Meeting Minutes 2021-12-08

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

DECEMBER 8, 2021

The Board of Directors (the “Board” or “Directors”) of Montgomery County Municipal Utility District No. 8 (the “District” or “MUD 8”) met in regular session, open to the public, on Wednesday, December 8, 2021, 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
John L. Patton – Vice President
Margie Barlow – Secretary
Randolph C. Moravec – Treasurer / Investment Officer
Bob Leasure – Assistant Secretary

All members of the Board were present, thus constituting a quorum. Also attending were Maria Felder of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Conner Murphy of JoneslCarter (“Engineer” or “JoneslCarter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron and Robert Ginandt, Directors of Montgomery County Municipal Utility District No. 9 (“MUD 9”); and Elliot M. Barner, attorney, and Kathryn Cain, paralegal, of Radcliffe Bobbitt Adams Polley PLLC (“Attorney” or “RBAP”).

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

The President first opened the meeting to public comment. There being no public comments, the President directed the Board to proceed with the agenda.

APPROVAL OF MINUTES OF NOVEMBER 10, 2021 REGULAR MEETING

The President next directed the Board to the approval of the November 10, 2021 regular meeting minutes. Director Moravec requested that such minutes be revised to reflect that it was the consensus of the Board not to request quotes from insurance providers until next year when the District will have a better idea of the new Wastewater Treatment Plant’s (“WWTP”) value and the cost of operating such WWTP. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the November 10, 2021 regular meeting minutes, subject to the above-noted corrections.

Director Patton then reminded the Board that it previously authorized the suspension of the one-time incentive of $12.00 for enrollment in paperless billing as of January 1, 2022. Director Patton stated that Hays North was instructed to include a message in customers’ bills announcing the suspension of such incentive program; however, such message was not included in such bills. Director Patton further stated that following the presentation of the Operator’s Report, he will make a motion to extend such program for one (1) more month in order to provide customers with adequate notice of the suspension of such program.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reported that the Tax Assessor-Collector’s Report is not yet available for the month of November 2021. Ms. Felder stated that such report will be presented at the next regular Board meeting.

BOOKKEEPER’S REPORT

Ms. Felder next reviewed the Bookkeeper’s Report, a copy of which is attached hereto, including the current fund balances, expenditures and investments.

Ms. Felder then reminded the Board that MAC erroneously transferred $400,000 from the District’s General Operating Fund to the District’s debt service fund based upon a recommendation made by the District’s Financial Advisor during the presentation of his tax rate study at the August 11th Board meeting. Ms. Felder stated that pursuant to the Board’s instruction, such transfer was reversed.

Ms. Felder next reported that several checks are not included on such report but were submitted to the Directors for approval and will be reflected on such report for the January 12th Board meeting, including a check payable to RBAP for legal fees, two (2) checks requested by JonesJCarter for the pre-purchase of equipment for the Motor Control Center Replacement Projects for both the Poe Street Water Plant and the Browning Street Water Plant (the “MCC Projects”), a check payable to the Walden Yacht Club for the District’s Christmas dinner party, a check payable to Bleyl Engineering relating to the Catahoula Water Well and a check payable to the Texas Commission on Environmental Quality (the “TCEQ”) for payment of certain fees.

Director Moravec then discussed certain revisions that he made to the previously circulated drafts of the District’s budgets for the Fiscal Year Ending (“FYE”) December 31, 2022. Director Moravec reported that he increased the amount of funds budgeted for certain line items in which the District was overbudget for the FYE December 31, 2021. Director Moravec then noted that the amount of the District’s debt service payments will increase next year due to the District’s Series 2018 Bonds.

Director Moravec next reminded the Board that as the District’s Investment Officer, he is required to attend four (4) hours of training related to the Public Funds Investment Act. Director Moravec then reported that he completed such training by taking courses offered through TexPool.

Upon a motion by Director Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board: 1) approved the Bookkeeper’s Report, as presented; and 2) authorized payment of checks detailed therein.

ADOPT ORDER AUTHORIZING THE USE OF SURPLUS CAPITAL PROJECT FUNDS

Mr. Barner then reported that following payment of the final invoices for the ground storage tank rehabilitation project at the Buckingham Water Plant, $66,200.07 remains in the District’s Series 2012 Bond Fund. Mr. Barner presented a Resolution Authorizing Use of Surplus Capital Project Funds and explained that the remaining surplus funds may be reallocated to provide additional funds for the WWTP Improvement Project.

