Meeting Minutes 2020-10-14

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

OCTOBER 14, 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, October 14, 2020, at 9:00 a.m., via telephone and video 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 and Conner Murphy of Jones|Carter (“Engineer” or “Jones|Carter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Lyle Hamm, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Elliot M. Barner, attorney, and Hannah Slaven, 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 SEPTEMBER 9, 2020 REGULAR MEETING

The President next directed the Board to the approval of the September 9, 2020 regular meeting minutes. Mr. Barner explained that there was a typographical error in the minutes regarding the time the Board had entered into and ended executive session, noting that the Board had entered executive session at 10:34 a.m., not 11:34 a.m. as originally printed in the draft minutes of the meeting, and ended executive session at 10:36 a.m., and adjourned regular session at 10:37 a.m. Mr. Barner confirmed that such error had been corrected. Upon a motion by Director Tryon, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the September 9, 2020 regular meeting minutes, subject to the above-noted corrections.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Bonds reviewed the Tax Assessor-Collector’s Report for the months of August 2020 and September 2020, copies of which are attached hereto, including past monthly collections and credits as reported by Tammy McRae, Tax Assessor-Collector for the District. Ms. Bonds reported that 99.27% of the 2019 taxes have been collected as of September 30, 2020.

Upon a motion by Director Patton, seconded by Director Leasure, 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.

Director Moravec expressed concern that the repairs to the District’s Lift Station appeared to go over budget if the costs were attributed to operating expenses, and stated that they should rather be budgeted as capital improvements. A lengthy discussion then ensued regarding the source of funds for such repairs.

The Board also discussed registration for attendance at the Association of Water Board Directors (“AWBD”) Mid-Winter Conference.

Upon a motion by Director Leasure, seconded by Director Barlow, 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 9239 through 9274 from the General Operating Fund; 3) authorized payment of checks numbered 1981 through 1987 from the WWTP Fund; and 4) authorized payment of checks numbered 1306 and 1307 from the Capital Projects Fund.

At this time, Mr. Barner asked that the Board return their attention to the Tax Assessor-Collector’s Report. He reported that six (6) letters have been sent to delinquent accounts, of which three (3) accounts have arranged payment plans through the District’s Tax Assessor-Collector. One (1) other account holder (account ending in 14400) has requested that they arrange a payment plan directly with the District. Mr. Barner noted this left two (2) remaining accounts that have not replied to any further collection efforts. Upon an amended motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the Tax Assessor-Collector’s Report, authorized the payment plan directly with the District for account number ending in 14400, and allowed two (2) accounts to be terminated for non-payment of 2019 taxes.

Regarding the engagement of Burton Accounting, P.L.L.C. (“Burton Accounting”) to prepare additional financial statements for the District in order to comply with certain requirements of the Texas Water Development Board (the “TWDB”) in connection with the District’s 2011 TWDB revenue bonds, Mr. Barner stated that the District has received a proposal from Burton Accounting for same. Mr. Barner explained the purpose of the TWDB’s requirements and the necessity of preparing such additional statements. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized the execution of the engagement letter on behalf of the Board and the District, and authorized Burton Accounting to complete the review as required.

Mr. Barner then explained that pursuant to Texas Government Code, Section 2256.005(e), as amended, the District is required to review its Amended and Restated Order Designating Investment Officer and Establishing Rules, Policies and Code of Ethics for the Investment of District Funds and Review of Investments (“Investment Policy”) not less than annually. Mr. Barner stated that there were no recommended changes to such policy and that any motion by the Board only needs to acknowledge that such policy had been reviewed. Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Investment Policy, as presented.

Regarding the review and approval of the Amended List of Qualified Brokers, Ms. Bonds noted for the Board that two (2) new brokers had been added to the list, and one (1) had been removed.

Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the Amended List of Qualified Brokers, as presented.

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, LLC (“Allco”) in the past month regarding the WWTP Improvement Project (the “WWTP Project”). Mr. Abshire reported that Allco was requesting a reduction in the retainage on the contract now that the project was over 50% complete by value. Mr. Abshire advised the Board that, if they declined the request from Allco, the Board would be required to pay interest on such retainage, which interest he calculated would likely amount to about $1,500.00 by the time such project was completed. He also reported that Allco was requesting payment of materials on hand for certain materials that were for Phase II of the WWTP Project. An extensive discussion ensued regarding reduction of the retainage and payment for materials on hand. Mr. Abshire also presented Pay Estimate No. 20 from Allco in the amount of $333,181.26, with the District’s portion being 46%, or $153,263.88.

Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board: 1) rejected Allco’s request for release of retainage; 2) approved payment for materials for Phase II of the WWTP Project, provided all items purchased were securely in the care, custody, and control of Allco and protected from the elements; and 3) authorized payment of the District’s portion of Pay Estimate No. 20 in the amount of $153,263.88.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that Jones|Carter had advertised for bids, with the low bid coming from AR Turnkee Construction Co. (“Turnkee”) in the amount of $809,768.00. A copy of the bid tabulation is included with the Engineer’s Report. Mr. Abshire informed the Board that MUD 9 has requested that, due to MUD 9’s higher share of costs in Turnkee’s bid relative to other bids received, that MUD 9 not be required to pay costs associated with bonds and insurance for the cost of the Project. Discussion ensued on the matter, and upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the award of the contract to Turnkee, and agreed to assume the costs of bonds and insurance for same pursuant to the request by MUD 9.

