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

July 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, July 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 of Municipal Accounts & Consulting L.P. (“Bookkeeper” or “MAC”); Justin Abshire and Conner Murphy of Quiddity Engineering (“Engineer” or “Quiddity”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Curt Harris, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Rusty Denner, General Manager for the Walden Community Improvement Association (“WCIA”); and Elliot M. Barner, attorney, Kathryn Cain, paralegal, and Cooper Montgomery, law clerk, 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 JUNE 8, 2022 REGULAR MEETING

The President next directed the Board to the approval of the June 8, 2022 regular meeting minutes. Director Patton noted that he had previously informed RBAP that such minutes needed to be revised to reflect that certain comments that he made regarding the landscaping were related to landscaping inside the fence of the District’s wastewater treatment plant (“WWTP”) and not outside of such fence as stated in the draft of such minutes. Upon a motion by Director Barlow, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved the June 8, 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 June 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 98.28% of the 2021 taxes have been collected as of June 30, 2022.

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 regarding a line item in the cash flow section of the Bookkeeper’s Report that related to three (3) returned items, Ms. Felder explained that such line item relates to checks paid to the District by customers that were returned due to insufficient funds in such customers’ checking accounts. Ms. Felder then stated that check nos. 10003 and 2134 for payment of RBAP’s legal fees were not included in the Bookkeeper’s Report but were presented to the Board for approval.

Next, Director Moravec stated that he reconsidered his previous recommendation to consolidate certain billing accounts included under the Administrative Services line item in the budget and is withdrawing such recommendation. Director Moravec then noted that laboratory expenses are trending higher than what was budgeted for by the Board. Mr. Wright explained that the increase in such expenses is due to the District’s Texas Pollution Discharge Elimination System Permit (“TPDES “) for the WWTP, which requires testing samples of such discharge two (2) times each week. Mr. Wright further explained that such requirement takes effect when such permit allows a district to discharge 1 million gallons of wastewater per day (“gpd”) or more. Mr. Wright stated that even though the District currently discharges approximately 777,000 gpd, it is permitted to discharge 1.2 million gpd; therefore, the District is required to test samples two (2) times each week.

Director Moravec then recommended that the Board contemplate increasing the District’s water and wastewater rates in order to cover the increased costs of providing water and wastewater services. Mr. Barner explained that the Board has not increased the District’s water and wastewater rates since 2016. Mr. Barner then explained the process for preparing an analysis of the District’s rates and the process for amending the District’s Rate Order. A discussion ensued.

Mr. Abshire stated that such analysis will take Quiddity approximately two (2) months to prepare at a cost of up to $10,000, but added that such analysis will assist the Board in determining whether the District’s rates generate sufficient revenue to pay for the costs associated with providing water and wastewater services.

Director Moravec next noted that interest rates for certificates of deposit (“CD”) have increased and recommended that the District resume its practice of purchasing new CDs when its current CDs mature.

Upon a motion by Director Barlow, seconded by Director Leasure, 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 Tax Assessor Collector’s Report, as presented.

REVIEW SCOPE OF SERVICES UNDER THE DISTRICT’S AGREEMENT FOR BOOKKEEPING SERVICES WITH MAC

Director Moravec then discussed with the Board his concerns regarding the significant increase in the amount of MAC’s monthly invoices for bookkeeping services. Director Moravec suggested that the Board consider not having the Bookkeeper present at the District’s Board meetings and stated that the Board can review electronic copies of the Tax Assessor-Collector’s Report and the Bookkeeper’s Report on their own prior to each meeting. Director Moravec suggested that if the Board should decide that Ms. Felder should not attend such meetings, that she be available by telephone to respond to questions from the Board during such meetings. Next, Director Moravec discussed with the Board the costs incurred by the District for Ms. Felder’s supervisor’s in-depth review of monthly invoices and reports and stated that such review need not be so thorough. A discussion then ensued regarding various methods by which MAC can reduce the District’s costs for bookkeeping services.

Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board: 1) requested that the Bookkeeper not to attend the District’s Board meetings; 2) authorized a reduction in the scope of review by senior employees at MAC of Ms. Felder’s work performed on behalf of the District; 3) authorized MAC to reduce the number of paper copies of documents provided to the Board and consultants; and 4) directed MAC to cease sending consultant invoices to the Board prior to Board meetings and to require such consultants to directly send their invoices to the Board by email.

The Board took a brief recess from 9:46 a.m. to 9:50 a.m.

ENGINEER’S REPORT

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

Mr. Murphy next updated the Board on Allco, LLC’s (“Allco”) progress over the past month regarding the WWTP Project. Mr. Murphy 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 then reported that Allco obtained 95% of the spare parts necessary for such WWTP and is working to secure the few remaining parts that were addressed in RBAP’s recent letter to Allco. Mr. Abshire further reported that Allco’s drawings are under final review by Quiddity and he expects such drawings to be approved next week. Mr. Abshire went on to report that Quiddity has conducted inspections of the WWTP Project and determined that once Allco submits certain paperwork for the completion of Phase 1 of such project, Phase 2 of such project may commence shortly thereafter. Upon a motion by Director Tryon, seconded by Director Patton after full discussion and with all Directors present voting aye, the Board declared Phase 1 of the WWTP Project substantially complete and authorized Allco to proceed with Phase 2 of such project, subject to Quiddity’s approval.

Mr. Murphy then presented Allco Pay Estimate No. 41 in the amount of $16,773.75 for work performed for the WWTP Project.

Mr. Murphy then reminded the Board that Quiddity has submitted the application for the renewal of the TPDES Permit for the WWTP to the Texas Commission on Environmental Quality (the “TCEQ”) on behalf of the District. Mr. Murphy reported that Quiddity is awaiting receipt of the draft of such permit from the TCEQ.

Mr. Murphy then stated that Quiddity is underway with the design of the Sanitary Sewer Rehabilitation Project and presented to the Board a preliminary project schedule. Mr. Murphy reported that Quiddity intends to advertise such project in August and will present bids and make a recommendation of award at the September 14th Board meeting.

Mr. Murphy then updated the Board on the Motor Control Center (“MCC”) Replacement Project for the Poe Drive Water Plant (Water Plant No. 1). Mr. Murphy reported that within the past month, McDonald Municipal & Industrial (“McDonald”), the contractor for such project, poured the piers and grade beams, erected the concrete masonry unit building, and partially installed the grounding system at such water plant. Mr. Murphy further reported that the MCC was delivered to the contractor and will be installed within the next two (2) months. Mr. Murphy then presented McDonald’s Pay Estimate No. 3 in the amount of $64,566.90 for work performed on the MCC Replacement Project.

Mr. Murphy then reminded the Board that it previously authorized Quiddity to advertise the MCC Replacement Project for the Browning Street Water Plant (Water Plant No. 2).

Mr. Murphy reported that Quiddity plans to advertise such project this month and will present bids and make a recommendation of award at the August 10th Board meeting.

Next, Mr. Murphy reported that Quiddity completed its review of plans provided by Safe Harbor Marinas (“Safe Harbor”) for an expansion of Walden Marina, which will use more water and wastewater than the existing marina. Mr. Murphy further reported that all of Quiddity’s comments to such plans were addressed by Safe Harbor and added that Quiddity has issued a plan approval letter to Safe Harbor.

Mr. Murphy then stated that pursuant to the Board’s authorization for Quiddity’s inspection of the electrical systems at the District’s water wells, Quiddity is underway with such electrical inspection. Mr. Murphy reported that Quiddity plans to present recommendations to the Board regarding methods by which to increase the efficiency of such systems at the August 14th Board meeting.

Upon a motion by Director Patton, seconded by Director Barlow, 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. 41 in the amount of $16,773.75; and 3) approved McDonald’s Pay Estimate No. 3 in the amount of $64,566.90.

