NOTES TO DECISIONS

1. Construction and Interpretation.

2. —Strict Construction.

Revenue acts are not to be interpreted so as to extend their provisions beyond the clear import of the language used. Bank of Commerce & Trust Co. v. McCabe, 164 Tenn. 591, 51 S.W.2d 850, 1931 Tenn. LEXIS 54 (1932).

Revenue acts are construed strictly against the state. Bank of Commerce & Trust Co. v. McCabe, 164 Tenn. 591, 51 S.W.2d 850, 1931 Tenn. LEXIS 54 (1932).

3. —“Inheritance” Defined.

The word “inheritance,” as used in inheritance tax laws, means succession to all the rights of the decedent, whether by will or by operation of law. Knox v. Emerson, 123 Tenn. 409, 131 S.W. 972, 1910 Tenn. LEXIS 14 (1910).

4. —Jail Fees as Revenue.

While it is true that jail fees paid by the county to the clerk of the criminal or circuit court, to be refunded to the state for jail fees advanced by it, do not constitute one of the sources of revenue defined by this section; and while, perhaps, revenue may be confined to money raised by some of the modes of taxation, still in one sense all money belonging to the state is revenue. Donelson v. State, 71 Tenn. 692, 1879 Tenn. LEXIS 132 (1879).

NOTES TO DECISIONS

1. Clerk Receiving No Revenue — Report Necessary.

A justice of the peace [now judge of the court of general sessions] need not report if such justice has received no revenue, but the clerk of the court is not so excused. State v. Jones, 70 Tenn. 716, 1879 Tenn. LEXIS 229 (1879).

NOTES TO DECISIONS

1. Failure to Report.

The indictment for failure to report need not charge that the failure or omission to report was corruptly done; and if the failure is found by the jury to be willful, the clerk or justice [now judge] shall be removed from office. State v. Jones, 70 Tenn. 716, 1879 Tenn. LEXIS 229 (1879).

Decisions Under Prior Law

1. Proceeding for Removal.

The proceeding for the removal of an officer from his office was summary and highly penal in its nature, and the judgment of removal had to assume, in itself, the existence of a state of facts which rendered the removal legal and proper under the statute authorizing the same. Ragsdale v. State, 32 Tenn. 416, 1852 Tenn. LEXIS 93 (1852).

Decisions Under Prior Law

1. Conviction upon Indictment Unnecessary.

The (former) county court could remove its clerk and appoint another, where the failure to produce his receipts appeared of record, without any conviction of his delinquency, upon indictment. Hardin County Court v. Hardin, 7 Tenn. 291, 1823 Tenn. LEXIS 59 (1823).

2. Judgment.

3. —Facts Assumed.

The judgment had to assume, in itself, the existence of a state of facts which rendered it legal and proper to remove the clerk from office, namely, that he was clerk of the court during the year or the term for which it is alleged that he was in default, and that it was moved before the court that he produce his revenue receipts, as directed under the statute, and that he failed to produce same. From these premises, a judgment that the clerk has forfeited his office, and that he be removed therefrom, was a proper and legal conclusion. Ragsdale v. State, 32 Tenn. 416, 1852 Tenn. LEXIS 93 (1852).

4. —Relief from Judgment.

From this judgment, an appeal in the nature of a writ of error did not lie; if it did, it would have had effect to suspend the judgment of removal and continue the clerk in office, pending the appeal. The remedy was by mandamus to be restored to office, or by writ of error to cause the proceedings to be revised and reversed, if erroneous. Ragsdale v. State, 32 Tenn. 416, 1852 Tenn. LEXIS 93 (1852). See Hardin County Court v. Hardin, 7 Tenn. 291, 1823 Tenn. LEXIS 59 (1823); Sevier v. Justices of Washington County, 7 Tenn. 334, 1824 Tenn. LEXIS 11 (1824); Fields v. State, 8 Tenn. 167, 8 Tenn. 168, 1827 Tenn. LEXIS 27 (1827); Dodd v. Weaver, 34 Tenn. 670, 1855 Tenn. LEXIS 116 (1855); Felts v. Memphis, 39 Tenn. 650, 1859 Tenn. LEXIS 296 (1859).

5. Reinstatement During Term.

An order of removal of the clerk, made on an early day of the term, was superseded by an order to reinstate the clerk, made on a subsequent day of the same term, whether such order of restitution was erroneous or otherwise; and the court, at a subsequent term, could not annul the reinstatement or order of restitution; but it could then make a new order of removal for the previous default. Hardin County Court v. Hardin, 7 Tenn. 291, 1823 Tenn. LEXIS 59 (1823).

Decisions Under Prior Law

1. Time for Motion.

Where the statute required that the motion should be made at the first term of the court after the clerk's default, it could not be made at a special term held thereafter, which was not an adjourned sitting of the preceding term. Garner v. Carrol, 15 Tenn. 364, 15 Tenn. 365, 1835 Tenn. LEXIS 12 (1835).

NOTES TO DECISIONS

1. Retroactive Divestiture.

Tax money paid into the treasury of the state becomes the property of the state, with title thereto vested in the state and no opinion of a court changing the construction of a statute can constitutionally operate retrospectively so as to divest the state of title to that money. Blank v. Olsen, 662 S.W.2d 324, 1983 Tenn. LEXIS 798 (Tenn. 1983).

Decisions Under Prior Law

1. State's Preference.

The state was entitled to a preferential payment of its deposit in the event of insolvency of its depository. Maryland Casualty Co. v. McConnell, 148 Tenn. 656, 257 S.W. 410, 1923 Tenn. LEXIS 52 (1924).

Under the common law, the state was entitled to priority in payment out of the effects of an insolvent debtor, and this rule has been adopted in Tennessee. State ex rel. Robertson v. Liberty Bank & Trust Co., 165 Tenn. 40, 52 S.W.2d 150, 1931 Tenn. LEXIS 167 (1932).

Statute that provided for depository bond for safekeeping and paying over of state funds did not waive state's prerogative right to priority. State ex rel. Robertson v. Liberty Bank & Trust Co., 165 Tenn. 40, 52 S.W.2d 150, 1931 Tenn. LEXIS 167 (1932).

2. Surety Paying Bank's Debt to State — Subrogation.

Where a surety of a bank for state deposits on the insolvency of the bank paid the entire indebtedness of the bank to the state, it was entitled to be subrogated to the rights of the state. Maryland Casualty Co. v. McConnell, 148 Tenn. 656, 257 S.W. 410, 1923 Tenn. LEXIS 52 (1924).

3. Pledge of Assets to Secure General Deposits.

A state bank may pledge its assets to secure general deposits of county and state funds. Grigsby v. People's Bank of Martin, 158 Tenn. 182, 11 S.W.2d 673, 1928 Tenn. LEXIS 138 (1928).

4. Depository Bond — Continuing Obligation.

A depository bond given by a bank and its officers and stockholders to a clerk and master of a chancery court, “and his successors in office,” was a continuing obligation enforceable, against the sureties for loss occurring during a subsequent term of such official, so long as the bank continues to receive deposits of such official unless the sureties took steps to terminate their liability. Holmes v. Elder, 170 Tenn. 257, 94 S.W.2d 390, 1936 Tenn. LEXIS 11, 104 A.L.R. 1282 (1936).

5. Receipt of Interest on Deposits.

The identity of money raised for school purposes was not lost by a deposit thereof in a bank at interest, for the interest was but incidental. Maryland Casualty Co. v. McConnell, 148 Tenn. 656, 257 S.W. 410, 1923 Tenn. LEXIS 52 (1924).

9-3-101. Serial bonds authorized.

A municipal or public corporation organized under the laws of the state of Tennessee, including, but not limited to, counties, municipalities, metropolitan governments, utility districts, and industrial development boards or corporations, may, by resolution duly adopted by its governing body, authorize the issuance, in lieu of serial bonds, of fully registered bonds, without coupons, payable in installments corresponding to the maturities of such serial bonds. Such resolution shall provide that at the request of the holder of an installment bond such municipality or public corporation shall have prepared, executed and delivered to the holder, in exchange for such installment bond, serial bonds in an aggregate principal amount equal to the principal amount of such installment bond then unpaid, having maturities corresponding to the maturities of the installments of principal of such installment bond then unpaid, and bearing interest at the same rate or rates as provided in such installment bond. Upon any such exchange, such installment bond shall be cancelled. The reasonable expenses in connection with such exchange shall, at the option of the municipal or public corporation, be paid by the holder or the issuer. Until so exchanged, such installment bonds shall in all respects be entitled to the same benefits as the serial bonds to be issued.

Acts 1985, ch. 118, § 9.

Compiler's Notes. Former part 1 of this chapter, relating to general audit provisions, was transferred in 1985 to part 2 of this chapter.

Cross-References. Public entities, information concerning debt obligation issuances, § 9-21-134.

9-3-102. Facsimile signatures and seals on public securities.

1. As used in this chapter, unless the context clearly otherwise requires:
   1. “Facsimile” means a reproduction by engraving, imprinting, stamping, lithographing or other means;
   2. “Municipality” means any county, incorporated city or town, school district, utility district, improvement district, taxing district, housing authority, industrial development board, health and educational facilities board, or other district, authority, commission, board, public body or political subdivision in this state; and
   3. “Public security” means any bond, note, warrant, certificate of indebtedness or other obligation for the payment of money authorized to be issued by a municipality.
2. Notwithstanding any other law:
   1. Any public security required to be executed by the officers of a municipality may be executed with the facsimile rather than the manual signatures of such officers if so provided in the proceedings authorizing the issuance of such public security; provided, that at least one (1) such signature on each public security shall be manually subscribed or, in the alternative, in the case of any public security being authenticated by a corporate trustee pursuant to the terms of an indenture of trust or other trust instrument, only the signature of the authenticating agent of such trustee need be manually subscribed on such public security, if so provided in such proceedings; and
   2. A facsimile of the official seal of a municipality may be placed on any public security in lieu of the manual impress of such seal, if so provided in the proceedings authorizing the issuance of such public security.
3. This section is in addition and supplemental to existing law and shall not repeal any other law permitting the use of facsimile signatures or seals on public securities.

Acts 1985, ch. 118, § 10.

Compiler's Notes. Former § 9-3-102 was transferred to § 9-3-202 in 1982.

9-3-103. Term of loan agreements — Security for loan agreement.

Whenever any county, metropolitan government, incorporated town or city or special district of this state is authorized by law to enter into any loan agreement, indenture or other contract or instrument for the borrowing of money, such loan agreement, indenture or other contract or instrument may be for such term as the parties thereto may agree, but in no event may such term exceed forty (40) years or the term otherwise authorized by law, and may provide for such security as authorized by law for the term of such loan agreement, indenture or other contract or instrument.

Acts 1985, ch. 118, § 11.

Compiler's Notes. Former § 9-3-103 was transferred to § 9-3-203 in 1985.

Part 2
General Audit Provisions

9-4-101. Collateral.

“Collateral” means eligible collateral pledged by a state depository.

Acts 1985, ch. 118, § 13.

Compiler's Notes. Former § 9-4-101 (Acts 1919, ch. 29, §§ 1, 2; Shan. Supp., §§ 20094¼, 294½; Code 1932, §§ 253, 254; T.C.A. (orig. ed.), § 9-401; Acts 1983, ch. 91, § 2), concerning deposit of state funds, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

9-4-102. Default.

“Default” may include, but is not limited to:

1. The failure of any state depository to return any state deposit, including earned interest, in accordance with the terms of the deposit contract;
2. The failure of any state depository to pay any check, draft or warrant drawn by the state treasurer;
3. The failure of any state depository to honor any request for electronic transfer of funds to the state;
4. The failure of any state depository to account for any check, draft, warrant, order, deposit certificate or money entrusted to it by the state;
5. The issuance of any order of any court or the taking of any formal action by any supervisory authority, which has the effect of restraining a state depository from making payments of deposit liabilities;
6. The appointment of a receiver for a state depository; or
7. Any other action which the state treasurer determines to place state deposits in jeopardy.

Acts 1985, ch. 118, § 14.

Compiler's Notes. Former § 9-4-102 (Code 1858, § 230 (deriv. Acts 1835-1836, ch. 27, § 10); Shan., § 278; Code 1932, § 222; mod. C. Supp. 1950, § 222; T.C.A. (orig. ed.), § 9-402; Acts 1983, ch. 91, § 3), concerning deposit of receipts by treasurer, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

Cross-References. Default, § 9-4-406.

9-4-103. Eligible collateral.

“Eligible collateral” means:

1. Bonds of the United States or any of its agencies;
2. Obligations guaranteed by the United States or any of its agencies, the payments of which are fully guaranteed both as to principal and interest by the United States;
3. Bonds of the state of Tennessee, including any revenue bond issued by any agency of the state specifically including institutions under the control of the state board of regents, the board of trustees of the University of Tennessee and bonds issued in the name of the state school bond authority;
4. Bonds of any utility district, county or municipal corporation of the state of Tennessee, including bonds payable from revenues (expressly excluding bonds of any road, levee or drainage district) upon which such bonds there has been no default in the payment of interest more than thirty (30) days upon any one (1) installment of interest, for the five (5) years next preceding the deposit of such bonds;
5. Loans to students guaranteed one hundred percent (100%) by the Tennessee student assistance corporation, during the dormant period of such loan;
6. Bonds issued under title 7, chapters 37 and 53, or under title 48, chapter 101, part 3, that are rated “A” or higher by any nationally recognized rating service;
7. In addition, the state treasurer, with the concurrence of the commissioners of finance and administration and of financial institutions, may accept any other collateral security which is acceptable to the secretary of the treasury to secure the United States for deposits of public money in tax and/or loan accounts;
8. An irrevocable letter of credit issued by the federal home loan bank; provided, that:
   1. The federal home loan bank is rated investment grade by at least one (1) nationally recognized securities rating service; and
   2. The state treasurer may require the state depository to promptly pledge securities in lieu of the letter of credit if the state treasurer believes it necessary to protect public funds;
9. A surety bond issued by an insurance company licensed under the laws of this state that meets the following:
   1. 1. The company has a financial strength rating, also known as claims-paying ability, in one (1) of the two (2) highest categories by at least one (1) nationally recognized statistical rating agency; and
      2. Any other financial or participation criteria and conditions established by the state funding board;
   2. The company offering the surety bond and the form of the bond is approved by the state funding board;
   3. The amount of surety bond pledged by any one (1) state depository or qualified public depository in lieu of other eligible collateral shall not exceed thirty million dollars ($30,000,000) or fifty percent (50%) of all collateral for that institution required to be pledged to the state treasurer or to the collateral pool, whichever is lower;
   4. The treasurer shall monitor the financial strength rating of a qualified insurance company no less than weekly, and at least annually shall file a report with the state funding board and the collateral pool board on the condition of the qualified insurance company. If the condition of an insurer changes to the extent that the issuer would no longer be qualified under the requirements of subdivision (9)(A), the treasurer shall immediately notify the state funding board and the collateral pool board; and the insurer shall thereafter become disqualified;
   5. In the event an insurer becomes disqualified under subdivision (9)(D), the state depository or qualified public depository using the insurer's surety bond shall be required within thirty (30) days' notice from the treasurer to substitute other eligible collateral or to otherwise meet the required collateral level;
   6. Notwithstanding the disqualification of an insurer under subdivisions (9)(D) and (E), the surety bond of the insurer shall remain in effect until its expiration, nonrenewal or termination as otherwise permitted by law;
   7. In addition to the authority otherwise provided in this section or by law, the state treasurer may require the state depository or qualified public depository to promptly pledge eligible collateral in lieu of the surety bond if the treasurer makes a finding that additional collateral is necessary to protect public funds;
   8. A surety bond authorized in this subdivision (9) may only be used to secure funds in the custody of the state treasurer or to secure funds covered by the collateral pool created under part 5 of this chapter; and
   9. In the event that an issuer of surety bonds desires to withdraw from the program or to terminate a surety bond, the bond issuer shall give the state treasurer and the insured state depository or qualified public depository no less than sixty (60) days' advance notice of the withdrawal, nonrenewal or cancellation of the bonds; or
10. State or municipal bonds from other states or from municipalities in other states; provided, that:
    1. The bond meets the definition of “qualified tax-exempt obligation” as defined in Section 265(b)(3) of the Internal Revenue Code of 1986 (26 U.S.C. § 265(b)(3));
    2. The bond is rated AA-, Aa3, or a higher rating by a nationally recognized bond rating service;
    3. The bond is not a structured debt instrument; and
    4. If the bond is downgraded below the minimum rating, the state depository shall substitute other eligible collateral or otherwise meet the required collateral levels within two (2) working days.

