Local Government, General - As enacted, makes changes to the process by which local governments may issue and sell grant anticipation notes; authorizes the comptroller to approve certain notes issued by a local governmen, the official text

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                             PUBLIC CHAPTER NO. 694

                                                    SENATE BILL NO. 1679

                                          By Crowe, Southerland, Harshbarger

                                           Substituted for: House Bill No. 1672

  By Renea Jones, Eldridge, Hale, Gary Hicks, Tim Hicks, Stinnett, Hill, Hawk, Alexander, Littleton,
                               Moon, Crawford, Wright, Hulsey, Mitchell, Rudd, Gant

AN ACT to amend Tennessee Code Annotated, Title 9, Chapter 13, Part 2 and Title 9, Chapter 21,
          Part 7, relative to local government debt.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

          SECTION 1. Tennessee Code Annotated, Section 9-13-203(3), is amended by adding the
language "or utility authority" after "utility district".

          SECTION 2. Tennessee Code Annotated, Section 9-13-206, is amended by deleting the
section and substituting:

                    Notwithstanding another law to the contrary, the governing body of a local
          government may issue notes that mature beyond the close of the fiscal year in which such
          notes are issued when such notes are:

                             (1) Approved by the comptroller of the treasury or the comptroller's designee
                    and guaranteed by the state funding board;

                             (2) Approved by the comptroller of the treasury or the comptroller's designee
                    in the case of economic distress due to a natural disaster certified by the federal
                   emergency management agency (FEMA); or

                             (3) Approved by the comptroller of the treasury or the comptroller's designee
                    after the local government has reasonably demonstrated to the comptroller or the
                    comptroller's designee that a natural disaster has caused economic distress to the
                    local government.

          SECTION 3. Tennessee Code Annotated, Section 9-21-701, is amended by deleting the
section and substituting the following:

                    The governing body of a local government, acting by resolution, may issue and sell
          interest-bearing grant anticipation notes for public works projects in anticipation of money to
          be received pursuant to a grant contract between a state or federal agency and the local
          government. The resolution is not effective until the contract between the state or federal
          agency and the local government has been executed by all parties to the contract. The
          governing body must receive approval from the comptroller of the treasury or the
          comptroller's designee prior to the issuance of the grant anticipation notes.

          SECTION 4. Tennessee Code Annotated, Section 9-21-704, is amended by deleting the
section and substituting the following:

                    (a) Grant anticipation notes issued under this part must be secured by a pledge of the
          money to be received pursuant to a grant contract between a state or federal agency and a
          local government, in an amount not less than the principal amount of such notes. At its
          discretion, the local government may add as additional security to the grant anticipation
          notes one (1) or both of the following:
SB 1679
                              (1) A general obligation pledge; or
                              (2) A revenue pledge from a special revenue or enterprise fund, as defined by

                   generally accepted accounting principles, that benefits from the grant.
                    (b) Interest on grant anticipation notes may be a general obligation of a local
          government, and the local government has the authority to levy ad valorem taxes for the
          payment of interest on such notes. This section does not preclude a local government from
          issuing capital outlay notes or bond anticipation notes in conjunction with grant anticipation
          notes issued under this section; provided, that the proceeds from the sale of any such capital
          outlay notes or bond anticipation notes must not be applied to the payment of such grant
          anticipation notes.
          SECTION 5. This act takes effect upon becoming a law, the public welfare requiring it.

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         SENATE BILL NO. 1679

PASSED:  March 23, 2026

                                                  RANDY ~NALLY
                                     SPEAKER OF THE iENATE

                                        SEXTON, SPEAKER
                                     F REPRESENTATIVES

APPROVED this ,~-u.. day of /'\prll  2026

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         BILL LEE, GOVERNOR