Meeting Minutes 2020-06-10

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

JUNE 10, 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, June 10, 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 (the “Governor”) 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, Mason Mueller, and Jordan Dunn 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 MAY 13, 2020 MEETING

The President next directed the Board to the approval of the May 13, 2020 regular meeting minutes. Director Moravec stated that he spoke with Mr. Barner to provide clarification as to Director Moravec’s motion made during such meeting authorizing the Bookkeeper to transfer funds from the District’s maturing certificates of deposit (“CD”) into money market accounts held by Texas Class and TexPool. Director Moravec explained that his motion was intended to authorize the Bookkeeper 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.

Director Moravec next stated that he further coordinated with Mr. Barner to additionally revise the minutes of the May 13, 2020 meeting to reflect Director Moravec’s request that Allco, LLC (“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 Wastewater Treatment Plant (“WWTP”) Improvement Project (the “WWTP Project”). Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the May 13, 2020 regular meeting minutes, subject to certain changes.

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. Director Moravec requested that Ms. Bonds provide the Board with a comparison of the District’s 2019 certified taxable value and its preliminary 2020 taxable value. Director Moravec stated that he will incorporate such values into his draft of the District’s proposed budget for the Fiscal Year Ending (“FYE”) December 31, 2021. Upon a motion by Director Leasure, seconded by Director Moravec, 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 pursuant to the Board’s authorization at its May 13, 2020 Board meeting, she is coordinating with Director Moravec to transfer funds from the District’s maturing CDs into money market accounts held with Texas Class and TexPool in a ratio not to exceed two-thirds (2/3) to one-third (1/3).

Director Moravec then noted that the District is halfway through its fiscal year and it appears that three (3) categories of expenditures are over-budget: 1) maintenance and repairs-water; 2) sewer repairs and maintenance; and 3) lift station repairs and maintenance. Director Moravec requested that Mr. Abshire and Mr. Wright coordinate to present a summary of the expected expenses for the remainder of the year in such categories so that the Board may determine whether the District’s budget for FYE December 31, 2020, needs to be amended.

Upon a motion by Director Leasure, 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 9091 through 9120 from the General Operating Fund; 3) authorized payment of checks numbered 1952 through 1959 from the WWTP Fund; and 4) authorized payment of checks numbered 1291 through 1292 from the Capital Projects Fund.

ENGINEER’S REPORT

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

Mr. Abshire next discussed the progress made by Allco in the past month regarding the WWTP Project. Mr. Abshire then presented Allco Pay Estimate No. 16 in the amount of $669,233.53 and recommended payment of the same. Mr. Abshire next reported that Allco requested that the District allow them to reallocate 100 days from the Phase II schedule to the Phase I schedule for such project, claiming that some of the items that Allco completed are actually Phase II items. Director Patton stated that Allco is making such request in order to avoid incurring penalties for not meeting scheduling deadlines set forth in its contract with the District. Director Patton then suggested that the Board may consider waiving such penalties after Allco has completed the WWTP Project and demonstrated that the WWTP is operating successfully.

Next, Mr. Abshire reminded the Board that it previously authorized Radarview, LLC (“Radarview”) to complete a subsurface investigation survey beneath the blower building at the WWTP in order to determine the extent of the layer of debris discovered during Allco’s excavation at such project site. Mr. Abshire then presented the report prepared by Radarview following the completion of such survey. Mr. Abshire stated his concern that while such debris is tightly compacted beneath the blower pad, the vibration of the blowers may eventually dislodge such debris.

Mr. Abshire then presented the Board with three (3) options for addressing the situation: 1) take no action to remove the debris layer at this time but authorize Jones|Carter to monitor the blower pad elevation at regular intervals (“Option No. 1”); 2) authorize the use of a tunneling method to dig beneath the blower pad to remove the debris layer and reinforce the remaining void with concrete cylinders and flowable fill (“Option No. 2”); and 3) remove the blower pad foundation, install piers and then reinstall the foundation (“Option No. 3”). Mr. Abshire noted that Option No. 2 will require 17 days to complete at a cost of $60,000, and Option No. 3 will require 30 days to complete at a cost of $80,000. Mr. Abshire then explained that the District’s contract with Allco for the WWTP Project includes $200,000 for unforeseen conditions; therefore, work relating to the removal of the debris layer will not increase the cost of such contract. Extensive discussion ensued regarding the options presented by Mr. Abshire relating to the issue of the debris layer. Upon a motion by Director Tryon, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized Jones|Carter to proceed with Option No. 3 at a cost not to exceed $80,000, subject to Jones|Carter’s confirmation of such cost estimate.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that Jones|Carter completed the surveying for the additional facilities to be constructed for the benefit of MUD 9 along Heatherglen and Sleepy Hollow. Mr. Abshire explained that such surveys revealed that the drainage outfall is not level as originally thought, but instead was constructed on a slope due to a change in elevation in the area where it is located. Mr. Abshire further explained that Jones|Carter is in the process of incorporating such updated information into the design plans for Phase II. Ms. Abshire stated that such plans will be submitted to Montgomery County (the “County”) for review within the next two (2) weeks.

