Tenn. Code Ann. § 68-221-1302: Authorities created as public and governmental bodies - Property and revenue exempt from taxes

(a) It is declared that water and wastewater treatment authorities created pursuant to this part shall be public and governmental bodies acting as agencies and instrumentalities of the creating and participating governmental entities; and that the acquisition, operation and finance of water and wastewater treatment works by the authorities is declared to be for a public and governmental purpose and a matter of public necessity.

(b) The property and revenues of the authority, or any interest in the property or revenues, are exempt from all state, county and municipal taxation.