Health, Educational and Housing Facility Corporations

Tenn. Code Ann. tit. 48, ch. 101, pt. 3

in effect

Tenn. Code Ann. § 48-101-301 Part definitions.

48-101-301. Part definitions. As used in this part, unless the context otherwise requires: (1) “Bonds” means bonds, notes, interim certificates, or other obligations of a corporation issued pursuant to this part; (2) “Clinic,” except in the context of a hospital-based facility, means a not for profit, out-patient, nonhospital facility providing: (A) Primary health care; (B) Dental care; (C) Eye care; (D) Child delivery or birthing facilities; or (E) Any other out-patient healthcare service; (3) “Contracting party” or “other contracting party” means any party to a sale contract or loan agreement except the corporation; (4) “Corporation” means any corporation organized pursuant to this part; (5) “Educational institutions for individuals with physical and/or intellectual disability” means any institution organized for-profit or not for profit authorized by law to provide a program for educating and training individuals with physical and/or intellectual disability; (6) “Enterprise” means the health, educational or housing operations to be carried on with the facilities of a project; (7) “Governing body” means the legislative body of a county or the board or other body in which the general legislative powers of a city or town are vested; (8) “Hospital institution” means any city, county, metropolitan government, or other local governmental entity, or any institution organized for-profit or not for profit authorized by law to provide congregate elderly facilities or extended care, hospital, or nursing home facilities in this state, or any finance subsidiary of such hospital institution; (9) “Housing” means any multi-family housing facilities to be occupied by persons of low and/or moderate income, and/or elderly, and/or handicapped persons as may be determined by the board of directors, which determination shall be conclusive; (10) “Institution for higher education” means any institution organized for-profit or not for profit authorized by law to provide a program of education at the primary level, secondary level or beyond the secondary level in this state; (11) “Lease” includes a lease containing an option to purchase the project for a nominal sum upon payment in full, or provision therefor, of all bonds issued in connection with the project and all interest thereon and all other expenses in connection with the project, and a lease containing an option to purchase the project at any time, as provided therein, upon payment of the purchase price which shall be sufficient to pay all bonds issued in connection with the project and all interest thereon and all other expenses incurred in connection with the project, but which payment may be made in the form of one (1) or more notes, debentures, bonds, or other secured or unsecured debt obligations of the lessee providing for timely payments, including, but not limited to, interest thereon sufficient for such purposes and delivered to the corporation or to the trustee under the indenture pursuant to which the bonds were issued; (12) “Loan agreement” means an agreement providing for a corporation to loan the proceeds derived from the issuance of bonds pursuant to this part 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 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 corporation or to the trustee under the indenture pursuant to which the bonds were issued; (13) “Multi-family housing facilities” or “Multi-family residential units” for a project in the case of a housing facility may include or consist of single family structures, on contiguous or non contiguous sites for such a project located in counties having a population in excess of eight hundred thousand (800,000), according to the 1990 federal census or any subsequent federal census; (14) “Municipality” means any county or incorporated city or town in this state with respect to which a corporation may be organized; (15)(A) “Project,” in the case of an institution for higher education, means a structure, facility, machinery, equipment or other property suitable for use by an institution for higher education in connection with its operations or proposed operations, including, but not limited to, a site therefor, an academic facility, administrative facility, agricultural facility, assembly hall, athletic facility, auditorium, campus, communication facility, computer facility, continuing education facility, classroom, dining hall, dormitory, exhibition hall, firefighting facility, fire prevention facility, food service and preparation facility, gymnasium, health care facility, hospital, housing, laboratory, laundry, maintenance facility, medical facility, museum, offices, parking area, physical education facility, recreational facility, research facility, storage facility, student union, study facility, theatre, utility or any combination of the foregoing; (B) “Project,” in the case of a private institution for higher education, also means, if such institution is organized not for profit, costs and expenses incurred by such institution in connection with the operation thereof, including, but not necessarily limited to, maintenance costs, heating and lighting expenditures, repair and replacement expenses, faculty salaries and administrative costs and expenses; provided, that any agreements entered into between the corporation and the institution as security for the payment of principal and interest on bonds issued to finance such a project must require that a borrowing institution shall repay all amounts received by it for such projects within two (2) years from the date such funds are received by it; provided, that the foregoing two-year limitation shall not apply in the case of bonds issued for the purpose of refinancing, or reimbursing, costs and expenses incurred by a private institution for higher education in connection with the operation by it of hospital and related facilities for the training of students enrolled in its medical education program; and provided further, that bonds for such refinancing or reimbursement purpose are not to be issued after July 1, 1994, but bonds, if any, issued for such purpose before such date shall, if issued in compliance with the other provisions hereof, be and remain valid, from and after such issuance termination date and shall not in any manner be limited or affected by such termination of issuance authority; provided, that the foregoing two-year limitation shall not apply in the case of bonds issued for the purpose of refinancing, or reimbursing, costs and expenses incurred by a private institution for higher education in connection with the operation by it of hospital and related facilities for the training of students enrolled in its medical education program; and provided further, that bonds for such refinancing or reimbursement purpose shall not be issued after July 1, 1995, but bonds, if any, issued for each purpose before such date shall, if issued in compliance with the other provisions hereof, be and remain valid, from and after such issuance termination date