In response to a question from Director Moravec regarding how the reallocation of such funds will be reflected in the Bookkeeper’s Report, Ms. Felder stated that such report will show a transfer of surplus funds from the Series 2012 Bond Fund to the Series 2018 Bond Fund.

Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board adopted the Resolution Authorizing Use of Surplus Capital Project Funds.

APPROVE ORDER ADOPTING BUDGET (GENERAL FUND) FOR FYE DECEMBER 31, 2022

The Board then discussed various line items in the District’s General Operating Fund budget for the FYE December 31, 2022. Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Order Adopting Budget for the FYE December 31, 2022.

In response to a question from Mr. Barron regarding any potential increase in the amount of the District and MUD 9’s insurance premiums to insure the new WWTP, Mr. Abshire stated that the District’s current insurance policy does not expire until March 2022. Mr. Abshire further reminded the Board and Mr. Barron that prior to the expiration of the policy for each year, JoneslCarter provides information to the District’s insurance provider regarding the value of the District’s facilities, including the new WWTP.

APPROVE ORDER ADOPTING THE WWTP’S BUDGET FOR FYE DECEMBER 31, 2022

Director Moravec stated that a draft of such budget was provided to the Board for review. Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Order Adopting Budget for the WWTP for the FYE December 31, 2022.

CONFIRM ENGAGEMENT OF AUDITOR FOR PREPARATION OF AUDIT FOR FYE DECEMBER 31, 2021

Mr. Barner reminded the Board that the District is in the second (2nd) year of its two (2)-year engagement agreement with McCall Gibson Swedlund Barfoot PLLC to perform the District’s audits for the FYEs December 31, 2020 and December 31, 2021. Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board confirmed its engagement of McCall Gibson Swedlund Barfoot PLLC to prepare the District’s audit for FYE December 31, 2021.

UPDATE ON STATUS OF REVIEW OF RATE ORDER

Director Moravec reminded the Board that the District is not recovering from customers the full amount of fees charged to the District by the Lone Star Groundwater Conservation District (the “LSGCD”). Director Moravec stated his recommendation that the District charge customers
$0.20 per 1,000 gallons of water to recover the full amount of such fees.

Director Moravec then recommended amending the District’s Rate Order to reflect that a monthly fee of $1.00 will be assessed for customers who receive billing statements by mail.

Next, Director Moravec recommended that the District establish a new water usage tier of 50,000 gallons per month with a rate between $6.00 and $8.00 per 1,000 gallons. Extensive discussion then ensued regarding the water rates charged by the District and MUD 9 and the number of customers who would be affected by such new usage tier.

Upon a motion by Director Barlow, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board authorized amending the District’s Rate Order, effective January 1, 2022, to: 1) charge customers $0.20 per 1,000 gallons of water forthe LSGCD fees; 2) assess a fee of $1.00 per month for customers who receive billing statements by mail; and
3) establish a water usage tier of 50,000 gallons at a rate of $6.00 per 1,000 gallons.

Director Patton then stated that he and Director Moravec will coordinate with Hays North regarding including a notice in customers’ next water bills regarding the suspension of the one-time incentive of $12.00 for enrollment in paperless billing and implementation of the monthly $1.00 fee assessed for customers who receive billing statements by mail. Director Barlow stated that she will include an article in the community newsletter informing customers of the implementation of such fee.

ENGINEER’S REPORT

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

Mr. Abshire next updated the Board on Allco, LLC’s (“Allco”) progress over the past month regarding the WWTP Project. Mr. Abshire reported that Phase I of such project is nearing substantial completion. Mr. Abshire reminded the Board that Allco submitted to Jones!Carter an acceptable startup plan for the WWTP, and added that the one (1)-month demonstration period is

expected to begin in early January. In response to a question from Director Moravec regarding liquidated damages due to the District from Allco for the period oftime for which such project is delayed past the originally scheduled completion date, Messrs. Abshire and Barner explained the provisions related to such damages found in the District’s contract with Allco. Mr. Abshire stated that he will provide the Board with a summary of such damages incurred by the District.

Mr. Abshire then presented Allco’s Pay Estimate No. 34 in the amount of $101,498.05 for work performed on the WWTP Project and recommended payment of the same.

