SENATE BILL 6006
By Haile
HOUSE BILL 6006
By Garrett
HB6006
001900
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AN ACT to amend Tennessee Code Annotated, Title 4 and
Title 54, relative to the financing of transportation
projects.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 4-29-248(a), is amended by adding
the following as a new subdivision:
( ) Tennessee transportation financing authority, created by § 54-8-102;
SECTION 2. Tennessee Code Annotated, Title 4, Chapter 3, Part 3, is amended by
adding the following as a new section:
4-3-309. Tennessee Transportation Financing Authority.
The Tennessee transportation financing authority created by § 54-8-102 is
attached to the office of the comptroller of the treasury for all administrative purposes.
SECTION 3. Tennessee Code Annotated, Title 54, is amended by adding the following
as a new chapter:
54-8-101. Chapter definitions.
As used in this chapter:
(1) "Authority" means the Tennessee transportation financing authority;
(2) "Board" means the governing board of the authority established by § 54-8-
102(b);
(3) "Bonds" means bonds, notes, renewal notes, refunding bonds, interim
certificates, certificates of indebtedness, debentures, warrants, commercial paper, or
other obligations or other evidence of indebtedness or obligations of the authority;
(4) "Cost":
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(A) Means, as applied to transportation facilities:
(i) The cost of construction;
(ii) The cost of acquisition of all lands, structures, fixtures, rights-
of-way, franchises, easements, and other property rights and interests;
(iii) The cost of demolishing, removing, or relocating any
buildings, structures, or fixtures on acquired lands, including the cost of
acquiring any lands to which such buildings, structures, or fixtures may be
moved or relocated;
(iv) The cost of all labor, materials, machinery, and equipment;
(v) Financing charges and expenses, and interest on all bonds
prior to and during construction and for one (1) year after completion of
construction;
(vi) The cost of engineering, financial, and legal services, plans,
specifications, studies, surveys, estimates of cost and of revenues, and
other expenses incidental to determining the feasibility of acquiring,
constructing, operating, or maintaining transportation facilities;
(vii) Administrative expenses, working capital, and reserves for
principal and interest on bonds and for extensions, enlargements,
additions, and improvements; and
(viii) Costs and expenses of bond trustees or other fiduciaries and
such other expenses as may be necessary or incidental to the acquisition,
construction, financing, operations, and maintenance of transportation
facilities, including, in the case of all of the enumerated costs in this
subdivision (4), reimbursements of prior expenditures; and
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(B) Includes any obligation or expense incurred by the state or any
agency thereof for studies, surveys, borings, preparation of plans and
specifications, or other work or materials in the acquisition or construction of
transportation facilities. Such obligation or expense is eligible to be reimbursed
to the state or such agency out of the proceeds of the bonds issued for such
transportation facilities as authorized in this chapter;
(5) "Department" means the department of transportation;
(6) "Lender" means any federal- or state-chartered bank, federal land bank,
production credit association, bank for cooperatives, federal- or state-chartered savings
institution, building and loan association, small business investment company, or any
other financial institution qualified within the state to originate and service loans,
including insurance companies, credit unions, investment banking or brokerage
companies, and mortgage loan companies;
(7) "Loan" means any loan made by the authority in furtherance of the purposes
of this chapter from the proceeds of the issuance and sale of the authority's bonds and
from any of its revenues or other moneys available to it as provided in this chapter;
(8) "Revenues" means user fee revenue and any revenues or receipts of the
authority or any other moneys or income collected by, payable to, or otherwise derived
by the authority;
(9) "State" means the state of Tennessee;
(10) "Transportation facilities" means the assets consisting of the real, personal,
or mixed property, or any interest in that property, whether tangible or intangible, that are
determined to be necessary or convenient for transportation in this state, including, but
not limited to, highways, bridges, tunnels, parking lots or garages, or other paved
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surfaces or structures that are designed to carry or contain transportation vehicles, and
transit, railway, port, airport, or multimodal transportation facilities; and
(11) "User fee revenue" has the same the meaning as defined in § 54-3-103.
54-8-102. Authority created; purpose; composition of board.
(a) There is hereby created the Tennessee transportation financing authority to
provide financing and refinancing for the development, maintenance, and improvement
of transportation facilities within the state, which authority is a public body corporate and
an instrumentality of the state.
(b) The powers of the Tennessee transportation financing authority are vested in
and exercised by a board, which shall be composed of the governor, the commissioner
of finance and administration, the state treasurer, the secretary of state, and the
comptroller of the treasury. The governor shall serve as the chair, and the comptroller
shall serve as the vice chair and secretary. The board has the power to prescribe its
bylaws, guidelines, rules, and regulations and govern its meetings and procedures as it
deems advisable. A majority of the board constitutes a quorum and the confirming vote
of at least three (3) members of the board is required.
54-8-103. Powers of the authority.
The authority, in addition to other powers enumerated in this chapter, is hereby
granted and has and may exercise all powers necessary or convenient for the carrying
out of its statutory purposes, including, but not limited to, the power to:
(1) Make, adopt, amend, and repeal bylaws, guidelines, policies and
procedures, and rules and regulations not inconsistent with this chapter, to
regulate its affairs and to carry into effect the powers and purposes of the
authority and for the conduct of its business;
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(2) Borrow money and issue bonds to finance and refinance
transportation facilities pursuant to this chapter, and pledge or otherwise
encumber revenues as security for all or any of the bonds of the authority as well
as any payment obligations under any agreements entered into in connection
with any such bonds, subject to the limitations of § 54-8-104(I);
(3) Make and enter into contracts and agreements necessary or
incidental to the performance of its duties, the furtherance of its purposes, and
the execution of its powers under this chapter upon such terms and conditions it
deems appropriate, including agreements with any person, entity, federal
agency, the state or other state, or any political subdivision of either;
(4) Receive and accept from any federal or private agency, foundation,
corporation, association, or person grants, donations of money or real or
personal property for the benefit of the authority, and receive and accept from the
state or any other state, and any political subdivision of either and from any other
source, aid or contributions of either money, property, or other things of value to
be held, used, and applied for the purposes for which such grants and
contributions may be made; provided, that any federal moneys so received and
accepted must be accepted and expended by the authority upon such terms and
conditions as are prescribed by the United States or any department or agency
thereof and as are consistent with the laws of the state, and any state moneys so
received must be accepted and expended by the authority upon such terms and
conditions as are prescribed by the state not inconsistent with such federal terms
and conditions;
(5) Accept loans from the federal government, the state government,
regional authorities, localities, and private sources; provided, that any federal
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moneys must be accepted and expended by the authority upon such terms and
conditions as are prescribed by the United States or any department or agency
thereof and as are consistent with laws of the state, and any state moneys must
be accepted and expended by the authority upon such terms and conditions as
are prescribed by the state;
(6) Make loans or grants to any person, partnership, association,
corporation, business, or governmental entity in furtherance of this chapter and
enter into such contracts, instruments, and agreements as may be expedient to
provide for the repayment of such loans and any security therefor, including to
pledge or otherwise encumber revenues, subject to the limitations of § 54-8-
104(l);
(7) Create and establish such funds and accounts as may be necessary
or desirable for the authority's purposes;
(8) Direct to any fund of the authority any of its property, including, but
not limited to, moneys appropriated by the state, premiums, fees and any other
amounts received by the authority with respect to financial assistance provided
by the authority, proceeds from the sale of bonds of the authority, proceeds as
designated by the authority from the loan or other disposition of property held or
acquired by the authority, income from investments that were made by the
authority or on behalf of the authority from moneys in one (1) or more of its funds,
or any other moneys made available to the authority consistent with this chapter;
(9) Collect such fees and charges, if any, as the authority determines to
be reasonable in connection with its loans and commitments and administration
thereof;
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(10) Apply for, execute, and endorse applications submitted by private
entities or political subdivisions of the state to obtain federal credit assistance for
one (1) or more transportation facilities; provided, that any such application,
agreement, and endorsement must not financially obligate the state or be
construed to implicate the credit of the state as security for any such federal
credit assistance;
(11) Pursue or otherwise apply for, and execute, an agreement to obtain
financing using a federal credit instrument for project financings otherwise
authorized by this chapter;
(12) Undertake all actions necessary and convenient to carry out the
powers granted in this chapter or reasonably implied from them;
(13) Notwithstanding this section, the authority shall not directly operate
any transportation facility; and
(14) Enter into loan agreements with others with respect to one (1) or
more transportation facilities or for activities, costs, debt restructuring, or working
capital associated with transportation facilities for such payments or deferrals and
upon such terms and conditions as the board of the authority deems advisable in
accordance with this chapter.
