§ 7-34-109 — Authorized projects - Bond issues - Resolutions - Interim certificates

(a) The construction, acquisition, reconstruction, improvement, betterments or extension of any public works may be authorized under this chapter, and bonds may be authorized to be issued under this chapter to provide funds for such purpose or purposes by resolution or resolutions of the governing body, which may be adopted at the same meeting at which they are introduced by a majority of all members of the governing body then in office, and shall take effect immediately upon adoption. (b) The bonds shall bear interest at a zero (0) rate or at rates that vary from time to time or at such rate or rates; payable at such time or times; may be in one (1) or more series; may bear such date or dates; may mature at such time or times, not exceeding forty (40) years from their respective dates; may be payable in such medium of payment, at such place or places; may carry such registration privileges; may be subject to such terms of redemption; may be executed in such manner; may contain such terms, covenants and conditions; and may be in such form, as such resolution or subsequent resolutions may provide. (c) The bonds may be sold at public or private sale at such price as may be determined by the governing body. (d) Pending the preparation of the definitive bonds, interim receipts or certificates in such form and with such provisions as the governing body may determine may be issued to the purchaser or purchasers of bonds sold pursuant to this chapter. (e) The bonds and interim receipts or certificates shall be fully negotiable within the meaning of and for all purposes of the Uniform Commercial Code, compiled in title 47, chapters 1-9. (f) With respect to all or any portion of any issue of bonds or notes issued or anticipated to be issued under this chapter, at any time during the term of the bonds or notes, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this subsection (f) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in subsection (h), a municipality by resolution may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, and other interest rate hedging agreements under such terms and conditions as the governing body of the municipality may determine, including, but not limited to, provisions permitting the municipality to pay to or receive from any person or entity any loss of benefits under such agreement upon early termination of the agreement or default under such agreement. (g) The governing body of a municipality may enter into an agreement to sell its bonds and notes, other than its refunding bonds, under this chapter, providing for delivery of its bonds and notes on a date greater than ninety (90) days and not greater than five (5) years, or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement or to sell its refunding bonds under this chapter, providing for delivery of its refunding bonds on a date greater than ninety (90) days from the date of execution of the agreement and not greater than the first optional redemption date on which the bonds being refunded can be optionally redeemed resulting in cost savings or at par, whichever is earlier, only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the agreement or contract of a municipality to sell its bonds and notes as authorized in this subsection (g) is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with subsection (h). Agreements to sell bonds and refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement do not require a report of the comptroller of the treasury or the comptroller's designee. (h) (1) The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts referenced in subsections (f) and (g), which may include, but shall not be limited to, the following: (A) The conditions under which such agreements or contracts can be entered into; (B) The methods by which such contracts are to be solicited and procured; (C) The form and content such contracts shall take; (D) The aspects of risk exposure associated with such contracts; (E) The standards and procedures for counterparty selection, including rating criteria; (F) The procurement of credit enhancement, liquidity facilities, or the setting aside of reserves in connection with such contracts or agreements; (G) The methods of securing the financial interest in such contracts; (H) The methods to be used to reflect such contracts in the municipality's financial statements; (I) Financial monitoring and periodic assessment of such contracts by the municipality; (J) The application and source of nonperiodic payments; and (K) Educational requirements for officials of any municipality responsible for approving any such contract or agreement. (2) Prior to the adoption by the governing body of the municipality of a resolution authorizing such contract or agreement, a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that such contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report on such compliance to the municipality. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the municipality may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that such contract or agreement is not in compliance with the guidelines, rules or regulations, then the municipality is not authorized to enter into such contract or agreement. The guidelines, rules or regulations shall provide for an appeal process to a determination of noncompliance. (i) When entering into any contracts or agreements facilitating the issuance and sale of bonds and notes, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating to the contracts or agreements, interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, other interest rate hedging agreements, and agreements with the purchaser of the bonds authorized under this section or with the purchaser of the notes authorized under § 7-34-111 evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the municipality may agree in the written contract or agreement that the rights and remedies of the parties to the contract or agreement shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over any municipality against which an action on such a contract or agreement is brought shall lie solely in a court in Tennessee that would otherwise have jurisdiction of actions brought in contract against such municipality. (j) Prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations with respect to the contracts and agreements authorized in subsections (f) and (g), a municipality may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law notwithstanding subsections (f) and (g). Nothing in subsection (f), (g), (h) or (i) is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a municipality to enter into the contracts or agreements described in subsection (f), (g), (h) or (i) heretofore entered into or entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations. (k) When entering into an interest rate agreement authorized by this section, a municipality may secure its obligations under the agreement, including its obligation for termination or other nonperiodic payments, with the revenues available to secure the bonds with respect to which such interest rate agreement is entered into.

Legislative History

Acts 1935 (Ex. Sess.), ch. 33, § 5; C. Supp. 1950, § 4406.46 (Williams, § 4406.38); Acts 1955, ch. 216, § 2; 1969, ch. 192, § 1; 1969, ch. 284, § 1; T.C.A. (orig. ed.), § 6-1309; Acts 1985, ch. 225, § 3; 1999, ch. 427, § 1; 2001, ch. 253, §§ 3 - 7; 2004, ch. 589, § 3.