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 reported that Jones|Carter made contact with all property owners from whom easements will be required for such drainage improvements and stated that such residents are receptive to granting such easements. Mr. Abshire further reported that MUD 9’s engineer has taken over all communications with such property owners regarding such easements.

Regarding hydropneumatic tank (the “HPT”) No. 1 at Water Treatment Plant (“WTP”) No. 1, Mr. Abshire reported that Jones|Carter completed the design plans for the replacement of such tank and solicited bids for such project. Mr. Abshire further reported that Jones|Carter received three (3) bids, the lowest of which was submitted by CFG Industries (“CFG”) at an amount of $53,500. Mr. Abshire stated that the replacement of the HPT will take 60 days to complete following delivery of such tank. Mr. Abshire then reported that Jones|Carter submitted a purchase order for such HPT to Holloway America, LLC (“Holloway”), the manufacturer of the defective HPT, in the amount of $36,548 with an estimated delivery date of 14 to 16 weeks. Mr. Abshire then requested authority from the Board to award the contract for the replacement of the HPT to CFG, but noted that a contact with CFG will not be executed until closer to the date of delivery of the HPT.

Mr. Abshire next reminded the Board that in March 2020, a resident of Lake Estates contacted Hays North regarding storm water collecting between his home and his neighbor’s home. Mr. Abshire stated that Hays North inspected the area and found that the swale located behind the property is overflowing during heavy rainstorms resulting in flooding of residents’ backyards and erosion behind such residents’ property. Mr. Wright added that following such complaint, Hays North has routinely inspected and cleared the swale inlets located behind the resident’s home.

Mr. Abshire reported that on June 5, 2020, such resident submitted a formal request for the District to provide a permanent resolution of such drainage issue. Mr. Abshire further reported that such resident requested that the District expand the existing swale inlet or install additional inlets. In response to a question by Director Tyron, Mr. Wright explained that the cost to expand an inlet is between $2,000 and $3,000 per inlet, and added that such resident is complaining about two (2) inlets overflowing. Discussion then ensued regarding modifying such overflowing swale inlets in order to prevent drainage issues in the area. Upon a motion by Director Tryon, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized Hays North to modify the two (2) existing swale inlets at issue in order to improve drainage flow. Director Moravec noted that modifying such inlets will reduce flooding in the area, but will not resolve the erosion issue.

Director Leasure exited the meeting at this time.

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 Engineer’s Report, as presented; 2) approved Allco Pay Estimate No. 16 in the amount of $669,233.53; and 3) awarded the project for replacement of the HPT at WTP No. 1 to CFG, subject to the Attorney’s review of the contract, bonds and insurance.

Director Leasure entered the meeting at this time.

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 95.83%. Mr. Wright next reported that the District had two (2) new taps last month and that the District has a total of 1,757 connections.

Mr. Wright then reported that 158 notices were mailed to customers with delinquent accounts. Mr. Wright further reported that Hays North did not terminate service to such accounts last month pursuant to the Board’s decision at the April 8, 2020 Board meeting to waive customers’ late fees and suspend termination of service to delinquent accounts through the next 60 days. In response to a question by Mr. Wright regarding the resumption of service terminations to delinquent accounts, Mr. Barner explained that the Governor’s State wide disaster declaration is still in effect; therefore, he cannot recommend that the District resume such terminations at this time. Director Patton requested that Mr. Wright verify that MUD 9 continues to suspend service terminations to delinquent accounts so that the two (2) districts may be consistent in their billing practices.

Mr. Wright next reported that Hays North repaired a cooling unit on the return pumps at the WWTP. Mr. Wright further reported that the failure of such cooling unit did not result in an increase of sludge draining into the GSU easement.

