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

July 12, 2023

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, July 12, 2023, 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
Michael White – 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 (via telephone) and Conner Murphy of Quiddity Engineering (“Engineer” or “Quiddity”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Elliot M Barner, attorney, and Kathryn Cain, paralegal, of Radcliffe Adams Barner PLLC (“Attorney” or “RAB”); Ray Geiselhart and Robert Ginandt, Directors of Montgomery County Municipal Utility District No. 9 (“MUD 9”); and Rusty Denner, General Manager for the Walden Community Improvement Association (“WCIA”).

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. Director Patton requested that the District’s consultants endeavor to present their reports in a concise manner during Board meetings.

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

Mr. Denner entered the meeting at this time.

APPROVAL OF MINUTES OF JUNE 14, 2023 REGULAR MEETING

Director Tryon next directed the Board to the approval of the June 14, 2023 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 June 14, 2023 regular meeting minutes, as presented.

PUBLIC COMMENT (CONTINUED)

Mr. Denner noted that the District owns the property and building where the Montgomery County Emergency Services District No. 2 (“ESD 2”) currently operates from within Walden. Mr. Denner stated that the WCIA is interested in acquiring such property from the District when ESD 2 vacates such building.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of June 2023, 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 98.5% of the 2022 taxes have been collected as of June 30, 2023.

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, 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.

Ms. Felder reported that the funds from the issuance of the Series 2018 Bonds are exhausted, and the District’s Capital Projects Fund account will be closed. Ms. Felder stated that Allco, LLC’s (“Allco”) pay applications for their work on the Wastewater Treatment Plant (“WWTP”) Improvement Project (the “WWTP Project”) will be paid from the District’s general operating fund.

Director Moravec then reported that he inquired with the Bookkeeper regarding potentially instituting a “Positive Pay” program in connection with District-issued checks. Ms. Felder explained the features of such program and responded to questions from the Board.

Next, Director Moravec reminded the Board that in the next few months, it will be considering the District’s tax rate for 2023 and suggested that the Board adjust the District’s debt service tax rate to cover the full amount of the Districts debt service obligations.

Upon a motion by Director Moravec, seconded by Director Barlow, 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) authorized the Bookkeeper to implement a “Positive Pay” program in connection with District-issued checks.

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

Mr. Murphy first updated the Board on Allco’s progress over the past month regarding the WWTP Project. Mr. Murphy reported that Allco continues with construction of the masonry walls and roofing at the dewatering building. Mr. Murphy further reported that Allco completed painting of the interior of such building and the first (1st) pour of the pavement around such building. Mr. Murphy then presented Allco’s Pay Estimate Nos. 53 and 54 in the amounts of $188,072.28 and $945,923.60, respectively, for work performed on the WWTP Project. Mr. Murphy noted that Pay Estimate No. 54 includes the release of five-percent (5%) retainage for such project. Mr. Murphy next reported that Quiddity is preparing a change order for the redesign and modification of the non-potable water system at the WWTP Project.

Next, Mr. Barner reminded the Board that it previously agreed to reduce the retainage withheld for the WWTP Project from ten percent (10%) to five percent (5%), subject to a written agreement with Allco stating that Allco will pay its subcontractors the outstanding amounts due to them with the released retainage funds. Mr. Geiselhart expressed MUD 9’s displeasure that MUD 9 was not consulted prior to the Board’s decision to reduce the retainage withheld from ten percent (10%) to five percent (5%). Mr. Barner stated that he will communicate with MUD 9’s attorney regarding the plan for the release of such retainage.

Regarding the 2022 Sanitary Sewer Rehabilitation Project, Mr. Murphy reported that Texas Pride Utilities, LLC (“Texas Pride”) completed all but one (1) point repairs and is underway with installation of cured-in-place piping. Mr. Murphy further reported that a resident’s deck is encroaching upon the District’s ten-foot (10′) easement and is preventing Texas Pride from accessing a portion of the District’s sanitary sewer system in order to complete the final point repair. Mr. Barner then requested authorization from the Board to prepare a consent to encroachment upon the District’s easement, which will state that it is the responsibility of the property owner to remove and replace the encroaching deck so that the Texas Pride may access the sanitary sewer line within such easement. Mr. Murphy then presented Texas Pride’s Pay Estimate No. 3 in the amount of $32,220.00.

Mr. Murphy next reminded the Board that during Quiddity’s inspection of Water Plant No. 2, areas of corrosions were identified in the interior of hydropneumatic tank (“HPT”) no. 2. Mr. Murphy further reminded the Board that it previously approved a proposal from A&H Coating Services to touch up the interior coating of such HPT. Mr. Wright reported that such work is complete.