54-8-104. Bond issues, authorization, funding, terms and conditions, form, and
signatures.
(a)
(1) The authority may issue bonds, without limitation as to amount, for
the purpose of financing or refinancing costs associated with the development of
transportation facilities.
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(2) The bonds must be authorized by resolution of the authority and must
be issued in such principal amounts; must be dated; must bear interest at such
rate or rates payable at such time or times and at such place or places; must
mature at such time or times; must be payable in such medium of payment; and
are subject to such terms and conditions, as may be determined by the authority.
(3) The bonds may be made redeemable before maturity at the option of
the authority at such price or prices and under such terms and conditions as may
be fixed by the authority prior to the issuance of the bonds.
(4) The authority shall determine the form of the bonds, and may provide
for interest coupons and the form thereof at such time or in the future, and the
manner of execution or authentication of the bonds and coupons, and shall fix
the denomination or denominations of the bonds and the place or places of
payment of the principal and interest, which may be at any bank or trust company
within or without the state.
(5) The authority may issue refunding bonds for the purpose of refunding
any bonds then outstanding that were issued under this chapter, including the
payment of principal, redemption premium, and accrued interest on the bonds to
be refunded, expenses related to the issuance of the refunding bonds, including
discount and costs of issuance, and expenses related to the payment of the
refunded bonds.
(b) If any member or officer of the authority whose signature or facsimile
signature thereof appears on the bonds or coupons ceases to be a member or officer of
the authority before the delivery thereof, then the signature or facsimile signature
nevertheless is valid and sufficient for all purposes, the same as if the person had
remained a member or officer of the authority until after such delivery.
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(c) The authority is authorized and empowered to offer for sale any bonds to be
issued by the authority at such times, in such manner, either by competitive or
negotiated public sale or private sale, and at such prices, as is determined by the
authority.
(d) For bonds issued by the authority, all statutory limitations regarding
maximum interest rates are hereby expressly removed.
(e) With respect to any portion of any issue of bonds issued under this chapter,
the authority 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 agreements as the authority may determine,
including, without limitation, provisions permitting the authority to pay to or receive from
any person or entity any loss of benefits under such agreement upon early termination
thereof or default under such agreement.
(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 thereto, 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 the state and also to another state or nation, the authority may agree in the written
contract or agreement that the rights and remedies of the parties thereto are to be
governed by the laws of this state or the laws of such other state or nation; provided, that
jurisdiction over the authority against which an action on such a contract or agreement is
brought lies solely in a court in this state that would otherwise have jurisdiction of actions
brought in contract against the authority.
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(g) A resolution authorizing bonds may provide that the bonds contain a recital
that they are issued pursuant to this chapter, which recital is conclusive evidence of their
validity and the regularity of their issuance. The validity of the authorization and
issuance of bonds is not dependent on or affected in any way by proceedings taken for,
or contracts or agreements made in connection with, the development of transportation
facilities.
(h) All expenses of the authority incurred in carrying out this chapter must be
payable solely from revenues, and liability must not be incurred by the authority under
this chapter beyond the extent to which moneys were provided or received under this
chapter.
(i) Except as may otherwise be expressly provided by the authority in
proceedings relating to a particular issue of bonds, every issue of its bonds are payable
solely out of any revenues and are not a debt of, and do not constitute a general
obligation or pledge of the full faith and credit of, the state or of any county, municipality,
taxing entity, or other political subdivision thereof and may be secured by a pledge of
revenues as authorized by § 54-8-103(2).