Next, Mr. Wright reported that H&H Utilities (“H&H”), a subcontractor for the internet service provider Tachus, submitted two (2) payments to the District in response to invoices sent by Hays North for damages to the District’s water lines caused during the installation of Tachus’ fiber-optic cables. Mr. Wright further reported that Hays North submitted invoices to several of Tachus’ other subcontractors who were installing Tachus’ fiber-optic cables on the dates that the District’s water lines were damaged. Director Moravec stated that the Board believes that reimbursement for damage to the District’s water lines caused during the installation of Tachus’ fiber-optic cables should be paid by Tachus rather than its subcontractors since Tachus is the company that is responsible for such project; however, he noted that requests made to Tachus for such reimbursement have been ineffective. In response to a question by Director Moravec regarding the possibility of the District pursuing such claims against Tachus in small claims court, Mr. Barner expressed his concerns over such an approach and said that he would review further to determine whether the District could pursue such a remedy. Mr. Barner reminded the Board that the District received reimbursement for some of the damage to its water lines from Tachus’ subcontractors, and suggested that if so authorized by the Board, RBAP would send a letter to Tachus demanding reimbursement for the remaining cost of all damages that occurred during the installation of such cables, pending receipt of information from Hays North.

Mr. Wright then reported that Hays North received a request from Gicor, Inc. (“Gicor”), a property management company, for an adjustment to the water bill for 3122 Canterbury Lane. Mr. Wright explained that a water leak at such property resulted in 429,000 gallons of water used last month and a water bill of $2,300. Mr. Wright further explained that Gicor informed Hays North that such leak was not detected earlier because the homeowners do not reside at such property; however, upon being made aware of such leak by Hays North, Gicor repaired the broken water line. Director Moravec reminded the Board that the District encourages customers to practice water conservation and sustainability; therefore, it is his opinion that customers who waste water should not be granted an adjustment to their water bills. Director Moravec then suggested that customers who own unoccupied property within the District should consider installing secondary devices that help such customers monitor their water usage. Mr. Wright stated that Hays North would provide the homeowner of the property at issue with information regarding the Flume water monitoring device. Director Barlow stated her agreement with denying an adjustment to such customer’s water bill, and added that such customer should seek reimbursement from Gicor for their failure to adequately manage the property.

Director Moravec then requested that Hays North provide the Board with a list of all customer accounts within the District that are at least 90 days delinquent and the total outstanding balance for such accounts. Mr. Barner explained that several districts have started sending letters to customers whose accounts are more than 90 days delinquent requesting that such customers make arrangements to set up payment plans for the outstanding balance.

Next, Director Moravec discussed a line item on the 2020 Water Plant Inspection Action Item Summary (the “Inspection Summary”) regarding the installation of a safety feature to allow for inspection of the roof vent on the tank at WTP No. 1. Director Moravec stated that the Inspection Summary indicates that such item will be included on District’s 10 year Capital Improvements Plan, but noted that such item would be more appropriately included in the District’s budget for maintenance and repair expenses. Mr. Wright explained that prior to installation of such safety feature, Jones|Carter intends to meet with the manufacturer of such tank to address making several modifications to such tank, including the installation of such safety feature.

In response to a request made earlier in the meeting by Director Moravec regarding the number of customer accounts that are at least 90 days delinquent, Mr. Wright reported that there are no customers of the District whose accounts are 90 days delinquent. Mr. Wright further reported that seven (7) accounts are 60 days past due, and noted that the total amount due to the District on such accounts is approximately $1,000.

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

MISCELLANEOUS REPORTS

Regarding MUD 9’s board meeting, Mr. Barron reported that Harbor Shores notified such district that it will soon begin Phase II construction and that such construction is expected to take 20 months to complete. Mr. Barron further reported that MUD 9’s operator received several complaints about poor water quality within such district and added that such complaints are being investigated. Mr. Barron then stated that the Buckingham Water Plant Improvement Project is expected to be substantially completed by the end of July 2020.