Acts 1985, ch. 118, § 15; 1986, ch. 551, § 2; 1994, ch. 586, § 1; 1997, ch. 217, §§ 3, 14; 2009, ch. 6, § 1; 2012, ch. 942, § 1; 2013, ch. 202, § 1; 2018, ch. 752, §§ 1, 2.

Compiler's Notes. Former § 9-4-103 (Acts 1883, ch. 132, § 1; Shan., § 279; Code 1932, § 223; mod. C. Supp. 1950, § 223; Acts 1957, ch. 308, § 1; T.C.A. (orig. ed.), § 9-403; Acts 1983, ch. 91, § 4), concerning certificates of deposit, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

9-4-104. Loss.

“Loss” includes, but is not limited to:

1. The principal amount of the state deposit;
2. All accrued interest through the date of default;
3. Additional interest at the rate the state deposit was earning on the total of subdivisions (1) and (2) through the day of payment to the state by a liquidator or other third party or through the date of sale by the state treasurer or the state treasurer's agent; and
4. Attorney's fees incurred in recovering state deposits.

Acts 1985, ch. 118, § 16.

Compiler's Notes. Former § 9-4-104 (Acts 1937, ch. 33, § 26; 1939, ch. 11, § 13; C. Supp. 1950, § 255.26; T.C.A. (orig. ed.), § 9-404), concerning petty cash accounts, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

9-4-105. Required collateral.

“Required collateral” means collateral whose market value is equal to one hundred five percent (105%) of the value of the state deposit secured thereby, less so much of such amount as is protected by the federal deposit insurance corporation.

Acts 1985, ch. 118, § 17; 1990, ch. 702, § 2.

Compiler's Notes. Former § 9-4-105 (Acts 1937, ch. 33, § 26; 1939, ch. 11, § 13; C. Supp. 1950, § 55.26; T.C.A. (orig. ed.), § 9-405), concerning special federal funds, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

9-4-106. State deposit.

“State deposit” means all state funds which are placed in a state depository, plus interest accrued thereon.

Acts 1985, ch. 118, § 18.

Compiler's Notes. Former § 9-4-106 (Acts 1949, ch. 137, § 1; C. Supp. 1950, § 252.2 (Williams, § 255.48a); Acts 1971, ch. 249, § 1; T.C.A. (orig. ed.), § 9-406; Acts 1983, ch. 90, § 1; 1983, ch. 91, § 2), concerning investment in government bonds, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

9-4-107. State depository.

1. 1. “State depository” means:
      1. Any savings bank (savings institution), or any bank chartered by the state of Tennessee;
      2. Any national bank, or federal savings institution that has its main office located in this state; or
      3. Any national or state bank, or any federal or state savings institution that has its main office located outside this state and that maintains one (1) or more branches in this state which are authorized to accept federally insured deposits;

         that has been designated by the state treasurer, the governor and the commissioner of finance and administration as a state depository.

   2. Notwithstanding any other law to the contrary, an automated teller machine or such other similar type receptacle or device shall not be considered a branch for purposes of this section.
2. Whenever the satisfactory conduct of the state's business clearly demands it, and not otherwise, a bank, savings institution or trust company that does not otherwise meet the requirements in subsection (a) may be designated as a state depository by the state treasurer, the governor and the commissioner of finance and administration. In the event it becomes necessary to designate such a bank, savings institution or trust company, the department or agency seeking such designation shall make a written request to the officials enumerated above, giving in detail the necessity for the designation and all other information the officials deem material. Any bank, savings institution or trust company designated under this subsection (b) shall be deemed a state depository only for the specific purpose for which it was designated and shall not be recognized as a state depository for any other purpose.
3. A bank, savings institution or trust company located outside this state shall not be eligible to be designated as a state depository pursuant to this section unless the bank, savings institution or trust company:
   1. Agrees that this chapter shall govern in determining its rights and responsibilities as a state depository; and
   2. Agrees to be subject to the jurisdiction of the courts of this state, or of the courts of the United States which are located within this state, for the purpose of any litigation arising out of this chapter.
4. Notwithstanding § 12-4-108 to the contrary, the public official described in § 12-4-108(b) shall have the power to enter into a trust agreement with any savings institution or bank described in subsection (a) for the safekeeping, custodial care and servicing of securities substituted for retained funds pursuant to § 12-4-108.
5. It is the duty of the commissioner of financial institutions to make inquiry, on a timely basis, of the primary regulatory authority respecting the condition and safety of each out-of-state state chartered bank and of each out-of-state state chartered savings institution as a state depository, and to advise the state treasurer and the commissioner of finance and administration of the results. Such inquiry shall be made on at least an annual basis.

Acts 1985, ch. 118, § 19; 1986, ch. 551, § 11; 1986, ch. 923, § 1; 1989, ch. 183, § 1; 1997, ch. 217, § 15; 2001, ch. 33, §§ 1, 2.

Compiler's Notes. Former § 9-4-107 (Acts 1869-1870, ch. 81, § 6; Shan., § 268; Code 1932, § 212; C. Supp. 1950, § 212; T.C.A. (orig. ed.), § 9-407), concerning interest accounts kept by commissioner of finance and administration, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

Attorney General Opinions. Designation of a branch of an out-of-state bank as a state depository, OAG 97-031, 1997 Tenn. AG LEXIS 30 (3/31/97).

9-4-108. Trustee custodian.

1. “Trustee custodian” means any bank or federal reserve bank or branch thereof or the federal home loan bank which the state treasurer has designated as trustee custodian to hold eligible collateral on behalf of the state treasurer. Such designation by the state treasurer of a bank other than a federal reserve bank or the federal home loan bank shall be submitted to the commissioners of financial institutions and finance and administration for their concurrence.
2. Financial institutions located outside this state shall be eligible to apply to be designated as trustee custodians pursuant to subsection (a); provided, that the financial institution:
   1. Is approved to serve as a trustee custodian to hold collateral pledged to secure United States treasury tax and loan accounts;
   2. Agrees that the laws of this state shall govern in determining its rights and responsibilities as a trustee custodian; and
   3. Agrees to be subject to the jurisdiction of the courts of this state, or of the courts of the United States which are located within this state, for the purpose of any litigation arising out of this chapter.

Acts 1985, ch. 118, § 20; 1990, ch. 702, § 6.

Compiler's Notes. Former § 9-4-108 (Code 1958, § 219 (deriv. Acts 1835-1836, ch. 12, § 13); Shan., § 265; Code 1932, § 209; mod. C. Supp. 1950, § 209; T.C.A. (orig. ed.), § 9-408), concerning copies of commissioner of finance and administration's records, was repealed by Acts 1985, ch. 118, § 12. For new law generally, see parts 1-3 of this chapter.

Part 2
Accounts or Appropriations for Designated Purposes

9-9-101. State funding board.

The state funding board shall be composed of the governor, the commissioner of finance and administration, the state treasurer, the secretary of state, and the comptroller of the treasury. The governor shall serve as the chair, and the comptroller shall serve as the vice chair and secretary. The board has the power to prescribe its rules and regulations and govern its meetings and procedures as it may deem advisable. A majority of the board constitutes a quorum and the confirming vote of at least three (3) members of the board is required.

Acts 1927, ch. 1, § 4; 1929, ch. 125, § 1; 1929 (Ex. Sess.), ch. 9, § 1; Code 1932, § 1800; Acts 1937, ch. 33, § 45; 1937, ch. 258, § 1; 1939, ch. 11, § 29; 1941, ch. 7, § 1; C. Supp. 1950, §§ 255.47, 1800.1 (Williams, §§ 255.48, 1800.1); Acts 1959, ch. 9, § 8; 1959, ch. 155, § 1; impl. am. Acts 1961, ch. 97, § 3; Acts 1976, ch. 806, § 1(46); T.C.A. (orig. ed.), § 9-901; Acts 2010, ch. 982, § 1; 2013, ch. 176, § 2.

Compiler's Notes. The state funding board, created by this section, terminates June 30, 2024. See §§ 4-29-112, 4-29-245.

Acts 2013, ch. 176, § 1 provided that the act, which deleted subsection (b), shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which deleted subsection (b), shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

Cross-References. Age discrimination prohibited for appointments to state boards and commissions, § 4-1-403.

Bonds for aid of consolidating counties, § 5-3-122.

Federal loans, approval by funding board, § 4-4-116.

State funding board attached to office of the comptroller of the treasury, § 4-3-306.

Law Reviews.

Financing Public Needs After Tax Reform (Jon G. Roach), 23 Tenn. B.J. 19 (1987).

Attorney General Opinions. In the event the general assembly does not enact an annual appropriations act, principal and interest on long-term general obligation bonds may still be paid, OAG 00-083, 2000 Tenn. AG LEXIS 86 (5/4/00).

9-9-102. Maintenance of records on the condition of all debt obligations and payments.

The commissioner of finance and administration shall maintain, or cause to be maintained, records on the condition of all debt obligations described in § 9-9-105(a) and of the payment of the principal of and premium, if any, and interest on such obligations.

Acts 1899, ch. 8, § 1; Shan., § 1068a2; Code 1932, § 1802; mod. C. Supp. 1950, § 1802; modified; T.C.A. (orig. ed.), § 9-903; Acts 1985, ch. 118, § 64; 2000, ch. 598, § 1; 2013, ch. 176, § 3.

Compiler's Notes. Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section,  shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

9-9-103. Debt service payments.

There is hereby appropriated to the state funding board on a direct and continuing basis a sum sufficient for payment of debt service (principal, interest and premium, if any) on outstanding bonds and other debt obligations (including notes), amounts due on contracts or agreements authorized under this chapter, and necessary related expenses. The state funding board is authorized to make debt service payments on outstanding bonds and other debt obligations (including notes), and make payments due under contracts and agreements authorized under this chapter, and necessary related expenses, as provided in this section from any funds held in the state treasury not otherwise legally restricted, independent of an appropriation bill as contemplated by chapter 4, part 51 of this title.

Acts 1937, ch. 165, § 1 (Williams, § 1811.12); impl. am. Acts 1949, ch. 52, § 1; modified; T.C.A. (orig. ed.), § 9-904; Acts 1998, ch. 582, § 7; 2001, ch. 264, § 1; 2013, ch. 176, § 4.

Compiler's Notes. Acts 1998, ch. 582, § 11 provided that if any court of last resort should determine the tax levied by Acts 1997, ch. 316 to be invalid, then immediately upon the effective date of the court's order, the prior sections amended by Acts 1998, ch. 582, §§ 7-10 shall be revived as in effect prior to January 1, 1998, and the reference in Acts 1998, ch. 582, § 1 to § 67-3-1303 shall be deleted and § 67-3-904 shall be substituted instead.

Acts 1998, ch. 582, § 13 provided that the amendments by §§ 7-11 of that act apply retroactively to January 1, 1998.

Acts 2013, ch. 176, § 1 provided that the act, which deleted subsection (a), shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which deleted subsection (a), shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

9-9-104. Pledge of revenues — Covenants for protection of bondholders.

1. For the payment of the principal of and interest on the bonds of the state of Tennessee issued under this chapter outstanding as of July 1, 2013, there is hereby pledged the annual proceeds of a tax of not less than five cents (5¢) per gallon upon gasoline, the annual proceeds of the special tax on petroleum products provided for by § 67-3-203, one-half (½) of the annual proceeds of motor vehicle registration fees now or hereafter required to be paid to the state, and the entire annual proceeds of franchise taxes imposed by the franchise tax law, compiled in title 67, chapter 4, part 21. This pledge shall not extend to any bonds issued under this chapter after July 1, 2013.
2. As long as any bonds issued under this chapter that were outstanding as of July 1, 2013 remain outstanding, the state of Tennessee hereby covenants with the persons who now or may hereafter hold such bonds that it will not decrease by legislative action any of the fees or taxes that constitute the special revenues pledged by this section, or eliminate from the requirement to pay such fees or taxes any substance, motor vehicle or corporation on account of which the payment of such fees or taxes is now required, and that it will levy a tax of not less than five cents (5¢) per gallon upon gasoline or other motor vehicle fuel, unless the state funding board shall certify that all payments due the state funding board under this chapter have been made in full, that the state is not in default in the payment of any outstanding debt or in the payment of interest thereon, and that such fees and taxes at lower rates to be specified by the state funding board, in such year or years (not exceeding two (2) years), will be sufficient to provide funds adequate to meet all payments required to be made by the state funding board in such year or years, as well as to provide for the other obligations and expenses of the state for such year or years, to be defrayed therefrom, in which event the state of Tennessee shall be under no obligation to charge or levy in such year or years fees or taxes in excess of the rates so certified by the state funding board.
3. In no event shall the pledge and covenants set forth in this section extend past or be effective after June 30, 2033.

Acts 1937, ch. 165, § 13 (Williams, § 1811.24); impl. am. Acts 1949, ch. 52, § 1; modified; Acts 1977, ch. 3, § 1; T.C.A. (orig. ed.), § 9-905; Acts 1998, ch. 582, §§ 1, 8; 2013, ch. 176, § 5.

Compiler's Notes. For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

Acts 1998, ch. 582, § 11 provided that if any court of last resort should determine the tax levied by Acts 1997, ch. 316 to be invalid, then immediately upon the effective date of the court's order, the prior sections amended by Acts 1998, ch. 582, §§ 7-10 shall be revived as in effect prior to January 1, 1998, and the reference in Acts 1998, ch. 582, § 1 to § 67-3-1303 shall be deleted and § 67-3-904 shall be substituted instead.

Acts 1998, ch. 582, § 13 provided that the amendments by §§ 7-11 of that act apply retroactively to January 1, 1998. Section 8, which amended this section, substituted “the special tax on petroleum products provided for in § 67-3-1303” for “the volatile substances inspection fee” in the first sentence.

Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section,  shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

9-9-105. Bonds constitute direct state obligations — Debt obligations constitute a charge and lien — Satisfaction of debt service coverage test.

1. All bonds issued (and to be issued) under this chapter, all notes issued (and to be issued) in anticipation of such bonds, and all tax revenue anticipation notes issued (and to be issued) under this chapter shall constitute direct general obligations of the state of Tennessee for the payment of the principal of and premium, if any, and interest on which there is also pledged the full faith and credit of the state of Tennessee. Subject only to § 9-9-104(a), all such debt obligations shall constitute a charge and lien upon the entire fees, taxes and other revenues and funds allocated to the general fund, the debt service fund, and the highway fund; and, if necessary, upon the first such fees, taxes, revenues and funds thereafter received and allocated to such funds, except only such fees, taxes, revenues and funds as may be otherwise legally restricted.
2. The state of Tennessee hereby covenants with the persons who now or may hereafter hold any debt obligations described in § 9-9-105(a) that it will raise fees, taxes and other revenues sufficient, together with funds on hand derived from all sources, to pay the principal of and premium, if any, and interest on such obligations as and when due and payable.
3. 1. The state of Tennessee hereby covenants with the persons who now or may hereafter hold any bonds issued under this chapter that no bonds shall be issued under this chapter after July 1, 2013, unless the following debt service coverage test is satisfied: the amount necessary to pay the maximum annual debt service payable in the then current or any future fiscal year, is not greater than ten percent (10%) of the amount of total state tax revenue allocated to the general fund, to the debt service fund, and to the highway fund for the immediately preceding fiscal year.
   2. For purposes of satisfying this test, “state tax revenues” are defined as those taxes, licenses, fees, fines, and permits collected by the department of revenue and allocated to the general fund, the debt service fund, and the highway fund excluding the portion of those taxes shared with local governments.
   3. “Debt service”, for this purpose, means and includes principal of and interest on all outstanding bonds issued under this chapter and the bonds then proposed to be issued under this chapter, in the aggregate; provided, that in determining the outstanding bonds, there shall be excluded any outstanding bonds the payment of which has been fully provided for by funds or securities (including expected income therefrom), or both, set aside for that purpose.

