Meeting Minutes 2022-04-13

MONTGOMERY COUNTY MUNICIPAL UTILITY DISTRICT NO. 8 MINUTES OF REGULAR MEETING
April 13, 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, April 13, 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, 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 Quiddity Engineering f/k/a JoneslCarter (“Engineer” or “Quiddity”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Michael Others of McCall Gibson Swedlund Barfoot PLLC (“MGSB” or “Auditor”); Charles Barron, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Elliot M. Barner, attorney, and Kathryn Cain, paralegal, of Radcliffe Bobbitt Adams Polley PLLC (“Attorney” or “RBAP”); and Tucker Stone, Kevin Kacir, Rick Grossmann and Steven Frank, residents of the District.

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. Mr. Stone introduced himself and Messrs. Kacir, Grossmann and Frank and requested that the District construct drainage improvements to mitigate flooding caused by stormwater along Emerson Drive. Mr. Stone explained that during heavy rainstorms, stormwater flows from surrounding properties into their property. Mr. Kacir went on to explain that it was his opinion that nearby residential construction by Camillo Properties (“Camillo”) is the cause of such flow into such property. In response to a comment about the Walden Community Improvement Association’s (“WCIA”) role in preventing such construction from causing such flow, Directors Tryon and Barlow informed Messrs. Kacir, Grossman and Frank that they are also members of the WCIA’s Architectural Control Committee (“ACC”) and that the two (2) of them will review with the WCIA’s staff any retention and drainage components proposed in Camilla’s construction plans. In response to a comment regarding the District’s construction improvements on behalf of Messrs. Kacir, Grossman and Frank, Director Moravec clarified that the District cannot spend public funds to construct drainage improvements that only benefit private property owners and that any improvements constructed by the District must be for the benefit of the public. Mr. Stone then explained that there is a stormwater inlet located adjacent to his property that, in his opinion, does not provide adequate drainage for the area. Director Moravec requested that Hays North inspect such inlet to ensure that it is not obstructed in any way. In response to a question from Mr. Stone regarding whether he or the District should notify Camillo of the impact that their construction project is having on stormwater flow, Mr. Barner stated that, in his opinion, the matter appeared to be a private property matter and as a result, recommended that Mr. Stone address such concerns directly with Camillo.

Messrs. Stone, Kacir, Grossmann and Frank exited the meeting at this time.

There being no further public comments, the President directed the Board to proceed with the agenda.

APPROVAL OF MINUTES OF MARCH 9, 2022 REGULAR MEETING

The President next directed the Board to the approval of the March 9, 2022 regular meeting minutes. Director Moravec stated that he previously spoke with Mr. Barner regarding revising such minutes to clarify that Jones!Carter changed their name to Quiddity Engineering. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the March 9, 2022 regular meeting minutes, subject to the above-noted revision.

APPROVE AUDIT REPORT FOR FISCAL YEAR ENDED (“FYE”) DECEMBER 31, 2021

Mr. Others then presented the Audit Report for FYE December 31, 2021 (the “FYE 2021 Audit”) and responded to questions from the Board. Mr. Others reported that the District’s financial statements show that the District has a four ( 4) year reserve of funds available.

Mr. Others then stated that the FYE 2021 Audit will be finalized after the Board and consultants have had time to review such audit and that the deadline for submitting such audit to the Texas Water Development Board (the “TWDB”) is April 30, 2022.

Upon a motion by Director Leasure, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the FYE 2021 Audit, subject to a ten (10)-day review period by the District’s consultants.

AUTHORIZE PREPARATION AND SUBMITTAL OF CONTINUING DISCLOSURE REPORT

Mr. Barner next explained that the District has an ongoing obligation to update, on an annual basis, certain financial information, as required by the District’s Bond Orders, which information will serve to keep bondholders and other interested parties apprised of the financial status of the District. Mr. Barner then requested the Board’s authorization to prepare and file such materials with the appropriate agencies, including the TWDB, the Texas Commission on Environmental Quality (the “TCEQ”) and the Electronic Municipal Markets Access (“EMMA”) website. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized the Attorney to prepare and file the required continuing disclosure materials with the appropriate agencies, including the TWDB, TCEQ and EMMA.

