such price and in such manner and from time to time as may be determined by the board of directors of the authority to be most advantageous, and the authority may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds.
  4. Any bonds of the authority, at any time outstanding, may, at any time and from time to time, be refunded by the authority by the issuance of its refunding bonds in such amount as the board of directors may deem necessary, which may include amounts sufficient to refund the principal of the bonds so to be refunded, any unpaid interest necessary or incidental and any premiums, commissions or other expenses or charges. Any such refunding may be effected whether the bonds to be refunded shall have then matured or shall thereafter mature, either by sale of the refunding bonds and the application of the proceeds of the refunding bonds to the payment of the bonds to be refunded by the refunding bonds, or by the exchange of the refunding bonds for the bonds to be refunded by the refunding bonds, with the consent of the holders of the bonds so to be refunded, and regardless of whether or not the bonds to be refunded were issued in connection with the same projects or separate projects, and regardless of whether or not the bonds proposed to be refunded shall be payable on the same date or different dates or shall be due serially or otherwise.
  5. Interim certificates or notes or other temporary obligations issued by the authority pending the issuance of its revenue bonds shall be payable out of revenues and receipts in like manner as such revenue bonds and shall be retired from the proceeds of such bonds upon the issuance of the revenue bonds, and shall be in such form and contain such terms, conditions and provisions consistent with this chapter as the board of directors may determine.
    1. Notwithstanding any provisions of this section or any other law to the contrary, a sports authority and the municipality in which it is located may enter into an agreement under which all or any portion of the real property ad valorem taxes paid by the owner of a sports facility shall be paid into a special enterprise fund of the municipality, subject to the conditions set forth in this subdivision (f)(1). The municipality is authorized to use the moneys in such enterprise fund in order to make any payments due to the sports authority from the municipality under a contractual obligation. Such an enterprise fund may only be utilized where the funds paid from the special enterprise fund to the sports authority shall be principally used by the sports authority to make payments on revenue bonds issued by the sports authority, where the net proceeds of such bonds were used by the sports authority to acquire, construct or equip systems, improvements or facilities that are public improvements dedicated for public use, and such improvements were made by the sports authority in order to assist in the development and construction of such sports facility, and the sports authority is authorized to pledge any moneys paid to it from such enterprise fund as collateral for such revenue bonds, notwithstanding § 7-67-113. The agreement between the sports authority and the municipality shall not be effective unless approved by the comptroller of the treasury.
    2. Notwithstanding subdivision (f)(1), if the sports authority is not the owner of the sports and recreational facility, then prior to the issuance of any bonds for a project as defined in § 7-67-103 related to the sports and recreational facility, the sports authority, in addition to the pledge of revenues from the project as the source of payment for such bonds, shall provide further security for the payment of the bonds, such as bond insurance, a surety bond, a letter of credit, a third party guarantee, the contractual obligation of the owner or operator of the sports facility as to its ownership and operation during the term of the bonds, or other similar security, all of which must be submitted to the comptroller of the treasury for approval.

Acts 1993, ch. 378, § 12; 1999, ch. 18, §§ 4, 5.

7-67-113. Security for bonds.

  1. The principal of and interest on any bonds issued by the authority shall be secured by a pledge of the revenues and receipts out of which the principal and interest shall be made payable and may be secured by a pledge of revenues of the authority derived from other sources, such as revenues from other sports and recreational facilities and a mortgage or deed of trust covering all or any part of the projects from which the revenues or receipts so pledged may be derived, including any enlargements of and additions to any such projects thereafter made, or revenues derived directly or indirectly by the authority from tax revenues allocated, transferred, contributed or pledged by a municipality having taxing authority, other than tax revenues derived from ad valorem property taxes that shall not be contributed or pledged by a municipality in payment of or collateral for any revenue bonds of the authority. The proceedings under which the bonds are authorized to be issued and any such mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered by the bonds, the fixing and collection of rents for any portions of projects leased by the authority to others, the creation and maintenance of special funds from such revenues and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this chapter. Each pledge, agreement, or mortgage or deed of trust made for the benefit or security of any of the bonds of the authority shall continue effective until the principal of and interest on the bonds for the benefit of which the pledge, agreement, or mortgage or deed of trust were made shall have been fully paid. In the event of default in such payment or in any agreement of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage or deed of trust executed as security for the bonds, such payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity or by foreclosure of any such mortgage or deed of trust, or any one (1) or more of such remedies.
  2. The board of directors of any authority issuing bonds under this chapter shall charge, collect and revise, from time to time whenever necessary, rents and charges for the rental of projects or parts of projects, the revenues from which are pledged to the payment of such bonds, sufficient to pay for the operation and maintenance of such projects and such portion of the administrative costs of the authority as may be provided in the lease or leases of such projects, and to pay such bonds and the interest on the bonds as the bonds and interest become due, including such reserves for the bonds and interest as may be determined to be necessary by the board of directors.

Acts 1993, ch. 378, § 13.

7-67-114. Exemption from taxation — Annual report of leased property.

  1. The authority is hereby declared to be performing a public function on behalf of the municipality with respect to which it is organized and to be a public instrumentality of such municipality. Accordingly, the authority and all properties at any time owned by it and the income from the properties and all bonds issued by the authority and the income from the bonds, shall be exempt from all taxation in the state. Also, for purposes of the Tennessee Securities Act of 1980, compiled in title 48, chapter 1, part 1, bonds issued by the authority shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state.
  2. On or before October 1 each year, any authority lessee or sublessee shall file with the comptroller of the treasury a report listing leased properties and details of the lease and payment in lieu of tax (PILOT) agreements in the format provided in § 7-53-305. A copy of the report shall be filed with the assessor of property on or before October 15. The assessor may audit or review the report and conduct comparative analysis to ensure that all agreements and reports are filed. Failure to timely complete and file the report at the comptroller of the treasury shall subject the lessee or sublessee to a late filing fee of fifty dollars ($50.00) payable to the comptroller of the treasury. In addition, failure to file the report with the comptroller of the treasury or assessor within thirty (30) days after written demand for the report shall subject the lessee or sublessee to an additional payment in lieu of tax in the amount of five hundred dollars ($500).

Acts 1993, ch. 378, § 14; 2008, ch. 1013, § 5; 2016, ch. 588, §§ 3, 4.

Amendments. The 2016 amendment in (b) substituted “comptroller of the treasury” for “state board of equalization” preceding “a report” in the middle of the first sentence; and substituted “comptroller of the treasury” for “board” twice in the fourth sentence and preceding “or assessor” in the middle of the last sentence.

Effective Dates. Acts 2016, ch. 588, § 7. March 10, 2016.

7-67-115. Nonliability of municipality.

Except to the extent of any revenues that may be specifically allocated, transferred, contributed or pledged by a municipality in accordance with this chapter and laws, rules and regulations applicable to this chapter, no municipality shall in any event be liable for the payment of the principal of or interest on any bonds of the authority or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the authority, and none of the bonds of the authority or any of its agreements or obligations shall be construed to constitute an indebtedness of the municipality within the meaning of any constitutional or statutory provision whatsoever.

Acts 1993, ch. 378, § 15.

7-67-116. Powers of municipalities to aid or assist authorities.

  1. Except as may be expressly prohibited by this section, any municipality is authorized to aid or otherwise provide assistance to an authority created pursuant to this chapter by such municipality, including entering into leases of projects, or parts of projects with an authority, for such term or terms and upon such conditions as may be determined by the governing body of such municipality, notwithstanding and without regard to the restrictions, prohibitions, or requirements of any other law, whether public or private, or granting, contributing or pledging revenues of the municipality to or for the benefit of the authority derived from any source, except revenues derived from ad valorem property taxes that shall not be granted, contributed or pledged by the municipality in payment of or collateral for any revenue bonds of the authority.
  2. In addition to the powers granted in this chapter, any metropolitan government or legislative bodies of municipalities, acting jointly, in any county having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, is authorized to aid or otherwise provide assistance to an authority created pursuant to the provisions of this chapter by such metropolitan government or municipalities, acting jointly, in any county having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, by entering into contracts with any other party in furtherance of the purposes of this chapter, for such term or terms and upon such conditions as may be determined by the governing body of such metropolitan government or legislative bodies of municipalities, acting jointly, in any county having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census.

Acts 1993, ch. 378, § 16; 1995, ch. 414, § 3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-67-117. Execution of leases, contracts, deeds.

Except as otherwise provided in this chapter, all leases, contracts, deeds of conveyance, or instruments in writing executed by the authority, shall be executed in the name of the authority by the chair or secretary of the authority, or by such other officers as the board of directors, by resolution, may direct, and the seal of the authority may be affixed to such instruments.

Acts 1993, ch. 378, § 17.

7-67-118. Nonprofit corporation — Disposition of earnings.

The authority shall be a public nonprofit corporation and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors shall determine that sufficient provision has been made for the full payment of the expenses, bonds and other obligations of the authority, including reserves for the expenses, bonds and other obligations, any net earnings of the authority thereafter accruing may be used to provide a reserve for depreciation of any project or projects undertaken by such authority, in an amount determined by the board of directors to be necessary and reasonable, and net earnings available thereafter shall be paid to the municipality with respect to which the authority was organized; provided, that nothing contained in this section shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease entered into by the authority.

Acts 1993, ch. 378, § 18.

7-67-119. Completion of corporate purpose — Dissolution.

Whenever the board of directors of an authority or the governing body of the creating municipality by resolution determines that the purposes for which the authority was formed have been substantially accomplished and all bonds theretofore issued and all obligations theretofore incurred by the authority have been fully paid, the members of the board of directors or the executive officers of the municipality, as the case may be, shall thereupon execute and file for record in the office of the secretary of state a certificate of dissolution, reciting such facts and declaring the authority to be dissolved. Such certificate of dissolution shall be executed under the seal of the authority. Upon the filing of such certificate of dissolution, the authority shall stand dissolved, the title to all funds and properties owned by it at the time of such dissolution shall vest in the municipality with respect to which the authority was organized, and possession of such funds and properties shall forthwith be delivered to such municipality.

Acts 1993, ch. 378, § 19.

Attorney General Opinions. Methods for dissolution of county sports authority, OAG 96-128, 1996 Tenn. AG LEXIS 156 (11/12/96).

7-67-120. Joint operation.

  1. The powers conferred upon authorities created under this chapter may be exercised by two (2) or more such authorities acting jointly.
  2. Two (2) or more municipalities may, by acting jointly, incorporate a sports authority to effectuate the purposes of this chapter. When two (2) or more municipalities incorporate such an authority, each and every requisite pertaining to the application for incorporation, qualification of applicants, charter and amendment of charter shall, as nearly as may be practicable, be incumbent in like manner upon each municipality joining in the creation of such authority.

Acts 1993, ch. 378, § 20.

7-67-121. Project sites.

Any municipality may acquire a project site by gift, purchase or lease, or exercise of the power of eminent domain, and may transfer any project site to an authority by sale, lease or gift. Such transfer may be authorized by a resolution of the governing body of the municipality without submission of the question to the voters, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 1993, ch. 378, § 21.

7-67-122. Powers not restricted — Law complete in itself.

This chapter shall not be construed as a restriction or limitation upon any powers that an authority, as a public corporation, might otherwise have under any laws of this state, but shall be construed as cumulative of any such powers. No proceedings, notice or approval shall be required for the organization of the authority or the issuance of any bonds or any instrument as security for the bonds, except as provided in this chapter, any other law to the contrary notwithstanding; provided, that nothing in this chapter shall be construed to deprive the state and its governmental subdivisions of their respective police powers over properties of the authority, or to impair any power over properties of the authority of any official or agency of the state and its governmental subdivisions that may be otherwise provided by law. Projects may be acquired, purchased, constructed, reconstructed, improved, bettered and extended, and bonds may be issued under this chapter for such purposes, notwithstanding that any other general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like project, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 1993, ch. 378, § 22.

Chapter 68
Enforcement of Federal Immigration Laws

7-68-101. Legislative findings, determinations and declarations.

The general assembly finds, determines and declares that:

  1. Because the matters contained in this chapter have important statewide ramifications for compliance with and enforcement of federal immigration laws and for the welfare of all citizens in this state, these matters are of statewide concern;
  2. Allowing illegal immigrants to reside within this state undermines federal immigration laws and state laws allocating available resources; and
  3. The state attorney general and reporter and all appropriate state and local law enforcement agencies are to vigorously pursue all federal moneys to which the state may be entitled for the reimbursement of moneys spent to enforce federal immigration laws.

Acts 2009, ch. 447, § 1.

7-68-102. Chapter definitions.

As used in this chapter:

  1. “Law enforcement agency”:
    1. Means an agency of a political subdivision of this state charged with enforcement of state, county, municipal, or federal laws, or with managing custody of detained persons in this state, and includes, but is not limited to, county and other municipal police departments and sheriffs' departments; and
    2. Includes officials, representatives, agents, and employees of an agency described in subdivision (1)(A);
  2. “Local governmental entity” means a governing body, board, commission, committee, department, or law enforcement agency of a municipality, county, or other political subdivision of this state;
  3. “Official” means an agent, employee, member, or representative of a local governmental entity; and
  4. “Sanctuary policy” means any directive, order, ordinance, resolution, practice, or policy, whether formally enacted, informally adopted, or otherwise effectuated, that:
    1. Limits or prohibits any local governmental entity or official from communicating or cooperating with federal agencies or officials to verify or report the immigration status of any alien;
    2. Grants to aliens unlawfully present in the United States the right to lawful presence within the boundaries of this state in violation of federal law;
    3. Violates 8 U.S.C. § 1373;
    4. Restricts in any way, or imposes any conditions on, a state or local governmental entity's cooperation or compliance with detainers from the United States department of homeland security, or other successor agency, to maintain custody of any alien or to transfer any alien to the custody of the United States department of homeland security, or other successor agency;
    5. Requires the United States department of homeland security, or other successor agency, to obtain a warrant or demonstrate probable cause before complying with detainers from the department to maintain custody of any alien or to transfer any alien to its custody; or
    6. Prevents law enforcement agencies from inquiring as to the citizenship or immigration status of any person.

Acts 2009, ch. 447, § 1; 2018, ch. 973, § 2.

Compiler's Notes. Acts 2018, ch. 973, § 6 provided that (a) The act, which amended this section, shall be implemented in a manner consistent with federal laws regulating immigration, protecting the civil rights of all persons, and respecting the privileges and immunities of United States citizens. (b) ln complying with the requirements of this act, no law enforcement officer shall consider an individual's race, color, or national origin, except to the extent permitted by the United States or Tennessee constitution, and federal law.

Amendments. The 2018 amendment rewrote the section which read:“As used in this chapter, unless the context otherwise requires:“(1) ‘Local governmental entity’ means a governing body, board, commission, committee or department of a municipality or county; and“(2) ‘Official’ means a member of a governing body, board, commission or committee of a municipality or county or the head of any department of a municipality or county.”

Effective Dates. Acts 2018, ch. 973, § 7. January 1, 2019.

7-68-103. Adoption of sanctuary policy prohibited.

No local governmental entity or official shall adopt or enact a sanctuary policy. A local governmental entity that adopts or enacts a sanctuary policy is ineligible to enter into any grant contract with the department of economic and community development until the sanctuary policy is repealed, rescinded, or otherwise no longer in effect.

Acts 2009, ch. 447, § 1; 2018, ch. 973, § 3.

Compiler's Notes. Acts 2018, ch. 973, § 6 provided that (a) the act, which amended this section, shall be implemented in a manner consistent with federal laws regulating immigration, protecting the civil rights of all persons, and respecting the privileges and immunities of United States citizens. (b) In complying with the requirements of this act, no law enforcement officer shall consider an individual's race, color, or national origin, except to the extent permitted by the United States or Tennessee constitution, and federal law.

Amendments. The 2018 amendment rewrote the section which read:“(a) A local governmental entity or official shall not adopt any ordinance or written policy that expressly prohibits a local governmental entity, official or employee from complying with applicable federal law pertaining to persons who reside within the state illegally.“(b) An official shall not materially interfere with the ability of a local governmental entity, official or employee of a municipality or a county to comply with applicable federal law pertaining to persons who reside within the state illegally.”

Effective Dates. Acts 2018, ch. 973, § 7. January 1, 2019.

7-68-104. Violations — Filing complaint — Burden of proof — Court actions — Compliance with orders.

  1. A person residing in a municipality or county who believes a local governmental entity or official has violated § 7-68-103 may file a complaint in chancery court in that person's county of residence.
  2. The person filing the complaint shall have the burden of proving by a preponderance of the evidence that a violation of § 7-68-103 has occurred.
    1. If the court finds the local governmental entity or official is in violation of § 7-68-103, the court shall issue a writ of mandamus against the entity or official ordering the entity or official to comply with § 7-68-103, enjoin the entity or official from further interference, and take other action to ensure compliance as is within the jurisdiction of the court.
    2. Upon a finding by the court that a local governmental entity or official has adopted or enacted a sanctuary policy, the local governmental entity, or the entity to which the official belongs, becomes ineligible to enter into any grant contract with the department of economic and community development. Ineligibility commences on the date the court finds that the local governmental entity or official is in violation of § 7-68-103 and continues until such time that the court certifies that the sanctuary policy is repealed, rescinded, or otherwise no longer in effect.
  3. A local governmental entity shall have no less than ninety (90) days nor more than one hundred twenty (120) days from the date of the court's order to comply with the order. If, after one hundred twenty (120) days, the local governmental entity has not complied with the court's order, the court may take whatever action necessary to enforce compliance.

Acts 2009, ch. 447, § 1; 2018, ch. 973, § 4.

Compiler's Notes. Acts 2018, ch. 973, § 6 provided that (a) The act, which amended this section, shall be implemented in a manner consistent with federal laws regulating immigration, protecting the civil rights of all persons, and respecting the privileges and immunities of United States citizens. (b) In complying with the requirements of this act, no law enforcement officer shall consider an individual's race, color, or national origin, except to the extent permitted by the United States or Tennessee constitution, and federal law.

Amendments. The 2018 amendment added (c)(2), and in present (c)(1), inserted “is” preceding “in violation”, substituted “shall” for “may” preceding “issue”, substituted “entity or official ordering the entity or official” for “local governmental entity of official ordering it” preceding “to comply”, inserted “entity or” following “enjoin the”, and substituted “, and” for “or” following “interference”.

Effective Dates. Acts 2018, ch. 973, § 7. January 1, 2019.

7-68-105. Authority to communicate with federal officials regarding immigration status of aliens not lawfully present — Memorandum of agreement between law enforcement agency and federal official — Notice to governor.

  1. All law enforcement agencies and officials are authorized, in accordance with 8 U.S.C. § 1357(g)(10), to communicate with the appropriate federal official regarding the immigration status of any individual, including reporting knowledge that a particular alien is not lawfully present in the United States or otherwise to cooperate with the appropriate federal official in the identification, apprehension, detention, or removal of aliens not lawfully present in the United States.
  2. A law enforcement agency may negotiate the terms of a memorandum of agreement between the law enforcement agency and the appropriate federal official in 8 U.S.C. § 1357(g), concerning the enforcement of federal immigration laws. Any memorandum of agreement negotiated pursuant to 8 U.S.C. § 1357(g) must:
    1. Be entered into in accordance with federal law;
    2. Require that each officer employed by the law enforcement agency be trained in accordance with the memorandum of agreement between the law enforcement agency and the appropriate federal official concerning the law enforcement officer's role in enforcing federal immigration laws, in accordance with 8 U.S.C. § 1357(g); and
    3. Allow for the enforcement of federal immigration laws to the full extent permitted under federal law.
    1. Whenever a law enforcement agency enters into a memorandum of agreement pursuant to subsection (b), notice of the agreement must be submitted in writing to the governor, the office of the lieutenant governor, who shall transmit the notice to the members of the senate, and the office of the speaker of the house of representatives, who shall transmit the notice to the members of the house of representatives.
    2. Any renewal, modification, or termination of a memorandum of agreement must be reported in the same manner as the original memorandum of agreement in subdivision (c)(1).

Acts 2018, ch. 973, § 5.

Compiler's Notes. Acts 2018, ch. 973, § 6 provided that (a) the act, which enacted this section, shall be implemented in a manner consistent with federal laws regulating immigration, protecting the civil rights of all persons, and respecting the privileges and immunities of United States citizens.  (b) ln complying with the requirements of this act, no law enforcement officer shall consider an individual's race, color, or national origin, except to the extent permitted by the United States or Tennessee constitution, and federal law.

Effective Dates. Acts 2018, ch. 973, § 7. January 1, 2019.

Chapter 69
Tourism Development Authority Act

7-69-101. Short title.

This chapter shall be known and may be cited as the “Tourism Development Authority Act.”

Acts 2012, ch. 846, § 2.

7-69-102. Creation of tourism development authority — Chapter definitions.

    1. Any municipality or county incorporated or existing under the laws of Tennessee, or any combination of any municipality or county incorporated or existing under the laws of Tennessee has authority to establish a tourism development authority, hereafter referred to as “authority,” within the area of the local governments establishing the authority.  The establishment of such an authority may also include the participation of a local chamber of commerce in such manner and to the extent authorized by the local governments creating the authority.
      1. It is declared that any tourism development authority created pursuant to this chapter:
        1. Is a public body corporate and politic, performing a public function on behalf of its creating municipalities;
        2. Is a public and governmental body acting as an agency and instrumentality of the municipality or county or any combination of any municipality or county with respect to which the authority is organized; and
        3. That the acquisition, operating and financing of any project by such authority is declared to be for a public and governmental purpose and a matter of public necessity.
      2. The authority and all properties at any time owned by it, and the income and revenues from such properties, and all bonds issued by the authority, and the income from the bonds, shall be exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes, and except as otherwise provided in this code.
      3. For purposes of the Tennessee Securities Act of 1980, compiled in title 48, chapter 1, part 1, bonds issued by the authority shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state of Tennessee.
    1. An authority shall come into existence under the terms of this chapter when any government votes or a combination of governments specified in subsection (a) each vote by majority vote of its governing body to establish an authority. Evidence of such authorization shall be proclaimed and countersigned by the presiding officer of each participating county or municipality and certified by such officer to the secretary of state.
    2. The governing bodies of all governments voting to become members of an authority shall indicate their willingness to appropriate sufficient funds to provide for the initial administration of the authority as a part of the authorization process.
    3. The creating municipality or municipalities are authorized to provide funding and appropriate money to the authority in such manner as directed by the governing bodies, which may include appropriation from the general fund or from an occupancy tax imposed by the municipality or municipalities to the extent authorized by the governing body of each such municipality.
  1. As used in this chapter:
    1. “Board” means the board of directors of the authority;
    2. “Governing body” means the legislative body of the creating municipality or municipalities;
    3. “Municipality” means any municipality or county incorporated or existing under the laws of Tennessee, or any combination of any municipality or county incorporated or existing under the laws of Tennessee;
    4. “Project” means any facilities or group of facilities to be owned or controlled (either through ownership, lease or an easement) by the authority or other governmental entity and that is available for use by the public including, without limitation, visitor centers, recreational facilities such as greenways and trails, and other governmentally-owned tourist attractions; provided, that any such project shall be determined by the authority to promote tourism in the municipality or municipalities creating the authority; and
    5. “Tourism” means the planning and conducting of programs of information and publicity designed to attract tourists, visitors and other interested persons from outside the area of the municipality or municipalities creating the authority and also encouraging and coordinating the efforts of other public and private organizations or groups of citizens to publicize the facilities and attractions of the area, and shall also include the acquisition, construction, and remodeling of facilities useful in the attraction and promoting of tourists, conventions, and recreational business.

Acts 2012, ch. 846, § 3; 2014, ch. 932, § 1.

Attorney General Opinions. T.C.A. § 7-69-102(a)(1) imposes no express limit on the number of tourism development authorities that a municipality or county may establish.  OAG 15-54, 2015 Tenn. AG LEXIS 54  (7/1/15).

7-69-103. Powers of authority.

  1. The authority shall have the following powers, together with all powers incidental to the following powers or necessary for the performance of those powers, to:
    1. Sue and be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
    2. Acquire, whether by purchase, construction, exchange, gift, lease, or otherwise, and design, plan, site, improve, repair, extend, equip, furnish, operate and maintain one (1) or more projects, which projects shall be within the jurisdictional boundaries of the governmental entities establishing the authority, including all real and personal properties that the board of directors of the authority may deem necessary in connection with the projects and regardless of whether or not any such projects shall then be in existence, and including the power to demolish any existing structures as may be on sites acquired when such structures are not needed for the project;
    3. To appoint agents and employees, describe their qualifications and fix their compensation;
    4. Operate, maintain, manage, and enter into contracts for the operation, maintenance and management of any project undertaken, and to make rules and regulations with regard to such operation, maintenance and management;
    5. Employ, contract with, fix the compensation of, and discharge engineering, architectural, legal, financial and other professional experts, consultants, agents and employees as may be necessary to carry out the purposes of this chapter and to provide for the proper construction, operation and maintenance of any project;
    6. Lease, rent and contract for the operation of all or any part of any project, and charge and collect rent for the project and terminate any such lease upon the failure of the lessee to comply with any of the obligations of the lease and include in or exclude from any such lease provisions that the lessee shall have the option to renew the term of the lease for such period or periods and at such rent as shall be determined by the board of directors;
    7. Lease such space in a project as from time to time may not be needed for related purposes to any other person, corporation, partnership or association for such purposes as the board of directors may determine are in the best interest of the authority or will help facilitate the purposes for which the authority was created, and upon such terms and in such manner as the board may determine;
    8. Fix and collect fees and charges for the use of any and all of the projects of the authority;
    9. Make contracts, including, without limitation, contracts with service providers;
    10. Sell, exchange, donate, and convey any or all of its properties, whenever the board of directors shall find any such action to be in furtherance of the purposes for which the authority was organized;
    11. Procure and enter into contracts for any type of insurance or indemnity against loss or damage to property from any cause, including loss of use and occupancy, against death or injury of any person, against employer's liability, against any act of any member, officer or employee of the authority in the performance of the duties of such person's office or employment or any other insurable risk, as the board of directors, in its discretion, may deem necessary;
    12. Accept donations, contributions, revenues, capital grants or gifts from any individuals, associations, public or private corporations, and municipalities, the state or the United States, or any agency or instrumentality of the state or the United States, for or in aid of any of the purposes of this chapter and enter into agreements in connection with the donations, contributions, revenues, capital grants or gifts;
    13. Obtain such licenses, permits, approvals and accreditations as the authority deems necessary in connection with any project;
    14. Borrow money from time to time and, in evidence of any obligation incurred, issue and, pursuant to § 7-69-111, sell its revenue bonds in accordance with this chapter and the applicable provisions of title 9, chapter 21, in such form and upon such terms as its board of directors may determine, payable out of any revenues of the authority, including grants or contributions or other revenues specifically provided to the authority, for the purpose of financing the cost of any project and refund and refinance, from time to time, bonds so issued and sold, as often as may be deemed to be advantageous by the board of directors;
    15. Mortgage and pledge as security for the payment of the principal of and interest on any bonds so issued and any agreements made in connection with the bonds, any or all of the projects or any part or parts of the projects, whether then owned or thereafter acquired;
    16. Exercise all powers expressly given herein and establish bylaws and make all rules and regulations not inconsistent with this chapter, deemed expedient for the management of the affairs of the authority; and
      1. Participate as a joint venturer in a joint venture or as a member in a nonprofit corporation that attracts and promotes tourism or performs activities related to the exercise of any power granted to a tourism development authority;
      2. Elect all or any of the members of the board of directors of any nonprofit corporation of which the tourism development authority is a member and has the power to so elect under the nonprofit corporation charter and bylaws; and
      3. Accomplish and facilitate the creation, establishment, acquisition, operation or support of any such joint venture or nonprofit corporation, by means of loans of funds, acquisition or transfer of assets, leases of real or personal property, gifts and grants of funds or guarantees of indebtedness of such joint venture or nonprofit corporation.
  2. The authority shall not be required to have a seal.

Acts 2012, ch. 846, § 4; 2014, ch. 932, § 2.

7-69-104. Board of directors.

  1. The authority shall have a board of directors in which all powers of the authority shall be vested. Such board shall consist of any number of directors, no fewer than five (5). The creating municipality or municipalities are authorized to establish the qualifications for the board members, which may include the number of board members that must be qualified voters, taxpayers, property owners or residents.
  2. The creating municipality or municipalities, if more than one (1) municipality has jointly created an authority, shall determine the number of directors, whether and to what extent the members of the local legislative bodies and the local chamber of commerce shall serve as members, the manner each director shall be appointed or elected and the manner of filling vacancies.
  3. The directors of the authority shall serve without compensation, except for reimbursement of necessary expenses incurred by directors in performance of their duties. All directors shall be residents of the county for which the authority is acting.
    1. The creating municipality or municipalities shall establish the term of office of each director of the authority; provided, that any director shall continue to serve beyond the end of the director’s term until the director’s successor has been appointed. At the first organizational meeting of the authority, the creating municipality shall establish the terms of the initial directors so that the directors serve staggered terms and an approximately equal number of directors have terms that expire in each year.
    2. If a creating municipality had established a tourism board, upon approval of the municipality or all municipalities if more than one (1) municipality was a part of establishing a tourism board, the board of the tourism board may become the initial board of the authority in such manner as directed by the creating municipality or municipalities.
    3. The authority shall provide to each governing body the initial terms assigned to each director.
    4. The term of a director is renewable, subject to reappointment.

Acts 2012, ch. 846, § 5.

7-69-105. Transaction of business.

A majority of the board of the authority shall constitute a quorum for the transaction of any business. Unless a greater number or percentage is required, or otherwise by state law, the vote of a simple majority of the directors of the authority present at any meeting at which a quorum is present shall be the action of the authority. The board may participate by electronic or other means of communication for the benefit of the public and the board in connection with any meeting authorized by law. To the extent such participation occurs, § 8-44-108 shall apply.

Acts 2012, ch. 846, § 6.

7-69-106. Meetings.

All meetings of the board of directors are declared to be public meetings open to the public pursuant to title 8, chapter 44, part 1.

Acts 2012, ch. 846, § 7.

7-69-107. Officers of authority.

  1. The officers of the authority shall consist of a chair, vice chair, secretary, treasurer, and such other officers as the authority shall from time to time deem necessary or desirable. The offices of secretary and treasurer may be held by the same person. The chair shall preside at all meetings of the directors, discharge all the duties which devolve upon a presiding officer, and perform such other duties as may be prescribed by the authority.
  2. The vice chair shall perform such duties as may be assigned to the vice chair. In the case of the death, disability or absence of the chair, the vice chair shall perform and be vested with all the duties and powers of the chair. The secretary shall keep the record of the minutes of the proceedings in each meeting and shall have custody of all books, records, and papers of the authority, except such as shall be in charge of the treasurer or such other person or persons authorized to have custody and possession thereof by a resolution of the authority. The treasurer shall keep account of all money received and disbursed and shall deposit such funds with a bank or trust company which is a member of the federal deposit insurance corporation (FDIC) or invest such funds in investments that would be eligible investments for a county.
  3. Other officers shall perform such duties as shall be designated by the authority.
  4. Each of such officers may be removed at any time by the affirmative vote of a majority of the board of the authority.

Acts 2012, ch. 846, § 8.

7-69-108. Election of officers.

The initial officers of the authority shall be elected by the board of directors at its first meeting following the appointment of the directors or as soon thereafter as may be convenient. Each initial officer shall hold office until the first annual meeting of the authority, which shall be held in January following the year the authority is created and thereafter until a successor has been duly elected and qualified. Subsequent officers of the corporation shall be elected at the annual meeting of the authority. Each such officer shall be elected for a one-year term but shall continue to hold office until a successor has been duly elected and qualified. The annual meeting of the authority shall be held in January of each year.

Acts 2012, ch. 846, § 9.

7-69-109. Annual audit — Annual report — Budget.

  1. The board of directors of each authority shall cause an annual audit to be made of the books and records of the authority. With prior approval of the comptroller of the treasury, the audit may be performed by a licensed certified public accountant selected by the authority. If a licensed certified public accountant is employed, the audit contract between the authority and the licensed certified public accountant shall be on contract forms prescribed by the comptroller of the treasury. The cost of any audit shall be paid by the authority. The comptroller of the treasury, through the department of audit, shall be responsible for determining that the audits are prepared in accordance with generally accepted government auditing standards and that the audits meet the minimum standards prescribed by the comptroller of the treasury.
  2. In the event the governing body of the authority fails or refuses to have the audit prepared, then the comptroller of the treasury may appoint a licensed certified public accountant, or direct the department of audit, to prepare the audit, the cost of the audit to be paid by the authority.
  3. Each authority shall prepare an annual report of its business affairs and transactions. A copy of such report and a copy of the annual audit referenced in subsection (a) shall be filed annually with the governing body of the municipality granting permission to the authority to organize.
  4. Before the commencement of each fiscal year, each authority shall adopt a budget for such fiscal year and file such budget with the municipality granting permission to the authority to organize.

Acts 2012, ch. 846, § 10.

7-69-110. Assignment or loan of employees and provision of facilities to authority — Acceptance of donations.

  1. For the purpose of aiding and cooperating with the authority, each municipality may assign or loan any of its employees, including its engineering staff and facilities, and may provide necessary office space, equipment, and other facilities for the use of the authority, as the governing body of such municipality shall approve.
  2. Each municipality may make donations of property, real or personal, or cash grants to the authority, and may loan funds to the authority in such amount or amounts as it may deem proper and appropriate in aiding the authority to accomplish its purpose.
  3. Each municipality may convey real property or personal property to the authority, and the authority is authorized to accept such a conveyance.

Acts 2012, ch. 846, § 11.

7-69-111. Bonds.

  1. The authority shall have power and is authorized to issue its bonds in accordance with this chapter and in accordance with the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, and for such purposes the bonds shall be treated as revenue obligations of the authority under this chapter, in order to finance:
    1. The costs of any project;
    2. The payment of the costs of issuance of such bonds, including underwriter's discount, financial advisory fee, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement, and legal, accounting, fiscal and other similar expenses;
    3. Reimbursement of the authority for moneys previously spent by the authority for any of the foregoing purposes; and
    4. The establishment of reasonable reserves for the payment of debt service on such bonds, for repair and replacement of any project, or for such other purposes as the board shall deem necessary and proper in connection with the issuance of any bonds and operation of any project for the benefit of which the financing is being undertaken.
    1. The authority shall have the power and is hereby authorized to issue its bonds to refund and refinance outstanding bonds of the authority heretofore or hereafter issued or lawfully assumed by the authority; provided, that in accordance with the Local Government Public Obligations Act of 1986, the authority shall request a report on any proposed refunding from the office of the comptroller. The proceeds of the sale of the bonds may be applied to:
      1. The payment of the principal amount of the bonds being refunded and refinanced;
      2. The payment of the redemption or tender premium thereon, if any;
      3. The payment of unpaid interest on the bonds being refunded, including interest in arrears, for the payment of which sufficient funds are not available, to the date of delivery or exchange of the refunding bonds;
      4. The payment of fees or other charges incident to the termination of any interest rate hedging agreements, liquidity or credit facilities, or other agreements related to the bonds being refunded and refinanced;
      5. The payment of interest on the bonds being refunded and refinanced from the date of delivery of the refunding bonds to maturity or to, and including, the first or any subsequent available redemption date or dates on which the bonds being refunded may be called for redemption;
      6. The payment of the costs of issuance of the refunding bonds, including underwriter's discount, financial advisory fee, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement, and legal, accounting, fiscal and other similar expenses, and the costs of refunding the outstanding bonds, including the costs of establishing an escrow for the retirement of the outstanding bonds, trustee and escrow agent fees in connection with any escrow, and accounting, legal and other professional fees in connection therewith; and
      7. The establishment of reserves for the purposes set forth in subdivision (a)(4).
    2. Refunding bonds may be issued to refinance and refund more than one (1) issue of outstanding bonds, notwithstanding that such outstanding bonds may have been issued at different times. The principal proceeds from the sale of refunding bonds may be applied either to the immediate payment and retirement of the bonds being refunded or, to the extent not required for the immediate payment of the bonds being refunded, to the deposit in escrow with a bank or trust company to provide for the payment and retirement at a later date of the bonds being refunded.
  2. No bonds shall be issued hereunder unless authorized to be issued or assumed by resolution of the board of directors of the authority. Bonds authorized to be issued hereunder may be issued in one (1) or more series, may bear such date or dates, mature at such time or times, not exceeding forty (40) years from their respective dates, bear interest at such rate or rates, payable at such time or times, be in such denominations, be in such form, either coupon or registered, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium, as such resolution or resolutions may provide. Bonds may be issued for money or property at competitive or negotiated sale for such price or prices as the board of directors, or its designee, shall determine. The authority may enter into such agreements in connection with the issuance of any bonds as its board of directors may approve, including without limitation, credit agreements and bond purchase agreements.
  3. Bonds may be repurchased by the authority out of any available funds at such price as the board of directors shall determine, and all bonds so repurchased shall be cancelled or held as an investment of the authority as the board of directors may determine.
    1. All bonds issued by the authority shall be payable solely out of the revenues of the authority, including tax revenues, as may be designated by the board of directors of the authority.
    2. The principal of and interest on any bonds issued by the authority shall be secured, as may be designated by the board of directors of the authority, by a pledge of the tax revenues by general law or private act allocable to the authority, by a pledge of the authority’s rights under agreements, leases and other contracts, or by a mortgage or deed of trust covering all or any part of the projects from which the revenues so pledged may be derived. The proceedings under which the bonds are authorized to be issued and any such pledge agreement or mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered by the bonds, the fixing and collection of rents for any portions of projects leased by the authority to others, the creation and maintenance of special funds from such revenues and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this chapter. Each pledge, agreement, or mortgage or deed of trust made for the benefit or security of any of the bonds of the authority shall continue effective until the principal of and interest on the bonds for the benefit of which the pledge, agreement, or mortgage or deed of trust were made shall have been fully paid. In the event of default in such payment or in any agreement of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage or deed of trust executed as security for the bonds, such payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity or by foreclosure of any such mortgage or deed of trust, or any one (1) or more of such remedies.
  4. Bonds and notes of the authority shall be executed in the name of the authority by such officers of the authority and in such manner as the board of directors may direct. If so provided in the proceedings authorizing the bonds, the facsimile signature of any of the officers executing such bonds may appear on the bonds in lieu of the manual signature of such officer.
  5. Any bonds and notes of the authority may be sold at public or private sale to the extent authorized for local governments, for such price and in such manner and from time to time as may be determined by the board of directors of the authority to be most advantageous, and the authority may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds.

Acts 2012, ch. 846, § 12.

7-69-112. Liability on bonds.

No municipality shall in any event be liable for the payment of the principal of or interest on any bonds of the authority or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the authority, and none of the bonds of the authority or any of its agreements or obligations shall be construed to constitute an indebtedness of any municipality within the meaning of any constitutional or statutory provision whatsoever.

Acts 2012, ch. 846, § 13.

7-69-113. Municipal aid and assistance.

Any municipality is authorized to aid or otherwise provide assistance to the authority, including entering into leases of projects, or parts of projects with an authority, for such term or terms and upon such conditions as may be determined by the governing body of such municipality, notwithstanding and without regard to the restrictions, prohibitions, or requirements of any other law, whether public or private.

Acts 2012, ch. 846, § 14.

7-69-114. Execution of written instruments.

All leases, contracts, deeds of conveyance, or instruments in writing executed by the authority, shall be executed in the name of the authority by the chair of the authority, or by such other officer as the board of directors of the authority, by resolution, may direct.

Acts 2012, ch. 846, § 15.

7-69-115. Net earnings — Transfer of property not affected.

As a public body, no part of the net earnings of the authority remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors of the authority shall determine that sufficient provision has been made for the full payment of the expenses, bonds, and other obligations of the authority, then any net earnings of the authority thereafter accruing shall be paid to the municipality or municipalities with respect to which the authority was organized; provided, that nothing contained in this section shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease entered into by the authority.

Acts 2012, ch. 846, § 16.

7-69-116. Dissolution of authority.

Whenever the board of directors of the authority, by resolution, determines that there has been substantial compliance with the purposes for which the authority was formed, and all bonds theretofore issued and all obligations theretofore incurred by the authority have been fully paid, then the members of the board of directors shall thereupon execute and file for record in the office of the secretary of state a certificate of dissolution reciting such facts and declaring the authority to be dissolved. Upon the filing of such certificate of dissolution, the authority shall stand dissolved, the title to all funds and properties owned by it at the time of such dissolution shall vest in the municipality and if created by a combination of any municipality and county, in the manner approved by such entities, and possession of such funds and properties shall forthwith be delivered to such municipality. Upon dissolution of the authority, any of its assets shall be distributed as shall be directed by the municipality or by agreement of the municipalities but in no event shall such costs be distributed to any person other than a governmental entity.

Acts 2012, ch. 846, § 17.

Chapters 70 — 80
[Reserved]
Special Districts

Chapter 81
Sanitary Districts

Part 1
Incorporation

7-81-101. Petition for election.

  1. In any community where there are as many as twenty (20) residences within one square mile (1 sq. mi.), whether the parties owning the residences reside in the community during the whole year or not, any ten (10) of the registered voters may file with the county election commission of the county in which the square mile, or the greater part of the square mile lies, a petition in substance as follows:

    “To the county election commission of  county:We, the undersigned registered voters, desire that a square mile (or such other quantity as may be desired) be incorporated by the name of (here insert name of town). The incorporated territory lies in civil district No.  , county of  , and is bounded as follows: (here insert boundaries of territory). We therefore pray that you hold an election to determine whether the territory shall be incorporated.”

  2. The petition shall be sworn to by some one (1) of the signers, who shall state under oath that such person is acquainted with the other signers, and that they are registered voters within the territory to be incorporated.

Acts 1901, ch. 64, §§ 1, 2; Shan., §§ 2023a17, 2023a18; Code 1932, §§ 3648, 3649; modified; Acts 1972, ch. 740, § 4(39); impl. am. Acts 1972, ch. 740, § 7; T.C.A. (orig. ed.), § 6-2501.

7-81-102. “Registered voters” defined.

“Registered voters” in this chapter means registered voters who are residents of the territory that is proposed for or has been incorporated.

Acts 1901, ch. 64, § 12; Shan., § 2023a28; Code 1932, § 3659; modified; Acts 1972, ch. 740, § 4(40); T.C.A. (orig. ed.), § 6-2502.

7-81-103. Notice of election.

In addition to all other election notices required by law, the county election commission shall post in three (3) conspicuous places in the proposed sanitary district, five (5) days before the election, a notice substantially in the following language:

NOTICE

State of Tennessee

County of

On the  day of  , 20  , between the hours of  and  ,  .m., the  county election commission will hold an election to determine whether the following territory: (here set out the boundaries as in the petition), shall be incorporated. All registered voters who are residents of the territory may vote in the election.

Chair

Chair

Acts 1901, ch. 64, § 3; Shan., § 2023a19; Code 1932, § 3650; modified; Acts 1972, ch. 740, § 4(41); T.C.A. (orig. ed.), § 6-2503.

7-81-104. Certification of result.

The county election commission shall determine and declare the results of the election and shall certify the results within forty-eight (48) hours after the commission completes its duties under § 2-8-105(3). The county election commission shall file the certificate with the county clerk.

Acts 1901, ch. 64, § 7; Shan., § 2023a23; Code 1932, § 3654; modified; Acts 1972, ch. 740, § 4(42); impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 6-2507.

7-81-105. Certification of majority for incorporation.

If the number of votes cast in favor of incorporation equals the majority of persons entitled to vote in the election, the county election commission shall immediately forward a certified copy of the certificate to the secretary of state.

Acts 1901, ch. 64, § 8; Shan., § 2023a24; Code 1932, § 3655; modified; Acts 1972, ch. 740, § 4(43); impl. am. Acts 1972, ch. 740, § 7; T.C.A. (orig. ed.), § 6-2508.

7-81-106. Duties of secretary of state — Charter of incorporation.

Upon receipt of the certified copy of the certificate by the secretary of state, the secretary of state shall copy it in a well-bound book and index the certified copy of the certificate. The secretary of state shall then return the certificate to the register of the county with a certificate that it has been copied in the proper book in such secretary of state's office, and shall issue a certificate of incorporation as follows:

STATE OF TENNESSEE—CHARTER OF INCORPORATIONBe it known, That the town of  (here insert name and boundaries of town) is duly and legally incorporated, and is entitled to all the benefits of title 7, chapter 81 of the Tennessee Code Annotated.

Acts 1901, ch. 64, § 9; Shan., § 2023a25; Code 1932, § 3656; Acts 1972, ch. 740, § 4(44); T.C.A. (orig. ed.), § 6-2509.

7-81-107. Registration of election report and charter — Fees.

  1. The register shall copy the certificate, together with the certificate of the secretary of state, in the charter book in such register's office, which shall complete the incorporation.
  2. The register shall be entitled to the regular recording fees received for recording corporate charters for services performed as directed in this part.

Acts 1901, ch. 64, § 10; Shan., § 2023a26; Code 1932, § 3657; Acts 1972, ch. 740, § 4(45); T.C.A. (orig. ed.), § 6-2510; Acts 1987, ch. 47, § 1.

7-81-108. Fees of public officers.

The fees of the sheriff shall be two dollars ($2.00), of the county clerk one dollar ($1.00) each, and the secretary of state two dollars ($2.00) for the services directed to be performed in this part.

Acts 1901, ch. 64, § 11; Shan., § 2023a27; Code 1932, § 3658; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A. (orig. ed.), § 6-2511; Acts 1987, ch. 47, § 2.

Cross-References. Charter fee, secretary of state, § 8-21-201.

County clerk's fee, § 8-21-701.

Register's fees, § 8-21-1001.

7-81-109. Incorporation — Designation as sanitary districts.

  1. Upon the registration of the certificate, the petitioners and their successors and all other voters of the town shall be incorporated and be vested with the right conferred by this chapter, and none other, it being the intention not to confer upon the corporation the powers of incorporated towns in this state.
  2. The corporations organized under this chapter shall be known as “Sanitary Districts.”

Acts 1901, ch. 64, § 13; Shan., § 2023a29; Code 1932, § 3660; T.C.A. (orig. ed.), § 6-2512.

7-81-110. General municipal laws preserved.

Nothing in this chapter shall be construed to alter, repeal, or amend the general laws for organizing municipal corporations or taxing districts in this state.

Acts 1901, ch. 64, § 27; Shan., § 2023a52; Code 1932, § 3683; T.C.A. (orig. ed.), § 6-2533.

Part 2
Town Assembly

7-81-201. Legislative power — Name of assembly.

The legislative power of the town shall reside in the voters of the town properly assembled at a convenient place, and such assembly shall be known as the “town assembly.”

Acts 1901, ch. 64, § 14; Shan., § 2023a30; Code 1932, § 3661; T.C.A. (orig. ed.), § 6-2513.

7-81-202. Meetings.

The first meeting of the assembly shall be called upon proper notice signed by at least five (5) of the voters and posted in three (3) conspicuous places in the town. Subsequent meetings shall be held at such times as the assembly may determine.

Acts 1901, ch. 64, § 15; Shan., § 2023a31; Code 1932, § 3662; T.C.A. (orig. ed.), § 6-2514.

7-81-203. Called assembly meetings.

The mayor shall, when such mayor deems it necessary, or when five (5) voters request it in writing, call a meeting of the assembly, and the business of the meeting shall be restricted to matters set out in the call.

Acts 1901, ch. 64, § 21; Shan., § 2023a43; Code 1932, § 3674; modified; T.C.A. (orig. ed.), § 6-2515.

7-81-204. Temporary officers of assembly — Qualifications of members.

At the first meeting of the assembly, there shall be elected a chair and secretary, who shall act until the election of mayor and clerk. The assembly shall be the sole judge of the qualification of its members.

Acts 1901, ch. 64, § 16; Shan., § 2023a32; Code 1932, § 3663; T.C.A. (orig. ed.), § 6-2516.

7-81-205. List of voters — Election of mayor.

Upon the assembly coming to order, the chair shall take a list of the voters present, and the clerk shall record them. The meeting shall then proceed to the election of a mayor, who shall qualify by announcing to the assembly that such mayor will faithfully, impartially, and honestly administer the office of mayor as long as such mayor may occupy the office. The chair shall then cease to preside, and the mayor shall thereafter be the presiding officer.

Acts 1901, ch. 64, § 17; Shan., § 2023a33; Code 1932, § 3664; T.C.A. (orig. ed.), § 6-2517.

7-81-206. Election of clerk and inspector — Terms of officers — Voting — When elections held.

  1. The assembly shall then proceed to elect a clerk and a sanitary inspector.
  2. The terms of all officers shall be for one (1) year, or until their successors are appointed and qualified.
  3. All elections shall be by viva voce vote upon the call of the roll, and shall be held annually the second Monday night in June.

Acts 1901, ch. 64, § 18; Shan., § 2023a34; Code 1932, § 3665; T.C.A. (orig. ed.), § 6-2518.

7-81-207. Powers of assembly.

The town assembly of each of the towns has powers by ordinance to:

  1. Assess, levy, and collect taxes on all property and privileges taxable by state law, and fix the rate of taxation on the property and privileges, which shall in no case exceed fifteen (15) mills on the dollar, and the taxes shall be a paramount lien on the property on which they are assessed;
  2. Appropriate money and provide for the payment of the debts and expenses of the town, but no assembly shall appropriate money or incur debts beyond the amount of the tax levy for the current year;
  3. Make regulations to prevent the introduction of contagious diseases in the town;
  4. Pass all laws necessary or proper to secure the health of the inhabitants of the town;
  5. Make such rules and regulations as to drainage and sanitary conditions of the premises of the inhabitants as may secure the health of the inhabitants of the town;
  6. Prohibit the running at large of animals within the corporate limits, whether the owners of the animals reside within the corporate limits or not;
  7. Prohibit the keeping of hogs or other animals in pens or in enclosures that may become offensive or injurious to the health of the inhabitants;
  8. Provide receptacles for the night soil and other slops and offal of all persons living in the town, and to fix the dimensions, material, and manner of constructing the receptacles; own a vehicle and team suitable for removing the slops and night soil of the inhabitants of the town; and provide for the manner of constructing the vehicle that shall remove the receptacles;
  9. Impose fines, forfeitures, and penalties for the breach of any ordinance, and provide for their recovery and appropriation;
  10. Condemn, from time to time, sufficient land for the purpose of using the land as a dumping ground for the night soil, garbage, and filth of the town. The land shall be selected by the assembly not farther than one (1) mile from the corporate limits. After selecting and condemning the land, the assembly shall appoint a commission, consisting of three (3) members, who shall be freeholders and householders, for the purpose of appraising the land. The commission shall notify the owner of the time and place of meeting, and cite the owner to appear and produce such proof as to the value of the property as the owner may deem necessary. The committee, after hearing proof, if any is offered, shall appraise the property and report to the assembly. The report shall be sworn to and spread upon the records of the assembly, and if neither the assembly nor the owner of the land appeals from the appraisement at its next meeting, the mayor shall pay to the owner the amount fixed in the appraisement. If either party is dissatisfied with the appraisement of the commission, such party may appeal to the circuit court, where the case may be heard as appeals from a judge of the court of general sessions;
  11. Determine by ordinance the number of standing committees, the number of members of which each committee shall be composed, and shall designate the character and duties of each. The mayor shall appoint the committees as soon as practicable after such mayor's election, to serve for one (1) year. The mayor shall be, ex officio, a member of all standing committees, but shall not be entitled to vote;
  12. Determine its own rules of proceeding and prescribe the punishment of its members for nonattendance or disorderly conduct, and enforce the rules; two thirds (2/3) of its members concurring may expel a member for improper conduct or neglect of a duty such member owes the town, and such expelled member shall be deprived of such member's seat in the assembly for a year from the date of such member's expulsion;
  13. Elect an officer to assess for taxation the property lying within its corporate limits, and collect the taxes levied on the property, and fix and determine the time when its taxes shall be due and payable, and the mayor shall appoint an equalizing board, composed of three (3) members of the assembly, which shall hear and determine all complaints of taxpayers as to the amount of the assessment placed upon their property, and the decision of the board shall be final and binding; and
  14. Impose a penalty, not to exceed fifteen percent (15%) of the amount of the tax, for the failure to pay the tax when due.

Acts 1901, ch. 64, § 19; 1903, ch. 477, §§ 1, 2; Shan., § 2023a35; Code 1932, § 3666; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 6-2519.

Collateral References.

Injunction against exercise of power of eminent domain. 93 A.L.R.2d 465.

Part 3
Officers

7-81-301. Filling of vacancies.

The mayor has the power to fill vacancies occasioned by sickness, absence, or other disability of any town officer.

Acts 1901, ch. 64, § 21; Shan., § 2023a41; Code 1932, § 3672; T.C.A. (orig. ed.), § 6-2522.

7-81-302. Suspension of officers.

The mayor has the power to suspend any officer for misconduct in office or neglect of duty, reporting the mayor's action, with reason for the action, in writing, to the next meeting of the town assembly, by whom final action shall be taken.

Acts 1901, ch. 64, § 21; Shan., § 2023a42; Code 1932, § 3673; modified; T.C.A. (orig. ed.), § 6-2523.

7-81-303. Mayor — Enforcement of ordinances.

The mayor shall take care that all of the ordinances are duly observed and respected.

Acts 1901, ch. 64, § 21; Shan., § 2023a44; Code 1932, § 3675; T.C.A. (orig. ed.), § 6-2524.

7-81-304. Mayor having judicial powers.

The mayor has the power and jurisdiction and shall exercise the functions formerly exercised by a justice of the peace, but only for the preservation of peace within the corporate limits and the trial of offenses against the town ordinances.

Acts 1901, ch. 64, § 21; Shan., § 2023a45; Code 1932, § 3676; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 6-2525.

7-81-305. Mayor's control of finances.

The mayor shall receive and hold all the moneys and property of the corporation, audit and pay all bills incurred by the corporation, but shall have no power to issue any negotiable paper. The mayor shall make, in writing, to each meeting of the assembly, an itemized statement of the money expended since the last meeting, and the financial condition of the town treasury.

Acts 1901, ch. 64, § 21; Shan., § 2023a46; Code 1932, § 3677; T.C.A. (orig. ed.), § 6-2526.

7-81-306. Clerk as acting mayor.

In case of the absence, resignation, or inability to act of the mayor, the town clerk shall take the mayor's place until the next regular meeting of the assembly, when another mayor shall be elected, if the assembly shall deem the mayor's absence sufficiently long to warrant another election.

Acts 1901, ch. 64, § 22; Shan., § 2023a47; Code 1932, § 3678; T.C.A. (orig. ed.), § 6-2527.

7-81-307. Duties of clerk.

It is the duty of the clerk of the assembly to attend each meeting of the assembly, to keep in a well-bound book a full and complete record of the acts and doings of the assembly, to file and safely keep all papers and records belonging to the corporation, to issue notice of the meetings of the assembly, and do all other service of a clerical nature imposed upon the clerk by the assembly.

Acts 1901, ch. 64, § 23; Shan., § 2023a48; Code 1932, § 3679; T.C.A. (orig. ed.), § 6-2528.

7-81-308. Copies of records as evidence.

A copy of any record or ordinance made and certified by the clerk shall be prima facie evidence of its contents in all courts.

Acts 1901, ch. 64, § 24; Shan., § 2023a49; Code 1932, § 3680; T.C.A. (orig. ed.), § 6-2529.

7-81-309. Sanitary inspector.

It is the duty of the sanitary inspector to thoroughly and carefully inspect the premises of each resident of the town, and to remove and abate all nuisances at such times as the assembly may prescribe, and to perform such other duties as the assembly may impose. The sanitary inspector shall, during such inspector's term of office, be vested with the powers and duties of a constable within the corporate limits of the town, but shall not serve civil process. The sanitary inspector's compensation and the manner of paying the compensation shall be fixed by the assembly. The sanitary inspector shall not be required to reside within the corporate limits of the town.

Acts 1901, ch. 64, § 25; Shan., § 2023a50; Code 1932, § 3681; T.C.A. (orig. ed.), § 6-2530.

Collateral References.

Right to maintain action to enjoin public nuisance as affected by existence of pollution control agency. 60 A.L.R.3d 665.

Part 4
Ordinances and Violations

7-81-401. Form of ordinances — Effective date.

All ordinances passed by the assembly shall begin by an enacting clause as follows: “Be it enacted by the mayor and town assembly of  (fill in blank with name of town),” and shall at the end of the act state the time when the ordinance is to take effect, otherwise it will take effect ten (10) days from passage.

Acts 1901, ch. 64, § 20; Shan., § 2023a36; Code 1932, § 3667; T.C.A. (orig. ed.), § 6-2520.

7-81-402. Ordinance procedure.

No ordinance shall become a law without having been passed at two (2) separate meetings by a majority of all the votes of the town and signed by the mayor. It is the duty of the mayor to carefully examine all ordinances passed, and should any of them not meet such mayor's approbation, to return the ordinance to the next meeting of the assembly with such mayor's objection in writing. No law or ordinance so vetoed by the mayor shall go into effect unless the law or ordinance be passed by a majority of the whole number of voters of the town. If the mayor fails to return any ordinance to the next meeting of the assembly, such mayor shall be deemed to have approved the ordinance, and the ordinance shall take effect without further action.

Acts 1901, ch. 64, § 21; Shan., §§ 2023a37-2023a40; Code 1932, §§ 3668-3671; T.C.A. (orig. ed.), § 6-2521.

7-81-403. Fines for violation of ordinances — Lien of judgment.

The violation of any ordinance or law of the town shall be punishable by a fine not exceeding fifty dollars ($50.00), recoverable before the mayor of the town upon warrant issued as for the recovery of the debt before a judge of the court of general sessions. The judgment, when so recovered, shall constitute a lien on the realty of the defendant situate within the corporate limits of the town.

Acts 1901, ch. 64, § 26; Shan., § 2023a51; Code 1932, § 3682; impl. am. Acts 1979, ch. 68, § 3; T.C.A. (orig. ed.), § 6-2531.

7-81-404. Confinement for violation of ordinances.

Any town incorporated under this chapter has the power to erect and maintain a calaboose or workhouse for the confinement and detention of persons violating any ordinance of the corporation. A person who fails to pay any fine and costs imposed by the corporation commits a Class C misdemeanor.

Acts 1903, ch. 477, § 3; Shan., § 2023a53; Code 1932, § 3684; T.C.A. (orig. ed.), § 6-2532; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

Chapter 82
Utility District Law of 1937

Part 1
General Provisions

7-82-101. Short title.

This chapter shall be known and may be cited as the “Utility District Law of 1937.”

Acts 1937, ch. 248, § 1; C. Supp. 1950, § 3695.26; T.C.A. (orig. ed.), § 6-2601.

Cross-References. Exemption of certain utility districts from rural electric and community services cooperative provisions, § 65-25-129.

Municipal utilities, title 7, ch. 34.

Utility location, title 13, ch. 24, part 3.

Textbooks. Tennessee Jurisprudence, 2 Tenn. Juris., Appeal and Error, § 214; 10 Tenn. Juris., Drains and Sewers, § 16; 13 Tenn. Juris., Gas Companies, § 7; 19 Tenn. Juris., Municipal Corporations, § 13; 21 Tenn. Juris., Public Service Commissions, § 3; 25 Tenn. Juris., Water Companies and Waterworks, §§ 3, 5.

Law Reviews.

Political Subdivisions Versus Employers: Does Jurisdiction of NLRB Extend to Public Utility Districts? (Robert Schneider), 1 Mem. St. U.L. Rev. 347 (1971).

Attorney General Opinions. Payments to utility district commissioner in lieu of insurance premium payments, OAG 99-133, 1999 Tenn. AG LEXIS 175 (7/7/99).

Sale of existing infrastructure by utility district, OAG 06-160 (10/9/06), 2006 Tenn. AG LEXIS 180.

NOTES TO DECISIONS

1. Constitutionality.

The creation of a suburban water utility district did not result in the creation of a monopoly in violation of Tenn. Const., art. I, § 22. First Suburban Water Utility Dist. v. McCanless, 177 Tenn. 128, 146 S.W.2d 948, 1940 Tenn. LEXIS 19 (1941).

2. Application of Chapter.

This chapter, which may apply to all sections of this state, is not exclusive, as sanitary conditions may vary as to different parts of the state. Whedbee v. Godsey, 190 Tenn. 140, 228 S.W.2d 91, 1950 Tenn. LEXIS 431 (1950).

Customer had an implied private right to contest a wastewater authority's charge because (1) the customer was an intended beneficiary of T.C.A. § 68-221-608,  (2) T.C.A. § 68-221-607(a)(1) let the authority be sued, and no intent to deny such a right of action appeared, and (3) an implied private right of action was in conformance to T.C.A. § 68-221-602(a), so it was error to apply the Utility District Law of 1937, T.C.A. §§ 7-82-101 to 7-82-804, since the authority was not a utility district. Am. Heritage Apts., Inc. v. Hamilton County Water & Wastewater Treatment Auth., — S.W.3d —, 2015 Tenn. App. LEXIS 43 (Tenn. Ct. App. Jan. 30, 2015), aff'd in part, rev'd in part, 494 S.W.3d 31, 2016 Tenn. LEXIS 269 (Tenn. Apr. 8, 2016).

3. Private Act Creating District.

Private Acts 1945, ch. 276, providing for a sanitary district for Fountain City did not violate Tenn. Const., art. XI, § 8 on the ground that it suspended the general law set forth in this chapter, as such private act created a public corporation with governmental powers over which legislature had absolute control. Whedbee v. Godsey, 190 Tenn. 140, 228 S.W.2d 91, 1950 Tenn. LEXIS 431 (1950).

4. Status of District.

Federal law, rather than state law, governs question of whether entity created under state law is a “political subdivision” of the State and, therefore, not subject to § 2121 of the Labor-Management Relations Act. NLRB v. Natural Gas Utility Dist., 402 U.S. 600, 91 S. Ct. 1746, 29 L. Ed. 2d 206, 1971 U.S. LEXIS 126 (1971).

A utility district is a political subdivision exempt from the Labor-Management Relations Act as an entity administered by individuals who are responsible to public officers and who are subject to removal procedures applicable to all public officials. NLRB v. Natural Gas Utility Dist., 402 U.S. 600, 91 S. Ct. 1746, 29 L. Ed. 2d 206, 1971 U.S. LEXIS 126 (1971).

7-82-102. Review of rates and services.

In all counties and districts, the following apply:

  1. In addition to any other procedure provided by law for the review of the actions of the board of commissioners, there is granted to the utility management review board the authority to review rates charged and services provided by public utility districts. The review provided for in this subdivision (1) may only be initiated by a petition containing the genuine signatures of at least ten percent (10%) of the customers within the authorized area of the public utility district;
  2. To be considered by the board, the customer or customers initiating the petition must file a letter of intent to compile and file the petition with the board before the petition is signed. All signatures of customers on the petition must have been obtained within ninety (90) days of the date the notice of intent to compile and file petition is filed with the board. Each customer signing the petition shall include the address at which the customer receives utility service and the date the customer signed the petition. The petition must be addressed to the utility management review board and a copy of the petition must be served upon the board of commissioners of the affected utility district. The petition must contain the genuine signatures of the customers of the utility district. All information submitted in the petition must be legible;
  3. Upon receipt of the petition, the board shall verify the names and addresses of the signers of the petition to ensure that they are bona fide customers of the utility district and to ensure that all signatures have been obtained within ninety (90) days of the date the notice of intent to compile and file petition is filed with the board. As used in this part, “customer” means a person who receives a bill for utility services and pays money for such services. Each utility account shall be entitled to one (1) signature, but no person shall sign the petition more than once. Only one (1) petition to review the rates and services provided under this section can be filed in any twelve-month period. The review by the utility management review board shall be held only upon public hearings, after notice;
  4. For purposes of this section, “genuine signatures” means written, original signatures and excludes facsimile and electronic signatures of any kind;
  5. The utility management review board shall review those petitions pertaining to rates on the basis of all provisions of this chapter governing the establishment of rates, the provisions of any bond resolutions or other debt contract instruments binding upon such utility districts, and the uniform audit manual prepared by the comptroller of the treasury pursuant to § 7-82-401;
  6. It is the express intent of the general assembly that the review granted in this section shall be a substantive and meaningful review. In order to accomplish this intention, the utility district shall take no action that will result in contractually binding the district or obligating the district to issue bonds that would require a rate increase, until the district has first given notice to the customers of the district of the anticipated action. For purposes of this subdivision (6), the notice shall be deemed to have been given by the district with respect to an issuance of bonds or notes upon the publication of the report of the comptroller of the treasury, or the comptroller's designee, as contemplated by § 7-82-501(c), and “bonds” does not include any bond or bonds or other evidence of indebtedness of the utility district to be purchased by the United States department of agriculture or any other direct lending department of the government of the United States; and
  7. The Uniform Administrative Procedures Act, compiled in title 4, chapter 5, applies to all procedures and proceedings coming before the utility management review board pursuant to this section, to the extent not inconsistent with this chapter.

Acts 1973, ch. 249, § 6; T.C.A., § 6-2637; Acts 1984, ch. 796, § 1; 1987, ch. 422, § 1; 1989, ch. 221, § 1; 1995, ch. 305, § 81; 2013, ch. 141, §§ 9, 10; 2015, ch. 140, § 1; 2017, ch. 94, § 18; 2017, ch. 129, § 6; 2018, ch. 495, § 3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2017, ch. 94, § 18 amended this section, effective April 4, 2017; however, Acts 2017, ch. 129, § 6 rewrote the section, effective April 17, 2017.

Amendments. The 2015 amendment added (a)(1)(D).

The 2017 amendment by ch. 94, in (b),  substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in the first sentence of (1); substituted “the commission” for “the authority” in the last two sentences of (1) and in (4), and  substituted “The commission” for “The authority” at the beginning of (2).

The 2017 amendment by ch. 129 rewrote the section which read:    “(a)  In all counties and districts, except those excluded in subsection (b), the following shall apply:“(1)(A)  Except as to those districts coming within § 7-82-103(b)(2), in addition to any other procedure provided by law for the review of the actions of the board of commissioners, there is hereby granted to the utility management review board the authority to review rates charged and services provided by public utility districts. The review provided for in this subsection (a) can only be initiated by a petition containing the genuine signatures of at least ten percent (10%) of the customers within the authorized area of the public utility district;  “(B)  To be considered by the board, the customer or customers initiating the petition must file a letter of intent to compile and file the petition with the board before the petition is signed. All signatures of customers on the petition must have been obtained within ninety (90) days of the date the notice of intent to compile and file petition is filed with the board. Each customer signing the petition shall include the address at which the customer receives utility service and the date the customer signed the petition. The petition shall be addressed to the utility management review board and a copy of the petition shall be served upon the board of commissioners of the affected utility district. The petition must contain the genuine signatures of the customers of the utility district. All information submitted in the petition must be legible; “(C)  Upon receipt of the petition, the board shall verify the names and addresses of the signers of the petition to ensure that they are bona fide customers of the utility district and to ensure that all signatures have been obtained within ninety (90) days of the date the notice of intent to compile and file petition is filed with the board. As used in this part, “customer” means a person who receives a bill for utility services and pays money for such services. Each utility account shall be entitled to one (1) signature, but no person shall sign the petition more than once. Only one (1) petition to review the rates and services provided under this section can be filed in any twelve-month period. The review by the utility management review board shall be held only upon public hearings, after notice;“(D)  For purposes of this subdivision (a)(1), “genuine signatures” means written, original signatures and excludes facsimile and electronic signatures of any kind;“(2)  The utility management review board shall review those petitions pertaining to rates on the basis of all provisions of this chapter governing the establishment of rates, the provisions of any bond resolutions or other debt contract instruments binding upon such utility districts, and the rules and regulations promulgated by the comptroller of the treasury pursuant to § 7-82-401;  “(3)  It is the express intent of the general assembly that the review granted in this subsection (a) shall be a substantive and meaningful review. In order to accomplish this intention, the utility district shall take no action that will result in contractually binding the district or obligating the district to issue bonds that would require a rate increase, until the district shall have first given notice to the customers of the district of such anticipated action; and “(4)  The Uniform Administrative Procedures Act shall apply to all procedures and proceedings coming before the utility management review board pursuant to this subsection (a), to the extent not inconsistent with this chapter. “(b)  In those counties and districts specified in subdivision (b)(5), the following shall apply:“(1)  Except as to those districts coming within § 7-82-103, in addition to any other procedure provided by law for the review of the actions of the board of commissioners, there is hereby granted to the Tennessee public utility commission the authority to review rates charged and services provided by public utility districts. The review provided for in this subsection (b) can only be initiated by a petition signed by at least ten percent (10%) of the users within the authorized area of the public utility district. The petition shall be addressed to the commission and a copy of the petition shall be served upon the board of commissioners of the affected utility district. The review by the commission shall be held only upon public hearings, after notice, in the county in which the utility district maintains its principal office;  “(2)  The commission shall review those petitions pertaining to rates as fully as in the case of private utility companies; provided, that the burden shall be upon the petitioners to show that the rates are discriminatory or unjust and unreasonable. In considering rate petitions, the authority shall take no action that adversely impairs the obligation of contracts or payment of existing bonds by such district, and may, within its sound legal discretion, assess costs of such hearings as equity and justice may demand;  “(3)  It is the express intent of the general assembly that the review granted in this subsection (b) shall be a substantive and meaningful review. In order to accomplish this intention, the utility district shall take no action that will result in contractually binding the district or obligating the district to issue bonds that would require a rate increase, until the district shall have first given notice to the users of the district of such anticipated action;“(4)  The Uniform Administrative Procedures Act, compiled in title 4, chapter 5, shall apply to all procedures and proceedings coming before the commission pursuant to this subsection (b), to the extent not inconsistent with this chapter; and“(5)(A)  This subsection (b) applies to any gas utility district for the reasons set out in § 7-82-103; and “(B)  This subsection (b) also applies in counties having the following populations, according to the 1980 federal census or any subsequent federal census: not less than  nor more than  13,600 13,610 28,500 28,560 28,690 28,750 48,400 48,500 84,000 84,100”

The 2018 amendment substituted “uniform audit manual prepared by the comptroller of the treasury” for “rules and regulations promulgated by the comptroller of the treasury” in (5).

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Acts 2017, ch. 94, § 83. April 4, 2017.

Acts 2017, ch. 129, § 15. April 17, 2017.

Acts 2018, ch. 495, § 11. February 22, 2018.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-103. [Repealed.]

Acts 1973, ch. 249, §§ 9-11; 1974, ch. 633, § 1; T.C.A., § 6-2638; Acts 1980, ch. 445, § 2; 1987, ch. 422, § 2; 1989, ch. 139, § 1; 1989, ch. 221, § 2; 1995, ch. 305, § 82; repealed by Acts 2017, ch. 129, § 7, effective April 17, 2017.

Compiler's Notes. Former § 7-82-103 concerned the applicability of §§ 7-82-102, 7-82-402(b) and 65-4-105.

7-82-104. Exemption from state regulation — Rules of construction.

  1. Neither the Tennessee public utility commission nor any other board or commission of like character hereafter created shall have jurisdiction over the district in the management and control of any system, including the regulation of its rates, fees, tolls or charges, except to the extent provided by this chapter and by the Wastewater Facilities Act of 1987, compiled in title 68, chapter 221, part 10.
  2. It shall be the obligation of every judge and every public official having occasion to construe §§ 7-82-102 and 7-82-402(b) to so construe them as to accomplish the ends indicated by the findings and policies set forth in the preamble and section 1 of Acts 1973, ch. 249.

Acts 1937, ch. 248, § 16; C. Supp. 1950, § 3695.42 (Williams, § 3695.41); impl. am. Acts 1955, ch. 69, § 1; Acts 1973, ch. 249, §§ 1, 7; T.C.A. (orig. ed.), § 6-2613; Acts 1987, ch. 299, § 17; 1995, ch. 305, § 83; 2017, ch. 94, § 19.

Compiler's Notes. The preamble and § 1 of Acts 1973, ch. 249, referred to in this section, provide:

“Whereas, the general assembly has on many occasions considered remedial legislation affecting districts created under the Utility District Law of 1937; and

“Whereas, the general assembly has repeatedly investigated and received and thoroughly considered reports concerning the rates, services, charges and practices of districts created under the Utility District Law of 1937; and

“Whereas, the general assembly recognizes that citizens serving as commissioner of such utility districts perform a public service; that it is needful that more orderly procedures be established to communicate complaints to such commissioners so that the commissioners can properly act thereon as a body instead of being individually subjected to citizen complaints; that the procedures presently provided for reviewing rates and services could be improved by taking advantage of the existing expertise of the public service commission; and

“Whereas, careful consideration has been given by the general assembly to conflicting demands and long established policies which have for the most part resulted in sound administration of utility district systems, their expansion and their rate structures; Now, therefore, be it enacted by the general assembly of the state of Tennessee:

“Sec. 1. This legislation is intended to remedy past complaints and to preserve and enhance the public benefits which have customarily been derived from the operations of utility districts created under the Utility District Law of 1937. To this end, it shall be the obligation of every judge and every public official having occasion to construe this act to so construe it as to accomplish the ends indicated by the findings and policies hereinbefore stated.”

Amendments. The 2017 amendment substituted “Neither the Tennessee public utility commission” for “Neither the Tennessee regulatory authority” at the beginning of (a).

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, §§ 2, 7; 21 Tenn. Juris., Public Service Commissions, § 3.

NOTES TO DECISIONS

1. Right to Furnish Services.

Public service commission (now Tennessee regulatory authority) did not have jurisdiction to issue certificate of convenience and necessity to water company to operate a public water system in an area of a county where utility district had previously been granted authority by county judge (now county mayor) of that county to operate a public water system. West Wilson Utility Dist. v. Atkins, 223 Tenn. 74, 442 S.W.2d 612, 1969 Tenn. LEXIS 391 (1969).

Chancery court properly dismissed a public utility's complaint for, inter alia, a declaratory judgment for lack of subject matter jurisdiction because, while the utility had the right to provide water service, the gravamen of its complaint was to maintain its exclusive franchise by prohibiting a developer and a competitor from providing water service where the utility's averments were ostensibly an appeal of the PUC's refusal to issue a declaratory order—that the competitor was a “public utility” and was illegally operating without a certificate of public convenience—and the PUC lacked authority to grant certificates of public conveniences or to eject a competitor from an exclusive service area. Milcrofton Util. Dist. of Williamson Cty. v. Non Potable Well Water, Inc., — S.W.3d —, 2019 Tenn. App. LEXIS 227 (Tenn. Ct. App. May 10, 2019).

7-82-105. Exemption from taxation.

So long as a district shall own any system, the property and revenue of such system shall be exempt from all state, county and municipal taxation. Bonds issued pursuant to this chapter and the income from the bonds shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes.

Acts 1937, ch. 248, § 15; C. Supp. 1950, § 3695.41 (Williams, § 3695.40); T.C.A. (orig. ed.), § 6-2626; Acts 2001, ch. 28, § 3.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

NOTES TO DECISIONS

1. Constitutionality.

The provision of this section exempting a public utility district created under the authority of this chapter from taxation is not unconstitutional as being in contravention of Tenn. Const., art. II, § 28 but falls within the exception of that section permitting the exemption from taxation of property “such as may be held by the State, by Counties, Cities or Towns, and used exclusively for public or corporation purposes.” First Suburban Water Utility Dist. v. McCanless, 177 Tenn. 128, 146 S.W.2d 948, 1940 Tenn. LEXIS 19 (1941).

2. —Right to Question.

Where suit against a utility district involved no taxes against the bonds of a utility district, the question of the constitutionality of the provisions of this section exempting such bonds from taxation could not be properly raised. First Suburban Water Utility Dist. v. McCanless, 177 Tenn. 128, 146 S.W.2d 948, 1940 Tenn. LEXIS 19 (1941).

3. Sales and Use Taxes.

Merchandise purchased by suburban utility district was exempt from sales and use taxes since the effect of collecting such taxes would amount to a direct tax levied by the state on revenue exempt from taxation by the express terms of this section. Madison Suburban Utility Dist. v. Carson, 191 Tenn. 300, 232 S.W.2d 277, 1950 Tenn. LEXIS 573 (1950).

7-82-106. Prohibition of racial discrimination.

  1. It is unlawful for any utility district organized under this chapter, the Utility District Law of 1937, or under any other public or private act, to discriminate on account of race in providing utility services or in laying out the services that they are to provide.
  2. A violation of this section is a Class C misdemeanor.

Acts 1973, ch. 281, § 1; T.C.A., § 6-2639; Acts 1989, ch. 591, § 113.

Cross-References. Penalty for Class C misdemeanor, § 40-35-111.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-107. Chapter unaffected by other law — Construction.

This chapter is complete in itself and shall be controlling. The provisions of any other law, general, special or local, except as provided in this chapter, shall not apply to a district incorporated under this chapter; provided, that nothing in this chapter shall be construed as impairing the powers and duties of the department of environment and conservation.

Acts 1937, ch. 248, § 17; C. Supp. 1950, § 3695.43 (Williams, § 3695.42); T.C.A. (orig. ed.), § 6-2627.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Law Reviews.

Local Government — 1962 Tennessee Survey (Gilbert Merritt, Jr.), 16 Vand. L. Rev. 800 (1963).

