MONTGOMERY COUNTY MUNICIPAL UTILITY DISTRICT NO. 8 MINUTES OF REGULAR MEETING
June 8, 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, June 8, 2022, at 9:00 a.m., at the Walden Community Church, 12400 Walden Road, Montgomery, Texas 77356, a designated meeting place located outside 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 of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire, Conner Murphy and Brian Broussard of Quiddity Engineering (“Engineer” or “Quiddity”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); 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.
The President first opened the meeting to public comment. There being no public comments, the President directed the Board to proceed with the agenda.
Mr. Abshire then introduced Mr. Broussard to the Board.
Mr. Barner next reminded the Board that Director Moravec had been declared elected to office, just as Directors Barlow and Leasure, because no additional applications for place on the ballot were received for the May 7, 2022 Directors Election. Mr. Barner reminded the Board that since Director Moravec was absent from the May 11, 2022 meeting, the Certificate of Election, Affidavit of Director, Statement of Elected Director and Oath of Office for Director Moravec needed to be accepted by the Board. It was the consensus of the Board to accept such election documents for Director Moravec. Mr. Barner noted that a copy of the Oath of Office will be filed with the Secretary of State’s office, pursuant to Article XVI, Section 1 of the Texas Constitution.
UPDATE ON REVIEW OF STORMWATER FLOW ALONG EMERSON DRIVE
Mr. Abshire then reminded the Board that certain members of the public previously requested that the District investigate what drainage improvements could be made to improve stormwater flow along Emerson Drive. Mr. Abshire explained that if the Board wishes to proceed with such investigation, Quiddity will need to obtain surveys of the area. A discussion then ensued.
Director Moravec stated that he estimated such improvements would cost the District at least $100,000.00. Director Tryon stated that such stormwater flow appears to be a private property matter as such members of the public reported that during heavy rain, stormwater flows from surrounding properties and into certain low-lying areas of their property. It was the consensus of the Board to take no further action on this matter. In response to a question by Director Patton, Mr. Wright stated that Hays North has not yet inspected the wastewater manholes located in the easement located on the properties along Emerson Drive and Whittier Drive to verify that such manholes are not obstructed or infiltrated by stormwater.
APPROVAL OF MINUTES OF MAY 11, 2022 REGULAR MEETING
The President next directed the Board to the approval of the May 11, 2022 regular meeting minutes. Director Patton noted that the date of Montgomery County Municipal Utility District No. 9’s (“MUD 9”) Board meeting is written incorrectly in such minutes. Upon a motion by Director Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the May 11, 2022 regular meeting minutes, subject to the above-noted correction.
TAX ASSESSOR-COLLECTOR’S REPORT
Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of May 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 97.63% of the 2021 taxes have been collected as of May 31, 2022. 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.
Ms. Felder next reviewed the Bookkeeper’s Report, a copy of which is attached hereto, including the current fund balances, expenditures and investments.
Next, Ms. Felder discussed the Unclaimed Property Report and explained that such report is required to be filed with the State Comptroller’s Office (“Comptroller”) annually regarding customer funds that remain uncollected for the period of March pt through February 28th.
Ms. Felder stated that the Unclaimed Property Report and a check in the amount of $657.04 have been prepared and will be sent to the Comptroller following the Board’s approval of the same.
Ms. Felder then stated that upon discussion with Director Moravec, the budget line item for Capital Outlay will be broken down to separate each of the accounts contained within such line item.
Director Moravec explained that each account within the Capital Outlay line item is budgeted separately.
In response to a question from Director Moravec regarding the investment of District funds in U.S. Treasuries, Ms. Felder stated that MAC continues to research such investment opportunities.
Regarding the summary of funds from the District’s Series 2018 Bonds as contained in the Bookkeeper’s Report, Director Moravec noted that $1,801,373.50 is needed in order to complete the projects for which such bonds were issued. Director Moravec further noted that the amount of funds remaining in the Capital Projects Fund is only $1,010,787.94. Director Moravec reminded the Board that the remainder of such projects will be funded from the District’s General Operating Fund.
A discussion then ensued regarding the Directors’ attendance at the Association of Water Board Directors – Texas 2022 Annual Conference to be held in Fort Worth, Texas from June 23-25, 2022.
Ms. Felder next presented the Quarterly Investment Report for the period ending March 31, 2022.
Upon a motion by Director Barlow, seconded by Director Patton, 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) approved the Quarterly Investment Report for the period ending March 31, 2022.
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 Allco is addressing the problems that occurred during the start-up of the WWTP and subsequent one (1) month demonstration period. Mr. Abshire further reported that Quiddity is reviewing Allco’s as-built drawings. Mr. Abshire went on to report that a letter was sent to Allco regarding the outstanding items remaining to completed before Phase 1 of the WWTP Project can be declared substantially complete. Mr. Abshire stated that Allco had informed Quiddity that it had hired an assistant project manager to improve performance for such project, but that such manager had apparently decided not to join Allco.
