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8.A. - Page 59 The supremacy clause of the United States Constitution reads as follows: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and 1ll Treaties made, or which shlll be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding." This melns that, unless Congress has otherwise provided, if 1 federal govemmental entity owns a Taxable Parcel within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for 1n lmount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ("FNMA") is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, 1s a result, 1n exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States. The City has not undertaken to determine whether any federll governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the Taxable Parcels, and tllerefore expresses no view concenzing the likelihood that the risks described above will materialize while the Bonds are outstanding. FDIC. In the event that any financial institution mal<ing any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go ulto default, resulting in ownerslup of the property by the FDIC, then the lbility of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDICs policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to stlte and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. Accordi�lg to the Policy Statement, the FDIC will pay its property tax obligations when they become due 1nd paylble and will p1y claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDICs interest in the property is appropriate. The FDIC will pay claims for interest on deluzquent property taxes owed at the rate provided under state law, to the extent the interest plyment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC- owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those cllims. The Policy Statement further provides thlt no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in wllich it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it -35-