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

APRIL 14, 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, April 14, 2021, at 9:00 a.m., via telephone and video conference call pursuant to Texas Government Code, Section 551.125, as amended, and as modified by the temporary suspension of various provisions thereof effective March 16, 2020, by the Governor of Texas (the “Governor”) in accordance with the Texas Disaster Act of 1975, all as related to the Governor’s proclamation on March 13, 2020, certifying that the COVID-19 pandemic (“COVID 19”) poses an imminent threat of disaster and declaring a state of disaster for all counties in Texas, 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 via video conference were Maria Felder of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Conner Murphy of Jones|Carter (“Engineer” or “Jones|Carter”); Philip Wright and John 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”); 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 MARCH 10, 2021 REGULAR MEETING

The President next directed the Board to the approval of the March 10, 2021 regular meeting minutes. Mr. Barner explained that following the distribution of such minutes to the Board, he subsequently revised the minutes to reflect that a significant increase in pumpage occurred immediately following Winter Storm Uri (the “Storm”). Mr. Barner went on to explain that such minutes were further revised to replace references to “Uri” with the term “the Storm,” and to correct the amount of the District’s one time incentive for enrollment in electronic billing from $10.00 to $12.00.

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 10, 2021 regular meeting minutes, subject to certain corrections.

APPROVE AUDIT REPORT FOR FISCAL YEAR ENDED (“FYE”) DECEMBER 31, 2020

Mr. Others then presented the Audit Report for FYE December 31, 2020 (the “FYE 2020 Audit”). Mr. Others next reported that the District’s financial statements show that the District has a four (4) year reserve of funds available.

Director Moravec then reported that he reviewed the FYE 2020 Audit with Mr. Others and discussed certain revisions to language regarding accounting methods for governmental funds.

Director Moravec further explained proposed revisions to the language on page 28 of such audit regarding a 1981 election in which voters authorized the District to levy a contract tax for firefighting purposes. Mr. Barner stated that he will provide Mr. Others with the appropriate revised language.

Mr. Barner reported that he spoke with Mr. Others regarding a revision to a certain note in the FYE 2020 Audit related to the financing of storm water facilities jointly owned with MUD 9 and explained that he will have such revision to Mr. Others soon.

Mr. Others then stated that the FYE 2020 Audit will be finalized next week and that the deadline for submitting such audit to the Texas Water Development Board (the “TWDB”) is April 30, 2021.

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 for all bond issues after 1995, 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 Texas Commission on Environmental Quality (the “TCEQ”), the TWDB and the Electronic Municipal Markets Access (“EMMA”) website.

AUTHORIZE SUBMITTAL OF AUDIT REPORT FOR FYE DECEMBER 31, 2020 TO STATE COMPTROLLER (“COMPTROLLER”)

Mr. Barner next requested approval of submitting the FYE 2020 Audit to the Comptroller and explained that a motion for such approval could also include authorizing submittal of the above-mentioned Continuing Disclosure documents.

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 FYE 2020 Audit subject to a ten (10) day review period by the District’s consultants; 2) authorized the Attorney to prepare and file the required continuing disclosure materials with the appropriate agencies, including the TCEQ, TWDB and EMMA; and 3) authorized the Attorney to file the FYE 2020 Audit Report with the Comptroller.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder reviewed the Tax Assessor-Collector’s Report for the month of March 2021, a copy of which is attached hereto, including past monthly collections and credits as reported by Tammy McRae, Tax Assessor-Collector for the District. Ms. Felder reported that 96.0% of the 2020 taxes have been collected as of March 31, 2021.

In response to a question from Director Moravec regarding the discrepancy in the amount of tax revenue reflected in the Tax Assessor-Collector’s Report and the District’s Profit & Loss Statements, Ms. Felder explained that the Tax Assessor-Collector’s tax year starts on October 1st, while period of time included in the Profit & Loss Statements begins on January 1st.