AUTHORIZE SUBMITTAL OF AUDIT REPORT FOR FYE DECEMBER 31, 2021 TO STATE COMPTROLLER (“COMPTROLLER”)

Mr. Barner next requested approval to submit the FYE 2021 Audit to the Comptroller.

Upon a motion by Director Leasure, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the Attorney to file the FYE 2021 Audit with the Comptroller.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of March 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 96.40% of the 2021 taxes have been collected as of March 31, 2022.

Upon a motion by Director Tryon, seconded by Director Barlow, 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 from Director Moravec, Ms. Felder reported that Texas Pride Utilities, LLC (“Texas Pride”) was paid from the District’s Capital Projects Fund for work relating to the cleaning and televising of the District’s wastewater collection lines. Director Moravec stated that expenses for such project were included in the budget for the General Operating Fund, and therefore, payment for such project should be made from such fund.

In response to a question from Director Moravec regarding the new format of MAC’ Bookkeeper’s Report, Mr. LaConti explained MAC’s billing account codes and stated that such codes can be customized per the Board’s preference. Director Moravec requested that MAC provide him with a list of such account codes so that he may determine whether it would be appropriate to consolidate certain accounts.

Ms. Felder next reported that a payment was made on March 31, 2022, for the principal and interest due on the District’s outstanding bond issues.

In response to a question from Director Moravec regarding investing District funds in U.S. Treasuries due to the decreased interest rates earned on certificates of deposits, Mr. LaConti stated that MAC is researching such investment opportunities.

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

Messrs. Others and LaConti exited the meeting at this time.

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 reported that the start-up of the WWTP and subsequent one (1) month demonstration period have been successful, and no major problems occurred at such plant during such time. Mr. Abshire further reported that some outstanding items required in the District’s contract with Allco have not been completed and that Phase 1 of such project will not be declared substantially complete until such items are completed. Mr. Abshire went on to report that the WWTP is not yet effectively able to treat influent without the addition of aluminum sulfate to remove the phosphorus. Mr. Abshire stated that once aluminum sulfate is no longer necessary for treatment of influent at the WWTP, Allco will begin a 30-day performance test of the Sequencing Batch Reactor. Mr. Abshire further stated that

Phase 2 of the WWTP Project is expected to commence within the next 60 days.

Mr. Abshire then presented Allco’s Pay Estimate No. 38 in the amount of $24,084.00 for work performed on the WWTP Project. Mr. Abshire reminded the Board that it previously authorized the Bookkeeper to withhold payment to Allco for Pay Estimate No. 37 until Allco: a) reimbursed the District for costs incurred by the District to repair a bypass pump and clean wastewater discharge at the WWTP that resulted from negligence by Allco’s subcontractor; and b) completes the above-mentioned outstanding items.

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 Quiddity submitted the TPDES permit renewal application to the TCEQ on behalf of the District. Mr. Abshire further reported that he anticipates receiving a preliminary permit from the TCEQ in May.

Next, Mr. Abshire reported that Texas Pride provided Quiddity with the final videos of the cleaning and televising of a certain portion of the District’s wastewater collection lines.

Mr. Abshire then presented Texas Pride’s Pay Estimate No. 2 and Final in the amount of $12,535.20. Mr. Abshire recommended payment of the same and issuance of the Certificate of Substantial Completion and Certificate of Acceptance to Texas Pride.

Mr. Abshire then stated that based upon the televising of the District’s wastewater collection lines, Quiddity is preparing recommendations for a sanitary sewer rehabilitation project.

Mr. Abshire further stated that Quiddity will prioritize the areas of such lines most in need of immediate repair and will present a proposal to the Board at the next regular Board meeting.

Mr. Abshire reminded the Board that the District budgeted approximately $300,000.00 in the Capital Improvements Plan for a sanitary sewer rehabilitation project; however, upon reviewing the video taken by Texas Pride, he estimates that the actual cost of such project may be closer to $700,000.00.

Ms. Felder exited the meeting at this time.

Next, Mr. Abshire presented a proposal for the inspection of the District’s eight (8) offsite lift stations. Mr. Abshire reported that the engineering cost for such inspection will be $22,000.00 and added that Quiddity will provide the Board with an inspection report within 90 days.

