Meeting Minutes 2020-05-13

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

MAY 13, 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, May 13, 2020, at 9:00 a.m., via telephone conference call pursuant to Texas Government Code, Section 551.125, as amended, and as modified by the temporary suspension of various provisions thereof effective March 16, 2020, by the Governor of Texas in accordance with the Texas Disaster Act of 1975, all as related to the Governor’s proclamation on March 13, 2020, certifying that the COVID-19 pandemic (“COVID-19”) poses an imminent threat of disaster and declaring a state of disaster for all counties in Texas, 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 via conference call were Dietra Bonds of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Mason Mueller 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 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 APRIL 8, 2020 MEETING

The President next directed the Board to the approval of the April 8, 2020 regular meeting minutes. In response to a question by Director Moravec regarding whether it is reflected in the minutes when, during a Board meeting, one of the District’s consultants says that they will do further research into an issue, Mr. Barner explained that such consultant is responsible for completing such research and updating the Board regarding the same at the following meeting. Mr. Barner noted that such update is then reflected in the minutes. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the April 8, 2020 regular meeting minutes as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Bonds reviewed the Tax Assessor-Collector’s Report for the month of April 2020, 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. Bonds reported that 95.90% of the 2019 taxes have been collected as of April 30, 2020. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the Tax Assessor-Collector’s Report.

BOOKKEEPER’S REPORT

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

Ms. Bonds reported that the District has several certificates of deposit (“CD”) that will be maturing in the next few months and suggested that the District consider transferring those funds into money market accounts instead of renewing such CDs due to the declining interest rates of CDs. Director Moravec reminded the Board that one of the primary objectives of the District’s Investment Policy is diversification of investments and expressed concern that the District may be overly invested with Texas Class; therefore, he recommended that the Board agree to transfer such funds into money market accounts held by Texas Class and TexPool in a ratio not to exceed two thirds (2/3) to one-third (1/3), with the larger portion of such funds being transferred into the money market accounts held by the investment pool offering a higher interest rate. In response to a question by Director Patton, Director Moravec clarified that such money market accounts are not insured by the Federal Deposit Insurance Corporation (“FDIC”). 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 from the District’s maturing CDs into money market accounts held by Texas Class and TexPool in a ratio not to exceed two thirds (2/3) to one-third (1/3), with the larger portion of such funds being transferred into the money market accounts held by the investment pool offering a higher interest rate.

Ms. Bonds then updated the Board regarding a certain payment that was incorrectly reflected in the Bookkeeper’s Report presented at the April 8, 2020 Board meeting and explained that the entry reflecting such payment made to Bleyl Engineering (“Bleyl”) from the District’s Sewage Treatment Plant (“STP”) fund was actually made to Jones|Carter.

Director Moravec next discussed modifying the amount of funds reflected on page 13 of the Bookkeeper’s Report related to construction costs remaining on projects funded by proceeds from the Series 2018 Unlimited Tax Bonds (the “Series 2018 Bonds”). Director Moravec noted that the actual remaining costs associated with the Wastewater Treatment Plant (“WWTP”) expansion are significantly greater than the costs reflected on such page of the Report, and added that the District will need to transfer funds designated to the construction costs for other projects. Mr. Barner suggested that Ms. Bonds coordinate with Director Moravec to update such page to include the District’s cash contribution to such funds.

In response to a question by Director Moravec regarding the status of the Association of Water Board Directors’ (the “AWBD”) 2020 Annual Conference, Mr. Barner stated that has not made a decision to cancel such conference to his knowledge and that AWBD’s Staff and Board continue to evaluate what impact COVID-19 may have on such conference. Mr. Barner agreed to reach out to the AWBD for additional information and update the Board at the June 10, 2020 meeting regarding any changes to the status of such 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 9062 through 9093 from the General Operating Fund; 3) authorized payment of checks numbered 1945 through 1953 from the WWTP Fund; and 4) authorized payment of checks numbered 1287 through 1290 from the Capital Projects Fund.

