HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO



HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 286

Minutes of Board of Directors Meeting

September 12, 2011

ACTIONS TAKEN

1. The Board of Directors (“Board”) voted to approve the minutes of the July 11, 2011 meeting as written.

2. The Board voted to approve the minutes of the August 1, 2011 meeting as written.

3. The Board voted to approve the Harris County Constable's Security Patrol Report for August 2011.

4. The Board approved the Tax Assessor-Collector’s Report as presented by JoAnn Ramos of Utility Tax Service, L.L.C. (“UTS”), including payment of the bills associated therewith.

5. The Board authorized Mr. Creed to draft a combined annual maintenance contract with Bryan Gardens.

6. The Board approved the Operations and Maintenance Report as presented by Eric Thiry of Environmental Development Partners, L.L.C. (“EDP”).

7. The Board authorized Dennis Eby of Eby Engineers, Inc. (“Eby”) to have plumbing contractor complete repairs to be done on multiple water fountains at the park.

8. The Board authorized Eby to engage the proposed certified park safety inspector to complete semi-annual inspections of the park.

9. The Board approved the Engineering Report presented by Dennis Eby of Eby Engineers, Inc. and certain action items contained therein.

10. The Board approved the Bookkeeper’s Report as presented by Claudia Redden of Claudia Redden & Associates, L.L.C., including the checks presented for payment, and adopted its fiscal year 2012 operating budget.

11. The Board authorized an expense of up to $ 4,000.00 to be dedicated to the provision of educational materials and food costs at an upcoming water conservation presentation to be given in coordination with the National Night Out event.

12. The Board approved a proposed debt service tax rate of $ .0475 and a proposed maintenance tax rate of $ .1325 and authorized UTS to publish notice of its intent to formally adopt such rate at its next meeting in the format required by law.

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The Board of Harris County Municipal Utility District No. 286 ("District") met at the Board’s regular meeting place, 8015 FM 1960 West, Houston, Harris, County, Texas 77070 on September 12, 2011 in accordance with the duly posted notice of meeting, and the roll was called of the duly constituted officers and members of said Board of Directors, as follows:

David Geaslen, President

Paul D. Nicosia, Vice-President

Steve Garner, Assistant Secretary

Michael Rhodes, Secretary

Jeffrey Carlyle, Director

All of said persons were present.

Also present were Deputy Martino and Sergeant Rouse of the Harris County Constable’s Office, Precinct No. 4; Claudia Redden of Claudia Redden & Associates L.L.C.; Dennis Eby of Eby Engineers, Inc. ("Eby"); Eric Thiry of Environmental Development Partners, L.L.C. ("EDP"); JoAnn Ramos of Utility Tax Service, L. L. C.; Spencer Creed of Schwartz, Page, & Harding, L.L.P. ("SPH"); Mike Merada of Hewlett Packard Company (“HP”); Brian Attaway of Trammell Crowe Company; Jessica Dixon of CB Richard Ellis (“CBRE”); and Jacquelin Scott, administrative assistant.

The meeting was called to order at 6:06 p.m. by President Geaslen.

APPROVAL OF MINUTES

The President asked that the approval of past minutes be given first consideration. Upon motion made by Director Carlyle, seconded by Director Rhodes, the Board voted unanimously to approve the minutes of the July 11, 2011 meeting as written.

The President next asked that the August 1, 2011 minutes be considered. After review, a motion was made by Director Carlyle and seconded by Director Rhodes and the Board voted unanimously to approve the minutes of the August 1, 2011 meeting as written.

SECURITY PATROL REPORT BY THE CONSTABLE'S OFFICE

The President recognized Deputy Martino and Sergeant Rouse, current officers for the District. The Officers then reported recent activities within the District, as noted on the Harris County Constable's Security Patrol Report for August 2011, attached hereto as Exhibit A.

