§ 7-82-501 — Issuance of bonds or notes

Tennessee § 7-82-501

• Jurisdiction: Tennessee
• Title: 7

Text

(a) Each district has the power and is hereby authorized from time to time to issue negotiable bonds in anticipation of the collection of revenues for the purpose of constructing, acquiring, reconstructing, improving, bettering or extending any facility or system authorized by this chapter, or any combination thereof, and to pledge to the payment of the interest and principal of such bonds all or any part of the revenues derived from the operation of such facility, system, or combination of such facility and system. There may be included in the costs for which bonds are to be issued, reasonable allowances for legal, engineering and fiscal services, interest during construction and for six (6) months after the estimated date of completion of construction, and other preliminary expenses, including the expenses of incorporation of the district. Each district has the power and is hereby authorized from time to time to issue revenue refunding bonds in the manner provided for a local government in the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21. (b) Any utility district that has the power and authority to operate a gas distribution system may borrow money in anticipation of the collection of revenues from such system, and issue negotiable notes to evidence such borrowing for the purpose of financing gas purchases, including storage costs and pipeline capacity costs. Any such notes shall be secured solely by a pledge of and lien on the revenues of such system. The principal amount of notes that may be issued during any twelve-month period shall not exceed sixty percent (60%) of total gas purchases for the same period, and all notes issued during such period shall be retired and paid in full on or before the end of such period. The notes shall be sold in such manner, at such price and upon such terms and conditions as may be determined by the board of commissioners of the district issuing such notes. No notes shall be issued under this subsection (b) unless the gas system for which the notes are to be issued has positive net position as shown in the most recent audited financial statements of the system, and the system has produced positive change in net position in at least one (1) fiscal year out of the three (3) fiscal years next preceding the issuance of the notes as shown on the audited financial statements of the system. No notes shall be issued without first being approved by the comptroller of the treasury or the comptroller's designee. Notes issued pursuant to this section and the income from the notes shall be exempt from all state, county and municipal taxation, except inheritance, transfer and estate taxes. If revenues of such system are insufficient to pay all such notes at maturity, any unpaid notes may be renewed one (1) time for a period not to exceed one (1) year, or may be otherwise liquidated as approved by the comptroller of the treasury or the comptroller's designee. (c) No bond or note authorized by this chapter may be issued 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 shall show in detail the total outstanding bonds, notes, warrants, refunding bonds, and other evidences of indebtedness of the utility district, 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 district and any other pertinent financial information, shall be 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 may report thereon to the utility district 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 utility district shall be published once in a newspaper of general circulation in the county of the principal office of the utility district, and any other counties that it serves, 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 utility district 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 shall also be made a part of the bond transcript. (d) No provision of this section dealing with 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, shall apply when the bond or bonds or other evidence of indebtedness of the utility district 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. (e) (1) Prior to the beginning of the fiscal year, a utility district, whether created pursuant to this chapter or a public or private act, shall adopt a balanced annual operating budget that identifies the utility district'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 a utility district 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 utility district 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 utility district to enter into emergency financial transactions. (f) If a utility district 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.

Legislative History

Amended by 2023 Tenn. Acts, ch. 463, s 22, eff. 7/1/2023. Amended by 2021 Tenn. Acts, ch. 256, s 4, eff. 4/28/2021. Amended by 2015 Tenn. Acts, ch. 140, Secs.s 10, s 11 eff. 4/17/2015. Acts 1937, ch., 248, § 9; C. Supp. 1950, § 3695.35 (Williams, § 3695.34); Acts 1951, ch. 262, § 3; 1963, ch. 104, § 1; 1977, ch. 495, §§ 1-3; 1978, ch. 669, § 1; 1978, ch. 713, § 1; T.C.A. (orig. ed.), § 6-2619; Acts 1985, ch. 38, §§ 1-4; 1987, ch. 422, § 9; 1988, ch. 750, § 37; 1989, ch. 139, § 7; 1989, ch. 221, § 9; 1998, ch. 701, § 1; 2004, ch. 663, § 1; 2010 , ch. 868, §§ 24-27; 2011 , ch. 392, §§ 14-16.