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

May 10, 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, May 10, 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 – Assistant Secretary

All members of the Board were present, except Director Patton, 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”); Elliot M. Barner and Campbell Colyer, attorneys, and Kathryn Cain, paralegal, of Radcliffe Adams Barner PLLC (“Attorney” or “RAB”); and Robert Ginandt and Curt Harris, Directors of Montgomery County Municipal Utility District No. 9 (“MUD 9”).

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.  Director Tryon stated that he was notified by the Walden Community Improvement Association’s Architectural Control Committee (“ACC”) that certain District residents made a complaint to the ACC regarding flooding caused by stormwater along Emerson Drive.  Director Tryon further stated that such residents are those who last year requested that the District construct drainage improvements to mitigate such flooding; however, he reminded the Board that the District cannot spend public funds to construct drainage improvements that only benefit private property owners and that any improvements constructed by the District must be for the benefit of the public.

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

APPROVAL OF MINUTES OF April 12, 2023 REGULAR MEETING

Director Tryon next directed the Board to the approval of the April 12, 2023 regular meeting minutes.  Upon a motion by Director Moravec, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved the April 12, 2023 regular meeting minutes, as presented.

TAX ASSESSOR-COLLECTOR’S REPORT

Ms. Felder then reviewed the Tax Assessor-Collector’s Report for the month of April 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 96.92% of the 2022 taxes have been collected as of April 30, 2023.

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. Director Moravec noted that the District’s revenue increased as compared to the same time last year due to the increase in the District’s water and wastewater rates.

Ms. Felder then explained to the Board that an Unclaimed Property Report is required to be filed with the State Comptroller’s Office (“Comptroller”) annually regarding customer funds that remain uncollected for the period of March 1, 2021 through February 28, 2022.  Ms. Felder stated that a check in the amount of $1,112.42 will be sent to the Comptroller following the Board’s approval of the same.

Director Moravec then stated that the operating expenses for the District’s wastewater treatment plant (“WWTP”) increased 37% as compared to last year.  Mr. Wright reminded the Board that there are now two (2) electricity bills for the WWTP, sludge hauling is occurring more often, and that due to the District being permitted to discharge over 1,000,000 gallons of wastewater per day, the District is required to test samples of such discharge more frequently.  Mr. Wright further reminded the Board that a large quantity of aluminum sulfate was necessary to remove phosphorus from the District’s influent because the new WWTP was previously not effectively able to treat influent without the addition of such chemical.  Mr. Wright then stated that he will coordinate with the Engineer to verify the necessity of all chemical tests currently being performed at the WWTP.  Mr. Abshire then reminded the Board that Quiddity and Hays North are documenting all expenses incurred by the District as the result of Allco, LLC’s (“Allco”) delay in completing the WWTP Improvement Project (the “WWTP Project”).

Ms. Felder next presented to the Board the Quarterly Investment Report for the period ending March 31, 2023.

Upon a motion by Director Barlow, seconded by Director White, after full discussion and with all Directors present voting aye, the Board:  1) approved the Tax Assessor-Collector’s Report, as presented; 2) approved the Bookkeeper’s Report, as presented; 3) authorized payment of checks detailed therein; and 4) approved the Quarterly Investment Report for the period ending March 31, 2023.

ENGINEER’S REPORT

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

Mr. Murphy first updated the Board on Allco’s progress over the past month regarding the WWTP Project.  Mr. Murphy reported that Allco continues with construction of the masonry walls at the dewatering building.  Mr. Murphy then presented Allco’s Pay Estimate No. 51 in the amount of $70,434.10 for work performed on the WWTP Project.  Director Moravec requested that Hays North provide the Board with an estimate as to the cost of continued sludge hauling for the duration of the WWTP Project as compared to installation of a belt press at the WWTP.

Mr. Murphy next presented Allco’s Change Order No. 14 in the amount of $12,747.25, which includes changes in piping material due to long lead times on certain materials, as well as the extension of conduit in the motor control center (“MCC”).  Mr. Murphy then noted that such change order also included a deduction to the total contract price in the amount of $2,700.00 because installation of an awning on the dewatering building was removed from the contract for the WWTP Project.

