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

February 8, 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, February 8, 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 and Robert Ginandt, Directors of Montgomery County Municipal Utility District No. 9 (“MUD 9”); Kimberly Courte of Arthur J. Gallagher Risk Management Services, Inc. (“Gallagher”); Elliot M. Barner and Campbell Colyer, attorneys, and Kathryn Cain, paralegal, of Radcliffe Bobbitt Adams Polley PLLC (“Attorney” or “RBAP”); and R. J. Wetzel, 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 JANUARY 11, 2023 REGULAR MEETING

Director Tryon next directed the Board to the approval of the January 11, 2023 regular meeting minutes. Mr. Barner stated that following distribution of the draft of such minutes, the Engineer provided RBAP with a correction related to the status of the Motor Control Center (“MCC”) Replacement Project for the Browning Street Water Plant (“Water Plant No. 2”). Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the January 11, 2023 regular meeting minutes, as presented.

INSURANCE PROPOSALS

Ms. Courte introduced herself to the Board and reviewed Gallagher’s proposal for the renewal of the District’s insurance. Ms. Courte reviewed the District’s coverages with the Board and explained that the proposed policies include the same carriers, deductibles and limits as the District’s current insurance policies. Ms. Courte further explained that the increase in value of the District’s facilities is primarily due to the improvements to the Wastewater Treatment Plant (“WWTP”).

Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board approved Gallagher’s insurance renewal proposal.

Ms. Courte exited the meeting at this time.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of January 2023, 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 86.45% of the 2022 taxes have been collected as of 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.

ADOPT ORDER DETERMINING AD VALOREM TAX EXEMPTIONS FOR 2023 TAX YEAR

Mr. Barner first introduced Mr. Colyer, an associate with RBAP, and explained that Mr. Colyer will be working with Mr. Barner on the District’s legal work.

Mr. Barner then presented the Order Determining Ad Valorem Tax Exemptions for the 2023 Tax Year and reminded the Board that the District provides a residential homestead exemption to any individual who is disabled or is 65 years of age or older in the amount of $30,000 as provided for by Texas Property Tax Code, Section 11.13(d), as amended. Upon a motion by Director Moravec, seconded by Director Patton, after full discussion and with all Directors present voting aye, the Board adopted the Order Determining Ad Valorem Tax Exemptions for 2023 Tax Year.

ADOPT RESOLUTION AUTHORIZING PETITION CHALLENGING APPRAISAL RECORDS

Mr. Barner next presented the Resolution Authorizing Petition Challenging Appraisal Records and reminded the Board that such resolution allows the District’s Tax Assessor-Collector to challenge certain information related to property values determined by the Montgomery Central Appraisal District (“MCAD”). Mr. Barner stated that it is his recommendation that the Board adopt such resolution so that if the Tax Assessor-Collector finds that any information in the MCAD’s records is incorrect or has been omitted, she will be able to challenge such records. Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board adopted the Resolution Authorizing Petition Challenging Appraisal Records.

ADOPT RESOLUTION IMPLEMENTING PENALTY FOR DELINQUENT TAXES

Mr. Barner next presented the Resolution Implementing Penalty for Delinquent Taxes and explained that, pursuant to Texas Property Code, Sections 6.30, 33.07, 33.08 and 33.11, as amended, the District may levy an additional 20% penalty on real property taxes for the tax year 2022 and any year thereafter that remain delinquent as of July 1, 2023 or July 1 of any year thereafter, to help defray the costs of collection owed to the Delinquent Tax Attorney. Mr. Barner further reminded the Board that pursuant to such statute, the District may levy an additional 20% penalty on personal property taxes for the tax year 2022 and any year thereafter that remain delinquent as of April 1, 2023 or April 1 of any year thereafter, to help defray the costs of collection owed to the Delinquent Tax Attorney. Upon a motion by Director Patton, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board adopted the Resolution Implementing Penalty for Delinquent Taxes.

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 28-month reserve of funds available in its General Operating Fund.

Ms. Felder then stated that $40,510.86 of the total insurance premium owed to Gallagher for the renewal of the District’s insurance was paid through the District’s General Operating Fund. Ms. Felder further stated that the remaining balance of such premium was paid through the District’s WWTP fund and will be split with MUD 9.

Director Moravec then noted that only $408,891.43 remains from the bond funds that were issued to finance the WWTP Improvement Project (the “WWTP Project”) and added that such funds will be exhausted within the next few months.

Upon a motion by Director Barlow, seconded by Director Patton, 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.

Ms. Felder next presented the Quarterly Investment Report for the period ending December 31, 2022.

Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved the Quarterly Investment Report for the period ending December 31, 2022.

ENGINEER’S REPORT

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

Mr. Murphy first 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 yard piping is underway, and Allco excavated and prepared the subgrade at the sites of the dewatering building and the booster pump. Mr. Murphy stated that he expects Allco to begin pouring the foundation for the dewatering building this month. Mr. Murphy then presented Allco’s Pay Estimate No. 48 in the amount of $192,952.96 for work performed on the WWTP Project.

