Meeting Minutes 2021-02-10

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

FEBRUARY 10, 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, February 10, 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 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 and John 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 JANUARY 13, 2021 REGULAR MEETING

The President next directed the Board to the approval of the January 13, 2021 regular meeting minutes. Upon a motion by Director Leasure, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the January 13, 2021 regular meeting minutes, as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Bonds reviewed the Tax Assessor-Collector’s Report for the month of January 2021, 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 87.07% of the 2020 taxes have been collected as of January 31, 2021.

Ms. Bonds explained that while January 1st is the beginning of the District’s fiscal year, the year to date amount of tax revenue received and the month to date amount received are not equal because the tax year begins on a different date than the fiscal year.

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.

ADOPT ORDER DETERMINING AD VALOREM TAX EXEMPTIONS FOR 2021 TAX YEAR

Mr. Barner discussed the Order Determining Ad Valorem Tax Exemptions for the 2021 Tax Year and reminded the Board that the District provides a residential homestead exemption to any individual who is disabled or is 65 years of age or older in the amount of $30,000 as provided for by Texas Property Tax Code Section 11.13(d), as amended. Upon a motion by Director Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board adopted the Order Determining Ad Valorem Tax Exemptions for 2021 Tax Year.

ADOPT RESOLUTION AUTHORIZING PETITION CHALLENGING APPRAISAL RECORDS

Regarding the Resolution Authorizing Petition Challenging Appraisal Records, Mr. Barner explained that such resolution allows the District’s Tax Assessor-Collector to challenge certain information related to property values determine by the Montgomery County Appraisal District (“MCAD”). Mr. Barner stated that it is his recommendation that the Board adopt such resolution so that if the Tax Assessor-Collector finds that any information in MCAD’s records is incorrect or has been omitted, she will be able to challenge such records. Upon a motion by Director Tryon, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board adopted the Resolution Authorizing Petition Challenging Appraisal Records.

ADOPT RESOLUTION IMPLEMENTING PENALTY FOR DELINQUENT 2020 TAXES

Mr. Barner next discussed the Resolution Implementing Penalty for Delinquent 2020 Taxes. Mr. Barner then explained that, pursuant to Texas Property Code, Sections 6.30, 33.07, 33.08 and 33.11,as amended, the District may levy an additional 20% penalty on 2020 real property taxes that remain delinquent as of July 1, 2021 and an additional 20% penalty on 2020 personal property taxes that remain delinquent as of April 1, 2021, to help defray the costs of collection owed to the Delinquent Tax Attorney. Upon a motion by Director Tryon, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board adopted the Resolution Implementing Penalty for Delinquent 2020 Taxes.

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 Moravec regarding inconsistencies year to year in the timing by which the District’s tax revenue is recorded in the Bookkeeper’s Report, Ms. Bonds explained that that Bookkeeper may not have included such revenue yet because they are still working on items related to the District’s annual audit.

In response to a question from Director Moravec regarding the status of the upgrades to the MUD 9 Buckingham Water Plant, Mr. Abshire explained that such upgrades are complete except for certain work related to the ground storage tank (“GST”) rehabilitation, but that such work is part of a separate contract.

Upon a motion by Director Moravec, 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.

Director Moravec then reported that he spoke with Ms. Bonds regarding the District’s funds held at Woodforest National Bank (“Woodforest”) and stated that Woodforest’s fees are higher than the fees charged by other banks. Ms. Bonds explained that Woodforest charges a service fee of $60.00, while the maximum service fee charged by BBVA Compass Bank (“BBVA”) is $18.00. Ms. Bonds further explained that the current interest rate offered by BBVA is 0.15%, while Woodforest is offering only 0.05%. Ms. Bonds stated that she believes it is in the best interest of the District to transfer funds held at Woodforest to BBVA because the District could save hundreds of dollars in fees annually. Mr. Barner then discussed the District’s Depository Pledge Agreement, which the District enters into with all entities with which the District banks. Mr. Barner explained that such agreement pertains to collateralization of funds above the amount of the Federal Deposit Insurance Corporation limit. Director Moravec requested that an item be included on the March 10, 2021 agenda to further discuss transferring the District’s funds held with Woodforest into accounts held by BBVA.

