Meeting Minutes 2022-02-09

MONTGOMERY COUNTY MUNICIPAL UTILITY DISTRICT NO. 8 MINUTES OF REGULAR MEETING
February 9, 2022

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 9, 2022, 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 for Director Barlow, thus constituting a quorum. Also attending were Maria Felder and Charlie LaConti of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Conner Murphy of JoneslCarter (“Engineer” or “JoneslCarter”); 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”); Elliot M. Barner, attorney, 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 12, 2022 REGULAR MEETING

The President next directed the Board to the approval of the January 12, 2022 regular meeting minutes. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the January 12, 2022 regular meeting minutes, as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of January 2022, 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 86.31% of the 2021 taxes have been collected as of January 31, 2022.

Ms. Felder next explained that the discrepancy in the values reflected in the Tax Assessor­ Collector’s Reports as compared to the Montgomery County Appraisal District’s (“MCAD”) records are due to frequent changes provided by MCAD such as exemptions granted by MCAD or adjustments made to property values following the protest of such values by taxpayers.

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, as presented.

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.

In response to a question, Mr. LaConti and Director Moravec explained the process by which the District’s maturing certificates of deposit are renewed.

Upon a motion by Director Leasure, seconded by Director Moravec, 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.

ADOPT ORDER DETERMINING ADVALOREM TAX EXEMPTIONS FOR 2022 TAX YEAR

Mr. Barner then presented the Order Determining Ad Valorem Tax Exemptions for the 2022 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 1l.13(d), as amended. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board adopted the Order Determining Ad Valorem Tax Exemptions for 2022 Tax Year.

ADOPT RESOLUTION AUTHORIZING PETITION CHALLENGING APPRAISAL RECORDS

Mr. Barner next presented the Resolution Authorizing Petition Challenging Appraisal Records and reminded the Board that such resolution allows the District’s Tax Assessor-Collector to challenge certain information related to property values determine by the 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 the MCAD’s records is incorrect or has been omitted, she will be able to challenge such records. Upon a motion by Director Moravec, seconded by Director Patton, 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 2021 TAXES

Mr. Barner next presented the Resolution Implementing Penalty for Delinquent 2021 Taxes and 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 2021 real property taxes that remain delinquent as of July 1, 2022 and an additional 20% penalty on 2021 personal property taxes that remain delinquent as of April 1, 2022, to help defray the costs of collection owed to the Delinquent Tax Attorney. Upon a motion by Director Leasure, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board adopted the Resolution Implementing Penalty for Delinquent 2021 Taxes.

REVIEW AND APPROVE AGREEMENT FOR BOOKKEEPING SERVICES

Mr. LaConti then presented to the Board a proposed Second Amended and Restated Agreement for Bookkeeping Services (“Amended Agreement”) containing MAC’s proposed new billing structure and responded to questions from the Board regarding such billing structure. Mr. LaConti explained that under the Amended Agreement, the District will be billed using a tiered hourly rate structure. Mr. LaConti further explained that instead of providing only basic bookkeeper services to its clients, MAC will now provide accounting, financial and investment services. Mr. LaConti stated that MAC will provide 35 separate training courses to its bookkeepers annually to ensure that such bookkeepers have a solid understanding of government regulations, reporting requirements and accounting standards that affect the District. In response to a question, Mr. LaConti further stated that MAC is migrating its data to a new software system while maintaining certain proprietary software already utilized by MAC.

In response to a question from Director Moravec regarding such software, Mr. LaConti explained that with MAC’s new billing software, invoices submitted to the District by MAC will provide more detail regarding the individual performing work for the District, the hours worked by such individual and the billing rate for such individual. Discussion then ensued regarding the workload ofMAC’s bookkeepers. Mr. LaConti reported that currently each ofMAC’s bookkeepers perform bookkeeping services for eight (8) to nine (9) districts and added that MAC is working to reduce each bookkeeper’s workload to six (6) districts.

