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

November 9, 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, November 9, 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 Barlow, 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 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 OCTOBER 12, 2022 REGULAR MEETING

Director Tryon next directed the Board to the approval of the October 12, 2022 regular meeting minutes. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the October 12, 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 October 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 2.73% of the 2022 taxes have been collected as of October 31, 2022; however, the payment of such taxes is not due until January 31, 2023.

Upon a motion by Director Tryon, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved the Tax Assessor-Collector’s Report.

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 noted that the Bookkeeper’s Report indicates that the District’s average water accountability for 2021 was 89.55%; however, the District’s water accountability as reflected in the Operator’s Report was never below 90% during 2021. Director Moravec requested that the Operator coordinate with the Bookkeeper and Auditor to determine the correct water accountability for the District and ensure such value is reflected correctly in the District’s audit and Bookkeeper’s Report.

Director Moravec next stated that the District pays all vendors via checks issued by the Bookkeeper and suggested that the Board consider developing a policy allowing the Bookkeeper to pay vendors via wire transfer in situations where there is not time to prepare a check. Director Moravec recommended that RBAP prepare a draft of such policy for the Board to review.

Mr. Barner then explained that under Chapter 2250 of the Texas Government Code (the “Texas Prompt Payment Act”), payment of invoices owed by a governmental entity such as the District are not past due until the forty-fifth ( 45th) calendar day following the date that such entity received an invoice for services performed. Mr. Barner added that any vendor or institution that attempts to assess late fees before such payment is due by the District should be notified that the Texas Prompt Payment Act applies to the District.

Director Moravec then reviewed with the Board certain line items contained in the budget comparison pages of the Bookkeeper’s Report and noted that the amount expended by the District on certain items already exceeds the total amount budgeted for the year.

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

Upon a motion by Director Leasure, 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 September 30, 2022.

REVIEW COMMENTS FROM MUD 9 ON WAS TEW ATER TREATMENT PLANT (“WWTP”) DRAFT BUDGET

Director Moravec reported that a draft of the WWTP budget for the Fiscal Year Ending (“FYE”) December 31, 2023, was provided to MUD 9 last week, but he has not yet received any comments from MUD 9.

REVIEW DRAFT BUDGET FOR FYE DECEMBER 31, 2023

The Board then discussed various line items in the District’s General Operating Fund budget for the FYE December 31, 2023. Director Moravec stated that he continues to coordinate with the District’s consultants regarding the draft of such budget.

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 and Allco is now backfilling the ground. Mr. Abshire stated that Allco completed the remaining punch-list items relating to Phase I of the WWTP Project.

Mr. Murphy then presented Allco’s Pay Estimate No. 45 in the amount of $214,440.29 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 stated that he expects to receive the final permit within the next few months.

Mr. Murphy next reminded the Board that it awarded the construction contract for the 2022 Sanitary Sewer Rehabilitation Project to Texas Pride Utilities, LLC (“Texas Pride”). Mr. Murphy then requested authority to coordinate with the Board regarding execution of the contract for such project following RBAP’s review of Texas Pride’s bonds and insurance.

Mr. Murphy then updated the Board on the Motor Control Center (“MCC”) Replacement Project for the Poe Drive Water Plant (“Water Plant No. l “). Mr. Murphy reported that construction is complete and McDonald Municipal & Industrial (“McDonald”) addressed all punch-list items related to such project. Mr. Murphy then reminded the Board that such water plant was placed into operation on September 28th . Mr. Murphy next presented McDonald’s Change Order No. 1 in the deduct amount of $26,100.00 and explained that such change order includes removal of unused items and the modification of the MCC to allow for remote operation of the booster pumps. Mr. Murphy next presented McDonald’s Pay Estimate No. 7 and Final in the amount of$41,636.91 for work performed on the Water Plant No. 1 MCC Replacement Project.

Mr. Murphy recommended payment of such pay estimate and issuance of the Certificate of Substantial Completion and Certificate of Acceptance to McDonald.

Mr. Murphy then updated the Board on the MCC Replacement Project for the Browning Street Water Plant (“Water Plant No. 2”). Mr. Murphy reported that McDonald demolished the existing MCC and completed re-coating of the cooling tower motors. Mr. Murphy further reported that while performing such work, it was determined that the cooling tower motor frames are heavily corroded. Mr. Murphy recommended that the Board authorize McDonald to sandblast and re-coat such frames at a cost of $4,800.00. Mr. Murphy stated that Quiddity will obtain one (1) additional proposal for the sandblasting and re-coating of such frames.

