There is broad authority in the statutes for cities and counties to jointly exercise powers and for contractual agreements between the two.
Any powers, privileges, or authority of a public agency in Tennessee may be exercised and enjoyed jointly with any other public agency of Tennessee, of any other state, or of the United States, providing (in the case of cities and counties) that this authority "shall apply only to such powers, privileges, or authority vested in their governing bodies." T.C.A. § 12-9-104.
Agencies of political subdivisions that have governing boards separate from the governing body (such as municipal utility boards) may enter into interlocal agreements for joint or cooperative action with other similar agencies and other public agencies. Governing bodies of political subdivisions must approve agreements made by their agencies before they take effect. T.C.A. § 12-9-104(a).
Governing bodies likewise may enter into contracts "with any one or more public agencies to perform any governmental service, activity, or undertaking that each public agency entering into the contract is authorized by law to perform." T.C.A. § 12-9-108.