Mr. Abshire stated that such inspection is included in the District’s Capital Improvement Plan for the cmTent year but was not included in the District’s budget for the FYE December 31, 2022.

Mr. Wright explained that while Hays North regularly maintains each of the District’s lift stations, it does not perform a detailed inspection of such lift stations.

Mr. Abshire then updated the Board on the Motor Control Center (“MCC”) Replacement Project for the Poe Drive Water Plant (“Water Plant No. 1 “). Mr. Abshire reported that Quiddity held the pre-construction meeting with McDonald Municipal & Industrial (“McDonald”) on April 1st and issued the Notice to Proceed to McDonald at such time. Mr. Abshire further reported that certain materials necessary for the MCC Replacement Project is expected to be delivered to the project site until June but should not affect the project schedule. In response to a question, Mr. Abshire stated that Water Plant No. 1 and the on-site water well will remain out of operation for the duration of such project.

Next, Mr. Abshire reminded the Board that Quiddity received a request for review of construction plans and a $1,500.00 deposit from Safe Harbor Marinas (“Safe Harbor”) in order to obtain approval for Safe Harbor’s expanded marina, which will use more water and wastewater than the existing marina. Mr. Abshire reported that Quiddity completed an initial review of Safe Harbor’s construction plans and provided comments to be addressed by Safe Harbor, but that Safe Harbor has not yet provided updated plans.

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 Engineer’s Report; 2) approved Allco’s Pay Estimate No. 38 in the amount of $24,084.00, with payment for such pay estimate being withheld until Allco: a) reimburses the District for costs incurred by the District to repair the bypass pump at the WWTP and clean the wastewater discharge resulting from such failed pump and b) completes the above-mentioned outstanding items; 3) approve Texas Pride’s Pay Estimate No. 2 and Final in the amount of $12,535.20; 4) approve issuance of the Certificate of Substantial Completion and Certificate of Acceptance to Texas Pride; and 5) authorize Quiddity to proceed with 2022 Lift Station Inspections Project.

REVIEW AND APPROVE ASSIGNMENT OF AGREEMENT WITH JONES & CARTER, INC. (“JONESJCARTER”) TO QUIDDITY

Mr. Barner reminded the Board that JoneslCarter recently changed its name to Quiddity and stated that the Board needs to approve the assignment of the District’s existing professional services agreement with Jones!Carter to Quiddity. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board consented to such assignment.

OPERATOR’S REPORT

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

Mr. Wright then reported that 535 customers are receiving electronic billing statements.

Mr. Wright explained that such number decreased from the prior month because the prior month’s count incorrectly included customers who had previously signed up to receive electronic billing statements but are no longer customers of the District.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 92.97%. Mr. Wright noted that some of the District’s hydropneumatics tanks were drained last month, which may have contributed to the low water accountability number.

Mr. Wright further reported that there were ten (10) new taps last month and that the District has a total of 1,800 connections.

Mr. Wright then reported that performance tests were conducted last month on the District’s water wells and added that Hays North will present the findings from such tests at next month’s Board meeting.

Mr. Wright next reminded the Board that it previously amended the District’s Rate Order to assess a fee of $1.00 per month for customers who receive billing statements by mail.

Mr. Wright reported such fee is now being assessed and an explanation of such fee is printed on customers’ water bills. Mr. Wright stated that such bills also include a statement encouraging customers to sign up to receive electronic billing statements.

In response to a question, about the electricity cost to operate the District’s water wells, Mr. Wright explained that the District reduced pumpage from the Poe and Walden Road water wells, which caused the price per kilowatt-hour to increase. A brief discussion ensued. Director Moravec requested that Quiddity provide the Board with a proposal for an electrical engineer to review the electrical systems at the District’s water wells and make recommendations regarding how to increase the efficiency of such systems.

Mr. Wright next reported that service was terminated to two (2) delinquent accounts last month; however, both accounts were subsequently paid in full and service was restored.

