MINUTES OF REGULAR MEETING
NORTHAMPTON MUNICIPAL UTILITY DISTRICT HARRIS COUNTY, TEXAS
July 16, 2012
THE STATE OF TEXAS § §
COUNTY OF HARRIS §
The Board of Directors (the “Board”) of Northampton Municipal Utility District (the “District”) of Harris County, Texas, met in regular session, open to the public, at 7:00 p.m., on the 16th day of July 2012, at the regular meeting place thereof, the Northampton Center, 6012 Root Road, Spring, Texas, within the boundaries of the District, and the roll was called of the duly constituted officers and members of the Board, to-wit:
E. C. Thomas President
Bill Black 1st Vice President
W. Paul Schneider 2nd Vice President
Joyce Nelsen Secretary
John A. Braden Treasurer/Investment Officer
All members of the Board were present, with the exception of Director Black, thus constituting a quorum.
Also present were Mr. Erich Peterson, P.E. and Mr. Joshua Lee, P.E. of Jones & Carter, Inc., the District’s Engineers; Mr. Jim Sheffield, the District’s General Manager; Mr. Ron Walkoviak of Lakeview Land Group, LLC, a developer; Mr. Cregg McGaha of Partners in Building, a developer; Mr. Joe Goggans of United Development Funding; Mr. Kirk LaGuarta, of Land Advisors Organization, a developer; Mr. Doug Eibsen of Peramco Inc., a developer; Ms. Cherie Cross of Environmental Allies, the District’s detention pond contractor; Mr. Tim Green, Attorney for Houston Gosling Woodlands, L.P.; Mr. Jerome Wunderlich, a District resident; and Mr. John R. Wallace and Mr. Michael P. Bacon of Bacon & Wallace, L.L.P., the District’s Attorneys.
WHEREUPON, following a notation that notices of the meeting had been duly posted in accordance with law, copies of which are attached hereto as exhibits, the meeting was called to order. In the absence of President Thomas, Vice President Black took the chair and presided over the meeting.
PLEDGE OF ALLEGIANCE AND INVOCATION
PUBLIC COMMENTS
There were no comments from the public. APPROVAL OF MINUTES
Minutes for the Board of Directors meeting held on June 18, 2012 were presented for review and approval. Following review, upon motion duly made and seconded, the Board voted unanimously to approve such minutes as written. The Board of Directors determined to table review and approval of the minutes of the meeting held on July 2, 2012.
TAX ASSESSOR/COLLECTOR’S REPORT
Esther Flores presented the Tax Assessor/Collector’s report, a copy of which is attached hereto as an exhibit. Ms. Flores reported that as of June 30, 2012, the District had received approximately 98.49% of the 2011 tax levy.
Ms. Flores next reported that the Delinquent Tax Roll for 2011 has been turned over to the District’s Delinquent Tax Attorney for collection. Ms. Flores agreed to distribute copies of the delinquent list to the Board members.
Following review and discussion, upon motion duly made and seconded, the Board voted unanimously to approve the Tax Assessor/Collector’s report and to authorize payment of the checks presented for approval.
BOOKKEEPER’S REPORT
Cindy Schmidt presented the Bookkeeper’s report and the Investment Report, copies of which are attached hereto as exhibits. Mr. Wallace reported that Paul Cheng has a $10,405 deficit balance on his developer deposit with the District. The Board authorized Ms. Schmidt to bill Mr. Cheng an additional $20,000 to re-establish the deposit fund going forward. Mr. Wallace said he offered to DR Horton to set up a separate account to bill DR Horton, but he had not received a response. He also reported that he provided Mr. Cheng with a budget of $15,000 for the Defined Area election.
Following review and discussion, upon motion duly made and seconded, the Board voted unanimously to approve the Bookkeeper’s report and the Investment Report and to authorize payment of the checks presented for approval.
UNITED DEVELOPMENT FUNDING
Joe Goggans submitted a $10,000 deposit for the feasibility study for the United Development Funding single-family project. Mr. Wallace said the annexation letter agreement has been drafted; however, Mr. Goggans reported that he is still working on the property acquisition, and that the developer is very interested in the District’s proposed bond election in November. It was noted that Mr. Wunderlich, one of the present property owners, was also present at the meeting.