Acts 1937, ch. 165, § 8 (Williams, § 1811.19); modified; T.C.A. (orig. ed.), § 9-906; Acts 1998, ch. 582, § 9; 2013, ch. 176, § 5.

Compiler's Notes. For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

Acts 1998, ch. 582, § 11 provided that if any court of last resort should determine the tax levied by Acts 1997, ch. 316 to be invalid, then immediately upon the effective date of the court's order, the prior sections amended by Acts 1998, ch. 582, §§ 7-10 shall be revived as in effect prior to January 1, 1998, and the reference in Acts 1998, ch. 582, § 1 to § 67-3-1303 shall be deleted and § 67-3-904 shall be substituted instead.

Acts 1998, ch. 582, § 13 provided that the amendments by §§ 7-11 of that act apply retroactively to January 1, 1998.

Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section, shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

9-9-106. Certification of amount necessary for payment of debt obligations.

The state funding board shall certify to the commissioner of finance and administration from time to time, but not less than annually, the amount necessary, together with funds on hand derived from all sources, to enable the board to provide for the payment of the principal of and premium, if any, and interest on all debt obligations described in § 9-9-105(a) as and when the same shall become due and payable.

Acts 1937, ch. 165, § 8 (Williams, § 1811.19); impl. am. Acts 1949, ch. 52, § 1; modified; impl. am. Acts 1959, ch. 9, § 8; Acts 1973, ch. 336, § 1; T.C.A. (orig. ed.), § 9-907; Acts 2013, ch. 176, § 5.

Compiler's Notes. For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section, shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

Cross-References. Parts of 1937 act left unrepealed, § 1-2-106.

9-9-107. Payments by state funding board.

The state funding board shall provide for the payment of the principal of and premium, if any, and interest on all bonds issued under this chapter, all notes issued in anticipation of such bonds and all tax revenue anticipation notes issued under this chapter, amounts due on contracts or agreements described in § 9-9-202(g) and (h) or other contracts or agreements relating to such debt obligations, and necessary related expenses incurred under this chapter as the same shall become due, out of the fees, taxes and other revenues and funds available for such purposes.

Acts 1937, ch. 165, §§ 9, 10 (Williams, §§ 1811.20, 1811.21); impl. am. Acts 1959, ch. 9, § 8; T.C.A. (orig. ed.), § 9-908; Acts 2000, ch. 598, § 2; 2013, ch. 176, § 5.

Compiler's Notes. For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section, shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

9-9-108. State funding board's authority to deposit or transfer funds.

The state funding board may:

1. Deposit funds and revenues paid to it in the pooled investment fund authorized by § 9-4-603 or in a deposit account at a bank or trust company located within or without this state, which will give such security for such deposit of the kind and type now required by law for the deposit of other state funds; or
2. Transfer cash, pending its application to the payment of the principal of or interest on the outstanding obligations of the state, into a fiduciary or trust account with a bank or trust company located within or without this state, under terms as the board may require to ensure the safety of the funds.

Acts 1937, ch. 165, § 10 (Williams, § 1811.21); impl. am. Acts 1959, ch. 9, § 8; T.C.A. (orig. ed.), § 9-909; Acts 1985, ch. 118, § 65; 2000, ch. 598, § 2.

Cross-References. Collateral for deposit of state funds, title 9, ch. 4.

9-9-109. Custodian for securities.

The state funding board is expressly authorized to contract with a bank or trust company located within or without this state to act as a custodian for securities held by or for the benefit of the board, including collateral pledged pursuant to § 9-9-108(1), under terms as the board may require to ensure the safety of the securities.

Acts 1937, ch. 165, § 3 (Williams, § 1811.14); impl. am. Acts 1959, ch. 9, § 8; T.C.A. (orig. ed.), § 9-910; Acts 1985, ch. 118, § 66; 2000, ch. 598, § 2.

Cross-References. Collateral for state funds, title 9, ch. 4.

9-9-110. Investment of cash not immediately required.

Cash in the hands of the state funding board not immediately required for the payment of the principal of or interest on outstanding obligations of the state and held as provided by § 9-9-108 may be invested, in the board's discretion, in general obligation debt of the state of Tennessee or in any other obligations which are legal for the investment of funds of the state of Tennessee, with such yield and maturity as determined by the board after consultation with the state treasurer.

Acts 1937, ch. 165, § 11 (Williams, § 1811.22); impl. am. Acts 1959, ch. 9, § 8; Acts 1977, ch. 3, § 2; T.C.A. (orig. ed.), § 9-911; Acts 1985, ch. 118, § 67; 2000, ch. 598, § 2.

Compiler's Notes. For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

9-9-111. Vested rights of holders of debt obligations.

The holders of all debt obligations of the state of Tennessee described in § 9-9-105(a) and all persons who may hereafter purchase such obligations shall have, and are hereby declared to have, a vested right in the performance of the covenants and pledges contained in this chapter, and the performance of the duties imposed upon any officer or agency of the state of Tennessee by or pursuant to this chapter may be enforced by the holder of any such obligation by appropriate proceedings; provided, that no such holders or purchasers of debt obligations issued after July 1, 2013, shall have any such rights with respect to § 9-9-104.

Acts 1937, ch. 165, § 12 (Williams, § 1811.23); impl. am. Acts 1949, ch. 52, § 1; modified; impl. am. Acts 1959, ch. 9, § 8; Acts 1977, ch. 3, § 5; T.C.A. (orig. ed.), § 9-916; Acts 1998, ch. 582, § 10; 2013, ch. 176, § 6.

Compiler's Notes. Section 67-3-911 deemed this section to be applicable to and to include the special tax on petroleum products levied by § 67-3-904, in lieu of the fees for inspection of volatile substances, so as not to effect a decrease by legislative action of the fees or taxes required by law to be paid at the time of enactment of the covenants.

For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

Acts 1998, ch. 582, § 11 provided that if any court of last resort should determine the tax levied by Acts 1997, ch. 316 to be invalid, then immediately upon the effective date of the court's order, the prior sections amended by Acts 1998, ch. 582, §§ 7-10 shall be revived as in effect prior to January 1, 1998, and the reference in Acts 1998, ch. 582, § 1 to § 67-3-1303 shall be deleted and § 67-3-904 shall be substituted instead.

Acts 1998, ch. 582, § 13 provided that the amendments by §§ 7-11 of that act apply retroactively to January 1, 1998.

Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section, shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

9-9-112. Exemption from taxes.

Principal of and interest on debt obligations issued under this chapter shall be exempt from taxation by the state, or by any county, municipality or taxing district of the state, except inheritance, transfer and estate taxes.

Acts 1937, ch. 165, § 15 (Williams, § 1811.26); 1977, ch. 3, § 6; T.C.A. (orig. ed.), § 9-917; Acts 2013, ch. 176, § 6.

Compiler's Notes. For codification of Acts 1937, ch. 165, see the Session Law Disposition Tables in Volume 13 of the Tennessee Code Annotated.

Acts 2013, ch. 176, § 1 provided that the act, which amended this section, shall be known and may be cited as the “Hawkins-Wilson Act.”

Acts 2013, ch. 176, § 11 provided that nothing in the act, which amended this section, shall be construed so as to impair the obligation of any contract made by the state of Tennessee upon any bond of the state issued under title 9, chapter 9 outstanding as of July 1, 2013.

Cross-References. Gift, estate and inheritance taxes, title 67, ch. 8, parts 1-5.

9-9-113. Bond term not to exceed lifetime of item financed — Tax exempt status.

1. No funds obtained through the sales of any bonds or notes of the state of Tennessee as provided for by this chapter shall be used to purchase or otherwise obtain any equipment, goods, or services, unless the equipment, goods, or services shall have a reasonably anticipated lifetime of use equal to or greater than the period of time for which the bonds or notes are issued and during which interest is payable for them. The “reasonably anticipated lifetime” within the meaning of this section shall be determined by the state building commission for projects under its jurisdiction and by other appropriate authority designated by the state funding board for all projects or programs not under the jurisdiction of the state building commission. Architectural, engineering, and other like services, which are determined by the state building commission or other appropriate authority designated by the state funding board to be a normal part of the project or program cost are not precluded by this section from funding from bond or note proceeds.
2. For the purpose of ensuring that the bonds, notes and other obligations issued after September 1, 1986, pursuant to this chapter maintain their tax-exempt status as may be provided by the Internal Revenue Code of 1986 (26 U.S.C.), as amended, no state officer or employee or user of a project or program shall authorize or allow any change, amendment or modification to a project or program financed or refinanced with the proceeds of such obligations which change, amendment or modification would affect the tax-exempt status of such obligations unless the change, amendment, or modification shall have received the prior approval of the office of state and local finance in the office of the comptroller of the treasury and the state funding board. Failure to receive such approval shall render any change, amendment, or modification null and void.

Acts 1977, ch. 222, § 1; T.C.A., § 9-929; Acts 1987, ch. 114, § 1; 2016, ch. 571, § 3.

Cross-References. Revenues to include proceeds of debt obligations, Tenn. Const., art. II, § 24.

9-9-114. Records of state obligations payments.

The secretary of the funding board shall keep, or cause to be kept, appropriate records concerning the payment of obligations of the state issued under this chapter, including information regarding items redeemed.

Acts 1957, ch. 297, § 1; T.C.A., § 9-925; Acts 2000, ch. 598, § 3.

9-9-115. Destruction of paid or cancelled bonds by paying agent.

1. The state of Tennessee, acting by resolution of the state funding board, may authorize and direct the paying agent for its bonds, notes and coupons, or other person in possession of its bonds, notes and coupons, to destroy all bonds, notes and coupons duly paid and cancelled.
2. Such bonds, notes and coupons duly paid and cancelled during any fiscal year beginning July 1 and ending on the following June 30 may be destroyed only after the fiscal audit of the appropriate state agency covering the fiscal year has been completed, and the department of audit will notify the state funding board that due account has been made of such duly paid and cancelled bonds, notes and coupons. The paying agent or other person in possession of the state's bonds, notes and coupons shall furnish a certified list of bonds, notes and coupons duly paid and cancelled, showing for each issue of bonds and notes: the bond, note and coupon number, the amount, the date paid, and such additional information as the state funding board by resolution may require.
3. This section shall be in addition to any other law. Where this section is in conflict with other law, this section shall prevail.

Acts 1977, ch. 273, §§ 1, 2; T.C.A., § 9-930.

9-9-116. Technical advice — Expenses of carrying out chapter.

The state funding board is hereby authorized to procure such legal and technical advice, approving opinions and such financial assistance as it may consider necessary in connection with the carrying into effect of  this chapter, and is also authorized to pay all necessary expenses, including costs of advertisement, printing bonds, certificates and coupons, publication of all releases, purchases of all necessary books and records, and all other incidental expenses as may be necessary. All such expenses, as well as the amount of any discount at which bonds issued under this chapter shall be sold, may be funded by bonds issued under this chapter and authorized heretofore or hereafter by the general assembly, to be issued by the funding board.

Acts 1937, ch. 165, § 14 (Williams, § 1811.25); 1977, ch. 3, § 7; T.C.A. (orig. ed.), § 9-918; Acts 1998, ch. 582, § 2.

9-9-117. State immunity preserved.

Nothing in this chapter shall be construed as either waiving the immunity of the state of Tennessee from suit or as extending its consent to be sued, notwithstanding any other portion or portions of this chapter to the contrary.

Acts 1937, ch. 165, § 15 (Williams, § 1811.26); T.C.A. (orig. ed.), § 9-919.

9-9-118. Authority to establish guidelines, rules and regulations.

The state funding board is authorized to establish guidelines, rules or regulations with respect to certain agreements and contracts facilitating the issuance and sale of debt by governmental entities established by private act, 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 debt when such agreements and contracts have been authorized under the private act subject to guidelines of the state funding board.

Acts 2002, ch. 818, § 1; T.C.A. § 9-9-120.

Code Commission Notes.

This section was renumbered from § 9-9-120 to § 9-9-118 by authority of the Code Commission in 2020.

Part 2
Issuance and Sale of Bonds

9-11-101. Short title.

This chapter may be cited as the “Cash Basis Law of 1937.”

Acts 1937, ch. 300, § 1; C. Supp. 1950, § 3516.11; T.C.A. (orig. ed.), § 9-1101.

Cross-References. Public entities, information concerning debt obligation issuances, § 9-21-134.

9-11-102. Chapter definitions.

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

1. “Bond order,” as applied to a city, means the ordinance authorizing the issuance of bonds of the city, and, as applied to a county, means the order of resolution authorizing the issuance of bonds of the county;
2. “Clerk” means the officer acting as clerk of the governing body;
3. “Funding bonds” means bonds issued to pay or to extend the time of payment of debt not evidenced by bonds;
4. “Governing body,” as applied to a county, means the county legislative body, and, as applied to a city, means the city council, board of commissioners, board of mayor and aldermen or the board or body in which the general legislative powers of the city are vested;
5. “Refunding bonds” means bonds issued to pay or to extend the time of payment of debts evidenced by bonds; and
6. “Unit” includes each county and city in the state, which shall issue bonds under this chapter.

Acts 1937, ch. 300, § 2; C. Supp. 1950, § 3516.12; impl. am. Acts 1959, ch. 9, § 8; impl. am. Acts 1978, ch. 934, §§ 7, 36; T.C.A. (orig. ed.), § 9-1102; Acts 2010, ch. 868, § 30.

9-11-103. Issuance of funding bonds.

In order that the fiscal affairs of the counties and cities in the state may be placed on a cash basis, each such unit is authorized and empowered to issue at one (1) time or from time to time bonds of the unit for the following purposes:

1. Funding any or all warrants, notes or other indebtedness of such unit not evidenced by bonds, and interest accrued thereon, which shall be outstanding at the close of the fiscal year immediately preceding the authorization of such funding bonds;
2. Refunding any or all bonds of the unit, and interest accrued thereon, whether such unit issued such bonds or assumed or became liable therefor, including bonds not matured if the unmatured bonds be then redeemable or if the holders thereof be willing to surrender the same for retirement, and including bonds belonging to the sinking fund of such unit; and
3. Paying any redemption premium upon bonds so refunded and also such expenses as the governing body may deem reasonable and proper for carrying out this chapter.

Acts 1937, ch. 300, § 3; C. Supp. 1950, § 3516.13; T.C.A. (orig. ed.), § 9-1103.

Cross-References. Additional bonds authorized, § 9-11-109.

Administration by the comptroller of the treasury, 4-3-305.

Refunding on consolidation of counties, §§ 5-3-113 — 5-3-121.

9-11-104. Contents of bond order.

All bonds issued by a unit under this chapter shall be authorized by a bond order passed by the governing body of the unit. Notwithstanding any public or private statute relating to the unit, such bond order may be finally passed at the meeting at which the same shall be introduced. The bond order shall state:

1. A brief description of the indebtedness to be funded or refunded sufficient to identify such indebtedness, and the amount of redemption premium, if any, to be paid upon bonds refunded and the amount of expenses, if any, to be paid from the proceeds of bonds;
2. The maximum aggregate principal amount of bonds to be issued;
3. That a tax sufficient to pay the principal of and interest on the bonds shall be annually levied upon all taxable property in the unit; and
4. That the bond order shall take effect upon its passage and shall not be submitted to the voters of the unit.

Acts 1937, ch. 300, § 4; C. Supp. 1950, § 3516.14; T.C.A. (orig. ed.), § 9-1104.

9-11-105. Publication of bond order.

A bond order shall be published once in each of two (2) consecutive weeks after its final passage. Such publication shall be made in a newspaper published in the unit. If there is no such newspaper, the bond order shall be posted at the door of the building in which the governing body usually holds its meetings and at three (3) other public places in the unit. A notice in substantially the following form (the blanks being first properly completed), with the printed or written signature of the clerk appended thereto, shall be published with the bond order:

“The foregoing order (ordinance) was passed on the  day of  , 20  , and was first published (posted) on the  day of  , 20  .