Attorney General Opinions. “Growth and Development Fees” and “Impact Fees” levied by local utilities.  OAG 12-11, 2012 Tenn. AG LEXIS 11 (2/3/12).

NOTES TO DECISIONS

1. Private Acts.

This section superseded provision of private act incorporating city and it was immaterial whether charter of city withheld from it the right to grant an exclusive franchise. Crossville v. Middle Tennessee Utility Dist., 208 Tenn. 268, 345 S.W.2d 865, 1961 Tenn. LEXIS 429 (1961).

2. Bankruptcy Laws.

T.C.A. § 7-82-107 does not prohibit a utility district from seeking relief under the federal bankruptcy laws. In re Pleasant View Utility Dist., 24 B.R. 632, 1982 Bankr. LEXIS 3350 (Bankr. M.D. Tenn. 1982).

7-82-108. Authorized investments.

    1. In order to provide a safe temporary medium for investment of idle funds, utility districts are authorized to invest in the following:
      1. Bonds, notes, or treasury bills of the United States;
      2. Nonconvertible debt securities of the following federal government sponsored enterprises; provided, that the securities are rated in the highest category by at least two (2) nationally recognized rating services:
        1. The federal home loan bank;
        2. The federal national mortgage association;
        3. The federal farm credit bank; and
        4. The federal home loan mortgage corporation;
      3. Any other obligations not listed in subdivisions (a)(1)(A) and (B) that are guaranteed as to principal and interest by the United States or any of its agencies;
      4. Certificates of deposit and other evidences of deposit at state and federal chartered banks and savings and loan associations. All investments made pursuant to this subdivision (a)(1)(D) shall be secured in the manner set forth in § 9-1-107 or title 9, chapter 4, parts 1 and 4;
      5. Obligations of the United States or its agencies under a repurchase agreement for a shorter time than the maturity date of the security itself, if the market value of the security itself is more than the amount of funds invested; provided, that utility districts may invest in repurchase agreements only if the comptroller of the treasury or the comptroller's designee approves repurchase agreements as an authorized investment, and if such investments are made in accordance with procedures established by the state funding board; and
      6. The local government investment pool created by title 9, chapter 4, part 7.
    2. The investments listed in subdivisions (a)(1)(A)-(D) may have a maturity of not greater than four (4) years from the date of investment; however, such investments may have a maturity of greater than four (4) years from the date of investment, if the maturity is approved by the comptroller of the treasury or the comptroller's designee.
      1. Investing in the instruments set forth in subdivision (a)(1)(B) or (a)(1)(E) shall require the following:
        1. The utility district's governing board must authorize the investment; and
        2. The utility district's governing board shall adopt a written investment policy to govern the use of investments, with the policies being no less restrictive than those established by the state funding board to govern state investments in these types of instruments.
      2. Investment in instruments covered by subdivision (a)(3)(A) shall be prohibited until the utility district's governing board has adopted written policies to govern the use of the investments or has voted to authorize the investment.
    1. Proceeds of bonds, notes and other obligations issued by utility districts, reserves held in connection with the bonds, notes or other obligations and the investment income from the bonds, notes or other obligations, may be invested in obligations that:
        1. Are rated in either of the two (2) highest rated categories by a nationally recognized rating agency of such obligations;
        2. Are direct general obligations of a state of the United States, or a political subdivision or instrumentality of a state, having general taxing powers; and
        3. Have a final maturity on the date of investment of not to exceed forty-eight (48) months, or that may be tendered by the holder to the issuer of the bonds, notes or other obligations, or an agent of the issuer, at not less than forty-eight-month intervals; or
        1. Are rated in the two (2) highest rating categories by a nationally recognized rating agency of such obligations;
        2. Are obligations of a state of the United States, or a political subdivision or instrumentality of a state, secured solely by revenues received by or on behalf of the state or political subdivision or instrumentality of the state, which revenues are irrevocably pledged to the payment of the principal of and interest on such obligations; and
        3. Have a final maturity on the date of investment of not to exceed forty-eight (48) months, or that may be tendered by the holder to the issuer of the bonds, notes and other obligations, or an agent of the issuer, at not less than forty-eight-month intervals.
    2. Such proceeds and the investment income on the proceeds may also be invested as otherwise set forth in this section.
  1. The investments authorized by this section are in addition to those authorized in any other general law.

Acts 1989, ch. 401, § 1; 1990, ch. 814, § 2; 1991, ch. 165, § 2; 2004, ch. 491, §§ 1-5; 2006, ch. 693, § 8; 2010, ch. 868, §§ 22, 23.

7-82-109. Water utility system operated by county — Transfer to utility district — Procedure.

Notwithstanding any other law to the contrary, any utility district having all or part of its official territory within a county may by resolution agree to accept transfer of all or a part of a water utility system operated by the county pursuant to a previous transfer of such system by a utility district to the county under this chapter, or its operation under a private act, or otherwise, which resolution must contain provisions agreeing to operate such system for the public benefit, and requiring the protection of all rights of bondholders, and which resolution must specifically state that the transfer shall be upon such conditions as may be contained in the county legislative resolution theretofore or thereafter adopted under § 5-7-117. When all conditions of such resolutions shall have been met, the county mayor and president of the utility district shall sign an addendum to the contract, identifying the county and the utility district resolutions of which the contract consists, certifying that all conditions therein have been met, and shall cause such addendum to be published in a newspaper of general circulation within the county at the expense of the utility district, upon which publication the transfer shall thereupon be consummated by operation of law without the need for the execution of any instruments of transfer.

Acts 1991, ch. 228, § 1; 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Transfer by county of water utility system to utility district, § 5-7-117.

7-82-110. Natural gas utility districts adjacent to tourist resort counties.

  1. Notwithstanding any law to the contrary, any natural gas utility district that is located and operated in a tourist resort county may also provide natural gas service to consumers in any municipality in an adjacent tourist resort county.
  2. As used in this section, “tourist resort county” means a county having more than five percent (5%) of its territory located within the boundaries of a national park established pursuant to 16 U.S.C. § 403.

Acts 1993, ch. 375, § 2.

7-82-111. Membership in local chambers of commerce.

Nothing in this chapter shall be construed to prohibit a utility district from becoming a member of a local chamber of commerce.

Acts 1995, ch. 47, § 1.

Attorney General Opinions. A utility district is authorized to contribute funds to its local chamber of commerce, its county government, or its county's nonprofit economic development corporation for economic development activities aimed at increasing development in the district's service area in anticipation of increasing its customer base and service loads, OAG 03-017 (2/19/03).

A utility district may pay membership dues to the chamber of commerce assessed at a higher rate than other members, so long as the assessment structure of dues is reasonable, OAG 03-017 (2/19/03).

7-82-112. Utility service to customer in adjoining utility district.

    1. Notwithstanding § 7-82-301(a), a utility district shall be allowed to provide utility service to a customer located within the boundaries of an adjoining utility district if the customer or adjoining utility district files a request with the utility management review board for the customer to obtain utility service from the adjoining utility district and if the utility management review board finds that:
      1. Either the utility district within which the customer is located has refused to provide utility service to the customer or is not able or willing to provide service within a reasonable period of time at a reasonable cost as determined by the utility management review board; and
      2. The adjoining utility district is willing to provide utility service to the customer.
    2. If the utility management review board finds that the customer should be served by the adjoining utility district, then the utility management review board shall enter an order setting forth its findings and granting the service request.
  1. This section shall only apply to the request of a single customer of a utility district for utility service from an adjoining utility district.
  2. Nothing in this section shall be construed to affect the exclusive or prior right of a utility district to provide utility service within its boundaries to any other customer located within its boundaries under state law or to affect the exclusive or prior right to a utility district to provide utility service within its boundaries under federal law.

Acts 2008, ch. 852, § 1.

7-82-113. Expenditures for lawful district purpose.

All expenditures of money made by a utility district must be made for a lawful district purpose.

Acts 2011, ch. 392, § 3.

Part 2
Creation

7-82-201. Petition for creation.

  1. A petition for the incorporation of a utility district shall be filed with the utility management review board for review and approval and to the county mayor of any county in which the proposed district is situated, the petition to be signed by not less than twenty-five (25) owners of real property, who shall reside within the boundaries of the proposed district. The petition shall include:
    1. A statement of the service or services to be supplied by the proposed district and the necessity for such service or services;
    2. The proposed corporate name and boundaries of the district;
    3. A statement showing why existing utility districts, or municipal or county services, could not adequately provide the needed service because of cost, time, or other service delivery factors;
    4. An estimate of the costs of the acquisition or construction of the facilities of the district, which estimate shall not, however, serve as a limitation upon the financing of improvements, or extensions of the facility; an estimate of the costs of operating the proposed facilities; an estimate of anticipated personnel needs; and an estimated schedule of rates and charges for the services to be rendered; and
    5. The nomination of three (3) residents of the district for appointment as commissioners of the district. The petition shall be signed in person by the petitioners with the addresses of their residences and shall be accompanied by a sworn statement of the person or persons circulating the petition, who shall state under oath that they witnessed the signature of each petitioner, that each signature is the signature of the person it purports to be, and that, to the best of their knowledge, each petitioner was, at the time of signing, an owner of real property within and a resident of the proposed district.
  2. Nonprofit property owners associations whose membership is constituted by at least ten thousand (10,000) owners of lots of residential property, which associations own, operate or maintain water or sewer service systems for the exclusive use of those associations, and which are unable to obtain such services from the local utility district, shall be entitled to petition the county mayor of the county in which they are located for incorporation as a utility district. If the association is located within the service area of an existing utility district that does not provide both water and sewer service, the association may petition the county mayor for exclusion from such utility district and for recognition and incorporation as a separate and independent utility district providing the service that the existing district does not provide. The initial commissioners of such utility districts shall be the officers of the association and shall serve initial terms as set forth in § 7-82-307. The successors to such initial commissioners shall serve four-year terms as set forth in § 7-82-307, but shall be selected by the management board of the property association, as long as that board is itself elected by a vote of all the property owners in the association. If the management board is not elected by vote of the property owners, successor commissioners shall be appointed by the county mayor as set forth in § 7-82-307. Commissioners shall serve in office until their successors are elected and qualified.

Acts 1937, ch. 248, § 2; C. Supp. 1950, § 3695.27; Acts 1968, ch. 529, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 36; Acts 1979, ch. 195, § 2; T.C.A. (orig. ed.), § 6-2602; Acts 1991, ch. 63, § 1; 1995, ch. 64, §§ 1, 2; 2003, ch. 90, § 2; 2009, ch. 320, § 1.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Acts 1995, ch. 64, § 10 provided that the amendments by Acts 1995, ch. 64 do not apply to any utility district that must, for the purpose of redefining its incorporated boundary, be recreated in accordance with existing law.

Cross-References. Exemption of certain utility districts from rural electric and community services cooperative provisions, § 65-25-129.

Multi-county districts, title 7, ch. 82, part 6.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7; 21 Tenn. Juris., Public Service Commissions, § 3.

Attorney General Opinions. Expanding a utility district, OAG 00-067, 2000 Tenn. AG LEXIS 68 (4/6/00).

NOTES TO DECISIONS

1. Public Convenience and Necessity.

Jurisdiction to determine whether public convenience and necessity requires that exclusive right of utility district to furnish services be revoked rests in the county judge or chair (now county mayor) of the county in which the petition for incorporation was presented and granted. Crossville v. Middle Tennessee Utility Dist., 208 Tenn. 268, 345 S.W.2d 865, 1961 Tenn. LEXIS 429 (1961). But see White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969), as to multi-county districts.

In multi-county districts jurisdiction to determine whether public convenience and necessity requires the exclusive right of utility district to furnish services, to be revoked rests in the tribunal which was authorized by law to grant and did grant the petition for incorporation, i.e., the panel of county judges or county chair (now county mayors) provided by law. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

County executive (now county mayor) was not authorized to modify the boundaries of an existing utility district, even though the district did not provide service to area residents; the sole remedy was to seek to modify the utility's exclusive franchise if public convenience and necessity so demanded. Town Of Rogersville ex rel. Rogersville Water Comm'n v. Mid Hawkins County Util. Dist., 122 S.W.3d 137, 2003 Tenn. App. LEXIS 411 (Tenn. Ct. App. 2003), appeal denied, — S.W.3d —, 2003 Tenn. LEXIS 1236 (Tenn. 2003).

2. Proof of Petition.

In absence of bill of exceptions it would be presumed that any deficiencies in petition for creation of utility district as to estimates of cost of operation, personnel needs and rates and schedules were supplied by the proof and since such facts were not indispensable to jurisdiction but only circumstantial to the issue, order of panel establishing district would not be reversed. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

3. Jurisdiction in Multi-County Districts.

Where a multi-county matter is heard, the judges (now county mayors) sitting as a panel, jurisdiction of the matter is not committed to the county court (now county legislative body), county judge or county chair (now county mayor) but to a panel or administrative body whose members are composed of judges or chairs. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

In multi-county districts jurisdiction to determine whether public convenience and necessity requires the exclusive right of utility district to furnish services, to be revoked rests in the tribunal that was authorized by law to grant and did grant the petition for incorporation, i.e., the panel of county judges or county chairs (now county mayors) provided by law. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

7-82-202. Hearing and order of approval — Modification, merger or consolidation.

    1. The utility management review board shall issue an order approving or disapproving the petition for the incorporation of the utility district within ninety (90) calendar days of receipt of the petition by the board, its agent or representative. If the board approves the petition, the board shall forward its order of approval and the original petition to the county mayor of any county in which the proposed district will serve. If the board fails to act on the petition within ninety (90) calendar days of receipt of the petition, the board, its agent or representative shall forward the original petition to the county mayor of any county in which the proposed district will serve. If the board disapproves the petition, the board shall not forward the original petition to the county mayor of any county in which the proposed district will serve, and the petitioners may pray and obtain an appeal from the order disapproving the petition as provided in § 7-82-204.
    2. Upon receipt of such petition, it is the duty of the county mayor to fix a time and place for a public hearing upon the convenience and necessity of the incorporation of the district to perform the services stated in the petition. The date of such hearing shall be not more than thirty (30) days after the receipt of the petition and its date, place and purpose shall be announced by the county mayor in a notice published not more than fifteen (15) days nor less than seven (7) days prior to the date of the hearing in a newspaper of general circulation in the proposed district, or if there be no such newspaper, then by posting such notice in five (5) conspicuous public places within the boundaries of the proposed district. If the boundaries of the proposed district include territory within five (5) miles of a city or town having a population of five thousand (5,000) or more, within three (3) miles of a city or town having a population of less than five thousand (5,000), or within three (3) miles of any water, sewerage or gas service facility of a county, city, town or utility district, notice by registered mail of the hearing, its purpose, date and place and the boundaries of the proposed district shall be given the mayor or chief executive officer of such county, city, town, and utility district at least ten (10) days before the hearing. The county mayor shall read the final comments of the board to persons at the public hearing and make copies available if requested by those in attendance.
    3. If, at the public hearing, the county mayor finds that:
      1. The public convenience and necessity requires the creation of the district; and
      2. The creation of the district is economically sound and desirable,

        the county mayor shall enter an order so finding, approving the creation of the district, designating it as “the  Utility District of  County, Tennessee,” defining its territorial limits, stating the service or services that the district shall be authorized to furnish, and appointing as commissioners of the district those persons nominated in the petition, of whom one (1) shall be appointed for a term of two (2) years, one (1) for a term of three (3) years, and one (1) for a term of four (4) years. Such order shall be subject to approval by a simple majority vote of the county legislative body of each county in which the district is created before it is filed with the county clerk and entered on record.

  1. On the issue of whether the public convenience and necessity requires the creation of the district, the county mayor shall take into consideration the review and final comments of the board, and the ability of an existing utility district or an incorporated city or town to serve the area, and such existing utility district or city or town at the hearing may make known its intention to serve the area. In that event, the county mayor shall suspend action on the petition for sixty (60) days. Within the sixty (60) days, the existing utility district or city or town may submit to the county mayor its plans for serving the area, including the specific area to be served, the facilities to be installed, the services to be supplied, and a time schedule for completing installation of facilities to provide the services, and the county mayor, after considering such plans and hearing the views of the utility district's proponents on the plans, shall determine a reasonable time within which the existing utility district or city or town must provide the services. If either party thinks that the time is unreasonable, as determined by the county mayor, an appeal may be taken as provided in § 7-82-204, to determine the time. If the existing utility district or city or town fails to provide the services within the time so determined, the county mayor, unless the county mayor decides that circumstances warrant an extension of time, may create the utility district, acting on the original petition, to serve such area as the county mayor decides it can reasonably be expected to serve. If no existing utility district or city or town presents such plans to the county mayor within the sixty (60) days, the petition shall be acted upon as otherwise provided by law.
  2. Should a city or town exercise its prior right, as herein provided, to serve areas adjoining its boundaries within five (5) miles of a municipality of five thousand (5,000) or more in population or within three (3) miles of a municipality of less than five thousand (5,000) in population, the county mayor shall excise such areas from the boundaries of the proposed district, or strike from the petition and omit from the order the authority of the district to perform the service or services in such areas.
  3. Upon the creation or recreation of any utility district as provided for in this chapter, the president of the utility district shall file with the secretary of state, the utility management review board and with the register of deeds of the county or counties wherein the district is located, a true and correct copy of the order creating the utility district. The secretary of state shall maintain and keep a book for recording orders creating utility districts and all fees in connection with the recordings shall be paid by the district. Any amendments whatsoever to such order creating the utility district or any order merging, consolidating or re-creating a utility district shall be filed in like manner. The failure to so file a copy of such order or orders is a Class C misdemeanor. Whenever two (2) or more utility districts, individually located in counties having a population of not less than thirty-six thousand nine hundred ninety-five (36,995) and not more than thirty-seven thousand five (37,005) or not less than fifty-nine thousand four hundred twenty-five (59,425) nor more than fifty-nine thousand four hundred thirty (59,430), according to the 1970 federal census or any subsequent federal census, or any county having a metropolitan form of government, by resolution of the respective governing bodies of such utility districts, concur in the contraction of the territory served by one (1) of the utility districts in one (1) county and corresponding expansion of the territory served by the other utility district in another county into the county served by the contracting district, the respective utility districts shall petition the county mayor of the county wherein the utility district was created for an order permitting such modification of territory, if such modification shall result in greater efficiency and convenience in the furnishing of the services authorized by the order of creation. Upon being so petitioned, and upon entering an order modifying the boundaries of such district, the county mayor shall proceed in the manner provided in this subsection (d) and may, at such time, waive §§ 7-82-602 and 7-82-607, relative to selection and appointment of commissioners in such territory so waived and thereby invoke § 7-82-307, relative to selection and appointment of commissioners in such territory, so that the commissioners so selected in the resulting multi-county districts are selected pursuant to § 7-82-307 pertaining only to single county districts.
      1. Whenever two (2) or more utility districts by resolution adopted by the respective governing bodies concur in a merger or consolidation of such utility districts, or whenever a utility district by resolution of its governing body agrees or proposes to consolidate with a municipality or a county by transferring all of its property and obligations to the municipality or county, the governing body or bodies shall petition the county mayor of the county or counties in which they were created, or in case of multi-county utility districts, the county mayor of any county in which they are situated in whole or in part, for an order permitting the merger, consolidation or transfer of its franchise facilities, assets and obligations to a municipality or a county for the purpose of more efficiently and conveniently furnishing the service or services authorized by their order of creation. Upon the petition being filed, the county mayor or mayors shall proceed in exactly the same manner as provided in this chapter for the creation of a utility district, except as set forth in subsection (g).
      2. Upon a finding that the public convenience and necessity requires the merger or consolidation of two (2) or more utility districts or the transfer of any utility district into a municipality or county and that the merger, consolidation or transfer is economically sound and feasible and in the public interest, an order shall be entered approving the merger, consolidation or transfer of the utility district or districts.
        1. If the petition is for a merger, the order shall designate the surviving utility district, and the boundaries of the surviving utility district shall be the boundaries of the merging utility districts. The members of the board of commissioners of the surviving utility district shall continue to serve their existing terms of office subject to subdivision (e)(2).
        2. If the petition is for a consolidation of utility districts, the order shall designate the name of the newly created consolidated utility district as the  Utility District of  County or Counties, Tennessee, shall define its territorial limits and shall appoint the commissioners of the utility district, all in accordance with the requirements of this chapter for the creation of a utility district subject to subdivision (e)(2).
        3. If the petition is for the transfer of all franchises, assets and liabilities to a municipality or a county, then the utility district shall be dissolved and provision made in the order for an equitable distribution of the assets and for the termination of the existence of the utility district and shall establish the legal rights, duties and obligations of the entities and parties involved.
        4. The order shall provide that the surviving utility district in a merger, the newly consolidated utility district or the municipality or county to which a transfer is made shall assume the operation of the system or systems then being merged, consolidated or transferred and shall account for the revenues from the system or systems in such a manner as not to impair the obligations of the contract with reference to bond issues or other legal obligations of the utility district or districts, and shall fully preserve and protect the contract rights vested in the owners of the outstanding bonds, obligations or contractual interests.
    1. Notwithstanding  this section or any other law to the contrary, two (2) or more utility districts, each of which has a board of three (3) commissioners, that concur in a merger or consolidation of such utility districts may by agreement increase the size of the board of commissioners of the merged or consolidated utility district to five (5) commissioners in accordance with the requirements of this subsection (e). The merging or consolidating utility districts that agree to increase the size of the board of commissioners to five (5) commissioners shall include the agreement in their respective resolutions concurring in the merger or consolidation and shall state such agreement in the petition for merger or consolidation submitted to the county mayor. The petition for merger or consolidation shall name in the petition up to five (5) individuals to serve as commissioners for the merged or consolidated utility district proposed by such petition, each of whom shall be an existing commissioner of one (1) of the utility districts proposing to merge or consolidate and shall be qualified to serve in accordance with § 7-82-308(d). The county mayor or mayors conducting the hearing on the petition for merger or consolidation shall appoint such individuals, named in the petition for merger or consolidation, as commissioners for the merged or consolidated utility district, unless the county mayor or mayors find such individuals are not qualified to serve as commissioners under § 7-82-308(d). If the merging or consolidating utility districts do not name five (5) individuals who are qualified to serve as commissioners under § 7-82-308(d) for the merged or consolidated utility district in the petition for merger or consolidation, then the county mayor or mayors shall appoint a sufficient number of individuals who are qualified under § 7-82-308(d) to serve as commissioners for any seats not named by the merging or consolidating utility districts in the petition. The county mayor or mayors shall appoint one (1) commissioner for an initial two-year term, two (2) commissioners for initial three-year terms and two (2) commissioners for initial four-year terms.
    2. Notwithstanding this section or any other law to the contrary, four (4) or more utility districts, each of which has a board of three (3) commissioners, that concur in a merger or consolidation of such utility districts may by agreement increase the size of the board of commissioners of the merged or consolidated utility district to seven (7) commissioners in accordance with the requirements of subdivision (e)(2). The county mayor or mayors shall appoint two (2) commissioners for initial two-year terms, two (2) commissioners for initial three-year terms and three (3) commissioners for initial four-year terms.
  4. A municipality may acquire a utility district to be operated as a department separate from any other municipal utility. Whenever a utility district by resolution adopted by its governing body agrees or proposes to consolidate with a municipality as a separate department of such municipality by transferring all of its property and obligations to such municipality, it shall petition the county mayor of the county in which it was created for an order approving the resolution to permit such consolidation, merger, acquisition or transfer of its franchise facilities, assets and obligations to a municipal corporation for the purpose of more efficiently and conveniently furnishing the service or services authorized by its order of creation. Upon such petition being filed, such county mayor shall proceed in exactly the same manner as provided in this chapter for the creation of a utility district, and upon a finding that the public convenience and necessity requires consolidation, merger, acquisition or transfer and that the same is economically sound and feasible and in the public interest, an order shall be entered approving such resolution. Upon the approval of such resolution by order of the county mayor, such utility district shall be dissolved and the assets, obligations, legal rights and duties of such district shall become those of the department of the municipality. Such order shall provide that the department of the municipality shall assume the operation of the utility system and account for the revenues from the system in such a manner as not to impair the obligations of contract with reference to bond issues or other legal obligations of the district, and shall fully preserve and protect the contract rights vested in the owners of such outstanding bonds, obligations or contractual interests. Such department of the municipality shall be operated separately from any other utility department of the municipality. The governing body of the municipality shall be the governing board of such department and shall appoint an advisory committee on utilities if the area served by the utility district is outside the boundaries of the municipality. The governing body of the municipality shall, by ordinance, create such advisory committee to be composed of either former utility district commissioners or residents and customers of the utility system so acquired. The advisory committee members shall be appointed by the governing body of the municipality in the number and for the term specified by the ordinance. When the former utility district ceases to be a separate department and is merged with the other utility services of the municipality into one (1) utility system, such advisory committee may be dissolved. No portion of such utility district shall be made a part of a municipal utility service without consideration being paid to the department composed of such utility district.
  5. Petitions for a merger or consolidation of utility districts or for a consolidation of a utility district with a municipality or county under subsections (e) and (f) shall be filed with the utility management review board simultaneously with the filing of the petition with the county mayor or mayors under subsections (e) and (f). Such petitions are not subject to approval or disapproval by the utility management review board as set forth in § 7-82-201(a) and subsection (a) and are not subject to approval by the county legislative body or bodies as set forth in subdivision (a)(3)(B).
  6. Petitions for re-creation of a utility district for the purpose of redefining its incorporated boundary shall be filed with the utility management review board simultaneously with the filing of the petition with the county mayor or mayors. Such petitions are not subject to approval or disapproval by the utility management review board as set forth in § 7-82-201(a) and subsection (a) and are not subject to approval by the county legislative body or bodies as set forth in subdivision (a)(3)(B).

Acts 1937, ch. 248, § 2; C. Supp. 1950, § 3695.27; Acts 1959, ch. 166, § 1; 1968, ch. 529, § 2; 1973, ch. 183, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 22, 36; Acts 1979, ch. 430, § 1; modified; T.C.A. (orig. ed.), § 6-2604; Acts 1989, ch. 591, § 113; 1995, ch. 64, §§ 3-9; 2000, ch. 648, § 1; 2003, ch. 90, § 2; 2005, ch. 61, § 1; 2009, ch. 320, §§ 2-4; 2015, ch. 179, §§ 1-3.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Acts 1995, ch. 64, § 10 provides that the amendments by Acts 1995, ch. 64 do not apply to any utility district that must, for the purpose of redefining its incorporated boundary, be recreated in accordance with existing law.

For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

In 2005, subsection (g) was deleted as similar provisions existed at § 7-82-204.

Amendments. The 2015 amendment rewrote the last sentence of (a)(3)(B), which read: “Such order shall be filed with the county clerk and entered on record.”; in (g), added a period after “subsections (e) and (f)”, substituted “Such petitions” for “, but”, and added “and are not subject to approval by the county legislative body or bodies as set forth in § 7-82-202(a){3)(B)” at the end; and added (h).

Effective Dates. Acts 2015, ch. 179, § 4. July 1, 2015.

Cross-References. Certified mail in lieu of registered mail, § 1-3-111.

Multi-county districts, §§ 7-82-603, 7-82-605.

Penalty for Class C misdemeanor, § 40-35-111.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. A municipality is not authorized to petition for the dissolution of a utility district, OAG 02-110, 2002 Tenn. AG LEXIS 115 (10/07/02).

Utility districts with territory in more than one county, OAG 00-003, 2000 Tenn. AG LEXIS 2 (1/6/00).

Expanding a utility district, OAG 00-067, 2000 Tenn. AG LEXIS 68  (4/6/00).

Utility district operating at a loss.  OAG 11-35, 2011 Tenn. AG LEXIS 37 (4/15/11).

NOTES TO DECISIONS

1. Constitutionality.

Subdivisions (a)(1) and (2) do not delegate such an unlimited discretion as to be an unconstitutional delegation of legislative power to the county judge or chair (now county mayor). First Suburban Water Utility Dist. v. McCanless, 177 Tenn. 128, 146 S.W.2d 948, 1940 Tenn. LEXIS 19 (1941).

2. Administrative Function.

Whether a county judge (now county mayor) is sitting alone considering a one-county district, or two or more county judges are considering a multi-county district, he or they are acting as an administrative body and not a court. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

3. Public Convenience and Necessity.

County executive (now county mayor) was not authorized to modify the boundaries of an existing utility district, even though the district did not provide service to area residents; the sole remedy was to seek to modify the utility's exclusive franchise if public convenience and necessity so demanded. Town Of Rogersville ex rel. Rogersville Water Comm'n v. Mid Hawkins County Util. Dist., 122 S.W.3d 137, 2003 Tenn. App. LEXIS 411 (Tenn. Ct. App. 2003), appeal denied, — S.W.3d —, 2003 Tenn. LEXIS 1236 (Tenn. 2003).

7-82-203. Cost of establishment proceedings.

All costs incident to the publication and posting of notices, and to the public hearing and determination, and all costs of the proceedings, including the costs of filing and entering the order, shall be borne by the parties filing the petition, and the county mayor may, in such county mayor's discretion, require the execution by the parties filing the petition of a cost bond in an amount and with good securities to guarantee the payment of such costs.

Acts 1937, ch. 248, § 2; C. Supp. 1950, § 3695.27; impl. am. Acts 1978, ch. 934, §§ 16, 36; modified; T.C.A. (orig. ed.), § 6-2605; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-204. Appeal to circuit court.

Any party having an interest in the subject matter and aggrieved or prejudiced by the finding and adjudication of the county mayor may pray and obtain an appeal from the finding and adjudication to the circuit court of the county in the manner provided by law for appeals from the court of general sessions, upon the execution of appeal bond as provided by law.

Acts 1937, ch. 248, § 2; C. Supp. 1950, § 3695.27; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A (orig. ed.), § 6-2606; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Appeals in multi-county districts, § 7-82-606.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

NOTES TO DECISIONS

1. Nature of Review.

Aggrieved party did not have the right under this section to prosecute a broad appeal without a bill of exceptions or to a trial de novo in the circuit court. Griffitts v. Rockford Utility Dist., 41 Tenn. App. 653, 298 S.W.2d 33, 1956 Tenn. App. LEXIS 107 (Tenn. Ct. App. 1956).

Mere fact that this section used the term “appeal” rather than terms “appeal in nature of writ of error” or “writ of error” would not be sufficient to indicate that appellant was entitled to broad appeal. Griffitts v. Rockford Utility Dist., 41 Tenn. App. 653, 298 S.W.2d 33, 1956 Tenn. App. LEXIS 107 (Tenn. Ct. App. 1956).

2. Aggrieved or Prejudiced Party.

Where resident of proposed utility district failed to have himself formally made a party in original proceeding and made no effort to introduce proof he was not an aggrieved party under this section. Griffitts v. Rockford Utility Dist., 41 Tenn. App. 653, 298 S.W.2d 33, 1956 Tenn. App. LEXIS 107 (Tenn. Ct. App. 1956).

3. Evidence.

Where evidence heard by county chair (now county mayor) was not preserved by bill of exceptions and no evidence was heard by the circuit court, upon review of the action of circuit court de novo, there was no presumption that the action of the circuit court was founded on some evidence not transmitted to court of appeals but it would be presumed that since evidence was heard by the county chair but not preserved that chair did hear evidence to support his conclusions of fact. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

If there is any material evidence of a substantial nature to support the action in establishing the district it must be affirmed. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

Part 3
Operation and Powers

7-82-301. District as municipality — Powers — Failure to act — Name change.

      1. From and after the date of the making and filing of an order of incorporation, the district so incorporated shall be a “municipality” or public corporation in perpetuity under its corporate name, and the district shall in that name be a body politic and corporate with power of perpetual succession, but without any power to levy or collect taxes. Charges for services authorized in this chapter shall not be construed as taxes. The powers of each district shall be vested in and exercised by a majority of the members of the board of commissioners of the district.
      2. So long as the district continues to furnish any of the services that it is authorized to furnish in this chapter, it shall be the sole public corporation empowered to furnish such services in the district, and no other person, firm or corporation shall furnish or attempt to furnish any of the services in the area embraced by the district, unless and until it has been established that the public convenience and necessity requires other or additional services; provided, that this chapter shall not amend or alter §§ 6-51-101 — 6-51-111, and 6-51-301.
      1. The district shall not be the sole public corporation empowered to furnish systems for gathering, storing or transmitting natural gas by pipeline. Other persons, firms and corporations may furnish such services involving natural gas in the area embraced by the district in addition to such services that are provided by the district.
      2. No person, firm or corporation shall commence construction or operation of any natural gas pipeline until such pipeline shall have met the safety requirements set by the Tennessee public utility commission. In addition, notice by registered mail shall be given to any utility district or municipality in the area or the Tennessee public utility commission, and any affected utility district or municipality shall be permitted to present its interest, if any, to the Tennessee public utility commission, which shall have the authority to review and approve rates and contracts for such services involving natural gas on the record without a public hearing.
      3. Notwithstanding anything contained in this section, a utility district shall retain the exclusive authority to engage in the retail distribution of natural gas within its area.
      4. In addition, no such person, firm, or corporation may transport natural gas from a well that on January 1, 1981, was supplying a utility district or municipality, so long as the utility district or municipality shall offer and pay to the gas producer or gatherer a price, and meet other contractual terms, equal to the price and terms offered to the producer or gatherer by any other bona fide purchaser.
    1. In the event no affirmative action is taken by a newly-formed utility district within one (1) year of the date of filing of order of creation, the county mayor may hold a hearing, after notification of the duly appointed commissioners, and determine if the utility district is proceeding with dispatch and diligence to provide the utility service or services it was authorized to provide in its order of creation. If the county mayor finds that the utility district is not proceeding with dispatch and diligence to provide the utility service or services it was authorized to provide in its order of creation, then the county mayor shall enter an order dissolving the utility district. The president of the utility district shall file with the secretary of state, the utility management review board and the register of deeds of the county or counties in which the district is located, a true and correct copy of the order dissolving the utility district.
    2. In the event a utility district fails to render any of the services for which it was created within a period of four (4) years of the date of filing of order of creation and fails to acquire within such period any assets or facilities necessary to provide the utility service or services for which it was created, the utility district shall be dissolved by operation of law. The county mayor of the county in which the original petition for creation of the utility district was filed shall file a notice of dissolution with the secretary of state and upon such filing the utility district shall no longer be deemed to exist. The county mayor shall file with the utility management review board and the register of deeds of the county or counties in which the utility district is located, a true and correct copy of the notice of dissolution.
  1. After one (1) year from the date of the filing of the order of incorporation of any utility, the name of the utility may be changed by the commissioners filing a petition with the county mayor of the county in which such order of incorporation was filed, setting forth the present name of the utility, the name to which the commissioners want to change and the reasons for such change. Upon good cause being shown, the county mayor shall issue such order, which shall be filed with the county clerk and entered on record.

Acts 1937, ch. 248, § 3; C. Supp. 1950, § 3695.28; Acts 1959, ch. 224, § 1; 1959, ch. 327, § 1; 1963, ch. 160, § 1; 1963, ch. 305, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 22, 36; T.C.A. (orig. ed.), § 6-2607; Acts 1981, ch. 468, § 1; 1995, ch. 305, § 84; 1996, ch. 1065, § 1; 2003, ch. 90, § 2; 2009, ch. 472, § 2; 2011, ch. 215, § 1; 2017, ch. 94, § 20.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Amendments. The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” throughout (a)(2)(B).

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Certified mail instead of registered mail, § 1-3-111.

Exemption of certain utility districts from rural electric and community services cooperative provisions, § 65-25-129.

Inapplicability to metropolitan public service districts, § 7-3-302.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7; 19 Tenn. Juris., Municipal Corporations, § 3; 25 Tenn. Juris., Water Companies and Waterworks, §§ 4, 5.

Law Reviews.

Public Sector Labor Relations Law in Tennessee — The Current Inadequacies and the Available Alternatives (Robert B. Moberly), II. The Need for Public Sector Labor Relations Legislation in Tennessee, 42 Tenn. L. Rev. 241 (1975).

Attorney General Opinions. Multi-county gas utility districts, OAG 93-56, 1993 Tenn. AG LEXIS 56 (9/2/93).

A city that wishes to provide services within the service area of a utility district may petition the county executive [now county mayor] under T.C.A. § 7-82-301(a) to change the service area of the utility district or to allow it to furnish services within the service area of the utility district; the petitioner must establish that “the public convenience and necessity requires” the change sought, OAG 02-110, 2002 Tenn. AG LEXIS 115 (10/07/02).

Utility district operating at a loss.  OAG 11-35, 2011 Tenn. AG LEXIS 37 (4/15/11).

“Growth and Development Fees” and “Impact Fees” levied by local utilities.  OAG 12-11, 2012 Tenn. AG LEXIS 11 (2/3/12).

NOTES TO DECISIONS

1. Nature of District.

This section clearly classes and characterizes a utility district created under its provisions as an operation for a state, governmental or public purpose and as a municipality or public corporation. First Suburban Water Utility Dist. v. McCanless, 177 Tenn. 128, 146 S.W.2d 948, 1940 Tenn. LEXIS 19 (1941).

2. Exclusive Right to Furnish Service.

Where utility district did not refuse service but terms on which service was offered was less advantageous than that which could be obtained from another source, chancery court had no authority to authorize applicant to obtain service from such other source. Chandler Inv. Co. v. Whitehaven Utility Dist., 44 Tenn. App. 1, 311 S.W.2d 603, 1957 Tenn. App. LEXIS 146 (Tenn. Ct. App. 1957).

Where subdivision was within the territorial limits of utility district, builder of subdivision could not obtain right to contract with city instead of utility district for water service by declaratory judgment proceedings in chancery court, but sole recourse was to petition under the provisions of this section. Chandler Inv. Co. v. Whitehaven Utility Dist., 44 Tenn. App. 1, 311 S.W.2d 603, 1957 Tenn. App. LEXIS 146 (Tenn. Ct. App. 1957).

Utility district had exclusive right to distribute gas within city under the statute and it was immaterial that charter of city withheld right to grant an exclusive franchise. Crossville v. Middle Tennessee Utility Dist., 208 Tenn. 268, 345 S.W.2d 865, 1961 Tenn. LEXIS 429 (1961).

Before any corporation may furnish electricity within the territory of a municipality it must have the permission of that municipality in the form of a franchise even where the corporation has been serving the area before it became a part of the municipality. Franklin Power & Light Co. v. Middle Tennessee Electric Membership Corp., 222 Tenn. 182, 434 S.W.2d 829, 1968 Tenn. LEXIS 421 (1968).

Public service commission did not have jurisdiction to issue certificate of convenience and necessity to water company to operate public water system in an area of a county where utility district had previously been granted authority by county judge (now county mayor) to operate a public water system since the only authority to alter or modify the franchise of the utility district rested in the (former) county court. West Wilson Utility Dist. v. Atkins, 223 Tenn. 74, 442 S.W.2d 612, 1969 Tenn. LEXIS 391 (1969).

3. —Territory Annexed.

A municipality, if and to the extent it chooses, shall have the exclusive right to perform or provide municipal and utility functions and services in any territory it annexes, notwithstanding this section, although subject to rights of electric cooperatives. Hendersonville v. Hendersonville Utility Dist., 506 S.W.2d 149, 1973 Tenn. App. LEXIS 266 (Tenn. Ct. App. 1973).

4. —Laches.

Where utility district knowingly allowed city and county to construct sewer projects within its boundaries with full knowledge of its exclusive right to provide such services within its boundaries and delayed bringing suit for eight years, utility district's suit seeking exclusive right to provide utility services within its boundaries was barred by laches. Whitehaven Utility Dist. v. Ramsay, 215 Tenn. 435, 387 S.W.2d 351, 1964 Tenn. LEXIS 531 (1964).

5. Boundaries.

Where boundaries of utility district had been fixed by the legislature, court possessed no power to detach territory from such district in absence of special legislation. Consolidated Gray-Fordtown-Colonial Heights Utility Dist. v. O'Neill, 209 Tenn. 342, 354 S.W.2d 63, 1962 Tenn. LEXIS 364 (1962).

County executive (now county mayor) was not authorized to modify the boundaries of an existing utility district, even though the district did not provide service to area residents; the sole remedy was to seek to modify the utility's exclusive franchise. Town Of Rogersville ex rel. Rogersville Water Comm'n v. Mid Hawkins County Util. Dist., 122 S.W.3d 137, 2003 Tenn. App. LEXIS 411 (Tenn. Ct. App. 2003), appeal denied, — S.W.3d —, 2003 Tenn. LEXIS 1236 (Tenn. 2003).

Utility district was not protected from encroachment by a town if the town was able to establish that public convenience and necessity required other or additional services under T.C.A. § 7-82-301(a). Town Of Rogersville ex rel. Rogersville Water Comm'n v. Mid Hawkins County Util. Dist., 122 S.W.3d 137, 2003 Tenn. App. LEXIS 411 (Tenn. Ct. App. 2003), appeal denied, — S.W.3d —, 2003 Tenn. LEXIS 1236 (Tenn. 2003).

T.C.A. § 7-82-301(a)(1)(B) did not prohibit a utility's condemnation of land outside the utility's boundaries to build a water tank because (1) T.C.A. § 7-82-302(a)(1) gave the district the power to conduct, operate and maintain a system for furnishing water services, including the authority to construct, reconstruct, improve, maintain, and operate such systems, (2) the construction did not conflict with another district's rights to exclusively provide services in that district's territory, and (3) trial testimony showed that, in constructing the tank, the district did not intend to violate the other district's rights in T.C.A. § 7-82-301(a)(1)(B), so the construction did not exceed the district's powers in T.C.A. § 7-82-304. West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. App. LEXIS 288 (Tenn. Ct. App. Apr. 26, 2016), appeal denied, West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. LEXIS 690 (Tenn. Sept. 22, 2016).

6. Services.

Even though court was without jurisdiction to detach territory from one utility district and add it to another, supreme court would remand suit to allow amendment of complaint for purpose of allowing proof as to whether utility district was rendering adequate services. Consolidated Gray-Fordtown-Colonial Heights Utility Dist. v. O'Neill, 209 Tenn. 342, 354 S.W.2d 63, 1962 Tenn. LEXIS 364 (1962).

Where evidence did not establish that garbage disposal district had failed to render adequate services or that petitioner for modification of franchise could supply garbage collection services county judge (now county mayor) was without power to modify franchise or grant petitioner authority to collect garbage within the district. Pace v. Garbage Disposal Dist., 54 Tenn. App. 263, 390 S.W.2d 461, 1965 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1965).

Chancery court properly dismissed a public utility's complaint for, inter alia, a declaratory judgment for lack of subject matter jurisdiction because, while the utility had the right to provide water service, the gravamen of its complaint was to maintain its exclusive franchise by prohibiting a developer and a competitor from providing water service where the utility's averments were ostensibly an appeal of the PUC's refusal to issue a declaratory order—that the competitor was a “public utility” and was illegally operating without a certificate of public convenience—and the PUC lacked authority to grant certificates of public conveniences or to eject a competitor from an exclusive service area. Milcrofton Util. Dist. of Williamson Cty. v. Non Potable Well Water, Inc., — S.W.3d —, 2019 Tenn. App. LEXIS 227 (Tenn. Ct. App. May 10, 2019).

7. Modification of Franchise.

In multi-county district jurisdiction to determine whether public convenience and necessity requires the exclusive right of utility district to furnish services to be revoked rests in the tribunal that was authorized by law to grant and did grant the petition for incorporation, i.e., the panel of county judges or chairs (now county mayors) provided by law. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

8. —Review.

Action of county judge (now county mayor) in granting modification of district's exclusive franchise was appealable to circuit court where it was reviewable as the action of an administrative body and would be sustained if supported by material evidence. Pace v. Garbage Disposal Dist., 54 Tenn. App. 263, 390 S.W.2d 461, 1965 Tenn. App. LEXIS 273 (Tenn. Ct. App. 1965).

9. Municipality in Proprietary Capacity.

A city operates its utilities in a proprietary or individual capacity and not in its legislative or governmental capacity. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

A contract made by a city in the course of its operation of a utility is in its proprietary capacity. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

The governing body of a municipal corporation, or a municipal board or officer having authority to contract, may bind successors in office by a contract made in the exercise of proprietary or business powers, but may not by contract prevent or impair the exercise by successors of legislative functions or governmental discretionary powers. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

It has been held that state laws permitting a municipality to contract in its proprietary capacity suspend the municipality's power to regulate rates during the contract period. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

As a “municipality” operating its utility in a proprietary or individual capacity, the rules that control a private individual or corporate business generally apply. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

7-82-302. Power to operate utilities.

    1. Any district heretofore or hereafter created under authority of this chapter is empowered to conduct, operate and maintain a system or systems for the furnishing of water, sewer, sewage disposal, natural gas, natural gas storage and related facilities, liquefied natural gas storage and related facilities, liquid propane gas storage and related facilities and other gaseous storage and related facilities, artificial gas, police, fire protection, garbage collection and garbage disposal, street lighting, parks and recreational facilities, transit facilities, transmission of industrial chemicals by pipeline to or from industries or plants located within the boundary of the district, transmission of natural gas by pipeline from one (1) or more wells or other sources of natural gas, or from one (1) or more collection points of natural gas located within or without the district, but in no event more than five (5) miles beyond the boundary of the district to one (1) or more utilities, “utilities” to include natural gas transportation pipelines, industries, or plants located within or without the district, but in no event more than one hundred (100) miles beyond the boundary of the district, community antenna television service, except for community antenna television service in counties having a population of more than sixty thousand (60,000) but less than sixty thousand one hundred (60,100), according to the 1960 federal census or any subsequent federal census, or two (2) or more of such systems, and to carry out such purpose it shall have the power and authority to acquire, construct, reconstruct, improve, better, extend, consolidate, maintain and operate such system or systems, within or without the district, and to purchase from, and furnish, deliver and sell to any municipality, the state, any public institution and the public, generally, any of the services authorized by this chapter.
    2. Powers relating to garbage disposal shall include the power of one (1) or more utility districts, acting individually or jointly, to engage in the conversion of garbage into steam power. In connection with the construction, financing, operation or maintenance of a facility for converting garbage into steam power, a utility district shall have the same power and authority as a municipality has under § 7-54-103(d) in connection with energy production facilities, and shall comply with the requirements set out in § 7-54-110, it being the intent of the general assembly to further the energy and environmental objectives of Acts 1983, chapter 226 and title 68, chapter 211.
    3. Powers relating to natural gas shall include the power to own and operate natural gas vehicle fueling stations; provided, that no utility district is authorized to franchise the operation of any such natural gas vehicle fueling station to another entity; provided, further, that subdivision (a)(1)(B) shall not prohibit nor in any way be construed to prohibit any other person, firm or corporation from owning and operating a natural gas vehicle fueling station within the area embraced by the district.
    4. Powers relating to natural gas include the power to sell any appliance or heating system, or set of appliances, that have a natural gas or propane gas component, and to facilitate those sales by installment payment plans and financing to customers. Incentives plans that include financing to home builders and contractors are also authorized. Transactions with customers may provide for periodic payments for appliances and heating to be added to customer monthly service billing statements. Natural gas providers may terminate utility service upon non-payment of these transactions in accordance with policies adopted by the utility's governing board.
    5. Powers relating to natural gas include the power, together with all powers incidental to that power or necessary for the performance of that power, acting by resolution of its governing body to purchase natural gas by contract or other agreement from a public corporation that is created under the authority of a contiguous state and that is similar to an energy acquisition corporation, as defined in § 7-39-102. A utility district has the power to enter into a contract or arrangement, including contracts to take or pay for any gas or gas substitutes, with such a public corporation created under the authority of a contiguous state. The contract or arrangement must contain the terms, covenants, representations, warranties, provisions, and duration as the governing body of the utility district determines.
    6. Powers relating to water, sewer, and natural gas services include the power for utility districts to enter into agreements with companies to provide water, sewer, or natural gas leak protection bill coverage, insurance, or service agreements for customers and to offer their customers water line, sewer line, or natural gas line damage protection coverage, insurance, or service agreements for customer-owned water, sewer, or natural gas lines. Utility districts may include the costs for the coverage, insurance, or service agreements on the monthly utility bills of their customers. As used in this subdivision (6), “utility districts” includes any utility district created pursuant to this chapter or any public or private act and any water or sewer authority created by any public or private act.
  1. With respect to the conduct and operation of a police protection system, nothing contained in this chapter shall be construed as meaning or intending any encroachment upon the police powers of the sheriff of any county in this state, but shall only empower the district to conduct and operate such police protection system when it is enabled to do so through legal arrangements with the sheriff of the county, and other constituted authorities, in a manner consistent with all provisions of the Constitution of Tennessee. The inclusion of the power of conducting and operating a police protection system as one of the purposes for which a district may be created shall not in anywise affect the validity of this section, the general assembly hereby expressly declaring its purpose to enact the remainder of this section without the provision contained in this section authorizing the conduct and operation of a police protection system, if the inclusion of such provision should be held to be invalid.
  2. “Transit facilities” means all real and personal property needed to provide public passenger transportation by means of trolley coach, bus, motor coach, or any combination of trolley coach, bus, and motorcoach, including terminal, maintenance and storage facilities.
  3. Community antenna television service shall be limited to all practices permitted by rules and regulations promulgated from time to time by the federal communications commission. This provision shall not apply to counties having populations over six hundred thousand (600,000), according to the 1970 federal census or any subsequent federal census. Such community antenna television service shall include the right to acquire and hold such real and personal property as may be needed to accomplish this subsection (d).
    1. Districts created on or after July 1, 1967, shall be empowered to furnish only those services stated in the order creating the district. Districts incorporated before July 1, 1967, shall be authorized to furnish only the services being furnished on that date, or that shall be furnished by facilities to be constructed from the proceeds of bonds issued not later than July 1, 1968. Supplemental petitions for authority to furnish other services contained in this section may be addressed to the county mayor, who shall give notice and hold hearings on such petitions in the same manner, on the same issues, and under the same conditions as for original incorporation.
    2. A supplemental petition shall be filed with the utility management review board simultaneously with the filing of the petition with the county mayor or county mayors but is not subject to approval or disapproval by the utility management review board as set forth in §§ 7-82-201(a) and 7-82-202(a). In the order granting a supplemental petition, the county mayor or mayors may exclude territory within the district's boundaries that is already receiving the service sought to be furnished by the district from the grant of authority to the district to provide such service under this subsection (e).
    1. A system or facilities for “the transmission of industrial chemicals by pipeline,” as used in this section, means and includes facilities or a system used or useful in the transmission by pipeline of industrial chemicals and related commodities, in liquid, gaseous, or solid form, including raw materials, processed products, or by-products, to or from plants or industries located within the boundary of the district, on an individual basis, or in company with other plants, and to or from docks, terminals or tank farms located within or without the boundary of the district, but within the same county. Such system or facilities include, but are not limited to, the pipelines, docks, terminals, tank farms, compressor stations, storage and temperature treatment facilities, rights-of-way, and together with all real and personal property and equipment appurtenant to, or useful in connection with, such facilities.
    2. Before any district shall be authorized to conduct, operate or maintain such system or facilities for transmission of industrial chemicals by pipeline, as provided in this section, the board of commissioners of the district, whether previously installed in such office or nominated only, shall submit a petition signed in their own names to the county mayor in which the order approving the creation of the district was or shall be entered, whereupon the county mayor shall, upon notice published, as provided by § 7-82-202, and public hearing, determine whether or not the project so proposed shall promote industry and develop trade to provide against low employment, and enter an order so finding.
    3. On the issue of whether or not industry, trade and employment shall be so promoted and developed, the county mayor shall take into consideration the plants proposed to be served by the facilities for transmission of industrial chemicals by pipeline, but no project so proposed to be undertaken shall be found not to promote and develop industry, trade and employment for either of the following reasons:
      1. That the project shall provide service for a single plant; or
      2. That the project shall serve to maintain existing industry and employment rather than encourage new industry and additional employment.
    4. Any party in interest, including any subscriber to existing services of the district, shall have the right of appeal from the order as provided by § 7-82-204, but no consent to the undertaking of such district services by any number of existing subscribers shall be required, notwithstanding § 7-82-303.
  4. Incorporated cities and towns having a population of five thousand (5,000) or more shall have the prior right as respects utility districts to extend water, sewer or other utilities in any territory within five (5) miles of their corporate limits; where an incorporated city or town has a population of less than five thousand (5,000), the limit shall be three (3) miles; provided, that this provision shall not apply within the boundaries of a utility district or to facilities heretofore extended by a utility district beyond its boundaries; and provided, further, that a utility district may extend water, sewer or other utility facilities into such an area through agreement with the city or town concerned. A city or town shall lose its prior right under the following conditions:
    1. Where an agreement cannot be reached, the utility district, by a resolution setting out the area to be served and the type of utility, shall notify the city or town of its intention to serve the area;
    2. After receipt of such notice, the city or town shall have sixty (60) days in which to adopt an appropriate ordinance or resolution determining to serve the area within a specified time. The utility district may, within ten (10) days, appeal to the county mayor of the county in which the major part of the land area is located if it considers the time so determined is too long, whereupon the county mayor after hearing both parties, shall determine a reasonable time for the city or town to provide the services, and further appeal may be taken by either party as provided in § 7-82-204; and
    3. Upon failure of the city or town to provide the services within the time so determined, the utility district shall be authorized to serve any part of the area not already served by the city or town.
    1. A system or facilities for “the transmission of natural gas by pipeline,” as used in this section, means and includes facilities or a system used or useful in the transmission by pipeline of natural gas from one (1) or more wells or other sources of natural gas or from one (1) or more collection points of natural gas located within or without the district, but in no event more than five (5) miles beyond the boundary of the district, to one (1) or more utilities, plants or industries located within or without the district, but in no event more than one hundred (100) miles distant from the boundary of the district; provided, that a portion of the system or facilities shall be located within the boundary of the district. Such system or facilities shall include, but not be limited to, pipelines, collection facilities, terminal facilities, rights-of-way and all real and personal property, including machinery and equipment, appurtenant to, or useful in connection with, such system or facilities.
    2. No district shall be authorized to conduct, operate or maintain such system or facilities for transmission of natural gas by pipeline, as provided in this section, unless the board of commissioners of the district, whether previously installed in such office or nominated only, shall submit a petition signed in their own names to the county mayor in which the order approving the creation of the district was or shall be entered, and the county mayor shall, upon notice published as provided by § 7-82-202 and public hearing, determine either that the project so proposed shall promote commerce, preserve the natural resources, or aid in the prevention of environmental pollution, and enter an order so finding.
    3. On the issue of whether or not such purpose or purposes shall be so promoted, preserved or aided, the county mayor shall take into consideration the utilities, plants or industries proposed to be served by the facilities for transmission of natural gas by pipeline, but no project so proposed to be undertaken shall be found not to promote commerce, preserve the natural resources, or aid in the prevention of environmental pollution for the reason that the project shall provide service for a single utility, plant or industry.
    4. Any party in interest, including any subscriber to existing services of the district, shall have the right of appeal from the order as provided by § 7-82-204, but no consent to the undertaking of such district services by any number of existing subscribers shall be required, notwithstanding § 7-82-303.
  5. Section 7-82-501, authorizing the issuance of revenue bonds for the purpose of constructing, acquiring, reconstructing, improving, bettering or extending any facility or system authorized by this chapter, is hereby made applicable to any district undertaking to exercise the power conferred by this section to conduct, operate and maintain a system or facilities for the transmission of industrial chemicals or natural gas by pipeline.
  6. Any district providing propane gas service on April 15, 1998, is empowered to provide such service within the county or counties in which it is providing service on that date without any further proceedings before or approvals of any county mayor, the utility management review board or any other person or agency; provided, that the authorization contained in this subsection (j) shall not preclude any other person, firm or corporation, public or private, from furnishing propane gas service within the area served by the district. Any such utility district is further empowered to sell or dispose of its propane gas service operation, in whole or in part.

Acts 1937, ch. 248, § 5; 1947, ch. 76, § 2; C. Supp. 1950, § 3695.30; Acts 1951, ch. 262, § 2; 1957, ch. 128, § 1; 1959, ch. 166, § 2; 1961, ch. 216, § 1; 1963, ch. 98, § 1; 1963, ch. 372, § 1; 1965, ch. 87, §§ 2-4; 1965, ch. 182, § 1; 1968, ch. 529, § 3; 1974, ch. 722, §§ 1-3; 1977, ch. 214, § 1; 1978, ch. 892, § 1; modified; impl. am. Acts 1978, ch. 934, §§ 16, 22, 36; modified; T.C.A. (orig. ed.), § 6-2608; Acts 1984, ch. 796, § 2; 1998, ch. 977, § 1; 2003, ch. 90, § 2; 2005, ch. 485, § 1; 2009, ch. 316, § 1; 2009, ch. 472, § 1; 2017, ch. 129, § 8; 2018, ch. 746, § 1; 2019, ch. 228, § 3.

Compiler's Notes. For codification of Acts 1983, ch. 226, see Disposition of Acts Table in Volume 13.

For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2017 amendment added (a)(4).

The 2018 amendment added (a)(5).

The 2019 amendment added (a)(6).

Effective Dates. Acts 2017, ch. 129, § 15. April 17, 2017.

Acts 2018, ch. 746, § 2. April 18, 2018.

Acts 2019, ch. 228, § 4. April 30, 2019.

Cross-References. Extension of service outside district, § 7-51-401.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7; 25 Tenn. Juris., Water Companies and Waterworks, § 5.

Law Reviews.

Political Subdivisions Versus Employers: Does Jurisdiction of NLRB Extend to Public Utility Districts? (Robert Schneider), 1 Mem. St. U.L. Rev. 347 (1971).

Attorney General Opinions. Constitutionality of private act creating water and wastewater authority, OAG 97-103, 1997 Tenn. AG LEXIS 100 (7/28/97).

A utility district is authorized to extend water mains and sewer lines using its own funds in order to increase customer load and promote development in its service area, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

It is within a district's authority to change its policy to allow extension of water mains and sewer lines using its own funds without requiring a developer or customer requesting the service to pay the full cost of the extensions, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

A utility district is authorized to adopt and enforce a written extension policy that allows it to expend a portion of its own funds on each requested extension of water mains and sewer lines based on reasonable economic factors, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

A utility district is authorized to adopt and enforce a written extension policy that provides a two-tier approach whereby developers of subdivisions and other service requesters who require less than a minimum number of taps are required to pay for the entire cost of the extension, while other, larger extension requests that involve more than the minimum number of taps are paid in part by the developer and in part by the district based on reasonable economic factors, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

A utility district is authorized to expend its own funds to extend utility lines and mains to a newly established industrial park in anticipation of future development activity related to such extension, even if the project is speculative with no actual customers requesting service at the time of the extension, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

A utility district is authorized to contribute funds to its local chamber of commerce, its county government, or its county's nonprofit economic development corporation for economic development activities aimed at increasing development in the district's service area in anticipation of increasing its customer base and service loads, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

Several utility districts may establish a not for profit corporation as part of an interlocal cooperative agreement for a joint exercise of their powers; whether a district is authorized to support the activities in which the corporation will engage depends on whether its support is necessary or requisite to its authority to own, operate, develop, and maintain a utility district, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

Whether a utility district may voluntarily pay a higher rate of dues than regular members for membership in a jointly formed organization to promote economic development activities depends on specific facts and circumstances, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

Whether a utility district is authorized to incur expenses, and to pay such expenses from its funds, directly related to its recruitment of new industry or commercial development prospects that might increase the service load on the district's system and thereby strengthen the economic operation of the system depends on specific facts and circumstances, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

NOTES TO DECISIONS

1. Constitutionality.

Private propane dealer failed to show that addition of subsection (j) of this section violated due process or equal protection principles where there was no allegation that the legislature enacted the amendment, at least in part, to discriminate against private propane dealers, and discrimination against private propane dealers was not apparent on the face of the amendment. National Gas Distribs. v. Sevier County Util. Dist., 7 S.W.3d 41, 1999 Tenn. App. LEXIS 452 (Tenn. Ct. App. 1999), review or rehearing denied, — S.W.3d —, 1999 Tenn. LEXIS 649 (Tenn. 1999).

2. Right to Question Constitutionality.

The constitutionality of the chapter could not be attacked by the state and county taxing authorities on the ground that this section provides that the district may extend itself beyond its corporate boundaries where there was no showing that such an extension had in fact been made or that such an extension could militate to the disadvantage of the state and county taxing authorities in the discharge of their duties. First Suburban Water Utility Dist. v. McCanless, 177 Tenn. 128, 146 S.W.2d 948, 1940 Tenn. LEXIS 19 (1941).

Private propane dealer lacked standing to challenge amendment of this section adding subsection (j) based on the claim that the amendment treated public utility districts differently. National Gas Distribs. v. Sevier County Util. Dist., 7 S.W.3d 41, 1999 Tenn. App. LEXIS 452 (Tenn. Ct. App. 1999), review or rehearing denied, — S.W.3d —, 1999 Tenn. LEXIS 649 (Tenn. 1999).

3. Exclusive Franchise.

Where city carried on a water line operation outside city limits under private contracts, as setting variable rates between individuals in the area and reserving right to discontinue service in a water shortage, it has no franchise sufficient to entitle it to question an exclusive right given to a water district. Johnson City v. Milligan Utility Dist., 38 Tenn. App. 520, 276 S.W.2d 748, 1954 Tenn. App. LEXIS 138 (Tenn. Ct. App. 1954).

4. Right to Furnish Services.

Ellendale utility district was entitled to furnish water to subdivision located outside but near its limits and within five miles of city of Memphis and within three miles of town of Bartlett (population less than 5,000) only if city of Memphis which had first right and town of Bartlett which had second right both elected not to provide such services. Bartlett v. Beaty, 59 Tenn. App. 406, 440 S.W.2d 831, 1967 Tenn. App. LEXIS 262 (Tenn. Ct. App. 1967).

T.C.A. § 7-82-301(a)(1)(B) did not prohibit a utility's condemnation of land outside the utility's boundaries to build a water tank because (1) T.C.A. § 7-82-302(a)(1) gave the district the power to conduct, operate and maintain a system for furnishing water services, including the authority to construct, reconstruct, improve, maintain, and operate such systems, (2) the construction did not conflict with another district's rights to exclusively provide services in that district's territory, and (3) trial testimony showed that, in constructing the tank, the district did not intend to violate the other district's rights in T.C.A. § 7-82-301(a)(1)(B), so the construction did not exceed the district's powers in T.C.A. § 7-82-304. West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. App. LEXIS 288 (Tenn. Ct. App. Apr. 26, 2016), appeal denied, West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. LEXIS 690 (Tenn. Sept. 22, 2016).

Collateral References.

Power of municipal corporation, as adjunct of public utility service furnished by it, to sell to consumers equipment necessary or convenient for use of the service. 108 A.L.R. 1454.

Power of municipal corporations to extend its services beyond corporate limits. 49 A.L.R. 1239, 98 A.L.R. 1001.

Right of municipality to refuse services provided by it to resident for failure to pay for other unrelated services. 60 A.L.R.3d 714.

7-82-303. Subscribers' consent to new services.

No utility district created prior to March 4, 1947, under the terms and provisions of this chapter, shall undertake to render or obligate itself to render services other than those for the furnishing of water, sewer, sewage disposal, fire protection, natural gas or artificial gas, unless and until it shall first have obtained the consent in writing of subscribers representing seventy-five percent (75%) in number of the total subscribers to the existing services furnished by the utility district at the time such written consents are obtained. The determination by the board of commissioners of any such district as to the percentage represented by the written consent of such subscribers shall be conclusive, that no such district may furnish natural gas service to any area now actually served by a private company.

Acts 1937, ch. 248, § 5; 1947, ch. 76, § 2; C. Supp. 1950, § 3695.31 (Williams, § 3695.30); Acts 1951, ch. 262, § 2; T.C.A. (orig. ed.), § 6-2609.

7-82-304. Powers in carrying out purposes.

  1. Any district created pursuant to this chapter has the power to:
    1. Sue and be sued;
    2. Have a seal;
    3. Acquire by purchase, gift, devise, lease or exercise of the power of eminent domain or other mode of acquisition, hold and dispose of real and personal property of every kind within or without the district, whether or not subject to mortgage or any other liens;
    4. Make and enter into contracts, conveyances, mortgages, deeds of trust, bonds or leases;
    5. Incur debts, borrow money, issue negotiable bonds and provide for the rights of holders of such bonds;
    6. Fix, maintain, collect and revise rates and charges for any service;
    7. Pledge all or any part of its revenues;
    8. Make such covenants in connection with the issuance of bonds, or secure the payment of bonds, that a private business corporation can make under the general laws of the state, notwithstanding that such covenants may operate as limitations on the exercise of any power granted by this chapter;
    9. Use any right-of-way, easement or other similar property right necessary or convenient in connection with the acquisition, improvement, operation or maintenance of a utility, held by the state or any political subdivision of the state; provided, that the governing body of such political subdivision shall consent to such use;
    10. Issue, by resolution adopted by the governing body in accordance with the requirements of this chapter, interest-bearing bond anticipation notes for all purposes for which bonds can be legally authorized and issued by such district. Such notes shall be secured by the proceeds from the sale of the bonds in anticipation of which such notes are issued and additionally secured by a lien upon the revenues of the district on a parity with the bonds in anticipation of which such notes are issued. In no event shall the amount of outstanding bond anticipation notes exceed the principal amount of the bonds to be issued by the district. The notes shall mature not later than three (3) years from their date of issuance or upon delivery of the bonds in anticipation of which such notes were issued, whichever is earlier, and shall bear interest at such rate or rates as shall be provided in the resolution authorizing the notes. The notes shall be executed in the name of the district by the proper officials authorized to execute the notes, together with the seal of the district attached to the notes, and all such notes shall be sold for not less than par and accrued interest; the proceeds arising from the sale of such notes shall be paid to the proper official to be disbursed by such official as provided by the resolution authorizing the issuance of the notes. Included within the term “bond anticipation notes” shall be interim certificates or other temporary obligations that may be issued by the district to the purchaser of such bonds upon the terms and conditions provided in this section. Whenever any district shall issue bond anticipation notes or interim certificates pursuant to this section, neither the principal of nor the interest on such notes or certificates shall be taxed by the state or by any county, or by any municipality in this state. The authority granted in this section to issue bond anticipation notes shall also authorize the issuance of grant anticipation notes, to be secured by the grant in anticipation of which such notes are issued, with all provisions of this subdivision (a)(10) being applicable to such grant anticipation notes;
    11. Act jointly with one (1) or more other utility districts, municipalities, or counties of the state to exercise jointly any of the powers granted by this chapter, contract with such entities as to the manner of exercise of each entity's internal powers, such as the determination of rates, tariffs, rules and regulations, and jointly contract with the state, the United States, or any agency of either such government; and
      1. Provide funding to chambers of commerce and economic and community organizations pursuant to a resolution adopted by the governing body in accordance with the requirements of this chapter;
      2. The authority to provide funding granted under subdivision (a)(12)(A) applies only to natural gas utility districts that serve customers in counties with the following populations, according to the 1990 federal census or any subsequent federal census:

        not less than  nor more than

        16,300 16,650

        29,100 29,400

        33,010 33,500

        35,075 35,200

        44,500 45,000

        51,000 51,300

        68,100 68,400

    1. In addition to the authority granted under otherwise applicable law, a utility district created under this chapter, or any private act of the general assembly, upon the adoption of a resolution by its board of commissioners, may accept and distribute excess receipts for bona fide charitable purposes pursuant to programs approved by the board of commissioners, which programs may include, but are not limited to, programs in which utility bills are rounded up to the next dollar when the amount of any excess receipt due to rounding is shown as a separate line on the utility bill.
    2. Excess receipts accepted by a utility district pursuant to programs authorized by subdivision (b)(1) are not considered revenue to the utility district, and the utility district may only use the excess receipts for charitable purposes.
    3. For purposes of this subsection (b):
      1. “Charitable purpose” means a purpose that provides relief to the poor or underprivileged, advances education or science, addresses community deterioration, provides community assistance, assists in economic development, provides for the erection of public buildings, monuments, or works, assists in historic preservation, or promotes social welfare through nonprofit or governmental organizations designed to accomplish any of the purposes set forth in this subdivision (b)(3). This section prohibits discrimination by a utility district in the distribution of excess receipts for bona fide charitable purposes to organizations whose mission is to assist persons regardless of their race, color, creed, religion, national origin, gender, disability, or age; and
      2. “Opt-out basis” means automatically enrolling customers in a program and requiring notice from the customer of a desire to be removed from the program in order to cease participation in the program.
      1. A utility district that establishes a program authorized by subdivision (b)(1) on or after January 1, 2021, shall not enroll any customer into the program without the express consent of the customer.
      2. A customer who is enrolled in a program authorized by subdivision (b)(1) may opt out of the program by providing notice to the utility district of the customer's desire to cease participation in the program.
      3. Upon receiving an opt-out notice from a customer, the utility district shall remove the customer from enrollment in the program no later than the first day of the customer's next regular billing cycle that begins no fewer than thirty (30) days after the date of the customer's opt-out notice.
      1. Any utility district that on June 3, 2019, utilizes a program authorized by subdivision (b)(1) and operates the program on an opt-out basis shall send a written notice to each utility district customer no later than November 1, 2020, that contains, but is not limited to, the following information:
        1. A statement that the utility district utilizes a program authorized by subdivision (b)(1), the program is operated on an opt-out basis, and a description of the program;
        2. Notification that a customer whose bill is currently rounded up by the utility district has the right to opt out of participation in the program; and
        3. Contact information for the utility district and instructions on how the customer may contact the utility district to opt out of participation in the program.
      2. The written notice required by this subdivision (b)(5) may be provided to the customer by electronic means and may accompany a regular billing statement, at the discretion of the utility district.
      3. A utility district that on June 3, 2019, utilizes a program authorized by subdivision (b)(1) and operates the program on an opt-out basis that fails to send the notice required by this subdivision (b)(5) shall, on and after January 1, 2021, cease operating the program on an opt-out basis and shall not operate a program unless operated in compliance with subdivision (b)(4).
    4. Any utility district that utilizes a program authorized by subdivision (b)(1) and that maintains a website that is accessible by the general public shall publish in a conspicuous location on the website by November 1, 2020, and throughout the duration of the utility district's utilization of the program, the following information:
      1. A statement that the utility district utilizes a program authorized by subdivision (b)(1) and a description of the program;
      2. Notification that a customer whose bill is currently rounded up by the utility has the right to opt out of participation in the program; and
      3. Contact information for the utility and instructions on how the customer may contact the utility to opt into or out of participation in the program.

Acts 1937, ch. 248, § 7; C. Supp. 1950, § 3695.33 (Williams, § 3695.32); Acts 1978, ch. 725, § 1; T.C.A. (orig. ed.), § 6-2610; Acts 1982, ch. 616, § 1; 1984, ch. 796, § 2; 1986, ch. 607, § 1; 1993, ch. 153, § 1; 1995, ch. 73, § 1; 1999, ch. 142, § 1; 2003, ch. 181, § 2; 2005, ch. 426, § 1; 2016, ch. 780, § 1; 2019, ch. 508, § 4.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2016 amendment amended the population table in (a)(12)(B) by adding  “44,500”  under “not less  than” and adding “45,000”  under “nor more than”.

The 2019 amendment rewrote (b), which read: “(1)  In addition to the authority granted under otherwise applicable law, a utility district created under this chapter, or any private act of the general assembly, upon the adoption of a resolution by its board of commissioners, has the power to accept and distribute voluntary contributions for bona fide charitable purposes pursuant to programs approved by the board of commissioners, which programs may include, but shall not be limited to, programs in which utility bills are rounded up to the next dollar when such contribution is shown as a separate line on the utility bill. (2)  Contributions accepted by a utility district pursuant to programs authorized by subdivision (b)(1) shall not be considered revenue to the utility district, and such contributions shall be used only for charitable purposes. (3)  For purposes of this subsection (b), a “charitable purpose” is one that provides relief to the poor or underprivileged, advances education or science, addresses community deterioration, provides community assistance, assists in economic development, provides for the erection of public buildings, monuments or works, assists in historic preservation, or promotes social welfare through nonprofit or governmental organizations designed to accomplish any of the purposes set forth in this subdivision (b)(3). This section prohibits discrimination by a utility district in the distribution of voluntary contributions for bona fide charitable purposes to organizations whose mission is to assist persons regardless of their race, color, creed, religion, national origin, gender, disability or age.”

Effective Dates. Acts 2016, ch. 780, § 2. April 12, 2016.

Acts 2019, ch. 508, § 6. June 3, 2019.

Cross-References. Fiscal practices, municipal utility systems, § 7-34-115.

Powers of cooperative, § 65-25-105.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7; 21 Tenn. Juris., Public Service Commissions, § 3; 25 Tenn. Juris., Water Companies and Waterworks, § 4.

NOTES TO DECISIONS

1. Construction.

Every utility district organized under Tennessee law is both empowered to fix and revise all its rates and charges and required to maintain the amounts of such rates and charges so they will always be adequate not only to maintain its system but also to pay when due all bonds and interest thereon, including reserves therefor. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

The powers granted under T.C.A. § 7-82-304 are general corporate powers necessary for the transaction of the district's business. The exercise of these powers is, however, limited by the heading of this section “Powers in carrying out purposes.” Those powers granted under T.C.A. § 7-82-305 can be exercised only in furtherance of the purposes for which the district was created. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

Pursuant to this section, T.C.A. §§ 7-82-306 and 7-82-309, a district, acting by and through its board of commissioners has, in addition to the powers peculiar to the providing of utilities to the public, the general power to acquire, hold, use, encumber, and sell real and personal property, enter into contracts and perform in accordance with the terms thereof, protect and enforce its rights by suits in court, and otherwise do all acts incident to the development and operation of a public utility. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

2. Purpose.

A utility district is not created for the purpose of conveying itself out of existence. The power to sell all its assets and its system to a private enterprise is, therefore, not an expressed or implied power of a utility district. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

The power to develop and operate a public utility does not include the power to sell the system and terminate the corporate existence of the district. Disposal of all corporate assets of the district is contrary to, and in violation of, the duty to operate the district for the benefit of the district's customers. Under the Utility District Law of 1937, the obligation to operate the system can be avoided only by consolidation or merger with another utility district or transfer of the system to a municipality or a county. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

3. Municipality in Proprietary Capacity.

A city operates its utilities in a proprietary or individual capacity and not in its legislative or governmental capacity. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

As a “municipality” operating its utility in a proprietary or individual capacity, the rules that control a private individual or corporate business generally apply. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

A contract made by a city in the course of its operation of a utility is in its proprietary capacity. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

The governing body of a municipal corporation, or a municipal board or officer having authority to contract, may bind successors in office by a contract made in the exercise of proprietary or business powers, but may not by contract prevent or impair the exercise by successors of legislative functions or governmental discretionary powers. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

It has been held that state laws permitting a municipality to contract in its proprietary capacity suspend the municipality's power to regulate rates during the contract period. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

4. Bankruptcy.

These delegations are sufficient to encompass the power to invoke the aid of the federal bankruptcy courts. In re Pleasant View Utility Dist., 24 B.R. 632, 1982 Bankr. LEXIS 3350 (Bankr. M.D. Tenn. 1982).

5. Eminent Domain.

T.C.A. § 7-82-301(a)(1)(B) did not prohibit a utility's condemnation of land outside the utility's boundaries to build a water tank because (1) T.C.A. § 7-82-302(a)(1) gave the district the power to conduct, operate and maintain a system for furnishing water services, including the authority to construct, reconstruct, improve, maintain, and operate such systems, (2) the construction did not conflict with another district's rights to exclusively provide services in that district's territory, and (3) trial testimony showed that, in constructing the tank, the district did not intend to violate the other district's rights in T.C.A. § 7-82-301(a)(1)(B), so the construction did not exceed the district's powers in T.C.A. § 7-82-304. West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. App. LEXIS 288 (Tenn. Ct. App. Apr. 26, 2016), appeal denied, West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. LEXIS 690 (Tenn. Sept. 22, 2016).

Collateral References.

Right of municipality to refuse services provided by it to resident for failure of resident to pay for other unrelated services. 60 A.L.R.3d 714.

7-82-305. Eminent domain.

Any district has the power to condemn either the fee, or such right, title interest, or easement in the property, as the board may deem necessary for any of the purposes mentioned in this chapter, and such property or interest in such property may be so acquired, whether or not the property or interest is owned or held for public use by corporations, associations or persons having the power of eminent domain, or otherwise held or used for public purposes; provided, that such prior public use shall not be interfered with by this use. Such power of condemnation may be exercised in the mode or method of procedure prescribed by title 29, chapter 16, or in the mode or method of procedure prescribed by any other applicable statutory provisions now in force or hereafter enacted for the exercise of the power of eminent domain; provided, that where title to any property sought to be condemned is defective, it shall be passed by decree of court. Where condemnation proceedings become necessary, the court in which such proceedings are filed shall, upon application by the district and upon the posting of a bond with the clerk of the court in such amount as the court may deem commensurate with the value of the property, order that the right of possession shall issue immediately or as soon and upon such terms as the court, in its discretion, may deem proper and just.

