Meeting Minutes 2021-10-13

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

OCTOBER 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, October 13, 2021, at 9:00 a.m., at the Walden Yacht Club, 13101 Melville Drive, Montgomery, Texas 77356, a designated meeting place located inside the boundaries of the District, 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 were Maria Felder of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Conner Murphy (“Engineer” or “JoneslCarter”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Rusty Denner, General Manager for the Walden Community Improvement Association (“WCIA”); 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 SEPTEMBER 8, 2021 REGULAR MEETING

The President next directed the Board to the approval of the September 8, 2021 regular meeting minutes. Director Moravec stated that upon reviewing such minutes, he did not recall Mr. Barron’s comments to the Board regarding the increase in Hays North’s service fees. A brief discussion ensued and it was the consensus of the Board that such comments remain in the minutes.

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the September 8, 2021 regular meeting minutes, as presented.

ANNUAL REVIEW OF RATE ORDER

Director Moravec reminded the Board that he had sent a memo to the Board regarding his proposed revisions to the District’s Rate Order. Director Moravec then noted that the District is not recovering from customers the full amount of fees charged to the District by the Lone Star Groundwater Conservation District (the “LSGCD”). Director Moravec stated his recommendation that the District charge customers $0.20 per 1,000 gallons of water to recover the full amount of such fees. Mr. Barron reported that in MUD 9’s review of the LSGCD’s fees, such district determined that an appropriate amount to charge customers in order to recover the full amount of such fees is $0.16 per 1,000 gallons of water. Extensive discussion then ensued, and it was the consensus of the Board to charge customers a fee of $0.16 per 1,000 gallons of water to recover the fees charged to the District by the LSGCD.

Next, Director Moravec recommended that the District establish a new water usage tier of 50,000 gallons per month. Director Moravec explained that approximately 40 customers of the District would fall within such tier and that the establishment of such tier is not for the purpose of generating additional revenue for the District, but rather to encourage water conservation. Extensive discussion then ensued regarding the water rates and property tax rate charged by the District. Mr. Barner reminded the Board that financing capital improvement projects through the issuance of bonds is a cost effective and efficient method of financing such projects. Mr. Barner further reminded the Board that the bonds issued by the District will be repaid through property taxes and not through water and sewer rates. Director Patton suggested that the District and MUD 9 form a committee to review both districts’ water usage tiers and rates and that such committee provide a recommendation to the Board at the next regular meeting regarding increasing such tiers and rates. Upon a motion by Director Tryon, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board designated a committee consisting of Directors Moravec and Leasure and two (2) MUD 9 directors and authorized such committee to provide the Board with a recommendation regarding the District’s water usage tiers and rates.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Reports for the months of August 2021 and September 2021, copies of which are attached hereto, including past monthly collections and credits as reported by the Tax Assessor-Collector for the District. Ms. Felder reported that 99.22% of the 2020 taxes have been collected as of September 30, 2021.

Mr. Barner next reported that there were no accounts that were terminated due to non-payment of delinquent taxes because all such delinquent taxpayers either paid their outstanding 2020 taxes or entered into payment plans.

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

BOOKKEEPER’S REPORT

Ms. Felder next reviewed the Bookkeeper’s Report, a copy of which is attached hereto, including the current fund balances, expenditures and investments. Ms. Felder reported that three (3) checks are not included on such report but were submitted to the Directors for signature.

Director Moravec then reported that MAC transferred $400,000 from the District’s General Operating Fund to the District’s debt service fund based upon the recommendation made by the District’s Financial Advisors during the presentation of his tax rate study at the August 11th Board meeting. Director Moravec stated that the transfer of funds in such amount was not authorized by the Board, and MAC was instructed to reverse such transfer.

Ms. Felder next reported that a payment was made on September 30, 2021, for the principal and interest due on the District’s outstanding bond issues.

Ms. Felder then stated that the Utility Usage and Expense spreadsheet contained in the Bookkeeper’s Report will be provided to Off Cinco for posting on the District’s website.

Upon a motion by Director Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board: 1) approved the Bookkeeper’s Report, as presented; and 2) authorized payment of checks detailed therein.