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 while Allco has poured most of the concrete required for such project, Allco continues to fall further behind on the overall construction schedule for such project. Mr. Abshire then presented Allco Pay Estimate No. 24 in the amount of $357,339.35 for work performed on the WWTP Project and recommended payment of the same. Mr. Abshire next reminded the Board that the District entered into an agreement with Jones|Carter for certain Project Management Services for the WWTP Project and that the costs outlined in such agreement for such services were based upon the such project’s originally scheduled completion date; however, due to the delays in such project, that the agreement would need to be amended. Mr. Abshire stated that such project is at least one (1) year away from completion.

Mr. Abshire then reminded the Board that a temporary construction fence was installed at the site of the WWTP Project; however, residents frequently tear down the fence and trespass on such property. Mr. Abshire further reported that Hays North has prepared two (2) additional signs notifying anyone entering such property without authorization that they were trespassing.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that AR Turnkee Construction Co. (“Turnkee”) completed the work in Zone 7, but still needs to clean the site following Tachus’ reinstallation of its fiber optic cables. Mr. Abshire further reported that Turnkee will begin work in Zone 11 tomorrow, and work in Zone 8 will likely begin in March.

Mr. Abshire requested authorization from the Board to install a swale in front of a home located in Zone 11 in an amount of approximately $5,000.00.

Mr. Abshire then reminded the Board that during the annual inspection of the District’s water plants, it was determined that Hydropneumatic Tank (“HPT”) No. 2 at Water Plant No. 2 showed signs of interior corrosion and needed to be recoated. Mr. Abshire reported that the contractor, A&H Services, began the recoating work this week on HPT No. 2, but was delayed due to recent rain and humidity.

Next, Mr. Abshire reminded the Board that the America’s Water Infrastructure Act of 2018 (“AWIA”) 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 Jones|Carter is preparing a draft of the RRA for the District and anticipates meeting with the District’s appointed AWIA Committee to discuss such RRA in early March.

In response to a question from Director Tryon regarding funds available from the Texas Water Development Board (the “TWDB”) for flood mitigation projects, Mr. Barner explained that such funds, which comes in the form of a loan secured by an issuance of bonds, is only available for use on future projects, not projects that have already been completed. Mr. Abshire added that while the TWDB’s loan rates are low, projects funded through TWDB loans typically have higher engineering costs due to the level of oversight required by the TWDB.

Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved: 1) the Engineer’s Report, as presented, 2) approved Engineer to install a swale in front of a home located in Zone 11 in an amount of approximately $5,000.00; and 3) Allco Pay Estimate No. 24 in the amount of $357,339.35.

OPERATOR’S REPORT

Mr. Wright introduced John Wright and explained that John Wright will attend the District’s meetings going forward. Mr. Phillip 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 96.20%. Mr. Wright next reported that there was one (1) new tap last month and that the District has a total of 1,774 connections.

Next, Mr. Wright reported that Hays North was able to have the motor repaired at the Poe Water for $7,000.00.

Mr. Wright then reported that 398 customers are receiving electronic billing statements, which is an increase of ten (10) customers from last month. Mr. Wright reported that First Billing, Hays North’s third (3rd) party billing contractor, included a pop up message on its website notifying District customers who go to such website to pay their water bill of the availability of electronic billing. Director Moravec pointed out that the paperless billing credit reflected in the Operator’s Report was $3,618.92, but the credit provided to each customer enrolling in paperless billing is $12.00 and should not result in a fractional total. Director Moravec requested that the Operator coordinate with the Bookkeeper to determine whether the amount of such credit is being accurately reported.

Next, Mr. Wright reported that seven (7) accounts are 60 days delinquent and added that there are no accounts delinquent by 90 or more days.

Mr. Wright then reported that the impeller of one (1) of the lift station pumps was damaged due to the amount of debris in such pump and will need to be replaced. Mr. Wright stated that he will provide the cost of such replacement impeller to the Board at the next meeting.

