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

October 12, 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, October 12, 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, except Director Tryon, thus constituting a quorum.

Also attending were Justin Abshire and Conner Murphy of Quiddity Engineering (“Engineer” or “Quiddity”); Philip Wright of Hays Utility North Corporation (“Operator” or “Hays North”); Ray Geiselhart, Director 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 Vice 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 Vice President first opened the meeting to public comment. There being no public comments, the Vice President directed the Board to proceed with the agenda.

APPROVAL OF MINUTES OF SEPTEMBER 14, 2022 REGULAR MEETING

Director Patton next directed the Board to the approval of the September 14, 2022 regular meeting minutes. Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the September 14, 2022 regular meeting minutes, as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Director Moravec then reviewed the Tax Assessor-Collector’s Report for the month of September 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 .21 % of the 2021 taxes have been collected as of September 30, 2022.

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.

Mr. Barner entered the meeting at this time.

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 District is only in the tenth (10th) month of its fiscal year ending (“FYE”) December 31, 2022, yet the amount expended by the District on certain items already exceeds the total amount budgeted for the year, particularly several items related to the District’s wastewater treatment plant (“WWTP”).

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

Director Moravec stated that he continues to coordinate with the District’s consultants to prepare a draft of the District’s budget for the FYE December 31, 2023 and added that he will present such draft budget to the Board next month.

Director Moravec then reminded the Board that the District’s Bookkeeper, Municipal Accounts & Consulting L.P. (“MAC”), is not a licensed investment broker-dealer with the Security and Exchange Commission, and therefore, does not believe that it is qualified to invest the District’s funds in U.S. Treasuries. In response to a question from Director Moravec, Mr. Barner confirmed that he understood from a discussion with MAC many years ago that MAC had determined it was not cost effective for them to obtain such licensure and that should the District wish to invest the District’s funds into Treasuries, it would need to engage a licensed broker-dealer qualified to advise the District on such investments.

Upon a motion by Director Moravec, 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.

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 Bookkeeper’s Report, as presented; and 2) authorized payment of checks detailed therein.

ANNUAL REVIEW OF INVESTMENT POLICY

Mr. Barner then explained that pursuant to Texas Government Code, Section 2256.00S(e), as amended, the District is required to review its Amended and Restated Order Designating Investment Officer and Establishing Rules, Policies and Code of Ethics for the Investment of District Funds and Review of Investments (“Investment Policy”) not less than annually.

Mr. Barner stated that there were no recommended changes to such policy and that any motion by the Board only needs to acknowledge that such policy had been reviewed. Upon a motion by Director Moravec, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board approved the Investment Policy, as presented.

REVIEW AND APPROVE AMENDED LIST OF AUTHORIZED BROKERS

Mr. Barner reported that the Bookkeeper provided the Board with the Amended List of Authorized Brokers. Mr. Barner then explained that certain brokers have been added to or removed from the list within the past year. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Amended List of Authorized Brokers, as presented.

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 demolition of the District’s existing WWTP is complete. Mr. Abshire stated that certain work involving the use of lime will be performed this week on the aeration basin which may create significant dust at the site of the WWTP Project. Mr. Murphy then presented Allco’s Pay Estimate No. 44 in the amount of $287,375.11 for work performed for the WWTP Project.

Mr. Murphy 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 Texas Commission on Environmental Quality (the “TCEQ”) on behalf of the District. Mr. Murphy reported that Quiddity received the draft of such permit from the TCEQ and provided minor comments. Mr. Murphy stated that he expects to receive the final permit within the next few months.

Mr. Murphy next reported that Quiddity advertised the 2022 Sanitary Sewer Rehabilitation Project and received two (2) bids. Mr. Murphy further reported that the lowest base bid was submitted by Texas Pride Utilities, LLC (“Texas Pride”) in the amount of $610,294.00 and a contract duration of 210 calendar days. Mr. Murphy explained that the base bid does not include rehabilitation of manholes. Mr. Murphy further explained that such work was included in the contractors’ alternative bids, but in Quiddity’s opinion, such alternative bids were too high.