Upon a motion by Director Patton, seconded by Director Tryon, 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 then reminded the Board that it previously authorized the Bookkeeper to transfer funds from the District’s money market accounts held by Texas Class and TexPool into one (1) year Certificates of Deposit (“CD”) in a ratio not to exceed two-thirds (2/3) to one-third (1/3), with the larger portion of such funds being transferred from the money market accounts held by the investment pool offering a lower interest rate. Ms. Felder reported that the District invested funds into one (1) such CD last month and a second (2nd) CD last week. Ms. Felder then reported that a third (3rd) CD will be purchased next month.

Ms. Felder next reported that a payment was made on March 31, 2021, for the principal and interest due on the District’s outstanding bond issues.

Regarding the transfer of the District’s funds held with Woodforest National Bank (“Woodforest”) into accounts held by BBVA Compass Bank (“BBVA”), Ms. Felder explained that after confirming all fees assessed by BBVA, the Bookkeeper no longer recommends that the District transfer such funds. Ms. Felder further explained that based upon BBVA’s fee structure, the District will be charged approximately $150.00 per month in fees for accounts held with BBVA. Ms. Felder further explained that last month, Woodforest charged the District only $4.00 in fees for accounts held with Woodforest. Ms. Felder stated that she will provide the Board with the historical fees charged to the District by Woodforest. It was the consensus of the Board not to transfer the District’s funds held with Woodforest into accounts held by BBVA.

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

ENGINEER’S REPORT

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

Mr. Abshire next discussed the progress made by Allco, LLC (“Allco”) in the past month regarding the Wastewater Treatment Plant (“WWTP”) Improvement Project (the “WWTP Project”). Mr. Abshire reported that significant electrical work was completed on the interior of the blower control building and chlorine building. Mr. Abshire further reported that CenterPoint Energy installed the gas meter and the concrete was poured on the secondary driveway connecting the WWTP to Walden Road. Mr. Abshire went on to report that construction started on the effluent line from the WWTP to Lake Conroe. Mr. Abshire stated that Jones|Carter continues to hold monthly progress meetings with Allco. Mr. Abshire then presented Allco Pay Estimate No. 26 in the amount of $252,253.58 for work performed on the WWTP Project.

Next, Mr. Abshire explained that an existing manhole located along the proposed route for the WWTP Project effluent line has deteriorated to the point that the structural integrity of such manhole is compromised. Mr. Abshire further explained that such manhole is not necessary for the WWTP Project, and recommended removing such manhole at an estimated cost of $6,500.00.

Mr. Abshire then reported that Jones|Carter coordinated with Suddenlink to locate a fiber optic cable installed in the area of the WWTP Project and stated that the District will need to extend such cable approximately 200 feet (200′) in order to provide service to the motor control building. In response to a question from Director Barlow regarding using Tachus’ fiber optic cables to provide service to such building, Mr. Abshire explained that Suddenlink’s cables are closer to the site of the WWTP Project than Tachus’ cables. Director Patton requested that Jones|Carter obtain quotes from both Suddenlink and Tachus for installation of the necessary fiber optic cables to provide service to the motor control building. Mr. Abshire requested authorization from the Board to obtain quotes from Suddenlink and Tachus for installation of such cable and to proceed with such installation at a cost not to exceed $10,000.00. Mr. Abshire stated that he will correspond with Director Tryon once the quotes are received from Suddenlink and Tachus. Mr. Abshire then presented Allco Change Order No. 10 in the deduct amount of $8,801.40 and stated that such change order includes: 1) removal of costs related to CenterPoint Energy; and 2) additional costs related to the installation of fiber optic cable and construction of an earthen swale between the chemical building and chlorine contact basin located at the site of the WWTP Project.

Mr. Abshire next reported that Allco has informed Jones|Carter that it needs additional space on which to temporarily store soil at the site of the WWTP Project. Mr. Abshire reminded the Board that such site is located next to property owned by the Walden Community Improvement Association (the “WCIA”). Mr. Abshire reported that Jones|Carter requested authorization from the WCIA to store soil on an easement located on the WCIA’s property. Director Tryon reported that he spoke with Scott Sustman, the WCIA’s General Manager, who is amenable to Allco storing soil on such easement as long as such soil does not fall onto the roadway.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that AR Turnkee Construction Co. (“Turnkee”) completed work in Zones 7 and 11, and added that work in Zone 8 began last month. Mr. Abshire then presented Turnkee’s Pay Estimate No. 1 in the amount of $268,310.70 for work completed in Zones 7 and 11. Mr. Abshire noted that the District’s share of such pay estimate is 100% because Zones 7 and 11 are located entirely within the boundaries of the District. Mr. Abshire next presented Turnkee’s Change Order No. 1 in the amount of $2,500.00 for installation of a 20 foot (20′) earthen berm at 11919 Thoreau Drive for the purpose of flood mitigation.