DISCUSS IMPLEMENTATION OF SERVICE FEE FOR STATEMENT BILLING

Director Patton next explained that electronic billing statements and electronic payments are less expensive for the District than providing customers with hard copies of billing statements and processing customers’ payments received by checks. Director Patton further explained that the District has offered customers the ability to receive electronic billing statements and make electronic payments for the past two (2) years, but few customers have taken advantage of those available options. Director Patton recommended that the District charge customers a fee of $1.00 per month to receive their billing statements by mail, unless such customers are 65 years of age or older. Director Patton further recommended that the District notify customers that such fee will be implemented beginning January 1, 2021. Director Moravec suggested that instead of charging customers a fee, the District should offer a $1.00 credit on customers’ monthly utility bills to those customers who receive electronic billing statements and those who make electronic payments. Discussion then ensued regarding incentivizing customers to sign-up to receive electronic billing statements and submit payments online. Director Moravec requested that Hays North research whether its billing software could discount customers’ accounts by $1.00 when they sign up to receive electronic billing statements or charge a $1.00 fee to accounts of customers who continue to receive billing statements by mail, and asked that Mr. Wright provide a recommendation to the Board regarding same. Director Barlow suggested that the District send an email to customers with a sample of an electronic billing statement in order to demonstrate the simplicity of receiving such statements electronically. Director Barlow further suggested that Hays North insert a flyer into customers’ utility bills promoting the availability of electronic billing statements. Mr. Wright stated that he will provide the Board with the cost to include such flyer in customers’ utility bills.

DISCUSS POLICIES RELATED TO THE DELEGATION OF AUTHORITY

Mr. Barner reminded the Board that a special meeting was required last month in order to discuss and authorize the subsurface investigation survey of the debris layer discovered beneath the blower building at the WWTP. Mr. Barner explained that the District does not have a policy that authorizes an individual director or a committee of directors to approve decisions within a certain dollar value limit; therefore, when a pressing issue arises and action on such issue cannot wait until the next regular Board meeting, a special meeting of the Board is required. Mr. Barner stated that if the Board wished to delegate such authority, RBAP would prepare a proposed policy for the Board to review regarding the scope of such authority. In response to a question by Director Tryon regarding the costs associated with holding a special meeting, Mr. Barner stated that the preparation for and holding of each special meeting costs the District a few hundred dollars, but noted that the District rarely holds special meetings. Director Moravec recommended that the Board consider appointing a committee of two (2) Directors authorized to make decisions regarding matters of less than $10,000. Director Moravec added that decisions made by such committee should be discussed with the full Board at the next regularly scheduled Board meeting. Director Moravec suggested that the Board also consider authorizing the President to solely make decisions relating matters of imminent concern to the District.

ATTORNEY’S REPORT

Mr. Barner reported that David Hartman, the General Manager of the Walden Community Improvement Association (the “WCIA”), informed him that the WCIA approved the deed for the conveyance of certain property from the District to the WCIA for use as a pocket park. Mr. Barner further reported that he will coordinate execution of such deed by the necessary parties.

Mr. Barner next reported that he and Clark Lord, MUD 9’s attorney, continue to prepare the 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 then reminded the Board that it previously authorized Hays North to file a claim with the District’s insurance provider for damage to equipment at the Waterfront Lift Station following a power surge that occurred on April 9, 2020. Mr. Wright stated that such claim was approved by the District’s insurance provider, and the District will be receiving a check for $3,377.

Mr. Barner reminded the Board that a separate claim was filed with the District’s insurance provider for damage caused by the backflow of sewage into two (2) residents’ homes as a result of the failure of such Lift Station equipment, and added that such claim is still under investigation.

In response to a question by Director Patton regarding the District’s agreement with the City of Huntsville for the purchase of its effluent, Mr. Barner stated that he will provide an update to the Board in advance of the July 8, 2020 Board meeting.

Next, discussion ensued regarding the cyber-security training required to be completed by all Directors in order to satisfy the cyber-security training requirements established by House Bill 3834. Mr. Barner reported that the Association of Water Board Directors (the “AWBD”) has partnered with Jones|Carter to offer a free cyber-security webinar. Mr. Barner requested that the Directors provide their certificates of completion to RBAP upon completion of such training. Mr. Barner then reminded the Board that in advance of the AWBD’s Summer Conference, the Board performs an annual review of the District’s Ethics Policy. Mr. Barner stated that he will provide the Board with a copy of such policy so that the Board may consider any necessary modifications to such policy at the July 8, 2020 Board meeting.

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 11:30 a.m. to discuss matters within the attorney/client privilege and security. Present for all or portions of the Executive Session were the Board of Directors, Messrs. Abshire, Mueller and Barner, and Ms. Cain. The Board declared the Executive Session was ended at 11:52 a.m.

RECONVENE IN OPEN SESSION
As of 11:52 a.m., the President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the implementation of the measures discussed in closed session.

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

PASSED AND APPROVED this the 8th day of July, 2020.

/s/ Margie Barlow Secretary, Board of Directors