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

September 14, 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, September 14, 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 Justin Abshire of Quiddity Engineering (“Engineer” or “Quiddity”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Charlie Barron and Ray Geiselhart, Directors of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Elliot M. Barner, attorney, and Kathryn Cain, paralegal, of Radcliffe Bobbitt Adams Polley PLLC (“Attorney” or “RBAP”); and Michael White, member of the public.

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 10, 2022 REGULAR MEETING

Director Tryon next directed the Board to the approval of the August 10, 2022 regular meeting minutes. Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the August 10, 2022 regular meeting minutes, as presented.

PUBLIC HEARING ON 2022 TAX RATE

Director Tryon next declared the public hearing open to discuss the District’s proposed tax rate for 2022.

Mr. Barner reminded the Board that it previously voted to publish a proposed total 2022 tax rate at $0.3150 per $100 of assessed valuation. Mr. Barner further reminded the Board that it previously voted to publish notice of the proposed 2022 tax rate and the public hearing 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, Director Tryon then declared the public hearing closed.

The Board then discussed the proposed tax rate for 2022. Mr. Barner next presented for the Board’s approval and adoption an Order Setting Rate and Levying Tax for 2022 reflecting the levy of a tax rate of $0.0621 per $100 of assessed valuation for debt service purposes and $0.2529 per $100 of assessed valuation for operations and maintenance purposes, resulting in a total 2022 tax rate of $0.3150 per $100 of assessed valuation. Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved a total ad valorem tax rate of $0.3150 per $100 of assessed value for the year 2022, comprised of$0.0621 per $100 assessed valuation for debt service purposes and $0.2529 per $100 assessed valuation for operation/maintenance purposes.

Next, Mr. Barner reviewed with the Board the Order Appointing Tammy McRae, the Montgomery County Tax Assessor-Collector, as the District’s Tax Assessor-Collector. Upon a motion by Director Leasure, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the Order Appointing Tax Assessor-Collector.

Mr. Barner 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 consider adopting a resolution re-affirming those tax collection procedures after each review.

Upon a motion by Director Tryon, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Resolution Concerning Tax Collection Procedures.

Mr. Barner 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 2022 tax rate has been adopted, an amendment to the ADIF is necessary. Mr. Barner 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 Barlow, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the ADIF, as presented, and authorized filing of the same with the MCRPR and the TCEQ.

TAX ASSESSOR-COLLECTOR’S REPORT

Director Moravec then reviewed the Tax Assessor-Collector’s Report for the month of August 2022, a copy of which is attached hereto, including past monthly collections and credits as reported by the Tax Assessor-Collector for the District. Director Moravec reported that 99.05% of the 2021 taxes have been collected as of August 31, 2022.

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. Barner 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 of those accounts that remain delinquent. 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 Tax Assessor-Collector’s Report, as presented; and 2) authorized termination of service to eligible accounts due to non-payment of delinquent taxes, following Hays North hanging door tags for such accounts.

BOOKKEEPER’S REPORT

Director Moravec next reviewed the Bookkeeper’s Report, a copy of which is attached hereto, including the current fund balances, expenditures, and investments.

Director Moravec then reviewed with the Board certain line items contained in the budget comparison page of the Bookkeeper’s Report. Director Moravec explained that the General Repairs and Maintenance line item includes irrigation repairs performed by Hays North and stated that such item should not be categorized in such report as an administrative expense. Director Moravec requested that the Operator coordinate with the Bookkeeper to determine whether certain budget items related to operations are categorized correctly.

Director Moravec then stated that he would like the Bookkeeper to continue to investigate opportunities for the investment of District funds in U.S. Treasuries due to the favorable interest rates earned through such investments.

Director Moravec next presented the Quarterly Investment Report for the period ending June 30, 2022.

Upon a motion by Director Barlow, 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; and 3) approved the Quarterly Investment Report for the period ending June 30, 2022.

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. Barner stated that the District received a proposal from Burton Accounting for the same. Mr. Barner explained the purpose of the TWDB’s requirements and the necessity of preparing such additional statements. Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board authorized the execution of the Burton Accounting engagement letter.

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 Wastewater Treatment Plant (“WWTP”) Project. Mr. Abshire reported that Allco commenced work related to Phase II of such project, including demolition of the chlorine contact basin, clarifiers and aeration basin.

Mr. Abshire further reported that demolition of the District’s existing WWTP is anticipated to be complete this week, at which time the heavy demolition equipment will be removed from the site. Mr. Abshire then stated that pursuant to the construction contract for the WWTP Project, Allco is supposed to complete Phase II of such project in June 2023; however, the proposed construction schedule presented by Allco to Quiddity reflects a completion date in October 2023. Mr. Abshire noted that Allco’s schedule is not compliant with the schedule set forth in the contract for such project.

