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 that may be undertaken by the corporation, and none of the bonds of the corporation 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. The municipality may pledge its full faith and credit as surety to the payment of the principal of and interest on the bonds in the following manner:

(1) The governing body of the municipality may by resolution propose the pledging of the full faith and credit and unlimited taxing power of the municipality as surety to the payment of the principal of and interest on the bonds. After securing a certificate of public purpose and necessity as provided in § 7-53-307, the governing body may direct the county election commission to hold an election for the registered voters of the municipality to determine whether the full faith and credit of the municipality shall be so pledged. Should three fourths (3/4) of the voters cast their vote in favor of lending the municipality’s credit by pledging the full faith and credit of the municipality to the payment, as surety, of the principal and interest of such bonds, according to the certificate of the county election commission, the municipality, through its governing board, would be authorized to so pledge its full faith and credit as surety and so indicate by the signature of the mayor or other chief executive official of the municipality on the bonds; and
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Terms Used In Tennessee Code 7-53-306

  • Bonds: means bonds, notes, interim certificates or other obligations of a corporation issued pursuant to this chapter. See Tennessee Code 7-53-101
  • 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.
  • Corporation: means any corporation organized pursuant to this chapter. See Tennessee Code 7-53-101
  • Governing body: means the board or body in which the general legislative powers of the municipality are vested. See Tennessee Code 7-53-101
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Municipality: means any county or incorporated city or town in this state with respect to which a corporation may be organized and in which it is contemplated the corporation will function. See Tennessee Code 7-53-101
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Trustee: A person or institution holding and administering property in trust.
(2) In the event such pledge of full faith and credit and unlimited taxing power of the municipality is given, any holder or holders of the bonds, including a trustee or trustees for holders of such bonds, shall have the right, in addition to all other rights, by mandamus or other suit, action or proceeding in any court of competent jurisdiction to enforce such person‘s rights against the municipality, and the governing body of the municipality and any officer, agent or employee of the municipality, including, but not limited to, the right to require the municipality and governing body and any proper officer, agent or employee of the municipality, to assess, levy and collect taxes and other revenues and charges adequate to carry out any agreement as to, or pledge of, such taxes, revenues and charges. The taxes authorized to be pledged in this section shall be levied without limit as to rate or amount upon all taxable property within the municipality, and all such taxes to be levied are hereby declared to have been levied for county and corporation purposes, respectively, within the meaning of the Constitution of Tennessee, Article II, § 29.
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