and shall not in any manner be limited or affected by such termination of issuance authority; (C) “Project” shall also include loans to a nonprofit corporation by any corporation receiving from the Tennessee state school bond authority pursuant to § 49-3-1210 allocation for the issuance of Qualified Zone Academy Bonds within the meaning of § 1397E of the Internal Revenue Code of 1986 (26 U.S.C. § 1397E) [repealed], when the proceeds of which are granted to or spent on behalf of one or more public institutions for higher education to pay costs of developing course materials for education and to train teachers and other school personnel. Such nonprofit corporation shall be deemed an institution for higher education for purposes of this part; (D) “Project,” in the case of a hospital institution, means a structure, facility, machinery, equipment or other property suitable for use by a hospital institution in connection with its operations or proposed operations, including, without limitation, a site therefor, a communication facility, clinic, computer facility, congregate elderly facilities, dining hall, elderly housing, extended care facilities, firefighting facility, fire prevention facility, food service and preparation facility, health care facility, hospital, interns' residence, laboratory, laundry, maintenance facility, nurses' residence, nursing home, nonprofit home for the aged, nursing school, offices, parking area, pharmacy, recreational facility, research facility, storage facility, utility, x-ray facility, or any combination of the foregoing; and, also, funds to be used by any hospital institution organized not for profit in connection with the operation thereof, including, but not limited to, maintenance and supply costs, heating, lighting and other utility expenditures, repair and replacement expenses, employee compensation and administrative costs and expenses; furthermore, in the case of a hospital institution, “project” means the purchase of the accounts receivable of any hospital institution; (E) “Project,” in the case of an educational facility for individuals with physical and/or intellectual disability, means a structure, facility, machinery, equipment or other property suitable for use by an educational facility for individuals with physical and/or intellectual disability in connection with its operation or proposed operations, including, without limitation, a site therefor, an academic facility, administrative facility, assembly halls, athletic facility, auditorium, campus, communications facility, continuing education facility, classrooms, dining halls, dormitory, exhibition halls, firefighting and fire prevention facility, food service and preparation facility, gymnasium, health care facility, hospital, housing, laboratory, laundry, maintenance facility, medical facilities, museum, offices, parking area, physical education facility, recreation facility, research facilities, storage, student union, study facility, theatre, utility, residence halls, or any combination of the foregoing; (F) “Project” also means a structure, facility, machinery, equipment or other property suitable for use by a not for profit blood bank or blood center in connection with its operations or proposed operations; (G) “Project,” in the case of a housing facility, means a structure, facility, machinery, equipment or other property suitable for use by a housing facility in connection with its operation or proposed operations, including, but not limited to, a site therefor, multi-family residential units, administrative facility, assembly halls, athletic facility, communications facility, dining and food service and preparation facility, gymnasium, health care facility, laundry, maintenance facility, parking area, recreation facility, storage, theatre, utility, or any combination of the foregoing; (H) “Project,” in the case of a housing facility, also means single family residential units for purchase where such units are financed by a for-profit, not-for-profit or governmental entity or any combination of such entities where payments to affected tax jurisdictions are made in lieu of property taxes in amounts equal to the property taxes which would be due if the property were fully taxable, and the bonds or notes for such financing shall: (i) Be purchased, guaranteed, or otherwise supported by a government sponsored mortgage entity participating in the residential mortgages market that are formed under a federal charter, whether owned by the federal government or by stockholders; and (ii) Not be exempt from taxation under the Internal Revenue Code of 1986 (26 U.S.C.); and (I) “Project,” in the case of a clinic, means a structure, facility, machinery, equipment or other property suitable for use by a clinic, including, without limitation, supporting facilities, including a site therefor, a computer facility, a laboratory, a maintenance facility, administrative offices, parking facilities, x-ray facilities, facilities for specialized diagnostic or out-patient treatment or any combination of the foregoing; and, funds to be used by any such clinic in connection with the operation thereof, including, but not limited to, maintenance and supply costs, heating, lighting and other utility expenditures, repair and replacement expenses, employee compensation and administrative costs and expenses; furthermore, in the case of a clinic, “project” means the purchase of the accounts receivable of any aforedescribed institution; (16) “Revenues” of a project, or derived from a project, include payments under a lease or sale contract and repayments under a loan agreement, or under notes, debentures, bonds and other secured or unsecured debt obligations of a lessee or contracting party delivered as herein provided; and (17) “Sale contract” means a contract providing for the sale of one (1) or more projects to one (1) or more contracting parties and includes a contract providing for payment of the purchase price in one (1) or more installments. If the sale contract permits title to the project to pass to the other contracting party or parties prior to payment in full of the entire purchase price, it shall also provide for the other contracting party or parties to deliver to the corporation or to the trustee under the indenture pursuant to which the bonds were issued one (1) or more notes, debentures, bonds or other secured or unsecured debt obligations of such contracting party or parties providing for timely payments, including, without limitation, interest thereon for the balance of the purchase price at or prior to the passage of such title. Acts 1969, ch. 333, § 1; 1971, ch. 413, §§ 1-4; 1975, ch. 16, § 1; 1975, ch. 29, §§ 1, 2; 1975, ch. 262, § 1; 1976, ch. 514, § 1; impl. am. Acts 1978, ch. 934, §§ 7, 36; 1982, ch. 629, § 1; 1982, ch. 947, § 2; 1983, ch. 76, § 1; 1983, ch. 187, § 1; T.C.A., § 48-1901; Acts 1985, ch. 243, § 1; 1985, ch. 307, § 1; 1988, ch. 1014, §§ 1, 2; 1990, ch. 1086, §§ 1, 2; 1993, ch. 427, § 1; 1994, ch. 912, § 1; T.C.A., § 48-3-301; Acts 1999, ch. 41, § 1; 2000, ch. 979, § 1; 2000, ch. 986, §§ 1-3; 2001, ch. 373, § 1; 2010, ch. 977, §§ 1, 2; 2011, ch. 158, § 21.