(j) Any pledge made by the authority is valid and binding from the time when the
pledge was made. The revenues or properties so pledged and thereafter received by
the authority are immediately subject to the lien of the pledge without any physical
delivery thereof or further act, and the lien of any such pledge is valid and binding as
against all parties having claims of any kind in tort, contract, or otherwise against the
authority, irrespective of whether the parties have notice thereof. Neither the resolution
nor any other instrument by which a pledge is created needs to be recorded. The
Perfection, Priority and Enforcement of Public Pledges and Liens Act, compiled in title 9,
chapter 22, applies to any pledge of the authority.
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(k) In order to secure the payment of the principal of and interest on the bonds
and any payment obligations under any agreements entered into in connection with any
bonds, in addition to the other powers set forth in this chapter, the authority has the
power to:
(1) Pledge all or any part of the revenues, or other moneys on deposit in
funds established pursuant to § 54-8-103, or any rights to receive the revenues,
to the punctual payment of the principal of and interest on the bonds and
obligations under any such agreements, and covenant against thereafter
pledging any such revenues or other monies to any other bonds or obligations;
(2) Covenant as to establishment and maintenance and collection of
revenues;
(3) Provide for the terms, form, payment, registration, exchange,
execution, and authentication of the bonds in a manner not inconsistent with this
chapter, which may include the appointment of trustees, paying agents,
registrars, and authenticating agents within or outside the state;
(4) Secure the bonds and payment obligations by a trust indenture or
agreement by and between the authority and a corporate trustee, which may be
any trust company or bank having the powers of a trust company within or
outside the state, which agreement also may take the form of a resolution of
authority accepted by the trustee;
(5) Covenant as to limitations on the issuance of additional bonds to
finance transportation facilities projects and on the lien on revenues or other
moneys for the payment and security of the additional bonds;
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(6) Covenant as to the amount and kind of insurance to be maintained on
transportation facilities projects, and the use and disposition of insurance
moneys;
(7) Covenant as to the operation of transportation facilities projects;
(8) Covenant to set aside or pay over reserves and sinking funds for the
bonds and as to the disposition of the reserves and sinking funds;
(9) Covenant as to the use and disposition of the proceeds from the sale
of the bonds in a manner not inconsistent with this chapter;
(10) Redeem the bonds, and covenant for their redemption and to
provide the terms and conditions of the redemption;
(11) Covenant as to books of account, as to the inspection and audit of
the books of account, and as to the accounting methods;
(12) Covenant as to the investment of moneys on deposit in any funds or
accounts held under the resolutions or indentures securing the bonds;
(13) Covenant and prescribe as to what occurrences constitute events of
default and the terms and conditions upon which any or all of the bonds become,
or may be declared, due before maturity and as to the terms and conditions upon
which the declaration and its consequences may be waived or rescinded;
(14) Covenant as to the rights, remedies, liabilities, powers, and duties
arising upon the breach by it of any covenant, condition, or obligation;
(15) Provide with respect to the enforcement of obligations of the
authority, which may include limitations on bondholders' rights in favor of trustee
enforcement;
(16) Make such covenants and do any acts and things as may be
necessary, convenient, or desirable in order to secure the bonds and payment
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obligations, or in the discretion of the authority, to make the bonds more
marketable, notwithstanding that the covenants, acts, or things may not be
enumerated in this section, it being the purpose of this section to give the
authority power to do all things in the issuance of the bonds and incurrence of
related payment obligations and for their security that may be consistent with this
chapter and the Constitution of Tennessee;
(17) Vest in a trustee or trustees, which may be located within or without
the state, powers and duties, including the right to enforce any covenants made
to secure, or to pay, the bonds, limitations on liabilities, and the terms and
conditions upon which the holders of the bonds or any portion or percentage of
them may enforce any covenants under the bonds or duties imposed by the
bonds;
(18) Prescribe a procedure by which the terms of any resolution
authorizing bonds, or any other contract with bondholders, including, but not
limited to, an indenture of trust or similar instrument, may be amended or
abrogated and as to the amount of bonds the holders of which must consent to
the amendment or abrogation, and the manner in which the consent must be
given;
(19) Covenant and provide for the discharge and satisfaction and
defeasance of all or any part of bonds and the indebtedness evidenced by the
bonds; and
(20) Execute all instruments and perform such other acts as are
necessary, convenient, or desirable in the exercise of the powers granted in this
chapter, or in the performance of the covenants or duties of the authority.