Mr. Abshire then presented Allco’s Pay Estimate No. 43 in the amount of $96,935.17 for work performed for the WWTP Project.

In response a question from Director Moravec regarding the funds budgeted by the District for the preparation of operations and maintenance manuals for the new WWTP, Mr. Abshire explained that the majority of such manuals will be created near the end of the WWTP Project. In response to a question from Director Moravec, Mr. Abshire explained various fees and expenses included in Quiddity’s invoices for such project. Mr. Abshire further explained that the engineering fees proposed for the WWTP budget assume that construction on such project will continue throughout 2023 and that Quiddity will provide project management services for such duration. Director Moravec requested that Quiddity provide the Board with updated estimates for the cost of Quiddity’s project management services on the WWTP Project.

Mr. Abshire then reminded the Board that Quiddity submitted the application for the renewal of the Texas Pollutant Discharge Elimination System Permit for the WWTP to the TCEQ on behalf of the District. Mr. Abshire reported that Quiddity is awaiting receipt of the draft of such permit from the TCEQ.

Mr. Abshire next stated that Quiddity completed the design of the Sanitary Sewer Rehabilitation Project and requests authorization from the Board to advertise such project.

Mr. Abshire stated that he will present bids and make a recommendation of award at the October 12th Board meeting.

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 substantial completion inspection and start-up period for such plant is expected to occur next week.

Mr. Abshire further reported that following the start-up of such plant, the Operator will take samples of the water pumped at such plant. Mr. Abshire went on to report that such plant is expected to be placed into operation next week. Mr. Abshire then presented McDonald Municipal & Industrial’s (“McDonald”) Pay Estimate No. 5 in the amount of $26,433.31 for work performed on the Water Plant No. 1 MCC Replacement Project.

Mr. Abshire then reminded the Board that it previously awarded the MCC Replacement Project for the Browning Street Water Plant (“Water Plant No. 2″) to McDonald in the amount of $414,469.00. Mr. Abshire stated that the contract documents were provided to RBAP for review.

Mr. Abshire then reported that McDonald inadvertently underestimated the cost for a particular item included in their bid for such project. Mr. Abshire explained that such item has a value of approximately $50,000.00; however, McDonald is only requesting the addition of $25,000.00 to the contract for such project. Mr. Abshire further explained that such contract includes contingencies in the amount of $20,000.00. Mr. Abshire stated that even with the addition of the amount requested by McDonald, McDonald remains the lowest bidder. Director Patton then recommended that the Board agree to a change order in the amount of $15,000.00 and offer an incentive of an additional $5,000.00 per week for up to three (3) weeks if such project is completed prior to the schedule set forth in the contract for such project.

Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board: 1) approved the Engineer’s Report, as presented; 2) approved Allco’s Pay Estimate No. 43 in the amount of $96,935.17; 3) authorized the Engineer to advertise the 2022 Sanitary Sewer Rehabilitation Project; 4) approved McDonald’s Pay Estimate No. 5 in the amount of $26,433.31 for the Water Plant No. 1 MCC Replacement Project; 5) approved and authorize execution of the construction contract with McDonald for the Water Plant No. 2 MCC Replacement Project; and 6) authorize the Engineer to prepare McDonald Change Order No. 1 in the amount of $15,000.00 and offer an incentive of an additional $5,000.00 per week for up to three (3) weeks for McDonald’s early completion of the Water Plant No. 2 MCC Replacement Project.

REVIEW OUIDDITY ENGINEERING, LLC’S PROPOSED SCHEDULE OF HOURLY RA TES

Mr. Abshire then presented to the Board a proposed schedule of increased hourly rates for engineering services provided by Quiddity. Mr. Abshire reminded the Board that Quiddity’s hourly rates last increased in January 2021; however, since that time, the cost of skilled labor and software licensing have increased significantly. Upon a motion by Director Patton, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved Quiddity’s schedule of hourly rates, effective January 1, 2023.

Mr. White exited the meeting at this time.

STATUS OF LANDSCAPING IMPROVEMENTS AT THE WWTP

Discussion next ensued regarding potential landscaping improvements to the grounds of the WWTP and the timeline for the same. Director Barlow stated that she is coordinating with the Engineer to develop a plan for landscaping the grounds both inside and outside of the fence at the WWTP. Director Barlow noted that an irrigation system is not installed within the perimeter fence at the WWTP.

The Board took a brief recess from 10:28 a.m. to 10:32 a.m.

OPERATOR’S REPORT

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

Mr. Wright then reported that 786 customers are receiving electronic billing statements which is an increase of 13 customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 92.97%. Mr. Wright explained that such accountability was lower than normal due to two (2) water main breaks that occurred last month.

