SENATE BILL 518
By Reeves
HOUSE BILL 561
By Capley
HB0561
001151
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AN ACT to amend Tennessee Code Annotated, Section 7-
34-111; Section 7-36-113; Section 7-82-501;
Section 7-82-702; Section 68-221-1311 and
Section 68-221-611, relative to utilities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 7-34-111, is amended by adding the
following new subsection:
(g)
(1) Any municipal, metropolitan-government, or county-owned water or
wastewater system may borrow money in anticipation of the collection of
revenues and issue negotiable notes to evidence such borrowing for the purpose
of providing emergency cash flow.
(2) Notes may only be issued under this subsection (g) by resolution of
the water or wastewater system's governing body, which shall determine the sale
price of the notes, how the notes may be sold, and the terms and conditions of
such sale.
(3) Notes issued under this subsection (g) must be secured solely by a
pledge of and lien on the revenues of the water or wastewater system.
(4) The principal value of the notes that may be issued under this
subsection (g) during any twelve-month period must not exceed sixty percent
(60%) of total projected cash flows for the same period.
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(5) All notes issued under this subsection (g) during the twelve-month
period pursuant to subdivision (g)(4) must be retired and paid in full on or before
the end of such period.
(6)
(A) The comptroller of the treasury, or the comptroller's designee,
must approve the sale of any notes sold under this subsection (g) prior to
the issuance of such notes.
(B) The comptroller of the treasury, or the comptroller's designee,
in consultation with the water or wastewater system, shall develop a
corrective action plan by which the system must abide. The corrective
action plan takes effect at the time the comptroller, or the comptroller's
designee approves the issuance of notes under this subsection (g) and
remains in effect as long as the notes are outstanding and until the
system, in the discretion of the comptroller, or the comptroller's designee,
has adequate cash reserves and an adequate cash management plan.
(C) If the comptroller, or the comptroller's designee, approves the
note issuance, then the comptroller or the comptroller's designee shall
refer the water or wastewater system to the Tennessee board of utility
regulation. The board may review the system and order any appropriate
remedial measures pursuant to § 7-82-706.
(7) If the water or wastewater system's revenues are insufficient to pay
all notes issued pursuant to this subsection (g) at maturity, then the system may
request approval from the comptroller, or comptroller's designee, to renew any
unpaid notes for a period of time and under such terms as approved by the
comptroller of the treasury or the comptroller's designee.
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SECTION 2. Tennessee Code Annotated, Section 7-36-113, is amended by adding the
following new subsection:
(j)
(1) Any authority, whether created pursuant to this chapter or another
public or private act, may borrow money in anticipation of the collection of
revenues and issue negotiable notes to evidence such borrowing for the purpose
of providing emergency cash flow.
(2) Notes may only be issued under this subsection (j) by resolution of
the authority's governing body, which shall determine the sale price, how the
notes may be sold, and the terms and conditions of such sale.
(3) Notes issued under this subsection (j) must be secured solely by a
pledge of and lien on the revenues of the authority.
(4) The principal value of the notes that may be issued under this
subsection (j) during any twelve-month period must not exceed sixty percent
(60%) of total projected cash flows for the same period.
(5) All notes issued under this subsection (j) during the twelve-month
period pursuant to subdivision (j)(4) must be retired and paid in full on or before
the end of such period.
(6)
(A) The comptroller of the treasury, or the comptroller's designee,
must approve the sale of any notes to be sold under this subsection (j)
prior to the issuance of such notes.
(B) The comptroller, or the comptroller's designee, in consultation
with the authority, shall develop a corrective action plan by which the
authority must abide. The corrective action plan takes effect at the time
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the comptroller, or the comptroller's designee, approves the issuance of
notes under this subsection (j) and remains in effect as long as the notes
are outstanding and until the authority, in the discretion of the comptroller,
or the comptroller’s designee, has adequate cash reserves and an
adequate cash management plan.