The officers noted that no burglaries were reported and that one small campfire was intentionally started. Some discussion was then had concerning the recent theft of security cameras from the park and the way to proceed in dealing with same. The officers then briefly noted the planned implosion of two buildings on the Lone Star College “Lonestar” campus in the upcoming month.

After this time, the Officers exited the meeting.

TAX ASSESSOR-COLLECTOR REPORT

JoAnn Ramos was next recognized by the President for discussion of the District’s tax matters. She disseminated to and reviewed with the Board the Tax Assessor-Collector’s Report dated August 31, 2011, a copy of which is attached hereto and considered a part of these minutes as Exhibit B.

Ms. Ramos discussed four checks listed on her report. She additionally stated that the collection of 2010 taxes was at 93%. Upon some discussion from the board, the listed postage fees were explained by Ms. Ramos. She explained that the postage for all notices and other correspondence were paid semi-annually and that the postage listed this month was the corresponding charge for this portion of the year. She also explained that the Tax Assessors fees were also on the report. Finally Ms. Ramos pointed out that the matter of the two (2) delinquent accounts discussed the previous month for the park and trail properties were paid as discussed and that those matters were completed.

Director Carlyle then moved that the Tax Assessor-Collector Report be approved as presented, and that the checks, as identified in said report, be approved for payment. Director Nicosia seconded said motion, which carried unanimously.

2011 TAX RATE RECOMMENDATION

Mr. Creed presented the board with the recommendation of the District’s Financial Advisor, RBC capital markets (“RBC”), regarding the proposed of 2011 debt service tax rate, a copy of which is attached hereto as Exhibit C. He noted that RBC is recommending a proposed 2011 debt service rate of $.06. A discussion ensued concerning the decrease in the District’s overall taxable value over the last several years, the proposed operating budget for the upcoming fiscal year, and the District’s remaining debt service schedule for its outstanding bonds. The Board noted that it desired to maintain the same allocation among its debt service and maintenance tax rates as levied in 2010, in order to maintain flexibility and the ability to increase its maintenance tax in the future, and transfers can be made from the operating fund to the debt service fund as required. There next followed a discussion concerning the requirements for notice of the District’s intention to adopt a 2011 tax rate pursuant to the Texas Water Code. Following discussion, Director Nicosia moved that the Board propose a 2011 debt service tax rate of $ .0475 and a maintenance tax rate of $ .1325 and that the District’s tax assessor-collector be authorized to publish notice of the District’s intention to adopt a 2011 tax rate at its next meeting in the form and time required by law. Ms. Ramos advised that the notice would be published by UTS in the Houston Chronicle in the Neighborhood News section.

OPERATIONS REPORT

The Board next considered the Operations and Maintenance Report. Mr. Eric Thiry of EDP then presented and reviewed with the Board the Operations and Maintenance Report dated September 9, 2011, a copy of which is attached hereto as Exhibit D.

Mr. Thiry informed the Board that all meters registering in excess of one million gallons had been replaced as of the present time. He also noted that he was preparing for the draining and inspection of the aeration basin and clarifier at the Wastewater Treatment Plant within the next two weeks.

Mr. Thiry then explained that at the Jones Road Lift station there are three pumps and that one had to be brought into the shop for repairs. He further noted that to repair the damage would cost approximately $1,000.00.

Mr. Thiry then remarked that Item #3 on his report, regarding Lonestar, was still in progress. He also explained that a service inspection of the central plant is to be done at Lonestar. He also noted that backflow preventers will need to be installed in that plant.

Mr. Thiry next addressed the rectification of a previous violation notice and directed the Board’s attention to page 7 of his report to view the notice posted in accordance with rectification of such.

Mr. Thiry then recalled the issue of the valve survey as addressed in the August Board meeting. He further explained that the residential survey was complete and that the commercial survey was in progress and would be completed soon so that the corresponding information could be added to the District’s maps. President Geaslen asked that this be completed immediately and Mr. Thiry verified that he would have this resolved before the October Board meeting. He further noted that he was working with Mr. Eby and will commence minor valve repairs soon.