Acts 1937, ch. 248, § 18; mod. C. Supp. 1950, § 3695.44 (Williams, § 3695.43); T.C.A. (orig. ed.), § 6-2611.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

NOTES TO DECISIONS

1. Legislative Intent.

When the general assembly enacted this section, it intended to insure that utility districts had the right to take immediate possession of property it sought to condemn; however, the language of this section indicates that the general assembly also intended for utility districts to be subject to any other procedures that might be in effect or that might be enacted in the future. West Wilson Utility Dist. v. Ligon, 768 S.W.2d 681, 1988 Tenn. App. LEXIS 291 (Tenn. Ct. App. 1988).

2. Construction With Other Sections.

T.C.A. § 7-82-305 sets forth the availability of alternatives to the procedures of T.C.A. § 29-16-113, which requires a jury of view to determine the location and quantity of an easement, and immediate possession. First Util. Dist. of Knox County v. Jarnigan-Bodden, 40 S.W.3d 60, 2000 Tenn. App. LEXIS 468 (Tenn. Ct. App. 2000), review or rehearing denied, — S.W.3d —, 2001 Tenn. LEXIS 200 (Tenn. Mar. 5, 2001).

Trial court's denial of a jury of view as to the size and location of a utility easement was consistent with the procedure set out in T.C.A. § 29-17-803 [now T.C.A. § 29-17-903], without the need to impanel a jury pursuant to T.C.A. § 29-16-113. First Util. Dist. of Knox County v. Jarnigan-Bodden, 40 S.W.3d 60, 2000 Tenn. App. LEXIS 468 (Tenn. Ct. App. 2000), review or rehearing denied, — S.W.3d —, 2001 Tenn. LEXIS 200 (Tenn. Mar. 5, 2001).

3. Application.

Where a public service corporation caused erosion of plaintiff's realty by releasing large amounts of water daily across his land, such amounted to the taking of a property right, the remedy for which would be action under § 29-16-123, with limitation as to time to sue for damages governed by § 29-16-124, not under § 28-3-105. Murphy v. Raleigh Utility Dist., 213 Tenn. 228, 373 S.W.2d 455, 1963 Tenn. LEXIS 482 (1963).

T.C.A. § 7-82-301(a)(1)(B) did not prohibit a utility's condemnation of land outside the utility's boundaries to build a water tank because (1) T.C.A. § 7-82-302(a)(1) gave the district the power to conduct, operate and maintain a system for furnishing water services, including the authority to construct, reconstruct, improve, maintain, and operate such systems, (2) the construction did not conflict with another district's rights to exclusively provide services in that district's territory, and (3) trial testimony showed that, in constructing the tank, the district did not intend to violate the other district's rights in T.C.A. § 7-82-301(a)(1)(B), so the construction did not exceed the district's powers in T.C.A. § 7-82-304. West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. App. LEXIS 288 (Tenn. Ct. App. Apr. 26, 2016), appeal denied, West Warren-Viola Util. Dist. v. Jarrell Enters., — S.W.3d —, 2016 Tenn. LEXIS 690 (Tenn. Sept. 22, 2016).

4. Deposits.

In a condemnation proceeding instituted by a utility district, affected landowners have the right to withdraw funds placed on deposit with the court clerk pending a final decision of the case on the merits. West Wilson Utility Dist. v. Ligon, 768 S.W.2d 681, 1988 Tenn. App. LEXIS 291 (Tenn. Ct. App. 1988).

5. Right to Jury.

Landowner was not entitled to a jury to determine the location and quantity of easement sought by utility district; selecting the property to be taken, as contradistinguished from similar property in the same locality, determining its suitableness for the use for which it is proposed, as well as deciding the quantity required, are decisions that lie most properly with the condemning body. First Util. Dist. of Knox County v. Jarnigan-Bodden, 40 S.W.3d 60, 2000 Tenn. App. LEXIS 468 (Tenn. Ct. App. 2000), review or rehearing denied, — S.W.3d —, 2001 Tenn. LEXIS 200 (Tenn. Mar. 5, 2001).

Collateral References.

Construction and application of rule requiring public use for which property is condemned to be “more necessary” or “higher use” than public use to which property is already appropriated—state takings. 49 A.L.R.5th 769.

7-82-306. General implementing powers.

Any district created pursuant to this chapter shall be vested with all the powers necessary and requisite for the accomplishment of the purpose for which such district is created, capable of being delegated by the general assembly. No enumeration of particular powers created in this chapter shall be construed to impair or limit any general grant of power contained in this chapter, nor to limit any such grant to a power or powers of the same class or classes as those enumerated. The district is empowered to do all acts necessary, proper or convenient in the exercise of the powers granted in this chapter.

Acts 1937, ch. 248, § 6; C. Supp. 1950, § 3695.32 (Williams, § 3695.31); T.C.A. (orig. ed.), § 6-2612.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Depending on the facts and circumstances, including practices among other utilities, costs of reconnecting, and past problems the district may have had in collecting water service fees, a reviewing court or agency could decide that actually removing a tap from a property for nonpayment is not reasonable because the same purpose could be accomplished by simply cutting off water service; similarly, based on the facts and circumstances, a reviewing court or agency could decide that charging a reconnecting fee to a new customer where a tap has been removed or allowing a new customer to receive service only if the customer pays the delinquent water bills of the previous customer is not reasonable or is not authorized because it improperly imposes on the new customer the debts of another party; and, based on the facts and circumstances, a reviewing court or agency could decide that charging a reconnecting fee to a new customer where a tap has not been actually removed is not reasonable because it is not related to the actual cost of providing the service, OAG 02-048, 2002 Tenn. AG LEXIS 44 (4/16/02).

NOTES TO DECISIONS

1. Construction.

The vesting of the powers set forth in T.C.A. § 7-82-306 is plenary in scope, not confined to those enumerated, but is limited to those powers “necessary and requisite for the accomplishment of the purpose for which such district is created.” United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

Pursuant to T.C.A. §§ 7-82-304, 7-82-306 and 7-82-309, a district, acting by and through its board of commissioners has, in addition to the powers peculiar to the providing of utilities to the public, the general power to acquire, hold, use, encumber, and sell real and personal property, enter into contracts and perform in accordance with the terms thereof, protect and enforce its rights by suits in court, and otherwise do all acts incident to the development and operation of a public utility. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

2. Bankruptcy.

T.C.A. § 7-82-306 grants a utility district the authority to file a petition for relief under chapter 9 of the bankruptcy code. In re Pleasant View Utility Dist., 24 B.R. 632, 1982 Bankr. LEXIS 3350 (Bankr. M.D. Tenn. 1982).

3. Termination.

Clearly, a utility district is not created for the purpose of conveying itself out of existence. The power to sell all its assets and its system to a private enterprise is, therefore, not an expressed or implied power of a utility district. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

The power to develop and operate a public utility does not include the power to sell the system and terminate the corporate existence of the district. Disposal of all corporate assets of the district is contrary to and in violation of the duty to operate the district for the benefit of the district's customers. Under the Utility District Law of 1937, the obligation to operate the system can be avoided only by consolidation or merger with another utility district or transfer of the system to a municipality or a county. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

7-82-307. Commissioners — Numbers — Terms — Vacancies — Election of commissioners.

    1. Each utility district shall have three (3) commissioners, except those multi-county utility districts and utility districts having a greater number of commissioners on May 6, 2004.
      1. Each utility district shall select board members using the selection method set forth in subdivisions (a)(4) or (a)(5).
      2. The commissioners of any single-county utility district using a selection method other than appointment by a county mayor as provided in subdivision (a)(4) on May 6, 2004, shall be appointed by the county mayor unless, on July 1, 2011, or hereafter approved by the general assembly, the selection method used by a single-county utility district is a plurality vote of customers of the utility district voting in an election held by the utility district or the single-county district is located in a county with a metropolitan form of government and the selection method is by appointment by a county probate judge.
      3. No later than July 1, 2014, vacancies occurring in multi-county utility districts shall be as provided in subdivision (a)(5) or subsection (h), unless, on July 1, 2011, or hereafter approved by the general assembly, the selection method used by a multi-county utility district is a plurality vote of customers of the utility district voting in an election held by the utility district or the multi-county district is located in a county with a metropolitan form of government and the selection method is by appointment by a county probate judge.
    2. The term of office of each commissioner shall be four (4) years after the initial appointment by the county mayor to create staggered terms, except for replacement commissioners filling unexpired terms. Each member, upon expiration of such member's term, shall continue to hold office until a successor is appointed or elected and qualified.
    3. Vacancies on the board of commissioners of single-county utility districts shall be filled by appointment of the county mayor. Within sixty (60) days after the occurrence of a vacancy in the office of any commissioner caused by death, resignation, disability, or forfeiture of office, and no later than thirty (30) days prior to the expiration of the term of office of any incumbent commissioner, the board of commissioners or its remaining members shall select three (3) nominees to fill such office, in full accordance with any residential requirements that may apply to the office vacated or to be vacated, and under the seal of the board of commissioners, shall certify such list of nominees in order of preference recommended by such commissioners, to the county mayor of the county in which the utility district or its principal office is located; or of the county in which the commissioners of the district customarily meet if the district has no principal office. Within twenty-one (21) days after the issuance of any certification by the board of commissioners to the county mayor, the county mayor may enter an order either appointing one (1) of the nominees or rejecting the entire list or may refrain from taking any action, in which event the first name on the list of nominees shall be deemed appointed to fill the vacancy or new term by operation of law. Any order either appointing or rejecting a list of nominees shall be entered of record on the minutes of the county legislative body and a certified copy of the order shall be furnished to the board of commissioners and to the appointee; provided, however, that upon the rejection of any entire list of nominees by the county mayor, the board of commissioners shall, to the extent authorized in this subdivision (a)(4), submit a new non-identical list or lists of three (3) nominees to the county mayor within sixty (60) days after the date of the written request to the board of commissioners or its remaining members to submit an additional list as required in subdivision (a)(6). If the county mayor enters an order rejecting the third list of nominees within twenty-one (21) days after the submission of the third list of nominees, then the county legislative body shall appoint a commissioner from any of the three (3) lists of nominees previously submitted to the county mayor to fill the vacancy at the meeting of the county legislative body in which the mayor's order rejecting the third list of nominees is entered of record on the minutes of the county legislative body.
      1. Effective July 1, 2014, and thereafter, unless, on July 1, 2011, or hereafter approved by the general assembly, the selection method used by a multi-county utility district is a plurality vote of customers of the utility district voting in an election held by the board of commissioners of the utility district, the procedure as provided in subdivision (a)(4) for submitting nominees to the county mayor to fill a vacancy shall be followed by the board of commissioners of multi-county utility districts for the filling of vacancies occurring on the board of commissioners of such multi-county utility district, except that, the utility district's charter, bylaws, state law or prior order creating or recreating such utility district board of commissioners shall be followed to determine which county mayor is the appropriate county mayor to fill the vacancy. In certifying the list of nominees to the appropriate county mayor, the board of commissioners shall send copies of the certification to the county mayor of every county which is a part of the multi-county utility district. The original certification shall include a statement listing all counties to which copies of the certification shall be furnished to the county mayors.
      2. As provided in its charter, bylaws, state law or prior order creating or recreating the multi-county utility district, if an appointee to the board of commissioners rotates between or among the counties which are included in the multi-county utility district, then the appropriate county mayor to make the appointment shall be the county mayor in the next rotation for the appointment. If a vacancy must be filled for an unexpired term, the county mayor which made the original appointment for that commissioner shall be the appropriate county mayor to fill the appointment for the unexpired term.
      3. Except for the appointment of the commissioner which is a rotating appointment, in all multi-county utility districts, the appointee shall be a resident of the same county as the appointee's predecessor.
    4. If the first or second list is rejected in its entirety, then within fourteen (14) days following the entry of the order rejecting the entire list of nominees, the county mayor shall make a written request to the board of commissioners or its remaining members to submit an additional list in accordance with subdivision (a)(4) or (a)(5).
    5. The method of filling vacancies set forth in subdivisions (a)(2), (4) and (5) is the uniform method created by the legislature for the filling of vacancies on a utility district board of commissioners. It is the legislature's intent to create a uniform general law of statewide application for selecting utility district commissioners.
    6. At least two (2) weeks prior to the board meeting at which the board of commissioners intends to select three (3) nominees to certify to the county mayor or county mayors to fill an existing vacancy or upcoming vacancy on the utility district’s board of commissioners under subdivisions (a)(4) and (5), the utility district shall notify its customers in writing of the board’s intent to select three (3) nominees to certify to the county mayor or county mayors at such board meeting and shall invite its customers to submit the names of qualified persons to be considered for nomination to fill the vacancy. The notice shall be:
      1. Mailed to the district’s customers by including the notice on the customer’s bill or by a separate insert with the customer’s bill;
      2. Mailed to the district’s customers by including the notice in a general mailing to its customers or by a separate insert with a general mailing to its customers; or
      3. Published in a newspaper of general circulation in the county or counties in which the utility district is created or recreated.
    7. Notwithstanding any law to the contrary, the board of commissioners of a utility district excepted by subdivision (a)(2) from the uniform method created by the legislature for the filling of vacancies may, by resolution, choose to change its present method of selection to appointment by a county mayor or mayors under subdivision (a)(4) or (a)(5). Upon the filing of a certified copy of the resolution with the utility management review board, the board shall enter an order either approving or disapproving the resolution. The board shall approve the resolution upon finding that a change in the method of filling vacancies to appointment by a county mayor under subdivision (a)(4) or (a)(5) is in the best interest of the utility district and its customers. All vacancies on the utility district's board of commissioners that occur after the entry of an order approving the resolution shall be by appointment by a county mayor under subdivision (a)(4) or (a)(5). If the board enters an order disapproving the resolution, then the utility district's method of filling vacancies shall remain unchanged, and the utility district shall continue to fill vacancies under the method the utility district has been using before the adoption of the resolution.
      1. Upon the petition of at least twenty percent (20%) of the customers of a utility district to the utility management review board requesting the removal of a member or members of the utility district board of commissioners, the board shall conduct a contested case hearing on the question of whether such member or members should be removed from office and a new member or members appointed or elected. To be considered by the board, the customer or customers initiating the petition must file a letter of intent to compile and file the petition with the board before the petition is signed. All signatures of customers on the petition must have been obtained within ninety (90) days of the date the notice of intent to compile and file petition is filed with the board. The petition must contain the genuine signatures of the customers of the utility district. All information submitted in the petition must be legible. Each customer signing the petition shall include the address at which the customer receives utility service and the date the customer signed the petition. Upon receipt of the petition, the board shall verify the names and addresses of the signers of the petition to ensure that they are bona fide customers of the utility district and to ensure that all signatures have been obtained within ninety (90) days of the date the notice of intent to compile and file petition is filed with the board. As used in this subdivision (b)(1), “customer” means a person who receives a bill for utility services and pays money for such services. Each utility account shall be entitled to one (1) signature, but no person shall sign the petition more than once. Only one petition to remove a utility district commissioner under this section can be filed in any twelve-month period.
      2. Upon filing the petition as provided in this subdivision (b)(1), the petitioners shall also file a cash bond or attorney or corporate surety bond in the sum of three hundred fifty dollars ($350); the bond being made payable to the state of Tennessee. Such bond shall be for the costs of hearing and processing the petition. The bond may be refunded if the utility management review board determines that the member or members of the utility district board of commissioners that are the subject of the petition should be removed; in such instance the cost of the hearing shall be assessed against the district. The administrative judge may assess additional costs against either the petitioners or the district, in accordance with this subdivision (b)(1)(B), to cover the total cost of the hearing.
      3. For purposes of this subdivision (b)(1), “genuine signatures” means written, original signatures and excludes facsimile and electronic signatures of any kind.
      1. If the comptroller of the treasury investigates or conducts an audit of a utility district, the comptroller shall forward to the utility management review board any published investigative audit reports involving a utility district incorporated under this chapter. The board shall review those reports and may conduct a contested case hearing on the question of whether utility district commissioners should be removed from office for knowingly or willfully committing misconduct in office, knowingly or willfully neglecting to fulfill any duty imposed upon the member by law, or failing to fulfill the commissioner’s or commissioners’ fiduciary responsibility in the operation or oversight of the district.
      2. If the board concludes the member or members of the utility district board of commissioners has knowingly or willfully committed misconduct in office or has knowingly or willfully neglected to perform any duty imposed upon such member by law, or failed to fulfill the commissioner’s or commissioners’ fiduciary responsibility in the operation or oversight of the district, then the board shall issue an order removing such member from office. Any vacancy on the board of commissioners shall then be filled by the selection method used by the utility district to fill vacancies; provided, that no member of the board of commissioners ousted by order of the board shall be eligible for reappointment, reelection, or to participate in either the nomination, appointment or election of new members by the board of commissioners.
        1. If a utility district is under the jurisdiction of the utility management review board pursuant to § 7-82-701(a), then the utility management review board may initiate a contested case hearing on the question of whether a member or members of the board of commissioners of the utility district should be removed from office and a new member or members appointed or elected on the grounds that either:
          1. The utility district failed to comply with an order of the utility management review board, which shall include failing to comply with an order concerning excessive water losses;
          2. A member or members failed to fulfill the commissioner’s or commissioners’ fiduciary responsibility in the operation or oversight of the district; or
          3. A member or members of the board of commissioners of the utility district committed misconduct in connection with such office or failed to perform any duty imposed by law on such office, including taking appropriate actions pursuant to § 7-82-709(b) to reduce water loss to an acceptable level as determined by the board.
        2. Failure of a member to vote in favor of a rate structure prescribed by the utility management review board that has been adopted by the utility district does not in itself constitute grounds for removal.
      1. If the utility management review board concludes a member or members of the board of commissioners of the utility district should be removed from office for failure to comply with an order of the utility management review board or should be removed from office for committing misconduct in connection with such office or failing to perform any duty imposed by law, then the utility management review board shall issue an order removing such member or members from office. Any vacancy on the board of commissioners shall then be filled by the selection method used by the utility district to fill vacancies; provided, that no member of the board of commissioners ousted by order of the utility management review board shall be eligible for reappointment or reelection or shall participate in either the nomination, appointment or election of new members by the board of commissioners.
      2. This subdivision (b)(3) shall not be construed as limiting any civil or criminal liability of any such member of the board of commissioners or the applicability of the ouster law, compiled in title 8, chapter 47.
    1. When the member of a utility district board of commissioners is absent from four (4) consecutive regular board meetings or from one half (½) or more of the regular board meetings in a calendar year, the utility district shall report such absenteeism in writing to the county mayor of the county in which the utility district commissioner resides or is a customer and to the county mayor of the county in which the utility district's principal office is located, if different. The utility district's written report of absenteeism shall be sent to the county mayor or mayors within thirty (30) days after:
      1. The fourth consecutive unattended board meeting; or
      2. The end of the calendar year in which one half (½) or more of the regular board meetings were not attended, with a copy of such written report sent to the utility district commissioner, all such reports to be sent by certified mail.
    2. A utility district commissioner who fails to meet the training and continuing education requirements set forth in § 7-82-308 before the end of the commissioner's term of office or before the end of any extension approved by the comptroller of the treasury or the comptroller's designee shall not be eligible for reappointment or reelection to another term of office. For the purposes of this subdivision (b)(5), the continuing education period used to determine whether a utility district commissioner has met the training and continuing education requirements set forth in § 7-82-308 shall be the last full continuing education period before the utility district commissioner's term of office ends.
    3. As used in this subsection (b):
      1. “Failing to fulfill a commissioner's fiduciary responsibility” includes, but is not limited to, an action where a utility district commissioner derives a personal benefit from the underlying misconduct, breach of duty, or failure in the operation or oversight of the utility district; and
      2. “Fiduciary responsibility” means a responsibility to act with:
        1. The highest degree of honesty and loyalty towards a utility district and in the best interests of the utility district; and
        2. The utmost good faith for the benefit of the utility district when exercising the duties, powers, and authority enumerated in this chapter.
  1. When the utility management review board reviews the audited annual financial report and operations of a financially distressed utility district pursuant to § 7-82-703, and the utility district fills vacancies on its board of commissioners by a method other than appointment by a county mayor or mayors, the board may elect to hold a public hearing on the issue of whether the method of filling vacancies on the district's board should be changed. If the board elects to hold a public hearing, then the board shall conduct a contested case hearing on this issue. If the board finds that it is in the best interest of the public served by the utility district that the method of filling vacancies on the utility district's board be changed, then the board shall enter an order that provides that all future vacancies on the utility district board shall be filled by appointment of the county mayor or mayors pursuant to the procedures set forth in subdivisions (a)(4) and (5).
  2. Notwithstanding this section to the contrary, if a utility district board of commissioners fails to undertake the necessary actions as prescribed in this section to provide for the appointment or election of a new commissioner to take office upon the expiration of a term or fill a vacancy that may occur for any reason within the period of time set forth in this section, then the county mayor of the county in which such utility district was incorporated shall have the power and responsibility to make an interim appointment to such board of commissioners until such time as the proper actions required pursuant to this section have been undertaken.
  3. In implementing this section, the appointing and electing authorities that fill vacancies on utility district boards of commissioners shall give due consideration to the need for racial, gender, age and ethnic minority diversity on utility district boards of commissioners.
  4. Immediately upon indictment for misconduct in office, the indicted utility district commissioner shall be suspended from office pending the final disposition of the criminal proceeding or until the expiration of the commissioner's term of office, whichever occurs first. While suspended, an indicted commissioner shall be ineligible to receive any payments or benefits as provided in § 7-82-308(a). In a single county utility district, the county mayor of that county shall have the power and responsibility to make an interim appointment to fill the vacancy created by the suspension from office. In a multi-county utility district, the county mayor of the county in which the indicted utility district commissioner resides or is a customer shall have the power and responsibility to make an interim appointment to fill the vacancy created by the suspension from office. If the criminal proceeding against the suspended utility district commissioner has not terminated by the expiration of the term, the office will be considered vacant and be filled as provided by law. If the criminal proceeding is terminated with a finding or verdict of guilty on any of the charges on which the commissioner was indicted, then the suspension shall be made permanent, the office will be considered vacant, and the interim appointee shall serve until the office is filled as provided by law. If the criminal proceeding against the suspended utility district commissioner related to the indictment for misconduct in office is terminated by any finding, adjudication or deferral of the proceedings, including a not guilty verdict or a dismissal on the merit, the suspension of the utility district commissioner shall be removed, and the commissioner shall become eligible to serve the commissioner's office; simultaneously the county mayor's interim appointee shall cease to hold office.
    1. Notwithstanding this section or any other law to the contrary, any water utility district having less than one thousand six hundred (1,600) customers in any county having a population of not less than thirty-nine thousand nine hundred (39,900) nor more than forty thousand (40,000), according to the 2000 federal census or any subsequent federal census, shall be governed by a five-member board of utility district commissioners. No person shall be eligible for appointment as utility district commissioner unless the person is a customer of the utility district and resides within the service area of the utility district. As used in this subdivision (g)(1), “customer” means a person who is regularly billed for utility service rendered by the district and who pays money for such service.
    2. The regular term of office of each utility district commissioner shall be four (4) years. In order to establish staggered terms on the board, the three (3) incumbent commissioners serving on May 24, 2004, shall each serve an initial term of four (4) years, commencing on May 24, 2004. Thereafter, those three (3) offices shall be subject to appointment every four (4) years in accordance with the requirements and procedures set forth in this subsection (g). The initial term of office of each of the two (2) commissioners added by this subsection (g) shall be two (2) years, commencing on May 24, 2004, to be filled in accordance with the requirements and procedures set forth in this subsection (g). Thereafter, those two (2) offices shall be subject to appointment every four (4) years in accordance with the requirements and procedures set forth in this subsection (g). All unscheduled vacancies arising after May 24, 2004, shall be filled, for the remainder of the unexpired term, in accordance with the requirements and procedures set forth in this subsection (g).
    3. Within sixty (60) days after the occurrence of any vacancy in the office of any utility district commissioner caused by death, resignation, disability, or forfeiture of office, and no later than sixty (60) days prior to the expiration of the term of office of any incumbent utility district commissioner, the board of utility district commissioners or its remaining members shall select three (3) qualified nominees to fill such office for the remainder of the term or for the full term, as the case may be, and, under the seal of the board of commissioners, shall certify such list of nominees in order of preference recommended by such commissioners, to the county mayor. Within fourteen (14) days after issuance of certification by the board of commissioners to the county mayor, the county mayor shall enter an order either appointing one of the nominees or rejecting the entire list. If this or any subsequent list of nominees is not timely submitted to the county mayor, then the county mayor shall proceed to appoint a qualified person to serve on the board of utility commissioners. Any order either making an appointment or rejecting the entire list of nominees shall be entered of record on the minutes of the county legislative body, and a certified copy of the order shall be furnished to the board of utility district commissioners. However, if the entire list of nominees is rejected by the county mayor, then the board of commissioners shall select a second list consisting of three (3) other qualified nominees to fill such office and, under the seal of the board of commissioners, shall certify such second list of other nominees in order of preference recommended by such commissioners, to the county mayor within fourteen (14) days following entry of the order rejecting the first list of nominees. Within fourteen (14) days after the second issuance of certification by the board of utility district commissioners to the county mayor, the county mayor shall enter an order either appointing one of the nominees or rejecting the entire second list. Any order either making an appointment or rejecting the entire list of nominees shall be entered of record on the minutes of the county legislative body, and a certified copy of the order shall be furnished to the board of utility district commissioners. However, if the entire second list of nominees is rejected by the county mayor, then, within fourteen (14) days following entry of such order, the county mayor shall request the board of commissioners or its remaining members to submit the third and final list consisting of three (3) other qualified nominees to fill such office or, alternatively, the county mayor shall request the county legislative body to submit the third and final list consisting of three (3) other, qualified nominees to fill such office; provided, further, however, that prior to requesting a list of nominees from the county legislative body, the county mayor must file a written statement with the county legislative body setting forth the mayor's specific reasons for rejecting each of the six (6) nominees previously selected by the utility district board of commissioners or its remaining members. Such written statement shall constitute a public record and shall be available for public inspection. Within fourteen (14) days following such request, the board of utility district commissioners or the county legislative body shall select the final list consisting of three (3) other qualified nominees to fill such office and shall certify such list of additional nominees in order of preference recommended to the county mayor. Within fourteen (14) days following such certification, the county mayor shall enter an order either appointing one of the nominees or rejecting the entire final list. Any order either making an appointment or rejecting the entire list of nominees shall be entered of record on the minutes of the county legislative body, and a certified copy of the order shall be furnished to the board of utility district commissioners. If the county mayor rejects the entire final list, then the vacant, or to be vacated, office of utility district commissioner shall be filled by appointment by the county mayor without any further nominations.
    4. In implementing this subsection (g), the nominating and appointing authorities shall give due consideration to the need for racial, gender, age and ethnic minority diversity on the utility district board of commissioners.
    5. No later than January 31 of each calendar year, any water utility district subject to this subsection (g) shall notify the county mayor of the county that created the utility district, in writing, of the beginning and ending dates of the terms of office of each member of the utility district's board of commissioners in office on January 1 of each calendar year.
    1. Notwithstanding this section or any other law to the contrary, the membership of the board of commissioners for any multi-county water utility district, whose principal office is located in, and whose present service area primarily lies within, the boundaries of any county having a population of not less than seventeen thousand four hundred (17,400) nor more than seventeen thousand four hundred fifty (17,450), according to the 2000 federal census or any subsequent federal census, and containing and physically divided by a United States government corps of engineers dam and reservoir project of thirty-four thousand (34,000) acres, shall be as provided in this subsection (h). On June 3, 2004, board membership from the county containing the principal office and the primary service area of such utility district shall be increased by two (2) members giving such county three (3) members on the board. The other two (2) counties within the service area having not less than one hundred fifty (150) customers shall be represented by one (1) board member from each such county and the two (2) present board members shall continue to serve on the board for the remainder of their terms and be appointed from such counties as otherwise provided by law.
    2. The two (2) new members of the board of commissioners added pursuant to subdivision (h)(1) shall be filled by appointment of the county mayor of the county containing the principal office and the primary service area of such utility district. As soon as possible after June 3, 2004, the existing board of commissioners shall select three (3) nominees for each of such two (2) new members, in full accordance with any residential requirements that may apply to the office created, and under the seal of the board of commissioners, shall certify such lists of nominees to such county mayor. Within twenty-one (21) days after the issuance of certification by the board of commissioners to the county mayor, the county mayor may enter an order either appointing one of the nominees from each such list or rejecting one of the lists or both lists. Any order either appointing or rejecting a list of nominees shall be entered of record on the minutes of the county legislative body and a certified copy of the order shall be furnished to the board of commissioners and to the appointee; provided, however, that upon the rejection of any entire list of nominees by the county mayor, the board of commissioners shall continue to submit new nonidentical lists of three (3) nominees to the county mayor within sixty (60) days after each such rejection until such procedure shall result in the position being filled for the new term, as provided in this subdivision (h)(2). If the county mayor fails to make an appointment for a position from such list or lists following three (3) submissions for such position, then the county mayor shall appoint the director or directors for such position or positions, as the case may be, without any further nominations.
    3. Notwithstanding this section or any other law to the contrary, within two (2) weeks after the occurrence of a vacancy in the office of any commissioner and no later than thirty (30) days prior to the scheduled expiration of the term of office of any incumbent commissioner, the board of commissioners or its remaining members shall select three (3) nominees to fill such office, in full accordance with residential requirements applicable to the office vacated or to be vacated, and, under the seal of the board of commissioners, shall certify such list of nominees to the county mayor of the county whose representation on the board shall be directly affected by the vacancy. Copies shall also be sent to the county mayors of the other two (2) counties. If all three (3) nominees are rejected by the mayor of the affected county, then the nominating process shall be repeated and repeated again, if necessary. Thereafter, without any further nominations, the county mayor shall appoint a person to fill such vacancy for the remainder of the term or for the next term of office.
    4. No later than January 31 of each year, the chair of the board of commissioners shall certify the number of customers within each county and mail a list of customers from each such county to the appropriate county mayor.
    5. Notwithstanding this section or any other law to the contrary, no contract entered into or renewed after June 3, 2004, for the sale of water to a water utility district described in subdivision (h)(1) shall, and it is against public policy for such a contract to, contain a clause that prohibits the district from lawfully selling water to other municipalities or governmental entities.

Acts 1937, ch. 248, § 4; C. Supp. 1950, § 3695.29; Acts 1959, ch. 266, § 1; modified; Acts 1973, ch. 249, §§ 3, 4; 1977, ch. 261, §§ 1, 2; 1977, ch. 489, §§ 1, 3; 1978, ch. 828, § 1; modified; impl. am. Acts 1978, ch. 934, §§ 7, 16, 22, 36; T.C.A. (orig. ed.), § 6-2614; Acts 1980, ch. 445, § 1; 1980, ch. 579, §§ 1, 2; 1982, ch. 786, § 1; 1982, ch. 928, §§ 1, 3; 1984, ch. 508, §§ 1, 2; 1985, ch. 336, §§ 1-3; 1986, ch. 649, §§ 1, 2; 1987, ch. 58, §§ 1-4; 1987, ch. 422, §§ 3, 4; 1988, ch. 505, § 1; 1988, ch. 534, § 1; 1989, ch. 139, § 2; 1989, ch. 221, § 3; 1989, ch. 268, § 1; 1989, ch. 335, § 1; 1989, ch. 572, § 1; 1990, ch. 761, § 1; 1990, ch. 786, § 1; 1990, ch. 825, § 1; 1990, ch. 826, § 1; 1990, ch. 861, § 1; 1990, ch. 923, § 1; 1990, ch. 1040, §§ 1-3; 1991, ch. 452, § 1; 1992, ch. 726, §§ 1, 2; 1993, ch. 266, § 1; 1994, ch. 647, § 1; 1994, ch. 717, §§ 1, 2; 1994, ch. 772, § 1; 1995, ch. 33, § 1; 1995, ch. 212, § 1; 1995, ch. 390, § 1; 1995, ch. 545, § 1; 1996, ch. 883, § 1; 1996, ch. 1048, § 1; 1997, ch. 545, §§ 1, 2; 1997, ch. 546, § 1; 1998, ch. 588, §§ 1-4; 1998, ch. 759, § 1; 1999, ch. 234, § 1; 1999, ch. 398, § 1; 2000, ch. 601, § 1; 2001, ch. 46, § 1; 2001, ch. 382, §§ 1-3; 2002, ch. 838, § 1; 2002, ch. 848, § 1; 2003, ch. 90, § 2; 2003, ch. 190, § 1; 2004, ch. 618, § 2; 2004, ch. 749, § 1; 2004, ch. 816, § 1; 2005, ch. 94, § 1; 2007, ch. 243, § 4; 2009, ch. 423, §§ 3-6; 2010, ch. 1146, §§ 1-8; 2011, ch. 392, §§ 5-11; 2012, ch. 538, §§ 1-3; 2012, ch. 596, § 1; 2013, ch. 141, §§  1, 11; 2013, ch. 320, § 1; 2014, ch. 536, § 1; 2014, ch. 628, § 5; 2015, ch. 140, § 2; 2015, ch. 248, §§ 1, 2; 2016, ch. 1011, § 1; 2017, ch. 118, § 2.

Code Commission Notes.

Acts 1990, ch. 860, §§ 1 and 2 provided that with respect to any county having a population, according to the 1980 federal census or any subsequent federal census, of not less than 19,200 nor more than 19,300, subdivision (f)(1) of this section is amended, effective April 12, 1990, by substituting: “As used in this subsection, ‘customer’ means any person who receives bills for services from the water utility district and pays money for such services,” for the last sentence in (f)(1), which read: “As used in this section, ‘customer’ means any individual who receives bills for services from the water utility district and pays money for such services and who resides within the boundaries of the water utility district.” Due to the limited applicability of the amendment by ch. 860, the act is deemed local in nature and has not been codified in the section set out above.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Acts 2004, ch. 618, § 1 provided that the act shall be known, and may be cited as, the “Utility District Commissioner Selection Reform Act of 2004”.

Acts 2010, ch. 1146, § 13 provided that, notwithstanding § 8-48-101, the office of a district commissioner will not be vacated on June 30, 2010, solely because the district commissioner is not a district resident or customer and the district commissioner may continue in office until the expiration of such commissioner's term of office in effect on June 30, 2010.

Amendments. The 2015 amendment, by ch. 140, added (b)(1)(C).

The 2015 amendment, by ch. 248, in (g), substituted “Within sixty (60) days” for “Within fourteen (14) days”  at the beginning of the first sentence of (g)(3) and added (g)(5).

The 2016 amendment added (b)(6).

The 2017 amendment, in (b)(5), substituted “§ 7-82-308” for “§ 7-82-308(h) or (i)” in the first and last sentences, and inserted “or before the end of any extension approved by the comptroller of the treasury or the comptroller's designee” in the first sentence.

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Acts 2015, ch. 248, § 3. April 24, 2015.

Acts 2016, ch. 1011, § 2. April 28, 2016.

Acts 2017, ch. 118, § 6. April 12, 2017.

Cross-References. Multi-county districts, §§ 7-82-602, 7-82-604.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Constitutionality of S.B. 627, OAG 85-071, 1985 Tenn. AG LEXIS 223 (3/8/85).

Applicability, OAG 98-002, 1998 Tenn. AG LEXIS 2 (1/5/98).

“Customer” construed, OAG 98-003, 1998 Tenn. AG LEXIS 3 (1/5/98).

Section not general law of mandatory statewide application, OAG 98-003, 1998 Tenn. AG LEXIS 3 (1/5/98).

Authority of utility district commissioner before taking oath of office, OAG 98-0118, 1998 Tenn. AG LEXIS 118 (6/30/98).

Selecting Commissioners of the Claiborne County Utility District, OAG 03-144, 2003 Tenn. AG LEXIS 161 (11/07/03).

A commissioner holds over until his or her successor has been appointed and qualified, no action need be taken regarding the period during which the commissioner held over after his or her term expired, OAG 05-002, 2005 Tenn. AG LEXIS 2 (1/05/05).

No state statute expressly forbids a city commissioner from also serving on the board of a utility district, nor does this service appear to violate the state's general conflict of interest statute, OAG 05-037 (3/29/05).

Term limits on county utility district commissioners, OAG 06-115 (7/25/06).

Change in selection of utility district commissioners under T.C.A. § 7-82-307(a)(7). OAG 11-13, 2011 Tenn. AG LEXIS 13 (1/31/11).

NOTES TO DECISIONS

1. Constitutionality.

Although the Utility District Act of 1937 has been amended several times since the Rector decision, the legislature has not modified the statute to create a uniform general law of statewide application in the context of selecting utility board commissioners and thus Acts 1990, ch. 861 does not unconstitutionally suspend that general law for the benefit of particular individuals in violation of Tenn. Const., art. I, § 8. First Utility Dist. v. Clark, 834 S.W.2d 283, 1992 Tenn. LEXIS 364 (Tenn. 1992).

Since utility districts such as the plaintiff are public, municipal corporations, subdivision (a)(1), U.S. Const., art. 1, § 10 and Tenn. Const., art. I, § 20, do not protect them from legislation amending their charters or altering their powers, and thus Acts 1990, ch. 861 does not unconstitutionally impair the plaintiff's obligations of contract. First Utility Dist. v. Clark, 834 S.W.2d 283, 1992 Tenn. LEXIS 364 (Tenn. 1992).

Acts 1990, ch. 861 does not unconstitutionally alter the corporate powers, in violation of Tenn. Const., art. XI, § 8. First Utility Dist. v. Clark, 834 S.W.2d 283, 1992 Tenn. LEXIS 364 (Tenn. 1992).

The general assembly did not delegate its authority, in violation of Tenn. Const., art. II, § 3 when it enacted Acts 1990, ch. 861, amending this section; instead, the amendment was governed by Tenn. Const., art. XI, § 9. First Utility Dist. v. Clark, 834 S.W.2d 283, 1992 Tenn. LEXIS 364 (Tenn. 1992).

2009 amendments to this statute were not unconstitutionally vague since utility district commissioners of ordinary intelligence would be able to construe their fiduciary duty to act with utmost good faith for the benefit of their district and not themselves when exercising the duties, powers, and authority set forth in T.C.A. tit. 7, ch. 82. Comm'rs v. Util. Mgmt. Review Bd., 427 S.W.3d 375, 2013 Tenn. App. LEXIS 503 (Tenn. Ct. App. July 31, 2013), rehearing denied, Comm'rs of the Powell-Clinch Util. Dist. v. Util. Mgmt. Review Bd., — S.W.3d —, 2013 Tenn. App. LEXIS 516 (Tenn. Ct. App. July 31, 2013), appeal denied, Util. Mgmt. Review Bd. v. Comm'rs of the Powell-Clinch Util. Dist., — S.W.3d —, 2013 Tenn. LEXIS 907 (Tenn. Nov. 13, 2013).

2. Removal of Utility District Commissioners.

Application of the portion of the June 2009 amendments permitting the removal of utility district commissioners (UDCs) for failing to fulfill their fiduciary responsibilities absent the elements of knowing or wilfulness was an impermissible retrospective application of law since before the 2009 amendments, UDCs could be removed from office only upon a showing of knowing or willful misconduct; the amendments attached a new disability to past transactions by removing the knowing and willfulness elements. Comm'rs v. Util. Mgmt. Review Bd., 427 S.W.3d 375, 2013 Tenn. App. LEXIS 503 (Tenn. Ct. App. July 31, 2013), rehearing denied, Comm'rs of the Powell-Clinch Util. Dist. v. Util. Mgmt. Review Bd., — S.W.3d —, 2013 Tenn. App. LEXIS 516 (Tenn. Ct. App. July 31, 2013), appeal denied, Util. Mgmt. Review Bd. v. Comm'rs of the Powell-Clinch Util. Dist., — S.W.3d —, 2013 Tenn. LEXIS 907 (Tenn. Nov. 13, 2013).

7-82-308. Compensation of commissioners — Delegation of powers — Officers — Records — Qualifications — Meetings.

    1. The members of the board shall serve without compensation for their services, except that by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year, at rates not greater than three hundred dollars ($300) per meeting. However, in any county with a population of not less than two hundred eighty-seven thousand seven hundred (287,700) nor more than two hundred eighty-seven thousand eight hundred (287,800), according to the 1980 federal census or any subsequent federal census, the members of the utility district board of commissioners shall serve without compensation for their services, except that by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year at rates not greater than two hundred fifty dollars ($250) per meeting for each district having more than three thousand (3,000) users and not more than one hundred dollars ($100) per meeting for each district having three thousand (3,000) or fewer users. In addition, group medical insurance coverage and group life insurance coverage as may be provided other employees, or payment of premiums for an equivalent or similar group medical coverage and group life insurance coverage that a commissioner may be participating in on April 18, 1985, or that a commissioner may have been participating in on May 25, 1984, or a group plan entered into subsequent thereto; provided, that such payment of such medical coverage and group life insurance coverage does not exceed the per person cost of the district's group medical insurance coverage and group life insurance coverage for its employees. Commissioners in those districts that are not financially distressed utility districts as defined in § 7-82-401(g) that distribute and sell natural gas are thereby authorized, upon resolution duly adopted by the board of commissioners, to receive not more than five hundred dollars ($500) per diem payments in the manner provided in this part.
    2. In any county with a population of not less than eighty-five thousand eight hundred (85,800) nor more than eighty-six thousand one hundred (86,100), according to the 1990 federal census or any subsequent federal census, the members of utility district board of commissioners shall serve without compensation for their services, except that, by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year, at rates not greater than one hundred fifty dollars ($150) per meeting for each district having more than three thousand (3,000) users, and not more than one hundred dollars ($100) per meeting for each district having three thousand (3,000) or fewer users.
    3. In any county having a charter form of government, the members of a utility district board of commissioners shall serve without compensation for their services, except that, by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year, at rates not greater than three hundred fifty dollars ($350) per meeting for each district having more than five thousand (5,000) users, and not more than one hundred dollars ($100) per meeting for each district having five thousand (5,000) or fewer users. In addition, group medical insurance coverage and group life insurance coverage may be provided for commissioners as such coverage is provided for other employees, or premiums for an equivalent or similar group medical coverage and group life insurance may be paid; however, payment of such medical coverage and group life insurance coverage must not exceed the per person cost of the district's group medical insurance coverage and group life insurance coverage for its employees.
        1. In any county having a population of not less than one hundred forty thousand (140,000) nor more than one hundred forty-five thousand (145,000), according to the 1990 federal census or any subsequent federal census, the members of a utility district board of commissioners shall serve without compensation for their services, except that, by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year, at rates not greater than two hundred fifty dollars ($250) per meeting.
        2. In addition, group medical insurance coverage and group life insurance coverage may be provided for commissioners as such coverage is provided for other employees, or premiums for an equivalent or similar group medical coverage and group life insurance may be paid; however, payment of such medical coverage and group life insurance coverage must not exceed the per person cost of the district's group medical insurance coverage and group life insurance coverage for its employees.
      1. Any resolution adopted, pursuant to subdivision (a)(3)(A)(i), on or after July 1, 2001, shall not take effect unless and until it is ratified by a majority of the customers of the utility district as provided in this subdivision (a)(3)(B). Upon adopting any such resolution, the board must promptly schedule a meeting of the district's customers for an election of ratification. Such election of ratification must coincide with the next succeeding meeting at which one (1) or more persons shall be elected or selected to serve on the utility district board of commissioners. At least thirty (30) days prior to the date of such meeting, the board must mail written notice to all customers of the utility district announcing the time, place and purposes of such meeting. If a majority of the customers present and voting at the meeting favor ratification of the resolution, then the resolution shall immediately take effect.
    4. Notwithstanding this section or any other law to the contrary, in any county having a population of not less than seventeen thousand eight hundred (17,800) nor more than seventeen thousand eight hundred seventy-five (17,875), or in any county having a population of not less than twenty thousand six hundred (20,600) nor more than twenty thousand seven hundred (20,700), according to the 2000 federal census or any subsequent federal census, the members of a utility district board of commissioners shall serve without compensation for their services, except that, by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year, at rates not greater than two hundred fifty dollars ($250) per meeting.
    5. Notwithstanding this section or any other law to the contrary, the members of the utility district board of commissioners in a census designated place that is the county seat of any county having a population of not less than one hundred fifty-six thousand eight hundred (156,800) nor more than one hundred fifty-six thousand nine hundred (156,900), according to the 2010 federal census or any subsequent federal census, shall serve without compensation for their services, except that by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year, at rates not greater than three hundred fifty dollars ($350) per meeting.
  1. The board may delegate to one (1) or more of its members, or to its agents and employees, such powers and duties as it may deem proper, but, at its first meeting and at the first meeting of each calendar year thereafter, it shall elect one (1) of its members to serve as president, and another of its members as secretary of the board of commissioners.
  2. The secretary shall keep a record of all proceedings of the commission, which shall be available for inspection as other public records, and shall be custodian of all official records of the district.
  3. Only persons who reside within the district's boundaries or who are customers of the district shall be eligible for appointment or election to the board. As used in this subsection (d), “customer” means a person who is regularly billed and pays for a utility service rendered by the district.
  4. The board of commissioners of every utility district created pursuant to this chapter shall meet at least once each quarter, the time and place of such meeting to be published in accordance with title 8, chapter 44.
    1. Within one (1) year of initial appointment or election to the board of commissioners of a utility district or prior to or within one (1) year of the reappointment or reelection to the board of commissioners of an incumbent utility district commissioner holding office on June 30, 2010, a utility district commissioner shall attend a minimum of twelve (12) hours of training and continuing education in one (1) or more of the subjects listed in subdivision (f)(6). An incumbent utility district commissioner holding office on June 30, 2010, who has received a minimum of twelve (12) hours of training or more in one (1) or more courses addressing subjects identified in subdivision (f)(6) within the past three (3) years may submit a request to the comptroller to be exempt from the training and continuing education requirements set forth in this subdivision (f)(1).
    2. In each continuing education period after the initial training and continuing education required by subdivision (f)(1), a utility district commissioner shall attend a minimum of twelve (12) hours of training and continuing education in one (1) or more of the subjects listed in subdivision (f)(6). For the purposes of this subdivision (f)(2), a “continuing education period” is a period of three (3) years beginning January 1 after the calendar year in which a utility district commissioner completes the training and continuing education requirements set forth in subdivision (f)(1) and each succeeding three-year period thereafter.
    3. For purposes of subdivisions (f)(1) and (2), a utility district commissioner may request a training and continuing education extension of up to six (6) months from the comptroller of the treasury or the comptroller's designee. The request shall only be granted upon a reasonable showing of substantial compliance with subdivisions (f)(1) and (2). If the extension is granted, the utility district commissioner must complete any additional required training hours necessary to achieve full compliance for only the relevant continuing education period within the extension period. The utility district commissioner shall file copies of any extension request letters and corresponding comptroller of the treasury determination letters with the utility management review board. The failure to file this information with the utility management review board shall cause a commissioner to be ineligible to receive any further payment or benefit as provided in subsection (a) until the information is properly filed.
    4. Each utility district commissioner shall certify by January 31 of each year the training and continuing education courses attended during the prior calendar year by filing an annual written statement with the utility district on a form developed by the comptroller. Each annual statement shall identify the date of each course attended, its subject matter, location, sponsor, and the hours attended for each course and shall include a certificate of attendance for each course listed on the annual statement. Each utility district commissioner shall be responsible for obtaining a certificate of attendance certifying that the utility district commissioner attended the course, on a form acceptable to the comptroller. The failure to file the annual statement shall cause a commissioner to be ineligible to receive any further payment or benefit as provided in subsection (a) until the annual written statement is filed. Each utility district shall keep for six (6) years after the calendar year in which each annual statement is filed a copy of the annual statements of attendance filed by members of the board of commissioners of the utility district.
    5. The utility district shall be responsible for paying the training and continuing education course registration and travel expenses for the training and continuing education required by this subsection (f) for the members of the utility district's board of commissioners.
    6. The subjects for the training and continuing education required by subdivisions (f)(1) and (2) shall include, but not be limited to, board governance, financial oversight, policy-making responsibilities and other topics reasonably related to the duties of the members of the board of commissioners of a utility district.
    7. Any association or organization with appropriate knowledge and experience may prepare a training and continuing education curriculum for utility district commissioners covering the subjects set forth in subdivision (f)(6) to be submitted to the comptroller for review and approval prior to use. The comptroller shall file a copy of approved training and continuing education curriculum with the utility management review board. Changes and updates to the curriculum shall be submitted to the comptroller for approval prior to use. Any training and continuing education curriculum approved by the comptroller shall be updated every three (3) years and resubmitted to the comptroller for review and approval.
    8. Nothing in this subsection (f) shall prohibit the utility management review board from requiring training and continuing education in addition to that required under this subsection (f) for utility district commissioners of a utility district which is financially distressed under § 7-82-703.
    9. As used in this subsection (f), “utility district commissioners” include the members of the governing board of any utility district created pursuant to this chapter or any public or private act and the members of the governing board of any water or sewer authority created by any public or private act; provided, that the education and training requirements pursuant to subsection (g) and not this subsection (f) shall apply to members of the governing board of a gas utility district.
  5. Subsection (f) shall not apply to any member of the governing board of a gas utility district who receives extensive annual training substantially equal to the training required pursuant to subsection (f) offered by an association of gas utility districts or directly through the gas utility district; provided, that the gas utility district submits the training curriculum to the comptroller for review and approval prior to use.
  6. If a utility district provides both water and gas, then the members of the governing board shall be subject to the education and training requirements of either subsection (f) or (g) based on the predominate customer base of the utility district.

Acts 1937, ch. 248, § 4; C. Supp. 1950, § 3695.29; Acts 1963, ch. 193, §§ 1, 2; 1968, ch. 567, § 1; T.C.A. (orig. ed.), § 6-2615; Acts 1981, ch. 145, § 1; 1982, ch. 839, § 1; 1983, ch. 145, § 1; 1983, ch. 146, § 1; 1983, ch. 364, § 1; 1984, ch. 706, § 1; 1984, ch. 796, §§ 2, 4; 1985, ch. 210, § 1; 1987, ch. 422, § 5; 1989, ch. 139, § 3; 1989, ch. 221, § 4; 1989, ch. 268, § 2; 1990, ch. 722, §§ 1, 2; 1995, ch. 307, § 1; 1995, ch. 453, § 1; 1998, ch. 961, § 1; 2001, ch. 55, § 1; 2001, ch. 83, § 1; 2005, ch. 230, § 1; 2007, ch. 74, § 1; 2009, ch. 398, § 1; 2010, ch. 1146, §§ 9, 10; 2014, ch. 628, § 6; 2017, ch. 118, § 3; 2017, ch. 129, § 9; 2018, ch. 915, § 1.

Compiler's Notes. Acts 2009, ch. 398, § 1 provided that: “Notwithstanding subsection (f), thirty (30) days after the adoption of a resolution by a two-thirds (2/3) vote of the commissioners of any water and sewer utility district to which subsection (f) applies, the applicable provisions of subsection (a) shall apply to per diem payments for commissioners of the utility district.

“(2) Upon the adoption of the resolution, subsection (f) shall be repealed.”

On September 8, 2009, the Huntsville Utility District of Scott County, the county to which former subsection (f) applied, voted to adopt the resolution; therefore, subsection (a) applies to that utility district and subsections (f) and (g) are repealed. Former subsections (f) and (g) read: “(f)(1) Notwithstanding the provisions of subsection (a), for any water and sewer utility district in any county with a population of not less than eighteen thousand two hundred (18,200) and not more than eighteen thousand five hundred (18,500), according to the 1990 federal census or any subsequent federal census, the members of the utility district board of commissioners shall serve without compensation for their services, except that, by resolution duly adopted by the board of commissioners, each commissioner may receive per diem payments for not more than twelve (12) meetings of the board of commissioners in any calendar year at rates not greater than two hundred fifty dollars ($250) per meeting.

“(2) Before any per diem payments may be made pursuant to this subsection (f), the customers of the utility district shall approve the action of the board in its resolution in an election. The board shall schedule a meeting of the district’s customers for an election for the approval of the resolution by the customers. At least thirty (30) days prior to such meeting, the board shall mail written notice of such meeting to all customers of the utility district. A majority of customers present and voting at the meeting shall approve the resolution.

“(g)(1) Notwithstanding subsection (f), thirty (30) days after the adoption of a resolution by a two-thirds (2/3) vote of the commissioners of any water and sewer utility district to which subsection (f) applies, the applicable provisions of subsection (a) shall apply to per diem payments for commissioners of the utility district.

“(2) Upon the adoption of the resolution, subsection (f) shall be repealed.

“(3) If no action is taken prior to December 1, 2009, or if the resolution is not adopted in accordance with this subsection (g) by December 1, 2009, this subsection (g) shall be repealed.

“(4) The presiding officer of the board of commissioners shall notify the executive secretary of the Tennessee code commission of the results of the action taken by the board of commissioners.”

For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2010, ch. 1146, § 13 provided that notwithstanding § 8-48-101, the office of a district commissioner will not be vacated on June 30, 2010 solely because the district commissioner is not a district resident or customer and the district commissioner may continue in office until the expiration of such commissioner's term of office in effect on June 30, 2010.

Amendments. The 2017 amendment by ch. 118, in (f), added present (3) and redesignated former (3)-(8) as (4)-(9), and substituted “subdivision (f)(6)” for “subdivision (f)(5)” twice in (f)(1), at the end of the first sentence of (f)(2), and in the first sentence of (f)(7).

The 2017 amendment by ch. 129 deleted former (e)(2) which read :”(2)(A)  No provision of this subsection (e) shall apply to any gas utility district for the reasons set out in § 7-82-103. “(B)  This subsection (e) shall not apply in counties having the following populations, according to the 1980 federal census or any subsequent federal census: not less than  nor more than  13,600 13,610 28,500 28,560 28,690 28,750 48,400 48,500.”

The 2018 amendment added (a)(5).

Effective Dates. Acts 2017, ch. 118, § 6. April 12, 2017.

Acts 2017, ch. 129, § 15. April 17, 2017.

Acts 2018, ch. 915, § 2. May 1, 2018.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Payments to utility district commissioner in lieu of insurance premium payments, OAG 99-133, 1999 Tenn. AG LEXIS 175 (7/7/99).

Variation in insurance premium amounts for county gas utility commissioners, OAG 04-048, 2004 Tenn. AG LEXIS 48 (3/22/04).

7-82-309. Powers of commissioners — Payment of expenses.

  1. The board of commissioners of any district has the power and authority to:
    1. Exercise by vote, ordinance or resolution all of the general and specific powers of the district;
    2. Make all needful rules, regulations and bylaws for the management and the conduct of the affairs of the district and of the board;
    3. Adopt a seal for the district, prescribe the style of the seal, and alter the seal at pleasure;
    4. Lease, purchase, sell, convey and mortgage the property of the district and to execute all instruments, contracts, mortgages, deeds or bonds on behalf of the district in such manner as the board shall direct;
    5. Inquire into any matter relating to the affairs of the district, compel by subpoena the attendance of witnesses and the production of books and papers material to any such inquiry, administer oaths to witnesses and examine such witnesses;
      1. Notwithstanding any public or private act to the contrary, in all utility districts in the state, any member of the board of commissioners and any board or committee member elected or appointed by the board of commissioners, and any official or employee of the utility district whose salary is set by charter or general law, may be reimbursed from district funds for the actual expense that such utility district officer may incur as an incident to holding such office;
      2. The utility district board of commissioners shall determine whether or not to pay the expenses incurred by members of the board, and any board or committee member elected or appointed by the president of the board of commissioners, and any official or employee of the utility district whose salary is set by charter or general law; and, if it is determined that the utility district will reimburse expenses, it shall enact a written policy as to how expenses will be reimbursed and determine what expenses are reimbursable;
      3. In such utility district, it is the duty of the board of commissioners to prescribe forms on which expenses shall be reported. The board of commissioners may designate such responsibility to the chief administrative officer of the district. It is the duty of the board of commissioners, or its designee, to examine such expense report to determine if all expenses so listed as reimbursable are legally reimbursable expenditures within the schedule as determined by the utility district board of commissioners, and, if such listed expenses are reimbursable, then forward the expense report to the proper disbursing officer for payment;
      4. To the extent not adequately documented as provided in subdivision (a)(6)(C), expense allowances shall be considered compensation for purposes of any salary limitations as may be provided by statute, charter or private act;
      5. All utility district travel and expense reimbursement policies, and any amendments to the policies, shall be filed with the office of the comptroller of the treasury or the comptroller of the treasury's designee. Such policies and amendments are not subject to approval of, but shall not be effective until filed with, the office of the comptroller of the treasury;
      6. The Tennessee Association of Utility Districts (TAUD) shall disseminate, and amend from time to time as necessary, a model travel and expense policy to provide guidance for the various utility districts. Such policy, and amendments to the policy, are subject to the approval of the comptroller of the treasury. Any utility district that adopts the policy promulgated by the TAUD is not required to file such policy with the office of the comptroller of the treasury, but shall notify the office in writing of adoption of the model policy;
    6. Appoint and fix the salaries and duties of such officers, experts, agents and employees as it deems necessary, hold office during the pleasure of the board and upon such terms and conditions as the board may require; and
    7. Do all things necessary or convenient to carry out its functions.
  2. All powers and authority enumerated in this section must be exercised by the district for the welfare and benefit of the public served by the district.

Acts 1937, ch. 248, § 8; C. Supp. 1950, § 3695.34 (Williams, § 3695.33); T.C.A. (orig. ed.), § 6-2616; Acts 1987, ch. 422, § 6; 1989, ch. 139, § 4; 1989, ch. 221, § 5; 1994, ch. 918, § 3; 2017, ch. 129, § 10.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Amendments. The 2017 amendment rewrote  (b) which read: “(b) (1)  All powers and authority enumerated in this section shall be exercised by such district for the welfare and benefit of the public served by such district.  “(2)(A)  This subsection (b) shall not apply to any gas utility district for the reasons set out in § 7-82-103. “(B)  This subsection (b) shall not apply in counties having the following populations, according to the 1980 federal census or any subsequent federal census: not less than  nor more than  13,600 13,610 28,500 28,560 28,690 28,750 48,400 48,500.”

Effective Dates. Acts 2017, ch. 129, § 15. April 17, 2017.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

NOTES TO DECISIONS

1. Construction.

T.C.A. § 7-82-309 designates the board of commissioners as the executive and administrative officials of the district and provides that they are authorized to exercise the powers granted to the district. T.C.A. § 7-82-309 does not, however, vest in the commissioners any powers not possessed by the district. It only authorizes the commissioners to act on behalf of the district. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

Pursuant to T.C.A. §§ 7-82-304, 7-82-306 and 7-82-309 a district, acting by and through its board of commissioners has, in addition to the powers peculiar to the providing of utilities to the public, the general power to acquire, hold, use, encumber, and sell real and personal property, enter into contracts and perform in accordance with the terms thereof, protect and enforce its rights by suits in court, and otherwise do all acts incident to the development and operation of a public utility. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

2. Power to Bind District.

The commissioners act for and on behalf of the residents of the district and the bondholders and if they act within the apparent scope of their authority their acts or omissions are binding on the utility district, the members and residents thereof and the bondholders. Whitehaven Utility Dist. v. Ramsay, 215 Tenn. 435, 387 S.W.2d 351, 1964 Tenn. LEXIS 531 (1964).

3. Deceased Commissioner, Rights.

Suit by administrator of estate of deceased commissioner of utility district against other commissioners for contribution on judgment recovered against deceased commissioner during his lifetime for alleged mishandling of funds was not ex delicto in nature but was a separate and distinct action that survived death of commissioner. Butler v. Trentham, 224 Tenn. 528, 458 S.W.2d 13, 1970 Tenn. LEXIS 353, 1970 Tenn. LEXIS 354 (1970).

4. Negligence.

Suit by administrator of estate of deceased commissioner of utility district against other commissioners for contribution on judgment recovered against deceased commissioner during his lifetime for alleged mishandling of funds was one for contribution between joint tort feasors so that allegation of acts of negligence on part of defendants was required in order to state a cause of action. Butler v. Trentham, 224 Tenn. 528, 458 S.W.2d 13, 1970 Tenn. LEXIS 353, 1970 Tenn. LEXIS 354 (1970).

5. Termination of District.

Clearly, a utility district is not created for the purpose of conveying itself out of existence. The power to sell all its assets and its system to a private enterprise is, therefore, not an expressed or implied power of a utility district. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

The power to develop and operate a public utility does not include the power to sell the system and terminate the corporate existence of the district. Disposal of all corporate assets of the district is contrary to, and in violation of, the duty to operate the district for the benefit of the district's customers. Under the Utility District Law of 1937, the obligation to operate the system can be avoided only by consolidation or merger with another utility district or transfer of the system to a municipality or a county. United Cities Gas Co. v. Wigington, 815 S.W.2d 506, 1991 Tenn. LEXIS 339 (Tenn. 1991).

6. Fiduciary Duties.

2009 amendments to this statute were not unconstitutionally vague since utility district commissioners of ordinary intelligence would be able to construe their fiduciary duty to act with utmost good faith for the benefit of their district and not themselves when exercising the duties, powers, and authority set forth in T.C.A. tit. 7, ch. 82. Comm'rs v. Util. Mgmt. Review Bd., 427 S.W.3d 375, 2013 Tenn. App. LEXIS 503 (Tenn. Ct. App. July 31, 2013), rehearing denied, Comm'rs of the Powell-Clinch Util. Dist. v. Util. Mgmt. Review Bd., — S.W.3d —, 2013 Tenn. App. LEXIS 516 (Tenn. Ct. App. July 31, 2013), appeal denied, Util. Mgmt. Review Bd. v. Comm'rs of the Powell-Clinch Util. Dist., — S.W.3d —, 2013 Tenn. LEXIS 907 (Tenn. Nov. 13, 2013).

7-82-310. Personnel not to benefit from water service agreements.

All personnel employed by the board of commissioners of any utility district incorporated under this chapter, including, but not limited to, the commissioners themselves, are hereby prohibited from receiving any money or other goods or services of value of any sort as a result of any agreement, contractual or otherwise, for the installation of water service within the bounds of the district; and further, such persons are also prohibited from receiving any moneys or other goods or services of value of any sort as a result of any agreement, contractual or otherwise, for the sale of any materials to be installed within the bounds of the district as water service.

Acts 1980, ch. 840, § 1.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Utility district contract with manager, OAG 94-104, 1994 Tenn. AG LEXIS 105 (9/9/94).

Independent work activities of utility district employees, OAG 95-120, 1995 Tenn. AG LEXIS 140 (12/14/95).

7-82-311. Customer installation of water service.

The recipient of water service to be provided by a utility shall be entitled to procure the material and install the water service for property personally owned by such proposed customer of the utility district; provided, that such material and installation shall fully comply with the standard specifications established for the district in which the service is to be placed. It shall be the sole responsibility of the utility to procure and install the meter for such service.

Acts 1980, ch. 840, § 2.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-312. Payment of fees or assessments — Actions — Liens — Notice.

  1. Any utility district, whether created pursuant to general law or uncodified public chapter, may enforce the payment of fees or assessments charged for sewer or wastewater disposal utility services by filing an action in the same manner and with the same penalties and interest attached as provided for the enforcement of unpaid taxes pursuant to title 67, including the sale on execution of such property as provided in title 26, chapter 5, and the redemption provisions of title 66, chapter 8. Such action may be taken only once every calendar year by the utility district for unpaid sewer or wastewater utility fees or assessments. The utility district shall be required to give notice to the property owner, if different from the utility user, not less than ninety (90) days prior to the filing of any action that would include levying on the real property. Such notice shall be mailed to the last known address of the property owner as contained on the tax records of the county where the property is located and shall include the amount of the unpaid fee or assessment for sewer or wastewater disposal utility services, together with penalties and interest. The notice shall also contain a statement to the effect that, unless the payments are brought up to date, a lien shall attach to the property and an action shall be filed pursuant to title 67.
  2. The utility district shall bear the reasonable costs incurred by a property owner in defending such an action due to an error in the records or fees of the utility district for the provision of such sewer or wastewater disposal utility services.
  3. For purposes of this section, “utility district” includes the Reelfoot Lake utility and planning district created by chapter 222 of the Public Acts of 1983.

Acts 1984, ch. 796, § 3.

Compiler's Notes. Acts 1983, ch. 222 was not codified in the Tennessee Code.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-313. Fire protection — Fees for services rendered to nonsubscribers.

  1. A utility district that dispatches fire trucks and offers other such fire protection services may charge for the services rendered to a nonsubscriber when a fire or other dangerous situation is reported by any citizen or emergency communications district. To impose such charges, the utility district's board of commissioners shall establish and publish a schedule of the costs for such services.
  2. This section shall only apply in counties having a population of not less than eighty-five thousand eight hundred (85,800) nor more than eighty-six thousand one hundred (86,100), according to the 1990 federal census or any subsequent federal census.

Acts 1997, ch. 99, §§ 1, 3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Part 4
Audit and Rates

7-82-401. Audited annual financial report — Accounting manual — Books and records.

    1. The commissioners of each utility district shall cause an audited annual financial report to be made of the books and records of their district. The comptroller of the treasury, through the department of audit, is responsible for determining that such audits are prepared in accordance with generally accepted governmental auditing standards, and that such audits meet the minimum standards prescribed by the comptroller of the treasury.
    2. In all counties and districts, the comptroller of the treasury shall prepare a uniform audit manual as is required to assure that the books and records are kept in accordance with generally accepted accounting principles and that the minimum audit standards prescribed by the comptroller are met. The manual shall not be applied to invalidate obligations contained in bond resolutions or other debt contracts, nor to modify any substantive legal powers or requirements applicable to utility districts.
  1. The audits shall be prepared by certified public accountants, public accountants or by the department of audit. In the event the governing body of the utility district shall fail or refuse to have the audit prepared, then the comptroller of the treasury may appoint a certified public accountant, or public accountant or direct the department to prepare the audit, the cost of such audit to be paid by the utility district.
  2. The comptroller of the treasury is authorized to modify the requirements for an audit as set out in this section for utility districts whose activity, in the comptroller of the treasury's judgment, is not sufficient to justify the expenses of a complete audit. Furthermore, the comptroller of the treasury is authorized to direct the department of audit to make an audit or financial review of the books and records of utility districts.
  3. Within ninety (90) days after the close of the fiscal year of each district organized and operating under this law, the commissioners of the district shall publish in a newspaper of general circulation, published in the county in which the district is situated, a statement showing:
    1. The financial condition of the district at the end of the fiscal year;
    2. The earnings of the district during the fiscal year just ended;
    3. All travel and related costs or expenses where any portion of such costs or expenses is paid by the district or any entity or entities, public or private, associated with the district, including, but not limited to, travel for commissioners and employees;
    4. A statement of the water rates then being charged by the district; and
    5. A brief statement of the method used in arriving at such rates.
  4. A copy of such annual statement and audit shall be filed with the county mayor or mayors where publication is required in accordance with this section and § 7-82-608.
  5. Audits performed by the internal audit staffs of the utility districts shall be conducted in accordance with the standards established by the comptroller of the treasury pursuant to § 4-3-304(9).
    1. Any utility district that is a financially distressed utility district shall be subject to the supervision and evaluation of the utility management review board created pursuant to part 7 of this chapter.
    2. A government joint venture that supplies or treats water or wastewater for wholesale use only to other governments shall not fall under the jurisdiction of the utility management review board for the purpose of reporting negative change in net position annually, but shall be referred to the board if the government joint venture is in a deficit or default position as described in subdivision (g)(3).
    3. For the purposes of this chapter, “financially distressed utility district” means a utility district, and its system or systems, that, as shown by the audited annual financial reports, has either a deficit in total net position, is in default on an indebtedness, or has a negative change in net position for two (2) consecutive years without regard to any grants, capital contributions, or excluded non-cash items. For purposes of this section, “change in net position” means total revenues less all grants, capital contributions, and expenses, but without reduction for any excluded non-cash items. For purposes of this section, “excluded non-cash items” means any non-cash charges arising from changes to or the implementation of pension and other post-employment benefit standards promulgated by the governmental accounting standards board.
    1. Utility districts operating public water systems shall include in their audited annual financial report the utility district's water loss in the manner as prescribed by the utility management review board. Failure of the utility district to include the schedule required in this section constitutes excessive water loss and the utility district shall be referred to the utility management review board. Within sixty (60) days from the time that a utility district's audit is filed with the comptroller of the treasury, the comptroller of the treasury shall file with the utility management review board the audited annual financial  report of any utility district operating a water system whose water loss is excessive as established by rules promulgated by the utility management review board.
    2. For the purposes of subdivision (h)(1), “utility district” includes agencies, authorities, or instrumentalities of government created by private act having the authority to administer a water or wastewater facility.
  6. By February 1 of each year, the comptroller of the treasury shall provide a written report to the speaker of the house of representatives and the speaker of the senate listing the average annual water loss contained in the audited annual financial report for those utility districts described in subsection (h).

Acts 1949, ch. 256, § 1; C. Supp. 1950, § 3695.46 (Williams, § 3695.43a); Acts 1968, ch. 529, § 4; 1975, ch. 139, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A. (orig. ed.), § 6-2617; Acts 1984, ch. 794, § 4; 1987, ch. 422, § 7; 1989, ch. 139, § 5; 1989, ch. 221, §§ 6, 7; 1989, ch. 591, § 113; 2004, ch. 619, § 7; 2007, ch. 243, § 1; 2008, ch. 700, § 1; 2009, ch. 72, § 1; 2010, ch. 876, §§ 1, 3; 2011, ch. 392, §§ 1, 4, 12; 2012, ch. 604, § 6; 2013, ch. 141, §§ 2, 3; 2013, ch. 236, § 6; 2014, ch. 628, §§ 7, 8; 2015, ch. 140, § 9; 2017, ch. 129, §§ 3, 4; 2017, ch. 132, § 1; 2018, ch. 495, § 4; 2018, ch. 646, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2013, ch. 236, § 6, effective April 19, 2013, purported to amend subsection (i) but failed to take into account the amendment by Acts 2013, ch. 141, § 3, effective April 12, 2013, and therefore could not be given effect.

Amendments. The 2015 amendment deleted “and a copy shall be forwarded to the office of the comptroller of the treasury. The failure to file such copies is a Class C misdemeanor.” at the end of (e).

The 2017 amendment by ch. 129, in (a)(2),  deleted  former (B) which read: “(B)  In gas utility districts, and in the counties having the following populations, according to the 1980 federal census or any subsequent census, the comptroller of the treasury shall promulgate such rules and regulations as are required to assure that the books and records are kept in accordance with generally accepted accounting procedures and that audit standards prescribed by the comptroller of the treasury are met: not less than  nor more than  13,600 13,610 28,500 28,560 28,690 28,750 48,400 48,500”, in the present first sentence, deleted “except as provided in subdivision (a)(2)(B),” preceding the first occurrence of “the comptroller of the treasury” and deleted “such” preceding “other rules and regulations”, and substituted “The manual” for “Such manual” at the beginning of the present last sentence; and, in (h)(2), substituted “private act” for “public or private act” and deleted “, other than those agencies, authorities or instrumentalities of government electing pursuant to § 68-221-1006(a) or § 68-221-1008 to come under the jurisdiction of the water and wastewater financing board” from the end.

The 2017 amendment by ch. 132, in (g)(3), substituted “either a deficit in total net position” for “either deficit total net position”  and added “without regard to any grants or capital contributions. For purposes of this section, a “change in net position” means total revenues less all grants, capital contributions, and expenses” at  the end.

The 2018 amendment by ch. 495 in (a)(2), in the first sentence, substituted “uniform audit manual as is required” for “uniform accounting manual and shall promulgate other rules and regulations as are required”, substituted “the minimum audit standards prescribed” for “audit standards prescribed”, and substituted  “comptroller” for “comptroller of the treasury” near the end; and substituted “The manual” for “The manual and rules” at the beginning of the second sentence.

The 2018 amendment by ch. 646 rewrote (g)(3) which read: “(3)  For the purposes of this chapter, a ‘financially distressed utility district’ is a utility district, its system or systems, that, as shown by the audited annual financial reports, has either a deficit in total net position, is in default on an indebtedness, or has a negative change in net position for two (2) consecutive years without regard to any grants or capital contributions. For purposes of this section, a ‘change in net position’ means total revenues less all grants, capital contributions, and expenses.”

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Acts 2017, ch. 129, § 15. April 17, 2017.

Acts 2017, ch. 132, § 3. April 17, 2017.

Acts 2018, ch. 495, § 11. February 22, 2018.

Acts 2018, ch. 646, § 3. April 9, 2018.

Cross-References. Financial statements in multi-county districts, § 7-82-608.

Penalty for Class C misdemeanor, § 40-35-111.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Utility management review board's authority over gas utility districts, OAG 99-031, 1999 Tenn. AG LEXIS 20 (2/18/99).

NOTES TO DECISIONS

1. Applicability.

Trial court erred in dismissing a customer's lawsuit against a water and wastewater treatment authority for failure to exhaust administrative remedies because the administrative procedure in Part 4 of the Utility District Law of 1937 was inapplicable since the authority was not a “utility district.” Am. Heritage Apts., Inc. v. Hamilton County Water & Wastewater Treatment Auth., 494 S.W.3d 31, 2016 Tenn. LEXIS 269 (Tenn. Apr. 8, 2016).

Collateral References.

Right to examine records or documents of municipality relating to public utility conducted by it. 102 A.L.R. 756.

7-82-402. Protest of rates — Adjustment of complaints — Consumer information records — Fire protection.

      1. Within thirty (30) days of the date on which the statement provided for in § 7-82-401 is published, any customer of the district may file with the commissioners of the district a protest, giving reasons why, in the opinion of the customer, the rates so published are too high or too low. Within a period of fifteen (15) days after the end of this thirty-day period during which such protest may be filed, the commissioners shall notify each such protestant of a hearing to be held by the commissioners on such protests as may have been filed within the thirty-day period prescribed. Upon the hearing date so fixed, which shall be some date within a period of sixty (60) days after giving such notices to the protestants, all such protests shall be heard together by the commissioners. After hearing and examining statements, exhibits and arguments of the protestants or their counsel, the commissioners shall make and spread upon the minutes of the commission their finding as to the reasonableness or unreasonableness of the published rates, and, at the same time, the commission may increase or decrease such rates upon a finding that they are too low or too high, as the case may be.
      2. For the purposes of this part, “customer” means a person who receives a bill for water or sewer services and pays money for such services.
    1. The commissioners shall not be required to receive, consider or act upon any protest filed at any time other than within the thirty-day period provided in this section.
    2. Any protestant feeling aggrieved by the final action of the commissioners under this section may obtain a review of the commissioners' action by simple written request to the utility management review board within thirty (30) days thereafter, with the right to judicial review as provided in § 7-82-702.
  1. It is the duty of the board of commissioners of each utility district to have and maintain a set of rules regarding the adjustment of all complaints that may be made to the district concerning the availability of utility services to persons in need of utility services, the quality of service performed, the adjustment of bills, and all other complaints of any nature, with provision as to the manner of resolution of individual complaints, provision as to the types of complaints that may be resolved by salaried employees of the district, and those that may be resolved only by the board of commissioners. The rules must be posted or otherwise available for convenient inspection by customers and members of the public in the offices of the district. The rules must provide for office employees or other employees of the district to schedule for consideration by the board of commissioners any complaint of such nature as may be decided by the board under its rules, and to schedule for consideration by the board of commissioners the review of any complaint that has not been settled to the satisfaction of the customer or citizen by a salaried employee to whom the settlement of such complaint is delegated.
  2. Each utility district under this chapter shall:
    1. Publish in local telephone directories the telephone number of the district and a telephone number in its service area to be used to report emergencies and for after hours, weekends, and holidays;
    2. Print on its regular billing the address of the office of the district, office hours, if appropriate, the telephone number, and the time and place of the regular meeting of the board of commissioners;
    3. Notify customers of any service interruption that will, or is likely to, last ten (10) hours or longer. Notification may be by public service broadcast over commercial radio stations in the area;
    4. Maintain a log of service interruptions, service restorations, customer complaints and disposition of complaints;
    5. When it is determined by the board to be financially feasible, facilities shall be furnished for fire protection under such arrangements as the district may decide and negotiate with other governmental or private agencies; and
    6. Notify its customers at least once a year that decisions by a utility district board of commissioners on customer complaints may be reviewed by the utility management review board pursuant to § 7-82-702(7), and notify its customers at least once a year of the method used to fill vacancies on the utility district's board of commissioners. This notice may be published in a newspaper of general circulation in the county or counties in which the district is situated, along with the statement required to be published under § 7-82-401(d), or may be mailed annually to the district's customers in a separate correspondence, in any annual report or newsletter mailed to the district's customers or other writing provided annually to the district's customers.

Acts 1949, ch. 256, § 1; C. Supp. 1950, § 3695.46 (Williams, § 3695.43a); Acts 1973, ch. 249, § 5; T.C.A. (orig. ed.), § 6-2618; Acts 1984, ch. 796, § 2; 1992, ch. 788, § 1; 2004, ch. 618, § 3; 2013, ch. 141, § 12; 2015, ch. 140, §§ 3, 6; 2017, ch. 129, § 5.

Compiler's Notes. Acts 2004, ch. 618, § 1 provided that the act shall be known, and may be cited as, the “Utility District Commissioner Selection Reform Act of 2004”.

Amendments. The 2015 amendment, in (a)(1)(A), deleted “water” preceding “customer” twice near the beginning; and, in (a)(1)(B), substituted “water or sewer services” for “water services”.

