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CITY OF SANTA ANA STATEMENT OF INVESTMENT POLICY <br />JULY 1, 2016 — JUNE 30, 2017 <br />Page 22 <br />(j) (1) Investments in repurchase agreements or reverse repurchase agreements or securities lending <br />agreements of securities authorized by this section, as long as the agreements are subject to this <br />subdivision, including the delivery requirements specified in this section. <br />(2) Investments in repurchase agreements may be made, on an investment authorized in this section, when <br />the term of the agreement does not exceed one year. The market value of securities that underlie a <br />repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those <br />securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying <br />securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in <br />compliance if the value of the underlying securities is brought back up to 102 percent no later than the next <br />business day. <br />(3) Reverse repurchase agreements or securities lending agreements may be utilized only when all of the <br />following conditions are met: <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 />(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 />(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 />(D) Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security <br />to a counterparty using a reverse repurchase agreement or securities lending agreement shall not be used <br />to purchase another <br />security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase <br />agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending <br />agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period <br />between the sale of a security using a reverse repurchase agreement or securities lending agreement and <br />the final maturity date of the same security. <br />(4) (A) Investments in reverse repurchase agreements, securities lending agreements, or similar <br />investments in which the local agency sells securities prior to purchase with a simultaneous agreement to <br />repurchase the security may be made only upon prior approval of the governing body of the local agency <br />and shall be made only with primary dealers of the Federal Reserve Bank of New York or with a nationally <br />or state - chartered bank that has or has had a significant banking relationship with a local agency. <br />(B) For purposes of this chapter, "significant banking relationship" means any of the following activities of a <br />bank: <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 />(ii) Financing of a local agency's activities. <br />(iii) Acceptance of a local agency's securities or funds as deposits. <br />55C -32 <br />