UPDATE ON STATUS OF DISTRICT’S BUDGET FOR FISCAL YEAR ENDING (“FYE”) DECEMBER 31, 2022

Director Moravec reported that he is preparing a draft of the District’s budget for the FYE December 31, 2022. Director Moravec further reported that he reached out to the District’s consultants regarding proposed rate increases for such fiscal year and recommended that the Board review such consultants’ contracts prior to approval of such budget. Mr. Barner reminded the Board that JonesjCarter’s rates automatically increase in January of each year. Mr. Abshire stated that he will provide the Board with JonesjCarter’s new rates as soon as they are made available. Director Moravec then stated that MAC provided him with a proposal for new rates to be effective in January 2022, and note that such proposal also modifies MAC’s billing method. Director Moravec further stated that he will meet with Mr. Charlie LaConti of MAC next week to discuss such proposal.

Next, Director Moravec suggested that before the District’s current insurance policy expires in March 2022, the District should request proposals from other insurance providers.

ANNUAL REVIEW OF INVESTMENT POLICY

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 Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the Investment Policy, as presented.

REVIEW AND APPROVE AMENDED LIST OF QUALIFIED BROKERS

Ms. Felder reported that she has not provided the Board with the Amended List of Qualified Brokers. Ms. Felder stated that she will provide such list to the Board prior to the next regular

Board meeting and will identify any brokers who have been added or removed from such list within the past year.

AUTHORIZE CASTING OF OFFICIAL BALLOT FOR THE MONTGOMERY CENTRAL APPRAISAL DISTRICT’S (“MCAD”) BOARD OF DIRECTORS ELECTION

Ms. Felder stated that information regarding such election has not yet been provided by MCAD, but added that such information should be received by MAC within the next week. It was the consensus of the Board to table further discussion regarding casting a ballot in such election until the next regular Board meeting.

ENGINEER’S REPORT

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

Mr. Abshire reported that JoneslCarter provided notification to the Texas Commission on Environmental Quality (the “TCEQ”) that the District’s new Wastewater Treatment Plant (“WWTP”) will begin operating in approximately 45 days as part of the commissioning phase of such project. Discussion then ensued regarding scheduling a tour of the WWTP once it is operating and holding a public ceremony to celebrate such plant being placed into operation.

Mr. Abshire next updated the Board on Allco, LLC’s (“Allco”) progress over the past month regarding the WWTP Project. Mr. Abshire reported that Jones!Carter is coordinating with Allco to develop a startup plan for the WWTP. Mr. Abshire reminded the Board that it previously approved issuance of Allco’s Pay Estimate No. 31 subject to JoneslCarter’s approval of Allco’s startup plan. In response to a question from Director Tryon, Mr. Abshire reported that Allco has an electrician onsite working to resolve certain electrical deficiencies that were observed at the WWTP Project.

Mr. Abshire then presented Allco’s Pay Estimate No. 32 in the amount of $136,175.62 for work performed on the WWTP Project. Mr. Abshire reported that the dumpster pad located at the site where the headworks discharges into the dumpster must be redesigned as the design of the existing dumpster pad does not allow dump trucks to adequately back up to retrieve the dumpsters. Mr. Abshire stated that JoneslCarter will reimburse the District $7,781.00 for the cost to demolish and redesign such dumpster pad.

Mr. Abshire then reminded the Board that the District’s current Texas Pollution Discharge Elimination System (“TPDES”) permit for the WWTP expires on June 1, 2022, and that the renewal application is due to the State 180 days before expiration, or by December 3, 2021. Mr. Abshire reported that JoneslCarter is coordinating with Hays North to prepare the TPDES permit renewal application on behalf of the District.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that only minor items remain outstanding. Mr. Abshire stated that he expects to present the contractor’s final pay estimate at next month’s Board meeting.

Next, Mr. Abshire updated the Board regarding the cleaning and televising of a certain portion of the District’s wastewater collection lines. Mr. Abshire reported that Texas Pride

Utilities, LLC (“Texas Pride”) is almost done with the cleaning and televising work in Walden on Lake Conroe. Mr. Abshire stated that Texas Pride has not yet submitted to Jones!Carter any videos related to such work. Mr. Abshire further stated that Texas Pride has not discovered any areas of the wastewater collection lines that are in need of emergency repair.