Mr. Abshire next presented Allco’s Pay Estimate No. 40 in the amount of $33,426.99 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 Nos. 37, 38 and 39 until Allco: a) reimburses 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. Director Patton reminded the Board that the District is currently withholding approximately $1,800,000.00 in retention. Director Patton then recommended that the Board release payment to Allco for Pay Estimate Nos. 37, 38 and 39 and further recommended that the Board withhold payment for Pay Estimate No. 40 until Quiddity confirms Allco’s as-built drawings and Allco completes the startup test of the Sequencing Batch Reactor.
Next, Mr. Abshire presented Allco Change Order No. 13 in the deduct amount of $270,000.00 for the elimination of grit removal services from the District’s contract with Allco.
Mr. Abshire then reminded the Board that the District’s current Texas Pollution Discharge Elimination System (“TPDES”) permit for the WWTP expired on June 1, 2022. Mr. Abshire reported that Quiddity submitted the TPDES permit renewal application to the Texas Commission on Environmental Quality (the “TCEQ”) on behalf of the District. Mr. Abshire further reported that the TCEQ declared such application to be administratively complete and added that he anticipates receiving a preliminary permit from the TCEQ soon.
Mr. Abshire then stated that based upon the televising of the District’s wastewater collection lines, Quiddity recommends rehabilitation of certain lines and manholes. Mr. Abshire presented a proposal in the amount of $984,000.00 for repair of certain wastewater collection lines and manholes. Mr. Abshire next presented a second (2nd) proposal in the amount of $733,000.00 for only the repair of the wastewater collection lines. Mr. Abshire reported that the District’s manholes are not at risk of immediate failure and the repair of such manholes can be postponed if the Board prefers. Mr. Abshire reported that the District budgeted $700,000.00 for a sanitary sewer project during the fiscal years ending December 31, 2022 and 2023; however, the District’s wastewater collection lines are in need of more extensive repair than was anticipated. Director Moravec recommended that Quiddity bid such project with the manhole repair included and stated that such portion of the project can be removed if the bids received are too high.
Next, Mr. Abshire reported that Quiddity is preparing the inspection report regarding its inspection of the District’s eight (8) off site lift stations. Mr. Abshire further reported that no major repairs are needed to 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 the existing MCC was demolished and the new concrete foundation was installed by the contractor, McDonald Municipal & Industrial (“McDonald”). Mr. Abshire further reported that certain materials necessary for the MCC Replacement Project are expected to be delivered to the project site by the end of the month, but such delayed delivery should not affect the project schedule. Mr. Abshire then presented McDonald’s Pay Estimate No. 2 in the amount of $19,800.00 for work performed on the MCC Replacement Project.
Mr. Abshire next requested authorization to advertise the MCC Replacement Project for the Browning Street Water Plant (Water Plant No. 2). Mr. Abshire stated that he expects to present bids and make a recommendation of award at the Board’s August 10th meeting. Mr. Abshire further stated that the MCC Replacement Project at Water Plant No. 2 is expected to begin construction in October 2022, which is when the MCC Replacement Project at Water Plant No. 1 should be completed.
Mr. Abshire then 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 Safe Harbor’s plans include installation of a water line to serve a food truck. Mr. Abshire reported that he will review the Walden Community Improvement Association’s (“WCIA”) deed restrictions to verify that food trucks are not prohibited.
Mr. Abshire then reminded the Board that it previously requested that Quiddity provide 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. Abshire presented a proposal in the amount of $7,500.00 to perform an efficiency analysis on the District water plants. Mr. Abshire reported that it will take 60 days to complete such analysis and provide recommendations regarding optimizing efficiency at such water plants. In response to a comment by Mr. Barner that MUD 9 has ownership in certain District facilities, Mr. Abshire stated that he will request that such proposal be included on the agenda of MUD 9’s next Board meeting.
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. 40 in the amount of $33,426.99, with payment for such pay estimate being withheld; 3) authorized release of payment for Allco’s Pay Estimate Nos. 37, 38 and 39; 4) approved Allco’s Change Order No. 13 in the deduct amount of $270,000.00; 5) approved the Engineer’s proposal in the amount of $984,000.00 for the 2022 Sanitary Sewer Rehabilitation Project; 6) approved McDonald’s Pay Estimate No. 2 in the amount of $19,800.00; and 7) authorized the Engineer to advertise the MCC Replacement Project for Water Plant No. 2.
Ms. Felder exited the meeting at this time.
Mr. Wright next presented the Operator’s Report, a copy of which is attached hereto.
Mr. Wright then reported that the old generator at the WWTP is no longer producing adequate voltage to operate such facility in case of a power failure. Mr. Wright reported that the cost to rent a generator is $1,500.00 per month and that installation of a manual transfer switch is $16,500.00. Director Patton noted that the only portion of the old WWTP that needs electricity is the lift station, which sends wastewater to the new WWTP. In response to a question from Director Moravec, Mr. Wright stated that he will meet with the Engineer and Engineering Committee to discuss options for providing power to the lift station from the generator at the new WWTP.
