Meeting Minutes 2018-07-11

MONTGOMERY COUNTY MUNICIPAL UTILITY DISTRICT NO. 8 MINUTES OF REGULAR MEETING

JULY 11, 2018

The Board of Directors (the “Board” or “Directors”) of Montgomery County Municipal Utility District No. 8 (the “District” or “MCMUD 8”) met in regular session, open to the public, on Wednesday, July 11, 2018, at 9:00 a.m., at the Walden Yacht Club, 13101 Melville Drive, Montgomery, Texas 77356, a designated meeting place located inside the boundaries of the District, and the roll was called of the duly constituted officers and members of the Board, to­ wit:

John Tryon – President
Bob Leasure – Vice President
Margie Barlow – Secretary
John L. Patton – Assistant Secretary
Randolph C. Moravec – Director

All members of the Board were present. Also attending were Katherine Turner of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Erich Peterson and Justin Abshire of JoneslCarter (“Engineer” or “JoneslCarter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron and Robert Ginandt of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Elliot M. Barner, attorney, and Diane F. Brewer, paralegal, of Radcliffe Bobbitt Adams Polley PLLC (“Attorney” or “RBAP”); and all persons on the attached Attendance Roster.

The President, after finding that the notice of the meeting was posted as required by law and determining that a quorum of the Board was present, called the meeting to order and declared it open for such business as may come before it.

PUBLIC COMMENT

Judd Schleper, MUD 9 resident, asked the Board to consider publishing a District newsletter or article in the Walden CIA newsletter regarding District projects to keep the community informed. The Board reminded the Mr. Schleper and those in attendance that District’s website, which may is located at: http://www.mud8.org, is a good source of information related to District activity.

Next, Donna Ausmus informed the Board that she had approximately two feet (2′) of water in her house from Hurricane Harvey. Ms. Ausmus went on to state that her contractor, whom she thought had previously attended a Board meeting on her behalf to notify the District that her house had flooded, engaged a civil engineer to review drainage on her property. Mr. Abshire requested that Ms. Ausmus provide him with her contact information so that he could obtain look into drainage issues on her street, as this was the first time anyone from her street had informed the District of any flooding.

Then, Mr. Peter Sheppard addressed the Board regarding drainage issues in Section 7 of Walden. The Board informed Mr. Sheppard that they would look further into the matter to determine the situation.

No further public comments were offered.

DRAINAGE REPORT

Mr. Abshire updated those in attendance regarding the drainage improvements project (the “Drainage Improvements”) and reminded them that the District must wait until all requisite easements are acquired before moving forward with such improvements. Mr. Abshire further stated that the Drainage Improvements are anticipated to begin between 60 to 90 days after all easements are acquired.

Director Moravec reminded those in attendance that easement acquisition is normally a lengthy process, as it is property acquisition by a governmental entity. Mr. Barner also explained that lienholder consent is often required to obtain easements from residential property owners, which can add to time to the process. Mr. Barner reminded everyone that the District has to acquire easements from the San Jacinto River Authority (“SJRA”), which is also a governmental entity. Mr. Barner added that he expects comments to the easements from the SJRA soon and that the SJRA will approve such easements within the month. Mr. Barner further reminded everyone that the Drainage Improvements are being paid for with public funds and that acquiring the requisite easements must occur in order to receive approval from all agencies with jurisdiction for such improvements. In response to a question by Mr. Boyd about property needed from Zone 1, Mr. Barner stated that the District is in the process of finalizing acquisition of the last tract needed for such zone.

APPROVAL OF MINUTES

The President next directed the Board to the approval of the June 13, 2018 regular meeting minutes. Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the June 13, 2018 regular meeting minutes.

At this time, those members of the public in attendance except for Ms. Ausmus, exited the meeting.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Turner reviewed the Tax Assessor-Collector’s Report for the month of June 2018, a copy of which is attached hereto, including past monthly collections and credits as reported by Tammy McRae, Tax Assessor-Collector for the District. Ms. Turner reported that 98.09% of the 2017 taxes have been collected as of June 30, 2018.

Mrs. Turner then reported that delinquent accounts have been turned over to the Delinquent Tax Attorney for collection.

Ms. Turner next reported that she expects to receive 2018 certified property values around the end of July and reminded the Board that the tax rate for the 2018 tax year must be adopted no later than September 15, 2018.

Upon a motion by Director Leasure, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Tax Assessor-Collector’s Report.

BOOKKEEPER’S REPORT

Ms. Turner reviewed the Bookkeeper’s Report, a copy of which is attached hereto, including the current fund balances, expenditures and investments. Ms. Turner then reviewed current year-to-date revenues and expenditures against the budget.

Ms. Turner next reviewed a Snap Shot Financial Report as of July 11, 2018, and a Revenue and Expenditure Comparison for 2017 and 2018 as of July 11, 2018, copies of which are attached to the Bookkeeper’s Report.

