EXECUTIVE OFFICER’S AGENDA REPORT

DECEMBER 7, 2016

STANISLAUS LOCAL AGENCY FORMATION COMMISSION

OUT-OF-BOUNDARY SERVICE APPLICATION

APPLICANT: City of Modesto

LOCATION: 311 W. Hatch Road (Assessor’s Parcel Number: 038-026-050) - Located on the northeast corner of West Hatch Road and Cascade Avenue in an unincorporated area within the Sphere of Influence of the City of Modesto. (See Exhibit A – Area Map.)

REQUEST: The application requests authorization to provide sewer service outside the City’s boundaries to serve a new retail building. (See attached Out-of-Boundary Service Application, Exhibit B.)

BACKGROUND Government Code §56133 specifies that a city or special district must apply for and obtain LAFCO approval before providing new or extended services outside its jurisdictional boundaries. The section describes the following situations where the Commission may authorize services outside a city or district’s jurisdictional boundaries. (1) For proposals within a city or district sphere of influence: in anticipation of a later change of

organization. (2) For proposals outside a city or district sphere of influence: to respond to an existing or

impending threat to the public health or safety of the residents of the affected territory. Stanislaus LAFCO has adopted its own policy with regards to out-of-boundary service requests, known as Policy 15. Policy 15 reiterates the requirements of §56133 and also allows the Executive Officer to approve extensions for existing development in limited emergency health and safety situations on behalf of the Commission. In most other cases, where a proposal intends to accommodate development, applications are forwarded to the Commission for review.

DISCUSSION The City of Modesto has requested authorization to provide a sewer service connection outside its jurisdictional boundaries to a property located at 311 W. Hatch Road in order to accommodate a new retail building. The property is owned by Caruso Shopping Center. The site is not contiguous to the City boundaries and would need to include a much larger, surrounding area in order to be annexed. The 0.58-acre site is currently vacant and previously had an older building used as a muffler shop. It is currently zoned for commercial uses in the County’s jurisdiction. A new 7,300+ square foot retail

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building is proposed for the site and necessitates a connection to sewer system. The site previously relied on an on-site septic facility. The site already receives water service from the City of Modesto. State law and Commission policies generally prefer annexation in order to accommodate the extension of services. However, the Commission has recognized that there are situations when out-of-boundary service extensions may be an appropriate alternative, consistent with Government Code §56133 and Commission Policy 15, as discussed below. Consistency with Commission Policy 15 The Commission’s Policy 15(C) describes a variety of situations where the Commission may favorably consider service extensions. These include the following:

1. Services will be provided to a small portion of a larger parcel and annexation of the entire parcel would be inappropriate in terms of orderly boundaries, adopted land use plans, open space/greenbelt agreements or other relevant factors.

2. Lack of contiguity makes annexations infeasible given current boundaries and the requested public service is justified based on adopted land use plans or other entitlements for use.

3. Where public agencies have a formal agreement defining service areas provided LAFCO has formally recognized the boundaries of the area.

4. Emergency or health related conditions mitigate against waiting for annexation.

5. Other circumstances which are consistent with the statutory purposes and the policies and standards of the Stanislaus LAFCO.

As the property is not contiguous to the existing City Limits, annexation would necessitate inclusion of a much larger area. Development on the site itself is considered infill and replaces a previous use, consistent with the existing zoning. Thus, the Commission may find situation 2 as described above to be applicable and the out-of-boundary request to be appropriate at this time. The site is also located just outside of two neighborhoods that were previously approved by the Commission on an area-wide basis for sewer extensions (Bret Harte and Shackelford). Approval of the current proposal would be consistent with other approvals in the area, as the Commission has historically been supportive of extensions that would assist with the replacement of on-site systems in developed areas. Consistency with Applicable State Law The Commission must also consider Government Code §56133, the applicable state law, that specifies “the commission may authorize a city or district to provide new or extended services outside its jurisdictional boundaries but within its sphere of influence in anticipation of a later change of organization [emphasis added].” While the timeframe for “anticipation of later change of organization” is not defined, Stanislaus LAFCO and others have interpreted this phrase as being synonymous with the property being located in a sphere of influence, or the City’s long-term planning area. As such, the application can be found consistent with State law.

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Ability of the City to Provide Services The City of Modesto has an existing 30-inch sewer line that runs along Cascade Avenue and Hatch Road, adjacent to the site. City staff has provided a will-serve letter indicating the City’s capacity and ability to serve the site. Landowner Consent to Annex A standard condition of approval for an out-of-boundary service extension is the requirement that the landowner record an agreement consenting to the annexation of the territory. The City also requires the property owner to sign an “Agreement to Waive Protest to Annexation Proceedings” that states in exchange for receiving City services and the property owner shall do any actions required to annex the property when requested by the City. The City’s application includes a copy of the draft Outside Service Agreement to be signed by the property owner in fulfillment of this standard condition.