Mr. Abshire then reminded the Board that the District’s current Texas Pollution Discharge Elimination System (“TPDES”) permit for the WWTP expires on June 1, 2022, and that the renewal application was due to the State 180 days before expiration, or by December 3, 2021. Mr. Abshire reported that JoneslCarter completed the TPDES permit renewal application and submitted such application to the TCEQ on behalf of the District.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that the contractor has addressed all outstanding items. Mr. Abshire then presented AR Turnkee Construction Co.’s (“AR Turnkee”) Pay Estimate No. 3 and Final in the amount of $109,754.00, which includes retainage, and recommended payment of the same.

Next, Mr. Abshire updated the Board regarding the cleaning and televising of a certain portion of the District’s wastewater collection lines. Mr. Abshire reported that Texas Pride Utilities, LLC (“Texas Pride”) completed the cleaning and televising work and submitted videos related to such work for JoneslCarter’s review. Mr. Abshire further reported that once such videos are reviewed by JoneslCarter, some portions of the District’s wastewater collection lines may require re-televising by Texas Pride.

Mr. Abshire then updated the Board on the MCC Project for the Poe Street Water Plant (Water Plant No. 1) (the “Poe Street MCC Project”). Mr. Abshire reported that the design plans for such project were submitted to Montgomery County (the “County”) for review, and added that JoneslCarter expects to receive the County’s approval of such plans prior to the Board’s next regular meeting. Mr. Abshire then requested authorization from the Board to advertise such project for bids upon receipt of the County’s approval of the design plans. Mr. Abshire next reminded the Board that it previously authorized the pre-purchase of certain equipment for the Poe Street MCC Project. Mr. Abshire then reported that JoneslCarter is coordinating with the Bookkeeper to submit a deposit to Eaton for 50% of the cost to purchase such equipment.

Mr. Abshire next updated the Board on the MCC Project for the Browning Street Water Plant (Water Plant No. 2) (the “Browning Street MCC Project”). Mr. Abshire reported that the design plans for such project were submitted to the County for review; however, JoneslCarter intends to delay advertising such project for bids until June 2022. Mr. Abshire next reminded the Board that it previously authorized the pre-purchase of certain equipment for the Browning Street MCC Project. Mr. Abshire then reported that JoneslCarter is coordinating with the Bookkeeper to submit a deposit to Eaton for 50% of the cost to purchase such equipment.

Next, Mr. Abshire reminded the Board that the America’s Water Infrastructure Act of2018 requires water districts serving more than 3,300 customers to develop an Emergency Response Plan (“ERP”). Mr. Abshire reported that JonesJCarter completed such ERP and, upon approval of the Board, will certify completion of the same prior to the deadline of December 26th•

The Board took a briefrecess from 10:10 a.m. to 10:15 a.m.

Mr. Abshire then reported that pursuant to Senate Bill 3, all water districts in Texas are required to submit an Emergency Preparedness Plan (“EPP”) to the TCEQ by March 1, 2022. Mr. Abshire reported that JonesJCarter is preparing such EPP on behalf of the District.

Mr. Abshire next reminded the Board that the TCEQ requires the District to inspect its water plants on an annual basis. Mr. Abshire reported that the previous inspection of Water Plant Nos. 1 and 2 was performed in January 2021. Mr. Abshire then presented a memorandum detailing the proposed scope, fee and schedule for such inspection. Mr. Abshire reported that an inspection of both of the District’s water plants will cost a total of $7,100.00 and added that such funds are included in the District’s budget for the FYE December 31, 2022. Discussion ensued regarding splitting the cost with MUD 9 for the inspection of the Browning Street Water Plant. Director Patton recommended that the District fund the full cost for inspection of such water plant and suggested that MUD 9 fund the full cost for the inspection of the Buckingham Water Plant when it is inspected later this year.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board: 1) approved the Engineer’s Report; 2) approved Allco’s Pay Estimate No. 34 in the amount of $101,498.05; 3) approved AR Turnkee’s Pay Estimate No. 3 and Final in the amount of$109,754.00; 4) authorized JonesJCarter to advertise the Poe Street MCC Project; 5) authorized JoneslCarter to certify completion of the ERP to the U.S. Environmental Protection Agency; and 6) authorized JoneslCarter to proceed with inspection of Water Plant Nos. 1 and 2.

Mr. Barron then reported that the rehabilitation of the Buckingham Water Plant is almost complete. Mr. Barron further reported that MUD 9 scheduled an inspection of the ground storage tank at such water plant at a cost of $5,000.00 and stated that MUD 9 may request that the District share the cost of such inspection.

Mr. Abshire then requested direction from the Board regarding the inclusion of a clause pertaining to liquidated damages in the contracts for the Poe Street MCC Project and Browning Street MCC Project. Discussion ensued regarding the structure of such liquidated damages clause and possible inclusion in such contracts of certain incentives for completing such projects ahead of schedule.

