Meeting Minutes 2021-11-10

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

NOVEMBER 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, November 10, 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, except Director Barlow, thus constituting a quorum. Also attending were Maria Felder of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire, Conner Murphy and Pam Madrigal 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”); 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 OCTOBER 13, 2021 REGULAR MEETING

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

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of October 2021, a copy of which is attached hereto, including past monthly collections and credits as reported

by the Tax Assessor-Collector for the District. Ms. Felder reported that 1.76% of the 2021 taxes have been collected as of October 31, 2021.

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. 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 checks payable to the Directors for expenses incurred during the Association of Water Board Directors’ 2022 Annual Conference are not included on such report but were submitted to the Directors for approval and will be reflected on such report for the December 8, 2021 Board meeting. Ms. Felder further reported that a check payable to RBAP for legal fees is not included on such report but was submitted to the Directors for approval and will be reflected on such report for the December 8, 2021 Board meeting.

In response to a question from Director Moravec, a discussion ensued regarding the process for recording funds paid by Tachus for damages caused to various District water lines during the installation of Tachus’ fiber optic cables.

In response to a question from Director Moravec regarding the reallocation of the balance of $66,200.07 remaining in the District’s Series 2012 Bond Fund, Mr. Barner stated that once the Engineer confirms that the final invoices have been paid for the ground storage tank rehabilitation project at the Buckingham Water Plant, the remaining surplus funds may be reallocated to other District projects and depending on the nature of such project, such reallocation may need the approval of the Texas Commission on Environmental Quality (the “TCEQ”). Director Patton requested that the Attorney and Engineer provide the Board with a recommendation at the next regular Board meeting regarding eligible projects to which to reallocate such surplus funds. Mr. Barner stated that he would review before and provide such recommendation at the December 8, 2021 Board meeting.
Ms. Felder next presented the Quarterly Investment Inventory Report for the Period Ending September 30, 2021, a copy of which is attached hereto.

Director Moravec then reminded the Board that as the District’s Investment Officer, he is required to attend four (4) hours of training related to the Public Funds Investment Act. Director Moravec reported that he has attended one (1) hour of training thus far offered through TexPool and plans on completing his training shortly.

Upon a motion by Director Moravec, seconded by Director Leasure, 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 detailed therein; and 3) approved the Quarterly Investment Inventory Report for the Period Ending September 30, 2021.

REVIEW COMMENTS FROM MUD 9 ON THE WASTEWATER TREATMENT PLANT (“WWTP”) DRAFT BUDGET

Ms. Felder next reported that the only comment that MUD 9 provided to her regarding the draft WWTP budget for the Fiscal Year Ending (“FYE”) December 31, 2022, was to include the increased costs of insuring the new WWTP in such budget. Mr. Barron confirmed that MUD 9 had no additional comments on such draft budget. Discussion next ensued regarding the operating expenses for the WWTP as reflected on the draft of the WWTP budget and the estimated costs of operations once the improvements to such plant are completed. Mr. Barner reminded the Board that it is permitted to amend the District’s budget at any time, and can therefore amend such budget if it appears that the amount budgeted for such operating expenses is too low.

REVIEW DRAFT BUDGET FOR FYE DECEMBER 31, 2022

The Board then discussed various line items in the District’s General Operating Fund budget for the FYE December 31, 2022.

Director Moravec next recommended that the Board consider the District’s long-term financial planning and the property tax rates that will need to be levied over the next five (5) years in order to finance the District’s operations and capital improvements. Director Moravec stated that the bond funds that were issued to finance the WWTP Improvement Project (the “WWTP Project”) will be exhausted prior to completion of such project, which will result in the need for the District to fund approximately $1.7 Million through an alternative source.

REVIEW AND APPROVE AMENDED LIST OF QUALIFIED BROKERS

Ms. Felder reported that she provided the Board with the Amended List of Qualified Brokers. Ms. Felder then explained that certain brokers have been added to or removed from the list within the past year. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the Amended List of Qualified Brokers, as presented.

