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BACKGROUND Prior to December 2002, the City operated under a policy of, with a few exceptions, providing water and sewer services to existing development outside City boundaries only for: a. health and safety reasons; or b. property within the boundaries of the former Pleasanton Township County Water District.1 However, the City began to receive requests for water and sewer service in unincorporated Happy Valley. Although a majority of Happy Valley residents voted against annexation, the more limited annexation (inclusive of properties necessary for development of the municipal golf course) resulted in the construction of water and sewer systems in Sycamore Road and Alisal Street. Therefore, staff requested policy guidance from City Council in response to these requests for water and sewer connections in Happy Valley. On December 3, 2002, City Council revisited the existing policy regarding service connections. Council considered four policy options: 1. Connect only when existing systems serving existing homes fail; 2. Connect any existing house; 3. Connect any existing house or new house on an existing, vacant lot; 4. Connect any existing house or new house on existing or newly subdivided lots. The agenda report for this December 3, 2002 City Council meeting is attached to this report as Attachment 3, and provides details on the procedures for service connection requests prior to December 2002 and associated policy considerations. After discussing the various options, City Council directed staff to follow policy Option 3 (connect any existing house or new house on an existing, vacant lot; not provide connections for newly created lots), with the understanding that City land use and fiscal policies were to be followed using pre-annexation agreements and other requirements. Since that time, the City has reviewed requests to provide water and sewer service to properties outside of the City limits on a case-by-case basis as part of an annexation or pre-annexation agreement. Once annexed into the City, a property owner may request to connect to City water and/or sewer services without City Council or LAFCo approval, subject to the property owner securing permits and paying applicable fees. Pre- annexation agreements allow a property owner to connect to the City's sewer and water systems prior to the property being annexed subject to the following requirements: (a) In the Remen Tract, a handful of sewer connections were approved for lots with existing homes and existing lots proposed for new homes on the basis that: all lots were lots of record and not newly subdivided; public sewer mains were located nearby; the properties were located within the Pleasanton County Township Water District, thus obligating the City to provide services; and the extension of sewer services to Remen Tract would not substantially induce growth. Page 2 of 5