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

January 11, 2023

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, January 11, 2023, 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
Michael White – Director

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”); Ray Geiselhart, Director of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Rusty Denner, General Manager for the Walden Community Improvement Association (“WCIA”); 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.

PUBLIC COMMENT

The President first opened the meeting to public comment. Mr. Denner reported receiving complaints from customers regarding the odor of sewage in Wal den, Section 10. Director Patton stated that such section of Walden is located within MUD 9. Mr. Wright stated that Hays North will investigate the installation of an additional filter at the wastewater treatment plant (“WWTP”) to reduce such odor.

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

There being no further public comments, the President directed the Board to proceed with the agenda.

ADMINISTER OATH OF OFFICE, EXECUTE AFFIDAVIT OF DIRECTOR AND STATEMENT OF APPOINTED OFFICIAL

Mr. Barner then reminded the Board that it voted unanimously at the special meeting of December 14, 2022, to appoint Mr. Michael White to serve as a Director, with a term expiring in May 2026. Mr. Barner then administered the Oath of Office to Mr. White and presented an Affidavit of Director and Statement of Appointed Official. 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. Upon a motion by Director Tryon, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board accepted the Oath of Office, Affidavit of Director and Statement of Appointed Official executed by Mr. White.

APPROVAL OF MINUTES OF DECEMBER 14, 2022 REGULAR MEETING AND DECEMBER 14, 2022 SPECIAL MEETING

Director Tryon next directed the Board to the approval of the December 14, 2022 regular meeting minutes and December 14, 2022 special meeting minutes. Director Moravec requested that RBAP revise certain repetitive language contained in the 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 December 14, 2022 regular meeting minutes, subject to certain revisions.

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the December 14, 2022 special meeting minutes, as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of December 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 57.09% of the 2022 taxes have been collected as of December 31, 2022; however, the payment of such taxes is not due until January 31, 2023.

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.

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. Ms. Felder noted that the District has a 27-month reserve of funds available in its General Operating Fund.

Ms. Felder then stated that she was informed by the Operator that all outstanding claims were resolved relating to damages caused to a District-owned water line during the installation of Tachus’ fiber optic cables by Tachus’ subcontractors.

Regarding the receivable builder damages line item included on the Balance Sheet section of the Bookkeeper’s Report, Director Moravec requested that the Bookkeeper and Operator coordinate to provide the Board with a recommendation regarding writing off such builder damages.

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

DISTRIC’S ETHICS POLICY AND EXPENSE REIMBURSEMENTS

Mr. Barner stated 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 policy at this time and requested that should the Board have any questions regarding such policy, to let him know.

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 Improvement Project (the “WWTP Project”).

Mr. Murphy reported that demolition of the District’s existing yard piping is underway, and Allco excavated and prepared the subgrade at the site of the dewatering building. Mr. Murphy then reminded the Board that pursuant to the contract for the WWTP Project, the substantial completion date for Phase II of such project is June 6, 2023; however, Allco’s proposed updated schedule includes a substantial completion date in late September. Discussion ensued regarding Allco’s progress on such project.

Mr. Murphy then presented Allco’s Pay Estimate No. 47 in the amount of $128,409.78 for work performed on the WWTP Project.

Director Moravec then stated that several of the District’s facilities lost power during the recent Winter Storm Elliott (“Storm Elliott”), at which time the District’s generators automatically went into operation. Director Moravec further stated that he was informed by the Operator, that following such storm, certain equipment at such facilities had to be manually reset by the Operator once power was restored to such facilities. Director Moravec suggested that the Board consider installing battery-powered back-up systems to automatically reset equipment at District facilities following a power outage.

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 (“TCEQ”) on behalf of the District. Mr. Murphy stated that he expects to receive the final permit in March 2023.

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”) and added that Quiddity issued the Notice to Proceed on January 2nd• Mr. Murphy reported that Texas Pride will start the pre-cleaning and televising work this month to confirm the location of repairs. Mr. Murphy further reported that Texas Pride will hang door tags notifying customers of the commencement of such work.

