Meeting Minutes 2020-01-08

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

JANUARY 8, 2020

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, January 8, 2020, 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 – Assistant Secretary
Bob Leasure – Director

All members of the Board were present. Also attending were Katherine Turner of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire of Jones|Carter (“Engineer” or “Jones|Carter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); and Elliot M. Barner, attorney, and Diane F. Brewer and Kathryn Cain, paralegals, 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

The President first opened the meeting to public comment. District resident, W. T. Beran, inquired regarding the District’s Wastewater Treatment Plant (“WWTP”) and whether or not selling the effluent from such plant was feasible as opposed to discharging it to Lake Conroe. A brief discussion ensued regarding the costs of treatment of such effluent prior to discharging it into Lake Conroe compared to costs associated for treatment of effluent for other uses.

Mr. Barner then introduced Ms. Cain to the Board.

There being no further public comments, the President directed the Board to proceed with the agenda.

APPROVAL OF MINUTES OF NOVEMER 25, 2019 SPECIAL MEETING AND DECEMBER 11, 2019 MEETING

The President next directed the Board to the approval of the November 25, 2019 special meeting and December 11, 2019 regular meeting minutes. Director Moravec discussed his recommended changes to the December 11, 2019 minutes related to the addition of Phase II of the Drainage Improvements Project (the “Drainage Improvements”) to the General Operating Fund Budget for Fiscal Year Ending (“FYE”) December 31, 2020.

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 25, 2019 special meeting minutes, as presented, and approved the December 11, 2019 regular meeting minutes, subject to certain changes.

In response to a question regarding recently enacted legislation concerning the audio recording of certain meetings held by governmental entities, Mr. Barner clarified that such meetings are limited to meetings where such entities are adopting a tax rate and a member of the public submits a written request at least 72 hours prior to such meeting.

BOOKKEEPER’S REPORT

Ms. Turner next 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 District’s budget for the fiscal year ended December 31, 2019.

Ms. Turner reviewed a Snap Shot Financial Report as of January 8, 2020, and Revenue and Expenditure Comparison for 2018 and 2019 as of January 8, 2020.

In response to a question, Ms. Turner confirmed that all of the Directors are registered for the Association of Water Board Director’s 2020 Annual Conference.

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; 2) authorized payment of checks numbered 8943 through 8973 from the General Operating Fund; 3) authorized payment of checks numbered 1918 through 1923 from the WWTP Fund; 4) authorized payment of checks numbered 1268 through 1273 from the Capital Projects Fund; and 5) authorized payment of check number 1061 from the Tax Account.

In response to a question, Mr. Wright then explained a check payable to MUD 9 for certain Buckingham Catahoula Well repairs performed by Hays North.

ENGINEER’S REPORT

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

Regarding the WWTP Improvement Project (the “WWTP Project”), Mr. Abshire reported that Allco, LLC (“Allco”) continues to work on the Sequencing Batch Reactor (“SBR”) basins, setting and removing forms for the basin walls and pouring concrete. Mr. Abshire presented information related to recent onsite meetings with Allco, a copy of which is attached to his report, and indicated that the next meeting is scheduled for January 27, 2020. Mr. Abshire stated that the contract period for Phase I of the WWTP Project began on January 2, 2019, and is scheduled to end in 480 calendar days, which is in April 2020.

Mr. Abshire next reported that he has requested Allco that it be allowed to store certain project materials onsite and went on to explain Jones|Carter’s concern that such materials will not be used until 2021. Mr. Abshire went on to report that Allco has also requested payment for such materials once they are stored onsite. Mr. Abshire added that Allco is looking for a third-party warehouse for materials storage. Director Patton inquired regarding liability for storage of materials at a third-party facility. Mr. Barner recommended that the District examine options for ensuring such materials are sufficiently insured and secured during such storage.

Mr. Abshire then updated the Board on the status of concrete pouring for the WWTP Project and what portions of such project has been completed to-date. In response to a question, Mr. Abshire reported that Allco is several months behind the schedule set forth in the contract for the WWTP Project.

Mr. Abshire presented Allco Pay Estimate No. 11 in the amount of $765,346.51.

Regarding the status of completion of Phase I of the Drainage Improvements, Mr. Abshire reported that Rebel Contractors, LLC (“Rebel”) is scheduled to begin certain driveway modifications at 11719 Thoreau Drive on January 10, 2020, and complete such modifications by January 13, 2020. A discussion ensued regarding final costs and whether the District should enter into a new contract with Rebel or if Rebel should submit a change order for final costs. Mr. Abshire recommended a change order.

