Meeting Minutes 2018-09-12

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

SEPTEMBER 12, 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, September 12, 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, Justin Abshire and Bethany Miller of Jones|Carter (“Engineer” or “Jones|Carter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron, Curt Harris and Robert Ginandt of Montgomery County Municipal Utility District No. 9 (“MUD 9”); John Howell of The GMS Group, LLC (“Financial Advisor” or “GMS”); Mark Adam of Bleyl Engineering; David Hartman of the Walden Community Improvement Association (“WCIA”); Tony Sekaly, Regional Director, Marketing, Texas Class; 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.

DRAINAGE REPORT

First, Mr. Barner asked members of the public in attendance if they had any questions concerning the Drainage Improvement Project (the “Drainage Improvements”).  David Ausmus introduced himself to the Board and informed them that he owned a house on Ripplewind Drive that has flooded in the heavy rain events of the past three years.  Mr. Ausmus asked the Board what the District is doing to improve drainage on such drive.  Mr. Barner summarized the current status of the Drainage Improvements and the process the District undertook to determine the scope of such improvements.  Mr. Abshire reminded the Board that Mr. Ausmus’ wife attended the July 11, 2018 Board meeting to report the incidences of flooding on Ripplewind Drive, which was the first time the District had received any report of such flooding.  Mr. Abshire stated that he reviewed a drainage study prepared by an engineer engaged by Mr. and Mrs. Ausmus, but that Jones|Carter was not yet prepared to make any recommendations to the Board on whether or not the District should make drainage improvements on Ripplewind.  Discussion ensued.  Director Moravec recommended that Mr. Abshire discuss the drainage issues on Ripplewind Drive further with Mr. Ausmus and update the Board at the October meeting.

Mr. Ausmus next asked the Board whether or not the District is responsible for maintaining sump pumps located on certain properties abutting Lake Conroe.  Director Patton informed Mr. Ausmus and reminded the Board that the WCIA entered into agreements with the owners of such properties in 2007 that set forth the terms of operation and maintenance of such sump pumps. Director Patton explained that under the terms of such agreements, any subsequent purchasers of such properties were required to maintain those sump pumps.  Mr. Barner then stated that the sump pumps are not nor ever have been the District’s responsibility.  Discussion ensued.  Director Tryon then emphasized that the District’s primary governmental function was to provide water and wastewater service to the District’s residents and that the District had only recently determined that it was necessary to make the Drainage Improvement and that such improvements were limited in scope.

In response to a question from Karen Burley, Mr. Barner stated that homeowners will be notified when construction of the Drainage Improvements begin after the District determines the contractor for such improvements.

Mr. Abshire next reported that bids for the Drainage Improvements will be opened and reviewed in October and expects that the Board will award a contract at the October 10, 2018  Board meeting.  In response to a question, Mr. Abshire stated that bid results for demolition of certain property located in Zone 1 will be presented at today’s meeting and the contractor should be onsite at the beginning of October.  Mr. Abshire added that it will take two (2) days to demolish the properties in question.

Director Moravec recommended that the maps of the zones identifying the location of the Drainage Improvements be added to the District’s website. It was the consensus of the Board to make such addition.

2018 TAX RATE

PUBLIC HEARING ON 2018 TAX RATE

The President next declared the public hearing open to discuss the District’s proposed tax rate for 2018.

Mr. Howell then reminded the Board that the Board voted to publish a proposed total 2018 tax rate at $0.33 per $100 of assessed valuation.  Mr. Howell further reminded the Board that the Board voted to publish notice of the proposed 2018 tax rate and the public hearing (the “Notice”) on such tax rate in the Conroe Courier at least seven (7) days prior to today’s public hearing.

Mr. Howell then reviewed with the Board his 2018 tax rate (the “Tax Rate Study”), a copy of which is attached hereto. Discussion ensued regarding a proposed rate of $.030 per $100 of valuation and what amount of such rate should be levied for debt service purposes and operating and maintenance purposes.

The President then closed the public hearing after receiving no comments from the public on the proposed 2018 tax rate.

ADOPTION OF ORDER SETTING RATE AND LEVYING TAX FOR 2017

Mr. Barner then presented for the Board’s approval and adoption an Order Setting Rate and Levying Tax for 2018 reflecting the levy of a tax rate of $0.0604 per $100 of assessed valuation for debt service purposes and $0.2396 per $100 of assessed valuation for operations and maintenance purposes, resulting in a total 2018 tax rate of $0.30 per $100 of assessed valuation.  Mr. Barner explained that the debt service tax to be levied at today’s meeting will be for the calendar year ending December 31, 2019, and that the operations and maintenance tax to be levied will be for the District’s fiscal year ending (the “FYE”) December 31, 2019.

