Meeting Minutes 2018-05-09

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

MAY 09, 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, May 9, 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. 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”); Linda Wilson and Charles Barron 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

Director Patton first discussed the link to First Billing on the District website and encouraged everyone to sign-up for online billing.
Director Tryon updated the public regarding the Wastewater Treatment Plant (“WWTP”) project and reported that the project should commence in June 2018.

In response to a question, Mr. Barner indicated there is no update regarding Zone 1 at this time.

There were no additional public comments.

ELECTION AGENDA

Mr. Barner directed the Board to consider certain election issues.

Director Tryon first executed and delivered the Certificates of Election of Directors Leasure, Barlow and Moravec, copies of which are attached hereto.

Mr. Barner presented the Director Qualification Affidavits, copies of which are attached hereto, to Directors Leasure, Barlow and Moravec, who executed same, thereby verifying their qualifications to serve as Directors of the District.

Mr. Barner next presented Directors Leasure, Barlow and Moravec with their sworn Statements of Elected/ Appointed Officer, copies of which are attached hereto, as required by the Texas Constitution, which statements were duly executed by Directors Leasure, Barlow and Moravec. Mr. Barner then presented the Oaths of Office to said Directors, copies of which are attached hereto.

Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board acknowledged the qualifications of the Directors elected to office.

APPROVAL OF MINUTES

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

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Turner reviewed the Tax Assessor-Collector’s Report for the month of April 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 96.65% of the 2017 taxes have been collected as of April 30, 2018.

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 May 9, 2018, and a Revenue and Expenditure Comparison for 2017 and 2018 as of May 9, 2018, copies of which are attached to the Bookkeeper’s Report. Discussion then ensued regarding revenue and tracking revenue. The Board directed Ms. Turner to add an asterisk to indicate that “Total Operating Revenue” includes revenue other than water, sewer and maintenance tax revenue.

Director Moravec inquired regarding the District’s Investment Policy and Certificate of Deposit (“CD”) interest rates. Extensive discussion ensued. In response to a question, Mr. Barner stated that he will review the District’s Investment Policy and determine if it should be revised.

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized the Bookkeeper to transfer funds to Tx Pool from CDs upon maturity, if the yield is higher.

Ms. Turner reported that checks are being held for energy bills until bills are received. Ms. Turner also reported that MAC would like to make online payments to Entergy, CenterPoint and Consolidated. Ms. Turner went on to report that invoices and proof of online bill payment would be presented to the Board. Ms. Turner suggested the appointment of two (2) Directors to review bills before making online payments. It was the consensus of the Board that Directors Moravec and Leasure review energy bills prior to online payment.

Next, Director Moravec asked Ms. Turner to explain the District’s procedures for closing out the District’s records on an annual basis as opposed to a monthly basis. As an example, Director Moravec pointed out JoneslCarter’s February/March 2018 invoices were recorded in March, but show up in the year-to-date column and not the monthly column. Extensive discussion ensued. Ms. Turner recommended that Director Moravec meet with Mr. Burton, MAC’ s Managing Partner to further discuss industry procedures.

Ms. Turner then added that in order to reflect back-dated invoices for transactions recorded prior to the current monthly Profit and Loss Statements, MAC could include an additional page in the Bookkeeper’s Report reflect such. However, preparation of such page would be outside of the Bookkeeper’s existing scope of services and the District would incur additional charges.

Ms. Turner discussed the use of Series 2012 surplus funds and reported that she will continue tracking expenses of the Water Plant Joint Project.

Ms. Turner next presented the Quarterly Investment Inventory Report for the Period Ending March 31, 2018, 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: 1) approved the Bookkeeper’s Report, as presented; 2) authorized payment of checks numbered 8301 through 8335 from the General Operating Fund; 3) authorized payment of checks numbered 1784 through 1788 from the Sewage Treatment Plant Fund; and 4) authorized payment of checks numbered 1199 through 1200 from the Capital Projects Fund.

ENGINEER’S REPORT

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

Limited discussion ensued regarding Drainage Improvements. Messrs. Abshire and Barner reported that property acquisition for such improvements would be discussed in closed sess10n.

Mr. Abshire next reported that, as directed by the Board, JoneslCarter has not submitted WWTP Improvement Project design plans to the City of Conroe (the “City”) for review until a resolution regarding the City’s plan review process is received. Mr. Abshire reminded the Board that the City’s review fee for the WWTP Improvement Project is approximately $85,000 and without City approvals or a letter of no objection, obtaining final plan approvals is on hold. Mr. Abshire went on to report that once all plan approvals are obtained, JoneslCarter will proceed with advertising for bids for construction.

Mr. Barner discussed the City’s review of project plans and the associated fees required for such review. Mr. Barner recommended the Board approach the City Council and request an item on a future City Council agenda. Mr. Barner stated that if an item is not placed on the City’s agenda, then MCMUD 8 and MCMUD 9 will need to address City Council under public comment at such meeting. Discussion ensued regarding the appeal/modification process and the City planning area.

Mr. Barner stated that the District needs to get a plan in place for presentation to the City. Mr. Abshire reported that JoneslCarter will get ready to bid the project upon MCMUD 9’s concurrence. The Board appointed Directors Patton and Moravec to speak with the City.

Mr. Abshire presented the Capital Project Schedule, a copy of which is attached to the Engineer’s Report. Mr. Abshire reported that Montgomery County has approved the Wastewater Improvement Project subject to City approval. Discussion ensued regarding moving forward with bidding the project with a notation that awarding the project is subject to City approval. Mr. Abshire stated that contracts will not be signed until all approvals are received. Director Tryon expressed his concerns with the process and the need to begin the project. It was the consensus of the Board to bid the project with a “subject to necessary approvals” notation. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized JoneslCarter to proceed with bidding and the contract will not be signed until all approvals are received. Mr. Barner noted that MCMUD 9 will need to concur with the Board’s decision.

