Meeting Minutes 2018-12-12

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

DECEMBER 12, 2018

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 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 and Justin Abshire of Jones|Carter (“Engineer” or “Jones|Carter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); 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.

DRAINAGE REPORT
Mr. Abshire first provided an update regarding the Drainage Improvement Project (the “Drainage Improvements”) and reported that a preconstruction meeting was recently held. Mr. Abshire also reported that the contractor, Rebel Contractors, Inc. (“Rebel”), has mobilized and cleared certain areas within Zone 1 of the Drainage Improvements and that Rebel expects to complete Zone 1 before the end of 2018.

In response to a question, Mr. Abshire further reported Zone 6 is expected to start construction in early January 2019 and that Zone 2 is expected to start construction in late January 2019.

In response to a question from Director Moravec regarding certain drainage issues on Doretta Drive identified by Mr. and Mrs. Brackles at the November 14, 2018 Board meeting, Mr. Abshire stated that he is planning on meeting with Mrs. Brackles to discuss such issues further.

BUDGETS FOR FISCAL YEAR ENDING DECEMBER 31, 2019
Ms. Turner presented the General Fund Budget and Wastewater Treatment Plant (“WWTP”) Budget for Fiscal Year Ending (“FYE”) December 31, 2019. Discussion ensued. Mrs. Brewer next presented to the Board an Order Adopting General Operating Budget for FYE December 31, 2019 and an Order Adopting Budget for the WWTP for FYE December 31, 2019.

Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Order Adopting General Operating Budget for FYE December 31, 2019 and the Order Adopting Budget for the WWTP for FYE December 31, 2019, copies of which are attached hereto, subject to changes discussed by the Board.

AUDITOR ENGAGEMENT
Julia McCain presented a proposal for auditing the financial statement for the fiscal years ending December 31, 2018 and December 31, 2019, a copy of which is attached hereto. Discussion ensued.

Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the proposal from McCall Gibson Swedlund Barfoot PLLC for auditing the financial statement for fiscal years ending December 31, 2018 and December 31, 2019.

Ms. McCain exited the meeting at this time.

TAX ASSESSOR-COLLECTOR’S REPORT
Ms. Turner reviewed the Tax Assessor-Collector’s Report for the month of November 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 8.64% of the 2018 taxes have been collected as of November 30, 2018.

Mr. Barner entered the meeting at this time.

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 budget.

Discussion ensued regarding capitalizing fixed assets and reviewing the District’s capital project policy. Mr. Peterson mentioned ramifications. The Board asked Mr. Barner to review the District’s capital project policy.

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

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board: 1) approved the Tax Assessor-Collector’s Report, as presented; 2) approved the Bookkeeper’s Report, as presented; 3) authorized payment of checks numbered 8522 through 8556 from the General Operating Fund; 4) authorized payment of checks numbered 1826 through 1832 from the WWTP Fund; and 5) authorized payment of checks numbered 1218 through 1220 from the Capital Projects Fund.

AMENDMENT TO AGREEMENT FOR BOOKKEEPING SERVICES
Ms. Turner and Mr. Barner then discussed certain revisions to the amended Agreement for Bookkeeping Services with Municipal Accounts & Consulting, L.P. (the “MAC Agreement”). Mr. Barner explained that he had spoken with Mr. Mark Burton at MAC regarding his proposed revisions related to indemnification provisions with the MAC Agreement and that Mr. Burton had accepted such revisions. A discussion then ensued regarding the terms of the MAC Agreement, including the amount of hours included for attendance at the District’s Board meetings that are paid for by MAC’s monthly standard fee.

Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the MAC Agreement.

APPROVAL OF MINUTES
The President next directed the Board to the approval of the November 14, 2018 regular meeting minutes. Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the November 14, 2018 regular meeting minutes, as presented.

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 all agency approvals were obtained. Mr. Abshire also reported that a successful pre-construction meeting occurred on December 11, 2018, and the Notice to Proceed was issued to Allco, LLC (“Allco”) at such meeting. Mr. Abshire noted that the expected start date is January 2, 2019. Mr. Abshire went on to report that monthly site meetings will occur and temporary construction fencing will be installed to keep the public away from the WWTP site. Mr. Abshire then reported that he is planning site meetings with Magellan Midstream Partners, L.P. and DCP Midstream since both are required to be onsite when work is performed around the pipelines. Extensive discussion ensued. Director Patton stated that a sign identifying Allco as the contractor and the start date of the WWTP Project needs to be installed at the WWTP site. In response to a question from Mr. Peterson, it was reported that the Walden Community Improvement Association (“WCIA”) is providing a sign that the trail will be closed due to the project.

Mr. Abshire went on to further discuss the Drainage Improvements and also presented a Project Summary Report, a copy of which is attached to the Engineer’s Report. Mr. Abshire next discussed engineering fees related to unanticipated time that Jones|Carter’s expended meeting with residents on the designing such improvements.

Director Moravec exited the meeting at this time.

Mr. Abshire then requested that the Board approve Jones|Carter’s request for an amendment to their proposal for the Drainage Improvements in the amount of $162,473. Director Barlow stated that she feels Jones|Carter goes above and beyond since its engineers spent time with residents and the Board agreed. Upon a motion by Director Leasure, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the additional engineering fees for the Drainage Improvements.

Mr. Abshire next presented contracts for the Water Plant Nos. 1 and 2 Improvement Project for Board execution.

Mr. Abshire then reported that work continues on updating the Capital Improvement Plan for 2019-2024.

