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. [Effective until January 1, 2021. See version effective January 1, 2021.]

  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).

7-4-101. Chapter definitions. [Effective January 1, 2021. See version effective until January 1, 2021.]

  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, short-term rental unit 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. “Residential dwelling” means a cabin, house, or structure used or designed to be used as an abode or home of a person, family, or household, and includes a single-family dwelling, a portion of a single-family dwelling, or an individual residential dwelling in a multi-dwelling building, such as an apartment building, condominium, cooperative, or timeshare;
    9. “Short-term rental unit” means a residential dwelling that is rented wholly or partially for a fee for a period of less than thirty (30) continuous days and does not include a hotel as defined in § 68-14-302 or a bed and breakfast establishment or a bed and breakfast homestay as those terms are defined in § 68-14-502;
    10. “Short-term rental unit marketplace” means any person or entity that provides a platform for compensation, through which a third party offers to rent a short-term rental unit to an occupant;
    11. “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;
    12. “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;
    13. “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
    14. “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; 2020, ch. 787, §§ 1, 2.

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

Amendments. The 2020 amendment, effective January 1, 2021, inserted “, short-term rental unit” in (4); and added the definitions of “Residential Dwelling”, “Short-term rental unit”, and “Short-term rental unit marketplace” in alphabetical order and redesignated the following definitions accordingly.

Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.

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. [Effective until January 1, 2021. See version effective January 1, 2021.]

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).

7-4-103. Tax added to room invoice — Tax on short-term rental unit — Collection and remittance of tax. [Effective January 1, 2021. See version effective until January 1, 2021.]

  1. 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.
  2. Notwithstanding this part to the contrary, on or after January 1, 2021, the tax, when levied upon the occupancy of a short-term rental unit secured through a short-term rental unit marketplace, must be collected and remitted in accordance with title 67, chapter 4, part 15.

Acts 1976, ch. 704, § 3; modified; T.C.A., § 6-3728; Acts 1994, ch. 758, § 4; 2020, ch. 787, § 3.

Amendments. The 2020 amendment, effective January 1, 2021, added (b).

Effective Dates. Acts 2020, ch. 787, § 12. January 1, 2021.

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. [Effective until January 1, 2021. See version effective January 1, 2021.]

  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.

7-4-202. Additional tax on hotel room or short-term rental unit occupancy. [Effective January 1, 2021. See version effective until January 1, 2021.]

  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.
  4. Notwithstanding this part to the contrary, on or after January 1, 2021, the tax levied pursuant to this section, when levied upon the occupancy of a short-term rental unit secured through a short-term rental unit marketplace, must be collected and remitted in accordance with title 67, chapter 4, part 15.

Acts 2007, ch. 422, § 4; 2008, ch. 1004, §§ 1, 2; 2013, ch. 340, § 1; 2014, ch. 806, § 1; 2019, ch. 426, § 1; 2020, ch. 787, § 4.

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

The 2020 amendment, effective January 1, 2021, added (e).

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

Acts 2020, ch. 787, § 12. January 1, 2021.

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. [Deleted by 2020 amendment.]

Acts 2007, ch. 422, § 7; 2013, ch. 236, § 66; 2020, ch. 711, § 1.

Amendments. The 2020 amendment deleted (b)(5), which read: “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.”

Effective Dates. Acts 2020, ch. 711, § 11, June 15, 2020.

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 is unnecessary for a municipality proceeding under this chapter to obtain a certificate of convenience or necessity, franchise, license, permit, or other authorization from a bureau, board, commission, or other like instrumentality of the state to acquire, construct, purchase, reconstruct, improve, extend, maintain, or operate public works, except as provided in § 68-221-1017.

Acts 1935 (Ex. Sess.), ch. 33, § 16; C. Supp. 1950, § 4406.57 (Williams, § 4406.49); T.C.A. (orig. ed.), § 6-1306; Acts 2020, ch. 720, § 1.

Amendments. The 2020 amendment rewrote this section, which read: “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.”

Effective Dates. Acts 2020, ch. 720, § 6. June 22, 2020.

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. [Effective until January 1, 2021. See the version effective on January 1, 2021.]

    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).

7-34-115. Operation of utility systems — Disposition of revenue. [Effective on January 1, 2021. See the version effective until January 1, 2021.]

    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.
      1. Notwithstanding subdivision (a)(1) or any other law to the contrary, if the municipal utility system is a natural gas utility system, then 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.
      2. The comptroller of the treasury shall devise standard procedures to assist a municipal utility system whose revenues are devoted pursuant to this subdivision (a)(2) in the disposition of those funds. The municipal utility board with management responsibility for the municipal utility system or, if there is no such board, the municipal governing body, shall devise guidelines directing for what purpose the appropriated money may be spent. These guidelines must provide generally that any funds appropriated must be used to benefit the customers of the municipal utility system. Any funds appropriated under this subdivision (a)(2) must be used and expended under the direction and control of the governing body of a municipality in conjunction with the guidelines and procedures set forth in this subdivision (a)(2)(B).
      3. 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 in this subdivision (a)(2) only applies 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 any subsequent federal census, and the authorization in this subdivision (a)(2) is in addition to any authorization as may be provided to municipal utility systems under otherwise applicable law.
    2. Any chamber of commerce, or economic and community organization, that seeks financial assistance from a municipal utility system pursuant to subdivision (a)(2) shall file with the city clerk a copy of an annual report of its business affairs and transactions that includes, but is not limited to:
      1. Either a copy of the entity's most recently completed annual audit or an annual report detailing all receipts and expenditures relative to the use of funds received from the municipal natural gas utility system in a form prescribed by the comptroller of the treasury and prepared and certified by the chief financial officer of the chamber of commerce or the economic and community organization;
      2. A description of how the financial assistance serves the municipal utility system and its customers; and
      3. The proposed use of the municipal utility system's contributions.
    3. The annual report filed pursuant to subdivision (a)(3) must be open for public inspection during regular business hours at the city clerk's office.
    4. Financial reports must be available to fiscal officers of the municipality and are subject to audit under § 6-56-105.
    5. Appropriations to chambers of commerce, or economic and community organizations, may be made only after notices have been published either on the website of the municipality, if possible, or in a newspaper of general circulation of the intent to make an appropriation to a chamber of commerce, or economic and community organization, specifying the intended amount of the appropriation and the purposes for which the appropriation will be spent.
  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; 2020, ch. 791, §§ 1, 2.

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).”

The 2020 amendment effective January 1, 2021, rewrote (a)(2) which read: “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.”; and added (a)(3) – (6).

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.

Acts 2020, ch. 791, § 3. January 1, 2021.

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 creates an additional and alternate method for the acquisition of waterworks or a sewerage system by any incorporated city or town and does not include, amend, alter, or repeal any other statute. A proceeding is not required for either the acquisition of a waterworks or sewerage system, or for the issuance of bonds under this part, except as provided by this part or § 68-221-1017, notwithstanding any other law to the contrary.

Acts 1933, ch. 68, § 23; C. Supp. 1950, § 3695.23; T.C.A. (orig. ed.), § 6-1439; Acts 2020, ch. 720, § 2.

Amendments. The 2020 amendment, in the first sentence, substituted “This part creates” for “This part shall be deemed to create” and “and does not include” for “, and shall not be deemed to include”; in the second sentence, substituted “A proceeding is not required for either” for “No proceedings shall be required for”, deleted “under this part” following “or sewerage system”, inserted “or § 68-221-1017” and substituted “any other law” for “any general or private laws of the state or the charter of any city or town”.

Effective Dates. Acts 2020, ch. 720, § 6. June 22, 2020.

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: