Tennessee law sets hearing and payment rules for infrastructure districts

The law requires a public hearing on whether to establish a district after an initiating petition is filed. Each host municipality required to receive the initiating petition must order a hearing. When two or more host municipalities must approve a district, they may hold joint hearings or separate hearings. A municipality holding a separate hearing may make its approval depend on another municipality’s approval. The hearing must be ordered when the initiating petition is filed.

A host municipality may manage district work itself or delegate some or all of it. District work includes collecting and enforcing assessments, required disclosures, duties tied to transferring public infrastructure, and other district duties the host municipality considers necessary. Delegating district work to a municipality that administers the host municipality’s property taxes requires an agreement approved by both governing bodies. Outside administrators must have a written contract requiring their costs to be paid from district assessments. A county trustee need not take part without an agreement. Both governing bodies must approve an agreement before district work is delegated to another municipality.

Property tax debts must be paid before collected money can be applied to district assessments. The payment rules apply to amounts collected by a host municipality or a municipality delegated district administration, and to district property owners. The rule covers property taxes, penalties, and interest owed to any taxing government, including municipalities and special school districts. A municipality handling district collections may apply a payment marked for assessments to those tax debts first. Otherwise, it collects and enforces assessments like property taxes, including billing them on the same invoice. Any delinquent district assessment must be handled in the same way as a delinquent property tax.

Infrastructure debt is limited to 30 years, and districts must dissolve by a deadline or when specified conditions occur. The debt limit covers bonds, notes, and other obligations issued to fund infrastructure, including refinancing. The dissolution deadline applies to each district established under this part. For a development with multiple phases, each phase may have its own debt, with a separate 30-year limit from the date that phase’s debt is issued. Dissolution based on an owners’ petition cannot occur until debt secured by assessments is fully paid. Another early dissolution trigger applies when all obligations payable only from district assessments are paid. A district must dissolve no later than 30 years after its last assessment is first levied. It must dissolve earlier after a qualifying owners’ petition or when all obligations payable only from district assessments are paid.