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(l) Any bond of the authority or payment obligation under any agreement entered
into in connection with a bond must not be deemed to constitute a debt, or pledge of the
faith and credit, of the state or of any other political subdivision thereof but is payable
solely from the revenues pledged thereto. All such bonds and related payment
obligations must contain a prominent statement to the effect that the state, any political
subdivision thereof, and the authority is not obligated to pay the same or the interest
thereon except from revenues pledged thereto, and that neither the faith and credit nor
the taxing power of the state or of any political subdivision thereof is pledged to the
payment of the principal of or the interest on such bonds or related payment obligations.
(m) The bonds and the interest on the bonds are exempt from taxation by the
state and by any county, municipality, or taxing entity of the state, except for inheritance,
transfer, and estate taxes.
(n) The members of the board and any person executing the bonds is not liable
personally on the bonds by reason of the issuance thereof.
(o) The authority may delegate to any member or officer of the authority the
power to establish the terms of any bonds and any payment obligations under any
agreements to be entered into in connection with any bonds within parameters
determined by the authority and to approve the forms of any documents to be executed
in connection therewith.
54-8-105. Public hearing and approval.
(a) Whenever federal law requires public hearings and public approval as a
prerequisite to obtaining federal tax exemption for the interest paid on private activity
bonds under § 147(f) of the Internal Revenue Code (26 U.S.C. § 147(f)), as amended,
unless otherwise specified by federal law or regulation, the public hearing for private
activity bonds of the authority must be conducted by the board or any one (1) or more
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officers or members of the authority after prior notice, all as required by § 147(f) and
applicable regulations and revenue rulings under that section.
(b) For public approval, the governor shall serve as the applicable elected
representative within the meaning of § 147(f)(2)(E) of the Internal Revenue Code (26
U.S.C. § 147(f)(2)(E)).
54-8-106. Bondholder protection.
This chapter does not impair the obligation of any contract made by the authority
upon any bonds or any payment obligations under any agreements entered into in
connection with any bonds. The state covenants and agrees with the holders of the
bonds that so long as the bonds are outstanding and unpaid, the state must not limit nor
alter the rights vested in the authority with respect to any agreements made with, or
remedies available to, the holders of bonds issued under this chapter until the bonds,
together with all interest thereon, and all costs and expenses in connection with any
proceeding by or on behalf of the holders, are fully met and discharged. The authority
may include this pledge and agreement of the state in any agreement with the holders of
the bonds.
54-8-107. Right to performance of covenants and pledges.
The holders of all bonds of the authority and all persons who may hereafter
purchase the bonds or to whom the authority has incurred a payment obligation under
any agreement entered into in connection with any bond have, and are hereby declared
to have, a vested right in the performance of the covenants and pledges contained in
this chapter, and the performance of the duties imposed upon any officer or member of
the authority by or pursuant to this chapter may be enforced by the holder of any such
bond subject to any limitation imposed on the right to do so pursuant to § 54-8-
104(k)(15) or other payment obligation by appropriate proceedings.
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54-8-108. Deposit and investment of funds.
All banks, trust companies, bankers, savings banks and institutions, building and
loan associations, savings and loan associations, investment companies, and other
persons carrying on a banking and investment business; all insurance companies,
insurance associations, and other persons carrying on an insurance business; and all
executors, administrators, curators, trustees, and other fiduciaries may legally invest any
sinking funds, moneys, or other funds belonging to them or within their control in any of
the bonds, and the bonds must be authorized security for all public deposits. This
section, with regard to legal investments, does not relieve any person of any duty of
exercising reasonable care in selecting securities.
54-8-109. Revenues of the authority.