Next Mr. Thiry addressed the mowing proposals with Bryan Gardens that were to become effective September 1, 2011 for the District’s plant and lift station sites. He verified that he was working out some insurance issues but that they will start mowing this month.

At this time Mr. Creed interjected and asked that the multiple proposals with Bryan Gardens be addressed. He focused the discussion on the 10 separate proposals that the District currently has with Bryan Gardens. He verified that these proposals add up to a sum of approximately $50,000.00 and recommended that these individual proposals be consolidated into one contract. He proposed that he be authorized to draw up this general contract covering all the current and proposed work with Bryan Gardens at a cost not to exceed $350.00 to the Board. The motion to authorize Mr. Creed to draft a combined annual contract with Bryan Gardens to be effective October 1, 2011 was made by Director Rhodes and seconded by Director Carlyle, which carried unanimously.

Mr. Thiry then directed the Board’s attention back to the Operations Report and reviewed the billing and collections summaries. Mr. Thiry apologized for the water accountability figures being incorrect and noted that he will work to correct those issues.

Mr. Thiry advised that there were no violations at the Wastewater Plant and that everything is operating as normal. He then relayed that the high number of customer service calls reflected in his report were mostly inquiries regarding high water bills and one leak was found and repaired. He further noted that the high number of delinquent accounts listed in his report were most likely due to the fact that the notices were mailed out earlier than usual this month. He reported that there were to be no disconnects.

After discussion, Director Carlyle moved that the Operator’s Report be approved as presented. Director Nicosia seconded said motion, which unanimously carried.

ENGINEERING REPORT

President Geaslen then recognized Mr. Eby for presentation of the Engineer’s Report dated September 12, 2011, relative to the status of various projects within the District, a copy of which is attached hereto as Exhibit E.

Mr. Eby stated that there was no report available yet regarding the inspection of the flare at the Water Plant. He also verified that he did provide a key so that Mr. Cummins can do inspections and provide reports for next month.

Mr. Eby reported that surveys for two easements required in the Centre at Cypress Creek are being completed and that the same would be presented to Mr. Creed in the near future to get the dedications prepared and recorded. He also noted that the installation of the two backflow preventor valves is still to be scheduled within the upcoming weeks, but that the Centre representatives are continuing to work towards compliance with the District’s outstanding requirements.

Mr. Eby then addressed the wastewater permit renewal. He advised that a copy of the Texas Commission on Environmental Quality’s (“TCEQ”) letter was included in his report and that the application was declared administratively complete on August 19, 2011. He explained that the application will now be in the process of review for technical issues.

Mr. Creed then discussed with the Board the requirements to publish notice of the District’s application in a TCEQ proscribed format in both an English and Spanish language paper. He stated that such notice had been placed in the La VOZ newspaper already and that it would be published in the Houston Chronicle later this week.

Mr. Creed reviewed the costs of the publication with the board and noted that similar notices would be required to be published once the District’s application was formally approved by the TCEQ.

Mr. Eby then briefly showed the progress on the District utility maps in the commercial areas. He noted that he still wanted to review and verify some Commercial areas. He expressed that he is anticipating being able to hand out bound District maps to the Board in the near future.

Next Mr. Eby addressed a report he had received from Bryan Gardens regarding some dead trees in the park and trail areas and their proposed removal. This was followed with discussion by the Board as to what areas were of concern and responsibility, and the best way to handle various dead trees. Mr. Eby agreed to view the trees at issue himself and report back with his recommendations.

Mr. Eby then discussed the issue of the water fountains in the park. He advised that they can be fixed in the upcoming week as he found a plumber who is familiar with repairing this style of fountain. He noted that the plumber will open the two fountains up and replace the three regulators which are broken, at a total cost not to exceed $1,000.00. Mr. Eby also advised that the other option available is to replace the fountains with a new “freeze proof” type which would cost upwards of $6,000.00.