Next, Mr. Abshire reported that the storm sewer rehabilitation project which is part of the Drainage Improvements is completed for Zones 3 and 4 along Thoreau Drive. Mr. Abshire also reported that while performing such project in Zone 4, private drainage connections from residential properties adjacent to the existing storm sewer lines were discovered. Mr. Abshire explained that such connections were prohibited and reported that he has spoken with the owners of such properties to explain that such owners should contact an engineer to review private drainage issues.

Mr. Abshire then presented: a) JD Poole Pay Estimate No. 2 and Final in the amount of $68,100; and b) Texas Pride Utilities, LLC (“Texas Pride”) Pay Estimate No. 1 and Final in the amount of $92,522.

Regarding the Drainage Improvements, Phase II, Mr. Abshire reported that Jones|Carter is currently underway with the design of such improvements. Mr. Abshire then presented the current schedule showing projected milestones for the project.

Mr. Abshire next reported that Jones|Carter is in the process of modeling drainage options for potential joint drainage improvements with MUD 9 along the natural gas pipeline easement located near Heatherglen.

Mr. Abshire updated the Board regarding the MUD 9 Buckingham Water Plant Project and reported that the Notice to Proceed was issued to Gemini Contracting on November 4, 2019. Mr. Abshire added that site work began with demolition of the existing structures. Mr. Abshire noted that the contract period is 270 calendar days and the contract completion date is July 31, 2020.

Mr. Abshire requested the Board’s authorization of the 2020 annual water plant inspection of Water Plant Nos. 1 and 2 as required by the Texas Commission on Environmental Quality (the “TCEQ”). Mr. Abshire recommended a full mechanical and electrical inspection at an estimated cost of $11,000. Mr. Abshire noted that such costs are included in the District’s Capital Improvement Plan (“CIP”) budget for 2020 and presented a scope memorandum, a copy of which is attached to the Engineer’s Report. Discussion ensued. In response to a question from Director Moravec, Mr. Abshire stated that the last full mechanical and electrical inspections of such plants were conducted in 2017. Director Moravec requested a revision to the 2019 Water Plant Inspection Scope Memorandum attached to the Engineer’s Report, specifically requesting to remove the phrase “hard to access” from the sixth (6th) paragraph of such Memorandum.

Ms. Turner exited the meeting at this time.

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 Engineer’s Report, as presented; 2) approved Allco Pay Estimate No. 1; 3) approved JD Poole Pay Estimate No. 2 and Final; 4) approved Texas Pride Pay Estimate No. 1 and Final; and 5) authorized the 2019 Annual Water Plant

Inspection, subject to the above-mentioned correction in paragraph six (6).

In response to a question concerning the status of removal of certain dead trees located at the WWTP, Directors Tryon and Leasure stated that they will inspect the status of removal of the dead trees.

OPERATOR’S REPORT

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

Mr. Wright first reported that a leak was found at the Poe Street ground storage tank, and that such leak was repaired and the tank filled. Mr. Wright noted that if the leak continues, he will make arrangements to have the tank repaired by a third (3rd) party.

Mr. Wright reported that the combined water accountability for the District and MUD 9 was 94.49%. Mr. Wright next reported that the District had three (3) new taps last month and that the District has a total of 1,746 connections. Mr. Wright then reported that there were 217 e statements sent out and 430 online bill payments made during the month of December.

Mr. Wright reported that 42,000 gallons of recycled water was used for irrigation during 2019.

Mr. Wright next reviewed the list of service termination notices, noting that out of 154 notices mailed to customers, no delinquent accounts were terminated.

Mr. Wright presented the WWTP Monthly Operations Summary and the Entergy kilowatt cost comparison, copies of which are attached to the Operator’s Report. Mr. Wright reported regarding two (2) leaks at the WWTP and noted no excursions. Mr. Wright went on to report that the wet well was vactor cleaned. Mr. Wright added that he will provide photographs to Director Barlow of wipes clogging the sewer system lines.

Mr. Wright next presented the Groundwater Reduction Plan Monthly Operations Summary, a copy of which is attached to the Operator’s Report.

Mr. Wright then presented the Notable Activity Report, a copy of which is attached to the Operator’s Report.

Mr. Wright updated the Board regarding the valve location project and reported that 84 valves were surveyed and 38 of such valves required repair. Mr. Wright added that Hays was unable to locate some of the valves indicated on their map. Mr. Wright stated that valve locations will be reported to Jones|Carter and an updated map will be prepared.

