District pursuant to an act of the District Council from time to time in amounts in the aggregate at any time outstanding not exceeding 2 per centum of said assessed value, exclusive of indebtedness owing to the United States on the effective date of this title. All other bonds or evidences of indebtedness, other than bonds to fund or refund outstanding indebtedness, shall be issued only with the assent of a majority of the qualified electors of said District voting at an election on the proposition of issuing such bonds. In determining the amount of indebtedness within all of the aforesaid limitations at any time outstanding there shall be deducted from the aggregate of such indebtedness the amount of the then current tax levy for the payment of the principal of the outstanding bonded indebtedness of the District and any other moneys set aside into any sinking fund and irrevocably dedicated to the payment of such bonded indebtedness. The District Council shall make provision for the payment of any bonds issued pursuant to this title, in the manner provided in section 631 hereof.

CONTENTS OF BORROWING LEGISLATION; REFERENDUM ON BOND ISSUE

SEC. 602. (a) An act authorizing the issuance of bonds may be enacted by majority of the District Council members at any meeting of the Council subsequent to the meeting at which such act was introduced, and shall contain at least the following provisions:

(1) A brief description of each purpose for which indebtedness is proposed to be incurred;

(2) The maximum amount of the principal of the indebtedness which may be incurred for each such purpose;

(3) The maximum rate of interest to be paid on such indebtedness; and (4) In the event the District Council is required by this part, or it is determined by the Council in its discretion, to submit the question of issuing such bonds to a vote of the qualified electors of the District, the date on which such election will be held, the manner of holding such election, the manner of voting for or against the incurring of such indebtedness, and the form of ballot to be used at such election. The ballot shall be in such form as to permit the electors to vote separately for or against the incurring of indebtedness for each of the purposes for which indebtedness is proposed to be incurred.

(b) The District Council shall cause the proposition of issuing such bonds to be submitted by the Board of Elections to the qualified electors at the first general election to be held in the District not less than forty days after the date of enactment of the act authorizing such bonds, or upon a vote of at least two-thirds of the members of the District Council, the Council may call a special election for the purpose of voting upon the issuance of said bonds, such election to be held by the Board of Elections at any date set by the Council not less than forty days after the enactment of such act.

(c) The Board of Elections is authorized and directed to prescribe the manner of registration and the polling places and to name the judges and clerks of election and to make such other rules and regulations for the conduct of such elections as are not specifically provided by the District Council as may be necessary or appropriate to carry out the provisions of this section, including provisions for the publication of a notice of such election stating briefly the proposition or propositions to be voted on and the designated polling places in the various precincts and wards in the District, which said notice shall be published at least once a week for four consecutive calendar weeks on any day of the week, the first publication thereof to be not less than thirty nor more than forty days prior to the date fixed by the District Council for the election. The Board of Elections shall canvass the votes cast at such election and certify the results thereof to the District Council in the manner prescribed for the canvass and certification of the results of general elections. The certification of the result of the election shall be published once by the Board of Elections within three days following the date of the election.

PUBLICATION OF BORROWING LEGISLATION

SEC. 603. The Mayor shall publish any act authorizing the issuance of bonds at least once within five days after the enactment thereof, together with a notice of the enactment thereof in substantially the following form:

"NOTICE

"The following act authorizing the issuance of bonds published herewith has become effective, and the time within which a suit, action, or proceeding questioning the validity of such bonds can be commenced as provided in the District of Columbia Charter Act will expire twenty days from the date of the first publication of this notice (or in the event the proposition of issuing the proposed bonds is to be submitted to the qualified electors, twenty days after the date of publication of the promulgation of the results of the election ordered by said act to be held).

Mayor."

SHORTER PERIOD OF LIMITATION

SEC. 604. Upon the expiration of twenty days from and after the date of publication of the notice of the enactment of an act authorizing the issuance of bonds without the submission of the proposition for the issuance thereof to the qualified electors, or upon the expiration of twenty days from the date publication of the promulgation of the results of an election upon the proposition of issuing bonds, as the case may be, all as provided in section 603—

(1) Any recitals or statements of fact contained in such act or in the preambles or the titles thereof or in the results of the election of any proceedings in connection with the calling, holding, or conducting of election upon the issuance of such bonds shall be deemed to be true for the purpose of determining the validity of the bonds thereby authorized, and the District and all others interested shall thereafter be estopped from denying same;

(2) Such act and all proceedings in connection with the authorization of the issuance of such bonds shall be conclusively presumed to have been duly and regularly taken, passed, and done by the District and the Board of Elections in full compliance with the provisions of this Act and of all laws applicable thereto;

(3) The validity of such act and said proceedings shall not thereafter be questioned by either a party plaintiff or a party defendant, and no court shall have jurisdiction in any suit, action, or proceeding questioning the validity of same, except in a suit, action, or proceeding commenced prior to the expiration of such twenty days.