Mr. Abshire then discussed the sag in the sanitary sewer line on Hemingway and reported that he reviewed the video and the sag is significant. Mr. Abshire also reported that there are no obstructions and the line is four feet (4′) deep with open access. Mr. Abshire recommended repairing the line. Mr. Wright stated that the cost to repair the line will be approximately $4,800.

Upon a motion by Director Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved repair of the line at a cost not to exceed $5,000.

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

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 MCMUD 9 was 95.44%. Mr. Wright next reported that the District had one (1) paid tap last month and the District has a total of 1, 713 connections.

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

Mr. Wright reported no major issues at the WWTP and that the WWTP is in compliance with the Texas Commission on Environmental Quality (“TCEQ”) permit.

Mr. Wright next reported that Hays North is in the process of its annual review of the District’s generators in preparation for hurricane season. Mr. Wright went on to report that Hays North has contracted with a third-party to test the diesel to be assured it is still good and not stale. Mr. Wright added that the diesel can be conditioned and reported that the lift station generators are exercised weekly.

Mr. Wright then presented combined expenses for MCMUD 8 and MCMUD 9 and the Billings and Collections Report. Mr. Wright stated that he will meet with Director Moravec on Thursday, May 10, 2018, to review the report.

Mr. Wright reviewed the Ground Water Permit Pumpage Report. In response to a question, Mr. Wright discussed the percentage of permitted pumpage.

Discussion ensued regarding tracking infiltration and inflow, as well as smoke testing lines to find problematic areas.

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

Mr. Wright next discussed hurricane preparedness and a major bulk head collapse on the 48-inch (48″) storm drain and indicated that the cost to repair is approximately $30,000.

Mr. Wright then presented the 2017 Consumer Confidence Report (“CCR”), which the TCEQ require be made directly available to customers annually no later than July 1. Mr. Wright reported that there was one (1) positive monthly coliform sample taken which was found to be a sampler error. Mr. Wright went on to report that all repeat samples were negative. Discussion then ensued concerning the process for distributing the CCR. Mr. Barner stated that a specific URL link for the CCR created by Off Cinco can be included on the District website and on utility bills. Mr. Wright added that hard copies of the CCR can be obtained from the Operator upon request. Mr.

Wright stated that a link to the TCEQ website could also be included on the District’s website.

Mr. Wright reported that e-billing is up and running and he is very happy with the results. Mr. Wright also reported that to-date, 18 customers have signed up for e-billing and made payments online.

Director Patton discussed problems with the transition to First Billing.

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 Operator’s Report, as presented; and authorized distribution of the CCR, pending preparation and creation of a URL.

At this time, Director Moravec requested the Engineer’s, Operator’s and Bookkeeper’s Reports two (2) days before each meeting.

STATE AND LOCAL AGENCY REPORTS

Mr. Barner discussed the November 2018 Lone Star Groundwater Conservation District (“Lone Star”) director’s election and indicated that such election will be called in June 2018. Discussion ensued regarding the Lone Star board of directors.

WALDEN COMMUNITY IMPROVEMENT ASSOCIATION (”WCIA”)

There was nothing new to report.

MCMUD 9 REPORT

MCMUD 9 Director Wilson invited everyone to attend MCMUD 9’s town hall meeting on May 10, 2018, regarding drainage.

LAKE CONROE COMMUNITIES NETWORK (“LCCN”)

It was reported that the LCCN quarterly report was requested, but never received. Mr. Barner stated that he will follow-up with Scott Sustman. Discussion ensued regarding the lake level and inviting Senator Nichols back to the area.

WEBSITE REPORT

The District’s website was discussed earlier in the meeting.

ATTORNEY’S REPORT

Mr. Barner first reported that the District needs easements from the San Jacinto River Authority and presented Drainage Easement Agreements for the Board’s consideration. Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Drainage Easement Agreements, as presented.

Mr. Barner discussed the District’s Ethics Policy and expense reimbursements policy and reminded the Board that each Director would receive four (4) per diems for attendance at the Association of Water Board Directors Summer Conference. Mr. Barner told the Board that if they have any questions concerning the Ethics Policy or expense reimbursement policy, to contact him.

Mr. Barner next discussed the requirements Chapter 2258.022 of the Texas Government Code relating to prevailing wage rates. Mr. Barner presented a Resolution Determining and Adopting Prevailing Wage Rates for Construction Projects for the Board’s consideration. Mr. Barner noted that the District uses rates established by the United States Department of Labor. Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Resolution Determining and Adopting Prevailing Wage Rates for Construction Projects, a copy of which is attached hereto.

Mr. Barner then discussed the merger of AquaSurance and Arthur J. Gallagher & Company. Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board acknowledged the merger of AquaSurance and Arthur J. Gallagher & Company.

Mr. Barner discussed annual review of the District’s Consultant’s contracts and the options to review such contracts. Director Patton stated that the Operator’s contract was reviewed earlier in the year to amend the rate schedule. It was the consensus of the Board to appoint Directors to review Consultant contracts, as follows: 1) RBAP – Director Tryon; 2) JoneslCarter- Director Patton; and 3) MAC-Director Moravec.

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 :32 a.m. to discuss matters within the attorney/client privilege and real estate. Present for 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 12:55 p.m.

RECONVENE IN OPEN SESSION

As of 12:55 p.m., the President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board:

1) authorized the Attorney to prepare an offer to Garrett Ritter according to the terms discussed in Executive Session; and 2) accepted Robert Spies’ counter offer for property according to the terms discussed in Executive Session.

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

May 09, 2018 Minutes Signature