(C) If the comptroller, or the comptroller's designee, approves the
note issuance, then the comptroller, or the comptroller's designee, shall
refer the authority to the Tennessee board of utility regulation. The board
may review the authority and order any appropriate remedial measures
pursuant to § 7-82-706.
(7) If the authority's revenues are insufficient to pay all such notes at
maturity, the authority may request approval from the comptroller, or
comptroller's designee, to renew any unpaid notes for a period of time and under
such terms as approved by the comptroller of the treasury, or the comptroller's
designee.
SECTION 3. Tennessee Code Annotated, Section 7-82-501(b), is amended by
designating the existing language as subdivision (b)(1) and adding the following as subdivision
(b)(2):
(b)
(2)
(A) Any utility district created pursuant to this chapter or another
public or private act may borrow money in anticipation of the collection of
revenues and issue negotiable notes to evidence such borrowing for the
purpose of providing emergency cash flow.
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(B) Notes may only be issued under this subdivision (b)(2) by
resolution of the utility district's governing body, which shall determine the
sale price of the notes, how the notes may be sold, and the terms and
conditions of such sale.
(C) Notes issued under this subdivision (b)(2) must be secured
solely by a pledge of and lien on the revenues of the utility district.
(D) The principal value of the notes that may be issued under this
subdivision (b)(2) during any twelve-month period must not exceed sixty
percent (60%) of total projected cash flows for the same period.
(E) All notes issued under this subdivision (b)(2) during the
twelve-month period pursuant to subdivision (b)(2)(D) must be retired and
paid in full on or before the end of such period.
(F)
(i) The comptroller of the treasury, or the comptroller's
designee, must approve the sale of any notes to be sold under
this subdivision (b)(2) prior to the issuance of such notes.
(ii) The comptroller, or the comptroller's designee, in
consultation with the utility district, shall develop a corrective
action plan by which the utility district must abide. The corrective
action plan takes effect at the time the comptroller, or the
comptroller's designee, approves the issuance of notes under this
subdivision (b)(2) and remains in effect as long as the notes are
outstanding and until the utility district, in the discretion of the
comptroller, or the comptroller's designee, has adequate cash
reserves and an adequate cash management plan.
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(iii) If the comptroller, or the comptroller's designee,
approves the note issuance, then the comptroller, or the
comptroller's designee, shall refer the utility district to the
Tennessee board of utility regulation. The board may review the
utility district and order any appropriate remedial measures
pursuant to § 7-82-706.
(G) If the utility district's revenues are insufficient to pay all such
notes at maturity, the utility district may request approval from the
comptroller, or comptroller's designee, to renew any unpaid notes for a
period of time and under such terms as approved by the comptroller of
the treasury, or the comptroller's designee.
SECTION 4. Tennessee Code Annotated, Section 7-82-501(f), is amended by deleting
the subsection.
SECTION 5. Tennessee Code Annotated, Section 7-82-702(a)(3), is amended by
deleting the subdivision and substituting:
(3)
(A) Conduct a contested case hearing to determine whether a member of
a utility system's governing body should be removed from office. The board may
remove a member of a governing body as provided in § 7-82-307(b) or for the
following:
(i) Failure to comply with § 12-4-101;
(ii) Misconduct, whether or not the misconduct results in criminal
charges;
(iii) Failure to exercise reasonable oversight;
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(iv) Actions or failures causing a utility system to display severe
managerial incompetence as described in § 7-82-704(a)(3);
(v) Failure to follow board directives, except for good cause
shown; or
(vi) Any other reason provided by law;
(B) A new member must be promptly appointed as provided by law;
(C) This section does not give the board the authority to remove an
elected official;
(D) As used in this subdivision (a)(3), misconduct is any conduct that
constitutes a violation of § 39-16-402, except it is not necessary that the public
servant intentionally or knowingly commit such a violation;
SECTION 6. Tennessee Code Annotated, Section 68-221-611(n), is amended by
deleting the subsection and substituting:
(n)
(1) Any authority, whether created pursuant to this chapter or another
public or private act, may borrow money in anticipation of the collection of
revenues and issue negotiable notes to evidence such borrowing for the purpose
of providing emergency cash flow.