ACTS FOR ISSUANCE OF BONDS

SEC. 605. After the expiration of the twenty-day limitation period provided for in section 604 of this part, the District Council may by act establish an issue of bonds as authorized pursuant to the provisions of sections 601 to 604, inclusive, hereof. An issue of bonds is hereby defined to be all or any part of an aggregate principal amount of bonds authorized pursuant to said sections, but no indebtedness shall be deemed to have been incurred within the meaning of this Act until the bonds shall have been sold, delivered, and paid for, and then only to the extent of the principal amount of bonds so sold and delivered. The bonds of any authorized issue may be issued all at one time, or from time to time in series and in such amounts as the District Council shall deem advisable. The act authorizing the issuance of any series of bonds shall fix the date of the bonds of such series, and the bonds of each such series shall be payable in annual installments beginning not more than three years after the date of the bonds and ending not more than thirty years from such date. The amount of said series to be payable in each year to be so fixed that when the annual interest is added to the principal amount payable in each year the total amount payable in each year in which part of the principal is payable shall be substantially equal. It shall be an immaterial variance if the difference between the largest and smallest amounts of principal and interest payable annually during the term of the bonds does not exceed 3 per centum of the total authorized amount of such series. Such act shall also prescribe the form of the bonds to be issued thereunder, and of the interest coupons appertaining thereto, and the manner in which said bonds and coupons shall be executed. The bonds and coupons may be executed by the facsimile signatures of the officer or officers designated by the act authorizing the bonds, to sign the bonds, with the exception that at least one signature shall be manual. Such bonds may be issued in

coupon form in the denomination of $1,000, registerable as to principal only or as to both principal and interest, and if registered as to both principal and interest may be issuable in denominations of multiples of $1,000. Such bonds and the interest thereon may be payable at such place or places within or without the District as the District Council may determine.

PUBLIC SALE

SEC. 606. (a) All bonds issued under this part shall be sold at public sale upon sealed proposals at such price or prices as shall be approved by the District Council after publication of a notice of such sale at least once not less than ten days prior to the date fixed for sale in a daily newspaper carrying municipal bond notices and devoted primarily to financial news or to the subject of State and municipal bonds published in the city of New York, New York, and in a newspaper of general circulation published in the District. Such notice shall state among other things that no proposal shall be considered unless there is deposited with the District as a downpayment a certified check or cashier's check for an amount equal to at least 2 per centum of the par amount of bonds bid for, and the District Council shall reserve the right to reject any and all bids.

(b) The Treasurer of the United States, and any administrative officer or agency of the United States Government may purchase bonds issued under this part with funds under the control of such officer or agency to the same extent as the Treasurer, officer, or agency is permitted by law to invest such moneys in obligations of the United States Government, and such sale may be negotiated without the necessity of complying with the provisions of this section, relative to a public sale of the bonds.

PART 2 SHORT-TERM BORROWING

BORROWING TO MEET SUPPLEMENTAL APPROPRIATIONS

SEC. 621. In the absence of unappropriated available revenues to meet supplemental appropriations made pursuant to section 505, the District Council may by act authorize the issuance of negotiable notes, in a total amount not to exceed 5 per centum of the total appropriations for the current fiscal year, each of which will be designated "supplemental" and may be renewed from time to time, but all such notes and renewals thereof shall be paid not later than the close of the fiscal year following that in which such act becomes effective.

BORROWING IN ANTICIPATION OF REVENUES

SEC. 622. For any fiscal year, in anticipation of the collection or receipt of revenues of that fiscal year, the District Council may by act authorize the borrowing of money by the execution of negotiable notes of the District, not to exceed in the aggregate at any time outstanding 20 per centum of the total anticipated revenue, each of which shall be designated "Revenue Note for the Fiscal Year 19 ". Such notes may be renewed from time to time, but all such notes, together with the renewals, shall mature and be paid not later than the end of the fiscal year for which the original notes have been issued.

NOTES REDEEMABLE PRIOR TO MATURITY

SEC. 623. No notes issued pursuant to this part shall be made payable on demand, but any note may be made subject to redemption prior to maturity on such notice and at such time as may be stated in the note.

SALE OF NOTES

SEC. 624. All notes issued pursuant to this part may be sold at not less than par and accrued interest at private sale without previous advertising.

PART 3-PAYMENT OF BONDS AND NOTES

SEC. 631. (a) The act of the District Council authorizing the issuance of bonds pursuant to this title, shall, where necessary, provide for the levy annually of a special tax without limitation as to rate or amount upon all the taxable real and personal tangible property within the District in amounts which, to

gether with other revenues of the District available and applicable for said purposes, will be sufficient to pay the principal of and interest on said bonds and the premium, if any, upon the redemption thereof, as the same respectively become due and payable, which tax shall be levied and collected at the same time and in the same manner as other District taxes are levied and collected, and when collected shall be set aside for the purpose of paying such principal, interest, and premium.

(b) The full faith and credit of the District shall be and is hereby pledged for the payment of the principal of and the interest on all bonds and notes of the District hereafter issued pursuant to this title whether or not such pledge be stated in the bonds or notes or in the act authorizing the issuance thereof.

PART 4-TAX EXEMPTION-LEGAL INVESTMENT

TAX EXEMPTION

SEC. 641. Bonds and notes issued by the District Council pursuant to this title and the interest thereon shall be exempt from all Federal and District taxation except estate, inheritance, and gift taxes.

