AN ACT to amend Tennessee Code Annotated, Title 5; Title 6; Title 7; Title 9; Title 12; Title 13 and Title 66, relative to development contracts.
SB0731 would regulate certain development contracts between local governments and private developers or contractors. It creates a new chapter in Title 7 defining terms such as “contract,” “developer,” “contractor,” “development property,” “local government,” and “nonessential infrastructure.” The bill generally limits a local government’s ability to alter an executed development contract unless the parties mutually agree to a specific modification, and it requires release of a required bond within 30 days after an independent inspection finds the contracted work complete.
The bill also restricts local governments from requiring developers or contractors to fund, build, or contribute to nonessential infrastructure unless that obligation was part of the original contract or later mutually amended. It bars demands for nonessential infrastructure beyond what was anticipated at the start of development or beyond the original contract’s scope or duration, again unless the parties agree otherwise. In addition, the bill allows contracts for nonessential infrastructure but preserves the same limits on unilateral changes and bond release timing.
A second major component sets deadlines and procedures for local review of development plans and site inspections. Local governments would have to accept an application and issue either an approval or a written deficiency report within 30 business days. They would be expected to consolidate change requests into a single set of documents, issue the requested permit once deficiencies are cured, and limit themselves to two written deficiency reports. If a third or later deficiency report is issued, the local government must refund 50% of the aggregate fees paid during the application process.
The bill’s impact on state law would be to impose new statewide limits on local government discretion in development review, contract administration, infrastructure exactions, and bond release procedures. It would affect counties, municipalities, local governing bodies, developers, contractors, and subcontractors involved in development projects, while applying only to contracts entered into, renewed, or amended on or after July 1, 2025. The bill also states that it does not repeal or modify existing contract, employment, property, zoning, permitting, or other applicable laws, which suggests it is intended to operate alongside current law rather than broadly replace it.
The general sentiment reflected in the available history appears negative or at least insufficient to advance the bill, as SB0731 failed in the Senate State and Local Government Committee by a 2-6 vote. With no committee transcript provided, the specific arguments are not recorded here, but the structure of the bill suggests the likely policy divide was between supporters seeking predictability and limits on local government demands, and opponents concerned about reduced local flexibility in development oversight and infrastructure planning.
SB0731 would create new statutory protections for developers and contractors by limiting local governments’ ability to revise development contracts, require nonessential infrastructure contributions, and delay bond release after completion. It would also impose firm processing deadlines, deficiency-report limits, and fee-refund requirements on local review of development plans and site inspections. The bill would affect local governments’ contracting and permitting practices statewide for covered development projects, while expressly preserving other existing laws and ordinances.
The bill appears to have faced unfavorable committee sentiment, as it failed in the Senate State and Local Government Committee by a 2-6 vote. No transcript is available, but the vote suggests the proposal did not gain broad support among committee members. The bill’s framing indicates a pro-development, anti-delay approach, which may have appealed to supporters concerned with predictability and timely permitting, but not enough to overcome opposition.
The main points of contention likely centered on local control versus developer certainty. Supporters would view the bill as preventing local governments from imposing new or expanded infrastructure obligations after a contract is signed and from prolonging permitting through repeated deficiency notices. Opponents would likely argue that the bill unduly restricts counties and municipalities from responding to project needs, protecting public interests, or ensuring adequate infrastructure and compliance. The refund requirement after a third deficiency report and the mandatory 30-business-day review deadline are also likely to have been controversial because they constrain administrative discretion and could pressure local permitting staff.