The Industrial Building Bond Act is highly restrictive. Cities may issue bonds and construct industrial buildings under this Act, but the bonds must be approved by a three-fourths affirmative vote in a referendum. T.C.A. § 7-55-107.
The building may be up to 10 miles from the city limits. The bonds may be secured only by rentals from the building, or the city may additionally pledge its full faith and credit.
To proceed with the project, the city must get a certificate of public purpose and necessity from the building finance committee in the Industrial Development Division of the Department of Economic and Community Development. The committee is empowered not only to issue the certificate but also to determine:
- the amount of bonds to be issued;
- the property to be acquired and acquisition terms;
- the expenditures that may be made in constructing and equipping the building; and
- the method of lease, rental and operation of the building.
As a condition of the certificate being issued, the committee must require the maximum economically feasible use of solar heating systems and solar water heaters and that the lessee of the building agree to make payments in lieu of taxes in amounts equivalent to the ad valorem property taxes that would have been levied on the building if it were owned by the lessee and subject to property taxation. If the city council refuses to follow all the committee’s requirements, then any councilmember voting for the refusal is personally liable for any loss the city sustains. T.C.A. §§ 7-55-105–106.