The 2017 amendment, in (b), deleted “Except in those districts coming within § 7-82-103, from and after September 1, 1973,” from  the beginning, substituted “set of rules” for “set of rules and regulations” in the first sentence, substituted “The rules must” for “Such rules shall” at the beginning of the second and third sentences, and, in the third sentence, substituted “the board under its rules, and to” for “the board under its rules and regulations, and also to” and substituted “is delegated” for “shall have been delegated” at the end.

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Acts 2017, ch. 129, § 15. April 17, 2017.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Law Reviews.

The Tennessee Court System — Circuit Court (Frederic S. Le Clercq), 8 Mem. St. U.L. Rev. 241 (1978).

Attorney General Opinions. Jurisdiction of the utility management review board, OAG 93-26, 1993 Tenn. AG LEXIS 29 (3/29/93).

Utility management review board's authority over gas utility districts, OAG 99-031, 1999 Tenn. AG LEXIS 20 (2/18/99).

Collateral References.

Profit factor in determining rates for municipally owned or operated public utility. 90 A.L.R. 700.

Right of municipality to refuse services provided by it to resident for failure of resident to pay for other unrelated services. 60 A.L.R.3d 714.

7-82-403. Rates sufficient to pay costs and retire bonds.

The board of commissioners of any district shall prescribe and collect reasonable rates, fees, tolls, or charges for the services, facilities and commodities of its system or systems, shall prescribe penalties for the nonpayment of the rates, fees, tolls, or charges, and shall revise such rates, fees, tolls or charges from time to time whenever necessary to ensure that such system or systems shall be and always remain self-supporting. The rates, fees, tolls or charges prescribed shall be such as will always produce revenue at least sufficient to:

  1. Provide for all expenses of operation and maintenance of the system or systems, including reserves for the expenses; and
  2. Pay when due all bonds and interest on the bonds, for the payment of which such revenues are or shall have been pledged, charged or otherwise encumbered, including reserves for the bonds and interest.

Acts 1937, ch. 248, § 14; C. Supp. 1950, § 3695.40 (Williams, § 3695.39); T.C.A. (orig. ed.), § 6-2625; Acts 1987, ch. 422, § 8; 1989, ch. 139, § 6; 1989, ch. 221, § 8; 2011, ch. 392, § 13; 2012, ch. 674, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Refinancing of bonds, authorized, § 7-82-507.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7; 25 Tenn. Juris., Water Companies and Waterworks, §§ 4, 5.

Attorney General Opinions. Utility district supply contracts, OAG 93-59, 1993 Tenn. AG LEXIS 59 (9/3/93).

A utility district created under the Utility District Law of 1937, T.C.A. § 7-82-101 et seq., has the authority to charge a sewer fee to a property owner to whom it makes sewer service available, even though the property owner is not connected, OAG 02-051, 2002 Tenn. AG LEXIS 52 (4/22/02).

A utility district is authorized to contribute funds to its local chamber of commerce, its county government, or its county's nonprofit economic development corporation for economic development activities aimed at increasing development in the district's service area in anticipation of increasing its customer base and service loads, OAG 03-017, 2003 Tenn. AG LEXIS 24 (2/19/03).

Requirements for utility rates, OAG 05-165 (10/25/05).

“Growth and Development Fees” and “Impact Fees” levied by local utilities.  OAG 12-11, 2012 Tenn. AG LEXIS 11 (2/3/12).

NOTES TO DECISIONS

1. Construction.

Every utility district organized under Tennessee law is both empowered to fix and revise all its rates and charges and required to maintain the amounts of such rates and charges so they will always be adequate not only to maintain its system but also to pay when due all bonds and interest thereon, including reserves therefor. Batson v. Pleasant View Utility Dist., 592 S.W.2d 578, 1979 Tenn. App. LEXIS 355 (Tenn. Ct. App. 1979).

Collateral References.

Discrimination between property within and that outside municipality or other governmental district as to rates for use of sewers. 4 A.L.R.2d 595.

Profit factor in determining rates for municipally owned or operated public utility. 90 A.L.R. 700.

Part 5
Bonds and Notes

7-82-501. Issuance of bonds or notes.

  1. Each district has the power and is hereby authorized from time to time to issue negotiable bonds in anticipation of the collection of revenues for the purpose of constructing, acquiring, reconstructing, improving, bettering or extending any facility or system authorized by this chapter, or any combination thereof, and to pledge to the payment of the interest and principal of such bonds all or any part of the revenues derived from the operation of such facility, system, or combination of such facility and system. There may be included in the costs for which bonds are to be issued, reasonable allowances for legal, engineering and fiscal services, interest during construction and for six (6) months after the estimated date of completion of construction, and other preliminary expenses, including the expenses of incorporation of the district. Each district has the power and is hereby authorized from time to time to issue revenue refunding bonds in the manner provided for a local government in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21.
  2. Any utility district that has the power and authority to operate a gas distribution system may borrow money in anticipation of the collection of revenues from such system, and issue negotiable notes to evidence such borrowing for the purpose of financing gas purchases, including storage costs and pipeline capacity costs. Any such notes shall be secured solely by a pledge of and lien on the revenues of such system. The principal amount of notes that may be issued during any twelve-month period shall not exceed sixty percent (60%) of total gas purchases for the same period, and all notes issued during such period shall be retired and paid in full on or before the end of such period. The notes shall be sold in such manner, at such price and upon such terms and conditions as may be determined by the board of commissioners of the district issuing such notes. No notes shall be issued under this subsection (b) unless the gas system for which the notes are to be issued has positive net position as shown in the most recent audited financial statements of the system, and the system has produced positive change in net position in at least one (1) fiscal year out of the three (3) fiscal years next preceding the issuance of the notes as shown on the audited financial statements of the system. No notes shall be issued without first being approved by the comptroller of the treasury or the comptroller's designee. Notes issued pursuant to this section and the income from the notes shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes. If revenues of such system are insufficient to pay all such notes at maturity, any unpaid notes may be renewed one (1) time for a period not to exceed one (1) year, or may be otherwise liquidated as approved by the comptroller of the treasury or the comptroller's designee.
  3. No bond or note authorized by this chapter may be issued until the resolution authorizing the issuance of bonds or notes, together with a statement as of the beginning of the then current fiscal year, which statement shall show in detail the total outstanding bonds, notes, warrants, refunding bonds, and other evidences of indebtedness of the utility district, together with the maturity dates of the bonds, notes, warrants, refunding bonds, and other evidences of indebtedness, interest rates, special provisions for payment, the project to be funded by the bonds or notes, the current operating financial statement of the district and any other pertinent financial information, shall be submitted to the comptroller of the treasury or the comptroller's designee for review, and the comptroller of the treasury or the comptroller's designee may report thereon to the utility district within fifteen (15) days from the date the plan is received by the comptroller of the treasury or the comptroller's designee. The comptroller of the treasury or the comptroller's designee shall immediately acknowledge receipt in writing of the proposed bond or note issue statement and information. The report thus received by the utility district shall be published once in a newspaper of general circulation in the county of the principal office of the utility district, and any other counties that it serves, during the week following the report's receipt. After receiving the report of the comptroller of the treasury or the comptroller's designee, and after publication of such report, or after the expiration of fifteen (15) days from the date the statement and information are received by the comptroller of the treasury or the comptroller's designee, whichever date is earlier, the utility district may take such action with reference to the proposed bond or note issue as it deems advisable. Such report of the comptroller of the treasury or the comptroller's designee shall also be made a part of the bond transcript.
  4. No provision of this section dealing with the review or approval of any bond or note issued by the comptroller of the treasury or the comptroller's designee, or other state agency, shall apply when the bond or bonds or other evidence of indebtedness of the utility district are to be purchased or the loan is to be made by the farmers home administration or any other direct lending department of the government of the United States.
  5. Prior to the beginning of its fiscal year, any utility district that has issued any debt obligations pursuant to the authority of this chapter shall adopt a balanced annual operating budget that identifies all anticipated revenues of the district by source and identifies all anticipated expenses by type of expense. Such budget shall be based upon historical operating results and reasonably anticipated future operations. The budget as adopted shall be submitted to the comptroller of the treasury or the comptroller's designee for review. The comptroller of the treasury or the comptroller's designee shall furnish the utility district a report on such review, which report shall be published in accordance with subsection (c).
  6. If a utility district proposes to sell bonds in excess of fifty million dollars ($50,000,000) at a negotiated sale, a written request for proposal must be sent to a minimum of five (5) qualified firms no later than thirty (30) days prior to the first meeting of the board of commissioners to discuss the specific bond transaction. A minimum of three (3) proposals must be received no later than fourteen (14) days prior to such first meeting. This requirement applies to both financial advisory and underwriting services.

Acts 1937, ch., 248, § 9; C. Supp. 1950, § 3695.35 (Williams, § 3695.34); Acts 1951, ch. 262, § 3; 1963, ch. 104, § 1; 1977, ch. 495, §§ 1-3; 1978, ch. 669, § 1; 1978, ch. 713, § 1; T.C.A. (orig. ed.), § 6-2619; Acts 1985, ch. 38, §§ 1-4; 1987, ch. 422, § 9; 1988, ch. 750, § 37; 1989, ch. 139, § 7; 1989, ch. 221, § 9; 1998, ch. 701, § 1; 2004, ch. 663, § 1; 2010, ch. 868, §§ 24-27; 2011, ch. 392, §§ 14-16; 2015, ch. 140, §§ 10, 11.

Compiler's Notes. For table of U.S. decennial populations of counties, see Volume 13 and its supplement.

Amendments. The 2015 amendment, in (b) substituted “net position” for “retained earnings” near the middle and substituted “change in net position” for “net income” in the fifth sentence.

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Cross-References. Applicability to districts relating to systems or facilities for the transmission of industrial chemicals or natural gas by pipeline, § 7-82-302.

Limitation of actions on bonds, § 28-3-113.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-502. Terms of instruments.

  1. Such bonds shall be authorized by resolution of the board of the district, and may be issued in one (1) or more series; may bear such date or dates; may mature at such time or times not exceeding forty (40) years from their respective dates; may bear interest at such rate or rates, which may vary from time to time; may be in such form, either coupon or registered; may be executed in such manner; may be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium; and may contain such terms, covenants and conditions as such resolution or subsequent resolution may provide. The bonds may be issued for money or property and may be sold in such manner and upon such terms as the board shall determine. Pending the preparation of the definitive bonds, interim receipts or certificates in such form and with such provisions as the governing body may determine may be issued to the purchaser or purchasers of bonds sold pursuant to this chapter. The bonds and interim receipts or certificates shall be fully negotiable within the meaning of and for all purposes of the Uniform Commercial Code, compiled in title 47, chapter 3.
  2. If any issue of such bonds is to be sold to an agency of the federal government or an agency of the state, such bond issue may, at the request of such agency, be delivered as an installment bond payable as to principal and interest in equal or approximately equal installments for the term of such bond issue, in accordance with the resolution authorizing such bond issue. Such authorizing resolution shall stipulate the annual principal and interest requirements during the full term of the bond issue.
  3. With respect to all or any portion of any issue of bonds issued or anticipated to be issued under this chapter, at any time during the term of the bonds, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this subsection (c) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in subsection (e), a utility district, by resolution, may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, and other interest rate hedging agreements under such terms and conditions as the governing body of the utility district may determine, including, but not limited to, provisions permitting the utility district to pay to or receive from any person or entity any loss of benefits under such agreement upon early termination of the agreement or default under such agreement.
  4. The governing body of a utility district may enter into an agreement to sell bonds, other than its refunding bonds, under this chapter, providing for delivery of the bonds on a date greater than ninety (90) days and not greater than five (5) years, or such greater period of time, if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement or to sell its refunding bonds under this chapter and in accordance with the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, providing for delivery of its refunding bonds on a date greater than ninety (90) days from the date of execution of the agreement and not greater than the first optional redemption date on which the bonds being refunded can be optionally redeemed resulting in cost savings or at par, whichever is earlier, only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the agreement or contract of a utility district to sell its bonds, as authorized in this subsection (d), is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with the provisions of subsection (e). Agreements to sell bonds or refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement do not require a report of the comptroller of the treasury or the comptroller's designee.
    1. The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts referenced in subsections (c) and (d), which may include, but shall not be limited to, the following:
      1. The conditions under which such agreements or contracts can be entered into;
      2. The methods by which such contracts are to be solicited and procured;
      3. The form and content such contracts shall take;
      4. The aspects of risk exposure associated with such contracts;
      5. The standards and procedures for counterparty selection, including rating criteria;
      6. The procurement of credit enhancement, liquidity facilities, or the setting aside of reserves in connection with such contracts or agreements;
      7. The methods of securing the financial interest in such contracts;
      8. The methods to be used to reflect such contracts in the utility district's financial statements;
      9. Financial monitoring and periodic assessment of such contracts by the utility district;
      10. The application and source of nonperiodic payments; and
      11. Educational requirements for officials of any utility district responsible for approving any such contract or agreement.
    2. Prior to the adoption by the governing body of the utility district of a resolution authorizing such contract or agreement, a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that such contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report on the compliance to the utility district. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the utility district may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that such contract or agreement is not in compliance with the guidelines, rules or regulations, then the utility district is not authorized to enter into such contract or agreement. The guidelines, rules or regulations shall provide for an appeal process to a determination of noncompliance.
  5. When entering into any contracts or agreements facilitating the issuance and sale of bonds, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating to the bonds, interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, other interest rate hedging agreements, and agreements with the purchaser of the bonds authorized under this section evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the utility district may agree in the written contract or agreement that the rights and remedies of the parties to the contract or agreement shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over any utility district against which an action on such a contract or agreement is brought shall lie solely in a court in Tennessee that would otherwise have jurisdiction of actions brought in contract against such utility district.
  6. Prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations with respect to the contracts and agreements authorized in subsections (c) and (d), a utility district may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law, notwithstanding subsections (c) and (d). Nothing in subsection (c), (d), (e) or (f) is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a utility district to enter into the contracts or agreements described in subsection (c), (d), (e) or (f) heretofore entered into or entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations.
  7. When entering into an interest rate agreement authorized by this section, a utility district may secure its obligations under the agreement, including its obligation for termination or other nonperiodic payments, with the revenues available to secure the bonds with respect to which such interest rate agreement is entered into.

Acts 1937, ch. 248, § 9; C. Supp. 1950, § 3695.35 (Williams, § 3695.34); Acts 1969, ch. 282, § 1; T.C.A. (orig. ed.), § 6-2620; Acts 1980, ch. 586, § 1; 1980, ch. 601, § 5; 1999, ch. 428, §§ 1, 2; 2001, ch. 253, § 8; 2004, ch. 589, § 5.

Cross-References. Bonds tax exempt, § 7-82-105.

Maximum effective rates of interest, § 47-14-103.

Refunding authorized, § 7-82-507.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-503. Covenants.

Any resolution authorizing the issuance of bonds under this chapter may contain covenants, including, but not limited to:

  1. The purpose or purposes to which the proceeds of the sale of the bonds may be applied and the deposit, use and disposition of the bonds;
  2. The use, deposit, securing of deposits, and disposition of the revenues of the district, including the creation and maintenance of reserves;
  3. The issuance of other additional bonds payable from the revenues of the district;
  4. The operation and maintenance of the system or systems;
  5. The insurance to be carried thereon and the use, deposit and disposition of insurance moneys;
  6. Books of account and the inspection and audit of the books, and the accounting methods of the district;
  7. The nonrendering of any free service by the district; and
  8. The preservation of the system or systems, so long as any of the bonds remain outstanding, from any mortgage, sale, lease or other encumbrance not specifically permitted by the terms of the resolution.

Acts 1937, ch. 248, § 10; C. Supp. 1950, § 3695.36 (Williams, § 3695.35); T.C.A. (orig. ed.), § 6-2621.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Collateral References.

Disposition of revenues from operation of revenue-producing enterprises owned by municipal corporation. 103 A.L.R. 579, 165 A.L.R. 854.

7-82-504. Validity of bonds.

Such bonds bearing the signatures of officers in office on the date of the signing of the bonds shall be valid and binding obligations, notwithstanding that before the delivery of the bonds and payment for the bonds any or all the persons whose signatures appear on the bonds shall have ceased to be officers of the district issuing the bonds. The validity of the bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of the utility for which the bonds are issued. The resolution authorizing the bonds may provide that the bonds shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Acts 1937, ch. 248, § 12; C. Supp. 1950, § 3695.38 (Williams, § 3695.37); T.C.A. (orig. ed.), § 6-2622.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-505. Lien — Default — Pledges or security interests — Construction.

  1. There shall be and there is created a statutory lien in the nature of a mortgage lien upon any system or systems acquired or constructed in accordance with this chapter, including all extensions and improvements to the system or systems, or combinations of extensions and improvements subsequently made, which lien shall be in favor of the holder or holders of any bonds issued pursuant to this chapter, and all such property shall remain subject to such statutory lien until the payment in full of the principal of and interest on the bonds. Any holder of such bonds or any of the coupons representing interest on the bonds may, either at law or in equity, by suit, action, mandamus, or other proceeding, in any court of competent jurisdiction, protect and enforce such statutory lien and compel performance of all duties required by this chapter, including the making and collection of sufficient rates for the service or services, the proper accounting for the collections, and the performance of any duties required by covenants with the holders of any bond issued in accordance with this chapter.
  2. If any default be made in the payment of the principal of or interest on such bonds, any court having jurisdiction of the action may appoint a receiver to administer the district, and the system or systems, with power to charge and collect rates sufficient to provide for the payment of all bonds and obligations outstanding against the system or systems and for the payment of operating expenses, and to apply the income and revenues of the bonds, in conformity with this chapter, and any covenants with bondholders.
    1. Any pledge of, or security interest in, the revenues, fees, rents, tolls or other charges received or receivable by any utility district to secure the payment of any bonds of such utility district, and the interest on the bonds, shall be valid and binding from the time when the pledge or security interest is made or granted; the revenues, fees, rents, tolls or other charges so pledged and thereafter received by the utility district or on behalf of any bondholders, together with any tangible property subjected to a security interest by the utility district, shall be subject to such lien as the resolution or other document creating such pledge in favor of the holder or holders of such bonds shall provide. Neither the resolution nor any other instrument by which any such pledge or security interest or any lien on any of the property of the utility district is created need be recorded.
    2. This subsection (c) shall be in addition to and supplemental to all other provisions of other laws of Tennessee; provided, that wherever the application of this subsection (c) conflicts with the application of such other provisions, this subsection (c) shall prevail.

Acts 1937, ch. 248, § 11; C. Supp. 1950, § 3695.37 (Williams, 3695.36); T.C.A. (orig. ed.), § 6-2623; Acts 1982, ch. 547, §§ 1, 2.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Utility district operating at a loss.  OAG 11-35, 2011 Tenn. AG LEXIS 37 (4/15/11).

NOTES TO DECISIONS

1. Revenue Held in Trust.

A utility district cannot lawfully use any current revenue to pay the cost of private sewer lines and connections, all such revenue being held in trust by the utility commissioners to liquidate bonds of the district. Cline v. Red Bank Utility Dist., 194 Tenn. 255, 250 S.W.2d 362, 1952 Tenn. LEXIS 374 (1952).

2. Suit Requiring Furnishing of Service — Parties.

Bondholders were not necessary parties to declaratory proceeding brought by builders of subdivision where bill asked that court determine the rights of complainant to contract for water service from a source other than the district or in the alternative that the district be required to construct lines to the subdivision where the chancellor did not order the utility to build such lines, and if he did order the building of such lines would not have ordered them built out of revenues pledged to payment of bonds. Chandler Inv. Co. v. Whitehaven Utility Dist., 44 Tenn. App. 1, 311 S.W.2d 603, 1957 Tenn. App. LEXIS 146 (Tenn. Ct. App. 1957).

3. Court of Competent Jurisdiction.

A federal bankruptcy court is a “court of competent jurisdiction.” In re Pleasant View Utility Dist., 27 B.R. 552, 1982 Bankr. LEXIS 2938 (M.D. Tenn. 1982).

Collateral References.

Disposition of revenues from operation of revenue-producing enterprises owned by municipal corporation. 103 A.L.R. 579, 165 A.L.R. 854.

7-82-506. Bonds payable from revenue.

No holder or holders of any bonds issued pursuant to this chapter shall ever have the right to compel the levy of any tax to pay the bonds or the interest on the bonds. Each bond shall recite in substance that the bond and interest on the bonds are payable solely from the revenue pledged to the payment of the bond and that the bond does not constitute a debt of the district within the meaning of any statutory limitation.

Acts 1937, ch. 248, § 13; C. Supp. 1950, § 3695.39 (Williams, § 3695.38); T.C.A. (orig. ed.), § 6-2624.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-507. Reamortization and refinancing.

When any bonds authorized to be issued pursuant to this chapter are held by any federal or state governmental authority or agency, such bonds, to the extent of the principal and interest on the bond outstanding at any time, may be recalled with the consent of such authority or agency and reamortized or refinanced upon such terms as are agreed upon by such authority or agency and as are incorporated in the resolution of the board of commissioners authorizing such reamortization or refinancing. The lien in favor of any holders of such reamortized or refinanced bonds shall continue in favor of such holders with the same priority as existed in favor of such holders prior to such reamortization or refinancing.

Acts 1978, ch. 668, § 1; T.C.A., § 6-2640.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Part 6
Multi-County Districts

7-82-601. Creation — Petition.

  1. Utility districts embracing territory in two (2) or more counties may be created in the manner provided in this chapter.
  2. The petition for the incorporation of such utility district may be submitted to the county mayor of any one (1) of the counties situated in whole or in part in such proposed district.

Acts 1955, ch. 275, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A., § 6-2628; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7; 19 Tenn. Juris., Municipal Corporations, §§ 13, 37.

Attorney General Opinions. Utility districts with territory in more than one county, OAG 00-003, 2000 Tenn. AG LEXIS 2 (1/6/00).

7-82-602. Commissioners.

      1. Except as provided in subdivision (a)(1)(B), the commissioners nominated in such petition shall be designated in such a manner that each county situated in whole or in part in the proposed district shall be represented on the board of commissioners by at least one (1) person resident in such county and in the district or owning property within such county and the district, and the county mayor shall appoint commissioners in like manner.
      2. In any county having a population of not less than twenty-seven thousand nine hundred (27,900) nor more than twenty-seven thousand nine hundred twenty (27,920), according to the 1980 federal census or any subsequent federal census, the commissioners nominated in such petition shall be designated in such a manner that each county situated in whole or in part in the proposed district shall be represented on the board of commissioners by at least one (1) resident of such county and of the district, and the county mayor shall appoint commissioners in like manner.
      1. If the proposed district is to comprise two (2) counties or parts of two (2) counties, the petition shall nominate three (3) commissioners.
      2. If the proposed district is to comprise three (3) or more counties or parts of three (3) or more counties, the petition shall nominate a number of commissioners equal to the number of counties or parts of counties to be included in such district; provided, that where the proposed district is to comprise an even number of counties or parts of counties, up to six (6), the petition shall nominate a number of commissioners equal to the number of counties, plus one (1) commissioner at large.
        1. If the proposed district is to comprise eight (8) or more counties or parts of counties, the petition shall nominate eight (8) residents of the district, and it shall not be necessary for each county to be represented on the board; however, each of the eight (8) commissioners shall be from separate counties, it being the purpose and intent of this subdivision (a)(2)(C) to limit the number of commissioners of any district to eight (8). Any existing districts with seven (7) commissioners serving districts comprised of more than seven (7) counties or parts of seven (7) counties shall add a qualified commissioner from the county having the largest number of district customers among those counties not already having a commissioner.
        2. Any commissioner added pursuant to subdivision (a)(2)(C)(i) to existing utility districts shall be made utilizing the applicable procedures described in § 7-82-307. The term for the added commissioner shall be four (4) years beginning July 12, 2016. The first certified list of nominees shall be submitted to the appropriate county mayor no later than May 1, 2016.
  1. In districts comprising seven (7) or more counties or parts of counties, the commissioners shall be entitled to receive compensation for their services in an amount not to exceed one hundred dollars ($100) per day for each day's attendance of the meetings of the board in the performance of their official duties. The amount of compensation shall be fixed by the board of commissioners, but the compensation shall not exceed the sum of one hundred dollars ($100) per day. No member of a board of commissioners shall draw compensation in excess of one thousand two hundred dollars ($1,200) for such services during any one (1) calendar year.
  2. In natural gas districts serving counties with a population of not less than twenty-nine thousand one hundred (29,100) nor more than twenty-nine thousand four hundred (29,400) and not less than thirty-three thousand ten (33,010) nor more than thirty-three thousand five hundred (33,500), according to the 1990 federal census or any subsequent federal census, there shall be five (5) commissioners. Each county shall be represented by at least two (2) commissioners.

Acts 1955, ch. 275, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A., § 6-2629; Acts 1980, ch. 794, § 1; 1987, ch. 162, §§ 1, 3; 1993, ch. 154, § 1; 2003, ch. 90, § 2; 2015, ch. 452, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Amendments. The 2015 amendment rewrote (a)(2), which read: “If the proposed district is to comprise two (2) counties or parts of two (2) counties, the petition shall nominate three (3) commissioners. If the proposed district is to comprise three (3) or more counties or parts of three (3) or more counties, the petition shall nominate a number of commissioners equal to the number of counties or parts of counties to be included in such district; provided, that where the proposed district is to comprise an even number of counties, or parts of counties, the petition shall nominate a number of commissioners equal to the number of counties, plus one (1) commissioner at large. If the proposed district is to comprise seven (7) or more counties or parts of counties, the petition shall nominate seven (7) residents of the district, and it shall not be necessary for each county to be represented on the board; however, each of the seven (7) commissioners shall be from separate counties, it being the purpose and intent of this subdivision (a)(2) to limit the number of commissioners of any district to seven (7).”

Effective Dates. Acts 2015, ch. 452, § 2. May 18, 2015.

Cross-References. Waiver of provisions, § 7-82-202.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-603. Hearing on incorporation — Notice — Address of district office.

  1. The notice of public hearing on the convenience and necessity of the incorporation of the district shall be published, as provided in § 7-82-202, in each of the counties situated in whole or in part in such proposed district in a newspaper published and having a general circulation in the counties. If there is no such newspaper in any of such counties, notice shall be given in such county or counties by posting, as provided in § 7-82-202. Such notice shall also be given by registered mail at least ten (10) days before the hearing to the county mayor of each county situated in whole or in part within such proposed district, and to the mayor or chief executive officer of each city, town and utility district, as provided in § 7-82-202.
  2. The petition for the incorporation of such utility district, the notice of public hearing on the petition, and the order creating such district, in addition to other requirements of this chapter, shall state the address of the principal office of such utility district.
  3. The public hearing shall be held before the county mayors of such counties sitting as a panel, at a time and place designated by the county mayor to whom the petition for the proposed district was addressed. All such county mayors shall be notified of the date, time and place of such hearing at least five (5) days prior to the date, and it shall be the responsibility of such county mayors to attend and participate if they elect to do so in such hearing. In the event a majority of such county mayors so notified fail to appear and participate in the hearing, the county mayor to whom the petition was addressed may proceed with the hearing and enter appropriate orders as provided in this chapter. In the event three (3) or more counties are involved and in the event two (2) or more of such county mayors elect to attend and participate in the hearing, a majority vote shall be required for the creation of the district.

Acts 1955, ch. 275, § 1; 1968, ch. 529, § 5; impl. am. Acts 1978, ch. 934, §§ 16, 36; T.C.A., § 6-2630; Acts 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

Cross-References. Certified mail instead of registered mail, § 1-3-111.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Multi-county gas utility districts, OAG 93-56, 1993 Tenn. AG LEXIS 56 (9/2/93).

NOTES TO DECISIONS

1. Jurisdiction.

The actions of the panel in multi-county proceedings are binding throughout all the territory presided over by the panel, with or without the presence of all members. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

2. Notice.

In multi-county proceeding county judge or chair (now county mayor) who first receives petition is granted only prerogative to set the time and place of hearing and duty to notify the remaining members of the panel to be present at hearing. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

In proceeding involving utility district lying in two counties wherein only county judge (now county mayor) acted, presumption would be, in absence of showing in record to the contrary, that judge who acted did so in accordance with this section and had given the required notice of meeting of the panel. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

3. Nature of Proceeding.

Whether a county judge (now county mayor) is sitting alone considering a one-county district, or two or more county judges are considering a multi-county district, he or they are acting as an administrative body and not a court. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

4. Attendance at Meeting.

Under this section it is the responsibility of the judges and chairs (now county mayors) to attend meetings of the panel when notified but if one or more of the panel members fail to attend after notice action may nevertheless be taken. White House Gas Utility Dist. v. Cross Plains Natural Gas Utility Dist., 60 Tenn. App. 162, 445 S.W.2d 459, 1969 Tenn. App. LEXIS 312 (Tenn. Ct. App. 1969).

7-82-604. Terms of commissioners.

In cases where more than three (3) commissioners are nominated under this chapter, such commissioners shall be appointed for terms of two (2), three (3) and four (4) years, the number of commissioners appointed for each such term to be as nearly equal as possible.

Acts 1955, ch. 275, § 1; T.C.A., § 6-2631.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-605. Filing and publication of order creating district.

A certified copy of the order creating such district shall be filed with the county clerk of each of the counties included in whole or in part in such district and shall be entered of record. A copy of such order shall also be published in each of the counties situated in whole or in part within such district in a newspaper published and having a general circulation in such county, or if there is no such newspaper in any such county, a copy of the order shall be posted in five (5) conspicuous public places within such county. A certified copy of such order shall also be filed with the secretary of state. Upon such filing and publication or posting, the incorporation of such district shall be complete.

Acts 1955, ch. 275, § 1; impl. am. Acts 1978, ch. 934, §§ 22, 36; T.C.A., § 6-2632.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-606. Appeals from order creating district.

Appeals from an order creating such a district may be prayed as provided in this chapter to the circuit court of any county included in whole or in part in such district.

Acts 1955, ch. 275, § 1; T.C.A., § 6-2633.

Cross-References. Appeal to circuit court, § 7-82-204.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-607. Vacancies in board.

  1. Except as provided in subsection (b), the office of any commissioner, other than a commissioner at large, shall become vacant if the incumbent ceases to reside in or be a district customer in the county from which the commissioner was elected.
  2. In any county having a population of not less than twenty-seven thousand nine hundred (27,900) nor more than twenty-seven thousand nine hundred twenty (27,920), according to the 1980 federal census or any subsequent federal census, the office of any commissioner, other than a commissioner at large, shall become vacant if the incumbent ceases to reside in the county from which the incumbent was elected.

Acts 1955, ch. 275, § 1; 1973, ch. 249, § 8; T.C.A., § 6-2634; Acts 1987, ch. 162, §§ 2, 3; 2006, ch. 512, § 1; 2010, ch. 1146, §§ 11, 12; 2012, ch. 538, § 4.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2010, ch. 1146, § 13 provided that, notwithstanding § 8-48-101, the office of a district commissioner will not be vacated on June 30, 2010, solely because the district commissioner is not a district resident or customer and the district commissioner may continue in office until the expiration of such commissioner's term of office in effect on June 30, 2010.

Cross-References. Waiver of provisions, § 7-82-202.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-608. Financial statements.

Statements published pursuant to § 7-82-401 shall be published in each of the counties situated in whole or in part in such district in a newspaper having general circulation in the counties.

Acts 1955, ch. 275, § 1; T.C.A., § 6-2635.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

7-82-609. Part not retroactive.

It is expressly the legislative intent that nothing in this part shall be construed to be retroactive, and that the terms and conditions of such sections shall in no wise affect or abridge the rights, powers, privileges and duties of utility districts existing on March 21, 1955.

Acts 1955, ch. 275, § 2; T.C.A., § 6-2636.

Textbooks. Tennessee Jurisprudence, 13 Tenn. Juris., Gas Companies, § 7.

Attorney General Opinions. Utility districts with territory in more than one county, OAG 00-003, 2000 Tenn. AG LEXIS 2 (1/6/00).

Part 7
Utility Management Review Board

7-82-701. Created — Authority — Composition — Terms — Chair.

  1. There is hereby created in the office of comptroller of the treasury a utility management review board for the purpose of advising utility district boards of commissioners in the area of utility management. The utility management review board created by this section is vested with authority over all utility districts established pursuant to this chapter or by any public or private act.
  2. The board shall be composed of nine (9) members as follows:
    1. The commissioner of environment and conservation or the commissioner's designee;
    2. The comptroller of the treasury or the comptroller's designee, who shall serve as chair; and
    3. Seven (7) members appointed by the governor, three (3) of whom shall be experienced utility district managers, three (3) of whom shall be experienced utility district commissioners and one (1) of whom shall be a consumer residing in the state who may have experience in residential development but is not engaged in utility district management or operation. The consumer member shall be appointed for a four-year term of office at the expiration of the term of office of a utility district manager first occurring after June 11, 2009.
  3. The governor shall consult with the Tennessee Association of Utility Districts (TAUD) as to qualified individuals to be appointed to the board.
  4. Members shall be appointed to four-year terms; provided, that the initial appointments shall be for terms, not to exceed four (4) years, as shall be necessary so that the terms of no more than two (2) members of the board shall end in any one (1) year.
  5. [Deleted by 2015 amendment.]

Acts 1987, ch. 422, § 10; 1989, ch. 400, §§ 1, 2; 1994, ch. 918, § 1; 2002, ch. 603, § 11; 2007, ch. 86, § 1; 2009, ch. 423, § 2; 2015, ch. 140, §§ 4, 5; 2017, ch. 129, § 1; 2018, ch. 688, § 1.

Compiler's Notes. For attachment of the utility management review board to the department of health, see Executive Order No. 21 (June 28, 1988).

The utility management review board, created by this section, terminates June 30, 2020. See §§ 4-29-112, 4-29-241.

Amendments. The 2015 amendment added “who shall serve as chair” at the end of (b)(2) and deleted (e), which read: “Every two (2) years the board shall elect a chair from among its members and such other officers as it may deem necessary.”

The 2017 amendment, in (a), substituted “private act” for “public or private act” in the second and third sentences, deleted “Effective July 1, 1989, notwithstanding any law to the contrary,” from the beginning of the second sentence, and, in the last sentence, inserted a comma preceding “or instrumentalities” and deleted “, other than those agencies, authorities or instrumentalities of government electing pursuant to § 68-221-1006(a) or § 68-221-1206(a) to come under the jurisdiction of the water and waste water financing board” from the end.

The 2018 amendment, in (a), substituted “any public or private act” for “any private act” at the end of the second sentence, and deleted the former last sentence which read: “For purposes of this part, ‘utility district’ includes agencies, authorities, or instrumentalities of government created by private act having the authority to administer a water or wastewater facility.”

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Acts 2017, ch. 129, § 15. April 17, 2017.

Acts 2018, ch. 688, § 3. April 9, 2018.

Attorney General Opinions. Jurisdiction over the Reelfoot Lake Regional Utility and Planning District, OAG 96-010, 1996 Tenn. AG LEXIS 9 (1/30/96).

Utility management review board's authority over gas utility districts, OAG 99-031, 1999 Tenn. AG LEXIS 20 (2/18/99).

NOTES TO DECISIONS

1. Construction.

In looking at the language of the statute, it is apparent that the legislature included wastewater treatment authorities in the definition of “utility district” in order to bring the authorities within the governing umbrella of the Utility Management Review Board for specified purposes that do not include the Part 4 administrative procedures. Am. Heritage Apts., Inc. v. Hamilton County Water & Wastewater Treatment Auth., 494 S.W.3d 31, 2016 Tenn. LEXIS 269 (Tenn. Apr. 8, 2016).

2002 amendment to the Utility District Law of 1937 (UDL) was not intended to mean that wastewater treatment authorities are deemed “utility districts” for all purposes under UDL, but rather, they are considered “utility districts” only for the purposes specified in the statute; a review of the whole 2002 amendment package demonstrates that it was designed primarily to provide loan and financing options for water and wastewater treatment entities. Am. Heritage Apts., Inc. v. Hamilton County Water & Wastewater Treatment Auth., 494 S.W.3d 31, 2016 Tenn. LEXIS 269 (Tenn. Apr. 8, 2016).

7-82-702. Powers and duties.

  1. In order to effectuate the purposes of this part, the board has the power and authority to:
    1. Promulgate rules and regulations for the conduct of the affairs of the board;
    2. Adopt a seal for the board, prescribe the style of the seal and alter the seal at pleasure;
    3. Subject to title 9, chapter 4, appoint and fix the salaries and duties of such experts, agents and employees as it deems necessary;
    4. Make and enter into contracts;
    5. Accept gifts, grants or other moneys and receive appropriations that may be made by law;
    6. Give advisory technical assistance to any utility district upon request;
    7. Review and conduct an informal hearing of any decision of any utility district under § 7-82-402(a) upon simple written request of any utility district customer or any member of the public within thirty (30) days after such decision. In making its decision as to whether the published rates are too high or too low, the utility management review board shall take into account the reasonableness of the utility district's rules, policies, and cost of service as well as any evidence presented during the hearing. Any judicial review of any decision of the board will be held by common law certiorari within the county in which the hearing was held;
    8. Upon the failure of the board of commissioners of a utility district to adopt the rules and regulations required by § 7-82-402(b) or any other section of this chapter or, upon the failure of a utility district to consider and resolve consumer complaints in accordance with such rules and regulations, establish an alternate mechanism for consideration and resolution of such complaints through an informal hearing process. In making its decision as to whether the complaint was resolved in accordance with the utility district's rules and regulations, the utility management review board shall also take into account the reasonableness of the utility district's application of its rules, policies, and cost of service as well as any evidence presented during the hearing. Any judicial review of any decision of the board will be held by common law certiorari within the county in which the hearing was held;
    9. Review and conduct an informal hearing of any decision of any utility district upon a written request of any utility district customer or an affected developer concerning the justness and reasonableness of the utility district's requirement that the customer or the developer build utility systems to be dedicated to the utility district or the justness and reasonableness of fees or charges against the customer or the developer related to the utility systems. The written complaint must be filed within thirty (30) days after the utility board has taken action upon a written complaint to the board of commissioners of the utility district. In making its decision as to whether the requirements, fees, or charges are just and reasonable, the utility management review board shall take into account the reasonableness of the utility district's rules, policies, and cost of service as well as any evidence presented during the hearing. Any judicial review of any decision of the board will be held by common law certiorari within the county in which the hearing was held;
    10. From time to time, submit to the governor or the comptroller of the treasury its suggestions for proposed amendments to this chapter;
    11. Exercise all the powers and take all the actions necessary, proper or convenient for the accomplishment of the purposes enumerated in this part;
    12. Issue subpoenas requiring attendance of witnesses and production of such evidence as requested; administer oaths; and take such testimony as the board deems necessary in fulfilling its purpose. If a person or entity refuses to obey a subpoena issued by the board under this part, the chancery court of Davidson County shall have jurisdiction upon application of the board to issue an order requiring such person to appear and testify or produce evidence as the case may require, and any failure to obey such order of the court may be punished by such court as contempt;
    13. Conduct a contested case hearing and issue an order on the question of whether a member or members of a utility district board should be removed from office and a new board or member appointed or elected as provided in § 7-82-307(b);
    14. Conduct a contested case hearing and issue an order on the question of whether a utility district that fills vacancies on its board using a method other than appointment by a county mayor or mayors should be required to begin filling vacancies under the uniform method for the filling of vacancies set forth by § 7-82-307(a)(4) and (5) as provided in § 7-82-307(c);
    15. Establish, adopt and promulgate in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, rules that the board deems necessary for the training of utility district commissioners;
    16. Establish, adopt and promulgate in accordance with the Uniform Administrative Procedures Act, rules to define excessive water losses for utility districts;
    17. Review and approve, by order, the model of ethical standards prepared by the Tennessee Association of Utility Districts (TAUD) for water, wastewater and gas authorities created by a private act or under the general law and for utility districts pursuant to § 8-17-105(b); and review and find, by order, that the ethical standards adopted by any water, wastewater or gas authority created by a private act or under the general law or a utility district that differ from the TAUD model are more stringent than the TAUD model;
    18. Hear and act upon the request for utility service by or for a utility district customer made pursuant to § 7-82-112; and
    19. [Deleted by 2015 amendment.]
  2. In the conduct of any informal hearing upon request or complaint, the board may receive affidavit evidence, in addition to minutes, transcripts, and other evidence of actions by the utility district, and may render its decision thereon or, if it shall deem an open hearing appropriate, may order the interested parties be notified of the date, time, and place that such hearing will be held.

Acts 1987, ch. 422, § 10; 1990, ch. 732, § 1; 1992, ch. 788, §§ 2, 3; 1994, ch. 918, § 2; 2000, ch. 721, § 1; 2004, ch. 618, § 4; 2007, ch. 243, § 2; 2007, ch. 405, § 4; 2008, ch. 852, § 2; 2009, ch. 423, § 1; 2013, ch. 141, § 4; 2015, ch. 140, §§ 7, 8; 2016, ch. 590, § 2; 2017, ch. 129, § 2.

Compiler's Notes. Acts 2004, ch. 618, § 1 provided that the act shall be known, and may be cited as, the “Utility District Commissioner Selection Reform Act of 2004”.

Amendments. The 2015 amendment rewrote (a)(7)-(9), which read: “(7) Review any decision of any utility district under § 7-82-402, regardless of exemptions or exclusions as may be enumerated in § 7-82-103, upon simple written request of any utility district customer or any member of the public within thirty (30) days after such decision, with any judicial review of any decision of the board thereon, to be held by common law certiorari within the county of the utility district's principal office;“(8) Upon the failure of the board of commissioners of a utility district to adopt the rules and regulations required by § 7-82-402(b), regardless of exemptions or exclusions as may be enumerated in § 7-82-103, or any other section of this chapter or, upon the failure of a utility district to consider and resolve consumer complaints in accordance with such rules and regulations, establish an alternate mechanism for consideration and resolution of such complaints;“(9) In the conduct of any hearing upon request or complaint, the board may receive affidavit evidence, in addition to minutes, transcripts, and other evidence of actions by the utility district, and may render its decision thereon or, if it shall deem an open hearing appropriate, may order the interested parties be notified of the date, time and place that such hearing will be held;”; deleted (a)(19), which read: “Review and conduct a hearing of any decision of any utility district upon a written request of any utility district customer or an affected developer concerning the justness and reasonableness of the utility district's requirement that the customer or the developer build utility systems to be dedicated to the utility district or the justness and reasonableness of fees or charges against the customer or the developer related to the utility systems. The written complaint must be filed within thirty (30) days after the utility board has taken action upon a written complaint to the board of commissioners of the utility district. In making its decision as to whether the requirements, fees or charges are just and reasonable, the utility management review board shall take into account the reasonableness of the utility district's rules, policies and cost of service as well as any evidence presented during the hearing. Any judicial review of a decision of the board is by common law certiorari with the county of the utility district's principal office as the proper venue.” and added (b).

The 2016 amendment inserted “or the comptroller of the treasury” following “governor” in (a)(10).

The 2017 amendment deleted “, regardless of exemptions or exclusions as may be enumerated in § 7-82-103,” following “under § 7-82-402(a),” in the first sentence of  (a)(7); and deleted “, regardless of exemptions or exclusions as may be enumerated in § 7-82-103,” following “required by § 7-82-402(b)” in the first sentence of (a)(8).

Effective Dates. Acts 2015, ch. 140, § 13. April 16, 2015.

Acts 2016, ch. 590, § 3. March 10, 2016.

Acts 2017, ch. 129, § 15. April 17, 2017.

Attorney General Opinions. Jurisdiction of the utility management review board, OAG 93-26, 1993 Tenn. AG LEXIS 29 (3/29/93).

Utility management review board's authority over gas utility districts, OAG 99-031, 1999 Tenn. AG LEXIS 20 (2/18/99).

7-82-703. Financially distressed utility districts — Audited annual financial reports — Adoption of prescribed rate structures.

  1. The comptroller of the treasury shall cause to be filed with the board a copy of the audited annual financial report of a financially distressed utility district prepared pursuant to § 7-82-401 within sixty (60) days from the date that the audit is filed with the comptroller of the treasury.
  2. After reviewing the audited annual financial report and operations of the financially distressed utility district, and after holding a public hearing within the service area of such utility district, the board may prescribe a rate structure to be adopted by the financially distressed utility district to cause such utility district to eliminate negative changes in net position, to liquidate in an orderly fashion any deficit total net position or to cure a default on any indebtedness of the district, or any combination of these.
  3. In the event the board of commissioners of the financially distressed utility district fails to adopt the prescribed rate structure, the utility management review board shall petition the chancery court in a jurisdiction in which the utility district is operating to require the adoption of the rate structure prescribed by the board or such other remedial actions that, in the opinion of the court, may be required to cause the utility district to be operated in accordance with state law.
  4. Notwithstanding any other law to the contrary, nothing in this section shall preclude a public utility district from operating water and sewer systems as individual or combined entities.

Acts 1987, ch. 422, § 10; 2004, ch. 619, §§ 8, 9; 2008, ch. 700, §§ 2-4; 2009, ch. 72, § 2; 2014, ch. 628, §§ 9, 10; 2016, ch. 590, § 1.

Amendments. The 2016 amendment substituted “pursuant to § 7-82-401 within sixty (60) days from the date that the audit is filed with the comptroller of the treasury” for “pursuant to § 7-82-401” at the end of (a).

Effective Dates. Acts 2016, ch. 590, § 3. March 10, 2016.

Attorney General Opinions. Comptroller's authority to report financially distressed gas utility districts, OAG 99-031, 1999 Tenn. AG LEXIS 20 (2/18/99).

Requirements for utility rates, OAG 05-165 (10/25/05).

7-82-704. Financially distressed utility districts — Consolidation.

    1. When a utility district is financially distressed or is financially unable to expand the amount or type of service or services as set forth and described in its petition for creation pursuant to § 7-82-201, the utility management review board may consider the consolidation of the utility district with another utility district or districts, municipal utility system or county utility system to restore financial stability and to ensure continued operations for the benefit of the public being served by the utility district. The utility management review board may initiate and participate in negotiations among the utility district, any other utility district, municipal utility system or county utility system with whom the utility district may consolidate and any other affected parties concerning a consolidation. In the event the utility management review board determines that such a consolidation is in the best interest of the public being served by the utility district and the utility management review board is able to negotiate an agreement among all affected parties for the consolidation, the utility management review board shall enter an order approving the consolidation agreement and shall require the utility district to enter into the consolidation agreement. If the utility management review board determines that the utility district, any other utility district, municipal utility system or county utility system with whom the utility district may consolidate, or any other affected party, has refused or failed to enter into good faith negotiations on a consolidation, then the utility management review board shall petition the chancery court in a jurisdiction in which the utility district is operating to require the party or parties to engage in good faith negotiations concerning a consolidation.
    2. In the event the board of commissioners of the utility district does not enter into the approved consolidation agreement or fails to abide by the terms and conditions of the consolidation agreement, then the utility management review board shall petition the chancery court in a jurisdiction in which the utility district is operating to enforce the utility management review board's order to require the board of commissioners to enter into the approved consolidation agreement and to abide by and implement all of the terms and conditions of the consolidation agreement.
  1. In order to mitigate any negative financial impact of such a consolidation on the utility district or districts, municipal utility system or county utility system agreeing to consolidate with a financially distressed utility district, the board is hereby authorized to develop a plan of mitigation payments to such consolidated utility system. Such mitigation payments shall be made from funds available in the utility district revitalization fund and shall include amounts to offset increased administrative costs relating to the consolidation, to the extent such costs cannot reasonably be recovered from customer revenues or other assets of the financially distressed utility district, amounts that may be necessary to cure a default on indebtedness of the financially distressed utility district to the extent such defaults can, in the opinion of the board, reasonably be cured, amounts that may be necessary to renovate and repair the facilities of the financially distressed utility district to the level necessary to enable the consolidated utility system to provide continued service to the public being served by the financially distressed utility district, and other such payments as may be necessary in the opinion of the board to accomplish such a consolidation and mitigate the financial impact of the consolidation.
  2. The board shall contract with a resulting consolidated utility system to provide for the repayment of any such mitigation payments over a period of time as may be agreed upon by the board and the consolidated utility system. Such repayments may be made from surcharges levied upon the customers in the service area of the financially distressed utility district being consolidated; provided, that such surcharges shall not result in user fees in the service area of the financially distressed utility district being in excess of the maximum level of users fees as may be determined by the board to be reasonable for the service area. Upon a determination by the board that repayment of the mitigation payments would be unduly burdensome and financially detrimental to the customers of such utility system, the board may waive repayments required pursuant to this section; provided, that any such waiver must be approved by the commissioner of finance and administration.
  3. Any repayments that may be received by the board pursuant to this section shall be deposited into and shall become part of the utility district revitalization fund.

Acts 1987, ch. 422, § 10; 2011, ch. 215, § 2.

7-82-705. Reports — Amendments to chapter.

The board shall report annually to the governor and the general assembly on the activities of the board for the preceding year. The board shall receive and consider from any source whatever, whether private or governmental, suggestions for amendments to this chapter, and, on the basis of the suggestions, shall either recommend amendments under § 7-82-702(10) or shall report to the suggesting party, in writing, its reasons for not recommending such proposed amendment.

Acts 1987, ch. 422, § 10.

Cross-References. Reporting requirements satisfied by notice to general assembly members of publication of reports, § 3-1-114.

7-82-706. Legislative intent.

In carrying out this part, the board shall be deemed to be acting for the public welfare and in furtherance of the general assembly's intent that utility districts be operated as self-sufficient enterprises.

Acts 1987, ch. 422, § 10.

7-82-707, 7-82-708. [Repealed.]

Compiler's Notes. Former §§ 7-82-707, 7-82-708 (Acts 1987, ch. 422, §§ 10, 12-14; 1989, ch. 139, § 8; 1989, ch. 221, § 10), concerning the utility management review board, were repealed by Acts 1989, ch. 400, §§ 3 and 4, effective July 1, 1989.

7-82-709. Authority of board to investigate compliance with federal and state law.

  1. Notwithstanding any law to the contrary, the utility management review board shall have the authority, in the case of public water systems of utility districts, to investigate, with the assistance of the department of environment and conservation and the comptroller of the treasury, and determine the financial, technical, and managerial capacity of the systems to comply with the requirements of the federal and the state acts; and to require systems to take appropriate action to correct any deficiencies in such areas, including, but not limited to, changes in ownership, management, accounting, rates, maintenance, consolidation, alternative water supply, or other procedures.
  2. The utility management review board shall have the authority to investigate public water systems of utility districts whose water loss as reported in the utility district's annual audit is excessive as established by rules determined by the board. In the event a utility district fails to take the appropriate actions required by the board to reduce water loss to an acceptable level, the utility management review board may petition the chancery court in a jurisdiction in which the utility district is operating to require the utility district to take such actions.

Acts 1997, ch. 483, § 23; 2007, ch. 86, § 2; 2007, ch. 243, § 3; 2013, ch. 141, § 5; 2018, ch. 713, § 1.

Amendments. The 2018 amendment deleted the last sentence in (a) which read: “The utility management review board also may approve or disapprove such corrections as a condition for any public water system of a utility district to receive assistance from the authority under § 68-221-1206(a)(3).”

Effective Dates. Acts 2018, ch. 713, § 2. April 12, 2018.

Part 8
Utility District Purchasing Procedures

7-82-801. Purchasing policy.

The board of commissioners of each utility district, whether created pursuant to this chapter or any public or private act by the general assembly, shall adopt a policy governing all purchases, leases, and lease-purchase agreements of the district, which shall contain the following provisions:

  1. Provisions requiring competitive bidding in appropriate circumstances;
  2. Provisions establishing appropriate competitive bidding procedures, which procedures need not require public advertisement for bids; provided, that a vendor list shall be developed by the Tennessee Association of Utility Districts (TAUD), and bids for capital expenditures or purchases in excess of ten thousand dollars ($10,000) not otherwise excepted from competitive bidding requirements shall be solicited from vendors on such list if public advertisement is not used, or, in the alternative, each utility district may develop and maintain its own vendor list according to procedures established by the district, so long as the district publicly advertises for additions to the list at least annually in a newspaper or other publication of general circulation in the grand division in which the district has its principal office;
  3. Provisions establishing appropriate exceptions to the competitive bidding requirement, including, but not limited to, establishing dollar purchase amounts for individual items or groups of items below which competitive bidding shall not be required; contracts to provide a continuous work force through independent contractors for maintenance, installation and repair of system facilities or items sold at retail by the district; purchase of goods or services for which there is a single source of supply; purchases or leases for immediate delivery in actual emergencies arising from unforeseen causes; purchases, leases, or lease-purchases of real property; purchases, leases or lease-purchases from any federal, state or local government unit or agency; purchases in the open market, including fuel and fuel product purchases; and purchases of items for resale;
  4. Provisions establishing procedures for open-market purchases; and
  5. Provisions establishing procedures for documentation of compliance with purchasing procedures, whether competitive, negotiated or open-market purchases.

Acts 1990, ch. 837, § 2.

Cross-References. Grand divisions, title 4, ch. 1, part 2.

7-82-802. Implementation of policy.

The purchasing policy shall be adopted by the board of commissioners of the district, and upon adoption shall be implemented and adhered to by the district. The policy shall provide for uniform procedures for the same or substantially similar purchases and shall be applied on a consistent basis to all purchases of the district.

Acts 1990, ch. 837, § 3.

7-82-803. Purchases not required to be addressed in a utility district purchasing policy.

Purchases of the following shall not be required to be included in any utility district policy:

  1. Purchases made under § 12-3-1201;
  2. Purchases from instrumentalities created by two (2) or more cooperative governments, such as, but not limited to, the Local Government Data Processing Corporation;
  3. Purchases from nonprofit corporations, such as, but not limited to, the Local Government Data Processing Corporation, whose purpose or one (1) of whose purposes is to provide goods or services specifically to various forms of local governments, including utility districts;
  4. Purchases, leases, or lease-purchases of real property; and
  5. Purchases, leases, or lease-purchases from any federal, state, or local government.

Acts 1990, ch. 837, § 4.

Compiler's Notes. Former § 12-3-1001, formerly referred to in this section, was transferred to § 12-3-1201 by Acts 2013, ch. 403, § 68, effective July 1, 2013.

7-82-804. Legislative intent.

It is the specific intent of the general assembly that this part shall facilitate and encourage fiscal internal controls of each utility district and in no way interfere with existing sound and prudent business practices as may be practiced by the board of commissioners of any utility district. Questions of the appropriateness or adequacy of any utility district purchasing policy shall be submitted in writing to the utility management review board pursuant to § 7-82-702(7).

Acts 1990, ch. 837, § 5.

Chapter 83
Power District Law [Repealed]

Part 1
General Provisions [Repealed]

7-83-101. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 1; C. Supp. 1950, § 3708.48 (Williams, § 3708.50); T.C.A. (orig. ed.), § 6-2701; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 1, §§ 7-83-1017-83-105, concerned general provisions of the power district law.

7-83-102. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 3; C. Supp. 1950, § 3708.49 (Williams, § 3708.52); T.C.A. (orig. ed.), § 6-2702; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 1, §§ 7-83-1017-83-105, concerned general provisions of the power district law.

7-83-103. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 7; C. Supp. 1950, § 3708.53 (Williams, § 3708.56); T.C.A. (orig. ed.), § 6-2724; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 1, §§ 7-83-1017-83-105, concerned general provisions of the power district law.

7-83-104. [Repealed.]

Acts 1980, ch. 756, § 7; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 1, §§ 7-83-1017-83-105, concerned general provisions of the power district law.

7-83-105. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 17; C. Supp. 1950, § 3708.63 (Williams, § 3708.66); T.C.A. (orig. ed.), § 6-2725; T.C.A., § 7-83-104; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 1, §§ 7-83-1017-83-105, concerned general provisions of the power district law.

Part 2
Creation and Boundaries [Repealed]

7-83-201. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 4; C. Supp. 1950, § 3708.50 (Williams, § 3708.53); T.C.A. (orig. ed.), § 6-2703; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 2, §§ 7-83-2017-83-206, concerned creation and boundaries of power districts.

7-83-202. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 4; C. Supp. 1950, § 3708.50 (Williams, § 3708.53); T.C.A. (orig. ed.), § 6-2704; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 2, §§ 7-83-2017-83-206, concerned creation and boundaries of power districts.

7-83-203. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 4; C. Supp. 1950, § 3708.50 (Williams, § 3708.53); T.C.A. (orig. ed.), § 6-2705; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 2, §§ 7-83-2017-83-206, concerned creation and boundaries of power districts.

7-83-204. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 4; C. Supp. 1950, § 3708.50 (Williams, § 3708.53); T.C.A. (orig. ed.), § 6-2706; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 2, §§ 7-83-2017-83-206, concerned creation and boundaries of power districts.

7-83-205. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 5; C. Supp. 1950, § 3708.51 (Williams, § 3708.54); T.C.A. (orig. ed.), § 6-2707; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 2, §§ 7-83-2017-83-206, concerned creation and boundaries.

7-83-206. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 6; C. Supp. 1950, § 3708.52 (Williams, § 3708.55); T.C.A. (orig. ed.), § 6-2708; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 2, §§ 7-83-2017-83-206, concerned creation and boundaries of power districts.

Part 3
Operation and Powers [Repealed]

7-83-301. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 8; C. Supp. 1950, § 3708.54 (Williams, § 3708.57); T.C.A. (orig. ed.), § 6-2709; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-302. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 8; C. Supp. 1950, § 3708.54 (Williams, § 3708.57); T.C.A. (orig. ed.), § 6-2710; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers.

7-83-303. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 4; C. Supp. 1950, § 3708.54 (Williams, § 3708.57); T.C.A. (orig. ed.), § 6-2711; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-304. [Repealed.]

C. Supp. 1950, § 3708.54; T.C.A. (orig. ed.), § 6-2712; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-305. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 18; C. Supp. 1950, § 3708.64 (Williams, § 3708.67); T.C.A. (orig. ed.), § 6-2713; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-306. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 14; C. Supp. 1950, § 3708.60 (Williams, § 3708.63); T.C.A. (orig. ed.), § 6-2714; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-307. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 13; C. Supp. 1950, § 3708.59 (Williams, § 3708.62); T.C.A. (orig. ed.), § 6-2715; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-308. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 15; C. Supp. 1950, § 3708.61 (Williams, § 3708.64); T.C.A. (orig. ed.), § 6-2720; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-309. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 16; C. Supp. 1950, § 3708.62 (Williams, § 3708.65); T.C.A. (orig. ed.), § 6-2721; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-310. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 11; C. Supp. 1950, § 3708.57 (Williams, § 3708.60); T.C.A. (orig. ed.), § 6-2722; Acts 1980, ch. 601, § 6; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

7-83-311. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 12; C. Supp. 1950, § 3708.58 (Williams, § 3708.61); T.C.A. (orig. ed.), § 6-2723; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 3, §§ 7-83-3017-83-311, concerned operation and powers of a power district.

Part 4
Board of Directors [Repealed]

7-83-401. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 9; C. Supp. 1950, § 3708.55 (Williams, § 3708.58); T.C.A. (orig. ed.), § 6-2716; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 4, §§ 7-83-4017-83-404, concerned the board of directors of power districts.

7-83-402. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 9; C. Supp. 1950, § 3708.55 (Williams, § 3708.58); T.C.A. (orig. ed.), § 6-2717; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 4, §§ 7-83-4017-83-404, concerned the board of directors of power districts.

7-83-403. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 9; C. Supp. 1950, § 3708.55 (Williams, § 3708.58); T.C.A. (orig. ed.), § 6-2718; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 4, §§ 7-83-4017-83-404, concerned the board of directors of power districts.

7-83-404. [Repealed.]

Acts 1935 (Ex. Sess.), ch. 4, § 10; C. Supp. 1950, § 3708.56 (Williams, § 3708.59); modified; T.C.A. (orig. ed.), § 6-2719; repealed by Acts 2013, ch. 211, § 6, effective July 1, 2013.

Compiler's Notes. Former title 7, ch. 83, part 4, §§ 7-83-4017-83-404, concerned the board of directors of power districts.

Chapter 84
Central Business Improvement District Act of 1971

Part 1
General Provisions

7-84-101. Short title.

This chapter shall be known and may be cited as the “Central Business Improvement District Act of 1971.”

Acts 1971, ch. 268, § 1; T.C.A., § 6-3901.

Cross-References. Alternative method of establishing and governing district, § 7-84-506.

7-84-102. Purpose.

It is hereby determined and declared that the deterioration of the central business districts of some cities and towns of the state by reason of dilapidation, obsolescence, overcrowding, faulty arrangement or design, deleterious land use, obsolete layout, or any combination of these or other factors, is a threat to the property tax and other revenue sources of such municipalities and is detrimental to the safety, health, morals, and general and economic welfare of the communities in which they are located; that the elimination of urban blight and decay and the modernization and general improvement of such central business districts by governmental action is considered necessary to promote the public health, safety and welfare of such communities; and that restoration of such central business districts is an appropriate subject for remedial legislation.

Acts 1971, ch. 268, § 2; T.C.A., § 6-3902.

Collateral References.

What constitutes “blighted area” within urban renewal and redevelopment statutes. 45 A.L.R.3d 1096.

7-84-103. Definitions — Parts 1-4.

As used in parts 1-4 of this chapter, unless the context otherwise requires:

  1. “Assessed value” means value as assessed for municipal property tax purposes;
  2. “Board” means the board of assessment commissioners;
  3. “District” means the central business district created by ordinance or resolution by a municipality, or a corridor of central business districts created by joint agreement of two (2) or more municipalities;
  4. “Governing body” means the council or commission or other municipal body exercising general legislative power in the municipality or any county legislative body;
  5. “Municipality” means any incorporated city, town, metropolitan government, or county of this state exercising general governmental functions in the state;
  6. “Owner” means record owner in fee; and
  7. “Plan” or “plan of improvement” means the detailed design plan of all proposed improvements in the district, including all such engineering studies, blueprints, architects' renderings, photographs, diagrams, maps, schematics, specifications, and drawings as may be required or desired to fully effectuate the construction of improvements and the purchase of equipment or other items.

Acts 1971, ch. 268, § 3; 1977, ch. 154, § 1; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A., § 6-3903; Acts 1990, ch. 808, § 1; 2003, ch. 196, § 1.

7-84-104. Housing authority proceedings not affected — District may be part of urban renewal area.

This chapter shall not affect any proceedings under title 13, chapter 20, parts 1-3, and all or any part of the area within the boundaries of a central business improvement district may be part of any urban renewal area created pursuant to such provisions or other laws.

Acts 1971, ch. 268, § 39; T.C.A., § 6-3939.

7-84-105. Supplemental nature of provisions — Scope of authority — Amendments.

  1. Parts 1-4 of this chapter are intended to afford an alternative method for the making or acquisition of improvements by a municipality, the creation of special improvement districts for central business districts of the various municipalities, the levy of assessments and the issuance of bonds by municipalities, and shall not be so construed as to deprive any municipality of the right to make or acquire improvements, create special improvement districts, levy the assessments or other special taxes or issue bonds under authority of any other law of this state now in effect or hereafter enacted, including part 5 of this chapter. Nevertheless, parts 1-4 of this chapter shall constitute full authority for the making or acquisition of improvements, creation of central business improvement districts, levy of assessments and issuance of bonds under title 9, chapter 21, to the extent applicable, by such municipalities as act under parts 1-4 of this chapter.
  2. No act hereafter passed by the general assembly amending other acts relating to the same subject matter as covered by parts 1-4 of this chapter shall be construed to affect the authority to proceed under parts 1-4 of this chapter in the manner provided in parts 1-4 of this chapter, unless such future act amends parts 1-4 of this chapter and specifically provides that it is to be applicable to proceedings taken and to bonds issued under parts 1-4 of this chapter.

Acts 1971, ch. 268, § 40; T.C.A., § 6-3940; Acts 1990, ch. 808, § 2; 2007, ch. 494, § 1.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-106. Control and jurisdiction over property.

Nothing in this chapter shall affect or impair the control and jurisdiction that a municipality has over all property within its boundaries. The powers and authority granted by this chapter shall be in addition to any and all other powers and authority now residing with, or hereafter granted to, municipalities in the state, and all powers granted in this chapter shall be subject to the general control and jurisdiction of such municipalities.

Acts 1971, ch. 268, § 41; T.C.A., § 6-3941.

7-84-107. Liberal construction.

This chapter, being necessary to secure and preserve the public health, safety, convenience and welfare, shall be liberally construed to effect its purposes.

Acts 1971, ch. 268, § 42; T.C.A., § 6-3942.

7-84-108. Effect of other laws.

In the event of conflict between this chapter and any other laws or parts of laws governing the statutes of Tennessee, this chapter shall govern.

Acts 1971, ch. 268, § 43; T.C.A., § 6-3943.

Part 2
Creation

7-84-201. Authorized.

The governing body of any municipality of the state is hereby authorized to create by ordinance one (1) or more central business improvement districts in the manner provided in this part.

Acts 1971, ch. 268, § 4; T.C.A., § 6-3904.

Cross-References. Alternative method of establishing and governing district, § 7-84-506.

7-84-202. Organization — Procedure — Contents of petition or resolution.

The organization of such a district shall be initiated in either of two (2) methods:

    1. By a petition filed in the office of the clerk of the governing body of the municipality signed by not less than a majority in number of the owners of real property in the district having an assessed value of not less than two thirds (2/3) of the assessed value of all the real property proposed to be included in the district;
    2. After the filing of the petition, no petitioner shall be permitted to withdraw such petitioner's name from the petition;
    3. No petition with the requisite signatures shall be declared void on account of formal or insubstantial defects. The governing body, at any time, may permit the petition to be amended to conform to the facts by correcting any errors in the description of the territory, or in any other particular. Similar petitions for the organization of the same district may be filed and together shall be regarded as one (1) petition with the original. All such petitions filed prior to the hearing on the first petition filed shall be considered by the governing body in the same manner as if filed with the first petition placed on file;
    4. The petition shall set forth:
      1. The name of the proposed district, which shall include the name of the municipality in which the district is to be located, together with the words, “Central Business Improvement District”;
      2. A general description of the boundaries of the district or the territory to be included in the district, identified with sufficient certainty to enable a property owner to determine whether or not such property owner's property is within the district;
      3. A general description of the improvements to be constructed, installed or acquired within and for the district;
      4. The estimated cost of the proposed improvements; and
      5. A prayer for the organization of the district; or
  1. The governing body of a municipality may initiate the organization of a central business improvement district by adoption of a resolution containing the matters prescribed in subdivision (1)(D) for a petition.

Acts 1971, ch. 268, § 5; T.C.A., § 6-3905; Acts 2007, ch. 494, § 2.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-203. Geographical area — Size and form — Property included.

Any central business improvement district created by a municipality may embrace a contiguous property area or two (2) or more separate property areas and may include one (1) or more business districts, which business districts may either be historic business districts or business districts in which additional development and growth is expected to occur, or both, and corridors connecting business districts. Two (2) or more central business improvement districts may overlap and may encompass some or all of the same properties. Each district shall be of such size and form as to include all properties that, in the judgment of the governing body, will be benefited by the construction of the improvement project or projects that are proposed to be made in or for such district, or by any portion or portions of such project. The jurisdiction of a municipality to make, finance, and assess the cost of any improvement project shall not be impaired by a lack of commonness, unity, or singleness of the location, purpose or character of the improvement or improvements, or by the fact that any one (1) or more of the properties included in the district is subsequently determined not to be benefited by such improvement or improvements, or by a particular portion of the improvement or improvements, and is not assessed for the improvement or improvements.

Acts 1971, ch. 268, § 6; T.C.A., § 6-3906; Acts 2007, ch. 494, § 3.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-204. Public hearing to be ordered — When held.

Upon the filing of a petition purporting to contain the requisite number of signatures, or upon the adoption of a resolution by the governing body, the governing body shall order a public hearing to determine whether such central business improvement district shall be established. Such hearing shall be not less than thirty (30) nor more than forty-five (45) days following the adoption of the resolution by the governing body or following the filing of the petition with the governing body.

Acts 1971, ch. 268, § 8; T.C.A., § 6-3908.

7-84-205. Notice of hearing.

Notice of the public hearing shall be given by publishing a notice once a week for three (3) consecutive weeks in some newspaper of general circulation in the municipality. It shall not be necessary to set out in full in such notice the proposed ordinance setting up such central business improvement district, but such notice shall state in summary detail those facts required to be included in the petition as set forth in § 7-84-202(1)(D). The notice shall state the time and place of such public hearing, which shall be at least seven (7) days following the date of publication of the third and final notice. Such notice shall also be given by mail to each owner of real property within the proposed district as provided in § 7-84-304.

Acts 1971, ch. 268, § 9; T.C.A., § 6-3909.

7-84-206. Hearing on creation of district — Adoption of ordinance.

  1. At the time and place thus appointed, the governing body shall meet, and at such meeting, or at the time and place to which the meeting may be adjourned from time to time, all persons whose property may be affected by such improvement or improvements may appear in person, by attorney or by petition and protest against the creation of such central business improvement district; and the governing body shall consider such objections and protests, if any, and may change the district boundaries or modify the proposal in such manner as may be deemed advisable by the governing body. At the conclusion of such public hearing, the governing body shall adopt, adopt as amended, or reject the organization of such central business improvement district by the adoption or rejection of an ordinance setting out the district. In all such municipalities requiring two (2) or more readings before passage of an ordinance, all readings shall have been held prior to the public hearing, except the final such reading, so that the adoption may take place at the conclusion of such public hearing.
  2. Any person who fails to file a protest, who fails to appear at the public hearing to protest, or, having filed, withdraws such protest, shall be deemed to have waived any objection to the creation of the district, the making or acquisition of the improvements, and the inclusion of such person's property in the district. Such waiver, however, shall not preclude such person's right to object to the amount of the assessment at the hearing for which provision is made in § 7-84-409.
  3. The governing body of any municipality may amend from time to time the ordinance organizing a central business improvement district to include additional improvements; provided, that the amendment shall not become effective until after a public hearing relating to the amendment is held in the manner required by § 7-84-204, and any amendment shall be subject to protest as provided in § 7-84-207.

Acts 1971, ch. 268, § 10; T.C.A., § 6-3910; Acts 2007, ch. 494, § 4.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

Cross-References. Ordinance creating district, contents, § 7-84-208.

7-84-207. Failure of organization by resolution — Amendment of resolution — Rehearings.

  1. In the event that such central business improvement district plan shall have been initiated by action of the governing body under § 7-84-202(2), such ordinance creating a central business improvement district shall not be adopted if written protests are filed with the governing body prior to the public hearing from owners representing more than one half (½) of the assessed value of all the property to be included in the district.
  2. Failure of such ordinance by reason of protests having been filed by owners representing more than one half (½) of the assessed value of the property to be included in the district shall not bar the governing body from amending the district boundaries in such manner as to reduce the number of objectors to one half (½) or less of the assessed value of the district; provided, that a new public hearing shall be had on the amended district under the provisions hereinbefore established for such public hearings, and all of the procedures and provisions herein established shall be applicable to such second public hearing.
  3. The governing body shall be permitted to amend the district boundaries only once in order to permit the adoption of such ordinance, and no petition shall be accepted nor resolution adopted by the governing body with respect to the same properties included in the original or amended proposed central business improvement district for a period of twelve (12) months following the failure of passage of such ordinance.

Acts 1971, ch. 268, § 11; T.C.A., § 6-3911.

7-84-208. Contents of ordinance creating district.

The ordinance adopted by the governing body of the municipality shall include:

  1. A description of the district by metes and bounds;
  2. A general description of the improvements to be constructed or established;
  3. Authority for the employment of architects and engineers for the design of such central business improvement district, or adoption of a plan of improvements already drafted and prepared by some public or private agency or association, or both;
  4. An estimate of the total cost of the improvements to be provided, including those to be furnished by the municipality;
  5. Authorization of special assessments to be levied against the properties benefited by the improvements. The ordinance shall provide for the assessment of municipally-owned properties, if such determination is made by the governing body in accordance with §§ 7-84-405 and 7-84-406. If the municipality does not expect at the time of adoption of the ordinance that special assessments will be levied against any of the properties in the district, the ordinance may provide that no special assessments will be imposed at that time. If the municipality subsequently determines that special assessments in the district are required, the municipality may amend the ordinance to permit special assessments; provided, that the amendment shall not become effective until after a public hearing relating to the amendment is held in the manner required by § 7-84-204, and any amendment shall be subject to protest as provided in § 7-84-207;
  6. Whether there shall be an allocation of the total costs of the improvement between the general revenues of the municipality and special assessments levied against the property owners, and what such allocation shall be;
  7. The time and manner in which special assessments authorized by this chapter shall be paid; and
    1. Create a board of assessment commissioners as provided in § 7-84-303 and appoint the members to the board; provided, that the appointment of members to such board may be by separate resolution of the governing body adopted at a later date, not less than six (6) months following the adoption of the ordinance provided in this chapter.
    2. Notwithstanding subdivision (8)(A), if the municipality does not expect at the time of adoption of the ordinance that special assessments will be levied against any of the properties in the district, the creation of a board of assessment commissioners shall not be required until such time, if any, as the ordinance is amended to permit special assessments to be levied.

Acts 1971, ch. 268, § 12; T.C.A., § 6-3912; Acts 2007, ch. 494, §§ 5, 6.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-209. Creation of corridors to link central business districts.

The governing bodies of two (2) or more municipalities may enter into agreements to create a corridor to link together central business districts. A corridor of central business districts shall be subject to all this chapter relative to a single central business district.

Acts 2003, ch. 196, § 2.

Part 3
Operation and Powers

7-84-301. Powers of municipality — General — Enumerated.

The governing body of any municipality has all the powers necessary or convenient to undertake and carry out any or all improvements adopted in the ordinance setting up such district, including, but not limited to:

  1. Closing existing streets or alleys or opening new streets and alleys or widening or narrowing existing streets and alleys in whole or in part;
  2. The power to condemn and take easements necessarily incidental to the plan of improvement adopted for such district. Except as otherwise provided in this chapter, the rules and procedures set forth in title 29, chapter 17, shall govern all condemnation proceedings;
  3. Acquire any and all other real or personal property by gift, purchase, or devise;
  4. Construct or install pedestrian or shopping malls, plazas, sidewalks or moving sidewalks, parks, parking lots and parking garages, bus stop shelters, decorative lighting, benches or other seating furniture, sculptures, telephone booths, traffic signs, fire hydrants, kiosks, trash receptacles, marquees, awnings, canopies, walls and barriers, paintings, murals, alleys, shelters, display cases, fountains, child care facilities, rest rooms, information booths, aquariums, aviaries, tunnels and ramps, pedestrian and vehicular overpasses and underpasses, and each and every other useful or necessary or desired improvement;
  5. Landscape and plant trees, bushes and shrubbery, flowers and each and every other kind of decorative planting;
  6. Install and operate, or lease, public music and news facilities;
  7. Purchase and operate buses, mini-buses, mobile benches, and other modes of transportation;
  8. Construct and operate child care facilities;
  9. Adopt such zoning regulations and building codes for such central business improvement districts as will best promote the overall improvement district plan;
  10. Lease space within the district for sidewalk cafe tables and chairs;
  11. Construct lakes, dams, and waterways of whatever size;
  12. Provide special police facilities and personnel for the protection and enjoyment of the property owners and the general public using the facilities of such central business improvement district;
  13. Maintain, as provided in this chapter, all government-owned streets, alleys, malls, bridges, ramps, tunnels, lawns, trees and decorative plantings of each and every nature, and every structure or object of any nature whatsoever constructed or operated by the municipality;
  14. Grant permits for newsstands, sidewalk cafes, and each and every other useful or necessary or desired private usage of public or private property;
  15. Prohibit or restrict vehicular traffic on such streets within the central business improvement district as the governing body may deem necessary and to provide the means for access by emergency vehicles to or in such areas;
  16. Acquire, construct, reconstruct, extend, maintain, or repair parking lots or parking garages, both above and below ground, or other facilities for the parking of vehicles, including the power to install such facilities in public areas, whether such areas are owned in fee or by easement;
  17. Remove any existing structures or signs of any description in the district not conforming to the plan of improvements;
  18. Require any or all utilities servicing the central business improvement district to lay such pipe, extend such wires, provide such facilities, or conform or modify existing facilities to effectuate the plan of improvement for the district; the governing body shall determine what portion of the cost is to be borne out of general revenues of the municipality, what portion is to be paid from the special assessments provided in this chapter, and what portion is to be paid individually by the property owners within the central business improvement district; and
  19. Do each and every and any thing necessary or desirable to effectuate the plan of improvement for the central business improvement district of the municipality.

Acts 1971, ch. 268, § 7; T.C.A., § 6-3907.

Cross-References. Alternative method of establishing and governing district, § 7-84-506.

Collateral References.

Classification and maintenance of advertising structures as nonconforming use. 80 A.L.R.3d 630.

Determination of just compensation for condemnation of billboards or other advertising signs. 73 A.L.R.3d 1122.

Governmental borrowing or expenditure for purposes of acquiring, maintaining, or improving stadium for use of professional athletic team. 67 A.L.R.3d 1186.

Validity and construction of ordinance prohibiting roof signs. 76 A.L.R.3d 1162.

Validity and construction of provision prohibiting or regulating advertising sign overhanging street or sidewalk. 80 A.L.R.3d 687.