Mr. Murphy next presented the Lift Station Inspection Report. Mr. Murphy reported that the District’s lift stations are generally in good condition, with most deterioration occurring within the wet wells of such stations. Mr. Murphy went on to report that Quiddity divided the recommended lift station improvements into three (3) phases, with the second (2nd) and third (3rd) phases included in the District’s IO-year capital improvement plan. Mr. Abshire then explained that each lift station will have to be taken out of operation and placed on bypass while the necessary improvements are made. Mr. Abshire then recommended that Phase 1 of the recommended lift station improvements occur within the next three (3) years. A discussion then ensued regarding such recommended improvements and the priority of such improvements. Director Patton then requested that the Operator determine which improvement items can be completed by Hays North and to provide a cost estimate to the Board for such items. Mr. Abshire then stated that Quiddity will prepare a cost estimate and proposed scope for Phase 1 of such improvements.

UPDATE ON STATUS OF LANDSCAPING IMPROVEMENTS AT THE WWTP

Mr. Barner reminded the Board that this item was placed on the agenda so that the Board could begin discussing the type of landscaping improvements it desired to make once the WWTP Project is completed. A brief discussion ensued. Director Moravec recommended that Director Barlow coordinate with the Engineer to develop a plan for landscaping the grounds both inside and outside of the fence at the WWTP.

OPERATOR’S REPORT

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

Mr. Wright then reported that 621 customers are receiving electronic billing statements which is an increase of 27 customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 93.02%. Mr. Wright further reported that there were no new taps last month and that the District has a total of 1,813 connections. Mr. Wright then stated that service to two (2) accounts was cut-off due to delinquent payment; however, one (1) such account subsequently paid the outstanding balance and service was restored.

Mr. Wright then reported that MUD 9 installed a generator at the Buckingham Water Plant.

Mr. Wright explained that following an issue last month with the Walden Road generator, three (3) of the District’s water plants now have generators on-site.

Director Moravec then recommended that the Board approve implementing Stage 1 of the District’s Drought Contingency Plan (“DCP”) due to the ongoing drought in Texas. Director Moravec reminded the Board that Stage 1 of such plan includes voluntary compliance by customers. Director Moravec went on to suggest that the District encourage customers to limit irrigation by placing a message on customers’ bills promoting water conservation. Director Moravec further recommended including an article in the Walden newsletter regarding conservation measures. Discussion then ensued regarding additional methods by which to encourage customers to conserve water. Director Moravec stated that he and Director Barlow will prepare language for the newsletter article and yard signs promoting awareness of the District’s DCP.

Next, Mr. Wright reported that the District has three (3) wells currently in operation and has no problem meeting customer demand for water. Mr. Wright further reported that the District exceeded certain permitted limits in some of the effluent samples taken from the WWTP due to reduced effectiveness of treatment of wastewater with phosphorus during the warmer summer months.

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 7 49 .10 milligrams per liter (“mg/I”), 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 next reported that the pump at the lift station on Twain Drive was replaced at a cost of $12,000.00 because of the frequency at which Hays North needed to remove non-dissolvable fibrous material, which is referred to in the wastewater utility industry as “Rags,” from such lift station. Mr. Wright explained that since replacing such pump, Hays North has not been required to pull such pump in order to remove these Rags. Director Moravec then stated that he provided Hays North with language regarding such Rags for door hangers to be hung on homes served by the Twain Drive lift station. Mr. Wright then stated that the cost to print and hang such door hangers will be approximately $300.00.

Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and will all Directors present voting aye, the Board: 1) approved the Operator’s Report, as presented; and 2) approved the implementation of Stage 1 of the District’s DCP.

DISCUSS LEASE OF GENERATOR FOR ALTERNATIVE WATER SUPPLY (“AWS”) FACILITIES LOCATED AT MUD NO. 9’s BUCKINGHAM WATER PLANT

Mr. Wright reported that last month, MUD 9 approved a lease of a temporary generator to operate the Catahoula Well at the Buckingham Water Plant in the event of an electric service interruption. Mr. Wright went on to report that MUD 9 has requested that the District participate in the costs associated with such lease. Mr. Wright then presented a proposal in the amount of $10,256.00 for the installation of and one (1) month’s lease payment for the lease of such generator.

