Meeting Minutes 2021-01-13

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

JANUARY 13, 2021

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, January 13, 2021, 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 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”); Charles Barron, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Kimberly Courte of Arthur J. Gallagher Risk Management Services, Inc. (“Gallagher”); 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 DECEMBER 9, 2020 REGULAR MEETING

The President next directed the Board to the approval of the December 9, 2020 regular meeting minutes. Mr. Barner explained that following the distribution of such minutes to the Board, he subsequently revised the minutes to replace certain references to “coffer dams” under the Operator’s Report with the term “outfall lines”.

Mr. Wright then noted that the motion made by the Board at the December 9, 2020 meeting, in which the Board approved inspection of outfall lines within the District, did not also include approval of the televising of such outfall lines as is reflected in the minutes of such meeting that were previously distributed.

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the December 9, 2020 regular meeting minutes, subject to certain corrections.

REVIEW INSURANCE PROPOSAL FROM GALLAGHER

Ms. Courte introduced herself to the Board and reviewed Gallagher’s proposal for the District’s insurance. Ms. Courte reviewed the District’s coverages with the Board. An extensive discussion then ensued regarding certain coverages, including coverage of improvements to the expansion of the Wastewater Treatment Plant (“WWTP”), the first phase of which will be operational by mid year. Ms. Courte explained that since such improvements are located at the same site as the District’s WWTP, and that such site is already included in the District’s insurance policy, therefore such location is already covered by such policy. Ms. Courte went on to explain that the increase in value of the District’s facilities will lead to an increase in the District’s premium once the improvements to the WWTP are operational.

In response to a question from Director Patton regarding the automobile liability coverage included in Gallagher’s proposal, Ms. Courte explained that such coverage covers physical damage to a Director’s vehicle when such Director is traveling on behalf of the District.

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the insurance renewal proposal.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Bonds reviewed the Tax Assessor-Collector’s Report for the month of December 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 55.88% of the 2020 taxes have been collected as of December 31, 2020.

Upon a motion by Director Tryon, seconded by Director Leasure, 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, expenditures and investments.

In response to a question from Director Patton regarding a check payable to the Internal Revenue Service, Mr. Barner explained that for taxation purposes, the Directors are considered to be employees of the District, which is why Federal Income, Social Security and Medicare taxes are deducted from the Directors’ fees of office. Mr. Barner noted that the Directors are not considered employees of the District under State law.

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

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 sealed the Motor Control Center/Blower Building, therefore work can now begin on the interior of such building. Mr. Abshire then presented for the Board’s approval an invoice from CenterPoint Energy (“CenterPoint”) for the installation of a gas meter and a service line extending from Walden Road in the amount of $13,900.00. Next, Mr. Abshire presented Allco Pay Estimate No. 23 in the amount of $175,620.49 for work performed on the WWTP Project and recommended payment of the same.

Mr. Abshire then reported that MUD 9 has expressed an interest in purchasing the diesel generator currently in use at the WWTP. Mr. Abshire stated that Jones|Carter would need authorization from the Board to perform certain calculations to determine whether or not such generator would properly function at the MUD 9 Buckingham Water Plant. Mr. Abshire went on to state that pursuant to the District’s contract with Allco, such generator will become Allco’s property once it is removed from the WWTP, and noted that Allco may request compensation in exchange for such generator. Mr. Abshire then explained that the District will continue to use such generator until Phase II of the WWTP Project is complete, which will not occur for approximately two (2) more years. Director Patton requested that Jones|Carter wait to discuss a possible purchase of such generator until nearer to the completion of Phase II of such project.

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 Turnkee began work in Zone 7 last month, but due to delays caused by COVID 19, such work will not be complete until the end of January 2021. Mr. Abshire further reported that work in Heatherglen will likely begin in late February.