Mr. Murphy then reported that the Walden Townhouse Association (“WTA”) hired Bleyl Engineering (“Bleyl”) to inspect the roadways within Walden on Lake Conroe Section 7, which are owned by the WT A. Mr. Murphy further reported that the storm sewers located in such subdivision are owned by the District. Mr. Murphy stated that through Bleyl, the WTA is requesting that the District contribute funding toward the cost of pavement repairs to the roadways around the District’s storm sewer structures, including one (1) inlet and five (5) manholes. Mr. Murphy further stated that Bleyl has not provided Quiddity with a cost estimate

for such repairs. Mr. Barner noted that Bleyl has not indicated that the damage to the TWA’s roadways was caused by the District’s storm sewer structures. The Board then directed Quiddity to request that the WT A provide the Board with a formal request for funding including the estimated cost for such repairs.

Next, Mr. Murphy reminded the Board that last month, certain District residents requested that the Board consider constructing additional drainage improvements adjacent to Emerson Drive in order to mitigate flooding along such drive. Mr. Murphy further reminded the Board that such residents reported that during heavy rainstorm events, storm.water flows from surrounding properties onto their properties. Mr. Murphy then presented to the Board photographs provided by such residents of flooding on their properties. Mr. Murphy then reminded the Board that the resident at 3610 Emerson Drive stated that storm.water flowed into her home during the most recent heavy rain event. Mr. Murphy reported that Quiddity inspected such property and found that the home was located below the street level; therefore, mitigation of the flow of storm.water into such home is the responsibility of the homeowner. Director Moravec requested that Quiddity prepare a letter to the residents who attended the June 14, 2023 meeting outlining Quiddity’s findings related to the flow of storm.water and the residents’ responsibility to mitigate flooding on their properties.

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, as presented; 2) approved Allco’s Pay Estimate Nos. 53 and 54 in the amounts of $188,072.28 and $945,923.60, respectively, subject to MUD 9’s concurrence with such pay estimates and Allco’s written agreement to pay its subcontractors from the released retainage funds the outstanding amounts due to them; 3) approved Texas Pride’s Pay Estimate No. 3 in the amount of $32,220.00; and 4) authorized RAB to prepare a consent to encroachment upon the District’s easement.

OPERATOR’S REPORT

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

Mr. Wright then reported that 876 customers are receiving electronic billing statements, which is an increase of 12 customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 93.85%.

Mr. Wright then reported that there were no new taps last month and that the District has a total of 1,824 connections. Mr. Wright then stated that two (2) accounts were terminated last month due to delinquent payment.

In response to a question from Director Moravec regarding the excessive cost to certain repairs as noted in the Alternative Water Supply Facilities Expenses portion of the Operator’s Report, Mr. Wright explained that such line was located beneath concrete and had to be excavated.

Mr. Wright next explained that part of the process for treating wastewater at the new WWTP includes filling the digesters and then terminating airflow to one (1) of the digester basins so that the sludge settles to the bottom of such basin in order to be decanted. Mr. Wright reported that the blowers providing such airflow are too powerful for the digesters, so when airflow to one (1) digester basin is stopped, the airflow to the second (2nd) basin becomes too forceful and creates significant foam within such digester. Mr. Wright reported that recently during this process, foam overflowed from one (1) of the digester basins. Mr. Wright stated that once the belt press within the new WWTP is operational, the airflow level will no longer be a problem.

Director Tryon exited the meeting at this time.

Mr. Wright stated that Hays North will monitor the above process more closely during the approximately three (3) hours that airflow is terminated each basin. Director Patton stated that Hays North needs to inform the Board of excursions at the WWTP in a timely manner.

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

Mr. Wright then reported that a certain homeowner within the District left her irrigation system running for 12 days from May 27, 2023 through June 8, 2023, and that such homeowner’s water bill reflects a usage of 172,000 gallons of water. Mr. Wright further reported that such homeowner provided Hays North with proof that her irrigation system was subsequently repaired. Mr. Wright went on to report that such homeowner’s average water usage during the past year was 6,000 gallons per month. Mr. Wright stated that such homeowner is requesting an adjustment to her water bill. Mr. Wright reminded the Board that the District’s leak adjustment policy authorizes the Operator to adjust the water bill for customers who request an adjustment so that such customers are billed at the lowest usage tier provided that such customers present proof that a leak occurred and was repaired. Mr. Wright stated that under such policy, such customer will receive a credit of $716.00. Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board authorized the Operator to adjust such customer’s water bill pursuant to the District’s leak adjustment policy.

Mr. Wright then reminded the Board it previously requested that Hays North hang door tags on homes served by the Twain Drive lift station informing residents how to properly dispose of such non-dissolvable fibrous material, which is referred to in the wastewater utility industry as “Rags”. Mr. Wright stated that such door tags will be hung tomorrow.