OPERATOR’S REPORT

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

Mr. Wright then reported that 567 customers are receiving electronic billing statements, which is an increase of 13 customers from last month. In response to a question from Director Patton regarding the number of total online transactions reflected in the Operator’s Report, Mr. Wright stated that he will confirm the type of transactions included in such number.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 97.42%. Mr. Wright further reported that there was one (1) new tap last month and that the District has a total of 1,798 connections.

Mr. Wright then reported that the water level in the Jasper Aquifer increased, while the water level in the Catahoula Aquifer remains steady.

Mr. Wright next reminded the Board that the tap fee charged to the District by Hays North is increasing ten percent (10%) in 2022.

Mr. Wright then discussed the Notable Activity Report contained within the Operator’s Report, and noted that within the past month Hays North repaired a valve on one (1) of the District’s water main lines and vactor cleaned a digester and hauled sludge at the WWTP.

Next, Mr. Wright reported that a home is being built on the property adjacent to the Walden Estates Lift Station. Mr. Wright further reported that the electrical panel for such lift station was installed close to the property line and faces such adjacent property. Mr. Wright went on to report that the developer intends to construct a fence along such property line, which does not allow for three (3)-feet of working space in front of such panel as required by the National Electrical Code. In response to a question from Director Patton, Mr. Barner explained that the District can request that such developer not construct the fence along the property line in front of the electrical panel, but noted that the District cannot prohibit such developer from constructing the fence in such location. Director Patton then stated that if such developer proceeds with his plans to construct a fence along such property line, the District will need to rotate the electrical panel so that it faces toward the lift station.

Mr. Wright then reported that the Texas Railroad Commission recently issued recommendations regarding safeguarding propane tanks, including the installation of bollards to protect tanks from damage by vehicles. Mr. Wright requested authorization from the Board to install bollards and expand the driveway for the Lift Station located near 3010 Chaucer Drive in order to prevent damage to the propane tank located at such site.

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board: 1) approved the Operator’s Report, as presented; 2) authorized Hays North to request that the developer of the property adjacent to the Walden Estates Lift Station avoid installing a fence along the property line directly in front of the electrical panel, and alternatively, to rotate the electrical panel if the fence will be installed in such location; 3) authorized Director Patton to coordinate with Hays North regarding the inclusion of a message in customers’ bills regarding the suspension of the one-time incentive of $12.00 for enrollment in paperless billing and implementation of the monthly $1.00 fee assessed for

customers who receive billing statements by mail; and 4) authorized Hays North to widen the driveway and install bollards at the Lift Station located near 3010 Chaucer Drive.

REVIEW AMENDMENT TO OPERATOR’S CONTRACT AND FEE SCHEDULE

Mr. Wright then presented a proposed amendment to the District’s Professional Service Agreement with Hays North and explained that Hays North’s service fees are increasing by ten percent (10%). Mr. Barner next explained that the Texas legislature recently passed statutes requiring that contracts entered into by governmental entities include language regarding boycotting of certain industries and foreign countries. Mr. Barner stated that the Professional Service Agreement was additionally amended to include such language. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the amendment to the District’s Professional Service Agreement with Hays North.

Director Moravec exited the meeting at this time.

In response to a question from Mr. Wright, the Board stated that it wished to defer termination of service to delinquent accounts during the month of December.

Director Moravec re-entered the meeting at this time.

UPDATE ON STATUS OF ASSOCIATION OF WATER BOARD DIRECTORS (“AWBD”) WATER SMART APPLICATION

Mr. Wright stated that the District must hold one (1) public event to satisfy the AWBD’s requirements for participation in the Water Smart program. Mr. Wright then reminded the Board that the District satisfied such requirement earlier in the year. Mr. Wright further stated that Hays North will submit the Water Smart application to the AWBD on behalf of the District prior to the deadline in March 2022. Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized Hays North to submit an application on behalf of the District for inclusion in the AWBD’s Water Smart program.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton next reminded the Board that it previously authorized the development of a joint website with MUD 9. Director Patton reported that he continues to coordinate with Mr. Ginandt and Off Cinco regarding the layout and information to be included on such joint website. Mr. Barner stated that RBAP is coordinating with Off Cinco and MUD 9’s attorney to finalize a joint agreement between Off Cinco and both districts for the development and maintenance of the joint website.