Mr. Wright then reported that Hays North had to remove non-dissolvable fibrous material, which is referred to in the wastewater utility world as “Rags”, from the lift station on Twain Drive numerous times during the past month. Mr. Wright further reported that the District expends at least $400.00 each time that Hays North must clear Rags from such lift station. Director Moravec reminded Mr. Wright that the Board previously requested that Hays North: a) prepare a cost-benefit analysis that compares the costs of continually removing the Rags to the costs of purchasing certain pumps that macerate the Rags into particles so that the Rags do not need to be removed; and b) provide the Board with a recommendation as to what would provide the best benefit to the District.

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

In response to a question from Mr. Barner, Mr. Wright 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 1st deadline.

UPDATE ON CLAIMS FILED FOR DAMAGES AGAINST TACHUS’ SUBCONTRACTORS

Mr. Wright then reported that he re-reviewed one (1) outstanding claim that he thought was originally related to a Tachus’ subcontractor and damages caused to a District-owned water line during the installation of Tachus’ fiber optic cables by such subcontractor.

Mr. Wright went on to explain that such claim actually relates to an incident in 2021 when Cox Directional Drilling (“Cox”) damaged a District-owned water line located beneath a residential property’s driveway. Mr. Wright further explained that while it is not known for whom Cox was working for, it is for another utility provider with utilities in the same utility easement as such water line. Mr. Wright added that Cox claims the District’s line was incorrectly marked by Hays North; however, Mr. Wright stated his belief that such line was marked correctly. A brief discussion ensued. Director Moravec recommended that the Board write-off the amount of such outstanding claim. A discussion then ensued regarding Hays North’s process for marking the District’s lines prior to construction in the area of such lines by third-party contractors.

UPDATE ON E-STATEMENT INCENTIVE PROGRAM OFFERED BY FIRST BILLING SERVICES, LLC (“FIRST BILLING”)

Director Patton then reminded the Board 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 customer of the District who enrolls in paperless billing during the month of April as a means of incentivization. Director Patton stated that the drawing to select the winning customer will be held at the May 11 th Board meeting. 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.

REVIEW EMERGENCY/HURRICANE PREPAREDNESS PLAN

Regarding the District’s Emergency/Hurricane Preparedness Plan, Mr. Wright reported that Hays North is preparing the District’s generators for the upcoming hurricane season.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Mr. Barner then reported that he has clarified with Off Cinco certain options selected by the District that are offered in its contract with Off Cinco for website services.

MISCELLANEOUS REPORTS

Director Leasure next briefly updated the Board regarding MUD 9’s Board meeting held on April 6th . Director Leasure reported that three (3) positions on MUD 9’s Board are due to expire in May 2022; however, only two (2) applications were submitted to fill such positions. Therefore, MUD 9’s Board will have a vacant position as of next month.

ATTORNEY’S REPORT

Mr. Barner then reported that he continues to prepare 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 next reminded the Board that a ramp extends into Lake Conroe from property owned by the District at 3127 Poe Drive. Mr. Barner further remined the Board that as part of the terms of the sale of such property, the District entered into an Access and Maintenance Easement Agreement with the previous property owner, granting her access to such property and the right to construct and maintain a ramp from such property into Lake Conroe. Mr. Barner reported that RBAP reached out to the previous property owner who stated that she no longer utilizes such ramp and is agreeable to the District’s removal of such ramp from the property. Mr. Barner stated that RBAP will notify the San Jacinto River Authority once such ramp is removed so that the District will no longer be assessed an annual permit fee for such ramp.

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized Hays North to remove such ramp at a cost not to exceed $1,500.00.

EXECUTIVE SESSION

Pursuant to Section 551.071 of the Texas Government Code, Subchapter D, of the Open Meetings Act, the President called the executive session to order at 11 :34 a.m. to discuss matters of attorney-client privilege. Present for all or portions of the Executive Session were the Board of Directors, Mr. Abshire, Mr. Murphy, Mr. Barner and Ms. Cain.

RECONVENE IN OPEN SESSION

As of 11 :44 a.m., the President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized Quiddity to coordinate with Allco pursuant to the terms discussed in executive session.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11 :45 a.m.

PASSED AND APPROVED this the 13th day of April, 2022.

Margie Barlow
Secretary, Board of Directors