In order to execute the upgrade with the local runtime binaries, we had to set the following values in tcserver.properties for each instance:
tcserver.get-runtime.disable=true
runtimes.tanzunet=false
This means that you will have to download and place the runtime manually.
This enables the upgrade to complete without prompting for a TanzuNet token.
These are the docs which describe the tc server upgrade practices and its properties:
https://docs.vmware.com/en/VMware-tc-Server/4/tc-server/GUID-topics-upgrade-best-practices.html
https://docs.vmware.com/en/VMware-tc-Server/4/tc-server/GUID-topics-tcserver-properties-reference.html