Tenn. Code Ann. § 48-101-302 Purpose of part — Liberal construction.

48-101-302. Purpose of part — Liberal construction. (a) It is hereby determined and declared that for the benefit of the people of the state of Tennessee, the increase of their commerce, welfare and prosperity and the improvement and maintenance of their health and living conditions, it is essential that the people of this state have access to adequate medical care and hospital facilities, that the elderly residents of the state be assisted, and that the youth of this state be given the fullest opportunity to learn and to develop their intellectual and mental capacities; that it is essential that hospital institutions and institutions for higher education within the state be provided with appropriate additional means to assist in the development and maintenance of the public health, especially for the elderly, and to assist such youth in achieving a higher level of learning and the development of their intellectual and mental capacities; that it is the purpose of this part to provide a measure of assistance and an alternative method to enable hospital institutions and institutions for higher education in the state of Tennessee to provide the facilities which are sorely needed to accomplish the purposes of this part, all to the public benefit and good, as more fully provided herein; and it is the intent of the general assembly by the passage of this part to authorize the incorporation in the several municipalities in this state of public corporations to finance, acquire, own, lease and/or dispose of properties to the end that such corporations may be able to promote the health and higher education of the people of this state, and to vest such corporations with all powers that may be necessary to enable them to accomplish such purposes. It is not intended hereby that any such corporation shall itself be authorized to operate any such enterprise. This part shall be liberally construed in conformity with such intention. (b) In conjunction with the above purposes of this part, it is further determined and declared that it is for the benefit of the people of the state of Tennessee, the increase of their commerce, welfare and prosperity and the improvement and maintenance of their health and living conditions, that provision be made for additional facilities for educational training and related facilities for individuals with physical and/or intellectual disability; that provision should be made for appropriate educational means to assist in the development and maintenance of the physical and mental health of the affected individuals and the development of their mental and intellectual capacities to the extent that they may be actively involved and participate in the normal day-to-day functions of the citizens of the state of Tennessee, and that it is the intent of the general assembly by the passage of this part to facilitate the foregoing purposes stated herein and above. (c) In conjunction with the above purposes of this part, it is further determined and declared that it is for the benefit of the people of the state of Tennessee, the increase of their commerce, welfare and prosperity and the improvement and maintenance of their health and living conditions, that provision be made for additional safe and sanitary multi-family housing facilities to be used by persons of low and/or moderate income; that provisions should be made for appropriate safe and sanitary housing of the affected individuals and the improvement of their living standards to the extent that they may be actively involved and participate in the normal day-to-day functions of the citizens of the state of Tennessee, and that it is the intent of the general assembly by the passage of this part to facilitate the foregoing purposes stated herein to the fullest extent allowed the several states of the union pursuant to the laws and regulations of the United States. Acts 1969, ch. 333, § 2; 1975, ch. 29, § 3; 1976, ch. 514, § 2; 1982, ch. 947, § 3; T.C.A., §§ 48-1902, 48-3-302; Acts 2011, ch. 158, § 22.

Tenn. Code Ann. § 48-101-303 Application for incorporation.

48-101-303. Application for incorporation. (a) Whenever any number of natural persons, not less than three (3), each of whom shall be a duly qualified elector of and taxpayer in the municipality, shall file with the governing body thereof an application in writing seeking permission to apply for the incorporation of a health, educational and housing facility corporation of such municipality, the governing body shall proceed to consider such application. (b) If the governing body shall, by appropriate resolution duly adopted, find and determine that it is wise, expedient, necessary or advisable that the corporation be formed and shall authorize the persons making such application to proceed to form such corporation and shall approve the form of certificate of incorporation proposed to be used in organizing the corporation, then the persons making such application shall execute, acknowledge and file a certificate of incorporation for the corporation as hereinafter provided. (c) No corporation may be formed unless such application shall have first been filed with the governing body of the municipality and the governing body shall have adopted a resolution as provided in this section. Acts 1969, ch. 333, § 3; 1982, ch. 947, § 4; T.C.A., §§ 48-1903, 48-3-303.

Tenn. Code Ann. § 48-101-304 Certificate of incorporation.

48-101-304. Certificate of incorporation. (a) The certificate of incorporation shall set forth: (1) The names and residences of the applicants, together with a recital that each of them is an elector of and taxpayer in the municipality; (2) The name of the corporation which shall be The Health, Educational and Housing Facility Board of the of (the blanks to be filled in with the name of the municipality), if such name shall be available for use by the corporation and if not available then the incorporators shall designate some other similar name that is available; (3) A recital that permission to organize the corporation has been granted by resolution duly adopted by the governing body of the municipality and the date of the adoption of such resolution; (4) The location of the principal office of the corporation (which shall be in the municipality); (5) The purposes for which the corporation is proposed to be organized; (6) The number of directors of the corporation; (7) The period, if any, for the duration of the corporation; and (8) Any other matter which the applicants may choose to insert therein which shall not be inconsistent with this part or with the laws of the state of Tennessee. (b) The certificate of incorporation shall be subscribed and acknowledged by each of the applicants before an officer authorized by the laws of Tennessee to take acknowledgments to deeds. Acts 1969, ch. 333, § 4; 1982, ch. 947, § 5; T.C.A., §§ 48-1904, 48-3-304.

Tenn. Code Ann. § 48-101-305 Filing of certificate of incorporation.