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

Mr. Abshire next presented Jones|Carter’s 2019 Schedule of Hourly Rates and Reimbursable Expenses, copies of which are attached to the Engineer’s Report. Mr. Abshire stated that Jones|Carter is also in the process of preparing an Amended Professional Services Agreement and will provide it for Mr. Barner’s review upon its completion. Mr. Abshire explained the reduction of categories and added that the new fees are accounted for in the FYE 2019 budget.

Mr. Abshire then presented correspondence from a District customer requesting a release of the District’s interest in a public utility easement adjacent to such customer’s property (the “Easement”). Messrs. Abshire and Barner informed the Board that while it had been some time since the District had received such a request, such requests are reviewed on a case-by-case basis and pursuant to certain procedures related to such request set forth in the District’s Rate Order. A discussion ensued on such request, including potential issues with the District’s access to water and wastewater facilities and whether or not the District should grant a partial release of its interest in the Easement or whether or not a Consent to Encroachment on the Easement would be the best approach.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved a partial release of the Easement to cover access, subject to receipt of a $3,500 deposit to cover engineering and legal fees.

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

Mr. Wright reported that the combined water accountability for the District and MUD 9 was 93.41%. Mr. Wright next reported that the District had no new taps last month and the District has a total of 1,726 connections.

Mr. Wright reported there were 76 statements sent out by electronic mail and 277 customer payments made online during the month of November.

Mr. Wright next reviewed the list of service termination notices, noting that 192 such notices were mailed to customers and two (2) delinquent accounts were terminated.

In response to a question from the Board regarding Hays North’s procedures for flushing water lines within the District, Mr. Wright explained that flushing is required by the Texas Commission on Environmental Quality under certain circumstances at certain times during the year. Mr. Wright further explained that Hays North also flushes water line when his office receives certain water quality complaints from customers. Extensive discussion ensued. In response to a question from Director Patton about how such flushing affects the District’s unbilled waste usage and water accountability each month, Mr. Wright stated that he will prepare a report about flushing in the District and the amount of water used during flushing. The Board then advised Mr. Wright that all future flushing requests from District customers be submitted to the Board for approval.

Mr. Wright then discussed with the Board water consumption in conjunction with the Water Smart application. Discussion ensued regarding irrigation systems and rain sensors. Director Barlow stated that she and Director Moravec are preparing a slide show for presentation at the Men’s Club meeting on January 4, 2019. Mr. Abshire and MUD 9 director Barron stated that they plan to attend the presentation.

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

LSGCD
Mr. Abshire reported regarding submittal of an application to amend the Alternative Water Source (“AWS”) Production Permit to the LSGCD adjusting the permit to 275,000 gallons. Mr. Abshire added that an item regarding such permit should have been on the LSGCD’s December 11, 2018 board meeting agenda. However, he is unsure whether any action was taken by the LSGCD. Director Tryon stated that he will attend the LSGCD’s January 8, 2019 board meeting.

MUD 9 REPORT
Director Leasure updated the Board regarding the MUD 9 board meeting. Director Leasure reported that MUD 9’s bond election passed and MUD 9 now has $19,000,000 of bond authority for water, sewer and drainage projects. Director Leasure also reported that a new director was appointed to fill the vacancy on the MUD 9 board. Director Barlow stated that she will attend the MUD 9 meeting on December 13, 2018. Discussion ensued regarding letters being sent to MUD 9 property owners regarding encroaching on water and wastewater easements without MUD 9 approval. Mr. Barner stated that he would prepare a letter to MUD 8 property owners about such encroachments on District easements for the Board’s approval and coordinate with Mr. Clark Lord, MUD 9’s attorney regarding such letter. It was the consensus of the Board to send such letter with water bills and by email to e-statement customers, as well as publishing such letter in the WCIA newsletter and on the District website.

MUD 9 director Barron reported that design of the Buckingham Water Plant is being finalized and design proposals have been requested for the MUD 9 drainage improvement project.

WEBSITE REPORT
Director Patton provided a District website update and reported increased usage.

Mr. Barner presented a Resolution Regarding Compliance with the Americans with Disabilities Act (“ADA Resolution”), a copy of which is attached. Director Patton stated that he had no comments to the ADA Resolution. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the ADA Resolution.

Mr. Barner stated that he will prepare a one-page summary of the Groundwater Reduction Plan for publication on the District’s website.

ASSOCIATION OF WATER BOARD DIRECTORS (“AWBD”)
The Board discussed renewing the District’s membership in the AWBD. Upon a motion by Director Leasure, seconded by Director Barlow, 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.

INSURANCE RENEWAL
The Board directed Mr. Barner to request the insurance renewal proposal for the 2019 policy period from Harry Peyton at Arthur J. Gallagher & Company.

ATTORNEY’S REPORT
Regarding the Walden Fire Station property, Mr. Barner reported that he is working through deal points with Montgomery County ESD No. 2.

Mr. Barner next discussed Senate Bill 1812, which requires the District to file an annual eminent domain report.

Mr. Barner then distributed the Annual Agenda for 2019 and explained that the Annual Agenda is for informational purposes only.

Upon a motion by Director Tryon, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board authorized Mr. Barner to file the annual eminent domain report on behalf of the District.

Messrs. Wright, Peterson and 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 President called the executive session to order at 11:51 a.m. to discuss matters within the attorney/client privilege. 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 12:25 p.m.
THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned.

PASSED AND APPROVED this the 9th day of January, 2019.
Secretary, Board of Directors

December 12, 2018 Minutes Signature

December 12, 2018 Minutes Signature