Next, Mr. Murphy reminded the Board that Allco previously requested that the Board permit Allco to use certain material for backfilling at the WWTP Project; however, the requested material does not comply with the specifications for soil condition standards as determined by Aviles Engineering (“Aviles”), Quiddity’s soil expert subcontractor. Mr. Murphy further reminded the Board that as instructed by the Board, RBAP sent a letter to Allco stating that the Board would not grant Allco’s request to use non-compliant backfill material. Mr. Abshire explained that the backfill material requested by Allco does not meet Aviles’ specifications and stated that such matter will be discussed further in executive session. Director Moravec noted that Allco offered to pay Aviles’ engineering fees for the reevaluation of their soil condition specifications. Director Moravec then requested to discuss such matter further in executive session along with Allco’s letter requesting a release of the retainage held by the District for the WWTP Project.

Mr. Abshire then reminded the Board that in December 2022, a customer filed a complaint with the Texas Commission on Environmental Quality (the “TCEQ”) regarding an odor coming from the WWTP. Mr. Abshire further reminded the Board that the TCEQ inspector who subsequently inspected the WWTP issued a notice of violation to the District 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. Abshire reported that such bar screen is now covered. Mr. Abshire then explained that such dumpster is required to be enclosed; however, as an expedient and temporary solution, he recommends installing a bagging system connecting the dumpster and the chute from which debris is discarded into such dumpster. Mr. Abshire explained that when the solid waste collection truck empties the dumpster, the plastic bag will be torn from the chute and discarded in the dumpster. Mr. Abshire further explained that the Operator will then affix a new plastic bag to the chute and dumpster. Mr. Abshire stated that he is coordinating with RBAP and Hays North to respond to the TCEQ’s notice of violation prior to the response deadline of February 18th. Director Patton requested that Quiddity and Hays North install the bagging system immediately at the WWTP.

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 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”). Mr. Murphy reported that Texas Pride is underway with the pre-cleaning and televising work to confirm the location of repairs. Mr. Murphy further reported that upon completion of the televising work, Texas Pride will begin making point repairs to the sanitary sewer lines. Mr. Abshire stated that trees located within certain District easements may need to be removed so that such repairs can be performed. Mr. Abshire then stated that Quiddity is communicating with customer regarding the commencement of such project.

Mr. Murphy then updated the Board on the MCC Replacement Project for Water Plant No. 2. Mr. Murphy reported that McDonald Municipal & Industrial (“McDonald”) completed construction on the new control building and added that McDonald is currently installing the MCC and auto-sensory panel inside such building. Mr. Murphy next presented McDonald’s Pay Estimate No. 3 in the amount of $73,575.00 for work performed on the Water Plant No. 2 MCC Replacement Project. Mr. Abshire then explained that a disconnect panel to be located inside the control building will not be delivered until April, which is after the completion date for such project. Mr. Abshire reported that such panel is not necessary for the operation of Water Plant No. 2 and recommended that such project move forward without such panel. Mr. Abshire stated that if such project is complete prior to the delivery of such panel, installation of such panel will be included as a punchlist item. Mr. Abshire further recommended that McDonald not be precluded from receiving the incentives previously offered by the District if McDonald completes such project ahead of schedule without receipt of the disconnect panel.

Mr. Murphy next reported that when McDonald was reinstalling the cooling towers for the MCC Replacement Project for Water Plant No. 2, it was unable to install one (1) such tower due to the deterioration of the bushing, which connects the shaft of the tower to the base. Mr. Murphy stated that Quiddity and McDonald are negotiating the cost to replace the bushing and reinstall the cooling tower. Mr. Murphy requested that the Board approve a change order for such work in an amount not to exceed $10,000.00.

Next, Mr. Murphy reported that Quiddity completed the bid package for the Storm Sewer Outfall Cleaning and Televising Project, Phase I; however, he recommends delaying the advertisement of such project until the water level in Lake Conroe has decreased.

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. 48 in the amount of $192,952.96 for the WWTP Project; 3) approved McDonald’s Pay Estimate No. 3 in the amount of $73,575.00 for the Water Plant No. 2 MCC Replacement Project; and 4) approved a change order in an amount not to exceed $10,000.00 for the Water Plant No. 2 MCC Replacement Project.

The Board took a brief recess from 10:20 a.m. to 10:26 a.m.

Directors Patton and Moravec 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. Director Barlow reported that 12 pine trees were purchased from Williamson Tree Farm in the amount of $1,395.00 and will be planted along the north side of the WWTP within the next two (2) weeks. Mr. Abshire reminded the Board that certain District facilities are installed inside the fence in such area; therefore, such trees will need to be planted outside of the fence.

Director Moravec re-entered the meeting at this time.

Ms. Felder exited the meeting at this time.

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 zero (0) customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 93.19%. 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 1,817 connections. Mr. Wright then stated that one (1) account was terminated last month due to delinquent payment.

Mr. Wright next reminded the Board that it previously increased the District’s water and wastewater rates. Mr. Wright stated that the new rates will be applied to customers’ usage for the billing cycle beginning January 24th and closing on February 28th. Mr. Wright further stated that such bills will be sent to customers on March 1st.

