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City of Santa - Annual <br />Statement of Investment Policy Page 37 July 1, 2022 - <br />June 30, 2023 <br /> <br />(3)Reverse repurchase agreements or securities lending agreements may be utilized only when all of the <br />following conditions are met: <br /> <br />(A) The security to be sold using a reverse repurchase agreement or securities lending agreement has been <br />owned and fully paid for by the local agency for a minimum of 30 days prior to sale. <br /> <br />(B) The total of all reverse repurchase agreements and securities lending agreements on investments <br />owned by the local agency does not exceed 20 percent of the base value of the portfolio. <br /> <br />(C) The agreement does not exceed a term of 92 days, unless the agreement includes a written codicil <br />guaranteeing a minimum earning or spread for the entire period between the sale of a security using a <br />reverse repurchase agreement or securities lending agreement and the final maturity date of the same <br />security. <br /> <br />(D) Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to <br />a counterparty using a reverse repurchase agreement or securities lending agreement shall not be used to <br />purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse <br />repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or <br />securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the <br />entire period between the sale of a security using a reverse repurchase agreement or securities lending <br />agreement and the final maturity date of the same security. <br /> <br />(4)(A) Investments in reverse repurchase agreements, securities lending agreements, or similar investments <br />in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the <br />security may be made only upon prior approval of the governing body of the local agency and shall be made <br />only with primary dealers of the Federal Reserve Bank of New York or with a nationally or state-chartered bank <br />that has or has had a significant banking relationship with a local agency. <br /> <br />(B) For purposes of this chapter, “significant banking relationship” means any of the following activities of a <br />bank: <br /> <br />(i) Involvement in the creation, sale, purchase, or retirement of a local agency’s bonds, warrants, notes, or <br />other evidence of indebtedness. <br /> <br />(ii) Financing of a local agency’s activities. <br /> <br />(iii) Acceptance of a local agency’s securities or funds as deposits. <br /> <br />(5)(A) “Repurchase agreement” means a purchase of securities by the local agency pursuant to an agreement <br />by which the counterparty seller will repurchase the securities on or before a specified date and for a specified <br />amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical <br />delivery, or by third-party custodial agreement. The transfer of underlying securities to the counterparty <br />bank’s customer book-entry account may be used for book-entry delivery. <br /> <br />(B) “Securities,” for purposes of repurchase under this subdivision, means securities of the same issuer, <br />description, issue date, and maturity. <br /> <br />(C) “Reverse repurchase agreement” means a sale of securities by the local agency pursuant to an <br />agreement by which the local agency will repurchase the securities on or before a specified date and <br />includes other comparable agreements.