“Any action or proceeding questioning the validity of the order (ordinance) or the indebtedness to be funded (or refunded) or the tax to be levied for the payment of the principal and interest of such bonds, must be commenced within thirty (30) days after its first publication (or posting).

Clerk.”

Acts 1937, ch. 300, § 6; C. Supp. 1950, § 3516.16; T.C.A. (orig. ed.), § 9-1105.

9-11-106. Limitation of actions to invalidate bonds.

Any action or proceedings in any court to set aside a bond order, or to obtain any other relief upon the ground that the order is invalid, or that the indebtedness to be funded or refunded is invalid, or that there is no authority for the levy of a tax to pay the principal of and interest on the bonds, must be commenced within thirty (30) days after the first publication of the notice aforementioned and the bond order referred to in the notice. After the expiration of such period of limitation, no right of action or defense founded upon the invalidity of the bond order or the indebtedness to be funded or refunded or the tax to be levied shall be asserted, nor shall the validity of the bond order or of the funding or refunding bonds to be issued or the tax to be levied for the payment of the principal of and interest thereon, be open to question in any court upon any ground whatever, except in an action or proceedings commenced within such period.

Acts 1937, ch. 300, § 7; C. Supp. 1950, § 3516.17; T.C.A. (orig. ed.), § 9-1106.

9-11-107. Resolution for issuance of bonds.

1. At any time after the passage of the bond order, the governing body of a unit shall have full authority by resolution to provide for the issuance of the bonds authorized by such bond order. Such resolution providing for the issuance of the bonds may be introduced and finally passed at any regular or duly called special meeting of the governing body and shall be in force and effect from and after its passage.
2. The governing body shall by resolution determine the rate or rates of interest to be paid on the bonds, and the time or times of payment of such interest, and the maturity or maturities of the bonds, which shall be at a time or times not exceeding twenty (20) years from the date of the bonds in the case of funding bonds, and not exceeding thirty (30) years from the date of bonds in the case of refunding bonds; provided, that with the approval of the comptroller of the treasury or the comptroller's designee, funding bonds may be made to mature at any time or times not exceeding thirty (30) years from the date of the bonds and refunding bonds may be made to mature at any time or times not exceeding forty (40) years from the date of the bonds.
3. The governing body shall also by resolution determine the form of the bonds, the officers by whom they shall be executed and the place or places in Tennessee or in any other state at which the principal and interest shall be payable.
4. In case any of the officers whose signatures appear on the bonds or coupons shall cease to be such officers before the delivery of such bonds, such signatures shall nevertheless be valid and sufficient for all purposes, the same as if they had remained in office until such delivery.
5. The bonds may be made registrable as to principal alone and as to both principal and interest, under such terms and conditions as may be determined by the governing body, and provisions may be made for the exchange of fully registered bonds for coupon bonds and of coupon bonds for fully registered bonds.

Acts 1937, ch. 300, § 8; C. Supp. 1950, § 3516.18; Acts 1969, ch. 283, § 3; T.C.A. (orig. ed.), § 9-1107; Acts 2010, ch. 868, § 31.

9-11-108. Annual statement by fiscal officer.

Before any funding or refunding bonds shall be issued under this chapter, a fiscal officer of the unit shall prepare a statement as of the beginning of the then current fiscal year, which statement shall show in detail the total outstanding bonds, notes, warrants and other evidences of indebtedness of the unit, together with the maturity dates thereof, interest rates, special provisions for payment, together with a description of the indebtedness proposed to be funded or refunded by the issuance of bonds. Such statement shall also show in detail the total tax collections of the unit for the preceding year, the amount of delinquent taxes, and the amount of expenditures of all funds during the preceding fiscal year, the proposed maturity or maturities of the new funding or refunding bonds to be issued, and any and all other pertinent information which may be requested by the comptroller of the treasury or the comptroller's designee. Such statement shall be filed with the comptroller of the treasury or the comptroller's designee, together with an application from the governing body of the unit requesting that the issuance of the proposed bonds be approved. If the comptroller of the treasury or the comptroller's designee shall determine that, in the comptroller of the treasury's or the comptroller's designee's opinion, the unit can fulfill this chapter as hereinafter set forth, the comptroller of the treasury or the comptroller's designee shall so certify in writing to the unit, and such certificate shall be recorded in the minutes of the unit.

Acts 1937, ch. 300, § 14; C. Supp. 1950, § 3516.23 (Williams, § 3516.24); T.C.A. (orig. ed.), § 9-1108; Acts 2010, ch. 868, § 32.

9-11-109. Sale price — Exchange — Premiums and discount.

The governing body may sell any or all of the bonds authorized under this chapter in such manner and for such price as it may determine to be for the best interest of the unit. Any or all of the bonds authorized under this chapter may be exchanged for the bonds to be refunded thereby or the evidences of indebtedness to be funded thereby, including bonds not matured or redeemable if the holder thereof be willing to surrender the same for retirement. Additional bonds may be authorized and sold under § 9-11-103(3), in an amount sufficient to pay:

1. Any redemption premium on bonds refunded; and
2. If such funding or refunding bonds shall be sold or delivered in exchange at a discount, the amount of such discount.

Acts 1937, ch. 300, § 9; C. Supp. 1950, § 3516.19; Acts 1969, ch. 283, § 4; T.C.A. (orig. ed.), § 9-1109.

9-11-110. Exercise of powers.

Except as hereinafter provided, the authority conferred by this chapter may be exercised at any time and from time to time, and the authorization of funding or refunding bonds by one (1) bond order shall not prevent the authorization of additional funding or refunding bonds by subsequent bond order or orders. One (1) resolution providing for the issuance of funding or refunding bonds may provide for the issuance of two (2) or more separate series of such bonds, and each series or class may have different terms and provisions from the others, and the bonds of each series or class may bear interest at different rates.

Acts 1937, ch. 300, § 12; C. Supp. 1950, § 3516.21 (Williams, § 3516.22); T.C.A. (orig. ed.), § 9-1110.

9-11-111. Exemption from taxation.

Any bonds issued pursuant to this chapter and the income therefrom are exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes and except as otherwise provided in this code.

Acts 1937, ch. 300, § 13; C. Supp. 1950, § 3516.22 (Williams, § 3516.23); T.C.A. (orig. ed.), § 9-1111; Acts 1988, ch. 750, § 41.

9-11-112. Tax levy and sinking fund provisions.

All bonds issued under this chapter shall be direct and general obligations of the unit issuing the same, for the payment of which the full faith and credit of the unit shall be irrevocably pledged. In each fiscal year while any funding or refunding bonds issued under this chapter shall be outstanding, there shall be levied upon all taxable property in the unit an ad valorem tax sufficient to pay the interest thereon as it falls due and the principal of such bonds which shall then have matured or which shall mature within the same fiscal year, and any sinking fund payments which may be provided for by the bonds or by the resolution authorizing the same, as well as all deficits in such interest, principal and sinking fund payments arising from failure to comply with this chapter or by failure to collect the taxes levied or otherwise; provided, that the governing body, in its discretion, may levy in any fiscal year a tax sufficient to pay, in addition to the interest and principal which shall fall due in such fiscal year, any portion of the interest or principal which shall fall due in any succeeding fiscal year, and may also levy in any fiscal year a tax for sinking fund payments in addition to the tax required for such payments by the resolution authorizing any of such bonds. The governing body may provide in the resolution authorizing the issuance of any such funding or refunding bonds that any sinking fund provided for such bonds shall be used solely for the purpose of redemption of the bonds authorized by such resolution, and all bonds so purchased or redeemed shall be cancelled and shall not be reissued.

Acts 1937, ch. 300, § 10; C. Supp. 1950, § 3516.20; T.C.A. (orig. ed.), § 9-1112.

9-11-113. Annual cash basis budget.

In order that the fiscal affairs of a unit may be maintained on a cash basis after issuance of any funding or refunding bonds under this chapter, and in order that the current receipts of such unit shall be sufficient to meet current expenditures, an annual budget shall be prepared by an official of the unit designated by the governing body for that purpose, which budget shall include the following:

1. The full amount required for interest on the indebtedness of the unit and for sinking funds and for principal of serial bonds maturing during the fiscal year;
2. A detailed statement of the amounts required during the fiscal year for the expense of conducting or operating each department, division, office or board and the subdivisions of each;
3. The amount of any cash deficit, being the sum of all outstanding and unpaid bills or other lawful obligations and all amounts payable to all special funds of the unit at the close of the preceding fiscal year incurred for debt or other lawful charges in connection with the operation of the unit, to the extent that such sum exceeds the cash on hand or on deposit to the credit of the general funds of the unit, exclusive, however, of any cash derived from prepaid taxes or other sources applicable to the budget of the succeeding fiscal year; and
4. An itemized estimate of the cash receipts to be available during the current fiscal year, but such itemized estimate shall be subject to the following provisions:
   1. Such estimate of collections of delinquent taxes shall not exceed an amount which represents the same percentage of the amount of taxes delinquent on the first day of the current fiscal year as the percentage of delinquent taxes outstanding on the first day of the preceding fiscal year which were actually collected in cash during such preceding fiscal year;
   2. Such estimate of collections of special assessments shall not exceed an amount which represents the same percentage of the amount of special assessments unpaid and owing to the unit on the first day of the current fiscal year as the percentage of special assessments unpaid and owing to the unit on the first day of the preceding fiscal year which were actually collected in cash during such preceding fiscal year;
   3. Such estimate of collections of miscellaneous revenues from sources other than taxes or special assessments shall in no instance nor as to any item be in an amount in excess of the amount of such miscellaneous revenues collected in cash in the preceding year; provided, that there may be included in the estimated cash receipts such amount of additional miscellaneous revenues to be derived from sources other than ad valorem taxes or special assessments as may be approved by the comptroller of the treasury or the comptroller's designee; and
   4. The amount of the cash surplus, being an amount not larger than the amount of cash on hand or on deposit to the credit of the general funds of the unit at the close of the preceding fiscal year exclusive, however, of any cash derived from prepaid taxes or other sources applicable to the budget of the succeeding fiscal year, to the extent that such cash is in excess of all outstanding and unpaid bills or other obligations lawfully incurred during such fiscal year and all amounts payable therefrom to all special funds of the unit.

Acts 1937, ch. 300, § 15; C. Supp. 1950, § 3516.24 (Williams, § 3516.25); T.C.A. (orig. ed.), § 9-1113; Acts 2010, ch. 868, § 33.

9-11-114. Appropriation ordinance.

After receiving the annual budget estimate, the governing body of the unit shall prepare an appropriation ordinance or resolution, using the budget estimate as a basis, but appropriating such sums as the governing body may deem proper for the expenses listed under § 9-11-113(2), whether greater or less than the budget estimate set forth under such subdivision (2), but no appropriation recommended by the budget estimate under § 9-11-113(1) and (3) shall be reduced by the governing body, and the taxes levied for such appropriations may be over and above all other taxes authorized or limited by law.

Acts 1937, ch. 300, § 15; C. Supp. 1950, § 3516.24 (Williams, § 3516.25); T.C.A. (orig. ed.), § 9-1114.

9-11-115. Tax levy for cash basis.

Immediately after the passage of the appropriation ordinance or resolution, the governing body shall pass an ordinance or resolution levying upon all property subject to taxation within the unit and basing such levy upon the current tax collection experience of the preceding fiscal year, such rate of tax as may be required to produce the sum necessary to balance the budget upon a cash basis. The sum necessary to balance the budget shall be ascertained by deducting from the total cash appropriations made under § 9-11-113(1), (2) and (3), such cash receipts applicable to such cash appropriations as may be estimated under the limitations of § 9-11-113(4)(A)-(D). In order that the current tax levy so made shall be truly based upon the current tax collection experience of the preceding year, such current tax levy shall be determined by dividing the sum necessary to be raised in order to balance the budget by a percentage which does not exceed the percentage obtained by dividing the amount of current taxes collected in cash in the preceding fiscal year by the amount of the taxes levied and payable in such preceding fiscal year.

Acts 1937, ch. 300, § 16; C. Supp. 1950, § 3516.25 (Williams, § 3516.26); T.C.A. (orig. ed.), § 9-1115.

9-11-116. Enforcement power of the comptroller of the treasury or comptroller's designee.

The comptroller of the treasury or the comptroller's designee shall require such periodic information from a unit operating under this chapter and make such audits as the comptroller of the treasury or the comptroller's designee deems necessary, to the end that it may be ascertained that the budget of the unit is kept balanced during the life of bonds issued under this chapter. The annual budget of each unit operating under this chapter shall be submitted to the comptroller of the treasury or the comptroller's designee at least three (3) weeks prior to its adoption. The comptroller of the treasury or the comptroller's designee must thereupon determine whether or not the budget will be in balance in accordance with this chapter. If the budget does not comply with this chapter, the comptroller of the treasury or the comptroller's designee shall have the power and authority to direct the governing body of the unit to adjust its estimates or to make additional tax levies sufficient to comply with this chapter. No budget shall be adopted by the governing body of a unit which shall have issued bonds under this chapter until it shall have been approved by the comptroller of the treasury or the comptroller's designee. The comptroller of the treasury or the comptroller's designee shall approve the budget only when the comptroller of the treasury or the comptroller's designee is satisfied that it complies with this chapter.

Acts 1937, ch. 300, § 17; C. Supp. 1950, § 3516.26 (Williams, § 3516.27); T.C.A. (orig. ed.), § 9-1116; Acts 2010, ch. 868, § 34.

9-11-117. Tax anticipation notes.

The governing body of any unit which shall have issued bonds under this chapter may issue tax anticipation notes under chapter 21 of this title.

Acts 1937, ch. 300, § 18; C. Supp. 1950, § 3516.27 (Williams, § 3516.28); T.C.A. (orig. ed.), § 9-1117; Acts 1982, ch. 580, § 2; 1988, ch. 750, § 42.

9-11-118. Remedies of bondholders.

1. Any holder of bonds issued under this chapter, or any person or officer being a party in interest, may either at law or in equity by suit, action or mandamus, enforce and compel the performance of the duties required by this chapter of the governing body or any board or officer of the unit.
2. Inasmuch as the purpose of this chapter is to place and maintain the fiscal affairs of the counties and cities in the state on a cash basis, this chapter shall constitute an irrepealable contract with the holders of bonds issued under this chapter.

Acts 1937, ch. 300, § 19; C. Supp. 1950, § 3516.28 (Williams, § 3516.29); T.C.A. (orig. ed.), § 9-1118.

9-11-119. Nature and construction of chapter.

No restriction, limitation, or provision contained in any other law, either public or private, relating to the issuance of bonds, notes, or other obligations of a unit, or limiting the amount of taxes which may be levied in a unit, shall apply to bonds or notes issued under this chapter. The powers granted by this chapter are in addition to all other powers heretofore granted to a unit, and nothing herein contained shall be construed as prohibiting a unit from issuing bonds or notes under any public or private statute applicable to such unit. Nothing in this chapter shall be construed as mandatory for any unit to issue funding or refunding bonds under the terms and conditions of this chapter.

Acts 1937, ch. 300, § 5; C. Supp. 1950, § 3516.15; T.C.A. (orig. ed.), § 9-1119; Acts 1982, ch. 580, § 3.

Part 1
General Provisions

9-16-101. Special census by counties.

For purposes of determining its eligibility in whole or part for an allocation of tax proceeds or other funds, each county may take not more than two (2) special censuses at its own expense at any time during the interim between the regular decennial federal censuses. The special census shall be taken by the federal census bureau or in a manner directed by and satisfactory to the department of economic and community development. The population of the county shall thereafter be revised in accordance with the special census, effective on July 1 following certification of the census results by the federal census bureau or department of economic and community development to the commissioner of finance and administration.

Acts 1978, ch. 806, § 1; T.C.A., § 9-1701; Acts 1995, ch. 501, § 7.

Cross-References. Special census by municipality for distribution of municipal street aid funds, § 54-4-203.

Special census by municipality for distribution of sales tax, § 67-6-103.