LEGAL INVESTMENT

SEC. 642. Notwithstanding any restriction on the investment of funds by fiduciaries contained in any other law, all domestic insurance companies, domestic insurance associations, executors, administrators, guardians, trustees, and other fiduciaries within the District of Columbia may legally invest any sinking funds, moneys, trust funds, or other funds belonging to them or under or within their control in any bonds issued pursuant to this title, it being the purpose of this section to authorize the investment in such bonds or notes of all sinking, insurance, retirement, compensation, pension and trust funds. National banking associations are authorized to deal in, underwrite, purchase and sell, for their own accounts or for the accounts of customers, bonds and notes issued by the District Council to the same extent as national banking associations are authorized by paragraph seven of section 5136 of the Revised Statutes (title 12, U.S.C., sec. 24), to deal in, underwrite, purchase and sell obligations of the United States, States, or political subdivisions thereof. All Federal building and loan associations and Federal savings and loan associations; and banks, trust companies, building and loan associations, and savings and loan associations, domiciled in the District of Columbia, may purchase, sell, underwrite, and deal in, for their own account or for the account of others, all bonds or notes issued pursuant to this title: Provided, That nothing contained in this section shall be construed as relieving any person, firm, association or corporation from any duty of exercising due and reasonable care in selecting securities for purchase or investment.

TITLE VII-FINANCIAL AFFAIRS OF THE DISTRICT

PART 1-FINANCIAL ADMINISTRATION

SURETY BONDS

SEC. 701. Each officer and employee of the District required to do so by the District Council shall provide a bond with such surety and in such amount as the District Council may required. The premiums for all such bonds shall be paid out of appropriations for the District.

FINANCIAL DUTIES OF THE MAYOR

SEC. 702. The Mayor, through his duly designated subordinates, shall have charge of the administration of the financial affairs of the District and to that end he shall

(1) prepare and submit in the form and manner prescribed by the District Council under section 502 the annual budget estimates and budget message;

(2) supervise and be responsible for all financial transactions to insure adequate control of revenues and resources and to insure that appropriations are not exceeded;

(3) maintain systems of accounting and internal control designed to provide

(A) full disclosure of the financial results of the District government's activities,

(B) adequate financial information needed by the District government for management purposes,

(C) effective control over and accountability for all funds, property, and other assets: Provided, That as soon as practicable after the date of enactment of this Act, the Mayor shall cause the accounts of the District to be maintained on a basis that will facilitate the preparation of cost-based budgets;

(4) submit to the District Council a monthly financial statement, by appropriation and department, and in any further detail the District Council may specify;

(5) prepare, as of the end of each fiscal year, a complete financial statement and report;

(6) supervise and be responsible for the assessment of all property subject to assessment within the corporate limits of the District for taxation, make all special assessments for the District government, prepare tax maps, and give such notice of taxes and special assessments as may be required by law;

(7) supervise and be responsible for the assessment and collection of all taxes, special assessments, license fees, and other revenues of the District for the collection of which the District is responsible and receive all money receivable by the District from the Federal Government, or from any court, or from any agency of the District;

(8) have custody of all public funds belonging to or under the control of the District, or any agency of the District government, and deposit all funds coming into his hands, in such depositories as may be designated and under such terms and conditions as may be prescribed by act of the District Council;

(9) have custody of all investments and invested funds of the District government, or in possession of such government in a fiduciary capacity, and have the safekeeping of all bonds and notes of the District and the receipt and delivery of District bonds and notes for transfer, registration, or exchange.

CONTROL OF APPROPRIATIONS

SEC. 703. The District Council may provide (1) the transfer during the budget year of any appropriation balance then available for one item of appropriation to another item of appropriation, and. (2) the allocation to new items of funds appropriated for contingent expenditure.

ACCOUNTING SUPERVISION AND CONTROL

SEC. 704. The Mayor, through his duly authorized subordinates, shall—

(1) prescribe the forms of receipts, vouchers, bills, and claims to be used by all the agencies of the District government;

(2) examine and approve all contracts, orders, and other documents by which the District government incurs financial obligations, having previously ascertained that moneys have been appropriated and allotted and will be available when the obligations shall become due and payable;

(3) audit and approve before payment all bills, invoices, payrolls, and other evidences of claims, demands, or charges against the District government and with the advice of the legal officials of the District determine the regularity, legality, and correctness of such claims, demands, or charges; and

(4) perform internal audits of central accounting and department and agency records of the District government, including the examination of any accounts or records of financial transactions, giving due consideration to the effectiveness of accounting systems, internal control, and related administrative practices of the respective agencies.

WHEN CONTRACTS AND EXPENDITURES PROHIBITED

SEC. 705. No officer or agency of the District shall, during any budget year, expend or contract to expend any money or incur any liability, or enter into any contract which by its terms involves the expenditure of money, for any purpose, in excess of the amounts appropriated for any item of expenditure. Any contract, verbal or written, made in violation of this Act shall be null and void.