AMENDED DISTRICT INFORMATION FORM (“ADIF”)

Mr. Barner then explained that pursuant to Section 49.455 of the Texas Water Code, as amended, the District is required to amend its District Information Form any time information in such form is revised or updated and, therefore, since the District’s 2018 tax rate has been adopted, an amendment to the District Information Form is necessary. A copy of the ADIF is attached hereto.

APPOINT TAX ASSESSOR-COLLECTOR

Mr. Barner next reviewed with the Board the Order Appointing Tammy McRae, the Montgomery County Tax Assessor-Collector, as the District’s Tax Assessor-Collector.

ADOPT RESOLUTION CONCERNING TAX COLLECTION

Mr. Barner then reviewed with the Board the Resolution Concerning Tax Collection Procedures and reminded the Board that it adopts such procedures related to rejection of certain tax payment options.

Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board:  1) approved a total ad valorem tax rate of $0.30 per $100 of assessed value for the year 2018, comprised of $0.0604 per $100 assessed valuation for debt service purposes and $0.2396 per $100 assessed valuation for operation/maintenance purposes; 2) approved the Order Appointing Tax Assessor/Collector; 3) approved the ADIF, as presented; and 4) approved the Resolution Concerning Tax Collection Procedures.

Mr. Howell exited the meeting at this time.

APPROVAL OF MINUTES

The President next directed the Board to the approval of the August 8, 2018 regular meeting minutes and the August 16, 2018 special meeting minutes.

Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the August 8, 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 August 16, 2018 special meeting minutes.

PRESENTATION BY TEXAS CLASS LOCAL GOVERNMENTAL INVESTMENT POOL (“TEX CLASS”)

Mr. Sekaly introduced himself to the Board and presented information about Texas Class.

In response to a question from Director Moravec, Mr. Sekaly explained the difference between Tex Pool and Texas Class.  Mr. Sekaly stated that Tex Pool is a regulated government pool.  Mr. Sekaly went on to state that Texas Class pays interest on a daily basis.  In response to a question from Director Moravec regarding Texas Class’ clients, Mr. Sekaly stated that Texas Class has 700 clients in the state, most of which are school districts.  Director Moravec recommended keeping funds in Tex Pool and investing in both Tex Pool and Texas Class.  Discussion ensued regarding Texas Class’ two (2) investment pools:  1) the prime pool; 2) and the government pool.  Director Moravec recommended investing in Texas Class’ prime pool and discussed the benefit of such investment.

Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved a Resolution authorizing investment in Texas Class.

Mr. Sekaly exited the meeting at this time.

WASTEWATER TREATMENT PLANT EXPANSION PROJECT (“WWTP PROJECT”)

Mr. Abshire presented three (3) bids for the WWTP Project, copies of which are attached hereto. Mr. Abshire summarized such bids, which were submitted by:  1) LEM Construction Co., Inc.; 2) Archer Western (“Archer”); and 3) Allco, LLC (“Allco”), copies of which are attached hereto.  Mr. Abshire next reminded the Board that Jones|Carter interviewed and certain representatives of the District and MUD 9.

Next, Ms. Miller discussed the bidders’ qualifications and the interviews with such bidders. Ms. Miller further reported that Allco was the lowest bidder and received the best overall score based on the criteria used by Jones|Carter to rank those bidding. An extensive discussion ensued regarding Allco’s anticipated project completion schedule and the need for construction management services by Jones|Carter. Ms. Miller and Mr. Abshire then reviewed   a preliminary proposal for additional services (“Additional Services Proposal”) to be provided by Jones|Carter in order to address construction management. Further discussion ensued regarding the Additional Services Proposal. It was the consensus of the Board to review and discuss the Additional Services Proposal at the October 10, 2018 Board meeting.

Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board and awarded the contract to Allco in the amount of $21,804,200.00, subject to concurrence of MUD 9 and receipt of a Form 1295 Certificate of Interested Parties, and authorized the Engineer to prepare a contract for the Board’s approval.

Director Tryon next asked the MUD 9 directors in attendance if they had any additional questions.  Jones|Carter then answered additional questions from MUD 9 directors regarding the total budget for the WWTP Project, including the fees related to the Additional Services Proposal and the process for reviewing and approving Change Orders for such project.  MUD 9 Director Barron reminded the Board that MUD 9’s concurrence is always subject to receiving project funds.

Mr. Adam exited the meeting at this time.

Upon a motion by MUD 9 director Ginant, seconded by MUD 9 director Harris, after full discussion and with all MUD 9 directors present voting aye, the Board concurred to awarding the contract to Allco in the amount of $21,804,200.00, subject to receipt of funds.

Mr. Peterson encouraged the Board to review the Additional Services Proposal and provide any comments prior to the October 10, 2018 Board meeting.

Discussion then ensued regarding the timing of the WWTP Project and Montgomery County’s Walden Road Widening Project.