Validity and construction of state or local regulation prohibiting off-premises advertising structures. 81 A.L.R.3d 486.

Validity and construction of state or local regulation prohibiting the erection or maintenance of advertising structures within a specified distance of street or highway. 81 A.L.R.3d 564.

Validity of regulation providing for reserved parking spaces or parking priority on publicly owned property for members of a designated group. 70 A.L.R.3d 1323.

7-84-302. Bids — Contracts — Construction — Detailed plan.

  1. Upon the adoption of the ordinance, the municipality shall proceed to advertise for bids, let the contracts, and construct the improvements under the laws and regulations governing the construction of other improvements within the municipality; provided, that where no detailed plan of improvements has yet been prepared, the municipality shall employ architects and engineers for the drafting of such plan, and, upon approval of such plan, shall thereafter, and within four (4) months time, advertise for bids.
  2. If a municipality acquires improvements from a third party, including a private entity, subsection (a) shall not apply.

Acts 1971, ch. 268, § 13; T.C.A., § 6-3913; Acts 2007, ch. 494, § 7.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-303. Board of assessment commissioners.

  1. The board of assessment commissioners authorized in this chapter shall consist of no fewer than three (3) nor more than seven (7) citizens of the municipality, none of whom shall be interested in any property contained within the central business improvement district. Such members shall be not less than thirty (30) years of age and shall serve until completion of their duties. A majority of such commissioners shall constitute a quorum and be competent to perform any duty required of these commissioners; and they shall be notified of their appointment, and vacancies in their number shall be filled, by the governing body, and they shall be sworn to the faithful discharge of their duties.
  2. The commissioners shall view each property located within the improvement district and shall:
    1. Determine the amount of the assessment to be levied upon each such property, according to the benefit conferred by the improvements; and
    2. Ascertain and award the amount of damages and compensation to be paid to the owners of property that is to be taken or injured by such improvements.
  3. The board of assessment commissioners shall be reimbursed for the performance of their duties at a rate to be determined by the governing body of the municipality, and such reimbursement shall be considered a cost of the improvements and reimbursed from the special assessments as provided in this chapter.

Acts 1971, ch. 268, § 14; T.C.A., § 6-3914.

Cross-References. Determination of benefit to property, § 7-84-404.

7-84-304. Notice to real property owner.

In any case where a notice is required to be sent to the owner of real property in the central business improvement district, such notice shall be deemed sufficient if sent by certified mail to the last known address of the owner. In any case where the governing body finds for any reason that due notice was not given, the governing body shall not lose jurisdiction by due notice not being given, and the proceeding in question shall not be void or be abated by due notice not being given, but the governing body, in that case, shall order due notice given and shall continue the proceeding until such time as notice shall be properly given, and thereupon shall proceed as though notice had been properly given in the first instance.

Acts 1971, ch. 268, § 35; T.C.A., § 6-3935.

Cross-References. Notice of hearing on establishment of district, § 7-84-205.

7-84-305. Borrowing in anticipation of bond proceeds authorized.

  1. The municipality is authorized to issue bonds and notes pursuant to the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, for the purpose of making payments for the improvements contemplated by this chapter. Such municipality is further authorized to make such payments out of any funds as may be available for such purpose.
    1. The municipality may issue revenue bonds in the manner provided in the Local Government Public Obligations Act of 1986,  including part 3, to finance all costs and expenses incurred in connection with the acquisition or construction of improvements contemplated by this chapter and costs related to the issuance of bonds. In that case, all assessments received pursuant to this chapter by the municipality shall be deemed revenues for purposes of the Local Government Public Obligations Act of 1986. In such a case, the revenue bonds may be, but are not required to be, additionally secured by the full faith and credit of the municipality.
    2. Any municipality is also authorized to delegate to any industrial development corporation incorporated by the municipality or any other municipality in which the central business improvement district is located the authority to issue the revenue bonds, in which case the municipality shall enter into an agreement with the industrial development corporation pursuant to which the municipality shall agree to promptly pay to the industrial development corporation the assessments, including any interest on the assessments, as collected. The assessments shall be held in trust by the municipality for the benefit of the industrial development corporation when received. The municipality may direct any property owner that is required to pay assessments to make the payments directly to an industrial development corporation or its assignee. If an industrial development corporation issues the bonds, assessments imposed pursuant to this chapter, and any interest collected on the assessments, shall constitute revenues, as defined in § 7-53-101, and improvements and related expenses described in this chapter, whether acquired by the industrial development corporation on behalf of the municipality or by the municipality itself, shall constitute a project as defined in § 7-53-101. Any municipality is authorized to delegate to an industrial development corporation the authority to acquire an improvement described in the ordinance organizing the central business improvement district, or any amendment to the ordinance, on behalf of the municipality. All bonds issued by industrial development corporations pursuant to this section shall be issued in accordance with chapter 53 of this title.
    3. Any municipality is also authorized to delegate to any public building authority the authority to issue the revenue bonds, in which case the municipality shall enter into an agreement with the public building authority pursuant to which the municipality shall agree to promptly pay to the public building authority the assessments, including any interest on the assessments, as collected and the assessments shall be held in trust by the municipality for the benefit of the public building authority when received. The municipality may direct any property owner that is required to pay assessments to make the payments directly to a public building authority or its assignee. If a public building authority issues the bonds, assessments imposed pursuant to this chapter, and any interest collected on the assessments shall constitute revenues, as defined in § 12-10-103 and improvements and related expenses described in this chapter, whether acquired by the public building authority on behalf of the municipality or by the municipality itself, shall constitute a project, as defined in § 12-10-103. Any municipality is authorized to delegate to a public building authority the authority to acquire an improvement described in the ordinance organizing the central business improvement district or any amendment to the ordinance on behalf of the municipality. All bonds issued by public building authorities pursuant to this section shall be issued in accordance with the Public Building Authorities Act of 1971, compiled in title 12, chapter 10.
  2. At least thirty (30) days prior to the issuance of any bonds or other obligations by any public entity acting pursuant to this chapter, the public entity shall give notice of the proposed issuance of the bonds or other obligations to the comptroller of the treasury or the comptroller's designee and shall also provide the comptroller of the treasury or the comptroller's designee with a copy of the ordinance or resolution authorizing the bonds or other obligations.

Acts 1971, ch. 268, § 36; T.C.A., § 6-3936; Acts 1988, ch. 750, § 38; 2007, ch. 494, § 8; 2010, ch. 868, § 28.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-306. [Repealed.]

Compiler's Notes. Former § 7-84-306 (Acts 1971, ch. 268, § 37; T.C.A., § 6-3937), concerning bond issues, was repealed by Acts 1988, ch. 750, § 39.

7-84-307. Fees.

The governing body of the municipality is hereby authorized to levy, according to the benefits received, and to collect in such manner as the governing body may determine to be proper, annual service or maintenance fees against the properties located within the central business improvement district for the maintenance, upkeep, and repairs of all public properties located within such district, including, but not limited to, capital improvements, movable furniture or fixtures, and all trees, plants, and decorative plantings of each and every kind. Additionally, such fees may cover the cost of additional fire and police protection required for, or desired by, such central business improvement district and all operating expenses of such special facilities provided in the district as are not charged by the governing body against the general revenues of the municipality.

Acts 1971, ch. 268, § 38; T.C.A., § 6-3938.

Part 4
Assessments and Damages

7-84-401. Special assessments.

The municipality is hereby authorized to levy special assessments against all properties, except those exempt from taxation, located within the central business improvement district to cover all costs and expenses of each and every improvement constructed, erected, or purchased and placed within such district, including all necessary incidental expenses. Such expenses may include all costs of construction, costs of making estimates and plans, feasibility studies, charges of engineers and attorneys, compensation of the members of the board of assessment commissioners, surveying, planning surveys, printing, advertising for bids, preparation of the assessment rolls, inspection and administrative expenses, abstracts and other title costs, construction interest, bond interest, necessary reserves, commissions paid to brokers or agents in connection with the sale of bonds issued by the municipality, and provision for additional costs or losses of assessment revenue for the development and construction of such improvements as are authorized by the municipal ordinance not contemplated at the time of the hearings on the organization of the central business improvement district. The assessment authorized in this section shall include all such costs, even though some of the construction, engineering, inspection, and administrative or other services necessary are performed by the municipality.

Acts 1971, ch. 268, § 15; T.C.A., § 6-3915.

Cross-References. Alternative method of establishing and governing district, § 7-84-506.

Apportionment and assessment to be made only after all work is completed and costs are determined, §§ 7-84-402, 7-84-420.

Special assessment of municipal property not otherwise assessed, § 7-84-406.

7-84-402. Apportionment of costs to property affected.

Prior to the acquisition of an improvement or commencement of the construction of an improvement described in the ordinance organizing the central business improvement district or upon completion of the improvements, at the discretion of the board of assessment commissioners, the board of assessment commissioners shall apportion the totality of all costs of such improvement district upon the various properties located within the district in accordance with the benefits to each property upon the completion of the work by such improvements conferred. If the board of assessment commissioners determines that certain improvements benefit only certain properties within a district, the board may apportion the costs of the improvements upon the various properties that benefit from the improvements.

Acts 1971, ch. 268, § 16; T.C.A., § 6-3916; Acts 2007, ch. 494, §§ 9, 10.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

Cross-References. Assessment to be made only after all work is completed and costs are determined, § 7-84-420.

7-84-403. Maximum assessment — Payments by municipality.

  1. Except as provided in subsection (b), the aggregate amount of the levy or assessment made against any lot or parcel of land shall not exceed fifteen percent (15%) of the assessed value of the lot and improvement on the lot. The municipality shall pay any part of the levy or assessment against any such lot or parcel of land as may be in excess of fifteen percent (15%) of the assessed value.
  2. In any tourist resort county, as defined in § 42-1-301, the aggregate amount of the levy or assessment made against a lot or parcel of land shall not exceed the cost of the improvements that are apportioned pursuant to § 7-84-404 to that lot or parcel.

Acts 1971, ch. 268, § 17; T.C.A., § 6-3917; Acts 2007, ch. 494, § 11.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

7-84-404. Determination of benefit to property — Apportionment of costs in relation to assessed valuation authorized.

  1. In determining the benefits to each lot or parcel of property within the central business improvement district, the board of assessment commissioners may consider frontage, area, the proportion that the assessed value of each lot or parcel bears to the whole assessed value of all properties within the district, or a combination of all of these. All assessments made by the board shall be presumed to have been made on the basis of the benefit conferred on each lot or parcel of property within the district, and shall be subject to review only as provided in this chapter.
  2. The fact that assessments may be spread uniformly over a large area within the district shall not be conclusive that such assessment was arbitrarily made or that the board made no attempt to distribute the costs of the improvements in proportion to the benefits received.
  3. The ordinance provided for in § 7-84-208 may contain a finding that the special benefit to all properties located within the central business improvement district is uniformly commensurate with the assessed value of each property in such district, in which event the determination provided for in § 7-84-303(b)(1) shall not be necessary, and the total costs of such improvements to be assessed against the owners of property in such district shall be assessed against each property in the same proportion that the assessed value of each such property bears to the assessed value of all such properties within the district.

Acts 1971, ch. 268, § 18; T.C.A., § 6-3918.

7-84-405. Assessment of municipally-owned property authorized.

The governing body of the municipality shall determine whether municipally-owned property located within the district shall be assessed in the same manner as private property, and, if it does so determine, shall provide for such assessments in the ordinance creating the central business improvement district as authorized in § 7-84-208(5).

Acts 1971, ch. 268, § 19; T.C.A., § 6-3919.

7-84-406. Special assessment of municipal property not otherwise assessed.

Municipal properties that are not assessed for taxation by the municipality or the county in which the municipality is located, and that are to be assessed for the purposes of this chapter, as provided in § 7-84-405, shall be specially assessed by the municipal assessor, or the county assessor, if the municipality uses county property assessments, upon the request of the board of assessment commissioners, and the cost for making such assessments shall be borne by the central business improvement district.

Acts 1971, ch. 268, § 20; T.C.A., § 6-3920.

Cross-References. Special assessments, § 7-84-401.

7-84-407. Assessment roll.

After all assessments have been determined by the board of assessment commissioners, the board shall prepare an assessment roll, which shall show the location of the property, the owner of the property as shown in the records of the municipal or county assessor, and the amount of the assessment.

Acts 1971, ch. 268, § 21; T.C.A., § 6-3921.

7-84-408. Schedule of property taken or damaged.

The board of assessment commissioners shall also prepare a schedule of all property proposed to be taken by condemnation by the municipality and all property that will in some manner be injured by the improvements to be constructed within the district, together with the valuations set on each such property or the damages to the property by the injuries to be inflicted. Such schedule of property shall be made public simultaneously with the assessment roll and for a like period of time.

Acts 1971, ch. 268, § 22; T.C.A., § 6-3922.

7-84-409. Assessment roll and schedule of damages — Filing — Open to public — Hearings on assessments and damages — Notice.

  1. Such assessment roll and such schedule of damages shall be filed with the governing body of the municipality, which shall open such roll and such schedule to the public for a period of not less than ten (10) days.
  2. The governing body of the municipality shall set a date for a public hearing on the assessments and damages and shall publish a notice of such public hearing in a newspaper of general circulation within the municipality, and shall also mail a copy of the notice to each property owner in the district as provided in § 7-84-304. The notice shall set out:
    1. A summary of the ordinance creating the central business improvement district;
    2. The fact that the assessments to pay for the improvements within such districts have been prepared and are on public display, setting forth the dates and times when they may be examined;
    3. The fact that damages have been set on all properties to be taken by the municipality and on all property in some manner to be injured by the proposed improvements;
    4. Notice that an ordinance adopting such assessments and such damages will be passed on final reading seven (7) days following the conclusion of the public hearing; and
    5. Notice of the date, time, and place of public hearing and that all objections to the amount of the assessments levied or the damages awarded will be heard at such public hearing.

Acts 1971, ch. 268, § 23; T.C.A., § 6-3923.

7-84-410. Hearing — Board of review — Board representation by attorney.

The governing body of the municipality shall, at the public hearing, sit as a board of review with respect to all assessments levied. The governing body shall appoint an attorney to represent the board of assessment commissioners in such hearings, and the compensation of such attorney shall be a cost of the central business improvement district.

Acts 1971, ch. 268, § 24; T.C.A., § 6-3924.

7-84-411. Objections to amount of assessment or damages.

  1. Any person whose property is proposed to be taken, interfered with, injured, or assessed for benefits under any of the provisions of this chapter, who is dissatisfied with the amount of damages awarded to such person for the taking of or interference with such person's property, with the valuation set on such person's property to be condemned, or with the amount of the assessment or benefits to any property affected by the proceedings, shall appear at the hearing or file with the governing body, at any time before the hearing, such person's objections to the damages awarded or benefits assessed.
  2. Any such person may appear at the hearing, in person or by attorney, and the governing body shall then consider the assessment roll and the schedule of damages and hear the objectors, or their representatives, and shall adjourn the hearing from time to time as may be necessary.

Acts 1971, ch. 268, § 25; T.C.A., § 6-3925.

7-84-412. Decisions on assessments and damages — Ordinances — Review.

  1. The governing body shall then consider the assessments and the damages awarded and may amend or affirm the assessments and damages and shall adopt an ordinance incorporating such assessments as amended and shall by separate ordinance confirm the award of damages as amended, as the governing body shall see fit.
  2. Such assessment shall be final and conclusive upon all parties interested, and may be reviewed only as provided by title 27, chapter 9, except that the petition referred to in § 27-9-102 shall be filed within thirty (30) days from the date of passage of such ordinance.
  3. Persons whose property is to be taken, or to whom damages are to be awarded for a partial taking or an injury to their property, in addition to the rights accorded by title 29, chapter 17, may, in the event proceedings are not initiated by the municipality, sue for damages in the ordinary way, in which case proceedings may be had, as near as may be, as provided in title 29, chapter 17.

Acts 1971, ch. 268, § 26; 1974, ch. 428, § 1; T.C.A., § 6-3926.

7-84-413. Levy and payment of assessments — Interest — Installments.

  1. The assessment on each property shall be levied at one (1) time in the ordinance provided for in § 7-84-412. The governing body may provide in such ordinance levying the assessment that all or such portion of the assessment as is designated in the ordinance may be paid in equal installments over a period of time, not exceeding thirty (30) years from the effective date of the ordinance levying the installment.
  2. Installments may be payable at least annually, but may be payable at more frequent intervals, as provided by the ordinance levying the assessment, and the governing body shall determine the method of collection.
  3. Where the assessment is payable in installments, the ordinance may provide that the unpaid balance of the assessment, from time to time, shall bear interest at a rate or rates not in excess of ten percent (10%) per annum from the effective date of such ordinance or from such other date as may be specified in the ordinance, until due. Interest may be paid in addition to the amount of each installment annually, or at more frequent intervals, as provided in the ordinance levying the assessment.

Acts 1971, ch. 268, § 27; T.C.A., § 6-3927; Acts 2007, ch. 494, § 12.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

Cross-References. Delinquent interest rate, § 7-84-415.

Penalty for late payment of assessment or installment, § 7-84-418.

7-84-414. Prepayment.

  1. Assessments payable in installments may be paid prior to the due date of any such installment.
  2. The whole or any part of the assessment may be paid without interest within sixty (60) days after the ordinance levying the assessment becomes effective. If the assessment is paid in part, the unpaid balance shall be payable in substantially equal installments over the period of time installments are payable as provided in the assessment ordinance.
  3. After such sixty-day period and if the ordinance levying the assessment so provides, all unpaid installments of assessments levied against any piece of property, but only in their entirety, may be paid prior to the dates on which they become due, but any such prepayment must include an additional amount equal to the interest that would accrue on the assessment to the next succeeding date on which interest is payable on any special improvement bonds issued in anticipation of the collection of the assessment, plus such additional amount as, in the opinion of the governing body of the municipality, is necessary to assure the availability of money to pay interest on the special improvement bonds as interest becomes due, and any premiums that may become payable on redeemable bonds that may be called in order to utilize the assessment thus paid in advance.
  4. The municipality may allow, in its discretion, discounts for prepayment of assessments, or installments of assessments; provided, that such discounts do not impair the ability of the municipality fully to fund the bonds issued in pursuance of the authority granted by this chapter.

Acts 1971, ch. 268, § 28; T.C.A., § 6-3928.

7-84-415. Default in payment of installments.

When an assessment is payable in installments, default in the payment of any installment of principal or interest when due shall cause the whole of the unpaid principal and interest to become due and payable immediately, and the whole amount of the unpaid principal shall thereafter draw interest at the rate of ten percent (10%) per annum until paid; but, at any time prior to the date of sale in proceedings to enforce the lien of the delinquent assessments, the owner may pay the amount of all unpaid installments past due, with interest at the rate of ten percent (10%) per annum to date of payment on the delinquent installments, and all proper costs, and shall thereupon be restored to the right thereafter to pay in installments in the same manner as if default had not occurred.

Acts 1971, ch. 268, § 29; T.C.A., § 6-3929.

Cross-References. Penalty for late payment of assessment or installment, § 7-84-418.

7-84-416. Lien on property affected.

An assessment, any interest accruing on the assessment, and the costs of collection of the assessment shall constitute a lien on and against the property upon which the assessment is levied on the effective date of the ordinance levying the assessment, which lien shall be superior to the lien of any trust deed, mortgage, mechanic's or material supplier's lien, or other encumbrance, except those of the state, county, or municipality for taxes. Such lien shall, however, survive any sale of the property for or on account of any unpaid taxes, and may be enforced by attachment and sale in bar of the equity of redemption, except as provided in § 7-84-417, in the chancery court or in any other lawful manner.

Acts 1971, ch. 268, § 30; T.C.A., § 6-3930.

7-84-417. Redemption from municipality after foreclosure of lien.

In case any assessment is or becomes delinquent and the property subject to the delinquency has been or is to be sold to the municipality for the delinquency, redemption of such property shall be permitted upon payment, not later than six (6) months after the date of sale, of the full amount due plus interest, any taxes paid by the municipality, and accrued costs and redemption fees as may be prescribed by ordinance of the municipality, unless, in the judgment of the governing body of the municipality, the interest of the municipality shall be subserved by accepting a less sum in settlement for the delinquency.

Acts 1971, ch. 268, § 31; T.C.A., § 6-3931.

7-84-418. Penalty for late payment of assessment or installment.

In case of failure to pay any assessment, or installment, on or before the date prescribed by the governing body for such payment, there shall be added to the assessment a penalty of one half of one percent (0.5%) per month of the amount of such assessment or installment.

Acts 1971, ch. 268, § 32; T.C.A., § 6-3932.

Cross-References. Delinquent interest rate, § 7-84-415.

7-84-419. Separate fund.

All money paid to the municipality in payment of the central business improvement district assessments and interest on the assessments shall be deemed to be a part of and constitute a separate fund for the payment of the cost and expenses of making the improvements in the district, for the payment of interim warrants and special improvement bonds with interest on the bonds issued against the central business improvement district created to make the improvements, and for no other purposes. The fund so created shall be held in the custody of the treasurer or other official of the municipality, kept intact and separate from all other funds and moneys of the municipality and shall be paid out only for the purposes specified in this chapter and as provided in the ordinance creating the central business improvement district. Such fund may be invested by the municipality in the same manner and under the same laws as provided for the investment of other public funds.

Acts 1971, ch. 268, § 33; T.C.A., § 6-3933.

7-84-420. When assessments made — Refunds — Increases.

Assessments shall be made by the board of assessment commissioners prior to the acquisition of an improvement or commencement of the construction of an improvement described in the ordinance organizing the central business improvement district or upon the completion of the improvements, at the discretion of the board of assessment commissioners. In the event, however, that such assessments prove ultimately to be in excess of the total cost, the surplus of assessments may be rebated to the owners of the property assessed. The amount to be rebated to each property owner shall be the proportion of the total rebate that the amount of the property owner's assessment bears to the total amount of all assessments originally levied. The rebate may be applied as a prepayment of any unpaid amount of the assessment and any balance shall be paid to the owner at the time the rebate is made of the property assessed. In the event that the totality of the assessment ultimately proves to be less than the total cost of all the improvements in the central business improvement district, the municipality shall be authorized to increase the assessment on each property by an amount equal to the percentage that the original assessment on each property bears to the total assessment, multiplied by the total additional assessment required of the district.

Acts 1971, ch. 268, § 34; T.C.A., § 6-3934; Acts 2007, ch. 494, § 13.

Compiler's Notes. Acts 2007, ch. 494, § 14 provided that the act shall apply to central business improvement districts already in existence and any districts that hereinafter may be created.

Cross-References. Costs determined upon completion of work, § 7-84-402.

Part 5
Central Business Improvement District Act of 1990

7-84-501. Short title.

This part shall be known and may be cited as the “Central Business Improvement District Act of 1990.”

Acts 1990, ch. 808, § 4.

7-84-502. Purpose.

  1. It is hereby determined and declared that the deterioration of central business districts of some cities and towns of the state is a threat to the property tax and other revenue sources of such municipalities and is detrimental to the safety, health, morals and general economic welfare of the communities in which they are located; that the elimination of urban blight and decay and the modernization and general improvement of such central business districts by governmental action is considered necessary to promote the public health, safety and welfare of such communities; and that restoration of such central business districts is an appropriate subject for remedial legislation.
  2. The general assembly further finds that:
    1. Municipalities should be encouraged to create self-financing central business improvement districts and designate district management corporations to execute self-help programs to enhance their local business climates; and
    2. Municipalities should be given the broadest possible discretion in establishing self-help programs most consistent with their local needs, goals and objectives.

Acts 1990, ch. 808, § 4.

7-84-503. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Assessed value” means value as assessed for municipal property tax purposes;
  2. “District” or “central business improvement district” means the central business improvement district created by the establishment ordinance of the municipality;
  3. “District management corporation” means the board or organization created or appointed pursuant to § 7-84-519;
  4. “Establishment ordinance” means the ordinance of the governing body adopted pursuant to § 7-84-515 establishing a district;
  5. “Governing body” means the council, commission, board or other body exercising general legislative power in the municipality;
  6. “Initiating petition” means the petition filed pursuant to § 7-84-511(1) requesting the establishment of a district pursuant to this part;
  7. “Initiating resolution” means the resolution adopted by the governing body pursuant to § 7-84-511(2) proposing to establish a district pursuant to this part;
  8. “Municipality” means any incorporated city, town or metropolitan government of this state exercising general governmental functions in the state; and
  9. “Owner” means record owner in fee, or a duly authorized representative.

Acts 1990, ch. 808, § 4.

7-84-504. Housing authority proceedings unaffected — District as part of urban renewal area.

This part does not affect any proceedings under title 13, chapter 20, parts 1-3, and all or any part of the area within the boundaries of a central business improvement district created pursuant to this part may be part of any urban renewal area created pursuant to such provisions or other laws.

Acts 1990, ch. 808, § 4.

7-84-505. Supplemental nature of part — Scope of authority — Amendments.

  1. This part is intended to afford an alternative method for the making of improvements by a municipality, the creation of special improvement districts for central business districts of the various municipalities, the levy of assessments and the issuance of bonds by municipalities, and shall not be so construed as to deprive any municipality of the right to make improvements, create special improvement districts, levy assessments or other special taxes or issue bonds under authority of any other law of this state now in effect or hereafter enacted, including parts 1-4 of this chapter; nevertheless, this part shall constitute full authority for the making of improvements, creation of central business improvement districts, levy of assessments and issuance of bonds under the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, to the extent applicable, by such municipalities as act under this part.
  2. No act hereafter passed by the general assembly amending other acts relating to the same subject matter as covered by this part shall be construed to affect the authority to proceed under this part, in the manner provided in this part, unless such future act amends this part and specifically provides that it is to be applicable to proceedings taken and to bonds issued under this part.

Acts 1990, ch. 808, § 4.

7-84-506. This part as alternative to parts 1-4 of this chapter.

This part shall constitute independent authority, separate and apart from parts 1-4 of this chapter, for the establishment and governance of a central business improvement district, and shall constitute an alternative method of establishing and governing such a district. None of this part shall in any way affect the operation and effect of parts 1-4 of this chapter, which shall continue in full force and effect as separate and independent authority for the establishment and governance of a central business improvement district.

Acts 1990, ch. 808, § 4.

7-84-507. Control and jurisdiction over property.

Nothing in this part shall affect or impair the control and jurisdiction that a municipality has over all property within its boundaries. The powers and authority granted by this part shall be in addition to any and all other powers and authority now residing with, or hereafter granted to, municipalities in this state, and all powers in this part shall be subject to the general control and jurisdiction of such municipalities.

Acts 1990, ch. 808, § 4.

7-84-508. Liberal construction.

This part, being necessary to secure and preserve the public health, safety, convenience and welfare, shall be liberally construed to effectuate its purposes.

Acts 1990, ch. 808, § 4.

7-84-509. Effect of other laws.

In the event of conflict between this part and any other laws or parts of laws governing the state, this part shall govern.

Acts 1990, ch. 808, § 4.

7-84-510. Districts authorized.

The governing body of any municipality of the state is hereby authorized to create, by ordinance, one (1) or more central business improvement districts in the manner provided in this part.

Acts 1990, ch. 808, § 4.

7-84-511. Organization — Procedure — Contents of petition or resolution.

The establishment of a district shall be initiated in either of two (2) ways, as follows:

  1. By a petition filed in the office of the clerk of the governing body of the municipality, signed by not less than a majority in number of the owners of real property in the district having an assessed value of not less than two thirds (2/3) of the assessed value of all the real property proposed to be included in the district. After the filing of the petition, no petitioner shall be permitted to withdraw the petitioner's name from the petition. No petition with the requisite signatures shall be declared void on account of formal or insubstantial defects. The governing body, at any time, may permit the petition to be amended to conform to the facts by correcting any errors in the description of the territory, or in any other particular. Similar petitions for the organization of the same district may be filed, and together shall be regarded as one (1) petition with the original. All such petitions filed prior to the hearing on the first petition filed shall be considered by the governing body in the same manner as if filed with the first petition placed on file. The initiating petition shall set forth:
    1. The name of the proposed district, which shall include the name of the municipality in which the district is to be located, together with the words, “Central Business Improvement District”;
    2. A general description of the boundaries of the district or the territory to be included in the district, identified with sufficient certainty to enable any and all owners to determine whether their property lies within the district;
    3. A general description of the improvements, services, projects proposed for the district, and other proposed uses of special assessment revenues within the district;
    4. The total estimated costs of the proposed improvements, services, projects and other proposed uses and the estimated rate of levy of the special assessment, with a proposed breakdown by property classification if such classification is to be used;
    5. A statement that the petition is filed pursuant to the terms of this part; and
    6. A request that a district be established pursuant to this part and that the administration of the district be governed by this part; or
  2. By adoption of a resolution by the governing body setting forth the same matters as are required to be set forth in the initiating petition.

Acts 1990, ch. 808, § 4.

7-84-512. Geographical area — Size and form — Property included.

Any central business improvement district created by a municipality may embrace two (2) or more separate property areas. Each district shall be of such size and form as to include all properties that, in the judgment of the governing body, shall be benefited by the improvements and services that are proposed to be made and provided in or for such district. The jurisdiction of a municipality to make and provide, finance and levy assessments for the cost of any improvements and services within a district shall not be impaired by a lack of commonness, unity, or singleness of the location, purpose or character of the improvements or services, or by the fact that any one (1) or more of the properties included in the district are subsequently determined not to be benefited by such improvement or improvements, or by a particular portion of the improvement or improvements, and is not assessed for such improvement or improvements.

Acts 1990, ch. 808, § 4.

7-84-513. Public hearing to be ordered — When held.

Upon the filing of an initiating petition purporting to contain the requisite number of signatures, or upon the adoption of an initiating resolution by the governing body, the governing body shall order a public hearing to determine whether such central business improvement district shall be established. Such hearing shall be held not less than thirty (30) nor more than forty-five (45) days following the adoption of the initiating resolution by the governing body or following the filing of the initiating petition with the clerk of the governing body.

Acts 1990, ch. 808, § 4.

7-84-514. Notice of hearing.

Notice of the public hearing shall be given by publishing a notice once a week for three (3) consecutive weeks in some newspaper of general circulation in the municipality. It shall not be necessary to set out in full in such notice the proposed establishment ordinance, but such notice shall state in summary detail those facts required to be included in the initiating petition or initiating resolution. The notice shall state the time and place of such public hearing, which shall be at least seven (7) days following the date of publication of the third and final notice. Such notice shall also be given by mail to each owner of real property within the proposed district.

Acts 1990, ch. 808, § 4.

7-84-515. Hearing on creation of district — Adoption of ordinance.

  1. At the time and place thus appointed, the governing body shall meet, and at such meeting, or at the time and place to which the meeting may be adjourned from time to time, all persons whose property may be affected by such improvement or improvements may appear in person, by attorney or by petition and protest against the creation of such central business improvement district; and the governing body shall consider such objections and protests, if any, and may change the district boundaries or modify the proposal in such manner as may be deemed advisable by the governing body. At the conclusion of such public hearing, the governing body shall adopt, adopt as amended, or reject the organization of such central business improvement district by the adoption or rejection of an ordinance setting out the district. In all such municipalities requiring two (2) or more readings before passage of an ordinance, all readings shall have been held prior to the public hearing, except the final such reading, so that the adoption may take place at the conclusion of such public hearing.
  2. Any person who fails to file a protest, or who fails to appear at the public hearing or protest, or, having filed, withdraws such protest, shall be deemed to have waived any objection to the creation of the district, the making of the improvements, and the inclusion of such person's property in the district.
  3. A central business improvement district may only be established by ordinance passed by a majority vote of the members of the governing body present and voting upon conclusion of the public hearing procedure as set forth in this part.

Acts 1990, ch. 808, § 4.

7-84-516. Failure of organization by resolution — Amendment of resolution — Rehearings.

  1. In the event that the establishment of a central business improvement district shall have been initiated by resolution of the governing body, the establishment ordinance shall not be adopted if owners representing more than one half (½) of the assessed value of all property to be included in the district file written protests with the governing body prior to the public hearing.
  2. The filing of protests by owners representing more than one half (½) of the assessed value of the property to be included in the district shall not bar the governing body from amending the district boundaries in such manner as to reduce the number of objectors to one half (½) or less of the assessed value of the district; provided, that a new public hearing shall be held on the amended district pursuant to the same provisions and procedures established in this part for the initial public hearing.
  3. The governing body shall be permitted to amend the district boundaries only once in order to permit the adoption of such ordinance, and no initiating petition shall be accepted nor initiating resolution adopted by the governing body with respect to the same properties included in the original or amended proposed central business improvement district for a period of twelve (12) months following the failure of passage of such ordinance.

Acts 1990, ch. 808, § 4.

7-84-517. Contents of establishment ordinance.

The establishment ordinance adopted by the governing body of the municipality shall include:

  1. The name of the district as set forth in the original or amended initiating petition or initiating resolution;
  2. A description of the boundaries of the district as set out in the original or amended initiating petition or initiating resolution;
  3. A statement that the properties in the area established by the ordinance shall be subject to the provisions of the special assessment;
  4. A statement of the improvements, services, and projects authorized to be provided within and for the district and other proposed uses of special assessment revenues within the district;
  5. The initial or additional rate of levy of the special assessment to be imposed with a breakdown by property classification if classifications are used;
  6. The time and manner in which special assessments authorized by the ordinance shall be paid;
  7. If the governing body desires to create or appoint a district management corporation as provided in § 7-84-502, such creation or appointment; and
  8. A statement that the district is established pursuant to this part and that the administration of such district shall be governed by this part.

Acts 1990, ch. 808, § 4.

7-84-518. Power to borrow money.

  1. The municipality has the authority and power to borrow money and issue bonds, notes or other obligations for the purpose of paying the costs of public improvements made pursuant to the establishment ordinance, or the refunding or refinancing of any such bonds, notes or obligations, under and pursuant to all the procedures and requirements set forth in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21.
  2. The municipality is further authorized to pledge to the payment of principal of and premium and interest on such bonds, notes or other obligations, and use for the payment thereof, the special assessment revenues authorized to be collected by the municipality pursuant to this part in the same manner as revenues may be pledged pursuant to the Local Government Public Obligations Act of 1986.
  3. “Public works project,” as contained in the Local Government Public Obligations Act of 1986, includes all public improvements made within the district and the proceeds of any such bonds, notes or other obligations may be used for any purpose for which bond proceeds may be used under the Local Government Public Obligations Act of 1986.
  4. “Revenues,” as contained in the Local Government Public Obligations Act of 1986, includes the special assessment revenues described in this part.

Acts 1990, ch. 808, § 4.

7-84-519. District management corporation.

  1. The governing body of the municipality, in the establishment ordinance or any other ordinance of the municipality, may create an advisory board, or appoint an existing organization, to act as an advisory board for the purpose of making recommendations for the use of special assessment revenues and for the purpose of administering activities within and for the district, the making of improvements within and for the district, and the provision of services and projects within and for the district.
  2. Such newly created board or existing organization so created or appointed shall be known and referred to in this part as the district management corporation.
  3. The governing body may contract with the district management corporation for the services to be provided by such corporation. Such district management corporation must comply with all applicable law, including this part, with all city resolutions and ordinances, and with all regulations lawfully imposed by the state auditor or other state agencies.
    1. The speaker of the senate shall appoint the senator whose senate district includes the majority of the area contained within the central business improvement district to serve as an ex officio member on the board of directors of the district management corporation created pursuant to this section. Likewise, the speaker of the house of representatives shall appoint the representative whose house of representatives district includes the majority of the area contained within the central business improvement district to also serve as an ex officio member on the board of directors.
    2. Alternatively, in any county having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, the speaker of the senate shall appoint as an ex officio member of the board of directors one (1) senator whose senatorial district lies in whole or in significant part within the boundaries of the center city revenue finance corporation, as the boundaries existed on January 1, 1999; and the speaker of the house of representatives shall appoint as an ex officio member of the board of directors one (1) representative whose representative district lies in whole or in significant part within the boundaries of the corporation, as the boundaries existed on January 1, 1999.
  4. The district management corporation shall submit an annual budget for review and approval by the governing body. This budget shall include a statement of the improvements to be made, the services to be provided and the projects and activities to be conducted during the ensuing fiscal year, the proposed program budget, and a statement of the assessment rates for financing the proposed budget.

Acts 1990, ch. 808, § 4; 1993, ch. 459, § 1; 1999, ch. 99, § 1; 2009, ch. 516, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Attorney General Opinions. Voting rights of appointed senator or representative, OAG 95-024, 1995 Tenn. AG LEXIS 21 (3/27/95).

Appointment to center city commission by speaker of senate, OAG 99-020, 1999 Tenn. AG LEXIS 31 (2/8/99).

Appointment under subsection (d) of this section, OAG 99-036, 1999 Tenn. AG LEXIS 15 (2/19/99).

7-84-520. Powers of municipality — Delegation of powers.

In addition to all other powers of a municipality enumerated in this part or elsewhere, a municipality has the following powers, limited only by the establishment ordinance, all of which powers may be delegated to the district management corporation by the establishment ordinance or other ordinance of the governing body of the municipality:

  1. Acquire, construct or maintain parking facilities;
  2. Acquire, construct or maintain public improvements;
  3. Acquire real property or an interest in property in connection with a public improvement;
  4. Provide services for the improvement and operation of the district, including, but not limited to:
    1. Promotion and marketing;
    2. Advertising;
    3. Health and sanitation;
    4. Public safety;
    5. Security;
    6. Elimination of problems related to traffic and parking;
    7. Recreation;
    8. Cultural enhancements;
    9. Consulting with respect to planning, management, and development activities;
    10. Maintenance of improvements;
    11. Activities in support of business or residential recruitment, retention, or management development;
    12. Aesthetic improvements, including the decoration, restoration or renovation of any public place or of building facades and exteriors in public view that confer a public benefit;
    13. Furnishing of music in any public place;
    14. Professional management, planning and promotion of the district; and
    15. Design assistance;
  5. Enter into contracts and agreements;
  6. Hire employees or retain agents, engineers, architects, planners, consultants, attorneys and accountants;
  7. Acquire, construct, install and operate public improvements contemplated by the establishment ordinance and all property, rights, or interests incidental or appurtenant to the public improvements and dispose of real and personal property and any interest in real and personal property, including leases and easements in connection with real and personal property;
  8. Manage, control and supervise:
    1. All the business and affairs of the district;
    2. The acquisition, construction, installation and operation of public improvements within the district; and
    3. The operation of district services in the district;
  9. Construct and install improvements across or along any public street, alley, highway, stream of water or watercourse;
  10. Construct and operate child care facilities; and
  11. Exercise all rights and powers necessary or incidental to or implied from the specific powers granted in this part. Such specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes and intent of this part.

Acts 1990, ch. 808, § 4; 1996, ch. 760, § 1.

7-84-521. Special assessments.

  1. The municipality is hereby authorized to levy special assessments against all properties located within the central business improvement district to cover all costs and expenses of making public improvements within the district and providing the services, projects and activities of the district.
  2. Such costs and expenses may include:
    1. All costs of acquisition, construction and maintenance of public improvements within the district;
    2. Costs of planning and feasibility studies, engineering, accounting, legal, surveying, consultant, and other professional fees;
    3. Administration expenses required in order to comply with the terms of this part, including costs incurred to establish the district, abstracts and other title costs, payment of principal of and premium and interest on any bonds, notes or other obligations issued as provided in this part and in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21;
    4. Funding of necessary reserves for debt service, maintenance, depreciation or other items, payment of all costs and expenses of the district management corporation that are authorized in this part and approved by the governing body pursuant to the budget review process described in this part or otherwise approved by the governing body; and
    5. Provision for additional costs or losses of assessment revenue for the development and construction of such improvements and provision of such services and activities as are authorized by the governing body.
  3. The assessment authorized in this section includes all such costs, even though some of the construction, engineering, inspection, and administrative or other services necessary are performed by the municipality.

Acts 1990, ch. 808, § 4.

Attorney General Opinions. Use of special assessments, OAG 95-024, 1995 Tenn. AG LEXIS 21 (3/27/95).

7-84-522. Apportionment of assessments.

  1. The governing body of the municipality shall determine annually the total costs and expenses to be paid from the special assessments, and annually apportion such costs and expenses upon the various properties located within the district in accordance with the benefits conferred upon the various properties.
  2. In determining the benefits to each lot or parcel of property within the district, the governing body may consider any of the following factors: square footage, front footage, assessed value, type of use, business classification, property location, zones of benefit, or a combination of such factors.
  3. The fact that assessments may be spread uniformly over a large area within the district shall not be conclusive that such assessment was arbitrarily made.
  4. Special assessments shall be imposed and collected annually, or on another basis specified in the ordinance establishing the central business improvement district.
  5. Changes may be made in the rate or additional rate of the special assessment as specified in the ordinance establishing the district.
  6. The governing body must hold a public hearing to change the rate or impose an additional rate of special assessment.

Acts 1990, ch. 808, § 4.

7-84-523. Government-owned property.

Notwithstanding §§ 7-84-521 and 7-84-522, no special assessment shall be levied on any government-owned property, including, but not limited to, any property owned by a county or by a public building authority, without the approval of the governing body of such governmental entity or of the public building authority that contains representatives of each participating governmental entity.

Acts 1990, ch. 808, § 4.

7-84-524. Assessment roll.

After all assessments have been determined, an assessment roll shall be prepared by the governing body, which shall show the location of the property, the owner of the property as shown in the records of the assessor, and the amount of the assessment.

Acts 1990, ch. 808, § 4.

7-84-525. Schedule of property taken or damages.

  1. The governing body shall prepare a schedule of all property proposed to be taken by condemnation by the municipality and all property that shall in some manner be injured by the improvements to be constructed within the district, together with the valuations set on each such property or the damages to the property by the injuries to be inflicted.
  2. Such schedule of property shall be made public simultaneously with the assessment roll and for a like period of time.

Acts 1990, ch. 808, § 4.

7-84-526. Lien on property affected.

An assessment, any interest accruing on the assessment, and the costs of collection of the assessment shall constitute a lien on and against the property upon which the assessment is levied as of the effective date of the ordinance levying the assessment, which lien shall be superior to the lien of any trust deed, mortgage, mechanic's or material supplier's lien, or other encumbrance, except those of the state, county or municipality for taxes.

Acts 1990, ch. 808, § 4.

7-84-527. Redemption.

In case any assessment shall become or has become delinquent and the property subject to the delinquency has been or shall be sold to the municipality for the delinquency, redemption of such property shall be permitted upon payment, not later than one (1) year after the date of sale, of the full amount due, plus interest, any taxes paid by the municipality, and accrued costs and redemption fees as may be prescribed by ordinance of the municipality, unless, in the judgment of the governing body of the municipality, the interest of the municipality will be subserved by accepting a lesser sum in settlement for the delinquency.

Acts 1990, ch. 808, § 4.

7-84-528. Penalty for late payment.

In case of failure to pay any assessment or installment provided for under this part on or before the date prescribed by the governing body for such payment, there shall be added to the assessment both interest of one percent (1%) per month and a penalty of one percent (1%) per month of the amount of such assessment or installment.

Acts 1990, ch. 808, § 4; 1993, ch. 459, § 2.

7-84-529. Dissolution.

  1. The governing body shall be authorized to dissolve the district upon written petition filed by the owners of either seventy-five percent (75%) of the assessed value of the property in the district based on the most recent certified city property tax rolls, or fifty percent (50%) of the owners of record within the district.
  2. The district may not be dissolved if the municipality has outstanding any bonds, notes or other obligations payable solely from the special assessment revenues levied on the property within the district, and such dissolution may occur only at such time as such bonded indebtedness has been repaid in full or the municipality pledges to the payment of such indebtedness its full faith and credit and unlimited taxing power.

Acts 1990, ch. 808, § 4.

7-84-530. Exemptions from part.

This part shall not apply in any county having a population of not less than forty-nine thousand two hundred seventy-five (49,275) nor more than forty-nine thousand three hundred seventy-five (49,375), according to the 1980 federal census or any subsequent federal census.

Acts 1990, ch. 808, §§ 5, 6; 1998, ch. 628, § 1.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Part 6
Inner-City Redevelopment Act of 2003

7-84-601. Short title.

This part shall be known and may be cited as the “Inner-City Redevelopment Act of 2003”.

Acts 2003, ch. 195, § 1.

7-84-602. Legislative intent.

  1. It is hereby determined and declared that the deterioration of inner-city areas within certain municipalities of the state is a threat to the property tax and other revenue sources of such municipalities and is detrimental to the safety, health, morals and general economic welfare of the communities in which they are located; that the elimination of urban blight and decay and the modernization and general improvement of such inner-city areas by governmental action is considered necessary to promote the public health, safety and welfare of such communities; and that restoration of such inner-city areas is an appropriate subject for remedial legislation.
  2. The general assembly further finds that:
    1. Municipalities should be encouraged to create self-financing inner-city redevelopment districts and designate district management corporations to execute self-help programs to enhance their local business climates; and
    2. Municipalities should be given the broadest possible discretion in establishing self-help programs most consistent with their local needs, goals and objectives.

Acts 2003, ch. 195, § 1.

7-84-603. Part definitions.

As used in this part, unless the context otherwise requires:

  1. “Assessed value” means value as assessed for municipal property tax purposes;
  2. “District” or “inner-city redevelopment district” means the inner-city redevelopment district created by the establishment ordinance of the municipality;
  3. “District management corporation” means the board or organization created or appointed pursuant to § 7-84-619;
  4. “Establishment ordinance” means the ordinance of the governing body adopted pursuant to § 7-84-615 establishing a district;
  5. “Governing body” means the council, commission, board or other body exercising general legislative power in the municipality;
  6. “Initiating petition” means the petition filed pursuant to § 7-84-611(1) requesting the establishment of a district pursuant to this part;
  7. “Initiating resolution” means the resolution adopted by the governing body pursuant to § 7-84-611(2) proposing to establish a district pursuant to this part;
  8. “Municipality” means any incorporated city, town or metropolitan government of this state exercising general governmental functions in the state; and
  9. “Owner” means record owner in fee, or duly authorized representative.

Acts 2003, ch. 195, § 1.

7-84-604. Housing authority proceedings unaffected — District as part of urban renewal area.

This part does not affect any proceedings under title 13, chapter 20, parts 1-3, and all or any part of the area within the boundaries of an inner-city redevelopment district created pursuant to this part may be part of any urban renewal area created pursuant to such provisions or other laws.

Acts 2003, ch. 195, § 1.

7-84-605. Supplemental nature of part — Scope of authority — Amendments.

  1. This part is intended to afford an alternative method for the making of improvements by a municipality, the creation of special improvement districts for inner-city redevelopment districts of the various municipalities, the levy of assessments and the issuance of bonds by municipalities, and shall not be so construed as to deprive any municipality of the right to make improvements, create special improvement districts, levy assessments or other special taxes or issue bonds under authority of any other law of this state now in effect or later enacted, including parts 1-5 of this chapter; nevertheless, this part shall constitute full authority for the making of improvements, creation of inner-city redevelopment districts, levy of assessments and issuance of bonds under the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, to the extent applicable, by such municipalities who choose to act under this part.
  2. No act later passed by the general assembly amending other acts relating to the same subject matter as covered by this part shall be construed to affect the authority to proceed under this part in the manner provided in this part, unless such future act amends this part and specifically provides that it is to be applicable to proceedings taken and to bonds issued under this part.

Acts 2003, ch. 195, § 1.

7-84-606. This part as alternative to parts 1-5 of this chapter.

This part shall constitute independent authority, separate and apart from parts 1-5 of this chapter, for the establishment and governance of an inner-city redevelopment district, and shall constitute an alternative method of establishing and governing such a district. None of this part shall in any way affect the operation and effect of parts 1-5 of this chapter, which shall continue in full force and effect as separate and independent authority for the establishment and governance of a central business improvement district; provided, however, that notwithstanding any law to the contrary, no designated center-city area of a municipality, that creates or has created a central business improvement district pursuant to this chapter, shall overlap any area within an inner-city redevelopment district created by the municipality pursuant to this part.

Acts 2003, ch. 195, § 1.

7-84-607. Control and jurisdiction over property.

Nothing in this part shall affect or impair the control and jurisdiction that a municipality has over all property within its boundaries. The powers and authority granted by this part shall be in addition to any and all other powers and authority now residing with, or later granted to, municipalities in this state, and all powers granted by this part shall be subject to the general control and jurisdiction of such municipalities.

Acts 2003, ch. 195, § 1.

7-84-608. Liberal construction.

This part, being necessary to secure and preserve the public health, safety, convenience and welfare, shall be liberally construed to effectuate its purposes.

Acts 2003, ch. 195, § 1.

7-84-609. Effect of other laws.

In the event of conflict between this part and any other laws or parts of laws governing Tennessee, this part shall govern.

Acts 2003, ch. 195, § 1.

7-84-610. Districts authorized.

The governing body of any municipality of the state is authorized to create, by ordinance, one (1) or more inner-city redevelopment districts in the manner provided in this part.

Acts 2003, ch. 195, § 1.

7-84-611. Organization — Procedure — Contents of petition or resolution.

The establishment of a district shall be initiated in either of two (2) ways, as follows:

  1. By a petition filed in the office of the clerk of the governing body of the municipality, signed by not less than a majority of the owners of real property in the district having an assessed value of not less than two thirds (2/3) of the assessed value of all the real property proposed to be included in the district. After the filing of the petition, no petitioner shall be permitted to withdraw the petitioner's name from the petition. No petition with the requisite signatures shall be declared void on account of formal or insubstantial defects. The governing body, at any time, may permit the petition to be amended to conform to the facts by correcting any errors in the description of the territory, or in any other particular. Similar petitions for the organization of the same district may be filed, and together shall be regarded as one (1) petition with the original. All such petitions filed prior to the hearing on the first petition filed shall be considered by the governing body in the same manner as if filed with the first petition placed on file. The initiating petition shall set forth:
    1. The name of the proposed district, which shall include the name of the municipality in which the district is to be located, together with the words, “Inner-City Redevelopment District”;
    2. A general description of the boundaries of the district or the territory to be included in the district, identified with sufficient certainty to enable any and all owners to determine whether their property lies within the district;
    3. A general description of the improvements, services, projects proposed for the district and other proposed uses of special assessment revenues within the district;
    4. The total estimated costs of the proposed improvements, services, projects and other proposed uses and the estimated rate of levy of the special assessment with a proposed breakdown by property classification if such classification is to be used;
    5. A statement that the petition is filed pursuant to the terms of this part; and
    6. A request that a district be established pursuant to this part and that the administration of the district be governed by this part; or
  2. By adoption of a resolution of the governing body setting forth the same matters as are required to be set forth in the initiating petition.

Acts 2003, ch. 195, § 1.

7-84-612. Geographic area — Size and form — Property included.

Any inner-city redevelopment district created by a municipality may embrace two (2) or more separate property areas. Each district shall be of such size and form as to include all properties that, in the judgment of the governing body, shall be benefited by the improvements and services that are proposed to be made and provided in or for such district. The jurisdiction of a municipality to make and provide, finance and levy assessments for the cost of any improvements and services within a district shall not be impaired by a lack of commonness, unity or singleness of the location, purpose or character of the improvements or services, or by the fact that any one (1) or more of the properties included in the district are subsequently determined not to be benefited by such improvement or improvements, or by a particular portion of the improvement or improvements, and is not assessed for such improvement or improvements.

Acts 2003, ch. 195, § 1.

7-84-613. Public hearing to be ordered — When held.

Upon the filing of an initiating petition purporting to contain the requisite number of signatures, or upon the adoption of an initiating resolution by the governing body, the governing body shall order a public hearing to determine whether such inner-city redevelopment district shall be established. Such hearing shall be held not less than thirty (30) nor more than forty-five (45) days following the adoption of the initiating resolution by the governing body or following the filing of the initiating petition with the clerk of the governing body.

Acts 2003, ch. 195, § 1.

7-84-614. Notice of hearing.

Notice of the public hearing shall be given by publishing a notice once a week for three (3) consecutive weeks in some newspaper of general circulation in the municipality. It shall not be necessary to set out in full in such notice the proposed establishment ordinance, but such notice shall state in summary detail those facts required to be included in the initiating petition or initiating resolution. The notice shall state the time and place of such public hearing, which shall be at least seven (7) days following the date of publication of the third and final notice. Such notice shall also be given by mail to each owner of real property within the proposed district.

Acts 2003, ch. 195, § 1.

7-84-615. Hearing on creation of district — Adoption of ordinance.

  1. At the time and place thus appointed, the governing body shall meet, and at such meeting, or at the time and place to which the meeting may be adjourned from time to time, all persons whose property may be affected by such improvement or improvements may appear in person, by attorney or by petition and protest against the creation of such inner-city redevelopment district; and the governing body shall consider such objections and protests, if any, and may change the district boundaries or modify the proposal in such manner as may be deemed advisable by the governing body. At the conclusion of such public hearing, the governing body shall adopt, adopt as amended or reject the organization of such inner-city redevelopment district by the adoption or rejection of an ordinance setting out the district. In all such municipalities requiring two (2) or more readings before passage of an ordinance, all readings shall have been held prior to the public hearing, except the final such reading, so that the adoption may take place at the conclusion of such public hearing.
  2. Any person who fails to file a protest, or who fails to appear at the public hearing or protest, or, having filed, withdraws such protest, shall be deemed to have waived any objection to the creation of the district, the making of the improvements and the inclusion of such person's property in the district.
  3. An inner-city redevelopment district may only be established by ordinance passed by a majority vote of the members of the governing body present and voting upon conclusion of the public hearing procedure as set forth in this part.

Acts 2003, ch. 195, § 1.

7-84-616. Failure of establishment ordinance due to protest — Amending district boundaries.

  1. In the event that the establishment of an inner-city redevelopment district shall have been initiated by resolution of the governing body, the establishment ordinance shall not be adopted if owners representing more than one half (½) of the assessed value of all property to be included in the district file written protests with the governing body prior to the public hearing.
  2. The filing of protests by owners representing more than one half (½) of the assessed value of the property to be included in the district shall not bar the governing body from amending the district boundaries in such manner as to reduce the number of objectors to one half (½) or less of the assessed value of the district; provided, however, that a new public hearing shall be held on the amended district pursuant to the same provisions and procedures established in this part for the initial public hearing.
  3. The governing body shall be permitted to amend the district boundaries only once in order to permit the adoption of such ordinance, and no initiating petition shall be accepted nor initiating resolution adopted by the governing body with respect to the same properties included in the original or amended proposed inner-city redevelopment district for a period of twelve (12) months following the failure of passage of such ordinance.

Acts 2003, ch. 195, § 1.

7-84-617. Contents of establishment ordinance.

The establishment ordinance adopted by the governing body of the municipality shall include:

  1. The name of the district as set forth in the original or amended initiating petition or initiating resolution;
  2. A description of the boundaries of the district as set out in the original or amended initiating petition or initiating resolution;
  3. A statement that the properties in the area established by the ordinance shall be subject to the special assessment;
  4. A statement of the improvements, services and projects authorized to be provided within and for the district and other proposed uses of special assessment revenues within the district;
  5. The initial or additional rate of levy of the special assessment to be imposed, with a breakdown by property classification if classifications are used;
  6. The time and manner in which special assessments authorized by the ordinance shall be paid;
  7. If the governing body desires to create or appoint a district management corporation as provided in § 7-84-602, such creation or appointment; and
  8. A statement that the district is established pursuant to this part and that the administration of such district shall be governed by this part.

Acts 2003, ch. 195, § 1.

7-84-618. Fiscal authority and power.

  1. The municipality has the authority and power to borrow money and issue bonds, notes or other obligations for the purpose of paying the costs of public improvements made pursuant to the establishment ordinance, or the refunding or refinancing of any such bonds, notes or obligations, under and pursuant to all the procedures and requirements set forth in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21.
  2. The municipality is further authorized to pledge to the payment of principal of and premium and interest on such bonds, notes or other obligations, and use for the payment of the bonds, notes or other obligations, the special assessment revenues authorized to be collected by the municipality pursuant to this part in the same manner as revenues may be pledged pursuant to the Local Government Public Obligations Act of 1986.
  3. “Public works project”, as contained in the Local Government Public Obligations Act of 1986, includes all public improvements made within the district and the proceeds of any such bonds, notes or other obligations may be used for any purpose for which bond proceeds may be used under the Local Government Public Obligations Act of 1986.
  4. “Revenues”, as contained in the Local Government Public Obligations Act of 1986, includes the special assessment revenues described in this part.

Acts 2003, ch. 195, § 1.

7-84-619. District management corporation.

  1. The governing body of the municipality, in the establishment ordinance or any other ordinance of the municipality, may create an advisory board or appoint an existing organization to act as an advisory board for the purpose of making recommendations for the use of special assessment revenues and for the purpose of administering activities within and for the district, the making of improvements within and for the district and the provision of services and projects within and for the district.
  2. Such newly created board or existing organization so created or appointed shall be known and referred to in this part as the district management corporation.
  3. The governing body may contract with the district management corporation for the services to be provided by such corporation. Such district management corporation must comply with all applicable provisions of law, including this part, with all city resolutions and ordinances, and with all regulations lawfully imposed by the state auditor or other state agencies.
    1. The speaker of the senate shall appoint the senator whose senate district includes the majority of the area contained within the inner-city redevelopment district to serve as an ex officio member on the board of directors of the district management corporation created pursuant to this section. Likewise, the speaker of the house of representatives shall appoint the representative whose house of representatives district includes the majority of the area contained within the inner-city redevelopment district to also serve as an ex officio member on such board of directors.
    2. Alternatively, in any county having a population in excess of eight hundred thousand (800,000), according to the 2000 federal census or any subsequent federal census, the speaker of the senate shall appoint as an ex officio member of the board of directors one (1) senator whose senatorial district lies in whole or in significant part within the boundaries of the center city revenue finance corporation, and the speaker of the house of representatives shall appoint as an ex officio member of the board of directors one (1) representative whose representative district lies in whole or in significant part within the boundaries of the corporation.
  4. The district management corporation shall submit an annual budget for review and approval by the governing body. This budget shall include a statement of the improvements to be made, the services to be provided and the projects and activities to be conducted during the ensuing fiscal year, the proposed program budget and a statement of the assessment rates for financing the proposed budget.

Acts 2003, ch. 195, § 1; 2009, ch. 516, § 2.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-84-620. Powers of municipality — Delegation of powers.

In addition to all other powers of a municipality enumerated in this part or elsewhere, a municipality has the following powers, limited only by the establishment ordinance, all of which powers may be delegated to the district management corporation by the establishment ordinance or other ordinance of the governing body of the municipality:

  1. Acquire, construct or maintain parking facilities;
  2. Acquire, construct or maintain public improvements;
  3. Acquire real property or an interest in real property in connection with a public improvement;
  4. Provide services for the improvement and operation of the district, including, but not limited to:
    1. Promotion and marketing;
    2. Advertising;
    3. Health and sanitation;
    4. Public safety;
    5. Security;
    6. Elimination of problems related to traffic and parking;
    7. Recreation;
    8. Cultural enhancements;
    9. Consulting with respect to planning, management and development activities;
    10. Maintenance of improvements;
    11. Activities in support of business or residential recruitment, retention or management development;
    12. Aesthetic improvements, including the decoration, restoration or renovation of any public place or of building facades and exteriors in public view that confer a public benefit;
    13. Furnishing of music in any public place;
    14. Professional management, planning and promotion of the district; and
    15. Design assistance;
  5. Enter into contracts and agreements;
  6. Hire employees or retain agents, engineers, architects, planners, consultants, attorneys and accountants;
  7. Acquire, construct, install and operate public improvements contemplated by the establishment ordinance and all property, rights or interests incidental or appurtenant to the property and dispose of real and personal property and any interest in real and personal property, including leases and easements in connection with real and personal property;
  8. Manage, control and supervise:
    1. All the business and affairs of the district;
    2. The acquisition, construction, installation and operation of public improvements within the district; and
    3. The operation of district services in the district;
  9. Construct and install improvements across or along any public street, alley, highway, stream of water or watercourse;
  10. Construct and operate child care facilities; and
  11. Exercise all rights and powers necessary or incidental to or implied from the specific powers granted in this part. Such specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes and intent of this part.

Acts 2003, ch. 195, § 1.

7-84-621. Special assessments.

  1. The municipality is hereby authorized to levy special assessments against all properties located within the inner-city redevelopment district to cover all costs and expenses of making public improvements within the district and providing the services, projects and activities of the district.
  2. Such costs and expenses may include:
    1. All costs of acquisition, construction and maintenance of public improvements within the district;
    2. Costs of planning and feasibility studies, engineering, accounting, legal, surveying, consultant and other professional fees;
    3. Administration expenses required in order to comply with the terms of this part, including costs incurred to establish the district, abstracts and other title costs, payment of principal of and premium and interest on any bonds, notes or other obligations issued as provided in this part and in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21;
    4. Funding of necessary reserves for debt service, maintenance, depreciation or other items, payment of all costs and expenses of the district management corporation that are authorized in this part and approved by the governing body pursuant to the budget review process described in this part or otherwise approved by the governing body; and
    5. Provision for additional costs or losses of assessment revenue for the development and construction of such improvements and provision of such services and activities as are authorized by the governing body.
  3. The assessment authorized in this section includes all such costs, even though some of the construction, engineering, inspection and administrative or other services necessary are performed by the municipality.

Acts 2003, ch. 195, § 1.

7-84-622. Apportionment of assessments.

  1. The governing body of the municipality shall annually determine the total costs and expenses to be paid from the special assessments and shall annually apportion such costs and expenses upon the various properties located within the district in accordance with the benefits conferred upon the various properties.
  2. In determining the benefits to each lot or parcel of property within the district, the governing body may consider any of the following factors: square footage, front footage, assessed value, type of use, business classification, property location, zones of benefit or a combination of such factors.
  3. The fact that assessments may be spread uniformly over a large area within the district shall not be conclusive that such assessment was arbitrarily made.
  4. Special assessments shall be imposed and collected annually, or on another basis specified in the ordinance establishing the inner-city redevelopment district.
  5. Changes may be made in the rate or additional rate of the special assessment as specified in the ordinance establishing the district.
  6. The governing body must hold a public hearing to change the rate or impose an additional rate of special assessment.

Acts 2003, ch. 195, § 1.

7-84-623. Exemption for government-owned property.

Notwithstanding §§ 7-84-621 and 7-84-622, no special assessment shall be levied on any government-owned property, including, but not limited to, any property owned by a county or by a public building authority, without the approval of the governing body of such governmental entity or of the public building authority that contains representatives of each participating governmental entity.

Acts 2003, ch. 195, § 1.

7-84-624. Assessment roll.

After all assessments have been determined, an assessment roll shall be prepared by the governing body which shall show the location of the property, the owner of the property as shown in the records of the assessor and the amount of the assessment.

Acts 2003, ch. 195, § 1.

7-84-625. Schedule of property condemned or injured.

  1. The governing body shall prepare a schedule of all property proposed to be taken by condemnation by the municipality and all property that shall in some manner be injured by the improvements to be constructed within the district, together with the valuations set on each such property or the damages to the property by the injuries to be inflicted.
  2. Such schedule of property shall be made public simultaneously with the assessment roll and for a like period of time.

Acts 2003, ch. 195, § 1.

7-84-626. Lien on affected property.

An assessment, any interest accruing on the assessment, and the costs of collection of the assessment shall constitute a lien on and against the property upon which the assessment is levied as of the effective date of the ordinance levying the assessment, which lien shall be superior to the lien of any trust deed, mortgage, mechanic's or material supplier's lien or other encumbrance, except those of the state, county or municipality for taxes.

Acts 2003, ch. 195, § 1.

7-84-627. Redemption of property.

In case any assessment is or becomes delinquent and the property subject to the delinquency has been or is to be sold to the municipality for the delinquency, redemption of such property shall be permitted upon payment, not later than one (1) year after the date of sale, of the full amount due plus interest, any taxes paid by the municipality and accrued costs and redemption fees as may be prescribed by ordinance of the municipality, unless, in the judgment of the governing body of the municipality, the interest of the municipality shall be subserved by accepting a lesser sum in settlement for the delinquency.

Acts 2003, ch. 195, § 1.

7-84-628. Penalty for late payment.

In case of failure to pay any assessment or installment provided for under this part on or before the date prescribed by the governing body for such payment, there shall be added to the assessment both interest of one percent (1%) per month and a penalty of one percent (1%) per month of the amount of such assessment or installment.

Acts 2003, ch. 195, § 1.

7-84-629. Dissolution.

  1. The governing body shall be authorized to dissolve the district upon written petition filed by the owners of either seventy-five percent (75%) of the assessed value of the property in the district, based on the most recent certified city property tax rolls, or fifty percent (50%) of the owners of record within the district.
  2. The district may not be dissolved if the municipality has outstanding any bonds, notes or other obligations payable solely from the special assessment revenues levied on the property within the district, and such dissolution may occur only at such time as such bonded indebtedness has been repaid in full or the municipality pledges to the payment of such indebtedness its full faith and credit and unlimited taxing power.

Acts 2003, ch. 195, § 1.

Chapter 85
Foreign Trade Zone Act

7-85-101. Short title.

This chapter shall be known and may be cited as the “Foreign Trade Zone Act.”

Acts 1981, ch. 411, § 1.

Cross-References. Metropolitan government port authorities, title 7, ch. 5.

Power of municipalities to own property outside boundaries, § 6-54-103.

Regional planning, title 13, ch. 3, part 3.

Tennessee River Four-County Port Authority Act, title 64, ch. 4.

Zoning powers of counties, title 13, ch. 7, part 1.

Zoning powers of municipalities, title 13, ch. 7, part 2.

Zoning powers of municipalities outside their boundaries, title 13, ch. 7, part 3.

7-85-102. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Foreign trade subzone” means a foreign trade zone established in an area separate from an existing foreign trade zone for one (1) or more of the specialized purposes of storing, manipulating, manufacturing, or exhibiting goods;
  2. “Foreign trade zone” means a foreign trade zone established pursuant to 19 U.S.C. §§ 81a-81u, or any laws of the United States enacted in lieu of 19 U.S.C. §§ 81a-81u;
  3. “Private corporation” means any corporation not for profit, other than a public corporation, formed under the laws of the state of Tennessee for the purpose of establishing, operating and maintaining foreign trade zones and foreign trade subzones; and
  4. “Public corporation” means the state of Tennessee, any political subdivision or public agency of the state, any municipal corporation formed under the laws of the state of Tennessee, or any corporate instrumentality of the state of Tennessee, of any political subdivision or public agency of the corporate instrumentality, or of such a municipal corporation.

Acts 1981, ch. 411, § 2.

7-85-103. Establishment, operation and maintenance.

Any public or private corporation has the power to apply to the proper authorities of the United States for a grant of the right to establish, operate, and maintain foreign trade zones and subzones under 19 U.S.C. §§ 81a-81u, and, when the grant is issued, to accept the grant and to establish, operate, and maintain the foreign trade zones and foreign trade subzones and to do all things necessary and proper to carry into effect the establishment, operation, and maintenance of such zones and subzones in accordance with applicable federal and state law.

Acts 1981, ch. 411, § 3.

Cross-References. Establishment of foreign trade zones, § 7-5-107(6).

Chapter 86
Emergency Communications

Part 1
Emergency Communications District Law

7-86-101. Short title.

This part shall be known and may be cited as the “Emergency Communications District Law.”

Acts 1984, ch. 867, § 1.

Cross-References. Disasters, emergencies and civil defense, title 58, ch. 2.

References to 911 service restricted, § 47-50-116.

Attorney General Opinions. Creation of municipal emergency communications district, OAG 93-72, 1993 Tenn. AG LEXIS 74 (12/28/93).

Emergency dispatchers: conflicts of interest, OAG 99-219, 1999 Tenn. AG LEXIS 179 (11/4/99).

The Emergency Communications District Law does not permit use of district funds for purposes other than 911, OAG 07-128 (8/27/07).

7-86-102. Legislative declaration and intent.

  1. The general assembly finds and declares that the establishment of a uniform emergency number to shorten the time required for a citizen to request and receive emergency aid is a matter of public concern and interest. The general assembly finds and declares that the establishment of the number 911 as the primary emergency telephone number provides a single, primary, three-digit emergency telephone number through which emergency service can be quickly and efficiently obtained, and make a significant contribution to law enforcement and other public service efforts requiring quick notification of public service personnel. It is the intent to provide a simplified means of securing emergency services, which will result in saving of life, a reduction in the destruction of property, quicker apprehension of criminals and, ultimately, the saving of money.
    1. The general assembly finds that the establishment of a uniform emergency number to shorten the time required for a citizen to request and receive emergency aid is a matter of public interest and concern. The general assembly finds also that the continued viability of the lifesaving 911 emergency communications service is of the highest priority for the health and safety of the citizens of Tennessee.
    2. The general assembly further finds that the effectiveness of 911 service depends on the ability of emergency service providers to timely respond to persons requiring emergency assistance; further, that the response by such providers is directly affected by the nature and coverage of the telephone and radio communications network available within a community, the quality of which is often limited by the availability of financial resources in the community.
    3. The general assembly further finds that rapid technological advancements have provided the public with non-wireline services, including, but not limited to, commercial mobile radio service (CMRS) and IP-enabled service, which are capable of connecting users dialing or entering the digits 911 to public safety answering points (PSAPs). The general assembly also finds that in various rules and orders, the federal communications commission (FCC) has mandated wireless enhanced 911 service for all CMRS users and subscribers. The FCC also has addressed enhanced 911 service requirements for IP-enabled service. The general assembly recognizes that all subscribers and users of non-wireline services, including CMRS and IP-enabled service, which are capable of connecting users dialing or entering the digits 911 to PSAPs should share in the benefits of 911 service and should participate in the funding of the service.
  2. Further, the general assembly finds that, while a competitive market for the public safety answering point equipment associated with the provision of 911 service is in the public interest, limited oversight by the Tennessee public utility commission of the provision of such equipment is also in the public interest. Therefore, public safety answering point equipment shall be regulated by the commission only for the purpose of adopting standards for the equipment and for the protection of proprietary customer specific information and to assure the integrity of 911 service and the privacy and safety of Tennesseans; provided, that such standards shall be consistent with the FCC Part 68 standards.
  3. It is the intent that all funds received by the district are public funds and are limited to purposes for the furtherance of this part. The funds received by the district are to be used to obtain emergency services for law enforcement and other public service efforts requiring emergency notification of public service personnel, and the funds received from all sources shall be used exclusively in the operation of the emergency communications district.

Acts 1984, ch. 867, § 2; 1993, ch. 411, § 1; 1993, ch. 479, § 1; 1995, ch. 305, § 85; 1998, ch. 1108, § 2; 2006, ch. 925, § 1; 2017, ch. 94, §§ 21, 82.

Compiler's Notes. FCC Part 68 standards referred to in this section may be found in 47 CFR Part 68.

Amendments. The 2017 amendment, in (c), substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in the first sentence and substituted “the commission” for “the authority” in the last sentence.

Effective Dates. Acts 2017, ch. 94, § 83. April 4, 2017.

7-86-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “911 service” means regular 911 service enhanced universal emergency number service or enhanced 911 service that is a telephone exchange communications service whereby a public safety answering point may receive telephone calls dialed to the telephone number 911. “911 service” includes lines and may include the equipment necessary for the answering, transferring and dispatching of public emergency telephone calls originated by persons within the serving area who dial 911, but does not include dial tone first from pay telephones that may be made available by the service provider based on the ability to recover the costs associated with its implementation and consistent with tariffs filed with the Tennessee public utility commission;
  2. “911 surcharge” means the surcharge that is required to be collected from consumers under § 7-86-128(a);
  3. “Appropriate county or municipality” means the legislative body of the county or municipality that, by resolution or ordinance, respectively, created the emergency communications district;
  4. “Automatic dialer” means an unattended customer premise device or equipment that generates pulses or tones that activate telephone company central office equipment and causes the calling line to be connected with the telephone line of the called number;
  5. “Commercial mobile radio service” or “CMRS” means commercial mobile radio service under §§ 3(27) and 332(d) of the Federal Telecommunications Act of 1996 (47 U.S.C. 151, et seq.), the Omnibus Budget Reconciliation Act of 1993, and 47 CFR 20.9, and includes service provided by any wireless two-way communication device, including radio telephone communication used in cellular telephone service, personal communication service, or the functional or competitive equivalent of a radio-telephone communications line used in cellular telephone service, a personal communication service, or a network access line. “Commercial mobile radio service” also includes, but is not limited to, any and all broadband personal communications service, cellular radio telephone service, geographic area specialized mobile radio (SMR) services in all bands that offer real-time, two-way voice service that is interconnected with the public switched network, incumbent wide area SMR service, or any other cellular or wireless telecommunications service. Nothing in this definition shall be construed to require compliance by any amateur radio operator or such radio system;
  6. “Commercial mobile radio service provider” means any person, corporation, or entity licensed by the federal communications commission to offer CMRS in the state of Tennessee, and includes, but is not limited to, broadband personal communications service, cellular radio telephone service, geographic area SMR services in the 800 MHz and 900 MHz bands that offer real-time, two-way voice service that is interconnected with the public switched network, incumbent wide area SMR licensees, or any other cellular or wireless telecommunications service to any service user;
  7. “Communications service” means a service that:
    1. Is capable of contacting and has been enabled to contact a public safety answering point (PSAP) via a 911 network by entering or dialing the digits 911;
    2. Is a “telecommunications service” as defined by § 67-6-102; and
    3. Is neither “prepaid calling service” nor “prepaid wireless calling service” as defined in § 67-6-102;
  8. “Consumer” means a person who purchases retail communications service or prepaid communications services in a retail transaction;
  9. “Dealer” has the meaning set forth in § 67-6-102;
  10. “Direct dispatch method” means a 911 service in which a public service answering point, upon receipt of a telephone request for emergency services, provides for the dispatch of appropriate emergency service units and a decision as to the proper action to be taken;
  11. “District” means any emergency communications district created pursuant to this part;
  12. “Exchange access facilities” means all lines, provided by the service supplier for the provision of exchange telephone service, as defined in existing general subscriber services tariffs filed by the service supplier with the Tennessee public utility commission;
  13. “Federal communications commission order” means the Order of the Federal Communications Commission, FCC Docket 94-102, adopted on June 12, 1996, and released on July 26, 1996, and any subsequent amendments, and includes other federal communications commission rules and orders relating to CMRS providers, CMRS, and wireless enhanced 911 service;
  14. “IP-enabled services” means services and applications making use of Internet protocol (IP) including, but not limited to, voice over IP and other services and applications provided through wireline, cable, wireless, and satellite facilities, and any other facility that may be provided in the future through platforms that may not be deployable at present, that are capable of connecting users dialing or entering the digits 911 to public safety answering points (PSAPs);
  15. “Non-wireline service” means any service provided by any person, corporation or entity, other than a service supplier as defined in this part, that connects a user dialing or entering the digits 911 to a PSAP, including, but not limited to, commercial mobile radio service and IP-enabled services;
  16. “Prepaid communications service” means “prepaid wireless calling service”, as set forth in § 67-6-102, that is capable of contacting a PSAP by entering or dialing the digits 911;
  17. “Prepaid wireless telecommunications service” means a wireless telecommunications service that allows a caller to dial 911 to access the 911 system, which service must be paid for in advance and is sold in predetermined units or dollars of which the number declines with use in a known amount;
  18. “Public safety answering point” or “PSAP” means a facility that has been designated to receive 911 phone calls and route them to emergency services personnel pursuant to § 7-86-107(b);
  19. “Public safety emergency services provider” means any municipality or county government that provides emergency services to the public. Such providers or services include, but are not limited to, emergency fire protection, law enforcement, police protection, emergency medical services, poison control, animal control, suicide prevention, and emergency rescue management;
  20. “Relay method” means a 911 service in which a public safety answering point, upon receipt of a telephone request for emergency services, notes the pertinent information from the caller and relays such information to the appropriate public safety agency or other agencies or other providers of emergency service for dispatch of an emergency unit;
  21. “Retail sale” has the meaning set forth in § 67-6-102;
  22. “Sales price” has the meaning set forth in § 67-6-102;
  23. “Service supplier” means any person, corporation or entity providing exchange telephone service to any service user;
  24. “Service user” means any person, corporation or entity that is provided 911 service;
  25. “Tariff rate” means the flat monthly recurring rate for one-party residence or business exchange access service within the base rate area of the principal exchange of the predominant service supplier within the geographical confines of the district, as stated in such service supplier's tariffs filed with the Tennessee public utility commission, but does not include taxes, fees, licenses, end-user access charges or any similar charges whatsoever;
  26. “Transfer method” means a 911 service in which a public safety answering point, upon receipt of a telephone request for emergency services, directly transfers such request to an appropriate public safety agency or other provider of emergency services;
  27. “Wireless enhanced 911 service” means service with location and number identification technology whereby users of non-wireline service may contact a PSAP by entering or dialing the digits 911; such service includes, but is not limited to, wireless enhanced 911 service as set forth in the federal communications commission order; and
  28. “Wireless telecommunications service” means commercial mobile radio service as defined by 47 CFR 20.3.

