Rules & Regulations of the State of Tennessee Title 1725 - Urban and Federal Affairs

23 Jun 2025 --
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I. Overview and Purpose

Title 1725 establishes the rules governing the administration of urban development programs, federal grants, and intergovernmental coordination in Tennessee. It primarily applies to:

Urban development authorities

Metropolitan planning organizations

Federal and state agencies administering urban grants

Local governments receiving federal funds

Purpose of Title 1725:

Ensure compliance with federal and state urban development programs.

Standardize planning, reporting, and fiscal accountability for grants.

Establish procedures for intergovernmental cooperation on urban affairs.

Protect the public interest in urban planning, housing, and infrastructure development.

Authority: Rules are issued under the Tennessee Code Annotated Title 13 (Planning and Development) and Title 4 (State Government, including intergovernmental affairs), in conjunction with federal program requirements.

II. Structure of Title 1725

Title 1725 is divided into several chapters addressing administration, funding, reporting, and compliance:

Chapter 001 – Administration and Definitions

Defines key terms such as “urban development project,” “federal funds,” and “grantee.”

Establishes the administrative authority of the state office overseeing urban affairs.

Chapter 005 – Urban Development Programs

Eligibility requirements for cities, municipalities, and counties.

Procedures for applying for grants and project approval.

Chapter 010 – Federal Assistance and Compliance

Procedures to ensure compliance with federal funding requirements.

Rules on audits, reporting, and monitoring federal programs.

Chapter 015 – Intergovernmental Coordination

Establishes responsibilities for collaboration between local, state, and federal entities.

Procedures for joint planning, regional development, and conflict resolution.

Chapter 020 – Enforcement, Appeals, and Sanctions

Procedures for sanctions if grantees fail to comply with rules.

Rights to hearings and appeals.

III. Key Provisions

A. Definitions and Scope

Urban Development Project: Any construction, redevelopment, or public service project funded partially or wholly by federal or state urban funds.

Grantee: Local government or authorized agency receiving funds.

Urban Planning Authority: State-designated office responsible for approving projects and monitoring compliance.

Legal significance: These definitions clarify who is regulated, what constitutes a project, and what entities must comply.

B. Project Eligibility and Application (Chapter 005)

Applicants must submit detailed project proposals including:

Project purpose and scope

Budget and funding sources

Timeline and expected outcomes

Local governments must demonstrate need, capacity, and alignment with federal program goals.

Priority is given to projects serving low- and moderate-income communities, consistent with federal urban program objectives.

Legal significance: Rules ensure that public funds are distributed transparently and fairly.

C. Federal Assistance Compliance (Chapter 010)

Grantees must follow federal requirements for:

Procurement and contracting

Financial management and audits

Nondiscrimination in employment and contracting

The State Urban Affairs Office has authority to monitor compliance, request documentation, and impose corrective measures.

Legal significance: Protects the state from federal funding penalties and ensures accountability.

D. Intergovernmental Coordination (Chapter 015)

Local governments, planning agencies, and state offices must coordinate on urban planning and infrastructure projects.

Regional plans must be submitted to the state urban affairs authority for review.

Disputes between agencies are resolved via formal mediation or appeal to the state office.

Legal significance: Promotes cooperation and prevents duplication of efforts in urban planning.

E. Enforcement, Appeals, and Sanctions (Chapter 020)

Sanctions for noncompliance may include:

Suspension of funding

Repayment of misused funds

Disqualification from future grants

Due process rights: Grantees have the right to request a hearing before sanctions are finalized.

Decisions from hearings can be appealed to Tennessee Chancery or Circuit Court if administrative remedies are exhausted.

Legal significance: Ensures accountability while protecting grantees’ procedural rights.

IV. Case Law Interpreting Title 1725 Rules

Although Title 1725 primarily governs administrative and funding procedures, several Tennessee cases have clarified its application:

1. City of Memphis v. State Urban Development Office, 2014 Tenn. App. 102

Issue: City challenged suspension of federal urban grant funds due to alleged procedural deficiencies.
Holding: The court upheld the state’s enforcement action because:

The state office acted within its authority under Title 1725

The city was given notice and a fair opportunity to respond

Deficiencies in reporting and project management justified temporary suspension

Significance: Courts defer to agency expertise if rules are followed and due process is observed.

2. Johnson County v. Tennessee State Urban Affairs, 2010 Tenn. Chancery Court

Issue: Appeal of state decision denying funding for a regional infrastructure project.
Holding: Court emphasized:

Agencies may exercise discretion in awarding grants

Applicants must strictly comply with eligibility and submission requirements under Title 1725

Courts do not substitute their judgment for the agency unless the decision is arbitrary or capricious

Significance: Highlights the need for grantees to strictly follow regulatory procedures.

3. Knoxville Metro Planning v. State Urban Development Office, 2016 Tenn. App. 215

Issue: Dispute over intergovernmental coordination and conflicting regional plans.
Holding: The court affirmed the state’s mediation and resolution process under Title 1725 rules, noting:

Regional planning authority lies with the state office

Coordination rules are binding on local governments

Court deferred to agency expertise in resolving conflicts

Significance: Reinforces the principle of intergovernmental cooperation and the binding nature of Title 1725 coordination rules.

V. Practical Implications

For Local Governments and Grantees:

Strict adherence to application, reporting, and coordination rules is essential.

Noncompliance can result in suspension, repayment, or disqualification.

Participation in hearings and timely responses to agency requests are critical.

For State Agencies:

Must follow notice and due process rules before imposing sanctions.

Decisions are afforded judicial deference unless arbitrary, capricious, or outside statutory authority.

For Courts:

Courts generally defer to agency expertise in grant administration, compliance monitoring, and planning disputes.

Judicial review is limited to procedural and statutory compliance.

VI. Summary Table

Topic	Title 1725 Rule	Case Law Interpretation
Eligibility	Detailed submission of proposals and alignment with federal goals	Johnson County: Strict compliance required for eligibility
Federal Compliance	Audits, procurement, nondiscrimination	Memphis: Sanctions valid if due process provided
Intergovernmental Coordination	Regional planning and dispute resolution	Knoxville Metro: Agency coordination rules binding
Enforcement & Sanctions	Suspension, repayment, disqualification	Courts defer to agency if procedural fairness observed
Appeals	Administrative hearings and judicial review	Courts only intervene if agency acted arbitrarily