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”) and Hays completed installation of the eight-inch (8″) potable water line under Walden Road. Mr. Abshire then presented Allco Pay Estimate No. 15 in the amount of $519,449.38. Mr. Abshire next explained that the cost for installation of the tap is included in the District’s contract with Allco; however, it was determined that such tap should be installed by Hays. Mr. Abshire further explained that the District will receive an invoice from Hays for approximately $8,200.00 for the installation of such tap and that the amount of such invoice will be deducted from the District’s contract with Allco.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that Jones|Carter has begun surveying for the additional facilities to be constructed for the benefit of MUD 9 along Heatherglen and Sleepy Hollow. Mr. Abshire reminded the Board that it had made contact with certain property owners from whom easements will be required and stated that such residents are receptive to granting such easements. Mr. Abshire added that after surveying, Jones|Carter will need about a month to incorporate certain design updates in Phase II and that they are coordinating with MUD 9’s Engineer on such updates.

Mr. Abshire then reminded the Board that MUD 9’s engineer is currently designing certain drainage improvements along the GSU easement near Lake Estates Drive, and that such improvements will require three (3) easements from property owners located within the District. Mr. Abshire reminded the Board that it had previously authorized Jones|Carter to reach out such property owners on behalf of MUD 9. Mr. Abshire stated that so far, he has only reached on property owners and that such owner has additional questions for MUD 9 regarding the specific drainage improvements to be located in such easements.

Regarding Hydrotank (the “HPT”) No. 1 at Water Treatment Plant (“WTP”) No. 1, Mr. Abshire reported that Jones|Carter is in the process of designing the plans for replacement of such tank and expects to bid such project in June 2020. Mr. Abshire then explained the he was coordinating with Mr. Barner on how the contract for installation of the HPT is procured. Mr. Abshire then stated that he believes that Jones|Carter was a couple of weeks away from advertising such contract. In response to a question by Director Patton regarding whether the contractor would purchase the HPT or the District would purchase directly, Mr. Abshire explained that such purchase was one of the questions that he and Mr. Barner were discussing. Mr. Abshire reminded the Board that they received a purchase order price from Holloway America, LLC (“Holloway”), the manufacturer of the defective HPT, for just cost of the HPT. Mr. Abshire then explained that the District can include such price of the HPT in the contract between the District and the contractor that it selects to install such tank or choose to purchase the HPT directly from Holloway.

Director Patton expressed his concern with getting the HPT on order as soon as possible so that the District is not only operating with one HPT at Water Plant No. 1. Mr. Abshire explained that it is anticipated that the HPT would be installed and operational in early 2021. Director Patton reminded Mr. Abshire and the Board the costs for design and installation of the HPT had been approved at the April 8, 2020 meeting and was under the impression that the Board had approved purchase of the HPT at that time. Mr. Barner then recommended that he explain certain matters within the attorney-client privilege related to procurement of the contract

Mr. Barron informed the Board that MUD 9 instructed Hays to place the HPT located at the its Buckingham Water Plant back into operation by Memorial Day to ease the burden placed on the HPT No. 2 located at WTP No. 1 while HPT No. 1 is out of operation. Regarding HPT No. 2, Mr. Abshire acknowledged that such tank is the District’s only remaining HPT in operation but stated that such tank was coated and inspected in 2017 and therefore is in good working condition.

Mr. Abshire next updated the Board regarding the MUD 9 Buckingham WTP Project. Mr. Abshire presented Gemini Contracting Pay Estimate Nos. 3 & 4 in the amount of $39,600.00 and $46,800.00, respectively. Mr. Abshire then reported that the foundations for the cooling towers and wet well were not poured in the locations indicated on the plans for such project. Mr. Barron reported that MUD 9 approved an amendment to the contract between MUD 9 and the contractor for such project and that a credit of $53,000.00 will be provided by the contractor. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board concurred with the contract amendment approved by MUD 9 for the Buckingham WTP. Mr. Barron then reported that the scheduled delivery of the cooling tower was delayed, but such delay should not affect the project’s date of completion.