Mr. Wright then reported that there were no new taps last month and that the District has a total of 1,816 connections. Mr. Wright then stated that service to two (2) accounts was terminated due to delinquent payment; however, the outstanding balance owed for one (1) such account was subsequently paid and service was restored.

Next, Mr. Wright reported that the District continues to exceed certain permit limitations in some of the effluent samples taken from the WWTP due to reduced effectiveness of the treatment of wastewater with phosphorus during the warmer summer months. Mr. Wright further reported that phosphorous excursions are not required to be reported to the TCEQ. Mr. Wright reminded the Board that such excursions will be resolved once the expanded WWTP is fully operational.

Director Moravec stated that the Miscellaneous line item on the Billing and Collections Report contained in the Operator’s Report appears high. Director Moravec further stated that such line item includes adjustments made to customers’ water bills by Hays North and requested that Mr. Wright provide him with a list of all such adjustments made last month.

Regarding the Notable Activity Report contained in the Operator’s Report, Mr. Wright reported that an eight-inch (8″) water main ruptured beneath a driveway on Twain Drive.

Mr. Wright further reported that an eight-inch (8”) water main ruptured on Thoreau Drive, which required an after-hours repair by Hays North.

Director Moravec reported that the gate at Water Plant No. 2 was left unsecured recently and stated that the current locking mechanism at such water plant is insufficient to properly secure such plant. Director Moravec requested that the Engineer and Operator coordinate to provide the Board with a recommendation regarding improving the security gates at the District’s water plants.

Mr. Wright then reported that Hays North is still preparing a recommendation for the Board regarding the items identified as needing repair during the annual inspection of the District’s water plants and the 2022 Lift Station Inspection Project.

Mr. Wright then reminded the Board that a District fire hydrant was previously damaged by a vehicle and had to be replaced at a cost of $8,000.00. Mr. Wright then reported that upon attempting to file a claim for such damage with the driver’s insurance company, he was notified that such driver did not have insurance coverage at the time of such accident. Mr. Wright further reported that he has not filed a claim for such damage with the District’s insurance.

Upon a motion by Director Barlow, seconded by Director Patton, 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 reported that the joint website between the District and MUD 9 is live.

Director Patton then stated that customers visiting the District’s old website are automatically redirected to the joint website.

ATTORNEY’S REPORT

Mr. Barner then reported that he sent to the Board a draft agreement between the District and the Walden Community Improvement Association (“WCIA”) relating to solid waste collection services. In response to a question regarding the absence of an exhibit to such agreement, Mr. Barner further reported that he needs to coordinate with the WCIA to identify all of the areas in which the District is billing its customers for such services on behalf of the WCIA. Mr. Barner stated that he will send such agreement to the WCIA for review.

Director Tryon exited the meeting at this time.

Mr. Barner next reminded the Board that Montgomery County Emergency Services District No. 2 (“MCESD 2”) previously paid $5,000.00 in earnest money as part of a deal to purchase certain land owned by the District. Mr. Barner further reminded the Board that MCESD 2 ultimately decided to purchase another tract of land. Mr. Barner then reminded the Board that MCESD 2 requested that the earnest money deposited by MCESD 2 be released. A discussion then ensued regarding the amount of attorney’s fees incurred by the District for RBAP’s work related to the purchase of such property. Mr. Barner went on to explain that the Commercial Earnest Money Contract between the District and MCESD 2 for such purchase had never been cancelled according to any of the terms of such agreement and recommended that he be authorized to cancel such contract. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board authorized cancellation of the Commercial Earnest Money Contract between the District and MCESD 2.

Next, Mr. Barner reminded the Board that the District’s option to purchase effluent from the City of Huntsville expires at the end of 2022 and recommended that the Board consider renewing such option for an additional two (2) years. Discussion then ensued regarding the cost of renewal and the likelihood that the District will exercise its option to purchase such effluent in the future.

Mr. Abshire then inquired as to the Board’s interest in an analysis of the District’s water and wastewater rates. Mr. Abshire stated that such analysis can be performed by Quiddity within 60 days at a cost of $5,000.00 to $7,000.00. Mr. Barner explained that the purpose of such analysis is to determine whether the District is recovering the cost incurred to provide water and wastewater services. Director Patton noted that certain residential rates have not been increased by the Board in approximately ten (10) years. Director Leasure requested that the Operator provide the Board with information regarding the District’s water and wastewater rates as compared to those of neighboring districts.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11: 17 a.m.

PASSED AND APPROVED this the 12th day of October, 2022.

Margie Barlow
Secretary, Board of Directors