All moneys received by the authority pursuant to this chapter, whether as
proceeds from the sale of bonds or as revenues, are deemed to be trust funds to be held
and applied solely as provided in this chapter. The resolution authorizing the bonds of
any issue or the trust indenture or agreement or resolution securing such bonds must
provide that any officer with whom, or any bank or trust company with which, such
moneys are deposited must act as a trustee of the moneys and must hold and apply the
same for the purposes hereof, subject to such regulations as this chapter and such trust
indenture or agreement or resolution may provide.
54-8-110. Recordkeeping.
(a) The secretary of the board shall keep, or cause to be kept, appropriate
records concerning the payment of bonds issued under this chapter and any payment
obligations under any agreements entered into in connection with any such bonds,
including information regarding items redeemed.
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(b) The accounts and records of the authority showing the receipt and
disbursement of funds from whatever source derived must be in a form prescribed by
governmental generally accepted accounting principles. Such accounts must
correspond as nearly as possible to the accounts and records for such matters
maintained by enterprises.
(c) The secretary of the board shall maintain an aggregate listing of its current
debt in accordance with guidelines approved by the state funding board. At the end of
each fiscal year, the authority shall file the listing, and any other information required by
the guidelines, with the state funding board. The authority shall file with the state
funding board notice of default on any of its debt obligations within five (5) days of the
event.
54-8-111. Implementation; advice, opinions, and financial assistance; necessary
expenses.
The authority may procure such legal and technical advice, approving opinions,
and such financial assistance as it may consider necessary in connection with the
carrying into effect of this chapter, and may pay all necessary expenses, including costs
of advertisement, printing bonds, certificates and coupons, publication of all releases,
purchases of all necessary books and records, and all other incidental expenses as may
be necessary. All such expenses, as well as the amount of any discount at which bonds
issued under this chapter are sold, may be funded by bonds issued under this chapter.
54-8-112. Exemption from taxation.
The authority is declared to be performing a public function and to be a public
body corporate and an instrumentality of the state. Accordingly, the principal of and
interest on the bonds must not be taxed by the state or by any county or municipality or
taxing district of the state, except inheritance, transfer, and estate taxes.
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54-8-113. Disposition of assets upon dissolution.
After all bonds of the authority and any payment obligations under any
agreements entered into in connection with any such bonds are discharged and the
authority is dissolved, its remaining assets must inure to the benefit of the state.
54-8-114. Proprietary records; trade secrets.
Records received or possessed by the authority that have been determined to be
proprietary by the department under § 54-3-115 or § 54-6-107, or by another responsible
public entity under § 54-6-107, must remain confidential and are not subject to public
inspection under § 10-7-503, but only upon request by the private person or entity to the
authority with proof that the department or other responsible public entity has made a
determination that the records are proprietary.
54-8-115. Liberal construction.
In order to effectuate the purposes and policies described in this chapter, this
chapter must be liberally construed. The powers conferred by this chapter are in
addition and supplementary to any other law, whether general, special, or local. Except
as may be otherwise explicitly provided in this chapter, the issuance of bonds under this
chapter do not need to comply with the requirements of any other law of the state
applicable to the issuance of bonds.
54-8-116. Immunity.
This chapter does not waive the immunity of the state from suit or extend its
consent to be sued.
SECTION 4. Tennessee Code Annotated, Section 54-3-103, is amended by adding the
following as a new, appropriately designated subdivision:
( ) "Authority" means the Tennessee transportation financing authority created
by § 54-8-102(a);
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SECTION 5. Tennessee Code Annotated, Section 54-3-105, is amended by adding the
following as a new subsection:
(e) Notwithstanding another law to the contrary, user fee revenue derived from
or related to a user fee facility developed pursuant to the terms of a concession
agreement or other user fee facility development agreement, as applicable, must be
deposited to such fund or funds as designated in the applicable concession agreement
or user fee facility development agreement, including to a fund or funds created in
connection with the issuance of bonds by the authority pursuant to § 54-8-103(7), as is
provided for in such agreements or separate loan agreements. Unless otherwise
expressly instructed to do so in writing by the department of transportation, the
department of finance and administration shall not deposit any such user fee revenue
into the state user fee fund.
SECTION 6. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 7. This act takes effect upon becoming a law, the public welfare requiring it.