Extensive discussion next ensued regarding updates made by Jones|Carter to the District’s Capital Improvement Plan (“CIP”). Director Moravec stated that he has closely reviewed such updates with Mr. Abshire and will incorporate such updates into his draft of the District’s proposed budget for Fiscal Year Ending (“FYE”) December 31, 2021. Messrs. Abshire and Wright agreed to take an inventory of the District’s booster pumps to determine whether any additional pumps need to be purchased.
Upon a motion by Director Barlow, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved: 1) the Engineer’s Report, as presented; 2) Allco Pay Estimate No. 15 in the amount of $519,449.38; 3) Gemini Contracting Pay Estimate No. 3 in the amount of $39,600.00; and 4) Gemini Contracting Pay Estimate No. 4 in the amount of $ $46,800.00.

Director Barlow then reported that she visited the construction site at the WWTP Project and noticed that there was no perimeter fencing installed to prevent the public from entering such site.

Director Barlow suggested that in the absence of a perimeter fence, the District should install additional signs prohibiting the public from entering such construction site. Mr. Abshire explained that it is the responsibility of the contractor to secure the construction site. Mr. Abshire further explained that such construction site does not have a fully-enclosed perimeter fence because such site is too large and includes too many access points, but he stated that Allco installed signs at such site notifying the public that such site is under video surveillance. Director Moravec then requested that Allco submit written assurance to the District, verified by Jones|Carter, that it is adhering to the Federal Occupational Safety and Health Administration (“OSHA”) standards of safety in securing the construction site of the WWTP Project. Mr. Abshire stated that he will notify Allco of the Board’s concerns regarding adequate security of such construction site.

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 96.94%. Mr. Wright next reported that the District had no new taps last month and that the District has a total of 1,756 connections.

Mr. Wright next reported that a storm knocked out power throughout the District on May 12, 2020 and noted that the automatic transfer switches installed at the District’s lift stations all operated successfully during such power outage. Mr. Wright further reported that the District’s generators also performed satisfactorily during such outage.

Mr. Wright then reported that seven (7) customers’ accounts are thirty (30) days delinquent and three (3) customers’ accounts are sixty (60) days delinquent. Mr. Wright further reported that Hays did not terminate service to such accounts last month pursuant to the Board’s decision at the April 8, 2020 meeting to waive customers’ late fees and suspend termination of service to delinquent accounts through the next sixty (60) days. Mr. Wright stated that standard letters were sent to such customers notifying them that their accounts are delinquent.

Director Patton next stated his opinion that the District should encourage more customers to receive their water bills electronically. Director Patton suggested that the District charge customers a fee to receive their water bills via regular mail. Mr. Wright stated that Hays will coordinate with First Billing, the 3rd party billing services provider responsible for creating such bills, in order to send a promotional email regarding electronic billing statements to customers who have made payments online but who are not signed-up to receive online statements.

Regarding the District’s Browning Catahoula Water Well, Mr. Wright reported that such well was operating less efficiently last month due to a failed actuator value on one (1) of the filters, which caused the well’s cooling tower to go off-line for one (1) week; however, such valve was repaired, and he expects such well to operate normally this month. Mr. Wright noted that currently he only notifies Director Tryon when one of the District’s wells goes off-line and asked if other directors wished to be notified. Director Moravec stated that all Directors should be notified when a significant problem occurs at any of the District’s facilities.

Mr. Write then reminded the Board that the District’s CIP includes an item regarding installation of automatic transfer switches at several of the District’s lift stations. Mr. Wright reported that such switches have been installed at four (4) of such lift stations and stated that there two (2) such switches left to be installed.