Mr. Wright then reported that next month’s Operator’s Report will likely include excursions of ammonia and phosphorous at the WWTP. Mr. Wright further reported that the levels of such chemicals have since returned to normal.

Mr. Wright next reported that the District received requests from two (2) customers for adjustments to their water bills for leaks that occurred during the recent Winter Storm Elliott. Mr. Wright reminded the Board that it recently adopted 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. Director Moravec acknowledged that he was one (1) of the two (2) customers who requested an adjustment to his bill due to a water line leak that was subsequently repaired.

Mr. Wright then reviewed the Notable Activity Report contained in the Operator’s Report and noted that such report includes the repair of breaks in two (2) main water lines and two (2) service lines. Mr. Wright further noted that the phosphorous analyzer at the WWTP required repair last month. Mr. Wright stated that certain repairs were covered by the manufacturer’s warranty.

Regarding the status of repair of items identified during the annual inspection of the District’s water plants, Mr. Wright stated that he believes the Board previously authorized Hays North to make such repairs.

Mr. Wright then reported that individuals vandalized the Buckingham Water Plant, and a police report was filed by Hays North. A discussion then ensued regarding the security of the District’s facilities. In response to a question from Director White, Mr. Abshire stated that the District’s facilities comply with the TCEQ’s requirements for the security of such facilities. Mr. Abshire then recommended that the Board appoint two (2) Directors to serve as security liaisons to coordinate with Quiddity regarding evaluating the security of the District’s facilities. Mr. Geiselhart stated that MUD 9 would like to be included in such evaluation process. It was the consensus of the Board to appoint Directors Tryon and White as liaisons to coordinate with Quiddity regarding evaluating the security of the District’s facilities.

Mr. Wright next reported that he provided RBAP with the information necessary to complete the MUD 8/MUD 9 Annual Report to the San Jacinto River Authority and the City of Houston. Mr. Barner further reported that such report was provided to such entities on January 30th.

Regarding the status of repair of items identified in the 2022 Lift Station Inspection Report, Mr. Barner reminded the Board that in November 2022, it authorized Hays North to make all necessary repairs to the District’s lift stations and to provide documentation of such repairs to the Board. Mr. Barner further reminded the Board that at such time, Mr. Wright stated that such repairs could be completed at a cost of $8,500.00.

Next, Mr. Barner reminded the Board that Mr. Wright previously provided a cost estimate in the amount of $8,000.00 to repair the fence around the lift station on River Road. Mr. Barner further reminded the Board that at such time, Mr. Wright recommendation that the District remove the fence and instead install landscaping around such lift station. Mr. Wright then reported that upon communicating with Director Barlow, it was determined that landscaping would not be feasible at such location; therefore, it will be necessary to repair such fence. Mr. Wright stated that he will provide the Board with an updated cost estimate for the repair of such fence.

Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the Operator’s Report, as presented.

RATE ORDER AMENDMENT

Mr. Barner then reminded the Board that the Public Utility Commission (“PUC”) established new rules pertaining to customers affected by extreme weather emergencies as defined by Texas Administrative Code, Section 24.173(d). Mr. Barner explained that such rules include the prohibition of late fees and termination due to delinquent payment during extreme weather emergencies. Mr. Barner stated that RBAP recommends amending the District’s Rate Order to include language in the section related to billing regarding the PUC’s new rules. Upon a motion by Director Moravec, seconded by Director Barlow, after full discussion and with all Directors present voting aye, the Board approved amending the District’s Rate Order to include reference to the PUC’s rules during extreme weather emergencies.

MISCELLANEOUS REPORTS

Director Tryon reported that at its last meeting, MUD 9 approved the Third Amendment to the Option to Purchase and Agreement to Pursue Water Supply with the City of Huntsville. Mr. Geiselhart then reported that MUD 9’s consultants are underway with an analysis of MUD 9’s rate order.

OFFICERS POSITIONS

Next, Mr. Barner reminded the Board that following the resignation of former Director Bob Leasure, the Board does not have anyone serving as the Assistant Secretary. It was the consensus of the Board to appoint Director White to serve as the Assistant Secretary of the Board.

Director Moravec next expressed his interest in running for an At-Large position on the Board of Trustees for the Association of Water Board Directors. A brief discussion ensued. In response to a question from Director Moravec as to whether the Board would support his interested in running for such position, the Board expressed such support.

ATTORNEY’S REPORT

Mr. Barner stated that he incorporated the comments made by the Board last month into the Solid Waste Collection Billing Services Agreement and provided a draft of such agreement to the Walden Community Improvement Association for review.

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 11:21 a.m. to discuss matters of attorney-client privilege. Present for all or portions of the Executive Session were the Board of Directors, Messrs. Abshire, Murphy, Barner and Colyer, and Ms. Cain.

RECONVENE IN OPEN SESSION

As of 11:46 a.m., the President declared the Executive Session was ended and the public session was resumed.

Upon a motion by Director Moravec, seconded by Director White, after full discussion and with all Directors present voting aye, the Board authorized RBAP to send a letter to Allco pursuant to the terms discussed in executive session.

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 March, 2023.

Margie Barlow
Secretary, Board of Directors