Mr. Abshire then updated the Board on the Motor Control Center Replacement Projects for both the Poe Street Water Plant and the Browning Street Water Plant. Mr. Abshire reported that the design plans for such projects are approximately 90% complete. Mr. Abshire further reported that Jones!Carter solicited three (3) proposals from certain manufacturers for the pre-purchase of two (2) motor control center, an automatic transfer switch and a prefabricated fiberglass building. Mr. Abshire further reported that two (2) proposals were received and that Jones!Carter is reviewing such proposals with RBAP. Mr. Barner then stated that RBAP is also coordinating with Jones!Carter regarding potential issues related to ownership of such equipment. Mr. Barner explained that typically the contractor is responsible for purchasing and insuring the equipment needed for a project. Mr. Abshire then requested that the Board designate one (1) Director as a liaison and authorize Jones!Carter to discuss such proposals with such liaison in order to proceed with the purchase of such equipment prior to the next Board meeting.

Director Moravec exited the meeting at this time.

Next, Mr. Abshire reminded the Board that the America’s Water Infrastructure Act of2018 requires water districts serving more than 3,300 customers to develop an Emergency Response Plan (“ERP”). Mr. Abshire reported that Jones!Carter is preparing such ERP and will certify completion of the same prior to the deadline of December 26, 2021. Mr. Abshire further reported that Jones!Carter will present the ERP to the Board at the next regular Board meeting.

Mr. Abshire then reported that pursuant to Senate Bill 3, all water district in Texas are required to submit an Emergency Preparedness Plan (“EPP”) to the TCEQ by March 1, 2022. Mr. Abshire then presented a proposal for $5,000.00 for Jones!Carter’s preparation of such EPP. In response to a question from Mr. Barron regarding preparation of a joint EPP with MUD 9, Mr. Abshire explained that the EPP is a checklist that must be prepared independently for each 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; 2) approved Allco’s Pay Estimate No. 32 in the amount of$136,175.62, subject to Allco’s completion of certain outstanding items; 3) authorized Jones!Carter to redesign the dumpster pad at the WWTP Project; 4) authorized the Engineering Committee to coordinate with the Engineer and Attorney regarding the pre-purchase of certain equipment for the Motor Control Center Replacement Projects; and 5) authorized Jones!Carter to prepare an EPP for the District at a cost not to exceed $5,000.00. The Board took a briefrecess from 10:35 a.m. to 10:47 a.m. Ms. Felder exited the meeting at this time.

OPERATOR’S REPORT

Mr. Wright presented the Operator’s Report, a copy of which is attached hereto.

Mr. Wright then reported that 543 customers are receiving electronic billing statements, which is an increase of 23 customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 96.03%. Mr. Wright further reported that there were two (2) new taps last month and that the District has a total of 1,795 connections.

In response to a question, Mr. Wright stated that the amount of reclaimed water provided to the WCIA last month was zero gallons because the facilities providing such water from the WWTP to the Racquet Club are currently disconnected due to the WWTP Project.

Regarding the Alternative Water Source Production Permit and the Jasper Water Well Production Permit, Mr. Wright reported that the District and MUD 9 are permitted to use a combined total of 1,054,592,000 gallons per year. Mr. Wright further reported that so far this year, a combined total of only 329,156,394 gallons, or approximately 31% of the permitted amount, has been used by the districts.

Director Barlow noted that page 1 of the Operator’s Report indicates that there were no cut-offs made during the past month; however, on page 7 of such report, it is shown that service was cut-off to three (3) customers. Mr. Wright then reminded the Board that last month was the first (1st) month during which the Board authorized resuming termination of service and assessment oflate fees for delinquent accounts, and stated that the number on page 1 of such report may be an error.

Mr. Wright next reported that Hays North’s invoice was higher than normal last month because Hays North repaired breaks in three (3) of the District’s water main lines and completed the fire hydrant repairs that were previously approved by the Board.