48-101-305. Filing of certificate of incorporation. When executed and acknowledged in conformity with § 48-101-304, the certificate of incorporation shall be filed with the secretary of state. The secretary of state shall thereupon examine the certificate of incorporation and, if the secretary of state finds that the recitals contained therein are correct, that the requirements of § 48-101-304 have been complied with, and that the name is not identical with or so nearly similar to that of another corporation already in existence in this state as to lead to confusion and uncertainty, the secretary of state shall approve the certificate of incorporation and record it in an appropriate book or record in the secretary of state's office. When such certificate has been so made, filed and approved, the applicants shall constitute a public corporation under the name set out in the certificate of incorporation. Acts 1969, ch. 333, § 5; T.C.A., §§ 48-1905, 48-3-305.

Tenn. Code Ann. § 48-101-306 Amendment of certificate of incorporation.

48-101-306. Amendment of certificate of incorporation. (a) The certificate of incorporation may at any time and from time to time be amended so as to make any changes therein and add any provisions thereto which might have been included in the certificate of incorporation in the first instance. Any such amendment shall be effected in the following manner: (1) The members of the board of directors of the corporation shall file with the governing body of the municipality an application in writing seeking permission to amend the certificate of incorporation, specifying in such application the amendment proposed to be made; (2) Such governing body shall consider such application and, if it shall by appropriate resolution duly find and determine that it is wise, expedient, necessary or advisable that the proposed amendment be made and shall authorize the same to be made, and shall approve the form of the proposed amendment, then the persons making such application shall execute an instrument embodying the amendment specified in such application, and shall file the same with the secretary of state; (3) The proposed amendment shall be subscribed and acknowledged by each member of the board of directors before an officer authorized by the laws of Tennessee to take acknowledgments to deeds; (4) The secretary of state shall thereupon examine the proposed amendment and, if the secretary of state finds that the requirements of this section have been complied with and the proposed amendment is within the scope of what might be included in an original certificate of incorporation, the secretary of state shall approve the amendment and record it in an appropriate book in the secretary of state's office; (5) When such amendment has been so made, filed and approved, it shall thereupon become effective and the certificate of incorporation shall thereupon be amended to the extent provided in the amendment. (b) No certificate of incorporation shall be amended except in the manner provided in this section. Acts 1969, ch. 333, § 6; T.C.A., §§ 48-1906, 48-3-306.

Tenn. Code Ann. § 48-101-307 Board of directors.

48-101-307. Board of directors. (a) The corporation shall have a board of directors in which all powers of the corporation shall be vested and which shall consist of any number of directors, not less than seven (7), all of whom shall be duly qualified electors of and taxpayers in the municipality. (b) The directors shall serve as such without compensation except that they shall be reimbursed for their actual expenses incurred in and about the performance of their duties hereunder. (c) No director shall be an officer or employee of the municipality. (d) The directors shall be elected by the governing body of the municipality, and they shall be so elected that they shall hold office for staggered terms. At the time of the election of the first board of directors, the governing body of the municipality shall divide the directors into three (3) groups containing as near equal whole numbers as may be possible. The first term of the directors included in the first group shall be two (2) years, the first term of the directors included in the second group shall be four (4) years, the first term of the directors included in the third group shall be six (6) years, and thereafter the terms of all directors shall be six (6) years; provided, that if at the expiration of any term of office of any director a successor thereto shall not have been elected, then the director whose term of office shall have expired shall continue to hold office until a successor shall be so elected. (e) The directors shall meet and organize as a board and shall elect one (1) of its members as chair, one (1) as vice chair, one (1) as treasurer and one (1) as secretary and such officers shall annually be elected thereafter in like manner. (f) The duties of secretary and treasurer may be performed by the same director. (g) Any action taken by the directors under this part may be authorized by resolution at any regular or special meeting, and such resolution shall take effect immediately and need not be published or posted. (h) Any meeting held by the board of directors for any purpose whatsoever shall be open to the public. Acts 1969, ch. 333, §§ 7, 8; 1975, ch. 29, § 4; 1976, ch. 514, § 3; T.C.A., §§ 48-1907, 48-1908, 48-3-307.

Tenn. Code Ann. § 48-101-308 Powers of corporations.

