(a) Any associated municipality or any municipally-owned energy distribution system acting by resolution of the governing body of its associated municipality is hereby authorized and empowered to:

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Terms Used In Tennessee Code 7-39-304

  • Associated municipality: means the municipality for the benefit of which an energy acquisition corporation is organized. See Tennessee Code 7-39-102
  • Bonds: means bonds, notes, interim certificates or other obligations of a corporation issued pursuant to this chapter. See Tennessee Code 7-39-102
  • 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.
  • energy acquisition corporation: means a public corporation formed under this chapter, which shall be a public instrumentality of its associated municipality and of the state of Tennessee. See Tennessee Code 7-39-102
  • Energy distribution system: means a system for the distribution of natural gas or electric power that is owned or operated by a municipality or any board or agency of the municipality. See Tennessee Code 7-39-102
  • Governing body: means , with respect to a municipality that is an associated municipality of, or purchaser of gas from, an acquisition corporation established to exercise the powers described in this chapter with respect to natural gas and natural gas substitutes, any board, commission or other instrumentality of such municipality having jurisdiction, control and management of the gas distribution system of that municipality, and, with respect to a municipality that is an associated municipality of, or purchaser of electrical power from, an acquisition corporation established to exercise the powers described in this chapter with respect to electrical power, any board, commission or other instrumentality of such municipality having jurisdiction, control and management of the electrical power distribution system of that municipality. See Tennessee Code 7-39-102
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Municipality: means any county, incorporated city, town or metropolitan government, utility district, energy acquisition corporation or gas, electric or energy authority in this state. See Tennessee Code 7-39-102
  • Municipally-owned: means owned by a municipality as defined in this chapter. See Tennessee Code 7-39-102
  • 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.
(1) Make loans to its energy acquisition corporation;
(2) Guarantee or assume the payment of the principal of and interest on any bonds or notes issued by such corporation or the payment or performance of any obligations of the corporation incurred in connection with the purchase of gas or electrical power by the corporation;
(3) Pledge the revenues of its energy distribution system to secure the payment of the principal of and interest on any bonds or notes of the corporation or to secure its guaranty of such bonds or notes;
(4) Pledge the revenues of its energy distribution system to secure the payment of obligations incurred in connection with the purchase of gas or electrical power, as appropriate, by the corporation or to secure its guaranty of any such obligations.
(b)

(1) Any loan, or payment under such guarantee or pledge, shall be made solely out of the funds otherwise available to the energy distribution system for the benefit of which the bonds or notes were issued or the obligations were incurred and shall not be a general obligation of the associated municipality. Any loan, guarantee or pledge of revenues shall be subject to any contractual limitations undertaken by the associated municipality or energy distribution system for the incurrence of indebtedness or the lending of its credit to others.
(2) Any pledge of, or lien on, revenues of the energy distribution system to secure the payment of any bonds, notes or obligations of such corporation pursuant to this chapter shall be valid and binding from the time the pledge or lien is created or granted and shall inure to the benefit of the holder or holders of such bonds or notes or the obligee under any such obligation until the payment or satisfaction in full of the obligation. 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. Neither the resolution, the indenture, nor any other instrument granting, creating or giving notice of the pledge or lien need be filed or recorded to preserve or protect the validity or priority of such pledge or lien.
(3) Any pledge or lien created or granted pursuant to the terms of this section shall not be subject to the mortgage tax imposed by § 67-4-409(b) and any other tax that is imposed upon the privilege of recording any instrument giving notice of the creation of a lien, security interest or pledge, and such exemption shall apply to any transaction to which the municipality is a party pursuant to this chapter, whether as the secured party or the debtor.
(c) Any associated municipality is hereby authorized to issue its revenue bonds in the manner provided by title 9, chapter 21 for the purpose of raising funds to lend to its energy acquisition corporation, such revenue bonds to be payable solely from the revenues derived from the energy distribution system owned by such associated municipality.
(d) An associated municipality shall not have the power to assume or guarantee bonds, notes or other obligations of a corporation in such a way as to pledge the full faith and credit and taxing power of the associated municipality to the payment of the obligations.
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