Special census by municipality for distribution of state privilege tax, § 57-5-205.

Textbooks. Tennessee Jurisprudence, 5 Tenn. Juris., Census, § 1.

9-18-101. Short title.

This chapter shall be known and may be cited as the “Financial Integrity Act of 1983.”

Acts 1983, ch. 129, § 1.

Law Reviews.

Selected Tennessee Legislation of 1983 (N. L. Resener, J. A. Whitson, K. J. Miller), 50 Tenn. L. Rev. 785 (1983).

9-18-102. Internal controls — Management assessment of risk.

1. Each agency of state government and institution of higher education along with each county, municipal, and metropolitan government shall establish and maintain internal controls, which shall provide reasonable assurance that:
   1. Obligations and costs are in compliance with applicable law;
   2. Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and
   3. Revenues and expenditures are properly recorded and accounted for to permit the preparation of accurate and reliable financial and statistical reports and to maintain accountability over the assets.
2. To document compliance with the requirements set forth in subsection (a), each agency of state government and institution of higher education shall annually perform a management assessment of risk. The internal controls discussed in subsection (a) should be incorporated into this assessment. The objectives of the annual risk assessment are to provide reasonable assurance of the following:
   1. Accountability for meeting program objectives;
   2. Promoting operational efficiency and effectiveness;
   3. Improving reliability of financial statements;
   4. Strengthening compliance with laws, regulations, rules, and contracts and grant agreements; and
   5. Reducing the risk of financial or other asset losses due to fraud, waste and abuse.

Acts 1983, ch. 129, § 1; 1998, ch. 664, §§ 1, 2; 2008, ch. 750, § 1; 2015, ch. 112, § 1.

9-18-103. Guidelines for assessment of compliance.

The commissioner of finance and administration, in consultation with the comptroller of the treasury, shall establish guidelines for the assessment, by management of state agencies and higher education institutions, of the risks and systems of internal control to determine compliance with the requirements of § 9-18-102. The commissioner, in consultation with the comptroller of the treasury, may modify the guidelines from time to time as deemed necessary.

Acts 1983, ch. 129, § 1; 1998, ch. 664, § 3; 2008, ch. 750, § 2.

9-18-104. Report by head of executive agency.

1. By December 31, 2008, initially, and then by December 31 of every year thereafter, the head of each state agency and higher education institution shall, on the basis of the evaluations conducted in accordance with guidelines prescribed under § 9-18-103, prepare and transmit to the commissioner of finance and administration and the comptroller of the treasury a report that states that:
   1. The agency or institution acknowledges its management's responsibility for establishing, implementing and maintaining an adequate system of internal control; and
   2. A management assessment of risk performed by the agency or institution provides or does not provide reasonable assurance of compliance with the objectives of the assessment as specified in this chapter.
2. In the event that the agency's or institution's assessment does not provide reasonable assurance of compliance with the objectives of the assessment as stated in this chapter, the report shall include a corrective action plan that identifies:
   1. Any significant deficiencies or material weaknesses in the agency's or institution's system of internal control and/or lack of risk mitigating control activity; and
   2. The plans and the schedule for correcting the weaknesses.

Acts 1983, ch. 129, § 1; 1998, ch. 664, §§ 4-6; 2008, ch. 750, § 3; 2009, ch. 99, § 1.

NOTES TO DECISIONS

1. Intent.

This statute was not intended to prevent access to the identities of bondholders, where that information is necessary to resolve matters in litigation. Huntsville Utility Dist. of Scott County v. General Trust Co., 839 S.W.2d 397, 1992 Tenn. App. LEXIS 238 (Tenn. Ct. App. 1992).

9-21-101. Short title.

This chapter shall be known and may be cited as the “Local Government Public Obligations Act of 1986.”

Acts 1986, ch. 770, § 1-1.

Cross-References. Central business improvement districts, authority to issue bonds, §§ 7-84-105, 7-84-505, 7-84-518.

Public entities, information concerning debt obligation issuances, § 9-21-134.

Law Reviews.

Financing Public Needs After Tax Reform (Jon G. Roach), 23 Tenn. B.J. 19 (1987).

Attorney General Opinions. Joint ownership of community center by county and city, OAG 99-109, 1999 Tenn. AG LEXIS 109 (5/12/99).

Authority of city of Memphis to sell assets of Memphis Light, Gas and Water, OAG 05-006, 2005  Tenn. AG LEXIS 7 (1/20/05).

9-21-102. Intent.

It is the intent and purpose of this chapter to provide a uniform and comprehensive statutory framework authorizing any local government to issue general obligation bonds and revenue bonds for public works projects, general obligation bonds for certain unfunded pension obligations, general obligation refunding bonds, revenue refunding bonds, bond anticipation notes, capital outlay notes, grant anticipation notes, tax anticipation notes, and health care revenue anticipation notes, and to authorize the destruction of bonds, notes and coupons.

Acts 1986, ch. 770, § 1-2; 1997, ch. 390, § 1; 2000, ch. 983, § 9.

9-21-103. No indebtedness limit.

Bonds or notes may be issued under this chapter, notwithstanding and without regard to any limit on indebtedness provided by law.

Acts 1986, ch. 770, § 1-3.

9-21-104. Negotiability.

Any bonds or notes issued by a local government pursuant to this chapter shall be fully negotiable for all purposes in the absence of an express recital on the face of the bond or note that it is nonnegotiable.

Acts 1986, ch. 770, § 1-4.

9-21-105. Chapter definitions.

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

1. “Bondholder,” “holder of bonds” or any similar term means any person who shall be the bearer of any outstanding bonds, notes or other obligations registered to bearer or not registered, or the registered owner of any such outstanding bonds, notes or other obligations which shall at the time be registered other than to bearer, or the holder of any interim certificate pending the issuance of definitive bonds or notes;
2. “Bonds” means bonds or interim certificates issued pending preparation or delivery of definitive bonds of a local government issued pursuant to this chapter;
3. “Certain unfunded other post-employment benefits” means nonpension benefits paid on behalf of former employees of any local government having a population in excess of one hundred fifty thousand (150,000), according to the 2000 federal census or any subsequent federal census, or the former employees' beneficiaries after separation from service. The benefits may include, but shall not be limited to, medical, prescription drugs, dental, vision, hearing, medicare part B or part D premiums, life insurance, long-term care, and long-term disability. For purposes of this subdivision (3), the value of any “certain unfunded other post-employment benefits” shall be limited to the unfunded actuarial accrued liability as determined pursuant to the Governmental Accounting Standards Board Statement No. 45 and as certified by the actuarial consultant of the local government;
4. 1. “Certain unfunded pension obligations” means:
      1. Pension benefits for past service of employees of a local government whose employment results from the local government's assumption of governmental responsibilities of another local government;
      2. Pension benefits for past service of employees of a local government whose pension benefits arise from a defined benefit pension plan that is closed to the enrollment of new employee participants and are funded solely by contributions of the local government to the plan;
      3. Pension benefits for past service of employees of a local government whose pension benefits arise from a defined benefit pension plan adopted by referendum amendment of a county charter, and that limits enrollment to law enforcement employees of the local government. The maturity of any bonds issued under this subdivision (4)(A)(iii) shall not exceed twenty (20) years from the date of the bonds, and the servicing of such bonds shall be subject to review by the office of the comptroller of the treasury; or
      4. Pension benefits for past service of employees of a local government which is either:

1. A metropolitan government with a general obligation rating of at least Aa1 (or its equivalent) from one (1) or more nationally recognized rating agencies; or
2. A municipality with a general obligation rating of Aaa (or its equivalent) from one (1) or more nationally recognized rating agencies that is located within a county with a general obligation rating of Aaa (or its equivalent) from one (1) or more nationally recognized rating agencies; and
3. In either case, whose pension benefits arise from a defined benefit plan administered by the local government;

For purposes of this subdivision (4), the value of any “certain unfunded pension obligations” shall be limited to the unfunded portion of the present value of benefits less the present value of future normal costs, as certified by the pension actuarial consultant of the local government;

Subdivisions (4)(A)(ii) and (iii) shall cease to be effective on July 1, 2008; provided, that no bonds issued pursuant to this subdivision (4) prior to July 1, 2008, shall be rendered ineffectual;

Subdivision (4)(A)(iv) shall cease to be effective on July 1, 2015; provided, that no bonds issued pursuant to this subdivision (4) prior to July 1, 2015, shall be rendered ineffectual;

“Construction” means building, reconstruction, erection, replacement, extension, repairing, betterment, equipment, development, embellishment, improvement, acquisition by gift, lease, purchase or the exercise of the right of eminent domain, or any one (1) or more or all of the foregoing, including the acquisition of land and of rights in land, and including acquisition of all of the outstanding capital stock of any corporation whose assets consist entirely of one (1) or more public works projects which together constitute a waterworks, sewer system, natural gas system, electric system, or any combination thereof, including, but not limited to, a water, sewer, natural gas and/or electric distribution system, or any combination thereof, serving a local government and assets related to the operation thereof and whose liabilities consist entirely of those related to the ownership and operation thereof; provided, that upon any such acquisition of stock by a local government, the corporation thus acquired shall be promptly liquidated by the local government, which shall thereupon acquire its assets and assume its liabilities;

“Contract” or “agreement” between a state or federal agency, or both, and a local government or a local government instrumentality includes contracts and agreements in the customary form and also includes an allotment of funds, resolution, unilateral promise or other commitments by such state or federal agency or agencies by which it shall undertake to make a loan or grant or both, upon performance of specified conditions or with rules and regulations theretofore or thereafter promulgated, prescribed or published by such state or federal agency or agencies. In the case of such an allotment of funds, resolution, unilateral promise or other commitment by a state or federal agency, the terms, conditions and restrictions therein set forth and the rules and regulations theretofore or thereafter promulgated, prescribed or published shall, for the purpose of this chapter, constitute covenants of such a contract that are to be performed by the local government, if the local government accepts any money from such state or federal agency;

“Enterprise” means any one (1) of or combination of two (2) or more public works projects, undertakings or projects which the local government is or may hereafter be authorized to construct and from which the local government has heretofore derived or may hereafter derive revenues, and such enterprise includes all improvements, betterments, extensions and replacements thereto, and all appurtenances, facilities, lands, rights in land, water rights, franchises and structures in connection therewith or incidental thereto;

“Facsimile seal” means the reproduction by engraving, imprinting, stamping, or other means of the seal of the issuer, official or governing body;

“Facsimile signature” means the reproduction by engraving, imprinting, stamping, or other means of the manual signature of an authorized officer of a local government;

“Federal agency” includes the United States, the president of the United States, or any agency, instrumentality or corporation of the United States, which has heretofore been or may hereafter be designated, created or authorized by or pursuant to any act or acts or joint resolutions of the congress of the United States, to make loans or grants, or which may be owned or controlled, directly or indirectly, by the United States;

“Federal aid act” means any act or acts or joint resolution of the congress of the United States to reduce and relieve unemployment, or to provide for the construction of public works, or to relieve and rehabilitate veterans of any war, or to subsidize or aid any local government, public works or construction project by grants of money, materials, equipment or otherwise by any federal agency;

“Financial newspaper” means a financial newspaper, financial journal or other financial publication;

“Governing body” means the legislative body of any local government of this state or any other authority charged with the governing of the affairs of any local government in this state;

“Law” means any act or statute, general, special or local, of this state, including, but not limited to, any local government charter;

(A)  “Local government” means any county, municipality or metropolitan government in this state; and

“Local government” also means any separate legal or administrative entity duly created by interlocal agreement between two (2) or more political subdivisions of the state acting pursuant to title 12, chapter 9, IF AND ONLY IF:

Such political subdivisions retain at least secondary liability for the debts of such legal entity;

The terms of such interlocal agreement authorize the entity to exercise powers actually conferred upon such political subdivisions by this chapter; and

The terms of such interlocal agreement conform to the restrictions set forth in § 12-9-104(e)(2)(A)(i), (ii) and (iii);

“Local government instrumentality” means any authority created by law on behalf of a county, metropolitan government, municipality or any combination thereof;

“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 pursuant to the authority of title 7, chapters 1-3;

“Municipality” means any incorporated city or any incorporated town of this state;

“Notes” means notes or interim certificates issued pending preparation or delivery of definitive notes of a local government issued pursuant to this chapter;

“Obligations” means bonds, notes and any other evidence of indebtedness lawfully issued or assumed by a local government;

(A)  “Public works project” includes any one (1) or any combination of the following: abattoirs, acquisitions of land for the purpose of providing or preserving open land, airports, alleys, ambulances, auditoriums, bridges, city and town halls, local government stables or garages, community houses, corrective, detention and penal facilities, including, but not limited to, jails, workhouses and reformatories, courthouses, culverts, curbs, dispensaries, drainage systems, including storm water sewers and drains, electric plants and systems, expositions, facilities for the handicapped, including physically and mentally handicapped, facilities for the indigent, fairgrounds and fairground facilities, fire department equipment and buildings, fire alarm systems, flood control, garbage collection and disposal systems, gas and natural gas systems and storage facilities, heat plants and systems, harbor and riverfront improvements, health centers and clinics, including medical and mental health centers and clinics, highways, major roads, highway and street equipment, hospitals, hotels and supporting or incidental facilities built by local governments which are built adjacent to and as a supporting facility of civic or convention centers located in municipalities which have created a central business improvement district under the Central Business Improvement District Act of 1971, compiled in title 7, chapter 84, improvements made pursuant to a plan of improvement for a central business improvement district created pursuant to the Central Business Improvement District Act of 1971, law enforcement and emergency services equipment, levees, libraries, markets, memorials, museums, nursing homes, parks, parking facilities, parkways, playgrounds, plazas, port facilities, docks and dock facilities, including any terminal storage and transportation facilities incident thereto, public art, public buildings, preserves, railroads, including the extension of railroads, and railway beltlines and switches, reclamation of land, recreation centers and facilities, reservoirs, rights-of-way, river and navigation improvements, roads, sanitariums, schools, transportation equipment for schools, sewers, sewage and waste water systems, including, but not limited to, collection, drainage, treatment and disposal systems, ship canals, sidewalks, stadiums, streets, swimming pools, thermal transfer generating plants and/or distribution systems, tunnels, viaducts, voting machines, water treatment distribution and storage systems, wharves and zoos;

“Public works project” also includes:

“Business park,” which includes lands and rights, easements and franchises relating thereto, and may include roads and streets, water, sewer, electric and other utilities, landscaping and related elements as required for the orderly development and use of corporate or professional office space by one (1) or more commercial, financial or service business, and such appurtenant land for necessary incidental use. “Business park” does not include a retail operation except for an incidental retail use. A “business park” shall contain not less than five (5) acres of land. The building finance committee in the industrial development division of the department of economic and community development is authorized and empowered to determine whether a local government shall have the right to engage in any or all of the rights and privileges accompanying such a public works project. Before a local government may undertake the financing of such a public works project, it shall apply to the committee for a certificate of public purpose and necessity. The committee shall issue such a certificate once it is affirmatively determined that:

There are adequate property values and suitable financial conditions so that the total bonded indebtedness of the local government, solely for this authorized purpose and those other purposes authorized by title 7, chapter 55 and title 13, chapter 16, shall not exceed ten percent (10%) of the total assessed valuation of all the property in the local government ascertained by the last completed assessment at the time of the issuance of such bonds; and

The project is well conceived, has a reasonable prospect of success, will provide economic development and employment, will tend to encourage businesses to locate there and will not become a burden upon the taxpayers of the local government;

“Industrial park,” which includes lands, rights, easements and franchises relating thereto, and may include adequate roads and streets, water and sewer facilities, utilities and docks and terminals. Any of the foregoing improvements which are to be located within the geographic boundaries of the industrial park may only be financed after compliance with title 13, chapter 16, part 2;

“Urban renewal project” which means the same as such projects which are defined in §§ 13-20-209 — 13-20-215. Any local government is hereby authorized to contribute money, property, and municipal services to any public agency engaged in the development of urban renewal projects in that local government;