Mr. White exited the meeting at this time.

Mr. Murphy then reported that Quiddity is underway with its analysis of the District’s water and wastewater rates. Mr. Murphy stated that Quiddity will coordinate with the designated liaisons of the District to finalize such analysis and provide the Board with recommendations regarding the District’s water and wastewater rates. A brief discussion ensued regarding MUD 9’s participation in such analysis. In response to a question, Mr. Abshire reminded the Board that the scope of work for such project includes only an analysis of the District’s water and wastewater rates, not MUD 9’s rates.

Next, Mr. Abshire stated that for the FYE December 31, 2022, the Board budgeted approximately $150,000.00 for repairs to the District’s storm sewer outfalls; however, no such repairs were performed during such fiscal year. Mr. Abshire further explained that due to the recent drought, the water level in Lake Conroe is lower than normal, which allows for improved access to such outfalls. Mr. Abshire then recommended that the Board authorize Quiddity to prepare a bid package and solicit bids for the cleaning and televising of the District’s 70-80 storm sewer outfalls. Mr. Abshire explained that if the bids received exceed $75,000.00, the District will be required to publicly advertise such project. Mr. Abshire stated that Quiddity intends to divide such project into multiple phases.

Director Patton requested that Quiddity and Hays North coordinate to promptly perform a visual inspection of the District’s outfalls in order to determine which are in need of the most immediate repair.

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. 45 in the amount of $214,440.29; 3) 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; 4) approved McDonald’s Change Order No. 1 in the deduct amount of $26,100.00; 5) approved McDonald’s Pay Estimate No. 7 and Final in the amount of$41,636.91 for the Water Plant No. 1 MCC Replacement Project; 6) approved issuance of the Certificate of Substantial Completion and Certificate of Acceptance to Texas Pride for the Water Plant No. 1 MCC Replacement Project; 7) authorized sandblasting and re-coating of the cooling tower motor frames at the Water Plant No. 2 MCC Replacement Project at a cost not to exceed $4,800.00; and 8) authorized Quiddity to prepare a bid package and solicit bids for the cleaning and televising of the District’s storm sewer outfalls.

OPERATOR’S REPORT

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

Mr. Wright then reported that 807 customers are receiving electronic billing statements which is an increase of eight (8) customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 95.23%.

Mr. Wright then reported that there were no new taps last month and that the District has a total of 1,817 connections. Mr. Wright then stated that no accounts were terminated due to delinquent payment.

Discussion next ensued regarding generators at the District’s facilities. Mr. Wright stated that generators are installed at only two (2) of the District’s water  plants. Director Tryon noted that the generator at Water Plant No. 2 is only capable of operating the Jasper well, not the Catahoula well. Director Patton requested that Hays North coordinate with Quiddity to provide a recommendation to the Board regarding at which of the District’s facilities it is most advantageous to install a new generator and the most appropriate size for such generator. Mr. Abshire stated that the generator at Water Plant No. 2 may continue operating for another ten (10) years; therefore, he would recommend installing a new generator at the Buckingham Water Plant.

Next, Mr. Wright reported that the phosphorous levels at the WWTP are within normal limits.

Mr. Wright then reviewed the Notable Activity Report contained in the Operator’s Report and noted that such report includes several items relating to bringing Water Plant No. 1 back into operation. Mr. Wright further reported that two (2) water mains ruptured within the past month, including one (1) underneath a roadway.

Director Tryon exited the meeting at this time.

Mr. Wright next presented the annual write-off list and reported that 13 accounts are at least 60 days delinquent. Mr. Wright went on to report that the total outstanding balance for all 13 delinquent accounts is $1,571.00 after deposits are applied.

Director Tryon re-entered the meeting at this time.

Mr. Wright then reported that Hays North inspected Water Plant No. 1 while it was out of operation and is preparing recommendations for the Board regarding the items identified as needing repair. Mr. Wright further reported that Hays North will inspect Water Plant No. 2 while it is out of operation for the MCC Replacement Project.

Mr. Wright next reported that the items identified as needing repair during the 2022 Lift Station Inspection Project can be completed within one (1) week at a cost of$8,500.00. It was the consensus of the Board that Hays North shall proceed with completing such lift station repairs.

Director Patton requested that Hays North document all repairs made so that Quiddity can note the completion of such repairs on their 2022 Lift Station Inspection Report.