Mr. Murphy recommended postponing the manhole rehabilitation because the District’s manholes need only minor repairs at this time and are not in danger of failing. Director Moravec requested that all future bid tabulations presented to the Board include the amount that the Engineer estimated for contractors’ bids.

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 McDonald Municipal & Industrial (“McDonald”) is addressing the final punch-list items related to such project and added that such water plant was placed into operation on September 28th.

Mr. Murphy then presented McDonald’s Pay Estimate No. 6 in the amount of $83,160.00 for work performed on the Water Plant No. 1 MCC Replacement Project.

Mr. Murphy 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. Murphy reported that the contract documents were executed, and the pre-construction meeting was held on October 11 th.

Mr. Murphy further reported that the Notice to Proceed was issued to McDonald on October 17th• Mr. Murphy stated that Water Plant No. 2 will be taken out of operation next week. Mr. Abshire then reported that McDonald already ordered several pieces of long-lead-time equipment and expects to complete such project prior to the scheduled completion date.

Mr. Murphy then presented a proposal in the amount of $7,500.00 for Quiddity’s analysis of the District’s water and wastewater rates. Mr. Murphy stated that such analysis can be performed by Quiddity within 60 days and such work will be billed to the District at an hourly rate. Director Patton recommended that after Quiddity completes and presents its analysis, Directors from the District and MUD 9 form a joint committee to consider such analysis and provide both districts with recommended changes to such districts’ water and wastewater rates.

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. Mr. Barner then noted that certain residential rates have not been increased by the Board since 2015. Discussion then ensued regarding the need for Quiddity to perform such analysis and the frequency at which to increase the District’s water and wastewater rates in the future.

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, as presented; 2) approved Allco’s Pay Estimate No. 44 in the amount of $287,375.11; 3) accepted the bid submitted by Texas Pride in the amount of $610,294.00 for the 2022 Sanitary Sewer Rehabilitation Project; 4) approved issuance of the Notice of Award to Texas Pride; 5) approved execution of the construction contract with Texas Pride, subject to Attorney’s review of bonds and insurance and receipt of a Form 1295 Certificate of Interested Parties; 6) authorized issuance of the Notice to Proceed to Texas Pride, subject to execution of the construction contract; 7) approved McDonald’s Pay Estimate No. 6 in the amount of $83,160.00 for the Water Plant No. 1 MCC Replacement Project; and 8) authorized Quiddity to perform an analysis of the District’s water and wastewater rates at a cost not to exceed $7,500.00.

A brief discussion then ensued, and it was the consensus of the Board to appoint Directors Tryon and Moravec to serve on the Rate Order Analysis Committee with Quiddity and two (2) MUD 9 Directors for the purpose of making recommendations to the Board regarding amending the District’s water and wastewater rates.

Next, Mr. Abshire presented to the Board an updated summary of the engineering costs related to the WWTP Project. Mr. Abshire explained that such updated summary maintains the same level of engineering services throughout such project that the District is currently receiving, including having an inspector, construction manager and project manager onsite intermittently each week. In response to a comment by Director Moravec that the engineering fees for the WWTP Project were originally budgeted at $4.2 million and have since increased to $5.9 million, Director Patton reminded the Board that such project is approximately two (2) years behind schedule.

The Board took a briefrecess from 10:15 a.m. to 10:20 a.m.

Mr. Abshire then presented to the Board an updated summary of the engineering costs related to the Water Plant Nos. 1 and 2 MCC Replacement Projects. Mr. Abshire explained that the Water Plant No. 1 MCC Replacement Project is overbudget because Quiddity was required to spend more time onsite than anticipated during the construction phase of such project. Discussion then ensued regarding the level of engineering services desired by the Board for such projects.

OPERATOR’S REPORT

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

Mr. Wright then reported that 799 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 93.44%. Mr. Wright explained that such accountability was lower than normal due to recent water main breaks.