Mr. Abshire next updated the Board regarding the MUD 9 Buckingham Water Plant Improvements Project. Mr. Abshire reported that such project is now complete. Mr. Abshire then presented Gemini Contracting Services, Inc. (“Gemini”) Pay Estimate No. 11 in the amount of $123,669.65. Mr. Abshire noted that the District’s share of such pay estimate is 50% of the total, or $61,834.83. Mr. Abshire next presented Gemini Pay Estimate No. 12 and Final in the amount of $123,669.64. Mr. Abshire explained that MUD 9 has proposed deducting liquidated damages from such Pay Estimate for exceeding the allowable amount of days to complete the project, which reduces the amount of Pay Estimate No 12 to $101,669.34.

Mr. Abshire next updated the Board regarding the annual inspection of the District’s water plants as required by the Texas Commission on Environmental Quality (“TCEQ”). Mr. Abshire reported that Jones|Carter performed such inspections on December 21, 2020 and January 5, 2021. Mr. Abshire then reported that during such inspections, it was determined that Hydropneumatic Tank (“HPT”) No. 2 at Water Plant No. 2 showed signs of interior corrosion and needs to be recoated. Mr. Abshire presented a proposal from A&H Services (“A&H”) in the amount of $9,500.00 to water blast and recoat HPT No. 2. Mr. Abshire explained that such HPT was last coated eight (8) years ago, which is the general life expectancy of such coating. Mr. Abshire stated that Hays North will contract with A&H regarding such work, but added that Jones|Carter will be on site to perform an inspection of the new coating. In response to a question from Director Moravec regarding Hays North’s practice of adding a fifteen percent (15%) upcharge when contracting with an outside vendor on a District project, Mr. Abshire explained that it would be more expensive for Jones|Carter to contract with A&H for such project because they have never worked with A&H before, while Hays North has, therefore Hays North already has the appropriate contract documents prepared. Mr. Wright noted that such project will also include costs associated with taking HPT No. 2 offline and then putting it back into service upon completion of the project.

Next, Mr. Abshire 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 the deadline to complete the RRA is June 30, 2021. Mr. Abshire reported that pursuant to the Board’s previous authorization, Jones|Carter will begin preparing a draft of the RRA for the District.

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. 23 in the amount of $175,620.49; 3) authorized payment of CenterPoint invoice in the amount of $13,900.00; 4) approved Gemini Pay Estimate No. 11 in the amount of $123,669.65; 5) approved Gemini Pay Estimate No. 12 and Final in the amount of $101,669.34; and 6) authorized Hays North to contract with A&H regarding blasting and recoating of HPT No. 2.

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 94.44%. Mr. Wright next reported that there were two (2) new taps last month and that the District has a total of 1,770 connections.

Mr. Wright then reported that 388 customers are receiving electronic billing statements, which is an increase of over 100 customers from last month. Mr. Wright stated that the Billings and Collection Report includes a credit for the paperless billing line item. Mr. Wright noted that such line item reflects the amount credited to customers who enrolled in electronic billing during the past month. Director Moravec recommended that such amount be recorded as an expense on the District’s financial statements.

Next, Mr. Wright reported that six (6) accounts are 60 days delinquent and added that there are no accounts delinquent by 90 or more days.

Discussion then ensued regarding calculation of influent infiltration into the District’s wastewater collection system. In response to a question from Director Moravec, Mr. Barron reported that MUD 9 completed the lining of all its sanitary sewer lines and noted that MUD 9’s manholes are not presently in need of repair according to Bleyl and Hays North. Mr. Abshire reported that the District’s Capital Improvements Plan for the Fiscal Year Ending 2021 includes cleaning and televising of certain sanitary sewer lines within the District, which will allow the District to detect and repair deficiencies within its wastewater collection system.

Mr. Wright next reported that Hays North has repaired the sinkhole that had developed over a storm water line located within an easement running from Canterbury Lane to Lake Conroe. Mr. Wright noted that such repair required the replacement of 52 feet (52′) of storm sewer line that had deteriorated.

