Meeting Minutes 2018-08-08

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

AUGUST 8, 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, August 8, 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, to­wit:

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, except for Director Tryon. Also attending were Katherine Turner of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire of JoneslCarter (“Engineer” or “JoneslCarter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Corey Howell of The GMS Group, LLC (“Financial Advisor” or “GMS”); 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 Vice 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.

DRAINAGE REPORT

First, Mr. Barner reported that he anticipates the easements needed from the San Jacinto River Authority (“SJRA”) for the Drainage Improvements Project (the “Drainage Improvements”) will be received within the next week. Mr. Barner added that after such easements are received, the District only needs two (2) more easements from property owners. Mr. Barner added that such owners are waiting on consent from mortgage companies for those easements.

Mr. Abshire reminded the Board and the members of the public in attendance that all the easements must be received before the Drainage Improvements are advertised. Mr. Abshire further reminded everyone that such improvements must be advertised in order for contractors to have the opportunity to bids for construction of such improvements and that he hopes that the Board will be able to authorized such advertising at the September 12, 2018 Board meeting.

In response to a question regarding the certain property acquired by the District for the Drainage Improvements, Mr. Abshire indicated that he is preparing a bid package for demolition of the houses on such property and will present bids at the September 12, 2018 Board meeting.

Mr. Howell presented his tax rate study for the proposed 2018 tax rates (the “Tax Rate Study”), a copy of which is attached hereto. Mr. Howell discussed the Tax Rate Study, which included a total ad valorem tax rate of $0.33 per $100 of assessed value for the year 2018 that is comprised of $0.23 per $100 assessed valuation for debt service purposes and $0.10 per $100 assessed valuation for operation/maintenance (“O&M”) purposes. Extensive discussion then ensued regarding the Tax Rate Study, including: 1) how much each component of the rate should be for the 2018 tax year; 2) legal requirements related to the amount of such components; 3) the amount of O&M revenue the District should maintain annually; and 4) publication requirements for tax rates.

Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized: 1) publication of the proposed 2018 tax rate at $0.3 3 per $ 100 of assessed value in the Conroe Courier; and 2) setting the public hearing regarding setting such rate at the regular meeting of Wednesday, September 12, 2018, at 9:00 a.m.

APPROVAL OF MINUTES

The Vice President next directed the Board to the approval of the July 11, 2018 regular meeting minutes. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the July 11, 2018 regular meeting minutes.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Turner reported that she did not receive a Tax Assessor-Collector’s Report for the month of July 2018.
Next, Mr. Barner reported that Ms. Turner provided him with information related to delinquent tax accounts for the 2017 tax year. Mr. Barner reminded the Board that RBAP has drafted letters to send to holders of such accounts to notify them that they are eligible for termination of their water service accounts in the event they do not pay the delinquent taxes or make payment arrangements for payment of such taxes.

Upon a motion by Director Barlow, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized RBAP to send letters to delinquent accountholders notifying them that the Board will hold a public hearing to consider termination of water accounts for customers with delinquent tax accounts at 9:00 a.m. on Wednesday, September 12, 2018.

BOOKKEEPER’S REPORT

Ms. Turner first discussed cutting off one (1) week before the meeting and sending the Bookkeeper’s Report to the Board one (1) week before the meeting. Discussion ensued regarding bill payments. Ms. Turner stated that the Bookkeeper’s contract with the District indicates the report is due five (5) days before the meeting. Director Moravec stated that the Bookkeeper’s contract will need to be amended. After discussion, it was the consensus of the Board for consultants to send reports to the Board on the Friday before the meeting.

Mr. Howell exited the meeting at this time.

In response to a question, Mr. Wright discussed the Operator’s bill and report and stated  that his goal is to get reports distributed to the Board on the Friday before the regular meeting.

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

Ms. Turner next reviewed a Snap Shot Financial Report as of August 8, 2018, and a Revenue and Expenditure Comparison for 2017 and 2018 as of August 8, 2018, copies of which are attached to the Bookkeeper’s Report. Discussion ensued regarding the process for transferring Capital Project Funds to the Sewer Treatment Plant Fund.

Director Moravec stated that he had spoken with a representative of Texas Class Intergovernmental Investment Pool (“TX. Class”) and recommended having TX. Class make a presentation to the Board at the September 12, 2018 Board meeting to determine whether or not the Board wished to invest funds in TX. Class.

Ms. Turner reported that she had spoken with Mark Burton about federal investments. Discussion ensued regarding Securities Exchange Commission regulations concerning investment of bond funds in such investments. Mr. Barner requested that Ms. Turner provide additional information regarding the restrictions Mr. Burton explained to her and recommended having additional conversation with Mr. Howell about the matter.

Ms. Turner next presented the Quarterly Investment Inventory Report for the Period Ending June 30, 2018, a copy of which is attached hereto. Ms. Turner reported that interest earned is $16,023.08 and no total net yield was prepared.

Upon a motion by Director Patton, seconded by Director Barlow, 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 8403 through 8432 from the General Operating Fund; 3) authorized payment of checks numbered 1802 through 1807 from the Sewage Treatment Plant Fund; and 4) authorized payment of checks numbered 1207 through 1210 from the Capital Projects Fund.