48-101-308. Powers of corporations. (a) The corporation has the following powers, together with all powers incidental thereto or necessary for the performance of those hereinafter stated, to: (1) Have succession by its corporate name for the period specified in the certificate of incorporation, unless sooner dissolved as hereinafter provided; (2) Sue and be sued and prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties; (3) Have and use a corporate seal and alter the same at pleasure; (4) Acquire, whether by purchase, construction, exchange, gift, lease, or otherwise, and improve, maintain, extend, equip and furnish one (1) or more projects, which projects may be either within or without the corporate limits of the municipality with respect to which the corporation was organized, including all real and personal properties which the board of directors of the corporation may deem necessary in connection therewith and regardless of whether or not any such projects shall then be in existence; (5) Finance or undertake one (1) or more projects, which may be located in one (1) or more municipalities in this state or outside this state, for one (1) or more institutions described in § 48-101-301. However: (A) No project located in this state, but outside the corporate limits of the municipality with respect to which the corporation was organized, may be financed or undertaken except after the approval of the financing or undertaking thereof by appropriate resolution duly adopted by either: (i) A corporation organized pursuant to this part by any municipality within the corporate limits of which the project is located; or (ii) The governing body of any municipality within the corporate limits of which the project is located; and (B) No project located outside this state may be financed or undertaken unless the hospital institution or institution of higher education for which the project is financed or undertaken maintains its principal place of business in this state prior to issuance of the debt and throughout the entire life of the debt; (6) Lease to a hospital institution, clinic, not for profit blood bank or blood center, or an institution for higher education or a housing facility, one (1) or more projects upon such terms and conditions as the board of directors shall deem proper and charge and collect rent therefor and terminate any such lease upon the failure of the lessee to comply with any of the obligations thereof; and include in any such lease, if desired, provisions that the lessee thereof shall have options to renew the term of the lease for such period or periods and at such rent as shall be determined by the board of directors of the corporation and/or to purchase any or all of its projects or that, upon payment of all of the indebtedness of the corporation, it may lease or convey any or all of its projects to the lessees thereof with or without consideration; (7) Sell to a hospital institution, clinic, not for profit blood bank or blood center, or an institution for higher education or a housing facility or educational institution for individuals with physical and/or intellectual disability, one (1) or more projects for such payments and upon such terms and conditions as the board of directors of the corporation may deem advisable in accordance with sale contracts entered into pursuant to this part; (8) Enter into loan agreements with a hospital institution, clinic, not for profit blood bank or blood center, or an institution for higher education or educational institutions for individuals with physical and/or intellectual disability or a housing facility with respect to one (1) or more projects for such payments and upon such terms and conditions as the board of directors of the corporation may deem advisable in accordance with this part; (9) Sell, exchange, donate and convey any or all of its properties whenever its board of directors shall find any such action to be in furtherance of the purposes for which the corporation was organized; (10) Borrow money and issue its bonds for the purpose of carrying out any of its powers; (11) As security for the payment of the principal of and interest on any bonds so issued and any agreements made in connection therewith, mortgage and pledge any or all of its projects or any part or parts thereof, whether then owned or thereafter acquired, and pledge the revenues and receipts therefrom or from any thereof, and/or assign and pledge all or any part of its interest in and rights under the leases, sale contracts or loan agreements relating thereto or to any thereof; (12) Employ and pay compensation to such employees and agents, including attorneys, as the board of directors shall deem necessary for the business of the corporation; (13) Exercise all powers expressly given in its certificate of incorporation and establish bylaws and make all rules and regulations not inconsistent with the certificate of incorporation or this part, deemed expedient for the management of the corporation's affairs; and (14) Provide information in accordance with § 9-21-134. (b) The corporation does not have power to operate any project financed under this part as a business or in any manner except as specifically provided in this part. Acts 1969, ch. 333, § 8; 1975, ch. 29, § 4; 1976, ch. 514, § 3; 1982, ch. 629, §§ 2, 3; 1982, ch. 947, § 6; 1983, ch. 76, §§ 2, 3; T.C.A., § 48-1908; Acts 1990, ch. 704, § 1; T.C.A., § 48-3-308; Acts 2010, ch. 977, § 3; 2011, ch. 158, § 23; 2015, ch. 91, § 1.

Tenn. Code Ann. § 48-101-309 Terms of contracts.

48-101-309. Terms of contracts. Any lease, sale contract or loan agreement with respect to a project entered into pursuant to this part shall be for a term not shorter than the longest maturity of any bonds issued to finance such project, and shall provide for revenues adequate to pay principal of and interest on such bonds as the same falls due and to pay such portion of the operating expenses of the corporation as the board of directors shall determine to be necessary. Acts 1969, ch. 333, § 8; 1975, ch. 29, § 4; 1976, ch. 514, § 3; 1982, ch. 629, §§ 2, 3; 1982, ch. 947, § 6; 1983, ch. 76, §§ 2, 3; T.C.A., §§ 48-1908, 48-3-309.

Tenn. Code Ann. § 48-101-310 Bonds of corporation.

48-101-310. Bonds of corporation. (a)(1) Except as herein otherwise expressly provided, all bonds issued by the corporation shall be payable solely out of revenues and receipts derived from the corporation'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; provided, that notes issued in anticipation of the issuance of bonds may be retired out of the proceeds of such bonds. (2) Such bonds may be executed and delivered by the corporation at any time and from time to time, may be in such form and denominations and of such terms and maturities, 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 the state of Tennessee, 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, may be executed by such officers of the corporation, 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. (3) If deemed advisable by the board of directors, there may be retained in the proceedings under which any bonds of the corporation are authorized to be issued, an option to redeem all or any part thereof as may be specified in such proceedings, at such price or prices and after such notice or notices and on such terms and conditions as may be set forth in such proceedings and as may be briefly recited in the face of the bonds, but nothing herein contained shall be construed to confer on the corporation any right or option to redeem any bonds except as may be provided in the proceedings under which they shall be issued. (4) Any bonds of the corporation 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 corporation to be most advantageous, and the corporation may pay all expenses, premiums and commissions which its board of directors may deem necessary or advantageous in connection with the issuance of such bonds. (5) Issuance by the corporation of one (1) or more series of bonds for one (1) or more purposes shall not preclude it from issuing other bonds in connection with the same project or any other project, but the proceedings whereunder any subsequent bonds may be issued shall recognize and protect any prior pledge or mortgage made for any prior issue of bonds. (b)(1) Proceeds of bonds issued by the corporation may be used for the purpose of constructing, acquiring, incurring, reconstructing, improving, equipping, furnishing, bettering, or extending any project or projects, including the payment of interest on the bonds during construction of any such project and for two (2) years after the estimated date of completion, the refinancing of any of the foregoing, the payment of engineering, fiscal, architectural, and legal expenses incurred in connection with such project and the issuance of the bonds, and the establishment of a reasonable reserve fund for the payment of principal of and interest on such bonds in the event of a deficiency in the revenues and receipts available for such payment. (2) Notwithstanding any provision of this part to the contrary, proceeds of bonds or notes issued by the corporation may be used to provide funds to any hospital institution organized not for profit to be used in connection with the operation thereof; provided, that any loan, note, pledge or other obligation under which such funds are provided shall require that a borrowing hospital institution which is in operation on the date it receives such funds shall repay all amounts received for use in connection with its operation within no longer than one (1) year from the date such funds are received by it or that a hospital institution which commences operation after the date it receives such funds shall repay all amounts received for use in connection with its operation within no longer than three (3) years from the date such funds are received by it. (c) Any bonds or notes of the corporation at any time outstanding may at any time and from time to time be refunded by the corporation 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: (1) The principal amount of the obligations being refinanced; (2) Applicable redemption premiums thereon; (3) Unpaid interest on such obligations to the date of delivery or exchange of the refunding bonds; (4) 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 corporation; (5) A reasonable reserve for the payment of principal of and interest on such bonds and/or a renewal and replacement reserve; (6) 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 (7) Expenses, premiums and commissions of the corporation, 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 corporation, 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. (d) Any such refunding may be effected whether the obligations to be refunded shall have then matured or shall thereafter mature, either 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, or by sale of the refunding bonds and the application of the proceeds thereof to the payment of the obligations to be refunded thereby, 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. (e) 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 of 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 the 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 in 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 board of directors shall cause notice thereof to be given as provided above. Except as otherwise set forth in this section, the notice required pursuant to this section shall be given whether or not any of the obligations to be refunded are to be called for redemption. (f) If any of the obligations to be refunded are to be called for redemption, the board of directors shall cause notice of redemption to be given in the manner required by the resolution or ordinance authorizing such outstanding obligations. (g) The principal proceeds from the sale of any refunding bonds shall be applied only as follows: either, (1) To the immediate payment and retirement of the obligations being refunded; or (2) To the extent not required for the immediate payment of the obligations being refunded, then such proceeds shall be deposited in trust 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 disposition of any surplus, 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. 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 the state of Tennessee if such certificates shall be secured by a pledge of any 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. Acts 1969, ch. 333, § 9; 1973, ch. 309, § 5; 1976, ch. 514, § 4; 1977, ch. 229, § 2; 1983, ch. 76, § 4; 1983, ch. 187, § 2; T.C.A., § 48-1909; Acts 1985, ch. 243, § 2; 1988, ch. 827, § 1; 1994, ch. 806, § 11; § 48-3-310.

Tenn. Code Ann. § 48-101-311 Security for bonds.

48-101-311. Security for bonds. (a) The principal of and interest on any bonds issued by the corporation shall be secured by a pledge of the revenues and receipts out of which the same shall be made payable, and may be secured by a mortgage or deed of trust covering all or any part of the projects from which the revenues or receipts so pledged may be derived, including any enlargements of and additions to any such projects thereafter made, and by an assignment and pledge of all or any part of the corporation's interest in and rights under the leases, sale contracts or loan agreements relating to such projects, or any thereof. (b) The resolution under which the bonds are authorized to be issued and any such mortgage or deed of trust may contain any agreements and provisions respecting the maintenance of the projects covered thereby; the fixing and collection of rents or payments with respect to any projects or portions thereof covered by such resolution, mortgage or deed of trust, the creation and maintenance of special funds from such revenues and from the proceeds of such bonds, and the rights and remedies available in the event of default, all as the board of directors shall deem advisable and not in conflict with this part. (c) Each pledge, agreement, mortgage and deed of trust made for the benefit or security of any of the bonds of the corporation shall continue effective until the principal of and interest on the bonds for the benefit of which the same were made shall have been fully paid. In the event of default in such payment or in any agreement of the corporation made as a part of the contract under which the bonds were issued, whether contained in the proceedings authorizing the bonds or in any mortgage and deed of trust executed as security therefor, the payment or agreement may be enforced by suit, mandamus, the appointment of a receiver in equity or by foreclosure of any such mortgage and deed of trust, or any one (1) or more of these remedies. Acts 1969, ch. 333, § 10; 1976, ch. 514, § 5; T.C.A., §§ 48-1910, 48-3-311.

Tenn. Code Ann. § 48-101-312 Exemption from taxation — Payments in lieu of taxes — Reporting.