Mr. Barner entered the meeting in-person at this time.

Regarding the 2022 Sanitary Sewer Rehabilitation Project, Mr. Murphy reported that Texas Pride Utilities, LLC (“Texas Pride”) is underway with installation of cured-in-place piping and pipe bursting, as necessary.  Mr. Murphy then presented Texas Pride’s Pay Estimate No. 1 in the amount of $94,456.80.

Mr. Murphy then updated the Board on the MCC Replacement Project for the Browning Street Water Plant (“Water Plant No. 2”).  Mr. Murphy presented McDonald Municipal & Industrial’s (“McDonald”) Change Order No. 3 in the amount of $3,133.00, which includes installation of a new circuit and conductors for the Water Well No. 2 post-cooling tower chlorine feeder and installation of a three (3)-way valve on the ground storage tank level gauge.

Mr. Murphy next presented McDonald’s Pay Estimate No. 6 and Final in the amount of $3,133.00 for installation of such equipment.  Mr. Murphy stated that once such equipment is installed by McDonald and inspected by Hays North, Quiddity will release the final payment to McDonald for the MCC Replacement Project at Water Plant No. 2.  Mr. Wright then reported that as the result of such water plant being out of operation for an extended period of time, the water samples taken from the Catahoula Water Well failed certain bacteriological tests.

Mr. Wright further reported that such well was taken out of operation and Hays North adjusted the level of disinfectant in such well.  Mr. Wright stated that another bacteriological test was performed yesterday on such well and he expects to receive the results today.

Mr. Abshire next updated the Board regarding the annual inspection of the District’s water plants as required by the Texas Commission on Environmental Quality (“TCEQ”).

Mr. Murphy reminded the Board that Quiddity performed an inspection of Water Plant No. 2 during the time it was out of operation for the MCC Replacement Project.  Mr. Murphy then stated that Quiddity intends to perform an inspection of Water Plant No. 1 this month.

A brief discussion then ensued regarding a dispute between Allco and its subcontractors regarding payment by Allco for work performed on the WWTP Project by such subcontractors.  Mr. Barner explained that a lien cannot be filed against property owned by a public entity such as the District.

Ms. Felder exited the meeting at this time.

Upon a motion by Director Barlow, seconded by Director Moravec, after full discussion and with all Directors present voting aye, the Board approved:  1) the Engineer’s Report, as presented; 2) Allco’s Pay Estimate No. 51 in the amount of $70,434.10 for work performed on the WWTP Project; 3) Allco’s Change Order No. 14 in the amount of $12,747.25; 4) Texas Pride’s Pay Estimate No. 1 in the amount of $94,456.80 for work performed on the 2022 Sanitary Sewer Rehabilitation Project; 5) McDonald’s Change Order No. 3 in the amount of $3,133.00 for the Water Plant No. 2 MCC Replacement Project; and 6) McDonald’s Pay Estimate No. 6 and Final in the amount of $3,133.00.

OPERATOR’S REPORT

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

Mr. Wright then reported that 857 customers are receiving electronic billing statements, which is an increase of 18 customers from last month.

Mr. Wright next reported that the combined water accountability for the District and MUD 9 was 93.96%.  Mr. Wright explained that such accountability is low due to the recent flushing of certain District water lines.

Mr. Wright then reported that there were no new taps last month and that the District has a total of 1,820 connections.  Mr. Wright then stated that four (4) accounts were terminated last month due to delinquent payment; however, the outstanding balances owed for two (2) such accounts were subsequently paid, and service was restored.

Director Tryon stated that several District facilities were found with their locks cut or unlocked.  Mr. Wright explained that the District has numerous sampling stations from which Hays North is able to collect water samples from certain points in the District’s water main lines, and such sampling stations look similar to structures used by other utility companies, which leads to employees of such utility companies mistakenly opening the District’s sampling stations.  Director Tryon requested that Hays North install signs on the District’s sampling stations identifying them as property of the District.