Mrs. Turner also reported that $400,000 needed to be transferred to the General Operating Fund from the Capital Project Fund as reimbursement for bond-related projects.

In response to a question by Director Moravec regarding the costs of sludge removal by Magna Flow, Mr. Wright explained that such costs may be attributable to the installation and operation of the new digester. A lengthy discussion ensued. Mr. Barner and Director Moravec requested that Hays provide a revised cost estimate for sludge removal services to the Board and provide an update on the reasons for such costs at the August 8, 2018 meeting. Ms. Turner added that since she is about to begin preparation of the Wastewater Treatment Plant (“WWTP”) budget for fiscal year ending (“FYE”) 2019 that she be provided an estimate of sludge removal costs for the FYE 2019 too.

Ms. Turner then presented a summary of investment products that was prepared by MAC at the Board’s request, a copy of which is attached hereto. Discussion then ensued regarding such products, including treasury bills, bank certificates of deposit (“CDs”) and the Texas Class Local Government Investment Pool (“Texas Class”). Director Moravec indicated that he wants an updated draw down from the Engineer for the WWTP project in order to determine how best to manage investment of the District’s funds. Ms. Turner asked if the Board is interested in investing in Texas Class and Director Moravec responded that he will email his thoughts to Ms. Turner and Mr. Barner.

Upon a motion by Director Leasure, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board: 1) approved the Bookkeeper’s Report, as presented; 2) authorized payment of checks numbered 8372 through 88402 from the General Operating Fund; 3) authorized payment of checks numbered 1 796 through 1801 from the Sewage Treatment Plant Fund; and 4) authorized payment of checks numbered 1205 through 1206 from the Capital Projects Fund.

ENGINEER’S REPORT

Mr. Abshire presented the Engineer’s Report, a copy of which is attached hereto.

Regarding the Drainage Improvements, Mr. Abshire reiterated that work continues on finalizing the requisite easements. Mr. Abshire added that once all plan approvals obtained, JoneslCarter will proceed with advertising for construction bids. Discussion ensued regarding demolition of the properties located in Zone 1. Mr. Abshire recommended demolition of such properties as soon as possible and that costs for such demolition not exceed $75,000.

Director Moravec addressed Ms. Ausmus and explained that improving drainage within the District is a new matter for the Board and is not the District’s primary governmental function.

Director Moravec further explained that the District’s primary governmental functions are the provision of water and wastewater service within the District and that the Board recently decided to use its drainage authority to perform the Drainage Improvements after performing a drainage study at the request of its residents.

Mr. Abshire next reported that the advertising and bidding of the WWTP Project is underway and sealed bids must be received on August 7, 2018. Mr. Abshire stated that presenting bids for the WWTP Project at either the District’s regular meeting in August or a joint meeting with MUD 9 will allow the contractors more time to prepare bids. Discussed then ensued regarding dates for a joint meeting with MUD 9. MUD 9 Director Barron indicated that it might be possible to hold a joint meeting at the August 16, 2018 MUD 9 regular meeting and that he would discuss further with the MUD 9 Board and consultants at their July Board meeting.

Director Tryon explained the timing of the upcoming Walden Road Widening Project (the “Widening Project”) and reported that he had informed Montgomery County (the “County”) Commissioner Mike Meador that the WWTP Project would be under construction during the same time as the Widening Project. Director Tryon also reported that he had spoken with the Walden Community Improvement Association (“WCIA”) General Manager about providing a plan to Walden residents for alternative street routes during the construction of the Widening and WWTP Projects and that he would provide updates on such alternatives moving forward.

Mr. Abshire then requested the Board’s authorization to begin preparation of a bid package for the Water Plant Nos. 1 and 2 Improvements project. Mr. Abshire reminded the Board that the project is a result of the 2018 Water Plant Inspection that was presented at the February Board meeting. Mr. Abshire stated that the project will include miscellaneous touch-up coatings throughout both water plants. Mr. Abshire presented a cost estimate, a copy of which is attached to the Engineer’s Report. Mr. Abshire added that JIC anticipates having bid results available for review by the October Board meeting.

Mr. Abshire next discussed the City of Conroe’s (the “City”) plan review fee. A lengthy discuss ensued. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized Mr. Barner to prepare correspondence to the City informing the City that it was paying the plan review fee.

Mr. Abshire presented a summary of the District’s Drought Contingency Plan (“DCP”), a copy of which is attached hereto, and reviewed same with the Board. Mr. Barner stated that the Board needs to determine if the triggers in the DCP should be revised in order to meet desired water conservation goals. Director Moravec then discussed the Association of Water Board Directors Water Smart Program and asked the Operator and Engineer what needs to be done to join such program. Director Moravec recommended providing District customers with basic information concerning water usage and working with the WCIA and MUD 9 to conserve water. Director Barlow inquired about including information in the August WCIA Newsletter. Director Moravec stated that he would like to have a plan in place by the end of the year in order for the District to become a member of the Water Smart Program next in 2019. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the Engineer and Operator to review and recommend revisions to the DCP and initiate a plan to qualify for the Water Smart Program.

Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the Engineer’s Report, as presented, and authorized the Engineer to begin preparation of the bid package for Water Plant Nos. 1 and 2.

OPERATOR’S REPORT

Mr. Wright then presented the Operator’s Report, a copy of which is attached hereto. Mr. Wright reported that the combined water accountability for the District and MUD 9 was 95.32%. Mr. Wright next reported that the District had two (2) paid taps last month and the District has a total of 1,717 connections.

Mr. Wright next reviewed the list of service termination notices and noted that 168 such notices were mailed to customers and no delinquent accounts were terminated.

Mr. Wright presented the Monthly Operations Summary of WWTP and reported that the District is in compliance with the Texas Commission on Environmental Quality discharge permit. Mr. Wright reported that sludge was hauled once during the current year. Mr. Wright stated that he will analyze sludge removal costs for budgeting purposes.

Mr. Wright then presented the combined expenses for MCMUD 8 and MUD 9 and the bJune 2018 Billings and Collections Report, copies of which are attached to the Operator’s Report.

Director Moravec and Mr. Wright next discussed online bill payment and issues with timing of ACH withdrawals from customer bank account as it relates to the due date of water bills. Director Moravec recommended that such withdrawals be performed two (2) days before the due date. Director Moravec requested that Mr. Wright discuss such withdrawals further with Hays North staff in order to make sure information regarding the timing of such withdrawals was consistently communicated to customers.

Discussion then ensued regarding the garbage collection fee increase passed through the District’s customer bills on behalf of the Walden CIA.

Mr. Wright next presented the Groundwater Reduction Plan Monthly Operations Summary, a copy of which is attached to the Operator’s Report, and stated that the report was redesigned as discussed at the June Board meeting. Discussion ensued regarding Catahoula usage.
Mr. Wright then presented the Water Accountability Report, a copy of which is attached to the Operator’s Report, and asked if the Board would like to continue receiving this report. Mr. Wright stated that he will reformat the report and Director Patton indicated that he would like an activity report similar to the one provided to MUD 9.

Mr. Wright then presented the Alternative Water Supply Facilities Expense Report, a copy of which is attached to the Operator’s Report.

Mr. Wright reported that 36 customers signed up for online bill payments and e­statements during the past period. Mr. Wright discussed his conversations with A VR and First Billing. Mr. Wright reported that customers opting in for paperless billing will no longer receive paper bills.

Next, Mr. Wright reported that Hays North has acquired new equipment to better conduct valve surveys. Discussion ensued regarding location of valves. Mr. Wright stated that the cost of a proposed valve survey in the District would be approximately $34,000. Director Moravec requested a written proposal. Discussion ensued and it was the consensus of the Board that Hays North provide a written proposal for such survey.

Mr. Wright discussed the write-off list and reported accounts totaling $3,715. Director Barlow inquired about owner-occupied and rental properties. Mr. Wright stated that the report is generated every six ( 6) months. Director Barlow then asked if the District should consider increasing deposits. Discussion ensued.

Upon a motion by Director Barlow, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the Operator’s Report, as presented.

STATE AND LOCAL AGENCY REPORTS

MUD 9 Director Ban-on reported that a public meeting will be held by San Jacinto River Authority tonight at 6:30 p.m. regarding the level of Lake Conroe. Director Tryon stated that he will attend the meeting on behalf of the District.

MUD 9 REPORT

Director Leasure reported that MUD 9 is considering a possible November 2018 bond election that will be called in August 2018.

LAKE CONROE COMMUNITIES NETWORK (“LCCN”)

It was reported that a quarterly newsletter was requested from the LCCN, but no report has been received to-date.

WEBSITE REPORT

Director Patton reported that he has been working with Shannon Waugh to address Americans with Disabilities Act (“ADA”) website compliance. Mr. Barner discussed Off Cinco’s conversion of MS Word documents for publication on the District’s website. The Board tabled adoption of a resolution regarding compliance with ADA requirements until the Board has a better understanding of the documents on the District’s website.

EXECUTIVE SESSION

Pursuant to Chapter 551 of the Texas Government Code, Subchapter D, of the Open Meetings Act, the President called the executive session to order at 11 :56 a.m. to discuss matters within the attorney/client privilege and real estate. Present for all of portions of the executive session were the Board of Directors; Messrs. Peterson, Abshire and Barner; and Ms. Brewer. The Board declared the Executive Session was ended at 12:35 p.m.

RECONVENE IN OPEN SESSION

As of 12:35 p.m., the President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized the Attorney to negotiate acquisition of 11923 Thoreau as discussed in closed session.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned.