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<br />3. <br /> <br />delivery") basis. In the absence of acceptable delivery, <br />the city will refuse to enter the transaction. <br /> <br />Repurchase agreements will meet the aforementioned <br />delivery criteria, and will be accompanied by a minimum <br />"haircut" (i.e., excess of market value of securities <br />over principal amount of investment). <br /> <br />4. <br /> <br />All wire transactions required to implement the <br />aforementioned purchase and sale transaction shall be <br />supported by written instructions to the City's bank, <br />unless the timely preparation of such written <br />instructions would hinder the orderly completion of the <br />transaction itself. In such cases, the City will prepare <br />follow-up letters, confirming the oral (typically <br />telephonic) instructions, and forward such written <br />instructions to the bank without undue delay. <br /> <br />v. <br /> <br />UTILIZATION OF MUNICIPAL CREDIT AUTHORITY <br /> <br />The City of San Marcos, like other municipalities throughout the United <br />States, is empowered to issue various forms of municipal debt. While <br />the unrestrained use of this authority is inappropriate, there are many <br />circumstances in which the application of specific borrowing techniques <br />is in the financial interest of the City and its taxpayers. <br /> <br />Such borrowing is closely regulated by federal law, Internal Revenue <br />Service regulations, specific provisions of the Tax Equity and Fiscal <br />Responsibility Act (TEFRA) , and various statutes of the State of Texas. <br />Within the established regulations and guidelines, however, the City has <br />a great deal of latitude with regard to the timing and general nature of <br />its financing activities. <br /> <br />The City will utilize those financing alternatives and techniques which <br />produce positive financial advantages for its citizens. For example: <br /> <br />A. <br /> <br />Immediate financing of capital construction programs, through <br />the issuance of either "permanent" or "interim" financing <br />instruments, can "free up" available cash balances for <br />investment. This will allow the City to take advantage of <br />potential "positive arbitrage" during the "temporary period" . <br />. . a period during which such "profits" are legally exempted <br />from the regulatory limits on such financial profits. As a <br />result, both the total cash availability and <br />investment-earning potential of the City can be significantly <br />enhanced. <br /> <br />B. <br /> <br />"Operating shortfalls" and "cash flow needs" can be financed <br />through the use of Tax Anticipation Notes (TANs), Grant <br />Anticipation Notes (GANs), Revenue Anticipation Notes (RANs) , <br />by borrowing through local banks in a fashion consistent with <br />traditional "fiscal agency" financings, and by borrowing from <br />the Texas Public Facilities Authority (TPFA). These borrowing <br />techniques will produce funds availability and <br /> <br />6 <br />