Members of the public, except for Messrs. Harris, Barron and Ausmus exited the meeting at this time and the Board took a brief recess.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Turner then reviewed the Tax Assessor-Collector’s Report for the month of July 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 98.64% of the 2017 taxes have been collected as of August 31, 2018.

It was determined by the Board that no persons were present for a public hearing regarding terminating service to customers with delinquent accounts.  Mr. Barner reviewed delinquent tax accounts with the Board.  Discussion ensued. Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Tax Assessor-Collector’s Report and authorized termination of service to the following accounts due to non-payment of delinquent taxes, as follows:  1) Salma and Jose Deprieto, account number 00.9455.06.02400, in the amount of $1,209.06; 2) Steve A. Bryant, account number 00.9455.06.18700, in the amount of $818.76; and 3) Kimberly and Eric Wiley, account number 00.9455.07.01500, in the amount of $659.91.

BOOKKEEPER’S REPORT

Ms. Turner discussed the proposed Wastewater Treatment Plant budget (“WWTP Budget”) for FYE 2019, a copy of which is attached hereto, and requested authorization to present such budget to MUD 9 at its October meeting.

In response to a question from Director Moravec regarding general operating projects, Mr. Peterson stated that the District’s Capital Improvement Plan reflects such projects and that it is time to review and update such plan. Discussion ensued.  Mr. Abshire stated that he will work with Allco regarding a draw schedule and he will revise the last two (2) items on the draft WWTP Budget.

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 next reviewed current year-to-date revenues and expenditures against the budget.

Ms. Turner then reviewed a Snap Shot Financial Report as of September 12, 2018, and Revenue and Expenditure Comparison for 2017 and 2018 as of September 12, 2018.

In response to a question from Director Moravec regarding the actual comparison categories of expenditures, Ms. Turner stated that she will categorize in next month’s report.

Director Moravec next requested the Board consider authorizing reimbursement for his attendance at the Fall Conference of the Government Finance Officers Association of Texas from October 23-28, 2018 in Galveston, Texas. Mr. Barner stated that he will add something to the October 10, 2018 Board meeting agenda regarding such request.

Ms. Turner reported that the amended Agreement for Bookkeeping Services with Municipal Accounts & Consulting, L.P. will be presented at the October 10, 2018 Board meeting for the Board’s consideration.

Upon a motion by Director Moravec, 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 8433 through 8457 from the General Operating Fund; 3) authorized payment of checks numbered 1808 through 1813 from the Sewage Treatment Plant Fund; 4) authorized payment of checks numbered 1211 through 1213 from the Capital Projects Fund; and 5) authorized payment of check number 1054 from the Tax Fund.

ENGINEER’S REPORT

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

Mr. Abshire presented the bids for demolition of property within Zone 1 of the Drainage Improvements Project, a copy of which is attached to his report. Mr. Abshire reported that Jones|Carter received four (4) bids for the demolition of two (2) homes in Zone 1.   Mr. Abshire next reported that one (1) bid arrived too late and was not considered.  Mr. Abshire went on to report that the low bid was submitted by Cherry Moving Co., Inc. (“Cherry”) in the base bid amount of $36,500.  Discussion then ensued regarding priority of demolition in Zone 1.

Mr. Abshire then reported that Jones|Carter is nearing completion of the bid package for the Water Plant Nos. 1 and 2 Improvements Project and he expects advertising the project within the next two (2) weeks.  Mr. Abshire also reported that he expects to receive bids by the end of the month and present a bid tabulation summary and recommendation of award at the October Board meeting.

Upon a motion by Director Barlow, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the Engineer’s Report, as presented, and awarded the contract for the Zone 1 Home Demolition Project to Cherry, subject to the Attorney’s review of the contract.

OPERATOR’S REPORT

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

Mr. Wright first discussed recent repairs to water main breaks and service line leaks during the past period and stated that most of the lines were cast iron pipes.

Mr. Wright reported that the combined water accountability for the District and MUD 9 was 93.59%.  Mr. Wright next reported that the District had no new taps last month and the District has a total of 1,723 connections.  Mr. Wright then reported that there were 71
e-statements sent out and 230 online bill payments made during the month of August.

Mr. Wright next reviewed the list of service termination notices, noting that 200 such notices were mailed to customers and one (1) delinquent account was terminated.

Mr. Wright presented the Wastewater Treatment Plant Monthly Operations Summary, a copy of which is attached to the Operator’s Report.  Discussion ensued on such report, including joint expenses payable by the District and MUD 9 and the August 2018 Billings and Collections Report, copies of which are attached to the Operator’s Report.

Mr. Wright presented the Entergy kilowatt cost comparison, a copy of which is attached to the Operator’s Report.  Director Patton recommended the comparison show a year to date billing period rather than a month to month billing period.