Regarding the storm drain repair on Brookhaven, Mr. Wright reported that Montgomery County (the “County”) did not have an available crew to repair the concrete, so Hays North repaired such concrete because of a sinkhole in the street.

Mr. Wright then reviewed costs associated with repairs of water service line breaks caused by installation of fiber-optic cable for internet service by Tachus, a copy of which is attached to the Operator’s Report. Mr. Wright reported that to-date payment has not been received from Tachus for such breaks. Mr. Barner requested information from Hays North in order to prepare a letter to Tachus requesting payment of the outstanding amounts. Director Moravec indicated that he prefers that Mr. Wright first speak with Tachus before Mr. Barner sends a letter demanding payment.

Mr. Barner stated that he and Clark Lord, MUD 9’s attorney, have previously spoken with Tachus’ attorney regarding the installation of fiber optic cable and were of the understanding that Tachus would pay for repairs to any water lines it damages if the line locate previously requested by Tachus had correctly identified the location of the lines.

Mr. Wright next discussed two (2) items in Lake Estates that need to be repaired or replaced, including some manholes that need to be repaired. Mr. Abshire stated that old lines and manholes have been addressed, and he will discuss this matter in more detail with Mr. Wright.

Regarding the District’s lift stations, Mr. Wright discussed automatic transfer switches on generators. Mr. Abshire noted that costs for such automatic transfer switches are included on the 2020 CIP and budget. Mr. Wright stated that he will work with Mr. Abshire and provide the Board with a proposal.

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

MISCELLANEOUS REPORTS

Concerning the District website, Mr. Barner confirmed that information for the District’s May 2, 2020 Directors Election (the “Election”) has been posted on the District’s website and in the District, as required by law.

Director Patton encouraged the Board to attend an upcoming Lone Star Groundwater Conservation District (“LSGCD”) meeting and noted that the General Manager of the San Jacinto River Authority (“SJRA”) will present information related to Lake Conroe’s water levels.

Mr. Barron updated the Board regarding MUD 9’s December meeting.

In response to a question from Director Patton regarding the Bed and Banks annual report, Mr. Barner stated that he coordinates with Mr. Wright to complete such report.

ANNUAL REVIEW OF AUDITOR’S FRAUD QUESTIONNAIRE

Mr. Barner discussed the Auditor’s fraud questionnaire and noted that receipt of such questionnaire should be forthcoming.

ATTORNEY’S REPORT

Mr. Barner updated the Board regarding Montgomery County Emergency Services District No. 2’s purchase of property from the Walden Community Improvement Association (the “WCIA”).

Mr. Barner next updated the Board regarding conveyance of property to the WCIA.

Mr. Barner then reported that Texas Local Government Code, Sections 203.062 and 403.0241, requires the annual filing of certain financial and tax-related information by all special purpose districts in the Texas Comptroller’s Special Purpose District Public Information Database. Mr. Barner noted that such information must be filed with the Texas Comptroller annually by April 1st or a fine will be incurred. Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and the question being put to the Board, the Board voted unanimously to authorize the Attorney to file the required financial and tax-related information with the Texas Comptroller by April 1, 2020.

Mr. Barner reminded the Board that the District and MUD 9’s option to purchase certain water from the City of Huntsville expires on January 31, 2021. Mr. Barner recommended that the committees formed by both the District and MUD 9 explore options for exercising the option. An extensive discussion ensued regarding such. Director Tryon stated that he will contact Roy McCoy, former Director of the District and of the LSGCD to schedule a meeting with Directors Tryon and Patton and MUD 9 directors Barron and Wilson.

ELECTION AGENDA

Mr. Barner presented an Order Calling the Election, which calls a Directors Election for May 2, 2020.

Mr. Barner next presented for execution by the Board an Election Services Agreement with the County and a Joint Election Agreement with the County, which were approved by the Board at the December 11, 2019 meeting.

Mr. Barner discussed potential dates to canvass the Election. It was the consensus of the Board to canvass such Election on May 13, 2020, at 9:00 a.m.

Mr. Barner then discussed payment to the County for conduct of the joint election.

Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved: 1) the Order Calling Directors Election; and 2) payment of a deposit to the County for conduct of the joint election.

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

PASSED AND APPROVED this the 12th day of February, 2020.

Secretary, Board of Directors

January 8, 2020 Minutes Signature

January 8, 2020 Minutes Signature