INSURANCE PROPOSALS
Marshall Schoth reviewed the AquaSurance proposal for renewal of the District’s insurance policies. Mr. Schoth informed the Board that a $10,000 deductible for the boiler and machinery insurance coverage is not available; however, a boiler and machinery policy that includes a $15,000 deductible can be purchased with a $5,000 premium increase. Mr. Schoth said a lower deductible may be considered in the future if the District has no claims. Following discussion, upon motion duly made and seconded, the Board voted unanimously to approve and execute the AquaSurance insurance proposal for renewal of the District’s insurance policies, including the boiler & machinery policy with the $25,000 deductible. The Board authorized the Bookkeeper to release the check to AquaSurance.
OPERATOR’S REPORT
Robb Clark presented the Operator’s report, a copy of which is attached hereto as an exhibit. Mr. Clark reported that the District accounted for 90.36% of the water produced during the previous month, and the flushing plan is underway. H reported that approximately 4 million gallons of water were sold to Oakmont Public Utility District (“Oakmont”) via the emergency interconnect. Mr. Clark informed the Board that a leak was repaired on a six-inch line on Elmgrove Court, and another leak was repaired on Dovershire at Auburn Lakes.
Mr. Clark next reported that a customer reported a sinkhole in their backyard at 6114 Hickorycrest. Mr. Clark said a dye test was performed which revealed a sanitary sewer line leak that affects three residents. He said the location was compared to the list of completed “cured in place” repairs, and it was determined that no leak or point repairs were performed in the area. Mr. Clark said the Operator will proceed with the necessary repairs at this location.
Mr. Sheffield then asked that the Operator inspect the two-inch water line located behind the Inway facility that enters the Wastewater Treatment Plant (the “Plant”) through a sleeve across Willow Creek. Mr. Lee suggested that the Operator also inspect the sewer line that crosses the creek for leaks that may have resulted from damage caused by the recent heavy rains.
Mr. Clark reported that the water re-use line has been installed at Spring Gardens Nursery and is ready for the tie-in.
Following discussion, upon motion duly made and seconded, the Board voted unanimously to approve the Operator’s report and to authorize termination of the delinquent accounts.
ENGINEER’S REPORT
Josh Lee presented the Engineer’s report, a copy of which is attached hereto as an exhibit.
Mr. Lee reported on the status of the plans for the Gosling Road Utility Extension Project. Mr. Lee informed the Board that Harris County will not require an access agreement for the all-weather access road along Gosling Road. Mr. Lee went on to say that bids for the project will be ready for consideration at the August 20, 2012 Board meeting.
Mr. Lee next reported that the District’s bond application is still pending at the Texas Commission on Environmental Quality (the “TCEQ”), and approval is expected soon. Mr. Lee reported that Oakmont has not formally responded to the District’s proposed interim lease agreement for wastewater treatment capacity. Mr. Lee reported that the Engineer is also looking at additional tracts that could serve as a site for the Plant expansion.
Mr. Lee reported that the TCEQ approved the District’s Application for Change of Project Scope on June 21, 2012 for the Water Well No. 2 Rework Project. Mr. Lee stated that $112,484 was transferred to the Operating Account pursuant to the approval received from the TCEQ.
Mr. Lee next reviewed the status of the United Development Funding proposed 33-acre single-family project on Dovershire Road. Mr. Lee reported that the Engineer will begin the feasibility study once the land is identified by the developer.
Mr. Lee informed the Board that there has been no further communication from the developer of the proposed swimming center project. The Board determined to table this matter.
Mr. Lee reported that the Sanitary Sewer Rehabilitation Project is complete and will be closed. He presented and recommended approval of Pay Estimate No. 10 and Final from Insituform Technologies in the amount of $223,710.45. Mr. Lee noted that the one-year warranty period will start now. Upon motion duly made and seconded, the Board voted unanimously to approve payment of the Pay Estimate to Insituform Technologies.
Mr. Lee next reported that Klein Independent School District is still evaluating the proposed amended agreement for sewer service with the District.
Upon motion duly made and seconded, the Board voted unanimously to approve the Engineer’s report.
PARTNERS IN BUILDING
Mr. Wallace reported that the reimbursement agreement and utility commitment letter have been executed for the Partners in Building project, and the Waiver of Appraisal is being recorded. He noted that copies of the documents will be distributed to the parties. Mr. Wallace recommended tabling discussion of the petitions for annexation until the property closing occurs, and Mr. Walkoviak agreed. Mr. Wallace noted that dates for a proposed town hall meeting are under discussion, and Partners in Building was invited to make a presentation at the town hall meeting. Mr. Walkoviak commented that 40 single-family lots are still planned, and the City of Houston has approved the preliminary plat for the project.
Mr. Wallace reported that he talked to Mr. Walkoviak and Mr. Goggans about the upcoming bond election, and they agreed that separate bond propositions would increase the likelihood of approval of bonds for their developments.