Mr. Wright then reminded the Board 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 District lift station with a perimeter fence. Mr. Wright stated that such damaged fence was included in Quiddity’s 2022 Lift Station Inspection Report and that the cost to repair such fence was estimated to be $8,000.00. Mr. Wright further stated his recommendation that the District remove the fence and instead install landscaping around such lift station at a cost of $4,500.00.

Director Moravec requested that Hays North coordinate with Director Barlow regarding such landscaping.

In response to a question from Director Moravec, Mr. Wright reported that there is only one (1) outstanding claim in the amount of approximately $900.00 relating to damages caused to a District-owned water line during the installation of Tachus’ fiber optic cables by Tachus’ subcontractors. Mr. Wright stated that he will coordinate with the District’s Bookkeeper regarding such outstanding claim.

Upon a motion by Director Moravec, 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) authorized write-offs of the total outstanding balance for the 13 delinquent accounts.

DISCUSS INSURANCE CLAIM FOR DAMAGES RELATED TO WASTEWATER BACKFLOW

Mr. Wright reported that last month, Hays North was notified of a backflow of sewage on Hemingway Drive that damaged a property owner’s home. Mr. Wright further reported that upon inspection, Hays North found that the manhole was full due to a blockage in the main line caused by a build-up of grease and debris.

Mr. Wright went on to report that the property owner contacted Hays North to inquire about filing an insurance claim with the District’s insurance provider.

Mr. Wright stated that such property owner was advised to file a claim for damages with his homeowners insurance.

DISCUSS RENEW AL OF THE DISTRICT’S INSURANCE

Director Moravec suggested that the Board should consider obtaining quotes from several insurance providers to ensure that the District is receiving the best and most economical insurance possible. Director Moravec stated that the District’s current insurance provider, Arthur J. Gallagher, is a broker; and therefore, charges the District a fee in addition to the insurance premiums. Mr. Abshire explained that the full value of the District’s new WWTP has not yet been added to the District’s schedule of assets. Mr. Abshire further explained that during the warranty period, any damage to the WWTP is covered by Allco’s insurance. A brief discussion ensued and it was the consensus of the Board not to request quotes from other insurance providers at this time.

UPDATE ON DISTRICT’S WEBSITE AND COMMUNICATIONS SERVICES

Director Patton then reported that approximately 20-30 individuals visit the District’s website each day.

MISCELLANEOUS REPORTS

Director Tryon reported that the Walden Community Improvement Association (the “WCIA”) held an election on November 5th, and two (2) new Trustees were elected.

Mr. Geiselhart next reported that there are two (2) vacancies on MUD 9’s Board of Directors, and the Board intends to appoint new directors at its next regular Board meeting.

Director Moravec then reported that that TCEQ is undergoing a Sunset Review by a State-appointed advisory committee who is considering the functions of the TCEQ. Director Patton stated that the San Jacinto River Authority is also undergoing a Sunset Review.

UPDATE ON STATUS 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. Mr. Barner reported that he reached out the City’s attorney regarding renewing such option for an additional two (2) years and will provide the Board and MUD 9 with an update once he hears from the City.

ATTORNEY’S REPORT

Mr. Barner then reported that the agreement between the District and the WCIA relating to solid waste collection services has been provided to the WCIA for review.

Director Leasure next reminded everyone that the District and MUD 9’s joint holiday dinner party will be held on December 14th at the Walden Yacht Club. Mr. Barner stated that RBAP will send an invitation to the Directors and consultants of both districts.

Director Tryon then stated that Director Leasure tendered his resignation from the Board and thanked Director Leasure for his years of service to the District.

Mr. Barner next explained the process for appointment of a new Director to fill the vacancy created by Director Leasure’s resignation. Mr. Barner presented to the Board an Application for Appointment to the Board.

Director Patton recommended posting such application on the District’s website and putting a notice in the community newsletter regarding such vacancy.

Discussion ensued regarding holding a special meeting to interview candidates and appoint a new Director to the Board. It was the consensus of the Board to accept applications until noon on December 9th and to interview candidates at a special Board meeting to be held at 1:00 p.m. on December 14th . Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board accepted Director Leasure’s resignation from the Board.

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 :56 a.m. to discuss matters of attorney-client privilege. Present for all or portions of the Executive Session were the Board of Directors, excluding Director Leasure, Mr. Barner and Ms. Cain.

RECONVENE IN OPEN SESSION

As of 12:01 p.m., the President declared the Executive Session was ended and the public session was resumed.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 12:01 p.m.

PASSED AND APPROVED this the 14th day of December, 2022.

Margie Barlow

Secretary, Board of Directors