§ 7-82-502 — Terms of instruments

(a) Such bonds shall be authorized by resolution of the board of the district, and may be issued 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 bear interest at such rate or rates, which may vary from time to time; may be in such form, either coupon or registered; may be executed in such manner; may be payable in such medium of payment, at such place or places, and be subject to such terms of redemption, with or without premium; and may contain such terms, covenants and conditions as such resolution or subsequent resolution may provide. The bonds may be issued for money or property and may be sold in such manner and upon such terms as the board shall determine. 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. 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, chapter 3. (b) If any issue of such bonds is to be sold to an agency of the federal government or an agency of the state, such bond issue may, at the request of such agency, be delivered as an installment bond payable as to principal and interest in equal or approximately equal installments for the term of such bond issue, in accordance with the resolution authorizing such bond issue. Such authorizing resolution shall stipulate the annual principal and interest requirements during the full term of the bond issue. (c) With respect to all or any portion of any issue of bonds issued or anticipated to be issued under this chapter, at any time during the term of the bonds, 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 (c) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in subsection (e), a utility district, 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 utility district may determine, including, but not limited to, provisions permitting the utility district 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. (d) The governing body of a utility district may enter into an agreement to sell bonds, other than its refunding bonds, under this chapter, providing for delivery of the bonds 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 and in accordance with the Local Government Public Obligations Act of 1986, compiled in title 9, chapter 21, 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 utility district to sell its bonds, as authorized in this subsection (d), is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with subsection (e). Agreements to sell bonds or 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. (e) (1) The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts referenced in subsections (c) and (d), 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 utility district's financial statements; (I) Financial monitoring and periodic assessment of such contracts by the utility district; (J) The application and source of nonperiodic payments; and (K) Educational requirements for officials of any utility district responsible for approving any such contract or agreement. (2) Prior to the adoption by the governing body of the utility district 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 the compliance to the utility district. 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 utility district 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 utility district 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. (f) When entering into any contracts or agreements facilitating the issuance and sale of bonds, including contracts or agreements providing for liquidity and credit enhancement and reimbursement agreements relating to the bonds, 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 evidencing a transaction bearing a reasonable relationship to this state and also to another state or nation, the utility district 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 utility district 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 utility district. (g) 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 (c) and (d), a utility district may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law, notwithstanding subsections (c) and (d). Nothing in subsection (c), (d), (e) or (f) is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a utility district to enter into the contracts or agreements described in subsection (c), (d), (e) or (f) heretofore entered into or entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations. (h) When entering into an interest rate agreement authorized by this section, a utility district 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 1937, ch. 248, § 9; C. Supp. 1950, § 3695.35 (Williams, § 3695.34); Acts 1969, ch. 282, § 1; T.C.A. (orig. ed.), § 6-2620; Acts 1980, ch. 586, § 1; 1980, ch. 601, § 5; 1999, ch. 428, §§ 1, 2; 2001, ch. 253, § 8; 2004, ch. 589, § 5.