Mr. Murphy then updated the Board on the Motor Control Center (“MCC”) Replacement Project for the Browning Street Water Plant (“Water Plant No. 2”). Mr. Murphy reported that McDonald Municipal & Industrial (“McDonald”) has almost completed construction on the new control building and explained that the remaining work includes painting and installation of doors. Mr. Murphy further reported that McDonald is currently installing the MCC and auto-sensory panel inside such building. Mr. Murphy next presented McDonald’s Pay Estimate No. 2 in the amount of$67,500.00 for work performed on the Water Plant No. 2 MCC Replacement Project.

Next, Mr. Murphy reported that Quiddity completed the on-site inspections of the District’s storm sewer outfalls. Mr. Murphy further reported that Quiddity is finalizing the design of the Storm Sewer Outfall Cleaning & Televising Project and will solicit bids for such project this month.

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. 47 in the amount of $128,409.78; and 3) approved McDonald’s Pay Estimate No. 2 in the amount of $67,500.00 for the Water Plant No. 2 MCC Replacement Project.

BOOKKEEPER’S REPORT, CONTINUED

Regarding the receivable builder damages line item included on the Balance Sheet section of the Bookkeeper’s Report, Mr. Wright reported that an additional charge of $554.49 was added to such line item last month and will be paid by the builder who caused such damage. Mr. Wright explained that the remaining amount of damages contained in such line item relate mostly to Cox Directional Drilling but also include some other minor builder damages. Ms. Felder and Mr. Wright recommended that the Board authorize writing off such builder damages and stated that the amounts would be deducted from whichever accounts to which they were billed under Hays North’s invoices. Mr. Barner stated that the Board can approve the write-off of such damages when it approves the Operator’s Report.

STATUS OF LANDSCAPING IMPROVEMENTS AT THE WWTP

Discussion next ensued regarding potential landscaping improvements to the grounds of the WWTP. Director Barlow stated that only the north side of the WWTP lacks a tree barrier between the WWTP and neighboring homes. Mr. Wright stated that Hays North will coordinate with Quiddity to determine whether any District facilities are installed within such area.

Ms. Felder exited the meeting at this time.

Director Barlow recommended that the District plant 12 pine trees along the north side of the WWTP at a cost of approximately $120.00 per tree. It was the consensus of the Board that Hays North will coordinate the purchase and planting of such trees 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 818 customers are receiving electronic billing statements which is an increase of six ( 6) customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 94.73%.

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 last month due to delinquent payment.

In response to a question from Director Moravec regarding the District’s policy for considering adjustments to customers’ water bills when such customers have a service line break or leak on their property, Mr. Barner explained that while the Board has never explicitly adopted a policy on such adjustments, the District’s past practice has been for the Operator to present such requests to the Board. Mr. Wright added that Hays North’s recommendation has always been to adjust a customer’s bill by determining such customer’s average monthly water usage for the previous 12 months and then applying the District’s lowest water rate tier to such usage, provided that the customer provides evidence that the cause of the leak has been repaired. Mr. Barner concurred with Mr. Wright’s description of such practice.

Mr. Wright then presented a letter from a customer requesting an adjustment to his water bill. Mr. Wright explained that such customer’s irrigation system was leaking and such leak was not detected immediately because the water was draining into Lake Conroe. Mr. Wright reported that such irrigation system developed a leak in July 2022 and was repaired in October 2022. Mr. Wright explained that if the Board applies the previously discussed adjustment procedure, such customer will receive an adjustment of $548. 75 on their next water bill.

Mr. Wright then reviewed the Notable Activity Report contained in the Operator’s Report and noted that such report includes hauling 274,543 gallons of sludge at the WWTP. Mr. Wright stated that such report also includes work related to Storm Elliott, including after-hours monitoring of District facilities and repair of frozen water lines.

Next, Mr. Wright reported that a customer filed a complaint several months ago with the TCEQ regarding an odor coming from the WWTP. Mr. Wright further reported that the TCEQ inspector who first investigated such complaint determined that there were no violations of the District’s TPDES Permit or TCEQ. Mr. Wright explained that he spoke to such customer and requested that they contact Hays North if they encountered such odor again in the future. Mr. Wright went on to explain that such customer subsequently filed a 2nd complaint with the TCEQ and did not contact Hays North regarding such odor and that a different TCEQ inspector visited the WWTP to inspect. Mr. Wright further explained that such inspector informed Hays North of an alleged violation this time due to such odor and recommended that the District cover the portion of the WWTP’s headworks where the bar screen is located as well as the dumpster in which debris collected by such bar screen is discarded. Mr. Wright then stated that upon speaking further with the TCEQ about such matter, the TCEQ informed him that it will issue a formal notice of violation with a deadline for the District’s response. Mr. Wright further stated that he will coordinate with RBAP regarding preparing a response to such notice of violation. Mr. Wright next reported that he is coordinating with Quiddity and the bar screen manufacturer regarding modification of certain equipment at the WWTP to mitigate the odor. Mr. Abshire stated that Quiddity and Hays North will provide the Board with proposals at next month’s regular Board meeting regarding such modifications.