Director Tryon re-entered the meeting at this time.

STATUS OF WATER SMART PROGRAM APPLICATION, INCLUDING RESOLUTION APPROVING SUBMITTAL OF 2024 WATER SMART APPLICATION FOR INCLUSION IN ASSOCIATION OF WATER BOARD DIRECTORS {“AWBD”) WATER SMART PARTNERS PROGRAM

Mr. Barner next reminded the Board that the District’s participation in the A WBD’s Water Smart program must be renewed on an annual basis. Mr. Barner then presented a Resolution Approving Submittal of the 2024 Water Smart Application for the period of January 1, 2023 through December 31, 2023, and explained that such application will be submitted by Hays North once they have assembled all necessary documentation. Director Patton stated that he will provide Hays North with photographs of an event held last month by the District and MUD 9 at the Walden Men’s Breakfast. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved a Resolution Approving Submittal of the 2024 Water Smart Application.

SECURITY AT DISTRICT FACILITIES

Director White then presented to the Board a proposed agreement from Today’s Integration, Inc. (“Today’s Integration”) for the installation of certain security features at Water Plant Nos. 1 and 2 and responded to questions from the Board.

Director White next presented to the Board proposals from Corbridge Fence and Montgomery Fencing & Exteriors (“Montgomery Fencing”) for replacement of the perimeter fencing Water Plant No. 1. Director Moravec then made a motion, which was seconded by Director Barlow, to accept Montgomery Fencing’s proposal; however, after further discussion by the Board regarding such proposals, such motion was withdrawn. The Board then requested that Director White reach out to Montgomery Fencing to request professional references from other entities for whom Montgomery Fencing has performed similar work.

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the agreement with Today’s Integration for the installation of certain security features at Water Plant Nos. 1 and 2.

Director White and Mr. Wright then stated that they will coordinate to obtain proposals for the installation of metal ladders at the WWTP.

AUTHORIZE ATTENDANCE AT A WBD FALL SEMINAR AND MID-WINTER CONFERENCE

The Board discussed the Directors’ attendance at the AWBD’s Fall Seminar on October 30, 2023, and the Mid-Winter Conference to be held in Dallas, Texas on January 19-20, 2024. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the Directors’ attendance at the A WBD Fall Seminar and Mid-Winter Conference.

DETERMINE DEVELOPMENT STATUS OF DISTRICT UNDER TEXAS WATER CODE SECTION 49.23603 FOR 2023 TAX YEAR

Mr. Barner explained that in order for the District to determine a proposed tax rate for the 2023 tax year, it must first determine whether the District is considered to be a “developing” or “developed” district, as defined in Texas Water Code Section 49.236. Mr. Barner went on to explain that in his opinion and the opinion of the District’s Financial Advisor, the District is a developing district because the facilities necessary to serve at least 95% of the District are not yet complete; therefore, the District may adopt a 2023 tax rate in an amount that does not exceed 1.08 times the amount of tax imposed by the District in the 2022 tax year.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board declared the District to be a developing district for purposes of calculating the District’s 2023 tax rate setting procedures.

ATTORNEY’S REPORT

Mr. Barner then explained that pursuant to House Bill 2815 of the 88th Legislative Session, Section 49.060 of the Texas Water Code was amended to allow the Board to set the fees of office per day at an amount not greater than the amount of fees set by the Texas Ethics Commission (“TEC”) for members of the legislature under Section 24a, Article III, Texas Constitution, provided that fees of office may not exceed $7,200.00 per annum. Mr. Barner stated that the current legislative per diem set by the TEC is $221.00 per day. Mr. Barner further stated that the District’s Ethics Policy currently states that Directors shall be paid fees of office of up to $150.00 per day for attending meetings or other functions in furtherance of the District’s business.

Mr. Barner next presented to the Board proposed amendments to the District’s Ethics Policy reflecting the recent amendment to Section 49.060 of the Texas Water Code relating to Director’s fees of office. Mr. Barner further explained that the proposed amendments to the Ethics Policy include procedures for conducting Board meetings by videoconference in situations where two (2) or less directors are unable to attend such meetings in-person. It was the consensus of the Board to table further discussion regarding the Ethic’s Policy until the August 9, 2023 Board meeting.

Mr. Barner then stated that RAB is finalizing a memorandum regarding the bills passed during the 88th Legislative Session. Mr. Barner further stated that he will distribute such memorandum electronically once finalized.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:13 a.m.

PASSED AND APPROVED this the 9th day of August, 2023.

Margie Barlow
Secretary, Board of Directors