Environmental Review The proposed retail building is considered an allowable use under the current zoning and requires a building permit from the County and fulfillment of associated conditions, including obtaining proper sewer service approvals from the City of Modesto and LAFCO. As the extension of sewer service would accommodate an allowable use, it is considered categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Article 19, §15303 (d) of the CEQA Guidelines. No change in land use is proposed as a result of this out-of-boundary service extension application. The Commission does not have any further obligations pursuant to CEQA for environmental review.

CONCLUSION Although Commission policies generally prefer annexation before services are extended outside of city boundaries, services may be extended prior to annexation in certain situations if approved by LAFCO. Based on the discussion above, including situations where out-of-boundary applications may be appropriate, the Commission may consider approval of the City’s request.

STAFF RECOMMENDATION

Based on the information contained in this report, staff recommends that following the required public hearing, the Commission adopt Resolution No. 2016-24, approving the request, subject to the following terms and conditions:

A. Sewer service is the only out-of-boundary service authorized by the Commission.

B. The extension of sewer service is to accommodate the proposed development at 311 W.

Hatch Road only. The City shall not allow future connections in the area and outside the City limits without first requesting and securing approval from LAFCO.

C. Before sewer service is extended, the City shall execute and record an outside service

agreement that includes the property owner’s consent to annex the property and forward a copy of the recorded agreement to the LAFCO Office.

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Respectfully submitted,

Sara Lytle-Pinhey Sara Lytle-Pinhey Executive Officer Attachments: Exhibit A - Area Map

Exhibit B - Out-of-Boundary Service Application Exhibit C - Draft LAFCO Resolution No. 2016-24

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EXHIBIT A

Area Map

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OUT OF BOUNDARY SERVICE APPLICATION

311 W. HATCH ROAD (APN 038-026-050)

SITE0.58+/- acres

ModestoCity Limits

Unincorporated Area

ModestoCity Limits

CR

OW

S L

AN

DIN

G R

D

W HATCH RD

TID Lateral No. 1

CR

YS

TA

L A

VE

CA

SC

AD

E A

VE

CRATER AVE

OLIVERO RD

SP

OK

AN

E S

T

EU

RE

KA

ST

AMADOR AVE

E HATCH RD

BUTTE AVE

Source: Stanislaus LAFCO, GIS Files, Nov. 2016

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EXHIBIT B

Out-of-Boundary Service Application

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15

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EXHIBIT C

Draft LAFCO Resolution No. 2016-24

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STANISLAUS COUNTY LOCAL AGENCY FORMATION COMMISSION

RESOLUTION

DATE: December 7, 2016 NO. 2016-24 SUBJECT: Out-of-Boundary Service Application – 311 W. Hatch Road On the motion of Commissioner _______, seconded by Commissioner _______, and approved by the following: Ayes: Commissioners: Noes: Commissioners: Absent: Commissioners: Ineligible: Commissioners: THE FOLLOWING RESOLUTION WAS ADOPTED: WHEREAS, Government Code Section 56133 provides that a city may provide new or extended services by contract or agreement outside its jurisdictional boundaries only if it first requests and receives written approval from the local agency formation commission in the affected county; WHEREAS, an out-of-boundary service application has been submitted that requests sewer service outside the City of Modesto’s jurisdictional boundaries to serve a new commercial building located at 311 W. Hatch Road; WHEREAS, the site is located outside the boundaries of the City of Modesto but within the City’s sphere of influence; WHEREAS, the site is otherwise identified as Assessor’s Parcel Number 038-026-050; WHEREAS, in accordance with adopted Commission policy and State law, the Executive Officer has forwarded this application to the Commission for their consideration; WHEREAS, the extension of sewer service would accommodate an allowable use and is considered to be categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15303(d) of the State CEQA Guidelines; WHEREAS, the City of Modesto has indicated that the requested sewer service is available to serve the subject site and can be provided upon satisfaction of the City’s terms and conditions; and WHEREAS, the Commission has, in evaluation of the proposal, considered the report submitted by the Executive Officer as well as the testimony and evidence presented at the meeting on December 7, 2016. NOW, THEREFORE, BE IT RESOLVED that the Commission:

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LAFCO Resolution No. 2016-24 December 7, 2016 Page 2 1. Authorizes the City of Modesto to provide sewer service connection to the site, subject to

the following terms and conditions:

A. Sewer service is the only out-of-boundary service authorized by the Commission. B. The extension of sewer service is to accommodate the site identified as 311 W.

Hatch only. The City shall not allow future connections in the area and outside the City limits without first requesting and securing approval from LAFCO.

C. Before sewer service is extended, the City shall execute and record an outside service agreement that includes the property owner’s consent to annex the property and forward a copy of the recorded agreement to the LAFCO Office.

ATTEST: _______________________________ Sara Lytle-Pinhey, Executive Officer

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