Next, Mr. Abshire updated the Board regarding the status of the ground storage tank (“GST”) rehabilitation at the Buckingham Water Plant (the “GST Rehabilitation Project”). Mr. Abshire reported that MK Painting, Inc. (“MK Painting”), the contractor on such project, completed rehabilitation on such GST last month. Mr. Abshire further reported that Jones|Carter inspected such GST on March 29, 2021, and that such GST was placed back into operation following such inspection. Mr. Abshire then presented MK Painting Pay Estimate No. 2 in the amount of $84,487.50 for work performed on the GST Rehabilitation Project. Mr. Abshire noted that the District’s share of such pay estimate is 50 percent (50%) of the total, or $42,243.75.

Mr. Abshire then reminded the Board that it previously authorized Jones|Carter to prepare a bid package for the cleaning and televising of a certain portion of the District’s sanitary sewer lines.

Mr. Abshire requested the Board’s authorization to advertise and bid such project and stated that such bids will be presented to the Board at its May 12, 2021 meeting.

Mr. Abshire next reminded the Board that the District and MUD 9’s Joint Capital Improvement Plan for the fiscal year ending 2021 includes replacement of the motor control centers at Water Plant Nos. 1 and 2. Mr. Abshire reported that the combined cost to the District and to MUD 9 for such project will be approximately $1,100,000.00. Mr. Abshire explained that MUD 9 will be responsible for 50 percent (50%) of the work relating to Water Plant No. 2, as such plant is considered to be an alternative water source. Mr. Abshire then requested that the Board authorize Jones|Carter to prepare design plans for such project. Mr. Abshire stated that the design of such project is expected to take the rest of the year, and added that construction on such project will likely begin in early 2022. In response to a question from Mr. Barron regarding both water plants being out of operation at the same time, Mr. Abshire explained that the costs for such project include temporary electrical service at each plant to minimize the time that both plants must be offline. Director Patton requested that once Jones|Carter has made some progress on developing the design plans for such project, Jones|Carter should arrange a meeting in May with Directors Tryon and Patton and Mr. Barron to discuss the scope of such project. Director Moravec suggested that the Board approve only the engineering costs for such project, in the amount of $95,500.00, rather than approve the full amount of such project at this time.

Next, Mr. Abshire reminded the Board that the America’s Water Infrastructure Act of 2018 (“AWIA”) requires water districts serving more than 3,300 customers to develop a Risk and Resilience Assessment (“RRA”) and Emergency Response Plan. Mr. Abshire further reminded the Board that the deadline to complete the RRA is June 30, 2021. Mr. Abshire reported that Jones|Carter completed a draft of the RRA and will schedule a meeting with the District’s appointed AWIA Committee, Mr. Barron, and MUD 9’s engineer to discuss such RRA in the next few weeks. Mr. Abshire stated that he will provide a copy of such draft for the AWIA Committee to review prior to such meeting.

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, as presented, 2) approved Allco Pay Estimate No. 26 in the amount of $252,253.58; 3) authorized removal of the WWTP effluent line manhole in an amount not to exceed $6,500.00; 4) approved Allco Change Order No. 10 in the deduct amount of $8,801.40; 5) authorized Jones|Carter to coordinate with Director Tryon regarding quotes obtained from Suddenlink and Tachus for extension of fiber optic cables to the WWTP in an amount not to exceed $10,000.00; 6) approved Turnkee’s Pay Estimate No. 1 in the amount of $268,310.70; 7) approved Turnkee’s Change Order No. 1 in the amount of $2,500.00; 8) approved MK Painting Pay Estimate No. 2 in the amount of $84,487.50; 9) authorized Jones|Carter to advertise for bids for the cleaning and televising of a certain portion of the District’s sanitary sewer lines; 10) approved $95,500.00 in engineering cost related to the design of the motor control center and control building replacement at Water Plant Nos. 1 and 2; and 11) authorized Jones|Carter to proceed with design plans for the replacement of such buildings.