Acts 1984, ch. 867, § 3; 1985, ch. 271, § 1; 1990, ch. 909, § 1; 1993, ch. 411, § 2; 1993, ch. 479, § 2; 1995, ch. 305, § 86; 1998, ch. 1108, §§ 3, 24; 2006, ch. 925, §§ 2-4; 2010, ch. 774, § 1; 2012, ch. 935, § 1; 2014, ch. 795, § 2; 2017, ch. 94, § 22.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which amended this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

The Omnibus Budget Reconciliation Act of 1993 referenced in this section is Act Aug. 10, 1993, P.L. 103-66, which is codified throughout several titles of the U.S.C.  It amends certain provisions of the Federal Telecommunications Act of 1996.

Amendments. The 2014 amendment, effective January 1, 2015,  added the definitions of “911 surcharge”, “communications service”, “consumer”, “dealer”, “prepaid communications service”, “retail sale”, and “sales price”.

The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” at the end of  the definitions of “911 service” and  “exchange access facilities” and in the definition of  “tariff rate”.

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

Acts 2017, ch. 94, § 83. April 4, 2017.

Cross-References. Statewide wireless enhanced 911 service, title 7, ch. 86, part 3.

Use of automatic dialer programmed to emergency number, § 7-86-118.

Attorney General Opinions. Status of “911 tapes” under Public Records Act, OAG 93-65, 1993 Tenn. AG LEXIS 67 (11/29/93).

The E911 board may impose an emergency telephone service charge for each channel in a T-1 or PRI circuit that is capable of conveying an outbound voice telephone call from the service user to an E911 public safety answering point, OAG 07-038 (3/28/07).

7-86-104. Creation — Referendum.

  1. The legislative body of any municipality or county may, by ordinance or resolution, respectively, create an emergency communications district within all or part of the boundaries of such municipality or county. Prior to the establishment of such district, an election shall be held as provided in subsection (b).
  2. The legislative body of any municipality or county shall, by resolution, request the county election commission to submit to the voters within the boundaries of a proposed emergency communications district the question of creating such district in an election to be held pursuant to § 2-3-204. In the election, the questions submitted to the qualified voters shall be, “For the Emergency Communications District” or “Against the Emergency Communications District.” The county election commission shall certify the results of the election to such legislative body. The expenses of such election shall be paid by such local government.

Acts 1984, ch. 867, § 4; 1994, ch. 778, § 1.

7-86-105. Creation — Board of directors — Membership — Terms — Appointment of replacement.

  1. Upon approval by a majority of the eligible voters within the area of the proposed district voting at such referendum, the legislative body may create an emergency communications district.
    1. Except as otherwise provided by law, an emergency communications district shall have a board of directors composed of no fewer than seven (7) nor more than nine (9) members to govern the affairs of the district. For districts created by a county legislative body, the county mayor shall appoint the members of the board of directors subject to confirmation by the county legislative body. When the county mayor names an appointee to the board, the county legislative body has ninety (90) days or until the conclusion of its next regularly scheduled meeting, whichever is later, to confirm or reject the appointment. If the legislative body does not act within this time period, the appointment shall take effect without confirmation. In any municipality having a population of less than thirty thousand (30,000), according to the 1980 federal census or any subsequent federal census, having adopted home rule pursuant to the Constitution of Tennessee, Article XI, § 9, and having an incorporated area lying in two (2) counties, the board of directors may be the legislative body of such municipality, if the emergency services are provided by such municipality.
    2. In any county having a metropolitan form of government and having a population of not less than four hundred thousand (400,000) nor more than five hundred thousand (500,000), according to the 1980 federal census or any subsequent federal census, the chief executive officer of the metropolitan government may appoint a board of directors, composed of no fewer than seven (7) nor more than nine (9) members, subject to confirmation by the chief legislative body of the metropolitan government, which shall govern the affairs of the district. Appointments to the board of directors shall include members selected from minorities as well as members of the sex that historically has been underrepresented on boards and commissions of the metropolitan government.
    3. In emergency communication districts established by counties with a population greater than three hundred thousand (300,000) and less than seven hundred fifty thousand (750,000), according to the 1980 federal census or any subsequent federal census, except in counties with a metropolitan form of government, the mayor, the chief of police and the fire chief of the municipality, or their representatives, with the largest population in the district, the county sheriff in the district, and the county mayor in the district, or their representatives, shall be members of the board of directors of the district. If, at the time this subdivision (b)(3) takes effect, any person or persons holding any one (1) of the positions mentioned in this subdivision (b)(3) is not a member of the board of directors of the district, then the board shall be immediately expanded to include such person or persons. In districts covered by this subsection (b), the legislative body may appoint up to eleven (11) members to govern the affairs of the district to allow for the appointment of two (2) additional directors, one (1) of whom shall be a woman and one (1) of whom shall be a representative of the nongovernmental emergency agencies servicing such district. Such additional members shall serve for an initial term of one (1) year. Each term thereafter shall be for a period of four (4) years. The method of appointment of the board of directors by the county legislative body referred to in this subdivision (b)(3) shall be by the confirmation process described in subdivision (b)(1).
    4. Notwithstanding this subsection (b) to the contrary, in any county having a population of not less than forty-three thousand seven hundred (43,700) nor more than forty-three thousand eight hundred (43,800), according to the 1980 federal census or any subsequent federal census, the legislative body may appoint an additional two (2) members to the board of directors for an initial term of two (2) years. Each term thereafter of such members shall be for a period of four (4) years.
    5. Notwithstanding this section to the contrary, in any county having a population of not less than eight hundred thousand (800,000), according to the 2000 federal census or any subsequent federal census, the county mayor may appoint a board of directors, composed of no fewer than seven (7) nor more than eleven (11) members, subject to confirmation by the chief legislative body of the county, which shall govern the affairs of the district. The county mayor and legislative body shall ensure that the views and opinions of all participating governmental entities are given full consideration in the selection of members of the board, with the exact methodology to be determined by local ordinance or resolution. The county mayor and legislative body shall make every effort to appoint members who represent the diversity of the community, including women and minorities.
    6. In emergency communication districts established in any county having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, one (1) of the members of the board of the directors of the district shall be an actively engaged firefighter, police officer or emergency medical technician; provided, that, if, on April 5, 1995, one (1) such person is not a member of the board in such county, when a vacancy occurs on the board or at the expiration of the term of office of a member of the board, at least one (1) person meeting the qualifications established in this subdivision (b)(6) shall be appointed to the board.
    7. It is the public policy of this state to encourage the consolidation of emergency communications operations in order to provide the best possible technology and service to all areas of the state in the most economical and efficient manner possible. Pursuant to this policy, if two (2) or more counties, cities, or existing emergency communications districts, or any combination of these, desire to consolidate their emergency communications operations, a joint emergency communications district may be established by the parties using an interlocal agreement as authorized by title 5, chapter 1, part 1, and title 12, chapter 9; provided, that, notwithstanding the language of this subdivision (b)(7) or any other law to the contrary, no such consolidation of emergency communications operations shall result in the creation of a separate emergency communications district within the boundaries of an existing emergency communications district. Under such an agreement, the funding percentages for each party, and the size and appointment of the board of directors of such combined emergency communications district shall be determined by negotiation of the parties, notwithstanding this subsection (b) to the contrary; provided, that the board of directors of such combined district shall be composed of no fewer than seven (7) members to govern the affairs of the district. The terms, remuneration, and duties stated in subsections (c)-(i) shall apply to any board of directors of any combined emergency communications district.
      1. Notwithstanding this section to the contrary, in any emergency communications district created by a municipality after July 1, 2002, the board of directors of the district may be the legislative body of such municipality. If the board of the directors of the district is comprised of the legislative body, then the terms of the members of the board of directors shall run concurrently with their terms as members of the legislative body. The terms of the members of the legislative body shall run concurrently with their terms as members on the board of directors.
      2. In the event subdivision (b)(8)(A) is in effect for an emergency communications district, and any member of the emergency communications district board is removed pursuant to § 7-86-314, then the mayor shall appoint a private citizen to serve in the member's place until such time as the replaced member no longer serves on the legislative body of the municipality. Such appointment shall be subject to confirmation by the remaining members of the board of directors of the district.
      3. In the event subdivision (b)(8)(A) is in effect for an emergency communications district, and the entire emergency communications district board is removed pursuant to § 7-86-314, then the mayor shall appoint private citizens to serve in each such member's place until such time as the replaced members no longer serve on the legislative body of the municipality. Such appointment shall be subject to confirmation by the board.
      4. Nothing in this subdivision (b)(8) shall be construed to be contrary to § 7-86-310.
  2. The members shall serve for a term of four (4) years. The initial members shall be appointed for staggered terms of two (2), three (3) and four (4) years, dating from the effective date of the ordinance or resolution creating such district. Members shall serve until a successor is duly appointed and, if required by this section or any other law, confirmed.
  3. The members shall serve without compensation.
  4. The board of directors shall have complete and sole authority to appoint a chair and any other officers the board may deem necessary from among the membership of the board of directors.
  5. A majority of the board of directors shall constitute a quorum, and all official action of the board shall require a quorum.
  6. The board has the authority to employ such employees, experts and consultants as the board may deem necessary to assist the board in the discharge of its responsibilities to the extent that funds are made available.
  7. The board has the authority to establish or make available for the benefit and welfare of the board's employees such pension, insurance or other employee benefit plans as the board may deem appropriate, including participation in the Tennessee consolidated retirement system in accordance with title 8, chapter 35, part 2.
  8. No member of the board of directors shall be an employee of the emergency communications district.

Acts 1984, ch. 867, § 5; 1986, ch. 784, § 1; 1987, ch. 94, § 3; 1988, ch. 884, § 1; 1989, ch. 243, § 1; 1990, ch. 809, §§ 1-4; 1991, ch. 283, § 1; 1992, ch. 891, § 2; 1993, ch. 479, § 10; 1995, ch. 68, § 5; 1996, ch. 696, § 1; 1998, ch. 1108, § 28; 2001, ch. 149, §§ 1, 2; 2002, ch. 567, § 1; 2003, ch. 90, § 2; 2005, ch. 64, § 1; 2007, ch. 55, § 1; 2013, ch. 34, § 1.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

For tables of population of Tennessee municipalities, and for U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Disasters, emergencies and civil defense, title 58, ch. 2.

Immunity of board members, § 29-20-108.

Attorney General Opinions. Appointment of county commissioner to emergency district board, OAG 94-013, 1994 Tenn. AG LEXIS 8 (2/3/94).

Manner of appointing board of directors, OAG 94-024, 1994 Tenn. AG LEXIS 19 (3/9/94).

Joint agreement for emergency communication services, OAG 04-065, 2004 Tenn. AG LEXIS 63 (4/15/04).

The automatic removal provisions of T.C.A. § 7-86-314(a) apply, by their plain language, to ex officio emergency communications district (ECD) board members.  This does not create any conflict with the requirement of T.C.A. § 7-86-105(b)(3) that certain officials serve ex officio as ECD board members. The statute allows those ex officio membership positions to be filled either by the specified official or by a representative of that official.  Thus, when an ex officio membership position is vacant because the specified official was automatically removed from the board, the statutory ex officio membership requirement is nevertheless fully satisfied when that position is filled by a representative of the official.  OAG 16-39, 2016 Tenn.  AG LEXIS 39 (10/11/2016).

7-86-106. Status — Corporate powers — Charges not taxes.

The emergency communications district so created shall be a “municipality” or public corporation in perpetuity under its corporate name, and the district shall in that name be a body politic and corporate with power of perpetual succession, but without any power to levy or collect taxes. Charges for services authorized in this chapter shall not be construed as taxes and shall be payable as bona fide service charges by all service users, whether private or public, profit making, or not-for-profit, including governmental entities. The powers of each district shall be vested in and exercised by a majority of the members of the board of directors of the district.

Acts 1984, ch. 867, § 6; 1987, ch. 94, § 1.

Attorney General Opinions. County policy relating to attendance of members of county boards does not apply to the board of directors of an emergency communications district, OAG 09-013 (2/6/09).

7-86-107. Response methods to emergency calls — Digits 911 — Backup numbers.

    1. The board of directors of the district shall create an emergency communications service designed to have the capability of utilizing at least one (1) of the following three (3) methods in response to emergency calls:
      1. Direct dispatch method;
      2. Relay method; or
      3. Transfer method.
    2. The board of directors of the district shall elect the method that it determines to be the most feasible for the district.
  1. Each public safety emergency services provider retains the right to dispatch its own services, unless a voluntary agreement is made between such provider and the board of directors of the emergency communications district.
  2. The primary emergency telephone number is the digits “911”.
  3. The board of directors has the authority to subscribe to the appropriate telephone services from the service supplier.
  4. The involved agencies may maintain a separate secondary backup number and shall maintain a separate number for nonemergency telephone calls.
  5. No service supplier shall be required to provide 911 service if the equipment for such service is not available.

Acts 1984, ch. 867, § 7; 1998, ch. 1108, §§ 25-27.

7-86-108. [Repealed.]

Compiler's Notes. Former §  7-86-108 (Acts 1984, ch. 867, § 8; 1985, ch. 271, §§ 2, 3; 1987, ch. 94, § 4; 1989, ch. 9, § 1; 1993, ch. 419, § 1; 1993, ch. 479, § 3; 1994, ch. 778, § 2; 1995, ch. 68, § 1; 1998, ch. 1108, § 6; 2002, ch. 719, § 7; 2003, ch. 90, § 2; 2003, ch. 205, §§ 1, 2; 2006, ch. 925, § 5; 2010, ch. 774, §§ 2, 4; 2010, ch. 1030, § 8.) concerning emergency telephone service charges; legislative levy decrease; and data service and billing was repealed by Acts 2014, ch. 795, § 3, effective January 1, 2015.

Acts 2014, ch. 795, § 1 provided that the act, which repealed this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

7-86-109. Additional funding.

In order to provide additional funding for the district and the service, the governing body of the district may receive funds from federal, state and local government sources, as well as funds from private sources, including funds from the issuance of bonds, and may expend such funds for the purposes of this part. Any legislative body of a municipality or county creating a district under the terms of this chapter may appropriate funds to the district to assist in the establishment, operations and maintenance of such district.

Acts 1984, ch. 867, § 9.

7-86-110. [Repealed.]

Acts 1984, ch. 867, § 10; 1987, ch. 94, § 2; 2014, ch. 795, § 5; repealed by Acts 2016, ch. 1047, § 1, effective July 1, 2017.

Compiler's Notes. Former Section 7-86-110, concerning 911 surcharge collections and remittance, was repealed by Acts 2016, ch. 1047, § 1, effective July 1, 2017.

Amendments. The 2014 amendment, effective January 1, 2015,  rewrote the section which read: “(a) The service supplier shall remit the funds collected as the service charge to the district every two (2) months. Such funds shall be remitted to the district no later than thirty (30) days after the last business day of such two-month period.“(b) The service supplier shall be entitled to retain as an administrative fee an amount equal to three percent (3%) of the collections of the service charge.“(c) The service supplier or the board of directors of the district shall be authorized to demand payment from any service user who fails to pay any proper service charge, and may take legal action, if necessary, to collect the service charge from such service user, or may, in the alternative, and without any liability whatsoever to such service user for any losses or damages that result from termination, terminate all service to such service user; provided, that any service user so terminated shall have the right to resume service from the service supplier as long as the service user is otherwise in compliance with the regulation of the service supplier, upon full payment of all past due service charges and any other costs or expenses, including reasonable interest, or normal costs or charges of the service supplier for the resumption of service, incurred by the service supplier and the district as the result of any nonpayment.“(d) However, the service supplier shall annually provide to the board of directors of the district an accounting of the amounts billed and collected and of the disposition of such amounts.“(e) Good faith compliance by the service supplier with this chapter shall constitute a complete defense to any legal action or claim against the service supplier arising in connection with this part.”

Cross-References. Audits, § 7-86-113.

Tennessee Claims Commission, Tit. 9, ch. 8, part 3.

7-86-111. [Repealed.]

Compiler's Notes. Former § 7-86-111 (Acts 1984, ch. 867, § 11; 1995, ch. 305, § 87), concerning billing and payment of charges, and § 7-86-112 (Acts 1984, § ch. 867, § 12), concerning adjustment of rates and charges, were repealed by Acts 2014, ch. 795, § 3, effective January 1, 2015.

Acts 2014, ch. 795, § 1 provided that the act, which repealed these sections, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

7-86-112. [Repealed.]

Compiler's Notes. Former § 7-86-112 (Acts 1984, ch. 867, § 12), concerning adjustment of rates and charges, was repealed by Acts 2014, ch. 795, § 3, effective January 1, 2015.

Acts 2014, ch. 795, § 1 provided that the act, which repeals this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

7-86-113. Audits.

  1. The board of directors of each district shall cause an annual audit to be made of the books and records of the district. Within thirty (30) days after receipt by the district, a copy of the annual audit shall be filed with the clerk or recorder of the appropriate county or municipality who shall then distribute copies to members of the appropriate legislative body. Within thirty (30) days after receipt by the district, a copy of the annual audit shall also be filed with the chief administrative officer of the appropriate county or municipality. The comptroller of the treasury, through the department of audit, shall be responsible for determining that such audits are prepared in accordance with generally accepted governmental auditing standards and that such audits meet the minimum standards prescribed by the comptroller of the treasury. The comptroller of the treasury, through the department of audit, shall also prescribe procedures such as are required to assure that the books and records are kept in accordance with generally accepted accounting principles.
  2. These audits shall be prepared by certified public accountants, public accountants or by the department of audit. In the event the governing body of the district shall fail or refuse to have the audit prepared, then the comptroller of the treasury may appoint a certified public accountant, or public accountant or direct the department of audit to prepare the audit, the cost of such audit to be paid by the district.
  3. The comptroller of the treasury is authorized to modify the requirements for an audit as set out in this section for any districts whose activity, in the comptroller of the treasury's judgment, is not sufficient to justify the expenses of a complete audit. Furthermore, the comptroller of the treasury is authorized to direct the department of audit to make an audit of financial review of the books and records of districts.

Acts 1984, ch. 867, § 13; 1993, ch. 479, § 4; 2018, ch. 495, § 5.

Amendments. The 2018 amendment rewrote the last sentence in (a) which read: “The comptroller of the treasury shall promulgate such rules and regulations as are required to assure that the books and records are kept in accordance with generally accepted accounting procedures and that audit standards prescribed by the comptroller of the treasury are met.”

Effective Dates. Acts 2018, ch. 495, § 11. February 22, 2018.

Cross-References. Accounting by service supplier, § 7-86-110.

7-86-114. Bond issues.

  1. Subject to the approval of the legislative body of a county or municipality in which a district is established, each district has the power and is hereby authorized, from time to time, to issue negotiable bonds, notes and debt obligations for lease or lease purchases in anticipation of the collection of revenues for the purpose of constructing, acquiring, reconstructing, improving, bettering or expanding any facility or service authorized by this part, or any combination of facility or service, and to pledge to the payment of the principal of and interest on such bonds, notes or debt obligations all or any part of the revenues derived from the operation of such facility, service or combination of facility or service. There may be included in the costs for which bonds or notes are to be issued, reasonable allowances for legal, engineering and fiscal services, interest during construction, and for six (6) months after the estimated date of completion of construction, and other preliminary expenses, including the expenses of incorporation of the district.
  2. No bond, note or debt obligation authorized in this section may be issued until the resolution authorizing the issuance of the bonds, notes or debt obligations, together with a statement, shall show in detail the total outstanding bonds, notes, warrants, refunding bonds, and other evidences of indebtedness of the district, together with the maturity dates of the bonds, notes, warrants, refunding bonds, and other evidences of indebtedness, interest rates, special provisions for payment, the project to be funded by the bonds, notes or debt obligation, the current operating financial statement of the district and any other pertinent financial information, is submitted to the comptroller of the treasury or the comptroller's designee for review, and the comptroller of the treasury or the comptroller's designee may report on the financial information to the district within fifteen (15) days from the date the plan was received by the comptroller of the treasury or the comptroller's designee, and the comptroller of the treasury or the comptroller's designee shall immediately acknowledge receipt in writing of the proposed issue statement and information. The report thus received by the district shall be published once in a newspaper of general circulation in the county of the principal office of the district, during the week following its receipt. After receiving the report of the comptroller of the treasury or the comptroller's designee, and after publication of such report, or after the expiration of fifteen (15) days from the date the statement and information are received by the comptroller of the treasury or the comptroller’s designee, whichever date is earlier, the district may take such action with reference to the proposed issue as it deems advisable. Such report of the comptroller of the treasury or the comptroller's designee shall also be made a part of the bond, note or debt obligation transcript.
  3. The bonds may be issued in one (1) or more series, may bear such date or dates, shall mature at such time or times, not exceeding forty (40) years from their respective dates, may bear interest at such rate or rates payable semi-annually, may be in such denomination, may be in such form, either coupon or registered, may be payable at such place or places, may carry such registration and conversion privileges, may be executed in such manner, may be payable in such medium of payment at such place or places, may be subject to such terms of redemption, with or without premium, all as may be provided by resolution of the legislative body of the county. The bonds shall be fully negotiable for all purposes.
  4. If any issue of such bonds or notes is to be sold to an agency of the federal government or an agency of the state, such bond or note issue may, at the request of such agency, be delivered as an installment bond or note payable as to principal and interest in equal or approximately equal installments for the term of such bond or note issue in accordance with the resolution authorizing such bond or note issue. Such authorizing resolution shall stipulate the annual principal and interest requirements during the full term of the bond or note issue.
  5. Nothing in this section shall prohibit or limit the authority of the board of directors from entering into leases or lease purchases, so long as the term of the lease or leases does not exceed five (5) years, and no other approvals of the lease or leases shall be required.
  6. Notes may be issued in the same manner as bonds, but shall mature at such time or times, not exceeding five (5) years.
    1. The lease/lease purchase agreements authorized under this section shall be issued in the manner prescribed by chapter 51, part 9 of this title. For the purposes of applying chapter 51, part 9 of this title, the district board of directors is deemed to be the governing body except that, all lease/lease purchase agreements exceeding five (5) years shall be subject to the approval of the appropriate county or municipal governing body.
    2. For the purposes of this section, and in §§ 7-86-115 — 7-86-117, “bond” or “bonds” are deemed to include notes.
    3. For the purposes of this section, in §§ 7-86-116 and 7-86-117, “bond” or “bonds” includes debt obligations for lease/lease purchases.

Acts 1984, ch. 867, §§ 14, 15; 1992, ch. 891, §§ 4-8; 2010, ch. 868, § 29.

7-86-115. Liens — Defaults on bonds — Receiver.

  1. There shall be and there is created a statutory lien in the nature of a mortgage lien upon any facility acquired or constructed in accordance with this part, including all extensions and improvements to the facilities or combinations of extensions and improvements to facilities subsequently made, which lien shall be in favor of the holder or holders of any bonds issued pursuant to this part, and all such property shall remain subject to such statutory lien until the payment in full of the principal of and interest on the bonds. Any holder of the bonds or any of the coupons representing interest of the bonds may either at law or in equity, by suit, action, mandamus, or other proceeding, in any court of competent jurisdiction, protect and enforce such statutory lien and compel performance of all duties required by this part, including the making and collection of sufficient rates for the service or services, the proper accounting for the collections, and the performance of any duties required by covenants with the holders of any bond issued in accordance with this section. The statutory lien shall not apply to any property, liens, or equipment owned by the service supplier.
  2. If any default be made in the payment of the principal of or interest on such bonds, any court having jurisdiction of the action may appoint a receiver to administer the district, and the facility or service, with power to charge and collect rates sufficient to provide for the payment of all bonds and obligations outstanding against the facility or service and for the payment of operating expenses, and to apply the income and revenues of the bonds, in conformity with this part, and any covenants with bondholders.

Acts 1984, ch. 867, § 16.

7-86-116. Payment of bonds and interest — Recitals on bonds.

No holder or holders of any bonds issued pursuant to this part shall ever have the right to compel the levy of any tax to pay the bonds or the interest on the bonds. Each bond shall recite in substance that the bond and interest on the bond are payable solely from the revenue pledged to the payment of the bonds and that the bond does not constitute a debt of the district within the meaning of any statutory limitation.

Acts 1984, ch. 867, § 17.

7-86-117. Exemption from taxation.

The district, and all properties at any time owned by it and the income from the properties and all bonds issued by it and the income from the bonds, shall be exempt from all taxation in the state.

Acts 1984, ch. 867, § 18.

7-86-118. Use of automatic dialer programmed to the emergency number — Resolution precluding use with security alarm systems.

  1. The board of directors of an emergency communications district may, by resolution, vote to preclude service users from programming the emergency number “911” in automatic dialers used in conjunction with security alarm systems.
  2. A fine not to exceed fifty dollars ($50.00) may be assessed by the board against any person violating such board decision.

Acts 1990, ch. 909, § 2.

Cross-References. Definition of automatic dialer, § 7-86-103.

7-86-119. Surety bond.

    1. Any board member, executive committee member, employee, officer, or any other authorized person of an emergency communications district, who receives public funds, has authority to make expenditures from public funds, or has access to any public funds is hereby required to give bond made payable to the state with such sureties as provided in this section. Such bond is to be conditioned in all cases in which a different condition is not prescribed, upon the faithful discharge of the duties of such office, employment or other authorized activity in which such person is engaged during the time such person continues in the duties, or in the discharge of any part of such duties.
      1. An emergency communications district may purchase, in lieu of the surety bonds required by subdivision (a)(1), fidelity bonds to cover any losses from breach of the condition of faithful discharge of the duties of any board member, executive committee member, employee, officer, or any other authorized person of an emergency communications district who receives public funds, has authority to make expenditures from public funds, or has access to any public funds.
      2. A fidelity bond purchased pursuant to this subdivision (a)(2) shall provide coverage for government crime and employee dishonesty that insures the lawful performance by officials and their employees of their fiduciary duties and responsibilities.
      3. A fidelity bond purchased pursuant to this subdivision (a)(2) must be purchased from a corporation licensed to do business in this state pursuant to title 56, chapter 2.
      4. A certificate evidencing the persons covered by the fidelity bond, the amount of coverage maintained, and the type of coverage provided shall be filed in the register's office for the county in which the emergency communications district is located.
      5. A certificate filed pursuant to subdivision (a)(2)(D) shall satisfy the requirement for the filing of official bonds under subsection (e).
  1. Provisions for bonds of all state and county officers set forth in title 8, chapter 19, shall also govern the bonds of all persons covered under this section, so far as the provisions of title 8, chapter 19, are not inconsistent with this section.
    1. The minimum amount of such required bond shall be determined from the amount of revenues handled by the respective emergency communications district as reported in the last audit approved by the comptroller of the treasury. The minimum amount of the bond shall be based on revenues as follows:
      1. Four percent (4%) of the revenues up to three million dollars ($3,000,000); and
      2. Two percent (2%) of the revenues in excess of three million dollars ($3,000,000) shall be added.
    2. The amounts indicated in subdivisions (c)(1)(A) and (B) shall be cumulative.
  2. Surety bonds purchased pursuant to this section shall be signed by authorized individuals of a corporate surety, and such corporation shall be duly licensed to do business in the state as a surety.
  3. The official bonds required under this section are hereby required to be recorded in the office of the register of deeds where the office of the emergency communications district is located and transmitted to the office of the county clerk in the same county for safekeeping.
  4. The respective emergency communications district shall pay the premiums for such bonds.

Acts 1992, ch. 891, § 1; 1993, ch. 479, § 5; 2013, ch. 315, §§ 21, 22; 2017, ch. 418, §§ 1-3.

Compiler's Notes. Acts 2013, ch. 315, § 31 provided that the act, which amended subdivision (c)(2) and subsection (e), shall apply to the renewal or obtaining an official bond for any bonding after April 29, 2013.

Amendments. The 2017 amendment added (a)(2); deleted former (c)(1); redesignated the introductory language of former (c)(2)(A) as the introductory language of present (c)(1); in the present introductory language of (c)(1), substituted “The” for “Effective July 1, 2013, the”; redesignated former (c)(2)(A)(i) and (c)(2)(A)(ii) as present (c)(1)(A) and (c)(1)(B), respectively; in present (c)(1)(A), substituted “of the revenues in excess of” for “of the excess over”; redesignated former (c)(2)(B) as present (c)(2); in present (c)(2), substituted “subdivisions (c)(1)(A) and (B)” for “subdivisions (2)(A)(i) and (ii)”; and, in (d), substituted “Surety bonds purchased pursuant to this section” for “All such official bonds”.

Effective Dates. Acts 2017, ch. 418, § 4. May 18, 2017.

7-86-120. Annual budget and fiscal plan.

  1. The board of each district shall adopt and operate under an annual budget. The budget shall present a financial plan for the ensuing fiscal year, including at least the following information:
    1. Estimates of proposed expenditures for each department, board, office or other agency of the district showing, in addition, the expenditures for corresponding items for the last preceding fiscal year, projected expenditures for the current fiscal year and reasons for recommended departures from the current appropriations pattern in such detail as may be prescribed by the board. It is the intent of this subdivision (a)(1) that all moneys received and expended by a district shall be included in the budget. Therefore, notwithstanding any other law, no district may expend any moneys regardless of their source, including moneys derived from bond and long-term note proceeds, federal, state or private grants or loans, or special assessments, except in accordance with a budget adopted under this section;
    2. Statements of the bonded and other indebtedness of the district, including the debt redemption and interest requirements, the debt authorized and unissued, and the condition of the sinking fund;
    3. Estimates of anticipated revenues of the district from all sources, including non-tax revenues and proceeds from the sale of any bonds, notes or other debt obligations with a comparative statement of the amounts received by the district from each of such sources for the last preceding fiscal year, the current fiscal year, and the coming fiscal year in such detail as may be prescribed by the board;
    4. A schedule of salaries by position and the number of people employed by the district;
    5. A statement of the estimated balance or deficit, as of the end of the current fiscal year;
    6. A statement of pending capital projects and proposed new capital projects, relating to respective amounts proposed to be raised for capital projects by appropriations in the budget and the respective amounts, if any, proposed to be raised for capital projects by the issuance of bonds, notes or other debt obligations during the fiscal year; and
    7. Such other supporting schedules as the board deems necessary, or is otherwise required by law.
  2. Prior to adoption by the district, a copy of the proposed budget shall be filed with the clerk or recorder of the appropriate county or municipality, who shall then distribute copies to members of the appropriate legislative body and to members of municipal legislative bodies participating in the district, at least thirty (30) days before the next scheduled meeting of the legislative body. A copy of the proposed budget shall also be filed with the chief administrative officer of the appropriate county or municipality at the same time the budget is filed with the clerk or recorder. Prior to adoption of the budget, the board of directors shall hold a public hearing on the proposed budget for which adequate public notice has been given. Nothing in this subsection (b) shall prohibit a district from adopting the proposed budget or delay the orderly adoption of the annual budget by the district's board of directors.
  3. Within thirty (30) days after the budget's adoption by the district board, the budget, and any amendments to the budget, shall be filed with the clerk or recorder of the appropriate county or municipality, who shall then distribute copies to members of the appropriate legislative body. Within thirty (30) days after its adoption by the district board, the budget, and any amendments to the budget shall be filed with the chief administrative officer of the appropriate county or municipality. Nothing in this subsection (c) shall prohibit or limit the authority of the board of directors from amending a budget after adoption.

Acts 1992, ch. 891, § 3; 1993, ch. 479, §§ 6, 7; 1995, ch. 68, §§ 2, 3.

7-86-121. Sale of bonds or notes — Revenue.

  1. Bonds or notes issued pursuant to this part may be sold at either public sale or private negotiated sale.
  2. All revenues, including any debt obligation issued for the purpose of a lease/lease purchase, must be expended according to the County Purchasing Law of 1983, compiled in title 5, chapter 14, part 2. For the purposes of applying title 5, chapter 14, part 2, the district board of directors is deemed to be the governing body.

Acts 1992, ch. 891, § 9.

7-86-122. Deposit and investment of idle funds.

In order to provide a safe temporary medium for the investment of idle funds, emergency communications districts shall deposit and invest idle funds according to  § 5-8-301.

Acts 1992, ch. 891, § 10.

7-86-123. Financial report.

At every regularly scheduled meeting of the board of directors, the board must be provided with a financial report of the emergency communication district's activities, in accordance with guidelines developed by the comptroller of the treasury.

Acts 1992, ch. 891, § 11.

7-86-124. Disbursement, transfer, withdrawal or investment of financial assets.

No member of the board of directors shall have control or custody of the financial assets of an emergency communications district. No member of the board of directors, on such member's sole authority, may authorize the disbursement, transfer, withdrawal or investment of any financial assets belonging to the emergency communications district.

Acts 1992, ch. 891, § 12.

7-86-125. Comprehensive travel regulations for district officers and employees.

  1. The board of directors of each district shall adopt comprehensive travel regulations applicable to all officers and employees of the district. The minimum regulations shall be the same as those of the appropriate county or municipality that created the district. Nothing in this subsection (a) shall prohibit a district from adopting a more stringent policy. However, the district may establish a mileage allowance for travel up to, but not in excess of, the business standard mileage rate established by the Internal Revenue Code (26 U.S.C.).
  2. If the appropriate county or municipality does not have comprehensive travel regulations as described in subsection (a), the board shall adopt travel regulations. Such regulations shall determine how expenses will be reimbursed and what expenses are reimbursable. A copy of such travel regulations shall be open for public inspection and kept on file in the district office.

Acts 1993, ch. 479, § 8.

7-86-126. Security of district funds by depositories.

All funds deposited with a bank or other financial institution shall be secured by collateral in the same manner and under the same conditions as state deposits under title 9, chapter 4, parts 1 and 4, or as provided in a collateral pool created under title 9, chapter 4, part 5.

Acts 1993, ch. 479, § 9; 1995, ch. 62, § 1.

7-86-127. Street names and numbers.

  1. Unless expressly provided otherwise by law, the authority to name public and private roads and streets, including roads and streets located within residential developments, and to assign property numbers relating to the roads and streets, is exclusively vested in the legislative bodies of counties for unincorporated areas, and municipalities within their incorporated boundaries; provided, that the exercise of this authority must be in a manner acceptable to the United States postal service.
  2. The legislative bodies of any county or municipality may delegate the authority provided under this section to the emergency communications district, if there be one; provided, that the legislative body shall approve road or street name changes made by the district under such terms as the legislative body may determine.
  3. Any county or city, including districts with delegated authority, may establish and impose reasonable fees and enforce policies relating to the changing of names of roads and streets, and may establish and enforce policies for the assignment and posting requirements of property numbers.
  4. The legislative bodies of all counties and municipalities, or their designees, shall provide their local county election commissions an updated list of any modifications or changes to all house, road, or street names or numbers every six (6) months.
  5. This section may not be construed to require a local government to maintain any portion of a road that the local government has not accepted.

Acts 1994, ch. 807, § 2; 1995, ch. 68, § 4; 1997, ch. 136, § 1; 2004, ch. 480, § 13.

Compiler's Notes. Acts 1994, ch. 807, § 1, provided that the general assembly found that the “Emergency Communications District Law” has been successful, embraced by the vast majority of Tennessee counties, most of which have already initiated Enhanced 911 (“E-911”) service, and all of which are developing or maintaining this life-saving service in fulfillment of the purposes stated in the law. The general assembly also found that to more fully accomplish the purposes of the law, it is essential that each county have a uniform system of addressing which is consistent with regulations of the United States postal service in order to achieve maximum effect with minimum inconvenience to the public. The general assembly further found that the involvement of emergency communications districts in the addressing activity is necessary and complementary to the responsibility of local governments, which requires explicit definition.

Attorney General Opinions. A city, county, or emergency communications district may establish and enforce policies that require homeowners or businesses to mark their establishments clearly with their street number, OAG 01-057, 2001 Tenn. AG LEXIS 49 (4/11/01).

If a county legislative body has created an emergency communications district, it may delegate authority to name public or private roads and streets to that district, OAG 03-088, 2003 Tenn. AG LEXIS 107 (7/15/03).

If the general assembly chooses to exercise its authority to rename a public street or highway, its actions are controlling, OAG 06-054 (3/28/06).

7-86-128. Collection of 911 surcharge.

    1. When a dealer collects the sales price for a retail sale of communications service or prepaid communications service from a consumer, such dealer shall collect a 911 surcharge of one dollar and sixteen cents ($1.16). Dealers shall be entitled to retain as an administrative fee an amount equal to two percent (2%) of the collections of the 911 surcharge on the retail sale of communications service.
    2. Any change in the 911 surcharge amount set in subdivision (a)(1) shall be set at a level that is sufficient to fully fund the mandatory disbursements to emergency communications districts, the operational expenses of the state emergency communications board, referred to as “board” in this section, and the Tennessee relay services/telecommunications devices access program (TRS/TDAP program) as provided in § 65-21-115. In the event of any revenue shortfall, mandatory disbursements to the emergency communications districts and the TRS/TDAP program shall be given priority. Revenues from the surcharge authorized in this section shall be used to support the long-term solvency and operations of emergency communications districts, as well as reasonable and necessary administrative and operational expenses of the board and the 911 Emergency Communications Fund.
    3. If the sales price for a retail sale of communications service is collected by a dealer less frequently than monthly, the 911 surcharge shall still apply and be collected for each month or partial month for which the sales price is collected.
    1. The board may increase the 911 surcharge upon determination of a need for additional funds after a public hearing before the board. At least thirty (30) days' notice shall be provided before the public hearing. There shall be opportunity for public comment at the public hearing. No increase in the 911 surcharge shall take effect until ratified by a joint resolution of the general assembly. Not less than ninety (90) days prior to the rate change, notice of the change shall be provided to all dealers in the manner that notices are provided of changes in sales tax rates pursuant to title 67.
    2. The board may decrease the amount of the 911 surcharge after providing thirty (30) days' notice and opportunity for public comment at a public hearing of the board. After determination of a decrease, the board must give at least sixty (60) days' notice to the speaker of the house of representatives, the speaker of the senate, and the governor. Not less than ninety (90) days prior to the rate change, notice of the change shall be provided to all dealers in the manner that notices are provided of changes in sales tax rates pursuant to title 67.
    3. It is the intent of the general assembly that the 911 surcharge be established at the lowest rate practicable consistent with the purposes of this section. The board shall report annually to the finance, ways and means committees of the senate and house of representatives on the financial status and solvency of emergency communications districts, status of the implementation of a uniform statewide 911 system and the status, level and solvency of the 911 Emergency Communications Fund.
  1. The 911 surcharge applicable to any multi-channel or other complex service that is capable of simultaneously carrying multiple voice and data transmissions, including, but not limited to, private branch exchange service, that is provided to a fixed location with a unique street address or physically identifiable location shall be calculated by applying one (1) 911 surcharge for each simultaneous outbound call that can be placed to 911 using such service.
  2. The maximum number of 911 surcharges that may be imposed on a single subscriber of retail communications services provided to a fixed location shall not exceed two hundred (200) surcharges per building with a unique street address or physically identifiable location. A communications service that is priced lower than five dollars ($5.00) per month or a prepaid communications service priced below a one-time fee of less than ten dollars ($10.00) shall not constitute a retail communications service for purposes of the 911 surcharge and shall not be subject to a 911 surcharge in accordance with subsection (a).
  3. Dealers of communications service shall collect the 911 surcharge from their customers and, when practicable, display the 911 surcharge as a separate line item on customer bills or invoices. Dealers of prepaid communications service shall collect the 911 surcharge at the point of the sale. 911 surcharge revenue actually collected by a dealer shall be remitted to the department of revenue monthly. No additional or local 911 surcharges on communications service or prepaid communications service shall be permitted. Dealers of retail communications service shall have no obligation to remit surcharges that they are unable to collect from subscribers.
    1. Dealers of communications service and prepaid communications service shall remit the 911 surcharge to the department of revenue in the manner provided by the Retailers' Sales Tax Act, compiled in title 67, chapter 6, with respect to the sales and use taxes. The department of revenue shall establish registration and payment procedures for such dealers that substantially coincide with the registration and payment procedures that apply under the Retailers' Sales Tax Act.
    2. A dealer of prepaid communications shall be permitted to deduct and retain up to two percent (2%) of 911 surcharges that are collected by the dealer from the consumers.
    3. The audit and appeal procedures applicable under title 67, chapter 1, shall apply to the 911 surcharges on communications service and prepaid communications service. Any audit of a dealer of communications service or prepaid communications service shall coincide with the department's normal auditing of the dealer for sales and use tax purposes.
    4. The penalty and interest provisions under title 67, chapter 1, part 8, shall apply to the 911 surcharges on communications service and prepaid communications service.
    5. The department of revenue shall pay all remitted 911 surcharges to the board within thirty (30) days of receipt, for use of the board in accordance with part 3 of this chapter. The department of revenue may deduct an administration fee of one and one hundred twenty-five thousandths percent (1.125%) of the collected charges.
  4. The 911 surcharge is the liability of the subscriber and not of the dealer. Dealers are authorized to demand payment from any subscriber who fails to pay any authorized 911 surcharge, and may take legal action, in the sole discretion of the dealer, to collect the 911 surcharge from any such subscriber, or may, in the alternative, and without any liability to such subscriber for any losses or damages that result from termination, terminate all service to such subscriber.
  5. Notwithstanding this section to the contrary, the board may withhold such distribution to an emergency communications district, if the district is operating in, or fails to correct a specific violation of state law. This may include, but not be limited to, the failure to submit an annual budget or audit, operating contrary to the open meeting requirements of title 8, chapter 44, part 1, or failure to comply with any requirements of this chapter 86. Further, the board may also withhold such distribution if it deems that the district is not taking sufficient actions or acting in good faith to establish, maintain, or advance E911 service for the citizens of an emergency communications district.
  6. The department of revenue shall have the exclusive authority to audit and to bring any legal action to collect the 911 surcharge collected and remitted by any dealer. The exclusive authority by the department includes, but is not limited to, nonpayment or under-collection errors or other causes of action that relate to the collection of 911 surcharges.

Acts 2010, ch. 774, § 3; 2014, ch. 795, § 4; 2016, ch. 1047, §§ 2-4, 6.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which amended this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

Amendments. The 2014 amendment, effective January 1, 2015, rewrote the section which read: “(a) As used in this section, unless the context otherwise requires:“(1) ‘Board’ means the emergency communications board established under § 7-86-302;“(2) ‘Consumer’ means a person who purchases prepaid wireless telecommunications service in a retail transaction;“(3) ‘Department’ means the department of revenue;“(4) ‘Prepaid wireless emergency telephone service charge" means the charge that is required to be collected by a seller from a consumer in the amount established under this section;“(5) ‘Prepaid wireless telecommunications service’ means a wireless telecommunications service that allows a caller to dial 911 to access the 911 system, which service must be paid for in advance and is sold in predetermined units or dollars of which the number declines with use in a known amount;“(6) ‘Provider’ means a person that provides prepaid wireless telecommunications service pursuant to a license issued by the federal communications commission;“(7) ‘Retail transaction’ means the purchase of prepaid wireless telecommunications service from a seller for any purpose other than resale, and the purchase of more than one (1) item that provides prepaid wireless telecommunications service, when such items are sold separately, constitutes more than one (1) retail transaction;“(8) ‘Seller’ means a person who sells prepaid wireless telecommunications service to another person; and“(9) ‘Wireless telecommunications service’ means commercial mobile radio service as defined by 47 CFR 20.3.“(b)(1)(A) A statewide prepaid wireless emergency telephone charge of fifty-three cents (53cent(s)), or an adjusted amount as provided in subdivision (b)(6), shall be imposed on each retail transaction in lieu of the charge imposed pursuant to § 7-86-108.“(B) Notwithstanding (b)(1)(A), if a minimal amount of prepaid wireless telecommunications service is sold with a prepaid wireless device and a single, non-itemized price is charged for the service, then the seller may elect not to apply the service charge imposed by this subdivision (b)(1). For purposes of this subdivision (b)(1)(B), a minimal amount of service means an amount of service denominated as either ten (10) minutes or less or five dollars ($5.00) or less.“(2) The prepaid wireless emergency telephone service charge shall be collected by the seller from the consumer with respect to each retail transaction occurring in this state. The amount of the prepaid wireless emergency telephone service charge shall be either separately stated on an invoice, receipt, or other similar document that is provided to the consumer by the seller, or otherwise disclosed to the consumer.“(3) For purposes of this subsection (b), a retail transaction that is effected in person by a consumer at a business location of the seller shall be treated as occurring in this state if that business location is in this state, and any other retail transaction shall be treated as occurring in this state if the retail transaction is treated as occurring in this state for purposes of § 67-6-230.“(4) The prepaid wireless emergency telephone service charge is the liability of the consumer and not of the seller or of any provider, except that the seller shall be liable to remit all charges that the seller is deemed to collect where the amount of the charge has not been separately stated on an invoice, receipt, or other similar document provided to the consumer by the seller.“(5) The amount of the prepaid wireless emergency telephone service charge that is collected by a seller from a consumer, if such amount is separately stated on an invoice, receipt, or other similar document provided to the consumer by the seller, shall not be included in the base for measuring any tax, fee, surcharge, or other charge that is imposed by this state, any political subdivision of this state, or any intergovernmental agency.“(6)(A) If the emergency telephone service charge imposed under § 7-86-108(a)(1)(B)(i)(a) is increased or reduced pursuant to the provisions of such subdivision, then the prepaid wireless emergency telephone charge imposed by subdivision (b)(1) shall be increased or reduced in proportion to such change.“(B) The proportional increase or reduction shall be effective on the first day of the first calendar month to occur at least sixty (60) days after notification is received by the department from the board as provided in § 7-86-108(a)(1)(B)(i)(b).“(C) The department shall provide notice on its web site of an increase or reduction that occurs pursuant to this subdivision (b)(6) at least thirty (30) days before such change takes effect.“(c)(1) Prepaid wireless emergency telephone service charges collected by sellers shall be remitted to the department at the times and in the manner provided by title 67, chapter 6, with respect to the sales and use taxes. The department shall establish registration and payment procedures that substantially coincide with the registration and payment procedures that apply under title 67, chapter 6.“(2) A seller shall be permitted to deduct and retain three percent (3%) of prepaid wireless E911 charges that are collected by the seller from consumers.“(3) The audit and appeal procedures applicable under title 67, chapter 1 shall apply to the prepaid wireless emergency telephone service charge.“(4) The department shall establish procedures by which a seller of prepaid wireless telecommunications service may document that a sale is not a retail transaction, which procedures shall substantially coincide with the procedures for documenting sale for resale transactions for sales and use purposes under title 67, chapter 6.“(5) The department shall pay all remitted prepaid wireless emergency telephone service charges over to the board within thirty (30) days of receipt, for use by the board in accordance with part 3 of this chapter. The department may deduct an amount, not to exceed two percent (2%) of collected charges, to be retained by the department to reimburse its direct costs of administering the collection and remittance of prepaid wireless emergency telephone service charges.“(d)(1) A seller that is not a provider shall be entitled to the immunity and liability protections under §§ 7-86-319 and 7-86-320, notwithstanding the requirement in § 7-86-320(a) regarding compliance with federal communications commission order number 05-116.“(2) A provider shall be entitled to the immunity and liability protections under §§ 7-86-319 and 7-86-320.“(3) In addition to the protection from liability provided by subdivisions (d)(1) and (2), each provider and seller shall be entitled to the further protection from liability, if any, that is provided to providers and sellers of wireless telecommunications service that is not prepaid wireless telecommunications service pursuant to §§ 7-86-319 and 7-86-320.“(e) The prepaid wireless emergency telephone service charge imposed by this section shall be the only E911 funding obligation imposed with respect to prepaid wireless telecommunications service in this state, and no tax, fee, surcharge, or other charge shall be imposed by this state, any political subdivision of this state, or any intergovernmental agency, for E911 funding purposes, upon any provider, seller, or consumer with respect to the sale, purchase, use or provision of prepaid wireless telecommunications service.”

The 2016 amendment, in (a)(1), deleted “Effective January 1, 2015,” from the beginning,  and added the last sentence; rewrote (e) and (f)  which read: “(e) The 911 surcharge shall, when practicable, be displayed as a separate line item by dealers of communications service on customer bills or invoices. 911 surcharge revenue actually collected by a dealer shall be remitted to the board every two (2) months. No additional or local 911 surcharges on retail communications service shall be permitted. Dealers of retail communications service shall have no obligation to remit surcharges that they are unable to collect from subscribers.“(f)(1) For prepaid communications service, the surcharge shall be collected at the point of sale and remitted to the department of revenue at the times and in the manner provided by title 67, chapter 6, with respect to the sales and use taxes. The department of revenue shall establish registration and payment procedures that substantially coincide with the registration and payment procedures that apply under title 67, chapter 6.“(2) A dealer of prepaid communications service shall be permitted to deduct and retain up to three percent (3%) of 911 surcharges that are collected by the dealer from consumers.“(3) The audit and appeal procedures applicable under title 67, chapter 1, shall apply to the 911 surcharges on prepaid communications service.“(4) The department of revenue shall pay all remitted 911 surcharges to the board within thirty (30) days of receipt, for use by the board in accordance with part 3 of this chapter. The department of revenue may deduct an amount, up to two percent (2%) of collected charges, to be retained by the department of revenue to reimburse its direct costs of administering the collection and remittance of 911 surcharges.”; and added (i).

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

Acts 2016, ch. 1047, § 7. July 1, 2017.

Attorney General Opinions. Emergency telephone charges on wireless phone service.  OAG 13-43, 2013 Tenn. AG LEXIS 43 (6/5/13).

7-86-129. Purchasing by emergency communications districts.

  1. Any emergency communications district may purchase equipment under the same terms of a legal bid initiated by any other district.
    1. Any emergency communications district may purchase directly from a vendor the same goods and equipment at the same price and under the same terms as provided in a contract for such equipment entered into by any other district.
    2. Any emergency communications district that purchases goods and equipment under this subsection (b) shall directly handle payment, refunds, returns, and any other communications or requirements involved in the purchase of the equipment without involving the district that originated the contract. The originating district shall have no liability or responsibility for any purchases made by another district under a contract that the originating district negotiated and consummated.

Acts 2011, ch. 117, § 1.

7-86-130. Disposition of 911 surcharge revenue collected in excess of annual fiscal requirements.

Any 911 surcharge revenue collected in excess of the annual fiscal requirements of the board and the mandatory every two (2) months payments to emergency communications districts shall not revert to the general fund. The board shall distribute a minimum of fifty percent (50%) of any revenue collected in excess of its annual fiscal requirements to the emergency communications districts in accordance with policies adopted by the board. Any unspent funds at the end of a fiscal year shall be carried forward to the next fiscal year to be used as a beginning balance of the fiscal requirements for such fiscal year.

Acts 2014, ch. 795, § 7.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which enacted this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

7-86-131. Study and report on 911 surcharge and implementation of IP-based next generation 911 technology.

The Tennessee advisory commission on intergovernmental relations shall study and report its conclusions to the joint committee on government operations on or before September 15, 2017, regarding the following matters:

  1. Whether the 911 surcharge is generating adequate revenue to cover the costs of the services, equipment, maintenance and improvements needed to provide a uniform, stable and effective statewide 911 system;
  2. Whether the expansion of 911 system functionality resulting from implementation of IP-based next generation 911 technology has increased or decreased costs for emergency communications districts;
  3. Whether there is a need or benefit to consolidate emergency communications districts or PSAPs;
  4. Whether the 911 surcharge is generating more revenue than necessary to implement the purpose of Chapter 795 of the Public Acts of 2014 and can be reduced to the benefit of communications consumers;
  5. Whether a flat rate communications services surcharge is the best manner in which to fund 911 system costs or whether such costs should be funded by a percentage surcharge or a different source, such as water service, electric power service or state general funds or local taxes;
  6. Whether the board membership of the state emergency communications board should be amended to include other stakeholders such as telecommunications providers, emergency communications districts that dispatch, and other interested parties;
  7. Whether there is a need or benefit for the board to have the ability to raise the 911 surcharge rate should there be a financial reason to do so;
  8. Whether there is a need or benefit for the providers of communications services to register with the board prior to providing service; and
  9. Whether there is a need or benefit for providers of communications services to notify the board when there is a known service interruption.

Acts 2014, ch. 795, § 10.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which enacted this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

7-86-132 — 7-86-150. [Reserved.]

  1. The legislative body of any municipality or county is authorized by ordinance or resolution, respectively, to establish, operate and maintain an emergency communications system providing 911 service within its boundaries when funded by general revenues.
  2. This chapter shall not be construed to prohibit such service by such municipality or county.

Acts 1987, ch. 94, § 5.

Part 2
Emergency Dispatches

7-86-201. [Repealed.]

Compiler's Notes. Former § 7-86-201 (Acts 1994, ch. 940, § 1; 1997, ch. 257, § 1; 1997, ch. 320, § 1; 1997, ch. 320, § 2; 1998, ch. 1108, § 31), concerning a public safety committee, was repealed by Acts 2000, ch. 946, § 3, effective July 1, 2000.

7-86-202. [Repealed.]

Compiler's Notes. Former § 7-86-202 (Acts 1994, ch. 940, § 2), concerning public safety dispatchers, was repealed by Acts 2000, ch. 946, § 3, effective July 1, 2000.

7-86-203. [Repealed.]

Compiler's Notes. Former § 7-86-203 (Acts 1994, ch. 940, § 3), concerning applicability, was repealed by Acts 2000, ch. 946, § 3, effective July 1, 2000.

7-86-204. Fire protection — No liability for costs of services rendered to a nonsubscriber.

  1. If an emergency communications district requests fire protection services, and if a utility district providing fire protection services responds to a request for a nonsubscriber, then the emergency communications district has no liability for the cost of such service.
  2. This section shall only apply in counties having a population of not less than eighty-five thousand eight hundred (85,800) nor more than eighty-six thousand one hundred (86,100), according to the 1990 federal census or any subsequent federal census.

Acts 1997, ch. 99, §§ 2, 3.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Cross-References. Fees for fire protection services rendered by utility service to nonsubscriber, § 7-82-313.

7-86-205. Requirements for public safety dispatchers.

  1. Regardless of agency or governmental jurisdiction, each emergency call taker or public safety dispatcher who receives an initial or transferred 911 call from the public is subject to the training and course of study requirements established by the emergency communications board created pursuant to § 7-86-302.
    1. The emergency communications board established by § 7-86-302 is the sole authority to implement this section and may determine whether to grant an exception to or to waive the requirements of subdivisions (d)(4) and (5), to the extent authorized pursuant to subdivision (b)(2), for an emergency call taker or public safety dispatcher at the request of a majority of the membership of a board of directors of an emergency communications district. No person may be employed as an emergency call taker or public safety dispatcher, who requires a waiver under this section, until such waiver is granted. The board may establish an advisory committee to hear and review requests for exceptions and waivers, and make recommendations to the board on whether to grant or deny the requests. The meetings of the committee shall be open to the public, recorded and the recording open to public inspection. Any party adversely affected may, within sixty (60) days of the board's decision, initiate a contested case as provided by the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, which shall be heard by an administrative law judge sitting alone.
    2. The board may grant a waiver of pre-employment requirements under the following circumstances:
      1. Military History.  The board may waive pre-employment requirements relating to the military history for the following separations from military service:
        1. An entry level separation; or
        2. A general discharge under honorable conditions.
        1. Criminal Activity.  The board may consider a waiver from pre-employment requirements relating to criminal activity if the person has been convicted of or pleaded guilty to or entered a plea of nolo contendere  to any violation of any federal or state law or city ordinance with the following charges:
          1. Relating to force, violence, theft, dishonesty, gambling, liquor (including driving while intoxicated) if such violation is a misdemeanor and is not classified as a domestic violence offense; or
          2. Controlled substances or controlled substance analogues when the offense was classed as a misdemeanor.
        2. The employing agency requesting waiver must present a copy of the final court disposition of the case.
      2. Expunction of Charges.  The board may consider a waiver from pre-employment requirements relating to expunction of misdemeanor charges, except for charges classified as a domestic violence offense, on an individual basis and depending on the circumstances. It is the responsibility of the requesting agency to present information and court documentation relating to the expunction to the board.
  2. Except as provided in subsection (e), beginning July 1, 2006, all emergency call takers or public safety dispatchers subject to this section shall have successfully completed a course of study approved by the emergency communications board created pursuant to § 7-86-302.
  3. Except as provided in subsection (f), in addition to the requirements of subsection (c), any such person shall:
    1. Be at least eighteen (18) years of age;
    2. Be a citizen of the United States;
    3. Be a high school graduate or possess equivalency;
    4. Not have been convicted or pleaded guilty to or entered a plea of nolo contendere to any felony charge or to any violation of any federal or state laws or city ordinances relating to force, violence, theft, dishonesty, gambling, liquor, controlled substances or controlled substance analogues;
    5. Not have been released or discharged under other than an honorable or medical discharge from any of the armed forces of the United States;
    6. Have such person's fingerprints on file with the Tennessee bureau of investigation;
    7. Have passed a physical examination by a licensed physician; and
    8. Have a good moral character as determined by a thorough investigation conducted by the employing agency.
  4. All emergency call takers and public safety dispatchers subject to this section employed after July 1, 2006, shall have six (6) months from the date of their employment to comply with this section.
  5. Notwithstanding other law to the contrary, the law in effect prior to May 1, 1994, relative to public safety dispatchers shall apply to any person who had more than five (5) years of continuous employment as a public safety dispatcher on May 1, 1994.

Acts 1994, ch. 940, § 1; 1997, ch. 257, § 1; 1997, ch. 320, § 1; 1997, ch. 320, § 2; 1998, ch. 1108, § 31; T.C.A., 7-86-201; Acts 2000, ch. 946, § 3; 2003, ch. 254, § 2; 2005, ch. 129, §§ 1-3; 2011, ch. 265, § 1; 2012, ch. 848, § 4.

Attorney General Opinions. Emergency 911 employment of aliens, OAG 06-022 (1/31/06).

Part 3
Statewide Enhanced 911 Service

7-86-301. Legislative findings.

The general assembly finds that the “Emergency Communications District Law” has been successfully embraced by the vast majority of Tennessee counties, most of which have already initiated basic or enhanced 911 service and are developing or maintaining this lifesaving service in furtherance of the purposes stated in the law. The general assembly also finds that the establishment of emergency communications services for all citizens of the state will promote the public interest. The general assembly further finds that statewide wireless enhanced 911 service is in the public interest.

Acts 1998, ch. 1108, § 1.

7-86-302. Emergency communication board established — Members — Terms of office — Officers — Meetings.

  1. There is created in the department of commerce and insurance an emergency communications board, referred to in this part as “the board”, for the purpose of assisting emergency communications district boards of directors in the areas of management, operations, and accountability, and establishing emergency communications for all citizens of this state. The board shall, upon being constituted, exercise its powers and duties in accordance with this part, relative to all emergency communications districts established pursuant to this chapter or by any public or private act.
    1. The board shall be composed of nine (9) members, as follows:
      1. The comptroller of the treasury or the comptroller's designee. The appointment of the comptroller's designee to the board shall be for the term of office of the comptroller;
      2. One (1) member, appointed by the governor, who has no connection to emergency communications districts and who does not fulfill any other requirements for appointment to the board;
      3. One (1) representative of county government, appointed by the speaker of the senate;
      4. One (1) representative of city government, appointed by the speaker of the house of representatives;
      5. Three (3) members, appointed by the governor, each of whom shall be either a current director of an emergency communications district or a current member of an emergency communications district board of directors at the time of their appointment. The members appointed pursuant to this subdivision (b)(1)(E) shall each reside in a separate grand division of the state;
      6. One (1) at large member appointed by the speaker of the senate, who at the time of the member's appointment is either a current director of an emergency communications district or a current member of an emergency communications district board of directors; and
      7. One (1) at large member appointed by the speaker of the house of representatives, who at the time of the member's appointment is either a current director of an emergency communications district or a current member of an emergency communications district board of directors.
    2. No more than one (1) member appointed pursuant to subdivisions (b)(1)(E)-(G) shall be from the same county.
    3. In appointing members to the board, the appointing authorities shall strive to ensure that the composition of the board represents:
      1. The diversity of persons in Tennessee by considering race, gender, age, and geographical and political interests;
      2. Emergency communication districts in urban and rural areas of the state; and
      3. Emergency communication districts that employ both E-911 operators and dispatchers.
    1. The governor shall appoint a successor to the member who has no connection to emergency communications districts following the expiration of that member's term on June 30, 2016, in accordance with subdivision (b)(1)(B).
    2. The speaker of the senate shall appoint a successor to the member who represents county government following the expiration of that member's term on June 30, 2018, in accordance with subdivision (b)(1)(C).
    3. The speaker of the house of representatives shall appoint a successor to the member who represents city government following the expiration of that member's term on June 30, 2017, in accordance with subdivision (b)(1)(D).
    4. The governor shall appoint successors to the three (3) members who represent emergency communication districts following the expiration of those members' terms on June 30, 2018, in accordance with subdivision (b)(1)(E).
    5. The speaker of the senate shall appoint a successor to the member who represents an emergency communications district following the expiration of that member's term on June 30, 2016, in accordance with subdivision (b)(1)(F).
    6. The speaker of the house of representatives shall appoint a successor to the member who represents an emergency communications district following the expiration of that member's term on June 30, 2017, in accordance with subdivision (b)(1)(G).
  2. Members appointed in accordance with subsection (c) shall serve three-year terms, to begin on July 1 and terminate on June 30, three (3) years thereafter.
  3. Members shall be selected to serve on the board for no more than two (2) successive terms.
  4. The board shall elect a chair and other officers as it may deem necessary and appropriate. The officers shall be elected for two-year terms.
  5. The board shall meet quarterly, and at the call of the chair.
  6. A quorum shall consist of five (5) or more members; and all official action of the board shall require a quorum.
    1. Any member of the board who fails to attend at least fifty percent (50%) of the regularly scheduled meetings of the board within any twelve-month period shall automatically be removed from the board and a successor member shall be appointed by the appointing authority to serve out the remaining term of the member being replaced.
    2. Subdivision (i)(1) shall not apply to meetings held in accordance with § 7-86-314(a).
  7. All meetings of the board shall be subject to the open meeting provisions of title 8, chapter 44, and the public records provisions of title 10, chapter 7.
  8. The executive director shall compile a report of the board's expenditures by item and revenue by source for the quarter prior to each board meeting, with the most recent report to be posted and prominently displayed on the board's web site each quarter.

Acts 1998, ch. 1108, § 5; 2013, ch. 438, § 3; 2015, ch. 350, § 3.

Compiler's Notes. The emergency communications board, created by this section, terminates June 30, 2021. See §§ 4-29-112, 4-29-242.

Amendments. The 2015 amendment rewrote the section, which read: “(a) There is created in the department of commerce and insurance an emergency communications board, referred to in this part as ‘the board’, for the purpose of assisting emergency communications district boards of directors in the area of management, operations, and accountability, and establishing emergency communications for all citizens of the state. Notwithstanding the provisions of any law to the contrary, the board shall, upon being constituted, exercise its powers and duties, in accordance with the provisions of this part, relative to all emergency communications districts established pursuant to this chapter or by any public or private act.“(b)(1) The board shall be composed of nine (9) members as follows: (A) One (1) member, appointed by the governor, who has no connection to emergency communications districts and who does not fulfill any other requirements for appointment to the board;   (B) The comptroller of the treasury or the comptroller's designee. The appointment of the comptroller's designee to the board shall be for the term of office of the comptroller;  (C) One (1) representative of county government, appointed by the governor, who may be appointed from lists of qualified persons submitted by interested county services groups including, but not limited to, the Tennessee County Services Association; (D) One (1) representative of city government, appointed by the governor, who may be appointed from lists of qualified persons submitted by interested municipal groups including, but not limited to, the Tennessee Municipal League; and (E) (i) Five (5) members, appointed by the governor, who shall either be current directors of emergency communications districts or current members of emergency communications district boards of directors at the time of their appointment. The governor may appoint such members from lists of qualified persons submitted by interested emergency communications groups including, but not limited to, the Tennessee Emergency Number Association, or from a nominating resolution adopted by an emergency communications district. No more than two (2) members appointed pursuant to this subdivision (b)(5) shall be residents of the same congressional district. (ii) Nominations shall be made not less than thirty (30) days before the end of a term, and shall be filed with the governor and the board. In appointing members, the governor shall strive to ensure that the composition of the board represents the diversity of persons in Tennessee by considering race, gender, age, and geographical and political interests. (2) The governor shall consult with interested groups including, but not limited to, the organizations listed in subdivision (b)(1) to determine qualified persons to fill positions on the board.“(c) Members shall be appointed to four-year terms, except as provided in this subsection (c). Two (2) of the members appointed by the governor shall be appointed to serve an initial term of two (2) years, two (2) members shall be appointed to serve an initial term of three (3) years, and the remaining four (4) members shall be appointed for an initial term of four (4) years. The governor may select the members whose initial terms are less than four (4) years. Thereafter, such members shall be appointed and serve four-year terms. Members appointed by the governor may be appointed to successive terms.“(d) The board shall elect a chair and such other officers as it may deem necessary and appropriate. Such officers shall be elected for two-year terms.“(e) The board shall meet at least quarterly, and at the call of the chair.“(f) A quorum shall consist of five (5) or more members; and all official action of the board shall require a quorum.“(g) All meetings of the board shall be subject to the open meeting provisions of title 8, chapter 44, and the public records provisions of title 10, chapter 7.”

Effective Dates. Acts 2015, ch. 350, § 6. May 4, 2015.

7-86-303. Budget — Salary and expenses — Funding — Authorized disbursements.

  1. The board's budget shall be subject to approval by the general assembly.
  2. No member of the board is entitled to a salary for duties performed as a member of the board. Each member is entitled to reimbursement for travel and other necessary expenses incurred in the performance of official duties, in accordance with the state comprehensive travel regulations as promulgated by the commissioner of finance and administration and approved by the attorney general and reporter.
  3. The board shall be funded by the 911 surcharge established in § 7-86-128.
  4. All current funds, including those funds currently in the 911 Emergency Communications Fund, funds collected by the board in future, and interest accrued on these funds shall be deposited in the state treasury in a separate interest-bearing fund to be known as the 911 Emergency Communications Fund. Disbursements from this fund shall be limited solely to the operational and administrative expenses of the board and the purposes as expressed in this part 3. At no time during its existence shall the 911 Emergency Communications Fund, or earnings derived thereof, be used to fund the general expenses of the state, except as authorized by this section. All interest or earnings derived from the fund shall be transferred to the fund when earned, and may be allocated by the board, in accordance with this chapter.
  5. In order to maintain adequate 911 funding provided to emergency communications districts, the board shall annually distribute to each emergency communications district a base amount equal to the average of total recurring annual revenue the district received from distributions from the board and from direct remittance of 911 surcharges for fiscal years 2010, 2011, and 2012; however, in no event shall such distribution be less than the amount the district received in fiscal year 2012. On or before December 1, 2014, the board shall publish on its web site the base amount for each emergency communications district. The board may not reduce the base amount for any emergency communications district unless the local government funding for such emergency communications district is reduced, in which case the board may reduce the base amount by the same amount as the local funding reduction. Any emergency communication district established after January 1, 2015, shall be entitled to receive a base amount from the board in an amount determined by the board. Disbursal of the base amount to emergency communications districts shall be conducted in the following manner:
    1. The board shall distribute one-sixth (1/6) of the base amount for each emergency communications district every two (2) months, beginning at the end of the second month of each fiscal year; and
    2. Any emergency communications district with a locally established 911 surcharge in effect as of July 1, 2011, less than the maximum allowable surcharge then in effect shall be eligible to apply to the board for an increase in the base amount. The board shall promulgate rules and regulations to facilitate such a request and to set minimum criteria that the emergency communication district must satisfy to obtain increased funding. The board shall not be obligated to increase the base amount if the board lacks sufficient funds or if the board, after reviewing its criteria as set out in its rules, finds the emergency communication district has not met the guidelines.
  6. The board's operational expenses shall include the implementation and maintenance of an IP-based next generation 911 network and any future 911 system advancements the board deems necessary; provided, that the board shall provide a report to the information systems council each year to describe any such future 911 system advancements. The board's operational expenses shall also include funding to the Tennessee public utility commission for the Tennessee relay services/telecommunications devices access program (TRS/TDAP), which provides assistance to those Tennesseans whose disabilities interfere with their use of communications services and technologies. Funding provided by the board shall not exceed the total cost of the TRS /TDAP program in 2012 unless approved by the fiscal review committee.

Acts 1998, ch. 1108, § 7; 2014, ch. 795, § 6; 2016, ch. 1047, § 5; 2017, ch. 94, § 23.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which amended this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

Amendments. The 2014 amendment, effective January 1, 2015,  rewrote (c) and (d) which read: “(c) The board shall be funded through a charge on all commercial mobile radio service, established pursuant to § 7-86-108.“(d) Any funds collected by the board shall be deposited in the state treasury in a separate interest-bearing fund to be known as the 911 Emergency Communications Fund. Disbursements from this fund shall be limited solely to the operational and administrative expenses of the board and the purposes as expressed in this part. At no time during its existence shall the 911 Emergency Communications Fund be used to fund the general expenses of the state of Tennessee.“(1) The board shall distribute twenty-five percent (25%) of the revenue generated by such a charge to each emergency communications district created either pursuant to § 7-86-105 or this part, based on the proportion of the population of each district to that of the state, according to the 1990 federal census or any subsequent federal census. Such funds shall be used at the discretion of each district for the provision of 911 service in accordance with this chapter. Such distribution shall be made thereafter as soon as possible in accordance with this part.“(2) The board shall also use such funds to reimburse emergency communications districts and commercial radio service providers for expenditures to implement, maintain, operate, or enhance statewide wireless enhanced 911 service, in accordance with  § 7-86-306(a)(11).“(3)(A) Any funds collected in excess of the annual fiscal requirements of the board, which shall include the payments to emergency communications districts established in subdivision (d)(1), shall not revert to the general fund. Any unspent funds at the end of a fiscal year shall be carried forward to the next fiscal year to be used as a beginning balance for the fiscal requirements for such fiscal year. The board may, at its discretion, and following policies, procedures, and criteria the board has developed, use any such unspent funds to provide grants for operating and capital expenditures for basic or enhanced 911 service and wireless enhanced 911 service to assist emergency communications districts created either pursuant to § 7-86-105 or this part. Such grants may be renewed by the board:“AFTER providing for all necessary and reasonable operating and administrative expenses of the board, which shall include the payments and grants established in this section;“AND AFTER implementing statewide wireless enhanced 911 service pursuant to standards established by the board, which shall include the present and future costs associated with required and necessary implementation, operation, maintenance, and enhancement of statewide wireless enhanced 911 service pursuant to the federal communications commission order, in accordance with subdivision (d)(2) and § 7-86-306(a)(10);“AND AFTER establishing 911 service throughout Tennessee pursuant to standards established by the board;“THEN the board may distribute any excess revenue to each emergency communications district created either pursuant to § 7-86-105 or this part, for the purposes of promoting uniform 911 service, and those purposes stated in the law and this section. The board must first determine that such distribution is possible and practicable, does not threaten the solvency of the 911 Emergency Communications Fund, and is consistent with § 7-86-306.“(B) It is the intent of the general assembly that the board should distribute such excess revenue to emergency communications districts, as long as such distribution is consistent with this section.” and added (e) and (f).

The 2016 amendment, in (d), added “, except as authorized by this section” at the end of the penultimate sentence, and added the last sentence.

The 2017 amendment substituted “Tennessee public utility commission” for “Tennessee regulatory authority” in the second sentence of (f).

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

Acts 2016, ch. 1047, § 7. July 1, 2017.

Acts 2017, ch. 94, § 83. April 4, 2017.

7-86-304. Uniform financial accounting system — Audit — Annual budgets — Supervision of financially distressed districts.

  1. The comptroller of the treasury is directed to develop a uniform financial accounting system conforming to generally accepted accounting principles for use as required by this section. Effective July 1, 1999, each emergency communications district shall use the uniform accounting system developed by the comptroller of the treasury.
  2. The annual audit of all emergency communications districts shall disclose the failure of any such district to maintain such a financial accounting system as prescribed by the comptroller of the treasury. The comptroller of the treasury shall file with the board a copy of the audited financial statements of each emergency communications district, prepared pursuant to § 7-86-113. The board shall have authority to act upon any adverse findings noted in such audits or financial statements and to order such action as may be necessary to remedy the adverse findings.
  3. The board of directors of each emergency communications district shall file with the board a copy of its annual budget, prepared in accordance with § 7-86-120.
    1. Any emergency communications district that is a financially distressed emergency communications district shall be subject to the supervision and evaluation of the board. A “financially distressed emergency communications district” is a district that, as shown by the annual audits:
      1. Has a negative change in net position for a period of three (3) consecutive years;
      2. Has a deficit in total net position; or
      3. Is in default on any indebtedness.
    2. Notwithstanding subdivision (d)(1), the board may determine that a district is a “financially distressed emergency communications district,” and shall be subject to the supervision and evaluation of the board, if a district:
      1. Is the subject of a lien filed by the internal revenue service;
      2. The board determines that it appears that the district cannot satisfy its financial obligations to the extent that the continued operation of the district is at risk; or
      3. The district has defaulted on any indebtedness due to insufficient funds, such default is not cured within sixty (60) days and, upon determination of the board, it appears that the district cannot satisfy its financial obligations to the extent that the continued operation of the district is at risk.
    3. After reviewing the financial statements and operations of any financially distressed emergency communications district, and after holding a public hearing within such district's service area, the board may prescribe a rate structure, up to the maximum established pursuant to former § 7-86-108(a)(2)(A) [repealed], to be adopted by the district, as may be necessary to cause the district to liquidate in an orderly fashion any deficit total net position, to cure a default on any indebtedness of the district, and to eliminate the negative change in net position, or any of these.
  4. If the board of an emergency communications district fails to adopt the prescribed rate structure, the board may, in addition to any and all other remedial actions available to it, petition the chancery court, in a jurisdiction in which the emergency communications district is operating, to require the adoption of the rate structure prescribed by the board or such other remedial actions that, in the opinion of the court, may be required to cause the district to be operated in accordance with the provisions of state law.

Acts 1998, ch. 1108, § 8; 2001, ch. 149, § 3; 2004, ch. 619, §§ 10-12; 2014, ch. 579, §§ 1-3.

Compiler's Notes. Former § 7-86-108, referred to in this section, was repealed by Acts 2014, ch. 795, § 3, effective January 1, 2015.

7-86-305. Consolidation or merger for purposes of financial stability.

  1. As a means to restore financial stability to financially distressed emergency communications districts and to ensure continued 911 service for the benefit of the public, the board may study the possible consolidation or merger of two (2) or more adjacent emergency communications districts, if at least one (1) such emergency communications district is financially distressed. In the event that the board determines that such a consolidation or merger is in the best interest of the public, and after holding public hearings within the service areas of the affected emergency communications districts, the board may order the consolidation or merger. The board shall establish rules and policies concerning the composition and selection of the board of directors, and shall establish technical and operating standards and a rate structure for such multi-jurisdictional emergency communications district; provided, that such action shall not threaten the financial integrity or stability of the affected emergency communications districts, or the level and quality of 911 service.
  2. Notwithstanding subsection (a) to the contrary, a merger or consolidation affecting a non-financially distressed emergency communications district shall not become effective without the prior approval of the board of directors of such non-financially distressed emergency communications district.
  3. For purposes of determining whether an emergency communications district is financially distressed, the board shall not consider an emergency communications district's depreciation costs as an operating expense.

Acts 1998, ch. 1108, § 9; 2014, ch. 795, § 11.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which amended this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

Amendments. The 2014 amendment, effective January 1, 2015,  added (c).

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

7-86-306. Powers and duties of board — Review of decisions or orders of board.

  1. In order to effectuate the purposes of this part, the board has the power and authority to:
    1. Promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, for the conduct of the affairs of the board;
    2. Adopt a seal for the board, prescribe the style of the seal, and alter the seal at pleasure;
    3. Subject to title 9, chapter 4, part 51, appoint and fix the salaries and duties of the experts, agents, and employees, and set the qualifications for such persons as it deems necessary;
      1. Appoint an executive director, who shall be a person of good moral character and shall be professionally qualified to administer, manage, and direct the affairs and business of the board, which include, but are not limited to:
        1. Maintaining and securing all essential records and files;
        2. Implementing board policies and procedures;
        3. Informing the board as to state statutes, policies, and procedures; and
        4. Any other matters delegated by the board;
      2. For the purposes of §§ 8-30-201 and 8-30-202, the executive director of the board shall be considered the equivalent of an assistant commissioner;
      3. Before assuming any official duties, the executive director shall take and subscribe to the oath of office and shall execute a bond in the manner prescribed by title 8, chapter 19. This subdivision (a)(4)(C) shall not apply to the executive director serving on May 4, 2015;
    4. Subject to title 12, make and enter into contracts and purchases;
    5. Adopt a proposed budget, which shall be included in the proposed budget of the department of commerce and insurance;
    6. Accept gifts, grants, or other moneys, and to receive appropriations that may be made by law;
    7. Provide advisory technical assistance to any emergency communications district upon request;
    8. Administer the deployment of 911 service for emerging communications technologies, including, but not limited to, IP-enabled service, that are capable of connecting users dialing or entering the digits 911 to public safety answering points and other non-wireline services;
    9. Establish technical operating standards for emergency communications districts and periodically review and revise wireless enhanced 911 standards based on orders and rulings by the federal communications commission (FCC);
    10. Establish operating standards concerning acceptable uses of revenue for emergency communications districts and periodically review and revise these standards;
    11. Respond to requests from emergency communications districts, commercial mobile radio service (CMRS) providers or other parties and subject to availability of funds, review and approve requests for reimbursements for expenditures or payment of obligations incurred to implement, operate, maintain, or enhance statewide wireless enhanced 911 service in conformance with any rules or orders of the FCC, and other federal and state requirements that pertain to wireless enhanced 911 service;
    12. Raise the emergency telephone service charge rates of an individual emergency communications district up to the maximum established in former § 7-86-108(a)(2)(A) [repealed]; provided, that the district meets financial and operational criteria established by the board in consultation with the comptroller of the treasury;
    13. From time to time, submit to the speakers of the general assembly any recommended amendments to this chapter; and
    14. Exercise all the powers and take all the actions necessary, proper, or convenient for the accomplishment of the purposes enumerated in this section.
    1. Any party adversely affected by a decision or order of the board may, within sixty (60) days of the board's action, initiate a contested case as provided by the Uniform Administrative Procedures Act,  which shall be heard by an administrative law judge sitting alone.
    2. In the conduct of any hearing upon request or complaint, the administrative law judge may receive evidence in the form of affidavits in addition to minutes, transcripts, and other evidence of actions by an emergency communications district.
  2. Nothing contained within subdivision (a)(12) or this section shall be construed to authorize the board to establish CMRS rates other than a flat, statewide, uniform rate.

