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

SEPTEMBER 8, 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, September 8, 2021, at 9:00 a.m., at the Walden Yacht Club, 13101 Melville Drive, Montgomery, Texas 77356, a designated meeting place located inside the boundaries of the District, and the roll was called of the duly constituted officers and members of the Board, to-wit:

John Tryon – President
John L. Patton – Vice President
Margie Barlow – Secretary
Randolph C. Moravec – Treasurer / Investment Officer
Bob Leasure – Assistant Secretary

All members of the Board were present, thus constituting a quorum. Also attending were Kaye Townley of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Conner Murphy (“Engineer” or “Jones|Carter”); Philip Wright and John Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charles Barron and Lyle Hamm, Directors of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Rusty Denner, General Manager for the Walden Community Improvement Association (“WCIA”); and Ross J. Radcliffe, 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 AUGUST 11, 2021 REGULAR MEETING

The President next directed the Board to the approval of the August 11, 2021 regular meeting minutes. Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the August 11, 2021 regular meeting minutes, as presented.

PUBLIC HEARING ON 2021 TAX RATE

The President next declared the public hearing open to discuss the District’s proposed tax rate for 2021.

Mr. Radcliffe reminded the Board that it previously voted to publish a proposed total 2021 tax rate at $0.3150 per $100 of assessed valuation. Mr. Radcliffe further reminded the Board that it previously voted to publish notice of the proposed 2021 tax rate and the public hearing (the “Notice”) on such tax rate in the Conroe Courier at least seven (7) days prior to today’s public hearing.

There being no members of the public present to discuss the proposed tax rate, the President then declared the public hearing closed.

The Board then discussed the proposed tax rate for 2021. Mr. Radcliffe presented for the Board’s approval and adoption an Order Setting Rate and Levying Tax for 2021 reflecting the levy of a tax rate of $0.0532 per $100 of assessed valuation for debt service purposes and $0.2618 per $100 of assessed valuation for operations and maintenance purposes, resulting in a total 2021 tax rate of $0.3150 per $100 of assessed valuation.

Next, Mr. Radcliffe reviewed with the Board the Order Appointing Tammy McRae, the Montgomery County Tax Assessor-Collector, as the District’s Tax Assessor-Collector.

Mr. Radcliffe then reviewed with the Board the Resolution Concerning Tax Collection Procedures and reminded the Board that the District is obligated to review its internal tax collection procedures at least once per year and adopt a resolution re-affirming those tax collection procedures after each review.

Mr. Radcliffe next explained that pursuant to Section 49.455 of the Texas Water Code, as amended, the District is required to amend its District Information Form (“ADIF”) any time information in such form is revised or updated and, therefore, since the District’s 2021 tax rate has been adopted, an amendment to the District Information Form is necessary. A copy of the ADIF is attached hereto. Mr. Radcliffe further stated that the ADIF is required to be filed with the Montgomery County Real Property Records (the “MCRPR”) and the Texas Commission on Environmental Quality (the “TCEQ”).

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board: 1) approved a total ad valorem tax rate of $0.3150 per $100 of assessed value for the year 2021, comprised of $0.0532 per $100 assessed valuation for debt service purposes and $0.2618 per $100 assessed valuation for operation/maintenance purposes; 2) approved the Order Appointing Tax Assessor/Collector; 3) approved the Resolution Concerning Tax Collection Procedures; and 4) approved the ADIF, as presented, and authorized filing of the same with the MCRPR and the TCEQ.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Townley reported that the Tax Assessor-Collector Report has not yet been received, and stated that MAC will provide such report to the Board upon receipt.

Next, it was determined by the Board that no persons were present for a public hearing regarding terminating service to customers with delinquent taxpayer accounts. Mr. Radcliffe then reported that RBAP sent letters via certified mail to certain customers with delinquent taxpayer accounts and discussed the process for terminating such accounts. The Board requested that Hays North hang door tags at the properties for which those accounts that remain delinquent. Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board authorized termination of service at the end of September to eligible accounts due to non-payment of delinquent taxes, following Hays North hanging door tags for such accounts.