Regarding hydropneumatic tank (“HPT”) No. 1 at Water Treatment Plant (“WTP”) No. 1, Mr. Abshire reminded the Board that the contract for such project with CFG Industries (“CFG”) was executed. The Notice to Proceed was issued to CFG on Monday, September 14, 2020, and a new pressure vessel arrived and has been installed in the existing location of HPT No. 1 at WTP No. 1.

Mr. Abshire further reported that the work is expected to be complete by mid-November.

Mr. Abshire provided some photos that illustrated that during the installation of the new tank, it became apparent that the HPT inlet pipe flange did not line up flush with the existing pipe flange.

To repair this issue will require a change order, which CFG has quoted to be completed at a cost $1,500.00. Mr. Abshire further noted that coating of the HPT has begun. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized a change order for the project not to exceed $1,500.00.

Mr. Abshire next updated the Board regarding the MUD 9 Buckingham WTP Project. Mr. Abshire reported that all site work has been completed and Gemini is ready to demonstrate total plant performance. Mr. Abshire presented Gemini Pay Estimate No. 9 in the amount of $97,532.10. Mr. Abshire noted that the District’s share of such pay estimate is 50% of the total, or $48,766.05.

Next, Mr. Abshire reminded the Board that the America’s Water Infrastructure Act of 2018 (the “AWIA”) requires water districts serving more than 3,300 customers to develop and/or update their Risk and Resilience Assessments (“RRA”) and Emergency Response Plans (“ERP”). Mr. Abshire further reminded the Board that preparation of a RRA will include a detailed review of the District’s facilities by Jones|Carter. Mr. Abshire reported that Jones|Carter met with the AWIA committee on September 25, 2020, to further discuss the RRA and ERP, and that the committee agreed that the assessment should be done jointly. Mr. Abshire stated that the cost of the assessment would be about $9,000, and would be split equally between MUD 8 and MUD 9. The ERP, which is to be prepared for only MUD 8, is due six (6) months after the assessment. Director Patton requested that the AWIA committee wait until January to begin its work on the assessment, and Director Moravec requested that the Board have the opportunity to review the RRA before the ERP is prepared. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the AWIA committee to begin preparation of the RRA for MUD 8 and MUD 9 in January.

Mr. Abshire next addressed the Water Well performance test results and noted that said results were attached to the Engineer’s Report.

A brief discussion then ensued concerning a low point in the District and a complaint from a resident about ponding at the back of her property located adjacent to the WWTP along Alcott.

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.

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 101.87%. Mr. Wright next reported that there were no new taps last month and that the District has a total of 1,763 connections.

A discussion then ensued on the handling of delinquent accounts. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board concurred that Hays North should resume termination of service for non-payment, with flexibility provided to Hays North to offer payment plans to those affected by COVID-19.

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

Discussion next ensued regarding a notice to be inserted into customers’ utility bills informing them of the availability of electronic statements and electronic payments. Director Patton recommended a one-time credit of $12.00 to customers who sign up for electronic billing statements. Costs of delivering the credit via the website were discussed, as well as costs to distribute the flyer in the community. Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved a one-time $12.00 credit for customers who elected to receive electronic bills, and authorized Hays North to take the necessary steps to accomplish the delivery of said credit.

Ms. Bonds exited the meeting during this discussion.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton reported that usage of the District’s website seems to have plateaued. Director Patton stated that he plans to update the website with additional materials soon.

AMENDMENT OF THE DISTRICT’S RATE ORDER

Mr. Barner advised the Board that he recommended no changes upon the annual review of the District’s Rate Order.

AUTHORIZE ATTENDANCE AT THE 2020 GULF COAST WATER CONSERVATION SYMPOSIUM (“GCWCS”)

Mr. Barner noted that the symposium would be held only virtually in 2020. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the attendance of two (2) Directors at the GCWCS.

ATTORNEY’S REPORT

Mr. Barner reminded the Board that the agreement with MUD 9 for financing, construction and operation of joint drainage improvements needed to be executed by all of the parties before construction begins on such improvements.

Mr. Barner reminded the Board that the District had an option to purchase effluent from the City of Huntsville (the “City”) which expires on January 31, 2021. Mr. Barner further reminded the Board that the District had requested an extension of time for said option, and the City had approved extensions of such option. Mr. Barner explained that he would circulate the amendment for the extension of the option of all parties for execution.

Mr. Barner next reminded the Board that Mr. Rudy Okhrulik had requested that the District resolve certain issues with drainage at his property that he believed had resulted from Phase I of the District’s Drainage Improvements. Mr. Barner explained that Mr. Okhrulik had accepted the District’s offer and that RBAP had prepared a release for such offer that would be provided to Mr. Okhrulik for his execution.

Director Moravec exited the meeting during the presentation of the Attorney’s Report.

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 11:23 a.m. to discuss matters within the attorney/client privilege. Present for all or portions of the Executive Session were the Board of Directors, except for Director Moravec; Mr. Abshire; Mr. Murphy; Mr. Barner; and Ms. Slaven. The Board declared the Executive Session was ended at 11:42 a.m.

RECONVENE IN OPEN SESSION

As of 11:42 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 Barlow, after full discussion and with all Directors present voting aye, the Board approved an offer to buy a certain easement in the District according to the terms discussed in Executive Session.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:43 a.m.

PASSED AND APPROVED this the 11th day of November, 2020.

Secretary, Board of Directors