§ 4-31-1005 — Loan agreements

Tennessee § 4-31-1005

• Jurisdiction: Tennessee
• Title: 4

Text

(a) Subject to any existing contractual obligations of the local government unit and the local education agency, the authority may enter into loan agreements with any local government unit and any local government unit may enter into loan agreements with the authority for loans for education projects described in this part. (b) Any loan agreement may include such provisions as may be agreed upon by the authority and the local government and shall additionally include, among other things, in substance, the following: (1) The amount of the loan, not to exceed the estimated reasonable cost of the project to be constructed, the financing costs of the authority, the administrative costs of the authority, and the amount of any required reserves as determined by the authority; (2) An agreement by the authority to pay part of the amount of the loan to the local government unit during the progress of the construction, or to pay the amount of the loan following completion of the construction, as may be agreed upon by the parties; and (3) An agreement by the local government unit: (A) To proceed expeditiously with and complete construction of the project in accordance with the plans approved pursuant to this part; (B) To commence operation of the project on its completion, and not to discontinue operations, change the use of, or dispose of the project without the approval of the authority; (C) To operate and maintain the project in accordance with applicable provisions of this part and in compliance with rules and regulations of the authority; (D) Not to contract with any for-profit-corporation, private person or firm for the operation or beneficial use of the for-profit-corporation, private person, or firm, notwithstanding any law authorizing such contracts, except upon approval by the authority of an application to the authority, which application shall include, but not be limited to, an opinion from a nationally recognized bond counsel that the contract will not affect the tax exempt status of the income of the authority's bonds or notes financing such facility under state or federal law; (E) To pledge such sources of revenue including, but not limited to, the tax required by § 4-31-1006 to pay the principal of and interest on the loan and to make such payments as and when due in accordance with the loan agreement; and (F) To establish and maintain adequate financial records for the project, and to cause to be made an annual audit of the financial records and transactions covering each fiscal year in accordance with generally accepted government auditing standards, and to furnish a copy of such audit and, upon request, such financial records to the comptroller of the treasury. (c) The authority has the right to enter into such further agreements with a local government unit and require such further security as it may see fit prior to, or simultaneously with, the issuance of bonds or notes or to refuse to issue bonds or notes until such agreements or security, in any form that the authority may elect, are agreed to or are obtained. (d) Failure of a local government unit to file the audit or, upon request, the financial information with the comptroller of the treasury as required by the loan agreement each year until the loan, together with interest, is totally repaid constitutes a Class A misdemeanor and anyone violating this subsection (d), upon conviction, shall be liable for a fine of not less than ten dollars ($10.00) nor more than one hundred dollars ($100) for each violation, within the discretion of the court, and each day of continued violation constitutes a separate offense. (e) The department of education, in conjunction with the authority, shall develop an application and review procedure for loans under this program and shall make recommendations to the authority as to loan applications. (f) The authority and the department shall have such other authority as may be necessary or appropriate for the exercise of the powers and duties conferred by this part. (g) (1) Each local education agency is authorized to pledge to the authority, for the further security of the authority's bonds and notes, a portion of the Tennessee investment in student achievement formula (TISA) base funding amount and a portion of an infrastructure stipend allocated pursuant to § 49-3-107 . These pledges may be required by the authority as a condition to making loans to local government units. (2) The maximum portions of the TISA base funding amount and the infrastructure stipend that may be pledged for purposes of subsection (a) must be established by the department of education by rules promulgated pursuant to the Uniform Administrative Procedures Act, codified in title 4, chapter 5. (h) The authority may promulgate additional guidelines, rules, or regulations in furtherance of the administration of this part.

Legislative History

Amended by 2022 Tenn. Acts, ch. 966, s 81, eff. 7/1/2023. Acts 2003 , ch. 298, § 5.