Contract: A legal written agreement that becomes binding when signed.
Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
Governing body: means the body in which the general legislative powers of a municipal corporation are vested, and in the case of counties means the legislative body of the respective counties. See Tennessee Code 12-10-103
Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
Lien: A claim against real or personal property in satisfaction of a debt.
Loan agreement: means an agreement providing for an authority to loan the proceeds derived from the issuance of bonds pursuant to this chapter to one (1) or more contracting parties to be used to pay the cost of one (1) or more projects and providing for the repayment of such loan by the other contracting party or parties, and which may provide for such loans to be secured by or evidenced by one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of the contracting party or parties, delivered to the authority or to the trustee under the indenture pursuant to which the bonds were issued. See Tennessee Code 12-10-103
Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
Municipal corporation: means any county, metropolitan government, incorporated city or town, utility district, school district, power district, sanitary district or other municipal, quasi-municipal or governmental body or political subdivision in this state, and any agency, authority, branch, bureau, commission, corporation, department or instrumentality thereof now or hereafter authorized by law to be created. See Tennessee Code 12-10-103
Municipality: means any county, incorporated city or town or utility district in this state with respect to which an authority may be organized. See Tennessee Code 12-10-103
Operating contract: means the written undertaking whereby the authority and a municipal corporation contract respecting construction of improvements upon and/or for the operation and maintenance of property owned by or leased by other than the authority to the municipal corporation. See Tennessee Code 12-10-103
other contracting party: means any party to a sale contract or loan agreement except the authority. See Tennessee Code 12-10-103
Project: includes an undertaking whereby a municipal corporation contracts with an authority respecting construction of improvements upon and/or for the operation and maintenance of property owned by or leased by other than the authority to the municipal corporation. See Tennessee Code 12-10-103
public building authority: means any public corporation organized pursuant to this chapter. See Tennessee Code 12-10-103
Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
Trustee: A person or institution holding and administering property in trust.
(1) Except as provided in subsections (b) and (c), whenever, and as often as, a municipal corporation having taxing power enters into a lease, loan agreement, sales contract or operating contract with a public building authority or other contracting party under this chapter, the governing body of such municipal corporation shall provide by resolution for the levy and collection of a tax sufficient to pay when due the annual amount payable under such lease, loan agreement, sales contract or operating contract as and when it becomes due and payable, and to pay any expenses of maintaining and operating the project required to be paid by the municipal corporation under the terms of such lease, loan agreement, sales contract or operating contract or by instrument collateral thereto and, furthermore, to pledge such tax and the full faith and credit of the municipal corporation to such payments. Such tax shall be assessed, levied, collected and paid in like manner as other taxes of the municipal corporation. Such tax shall not be included within any statutory or other limitation of rate or amount for such municipal corporation but shall be excluded therefrom and be in addition thereto and in excess thereof, notwithstanding and without regard to the prohibitions, restrictions or requirements of any other law, whether public or private. There shall be set aside from such tax levy into a special fund an amount sufficient for the payment of the annual amount due under any such lease, loan agreement, sales contract or operating contract and the money in such fund shall be used exclusively for such purpose and shall not be used for any other purpose until such annual amount has been paid in full. The foregoing shall not be construed to limit the power of the authority or other contracting party to enter into leases, loan agreements, sales contracts or operating contracts with municipal corporations not having the power of taxation.(2) Except for a lease, loan agreement, sales contract or operating contract entered into for school purposes as specified in § 49-3-1004, and except as provided in subsection (b), before any municipal corporation having the power of taxation enters into any lease, loan agreement, sales contract or operating contract with a public building authority under this part, the municipal corporation must comply with the resolution, notice and election provisions found in §§ 9-21-205 – 9-21-212. If such lease, loan agreement, sales contract or operating contract is done to retire or refund existing debt, then the resolution, notice and election requirements need not be followed.(b)(1) Notwithstanding subsection (a), a municipal corporation may enter into a lease, loan agreement, sales contract or operating contract with a public building authority or other contracting party under this chapter payable exclusively from the revenues of one (1) or more projects of the municipal corporation, if the governing body of such municipal corporation shall provide by resolution that the lease, loan agreement, sales contract or operating contract shall be so payable. The obligations of the municipal corporation under such a lease, loan agreement, sales contract or operating contract shall be secured solely by a pledge of and lien on the revenues so pledged, and, in the case of a utility district, a statutory lien in the nature of a mortgage lien upon any utility system or systems of such district, which pledge and lien shall be in favor of the public building authority or other contracting party pursuant to this chapter, and their assigns, and all such property shall remain subject to such pledge and lien until the payment in full of the obligations of the municipal corporation under the lease, loan agreement, sales contract or operating contract. If the governing body of the municipal corporation shall provide for a lease, loan agreement, sales contract or operating contract solely payable from and secured by such revenues, no recourse shall be had for the payment of any obligations thereunder against the general funds of the municipal corporation, nor shall the full faith and credit or taxing power, if any, of the municipal corporation, be deemed to be pledged to the payment of the obligations. Such obligations shall not be a debt of the municipal corporation, nor a charge, lien or encumbrance, legal or equitable, upon any property of the municipal corporation or upon any income, receipts or revenues of the municipal corporation other than revenues pledged to the payment of the obligations as provided herein.