OPERATOR’S REPORT

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

Mr. Wright reported that the combined water accountability for the District and MUD 9 was 95.09%. Mr. Wright next reported that there were no new taps last month and that the District has a total of 1,775 connections.

Mr. Wright then reported that 439 customers are receiving electronic billing statements, which is an increase of 24 customers from last month. Director Moravec pointed out that the paperless billing credit reflected in the Operator’s Report was $36.00, which indicates that only three (3) customers received the one time incentive of $12.00 for enrolling in paperless billing last month.

Mr. Wright stated that he will research the issue to determine whether the amount of such credit is being accurately reported.

Next, Mr. Wright reported that six (6) accounts are 60 days delinquent and added that there are no accounts delinquent by 90 or more days. Mr. Wright then reminded the Board that the District has not terminated service to any delinquent accounts since the beginning of COVID 19, approximately one (1) year ago.

Mr. Wright then reported that the District did not experience a spike in energy usage or increased electricity bills related to the Storm.

Mr. Wright next reported that Hays North submitted an application on behalf of MUD 9 to the Lone Star Groundwater Conservation District (“LSGCD”) to increase the amount of water that MUD 9 is permitted to pump from the Catahoula water well. Mr. Wright explained that under the current permits, the District is allowed to pump 225,000 gallons per day (“gpd”) and MUD 9 is allowed to pump 100,000 gpd from such well; however, MUD 9 has requested permission to pump 225,000 gpd.

Mr. Wright next reported that all of the District’s generators have been inspected and serviced in preparation of the upcoming hurricane season.

Mr. Wright then reminded the Board that Hays North conducts an inspection of all of the District’s 135 fire hydrants every two (2) years, and stated that the District is due for such inspections.

Mr. Wright stated that Hays North will hire a contractor to perform flow testing on such hydrants and estimated that such work will cost approximately $3,700.00 to complete.

Regarding the status of the valve location project, Mr. Wright stated that he provided Jones|Carter with drawings for such project, but noted that Hays North still needs to clarify certain field notes that were included on such drawings.

Mr. Wright next reported that Hays North has prepared the District’s Annual Water Loss Audit and will submit such audit to the Texas Water Development Board in advance of the May 1, 2021 deadline.

Mr. Wright then reported that the District has 2,472,000 groundwater credits received from the LSGCD, but added that the LSGCD no longer issues such credits. Mr. Wright explained that such credits were issued previously as an incentive to encourage water districts to utilize alternative water sources in order to reduce their groundwater use.

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 Operator’s Report, as presented; and 2) authorized the performance of flow testing on the District’s fire hydrants at a cost not to exceed $9,000.00.

Mr. Wright next reported that he provided by email a proposed amendment to the Operator’s contract with the District. Mr. Wright explained that Hays North last increased service rates in 2017 and is now proposing a ten percent (10%) increase to such rates. Discussion ensued regarding the effective date of such rate increase. Director Moravec suggested that the increased rates become effective as of January 1, 2022, to coincide with the District’s fiscal year. Director Moravec stated that the Board adopts its budget each December for the following fiscal year, and requested that all of the District’s consultants present any proposed rate increases to the Board in August so that the Board can consider such rates when preparing the budget for the next fiscal year. In response to a question from Director Barlow regarding the amount of the rate increase implemented by Hays North in 2017, Mr. Wright stated that he just provided such information by email during the meeting. Director Leasure then requested that the Board also review the District’s water and sewer rates and consider raising the same.

UPDATE ON INSURANCE CLAIMS FOR DAMAGES RELATED TO WASTEWATER BACKFLOW

Next, Mr. Wright updated the Board regarding the claim that Hays North filed with the District’s insurance provider related to a backflow of sewage that damaged three (3) customers’ homes.

Mr. Wright reported that he provided the insurance adjuster with the requested information and has not received any updates on the progress of the claim.

