7-82-501 - Issuance of bonds or notes.
7-82-501. Issuance of bonds or notes.
(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 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 retained earnings as shown in the most recent audited financial statements of the system, and the system has produced positive net income 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 state director of local finance. 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 director of the division of local finance.
(c) (1) 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 state director of local finance for review, and the state director of local finance may report thereon to the utility district within fifteen (15) days from the date the plan is received by the state director of local finance. The state director of local finance 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 state director of local finance, 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 state director of local finance, 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 state director of local finance shall also be made a part of the bond transcript.
(2) The provisions of subsection (c) shall not apply to any gas utility district in any county with the following populations, according to the 1970 federal census or any subsequent federal census:
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(d) No provision of this section dealing with the review or approval of any bond or note issued by the state director of local finance, 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) Except as provided is subdivision (e)(2), prior to the beginning of its fiscal year, any utility district that has issued any debt obligations pursuant to the authority of this chapter shall adopt a balanced annual operating budget that identifies all anticipated revenues of the district by source and identifies all anticipated expenses by type of expense. Such budget shall be based upon historical operating results and reasonably anticipated future operations. The budget as adopted shall be submitted to the state director of local finance for review. The state director of local finance shall furnish the utility district a report on such review, which report shall be published in accordance with subsection (c).
(2) The provisions of subdivision (e)(1) shall not apply in any gas utility district or in any county having the following populations, according to the 1980 federal census or any subsequent federal census:
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(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.
[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.]