Next, Mr. Wright reported that a customer had a leak in her irrigation system last year and requested an adjustment to her water bill. Mr. Wright further reported that after such customer repaired such leak, the Board authorized reducing such customer’s water bill to the lowest usage tier and issuing a credit to such customer. Mr. Wright went on to report that such customer recently experienced another leak, which resulted in the use of 100,000 gallons of water during the past month, and stated that such customer is again requesting an adjustment to her water bill. Director Moravec stated his opinion that the District should promote water conservation. It was the consensus of the Board to deny such customer’s request for an adjustment to her water bill.
Mr. Wright then presented the District’s Drinking Water Quality Report, formerly the Consumer Confidence Report (“CCR”). Mr. Barner then reminded the Board about the process for distributing the CCR to customers pursuant to the requirements of the Environmental Protection Agency and the TCEQ. Mr. Barner stated that a direct URL link for the CCR must be included in customers’ water bills prior to June 30th in order to comply with such requirements.
Mr. Wright then reported that 594 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 93.97%. Mr. Wright further reported that there were no new taps last month and that the District has a total of 1,806 connections.
Mr. Wright then reported that a phosphorous limit excursion occurred at the WWTP.
Mr. Abshire stated that the TCEQ will be informed that such excursion occurred during construction at such WWTP and that phosphorous levels were returned to normal immediately after the discovery of such excursion.
Mr. Wright then reported that the sample taken from the WWTP last month shows that the amount of total dissolvable solids (“TDS”) in the effluent is 807.75 milligrams per liter (“mg/1”), which is higher than normal but still below the limit permitted in drinking water. Mr. Wright reminded the Board that the TCEQ does not have any requirements related to the amount of TDS contained in the District’s effluent. Mr. Wright stated that Hays North will continue to monitor the amount of TDS on a weekly basis. Director Patton requested that Hays North provide the Board with all TDS samples taken from the WWTP within the past month.
Mr. Wright next reported that when the Board amended the District’s Rate Order to increase the fee charged to customers related to the Lone Star Groundwater Conservation District’s fees, Hays North failed to update such rate on customers’ water bills. Mr. Wright explained that for one (1) month, customers were incorrectly billed a fee of $0.08 per 1,000 gallons instead of the updated rate of $0.20 per 1,000 gallons. Mr. Barner requested that Hays North calculate the amount of revenue lost by the District as a result of such billing error and provide such information to the Board.
Regarding the Notable Activity Report contained in the Operator’s Report, Mr. Wright reported that the cleanout of the old WWTP was incorrectly billed to the District at a fifteen percent (15%) mark-up. Mr. Wright further reported that dewatering and sludge removal from the WWTP should have been billed at an eight percent (8%) mark-up and stated that the District will receive a credit on Hays North’s next invoice.
Discussion then ensued regarding the frequency at which Hays North must remove non-dissolvable fibrous material, which is referred to in the wastewater utility industry as “Rags”, from the lift station on Twain Drive. Further discussion ensued regarding methods by which to inform the public about proper disposal of solid waste.
Upon a motion by Director Barlow, 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) approved distribution of the CCR.
UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES
Director Patton reported that Off Cinco is still developing the joint website between the District and MUD 9. Director Patton further reported that the District’s current website remains accessible.
Mr. Barner reported that he is corresponding with the WCIA’s attorney regarding the WCIA’s deed restrictions pertaining to the flow of stormwater onto public streets.
Director Tryon next briefly updated the Board regarding MUD 9’s most recent Board meeting. Director Tryon reported that an individual was appointed to fill the vacancy on MUD 9’s Board.
Director Tryon further reported that MUD 9 is considering upgrading all of its electronic water meters.
Director Patton then stated that the landscaping inside the fence at the WWTP needs maintenance. Mr. Wright stated that he will inspect such site to determine whether Hays North can easily landscape such grounds.
Mr. Barner then reported that he continues to draft the 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 stated that he will provide such agreement to the Board for review prior to the next regular Board meeting.
Next, discussion ensued regarding conducting Board meetings when a Director is unable to attend such meeting in-person. Mr. Barner explained that pursuant to the Texas Open Meetings Act (“TOMA”), at least three (3) Directors must be physically present at a Board meeting in order to establish a quorum for the purposes of conducting a meeting via videoconference. Mr. Barner further explained that in order to conduct a Board meeting via videoconference, certain audio and video equipment would be needed to comply with the pertinent provisions of the TOMA because those directors that attend via videoconference must be both audible and visible to all of those in attendance at the Board meeting. A discussion ensued regarding options for conducting Board meetings by videoconference in the event that a director was not able to attend in person.
REVIEW DISTRICT’S ETHICS POLICY AND EXPENSE REIMBURSEMENTS
Mr. Barner reminded the Board that review of the District’s Ethics Policy is an annual agenda item and is an opportunity for the Board to discuss or review any items contained in such policy. Mr. Barner went on to state that he recommends no changes to such policies at this time.
Upon a motion by Director Leasure, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Attorney’s Report, as presented.
THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11 :52 a.m.
PASSED AND APPROVED this the 13th day of July, 2022.
Secretary, Board of Directors