Next, Mr. Wright reviewed the Monthly Operations Summary.

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

Mr. Wright presented the Alternative Water Supply Facilities Expense Report, a copy of which is attached to the Operator’s Report, and reported that he will investigate costs and vendors to repair the vibration sensors.

Mr. Wright next presented the Notable Activity Report, a copy of which is attached to the Operator’s Report, including service line leaks and water main breaks.  Director Moravec requested that Mr. Wright include the amount of linear feet of line replaced in future reports.

Mr. Wright then reported that he received a call on September 11, 2018, regarding a sinkhole caused by a leak along a retainage wall to the lake at a house on Ripplewind Drive.  Discussion ensued. Mr. Wright and Mr. Abshire will visit the site and investigate further.

Mr. Wright discussed questions concerning Hays North’s invoices and proposed meeting with two (2) Directors before each month’s regular meeting to review such invoices.  Directors Tryon and Leasure stated they are available to meet with Mr. Wright to review invoices.

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.

 

ATTORNEY REPORT

Mr. Barner first presented the Encroachment Agreement with the WCIA, a copy of which is attached hereto.

Next, Mr. Barner presented an Encroachment Agreement with Magellan Midstream Partners, L.P. (“Magellan”), a copy of which is attached hereto, for installation of water lines, sewer/waste lines and electric conduit box culvert at the 1.25 MGD Biological Nutrient Removal Wastewater Treatment Plant for the District and crossing Magellan’s 16″ Corsicana – East Houston Refined Products High-Pressure Pipeline in Montgomery County.

Mr. Barner then presented a Buffer Zone Easement with the WCIA, a copy of which is attached hereto, for the District’s lift station and digester project.

Mr. Barner reported that he had spoken with Montgomery County Emergency Service District No. 2 (“ESD 2”) representatives regarding Walden Fire Station property matters and that he is now waiting on additional information from ESD 2.

Mr. Barner next presented a request for wastewater treatment capacity received from Tejas Creek, Ltd. (“Tejas”).  Messrs. Barner and Abshire explained that such request is required by the Texas Commission on Environmental Quality to comply with certain regulations regarding wastewater treatment facilities development. Mr. Wright informed the Board that the District could not feasibly serve Tejas due to its location and recommended that such request be denied.

Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board:  1) approved the Encroachment Agreement with the WCIA; 2) approved the Encroachment Agreement with Magellan; 3) approved the Buffer Zone Easement; and 4) denied the Tejas request for service.

WATER SMART PROGRAM

The Board then discussed the status of the Water Smart application.  Mr. Abshire stated that a recent meeting was very informative.  Directors Barlow and Moravec indicated they need to meet with Mr. Wright.

LONE STAR GROUNDWATER CONSERVATION DISTRICT (“LSGCD”)

Mr. Barner reminded the Board the LSGCD is holding its first directors’ election on November 6, 2018. Director Tryon stated that he was aware that there were two (2) candidates for Position 5.  Mr. Barner stated that he would update the Board at the October 10, 2018 Board meeting on the status of other LSGCD Board positions.

MUD 9 REPORT

Director Barlow provided an update regarding MUD 9’s August meeting.  MUD 9 director Barron stated that the September 11, 2018 town hall meeting to discuss MUD 9’s November 6, 2018 Bond Election was a success.  MUD 9 director Barron also stated that MUD 9 is trying to address drainage issues.

WEBSITE REPORT

Director Tryon discussed issues he has encountered with the District email server. Director Patton updated the Board on the status of Off Cinco’s review of the website’s compliance with the Americans with Disabilities Act.

INVESTMENT POLICY

Mrs. Brewer presented an Order Reviewing Investment Policy and Investment Strategies, a copy of which is attached hereto.  Ms. Turner stated that reviewing the Investment Policy was an annual requirement of the Texas Public Funds Investment Act, but no changes were being proposed at this time.  Ms. Turner also stated that the list of authorized brokers will be updated and presented at the October meeting.

It was the consensus of the Board to table action on the Order Reviewing Investment Policy and Investment Strategies until the October meeting.

ASSOCIATION OF WATER BOARD DIRECTORS (“AWBD”) FALL SEMINAR AND MID-WINTER CONFERENCE

The Board discussed the Directors’ attendance at the AWBD Fall Seminar on Tuesday, October 30, 2018, and Mid-Winter Conference in Austin, Texas, on Friday, January 25, 2019, through Saturday, January 26, 2019.  Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board authorized the Directors’ attendance at the AWBD Mid-Winter Conference for two (2) nights on behalf of the District.

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

PASSED AND APPROVED this the 10th day of October, 2018.

                                                                                                                                                                        Secretary, Board of Directors

September 12, 2018 Minutes Signature

September 12, 2018 Minutes Signature