Mr. Wright then reported that a blockage occurred in a sewer main line and added that such line was cleaned and televised. Discussion ensued regarding preparing an article for inclusion in the community newsletter and on the District’s website regarding the damage caused by disposing of “flushable” wipes into the sewer system.

Mr. Wright next reminded the Board that two (2) sinkholes developed near the District’s stormwater drainage outfalls located in the Estates of Walden Subdivision. Mr. Wright reported that the repair of one (1) outfall is underway; however, Hays North has not yet started the repair of the second (2nd) outfall.

Next, Mr. Wright presented the annual write-off list and reported that 16 accounts are at least 60 days delinquent. Mr. Wright went on to report that the total outstanding balance for all 16 delinquent accounts is $2,009.13 after deposits are applied.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board: 1) approved the Operator’s Report, as presented; and 2) authorized write-offs of the total outstanding balance for the 16 delinquent accounts.

UPDATE ON CLAIMS FILED FOR DAMAGES AGAINST TACHUS’ SUBCONTRACTORS

Mr. Barner then reported that the District received a check yesterday from Structured Communications for payment of claims filed for damages to various District water lines during the installation of Tachus’ fiber optic cables. Messrs. Wright and Barner reported that $1,050.00 remains to be collected from Tachus’ subcontractors.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton next reported that MUD 9’s Board voted to launch a district website and obtained a quote from Off Cinco for the development and maintenance of a joint website with the District.

Director Patton further reported that MUD 9 agreed to pay the full cost of $4,000.00 for the development of such joint website. Extensive discussion then ensued regarding the layout and information to be included on such joint website. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board accepted Off Cinco’s proposal for the development of a joint website for the District and MUD 9, subject to review of such proposal by the Attorney.

Mr. Barner stated that RBAP will coordinate with Off Cinco and MUD 9’s attorney to prepare a joint agreement between Off Cinco and both districts for the development and maintenance of the joint website. Mr. Barner further stated that each district is responsible for updating their district-specific information on such website in accordance with the law.

MISCELLANEOUS REPORTS

Mr. Denner reported that the WCIA provided the Board with a proposed contract for the maintenance of the grounds at various District facilities. Mr. Denner then reminded the Board that the WCIA is already maintaining such grounds.

Mr. Barner next discussed the agreement between the District and the WCIA relating to collection of solid waste. Mr. Barner stated that such agreement is out of date and added that RBAP will provide the WCIA with proposed revisions to such agreement within the next month.

Mr. Barner then reminded the Board of the WCIA’s claim that the District owes maintenance fees on certain tracts of land located within the District. Mr. Barner reported that he is preparing a formal request to the WCIA to waive such fees. Mr. Denner stated that he will present such request to the WCIA’s Board of Trustees.

In response to a question from Director Tryon regarding the status of the relocation of the Walden Fire Station operated by Montgomery County Emergency Services District No. 2, Mr. Abshire reported that JoneslCarter is reviewing the drainage report provided by MUD 9’s engineer regarding the impact of the proposed new fire station. Mr. Abshire explained that the drainage from such fire station will flow through the District’s storm drainage system before ultimately draining into Lake Conroe, which may exacerbate the District’s existing drainage issues.

Mr. Denner exited the meeting at this time.

Mr. Barron then reported that MUD 9 revised its budget to include an additional $75,000.00 for the maintenance and repairs of such district’s sanitary sewer manholes. Mr. Barron further reported that corrosion was discovered in all of the manholes located near MUD 9’s lift stations.

ATTORNEY’S REPORT

Regarding adoption of the State’s new document retention schedules, Mr. Barner reported that RBAP is still coordinating with the District’s consultants to develop a comprehensive policy for document retention.

Next, Mr. Barner then briefly reviewed with the Board RBAP’s 87th Legislative Update Memorandum and discussed certain proposed constitutional amendments.

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 11:37 a.m. to discuss matters of attorney-client privilege. Present for all or portions of the Executive Session were the Board of Directors, except Director Moravec; Mr. Wright; Mr. Barner; and Ms. Cain.

RECONVENE IN OPEN SESSION

As of 11:53 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 11:53 a.m.

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

Secretary, Board of Directors