(2) The pledge of and lien on revenues and the statutory mortgage lien hereinabove described shall be valid and binding from the time the pledge or lien is created or granted and shall inure to the benefit of the public building authority or contracting party, or their assigns, until the obligations secured are paid and performed in full. The priority of any pledge or lien with respect to competing pledges or liens shall be determined by the date such pledge or lien is created or granted and neither the lease, loan agreement, sales contract or operating contract nor any other instrument granting, creating or giving notice of the pledge or lien needs to be filed or recorded in order to preserve or protect the validity or priority of such pledge or lien.(3) The governing body of a municipal corporation entering into a lease, loan agreement, sales contract or operating agreement described in this subsection (b) shall prescribe and collect, or cause to be prescribed and collected, reasonable rates, fees or charges for the services, facilities and commodities of the project or projects, and shall revise such rates, fees, or charges from time to time, whenever necessary, so that the project or projects shall be and always remain self-supporting. The rates, fees or charges prescribed shall be at least sufficient to produce revenue to provide for all expenses of operation and maintenance of the project or projects, including reasonable reserves therefor, and pay when due all bonds and notes and interest thereon and all obligations under any lease, loan agreement, sales contract or operating contract for the payment of which such revenue is or shall have been pledged, charged or otherwise encumbered, including reasonable reserves therefor. A municipal corporation described in § 7-34-102, which enters into a lease, loan agreement, sales contract or operating contract relating to a system or systems included within the definition of “public works” as set forth in § 7-34-102, shall be governed by the terms and requirements of § 7-34-115.(4) A municipal corporation entering into a lease, loan agreement, sales contract or operating contract relating to a project hereunder is authorized to make such covenants and agreements with the public building authority or contracting party as such corporation is authorized to make with and for the benefit of bond holders under any of the laws of this state. The public building authority or contracting party shall have all the remedies provided to bond holders pursuant to title 7, chapter 34, or title 9, chapter 21, part 3, with respect to the municipal corporations described therein and the revenues pledged by the corporations, or pursuant to title 7, chapter 82, with respect to the municipal corporations described therein and the revenues pledged thereby.(c)(1) Proceeds received from a lease, loan agreement, sales contract or operating contract with a public building authority or other contracting party under provisions of this chapter for school capital outlay purposes by a municipal corporation that is a county or metropolitan government within which an incorporated city or town or a special school district operates a school system shall be shared with such incorporated city or town or special school district system on the same basis as the proceeds of bonds issued pursuant to title 49, chapter 3, part 10 are shared. The trustee of the county or treasurer of the metropolitan government shall pay over to the treasurer of the incorporated city or town or the special school district that amount of the proceeds which bears the same ratio to the entire amount of proceeds, net of all costs incurred in connection with the execution and delivery of the lease, loan agreement, sales contract or operating contract and any bonds or notes of the public building authority issued in connection with such lease, loan agreement, sales contract or operating contract, as the average daily attendance of the incorporated city or town or special school district for the year ending June 30 immediately preceding the receipt of the proceeds bears to the average daily attendance of the entire county or metropolitan government for the year ending June 30 immediately preceding the receipt of the proceeds. No proceeds to be shared hereunder shall be required to be disbursed to the incorporated city or town or special school district until the time the county or metropolitan government actually receives the proceeds of the lease, loan agreement, sales contract, or operating contract.(2) The governing body of any such incorporated city or town or special school district may, by resolution regularly adopted, waive its right to all or a portion of any funds due under this subsection (c).(3) In lieu of the levy and collection of the tax required pursuant to subsection (a), a county or metropolitan government may provide for the payment of the amounts due under such lease, loan agreement, sales contract or operating contract by levying a tax only on that portion of the taxable property within the county or metropolitan government lying outside the territorial limits of the incorporated city or town or special school district independently operating its schools, and may in addition pledge and use for such purpose the proceeds of the county’s or metropolitan government’s share of the sales tax distributed under title 67, chapter 6, or a portion of the Tennessee investment in student achievement formula (TISA) base funding amount and a portion of an infrastructure stipend allocated pursuant to § 49-3-107, subject to the maximum limits established pursuant to § 4-31-1005(g)(2). In such event, the proceeds of the lease, loan agreement, sales contract or operating contract shall not be required to be shared with any incorporated city or town or special school district school system.(4) The proceeds of any lease, loan agreement, sales contract or operating contract executed and delivered pursuant to this chapter to refund outstanding obligations issued by a county or metropolitan government for school capital outlay purposes shall not be required to be shared as provided herein, unless the outstanding obligations to be refunded were payable as provided in subdivision (c)(3) and the lease, loan agreement, sales contract or operating contract executed and delivered to accomplish such refunding is payable from taxes to be levied on all taxable property in the county or metropolitan government.(5) This subsection (c) is not applicable in counties and metropolitan governments having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census, or any municipality within such county served by a municipal or special school district.(d) The governing body of any municipal corporation not having the power of taxation and the state of Tennessee shall, upon entering into a lease, loan agreement, sales contract or operating contract with a public building authority or other contracting party, make adequate provision for the payment of the annual amount payable under the lease, loan agreement, sales contract or operating contract.
