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Preannexation and Provisions of Sanitary Sewer and Water Service Agreement When an owner of property located outside of the City limits within the HVSP area requests sewer and/or water services, the City applies policies adopted in December of 2002. The City has granted such requests only after determining that the use on the property to be serviced is consistent with the City's General Plan, that no subdivision of the property is proposed, and that the property owner has entered into a preannexation agreement. This agreement allows the owner to connect to the City's sewer and water systems prior to the property being annexed to the City subject to the following requirements: (a) payment of the sewer and water connection fees; (b) payment of all costs associated with extending the sewer and water systems to serve the property; (c) payment of all costs associated with the connection to and use of the sewer and water systems; (d) abandonment of the existing septic system on the property; (e) payment of all City and County processing fees for LAFCo and LAVWMA approval; (f) agreement to support any subsequent annexation initiative that may occur; and (g) agreement to review and approval of any future modifications of the residence by the City. DISCUSSION The City typically requires that properties annex to the City in order to receive City utility services. This parcel is contiguous to the City Limit boundary on one side and would require annexation of other parcels to allow for an annexation. However, some time in the future this parcel, along with surrounding parcels, could be part of a larger annexation. The proposed preannexation agreement includes language that requires the property owners to submit development plans for the planned addition to the City for review and approval prior to obtaining a building permit from Alameda County. A copy of the draft preannexation agreement is attached. The LAFCo Board of Commissioners has requested that the City study the ability and financial impact to extend sewer and water service into the Happy Valley Area of the County of Alameda. The City has committed to perform the study in 2016. As a cautionary note, it is possible that LAFCo will not approve individual applications for out- of-service-area agreements before the study is complete and sewer and water utilities in the Happy Valley area can be evaluated comprehensively. At this time, staff recommends that the City Council authorize the sewer and water connections requested by the owners with an agreement to annex at some future date as part of a larger annexation area. The extension of City services shall be subject to LAFCo, and LAVWMA approval, as applicable, and if the preannexation agreement is approved the City will make an application on the owners' behalf. ' The City's agreement with LAVWMA requires LAVWMA's approval when connections outside of the City's boundaries exceed ten (10). City staff and LAVWMA staff are resolving how to treat individual connections, such as this, when the total number of connections already previously approved exceeds ten. Page 3 of 4