In the First Session of the 113th General Assembly, Tennessee legislators sponsored numerous bills that impacted local governments in some measure. Due to this uptick in legislative activity, the Bass, Berry & Sims Public Finance team actively tracked 65 bills. In this update, you will find a brief summary of six newly enacted public chapters of general application that could impact your government’s operations, as well as other relevant updates. Please feel free to reach out to our team with any questions.
Public Meeting Requirements
The two most consequential laws that will affect the day-to-day operations of governmental entities related to public meetings. These laws add new requirements for conducting public meetings, and failure to comply with these laws could affect the validity of any action taken at a public meeting. Therefore, local government entities must start complying with these new laws.
Public Chapter No. 213, which went into effect on April 25, 2023, imposes new agenda requirements for local government legislative bodies. It is very important to note that this law only applies to cities, metropolitan governments, and counties, and not all governmental entities subject to open meeting requirements. This new law requires cities, metropolitan governments, and counties to post meeting agendas prior to public meetings. Highlights of the law include:
- Agendas must reasonably describe matters that will be acted upon.
- Agendas must be posted 48 hours prior to a public meeting.
- Agendas may be posted on websites or other places accessible to the public.
Items may be added to an agenda at a meeting but only if allowed by the local government’s bylaws or rules and procedures. Therefore, if a city, metropolitan government or county does not have procedures for adding agenda items, such procedures should be adopted.
Required Public Forum at Public Meetings
Public Chapter No. 300 requires all governing bodies acting at public meetings to reserve a period for public comment to permit the public the opportunity to comment on matters germane to agenda items. While this law does not become effective until July 1, 2023, compliance should begin as soon as possible because notices for meetings in July need to comply with this new law. This law applies to all local government entities to which the open meetings laws apply, including local governments and all of their instrumentalities. Among the highlights of the law are:
- The notice of the public meeting must include how a person may provide public comment.
- Governing bodies are allowed to put reasonable restrictions on the period of public comment.
Until this law was passed, public entities had no obligation to permit public comment at meetings, and constitutional law does not generally require a public entity to provide for public comment. Now that a public comment period is required, public entities should consider adopting public input policies to provide reasonable restrictions relating to public comment. This new law specifically authorizes these policies but also are needed to meet federal constitutional requirements and to provide order to meetings. These policies ensure consistent public comment practices at all public meetings of governing bodies, including committee meetings and meetings that include consent agendas. These policies can address such issues as the length of the comment period, the number of speakers, and the time allotted to each speaker.
Prohibition of Ownership by Certain Foreign Entities
Public Chapter No. 369, which goes into effect on July 1, 2023, prohibits certain foreign entities and nonresident individuals from acquiring any ownership interest in real property, including leases and easements, in Tennessee. Generally, the entities and individuals that are prohibited from acquiring property are entities or persons listed on the Office of Foreign Assets Control of the U.S. Department of Treasury’s sanctions programs and country information list. This new prohibition only applies to the acquisition of a real property interest occurring on or after July 1, 2023. This prohibition could have a significant effect on economic development relating to facilities owned by foreign companies, and in offering incentives, particularly payment in lieu of tax agreements, local government entities will want to undertake a thorough check of the sanctioned list before leasing property to a foreign entity. This law could also affect the acquisition by foreign entities of property held under existing payment-in-lieu-of-tax arrangements. All sanctioned entities and individuals currently owning real property in Tennessee must register with the Tennessee Secretary of State’s Office within 60 days after July 1, 2023.
New Utility Regulatory Board
Public Chapter No. 463, which goes into effect on July 1, 2023, is the largest utility law rewrite in years. It merges the Water & Wastewater Financing Board with the Utility Management Review Board to create a new board known as the Tennessee Board of Utility Regulation (TBOUR). The TBOUR will oversee all Tennessee public water, sewer, and natural gas utilities, including energy authorities, utility districts, municipal utilities, and other utility authorities. Among some of the TBOUR’s new regulatory powers is the authority to hear municipal utility customer complaints and the broadened authority to facilitate grants from the Utility Revitalization Fund to help mitigate costs related to a merger or consolidation. Also included in this law is new Comptroller oversight of energy authorities’ annual budgets and debt issuance.
Brownfield Redevelopment Fund
Public Chapter No. 86, which goes into effect July 1, 2023, establishes a new Brownfield Redevelopment Area Fund that will be administered by the Tennessee Department of Environment and Conservation (TDEC). The fund was created to incentivize the redevelopment of brownfield sites in Tier 3 and 4 counties (At-Risk and Distressed). Grants will be awarded to eligible entities based on criteria developed by TDEC and will not exceed $500,000 in one fiscal year. The grant funds can be used to help offset remediation costs.
Tourism Development Authority Update
Public Chapter No. 121, which went into effect on April 4, 2023, expands the list of projects a Tourism Development Authority (TDA) can undertake and requires Comptroller approval of the revenues pledged to any TDA debt issued on or after April 4, 2023. TDAs are governmental authorities, similar to industrial development boards, that cities and counties can form to undertake tourism development projects. Several TDAs have been formed in the state in recent years.
New Online Debt Reporting Form – the new state-level debt disclosure process is all online and mandatory usage of the online system started on June 15, 2023.
Cybersecurity Plan Requirement – a reminder that all public water, sewer, and natural gas utilities, as well as certain co-ops and county/municipally-owned utilities providing electric, natural gas, or propane services to the public, must have a cybersecurity plan adopted by July 1, 2023. For more information on this requirement, please visit the Tennessee Association of Utility Districts’ online resource page.
If you have any questions about how these new bills could impact your business, please contact one of the authors.