Acts 1998, ch. 1108, § 10; 2004, ch. 810, § 5; 2005, ch. 147, § 1; 2006, ch. 647, § 1; 2015, ch. 350, §§ 4, 5.

Compiler's Notes. Acts 2004, ch. 810, § 1 provided the Tennessee advisory commission on intergovernmental relations is directed to conduct, within existing resources, an expedited, comprehensive study of all aspects of Tennessee's emergency telephone service (911) statutes, including, but not limited to, local emergency communications districts and their respective boards, the state emergency communications board, the provision of enhanced 911 service, and the assessment of emergency telephone service charges upon telecommunications service providers and customers.

Acts 2004, ch. 810, § 2 provided that in conducting such study, the Tennessee advisory commission on intergovernmental relations shall specifically examine the funding mechanisms and the adequacy of the funding for local emergency communications districts and their respective boards, as well as the state emergency communications board.

Acts 2004, ch. 810, § 3 provided that such study shall also evaluate the feasibility and necessity of:

  1. Increasing emergency telephone service charges on telephone land lines and wireless telecommunications services; and
  2. Revising the statutory assessment formula for funding emergency telephone services.

Acts 2004, ch. 810, § 4 provided that the Tennessee advisory commission on intergovernmental relations shall complete such study relative to emergency telephone service (911) and report its findings and recommendations, including any necessary legislation, to the general assembly no later than February 1, 2006.

In light of the passage of Acts 2012, ch. 800, which rewrote the civil service provisions, “§§ 8-30-201 and 8-30-202” was substituted for “§ 8-30-208” in (a)(3).

Former 7-86-108 referred to in this section was repealed by Acts 2014, ch. 795, § 3, effective January 1, 2015.

Amendments. The 2015 amendment rewrote (a)(3), which read: “Subject to title 9, chapter 4, part 51 appoint and fix the salaries and duties of such experts, agents, and employees as it deems necessary. Notwithstanding any provision of law to the contrary, for the purposes of §§ 8-30-201 and 8-30-202, the executive director of the board shall be considered the equivalent of an assistant commissioner;”; added a new (a)(4) and renumbered the subsequent subdivisions accordingly.

Effective Dates. Acts 2015, ch. 350, § 6. May 4, 2015.

Attorney General Opinions. Communication board may consider county's commitment to maintain funding for an emergency communications district when considering whether to approve higher rates for that district, OAG 08-193 (12/29/08).

7-86-307. Plan for providing statewide 911 and enhanced wireless 911 service.

  1. The board shall develop and implement a plan for providing 911 service and wireless enhanced 911 service to all citizens of Tennessee. The plan shall provide for:
    1. A schedule for the implementation, installation, operation, maintenance, and enhancement of statewide wireless enhanced 911 service, and the funding of the service;
    2. A schedule for the implementation and coordination of a 911 system plan for the state, which shall include the funding of the plan. With respect to an emergency communications district's financial standing and the level and quality of 911 service, the board shall act as the deciding agency whenever such issues arise between an emergency communications district and other governmental units involving the 911 system;
    3. A review and analysis of progress maintained by emergency communications districts in complying with technical, operating, and financial standards adopted by the board;
    4. A plan for each emergency communications district not meeting technical, financial, and operating standards as established in this part by the board to come into compliance with such standards; and
    5. An implementation schedule that accounts for the progress achieved by each district in attaining and maintaining financial, technical, and operating standards.
    1. The board shall encourage and promote the planning, development, and implementation of 911 service for each newly created emergency communications district. Any emergency communications district newly created after May 20, 1998, shall have its 911 system plan approved by the board prior to implementation. The plan for each such district shall include specific local requirements. Such plan shall include, but not be limited to, law enforcement, firefighting, and emergency medical services and may include, but not be limited to, other emergency services such as poison control, animal control, suicide prevention, and emergency management services.
    2. Such plan shall also include funding requirements necessary to implement and operate the 911 system; provided, that if anticipated revenues are not adequate to achieve and maintain technical and operating standards as established by the board in this part, the board shall undertake a study to determine other options for the provision of 911 service to that area.
  2. The board shall not require the commercial mobile radio service providers to select or deploy particular commercial solutions to meet any federal communications commission rulings or orders, or other requirements concerning wireless enhanced 911 service; provided, that the solutions chosen are compatible with the operations of emergency communications districts and the technical and operating standards for wireless enhanced 911 service adopted by the board.

Acts 1998, ch. 1108, § 11.

7-86-308. Technical advisory committee.

The board shall appoint a technical advisory committee, the number of members to be determined by the board. The technical advisory committee shall be composed of representatives of 911 service suppliers and non-wireline service providers, including, but not limited to, commercial mobile radio service and IP-enabled service providers, for the purpose of providing and receiving operational and technical information and advice on all aspects of wireless enhanced 911 service. The technical advisory committee members shall not be voting members of the board. No member of this committee is entitled to a salary for duties performed as a member of the committee. No member is entitled to reimbursement for travel and other necessary expenses incurred in the performance of official duties.

Acts 1998, ch. 1108, § 12; 2007, ch. 380, § 1.

7-86-309. Other advisory committees.

The board shall appoint advisory committees for the purpose of providing and receiving information to the board; the number of members on such committees shall be determined by the board. Such committees may include, but not be limited to, local government officials, consumers, 911 service users, law enforcement personnel, firefighting personnel, and emergency medical services personnel. Members of such advisory committees shall not be voting members of the board. No member of any such advisory committee is entitled to a salary for duties performed as a committee member. No member is entitled to reimbursement for travel and other necessary expenses incurred in the performance of official duties.

Acts 1998, ch. 1108, § 13.

7-86-310. Board approval required for approval of new district within existing district.

After May 20, 1998, no referendum to allow the creation of a new emergency communications district within the boundaries of an existing emergency communications district shall take place without prior approval by the board. In the event that the board determines that such a creation is in the best interest of the public, and after holding a public hearing within the service area of the existing emergency communications district, the board may order that a referendum be held; provided, that such action shall not threaten the financial integrity or stability or the level or quality of 911 service of the existing emergency communications district.

Acts 1998, ch. 1108, § 14.

7-86-311. Referendum to create countywide districts — Plan to provide service to counties that fail to approve referendum.

  1. In each county in which an emergency communications district has not been created by January 1, 2000, the board shall order an election to be held at the next regularly scheduled general election, pursuant to § 2-3-204, to submit to the voters of the county the question of creating a countywide emergency communications district. In the election to be held, the questions submitted to the qualified voters shall be “For the Emergency Communications District,” or “Against the Emergency Communications District.” Upon approval by a majority of those voting, an emergency communications district is created in accordance with title 7, chapter 86.
  2. In the event that such a referendum is not approved by a majority of those voting, the board shall be authorized to develop and implement a plan for the provision of wireless enhanced 911 service to such county.

Acts 1998, ch. 1108, § 15.

7-86-312. Request for board review of district decision.

Any city or county governing body may, by resolution, request the board to review a decision of the board of directors of the emergency communications district serving such city or county affecting its financial standing and its level or quality of 911 service.

Acts 1998, ch. 1108, § 16.

7-86-313. Request for board review of district financial statements — Petition by board to require district to adopt temporary rate structure.

Any county or city governing body may, by resolution, request the board to review the financial statements of an emergency communications district serving such county or city. If the board determines that such district is accumulating excess reserves or retained earnings, and if such emergency communications district is not able to justify such accumulation of revenues, the board may petition the chancery court in a jurisdiction in which such emergency communications district is operating, to require the adoption of a temporary rate structure recommended by the board, or other temporary rate structure sufficient to reduce such excess retained earnings; provided, that any such rate ordered by the chancery court must be adequate to cover all reasonable and necessary costs of operation, and shall not threaten the financial integrity of such emergency communications district or its quality and level of 911 service.

Acts 1998, ch. 1108, § 17.

7-86-314. Removal of member or board.

    1. Effective July 1, 2017, any member of the board of directors of an emergency communications district with four (4) consecutive unexcused absences or who fails to attend at least fifty percent (50%) of regularly scheduled meetings within any twelve-month period shall automatically be removed from the board.
    2. Upon removal of a member pursuant to subdivision (a)(1), the chair of the board of directors or acting chair shall notify the appointing authority in writing that a member has been removed and that a vacancy exists on the board. A successor shall be appointed to serve the remainder of the term of the member being replaced. Any member removed pursuant to subdivision (a)(1), shall be eligible for reappointment at any time by the appointing authority.
    1. If a member of a board of directors of an emergency communications district, or a board of directors of an emergency communications district, refuses to carry out either this chapter or an order of the board after May 20, 1998, such member or board may be removed by order of the chancery court in a jurisdiction in which such emergency communications district operates, upon petition by either the board, or a city or county governing body in the service area of such district.
    2. If a member of a board of directors of an emergency communications district or a board of directors of an emergency communications district knowingly or willfully neglects to perform the duties of such office, such member or board may be removed by order of the chancery court in the jurisdiction in which the emergency communications district operates, upon petition by either the board or a county or city governing body in the service area of such district.
    3. Any member removed pursuant to subdivision (b)(1) or (b)(2) shall not be eligible for reappointment at any time.

Acts 1998, ch. 1108, § 18; 2016, ch. 674, § 1; 2017, ch. 217, § 1.

Amendments. The 2016 amendment rewrote (a) which read, “(a) No member of the board of directors of an emergency communications district shall have more than three (3) consecutive unexcused absences from meetings. If such a member has three (3) or more consecutive unexcused absences after May 20, 1998, such member may be removed by order of the chancery court in a jurisdiction in which such emergency communications district operates, upon petition by either the board, or a county or city governing body in the service area of such district.”

The 2017 amendment, in (a), designated the former first sentence as present (1) and designated the former second and third sentences as present (2), respectively,  substituted “July 1, 2017” for “July 1, 2016” in (1), and, in (2),  added “Upon removal of a member pursuant to this subdivision (a)(1),” at the beginning of the first sentence, deleted “Upon the removal of a member pursuant to this subsection (a),” at the beginning of the second sentence, and added the last sentence; redesignated former (b) and (c) as present (b)(1) and (2), respectively;  added (b)(3); and deleted former (d) which read: “Any such board member so removed under this section shall be ineligible for reappointment for a period of not less than forty-eight (48) months. Such provisions shall be in addition to ouster provisions contained in title 8, chapter 47.”

Effective Dates. Acts 2016, ch. 674, § 2. March 29, 2016.

Acts 2017, ch. 217, § 3. April 28, 2017.

Attorney General Opinions. T.C.A. § 7-86-314 provides the exclusive grounds and procedures for removal of members of the board of directors of an emergency communications district, OAG 09-013 (2/6/09).

The automatic removal provisions of T.C.A. § 7-86-314(a) apply, by their plain language, to ex officio emergency communications district (ECD) board members.  This does not create any conflict with the requirement of T.C.A. § 7-86-105(b)(3) that certain officials serve ex officio as ECD board members. The statute allows those ex officio membership positions to be filled either by the specified official or by a representative of that official.  Thus, when an ex officio membership position is vacant because the specified official was automatically removed from the board, the statutory ex officio membership requirement is nevertheless fully satisfied when that position is filled by a representative of the official.  OAG 16-39, 2016 Tenn.  AG LEXIS 39 (10/11/2016).

7-86-315. Report to governor and speakers of general assembly.

The board shall report annually to the governor and the speakers of the general assembly on the activities of the board for the preceding year. The board shall receive and consider from any source whatsoever, whether private or governmental, suggestions for amendments to this chapter.

Acts 1998, ch. 1108, § 19.

Cross-References. Reporting requirements satisfied by notice to general assembly members of publication of reports, § 3-1-114.

7-86-316. 911 calls in nonemergency situations prohibited — Penalty.

  1. Contacting 911 for some purpose other than to report an emergency or an event that the person contacting 911 reasonably believes to be an emergency is a Class C misdemeanor.
    1. Aggravated nonemergency contact of 911 is contacting 911 as described in subsection (a) where:
      1. An individual makes nonemergency contact to 911 in an offensively repetitious manner;
      2. The nonemergency contact of 911 creates a delay in the response to an emergency; or
      3. The nonemergency contact of 911 results in harm to person or property.
    2. An aggravated nonemergency contact of 911 is a Class A misdemeanor.
    1. Harassing noninitialized 911 phone calls are ten (10) or more nonemergency calls within a one-hour period or twenty (20) or more nonemergency calls within a twenty-four-hour period made to 911 from a handset that is not registered for service with any commercial mobile radio service (CMRS) carrier.
    2. A public safety answering point (PSAP) or a district may authorize the emergency communications board to divert harassing noninitialized 911 phone calls, for a period of no more than twelve (12) hours, to an entity designated by the emergency communications board to receive such calls.
    3. Repetitive harassing noninitialized 911 phone calls are phone calls from a handset from which calls have previously been diverted pursuant to subdivision (c)(2).
    4. A PSAP or a district may authorize the emergency communications board to indefinitely divert repetitive harassing noninitialized 911 phone calls to an entity designated by the emergency communications board to receive such calls; provided, that the entity notifies the caller that the caller may contact the PSAP or district to request it rescind its authorization to divert 911 calls from the caller’s handset.
    5. The emergency communications board, CMRS service providers, providers of non-wireline service, and PSAPs, and their employees, vendors, agents, and authorizing government entities, if any, shall have immunity from liability for diverting or not diverting harassing noninitialized 911 phone calls to an entity designated by the emergency communications board to receive such calls.
    6. An entity designated by the emergency communications board to receive diverted harassing noninitialized 911 phone calls shall have immunity from liability for receiving and processing such calls.

Acts 1998, ch. 1108, § 20; 2007, ch. 480, § 1; 2012, ch. 705, § 1; 2013, ch. 116, §§ 1-3.

Cross-References. Penalties for Class A and Class C misdemeanors, § 40-35-111.

NOTES TO DECISIONS

1. Emergency Nature of a 911 Call.

Combination of a 911 hang call (911 was called but the caller hung up before speaking with the operator), an unanswered return call, and police finding an open door with no response from within sufficiently satisfied the exigency requirement, thus, plaintiff widow's Fourth Amendment claim against defendant city failed; the whole point of the 911 system was to provide people in need of emergency assistance an expeditious way to request it, and indeed, under T.C.A. § 7-86-316(a), the use of 911 for any purpose other than to report an emergency or to request emergency assistance was at least a misdemeanor offense. Johnson v. City of Memphis, 617 F.3d 864, 2010 FED App. 259P, 2010 U.S. App. LEXIS 17658 (6th Cir. Aug. 24, 2010).

7-86-317. Rules and regulations.

Notwithstanding any other law to the contrary, the board shall promulgate rules and regulations to safeguard proprietary information submitted to the board. Such rules and regulations shall be consistent with determinations, actions, customs, and practices of the Tennessee regulatory agency with respect to proprietary information. Any information determined to be proprietary in accordance with such rules and regulations shall be confidential and shall not be open to the public for inspection, notwithstanding the public records provisions of title 10, chapter 7.

Acts 1998, ch. 1108, § 21.

Cross-References. Confidentiality of public records, § 10-7-504.

7-86-318. Part not to be construed to regulate commercial mobile radio service (CMRS).

Nothing in this part shall be construed to constitute the regulation of the entry or of rates charged by CMRS providers for any service or feature that they provide to their CMRS customers, or to prohibit a CMRS provider from charging a CMRS subscriber for any service or feature provided to such customer.

Acts 1998, ch. 1108, § 22.

7-86-319. Duty of commercial providers no greater than that of noncommercial providers.

A commercial mobile radio service provider shall not have any greater responsibility or duty to its customers or other persons with respect to 911 calls and the operation of a 911 system than does a noncommercial mobile radio service provider to its customers or other persons.

Acts 1998, ch. 1108, § 23.

7-86-320. Immunity or protection from liability.

  1. If a provider of an IP-enabled service offers 911 or E911 services and such provider complies with federal communication commission Order #05-116, adopted May 19, 2005, that provider, its officers, directors, employees, vendors, and agents, shall have immunity or other protection from liability of a scope and extent that is not less than the scope and extent of immunity or other protection from liability that any incumbent local exchange carrier in the provider's service area, and its officers, directors, employees, vendors, or agents, have under applicable law, whether through statute, judicial decision, tariffs filed by the local exchange company, or otherwise, including in connection with an act or omission involving the release of subscriber information related to the emergency calls or emergency services to a public safety answering point (PSAP), emergency medical service provider, emergency dispatch provider, public safety, fire service, or law enforcement official, or hospital emergency or trauma care facility.
  2. A person using an IP-enabled service that offers 911 or E911 services pursuant to this section shall have immunity or other protection from liability of a scope and extent that is not less than the scope and extent of immunity or other protection from liability under applicable law in similar circumstances of a person using 911 or E911 service that is not provided through an IP-enabled voice service.
  3. In matters related to IP-enabled 911 and E911 communications, a PSAP, and its employees, vendors, agents, and authorizing government entity, if any, shall have immunity or other protection from liability of a scope and extent that is not less than the scope and extent of immunity or other protection from liability under applicable law accorded to the PSAP, employees, vendors, agents, and authorizing government entity, respective, in matters related to 911 or E911 communications that are not provided via an IP-enabled service.
    1. Emergency communications districts shall be immune from suit or liability for civil claims arising from the actions or omission of emergency communications district personnel in processing emergency calls, except that claims for recklessness or intentional misconduct in processing emergency calls shall be permitted, but damages for such claims shall not exceed actual damages or the maximum award that may be awarded per claimant by the Tennessee claims commission.
    2. A provider or user of 911 services or next generation 911 services, a public safety answering point, and the officers, directors, employees, vendors, agents, and authorizing government entity, if any, of such provider, user, or public safety answering point, shall have immunity and protection from liability under federal and state law to the extent provided in subdivision (d)(1) with respect to:
      1. The release of subscriber information related to emergency calls or emergency services;
      2. The use or provision of 911 services, E911 services, or next generation 911 services; and
      3. Other matters related to 911 services, E911 services, or next generation 911 services.
    3. A dealer or provider of telecommunications service and other services, a user of such services, and a public safety answering point, and the officers, directors, employees, agents, vendors, and authorizing government entity, if any, involved in providing 911 service, shall not be liable for:
      1. Any civil claim, damage, or loss caused by an act or omission in the design, development, installation, maintenance, or provision of 911 service;
      2. The release of subscriber information related to emergency calls or emergency services; and
      3. Other matters related to the provision of 911 service.

Acts 2006, ch. 925, § 6; 2014, ch. 795, § 8.

Compiler's Notes. Acts 2014, ch. 795, § 1 provided that the act, which amended this section, shall be known and may be cited as the “911 Funding Modernization and IP Transition Act of 2014”.

Amendments. The 2014 amendment, effective January 1, 2015,  added (d).

Effective Dates. Acts 2014, ch. 795, § 15. January 1, 2015.

Part 4
Kari's Law

7-86-401. Short title.

This part shall be known and may be cited as “Kari's Law.”

Acts 2016, ch. 808, § 1.

Effective Dates. Acts 2016, ch. 808, § 2. January 1, 2017.

7-86-402. Part definitions.

As used in this part:

  1. “911 service” has the same meaning as defined in § 7-86-103;
  2. “Entity” means an owner or operator of a business, the state, or a local government;
  3. “IP-enabled services” has the same meaning as defined in § 7-86-103; and
  4. “Telephone system” includes a multiline telephone system and any equivalent system that utilizes IP-enabled services.

Acts 2016, ch. 808, § 1.

Effective Dates. Acts 2016, ch. 808, § 2. January 1, 2017.

7-86-403. Free access to 911 telephone services — Upgrades to hardware or software systems — Liability.

  1. Except as otherwise provided in subsection (b):
    1. An entity that owns or controls a telephone system that is capable of outbound dialing or access shall configure the telephone system to allow a person initiating a 911 call on the telephone system direct access to 911 service without an additional code, digit, prefix, postfix, or trunk access code; and
    2. An entity that owns or operates a residential or business facility utilizing a telephone system configured in accordance with subdivision (a)(1) shall configure the telephone system to provide notification to a central location on the site of the residential or business facility when a person within the facility dials 911. This subdivision (a)(2) does not require the entity to have a person available at the central location to receive the notification.
  2. If an entity would be required to replace or upgrade any component of its telephone system, including any hardware or software necessary for the operation of the telephone system, for the purposes of compliance with subsection (a), the entity shall not be required to comply with subsection (a) until the entity utilizes a telephone system that is capable of being configured in accordance with subsection (a).
  3. An entity shall not be liable in any civil or criminal action based solely upon the failure of the entity to configure a telephone system in accordance with subsection (a).

Acts 2016, ch. 808, § 1.

Effective Dates. Acts 2016, ch. 808, § 2. January 1, 2017.

7-86-151. Systems funded by general revenues — Construction of chapter.

Chapter 87
Port Authority Act

7-87-101. Short title.

This chapter shall be known and may be cited as the “Port Authority Act.”

Acts 1995, ch. 432, § 1.

7-87-102. Port authorities public and governmental bodies — Tax exempt status.

  1. It is hereby declared that the port authorities created pursuant to this chapter are public and governmental bodies acting as agencies and instrumentalities of the municipality or municipalities with respect to which the authority is organized and that the acquisition, operating and financing of ports and related facilities by such port authorities are hereby declared to be for a public and governmental purpose and a matter of public necessity.
  2. The property and revenues of the authority or any interest in the property and revenues shall be exempt from all state, county, and municipal taxation.

Acts 1995, ch. 432, § 2.

7-87-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” means a port authority created pursuant to this chapter;
  2. “Board” means the board of commissioners of an authority;
  3. “Bonds” or “revenue bonds” means bonds, notes, interim certificates or other obligations of an authority issued pursuant to this chapter, or pursuant to any other law, as supplemented by, or in conjunction with, this chapter;
  4. “Executive officer” means the mayor, county mayor, or other chief executive of a municipality;
  5. “Governing body” means the body in which the general legislative powers of a municipality are vested;
  6. “Municipality” means any county or incorporated city or town in this state with respect to which an authority may be organized;
  7. “Port” means and includes any one (1) or more harbors or ports and related facilities, including, but not limited to, land and interests in land, wharves, piers, loading and unloading machinery, scales, transportation equipment, harbor and riverfront or lake front improvements, buildings, storage and transfer facilities, elevators, railroads, switchyards, concentration yards, roads, bridges, communication, electric power, gas, water and all other utility facilities and such other structures, facilities and improvements necessary or convenient to the development of harbors and river ports and for the promotion either directly or indirectly of trade, industry, and commerce; and
  8. “State” means the state of Tennessee.

Acts 1995, ch. 432, § 3; 2003, ch. 90, § 2.

Compiler's Notes. Acts 2003, ch. 90, § 2, directed the code commission to change all references from “county executive” to “county mayor” and to include all such changes in supplements and replacement volumes for the Tennessee Code Annotated.

7-87-104. Creation — Hearings —Resolutions — Joint port authorities.

  1. Any municipality in this state may create a port authority in the manner provided in this section.
    1. The governing body of the municipality shall adopt and its executive officer shall approve a resolution calling a public hearing on the question of creating a port authority.
    2. Notice of the date, hour, place, and purpose of such hearing shall be published at least once each week for two (2) consecutive weeks in a newspaper of general circulation in the municipality, the last such publication to be at least one (1) week prior to the date set for the hearing.
    3. Such hearing shall be had before the governing body and all interested persons shall have an opportunity to be heard.
    1. After such hearing, if the governing body determines that public convenience and necessity require the creation of a port authority, it shall adopt, and its executive officer shall approve, a resolution so declaring and creating an authority, which resolution shall also designate the name and principal office address of the authority.
    2. A certified copy of such resolution shall be filed with the secretary of state together with the resolution approving the appointment of the board of commissioners as provided in § 7-87-105, and upon such adoption and filing, the authority shall constitute a body politic and corporate with all the powers provided in this chapter.
    1. Two (2) or more municipalities may, by acting jointly, establish an authority to effectuate the purposes of this chapter. When two (2) or more municipalities establish such an authority, each and every requisite pertaining to the establishment shall, as nearly as may be practicable, be incumbent in like manner upon each municipality joining in the creating of such authority.
    2. Whenever an authority is created under this chapter, the municipality shall enter into an agreement with the authority for the orderly transfer to the authority of harbor and port properties, functions, and outstanding obligations of such municipality.
    3. Such agreement may include provisions for the reimbursement of such municipality for its obligations issued for port purposes and such agreement may also include provisions for the payment of tax equivalents by the authority and its lessees on all or any part of the properties owned by the authority and any improvements owed by the authority or its lessees to the municipality.

Acts 1995, ch. 432, § 4.

7-87-105. Board of commissioners.

    1. The governing body of the authority shall be a board of commissioners of eight (8) persons appointed by the executive officer of the municipality and approved by its governing body, none of whom shall have a financial interest in a port or its concessions, or be an employee of the municipality.
    2. Commissioners first appointed to the board shall be appointed for terms of one (1), two (2), three (3), four (4), five (5), six (6), seven (7), and eight (8) years, respectively, but thereafter, each commissioner shall be appointed for a term of eight (8) years.
  1. In the case of authorities created pursuant to the approval of two (2) or more municipalities acting jointly, the number of commissioners appointed by the chief executive officer and approved by the governing body of each municipality shall be as nearly equal as practicable.
  2. All commissioners shall be of excellent character and reputation.
  3. Any vacancy by reason of incapacity, resignation, or death shall be filled in like manner for the unexpired term.
  4. A commissioner's term shall continue until the appointment and qualification of a successor.
  5. A commissioner may be removed from office by a two-thirds (2/3) vote of the governing body of the municipality that appointed such commissioner, but only after notice of the cause of such removal has been served upon the commissioner and only after such commissioner has been granted an opportunity for a public hearing on such cause.
  6. The board shall elect from among its members a chair, vice chair, and secretary, each of whom shall continue to be voting members, and shall adopt its own bylaws and rules of procedure. A majority of the commissioners shall constitute a quorum for the transaction of business. Except as expressly otherwise specified in this chapter, all powers granted in this chapter to an authority shall be exercised by the board.
  7. Commissioners shall receive no salary, but shall be reimbursed for necessary expenses incurred in the performance of their official duties.

Acts 1995, ch. 432, § 5; 1997, ch. 233, §§ 1, 2.

7-87-106. Officers — Budget — Reports.

  1. The board shall appoint a president, who shall be the chief executive and administrative officer of the authority, and shall enter into a contract with that person establishing the salary and term of office.
  2. The president shall appoint, and the board shall confirm, the following additional officers: a secretary, an auditor, legal counsel, a treasurer, and a chief engineer.
  3. All other officers and employees of the authority shall be appointed by the president, subject to any civil service plan adopted by the board.
    1. The president shall prepare annually the operating budget of the authority and submit the budget to the board for approval at least sixty (60) days prior to the beginning of the fiscal year.
    2. If such budget has not been acted upon by the board on the first day of the fiscal year, it shall then automatically go into effect.
  4. The president shall also submit such periodic reports to the board as it may direct.
  5. The president shall attend all meetings of the board.

Acts 1995, ch. 432, § 6.

7-87-107. Powers of the authority.

An authority created pursuant to this chapter has all powers necessary to accomplish the purposes of this chapter, excluding the power to levy and collect taxes and special assessments, including, but not limited to, the following:

  1. Have perpetual succession, sue and be sued, and adopt a corporate seal;
  2. Plan, establish, acquire, construct, improve and operate one (1) or more ports within or without the municipality and within this state;
  3. Acquire real or personal property or any interest in real or personal property by gift, lease or purchase for any of the purposes provided in this chapter, and sell, lease, or otherwise dispose of such property;
  4. Enter into agreements with the municipality with respect to which such authority is created, acquire by lease, gift, purchase, or otherwise, any port of such municipality and operate such port as a part of its port;
  5. Enter into a contract with the municipality with respect to which such authority is created, a plan for pension, disability, hospitalization and death benefits for the officers and employees of the authority, as well as the right to contract with such municipality for the transfer of the employees of the municipality with the retention by such employees of existing civil service status and accrued pension, disability, hospitalization and death benefits;
  6. Enter into, by contract with the municipality with respect to which such authority is created, a plan of civil service for employees of the authority;
  7. Make application directly to the proper federal, state, county, and municipal officials and agencies, or to any other source, public or private, for loans, grants, guarantees or other financial assistance in aid of ports operated by it and to accept the loans, grants, guarantees or other financial assistance;
  8. Make studies and recommend to the appropriate legislative body of the municipality in which a port is situated, zoning changes in the area of any port operated by the authority;
  9. Have control of the authority's port and the facilities of the port with the right and duty to establish and charge fees, rentals, rates and other charges for the use of, or for services rendered by, any authority facility, and collect revenues from the fees, rentals, rates and other charges, not inconsistent with the rights of the holders of the authority's bonds;
  10. Appoint a president, and to confirm or reject the president's appointments of a secretary, a treasurer, an auditor, legal counsel, and a chief engineer; prescribe their duties and qualifications and to fix their compensation; employ, contract with, fix the compensation of such other employees both professional and other as may be necessary to carry out the purposes of this chapter; and provide for the proper operation and maintenance of the port;
  11. Use, in the performance of its functions, the officers, agents, employees, services, facilities, records and equipment of any municipality with respect to which the authority has been created, with the consent of such municipality and subject to such terms and conditions as may be agreed upon;
  12. Enter upon such lands, waters or premises as, in the judgment of the authority, may be necessary for the purpose of making surveys, soundings, borings and examinations to accomplish any purpose authorized by this chapter, the authority to be liable for actual damages done;
  13. Contract with carriers with regard to docking, accommodation and servicing of barges and marine craft; the loading and unloading of cargo, passengers and baggage, and the accommodation of the employees and passengers of such carriers;
  14. Develop, police, and beautify the harbor and port facilities, including the preservation and enhancement of the ecological amenities by the establishment and implementation of a plan for appropriate environmental development, and undertake or make arrangements to undertake the dredging of approaches to the port and its facilities;
  15. Operate, maintain, manage and enter into contracts for the operation, maintenance, and management of any project undertaken, and make rules and regulations with regard to such operation, maintenance and management;
  16. Contract with any and all persons, individuals, firms or corporations, including, but not limited to, steamship and railroad companies with reference to the development of transportation and other utility services, and do and perform any and all other acts that may tend, either directly or indirectly, to promote trade, industry, and commerce;
  17. Lend the proceeds of bonds issued pursuant to this chapter and enter into loan agreements or other agreements with persons or corporations with respect to such loans and the construction, reconstruction, improvement, or acquisition of one (1) or more projects at its ports, upon such terms and conditions as the authority deems advisable; and
  18. Incorporate, operate in all respects and exercise all the powers granted to industrial development corporations under chapter 53 of this title; provided, that the municipality grants such power to the port authority by resolution enacted by the governing body. However, any project development under this subdivision (18) shall be developed as the property of the authority and the authority shall make in lieu of tax payments on any such development to the municipality. Further, an authority, before issuing any industrial development bonds pursuant to this chapter, shall consider whether any proposed industrial operation is compatible with port purposes.

Acts 1995, ch. 432, § 7.

7-87-108. Acquisition of land.

Any municipality, county, or any other form of local government may acquire any interest in land within the boundaries of the local government by gift, purchase, lease, condemnation or any other means, and may transfer that interest to any authority by sale, lease or gift. The transfer may be authorized by resolution or by ordinance of the governing body of the local government without submission of the question to the voters and without regard to the requirements, restrictions, limitations, or other provisions contained in any other general, special, or local law.

Acts 1995, ch. 432, § 8; 2007, ch. 389, § 1.

7-87-109. Bond issuance.

    1. An authority has the power to borrow money for any corporate purposes and issue revenue bonds for any corporate purposes, including revenue refunding bonds, in such form and upon such terms as it may determine, payable out of any revenues of the authority, including grants or contributions from the federal government or other sources. Such bonds may be sold at public or private sale. Revenue bonds may be sold at public or private sale. Revenue bonds may be issued for any corporate purposes and the authority may pledge as security for such bonds all or any portion of concessions, fees, rents, charges, or any other revenues derived from the operation of the port. Further, the payment or purchase of such revenue bonds, if issued for any essential public purpose, may be additionally secured, in whole or in part, in the manner provided in this section, by a pledge of the full faith and credit and unlimited taxing powers of the municipality or municipalities with respect to which the authority has been created. Such revenue bonds or revenue refunding bonds shall be issued in the manner provided for a local government in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21; provided, that any such fees, rents, or charges so pledged that are fixed and established pursuant to a lease or contract are not subject to revision or change except in such manner as is provided in such lease or contract. Any bonds of any authority issued pursuant to this chapter that are payable, as to principal and interest, solely from revenues of a port or port facility (and they shall so state on their face) shall not constitute a debt of any municipality, the state, or any political subdivision of the state, other than the authority or any municipality guaranteeing the payment or purchase of the bonds in the manner provided in this chapter, and shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the commissioners of any authority nor any person executing such bonds shall be liable personally on the bonds by reason of the issuance of the bonds.
    2. An authority, or municipality or municipalities with respect to which the authority has been created, may enter into interest rate exchange agreements with respect to any issue of revenue bonds or revenue refunding bonds, with any person, under such terms and conditions as the authority or municipality may determine, including, but not limited to, provisions permitting the authority or municipality to indemnify or otherwise pay any person for any loss of benefits under such agreement upon early termination of or default under such agreement.
  1. In case any of the commissioners or officers of an authority whose signatures appear on any bonds or coupons shall cease to be commissioners or officers after authorization, but before the delivery, of the bonds, the signatures shall nevertheless be valid and sufficient for all purposes, the same as if the commissioners or officers had remained in office until delivery. Any provision of any loan to the contrary notwithstanding, any bonds issued pursuant to this chapter shall be fully negotiable.
  2. Any bond reciting in substance that it has been issued by an authority pursuant to this chapter and for a purpose or purposes authorized to be accomplished by this chapter shall be conclusively deemed, in any suit, action, or proceeding involving the validity or enforceability of the bond or security for the bond, to have been issued pursuant to such provisions and for such purpose or purposes.
  3. Bonds issued by an authority pursuant to this chapter are declared to be issued for an essential public and governmental purpose, and together with interest on the bonds and income from the bonds, are exempt from all state, county and municipal taxation, except for inheritance, transfer and estate taxes, and except as otherwise provided in this code.
    1. The governing body of a municipality or municipalities with respect to which the authority has been created may, by resolution, pledge the full faith and credit and unlimited taxing power of the municipality as guarantor to the payment of the principal or premium, if any, and interest on bonds of an authority, the purchase price of any such bonds subject to optional or mandatory tender for purchase, or the reimbursement or repayment to any bank or financial institution under any agreement providing for any draw, borrowing, advance or payment to be made for the payment of such principal, premium, interest or purchase price or the payment of amounts payable under any interest rate exchange agreement.
    2. Prior to any meeting where such guarantee will be considered by the governing body of the municipality, a notice shall be published at least five (5) days in advance of such meeting in a newspaper of general circulation within the municipality, describing the matter to be considered and containing an estimate of the dollar amount of any contingent liability proposed to be undertaken by the municipality.
    3. In the event of any such pledge of the full faith and credit and unlimited taxing power of the municipality, any holder or holders of the bonds, including a trustee or trustees for holders of such bonds, any financial institution providing any agreement on the payment of principal, premium, interest, purchase price on such bonds or any party to any interest rate exchange agreement with respect to such bonds shall have the right, in addition to all other rights, by mandamus or other suit, action, or proceeding in any court of competent jurisdiction, to enforce such person's rights against the municipality so pledging, and the governing body of such municipality and any officer, agent, or employee of such municipality, including, but not limited to, the right to require the municipality and governing body and any proper officer, agent, or employee of the municipality to assess, levy, and collect taxes and other revenues and charges adequate to carry out any agreement as to, or pledge of, such taxes, revenues, and charges. The taxes authorized to be pledged in this subdivision (e)(3) shall be levied without limit as to rate or amount upon all taxable property within the municipality, and all such taxes to be levied are hereby declared to have been levied for county and corporation purposes, respectively, within the meaning of the Constitution of Tennessee, Article II, § 29.

Acts 1995, ch. 432, § 9.

7-87-110. Civil service plan.

  1. The authority, by action of its board, may elect to come under the civil service plan of the municipality, to be administered by the civil service commission or board of such municipality, or may adopt its own civil service plan to be administered by the board, which plan shall include, but need not be limited to, the following provisions:
    1. Entry into the service on the basis of open competition and service, promotions and remuneration on the basis of merit, efficiency and fitness;
    2. Classifications of the positions in the service;
    3. The rating of candidates on the basis of publicly announced competitive examinations and the maintenance of lists of eligible candidates;
    4. Employment of candidates from the eligible lists in the highest qualified rating;
    5. Probationary periods not to exceed six (6) months;
    6. Disciplinary action, suspension or discharge of employees for cause, only with the right of notice and review;
    7. Schedules of compensation and pay increases prepared by the president and approved by the board;
    8. Promotion on the basis of ascertained merit, seniority in service, and competitive examinations;
    9. Provision for keeping service records on all employees;
    10. Regulations for hours of work, attendance, holidays, leaves of absence and transfers, and procedures for layoffs, discharge, suspension, discipline and reinstatement; and
    11. Review by the board at the request of the employee in question, and after notice and public hearing of any disciplinary action, suspension or discharge of any employee, which action, suspension or discharge may be affirmed, modified or reversed by the board. Findings of fact by the board are not subject to review by any court, except for illegality or want of jurisdiction.
  2. A civil service plan adopted and administered by the board may include a provision exempting from the plan those persons employed to render professional, scientific, technical or expert service of a temporary or unusual character; persons primarily employed on projects funded from the proceeds of bonds issued by the authority or from grants or loans to be repaid from the proceeds of bonds issued by the authority or from grants received by the authority; and persons employed for a period of less than six (6) months in any twelve-month period or working thirty (30) hours or less per week.

Acts 1995, ch. 432, § 10.

7-87-111. Powers of municipalities with regard to port authorities.

Any municipality or municipalities with respect to which the authority has been created has all necessary powers in order to further the purposes of this chapter, including, but not limited to, the following, any or all of which powers may be exercised by resolution of its governing body:

  1. Advance, donate or lend money or real or personal property to the authority;
  2. Provide that any funds on hand or that become available to it for port purposes shall be paid directly to the authority;
  3. Cause water, sewer, gas, electric or other utility services to be provided to the authority;
  4. Sell, lease, dedicate, donate or otherwise convey to the authority any of the municipality's interest in any existing port or other related property, or grant easements, licenses or other rights or privileges in the port or other related property to the authority;
  5. Open and improve streets, roads and alleys to the port;
  6. Provide police and fire protection services to the port; and
  7. Enter into agreements with the authority with regard to the transfer of its port employees to the authority with the retention of such employees of any civil service status and accrued rights in pension, disability, hospitalization and death benefits.

Acts 1995, ch. 432, § 11.

7-87-112. Dissolution of an authority.

  1. Whenever the governing body of the municipality or municipalities with respect to which the authority has been created shall, by resolution, determine that the purposes for which the authority was created have been substantially accomplished, that all of the bonds and other obligations of the authority have been fully paid, and that such municipality has determined, or such municipalities have agreed on, the distribution of the funds and other properties of the authority, then the executive officers of such municipality or the executive officers of such municipalities shall execute and file for record with the secretary of state a certificate of dissolution reciting such facts and declaring the authority to be dissolved.
  2. Upon such filing, the authority is dissolved and title to all funds and other properties of the authority at the time of such dissolution shall vest in and be delivered to such municipalities in accordance with the terms of their agreement relating to the dissolution.

Acts 1995, ch. 432, § 12.

7-87-113. Powers supplemental to existing powers.

  1. The powers conferred by this chapter shall be in addition and supplemental to the powers conferred by any other law, and are not in substitution for such powers, and the limitations imposed by this chapter shall not affect such powers.
  2. The powers granted in this chapter may be exercised without regard to requirements, restrictions or procedural provisions contained in any other law or charter, except as expressly provided in this chapter.
  3. Any municipality authorized under this chapter to create a port authority may do so without the necessity of a charter amendment, notwithstanding anything in its charter to the contrary.

Acts 1995, ch. 432, § 13.

7-87-114. Construction.

This chapter shall be liberally construed to effect the purposes set forth in this chapter, and insofar as this chapter may be inconsistent with any other law, this chapter shall be controlling.

Acts 1995, ch. 432, § 14.

Chapter 88
Convention Center and Tourism Development Financing Act of 1998

7-88-101. Short title.

This chapter shall be known and may be cited as the “Convention Center and Tourism Development Financing Act of 1998.”

Acts 1998, ch. 1055, § 2.

7-88-102. Purpose of chapter.

The purpose of this chapter is to increase state tourism and related economic development by providing a financing mechanism for the development of convention centers and other similar public use facilities that will attract and serve major tourism destinations, thereby fostering economic benefit to the state and hosting cities and counties.

Acts 1998, ch. 1055, § 3.

7-88-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Base tax revenues” means the revenues generated from the collection of state and local sales and use taxes from all businesses within the applicable tourism development zone as of the end of the fiscal year of the state of Tennessee immediately prior to the year in which the municipality or public authority is entitled to receive an allocation of tax revenue pursuant to this chapter, adjusted annually after the first year by a percentage equal to the percentage of change in the collection of state and local sales and use taxes derived from the sale of goods, products and services for the entire county in which the public use facility is located for the preceding fiscal year. In the event the state rate for sales and use tax should increase during the period any municipality is receiving an apportionment pursuant to this chapter, the increase in the state rate for sales and use tax shall not be used for the purpose set forth in this chapter. In the event the state rate for sales and use tax should decrease during the period any municipality is receiving an apportionment pursuant to this chapter, the department of revenue, after consultation with the commissioner of finance and administration, shall adjust the base tax revenues to reflect such change in tax rate so as to provide for substantially the same economic benefit to the municipality and substantially the same overall allocation of revenue between the municipality and the state as is provided in this chapter;
  2. “Beneficially impacted area” means the geographic area within which it is reasonably anticipated and projected that state and local sales and use taxes will increase as a result of the construction and operation of the qualified public use facility by an amount in excess of the increases in the collection of state and local sales and use tax revenues reasonably projected to occur within that area without regard to the construction of the public use facility;
  3. “Cost”, as applied to any public use facility, means the cost of acquisition, design, construction, renovation, improvement, demolition and relocation of any improvements; the cost of labor, materials and equipment; the cost of all lands, property rights, easements and franchises required; financing charges, interest and debt service prior to, during or after construction; the cost of issuing bonds in connection with any financing, cost of plans and specifications, services and estimates of costs and of revenue; cost of engineering, accounting and legal services; all expenses necessary or incident to determining the feasibility or practicability of such acquisitions or constructions; salaries, overhead and other costs of the public building authority allocated to the project; and administrative, legal and engineering expenses and such other expenses as may be necessary or incident to such acquisition, design, construction, renovation, demolition, relocation or the financing of such other expenses, including any such costs incurred by a municipality or public building authority relating to the public use facility within one (1) year prior to the municipality's designation of the proposed tourism development zone for such facility;
  4. “Municipality” means any incorporated city or county located in the state of Tennessee, including a county with a metropolitan form of government;
  5. “Public authority” means any agency, authority or instrumentality created or authorized by any municipality or by two (2) or more municipalities acting jointly, including, but not limited to, any public building authority organized pursuant to the Public Building Authorities Act of 1971, compiled in title 12, chapter 10 or an industrial development corporation organized pursuant to chapter 53 of this title;
  6. “Qualified associated development” means parks, plazas, recreational facilities, schools, sidewalks, access ways, roads, drives, bridges, ramps, landscaping, signage and other public improvements constructed or renovated by the municipality or the public building authority in connection with the public use facility and related infrastructure and utility improvements for public or private peripheral development included in a master development plan for the tourism development zone and that is constructed, renovated or installed by the municipality or the public authority. The total costs of the qualified associated development shall not exceed thirty percent (30%) of the costs of the entire qualified public use facility. Qualified associated development, except for public utility improvements, including water, sewer, electricity, or gas, associated with the qualified public use facility, shall be located within one and one half (1 ½) miles of the qualified public use facility and shall be considered qualified associated development if leased by a municipality or a public building authority;
    1. “Qualified public use facility” includes:
      1. Any building, complex, center, facility or any two (2) or more adjacent buildings, complexes, centers or facilities containing at least two hundred fifty thousand square feet (250,000 sq. ft.), in the aggregate, inclusive of exhibit halls, ballrooms, meeting rooms, lobbies, corridors, service areas and other building areas, or areas enclosed thereby, constructed, leased, equipped, renovated, acquired or expanded after January 1, 1998, as a project meeting the requirements of the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, the Public Building Authorities Act of 1971, or chapter 53 or chapter 89 of this title, by a public authority or municipality for purpose of furnishing economic development centers, renovated or new or expanded community facilities for conventions, meetings, exhibitions, trade shows, sports events or other events for educational, entertainment, business, association, cultural, public interest, public service and common interest groups, organizations and entities and that requires:
  1. On or after January 1, 1998, a local investment of public funds in excess of seventy-five million dollars ($75,000,000), and is reasonably anticipated to attract private investment in the tourism development zone of more than fifty million dollars ($50,000,000) after January 1, 1998; or
  2. On or after January 1, 2007, a local investment of public or private funds of not less than two hundred million dollars ($200,000,000);

Any privately owned or operated amusement or theme park that involves an investment of funds of more than one hundred million dollars ($100,000,000);

Any privately owned or operated tourism attraction involving an aggregate investment of public and private funds in excess of seventy-five million dollars ($75,000,000) that is designed to attract tourists to the state, including a cultural or historical site, a museum or visitors center, a recreation or entertainment facility, and all related hotel or hotels, convention center facilities, administrative facilities and offices, mixed use facilities, restaurants and other tourism amenities constructed or acquired as a part of the attraction; or

Any ancillary structures or facilities associated with a qualified public use facility described in subdivision (7)(A)(i), including hotel accommodations; transportation infrastructure; tourism, theatre, retail business and commercial office space facilities; parking facilities or any other structure or facility constructed, leased, equipped, renovated or acquired for any of the purposes set forth in chapter 89 of this title;

“Qualified public use facility” also includes qualified associated development. An investment in qualified public use facilities required by a lease from a municipality shall be considered a local investment of public funds for the purposes of this chapter;

“Secondary tourist development zone” means a tourist development zone that at the time of its creation is located more than three (3) miles from the county courthouse;

“Structured lease agreement” means a lease by a municipality of a qualified public use facility within a tourism development zone financed by bonds issued and outstanding in compliance with § 7-88-107 and for which the issuer of the bonds or the lessor of the facility has entered into an interest rate swap or exchange agreement, an agreement establishing interest rate floors or ceilings, or both, and other interest rate hedging agreements as referenced in § 9-21-305(c), under which:

The calculation of the lease payment due is to be based, in whole or in part, on such agreements;

The municipality is obligated to make lease payments from revenues available under § 7-88-106(b) and revenues derived from the project; and

Under the terms of the lease the municipality has the right to direct or cause the issuer to exercise any rights, including the right of termination, under the agreement as if the municipality were a direct party to the agreement. A “structured lease agreement” shall also include a lease by a municipality of a public use facility where the lease payments are limited to a pledge of all proceeds or taxes received by the municipality pursuant to this chapter; and

“Tourism development zone” means an area in a municipality designated by ordinance or resolution of such municipality in which a qualified public use facility is located or planned, that is determined by the department of finance and administration to be a beneficially impacted area in accordance with the requirements of this chapter and that is certified as a tourism development zone by the department. The department, in its sole discretion, can reduce or reconfigure a tourism development zone proposed by a municipality.

Acts 1998, ch. 1055, § 4; 2003, ch. 354, § 1; 2004, ch. 909, §§ 1-5; 2007, ch. 461, §§ 7-11; 2007, ch. 524, § 3; 2007; ch. 593, §§ 1, 2; 2009, ch. 474, §§ 3-7; 2014, ch. 962, § 2.

Compiler's Notes. Acts 2004, ch. 909, § 10 provided that:

“It is the express intent of the General Assembly that the enactment of this act will not affect applications which as of the date of passage of this act [June 8, 2004] either have already been approved by the state or for which a letter of intent has been filed with the commissioner of finance and administration.”

Acts 2007, ch. 593, § 1 purported to amend subdivision (7) with provisions exactly the same as the provisions as amended by Acts 2007, ch. 524, § 3; therefore, the amendments to this section by ch. 593, § 1 were not given effect.

Attorney General Opinions. The Mid-South Fairgrounds Redevelopment meets the “qualified public use facility” investment threshold in T.C.A. § 7-88-103(7)(A)(i)(a), OAG 09-014 (2/10/09), 2009 Tenn. AG LEXIS 25.

7-88-104. Annual adjustments to base tax revenue.

Annual adjustments to the base tax revenues of the tourism development zone shall be made by the department of revenue within ninety (90) days of the end of each fiscal year and shall be effective immediately upon notification of such adjustment from the department to the municipality or public authority.

Acts 1998, ch. 1055, § 5.

7-88-105. Tourism development zone within a one-mile radius of qualified public use facility — Exception.

A tourism development zone shall not extend farther than one (1) mile from the outer perimeter of a qualified public use facility; provided, however, that if the department of finance and administration determines that the geographical configuration of a municipality requires an unusually shaped tourism development zone, such zone may extend farther than one (1) mile from the outer perimeter of a qualified public use facility, except that the size of the tourism development zone shall not exceed three square miles (3 sq. mi.).

Acts 1998, ch. 1055, § 6; 2004, ch. 909, § 6.

Compiler's Notes. Acts 2004, ch. 909, § 10 provided that:

“It is the express intent of the General Assembly that the enactment of this act will not affect applications which as of the date of passage of this act [June 8, 2004] either have already been approved by the state or for which a letter of intent has been filed with the commissioner of finance and administration.”

7-88-106. Apportionment and distribution of incremental increases due to public use facility.

    1. If a municipality or public authority has financed, constructed, leased, equipped, renovated or acquired a qualified public use facility within a tourism development zone, then state and local sales and use taxes shall be apportioned and distributed to the municipality in an amount equal to the incremental increase in state and local sales and use tax revenue derived from the sale of goods, products and services within the tourism development zone in excess of base tax revenues, excluding any increase in the state rate for sales and use tax; provided, however, that, with respect to any facility that elects to qualify as a qualified public use facility under § 7-88-103(7)(A)(ii) or (7)(A)(iii), only the portion of the incremental increase in the local sales and use tax revenue as is designated by resolution of the municipality shall be so apportioned and distributed under this section, unless the municipality designates by resolution a lesser time period for the apportionment and distribution of the revenues; and  in the event one (1) or more other local taxes are authorized for use within the tourist development zone, then the portion of the additional taxes as are designated by resolution of the municipality shall be similarly apportioned and distributed. For any facility that elects to qualify as a qualified public use facility under § 7-88-103(7)(A)(ii) or (7)(A)(iii), the portion of the incremental increase in the local sales and use tax revenue that is statutorily designated for local schools may not be apportioned and  distributed for such a qualified public use facility. For any facility that elects to qualify as a qualified public use facility and is located in any county having a population of not less than seventy-one thousand one hundred (71,100) nor more than seventy-one thousand two hundred (71,200), according to the 2000 federal census or any subsequent federal census, any revenue derived from an increase in the local sales and use tax rate occurring on or after January 1, 2009, may not be apportioned and distributed for such a qualified public use facility and instead shall be apportioned and distributed exclusively as provided in § 67-6-712(a); provided, however, that this sentence shall not apply to any increase in the local sales and use tax enacted after July 1, 2010. Apportionment and distribution of such taxes shall continue, until the earlier of:
      1. The date on which the cumulative amount apportioned and distributed to the municipality equals the cost of the qualified public use facility, plus any interest on indebtedness of the municipality or public authority related to such cost;
      2. The date on which the qualified public use facility ceases to be a qualified public use facility; or
      3. Thirty (30) years from the date it is reasonably anticipated that the facility will commence operations as a public use facility.
      1. After the apportionment and distribution of state sales and use taxes pursuant to subdivision (a)(1) has ceased with respect to one (1) qualified public use facility that consisted of a hotel with at least five hundred (500) rooms and related retail, parking, and commercial uses, that was approved by the state building commission, on recommendation of the comptroller prior to December 31, 2018, or as such approval shall thereafter be amended by the state building commission, and that was placed in service no later than December 31, 2024, the apportionment and distribution of the incremental increase in the local sales and use tax revenue with respect to such qualified public use facility must continue until the earlier of:
        1. Thirty (30) years from the date it is reasonably anticipated that the facility will commence operations as a public use facility; or
        2. The date the cumulative amount apportioned and distributed to the municipality under this subdivision (a)(2) with respect to such facility equals the indebtedness of the municipality or public authority, plus interest thereon, related to the cost of the public use facility payable from such amount.
      2. This subdivision (a)(2) does not affect the apportionment and distribution pursuant to subdivision (a)(1) of any state sales and use taxes generated by such qualified public use facility hotel and related retail parking and commercial uses as described in subdivision (a)(2)(A).
      3. This subdivision (a)(2) does not affect the apportionment and distribution pursuant to subdivision (a)(1) of any local sales and use taxes generated by such qualified public use facility hotel and related retail parking and commercial uses as described in subdivision (a)(2)(A).
  1. Except as otherwise provided in subsection (c), tax revenue distributed to the municipality shall be for the exclusive use of the municipality or the public authority formally designated by the municipality, in accordance with the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, the Public Building Authorities Act of 1971, compiled in title 12, chapter 10, or chapter 53 of this title for payment of the cost of the public use facility, including interest and debt service on any indebtedness related to the public use facility, or the lease payments with respect to any public use facility, and shall apply to only one (1) tourism development zone per municipality. The apportionment and payment shall be made by the department of revenue to the municipality within ninety (90) days of the end of each fiscal year for which the municipality is entitled to receive an allocation and payment pursuant to this chapter. Notwithstanding this subsection (b), a county having a metropolitan form of government with a population of more than five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, and a municipality in a county having a population of more than five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census, shall not be limited to one (1) tourism development zone eligible to receive a distribution of tax revenue, and such county and such municipality are not required to designate additional tourism development zones as a secondary tourism development zone to receive a distribution of tax revenue.
  2. If there has been designated within the municipality a secondary tourist development zone, then the incremental increase in state and local sales and use tax revenue derived from the sale of goods, products and services within the secondary tourist development zone in excess of base tax revenues, excluding any increase in the state rate for sales and use tax, shall be apportioned and distributed to the municipality for deposit in its general fund. Apportionment and distribution of the taxes shall continue until the earliest of:
    1. The first date on which the indebtedness of the municipality or public authority related to the qualified public use facility located within the secondary tourist development zone has been paid in full;
    2. The date on which the cumulative amount apportioned and distributed equals the cumulative amount of principal and interest on indebtedness of the municipality or public authority related to the qualified public use facility located within the secondary tourist development zone;
    3. The date on which the qualified public use facility ceases to be a qualified public use facility; or
    4. Thirty (30) years from the date it is reasonably anticipated that the facility will commence operations as a public use facility.

Acts 1998, ch. 1055, § 7; 1999, ch. 356, § 1; 2004, ch. 909, §§ 7, 8; 2006, ch. 781, § 2; 2007, ch. 461, §§ 12, 13; 2007, ch. 524, §§ 4, 5; 2007, ch. 593, § 3; 2010, ch. 1134, § 4; 2018, ch. 1058, § 1; 2019, ch. 84, § 1; 2019, ch. 226, § 1.

Compiler's Notes. Acts 2004, ch. 909, § 10 provided that:

“It is the express intent of the General Assembly that the enactment of this act will not affect applications which as of the date of passage of this act [June 8, 2004] either have already been approved by the state or for which a letter of intent has been filed with the commissioner of finance and administration.”

For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Acts 2007, ch. 593, § 3 purported to amend this section, effective June 28, 2007, by adding subsection (c). Acts 2007, ch. 461, § 13 amended this section, effective June 19, 2007, by adding subsection (c). The provisions of subsection (c) as added by ch. 593 were the same as the provisions added by ch. 461, ch. 593 was not given effect.

Amendments. The 2018 amendment added (a)(2).

The 2019 amendment by ch. 84, rewrote (a)(2) which read: “(2)(A)  Notwithstanding subdivision (a)(1), and subject to the recommendation of the comptroller of the treasury and approval by the state building commission no later than December 31, 2018, the portion of the incremental increase in the local sales and use tax revenue shall be apportioned and distributed for one (1) qualified public use facility if placed in service no later than December 31, 2022, and if such facility consists of a hotel with at least five hundred (500) rooms and related retail, parking, and commercial uses. No state sales and use tax revenue shall be allocated to the municipality pursuant to this subdivision (a)(2).“(B)  Apportionment and distribution of local tax revenue in accordance with subdivision (a)(2)(A) shall continue until the earlier of:“(i)  Thirty (30) years from the date it is reasonably anticipated that the facility will commence operations as a public use facility; or“(ii)  The date the cumulative amount apportioned and distributed to the municipality under subdivision (a)(2)(A) with respect to such facility equals the indebtedness of the municipality or public authority, plus interest thereon, related to the cost of the public use facility payable from such amount.”

The 2019 amendment by ch. 226, substituted “December 31, 2018, or as such approval shall thereafter be amended by the state building commission,” for “December 31, 2018,” in (a)(2).

Effective Dates. Acts 2018, ch. 1058. § 3. May 21, 2018.

Acts 2019, ch. 84, § 2. April 3, 2019.

Acts 2019, ch. 226, § 2. April 30, 2019.

7-88-107. Limitations on indebtedness.

  1. Any bonds, notes or other indebtedness relative to the cost of a qualified public use facility shall not be issued for a term longer than thirty (30) years from the date it is reasonably anticipated that the facility will commence operation as a public use facility, and the municipality or public authority is authorized to pledge all proceeds or taxes received by it, pursuant to this chapter, to the payment of principal of and interest on such bonds, notes or other indebtedness.
  2. A municipality is authorized to enter into a structured lease agreement; provided, that the municipality complies with  § 9-21-305(c) regarding guidelines, rules or regulations adopted or promulgated by the state funding board under § 9-21-130, treating the lease as if it were a revenue bond of the municipality and the comptroller determines compliance with the guidelines. However, if the municipality is additionally obligated to make the lease payments from legally available sources, subject to appropriation, other than revenues available under § 7-88-106(b) and revenues derived from the project, then the municipality, seven (7) days before the effective date of the structured lease agreement or the amendment to a lease making it a structured lease agreement, must provide notice generally available within the municipality, disclosing the purpose for the structured lease agreement, the additional sources, whether taxes or revenues, to be used for lease payments, and the maximum liability of the municipality.
  3. Any bonds, notes, or other indebtedness, including any refinancing or refunding, proposed to be issued under this part must be approved by the state funding board.

Acts 1998, ch. 1055, § 8; 2003, ch. 354, § 2; 2018, ch. 816, § 1.

Amendments. The 2018 amendment added (c).

Effective Dates. Acts 2018, ch. 816, § 3. April 27, 2018.

7-88-108. Qualified public use facility — Application for certification — Review — Cost summary — Commencement of tax apportionment and distribution.

  1. To be entitled to receive the allocations of state and local sales and use taxes as provided in this chapter, a municipality or public authority must first file with the department of finance and administration an application seeking certification of the tourism development zone and the planned public use facility as a qualified public use facility. The application shall include a master development plan for the proposed tourism development zone, containing such information as may be reasonably required by the department. A municipality or public authority shall include a resolution adopted by the county legislative body with any application for approval of the tourism development zone which would utilize any portion of the local option sales tax revenues designated for schools pursuant to § 67-6-712(a)(1). The resolution shall provide whether the county legislative body is in support of, in opposition to, or neutral regarding the application. Upon request by the municipality or the public authority, the county legislative body shall provide such resolution not less than five (5) days after the next regularly scheduled meeting of the county legislative body. The department shall review the application to confirm that:
    1. The planned public use facility is qualified under the requirements of this chapter; and
    2. The planned public use facility will be located within a qualified tourism development zone.
  2. The department shall also review the proposed boundaries of the proposed tourism development zone and shall determine if it is a beneficially impacted area. If the department determines that the boundaries of the proposed tourism development zone exceed the area that is reasonably anticipated to benefit from the construction and operation of the qualified public use facility, the department may adjust or reduce the boundaries of the proposed area. In reviewing the application, the department shall consult with the department of economic and community development and the department of tourism. Upon completion of its review of the application, the department of finance and administration shall certify the tourism development zone and forward the application to the state building commission for review and approval or disapproval, based on the standards established by this chapter.
  3. Upon completion of the qualified public use facility, the municipality shall submit to the department of finance and administration a summary of the cost of the public use facility with supporting documentation, certified by the chief financial officer of the municipality. The department shall review the cost certification to confirm the amount of state and local sales and use taxes to be apportioned and distributed to the municipality pursuant to § 7-88-106.
  4. Except as otherwise provided in subsection (f), the apportionment and distribution of state and local sales and use taxes to the municipality, as provided in this chapter, shall commence at the beginning of the fiscal year in which the state building commission approves the application, or the beginning of the fiscal year in which the facility opens for public use, whichever is later.
  5. A facility shall be deemed to be “open for public use” for purposes of subsection (d), if:
    1. Financing is in place and debt service payments by the municipality or public authority have commenced;
    2. A significant part or component of the qualified public use facility, as defined in § 7-88-103, has been completed and is open to the public;
    3. The municipality or public authority is making reasonable progress on the unfinished portion of the qualified public use facility; and
    4. All other provisions of this chapter have been complied with.
  6. If there has been designated within the municipality a secondary tourist development zone, then the apportionment and distribution of state and local sales and use taxes to the municipality, as provided in § 7-88-106(c), shall commence at the beginning of the fiscal year in which the state building commission approves the application and the public authority has incurred debt to finance construction of the qualified public use facility within the zone, whichever is later.

Acts 1998, ch. 1055, § 9; 2004, ch. 909, § 9; 2007, ch. 461, §§ 14, 15; 2014, ch. 889, § 1.

Compiler's Notes. Acts 2004, ch. 909, § 10 provided that:

“It is the express intent of the General Assembly that the enactment of this act will not affect applications which as of the date of passage of this act [June 8, 2004] either have already been approved by the state or for which a letter of intent has been filed with the commissioner of finance and administration.”

7-88-109. Proposed debt amortization schedule.

Prior to the issuance of any bonds to finance the cost of a qualified public use facility that will be repaid in whole or in part from apportionments under this chapter, the municipality or public authority issuing such bonds shall submit a proposed debt amortization schedule for such bonds to the commissioner of finance and administration for approval. Such schedule shall show the anticipated contribution to be made to the annual debt service for such bonds from the apportionment of sales and use taxes pursuant to this chapter and all other sources. After the date of issuance of such bonds, the municipality shall continue to contribute each year thereafter until such bonds are retired or a sufficient sinking fund has been established for their retirement, an amount not less than the municipality's contribution to the annual debt service projected on the approved debt amortization schedule to the repayment of such bonds or a sinking fund for their retirement.

Acts 1998, ch. 1055, § 10.

7-88-110. Rules and regulations.

The department of revenue and the department of finance and administration are authorized to adopt rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to implement this chapter. The state building commission is authorized to adopt procedures to implement this chapter.

Acts 1998, ch. 1055, § 14.

7-88-111. Compliance with Civil Rights Act.

Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d, et seq.), and title 4, chapter 21, part 9, shall be strictly complied with whenever applicable under this chapter.

Acts 1998, ch. 1055, § 15.

7-88-112. Bidding for construction of conference or convention facilities.

  1. For the purposes of this section, unless the context otherwise requires:
    1. “Metropolitan government” means a county having a metropolitan form of government which has a population in excess of five hundred thousand (500,000), according to the 2000 federal census or any subsequent federal census;
    2. “Minority-owned business” means a business that is solely owned, or at least fifty-one percent (51%) of the assets or outstanding stock of which is owned, by an individual who personally manages and controls the daily operations of the business and who is impeded from normal entry into the economic mainstream because of:
      1. Past practices of discrimination based on race, religion, ethnic background, or sex;
      2. A disability as defined in § 4-26-102; or
      3. Past practices of racial discrimination against African-Americans; and
    3. “Person” means any individual, partnership, committee, association, corporation, labor organization, or any other organization or group of persons.
  2. Any person, in soliciting bids for the construction of any conference or convention center facilities located in a secondary tourist development zone within the territory of a metropolitan government and receiving any benefit, directly or indirectly, from public financing pursuant to Acts 2007, ch. 461, shall actively solicit bids from minority-owned businesses. A person shall strive to maximize participation of minority-owned businesses through both prime and second tier business contracting opportunities.
    1. The metropolitan government shall monitor the results of minority-owned business participation. The government shall periodically investigate to ascertain whether minority-owned business participation is being achieved at a level contemplated pursuant to subsection (b) and shall report the information to the comptroller of the treasury in the manner prescribed in subdivision (c)(2).
    2. The metropolitan government shall prepare and submit an annual report entitled “The Conference and Convention Center Facilities Compliance Report” which shall be submitted to the comptroller of the treasury. The report shall include:
      1. Data on the race, religion, ethnic background and sex of each person employed in the construction of any conference or convention center facilities located in a secondary tourist development zone within the territory of a metropolitan government and receiving any benefit, directly or indirectly, from public financing pursuant to Acts 2007, ch. 461;
      2. Data on the actual expenditures to minority-owned businesses employed in the construction of any conference or convention center facilities located in a secondary tourist development zone within the territory of a metropolitan government and receiving any benefit, directly or indirectly, from public financing pursuant to Acts 2007, ch. 461; and
      3. Data summarizing the findings of all periodic investigations conducted in accordance with subdivision (c)(1).
    3. The comptroller of the treasury shall, upon receipt of the report from the metropolitan government, transmit a synopsis of the report to the chairs and membership of the state and local government committee of the senate and the local government committee of the house of representatives.

Acts 2007, ch. 461, § 16; 2013, ch. 236, § 66.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-88-113. Qualified public use facility as project.

A qualified public use facility shall be deemed to be within the term “project” as defined in § 7-53-101. In addition to the powers under chapter 53 of this title, any local government having jurisdiction over any part of a qualified public use facility is authorized to use tax increment financing for such project costs in § 7-88-103(3) pursuant to § 13-20-205.

Acts 2007, ch. 524, § 6.

7-88-114. Application.

  1. This part shall apply to:
    1. Tourism development zones existing as of April 27, 2018; and
    2. Tourism development zones approved by the state building commission no later than December 31, 2018, that are created pursuant to a letter of intent or application filed as of June 26, 2007.
  2. No tourism development zones shall be created after April 27, 2018, except for those tourism development zones created pursuant to subdivision (a)(2).
  3. Should an application not be approved by the state building commission by December 31, 2018, whether or not it is filed pursuant to a letter of intent filed by June 26, 2007, the application and letter of intent shall be null and void.
  4. The state building commission has the authority to approve or disapprove an application for a tourism development zone in whole or in part.
    1. The state building commission has the authority to approve or disapprove any modification to a tourism development zone in whole or in part; however, a tourism development zone may not be modified to expand its boundaries or extend its term unless specifically authorized by statute with respect to a particular tourism development zone. The state building commission has the authority to deny a modification relative to the use of the tourism development zone funds if it determines that any proposed use is not economically feasible or not in the best interest of the state.
    2. As used in this part, “modification” means any change in a tourism development zone, including, but not limited to, adding new qualified public use facilities; adding qualified associated developments or ancillary structures or facilities; or adding any use of property tax revenue pursuant to § 7-88-113.
  5. The municipality or public authority in which a tourism development zone is located shall file with the commissioner of finance and administration and the state building commission an annual report on a form and in accordance with the procedures prescribed by the comptroller of the treasury for the year previous to the date of the annual report, which shall include:
    1. A list of contractual commitments specifying the individual parties, expenditures, and the scope of work. For the purpose of this part, “contractual commitment” means any contract, agreement, or commitment for goods or services that is funded in whole or in part by tourism development zone funds;
    2. A tourism development zone's principal debt and interest, revenues, total expenditures, expenditures made with surplus funds, outstanding indebtedness, periodic surplus/deficit, and cumulative surplus/deficit;
    3. The cumulative amount of funds expended by the tourism development zone on the zone itself specified by subaccount on each qualified public use facility, and specifying whether such funds were bond proceeds or surplus revenues; and
    4. A sources and uses report showing all funds received or expended in conjunction with, in relation to, or leveraged with, tourism development zone funds. Received funds shall be stated separately from the funding source. Receipts or expenditures of less than one hundred thousand dollars ($100,000) may be reported in the aggregate by category. For receipts and expenditures equal to or in excess of one hundred thousand dollars ($100,000), each item must be listed with specificity and include the payee or payees, purpose, and date.
  6. In addition to the annual report, the state building commission shall have the authority to request at any time a sources and uses report showing all funds received or expended by the municipality or public authority with respect to the tourism development zone during the previous three (3) months.

Acts 2007, ch. 524, § 6; 2007, ch. 593, § 4; 2018, ch. 816, § 2.

Compiler's Notes. Acts 2007, ch. 593, § 4 purported to enact this section, effective June 28, 2007. Acts 2007, ch. 524, § 6 enacted the same provisions, effective June 26, 2007. Because of the enactment by ch. 524, the provisions of ch. 593 were not given effect.

Amendments. The 2018 amendment rewrote the section which formerly read: “This part shall only apply to tourism development zones that, as of June 26, 2007, either have already been approved by the state or for which a letter of intent has been filed with the commissioner of finance and administration.”

Effective Dates. Acts 2018, ch. 816, § 3. April 27, 2018.

7-88-115. [Repealed.]

Acts 2007, ch. 524, § 6; 2007, ch. 593, § 4; repealed by Acts 2015, ch. 123, § 3, effective April 10, 2015.

Compiler's Notes. Former § 7-88-115 concerned monitoring and reporting of impact of the Convention Center and Tourism Development Financing Act of 1998.

7-88-116. Involvement of minority-owned business.

  1. For the purposes of this section, unless the context otherwise requires:
    1. “Covered qualified public use facility” means a qualified public use facility that elects to qualify as a qualified public use facility under § 7-88-103(7)(A)(ii) or (7)(A)(iii). “Covered qualified public use facility” also means a qualified public use facility created after January 1, 2007, in any county that does not have a metropolitan form of government;
    2. “Local government” means a municipality that creates a tourism development zone for the benefit of a covered qualified public use facility;
    3. “Minority-owned business” means a business that is solely owned, or at least fifty-one percent (51%) of the assets or outstanding stock of which is owned, by an individual who personally manages and controls the daily operations of the business and who is impeded from normal entry into the economic mainstream because of:
      1. Past practices of discrimination based on race, religion, ethnic background, or sex;
      2. A disability as defined in § 4-26-102; or
      3. Past practices of racial discrimination against African Americans;
    4. “Minority-owned business participation plan” means a business plan for actively soliciting bids from minority-owned businesses when a municipality or public authority proposes to finance, construct, lease, equip, renovate or acquire a qualified public use facility within a tourism development zone. Any such plan shall strive to maximize participation of minority-owned businesses through both prime and second tier business contracting opportunities throughout the tourism development zone and shall strive to achieve a level of minority-owned business participation representative of the population demographics of the county in which the tourism development zone is located; and
    5. “Person” means any individual, partnership, committee, association, corporation, labor organization, or any other organization or group of persons.
  2. Any person, in soliciting bids for the construction of a covered qualified public use facility in a tourist development zone within the territory of a local government and receiving any benefit, directly or indirectly, from public financing pursuant to Acts 2007, ch. 524, shall actively solicit bids from minority-owned businesses. Such person shall strive to maximize participation of minority-owned businesses through both prime and second tier business contracting opportunities.
    1. The local government shall monitor the results of minority-owned business participation. The local government shall periodically investigate to ascertain whether minority-owned business participation is being achieved at a level contemplated pursuant to subsection (b) and shall report the information to the comptroller of the treasury in the manner prescribed in subdivision (c)(2).
    2. The local government shall prepare and submit an annual report entitled “The Conference and Convention Center Facilities Compliance Report,” which shall be submitted to the comptroller of the treasury. The report shall include:
      1. Data on the race, religion, ethnic background and sex of each person employed in the construction of a covered qualified public use facility that is located within the territory of the local government and that receives any benefit, directly or indirectly, from public financing pursuant to the provisions Acts 2007, ch. 524;
      2. Data on the actual expenditures to minority-owned businesses employed in the construction of any such qualified public use facility; and
      3. Data summarizing the findings of all periodic investigations conducted in accordance with subdivision (c)(1).
    3. The comptroller of the treasury shall, upon receipt of the report from the local government, transmit a synopsis of the report to the chairs and membership of the state and local government committee of the senate and the local government committee of the house of representatives.
    1. Notwithstanding § 7-88-108(a) or any other law to the contrary, to be entitled to receive the allocations of state and local sales and use taxes as provided in this chapter, a municipality or public authority must first file with the department of finance and administration an application seeking certification of the tourism development zone and the planned public use facility as a qualified public use facility. The application shall include a master development plan for the proposed tourism development zone, containing such information as may be reasonably required by the department, and a minority-owned business participation plan for the tourism development zone. No application shall be approved by the department that fails to include a master development plan or a minority-owned business participation plan. A master development plan shall be approved by the legislative body of the municipality creating the tourism development zone and the plan shall take into consideration any historic site, structure, or object listed on the national register of historic places. The department shall review the application to confirm that:
      1. The planned public use facility is qualified under the requirements of this chapter;
      2. The planned public use facility will be located within a qualified tourism development zone; and
      3. The minority-owned business participation plan includes the following information:
        1. The proposal for purchasing goods and services from minority-owned businesses;
        2. Information on programs to provide technical assistance to such businesses;
        3. A statement of intent to make a concerted effort to follow its minority-owned business participation plan; and
        4. Any other information deemed relevant in the discretion of the commissioner.
    2. Notwithstanding any provision of this chapter to the contrary, the department of finance and administration shall annually review each municipality or public authority receiving an allocation pursuant to this chapter for compliance with the municipality's or public authority's minority-owned business participation plan.
    3. This subsection (d) shall only apply to any county having a population in excess of eight hundred thousand (800,000), according to the 2000 federal census or any subsequent federal census.

Acts 2007, ch. 524, § 6; 2007, ch. 593, §§ 6, 7; 2013, ch. 236, § 66.

Compiler's Notes. For table of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-88-117. Fee on sales of services and tangible personal property within central business improvement district within tourism development zone.

    1. Notwithstanding any law to the contrary, any metropolitan government which has created a tourism development zone pursuant to this chapter and which tourism development zone completely includes one (1) or more central business improvement districts, may, by resolution of its governing body, impose an additional fee on the sales price of services and tangible personal property sold at retail within one (1) central business improvement district located within the tourism development zone; provided, that there shall be exempt from the fee imposed by this chapter any sales of the following:
      1. Professional services;
      2. Lodging provided to transients;
      3. Tickets to sporting events or other live ticketed events;
      4. Alcoholic beverages which are subject to the liquor by the drink tax in addition to sales tax;
      5. Newspapers and other publications; and
      6. Overnight and long term parking.
    2. The fee authorized by this section shall not exceed the rate of twenty-five hundredths percent (0.25%).
    1. The metropolitan government shall furnish a certified copy of the adopting resolution to the department of revenue in accordance with regulations prescribed by the department. Such resolution shall clearly designate the one (1) central business improvement district within which the additional fee applies and shall include a description of the boundaries of such district.
    2. The department of revenue shall collect such fee concurrently with the collection of the state sales tax in the same manner as the state sales tax is collected.
    3. Except as provided in subdivision (b)(4), the proceeds of the fee provided for in this section shall be distributed to the metropolitan government from which the fee was collected to be deposited into the event and marketing fund of such government. The funds derived from the collection of this fee shall be used to assist in the recruitment of major conventions and group meetings, the improvement of promotion, and to provide additional focused security in the central business improvement districts located within a tourism development zone. The funds derived from the collection of this fee shall not be used to assist in the recruitment of, directly or indirectly, conventions or group meetings which are considering, or would otherwise consider absent the use of this fee, other meeting and convention venues located in a county in which such fee is imposed.
      1. For fiscal year 2013-2014, the first one hundred sixty-five thousand dollars ($165,000) of the fee collected shall be deposited into the state general fund prior to any distribution to metropolitan government.
      2. For fiscal year 2014-2015 and subsequent fiscal years, the first fifty thousand dollars ($50,000) of the fee collected shall be deposited into the state general fund prior to any distribution to metropolitan government.