(2) Notes may only be issued under this subsection (n) by resolution of
the authority's governing body, which shall determine the sale price of the notes,
how the notes may be sold, and the terms and conditions of such sale.
(3) Notes issued under this subsection (n) must be secured solely by a
pledge of and lien on the revenues of the authority.
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(4) The principal value of the notes that may be issued under this
subsection (n) during any twelve-month period must not exceed sixty percent
(60%) of total projected cash flows for the same period.
(5) All notes issued under this subsection (n) during the twelve-month
period pursuant to subdivision (n)(4) must be retired and paid in full on or before
the end of such period.
(6)
(A) The comptroller of the treasury, or the comptroller's designee,
must approve the sale of any notes to be sold under this subsection prior
to the issuance of such notes.
(B) The comptroller, or the comptroller's designee, in consultation
with the authority, shall develop a corrective action plan by which the
authority must abide. The corrective action plan takes effect at the time
the comptroller, or the comptroller's designee, approves the issuance of
notes under this subsection (n) and remains in effect as long as the notes
are outstanding and until the authority, in the discretion of the comptroller,
or the comptroller's designee, has adequate cash reserves and an
adequate cash management plan.
(C) If the comptroller, or the comptroller's designee, approves the
note issuance, then the comptroller or the comptroller's designee shall
refer the authority to the Tennessee board of utility regulation. The board
may review the authority and order any appropriate remedial measures
pursuant to § 7-82-706.
(7) If the authority's revenues are insufficient to pay all notes issued at
maturity, the authority may request approval from the comptroller, or
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comptroller's designee, to renew any unpaid notes for a period of time and under
such terms as approved by the comptroller, or the comptroller's designee.
SECTION 7. Tennessee Code Annotated, Section 68-221-1311(m), is amended by
deleting the subsection and substituting:
(m)
(1) Any authority, whether created pursuant to this chapter or another
public or private act, may borrow money in anticipation of the collection of
revenues and issue negotiable notes to evidence such borrowing for the purpose
of providing emergency cash flow.
(2) Notes may only be issued under this subsection (m) by resolution of
the authority's governing body, which shall determine the sale price of the notes,
how the notes may be sold, and the terms and conditions of such sale.
(3) Notes issued under this subsection (m) must be secured solely by a
pledge of and lien on the revenues of the authority.
(4) The principal value of the notes that may be issued under this
subsection (m) during any twelve-month period must not exceed sixty percent
(60%) of total projected cash flows for the same period.
(5) All notes issued under this subsection (m) during the period pursuant
to subdivision (m)(4) must be retired and paid in full on or before the end of such
period.
(6)
(A) The comptroller of the treasury, or the comptroller's designee,
must approve the sale of any notes to be sold under this subsection (m)
prior to the issuance of such notes.
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(B) The comptroller, or the comptroller's designee, in consultation
with the authority, shall develop a corrective action plan by which the
authority must abide. The corrective action plan takes effect at the time
the comptroller, or the comptroller's designee, approves the issuance of
notes under this subsection (m) and remains in effect as long as the
notes are outstanding and until the authority, in the discretion of the
comptroller, or the comptroller's designee, has adequate cash reserves
and an adequate cash management plan.
(C) If the comptroller, or the comptroller's designee, approves the
note issuance, then the comptroller, or the comptroller's designee, shall
refer the authority to the Tennessee board of utility regulation. The board
may review the authority and order any appropriate remedial measures
pursuant to § 7-82-706.
(7) If the authority's revenues are insufficient to pay all such notes at
maturity, the authority may request approval from the comptroller, or
comptroller's designee, to renew any unpaid notes for a period of time and under
such terms as approved by the comptroller of the treasury, or the comptroller's
designee.
SECTION 8. This act takes effect July 1, 2025, the public welfare requiring it.