Next, Mr. Wright reported that H&H Utilities (“H&H”), a subcontractor for the internet service provider Tachus, responded to Hays regarding the District’s requests for payment for damages to the District’s water lines caused during the installation of Tachus’ fiber-optic cables. Mr. Wright further reported that H&H claims that $17,000.00 of the total $37,000.00 in damages were the result of incorrectly marked water lines. Mr. Wright explained that it is H&H’s position that if a water line was not marked within four (4) feet of its location, then damage caused to such line was not the responsibility of H&H. Director Patton stated that Tachus requested location marking of the District’s water lines several months before Tachus began installing such cables, and suggested that the markers could have been moved during such time. Mr. Wright then reported that H&H reviewed the invoices sent to them by Hays and agreed to pay two (2) such invoices thus far. Mr. Wright further reported that H&H provided Hays with the names of five (5) subcontractors who were installing Tachus’ fiber-optic cables on the dates that the District’s water lines were damaged. Mr. Wright stated that upon contacting such subcontractors, only one (1) has offered to reimburse the District for any damages to its water lines. Director Moravec requested that Hays modify the page of the Operator’s Report dedicated to Tachus-related expenses, which is titled Reimbursables, to reflect which contractor Hays believes is responsible for each incident of damage to the District’s water lines. Director Barlow stated that she believes that it is Tachus’ responsibility to collect repayment from its subcontractors for damage to the District’s water lines caused by such subcontractors. Mr. Barner requested that Mr. Wright forward copies of all correspondence sent by Hays to Tachus and its subcontractors regarding reimbursement for damage to the District’s water lines.

Regarding the annual water plant inspection of WTP Nos. 1 and 2 as required by the Texas Commission on Environmental Quality (the “TCEQ”), Mr. Wright reported that Hays and Jones|Carter met to discuss the items noted in both the 2018 and 2020 water plant inspection reports. Mr. Wright stated that Mr. Abshire prepared an Action Items List (“AIL”) indicating all repairs required at such plants as identified in such reports. Mr. Wright further stated that he will update the Board at its June 10, 2020 meeting regarding the dates of completion of such repairs.

Next, Mr. Wright recommended that Board authorize the cleaning and coating of all exterior pipes at the Poe and Browning WTPs. Mr. Wright explained that the cost to clean and coat all such piping at both water plants is $7,000.00. Mr. Wright recommended authorizing Hays to contract with a subcontractor, an operator employed by Hays that has a coatings business, for the completion of such work. A brief discussion ensued regarding such contract. Upon a motion by Director Barlow, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board authorized Hays to issue a subcontract to clean and coat all exterior pipes located at the Poe and Browning WTP.

In response to a question by Director Tryon regarding several recommendations noted on Jones|Carter’s 2018 WTP inspection reports that were also recommended on their 2020 WTP inspection reports, Mr. Wright explained that certain items are repaired on an as-needed basis, and that some of the recommendations made in the 2018 reports were not critical at the time.

Mr. Wright added that some of the recommended repairs were made by Hays but were not documented or reported to Jones|Carter, and therefore remained on the 2020 reports prepared by Jones|Carter. Mr. Wright agreed to notify the Engineer whenever such recommended repairs were completed by Hays. Director Moravec requested that the AIL to be presented at the June 10, 2020 meeting be updated to include expected completion dates for any items that can be completed within one (1) month following such meeting.

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

APPROVE DISTRIBUTION OF DRINKING WATER QUALITY REPORT

Mr. Wright then presented the 2019 Drinking Water Quality Report, formerly known as the Consumer Confidence Report, (the “CCR”), which the TCEQ requires be made directly available to customers annually no later than July 1. Discussion then ensued concerning the process for distributing the CCR. Mr. Barner reminded the Board and Mr. Wright that a specific URL link for the CCR must be provided to customers by July 1, 2020. Mr. Wright confirmed such requirement and added that hard copies of the CCR can be obtained from the Operator upon request and that he will also ensure that a link to the CCR will be posted on the District’s website. Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board authorized distribution of the CCR, subject to review by the Board and the creation of a URL.

