37 1 chase is necessary in order to permit the District to make 2 timely payment of the principal and interest on any of its 3 outstanding obligations. The Secretary is further authorized 4 to purchase from the District all or any part of any proposed 5 issue of its obligations whenever, pursuant to section 604 6 (b), he determines that this is preferable to Federal payment of the net effective interest expense thereof. 7 8 (b) For the purpose of purchasing obligations of the 9 District pursuant to subsection (a) or section 604 (b), as 10 authorized in appropriation Acts, and such authorizations 11 may be without fiscal year limitation, the Secretary may use 12 as a public debt transaction the proceeds of the sale of any 13 securities hereafter issued under the Second Liberty Bond Act, as now or hereafter in force, are extended to include pur15 chases of District obligations. Each purchase of obligations 16 by the Secretary under this section shall be upon such terms 14 17 18 and conditions as to yield a return at a rate not less than a rate determined by the Secretary, taking into consideration 19 the current average yield on outstanding marketable obliga 20 tions of the United States of comparable maturities. The 21 222 23 Secretary may sell, upon such terms and conditions and at such price or prices as he shall determine, any of the obliga tions acquired by him under this section. All purchases and 24 sales by the Secretary of such obligations under this section 38 1 shall be treated as public debt transactions of the United 2 States. 3 FEDERAL PAYMENT OF NET EFFECTIVE 4 INTEREST EXPENSE 5 SEC. 604. (a) Except as provided in subsection (b), 6 the Secretary is authorized and directed to make periodic 7 payments to the District, upon request therefor by the 8 Mayor in such amounts as may be necessary (1) to equal 9 one-fourth of the net effective interest expense, including 10 fees, commissions, and other costs of issuance incurred by 11 the District on its obligations, or (2) to equal the difference 12 between the net effective interest expense incurred by the 13 District on account of its obligations and the net effective 14 interest expense which the District would have incurred 15 had the interest rate on its obligations been equal to the 16 interest rate on purchases by the Secretary pursuant to sec17 tion 603, whichever is greater. 18 (b) The Mayor shall, prior to making any request 19 of the Secretary as authorized by subsection (a), advise 20 him as to the net effective interest expense which the Dis21 trict expects to incur with respect to the proposed issue of 22 its obligations. The Secretary shall, on the basis of such 23 advice from the Mayor, determine whether to pay to the 24 District the periodic amounts determined as specified in 25 clause (1) or (2) of subsection (a), or, in the alternative, 39 1 to purchase from the District all or part of the proposed 2 issue of its obligations as authorized in section 603. 3 INTERIM LOAN AUTHORITY 4 SEC. 605. (a) The Mayor is authorized to accept loans 5 for the District from the United States Treasury, and the 6 Secretary is authorized to lend to the Mayor, such sums as 7 the Mayor may determine are required to complete payments 8 on capital outlay contracts which have been awarded not 9 later than ninety days after the effective date of this provi10 sion. In addition, such loans shall include funds to pay the 11 District's share of the cost of the Adopted Regional System 12 specified in the National Capital Transportation Act of 13 1969. 14 (b) In addition to loan authority contained in subsec15 tion (a), the Mayor is authorized to accept loans for the 16 District from the Treasury, and the Secretary is authorized 17 to lend to the Mayor such sums as the Mayor from time to 18 time determines are necessary to provide for the continuation 19 of work on any capital program project or projects, pending 20 the sale of an issue of District obligations. Any such loan 21 shall be for such term as may be agreed upon by the Mayor 22 and the Secretary, but in no event shall the term of any 23 such loan extend for more than thirty days beyond the date 24 on which proceeds from the sale of the District's obligations 40 1 become available for the construction of such project or 2 projects. 3 (c) Loans advanced pursuant to this section during any 4 six-month period shall be at a rate of interest determined by 5 the Secretary as of the beginning of such period, which, in 6 his judgment, would reflect the cost of money to the Treasury 7 for borrowing at a maturity approximately equal to the period of time the loan is outstanding. 8 9 (d) There are authorized to be appropriated such sums as may be necessary to make loans under this section. 10 11 12 DISTRICT OBLIGATIONS SUBJECT TO TAXATION SEC. 606. Notwithstanding the provisions of section 103 13 of the Internal Revenue Code (26 U.S.C. 103), any and 14 all obligations issued by the District under the authority of 15 this title shall be subject both as to principal and interest to 16 District, Federal, State, and local taxation to the same extent 17 as the obligations of private corporations are taxed. 18 19 220 20 DISTRICT OBLIGATIONS AS LAWFUL INVESTMENTS, ACCEPTANCE AS SECURITY SEC. 607. All obligations issued by the District under the 21 authority of this title shall be lawful investments, and may 22 be accepted as security for fiduciary, trust, and public funds, 23 the investment or deposit of which shall be under authority 24 or control of the United States or of any officer or officers 25 thereof. All obligations issued by the District pursuant to 26 this title shall be deemed to be exempt securities within the 41 1 meaning of laws administered by the Securities and 2 Exchange Commission, to the same extent as securities which 6 SEC. 608. (a) The sixth sentence of the seventh para 7 graph of section 5136 of the Revised Statutes, as amended 8 (12 U.S.C. 24), is amended by inserting ", or obligations 9 of the District of Columbia issued pursuant to the District 10 of Columbia Charter Act," immediately following "United 11 States" where such term first appears in such sixth sentence. (b) Notwithstanding any other provision of law, any 13 building association or building and loan association or any savings and loan association, incorporated or unincorporated, organized and operating under the laws of the District, or 12 14 15 : any Federal savings and loan association, may invest its funds in obligations of the District issued pursuant to this title. PERMANENT APPROPRIATION FOR FEDERAL PAYMENT OF NET EFFECTIVE INTEREST EXPENSE SEC. 609. Section 3689 of the Revised Statutes, as amended (31 U.S.C. 711), is further amended by adding a new paragraph appropriating moneys for the purposes under the Treasury Department, to read as follows: "Payments with respect to District of Columbia Obligations: For payments with respect to obligations of the |