In response to a question, Mr. Wright confirmed that Hays North was adjusting the District’s water and wastewater rates to reflect that such rates were increased, effective January 1, 2023, and that such rates would be billed beginning in the month of February 2023.

Mr. Denner exited the meeting at this time.

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; 2) approved a leak adjustment policy authorizing the Operator to adjust the water bill for customers who request an adjustment so that such customers are billed at the lowest usage tier provided that such customers present proof that a leak occurred and was repaired; 3) approved the customer’s request for an adjustment to his water bill in the amount of $548.75; and 4) approved write-offs in the amount of $18,455.73, including $2,746.09 for damage caused by Tachus and $15,709.64 for builder damages.

Mr. Wright then reminded the Board that the fence around the lift station on River Road is deteriorating. Mr. Wright recommended that such fence be replaced in order to comply with TCEQ regulations.

MATTERS AFFECTED BY WINTER STORM ELLIOTT

Mr. Wright reported that there were no problems with the District’s facilities resulting from Storm Elliott.

Director Patton stated that the District has only one ( 1) or two (2) diesel or propane powered generators and added that most of the District’s generators operate using natural gas. Director Patton further stated that the pipeline providing the District with natural gas is approximately 50 years old and added that if such line was to fail, most of the District’s generators would be unable to operate. Mr. Abshire reminded the Board that the Walden Road Water Plant and the Poe Street Water Plant each have generators on-site that have approximately ten ( 10) years of life expectancy remaining. Mr. Abshire explained that the generator at the Browning Street Water Plant is only large enough to operator the Jasper water well, not the Catahoula water well; however, a one (1) megawatt generator would be required to operator both wells simultaneously, which would cost approximately $1,000,000.00. Mr. Abshire stated that if the Board wants to purchase another generator, it is his recommendation that such generator be installed at the Buckingham Water Plant.

Director Moravec then stated that he wanted to recognize Hays North for their efforts during Storm Elliott.

MISCELLANEOUS REPORTS

Mr. Geiselhart next reported that at its last meeting, MUD 9 approved its budgets for the Fiscal Year Ending December 31, 2024, including the budget for the WWTP. Mr. Geiselhart further reported that MUD 9’s consultants are underway with an analysis of MUD 9’s rate order.

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 the City approved the renewal of such option for an additional two (2) years and presented to the Board a Third Amendment to the Option to Purchase and Agreement to Pursue Water Supply (the “Third Amendment”). Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Third Amendment.

AUTHORIZE FILING OF FINANCIAL AND TAX-RELATED INFORMATION WITH TEXAS COMPTROLLER

Mr. Barner then reported that Texas Local Government Code, Sections 203.062 and 403.0241, requires the annual filing of certain financial and tax-related information by all special purpose districts in the Texas Comptroller’s Special Purpose District Public Information Database. Mr. Barner noted that such information must be filed with the Texas Comptroller annually by April 1st or a fine will be incurred. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors voting aye, the Board authorized the Attorney to file the required financial and tax-related information with the Texas Comptroller by April 1, 2023.

ATTORNEY’S REPORT

Mr. Barner next reported that the WCIA’s attorney reviewed the agreement between the District and the WCIA relating to solid waste collection services and had no comments to the same. Mr. Barner then presented to the Board a draft of the Solid Waste Collection Billing Services Agreement (the “Agreement”).

Discussion ensued regarding certain revisions to such agreement relating to billing fees and requirements for termination of such agreement.

Director Barlow exited the meeting at this time.

Mr. Barner stated that he will incorporate the Board’s comments into the Agreement and provide the Board with a revised Agreement at the next regular Board meeting. Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the Agreement, subject to finalization by RBAP.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11 :07 a.m.

PASSED AND APPROVED this the 8th day of February, 2023.

Margie Barlow
Secretary, Board of Directors