TCA § 12-10-111 — Bonds of the authority — Issuance — Terms — Refunding — Payment

Except as herein otherwise expressly provided, all bonds issued by the authority shall be payable solely out of the revenue and receipts derived from the authority's projects or of any thereof as may be designated in the proceedings of the board of directors under which the bonds shall be authorized to be issued, including debt obligations of the lessee or contracting party obtained from or in connection with the financing of a project. Such bonds may be issued in one (1) or more series, may be executed and delivered by the authority at any time and from time to time, may be in such form and denomination and of such terms and maturities, may be subject to redemption prior to maturity either with or without premium, may be in fully registered form or in bearer form registrable either as to principal or interest, or both, may bear such conversion privileges and be payable in such installments and at such time or times not exceeding forty (40) years from the date thereof, may be payable at such place or places whether within or without this state, may bear interest at such rate or rates payable at such time or times and at such place or places and evidenced in such manner, and may contain such provisions not inconsistent herewith, all as shall be provided in the proceedings of the board of directors whereunder the bonds shall be authorized to be issued. Bonds and notes issued under this chapter in registered form shall be executed in the manner provided for in the Tennessee Public Obligations Registration Act, compiled in title 9, chapter 19. Bonds and notes, and any interest coupons attached thereto, issued under this chapter which are not in registered form shall be executed in the name of the authority by such officers of the authority and in such manner as the board of directors may direct, and shall be sealed with the corporate seal of the authority. If so provided in the proceedings authorizing the bonds or notes, the facsimile signature of any of the officers of the authority may appear on such bonds or notes and a facsimile of the corporate seal of the authority may appear on the bonds or notes in lieu of the manual signature of such officer and the manual impress of such seal; provided, that at least one (1) of the signatures appearing on such bonds or notes shall be a manual signature. Interest coupons attached to such bonds or notes shall be executed with the facsimile signatures of the officers who shall execute the bonds or notes, who shall adopt as and for their own signatures their respective facsimile signatures appearing on such coupons. Bonds or notes issued under this chapter, and the coupons appurtenant thereto, if any, bearing the signature of any officer in office on the date of signing thereof shall be valid and binding obligations, notwithstanding that before the delivery thereof, such person shall have ceased to be an officer of the authority. Any bonds of the authority may be sold at public or private sale for such price and in such manner and from time to time as may be determined by the board of directors of the authority to be most advantageous, and the authority may pay all expenses, premiums and commissions which its board of directors may deem necessary or advantageous in connection with the issuance thereof. All bonds of the authority and the interest coupons applicable thereto are hereby made and shall be construed to be negotiable instruments. Interim certificates or notes or other temporary obligations issued by the authority pending the issuance of its revenue bonds shall be payable out of revenues and receipts in like manner as such revenue bonds and shall be retired from the proceeds of such bonds upon the issuance thereof, and shall be in such form and contain such terms, conditions and provisions consistent with this chapter as the board of directors may determine. Any bonds or notes of the authority or any other authority at any time outstanding may at any time and from time to time be refunded by the authority by the issuance of its refunding bonds in such amount as the board of directors may deem necessary, but not exceeding the sum of the following: The principal amount of the obligations being refinanced; Applicable redemption premiums thereon; Unpaid interest on such obligations to the date of delivery or exchange of the refunding bonds; In the event the proceeds from the sale of the refunding bonds are to be deposited in trust as hereinafter provided, interest to accrue on such obligations from the date of delivery to the first or any subsequent available redemption date or dates selected, in its discretion, by the board of directors, or to the date or dates of maturity, whichever shall be determined by the board of directors to be most advantageous or necessary to the authority; A reasonable reserve for the payment of principal of and interest on such bonds and/or a renewal and replacement reserve; If the project to be constructed from the proceeds of the obligations being refinanced has not been completed, an amount sufficient to meet the interest charges on the refunding bonds during the construction of such project and for two (2) years after the estimated date of completion, but only to the extent that interest charges have not been capitalized from the proceeds of the obligations being refinanced; and Expenses of the authority, including bond discount, deemed by the board of directors to be necessary for the issuance of the refunding bonds. A determination by the board of directors that any refinancing is advantageous or necessary to the authority, or that any of the amounts provided in the preceding sentence should be included in such refinancing, or that any of the obligations to be refinanced should be called for redemption on the first or any subsequent available redemption date or permitted to remain outstanding until their respective dates of maturity, shall be conclusive; provided, that prior to the adoption by the board of directors of the resolution authorizing the issuance of refunding bonds under this section, the plan for refunding shall be submitted to the comptroller of the treasury or the comptroller's designee for review, and the comptroller of the treasury or the comptroller's designee may report thereon to the board of directors within fifteen (15) days from the date the plan is received by the comptroller of the treasury or the comptroller's designee, and the comptroller of the treasury or the comptroller's designee shall immediately acknowledge receipt in writing of the proposed refunding plan. After receiving the report of the comptroller of the treasury or the comptroller's designee or after the expiration of fifteen (15) days from the date the refunding plan is received by the comptroller of the treasury or the comptroller's designee, whichever date is earlier, the board of directors may take such action with reference to such proposed refunding plan as it deems advisable. Any such refunding may be effected whether the obligations to be refunded shall have then matured or shall thereafter mature, either by sale of the refunding bonds and the application of the proceeds thereof to the payment of the obligations to be refunded thereby, or by the exchange of the refunding bonds for the obligations to be refunded thereby with the consent of the holders of the obligations so to be refunded, and regardless of whether or not the obligations to be refunded were issued in connection with the same projects or separate projects, and regardless of whether or not the obligations proposed to be refunded shall be payable on the same date or different dates or shall be due serially or otherwise. If, at the time of delivery of the refunding bonds, the obligations to be refunded will not be retired or a valid and timely