UPDATE ON CLAIMS FILED FOR DAMAGES AGAINST TACHUS’ SUBCONTRACTORS

Regarding the status of claims filed for damages to various District water lines resulting from Hay North’s mismarking of water lines where Tachus was installing fiber optic cable, Mr. Wright reported that there have been no recent updates from the insurance provider. In response to a question from Director Moravec regarding the outstanding receivable amount of $35,000.00, Mr. Wright reminded the Board that Hays North’s liability insurance provider agreed to pay certain claims filed for such damages and that such payment will reduce the outstanding receivable amount. Mr. Barron reported that the judge of the small claims court in which MUD 9 filed suit against Tachus for damages to various MUD 9 water lines has ordered the parties to attend mediation. Mr. Barron reported that such mediation is schedule for late May.

REVIEW EMERGENCY/HURRICANE PREPAREDNESS PLAN

Mr. Wright reported that Hays North is examining disruptions to the operation of the District’s facilities that occurred during the Storm, and is making necessary adjustments to prevent similar disruptions during the upcoming hurricane season.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton suggested that the District post information regarding the status of the WWTP Project on the District’s website.

CONSIDER AMENDING RATE ORDER TO INCREASE CERTAIN DEPOSIT AMOUNTS FOR WATER SERVICE

Mr. Barner then explained that the Board previously requested inclusion of an item on the agenda to consider increasing the deposit amount required for new water service in order to cover outstanding balances owed by customers. Director Moravec requested that such matter be discussed further at a future Board meeting in conjunction with discussions regarding the District’s water and sewer rates. Mr. Barner then suggested that the Board authorize the District’s Engineer, Operator, and Financial Advisor to review the revenues generated from the District’s water and sewer rates (“Rate Order Study”). It was the consensus of the Board to table further discussion regarding a Rate Order Study until the Board’s regular August meeting.

MISCELLANEOUS REPORTS

Director Patton reported that Scott Sustman is the interim General Manager of the WCIA.

Director Leasure then reported that he attended MUD 9’s most recent Board of Directors meeting and discussed the delays related to the relocation of the fire station located within MUD 9.

Mr. Barron next updated the Board regarding the frequent electrical shortages at the Buckingham Water Plant that were caused by fluctuating power levels provided by Entergy. Mr. Barron reported that Entergy re-tapped the transformer at such water plant in order to lower the voltage level so as not to continue tripping the protective equipment at such water plant. Mr. Barron further reported that MUD 9’s engineer determined that the protection limits for such protective equipment had been programed at a level that was too low to tolerate the incoming energy levels. Mr. Barron went on to report that MUD 9’s electrical engineer adjusted the protection limits on such protective equipment, which has stopped such equipment from continually tripping.

DISCUSS ASSOCIATION OF WATER BOARD DIRECTORS (“AWBD”) TRUSTEE AND BYLAWS ELECTION

Mr. Barner explained that the AWBD’s bylaws require the election of trustees to occur by August 31st of each year. Mr. Barner stated that each member district may cast a ballot in the AWBD’s Trustee and Bylaws Amendment Election during the AWBD’s 2021 Annual Conference, which will be held on June 17-19, 2021. Mr. Barner went on to explain that each member district will need to appoint one (1) voting representative to cast a ballot in such election. Mr. Barner stated that the AWBD has not yet provided members with a list of the candidates or the proposed amendments to the bylaws. It was the consensus of the Board to table further discussion on such matter until the May 12, 2021 Board meeting.

Director Moravec then reported that Ms. Felder provided the Board with a notice regarding casting a ballot in the upcoming election of the Montgomery Central Appraisal District’s Board of Directors. Mr. Barner stated that an item will be on the next agenda for discussion of such election.

ATTORNEY’S REPORT

Next, discussion ensued regarding the cybersecurity training required to be completed by all Directors in order to satisfy the cybersecurity training requirements established by House Bill 3834.

Mr. Barner reported that the AWBD has partnered with Jones|Carter to offer a free cybersecurity webinar. Mr. Barner further reported that numerous cybersecurity courses are offered online through the Texas Department of Information Resources. Mr. Barner requested that the Directors provide their certificates of completion to RBAP upon completion of such training.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:42 a.m. PASSED AND APPROVED this the 12th day of May, 2021.

Secretary, Board of Directors