MISCELLANEOUS REPORTS

Director Patton reported that he attended MUD 9’s April board meeting and noted that MUD 9 authorized Jones|Carter to conduct surveying in Sleepy Hollow for the purpose of drainage improvements.

ATTORNEY’S REPORT

Mr. Barner reported that he provided a deed in February to David Hartman, the General Manager of the Walden Community Improvement Association (the “WCIA”) for the conveyance of certain property from the District to the WCIA for use as a pocket park. Mr. Barner further reported that he understands that such deed is under review by the WCIA’s attorney.

Mr. Barner next updated the Board on a proposed interlocal agreement between the District and MUD 9 to set forth each district’s obligations related to the funding, construction, and operation of certain joint drainage improvements. Mr. Barner reminded the Board that it previously appointed Directors Tryon and Moravec to serve on a committee to discuss such improvements with Directors Barron and Ginault of MUD 9 and provide recommendations to the Board on same. Director Moravec then reported on the status of discussion with Directors Barron and Ginault and stated that it was understood that MUD 9 will pay all costs associated with the design and construction of the enlargement of the existing storm water line and outfall located along Heatherglen Road (the “Joint Improvements”). Director Moravec and Mr. Barner explained that the Joint Improvements consist of a four-foot (4′) diameter storm water line that has yet to be constructed along Sleepy Hollow and an existing 42-inch (42″) storm water line, which will be replaced with a six-foot (6′) diameter line in order to improve drainage. Mr. Barner then explained that the existing storm water line is located within the District and was constructed by the District; however, it is the opinion of MUD 9’s engineer that such water line must be upsized to improve drainage within MUD 9. Director Moravec further reported that MUD 9 proposed to share the cost of maintenance of such improvements, with two-thirds (2/3) of such cost being paid by MUD 9 and one-third (1/3) of such cost being paid by the District. Director Moravec stated that MUD 9 has requested sole ownership of the Improvements on the basis that it is paying for such improvements with bond proceeds. Director Tryon stated that he and Director Moravec are in agreement with granting MUD 9’s request for ownership of the six-foot (6′) diameter storm water line. Mr. Barner then explained that the District can convey the Improvements, which are to be located within the District, to MUD 9 following construction, but clarified that it is not a requirement that projects funded with bond proceeds be owned by the entity funding such projects; however, such funding needed to be memorialized in an agreement between the parties. Mr. Barner further explained that if the District conveys such improvements to MUD 9, such conveyance will be clearly documented in the proposed agreement between the District and MUD 9.

Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved an agreement for the financing, design, construction and operation of the Joint Improvements between the District and MUD 9, subject to finalization by the attorneys of both districts.

ELECTION AGENDA

Mr. Barner updated the Board regarding the May 2, 2020 Directors Election (the “Election”) and the election of officers. Mr. Barner then discussed the Certificates of Election, Affidavits of Directors, and Oaths of Office for Directors Tryon and Patton and stated that RBAP will send hard copies of such documents to Directors Tryon and Patton for signature. Upon motion by Director Leasure, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board voted to accept the executed Oaths of Office and Statements of Elected Director for Directors Tryon and Patton. Mr. Barner noted that copies of the Oaths of Office will be filed with the Secretary of State’s office, pursuant to Article XVI, Section 1 of the Texas Constitution.

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 11:20 a.m. to discuss matters within the attorney/client privilege. Present for all or portions of the executive session were the Board of Directors, Philip Wright, Mr. Ross J. Radcliffe, Mr. Barner, and Ms. Cain. The Board declared the Executive Session was ended at 12:10 p.m.

RECONVENE IN OPEN SESSION

As of 12:10 p.m., the President declared the Executive Session was ended and the public session was resumed.

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

PASSED AND APPROVED this the ____ day of ________________, 2020.

Secretary, Board of Directors