Acts 2013, ch. 347, § 1.

Chapter 89
Convention Center Authorities Act of 2009

7-89-101. Short title.

This chapter shall be known and may be cited as the “Convention Center Authorities Act of 2009.”

Acts 2009, ch. 474, § 1.

7-89-102. Legislative findings — Purpose — Liberal construction.

  1. It is found and determined that:
    1. There is an immediate need to promote and further develop tourism, convention and employment opportunities in this state, by facilitating the acquisition, construction and rehabilitation of convention center facilities along with associated hotel accommodations; transportation infrastructure; tourism, theatre, retail business and commercial office space facilities; parking facilities; parks; greenways; open space and any and all facilities related to any of these;
    2. The development of such facilities will provide a means to attract conventions, public assemblies, conferences, trade exhibitions or other business, social, cultural, scientific and public interest events to the state, enhance the state's image as a convention destination, and encourage and foster economic development and prosperity and employment within the state;
    3. An authority is needed in individual communities to prepare comprehensive, long-range master plans for the orderly development of convention center facilities and to promote related activities; and
    4. In many instances, effective cooperation between various units of government has been hampered because of inadequate statutory authority.
  2. It is the purpose of this chapter to address these findings by providing for the establishment of convention center authorities to plan, promote, finance, construct, acquire, renovate, equip and enlarge convention center facilities along with associated hotel accommodations; transportation infrastructure; tourist, theatre and retail business facilities; commercial offices; parking lots or garages and any and all facilities related to any of these. The primary purpose of any and all such facilities shall be the conduct and service of conventions, public assemblies, conferences, trade exhibitions or other business, social, cultural, scientific and public interest events and related activities, but use of these facilities need not be limited to those events.
  3. This chapter shall be liberally construed in conformity with its purpose.

Acts 2009, ch. 474, § 1.

7-89-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” or “convention center authority” means any public corporation organized pursuant to this chapter;
  2. “Board” or “board of directors” means the governing body of the authority;
  3. “Bonds” or “revenue bonds” means bonds, notes, interim certificates or other obligations of an authority issued pursuant to this chapter, or pursuant to any other law, as supplemented by, or in conjunction with, this chapter;
  4. “Contracting party” or “other contracting party” means any party, including a municipality, to a sale contract, lease agreement or loan agreement, other than the authority;
  5. “Cost”, as applied to any project, means and includes the cost of acquisition, construction, extension, enlargement or improvement; the cost of labor, materials and equipment; the cost of all lands, property rights, easements and franchises required; financing charges, interest and debt service prior to and during construction and up to twenty-four (24) months thereafter; costs of plans and specifications, services and estimates of costs and of revenues; costs of engineering, architectural and legal services; all expenses necessary or incident to determining the feasibility or practicability of such acquisitions or constructions and any and all other expenses as may be necessary or incident to the acquisition, construction, improvement or financing authorized in this chapter;
  6. “Governing body” means the body in which the general legislative powers of a municipality are vested;
  7. “Joint venture” means a partnership or any other type of business relationship or organization, such as a corporation, trust, partnership, public-private partnership, limited liability company, association, government or governmental subdivision, agency or instrumentality that is sponsored, owned, operated, or governed by two (2) or more entities;
  8. “Loan agreement” means an agreement providing for an authority to loan the proceeds derived from the issuance of revenue bonds pursuant to this chapter to one (1) or more contracting parties to be used to pay the cost of one (1) or more projects and providing for the repayment of the loan by the other contracting party or parties;
  9. “Municipality” means any county, metropolitan government or incorporated city or town in this state with respect to which an authority may be organized;
  10. “Project” means any land, improvement, structure, building or part of a building comprised of facilities for conventions, public assemblies, conferences, trade exhibitions or other business, social, cultural, scientific and public interest events, along with any associated hotel accommodations; transportation infrastructure; tourism, theatre, retail business and commercial office space facilities; parking facilities or any other structure or facility constructed, leased, equipped, renovated or acquired for any of the purposes set forth in this chapter, and also includes, but is not limited to, parks, greenways, open spaces, roads, streets, highways, curbs, bridges, flood control facilities and utility services, such as water, sanitary sewer, electricity, gas and natural gas and telecommunications that are constructed, leased, equipped, renovated or acquired as a supporting system or facility for any of the purposes set forth in this chapter; provided, that any such supporting system or facility is dedicated for public use;
  11. “Revenues” of a project means all revenues derived from and on account of a project, directly or indirectly, including payments under a lease or sale contract and repayments under a loan agreement, or under notes, debentures, bonds and other secured or unsecured debt obligations of a lessee or contracting party delivered as provided in this chapter, and any moneys paid, contributed or pledged to an authority by the state or a municipality pursuant to law, agreement or otherwise;
  12. “Sale contract” means a contract providing for the sale of one (1) or more projects to one (1) or more contracting parties and includes a contract providing for payment of the purchase price in one (1) or more installments; and
  13. “State” means the state of Tennessee and, unless otherwise indicated by the context, any agency, authority, branch, bureau, commission, corporation, department or instrumentality of the state, now or hereafter existing.

Acts 2009, ch. 474, § 1.

7-89-104. Adoption of resolution to form authority.

If the governing body of a municipality, by appropriate resolution duly adopted, finds and determines that it is wise, expedient, necessary or advisable that a convention center authority of the municipality be formed, authorizes the chief executive officer of the municipality to form the authority and approves the form of corporate charter proposed to be used in organizing the authority, then the chief executive officer of the municipality shall execute, acknowledge and file a charter for the authority as provided in § 7-89-106. No authority may be formed unless the governing body of a municipality has adopted a resolution as provided in this section.

Acts 2009, ch. 474, § 1.

7-89-105. Charter contents.

  1. The charter shall set forth:
    1. The name of the authority, which shall be the convention center authority of the city, county or metropolitan government of  , where the blank is to be filled in with the name of the municipality, if the name is available for use by the authority, and if not available, then the chief executive officer of the municipality shall designate some other similar name that is available;
    2. A recital that permission to organize the authority has been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of the resolution;
    3. The location of the principal office of the authority;
    4. The purposes for which the authority is proposed to be organized;
    5. The number of directors of the authority;
    6. The period, which may be perpetual, for the duration of the authority;
    7. A provision addressing conflicts of interest of members of the board of directors of the convention center authority; and
    8. Any other matter that the chief executive officer of the municipality may choose to insert in the charter that is not inconsistent with this chapter or with the laws of the state.
  2. The charter shall be subscribed and acknowledged by the chief executive officer of the municipality.

Acts 2009, ch. 474, § 1.

7-89-106. Filing of charter.

When executed and acknowledged in conformity with § 7-89-105, the charter shall be filed with the secretary of state. The secretary of state shall examine the charter and, if the secretary of state finds that the recitals contained in the charter are correct, that the requirements of § 7-89-104 have been complied with and that the name is not identical with or so nearly similar to that of another authority already in existence in this state as to lead to confusion and uncertainty, the secretary of state shall approve the charter and accept it for filing. When the charter has been so made, filed and approved, the authority shall constitute a public corporation under the name set out in the charter.

Acts 2009, ch. 474, § 1.

7-89-107. Amendment of charter.

The charter may, at any time and from time to time, be amended in a manner not inconsistent with § 7-89-105. Any such amendment shall be adopted in the following manner:

  1. The board of directors of the authority shall file with the governing body of the municipality an application in writing seeking permission to amend the charter, setting forth the proposed amendment to be made;
  2. If the governing body, by appropriate resolution, finds and determines that it is wise, expedient, necessary or advisable that the proposed amendment be made and authorizes the amendment to be made, approving the form of the proposed amendment, then the chair of the board of directors of the authority shall execute an instrument embodying the amendment, and shall file the amendment with the secretary of state;
  3. The secretary of state shall examine the proposed amendment and, if the secretary of state finds that the requirements of this section have been complied with, the secretary of state shall approve the amendment and accept it for filing in an appropriate book in the secretary of state's office; and
  4. When the amendment has been so made, filed and approved, it shall become effective.

Acts 2009, ch. 474, § 1.

7-89-108. Board of directors.

    1. The authority shall have a board of directors in which all corporate powers of the authority shall be vested. The board shall consist of no fewer than seven (7) directors, all of whom shall be duly qualified voters of the municipality. A director shall serve without compensation, except that the authority may reimburse a director for actual expenses incurred in the performance of a director's duties. A director may not be an elected official or employee of the municipality. The directors shall have staggered terms.
    2. The initial board of directors shall be divided into three (3) groups containing substantially equal numbers. The initial term of the directors included in the first group shall be two (2) years; the initial term of the directors included in the second group shall be three (3) years; and the initial term of the directors included in the third group shall be four (4) years. All subsequent terms of directors shall be four (4) years; provided, that if at the expiration of any term of office of any director a successor has not been appointed, the director whose term of office has expired shall continue to hold office until the director's successor is appointed.
    3. In the case of authorities created pursuant to the approval of two (2) or more municipalities acting jointly, as provided in § 7-89-120, the number of directors appointed by the governing body of each municipality shall be as nearly equal as practicable.
    4. The chief executive officer of the municipality shall appoint all directors, and the governing body of the municipality shall by resolution confirm the appointments of the chief executive officer. The chief executive officer of the municipality shall strive to ensure that the board is composed of directors who are diverse in professional background, educational background, ethnicity, race, gender, geographic residency, heritage, perspective and experience. The chief executive officer of the municipality shall strive to appoint at least one (1) director who is female and at least one (1) director who is a racial minority. When the chief executive officer makes the initial appointments, the chief executive officer shall designate which directors serve an initial term of two (2), three (3) and four (4) years, respectively.
    5. If a vacancy occurs in the position of director, the vacancy shall be filled in the same manner as the original term for the remainder of the unexpired term.
  1. The directors shall meet and organize as a board and shall elect one (1) of its members as chair, one (1) as vice chair, one (1) as secretary and one (1) as treasurer, and these offices shall annually be filled in like manner. The duties of secretary and treasurer may be performed by the same director. In the event of the resignation or death of the chair, vice chair, secretary or treasurer, another member may be elected to fill the vacancy for the anticipated term of the chair, vice chair, secretary or treasurer.
  2. Any meeting of the board of directors for any purpose whatsoever shall be open to the public. Any action taken by the directors under this chapter may be authorized by resolution at any regular or special meeting. A majority of the board shall constitute a quorum for the transaction of business. The concurring vote of a majority of the directors voting at a meeting at which a quorum is present shall be necessary for the exercise of any of the powers granted by this chapter.

Acts 2009, ch. 474, § 1.

7-89-109. Authority shall be public nonprofit corporation — Powers of authority.

Each convention center authority created pursuant to this chapter shall be a public nonprofit corporation and a public instrumentality of the municipality with respect to which the authority is organized. The authority shall have the following powers, together with all powers incidental to the following powers or necessary for the performance of those powers, to:

  1. Have succession by its corporate name for the period specified in the charter, unless sooner dissolved as provided in § 7-89-119;
  2. Sue and be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
  3. Have and use a corporate seal and alter the seal at pleasure;
  4. Acquire, whether by purchase, construction, exchange, gift, lease or otherwise, and design, plan, site, construct, improve, repair, extend, equip, furnish, operate and maintain one (1) or more projects, which projects shall be within at least one (1) of the municipalities with respect to which the authority has been created, including all real and personal properties that the board of directors of the authority may deem necessary in connection with the projects and regardless of whether or not any such projects shall then be in existence, and including the power to demolish such existing structures as may be on sites acquired when those structures are not needed for the project;
  5. Appoint officers, agents and employees, describe their qualifications and fix their compensation;
  6. Operate, maintain, manage and enter into contracts for the operation, maintenance and management of any project undertaken, and to make rules and regulations with regard to the operation, maintenance and management;
  7. Employ, contract with, fix the compensation of and discharge engineering, architectural, legal, financial and other professional experts, consultants, agents and employees as may be necessary to carry out the purposes of this chapter and to provide for the proper construction, operation and maintenance of any project;
  8. Lease, rent and contract for the operation of all or any part of any project and charge and collect rent for the project and terminate any such lease upon the failure of the lessee to comply with any of the obligations of the lease; and include in or exclude from any such lease provisions that the lessee shall have the option to renew the term of the lease for such period or periods and at such rent as shall be determined by the board of directors;
  9. Lease such space in a project as from time to time may not be needed for convention center related purposes to any other person, corporation, partnership or association for such purposes as the board of directors may determine are in the best interest of the authority or will help facilitate the purposes for which the authority was created, and upon such terms and in such manner as the board may determine;
  10. Fix and collect rates, rentals, fees and charges for the use of any and all of the projects of the authority and for the naming rights relating to any and all of the projects of the authority;
  11. Make contracts, including, without limitation, contracts with vendors, concessionaires, tenants or convention center facility users, or both, occupant managers and service providers;
  12. Advertise within or without the state any of the projects of the authority;
  13. Sell, exchange, donate and convey any or all of its properties, whenever the board of directors shall find the action to be in furtherance of the purposes for which the authority was organized; provided, however, that the authority may not sell, exchange, donate or convey all or substantially all of its properties without the prior approval, by resolution, of the governing body of the municipality;
  14. Procure and enter into contracts for any type of insurance, surety or performance bond, or indemnity against loss or damage to property from any cause, including, but not limited to, general errors and omissions, property loss and casualty, loss of use and occupancy, against death or injury of any person, against employer's liability, against any act of any member, officer or employee of the authority in the performance of the duties of such person's office or employment, or the authority itself, or any other insurable risk, as the board of directors, in its discretion, may deem necessary, and to exercise all rights, immunities and protections afforded by Tennessee law and the Governmental Tort Liability Act, compiled in title 29, chapter 20;
  15. Accept donations, contributions, revenues, capital grants or gifts of any kind from any individuals, associations, public or private corporations and municipalities, the state or the United States, or any agency or instrumentality of the state or the United States, for or in aid of any of the purposes of this chapter and enter into agreements in connection with the donations, contributions, revenues, capital grants or gifts;
  16. Enter into joint ventures with third parties for the purpose of owning a project or any portion of a project, on such terms and conditions as the board of directors of the authority may determine;
  17. Borrow money from time to time and, in evidence of any obligation incurred, issue and sell its revenue bonds in accordance with this chapter, in such form and upon such terms as its board of directors may determine and as approved by resolution of the governing body of the creating municipality, payable out of any revenues of the authority, including grants or contributions or other revenues specifically provided to the authority, for the purpose of financing the cost of any project, refund and refinance, from time to time, revenue bonds so issued and sold as often as may be deemed to be advantageous by the board of directors and, pending the issuance of its revenue bonds for the purposes in this chapter authorized, issue its interim certificates or notes or other temporary obligations;
  18. Enter into any agreement or contract with any lessee who, pursuant to the terms of this chapter, is renting or is about to rent from the authority all or part of any building or buildings or facilities, whereby, under such agreement or contract, the lessee obligates itself to pay all or part of the cost of maintaining and operating the premises so leased. The agreement may be included as a provision of any lease entered into pursuant to the terms of this chapter or may be made the subject of a separate agreement or contract between the authority and the lessee;
  19. Mortgage and pledge as security for the payment of the principal of and interest on any revenue bonds so issued and any agreements made in connection with the bonds, any or all of the projects or any part or parts of the projects, whether then owned or thereafter acquired;
  20. Exercise all powers expressly given in its charter and establish bylaws and make all rules and regulations not inconsistent with the charter or this chapter deemed expedient for the management of the affairs of the authority;
  21. Acquire, whether by purchase, construction, exchange, gift, lease or otherwise, and improve, repair, extend, equip, furnish, operate and maintain any roads, streets, highways, curbs, bridges, flood control facilities, utility services such as water, sanitary sewer, electricity, gas and natural gas and telecommunications that the board of directors of the convention center authority deems to be necessary, expedient or advisable in connection with the development or operation of any project; dedicate any such highways, roads or services to the public use; enter into any contract to facilitate these purposes and make any payments required under the contracts; borrow funds for the purpose of making any payment authorized by this subdivision (21) and pledge and otherwise use the revenues of the authority to repay the borrowed funds;
  22. Establish, secure, own, develop and hold patents, copyrights, trademarks and service marks and enforce its rights with respect to the copyrights and marks; and
  23. Do all things necessary or convenient to carry out the powers expressly given in this chapter.

Acts 2009, ch. 474, § 1.

Attorney General Opinions. A convention center owned by a nonprofit organization that is created by a government entity is considered a “government-owned convention center” within the meaning of T.C.A. § 67-4-1425(c)(2).  OAG 14-04, 2014 Tenn. AG LEXIS 3 (1/9/14).

7-89-110. Annual audit and report.

  1. The board of directors of each authority shall cause an annual audit to be made of the books and records of its authority. The comptroller of the treasury, through the department of audit, shall be responsible for determining that the audits are prepared in accordance with generally accepted governmental auditing standards and that the audits meet the minimum standards prescribed by the comptroller of the treasury.
  2. The audits shall be prepared by certified public accountants or by the department of audit. In the event the governing body of the authority fails or refuses to have the audit prepared, then the comptroller of the treasury may appoint a certified public accountant, or direct the department of audit, to prepare the audit, the cost of the audit to be paid by the authority.
  3. Each authority shall prepare an annual report of its business affairs and transactions. A copy of the report and a copy of the annual audit referenced in subsection (a) shall be filed annually with the governing body of the municipality granting permission to the authority to organize.

Acts 2009, ch. 474, § 1.

7-89-111. Municipal support of projects — Assignment or loan of employees and provision of facilities to authority — Acceptance of donations— Reversion of property to donor.

  1. For the purpose of aiding and cooperating with an authority, the municipality authorizing the authority may assign or loan any of its employees, including its engineering staff, and facilities, or those of its agencies and instrumentalities; may provide necessary office space, equipment, and other facilities for the use of the authority and may provide or cause its agencies and instrumentalities to provide such services, all as the governing body of the municipality shall approve by resolution.
  2. The governing body of the municipality may enter into a lease of any project or part of a project, and may make donations of property, real or personal, or cash grants to the authority, in such amount or amounts as it may deem proper and appropriate in aiding the authority to accomplish its purpose, all as the governing body of the municipality shall approve by resolution.
  3. Any municipality authorizing an authority that enters into a lease with an authority may convey real property or personal property to the authority and may include a provision in the conveyance for the reversion of the property to the transferor at such time as all revenue bonds or other obligations of the authority incident to the real property so conveyed have been paid in full, all as the governing body of the municipality shall approve by resolution, and any authority created pursuant to this chapter is authorized to accept such a conveyance.

Acts 2009, ch. 474, § 1.

7-89-112. Authority to issue bonds — Application of proceeds of bonds — Refunding and refinancing outstanding bonds — Payment of real property ad valorem taxes into special fund.

  1. The authority shall have power and is authorized to issue its bonds in order to finance:
    1. The costs of any project;
    2. The payment of the costs of issuance of the bonds, including underwriter's discounts, financial advisory fees, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement and legal, accounting, fiscal and other similar expenses;
    3. Reimbursement of the authority or the municipality for moneys previously spent by the authority or municipality for any of the purposes set forth in this chapter;
    4. The establishment of reasonable reserves for the payment of debt service on the bonds, for repair and replacement of any project or for such other purposes as the board deems necessary and proper in connection with the issuance of any bonds and operation of any project for the benefit of which the financing is being undertaken; and
    5. The contribution of the authority's share of the funding for any joint venture or joint undertaking for the purposes set forth in this chapter.
    1. The authority shall have the power and is authorized to issue its bonds to refund and refinance outstanding bonds of the authority heretofore or hereafter issued or lawfully assumed by the authority. The proceeds of the sale of the bonds may be applied to:
      1. The payment of the principal amount of the bonds being refunded and refinanced;
      2. The payment of the redemption or tender premium thereon, if any;
      3. The payment of unpaid interest on the bonds being refunded, including interest in arrears, for the payment of which sufficient funds are not available, to the date of delivery or exchange of the refunding bonds;
      4. The payment of fees or other charges incident to the termination of any interest rate hedging agreements, liquidity or credit facilities or other agreements related to the bonds being refunded and refinanced;
      5. The payment of interest on the bonds being refunded and refinanced from the date of delivery of the refunding bonds to maturity or to, and including, the first or any subsequent available redemption date or dates on which the bonds being refunded may be called for redemption;
      6. The payment of the costs of issuance of the refunding bonds, including underwriter's discounts, financial advisory fees, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement and legal, accounting, fiscal and other similar expenses, and the costs of refunding the outstanding bonds, including the costs of establishing an escrow for the retirement of the outstanding bonds, trustee and escrow agent fees in connection with any escrow and accounting, legal and other professional fees in connection therewith; and
      7. The establishment of reserves for the purposes set forth in subdivision (a)(4).
    2. Refunding bonds may be issued to refinance and refund more than one (1) issue of outstanding bonds, notwithstanding that the outstanding bonds may have been issued at different times. Refunding bonds may be issued jointly with other refunding bonds or other bonds of the authority. The principal proceeds from the sale of refunding bonds may be applied either to the immediate payment and retirement of the bonds being refunded or, to the extent not required for the immediate payment of the bonds being refunded, to the deposit in escrow with a bank or trust company to provide for the payment and retirement at a later date of the bonds being refunded.
  2. No bonds shall be issued under this chapter unless authorized to be issued by resolution of the board of directors of the authority and approved by resolution of the governing body of the municipality. Bonds authorized to be issued under this chapter may be issued in one (1) or more series, may bear such date or dates, mature at such time or times, not exceeding forty (40) years from their respective dates, bear interest at such rate or rates, payable at such time or times, be in such denominations, be in such form, either coupon or registered, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium, as the resolution or resolutions may provide. Bonds may be issued for money or property at competitive or negotiated sale for such price or prices as the board of directors, or its designee, shall determine. The authority may enter into such agreements in connection with the issuance of any bonds as its board of directors may approve, including, without limitation, agreements related to municipal bond insurance, credit or liquidity facility agreements, remarketing agreements and bond purchase agreements.
  3. Bonds may be repurchased by the authority out of any available funds at such price as the board of directors shall determine, and all bonds so repurchased shall be cancelled or held as an investment of the authority as the board may determine.
  4. Pending the preparation or execution of definitive bonds, interim receipts or certificates or temporary bonds may be delivered to the purchasers of bonds.
    1. With respect to all or any portion of any issue of bonds issued under this chapter, at any time during the term of the bonds, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this subdivision (f)(1) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in § 9-21-130, the authority, by resolution of the board of directors, may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings, or both, and other interest rate hedging agreements under such terms and conditions as the board of directors may determine, including, without limitation, provisions permitting the authority to pay to, or receive from, any person or entity any loss of benefits under such agreement upon early termination of the agreement or default under the agreement.
    2. The authority may enter into an agreement to sell bonds, other than its refunding bonds, under this chapter providing for delivery of its bonds on a date greater than ninety (90) days and not greater than five (5) years,or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of the agreement or to sell its refunding bonds providing for delivery of its bonds on a date greater than ninety (90) days from the date of execution of the agreement and not greater than the first optional redemption date on which the bonds being refunded can be optionally redeemed resulting in cost savings or at par, whichever is earlier, only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the agreement or contract of the authority to sell its bonds as authorized in this subdivision (f)(2) is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with § 9-21-130. Agreements to sell bonds and refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement do not require a report of the comptroller of the treasury or the comptroller's designee.
    3. Prior to the adoption by the board of a resolution authorizing a contract or agreement described in subdivision (f)(1) or (f)(2), a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that the contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report on the compliance to the authority. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the authority may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement is not in compliance with the guidelines, rules or regulations, then the authority is not authorized to enter into the contract or agreement. The guidelines, rules or regulations shall provide for an appeal process upon a determination of noncompliance.
    4. When entering into any contracts or agreements facilitating the issuance and sale of bonds, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating thereto, interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, other interest rate hedging agreements and agreements with the purchaser of the bonds, evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the authority may agree in the written contract or agreement that the rights and remedies of the parties thereto shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over the authority shall lie solely in the courts of the county in which the municipality forming the authority is located.
    5. The governing body of the municipality shall authorize by resolution the authority to enter into any contract or agreement described in subdivision (f)(1) or (f)(2) prior to the authority entering into any contract or agreement.
    1. All bonds issued by the authority, as well as any other agreements authorized by this section, may be payable out of the revenues and receipts derived from any projects, or of any portion of projects owned, operated or leased to or from the authority, as may be designated by the board of directors of the authority, or from any revenues to be derived directly or indirectly by the authority from the projects, including revenues from concessions, endorsements, ticket sales and souvenir sales or from any revenues derived directly or indirectly by the authority from the allocation, transfer, contribution or pledge of tax revenues or moneys of any nature by the state or a municipality having taxing power or any other revenues or collections of the state or a municipality.
    2. The principal of and interest on any bonds issued by the authority, as well as any other agreements authorized by this section, may be secured, as may be designated by the board of directors of the authority, by a pledge of all or any portion of the revenues and receipts of the authority described in subdivision (g)(1) or by a pledge of the authority's rights under agreements, leases and other contracts or by a mortgage or deed of trust covering all or any part of the projects from which the revenues or receipts so pledged may be derived. The proceedings under which the bonds or any such agreements are authorized and any such pledge agreement or mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered by the bonds, the fixing and collection of rents for any portions of projects leased by the authority to others, the creation and maintenance of special funds from such revenues and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this chapter. Each pledge, agreement or mortgage or deed of trust made for the benefit or security of any of the bonds or agreements of the authority shall continue to be effective until the payments thereon for the benefit of which the pledge, agreement or mortgage or deed of trust were made shall have been fully paid. In the event of default in such payment or in any agreement of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage or deed of trust executed as security for the bonds, the payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity or by foreclosure of any such mortgage or deed of trust, or any one (1) or more of such remedies.
  5. The authority may issue interim certificates, bond anticipation notes or other temporary obligations pending the issuance of its revenue bonds, which such temporary obligations shall be payable out of revenues and receipts of the authority in like manner as the revenue bonds and shall be retired from the proceeds of the bonds upon the issuance of the revenue bonds, and shall be in such form and contain such terms, conditions and provisions consistent with this chapter as the board of directors may determine.
  6. Bonds and notes of the authority shall be executed in the name of the authority by the officers of the authority and in the manner that the board of directors may direct. If so provided in the proceedings authorizing the bonds, the facsimile signature of any of the officers executing the bonds may appear on the bonds in lieu of the manual signature of the officer.
  7. Any bonds and notes of the authority may be sold at public or private sale, for such price and in such manner and from time to time as may be determined by the board of directors of the authority to be most advantageous, and the authority may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds.
    1. Notwithstanding this section or any other law to the contrary, a convention center authority and the municipality in which it is located may enter into an agreement under which all or any portion of the real property ad valorem taxes paid by the owner of convention center facilities, if other than the municipality or the authority, shall be paid into a special fund of the municipality, subject to the conditions set forth in this subdivision (k)(1). The municipality is authorized to use the moneys in the fund in order to make any payments due to the convention center authority from the municipality under a contractual obligation. This fund may only be utilized where the funds paid from the special fund to the convention center authority shall be principally used by the convention center authority to make payments on revenue bonds issued by the convention center authority, where the net proceeds of the bonds were used by the convention center authority to acquire, construct or equip systems, improvements or facilities that are public improvements dedicated for public use, and the improvements were made by the convention center authority in order to assist in the development and construction of the convention center facility, and the convention center authority is authorized to pledge any moneys paid to it from the fund as collateral for the revenue bonds, notwithstanding any contrary provisions of this section. The agreement between the convention center authority and the municipality shall not be effective unless approved by the comptroller of the treasury and authorized by appropriate resolution of the governing body of the municipality.
    2. Notwithstanding subdivision (k)(1), if the convention center authority is not the owner of the convention center facility, then prior to the issuance of any bonds for a project as defined in § 7-89-103 related to the convention center facility, the convention center authority, in addition to the pledge of revenues from the project as the source of payment for the bonds, may provide further security for the payment of the bonds, such as bond insurance, a surety bond, a letter of credit, a third party guarantee, the contractual obligation of the owner or operator of the convention center facility as to its ownership and operation during the term of the bonds or other similar security, all of which must be submitted to the comptroller of the treasury for approval.
  8. An authority or instrumentality of the state that has or will issue debt, the interest of which is excluded from income for federal taxation purposes, shall certify to the comptroller of the treasury that the authority or the instrumentality has taken due care to confirm that the bonds, project and the contracts are in compliance with federal regulations and revenue procedures.
  9. In applying § 47-14-103, and related provisions of title 47, chapter 14, to bonds issued by an authority pursuant to this section, the effective rate of interest on any such bond with respect to which the authority has made elections under § 54AA(d)(1)(C) of the Internal Revenue Code of 1986 (26 U.S.C. § 54AA(d)(1)(C)), to have § 54AA apply to such bond, and § 54AA(g)(2)(B) of the Internal Revenue Code of 1986 (26 U.S.C. § 54AA(g)(2)(B)), to have § 54AA(g) apply to such bond, shall be determined by reducing the interest payable by the authority with respect to such bond by the amount of payments from the treasury department of the United States of America that the authority expected, at the time of the issuance of such bond, to receive with respect to such bond under § 6431(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 6431), as a result of the foregoing elections. This subsection (m) shall apply to any bonds issued by the authority on or before June 30, 2012.

Acts 2009, ch. 474, § 1; 2010, ch. 723, § 1.

Compiler's Notes. For the preamble to the act amending title 7, chapter 89 to allow convention center authorities to take advantage of the interest cost savings provided by Build America Bonds (BAB), please refer to Acts 2010, ch. 723.

7-89-113. Exemption from taxation — Bonds deemed to be securities issued by public instrumentality or political subdivision of state.

The authority is declared to be performing a public function on behalf of the municipality with respect to which it is organized and to be a public instrumentality of the municipality. Accordingly, the authority and all properties at any time owned by it and the income from the properties and all bonds issued by the authority and the income from the bonds, shall be exempt from all taxation in the state. Also, for purposes of the Tennessee Securities Act of 1980, compiled in title 48, chapter 1, part 1, bonds issued by the authority shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state.

Acts 2009, ch. 474, § 1.

7-89-114. Credit of municipality not pledged.

Except to the extent of any revenues that may be specifically allocated, transferred, contributed or pledged by a municipality in accordance with this chapter and laws, rules and regulations applicable to this chapter, no municipality shall in any event be liable for the payment of the principal of or interest on any bonds of the authority or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the authority, and none of the bonds of the authority or any of its agreements or obligations shall be construed to constitute an indebtedness of the municipality within the meaning of any constitutional or statutory provision whatsoever.

Acts 2009, ch. 474, § 1.

7-89-115. Powers of municipalities to aid or assist authorities.

  1. Any municipality is authorized to aid or otherwise provide assistance to an authority created pursuant to this chapter by the municipality, including entering into leases or lease-purchase agreements of projects, or parts of projects with an authority, for such term or terms and upon such conditions as may be determined by resolution of the governing body of the municipality, or granting, contributing or pledging revenues of the municipality to or for the benefit of the authority derived from any source, notwithstanding and without regard to the restrictions, prohibitions or requirements of any other law, whether public or private.
  2. Notwithstanding any provision of this chapter to the contrary, revenues of the municipality derived from ad valorem property taxes shall not be granted, contributed or pledged by the municipality in payment of or as collateral for any bonds of the authority.
  3. The governing body of any municipality, by resolution, may designate the authority to be the recipient of funds of the state or the municipality, which funds are allocated or directed for use in connection with the construction, improvement, financing or operation of convention center facilities. The municipality may take such actions as may be necessary to cause any such funds to be paid to the authority, and the municipality and the authority may enter into any and all agreements as may be necessary to provide for the payment of the authority's bonds out of such funds, as described in § 7-89-112(g). Without limiting this subsection (c), the governing body of any municipality may, by resolution, designate an authority as a public authority for purposes of chapter 88 of this title, and any project undertaken pursuant to this chapter shall, for purposes of chapter 88 of this title, be deemed to be a project meeting the requirements of the Local Government Public Obligations Act of 1986, compiled in, title 9, chapter 21.
  4. The governing body of any municipality, by resolution, may cause any departments, instrumentalities or organizations formed by the municipality to be joined with and into the authority, and may take such steps as may be necessary to cause the assets, liabilities and operations of any such organizations to be transferred to the authority.

Acts 2009, ch. 474, § 1.

7-89-116. Execution of leases, contracts, deeds.

Except as otherwise provided in this chapter, all leases, contracts, deeds of conveyance or instruments in writing executed by the authority shall be executed in the name of the authority by the chair or secretary of the authority, or by such other officers as the board of directors, by resolution, may direct, and the seal of the authority may be affixed to the instruments.

Acts 2009, ch. 474, § 1.

7-89-117. Wage rates and benefits for workers — Solicitation of bids from minority-owned businesses.

In the case of an authority created by a municipality subject to title 7, chapter 4, part 2, the authority shall, if otherwise applicable, be subject to §§ 7-4-205 and 7-4-206 in addition to the metropolitan government; provided, that, notwithstanding any contrary provision of §§ 7-4-205 and 7-4-206, the governing body of the municipality may, by resolution, designate the authority and its board of directors to be responsible for satisfaction of the requirements of the municipality and its governing body under §§ 7-4-205 and 7-4-206.

Acts 2009, ch. 474, § 1.

7-89-118. Disposition of earnings.

The authority shall be a public nonprofit corporation, and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that, in the event the board of directors determines that sufficient provision has been made for the full payment of the expenses, bonds and other obligations of the authority, including reserves for the expenses, bonds and other obligations, any net earnings of the authority thereafter accruing may be used to provide a reserve for depreciation of any project or projects undertaken by the authority, in an amount determined by the board of directors to be necessary and reasonable, and net earnings available thereafter shall be paid to the municipality with respect to which the authority was organized; provided, that nothing contained in this section shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease entered into by the authority.

Acts 2009, ch. 474, § 1.

7-89-119. Dissolution — Disposition of property.

Whenever the board of directors of an authority or the governing body of the creating municipality by resolution determines that the purposes for which the authority was formed have been substantially accomplished and all bonds theretofore issued and all obligations theretofore incurred by the authority have been fully paid, the members of the board of directors or the executive officers of the municipality, as the case may be, shall thereupon execute and file for record in the office of the secretary of state a certificate of dissolution, reciting such facts and declaring the authority to be dissolved. The certificate of dissolution shall be executed under the seal of the authority. Upon the filing of the certificate of dissolution, the authority shall stand dissolved, the title to all funds and properties owned by it at the time of the dissolution shall vest in the municipality with respect to which the authority was organized, and possession of such funds and properties shall forthwith be delivered to the municipality.

Acts 2009, ch. 474, § 1.

7-89-120. Joint operation of authorities.

  1. The powers conferred upon authorities created under this chapter may be exercised by two (2) or more such authorities acting jointly.
  2. Two (2) or more municipalities by resolution may, by acting jointly, incorporate a convention center authority to effectuate the purposes of this chapter. When two (2) or more municipalities incorporate such an authority, each and every requisite pertaining to the application for incorporation, charter and amendment of charter shall, as nearly as may be practicable, be incumbent in like manner upon each municipality joining in the creation of the authority.

Acts 2009, ch. 474, § 1.

7-89-121. Acquisition and transfer of project sites.

Any municipality may acquire a project site by gift, purchase or lease, or exercise of the power of eminent domain, and may transfer any project site to an authority by sale, lease or gift. The transfer may be authorized by a resolution of the governing body of the municipality without submission of the question to the voters, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 2009, ch. 474, § 1.

7-89-122. Investment of funds.

Funds of the authority are authorized to be invested in the following:

  1. Direct obligations of the United States government or any of its agencies;
  2. Obligations guaranteed as to principal and interest by the United States government or any of its agencies;
  3. Certificates of deposit and other evidences of deposit at state and federally chartered banks, savings and loan institutions or savings banks deposited and collateralized as described in § 7-39-313(a);
  4. Repurchase agreements entered into with the United States or its agencies or with any bank, broker-dealer or other such entity, so long as the obligation of the obligated party is secured by a perfected pledge of full faith and credit obligations of the United States or its agencies;
  5. Guaranteed investment contracts or similar agreements providing for a specified rate of return over a specified time period with entities rated in one (1) of the two (2) highest rating categories of a nationally recognized rating agency;
  6. The local government investment pool created by title 9, chapter 4, part 7;
  7. Direct general obligations of a state of the United States, or a political subdivision or instrumentality of a state, having general taxing powers and rated in either of the two (2) highest rating categories by a nationally recognized rating agency of such obligations; or
  8. Obligations of any state of the United States or a political subdivision or instrumentality of any state, secured solely by revenues received by or on behalf of the state or political subdivision or instrumentality of the state irrevocably pledged to the payment of the principal of and interest on the obligations, rated in the two (2) highest rating categories by a nationally recognized rating agency of those obligations.

Acts 2009, ch. 474, § 1.

7-89-123. Certain purchases for which competitive bidding not required — Use of competitive sealed proposals.

  1. An authority in the operation, maintenance, and routine repairs of a project may purchase goods, supplies and services that are generally sold to the public by advertised price without the necessity of competitive bidding; provided, that no such purchase shall exceed ten thousand dollars ($10,000). The board of directors of the authority shall adopt a policy governing all purchases in the operation, maintenance and routine repairs of a project in excess of ten thousand dollars ($10,000). In lieu of adopting its own policy for such purchases in excess of ten thousand dollars ($10,000), the authority may adopt, follow or participate in the purchasing procedures of the municipality.
  2. A qualified management contract or other agreement for the operations of an authority facility in excess of ten thousand dollars ($10,000) annually shall be selected through the use of competitive sealed proposals independent of any other procurement.

Acts 2009, ch. 474, § 1.

7-89-124. Powers not restricted — Law complete in itself.

This chapter shall not be construed as a restriction or limitation upon any powers that an authority, as a public corporation, might otherwise have under any laws of this state, but shall be construed as cumulative of any such powers. No proceedings, notice or approval shall be required for the organization of the authority or the issuance of any bonds or any instrument as security for the bonds, except as provided in this chapter, any other law to the contrary notwithstanding; provided, that nothing in this chapter shall be construed to deprive the state and its governmental subdivisions of their respective police powers over properties of the authority, or to impair any power over properties of the authority of any official or agency of the state and its governmental subdivisions that may be otherwise provided by law. Projects may be acquired, purchased, constructed, reconstructed, improved, bettered and extended, and bonds may be issued under this chapter for such purposes, notwithstanding that any other general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like project, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 2009, ch. 474, § 1.

Chapter 90
Medical School Authorities Act of 2010

7-90-101. Short title.

This chapter shall be known and may be cited as the “Medical School Authorities Act of 2010.”

Acts 2010, ch. 1078, § 1.

7-90-102. Legislative findings — Purpose — Construction.

  1. It is hereby found and determined that:
    1. There is and is expected to be in the future a shortage of physicians and nurses, particularly primary care physicians in the state, and the existing schools in the state are not presently able to graduate sufficient numbers to avoid this shortage;
    2. The creation of additional medical education facilities in the state will help mitigate the existing and expected shortage of physicians and nurses in this state;
    3. The existence of a medical education facility within or adjacent to a municipality helps promote the quality of health care in that municipality and is a significant contributor to the economic growth of such municipalities;
    4. It is in the best interests of the state to permit municipalities, as defined herein, to facilitate the creation of medical education schools within their jurisdiction or within jurisdictions adjacent to their jurisdiction; and
    5. It is in the best interests of the state to permit the creation of medical school authorities, created by one (1) or more municipalities, to provide facilities to promote the creation and development of medical education facilities within their jurisdiction.
  2. It is the purpose of this chapter to address these findings by providing for the establishment of authorities to plan, finance, construct, acquire, renovate, equip and enlarge educational and research facilities to be used for education of physicians, dentists, nurses and allied health professional.
  3. This chapter shall be liberally construed in conformity with its purpose.

Acts 2010, ch. 1078, § 1.

7-90-103. Chapter definitions.

As used in this chapter, unless the context otherwise requires:

  1. “Authority” or “medical school authority” means any public corporation organized pursuant to this chapter;
  2. “Bio-medical research facility” means a facility that engages in the study of biological processes and diseases with the ultimate goal of developing effective treatments and cures;
  3. “Bonds” or “revenue bonds” means bonds, notes, interim certificates or other obligations of an authority issued pursuant to this chapter, or pursuant to any other law, as supplemented by, or in conjunction with, this chapter;
  4. “Cost,” as applied to any project, means and includes the cost of acquisition or construction, the cost of labor, materials, and equipment, the cost of all lands, property rights, easements and franchises required; financing charges, interest and debt service prior to and during construction and up to one (1) year thereafter; costs of plans and specifications, services and estimates of costs and of revenues; costs of engineering and legal services; all expenses necessary or incident to determining the feasibility or practicability of such acquisitions or constructions; and administrative, legal and engineering expenses and such other expenses as may be necessary or incident to the acquisition or construction or the financing authorized in this chapter;
  5. “Dental school” means an educational facility created and operated as part of a program that grants the degree of doctor of dental surgery or doctor of dental medicine to the graduates of such educational facility;
  6. “Governing body” means the body in which the general legislative powers of a municipality are vested, and in the case of counties means the legislative body of any county;
  7. “Graduate medical education” means the period of didactic and clinical education in a medical specialty or subspecialty which follows the completion of a recognized undergraduate medical education and which prepares physicians for the independent practice of medicine in that specialty or subspecialty, also referred to as residency education;
  8. “Lessee” means a private nonprofit or public educational institution, which provides a medical education program;
  9. “Medical education program” means a program of study that is a biomedical research program, dental program, nursing program, medical program, including graduate medical education, or allied health program;
  10. “Medical school” means an educational facility created and operated as part of a program that grants the degree of doctor of medicine to the graduates of such educational facility or provides graduate medical education;
  11. “Municipality” means any county, metropolitan government or incorporated city or town in this state located in a county having a population of not less than ninety-one thousand eight hundred (91,800), according to the 2000 federal census or any subsequent federal census;
  12. “Project” means any facilities or group of facilities to be used for a medical school, dental school, biomedical research, graduate medical education, nursing degree programs, or allied health profession degree programs; and also includes, but is not limited to, roads, streets, utility services, such as water, sanitary sewer, electricity, gas and natural gas, and telecommunications that are constructed, leased, equipped, renovated or acquired as a supporting system or facility for any of the purposes set forth in this chapter; provided, that any such supporting system or facility is dedicated for public use and further provided that there is no medical education program granting the same degree as the proposed project in the same county at the time of issuance of any debt;
  13. “Revenues” of a project means all revenues derived from and on account of a project, directly or indirectly, and any revenues paid, contributed or pledged to an authority by the state or a municipality pursuant to law, agreement or otherwise;
  14. “State” means the state of Tennessee and, unless otherwise indicated by the context, any agency, authority, branch, bureau, commission, corporation, department or instrumentality of the state, now or hereafter existing; and
  15. “THEC” means the Tennessee higher education commission.

Acts 2010, ch. 1078, § 1.

Compiler's Notes. For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

7-90-104. Filing application for permission to apply for medical school authority — Filing a charter.

Any number of natural persons, not fewer than three (3), each of whom are duly qualified voters of the municipality, may file with the governing body of the municipality an application in writing seeking permission to apply for the incorporation of a medical school authority of such municipality. If the governing body, by appropriate resolution duly adopted, finds and determines that it is wise, expedient, necessary or advisable that the authority be formed, authorizes the persons making such application to proceed to form such authority and approves the form of corporate charter proposed to be used in organizing the authority, then the persons making such application shall execute, acknowledge and file a charter for the authority as provided in § 7-90-106. No authority may be formed unless such application has first been filed with the governing body of the municipality and the governing body has adopted a resolution as provided in this section.

Acts 2010, ch. 1078, § 1.

7-90-105. Charter contents.

  1. The charter shall set forth:
    1. The names and residences of the applicants, together with a recital that each of them is a duly qualified voter in the municipality;
    2. The name of the authority, which shall contain the words “medical school authority”;
    3. The location of the principal office of the authority;
    4. The number of directors of the authority, which shall be no fewer than seven (7);
    5. The period, which may be perpetual, for the duration of the authority;
    6. A provision addressing conflicts of interest of members of the boards of directors of the medical school authority;
    7. The purposes for which the authority is proposed to be organized;
    8. A statement that permission to organize the authority has been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of such resolution; and
    9. Any other matter that the applicants may choose to insert in the charter that is not inconsistent with this chapter or with the laws of the state.
  2. The charter shall be subscribed and acknowledged by each of the applicants as being in conformity with this section and § 7-90-104.

Acts 2010, ch. 1078, § 1.

7-90-106. Filing of charter.

The secretary of state shall examine the charter and, if the secretary of state finds that the necessary information is contained in the charter and that the name is distinguishable from that of any other authority already in existence in this state, the secretary of state shall file the charter. Upon such filing, the charter shall be effective and the authority shall constitute a public corporation under the name set out in the charter.

Acts 2010, ch. 1078, § 1.

7-90-107. Amendments to charter.

  1. The charter may, at any time and from time to time, be amended in a manner not inconsistent with § 7-90-105. Any such amendment shall be adopted in the manner set out in subsection (b).
  2. The board of directors of the authority shall file with the governing body of the municipality with which the application for the creation of the authority was filed an application in writing seeking permission to amend the charter, setting forth the proposed amendment to be made. If that governing body, by appropriate resolution, finds and determines that it is wise, expedient, necessary or advisable that the proposed amendment be made and authorizes the amendment to be made, approving the form of the proposed amendment, then the chair of the board of directors of the authority shall execute an instrument embodying the amendment, and shall file the amendment with the secretary of state. The secretary of state shall examine the proposed amendment and, if the secretary of state finds that the requirements of this section have been complied with, the secretary of state shall file the amendment. Upon such filing, the amendment shall be in effect.

Acts 2010, ch. 1078, § 1.

7-90-108. Board of directors.

    1. The authority shall have a board of directors in which all corporate powers of the authority shall be vested. The board shall consist of no fewer than seven (7) directors, all of whom shall be duly qualified voters of the municipality. A director shall serve without compensation, except that the authority may reimburse a director for actual expenses incurred in the performance of a director's duties. A director may not be an elected official or employee of the municipality. The directors shall have staggered terms.
    2. The initial board of directors shall be divided into three (3) groups containing substantially equal numbers. The initial term of the directors included in the first group shall be two (2) years; the initial term of the directors included in the second group shall be four (4) years; the initial term of the directors included in the third group shall be six (6) years. All subsequent terms of directors shall be six (6) years; provided, that if at the expiration of any term of office of any director a successor has not been appointed, the director whose term of office has expired shall continue to hold office until the director's successor is appointed.
    3. In the case of authorities created pursuant to the approval of two (2) or more municipalities acting jointly, as provided in § 7-90-119, the number of directors appointed by the governing body of each municipality shall be as nearly equal as practicable, and members appointed by one (1) municipality need not be approved by the other creating municipalities unless the charter of the authority provides otherwise.
    4. The governing body of the municipality shall appoint all directors. At the initial appointment, the governing body shall designate which directors serve an initial term of two (2), four (4) and six (6) years, respectively.
    5. If a vacancy occurs in the position of director, the vacancy shall be filled in the same manner as the original term for the remainder of the unexpired term.
  1. The directors shall meet and organize and shall elect one (1) of its members as chair, one (1) as vice chair, one (1) as secretary, and one (1) as treasurer, and such offices shall annually be filled in like manner. The duties of secretary and treasurer may be performed by the same director. In the event of the resignation or death of the chair, vice chair, secretary or treasurer, another member may be elected to fill the vacancy for the unexpired term of the chair, vice chair, secretary or treasurer.
  2. Meetings of the board of directors shall be open in accordance with title 8, chapter 44. Any action taken by the directors under this chapter may be authorized by resolution at any regular or special meeting. A majority of the board shall constitute a quorum for the transaction of business. The concurring vote of a majority of the directors voting at a meeting at which a quorum is present shall be necessary for the exercise of any of the powers granted by this chapter.

Acts 2010, ch. 1078, § 1.

7-90-109. Organization — Powers of the authority.

Each medical school authority created pursuant to this chapter shall be a public nonprofit corporation and a public instrumentality of the municipality with respect to which the authority is organized. The authority shall have the following powers, together with all powers incidental to the following powers or necessary for the performance of those powers, to:

  1. Have succession by its corporate name for the period specified in the charter, unless sooner dissolved as provided in § 7-90-118;
  2. Sue and be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;
  3. Have and use a corporate seal and alter the seal at pleasure;
  4. Acquire, whether by purchase, construction, exchange, gift, lease, or otherwise, and design, plan, site, improve, repair, extend, equip, furnish, operate and maintain one (1) or more projects, which projects shall be within at least one (1) of the municipalities with respect to which the authority shall have been created, including all real and personal properties that the board of directors of the authority may deem necessary in connection with the projects and regardless of whether or not any such projects shall then be in existence, and including the power to demolish such existing structures as may be on sites acquired when such structures are not needed for the project;
  5. Operate, maintain, manage, and enter into contracts for the operation, maintenance and management of any project undertaken, and to make rules and regulations with regard to such operation, maintenance and management. Without limiting the forgoing, any authority may enter into a contract for the management of any project upon the same terms as a municipality would be permitted to enter into an operating agreement under title 6 for a public works project; provided, however, that in no event shall any of the net earnings from a project financed with bonds secured by the full faith and credit of a municipality inure to the benefit of a private entity and provided further that such manager is a public or private non-profit educational institution;
  6. Employ, contract with, fix the compensation of, and discharge engineering, architectural, legal, financial and other professional experts, consultants, agents and employees as may be necessary to carry out the purposes of this chapter and to provide for the proper construction, operation and maintenance of any project;
  7. Lease, rent and contract for the operation of all or any part of any project, and charge and collect rent for the project and terminate any such lease upon the failure of the lessee to comply with any of the obligations of the lease; and include in or exclude from any such lease provisions that the lessee shall have the option to renew the term of the lease for such period or periods and at such rent as shall be determined by the board of directors;
  8. Lease such space in a project as from time to time may not be needed for related purposes to any other person, corporation, partnership or association for such purposes as the board of directors may determine are in the best interest of the authority or will help facilitate the purposes for which the authority was created, and upon such terms and in such manner as the board may determine;
  9. Fix and collect fees and charges for the use of any and all of the projects of the authority;
  10. Make contracts, including without limitation contracts with lessees and service providers;
  11. Sell, exchange, donate, and convey any or all of its properties, whenever the board of directors shall find any such action to be in furtherance of the purposes for which the authority was organized;
  12. Procure and enter into contracts for any type of insurance or indemnity against loss or damage to property from any cause, including loss of use and occupancy, against death or injury of any person, against employer's liability, against any act of any member, officer or employee of the authority in the performance of the duties of such person's office or employment or any other insurable risk, as the board of directors, in its discretion, may deem necessary;
  13. Accept donations, contributions, revenues, capital grants or gifts from any individuals, associations, public or private corporations, and municipalities, the state or the United States, or any agency or instrumentality of the state or the United States, for or in aid of any of the purposes of this chapter and enter into agreements in connection with the donations, contributions, revenues, capital grants or gifts;
  14. Obtain such licenses, permits, approvals and accreditations as the authority deems necessary in connection with any project;
  15. Borrow money from time to time and, in evidence of any obligation incurred, issue and sell its bonds in accordance with this chapter, in such form and upon such terms as its board of directors may determine and as approved by the governing body of the creating municipality, payable out of any revenues of the authority, including grants or contributions or other revenues specifically provided to the authority, for the purpose of financing the cost of any project; refund and refinance, from time to time, bonds so issued and sold, as often as may be deemed to be advantageous by the board of directors; and, pending the issuance of its bonds for the purposes in this chapter authorized, issue its interim certificates or notes or other temporary obligations;
  16. Mortgage and pledge as security for the payment of the principal of and interest on any bonds so issued and any agreements made in connection with the bonds, any or all of the projects or any part or parts of the projects, whether then owned or thereafter acquired; and
  17. Exercise all powers expressly given in its charter and establish bylaws and make all rules and regulations not inconsistent with the charter or this chapter, deemed expedient for the management of the affairs of the authority.

Acts 2010, ch. 1078, § 1.

7-90-110. Audit.

  1. The board of directors of each authority shall cause an annual audit to be made of the books and records of its authority. The comptroller of the treasury, through the department of audit shall be responsible for determining that such audits are prepared in accordance with generally accepted governmental auditing standards and that such audits meet the minimum standards prescribed by the comptroller of the treasury.
  2. Such audits shall be prepared by certified public accountants or by the department of audit. In the event the governing body of the authority shall fail or refuse to have the audit prepared, then the comptroller of the treasury may appoint a certified public accountant, or direct the department of audit, to prepare the audit, the cost of such audit to be paid by the authority.
  3. Each authority shall prepare an annual report of its business affairs and transactions. A copy of such report shall be filed with the municipality granting permission to the authority to organize.

Acts 2010, ch. 1078, § 1.

7-90-111. Donations of services and property — Reversion of property to donor.

  1. For the purpose of aiding and cooperating with an authority, the municipality authorizing such authority may assign or loan any of its employees, including its engineering staff and facilities, and may provide necessary office space, equipment, and other facilities for the use of such authority, as the governing body of such municipality shall approve.
  2. The governing body of such municipality may make donations of property, real or personal, or cash grants to the authority, in such amount or amounts as it may deem proper and appropriate in aiding the authority to accomplish its purpose; provided that such donations or cash grants shall only be used to fund a project and shall not be otherwise used to fund the operating expenses of the medical education program.
  3. Any municipality creating an authority may convey real property or personal property to the authority and may include a provision in such conveyance for the reversion of such property to the transferor at such time as all revenue bonds or other obligations of the authority incident to the real property so conveyed shall have been paid in full, and any authority created pursuant to this chapter is authorized to accept such a conveyance.

Acts 2010, ch. 1078, § 1.

7-90-112. Bonds of authority.

  1. The authority shall have power and is authorized to issue its bonds in order to finance:
    1. The costs of any project;
    2. The payment of the costs of issuance of such bonds, including underwriter's discount, financial advisory fee, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement, and legal, accounting, fiscal and other similar expenses;
    3. Reimbursement of the authority for moneys previously spent by the authority for any of the foregoing purposes; and
    4. The establishment of reasonable reserves for the payment of debt service on such bonds, for repair and replacement of any project, or for such other purposes as the board shall deem necessary and proper in connection with the issuance of any bonds and operation of any project for the benefit of which the financing is being undertaken.
    1. The authority shall have the power and is hereby authorized to issue its bonds to refund and refinance outstanding bonds of the authority heretofore or hereafter issued or lawfully assumed by the authority. The proceeds of the sale of the bonds may be applied to:
      1. The payment of the principal amount of the bonds being refunded and refinanced;
      2. The payment of the redemption or tender premium thereon, if any;
      3. The payment of unpaid interest on the bonds being refunded, including interest in arrears, for the payment of which sufficient funds are not available, to the date of delivery or exchange of the refunding bonds;
      4. The payment of fees or other charges incident to the termination of any interest rate hedging agreements, liquidity or credit facilities, or other agreements related to the bonds being refunded and refinanced;
      5. The payment of interest on the bonds being refunded and refinanced from the date of delivery of the refunding bonds to maturity or to, and including, the first or any subsequent available redemption date or dates on which the bonds being refunded may be called for redemption;
      6. The payment of the costs of issuance of the refunding bonds, including underwriter's discount, financial advisory fee, preparation of the definitive bonds, preparation of all public offering and marketing materials, advertising, credit enhancement, and legal, accounting, fiscal and other similar expenses, and the costs of refunding the outstanding bonds, including the costs of establishing an escrow for the retirement of the outstanding bonds, trustee and escrow agent fees in connection with any escrow, and accounting, legal and other professional fees in connection therewith; and
      7. The establishment of reserves for the purposes set forth in subdivision (a)(4).
    2. Refunding bonds may be issued to refinance and refund more than one (1) issue of outstanding bonds, notwithstanding that such outstanding bonds may have been issued at different times. Refunding bonds may be issued jointly with other refunding bonds or other bonds of the authority. The principal proceeds from the sale of refunding bonds may be applied either to the immediate payment and retirement of the bonds being refunded or, to the extent not required for the immediate payment of the bonds being refunded, to the deposit in escrow with a bank or trust company to provide for the payment and retirement at a later date of the bonds being refunded.
  2. No bonds shall be issued hereunder unless authorized to be issued or assumed by resolution of the board of directors of the authority, and approved by resolution of the governing body of the municipality. Bonds authorized to be issued hereunder may be issued in one (1) or more series, may bear such date or dates, mature at such time or times, not exceeding forty (40) years from their respective dates, bear interest at such rate or rates, payable at such time or times, be in such denominations, be in such form, either coupon or registered, be executed in such manner, be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium, as such resolution or resolutions may provide. Bonds may be issued at competitive or negotiated sale for such price or prices as the board of directors, or its designee, shall determine. The authority may enter into such agreements in connection with the issuance of any bonds as its board of directors may approve, including without limitation agreements related to municipal bond insurance, credit or liquidity facility agreements, remarketing agreements and bond purchase agreements.
  3. Bonds may be repurchased by the authority out of any available funds at such price as the board of directors shall determine, and all bonds so repurchased shall be cancelled or held as an investment of the authority as the board may determine.
  4. Pending the preparation or execution of definitive bonds, interim receipts or certificates or temporary bonds may be delivered to the purchasers of bonds.
    1. With respect to all or any portion of any issue of bonds issued hereunder, at any time during the term of the bonds, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this subsection (f) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in § 9-21-130, the authority, by resolution of the board of directors and upon approval by resolution of the governing body of the municipality, may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, and other interest rate hedging agreements under such terms and conditions as the board of directors may determine, including, without limitation, provisions permitting the authority to pay to, or receive from, any person or entity any loss of benefits under such agreement upon early termination thereof or default under such agreement.
    2. The authority may enter into an agreement to sell bonds, other than its refunding bonds, under this chapter providing for delivery of its bonds on a date greater than ninety (90) days and not greater than five (5) years or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement or to sell its refunding bonds providing for delivery thereof on a date greater than ninety (90) days from the date of execution of the agreement and not greater than the first optional redemption date on which the bonds being refunded can be optionally redeemed resulting in cost savings or at par, whichever is earlier, only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the agreement or contract of the authority to sell its bonds as authorized in this subsection (f) is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with § 9-21-130. Agreements to sell bonds and refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement do not require a report of the comptroller of the treasury or the comptroller's designee.
    3. Prior to the adoption by the board of a resolution authorizing a contract or agreement described in subdivision (f)(1) or (f)(2), a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that such contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report thereon to the authority. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the authority may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that such contract or agreement is not in compliance with the guidelines, rules or regulations, then the authority is not authorized to enter into such contract or agreement. The guidelines, rules or regulations shall provide for an appeal process upon a determination of noncompliance.
    4. When entering into any contracts or agreements facilitating the issuance and sale of bonds, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating thereto, interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, other interest rate hedging agreements, and agreements with the purchaser of the bonds, evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the authority may agree in the written contract or agreement that the rights and remedies of the parties thereto shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over the authority shall lie solely in the courts of the county in which the municipality forming the authority is located.
    1. Except as provided in § 7-90-114, all bonds issued by the authority shall be payable solely out of the revenues from any projects, or of any portion of projects owned, operated or leased to or from the authority, as may be designated by the board of directors of the authority.
    2. The principal of and interest on any bonds issued by the authority shall be secured, as may be designated by the board of directors of the authority, by a pledge of revenues and receipts of the authority described in subdivision (g)(1), by a pledge of the authority's rights under agreements, leases and other contracts, or by a mortgage or deed of trust covering all or any part of the projects from which the revenues or receipts so pledged may be derived. The proceedings under which the bonds are authorized to be issued and any such pledge agreement or mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered by the bonds, the fixing and collection of rents for any portions of projects leased by the authority to others, the creation and maintenance of special funds from such revenues and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this chapter. Each pledge, agreement, or mortgage or deed of trust made for the benefit or security of any of the bonds of the authority shall continue effective until the principal of and interest on the bonds for the benefit of which the pledge, agreement, or mortgage or deed of trust were made shall have been fully paid. In the event of default in such payment or in any agreement of the authority made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage or deed of trust executed as security for the bonds, such payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity or by foreclosure of any such mortgage or deed of trust, or any one (1) or more of such remedies.
  5. The authority may issue interim certificates, bond anticipation notes or other temporary obligations pending the issuance of its revenue bonds, which such temporary obligations shall be payable out of revenues and receipts of the authority in like manner as such revenue bonds and shall be retired from the proceeds of such bonds upon the issuance of the revenue bonds, and shall be in such form and contain such terms, conditions and provisions consistent with this chapter as the board of directors may determine.
  6. Bonds and notes of the authority shall be executed in the name of the authority by such officers of the authority and in such manner as the board of directors may direct, and shall be sealed with the corporate seal of the authority. If so provided in the proceedings authorizing the bonds, the facsimile signature of any of the officers executing such bonds and a facsimile of the corporate seal of the authority may appear on the bonds in lieu of the manual signature of such officer and the manual impress of such seal.
  7. Any bonds and notes of the authority may be sold at public or private sale, for such price and in such manner and from time to time as may be determined by the board of directors of the authority to be most advantageous, and the authority may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds.

Acts 2010, ch. 1078, § 1.

7-90-113. Exemption from taxation.

The authority is hereby declared to be performing a public function in behalf of the municipality with respect to which it is organized and to be a public instrumentality of such municipality. Accordingly, the authority and all properties at any time owned by it and the income from the properties and all bonds issued by the authority and the income from the bonds, shall be exempt from all taxation in the state. Also, for purposes of the Tennessee Securities Act of 1980, compiled in title 48, chapter 1, part 1, bonds issued by the authority shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state.

Acts 2010, ch. 1078, § 1.

7-90-114. Nonliability of municipality — Pledge by municipality of full faith and credit and unlimited taxing power.

  1. Except to the extent of any revenues that may be specifically allocated, transferred, contributed or pledged by a municipality in accordance with this chapter and except as provided in subsection (b), no municipality shall in any event be liable for the payment of the principal of or interest on any bonds of the authority or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the authority, and none of the bonds of the authority or any of its agreements or obligations shall be construed to constitute an indebtedness of the municipality within the meaning of any constitutional or statutory provision whatsoever.
    1. Following compliance by the authority with § 7-90-123 and after complying with the resolution, notice, and election provisions found in title 9, chapter 21, with such reasonable provisions as are necessary to reflect that the bonds are not being issued directly by the municipality, the governing body of a municipality or municipalities with respect to which the authority has been created may, by resolution, pledge the full faith and credit and unlimited taxing power of the municipality to the payment of the principal or premium, if any, and interest on bonds of an authority, the purchase price of any such bonds subject to optional or mandatory tender for purchase, or the reimbursement or repayment to any bank or financial institution under any agreement providing for any draw, borrowing, advance or payment to be made for the payment of such principal, premium, interest or purchase price or the payment of amounts payable under any interest rate exchange agreement.
    2. Prior to any meeting where such pledge will be considered by the governing body of the municipality, a notice shall be published at least five (5) days in advance of such meeting in a newspaper of general circulation within the municipality, describing the matter to be considered and containing an estimate of the dollar amount of any contingent liability proposed to be undertaken by the municipality.
    3. In the event of any such pledge of the full faith and credit and unlimited taxing power of the municipality, any holder or holders of the bonds, including a trustee or trustees for holders of such bonds, any financial institution providing any agreement on the payment of principal, premium, interest, purchase price on such bonds or any party to any interest rate exchange agreement with respect to such bonds shall have the right, in addition to all other rights, by mandamus or other suit, action, or proceeding in any court of competent jurisdiction, to enforce such person's rights against the municipality so pledging, and the governing body of such municipality and any officer, agent, or employee of such municipality, including, but not limited to, the right to require the municipality and governing body and any proper officer, agent, or employee of the municipality to assess, levy, and collect taxes and other revenues and charges adequate to carry out any agreement as to, or pledge of, such taxes, revenues, and charges. The taxes authorized to be pledged in this subdivision (b)(3) shall be levied without limit as to rate or amount upon all taxable property within the municipality, and all such taxes to be levied are hereby declared to have been levied for county and corporation purposes, respectively, within the meaning of the Constitution of Tennessee, Article II, § 29.

Acts 2010, ch. 1078, § 1.

7-90-115. Powers of municipalities to aid or assist authorities.

  1. Any municipality is authorized to aid or otherwise provide assistance to an authority created pursuant to this chapter by such municipality, including entering into leases of projects, or parts of projects with an authority, for such term or terms and upon such conditions as may be determined by the governing body of such municipality, notwithstanding and without regard to the restrictions, prohibitions, or requirements of any other law, whether public or private, or granting, contributing or pledging revenues of the municipality to or for the benefit of the authority derived from any source.
  2. The governing body of any municipality, by resolution, may designate the authority to be the recipient of funds of the state or the municipality, when such funds are allocated or directed for use in connection with the construction, improvement, financing or operation of facilities. The municipality may take such actions as may be necessary to cause any such funds to be paid to the authority, and the municipality and the authority may enter into any and all agreements as may be necessary to provide for the payment of the authority's bonds out of such funds, as described in § 7-90-112(g).
  3. The governing body of any municipality, by resolution, may cause any departments, instrumentalities or organizations formed by the municipality to be joined with and into the authority, and may take such steps as may be necessary to cause the assets, liabilities and operations of any such organizations to be transferred to the authority.

Acts 2010, ch. 1078, § 1.

7-90-116. Execution of leases, contracts, deeds, instruments in writing.

Except as otherwise provided in this chapter, all leases, contracts, deeds of conveyance, or instruments in writing executed by the authority, shall be executed in the name of the authority by the chair or secretary of the authority, or by such other officers as the board of directors, by resolution, may direct, and the seal of the authority may be affixed to such instruments.

Acts 2010, ch. 1078, § 1.

7-90-117. Nonprofit corporation — Disposition of earnings.

The authority shall be a public nonprofit corporation and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors shall determine that sufficient provision has been made for the full payment of the expenses, bonds and other obligations of the authority, including reserves for the expenses, bonds and other obligations; any net earnings of the authority thereafter accruing may be used to provide a reserve for depreciation of any project or projects undertaken by such authority, in an amount determined by the board of directors to be necessary and reasonable, and net earnings available thereafter shall be paid to the municipality with respect to which the authority was organized; provided, that nothing contained in this section shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease entered into by the authority; provided further, that in no event shall such transfer inure to the benefit of a private entity.

Acts 2010, ch. 1078, § 1.

7-90-118. Completion of corporate purpose — Dissolution.

If the board of directors of an authority or the governing body of the creating municipality by resolution determines that the purposes for which the authority was formed have been substantially accomplished and all bonds theretofore issued and all obligations theretofore incurred by the authority have been fully paid, then the members of the board of directors or the executive officers of the municipality, as the case may be, shall thereupon execute and file for record in the office of the secretary of state a certificate of dissolution, reciting such facts and declaring the authority to be dissolved. Such certificate of dissolution shall be executed under the seal of the authority. Upon the filing of such certificate of dissolution, the authority shall stand dissolved; the title to all funds and properties owned by it at the time of such dissolution shall vest in the municipality with respect to which the authority was organized, and possession of such funds and properties shall forthwith be delivered to such municipality.

Acts 2010, ch. 1078, § 1.

7-90-119. Joint operation.

  1. The powers conferred upon authorities created under this chapter may be exercised by two (2) or more such authorities acting jointly.
  2. Two (2) or more municipalities may, by acting jointly, incorporate a medical school authority to effectuate the purposes of this chapter. When two (2) or more municipalities incorporate such an authority, each and every requisite pertaining to the application for incorporation, qualification of applicants, charter and amendment of charter shall, as nearly as may be practicable, be incumbent in like manner upon each municipality joining in the creation of such authority.

Acts 2010, ch. 1078, § 1.

7-90-120. Acquisition of project sites.

Any municipality may acquire a project site by gift, purchase or lease, or exercise of the power of eminent domain, and may transfer any project site to an authority by sale, lease or gift. Such transfer may be authorized by a resolution of the governing body of the municipality without submission of the question to the voters, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 2010, ch. 1078, § 1.

7-90-121. Construction of chapter — Powers not restricted.

This chapter shall not be construed as a restriction or limitation upon any powers that an authority, as a public corporation, might otherwise have under any laws of this state, but shall be construed as cumulative of any such powers. No proceedings, notice or approval shall be required for the organization of the authority or the issuance of any bonds or any instrument as security for the bonds, except as provided in this chapter, any other law to the contrary notwithstanding; provided, that nothing in this chapter shall be construed to deprive the state and its governmental subdivisions of their respective police powers over properties of the authority, or to impair any power over properties of the authority of any official or agency of the state and its governmental subdivisions that may be otherwise provided by law. Projects may be acquired, purchased, constructed, reconstructed, improved, bettered and extended, and bonds may be issued under this chapter for such purposes, notwithstanding that any other general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like project, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law.

Acts 2010, ch. 1078, § 1.

7-90-122. Approval for public funding.

      1. No state or local funds shall be expended by or on behalf of a medical school authority for a proposed project under this chapter nor shall bonds be issued by the state or bonds be guaranteed under § 7-90-114(b) on behalf of such project unless THEC, upon review of the proposed medical education program, specifically approves the program for public funding. The program shall not be approved for public funding unless THEC finds that such program is consistent with the purposes of this chapter, as expressed by the general assembly in § 7-90-102. In considering the program for such approval, THEC shall evaluate whether:
        1. The medical education program conflicts with the master plan for public higher education developed pursuant to § 49-7-202(c)(1);
        2. The medical education program is unnecessarily duplicative of other programs offered within the region of Tennessee for which the project is proposed;
        3. There are sufficient potential students in the region or who would be attracted to the region to justify and maintain the operation of the medical education program;
        4. The market demand for potential graduates of the medical education program is sufficient to support the number of graduates produced; and
        5. The resources available in the region can sustain the medical education program.
      2. In making its decision, THEC may also consider other criteria found in § 7-90-123(a) and information developed by the feasibility study required by § 7-90-123.
    1. THEC approval is not required under this subsection (a), if the proposed project and medical education program will be funded exclusively with nonpublic funding and without the issuance of state bonds. A determination that THEC approval under this subsection (a) is not required shall not affect the requirements of § 7-90-123.
    2. THEC shall have the authority to contract with another entity to perform the evaluation required by this part, the cost of which shall be the sole responsibility of the authority or the municipality or municipalities creating the authority.
    3. The authority shall have a right to appeal THEC's action made pursuant to this section to the chancery court of Davidson County. Any such appeal shall be heard by the court de novo.
  1. The comptroller of the treasury or the comptroller's designee shall not approve a state bond issue under § 7-90-112(f) until the comptroller or the comptroller's designee has received and examined the approval of the associated medical education program by THEC pursuant to subsection (a).
  2. All state funds to be expended for a project of a medical school authority shall be specifically appropriated by reference to such project in the general appropriations act and such funds shall only be expended in accordance with the provisions of such act.

Acts 2010, ch. 1078, § 1.

7-90-123. Approval of project.

  1. Notwithstanding any language in this chapter to the contrary, subsequent to initiation by an authority of a project or prior to acting upon any inducement or commitment related to such proposed project, the authority shall, with respect to each proposed project, make an application to THEC for THEC approval of the project and any debt issuance following THEC's review of a feasibility study relative to the need for the proposed medical education program described in the application and, if debt is to be issued, the capacity of the proposed project and the associated medical education program to pay the principal, interest and costs of issuance of any debt to be incurred. THEC shall develop a policy specifying any information, documents or data that will be required in making an application required by this section, which shall include, but not be limited to:
    1. The type of medical education program that will be offered, to include the specific degree or degrees to be awarded;
    2. The anticipated number of students to be served by the proposed project for each degree being offered;
    3. Conceptual plans and cost estimates related to the facility to house the proposed medical education program;
    4. A copy of any known feasibility study or studies related to the proposed project;
    5. Information to ensure that the medical education program will not negatively impact an existing institution in the state or region of the same or similar type or with the same or similar mission;
    6. A copy of the business plan for operation of the medical education program;
    7. Assurances that such institution will seek and attain appropriate programmatic and institutional accreditations;
    8. A detailed description of how the proposed medical education program fits into the state's higher education master plan along with any relevant supporting information and documentation pertaining to the project; and
    9. Information pertaining to the proposed fiscal operations of the proposed program, and the proposed structure and terms of the financing.
  2. THEC shall have the authority to contract with another entity to perform the feasibility study required by this part, the cost of which, including the reasonable costs of THEC, shall be the responsibility of the authority.
  3. A copy of the information specified in subsection (a) with respect to the feasibility study shall be furnished to the comptroller of the treasury which shall furnish to the authority, THEC and any municipality granting a pledge of revenues or full faith and credit, written comments on the structure of the proposed debt financing and, if the comptroller of the treasury desires to do so, comments on the capacity of the proposed project to pay the debt service. The reasonable costs of the comptroller of the treasury in reviewing and analyzing the information furnished to the comptroller and in preparing comments thereon shall be the responsibility of the authority.
  4. The authority may not approve the project, or the issuance of debt in connection therewith, unless and until the authority receives written approval of THEC following THEC's receipt and review of a written feasibility study performed pursuant to this section which finds that the project is consistent with the state's higher education master plan and, if debt is to be issued, that the proposed project has the capacity to pay the principal, interest and costs of issuance of the debt to be incurred and which finds feasibility in compliance with the factors in subsection (a).

Acts 2010, ch. 1078, § 1.

7-90-124. Project subject to capital outlay priority policies of higher education governing board.

Notwithstanding any other language in this chapter to the contrary, if the proposed project includes a medical education program affiliated with a public institution of higher learning, then such project shall be subject to the capital outlay priority policies of the respective higher education governing board with respect to such public institution and also such policies of THEC.

Acts 2010, ch. 1078, § 1.

Chapter 91
JustBeGreen Villages [Repealed effective July 1, 2026.]

7-91-101. JustBeGreen Villages of America development area. [Repealed effective July 1, 2026.]

An area of property meeting the following description may be deemed, in accordance with this chapter, the JustBeGreen Villages of America development area, and the future site of an agricultural and educational based development supported by state-of-the-art smart technologies to be known as JustBeGreen Villages of America, for purposes of sustainable living and sustainable economic development, including, but not limited to, the development of sustainable technologies, products, and agriculture:

  1. The property is located in a county with a population of not less than twenty-one thousand nine hundred (21,900) and not more than twenty-two thousand (22,000), according to the 2010 or any subsequent federal census; and
  2. The property consists of not less than two thousand (2,000) contiguous acres.

Acts 2018, ch. 856, § 1.

Compiler's Notes. For the Preamble to the act concerning the creation of the futuristic green City of JustBeGreen, please refer to Acts 2018, ch. 856.

For tables of U.S. decennial populations of Tennessee counties, see Volume 13 and its supplement.

Effective Dates. Acts 2018, ch. 856, § 2. May 3, 2018.

Cross-References. Repealer, § 7-91-104.

7-91-102. Petition — Resolution. [Repealed effective July 1, 2026.]

  1. One (1) or more property owners of property within an area described under § 7-91-101 may petition the county commission to be deemed the JustBeGreen Villages of America development area.
  2. For purposes of filing a petition under subsection (a), property owners shall provide to the county commission:
    1. A description of all property to be included in the proposed development area;
    2. The identity of each property owner filing the petition; and
    3. A description of the proposed development and its purpose and land uses within the development area.
  3. Upon receipt of a petition, the county commission may adopt a resolution:
    1. Designating the area described in the petition as the JustBeGreen Villages of America development area; and
    2. Authorizing the area to be referred to as JustBeGreen Villages of America.

Acts 2018, ch. 856, § 1.

Compiler's Notes. For the Preamble to the act concerning the creation of the futuristic green City of JustBeGreen, please refer to Acts 2018, ch. 856.

Effective Dates. Acts 2018, ch. 856, § 2. May 3, 2018.

Cross-References. Repealer, § 7-91-104.

7-91-103. Development area not a municipality. [Repealed effective July 1, 2026.]

The JustBeGreen Villages of America development area, designated JustBeGreen Villages of America in accordance with this chapter, is not a municipality for purposes of this code, and does not have the corporate powers and authority of a municipality under this code.

Acts 2018, ch. 856, § 1.

Compiler's Notes. For the Preamble to the act concerning the creation of the futuristic green City of JustBeGreen, please refer to Acts 2018, ch. 856.

Effective Dates. Acts 2018, ch. 856, § 2. May 3, 2018.

Cross-References. Repealer, § 7-91-104.

7-91-104. Repealer. [Repealed effective July 1, 2026.]

This chapter is repealed on July 1, 2026.

Acts 2018, ch. 856, § 1.

Compiler's Notes. For the Preamble to the act concerning the creation of the futuristic green City of JustBeGreen, please refer to Acts 2018, ch. 856.

Effective Dates. Acts 2018, ch. 856, § 2. May 3, 2018.