48-101-312. Exemption from taxation — Payments in lieu of taxes — Reporting. (a) The corporation is hereby declared to be performing a public function in behalf of the municipality with respect to which the corporation is organized and to be a public instrumentality of such municipality. Accordingly, the corporation and all properties at any time owned by it and the income and revenues therefrom and all bonds issued by it and the income therefrom shall be exempt from all taxation in the state of Tennessee. Also, for purposes of the Securities Act of 1980, compiled in chapter 1, part 1 of this title, and any amendment thereto or substitution therefor, bonds issued by the corporation shall be deemed to be securities issued by a public instrumentality or a political subdivision of the state of Tennessee. (b)(1)(A) The municipality may delegate to a corporation the authority to negotiate and enter into payments in lieu of ad valorem taxes with a corporation's lessees; provided, that such authorization must only be granted upon a finding that such payments are deemed to be in furtherance of the corporation's public purposes as defined in this subsection (b). The legislative body of the municipality making such delegation may, in its sole discretion, require the corporation to submit any such agreement to the legislative body for its approval. (B) Further, if the proposed agreement would result in payments in lieu of taxes being made to any taxing jurisdiction that are less than the taxes that otherwise would be payable to such jurisdiction, then the corporation shall not enter into any such agreement until the corporation has given written notice of such agreement to the chief executive officer of each such taxing jurisdiction. Upon receipt of such notice, the chief executive officer may either: (i) Notify the corporation that the agreement must be submitted to the legislative body of that taxing jurisdiction for approval or disapproval; or (ii) Notify the corporation that the chief executive officer does not object to the proposed agreement. (C) If the chief executive officer does not provide a notification to the corporation within ten (10) days of receipt of the notice from the corporation pursuant to subdivision (b)(1)(B), then the corporation may proceed to enter into the proposed agreement. (D) If the chief executive officer requires that the agreement be submitted to the legislative body of the taxing jurisdiction, then the corporation shall not enter into the agreement unless the agreement is approved by such legislative body. (2) If the project is located within the corporate limits of a municipality, the payments must be apportioned between the municipality and the county in the same manner as ad valorem taxes are apportioned on the date of execution of the agreement for payments in lieu of taxes. However, any agreement entered into on or after July 1, 2026, without complying with subdivision (b)(1), is void and unenforceable. (3) The trustee shall bill and collect all in lieu of tax payments based on the agreement and the apportioned taxes. (4)(A) Notwithstanding this section to the contrary, and unless the municipality adopts an ordinance or resolution requiring that any agreement with respect to the payments in lieu of taxes entered into pursuant to this subdivision (b)(4) be approved by the municipality, a corporation may negotiate and receive from any lessee of the corporation, without any delegation from the municipality, payments in lieu of taxes with respect to a tax-credit housing project or workforce housing project; provided, that: (i) The payments in lieu of taxes are payable to all applicable taxing jurisdictions in which the project is located and are not less than the taxes that would have been paid to each such taxing jurisdiction for the tax year prior to the year the project became a tax-credit housing project or workforce housing project; and (ii) The chief executive officer of the municipality has executed a letter supporting the project that is filed with the corporation. (B) As used in this subdivision (b)(4): (i) “Public-private partnership” has the same meaning as defined in Section 1; (ii) “Tax-credit housing project” means a project that has received an allocation of low-income housing tax credits under Section 42 of the Internal Revenue Code of 1986 (26 U.S.C. § 42), or any successor provision, from the Tennessee housing development agency or is otherwise eligible for the tax credits as the result of the issuance of bonds, the interest on which is not subject to federal income taxation; (iii) “Workforce housing” has the same meaning as defined in Section 1; and (iv) “Workforce housing project” means a project financed, in whole or in part, by a community workforce housing innovation pilot program loan provided to a public-private partnership by the Tennessee housing development agency pursuant to Section 1 for construction or rehabilitation of workforce housing in this state. (C) In any municipality in which a corporation does not exist or has been administratively dissolved, a housing authority formed by the municipality pursuant to the Housing Authorities Law, compiled in title 13, chapter 20, may negotiate and receive from any lessee payments in lieu of taxes with respect to a tax-credit housing project or workforce housing project in accordance with this subdivision (b)(4), and in that case, the housing authority shall have all rights and powers granted to the corporation pursuant to this chapter necessary to acquire and lease a tax-credit housing project or workforce housing project in order to effectuate this subdivision (b)(4). (D) Nothing in this subdivision (b)(4) shall limit the authority of a corporation to negotiate and receive from a lessee of the corporation payments in lieu of taxes with respect to a tax-credit housing project or workforce housing project when that authority has been delegated to the corporation by a municipality. (c) An agreement for payment in lieu of taxes shall contain such terms and conditions as the corporation may determine, which may include, but shall not be limited to, provisions to: (1) Defer and/or subordinate payment of all or a portion of the payment in lieu of taxes to such future time as the corporation may determine; (2) Require interest to accrue on such deferred amount; (3) Require that payments in lieu of taxes, including any interest, expenses or costs of collection of same, shall be secured by a deed of trust upon the project; or (4) Provide that such deed of trust may be subordinate to other liens or indebtedness of the project. (d) On or before October 1 each year, the corporation lessee or sublessee shall file with the comptroller of the treasury a report listing leased properties and details of the lease and payment in lieu of tax (PILOT) agreements in the format provided in § 7-53-305. A copy of the report shall be filed with the assessor of property on or before October 15. The assessor may audit or review the report and conduct comparative analysis to ensure that all agreements and reports are filed. Failure to timely complete and file the report with the comptroller of the treasury shall subject the lessee or sublessee to a late filing fee of fifty dollars ($50.00) payable to the comptroller of the treasury. In addition, failure to file the report with the comptroller of the treasury or assessor within thirty (30) days after written demand for the report shall subject the lessee or sublessee to an additional payment in lieu of tax in the amount of five hundred dollars ($500). (e) For purposes of this part, the corporation or municipality shall at all times be immune from suit, and any legal and financial obligations whatsoever pertaining to the subject of real property, while the corporation is performing its public function by holding legal title to real property pursuant to a lease and payment in lieu of tax (PILOT) agreement; provided, that the person who transferred title to the corporation or municipality pursuant to such PILOT agreement shall remain liable for suits, and any legal and financial obligations whatsoever, pertaining to the real property. Acts 1969, ch. 333, § 11; 1976, ch. 514, § 6; T.C.A., §§ 48-1911, 48-3-312; Acts 1998, ch. 804, § 1; 2000, ch. 914, § 2; 2002, ch. 605, § 2; 2008, ch. 1013, § 6; 2011, ch. 162, § 1; 2015, ch. 519, § 1; 2016, ch. 588, §§ 5, 6; 2026, ch. 820, § 1; 2026, ch. 1037, §§ 2, 3.

Tenn. Code Ann. § 48-101-313 Nonliability of municipality.

48-101-313. Nonliability of municipality. The municipality shall not in any event be liable for the payment of the principal of or interest on any bonds of the corporation, or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever, which may be undertaken by the corporation, and none of the bonds of the corporations or any of its agreements or obligations shall be construed to constitute an indebtedness of the municipality within the meaning of any constitutional or statutory provision whatsoever. Acts 1969, ch. 333, § 12; T.C.A., §§ 48-1912, 48-3-313.

