Meeting Minutes 2020-12-09

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

DECEMBER 9, 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, December 9, 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 video conference were Dietra Bonds and Maria Felder 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”); Michael Others of McCall Gibson Swedlund Barfoot PLLC (“MGSB” or “Auditor”); Charles Barron, 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 NOVEMBER 11, 2020 REGULAR MEETING

The President next directed the Board to the approval of the November 11, 2020 regular meeting minutes. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the November 11, 2020 regular meeting minutes, as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Bonds reviewed the Tax Assessor-Collector’s Report for the month of November 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 8.49% of the 2020 taxes have been collected as of November 30, 2020.

Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the Tax Assessor-Collector’s Report, as presented.

BOOKKEEPER’S REPORT

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

Ms. Bonds then reviewed the District’s general operating revenue budget comparison for fiscal year ending (“FYE”) December 31, 2020. Director Moravec then reminded the Board that there is a negative variance between revenues and expenses related to fees paid to the Lone Star Groundwater Conservation District (“LSGCD”) for the District’s water well permits.

Mr. Wright explained that there are several factors to consider when accounting for such variance: 1) the District bills its customers based on water usage in the amount of thousands of gallons; 2) the District pumps an amount of water from its wells approximately five percent (5%) greater than what it bills such customers and that such amount is lost through leaks in the Water Distribution System; and 3) LSGCD bills the District and the District makes quarterly payments for the amount of water issued through the LSGCD permit and not the amount of water actually used by the District or the District’s customers. Mr. Wright went on to explain that the District is significantly permitted through LSGCD for more water than is demanded in order to ensure a continuous and adequate supply of water to the District.

Mr. Barner then went on to explain that public water suppliers customarily assess a water rate in an amount that sufficiently covers not just the costs of producing water, but also water loss and administrative costs such as permitting from entities such as LSGCD, the City of Houston and other regional water authorities in which public water suppliers such as the District are required to be members. Mr. Barner added that such costs have to be considered as part of the overall cost of water in order to resolve the aforementioned variance.

Extensive discussion ensued regarding the timing of a comprehensive water and wastewater rate review and it was the consensus of the Board that it would conduct such review after the expanded Wastewater Treatment Plant (“WWTP”) has been in operation for one (1) year.

Ms. Bonds then continued presenting the Bookkeeper’s Report, including expenditures and investments.

Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Bookkeeper’s Report, as presented, and authorized payment of checks detailed therein.

ADOPT ORDERS ADOPTING BUDGETS

The Board then discussed the General Operating Fund (“GOF”) Budget and WWTP Fund Budget for FYE December 31, 2021. Ms. Bonds and Director Moravec discussed such Director’s final revisions to the GOF budget and financial plan, a copy of which is attached hereto. Regarding the WWTP budget, Mr. Abshire noted that there would be a slight change to the WWTP budget based on anticipated operating costs of the expanded WWTP, the first phase of which is expected to being operation in June or July of 2021.

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Order Adopting the GOF Budget for FYE December 31, 2021, a copy of which is attached hereto.

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 the WWTP Budget for FYE December 31, 2021, a copy of which is attached hereto.

ETHICS POLICY

Mr. Barner stated that review of the District’s Ethics Policy is an annual agenda item. Mr. Barner went on to state that he recommends no changes to such policy at this time. In response to a question, Mr. Barner noted that the last revision to the policy was in 2006.

AUDITOR ENGAGEMENT

Mr. Others presented a proposal for auditing the financial statements for the fiscal years ending December 31, 2020 and December 31, 2021, a copy of which is attached hereto. A discussion ensued regarding the range of fees for MGSB’s services in the proposal, with the Board requesting that MGSB reduce the high point of the fee range for auditing the District’s financial statements and special revenue fund from $15,500 and $3,500 respectively to $15,000 and $3,000. Mr. Others explained that he will discuss further with the principals of MGSB and update the Board accordingly.

Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the engagement subject to the aforementioned reductions in fees.