BOOKKEEPER’S REPORT

Ms. Townley next reviewed the Bookkeeper’s Report, a copy of which is attached hereto, including the current fund balances, expenditures and investments. Ms. Townley reported that check nos. 9661-9665 and check no. 2062 are not included on such report but were submitted to the Directors for signature.

Ms. Townley next presented the Quarterly Investment Inventory Report for the Period Ending June 30, 2021, a copy of which is attached hereto.

Director Moravec then reminded the Board that as the District’s Investment Officer, he is required to attend four (4) hours of training related to the Public Funds Investment Act (“PFIA”).

Director Moravec discussed various training options available to him and requested authorization from the Board to attend training in Fort Worth, Texas offered by TexPool. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized Director Moravec to attend PFIA training in Fort Worth.

Regarding the engagement of Burton Accounting, P.L.L.C. (“Burton Accounting”) to prepare additional financial statements for the District in order to comply with certain requirements of the Texas Water Development Board (the “TWDB”) in connection with the District’s 2011 TWDB revenue bonds, Mr. Radcliffe stated that the District has received a proposal from Burton Accounting for same. Mr. Radcliffe explained the purpose of the TWDB’s requirements and the necessity of preparing such additional statements.

Upon a motion by Director Moravec, seconded by Director Tryon, 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; 3) approved the Quarterly Investment Inventory Report for the Period Ending June 30, 2021; and 4) authorized the execution of the Burton Accounting engagement letter.

UPDATE ON STATUS OF DISTRICT’S BUDGET FOR FISCAL YEAR ENDING (“FYE”) DECEMBER 31, 2022

Director Moravec reported that he is preparing a draft of the District’s budget for the FYE December 31, 2022. Director Moravec further reported that he is reaching out to the District’s consultants regarding proposed rate increases for such fiscal year. Director Moravec then discussed the method by which the District bills customers for fees charged to the District by the Lone Star Groundwater Conservation District (the “LSGCD”) and noted that the District is not recovering from customers the full amount of such fees.

Next, Director Moravec recommended increasing the rate charged for the District’s highest water usage tier of 30,000 gallons per month (“gpm”). Director Moravec further recommended that the District establish a new water usage tier of 50,000 gpm. Mr. Barron stated that Hays North is increasing its fees by ten percent (10%) and suggested that the District and MUD 9 increase the rate charged for each water usage tier by ten percent (10%). Extensive discussion then ensued regarding the rates charged by the District for each water usage tier.

REVIEW POLICIES ON CAPITALIZATION AND DEPRECIATION OF DISTRICT’S ASSETS

Director Patton then discussed depreciation of District assets relating to the portions of the existing wastewater treatment plant (“WWTP”). Director Patton reminded the Board that portions of such WWTP will be demolished once the new WWTP is operational. Director Patton stated that the Board will need to coordinate with the District’s Financial Advisor regarding how to value such assets on the District’s financial statements.

ENGINEER’S REPORT

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

Mr. Abshire next updated the Board on Allco, LLC’s (“Allco”) progress over the past month regarding the WWTP Project. Mr. Abshire reported that Jones|Carter is coordinating with Allco to reach substantial completion of Phase 1 of such project. Mr. Abshire explained that Phase 1 will likely be complete at the end of the year, and Phase 2 will begin early next year. Mr. Abshire further reported that Allco is working to resolve certain electrical deficiencies that were observed at the WWTP Project last month. Mr. Abshire went on to report that the lift station should be taken off bypass within the next two (2) weeks. Mr. Abshire then reported that Jones|Carter is coordinating with Allco to develop a start up plan for the new WWTP.

In response to a question from Director Moravec regarding unauthorized discharge of effluent at the WWTP, Mr. Abshire explained that treated effluent overflowed from a manhole and entered into a storm drain. Mr. Abshire reported that such discharge is required to be reported to the TCEQ.