SUBSIDENCE DISTRICT AGREEMENT
Mr. Wallace next presented to the Board for approval the proposed Interlocal Agreement with the Subsidence District for the 2012 Learning to Be Water Wise program at Northampton Elementary School. Mr. Wallace noted that the terms of the agreement were the same as last year. Following discussion, upon motion duly made and seconded, the Board voted unanimously to approve the Interlocal Agreement with the Subsidence District, a copy of which is attached hereto as an exhibit.
ACCLAIM ENERGY ADVISORS
Mr. Wallace next presented the proposed agreement with Acclaim Energy Advisors for participation in the Demand Response Program’s and electricity curtailment authorization. Mr. Wallace noted that the agreement has been revised to extend insurance coverage to the District’s equipment in the event of malfunction, and the District will be added as an additional insured. Upon motion duly made and seconded, the Board voted unanimously to approve the agreement with Acclaim Energy Advisors, a copy of which is attached hereto as an exhibit.
DISCUSSION OF PROPOSED DEFINED AREA.
Mr. Wallace summarized the proposed Defined Area project and election requirements. He informed the Board that there is still no definitive agreement in place with Mr. Cheng. Mr. Wallace recapped the meeting held on July 13, 2012 with the developer. Mr. Wallace reported that the Board must take action today if an election for the Defined Area will be held in November. Mr. Wallace stated that Houston Gosling Woodlands, L.P. has requested 220 ESFC for the first phase of their proposed multi-family project and a similar amount for the second phase, all within a 41 acre tract.
Mr. Green questioned what would happen if the utility commitments are given, but the bond election fails to pass. Mr. Green stated that capacity for the first phase of the multi-family project and the first phase of the DR Horton project have been requested at this time. He stated further that the developers will have to fund the Plant expansion themselves without reimbursement if the bond election does not pass. Mr. Wallace said that the Defined Area residents can approve their own bonds and the election will most likely pass, but other facilities will require approval of bonds voted on by residents of the entire District.
Mr. Wallace reviewed the Texas Water Code, Section 54.802 requirements for establishing the Defined Area, including the Notice of Publication of Hearing on the Defined Area development and bond election. He suggested publication dates of July 26, 2012 and August 2, 2012, with the hearing scheduled on August 13, 2012. He noted that August 20, 2012 is the last available date to call the election. Director Braden commented that the proposed development as a whole would be good for the District, and the problem will be shaping the
message so that the District’s residents can be adequately informed. Director Braden added that the Board needs to show that the District’s involvement would be better than allowing an unknown development to occur. Mr. Sheffield suggested that written material be distributed to the residents for review. Director Black said that they should make every effort to get good attendance at the August 13, 2012 public hearing. Director Braden and Mr. Sheffield agreed to work on a notice for the newsletter and website. Following discussion, upon motion duly made and seconded, the Board voted three to zero, with Director Nelsen abstaining, to approve a Resolution Approving Proposed Defined Area, Plan of Improvements and Taxation, and Approving Other Matters Related to the Proposed Defined Area.
A discussion regarding utility commitments ensued. Mr. Green stated that it makes sense to secure the utility commitments and development agreements at the same time. It was noted that representatives for the various developments will be able to make presentations at the August 13, 2012 public hearing. Mr. Green asked for an opportunity to describe Houston Gosling Woodlands, L.P.’s and Mr. Cheng’s backgrounds as excellent developers and businessmen. Mr. Green stated that the Houston Gosling Woodlands, L.P. owners are well funded, and Mr. Cheng’s developments in Dallas have been huge successes, with large, high-scale amenity centers opening during the first phase of each development. Mr. Green went on to say that the Dallas Grand Heritage community was developed by the same owners and Mr. Cheng, and it was voted the Best Master Planned Community that year. He also noted that Mr. Cheng developed the Aliana community on the Grand Parkway, west of Houston, on his own without the Houston Gosling Woodlands, L.P. owners. He stated that Aliana is a great example of the high quality work of Mr. Cheng.
The Board agreed to appoint Directors Black and Director Braden to work with the District’s consultants to determine bond election requirements and presentation strategies. A committee meeting was scheduled for 11:30 a.m. on July 27, 2012.
FINANCIAL ADVISOR’S REPORT
Jan Bartholomew reported that the TCEQ is reviewing the District’s Bond Application, and they expect to complete their review in early August. The Board determined to table this matter until the staff memo is received from the TCEQ.
There being no further business to come before the Board, the meeting was adjourned.
_________________________________ Secretary, Board of Directors