DISCUSS RENEWAL OF THE DISTRICT’S INSURANCE

Director Moravec suggested that the Board should consider obtaining quotes from several insurance providers to ensure that the District is receiving the best and most economical insurance possible. Director Moravec stated that the District’s current insurance provider, Arthur J. Gallagher, is a broker; and therefore charges the District a fee in addition to the insurance premiums. In response to a question, Mr. Barner then explained the process for obtaining quotes from insurance providers. Extensive discussion ensued and it was the consensus of the Board not to request quotes from other insurance providers until next year when the District will have a better idea of the new WWTP’s value and the cost of operating such WWTP.

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

Ms. Felder stated that she previously provided the Board with correspondence from MCAD relating to the candidates in such election. Upon a motion by Director Moravec, seconded by

Director Patton, after full discussion and with all Directors present voting aye, the Board voted not to cast a ballot in the MCAD Board of Directors Election.

ENGINEER’S REPORT

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

Mr. Abshire next updated the Board on Allco, LLC’s (“Allco”) progress over the past month regarding the WWTP Project. Mr. Abshire reported that Allco submitted to Jones!Carter an acceptable 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. Mr. Abshire then reported that the anticipated date for the startup of the new WWTP is November 30th• Mr. Abshire reported that the District’s Operator has almost completed training regarding the operation of such plant.

Mr. Abshire then reported that Allco is requesting payment from the District for the off-site storage of the equipment that was pre-purchased for Phase II of the WWTP Project. Mr. Abshire explained that there is not enough space to store such equipment at the site of the WWTP Project. Director Patton then explained that Allco is requesting that the District immediately pay 80% of the cost to purchase and store such equipment, and pay the remaining 20% once such equipment is delivered to the site of the WWTP Project. Mr. Abshire next reported that Allco is requesting authorization to store such equipment at a warehouse owned by Electrical Automation Controls (“EAC”). Discussion then ensued regarding insuring such equipment and each party’s responsibility if such equipment is lost or damaged prior to delivery to the WWTP Project. Director Patton recommended that the District allow Allco to store such equipment at EAC’s warehouse, provided that Allco agrees to assume responsibility for such equipment if it is lost or damaged. Further discussion then ensued regarding the process of storing, tracking and inspecting such equipment. Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board: 1) authorized Allco to pre­ purchase certain equipment required for Phase II of the WWTP Project and to store such equipment at EAC’s warehouse, subject to Allco’s execution of an agreement setting forth certain conditions for such storage, as determined by the Attorney and Engineer.

Further discussion next ensued regarding the startup date of the new WWTP. Director Tryon questioned whether the startup of such plant should occur after the Christmas and New Year Holidays. Mr. Abshire stated that startup of such plant will not occur until all conditions of Allco’s startup plan have been met; however, he does not advise that the Board delay startup once such conditions are met.

Mr. Abshire then presented Allco’s Pay Estimate No. 33 in the amount of $191,547.56 for work performed on the WWTP Project and recommended payment of the same.

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 Jones!Carter completed the TPDES permit renewal application and requested authorization to submit such application to the TCEQ 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 JoneslCarter any videos related to such work. Mr. Abshire further stated that once such videos are provided to JoneslCarter for review, some portions of the District’s wastewater collection lines may require re-televising by Texas Pride.

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 (the “MCC Projects”). Mr. Abshire reported that the design plans for such projects are approximately 90% complete. Mr. Abshire next reminded the Board that it previously authorized the Engineering Committee to coordinate with the Engineer and Attorney regarding approval of the pre-purchase of certain equipment for the MCC Projects so that the District can avoid anticipated price increases and supply chain issues with the delivery of such equipment. Mr. Abshire explained that the Engineering Committee approved a proposal submitted by Eaton for the purchase of such equipment. Mr. Abshire further explained that upon discussing such projects with the Engineering Committee and the Attorney, the Engineer proposed preparing separate contracts for the MCC Projects. Mr. Abshire went on to explain that the work at the Poe Street Water Plant will be advertised for bids in December, and the work at Browning Street Water Plant will be advertised for bids in late 2022. Discussion then ensued regarding the costs associated with separating the MCC Projects. Mr. Abshire stated that he will provide the Board with a breakdown of the engineering fees for each of the MCC Projects at the December 8, 2021 Board meeting.