notice of redemption of the outstanding obligations is not given in accordance with the resolution, indenture or other instrument governing the redemption of the outstanding obligations, then, prior to the issuance of the refunding bonds, the board of directors shall cause to be given a notice of its intention to issue the refunding bonds. The notice shall be given either by mail to the owners of all the outstanding obligations to be refunded at their addresses shown on the bond registration records for the outstanding obligations or given by publication one (1) time each in a newspaper having a general circulation in the municipality with respect to which the corporation was organized and in a financial newspaper published in New York, New York, having a national circulation. The notice shall set forth the estimated date of delivery of the refunding bonds and identify the obligations, or the individual maturities thereof, proposed to be refunded; provided, that, if portions of individual maturities are proposed to be refunded, the notice shall identify the maturities subject to partial refunding and the aggregate principal amount to be refunded within each maturity. If the issuance of the refunding bonds does not occur as provided in the notice, the governing body shall cause notice thereof to be given as provided above. Except as otherwise set forth in this subsection (h), the notice required pursuant to this subsection (h) shall be given whether or not any of the obligations to be refunded are to be called for redemption. The principal proceeds from the sale of any refunding bonds shall be applied only as follows, either: To the immediate payment and retirement of the obligations being refunded; or To the extent not required for the immediate payment of the obligations being refunded, then such proceeds shall be deposited in trust and together with any investment income thereon to provide for the payment and retirement of the obligations being refunded, and to pay any expenses incurred in connection with such refunding, but provision may be made for the pledging and application of any surplus for any purposes of the authority including, without limitation, provision for the pledging of any such surplus to the payment of the principal of and interest on any issue or series of refunding bonds or other obligations of the authority. Money in any such trust fund may be invested in direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States government, or obligations of any agency or instrumentality of the United States government, or in certificates of deposit issued by a bank or trust company located in this state if such certificates shall be secured by a pledge of any of the obligations having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. Nothing herein shall be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refunded but which shall not have matured and which shall not be presently redeemable or, if presently redeemable, shall not have been called for redemption. The board of an authority may enter into an agreement to sell its bonds and its refunding bonds providing for delivery 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, in the case of bonds and not greater than the later of the first 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 such an agreement or contract is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with subsection (l ). Agreements to sell bonds or refunding bonds for delivery ninety (90) days or less from the date of execution of the agreement to sell the bonds or refunding bonds do not require a report of the comptroller of the treasury or the comptroller's designee pursuant to subsection (l ). With respect to all or any portion of any issue of bonds and refunding bonds issued or anticipated to be issued hereunder, at any time during the term of the bonds or refunding 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 (k) are in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board, as set forth in subsection (m), an authority, 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 board of 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. Such a contract or agreement to be entered into by an authority with respect to bonds or refunding bonds issued to fund or finance a lease agreement, loan agreement or operating contract with a municipal corporation must also be approved by the governing body of the municipal corporation. The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts referenced in subsections (j) and (k) and § 12-10-116(c), which may include, but shall not be limited to, the following: The conditions under which such agreements or contracts can be entered into; The methods by which such contracts are to be solicited and procured; The form and content such contracts shall take; The aspects of risk exposure associated with such contracts; The standards and procedures for counterparty selection, including rating criteria; The procurement of credit enhancement, liquidity facilities, or the setting aside of reserves in connection with such contracts or agreements; The methods of securing the financial interest in such contracts; The methods to be used to reflect such contracts in the authority's or municipal corporation's financial statements; Financial monitoring and periodic assessment of such contracts by the authority or municipal corporation; The application and source of nonperiodic payments; and Educational requirements for officials of the authority or the municipal corporation responsible for approving any such contract or agreement. Prior to the adoption by the governing body of the authority or the governing body of the municipal corporation 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 and shall report thereon to the authority or municipal corporation. 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 authority or the municipal corporation 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 authority or the municipal corporation 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. When entering into any contracts or agreements facilitating the issuance and sale of bonds or refunding 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 or refunding bonds evidencing a transaction bearing a reasonable relationship to this 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 shall be governed by the laws of this state or the laws of such other state or nation; provided, that jurisdiction over any authority or municipal corporation against which an action on such a contract or agreement is brought shall lie solely in a court located in Tennessee which would otherwise have jurisdiction of actions brought in contract against such authority or municipal corporation. In addition to any other investments authorized herein, cities, counties, or metropolitan governments may invest, or cause to be invested, the proceeds of loans to such cities, counties, or metropolitan governments from a public building authority in a guaranteed investment contract chosen or established by such public building authority provided: Such guaranteed investment contract has a defined termination date not exceeding five (5) years from the date of the issuance of the obligation by the public building authority for the purpose of funding such loans; Such guaranteed investment contract is secured by obligations described in § 9-4-103 and secured at a level as required by § 9-4-105; Such guaranteed investment contract is issued by an issuer having a credit rating of at least AA or its equivalent, by at least one (1) nationally recognized rating agency; and The obligations securing such guaranteed investment contract are deposited with an independent third party selected by the public building authority and are pledged to the cities, counties, and metropolitan governments receiving such loans.