Mr. John Wright next reported that the total amount of water currently permitted to be pumped from the Catahoula water well by the District and MUD 9 is 450,000 gallons per day (“gpd”).

Mr. Abshire stated that such amount will be more than enough to meet the needs of both districts and explained that the total combined amount of water pumped from such water well by the District and MUD 9 was 426,000 gpd in 2020 and 403,000 gpd in 2019.

Next, Mr. Wright reported that the District’s application for participation in the Association of Water Board Directors’ Water Smart Program will be submitted this month.

Mr. Wright then reminded the Board 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 the cost to repair such line is $10,902.65 and that Hays North intends to seek reimbursement for such cost from Cox. Mr. Wright went on to report that Cox sent an invoice to the District in the amount of $11,000.00 requesting reimbursement for the time that Cox was unable to work on installing such cables due to the broken water line. Mr. Wright further reported that Hays North took pictures 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. Director Moravec recommended that all telecommunication companies who wish to install buried cables within the District be required to provide the location and depth of such cables to the Operator.

Mr. Wright next reported that previous invoices related to the Buckingham Water Plant were all billed to MUD 9; however, going forward, such invoices will be split equally between the District and MUD 9. Mr. John Wright explained that this month’s invoice related to such water plant includes several charges for after hours service calls due to multiple electrical shortages caused by fluctuating power levels from Entergy.

Next, Mr. Wright updated the Board regarding the claim that Hays North filed with the District’s insurance provider related to a backflow of sewage that damaged three (3) customers’ homes.

Mr. Wright reported that he is corresponding with the insurance adjuster to provide all requested information. Mr. Wright further reported that he has not been contacted by the customers whose homes were damaged.

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 next reported that Hays North has prepared the District’s Annual Water Loss Audit and will submit such audit to the TWDB in advance of the May 1, 2021 deadline.

Discussion then ensued regarding the sub freezing temperatures that are expected to occur throughout the region during the following week and whether the District’s facilities are properly protected.

Next, Mr. Barner requested that Mr. Wright update the Board regarding the status of the District’s 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 stated that he had no update regarding the status of such claims, but did report that he had reached out to Hays North’s insurance provider and is waiting for an update regarding such claim.

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

UPDATE ON INCENTIVES TO INCREASE US OF E-STATEMENTS BILLING

Mr. Wright reiterated that First Billing included a pop up message on its website notifying District customers who go to such website to pay their water bill of the availability of electronic billing.

Director Patton explained that the District is not benefitted by customers paying their water bills electronically and stated that it is more important to encourage customers to sign up to receive electronic statements.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton reported that usage of the District’s website is consistent and customer inquiries are received via such website each month.

MISCELLANEOUS REPORTS

Director Tryon reported that he is in the process of coordinating with David Hartman, the General Manager of the Walden Community Improvement Association (the “WCIA”), to discuss the status of the agreement between the District and the WCIA for the collection of solid waste and related services fees.

Director Patton next reported that he attended the most recent meeting held virtually by the Lone Star Groundwater Conservation District and learned that the rates for water and wastewater service charged by District and MUD 9 are lower than the rates charged by most of the neighboring districts.

Regarding MUD 9, Mr. Barron then updated the Board regarding the status of the recoating work being conducted that the Buckingham Water Plant. Mr. Barron explained that the floors will need to be recoated as none of the original coating was reusable; therefore, a change order for such work will likely be presented next month.

Mr. Barron next reported that MUD 9’s board of directors authorized their engineer to advertise and bid a drainage project that will connect the drainage improvements in Sleepy Hollow and Heatherglen.

Regarding the Jasper Aquifer, Mr. Barron explained that during the previous year, MUD 9 pumped 29,000,000 gallons more water that the District and stated that he would like to have a conversation with certain Directors regarding the Alternative Water Source charges incurred by both districts.

ATTORNEY’S REPORT

In response to a question from Director Moravec regarding submission of fraud statements to the District’s Auditor, Mr. Barner explained that he spoke with the Auditor regarding the process of detecting and reporting fraud within the District and will provide such information to Director Moravec.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:06 a.m.

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

Secretary, Board of Directors