ENGINEER’S REPORT

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

Mr. Abshire next reported that JoneslCarter is scheduled to receive sealed proposals for the Wastewater Treatment Plant (“WWTP”) Expansion Project (the “WWTP Project”) on August 14, 2018. Mr. Abshire also reported that JoneslCarter will present bid results, including the results of each bidder’s score at the August 16, 2018 joint meeting with MUD 9. Discussion ensued regarding questions related to clarification of the WWTP Project specifications. Mr. Abshire indicated that he expects to receive four (4) to five (5) bids for the WWTP Project. Mr. Abshire stated that he would like the District and MUD 9 Boards to award the contract at the joint meeting and noted that the City of Conroe’s (the “City”) approval was expected in the next couple of weeks, Mr. Abshire then reported that work continues on the bid package for the Water Plant Nos. 1 and 2 Improvements project. Mr. Abshire reminded the Board that the WWTP Project is a result of the 2018 Water Plant Inspection that was presented at the February Board meeting.

Mr. Abshire then reviewed with the Board that the Capital Project Schedule, a copy of which is attached hereto.

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

Mr. Abshire presented preliminary Stage Triggers of the District’s Drought Contingency Plan (“DCP”), a copy of which is attached hereto, and reviewed same with the Board. Mr. Abshire noted that such Stage Triggers are strictly for the Board’s review. Director Patton inquired regarding hours of irrigation and the method of notifying the community about the triggers. Extensive discussion ensued.

OPERATOR’S REPORT

Mr. Wright presented the Operator’s Report, a copy of which is attached hereto.

In response to a question, Mr. Wright discussed the WWTP budget line item for sludge hauling and reported that since installation of the new digesters, sludge has been hauled twice a year. Discussion ensued regarding budget preparation for the WWTP and Mr. Wright indicated that $62,000 should be budgeted for sludge hauling. Mr. Barner suggested scheduling a budget workshop to discuss the fiscal year ending (“FYE”) 2019 budget in more detail. Director Moravec stated that he would like to see a five (5) year budget projection. Ms. Turner discussed the timeline and review before the Board adopts the FYE 2019 budget.

In response to a question, Mr. Wright next reported that Hays North will track the number of customers requesting e-statements and making online payments and include such information in the Operator’s Report. Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 95.24%. Mr. Wright then reported that the District had no new water taps last month and the District currently has a total of 1,720 connections.

Mr. Wright next reviewed the list of service termination notice, noting that 155 of such notices were mailed to customers and one (1) delinquent account was terminated.

Mr. Wright presented the Monthly Operations Summary of the WWTP and reported that the District is in compliance with the Texas Commission on Environmental Quality discharge permit.

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

Mr. Wright next presented the Groundwater Reduction Plan Monthly Operations Summary, a copy of which is attached to the Operator’s Report. Discussion ensued regarding the fee based upon permitted usage. In response to a question from Director Moravec, it was reported that the District does not pay fees to the San Jacinto River Authority since the District has its own groundwater reduction plan.
Mr. Wright then presented the Water Accountability Report and stated that he will change the format of such report.

Mr. Wright discussed the process for testing water meter accuracy in the District. Director Moravec recommended that Hays North prioritize testing of such meters in order of size, with the District’s larger meters being tested first.

Mr. Wright presented the Alternative Water Supply Facilities Expense Report, a copy of which is attached to the Operator’s Report, and reported that the air conditioner was replaced in the control room due to motor/compressor failure.

Mr. Wright next presented the Notable Activity Report, a copy of which is attached to the Operator’s Report, and reported that repair of the eight-inch (8″) water main is not complete.

Mr. Wright explained the lead and copper testing process.

At this time, Mr. Wright presented a Valve Survey and Report Proposal (the “Proposal”), a copy of which is attached hereto. Mr. Wright explained to the Board the process for locating water valves. Discussion ensued. Director Moravec suggested the Board consider modifying the contract with Hays North to include conducting the valve survey on a monthly basis. In response to a question from Director Moravec, Mr. Wright stated that Hays North typically performs the water valve survey every two (2) years which is similar to the flushing valve inspection process.

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

WATER SMART PROGRAM

Mr. Wright presented Goals of the Water Smart Program, a copy of which is attached hereto, and reviewed the Application Checklist. Discussion ensued about increasing the District ‘s water rate structure. Mr. Wright discussed various options for events in the community. Director Barlow asked about a school presentation regarding water conservation. Director Moravec volunteered to give a presentation at a men’s club meeting. Director Patton reminded the Board that information regarding water conservation is published on the District’s website. Mr. Wright stressed the importance of Director participation in the Water Smart Program. Discussion next ensued about a “new resident” package and water logo signage.

MUD9REPORT

MUD 9 Director Barron reported that MUD 9 received a request to provide water and sewer service to a new restaurant on Walden Road.

WEBSITE REPORT

Director Patton provided the Website Report and stated that District customers are encouraged to use e-statement and e-billing services.
Mr. Barner reported that he sent a compliance statement regarding the Americans with Disabilities Act to Shannon Waugh at Off Cinco and he awaits comments.

Mr. Barron, Ms. Turner, Mr. Wright and Mr. Abshire exited the meeting at this time.

EXECUTIVE SESSION

Pursuant to Chapter 551 of the Texas Government Code, Subchapter D, of the Open Meetings Act, the Vice President called the executive session to order at 12: 13 a.m. to discuss matters within the attorney/client privilege and real estate. Present for all or portions of the executive session were the Board of Directors, Mr. Barner and Ms. Brewer. The Board declared the Executive Session was ended at 12:34 p.m.

RECONVENE IN OPEN SESSION

As of 12:34 p.m., the Vice President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Barlow, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board concurred to MUD 9’s settlement with Alsay Incorporated as discussed in closed session.

Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board authorized Mr. Barner to communicate with Montgomery County ESD No. 2 as discussed in closed session.

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

August 8, 2018 Minutes Signature