Next, Mr. Wright reported that Hays North filed a claim with the District’s insurance provider related to a backflow of sewage that damaged three (3) customers’ homes. Mr. Wright explained that one (1) such customer called Hays North on December 30, 2020, to report a backflow of sewage in his home. Mr. Wight further explained that Hays North inspected the manhole nearest such customer’s home and determined that the blockage was located in the customer’s line. Mr. Wright then reported that such customer and his neighbor contacted Hays North the following night regarding a backflow of sewage into both of their homes. Mr. Wright stated that Hays North subsequently removed the blockage from the sewer line. Mr. Wright further stated that following a complaint from a third (3rd) neighbor regarding backflow of sewage into his home, Hays North televised the District’s sanitary sewer line and found a blockage in such line. Mr.

Wright noted that the blockage was immediately removed, and added that repair of such line has been scheduled.

Mr. Wright then reported that water got inside the stator in the motor at the Jasper Water Well, which caused such motor to malfunction. Mr. Wright stated that he will provide the Board with a cost estimate for repair of such stator. Mr. Wright stated that since the Buckingham Water Plant is now online, the District will still be able to provide adequate water capacity to customers while the Jasper Water Well is out of service.

Mr. Wright next reported that Cox Directional Drilling (“Cox”), a subcontractor for the internet service provider Tachus, recently hit a District water line during the installation of Tachus’ fiber optic cables. Mr. Wright further reported that Hays North took a picture of the site to show that Hays North had properly marked the location of the water line prior to Cox commencing work at such location.

Regarding the status of the valve location project, Mr. Wright stated that he provided Jones|Carter with drawings for such project, but noted that Hays North still needs to clarify certain field notes that were included on such drawings.

Mr. Wright then acknowledged that Hays North still needs to provide the Attorney with the annual information necessary to complete the MUD 8 and MUD 9 Annual Report to the San Jacinto River Authority and the City of Houston.

Director Patton and the Board then discussed with Mr. Wright blending options for the waters pumped from the Jasper Water Well and the Catahoula Water Well.

Mr. Wright then explained certain wastewater backflow issues that had recently occurred along Long Fellow and informed the Board that he had provided information on such issues to the District’s insurance broker, Gallagher.

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.

MISCELLANEOUS REPORTS

Regarding MUD 9, Director Leasure reported on certain items discussed in such district’s last Board meeting that Mr. Abshire had reported on previously under his report. Director Leasure also reported that MUD 9 was reviewing its five (5)-year Capital Improvements Plan to determine whether or not the timing of some improvements should be moved up due to unprecedented low interest rates for municipal bonds.

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 requested that Mr. Wright update the Board regarding the status of the claims against Tachus for damages to various District water lines resulting from Tachus’ installation of fiber optic cable as well as the claim filed through Hays North’s insurance provider for the Operator’s mismarking of water lines where Tachus was installing such cable. Mr. Wright reported that all documentation requested by the insurance providers was provided by Hays North.

AUTHORIZE FILING OF FINANCIAL AND TAX RELATED INFORMATION WITH TEXAS COMPTROLLER

Mr. Barner then reported that Texas Local Government Code, Sections 203.062 and 403.0241, requires the annual filing of certain financial and tax-related information by all special purpose districts in the Texas Comptroller’s Special Purpose District Public Information Database. Mr. Barner noted that such information must be filed with the Texas Comptroller annually by May 1st or a fine will be incurred. Upon a motion by Director Tryon, seconded by Director Leasure, after full discussion and with all Directors voting aye, the Board authorized the Attorney to file the required financial and tax-related information with the Texas Comptroller by May 1, 2021.

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 11:00 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. Cain. The Board declared the Executive Session was ended at 11:37 a.m.

RECONVENE IN OPEN SESSION

As of 11:38 a.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 at 11:38 a.m.

PASSED AND APPROVED this the 10th day of February, 2021.

Secretary, Board of Directors