2023 Tennessee Code › Title 68 - HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION (§§ 68-1-NEW — 68-221-1319) › ENVIRONMENTAL PROTECTION (§§ 68-201-NEW — 68-221-1319) › Chapter 221 - WATER AND SEWERAGE (§§ 68-221-101 — 68-221-1319) › Part 6 - WATER AND WASTEWATER TREATMENT AUTHORITY ACT (§§ 68-221-601 — 68-221-620) › Section 68-221-611 - Power to issue bonds - Conditions of bonds - Rights of bondholders - Execution - Tax exemption - Legal investment

(a)
(1)
The authority has the power to issue negotiable bonds from time to time in order to accomplish any of the purposes authorized by this part, and it also has the power to issue bonds in the same manner and under the same provisions as municipalities or metropolitan governments or counties are empowered to issue bonds under the laws of this state, for the purposes authorized by this part.
(2)
All such bonds shall be payable from all or any part of the revenues, income and charges of the authority and such bonds may also constitute an obligation of one (1) or more of the creating and participating governmental entities.
(b)
(1)
Such bonds shall be authorized by resolution of the board and shall bear such date, mature at such time or times, bear interest at such rate or rates payable annually or semiannually, be in such form and denominations, be subject to such terms of redemption with or without premium, carry such registration privileges, be payable in such medium and at such place or places, be executed in such manner, all as may be provided in the resolution authorizing the bonds.
(2)
Such bonds may be sold at public or private sale in such manner and for such amount as the board may determine.
(c)
Such resolution may include any covenants which are deemed necessary by the board to make such bonds secure and marketable, including, but not limited to, covenants regarding:
(1)
The application of the bond proceeds;
(2)
The pledging, application and securing of the revenues of the authority;
(3)
The creation and maintenance of reserves;
(4)
The investment of funds;
(5)
The issuance of additional bonds;
(6)
The maintenance of minimum fees, charges and rentals;
(7)
The operation and maintenance of its treatment works;
(8)
Insurance and insurance proceeds;
(9)
Accounts and audits;
(10)
The sale of treatment works properties;
(11)
Remedies of bondholders;
(12)
The vesting in a trustee or trustees such powers and rights as may be necessary to secure the bonds and the revenues and funds from which they are payable;
(13)
The terms and conditions upon which bondholders may exercise their rights and remedies;
(14)
The replacement of lost, destroyed or mutilated bonds;
(15)
The definition, consequences and remedies of an event of default;
(16)
The amendment of such resolution; and
(17)
The appointment of a receiver in the event of a default.
(d)
Any holder of any such bonds, including any trustee for any bondholders, may enforce their rights against the authority, its board or any officer, agent or employee thereof by mandamus, injunction or other action in any court of competent jurisdiction, subject to the covenants included in the bond resolution.
(e)
(1)
Sums received as accrued interest from the sale of any bonds may be applied to the payment of interest on such bonds.
(2)
All sums received as principal or premium from such sale shall be applied to the purpose for which such bonds were issued, and may include, but without limitation, expenses for fiscal, legal, engineering and architectural services, expenses for the authorization, sale and issuance of the bonds, expenses for obtaining an economic feasibility survey in connection with such bonds, and to create a reserve for the payment of not exceeding one (1) year's interest on such bonds.
(f)
Bonds issued pursuant to this part executed by officers in office on the date of such execution shall be valid obligations of the authority, notwithstanding that before the delivery thereof, any or all of the persons executing the bonds shall have ceased to be such officers.
(g)
Bonds issued pursuant to this part, and the income therefrom, shall be exempt from all state, county and municipal taxation except inheritance, transfer and estate taxes.
(h)
All public officers and bodies of the state, municipal corporations, political subdivisions, all insurance companies and associations, all savings banks and savings institutions, including savings and loan associations, all executors, administrators, guardians, trustees, and all other fiduciaries in the state may legally invest funds within their control in bonds of an authority.
(i)
Any bonds issued for the purpose of financing the cost of the establishment, construction, installation, acquisition, extension or improvement of any treatment works, as defined by §
68-221-603
, which are to be the joint obligations of the authority and any creating governmental entity, or participating governmental entity, shall be authorized and issued by such governmental entity in the form and manner prescribed by the applicable provisions of [former] title 5, chapter 11 [repealed] and [former] title 7, chapter 36 [repealed], and the construction, installation, acquisition, extension or improvement of any treatment works shall be deemed to be a public works project, as defined in [former] title 5, chapter 11 [repealed] and [former] title 7, chapter 36 [repealed]. To the extent any of [former] title 5, chapter 11 [repealed] and [former] title 7, chapter 36 [repealed], relating to the terms and conditions of any bonds so issued, conflict with this section, the former shall prevail.
(j)
Any bonds upon which any creating governmental entity, or participating governmental entity, is jointly obligated with the authority may be secured by the full faith and credit and taxing powers of such governmental entity as provided in the chapters cited herein.
(k)
All authorities, whether created pursuant to this chapter or any public or private act by the general assembly, shall not issue a bond or note authorized by this chapter until the resolution authorizing the issuance of bonds or notes, together with a statement as of the beginning of the then current fiscal year, which statement must show in detail the total outstanding bonds, notes, warrants, refunding bonds, and other evidences of indebtedness of the authority, together with the maturity dates of the bonds, notes, warrants, refunding bonds, and other evidences of indebtedness, interest rates, special provisions for payment, the project to be funded by the bonds or notes, the current operating financial statement of the authority and any other pertinent financial information, is submitted to the comptroller of the treasury or the comptroller's designee for review, and the comptroller of the treasury or the comptroller's designee shall report thereon to the authority within fifteen (15) days from the date the plan is received by the comptroller of the treasury or the comptroller's designee. The comptroller of the treasury or the comptroller's designee shall immediately acknowledge receipt in writing of the proposed bond or note issue statement and information. The report thus received by the authority must be published once in a newspaper of general circulation in the county of the principal office of the authority or the county the authority primarily serves if its principal office is not also located in that county, and once on the authority's website, during the week following the report's receipt. After receiving the report of the comptroller of the treasury or the comptroller's designee, and after publication of such report, or after the expiration of fifteen (15) days from the date the statement and information are received by the comptroller of the treasury or the comptroller's designee, whichever date is earlier, the authority may take such action with reference to the proposed bond or note issue as it deems advisable. Such report of the comptroller of the treasury or the comptroller's designee must also be made a part of the bond transcript.
(l)
Any provision of this section related to the review or approval of any bond or note issued by the comptroller of the treasury or the comptroller's designee, or other state agency, does not apply when the bond or bonds or other evidence of indebtedness of the authority are to be purchased or the loan is to be made by the farmers home administration or any other direct lending department of the government of the United States.
(m)
(1)
Prior to the beginning of the fiscal year, an authority, whether created pursuant to this chapter or a public or private act, shall adopt a balanced annual operating budget that identifies the authority's anticipated revenues by source and anticipated expenses by type of expense. The budget must be:
(A)
Based upon historical operating results and reasonably anticipated future operations; and
(B)
Created in conformity with generally accepted accounting principles and prepared in a form consistent with accepted governmental standards and as approved by the comptroller of the treasury or the comptroller's designee.
(2)
A budget as adopted must be submitted to the comptroller of the treasury, or the comptroller's designee, for approval.
(3)
The comptroller of the treasury, or the comptroller's designee, shall provide guidance to the form of a budget, including supplemental schedules, as necessary, to demonstrate that an authority has adequate cash to meet current obligations, including principal and interest, as applicable.
(4)
If a proper budget is not approved by or submitted to the comptroller of the treasury, or the comptroller's designee, within two (2) months of the beginning of the fiscal year, then the authority shall not issue a debt or financing obligation until the comptroller of the treasury, or the comptroller's designee, has approved the budget, or as otherwise provided for in a manner approved by the comptroller of the treasury, or the comptroller's designee.
(5)
In the case of an emergency, the comptroller of the treasury, or the comptroller's designee, may waive the requirement of budget approval in order to allow the authority to enter into emergency financial transactions.
(n)
If an authority proposes to sell bonds in excess of fifty million dollars ($50,000,000) at a negotiated sale, a written request for proposal must be sent to a minimum of five (5) qualified firms no later than thirty (30) days prior to the first meeting of the board of commissioners to discuss the specific bond transaction. A minimum of three (3) proposals must be received no later than fourteen (14) days prior to such first meeting. This requirement applies to both financial advisory and underwriting services.
Amended by 2023 Tenn. Acts, ch. 463, s 34, eff. 7/1/2023.
Amended by 2022 Tenn. Acts, ch. 663, s 2, eff. 3/16/2022.
Amended by 2021 Tenn. Acts, ch. 256, s 8, eff. 4/28/2021.
Acts 1974, ch. 605, § 11; 1977, ch. 217, § 1; T.C.A., §§ 53-6011, 68-13-611.