“Urban transit facility” which includes any or all real and personal property needed to provide public passenger transportation by means of street railway, electric railway, incline railroad, trolley coach, bus, motor coach, or any combination thereof, including terminal, maintenance and storage facility, whether owned and operated by a local government or owned by a local government and leased to private operators, all of which are hereby found and determined to be in the public interest and a proper public purpose;

Facilities for the storage and maintenance of any of the items of equipment which constitute public works projects; and

Facilities or capital expenditures paid or incurred with respect to property located in a “recovery zone,” as defined in § 1400U-1(b) of the Internal Revenue Code of 1986 (26 U.S.C. §  1400U-1(b)) [repealed], that are made for a “qualified economic development purpose,” as defined in § 1400U-2(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 1400U-2(c)) [repealed];

Facilities or expenditures paid or incurred for “qualified conservation purposes,” as defined in § 54D(f) of the Internal Revenue Code of 1986 (26 U.S.C. § 54D(f)) [repealed], in connection with the issuance of “qualified energy conservation bonds,” as defined in § 54D of the Internal Revenue Code of 1986 (26 U.S.C. § 54D) [repealed];

All property real and personal, appurtenant thereto or connected with any public works project, work or undertaking and the existing public works project, work or undertaking, if any, to which such public works project, work or undertaking is an extension, addition, betterment or improvement; and

Facilities or capital expenditures paid or incurred with respect to development of affordable housing or workforce housing in a county having a metropolitan form of government with a population of not less than six hundred thousand (600,000), according to the 2010 federal census or any subsequent federal census, including expenditures related to a housing trust fund established in accordance with title 7, chapter 8 or title 13, chapter 23, part 5. For purposes of this subdivision (21)(B)(ix), only local governments within which the affordable or workforce housing is located are authorized to issue debt or borrow money, and in no event, shall the credit of any county, city, or town be given or loaned to or in aid of any person, company, association, or corporation, within the meaning of the Constitution of Tennessee, Article II, § 29, without first complying with the applicable requirements of the Constitution of Tennessee, Article II, § 29;

This enumeration does not exclude any other project for the benefit of the people at large of any local government where any state or federal agency will match the funds of the local government with grants-in-aid or gratuities to subsidize or assist the development of a public works project;

Notwithstanding subdivision (21)(B)(i), a certificate of public purpose and necessity shall not be required for a public works project of a local government with a population of not less than three hundred thousand (300,000), according to the 2000 federal census or any subsequent federal census. The total pledge of full faith and credit of any such local government related to the project shall not exceed ten percent (10%) of the total assessed valuation of all property in the local government, ascertained by the last completed assessment at the time of issuance of the obligations. In any resolution pledging the full faith and credit and unlimited taxing power of any such local government to secure any obligations related to a public works project, the governing body of the local government shall state that the project being considered is well conceived, has a reasonable prospect for success, will provide proper economic development and employment, and will not likely become a burden on the taxpayers of the local government;

“Refinancing” means funding, refunding, paying, or discharging, by means of refunding bonds or the proceeds received from the sale thereof, all or any part of any bonds, notes, or other obligations heretofore or hereafter issued or lawfully assumed and payable solely from all or any part of the revenues of one (1) or more enterprises, or from a combination of such revenues and taxes, except capital outlay notes when retired by bonds in conformance with part 6 of this chapter and notes issued in anticipation of bonds;

“Refunding bonds” means bonds issued to refund all or any part of bonds, notes or other obligations, except capital outlay notes when retired by bonds in conformance with part 6 of this chapter, and notes issued in anticipation of bonds, heretofore or hereafter issued or lawfully assumed by a local government pursuant to this chapter, or any other provision of this code or any other general or special law;

“Revenues” means all fees, rents, tolls, rates, rentals, interest earnings, or other charges received or receivable by the local government from any public works project or enterprise then existing or thereafter to be constructed, including any revenues derived or to be derived by a local government from a lease, agreement or contract with any other local government, local government instrumentality, the state, or a state or federal agency for the use of or in connection with a public works project or enterprise, or all other charges to be levied and collected in connection with and all other income and receipts of whatever kind or character derived by the local government from the operation of any public works project or enterprise or arising from any public works project or enterprise;

“State” means the state of Tennessee;

“State agency” means any agency of the state created by the general assembly; and

“Taxable property” means all property subject to ad valorem taxation within the local government, or any portion of the local government, if applicable.

Acts 1986, ch. 770, § 1-5; 1990, ch. 593, § 6; 1992, ch. 880, § 1; 1997, ch. 390, § 2; 1998, ch. 728, § 1; 1998, ch. 751, § 1; 2004, ch. 705, § 1; 2006, ch. 770, § 1; 2006, ch. 847, § 1; 2007, ch. 131, § 1; 2008, ch. 991, § 1; 2009, ch. 608, § 2; 2010, ch. 868, § 41; 2013, ch. 467, §§ 1-4; 2016, ch. 738, § 1.

Compiler's Notes. For tables of population of Tennessee municipalities and counties, see Volume 13 and its supplement.

For the Preamble to the act concerning certain unfunded pension obligations for which local governments may issue bonds, please refer to Acts 2013, ch. 467.

26 U.S.C. §§ 1400U-1 and 1400U-2, which are referred to in this section, were repealed by March 23, 2018, P. L. 115-141, Div U, Title IV, § 401(d)(6)(A), 132 Stat. 1211, subject to savings provisions, as provided by Sec. 401(d)(6)(C) of P.L. 115-141, which appears as a note to 16 U.S.C. § 1400L. It provided for allocation of recovery zone bonds.

26 U.S.C. § 54D, which is referred to in this section, was repealed by Act Dec. 22, 2017, P. L. 115-97, Title I, Subtitle C, Part V, § 13404(a), 131 Stat. 2138, applicable to bonds issued after 12/31/2017, as provided by § 13404(d) of such Act, which appears as 26 USCS § 54 note. It provided for qualified energy conservation bonds.

Attorney General Opinions. Municipal authority to make or guarantee loans to local housing authority, OAG 98-0104, 1998 Tenn. AG LEXIS 104 (6/11/98).

Multi-family housing project not “public works project”, OAG 98-0104, 1998 Tenn. AG LEXIS 104 (6/11/98).

Joint ownership of community center by county and city, OAG 99-109, 1999 Tenn. AG LEXIS 109 (5/12/99).

Sale of city land for golf course, OAG 99-143, 1999  Tenn. AG LEXIS 165 (7/30/99).

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).

9-21-106. Rate discrimination prohibited.

When a public works project supplies its services to consumers who use solar or wind powered equipment as a source of energy, that public works project shall not discriminate against those consumers by its rates, fees or charges or by altering the availability or quality of energy. Any consumer who uses solar, wind power, or other auxiliary source of energy shall install and operate the equipment, property, or appliance for such energy source in compliance with any state or local code or regulation applicable to the safe operation of such equipment, property or appliance.

Acts 1986, ch. 770, § 1-6.

9-21-107. Powers of local governments.

All local governments have the power and are authorized, either singly or jointly with any one (1) or more other local governments, local government instrumentalities, the state, or a state or federal agency or jointly with one (1) or more of the above, to:

1. Engage in the construction of any public works project which may be constructed within or without the local government, or partially within and partially without the local government. However, no local government shall engage in the construction of a public works project wholly or partly within the legal boundaries of another local government, other than to perform maintenance on or make improvements to its existing public works projects in its service area, except with the consent of the governing body of the other local government; provided, that any county or metropolitan government may construct a public works project within a municipality within the county or metropolitan government without the permission of the governing body of the municipality;
2. Operate and maintain any public works project for its own purpose or for the benefit and use of its inhabitants and, in the case of municipalities, also to operate and maintain such public works project for the benefit and use of the municipality and persons, firms and corporations therein and persons, firms and corporations, including municipal corporations, which are situated or whose residences or places of business are situated outside the territorial boundaries of the municipality but within the state and within a radius of twenty (20) miles from the territorial boundaries of the municipality; provided, that a joint project of any local government may, by agreement of the joint participants be operated or maintained, or both, by the local government itself, or by any one (1) of the other joint participants, or jointly by the local government and any one (1) or more of the joint participants, or jointly by any of the joint participants other than the local government;
3. 1. Contract debts for the construction of any public works project or for the local government's share of the cost of any joint public works project;
   2. Contract debts in order to make grants, donations, reimbursements or loans to one (1) or more local governments, local government instrumentalities, or utility districts for the construction of any public works project;
   3. Borrow money;
   4. Issue bonds or notes to finance such construction, grant, donation, reimbursement or loan;
   5. Provide for the rights of the holders of such bonds or notes; and
   6. Secure such bonds or notes as hereinafter provided;
4. Pledge the full faith, credit and unlimited taxing power of the local government as to all taxable property in the local government or a portion of the local government, if applicable, to the punctual payment of the principal of and interest on the bonds or notes issued to finance any public works project, except bonds or notes and the interest thereon payable exclusively from revenues of a public works project;
5. In the case of a county or metropolitan government which contains within its boundaries a special school district and/or incorporated city or town maintaining a public school system separate from the county or metropolitan government public school system, the tax pledge authorized by subdivision (4), when pledged to the payment of bonds or notes issued to finance the construction of public schools of the county or metropolitan government serving outside the territorial limits of such special school district and/or incorporated city or town, may be a pledge of taxes to be levied only upon taxable property within that portion of the county or metropolitan government lying outside the territorial limits of such special school district and/or incorporated city or town;
6. In the case of a county or metropolitan government which contains within its boundaries an incorporated city or town which constructs and maintains its streets, avenues, alleys and other highways separate from the county or metropolitan government, the tax pledge authorized by subdivision (4), when pledged to the payment of bonds or notes issued to finance the construction of streets, avenues, alleys and other highways of the county or metropolitan government lying outside the territorial limits of such incorporated city or town may be a pledge of taxes to be levied only upon taxable property within that portion of the county or metropolitan government lying outside the territorial limits of such incorporated city or town;
7. Assess, levy and collect ad valorem taxes on all taxable property within the local government or a portion of the local government, if applicable, sufficient to pay the principal of and interest on the bonds or notes issued to finance any public works project, except bonds or notes and the interest thereon payable exclusively from revenues of a public works project;
8. Fix, levy and collect fees, rents, tolls or other charges for the use of or in connection with any public works project and, in the event any agreements with holders of bonds or notes shall have been made as hereinafter provided, to fix, levy and collect such fees, rents, tolls and other charges in accordance with and subject to such agreements. Such fees, rents, tolls and other charges may also include any revenues derived by a local government from a lease, agreement or contract with any other local government, local government instrumentality, the state, or state or federal agency for the use of or in connection with a public works project. The power to fix, levy, and collect such fees, rents, tolls, or other charges includes the power to impose charges for the privilege of parking motor vehicles in or upon any on-street or off-street parking facilities, and the power to facilitate the collection of such parking fees or other charges by the use of parking meters;
9. Pledge all or any part of the fees, rents, tolls, or other charges received or receivable by the local government from any public works project or projects then existing or thereafter to be constructed, including also any revenues derived or to be derived by a local government from a lease, agreement or contract with any other local government, local government instrumentality, the state, or a state or federal agency for the use of or in connection with such public works project or projects, to the payment of all operating expenses of the public works project or projects, to the punctual payment of the principal of and interest on bonds or notes issued to finance such public works project or projects, or any other public works project or projects, or if the governing body of the local government shall by resolution so request, payments to the local government in lieu of ad valorem taxes on the property constituting such public works project or projects, not to exceed the amount of taxes payable on privately owned property of similar nature, and to covenant against thereafter pledging any such fees, rents, tolls, or charges to any other bonds or notes or any other obligations of the local government;
10. Acquire by purchase, gift or the exercise of the right of eminent domain, to lease as lessor or lessee, and to hold, dispose of, and convey any property, real or personal, tangible or intangible, or any right or interest in any such property, in connection with any public works project, whether or not subject to mortgages, liens, charges or other encumbrances, and to construct any public works project subject thereto. In the acquisition of public works projects, no governing body shall have the right to exercise the power of eminent domain with respect to real or personal property which has been dedicated to a public use, or which is at the time being so used, unless the owners or authorities having jurisdiction over the property agree to such acquisition. No governing body shall construct any structure of any type on or over any property which has been dedicated to public use, or which is at the time being so used, unless the owners or authorities having jurisdiction over the property agree to the construction of such structure. A local government may use any right-of-way, easement or other similar property right necessary or convenient in connection with the acquisition, improvement, operation or maintenance of a public works project held by the state or any other local government; provided, that the state or such other local government consents to such use;
11. Enter on any lands, waters and premises for the purpose of making surveys, soundings and examinations in or for the furtherance of any public works project;
12. Make contracts and execute instruments containing such terms, provisions and conditions as in the discretion of the governing body may be necessary, proper or advisable for the purpose of obtaining a grant, loan or other financial assistance from the state or any state or federal agency pursuant to a state or federal aid act; make all other contracts and execute all other instruments necessary, proper or advisable in or for the furtherance of any public works project; and carry out and perform the terms and conditions of all such contracts or instruments;
13. Accept from any state or federal agency grants for or in aid of the construction of any public works project;
14. Subscribe to and comply with any state or federal aid act and any rules and regulations made by the state or any state or federal agency with regard to any grants or loans, or both;
15. Exercise, for the purpose of obtaining a grant, loan or other financial assistance from the state or any state or federal agency pursuant to or by virtue of any state or federal aid act, any power conferred by this chapter independently or in conjunction with any other power or powers conferred by this chapter or heretofore or hereafter conferred by any other law;
16. Lease all or any portion of off-street parking facilities for the purpose of parking motor vehicles to any person, firm or corporation, for operation by such person, firm or corporation, and fix and collect rentals therefor and make contracts for the operation and management thereof. All revenues derived from any such lease or contract shall be regarded as fees, rents, tolls or other charges for the use of, or in connection with, the facilities;
17. Lease all or any portion of urban transit facilities to any person, firm, or corporation, for operation by such person, firm or corporation, and to fix and collect rentals therefor and make contracts for the operation and management thereof, notwithstanding the fact that the local government may or may not then operate its own urban transit facilities. All revenues derived from any such lease or contract shall be regarded as fees, rents, tolls or other charges for the use of, or in connection with, the respective facilities;
18. Combine all or any parts of parking facilities into a single public works project. Nothing contained in this chapter shall in any way affect the validity of any private act now existing or which may hereafter be enacted, prohibiting any local government from engaging in the public parking business;
19. Provide for the replacement of lost, destroyed or mutilated bonds or notes;
20. Perform any powers or duties authorized under this chapter through, or by means of, its own officers, agents and employees, or by contract with private corporations, firms or individuals;
21. Designate one (1) or more areas that meet the requirements of § 1400U-1(b) of the Internal Revenue Code of 1986 (26 U.S.C. § 1400U-1(b)) [repealed], as a recovery zone for purposes of that section; and
22. Do all things necessary or convenient to carry out the powers expressly given in this chapter.

Acts 1986, ch. 770, § 1-7; 1987, ch. 77, §§ 1, 2; 1990, ch. 683, § 1; 2009, ch. 74, § 2; 2009, ch. 608, § 3.

Compiler's Notes. 26 U.S.C. § 1400U-1, which is referred to in this section, was repealed  by March 23, 2018, P. L. 115-141, Div U, Title IV, § 401(d)(6)(A), 132 Stat. 1211, subject to savings provisions, as provided by Sec. 401(d)(6)(C) of P.L. 115-141, which appears as a note to 16 U.S.C. § 1400L. It provided for allocation of recovery zone bonds.

Attorney General Opinions. Projects outside municipal limits financed under Local Public Obligations Act, OAG 96-005, 1996  Tenn. AG LEXIS 4 (1/16/96).

Franklin special school district — avoiding county tax for bonds for school purposes, OAG 00-024, 2000  Tenn. AG LEXIS 24 (2/15/00).

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).

Domestic nonprofit water cooperative merging with or transferring assets to municipality, OAG 06-176, 2006 Tenn. AG LEXIS 196 (12/19/06).

9-21-108. Governing body authorized to act by resolution — Procedure for adoption of resolutions.