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 one (1) account was terminated due to delinquent payment; however, the outstanding balance owed for such account was subsequently paid and service was restored.

Mr. Wright next reported that an inspection of the District’s water wells was performed recently and no major deficiencies were found.

Mr. White exited the meeting at this time.

Mr. Wright then reported that he is coordinating each month with Director Moravec regarding adjustments made to customers’ water bills by Hays North.

Mr. Wright next reviewed the Notable Activity Report contained in the Operator’s Report and noted that such report includes the final lease period for the temporary generator at the Buckingham Water Plant.

Mr. Wright then reported that a property owner complained that the fence around the lift station on River Road is deteriorating. Mr. Wright noted that such lift station is the only one of the District’s lift stations with a perimeter fence and inquired as to whether the Board would prefer for Hays North to repair such fence or remove it. Director Moravec requested that Mr. Wright provide the Board with photographs of the damaged fence.

Mr. Wright then reported that Hays North is still preparing recommendations 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.

In response to a question from Mr. Barner regarding the Alternative Water Source Production Permit and the Jasper Water Well Production Permit, Mr. Wright reported that such permits do not need to be amended this year.

In response to a question from Director Moravec regarding security at the District’s facilities, Mr. Wright reported that none of the districts for which he works have gates with keypad locks or gates that automatically close. Mr. Abshire stated that such features are cost prohibitive and uncommon on facilities owned by water districts. Mr. Wright then noted that the District’s facilities are equipped with multi-smart systems that can be programmed to notify Hays North if a gate remains open longer than 15 minutes. Mr. Wright stated that he will provide the Board with a cost estimate for such programming of the muti-smart systems at the District’s facilities.

Upon a motion by Director Barlow, seconded by Director Moravec, 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 reminded the Board that the joint website between the District and MUD 9 1s live. Director Patton then stated that customers visiting the District’s old website are automatically redirected to the joint website.

ANNUAL REVIEW OF POST-ISSUANCE TAX EXEMPT DEBT COMPLIANCE POLICIES

Mr. Barner briefly reviewed with the Board the District’s Post-Issuance Compliance Policies for tax-exempt debt. Mr. Barner informed the Board that a checklist relating to such compliance policies was completed by RBAP and Arbitrage Compliance Specialists. Mr. Barner stated that he will schedule a meeting with the District’s Compliance Officer in order to review such checklist prior to the next regular Board meeting.

ANNUAL REVIEW OF AGREEMENTS WITH CITY OF HUNTSVILLE {THE “CITY”)

Next, Mr. Barner reminded the Board that the District’s option to purchase effluent from the City expires on January 31, 2023 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. Geiselhart stated that MUD 9 is in favor of extending MUD 9’s option to purchase effluent from the City. Upon a motion by Director Patton, seconded by Director Leasure, after full discussion and with all Directors present voting aye, the Board authorized RBAP to coordinate with the City to negotiate extending the District’s option to purchase effluent from the City.

ATTORNEY’S REPORT

Mr. Barner then reported that the agreement between the District and the Walden

Community Improvement Association (“WCIA”) relating to solid waste collection services has been provided to the WCIA for review.

Mr. Barner next reminded the Board that Montgomery County Emergency Services District No. 2 (“MCESD 2”) previously paid $5,000.00 in earnest money pursuant to an Earnest Money Contract between the District and MCESD 2 for the purchase of the site where the Walden Volunteer Fire Station is located. Mr. Barner further reminded the Board that MCESD 2 decided to purchase another tract ofland. Mr. Barner reported that he sent a letter to MCESD 2 cancelling such contract and requesting that the earnest money be released to the District. Mr. Barner stated that he has not yet heard from MCESD 2’s general counsel but he will provide the Board with an update as soon as he receives a response.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11 :06 a.m.

PASSED AND APPROVED this the 9th day of November, 2022.

Margie Barlow

Secretary, Board of Directors