1. Infrastructure Committee Formed in March 2007 to review coverage of the sewer system and determine possible improvements Comprised of volunteers Lauren Angelo, Gloria Chen, Bob Johnson, Mark Kroot, Mansour Moussavian and Councilmember Mike O’Malley Worked with Town Staff including Cyrus Kianpour, Richard Chiu, Michelle Chen and Karen Jost Met twice per month on average over the past 18 months Surveyed all 1,650 residents not on sewer and received a 40% response rate (649 responses) Presented initial findings to Council in Feb 2008 Agenda #10

2. Initial Findings Approximately 50% of Town’s residents are on sewer and 50% are on septic systems. While there is an argument that septic systems put some water back into environment, most engineering professionals believe sewer systems are preferable to septic from an environmental standpoint. Santa Clara County Health Department requires that new residences must connect to sewer system if there is an existing sewer main within 200 feet of residence Septic systems fail with age and replacement of existing leach field can be problematic

3. Initial Findings - Page 2 While not conclusive, Realtor Owen Halliday reviewed residential sales over the past three years in LAH and data showed homes with sewers sell for significantly higher prices ($400K) than homes with septic (newer homes tend to have sewer) Main issue in connecting to sewer is proximity to existing sewer main - longer distance from sewer main means less likely to connect Even at cost of $40,000, 56% of those surveyed would be interested in connecting in next 5 years

4. Two Case Studies In an effort to understand the economics of building sewer mains in areas of high interest we identified two projects and studied them in depth: –Robleda: From Purissima to Orchard Hill Lane –Moody: Extension from Tanglewood to Canyon Road and up Moody Court Contacted residents who had expressed interest in the 2007 sewer survey Interested residents signed letters of intent expressing willingness to pay up to $25,000 for sewer

5. Robleda Project Total residences served: 57 Letters of intent received: 13 Length of sewer extension: 5,055 feet Total project cost: $1.01 million Cost per 13 residents with strong interest: $80,000 Cost if 40 of the 57 residences connected: $25,000

6. Moody Project Total residences served: 40 Letters of intent received: 22 Neighborhood interest: 50% Length of sewer extension: 7,646 feet Total project cost: $1.5 million Cost per 22 residents with strong interest: $66,000 Cost if all 40 residences connected: $37,500

7. Case Study Conclusions Even with up to 50% interest in some areas, project cost is still too high to be borne by interested residents. Without financing assistance, status quo will persist –Failing septic systems and new construction will lead to new septic systems where sewer is unavailable, and the neighborhood will lose another resident interested in sewer –Town will continue to see a trickle of sewer connections (approximately 10 per year) –There will be an occasional sewer reimbursement district (about one every other year) formed where one or two residents have a driving need (either property development or septic failure)

8. Recommendations Town must finance the extension of the sewer into neighborhoods with high interest Expectation that Town will be paid back over time as residents connect Interested residences in these areas connect for a higher connection fee (e.g. $25,000-$40,000) Each year connection fee increases to offset inflation/Town’s interest rate Expectation that residents with failing septic systems or new construction will connect to sewer if available New committee with Finance involvement needed to drive this process