Next, further discussion ensued regarding MAC’s new billing structure. Mr. LaConti explained that as MAC’s Regional Manager, he reviews certain work performed by Ms. Felder for the District.

Mr. LaConti further explained that Ms. Kaye Townley is the primary individual reviewing Ms. Felder’s work.

Mr. LaConti then reported that MAC is transferring all payroll services to a third (3rd)-party payroll provider, HR&P. Mr. LaConti further reported that HR&P, at the District’s request, will provide for direct deposit of the Directors’ fees of office and expense reimbursements. In response to a question regarding whether a savings is achieved by utilizing direct deposit rather than issuing checks to the Directors for such fees and expenses, Mr. LaConti stated that the District could save approximately $50.00 per month by utilizing direct deposit.

Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the Amended Agreement, subject to certain modifications, with MAC’s new billing rates becoming effective March 1, 2022.

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 Wastewater Treatment Plant (“WWTP”) Project. Mr. Abshire then reported that he anticipates the startup of the new WWTP to occur this month, followed by a one (1) month demonstration period and then final completion of Phase I of the WWTP Project. Mr. Abshire further reported that Phase II of such project is expected to begin in April 2022.

Mr. Abshire then presented Allco’s Pay Estimate No. 36 in the amount of $34,641.90 for work performed on the WWTP Project and recommended payment of the same.

Mr. Abshire next reminded the Board that Stephens Pipe & Steel, LLC (“Stephens”), Allco’s fencing material subcontractor, issued a Notice of Non-Payment to Allco, alleging that they are owed $27,111.18 by Allco. Mr. Abshire further reminded the Board that it previously authorized the Bookkeeper to withhold payment to Allco for Pay Estimate No. 35 until Allco provides proof that the dispute between Allco and Stephens is resolved.

Mr. Abshire then reminded the Board that the on-site lift station located at the WWTP is on bypass and reported that the influent bypass pumpage system recently failed. Mr. Abshire further reported that once the bypass pump failed, Xylem Water Solutions was immediately notified but took several hours to respond. Mr. Abshire stated that as a result of such delayed response, treated wastewater was discharged onto the WWTP site and certain District-owned wastewater lines were full due to back flow from the failed pump. Mr. Abshire reported that several District residents notified Hays North regarding such discharge, but noted that none of the residents reported that wastewater had back flowed onto their property. Mr. Abshire further reported that Jones | Carter notified the Texas Commission on Environmental Quality (the “TCEQ”) about such discharge. Mr. Abshire stated that the lift station must remain on bypass for at least another 30 days. In response to a question, Mr. Abshire clarified that the effluent bypass system pump also failed earlier that same day. Director Patton explained to the Board the severity of the wastewater discharge and the pumps failures and reported being unable to flush his toilet because the District’s wastewater lines were full. Director Patton then suggested the District recommend that customers install blow-off caps in order to prevent possible property damages due to back flows.

Next, Mr. Barner discussed the process of accounting for the cost incurred by the District related to cleaning the wastewater discharge and repairing the damaged bypass pump. Mr. Barner further discussed options for assessing such costs.

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. Mr. Abshire reported that JoneslCarter completed the TPDES permit renewal application and submitted such application to the TCEQ on behalf of the District.

Next, Mr. Abshire updated the Board regarding the cleaning and televising of a certain portion of the District’s wastewater collection lines. Mr. Abshire reminded the Board that upon review of the cleaning and televising videos submitted by Texas Pride Utilities, LLC (“Texas Pride”), JoneslCarter determined that some portions of the District’s wastewater collection lines need to be re-televised by Texas Pride. Mr. Abshire reported that Texas Pride is underway with re- televising certain lines.

Mr. Abshire then updated the Board on the Motor Control Center (“MCC”) Replacement Project for the Poe Street Water Plant (Water Plant No. 1) (the “Poe Street MCC Project”). Mr. Abshire reported that such project was advertised on January 7th and 14th, and four (4) bids were received. Mr. Abshire reported that the lowest bid was submitted by McDonald Municipal & Industrial (“McDonald”) in the amount of $352,469.00. Mr. Abshire then discussed the anticipated timeline for such project.