Mr. Abshire then reminded the Board that payment in the amount of $321,596.97 for Allco’s Pay Estimate No. 30 has not yet been released to Allco. Mr. Abshire next presented Allco’s Pay Estimate No. 31 in the amount of $75,654.00 for work performed on the WWTP Project. Director Patton requested that such pay estimates be discussed further during executive session.
Mr. Abshire then reminded the Board that the District’s current Texas Pollution Discharge Elimination System (“TPDES”) permit for the WWTP expires on June 1, 2022, and that the renewal application is due to the State 180 days before expiration, or by December 3, 2021. Mr. Abshire reported that Jones|Carter is coordinating with Hays North to prepare the TPDES permit renewal application on behalf of the District.

Regarding the Drainage Improvements, Phase II (Zones 7, 8 and 11), Mr. Abshire reported that such project is substantially complete and the final inspection was held on August 9th. Mr. Abshire further reported that only minor items remain outstanding. Mr. Abshire stated that he expects to present the contractor’s final pay estimate at next month’s Board meeting.

Next, Mr. Abshire updated the Board regarding the cleaning and televising of a certain portion of the District’s wastewater collection lines. Mr. Abshire reported that Texas Pride Utilities, LLC (“Texas Pride”) is almost complete with the cleaning and televising work in the Estates of Walden. Mr. Abshire stated that Texas Pride should be done with the cleaning and televising work in Walden on Lake Conroe, Section 6 prior to next month’s Board meeting; however, Jones|Carter will need time to review all of the video provided by Texas Pride related to such work.

Mr. Abshire then updated the Board on the Motor Control Center Replacement Projects for both the Poe Street Water Plant and the Browning Street Water Plant. Mr. Abshire reported that the design plans for such projects are approximately 60% complete. Mr. Abshire further reported that Jones|Carter is coordinating with certain manufacturers regarding the pre purchase of certain equipment required for such projects. Mr. Abshire went on to report that Jones|Carter is also coordinating with RBAP regarding potential issues related to ownership of such equipment.

Next, Mr. Abshire reminded the Board that the America’s Water Infrastructure Act of 2018 requires water districts serving more than 3,300 customers to develop an Emergency Response Plan (“ERP”). Mr. Abshire then presented a proposal for $6,000.00 for Jones|Carter’s preparation of such ERP. Mr. Barron suggested that the District and MUD 9 prepare a joint ERP and requested that the Board consider authorizing Jones|Carter to prepare the same. Mr. Abshire stated that the cost for a joint ERP would be $10,000.00, split equally between the District and MUD 9.

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, excluding Allco’s pay estimate; and 2) authorized Jones|Carter to prepare a joint ERP for the District and MUD 9 at a total cost not to exceed $10,000.00.

OPERATOR’S REPORT

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

Mr. Philip Wright then reported that 520 customers are receiving electronic billing statements, which is an increase of 19 customers from last month.

Mr. Philip Wright next reported that the combined water accountability for the District and MUD 9 was 95.08%. Mr. Philip Wright further reported that there were two (2) new taps last month and that the District has a total of 1,792 connections.

Mr. Philip Wright then reported that pumpage tests will be performed on the District’s wells this month.

Next, Mr. Philip Wright reported that there are no accounts delinquent by 90 or more days. Discussion then ensued regarding resuming termination of service and assessment of late fees to delinquent accounts. Upon a motion by Director Leasure, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board authorized resuming termination of service and assessment of late fees for delinquent accounts.

Mr. John Wright then reported that an electrical meter was replaced at the Buckingham Water Plant; however, the data recorded by the new meter was inaccurate. Mr. John Wright stated that such meter indicated that an unusually high amount of energy was used at such water plant and added that Hays North requested an adjustment from Entergy.

Mr. Philip Wright next stated that the LSGCD charges the District a flat fee and noted that such fee is so high because the District is permitted to pump a much larger amount of water than it actually uses. Mr. Philip Wright explained that the LSGCD fee charged to the District remains the same no matter the amount of water pumped by the District. Mr. Philip Wright then stated that the District charges its customers based upon the amount of water used by such customers. Mr. Philip Wright suggested that the Board may want to consider how it passes the LSGCD’s fees to customers in order to fully recover fees that the District pays to the LSGCD.

