TN Code § 7-82-704 (2021)
2021 Tennessee Code|Title 7 - Consolidated Governments and Local Governmental Functions and Entities|Chapter 82 - Utility District Law of 1937|Part 7 - Utility Management Review Board|§ 7-82-704. Financially Distressed Utility Districts — Consolidation

   When a utility district is financially distressed or is financially unable to expand the amount or type of service or services as set forth and described in its petition for creation pursuant to § 7-82-201, the utility management review board may consider the consolidation of the utility district with another utility district or districts, municipal utility system or county utility system to restore financial stability and to ensure continued operations for the benefit of the public being served by the utility district. The utility management review board may initiate and participate in negotiations among the utility district, any other utility district, municipal utility system or county utility system with whom the utility district may consolidate and any other affected parties concerning a consolidation. In the event the utility management review board determines that such a consolidation is in the best interest of the public being served by the utility district and the utility management review board is able to negotiate an agreement among all affected parties for the consolidation, the utility management review board shall enter an order approving the consolidation agreement and shall require the utility district to enter into the consolidation agreement. If the utility management review board determines that the utility district, any other utility district, municipal utility system or county utility system with whom the utility district may consolidate, or any other affected party, has refused or failed to enter into good faith negotiations on a consolidation, then the utility management review board shall petition the chancery court in a jurisdiction in which the utility district is operating to require the party or parties to engage in good faith negotiations concerning a consolidation.   In the event the board of commissioners of the utility district does not enter into the approved consolidation agreement or fails to abide by the terms and conditions of the consolidation agreement, then the utility management review board shall petition the chancery court in a jurisdiction in which the utility district is operating to enforce the utility management review board's order to require the board of commissioners to enter into the approved consolidation agreement and to abide by and implement all of the terms and conditions of the consolidation agreement.     In order to mitigate any negative financial impact of such a consolidation on the utility district or districts, municipal utility system or county utility system agreeing to consolidate with a financially distressed utility district, the board is hereby authorized to develop a plan of mitigation payments to such consolidated utility system. Such mitigation payments shall be made from funds available in the utility district revitalization fund and shall include amounts to offset increased administrative costs relating to the consolidation, to the extent such costs cannot reasonably be recovered from customer revenues or other assets of the financially distressed utility district, amounts that may be necessary to cure a default on indebtedness of the financially distressed utility district to the extent such defaults can, in the opinion of the board, reasonably be cured, amounts that may be necessary to renovate and repair the facilities of the financially distressed utility district to the level necessary to enable the consolidated utility system to provide continued service to the public being served by the financially distressed utility district, and other such payments as may be necessary in the opinion of the board to accomplish such a consolidation and mitigate the financial impact of the consolidation.   The board shall contract with a resulting consolidated utility system to provide for the repayment of any such mitigation payments over a period of time as may be agreed upon by the board and the consolidated utility system. Such repayments may be made from surcharges levied upon the customers in the service area of the financially distressed utility district being consolidated; provided, that such surcharges shall not result in user fees in the service area of the financially distressed utility district being in excess of the maximum level of users fees as may be determined by the board to be reasonable for the service area. Upon a determination by the board that repayment of the mitigation payments would be unduly burdensome and financially detrimental to the customers of such utility system, the board may waive repayments required pursuant to this section; provided, that any such waiver must be approved by the commissioner of finance and administration.   Any repayments that may be received by the board pursuant to this section shall be deposited into and shall become part of the utility district revitalization fund.