All actions required or authorized to be taken under this chapter by the governing body of a local government may be by resolution. The resolution may be adopted at the meeting, regular or special, of the governing body at which the resolution is introduced, and shall take effect immediately upon adoption. Except as otherwise provided in this chapter, no resolution under this chapter need be published or posted, nor shall any such resolution be subject to veto by the chief executive officer or presiding officer of the governing body, nor shall any such resolution require for its passage more than a majority vote of all the members of the governing body then in office. The resolution may delegate authority to the chief executive officer of the local government to sell notes or bonds under this chapter.

Acts 1986, ch. 770, § 1-8; 1994, ch. 806, § 6.

9-21-109. Determination of costs of public works projects.

In determining the costs of any public works project for which bonds or notes are to be issued, the following items may also be included as a part of the cost of the public works project to be financed by the issuance of bonds or notes:

1. Engineering, architectural, art design services, inspection, legal and accounting expenses, and relocation expenses in connection with construction of a public works project;
2. The cost of issuance of the bonds or notes, including engraving, printing, advertising, credit enhancement, legal, fiscal and other similar expenses;
3. Any interest costs during the period of construction of a public works project and for six (6) months thereafter on any money borrowed or estimated to be borrowed;
4. Any moneys already spent by the local government from any of its funds for any of the foregoing expenses enumerated in subdivisions (1), (2) and (3), and upon the actual construction of a public works project in order to permit the construction of public works projects by the use of the funds of the local government if desired, and the later replacement of those funds by the sale of bonds or notes authorized by this chapter; and
5. The establishing of a reasonably required reserved fund for the payment of the principal of and interest on the bonds or notes.

Acts 1986, ch. 770, § 1-9; 1988, ch. 743, § 1; 1998, ch. 751, § 2.

9-21-110. Appointment of a fiscal agent.

Any local government has the power in connection with the issuance of bonds or notes to appoint a fiscal agent, to provide for the powers, duties, functions and compensation of such fiscal agent, to limit the liabilities of the fiscal agent, to prescribe a method for the resignation, removal, merger or consolidation of the fiscal agent, the appointment of a successor fiscal agent, and the transfer of rights and properties to the successor fiscal agent.

Acts 1986, ch. 770, § 1-10.

9-21-111. Execution of bonds and notes.

1. Bonds and notes issued under this chapter in registered form shall be executed in the manner provided for in the Tennessee Public Obligations Registration Act, compiled in chapter 19 of this title.
2. Bonds, notes, and any interest coupons attached thereto issued under this chapter which are not in registered form may, if so authorized by the governing body of the local government, bear or be executed with the facsimile signature of the chief executive officer of the local government; provided, that each bond, or note, shall be manually signed by the county clerk, by the city recorder or other similar local government official so authorized by resolution of the governing body of the local government.
3. When an official or corporate seal of the local government, its governing body or of any local government official is required or permitted in the execution of any bond, note or coupon, the seal may be printed, engraved, stamped, or otherwise placed in facsimile thereon. The facsimile seal has the same legal effect as the impression of the seal.
4. In case any official whose signature or facsimile signature appears on the bonds, notes or coupons shall cease to be such official before the delivery of the bonds, notes, or coupons to the purchaser, that signature shall be valid and sufficient for all purposes, as if that official had remained in office until the delivery of the bonds, notes or coupons.

Acts 1986, ch. 770, § 1-11; 1987, ch. 77, § 3.

9-21-112. Interim certificates.

Pending the preparation or delivery of definitive bonds or notes under this chapter, interim certificates or other temporary obligations may be issued by the local government to the purchaser of the bonds or notes. The interim certificates or other temporary obligations shall be in such form and contain such terms, conditions and provisions as the governing body of the local government may determine.

Acts 1986, ch. 770, § 1-12.

9-21-113. Deposit and custody of proceeds.

1. The proceeds received from the sale of bonds or notes issued under this chapter by a local government shall be deposited with, in the case of counties, the county trustee or, in the case of municipalities or metropolitan governments, with the official designated by law as custodian of the funds, or be deposited as provided in the resolution authorizing the bonds or notes.
2. The official designated as custodian of the funds shall not receive extra compensation for handling the funds.

Acts 1986, ch. 770, § 1-13; 1987, ch. 77, § 4.

9-21-114. Fees for reselling bonds or notes forbidden.

1. It is unlawful and deemed a misappropriation of public funds for any official to pay a fee other than underwriting discount to any person, group of persons, firm, company or corporation for selling bonds or notes issued by such official's local government after such bonds or notes have been sold. Nothing in this section shall be construed to prohibit the payment of fees for legal and fiscal services in connection with the issuance of bonds or notes. Nothing in this section shall be construed to prohibit the payment of a remarketing fee to a remarketing agent for remarketing services in connection with the resale of bonds or notes subject to repurchase on demand of the owner or subject to repurchase on demand of the local government.
2. Any local government official who unlawfully misappropriates public funds, in the manner set forth in subsection (a), shall be personally liable to the local government for the total amount of such unlawful misappropriation and reasonable attorney fees incident to the collection of such amount. A suit to recover the total amount for which a local government official is personally liable may be filed by any person who is a resident and taxpayer of the local government for general obligation bonds or notes, or by any person who is a user of the service provided in the case of revenue bonds or notes of the local government.

Acts 1986, ch. 770, § 1-14.

9-21-115. State control of public works projects.

This chapter shall not otherwise operate to dispense with the approval by a state department, board, officer or commission of a public works project where such approval under existing law must be obtained before a local government may construct a public works project.

Acts 1986, ch. 770, § 1-15.

9-21-116. Hotel and motel projects subject to tax.

In local governments of this state where a tax is imposed on hotel and motel accommodations, any hotel or motel built as a public works project under this chapter shall be subject to the collection of such a tax.

Acts 1986, ch. 770, § 1-16.

9-21-117. Tax exemption.

Any bonds or notes issued by a local government pursuant to this chapter and the income therefrom shall be exempt from all state, county and municipal taxation except for inheritance, transfer and estate taxes, and except as otherwise provided in this code.

Acts 1986, ch. 770, § 1-17.

Cross-References. Gift, estate, and inheritance taxes, title 67, ch. 8, parts 1-5.

9-21-118. Recital of issuance pursuant to this chapter.

A resolution authorizing bonds or notes under this chapter may provide that such bonds or notes shall contain a recital that they are issued pursuant to this chapter, which recital shall be conclusive evidence of their validity and the regularity of their issuance.

Acts 1986, ch. 770, § 1-18.

9-21-119. Validity of bonds and notes unaffected by certain irregularities.

The validity of the authorization and issuance of the bonds or notes authorized under this chapter shall not be dependent on or affected in any way by proceedings taken for the construction of any public works project or enterprise or contracts made in connection with the construction of any public works project or enterprise or by a failure to obtain the approval referred to in § 9-21-115.

Acts 1986, ch. 770, § 1-19.

9-21-120. Bond and note issues validated.

1. All bonds and notes issued prior to July 1, 1986, and all proceedings theretofore taken to authorize the issuance of bonds or notes by any local government of this state for any purpose which is designated a public works project by this chapter, are hereby ratified, validated and confirmed, and such bonds and notes are hereby declared to be valid and legally binding obligations payable in accordance with their terms, notwithstanding any lack of power of the governing body of the local government to authorize and issue such bonds or notes and to provide for the payment thereof in the manner stated in such bonds or notes and in the proceedings authorizing their issuance, and further notwithstanding any defects or irregularities in any such proceedings, or the failure of any such proceedings, authorizing any such bonds or notes, to comply with any of the provisions of this chapter or with any of the provisions of any other applicable section or chapter or any applicable general or special law or charter.
2. The disposition of proceeds of all capital outlay notes issued prior to January 15, 1998, for school purposes, by a county or metropolitan government which contains within its boundaries a special school district and/or incorporated town or city maintaining a public school system separate from the county or metropolitan government public school system, is hereby declared to be valid and legally binding unless proceedings which challenge the disposition of such proceeds have been instituted in any court in this state before January 15, 1998.

Acts 1986, ch. 770, § 1-20; 1998, ch. 903, § 1.

9-21-121. Impairment of contract.

Nothing in this chapter shall be deemed in any way to alter the terms of any agreements made with the holders of any outstanding bonds or notes of the local government or to authorize the local government to alter the terms of any such agreements, or to impair, or to authorize the local government to impair, the rights and remedies of any creditors of the local government.

Acts 1986, ch. 770, § 1-21.

9-21-122. Authorization to cancel bonds, notes and coupons.

Whenever any bonds, notes, or interest coupons shall be paid and discharged, they shall be cancelled by stamping and punching, immediately upon their redemption. The cancelled bonds, notes, and coupons shall be retained and be available for examination in annual audits subject to § 9-21-123.

Acts 1986, ch. 770, § 1-22.

9-21-123. Authorization to destroy bonds, notes and coupons.

1. Subject to subsection (b), any local government may, by resolution duly adopted by its governing body, authorize and direct the paying agent for its bonds, notes and coupons, or other person in possession of its bonds, notes and coupons, to destroy all bonds, notes and coupons duly paid and cancelled.
2. Such bonds, notes and coupons duly paid and cancelled during any fiscal year may be destroyed only after the fiscal audit of the local government covering the fiscal year has been completed and the appropriate local government official shall have properly posted all bonds, notes and coupons duly paid and cancelled to the local government bond, note and coupon records on a current basis. If the audit reflects that all bonds, notes and coupons duly paid and cancelled have been properly accounted for, then the paying agents or other persons who have the local government's bonds, notes and coupons in their possession shall, at the direction of the local government, destroy the same and furnish a certified list of bonds, notes and coupons duly paid and cancelled by issue showing the bond, note and coupon number, the amount of each, the date paid and such additional information as the governing body may require. The governing body shall cause the certified list of bonds, notes and coupons duly paid and cancelled to be recorded in the official minutes of the governing body.

Acts 1986, ch. 770, § 1-23.

9-21-124. Supplementary nature — Transitional provisions — Interest rate agreements.

1. The powers conferred by this chapter shall be in addition and supplemental to the powers conferred by any other law and not in substitution for the powers conferred by any other law; however, to the extent this law conflicts with any other law or is inconsistent with any other law, this chapter shall prevail with respect to all bonds and notes issued under this chapter. Bonds or notes may be issued hereunder for any public works project, notwithstanding that any other law may provide for the issuance of bonds or notes for like purposes and without regard to the requirements, restrictions or procedural provisions contained in any other law or any home rule charter, and notwithstanding any other provisions to the contrary contained in any other law or laws. Any proceedings heretofore taken by any local government relating to the subject matters hereof, whether or not commenced under any other law, may be continued hereunder, or at the option of the governing body, may be discontinued and new proceedings instituted under this chapter.
2. 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 §§ 9-21-213(d), 9-21-302(b), 9-21-305(c), 9-21-602(c), 9-21-907(c), 9-21-910(d), 9-21-1006(c) and 9-21-1008(c), a local government may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law notwithstanding §§ 9-21-213(d), 9-21-302(b), 9-21-305(c), 9-21-602(c), 9-21-907(c), 9-21-910(d), 9-21-1006(c) and 9-21-1008(c). Nothing in §§ 9-21-213(d), 9-21-302(b), 9-21-602(c), 9-21-907(c), 9-21-910(d), 9-21-1006(c) and 9-21-1008(c) is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a local government to enter into the contracts or agreements described in §§ 9-21-213(d), 9-21-302(b), 9-21-305(c), 9-21-602(c), 9-21-907(c), 9-21-910(d), 9-21-1006(c) and 9-21-1008(c) heretofore entered into or entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations.

Acts 1986, ch. 770, § 1-24; 1999, ch. 432, § 1.

Compiler's Notes. Title 5, ch. 10, part 7, referred to in this section, was repealed by Acts 1988, ch. 750, § 2.

Title 6, ch. 57, part 3, referred to in this section, was repealed by Acts 1988, ch. 750, § 10.

9-21-125. Effectiveness and priority of pledges and liens.

1. 1. Any pledge of, or lien on, revenues, fees, rents, tolls or other charges received or receivable by any local government to secure the payment of any bonds or notes issued by a local government pursuant to this chapter, 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 the holder or holders of any such bonds or notes until the payment in full of the principal thereof and premium and interest thereon.
   2. 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.
   3. 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. This section applies to all pledges of and liens on revenues, fees, rents, tolls or other charges received or receivable by any local government to secure the payment of any bonds or notes issued by a local government, whether created or granted before or after May 22, 1991, except such application does not affect the rights of persons to the extent their relative priorities were intended to be fixed by reference to any other provision of law prior to May 22, 1991.

Acts 1991, ch. 403, §§ 1, 2.

9-21-126. Advertisements for sale of bonds or notes.

An advertisement for sale of bonds or notes under this chapter may omit the date and time of sale, and in such event, the advertisement for sale shall set forth the manner in which the date and time of sale shall be subsequently published, which may be either by publication:

1. In the same financial journal and/or newspaper where the advertisement for sale is published; or
2. Via electronic communication systems deemed proper by the local government which is generally available to the financial community, in either case at least forty-eight (48) hours prior to the time fixed for such sale.

Acts 1994, ch. 806, § 10.

9-21-127. Bonds for certain unfunded pension obligations.

1. Local governments may issue general obligation bonds or revenue bonds under this part and parts 2 and 3 of this chapter for certain unfunded pension obligations or for not greater than fifty percent (50%) of the value of certain unfunded other post-employment benefits if such is approved by the state funding board after receiving a recommendation by the comptroller of the treasury or the comptroller's designee.
2. 1. A local government that issues bonds for certain unfunded pension obligations pursuant to § 9-21-105(4)(A)(iv) shall not be required to receive a recommendation by the comptroller of the treasury or the comptroller's designee or the approval of the state funding board if:
      1. The principal amount of the bonds is amortized over the term of the bonds such that the bonds are not balloon indebtedness, as defined in subdivision (b)(2); and
      2. The local government has:
         1. Adopted a debt management policy in compliance with guidelines promulgated by the state funding board;
         2. Available for public inspection its financial statements prepared in compliance with generally accepted accounting principles for state and local governments with an unqualified auditor's opinion for the two (2) most recent fiscal years;
         3. Presented to its governing body at a public hearing an explanation of the risk exposure associated with such bonds, economic and demographic assumptions used in the funding assumptions, alternative funding options considered, issuance costs associated with the proposed bonds and any conflicts of interest among the professionals involved (if disclosing such conflicts would not violate any rules of professional conduct);
         4. Engaged or will engage a financial advisor, bond counsel and actuarial consultant in connection with the issuance of such bonds;
         5. A full-time finance staff of at least three (3) persons; and
         6. An audit committee.
   2. As used in this subsection (b), “balloon indebtedness” means any bond:
      1. Twenty percent (20%) or more of the principal amount of which is payable during any twelve-month period; or
      2. Fifty percent (50%) or more of the principal amount of which is payable in the aggregate twenty (20) years or more after the date of issuance.
3. Notwithstanding any provisions of this chapter to the contrary, any bonds issued pursuant to this section shall mature at such time or times not exceeding thirty (30) years from their respective dates and the proceeds from any bonds issued for certain unfunded other post-employment benefits shall be invested in accordance with an investment trust established pursuant to title 8, chapter 50, part 12.

Acts 1997, ch. 390, § 3; 2008, ch. 991, § 2; 2010, ch. 868, § 42; 2013, ch. 467, § 5.

Compiler's Notes. For the Preamble to the act concerning certain unfunded pension obligations for which local governments may issue bonds, please refer to Acts 2013, ch. 467.

9-21-128. Debt necessary to fund school building improvements, demolition or new construction.

Whenever the commissioner of education is authorized by the state board of education to take responsibility for the operation of any local school system or school that has been placed on probation pursuant to title 49, chapter 1, part 6, the state acting under the authority of the state building commission may issue debt necessary to fund school building improvements, demolition or new construction as approved by the commissioner and the state board of education. Such debt may be required to be repaid from any funds available to such local school system.

Acts 1998, ch. 737, § 2.

9-21-129. Proceeds to be shared among municipal or special school district systems.