A discussion ensued. In response to a question, Mr. Wright explained that MUD 9 determined that such generator was necessary and such generator has already been installed at such water plant. Mr. Wright further reported that the cost to continue to lease such generator is $9,000.00 per month. Mr. Wright then explained that MUD 9 believes that such generator is necessary because the Walden Road Water Plant’s generator recently failed, which leaves the Browning Water Plant as the only water source for providing water service to the District and MUD 9 in the event of an electric service interruption. Mr. Wright then recommended that the Board approve the lease of such generator throughout the hurricane season or until the Poe Drive Water Plant is back in operation after the Poe Drive MCC Project is completed. Additional discussion ensued.

Director Moravec stated that Hays North should have notified the District of MUD 9’s decision to lease the temporary generator prior to the installation of such generator. In response to a question from Director Moravec regarding why the Board was not notified earlier that it may be necessary to lease a temporary generator for the Buckingham Water Plant, Mr. Abshire explained that at the time that the Board approved taking the Poe Drive Water Plant out of service, the District still had three (3) operational water plants and that in Quiddity’s opinion, a generator for Buckingham Drive was not necessary.

In response to a question, Mr. Barner reminded the Board and Hays North that the Interlocal Agreement Between the District and MUD 9 for the Operation and Maintenance of the Alternative Water Supply Facilities requires that certain costs be presented to both districts’ Boards for approval in order for such costs to be considered both districts’ expense. Mr. Barner explained that the Board is not obligated to approve the generator lease.

A discussion then ensued regarding the need for generators at all four ( 4) water plants serving the District and MUD 9. Director Patton recommended that the District approve the proposal in the amount of $10,256.00 for the installation of the temporary generator, but requested that Hays North provide the Board with information regarding when the Poe Drive Water Plant will return to operation so that the Board may consider whether to continue participating in the lease of such generator on a monthly basis.

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 proposal in the amount of $10,256.00 for the installation of the temporary generator at the Buckingham Water Plant and the rental fee for July; and 2) appointed Directors Tryon and Patton as liaisons to coordinate with MUD 9 regarding the necessity of continuing with such generator lease.

ATTORNEY’S REPORT

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.

Mr. Denner exited the meeting at this time.

STATUS OF WATER SMART PROGRAM APPLICATION, INCLUDING APPROVAL OF RESOLUTION APPROVING SUBMITTAL OF 2023 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 AWBD’s Water Smart program must be renewed on an annual basis. Mr. Barner then presented a Resolution Approving Submittal of the 2023 Water Smart Application for the period of January 1, 2022 through December 31, 2022, and explained that such application will be submitted by Hays North once they have assembled all necessary documentation. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved a Resolution Approving Submittal of the 2023 Water Smart Application.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton reported that Off Cinco is in the final stages of developing the joint website between the District and MUD 9. Director Patton further reported that Off Cinco informed him that such website will be live by August 1st.

MISCELLANEOUS REPORTS

Director Tryon next briefly updated the Board regarding MUD 9’s most recent Board meeting. Director Tryon reported that MUD 9 discussed implementation of a water conservation plan.

AUTHORIZE ATTENDANCE AT AWBD FALL SEMINAR AND MID-WINTER CONFERENCE

The Board discussed the Directors’ attendance at the AWBD’s Fall Seminar on October 31 st and the Mid-Winter Conference to be held in Austin, Texas, on January 27-28, 2023.

Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board authorized the Directors attendance at the AWBD Fall Seminar and Mid-Winter Conference.

DETERMINE DEVELOPMENT STATUS OF DISTRICT UNDER TEXAS WATER CODE SECTION 49.23603 FOR 2022 TAX YEAR

Mr. Barner reminded the Board that in order for the District to determine a proposed tax rate for the 2022 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 2022 tax rate in an amount that does not exceed 1.08 times the amount of tax imposed by the District in the 2021 tax year.

Upon a motion by Director Barlow, seconded by Director Leasure, 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 2022 tax rate setting procedures.

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 :45 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, Ms. Cain, and Mr. Montgomery.

Messrs. Abshire and Murphy exited the meeting at this time.

RECONVENE IN OPEN SESSION

As of 12:09 p.m., the President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Patton, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board authorized Quiddity and RBAP 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 12:10 p.m.

PASSED AND APPROVED this the 10th day of August, 2022.

Margie Barlow
Secretary, Board of Directors