MISCELLANEOUS REPORTS

Director Leasure then reported that during their most recent Board meeting, MUD 9 amended its Rate Order to charge customers $0.20 per 1,000 gallons of water for the LSGCD fees. Director Leasure further reported that MUD 9 adopted its budget for the FYE December 31, 2022.

Director Leasure next reported that during MUD 9’s Board meeting, MAC discussed their new fee structure. Mr. Barner stated that MAC has not provided the Board with a proposed amendment to the District’s service agreement with MAC; therefore, the new billing structure has not yet taken effect. In response to a question from Director Leasure regarding recent changes to MAC’s invoices, Director Moravec and Mr. Barner stated that they will reach out to MAC regarding such changes and the implementation of MAC’s new fee structure.

ATTORNEY’S REPORT

Mr. Barner reported that RBAP is coordinating with the Hays North to finalize the contract between the WCIA and the District for the maintenance of the grounds at various District facilities. Mr. Barner then reminded the Board that the WCIA is already maintaining such grounds, but that he is coordinating with Hays North to identify all of the properties that the WCIA is maintaining.

Mr. Barner next reported that he is coordinating with the WCIA to finalize an agreement between the District and the WCIA relating to collection of solid waste. Mr. Barner reminded the Board that the existing agreement for solid waste collection is between the WCIA and Hays North’s predecessor. In response to a question from Director Moravec regarding how the District is reimbursed for costs incurred related to the collection of solid waste, Mr. Barner explained that under the current contract, Hays North pays the WCIA the money that it collects through the District’s water bills for the collection of such waste.

Mr. Barner then reminded the Board of the WCIA’s claim that the District owes maintenance fees on certain tracts of land located within the District. Mr. Barner further reminded the Board that RBAP sent a letter to the WCIA requesting that they waive such fees. Mr. Barner stated that based on statements the WCIA General Manager made in the District’s previous Board meeting, that the WCIA’s Board of Trustees is reviewing such request.

Mr. Barner next stated that he will coordinate with the District’s consultants regarding the procedures for maintaining the District’s records pursuant to the new guidelines issued by the State of Texas.

REVIEW AMENDMENT TO GENERAL COUNSEL’S CONTRACT AND FEE SCHEDULE

Mr. Barner then presented for the Board’s review an updated Attorney Fee Agreement for General and Bond Counsel Services (the “Fee Agreement”). Discussion ensued regarding such rates. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Fee Agreement as presented.

RENEW MEMBERSHIP IN AWBD

The Board next discussed renewing the District’s membership in the AWBD. Upon a motion by Director Barlow, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized the renewal of the District’s membership in AWBD and authorized payment of same.

AUTHORIZE EMINENT DOMAIN REPORTING COMPLIANCE PURSUANT TO TEXAS GOVERNMENT CODE, SECTION 2206.151-157, AS AMENDED

Mr. Barner then reported that RBAP will file the required annual eminent domain report on behalf of the District pursuant to Texas Government Code, Section 2206.151-157, as amended. Mr. Barner explained that the report includes information related to the District’s authority to exercise its power of eminent domain and must be filed by no later than February 1st of each year. Upon a motion by Director Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board authorized RBAP to file the required annual eminent domain report pursuant to Texas Government Code, Section 2206.151-157, as amended.

ELECTION AGENDA

Mr. Barner then reminded the Board that a directors election is scheduled to be held on Saturday, May 7, 2022 (the “Election”), and that such election will be for positions held by Directors Leasure, Barlow and Moravec, since such positions’ terms of office are due to expire. Mr. Barner stated that candidate packets will be provided to each of the incumbents in the next few weeks.

Mr. Barner discussed the appointment of a designated agent for the Election to perform the duties set forth in Sections 31.122 and 31.123 of the Texas Election Code, as amended. Mr. Barner explained that a copy of the Notice of Appointment of Designated Agent will be posted at the Walden Yacht Club, the offices of Radcliffe Bobbitt Adams Polley PLLC and the District’s website.

Next, Mr. Barner reported that the District must post the Notice of Deadline to File Applications for Place on the Ballot no later than Monday, December 20, 2021. Mr. Barner also reported that the first day to file an application for a place on the ballot is January 19, 2022, and the last day to file an application for a place on the ballot is 5:00 p.m. on February 18, 2022.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board appointed RBAP as the District’s designated agent for the Election; and 2) authorized posting the Notice of Deadline according to applicable law governing such notices.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:36 a.m.

PASSED AND APPROVED this the 12th day of January, 2022.