Tennessee Code Title 9. Public Finances § 9-4-5306

(a) Notwithstanding any law to the contrary,

IF, after July 1, 1998, a locality is deemed by the state to be a municipality for purposes of distributing grants or state-shared taxes; AND

IF, thereafter the locality, acting in good faith and under color of law and for municipal purposes, receives and expends or obligates grants or state-shared taxes; AND

IF, thereafter it is judicially determined that the locality was not incorporated in accordance with the requirements of law and, therefore, is not a municipality; THEN

Neither the locality nor any person who acted on behalf of the locality is required to return or repay such grants or state-shared taxes; however, subject to § 67-5-104(c), any portion of such grants or state-shared taxes, that remains unexpended and unobligated, shall become assets of the county.

(b) As used in subsection (a), “the locality, acting in good faith and under color of law and for municipal purposes, … expends” includes, but is not limited to, reimbursement paid from grants or state-shared taxes for documented, reasonable expenses of municipal incorporation that were paid out-of-pocket by one (1) or more residents acting on behalf of the locality and its incorporation.