Mr. Philip Wright next reminded the Board that two (2) sinkholes developed near the District’s stormwater drainage outfalls located in the Estates of Walden Subdivision. Mr. Philip Wright reported that the repair of one (1) outfall is underway; however, Hays North has not yet started the repair of the second (2nd) outfall.

Mr. Philip Wright then presented a handout regarding the status of claims filed for damages to various District water lines during the installation of Tachus’ fiber optic cables. Mr. Philip Wright reported that $8,500.00 remains to be collected from Tachus’ subcontractors.

Mr. John Wright next discussed the method by which Hays North calculates the District and MUD 9’s pumpage from the Jasper Water Wells. Mr. John Wright explained that Hays North compares the percentage difference in the districts’ billed consumption and the percentage difference in the districts’ pumpage from such wells. Director Patton then explained that the current imbalance calculation includes pumpage from the Catahoula water wells as well as the Jasper water wells. Mr. Barron stated that the year to date imbalance in the amount of water pumped by each district from such wells is approximately 40,000 gallons. Director Patton noted that the District owns two (2) Jasper water wells while MUD 9 owns one (1), therefore, MUD 9 will need to pump twice as much water in order to pump an equivalent amount to the District. Mr. Barron stated that the purpose of pumping an equal amount between the districts is to keep the operating costs for such wells roughly equal. Mr. Philip Wright added that achieving a pumpage balance between the districts allows Hays North to determine when each of the Jasper Water Wells needs to be running and make necessary adjustments accordingly. Upon a motion by Director Leasure, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized Hays North to modify the imbalance calculation to include only pumpage from the Jasper Water Wells.

In response to a question from Director Leasure regarding the grass at the lift station being maintained by both the District and the WCIA, Mr. John Wright stated that Hays North is coordinating with the WCIA to ensure that grounds maintenance at the District and MUD 9’s facilities is not being duplicated.

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

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton next reminded the Board that MUD 9 is considering launching a district website and obtained a quote from Off Cinco for the development and maintenance of a joint website with the District. Extensive discussion then ensued regarding such proposal and whether a joint website would be beneficial to the District. Director Patton recommended that MUD 9 coordinate with Off Cinco regarding the details of such proposed joint website and discuss such proposal further with the District at next month’s Board meeting.

MISCELLANEOUS REPORTS

Director Leasure reported that he attended MUD 9’s board meeting last week at which such board set a 2021 tax rate of $0.405.

Director Patton next reported that cars are parking on the property on which the lift station is located, adjacent to Madeley Ranch Elementary School (“Madeley”), and stated that Madeley asked MUD 9 to post signs prohibiting parking on such site. Mr. John Wright then stated that the property on which people are parking cars is an easement owned by Madeley, therefore, Madeley is able to install their own signage on such property.

Mr. Barron then reported that MUD 9 has not yet completed development of a chain of communication among the board and consultants for use during emergencies such as when a boil water notice must be issued. Director Moravec recommended that the District consider developing a similar chain of communication for use during emergencies. Director Patton stated that the Association of Water Board Directors has a flowchart available online that the District can use as a template in developing such chain of communication.

ATTORNEY’S REPORT

In response to a question from Mr. Radcliffe regarding adoption of the State’s new document retention schedules, Director Moravec stated that he understood that RBAP is still coordinating with the District’s consultants to develop a comprehensive policy for document retention.

Next, Mr. Radcliffe then briefly reviewed with the Board RBAP’s 87th Legislative Update Memorandum and discussed certain bills that impact the District.

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 11:19 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. Radcliffe; and Ms. Cain.

As of 11:58 a.m., the President declared the Executive Session was ended and the public session was resumed.

RECONVENE IN OPEN SESSION

Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board: 1) authorized RBAP to meet with Allco pursuant to the terms discussed in executive session; and 2) approved Allco’s Pay Estimate No. 31 in the amount of $75,654.00, subject to the outcome of RBAP’s meeting with Allco.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11:59 a.m.

PASSED AND APPROVED this the 13th day of October, 2021.

Secretary, Board of Directors