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 JoneslCarter completed such ERP and, upon approval of the Board, will certify completion of the same prior to the deadline of December 26, 2021. Discussion then ensued regarding the portion of the ERP relating to the District’s provision of potable water to customers during an emergency. Mr. Abshire stated that JoneslCarter will revise the District’s ERP to address such matter.

Mr. Abshire then reported that pursuant to Senate Bill 3, all water districts in Texas are required to submit an Emergency Preparedness Plan (“EPP”) to the TCEQ by March 1, 2022. Mr. Abshire reported that JoneslCarter is preparing such EPP on behalf of the District.

Mr. Abshire next discussed the status of the relocation of Walden Fire Station No. 54 operated by Montgomery County Emergency Services District No. 2. Mr. Abshire reported that JoneslCarter reviewed the drainage report provided by MUD 9’s engineer regarding the impact of the proposed new fire station and added that JoneslCarter has no objection to such report. Mr. Abshire explained that the drainage from the undeveloped site on which such fire station will be relocated currently flows over land into the District’s storm drainage system before ultimately draining into Lake Conroe. Mr. Abshire further explained that once such site is developed, an

enlarged storm sewer line will reroute excess flow into an alternate storm drainage system. Mr. Abshire then requested authorization from the Board to send a letter to MUD 9’s engineer on behalf of the District stating that the District has no objection to the relocation of Walden Fire Station No. 54.

Upon a motion by Director Patton, seconded by Director Leasure, 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. 33 in the amount of $191,547.56; 3) authorized Jones!Carter to submit the TPDES permit renewal application to the TCEQ on behalf of the District; 4) authorized separation of the Motor Control Center Replacement Projects into two (2) separate projects, subject to the Engineer and Attorney’s finalization of the agreement for the pre-purchase of certain equipment for such projects; and 5) authorize Jones!Carter to provide a letter to MUD 9’s engineer on behalf of the District stating that the District has no objection to the relocation of Walden Fire Station No. 54.

Director Moravec 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 554 customers are receiving electronic billing statements, which is an increase of 11 customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 96.16%. Mr. Wright further reported that there was one (1) new tap last month and that the District has a total of 1,797 connections.

Mr. Wright then reported that bi-annual pumpage tests were performed on the District’s wells last month. Mr. Wright further reported that Jones!Carter will review the corresponding report and make recommendations to the Board regarding any necessary repairs to the District’s wells.

Director Moravec re-entered the meeting at this time.

Mr. Wright next reported that one (1) of the District’s aeration basins failed and stated that repairs are underway. Mr. Wright further reported that Hays North must regularly repair the pumps at the District’s lift stations due to improper disposal of solid waste into the District’s wastewater collection system. Discussion then ensued regarding disseminating information to customers about the damage caused by such improper disposal of solid waste.

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.

AUTHORIZE E-STATEMENT INCENTIVE PROGRAM OFFERED BY FIRST BILLING

Director Patton then reported that First Billing, the vendor responsible for processing credit card payments to the District, is offering to give a $100.00 gift certificate to a random customer of

the District who enrolls in paperless billing within the next 30 days as a means of incentivization. Mr. Barner then clarified that such gift certificate will be funded by First Billing and added that the District will incur no costs for its participation in such incentive program. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the District’s participation in First Billing’s e-statement incentive program.

Next, Director Patton reminded the Board that since October 2020, the District has offered customers a one-time incentive of $12.00 for enrollment in paperless billing. Director Patton then discussed implementation of a service fee assessed against customers who choose to receive paper billing statements in order to encourage such customers to sign up to receive electronic billing statements. Director Patton suggested that the District end the incentive program and begin charging customers a fee of $1.00 per month to receive their billing statements by mail as of January 1, 2022. Director Patton requested that Hays North include a message on the next month’s water/sewer bills to notify customers that the $12.00 incentive will expire on January 1, 2022, and a $1.00 fee will be assessed each month for those customers who continue to receive billing statements by mail. Mr. Barner stated that the District’s Rate Order will need to be amended to reflect the assessment of such fee before it can be implemented.

Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized the suspension of the one-time incentive of $12.00 for enrollment in paperless billing incentive as of January 1, 2022.

UPDATE ON CLAIMS FILED FOR DAMAGES AGAINST TACHUS’ SUBCONTRACTORS

Messrs. Wright and Barner reported that only a few claims remain to be collected from Tachus’ subcontractors for damages to District water lines during the installation of Tachus’ fiber optic cables.

UPDATE ON STATUS OF REVIEW OF RATE ORDER

Director Moravec reported that he and Director Leasure met with Mr. Barron and Robert Ginandt of MUD 9 to discuss certain proposed revisions to each districts’ Rate Order. Director Moravec reminded the Board 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.

Next, Director Moravec recommended that the District establish a new water usage tier of 50,000 gallons per month with a rate of$8.00 per 1,000 gallons. Extensive discussion then ensued regarding the water rates charged by the District and MUD 9. Mr. Barron stated that MUD 9 does not intend to establish a water usage tier of 50,000 gallons.

Director Moravec then stated that he recommends amending the District’s Rate Order to reflect that a monthly fee of $1.00 will be assessed for customers who receive billing statements by mail.

Director Moravec then made a motion, seconded by Director Patton, to amend the District’s Rate Order, effective January 1, 2022, to: 1) charge customers $0.20 per 1,000 gallons of water for the LSGCD fees; 2) establish a water usage tier of 50,000 gallons at a rate of $8.00 per 1,000 gallons; and 3) assess a fee of $1.00 per month for customers who receive billing statements by mail. Directors Leasure and Tryon stated that they are not in favor of establishing such water usage tier or implementing the monthly fee for paper billing and requested to take action on each of the proposed Rate Order revisions as separate items. Director Moravec then withdrew his motion and it was the consensus of the Board to place an item on the agenda for the December 8, 2021 Board meeting to reconsider amending the Rate Order.

ATTORNEY’S REPORT

Mr. Barner reported that RBAP is coordinating with the WCIA to finalize the contract for the maintenance of the grounds at various District facilities. Mr. Barner then reminded the Board that the WCIA is already maintaining such grounds. Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the agreement between the District and the WCIA for maintenance of the grounds at various District facilities, subject to finalization of such agreement by RBAP.

Mr. Barner next discussed a proposed agreement between the District and the WCIA relating to collection of solid waste. Mr. Barner stated that the existing agreement for solid waste collection is between the WCIA and Hays North’s predecessor. It was the consensus of the Board to authorize RBAP to prepare an agreement between the District and the WCIA for the collection of solid waste.

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 sent a letter to the WCIA requesting that they waive such fees because the District, as a governmental entity, is not subject to such fees. Mr. Denner stated that he provided such letter to the WCIA’s Board of Trustees. Mr. Denner further stated that upon the Board of Trustee’s approval to waive such maintenance fees, the WCIA will coordinate with RBAP to formalize such agreement.

Mr. Denner exited the meeting at this time.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton next reminded the Board that MUD 9 voted to launch a joint website with the District. Director Patton further reminded the Board that MUD 9 agreed to pay the full cost of
$4,000.00 for the development of such joint website. Director Patton then reported that he is coordinating with Robert Ginandt and Off Cinco regarding the layout and information to be included on suchjoint website. 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.

MISCELLANEOUS REPORTS

Director Leasure then reported that during the MUD 9 Board meeting, MAC stated that they are changing their fee structure from monthly to hourly billing. Director Moravec reminded the Board that MAC informed the District of such change at the previous month’s Board meeting but that he has not received an updated proposed agreement from MAC.

Director Leasure next reported that the Justice of the Peace Court in which MUD 9 filed its lawsuit against Tachus set the next hearing date for such case in June 2022.

Discussion then ensued regarding the date of the District’s Christmas dinner party to be held at the Walden Yacht Club. It was the consensus of the Board to hold such party on December 8, 2021.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 12:24 p.m.

PASSED AND APPROVED this the 8th day of December, 2021.