19D - EXHIBIT FY 10-11 RDA Annual Report

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(3) COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA Notes to the Basic Financial Statements (Continued) Year Ended June 30, 2011 Minimum Rating as of Legal Year End Investment Type Rating Aa Held by Fiscal Agent: Money Market Funds A $ 6,746,113 Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. At June 30, 2011, the Agency had no investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total Agency investments. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker - dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the Agency. LOANS AND NOTES RECEIVABLE During April 1993, the Agency implemented a self - funding residential loan program. The program makes direct loans to qualifying persons for both single- family and multiple units. Generally, all loans are due upon transfer of ownership and are secured by a trust deed. The program is funded by the Low and Moderate Income Housing Capital Projects Fund. At June 30, 2011, amounts totaling $34,180,689 were recorded as loans receivable, of which $350,000 is due within one year and deferred revenue of $33,830,689 in the fund financial statements to indicate that this asset is not available for expenditures. 30