Tenn. Code Ann. § 48-101-314 Disposition of earnings.

48-101-314. Disposition of earnings. The corporation shall be a nonprofit corporation and no part of its net earnings remaining after payment of its expenses shall inure to the benefit of any individual, firm or corporation, except that in the event the board of directors of the corporation shall determine that sufficient provision has been made for the full payment of the expenses, bonds, and other obligations of the corporation, then any net earnings of the corporation thereafter accruing shall be paid to the municipality with respect to which the corporation was organized; provided, that nothing herein contained shall prevent the board of directors from transferring all or any part of its properties in accordance with the terms of any lease, sale contract, loan agreement, mortgage or deed of trust entered into by the corporation. Acts 1969, ch. 333, § 13; 1976, ch. 514, § 7; T.C.A., §§ 48-1913, 48-3-314.

Tenn. Code Ann. § 48-101-315 Completion of corporate purpose — Dissolution.

48-101-315. Completion of corporate purpose — Dissolution. (a) Whenever the board of directors of the corporation shall by resolution determine that the purposes for which the corporation was formed have been substantially complied with and all bonds theretofore issued and all obligations theretofore incurred by the corporation have been fully paid, the then members of the board of directors of the corporation shall thereupon execute and file for record in the office of the secretary of state a certificate of dissolution reciting such facts and declaring the corporation to be dissolved. Such certificate of dissolution shall be executed under the corporate seal of the corporation. (b) Upon the filing of such certificate of dissolution, the corporation shall stand dissolved, the title to all funds and properties owned by it at the time of such dissolution shall vest in the municipality, and possession of such funds and properties shall forthwith be delivered to such municipality. Acts 1969, ch. 333, § 14; T.C.A., §§ 48-1914, 48-3-315.

Tenn. Code Ann. § 48-101-316 Joint operation.

48-101-316. Joint operation. The authorities and powers herein conferred upon corporations created under this part may be exercised by two (2) or more such corporations acting jointly. Two (2) or more municipalities may by acting jointly incorporate a public corporation to effectuate the purposes of this part. When two (2) or more municipalities incorporate such a public corporation, each and every requisite pertaining to the application for incorporation, qualifications of applicants, certificate of incorporation and amendment of certificate shall be incumbent in like manner upon each municipality joining in the creation of this public corporation. Officers, but not employees, of a municipality within a public corporation organized among two (2) or more municipalities may serve as directors of such a corporation. Acts 1969, ch. 333, § 15; T.C.A., §§ 48-1915, 48-3-316.

Tenn. Code Ann. § 48-101-317 Transfer of project sites.

48-101-317. Transfer of project sites. Any municipality may acquire a project site by gift, purchase or lease, and may transfer any project site to a corporation by sale, lease, or gift. Such transfer may be authorized by a resolution of the governing body of the municipality without submission of the question to the voters, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law. Such project site may be within or without the municipality or partially within and partially without the municipality. Acts 1969, ch. 333, § 17; T.C.A., §§ 48-1917, 48-3-317.

Tenn. Code Ann. § 48-101-318 Construction with other laws — Severability.

48-101-318. Construction with other laws — Severability. (a) Neither this part nor anything herein contained shall be construed as a restriction or limitation upon any powers which the corporation might otherwise have under any laws of this state, but shall be construed as cumulative of any such powers. No proceedings, notice or approval shall be required for the organization of the corporation or the issuance of any bonds or any instrument as security therefor, except as herein provided, any other law to the contrary notwithstanding; provided, that nothing herein shall be construed to deprive the state and its governmental subdivisions of their respective police powers over properties of the corporation, or to impair any power thereover of any official or agency of the state and its governmental subdivisions which may be otherwise provided by law. (b) The powers conferred by this part shall be in addition and supplementary to, and the limitations by this part shall not affect the powers conferred by, any other general, special or local law. Projects may be acquired, purchased, constructed, reconstructed, improved, bettered and extended and bonds may be issued under this part for these purposes, notwithstanding that any other general, special or local law may provide for the acquisition, purchase, construction, reconstruction, improvement, betterment and extension of a like project, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law. (c) If any one (1) or more sections or provisions of this part (including, without limitation, the provisions of § 48-101-317 authorizing the transfer of a project site by a municipality to a corporation and the provisions of § 48-101-312 exempting the corporation and its properties from taxation), or the application thereof to any person or circumstance, shall ever be held by any court of competent jurisdiction to be invalid, the remaining provisions of this part and the application thereof to persons or circumstances, other than those to which it is held to be invalid, shall not be affected thereby, it being the intention of the general assembly to enact the remaining provisions of this part, notwithstanding such invalidity. (d) If any provision of § 48-101-301(8) or § 48-101-301(15)(D), as amended by Acts 1988, ch. 1014, or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of § 48-101-301(8) or § 48-101-301(15)(D), as amended by chapter 1014 of the Acts of 1988, which can be given effect without the invalid provision or application, and to that end § 48-101-301(8) or (15)(D), as amended by chapter 1014 of the Acts of 1988, are declared to be severable. Acts 1969, ch. 333, §§ 16, 18; T.C.A., §§ 48-1916, 48-1918; Acts 1988, ch. 1014, § 3; T.C.A., § 48-3-318.

Source: Tennessee Code (state release 76 via Public.Resource.Org) + public chapters (Tennessee Secretary of State)URL: https://archive.org/download/gov.tn.tca/release76.2021.05.21/gov.tn.tca.title.48.htmlFetched: 10/24/2026