Mr. Abshire next reminded the Board that Montgomery County (the “County”) approved Jones!Carter’s design plans for the MCC Replacement Project for the Browning Street Water Plant (Water Plant No. 2); however, JoneslCarter intends to delay advertising such project for bids until June 2022.

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 completed such EPP on behalf of the District and requested authorization to submit such EPP to the TCEQ.

Mr. Abshire next reminded the Board that the TCEQ requires the District to inspect its water plants on an annual basis. Mr. Abshire reported that JoneslCarter completed such inspection and is finalizing the inspection report. Mr. Abshire further reported that signs of early corrosions were observed on the two (2) hydropneumatic tanks (“HPT”) located at the Browning Water Plant and one (1) HPT at the Poe Water Plant. Mr. Abshire went on to report that Hays North obtained a quote from A&H Services in the amount of $9,000.00 to touch-up the interior coating of all three (3) HPTs.

Next, Mr. Abshire reported that JoneslCarter received a request from Safe Harbor Marinas (“Safe Harbor”) for a Will Serve Letter from the District for the Walden Marina on Lake Conroe. Mr. Abshire explained that Safe Harbor intends to improve the existing marina, and in order to obtain the necessary permits from the County, Safe Harbor must obtain a Will Serve Letter from the District. Mr. Abshire reported that Safe Harbor was informed that design plans must be reviewed by Jones!Carter prior to the issuance of letter.

Mr. Abshire then presented the District’s capital projects schedule and corresponding summary map.

Upon a motion by Director Patton, seconded by Director Moravec, 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. 36 in the amount of $34,641.90, with payment for such pay estimate being withheld until Allco reimburses the District for costs incurred by the District to repair the bypass pump and clean the wastewater discharge at the WWTP; 3) accepted the bid submitted by McDonald in the amount of $352,469.00 for the Poe Street MCC Project; 4) approved issuance of the Notice of Award to McDonald; 5) approved execution of the construction contract with McDonald, subject to Attorney’s review of bonds and insurance and receipt of a Form 1295 Certificate of Interested Parties; 6) authorized issuance of the Notice to Proceed to McDonald, subject to execution of the construction contract; 7) authorized Jones!Carter to submit the EPP to the TCEQ; 8) authorized Hays North to coordinate with A&H Services regarding recoating of the HPTs; and 9) authorized Jones!Carter to review Safe Harbor’s design plans, subject to receipt of a $1,500 deposit for such review.

OPERATOR’S REPORT

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

Mr. Philip Wright then reported that 630 customers are receiving electronic billing statements, which is an increase of 30 customers from last month.

Mr. Philip Wright next reported that the combined water accountability for the District and MUD 9 was 95.55%. Mr. Philip Wright further reported that there was one (1) new tap last month and that the District has a total of 1,800 connections.

Discussion then ensued regarding Entergy’s billing structure and the varying electricity rates charged to the District for its facilities. Mr. Philip Wright stated that he reached out to Entergy in order to determine whether the District is being billed appropriately by Entergy.

Next, Mr. Philip Wright reported that a District customer requested to change his existing fire line to an irrigation line. Mr. Philip Wright stated that Hays North provided a cost estimate to such customer in the amount of $6,000.00 for such work. Mr. Philip Wright noted that the water meter and meter vault are property of the District. Mr. Philip Wright then stated that if Hays North’s modification to such fire line costs less than $6,000.00 to complete, the remainder of such customer’s payment will be refunded.

In response to a question, Mr. Philip Wright confirmed that the tap located on Brookhaven Point is located within the boundaries of the District.

Mr. Philip Wright presented the Alternative Water Supply Facilities Expense Report, a copy of which is attached to the Operator’s Report.