INSURANCE RENEWAL

Mr. Barner then reminded the Board that its insurance policies expire in March 2021 and asked the Board if it wished to request additional proposals for such policies for the 2021-2022 coverage year. Discussion ensued regarding such policies. The Board requested that Mr. Barner reach out to the District’s insurance broker, Arthur J. Gallagher, and request that such proposals be provide to them before the District’s January 13, 2021 Board meeting.

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”), and presented for the Board’s approval Pay Estimate No. 22 in the amount of $345,278.65. Mr. Abshire reported that the fire marshal has approved the water line and that Allco has been approved to finish the building.
Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reminded the Board that it had previously awarded the contract for such project to AR Turnkee Construction Co. (“Turnkee”). Mr. Abshire reported that the Notice to Proceed has been issued, and that Jones|Carter was working with Turnkee to obtain a schedule. Mr. Abshire stated that he expected some work in Zone 7 to begin in December, but the majority of the work should begin in the beginning of 2021.

Regarding hydropneumatic tank (“HPT”) No. 1 at Water Treatment Plant (“WTP”) No. 1, Mr. Abshire reported that the project was complete, all punch list items have been addressed by CFG Industries, LLC (“CFG”), and the HPT is now operating. Mr. Abshire presented for the Board’s approval Pay Estimate No. 2 and Final in the amount of $3,850.00.

Mr. Abshire next updated the Board regarding the MUD 9 Buckingham Water Plant Improvements Project. Mr. Abshire reported that Gemini Contracting Services, Inc. (“Gemini”) was addressing punch list items relative to the Water Plant Upgrades project. Mr. Abshire reminded the Board that, regarding the ground storage tank rehabilitation, the Board had previously awarded the contract to M.K. Painting, Inc., subject to approval by MUD 9. Mr. Abshire noted that Bleyl Engineering, MUD 9’s engineer, was preparing contract documents for such project.

Mr. Abshire next requested the Board’s authorization to perform an annual water plant inspection as required by the Texas Commission on Environmental Quality. Mr. Abshire provided a scope memorandum that provided details of the inspection, including a cost of $3,200.00.

Mr. Abshire next reminded the Board that it had previously approved an offer to purchase an easement from the owners of a certain property located along Alcott adjacent to the WWTP. Mr. Abshire stated that he had presented said offer to such owners, but that he had as yet no update to report.

Next, Mr. Abshire then reminded the Board that the America’s Water Infrastructure Act of 2018 requires water districts serving more than 3,300 customers to develop a Risk and Resilience Assessment (“RRA”) and Emergency Response Plan. Mr. Abshire further reminded the Board that it had authorized the Engineer to begin preparation of the RRA for the District and MUD 9 in January.

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 Pay Estimate No. 22 in the amount of $345,278.65 to Allco; 3) approved Pay Estimate No. 2 and Final in the amount of $3,850.00 to CFG; and 4) authorized the annual water plant inspection by Jones|Carter at a cost not to exceed $3,200.00.

Regarding an update on the status of the Buckingham Catahoula Well project, Mr. Barron next reported that such project had been delivered behind schedule. A discussion ensued regarding the effects of such delivery.

STATUS OF “NO TRESSPASSING” SIGN PLACEMENT
Mr. Abshire reported that 30 to 40 signs have been placed throughout the WWTP 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 95%. In response to a question, Mr. Wright explained that Hays North uses supervisory control and data acquisition (“SCADA”) facilities to ensure consistent water quality throughout the District.

A discussion ensued regarding the Board’s continuing efforts to encourage District residents to sign up for paperless billing. Director Barlow stated she would add the information to NextDoor.
Director Moravec then explained that the District’s customer water bills included a message last month that the District had increased the solid waste collection rate. Director Moravec reminded everyone that it is actually the Walden Community Improvement Association (the “WCIA”) that contracts with the solid waste collection provider and that such fees are collected by the Operator through the District’s customer water bills and then provided to the WCIA on a monthly basis. Director Moravec recommended that one (1) or two (2) Directors be appointed to review any messages included in the water bills prior to such bills being sent to customers.

An extensive discussion next ensued regarding the amount of the recent increase in solid waste collection fees by the WCIA and the responsibility party for notifying Walden residents of such increases. Mr. Barner requested that the Board consider allowing him and one (1) Director to discuss the status of the agreement between the District and the WCIA for payment and collection of solid waste collection services’ fees. Director Tryon stated that he would coordinate with the WCIA for further discussion on such agreement. Mr. Barner then recommended Mr. Wright provide the Board with the contents of the messages contained in the past 12 months of customer water bills.

Mr. Barner then reminded the Board and Mr. Wright that he needed the Operator to provide him with the annual information necessary to complete the MUD 8 and MUD 9 Annual Report to San Jacinto River Authority and the City of Houston.

In response to the agenda item related to the annual Water Loss Audit, Mr. Wright stated that he will follow up and find out the status of such audit.

Regarding the status of the valve location project, Mr. Wright stated that he had provided Jones|Carter with certain drawings for such project. Mr. Abshire clarified that such drawings contained certain field notes that the Operator needed to clarify.

A discussion next ensued regarding claims against Tachus for damages to various District water lines resulting from Tachus’ installation of fiber optic cable. Mr. Wright stated that he has filed a claim through one of Tachus’ subcontractor’s insurance carrier for certain damages that resulted from such damages. Director Moravec then explained that there is a receivable amount based on the Operator’s original estimate of damages on the District’s annual financial report and that such amount needed to be reconciled at some point. A discussion ensued on the accuracy of such amount. In response to a question from Mr. Barner, Mr. Wright explained that he did not have an update on the claim that he filed through his insurance provider for the Operator’s mismarking of water lines where Tachus was installing fiber optic cable. Mr. Barner advised that Mr. Wright should reach back out to the primary subcontractor, H&H and clarify/confirm the insurance provider’s information.

Mr. Wright then presented a table of uncollectible accounts.

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.

Mr. Wright next reminded that Board that he had previously presented information related to a sinkhole that had developed over a stormwater line located within an easement running from Canterbury Lane to Lake Conroe. Mr. Wright explained that Hays North had televised such line in order to determine the extent of such deterioration and present the Board with options for repair. A discussion ensued on the costs of such options.

Mr. Wright further noted that this type of deterioration was likely to be an issue near other outfalls throughout the District. Mr. Wright recommended a televised inspection of all other outfall lines throughout the District, suggesting that the Board add it to the District’s five (5)-year maintenance plan.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved: 1) having the pipe at Canterbury Lane cleared of debris, and to replace approximately twenty-five feet (25′) of pipe; and 2) adding a full inventory of inspection of all other outfall lines in the District to the District’s five (5)-year maintenance plan at a cost not to exceed $5,000.00.

ASSOCIATION OF WATER BOARD DIRECTORS (“AWBD”) WATER SMART PROGRAM

The Board next considered an application to the Water Smart Program offered by AWBD. Mr. Wright noted that AWBD is offering no in-person events at this time. Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized Mr. Wright to apply to the Water Smart Program on behalf of the District.

MISCELLANEOUS REPORTS

Director Leasure noted that he had attended the MUD 9 board of directors meeting, and that MUD 9 had approved the WWTP budget. Director Leasure further noted that some construction projects were likely to get moved up on the schedule, but final decisions on which ones had not yet been made.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton reported that usage of the District’s website is consistent.

ATTORNEY’S REPORT

Mr. Barner reported that RBAP will file the required annual eminent domain report on behalf of the District pursuant to Texas Government Code, Section 2206.151-157, as amended. Mr. Barner explained that the report includes information related to the District’s authority to exercise its power of eminent domain and must be filed by no later than February 1st of each year. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board voted unanimously to authorize RBAP to file the required annual eminent domain report pursuant to Texas Government Code, Section 2206.151-157, as amended.

REVIEW ANNUAL AGENDA FOR 2021

Mr. Barner presented the 2021 Annual Agenda and requested that the Board and consultants provide him with their comments to same. Director Moravec requested that the insurance item be moved from December to November.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:42 a.m.

PASSED AND APPROVED this the 13th day of January, 2021.

Secretary, Board of Directors