Mr. Wright then reviewed the Notable Activity Report contained in the Operator’s Report and noted that such report includes the repair of several items identified during Quiddity’s inspection of Water Plant No. 2.

Next, Mr. Wright reported that the automatic transfer switch on the generator at Water Plant No. 1 is damaged and must be replaced; however, there is an approximately 12-month lead time on such equipment.  Mr. Wright further reported that in the meantime, a manual transfer switch was installed on such generator.

Mr. Wright then reported that the hydropneumatic tank at Water Plant No. 1 is out of operation due to a leak in the line that feeds compressed air into such tank.

Mr. Wright next presented the District’s Drinking Water Quality Report, formerly the Consumer Confidence Report (“CCR”).  Mr. Barner then reminded the Board about the process for distributing the CCR to customers pursuant to the requirements of the Environmental Protection Agency and the TCEQ.  Mr. Barner stated that a direct URL link for the CCR must be included in customers’ water bills prior to June 30^th in order to comply with such requirements.

Upon a motion by Director Barlow, seconded by Director Tryon, after full discussion and with all Directors present voting aye, the Board approved:  1) the Operator’s Report, as presented; and 2) distribution of the CCR, subject to the Attorney’s review.

In response to a question from Mr. Barner regarding the status of the District’s Groundwater Credit Report, Mr. Wright stated that he will provide such report to Mr. Barner.

Mr. Wright then reported that Hays North submitted the District’s Annual Water Loss Audit to the Texas Water Development Board in advance of the May 1, 2023 deadline.

Mr. Wright next reported that Hays North completed the repairs identified during the annual inspection of Water Plant No. 2; however, they still have minor repairs to complete regarding the items identified in the 2022 Lift Station Inspection Report.

SECURITY AT DISTRICT FACILITIES

Director White reported that he requested feedback from other water district operators regarding their experience with the security equipment and services provided by Today’s Integration, Inc. (“Today’s Integration”), and all such feedback was positive.  Director White stated that he will coordinate with Director Tryon, Today’s Integration, and a liaison from MUD 9 to determine the security features desired at each of the District’s facilities for the purpose of including the same in a proposal from Today’s Integration.  Mr. Barner stated that such proposal will specify how the cost of such security features will be split between the districts.

MISCELLANEOUS REPORTS

Mr. Harris reported that MUD 9 is in favor of improving security at their facilities, including the facilities that they operate jointly with the District.  Mr. Harris stated that MUD 9 would like to be included in Directors White and Tryon’s discussions with Today’s Integration regarding security of the districts’ facilities.

Mr. Ginandt then briefly updated the Board regarding the status of MUD 9’s various ongoing engineering projects.

OPERATOR’S REPORT (CONTINUED)

Mr. Wright next informed the Board about the failure of two (2) of the District’s storm drains.  Mr. Wright reported that one (1) such storm drain is located on Willowbend Road and created a large sinkhole.  Mr. Wright stated that Hays North is ready to repair such sinkhole as soon as the rainstorms cease.  Mr. Wright reported that the second (2^nd) failed storm drain created a small sinkhole in an easement between two (2) homes and noted that there is limited space to work within such easement.  Mr. Wright further reported that Hays North is coordinating with Quiddity to televise the storm sewer line beneath such storm drain.

MISCELLANEOUS REPORTS (CONTINUED)

Director Tryon briefly updated the Board regarding ongoing litigation between the City of Conroe and the San Jacinto River Authority.  Mr. Barner explained that such litigation does not affect the District.

Next, Mr. Abshire reported that he was informed by the property management company for Walden, Section 7, that Bleyl Engineering (“Bleyl”) inspected the private streets within such section and identified several storm sewer inlets and manholes in need of repair.  Mr. Abshire further reported that Quiddity is coordinating with Bleyl to determine whether such manholes are part of the District’s storm sewer system or sanitary sewer system.

THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, the meeting was adjourned at 11 :05 a.m.

PASSED AND APPROVED this the 14th day of June, 2023.

Assistant Secretary, Board of Directors