Next, Mr. Philip Wright reminded the Board that a home is being built on the property adjacent to the Walden Estates Lift Station. Mr. Philip Wright further reminded the Board that the electrical panel for such lift station was installed close to the property line and faces such adjacent property. Mr. Philip Wright reported that the developer of such property has not installed a fence along the property line directly in front of such panel. Director Tryon stated that he will confirm that a fence was not installed in such location.

Mr. Philip Wright then noted that the Operator’s Report does not include the number of customers who used at least 50,000 gallons of water during the past month. Mr. Philip Wright stated that he will include such information in the Operator’s Report going forward.

Mr. Philip Wright next reminded the Board that it previously amended the District’s Rate Order to increase the fee charged to customers related to the Lone Star Groundwater Conservation District’s (“LSGCD”) fees and to assess a fee of $1.00 per month for customers who receive billing statements by mail. Mr. Philip Wright confirmed that such increased LSGCD fees are being assessed as of January 1, 2022. Mr. Wright stated that AVR, Hays North’s billing software provider, is still determining how to implement the $1.00 fee for receiving billing statements by mail.

Mr. Philip Wright then reported that the transfer switch on the generator located at the WWTP caused such plant to be off-line during a recent storm because such switch failed to automatically restart; however, a power outage did not occur during such storm.

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 CLAIMS FILED FOR DAMAGES AGAINST TACHUS’ SUBCONTRACTORS

Mr. Philip Wright reported that only a small claim of approximately $300.00 – $400.00 remains outstanding against Tachus’ subcontractors for damages caused to various District water lines during the installation ofTachus’ fiber optic cables. Mr. Philip Wright explained that he will make another attempt to reach out to such subcontractor to collect the remaining balance.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton then discussed the status of Off Cinco’s development of a joint website with MUD 9.

REVIEW AND APPROVE JOINT AGREEMENT WITH MUD 9 AND OFF CINCO

Mr. Barner then reported that RBAP continues to coordinate with Off Cinco and MUD 9’s attorney to finalize a Service Agreement between Off Cinco, the District and MUD 9 for the development and maintenance of the joint website.

ATTORNEY’S REPORT

Mr. Barner then reported that RBAP continues to coordinate with the Walden Community Improvement Association (“WCIA”) regarding the Agreement for Landscaping Services with the WCIA regarding maintenance of the grounds at various District facilities.

Mr. Barner next reported that he is preparing an agreement between the District and the WCIA relating to solid waste collection services since the District is billing its customers for such services on behalf of the WCIA.

Mr. Barner then reminded the Board of the WCIA’s claims that the District owes maintenance fees on certain tracts ofland located within the District. Mr. Barner further reminded the Board that RBAP sent a letter to the WCIA requesting that they waive such fees. Mr. Barner reported that he prepared a proposed Agreement for Waiver of Maintenance Fees, which was provided to the WCIA’s General Manager, and stated that it was his understanding from statements made by the General Manager at the Board’s November 2021 meeting, that the Board of Trustees would be considering such agreement.

Mr. Barner next stated that he will coordinate with the District’s consultants regarding the procedures for maintaining the District’s records pursuant to the new guidelines issued by the State of Texas.

ELECTION AGENDA

Mr. Barner then reminded the Board that a directors’ election is scheduled to be held on Saturday, May 7, 2022 (the “Election”), and that such election will be for positions held by Directors Leasure, Barlow and Moravec, since such positions’ terms of office are due to expire. Mr. Barner stated that candidate packets were provided to each of the incumbents. Mr. Barner then reminded the Board that the deadline by which to file an application for a place on the ballot is 5:00 p.m. Friday, February 18, 2022.

Mr. Barner next discussed potential dates on which to canvass the Election. It was the consensus of the Board to canvass such Election on May 11, 2022, at 9:00 a.m.

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 12:35 p.m. to discuss matters of attorney-client privilege. Present for all or portions of the Executive Session were the Board of Directors and Mr. Barner.

RECONVENE IN OPEN SESSION

As of 12:45 p.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 12:45 p.m.

PASSED AND APPROVED this the 9th day of March, 2022.