1. Proceeds from the sale of bonds or notes issued pursuant to this chapter by a county or metropolitan government for school capital outlay purposes shall be shared with any municipal or special school district system within the county or metropolitan government on the same basis as is provided in § 49-3-1003. The trustee of the county or the treasurer of the metropolitan government shall pay over to the treasurer of the municipality or the special school district that amount of the proceeds which bears the same ratio to the entire amount of proceeds, net of all costs of issuance and sale of the bonds or notes, as the average daily attendance of the year ending June 30 immediately preceding the receipt of the proceeds of the respective municipality or special school district bears to the average daily attendance for the year ending June 30 immediately preceding the receipt of the proceeds of the entire county or metropolitan government.
2. The governing body of such municipality or special school district may, by regularly adopted resolution, waive its right to all or a part of any funds due under this section and return the funds to the trustee of the county or the treasurer of the metropolitan government for the purposes originally provided.
3. The proceeds of any bonds or notes issued for school capital outlay purposes shall not be required to be shared if the county or metropolitan government elects to pay for such bonds or notes pursuant to any applicable provision of § 49-3-1005(b) or (c).
4. Proceeds required to be shared pursuant to this section shall be shared at the time of the issuance of the bonds or notes.
5. The proceeds of any refunding bonds and notes issued pursuant to part 9 of this chapter to refund bonds or notes issued for school capital outlay purposes, the proceeds of bonds issued to retire capital outlay notes issued for school capital outlay purposes pursuant to part 6 of this chapter, the proceeds of bonds issued to retire bond anticipation notes issued for school capital outlay purposes, and notes issued to renew other notes issued for school capital outlay purposes, shall not be required to be shared as provided herein, unless the bonds or notes to be refunded, refinanced, renewed or extended are payable from taxes levied only upon a portion of the property in a county or metropolitan government as provided in § 49-3-1005(b), or are payable as provided in § 49-3-1005(c), and the instruments issued to accomplish such refinancing are payable from taxes to be levied on all taxable property in the county or metropolitan government.

Acts 1998, ch. 903, § 2.

Attorney General Opinions. Special school district — waiver of pro rata distribution of bond proceeds, OAG 00-004, 2000  Tenn. AG LEXIS 1 (1/6/00).

Cities, special school districts and counties may not change the statutory average daily attendance (ADA) measure; however, they may waive their rights to their portion, in whole or in part, of school bond proceeds, and, thus, distribution may not always follow the ADA ratio, OAG 05-134, 2005 Tenn. AG LEXIS 136 (8/26/05).

9-21-130. Guidelines and rules and regulations relating to contracts and agreements authorized — Compliance with.

1. The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts authorized in §§ 9-21-213(d), 9-21-302(b), 9-21-305(c), 9-21-602(c), 9-21-907(c), 9-21-910(d), 9-21-1006(c) and 9-21-1008(c), 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 local government's financial statements;
   9. Financial monitoring and periodic assessment of such contracts by the local government;
   10. The application and source of non-periodic payments; and
   11. Educational requirements for officials of any local government responsible for approving any such contract or agreement.
2. Prior to the adoption by the governing body of the local government 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 thereon to the local government. 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 local government 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 local government 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.

Acts 1999, ch. 432, § 2.

9-21-131. Agreements concerning rights and remedies of parties — Jurisdiction — Applicable law.

When entering into any contracts or agreements authorized under this chapter, 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, evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the local government 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 any local government against which an action on such a contract or agreement is brought shall lie solely in a court located in Tennessee which would otherwise have jurisdiction of actions brought in contract against such local government.

Acts 1999, ch. 432, § 2.

9-21-132. Sale of bonds at private sale by local government.

1. A local government shall have discretion until June 30, 2014, to sell bonds at private sale upon terms and conditions that it determines and upon approval by the governing body of the local government.
2. Subsection (a) shall apply to counties having a population greater than three hundred seven thousand (307,000), according to the 2000 federal census or any subsequent federal census, and the municipality that is the county seat of the county.
3. Any local government may petition the state funding board for permission to sell specific bonds determined to be required to be sold at taxable interest rates at private sale upon terms and conditions that the local government determines and upon approval by the governing body of the local government.

Acts 2009, ch. 223, § 1; 2010, ch. 982, § 5; 2012, ch. 601, §§ 1-3.

Code Commission Notes.

Acts 2009, ch. 223, § 1 purported to add this section as § 9-21-152; however, the code commission added this section as § 9-21-132.

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

9-21-133. Approval of comptroller of treasury required prior to issuance of balloon indebtedness — Evaluation of plan.

1. As used in this section:
   1. “Balloon indebtedness”:
      1. Means any indebtedness that:
         1. Has a final term to maturity totaling thirty-one (31) or more years from the original date of issuance of the indebtedness to the date the indebtedness is fully amortized, including any subsequent refinancing thereof;
         2. Delays principal repayment for more than three (3) years after the date of issuance;
         3. Capitalizes interest beyond the later of the construction period or three (3) years from the date of issuance; or
         4. Does not have substantially level or declining debt service; and
      2. Does not include any indebtedness that:
         1. Has at least seventy-five percent (75%) of total principal amortized within ten (10) years from the date of issuance with no more than twenty-five percent (25%) of principal subject to payment in any one (1) year;
         2. Has a debt service schedule in which each annual principal installment is not more than fifty percent (50%) in excess of the smallest prior installment;
         3. Has a general obligation pledge and is being issued by a local government or local government instrumentality that has some amount of long-term general obligation indebtedness outstanding or proposed to be issued that is rated in the highest rating category for long-term debt instruments (AAA/Aaa) or the first tier (AA+/Aa1) of the second highest rating category for long-term debt instruments by a nationally recognized rating agency for municipal securities, without regard to the effect of any credit agreement or other form of credit enhancement entered into in connection with such rated indebtedness;
         4. Is secured solely by a revenue pledge and is being issued by a local government or local government instrumentality that has some amount of long-term revenue indebtedness outstanding or proposed to be issued that is rated in the highest rating category for long-term debt instruments (AAA/Aaa) or the first tier (AA+/Aa1) of the second highest rating category for long-term debt instruments by a nationally recognized rating agency for municipal securities, without regard to the effect of any credit agreement or other form of credit enhancement entered into in connection with such rated indebtedness;
         5. State or federal law requires the local government or local government instrumentality to participate in the financing program;
         6. Is a conduit transaction for a nongovernmental entity;
         7. Is evidenced by a loan with either the United States department of agriculture or the United States department of housing and urban development; or
         8. Is a note the issuance of which is otherwise subject to the approval of the comptroller of the treasury;
   2. “Indebtedness” means:
      1. Any bond, note, loan agreement or any other evidence of a debt obligation in which a local government or local government instrumentality, either directly or indirectly, incurs a definite and absolute obligation to the payment of the principal of and interest on the debt obligation; and
      2. Does not include bonds and loan agreements authorized by title 7, chapter 53;
   3. “Local government” means, solely for the purposes of this section, any incorporated city or town, metropolitan government, county, or utility district; and
   4. 1. “Substantially level or declining debt service” means an amortization schedule in which the aggregate amount of debt service calculated as principal plus interest that is payable in each year is not in excess of the lowest aggregate amount of debt service payable in any prior year by more than the greater of five percent (5%) or ten thousand dollars ($10,000);
      2. For purposes of determining whether debt service is substantially level or declining in accordance with the preceding sentence, the first three (3) years of debt service do not need to be taken into account. For purposes of determining whether debt service is substantially level or declining on bonds issued with a variable interest rate, the average rate of interest at which fixed interest rate bonds of the same maturities would be sold should be estimated and the total principal amount should be amortized based upon such interest rate assumption.
2. For purposes of this section, principal of debt will be treated as being payable or amortized upon its stated maturity, upon any mandatory redemption date, and upon any date on which the holder of the debt has the option to require the debt to be prepaid, redeemed, or purchased, other than with the proceeds of a liquidity facility provided by a third party.
3. Solely for purposes of this section, a local government may account for the amortization of principal and the payment of debt service on:
   1. A fiscal year basis;
   2. A calendar year basis; or
   3. An annual basis commencing on the date upon which debt is issued.
4. On and after July 1, 2014, if any local government or local government instrumentality proposes to issue any balloon indebtedness, then the local government or local government instrumentality shall first obtain approval from the comptroller of the treasury in accordance with subsection (e).
5. Prior to the adoption by the local government or local government instrumentality of any action authorizing the issuance of balloon indebtedness, the local government or local government instrumentality shall submit a plan of balloon indebtedness to the comptroller of the treasury or the comptroller's designee for approval. The comptroller of the treasury or the comptroller's designee may request any additional information as may be required to properly review the proposed plan of balloon indebtedness. The comptroller of the treasury or the comptroller's designee shall evaluate each plan of balloon indebtedness based on the plan's particular circumstances and shall approve the plan only if a determination is made that the repayment structure is in the public's interest.
6. The comptroller of the treasury or the comptroller's designee shall report the comptroller's approval or disapproval of the plan of balloon indebtedness to the governing body within fifteen (15) business days after receipt of the plan and all requested supplemental documentation. After receiving the approval of the comptroller of the treasury or the comptroller's designee of the plan of balloon indebtedness or after the expiration of fifteen (15) business days from the date the plan of balloon indebtedness is received by the comptroller of the treasury or the comptroller's designee and no disapproval having been reported by the comptroller of the treasury or the comptroller's designee, whichever date is earlier, the governing body may take such action with reference to the proposed plan of balloon indebtedness as it deems advisable in accordance with this part.
7. The state funding board is authorized to establish guidelines, rules, or regulations with respect to the comptroller of the treasury's approval of balloon indebtedness and may exempt certain classes or issues of indebtedness from such approval.

Acts 2014, ch. 766, § 5; 2018, ch. 498, § 1; T.C.A. § 9-21-134.

Code Commission Notes.

The version of this section from Acts 2014, ch. 529, § 2 has not been codified because the code commission has determined that Acts 2014, ch. 766, §  5 supersedes it.This section was renumbered from § 9-21-134 to § 9-21-133 by the authority of the Code Commission in 2020.

Compiler's Notes. Acts 2014, ch. 529, § 1 provided that the act shall be known and may be cited as the “Anti-Kicking the Can Act”.

9-21-134. Public entities — Information concerning debt obligation issuances.

1. In addition to the definitions applicable generally to this chapter, the following definitions shall be applicable to this section only:
   1. “Advisor” means a financial advisor, swap advisor, or program administrator, with respect to a finance transaction, whether or not such title is used;
   2. “Costs” related to a finance transaction may include, but are not limited to, fees and expenses of advisors, underwriters, placement agents, counterparties, bond and other counsel, paying agents, registrars, trustees, escrow agents, verification agents, credit enhancement and liquidity providers, remarketing and auction agents, rating agencies, publishing, and other similar fees and expenses, whether or not payable at issuance. “Cost” may include recurring and nonrecurring fees and expenses occurring during the life of the transaction, debt service payments, including interest, and any payments made to a counterparty;
   3. “Debt obligation” means bonds, notes, capital leases, loan agreements, and any other evidence of indebtedness lawfully issued, executed or assumed by a public entity;
   4. “Derivative” means an interest rate agreement, as defined in § 9-22-103, and such other transactions related to debt obligations as identified by the state funding board;
   5. “Event of default” means default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties;
   6. “Finance transaction” means debt obligations, derivatives, or both;
   7. “Financial obligation”:
      1. Means:
         1. A debt obligation;
         2. A derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or
         3. A guarantee of a debt obligation or derivative instrument; and
      2. Does not include municipal securities as to which a final, official statement has been provided to the Municipal Securities Rulemaking Board (MSRB) consistent with 17 CFR 240.15c2-12 under the Securities and Exchange Act of 1934;
   8. “Public entity” means the state, a state agency, a local government, a local government instrumentality, or any other authority, board, district, instrumentality, or entity created by the state, a state agency, local government, a local government instrumentality, or combination, thereof;
   9. “Public finance professional” means an advisor, underwriter, placement agent, counterparty, bond counsel, issuer's counsel, or other person or entity advising the public entity with respect to a finance transaction or offering to provide professional services with respect to a finance transaction; and
   10. “State funding board” means the state funding board, created pursuant to chapter 9 of this title.
2. The state funding board is authorized to:
   1. Develop model finance transaction policies for use by public entities; and
   2. Exempt from the filing requirements of this section any finance transaction:
      1. Deemed de minimis by the board;
      2. Where the public entity is required by statute to participate in the financing program;
      3. That is a conduit transaction for a nongovernmental entity; or
      4. Where the disclosure of costs of the transaction is deemed not consistent with the public disclosure intent of this section.
3. 1. The board shall determine the information to be disclosed pursuant to this section, including:
      1. A brief description of the finance transaction;
      2. The issuance, continuing and one-time costs of the finance transaction;
      3. A brief description of any continuing disclosure obligations with respect to the finance transaction;
      4. A copy of the offering document, if any; and
      5. Such other information and in such manner as may be required by the board.
   2. Not later than forty-five (45) days following the issuance or execution of a finance transaction by or on behalf of any public entity, the public entity shall submit, or cause to be submitted, the information pursuant to subdivision (c)(1) to the governing body of the public entity, with a copy to the comptroller of the treasury or the comptroller's designee. If an open meeting of the governing body is not scheduled within the forty-five-day period, then the public entity shall give a copy to each member of the body within such period and present the information in subdivision (c)(1) to the body at the next scheduled meeting.
   3. The state funding board shall require public entities to disclose financial obligations and events of default on the Electronic Municipal Market Access (EMMA) website of the MSRB and to disclose events of default to the office of the comptroller of the treasury by those public entities not required by the securities and exchange commission to disclose financial obligations and events of default on the EMMA website of the MSRB within ten (10) business days, in accordance with guidelines approved by the board.
4. 1. Upon discovery by the public entity of a failure to comply with the requirements of this section, the public entity may immediately request permission from the comptroller of the treasury or the comptroller's designee to permit a late filing of such information. In addition, upon discovery by the comptroller of the treasury or the comptroller's designee of an omission or error or filing failure, the comptroller of the treasury or the comptroller's designee shall notify the public entity of such noncompliance. The public entity shall submit the required information, along with an explanation for the noncompliance, within fifteen (15) days following its discovery or notice by the comptroller of the treasury or the comptroller's designee.
   2. The comptroller of the treasury or the comptroller's designee shall maintain a list of all finance transactions discovered as not complying with the requirements of this section, along with a description of the nature of the noncompliance. The comptroller of the treasury or the comptroller's designee shall also maintain lists of all public entities that have failed to respond to the comptroller of the treasury's or the comptroller's designee's notification of failure to file. The lists of entities that have failed to comply with the requirements of this section shall be a public record. Upon receipt of the information required for any finance transaction for which information is noncompliant, the comptroller of the treasury or the comptroller's designee shall remove the public entity from the list of those that have failed to respond to the comptroller of the treasury's or the comptroller's designee's notification and shall notify the public entity of its removal. If a public entity is on the comptroller of the treasury's or the comptroller's designee's list of public entities that have failed to respond to the comptroller of the treasury's or the comptroller's designee's notification of failure to file, no finance transactions may be issued by the public entity until the comptroller of the treasury or the comptroller's designee has removed the public entity from the list.

Acts 1989, ch. 402, § 1; T.C.A., § 7-53-312; Acts 1994, ch. 740, §§ 1, 2; 1998, ch. 879, § 1; 2005, ch. 392, § 1; 2006, ch. 874, § 1; 2010, ch. 868, § 43; 2014, ch. 766, § 1; 2019, ch. 6, §§ 1, 2; T.C.A. § 9-21-151.

Code Commission Notes.

This section was renumbered from § 9-21-151 to § 9-21-134 by the authority of the Code Commission in 2020.

Compiler's Notes. Acts 2006, ch. 874, § 4 provided that no expenditure of public funds pursuant to the act shall be made in violation of the provisions of Title VI of the Civil Rights Act of 1964, as codified in 42 U.S.C. § 2000d.

Cross-References. Confidentiality of records, § 10-7-504.

Powers of corporations, § 48-101-308.

Part 2
General Obligation Bonds