After some discussion, Director Rhodes made a motion to approve the proposed repairs to the two fountains as long as the total repairs were less than $1,000.00. Mr. Carlyle seconded the motion and it carried without dissent.

Mr. Eby additionally noted that he would attempt to manually reset the Comcast router for the stolen security cameras. He explained that the reset must be done before he can view the footage of the time period immediately before the camera theft. He advised that not only would this hopefully be helpful in finding the persons responsible but that it would also help to determine how to proceed with the camera replacement. Mr. Eby clarified that the company which the cameras were purchased through had not been paid yet as the cameras were never adjusted to proper working condition since the time of installation. He advised that this company is also willing to work with the Board to come up with an amicable solution.

At this time Director Carlyle interjected that he would submit to the County Commissioner for Precinct #4 to have the graffiti on a building along the path painted over in the near future.

Mr. Eby then made a comment that a proposal from Bryan Gardens was included in his report but that it was going to fall under the scope of the contract that Mr. Creed was asked to prepare.

Mr. Eby commented that Item #8 of his report was the playground inspection proposal as previously requested by the Board. He clarified that the quote was to have a certified park safety Inspector come inspect the playground and equipment quarterly and to prepare a report for any needed repairs. The proposal bid was $2,400.00. After some discussion, the board decided that they would prefer that the inspections be done semi-annually and that the proposal should be modified to reflect such.

Director Nicosia made a motion to accept the modified proposal including two inspections per year at half the stated cost of the four (i.e. $1,200.00) and this motion was seconded by Director Carlyle and carried unanimously. Mr. Eby advised that he would contact the inspector to confirm the inspections could be performed at that schedule and price.

Mr. Eby next reported on the matter of the alleged violation from the water plant inspection as listed by the TCEQ from December of 2010. He noted this violation states that the District must have a contract for water supply with the North Harris County Regional Water Authority (“NHCRWA”). As mentioned in previous meetings, Mr. Eby explained that the TCEQ staff member who he has been corresponding with demands “compliance” via a signed contract with the NHCRWA and continues to argue for a contract that allows the District to take 20% of its water from the NCHRWA. At this time the NHCRWA refuses to provide such contract as it is unnecessary, he advised. He noted that he is advancing the issue to the next level of management in an attempt to have it resolved. He verified that he had contacted Mike Boyer, and engineer for the NHCRWA, who has agreed to help resolve the confusion.

Mr. Eby confirmed that the chloramine credit paperwork was submitted to the NHCRWA for review by their engineer. He remarked that there is one item that the NHCRWA may potentially not reimburse as it is not specifically provided for in the regulations. He explained that reimbursing the connection to the second tank was not in the NHCRWA regulations and therefore does not necessarily have to be reimbursed. He did denote that this connection was actually beneficial to the NHCRWA and therefore they have motivation to accept it, but that he is waiting to hear back on that topic. Mr. Eby stated that once the credit paperwork is approved by the NHCRWA the monthly credit will appear on the District’s bill. After some discussion the Board requested to know what that reimbursement would amount to. Mr. Eby remarked that it would be approximately $320,000.00 spread out through credits over 20 years of bills.

At this time the Board revisited the issue of the water fountains and the concern about potential damage due to freezing in the future. The Board then requested that Mr. Eby inquire as to whether or not it was possible to have the plumber install a drain valve. Mr. Eby agreed to look into the matter.

Director Nicosia moved that the Engineering Report be approved as presented, the required publications for renewal of the waste discharge permit be authorized and that Brian Gardens proposal for removal of 13 dead trees from the park at a cost of $2,200.00 be approved. Director Rhodes seconded the motion, which unanimously carried.

BOOKKEEPING REPORT AND OPERATING BUDGET FOR FISCAL YEAR 2012

The Board considered the Bookkeeper’s Report. In connection therewith, Ms. Redden reviewed with the Board the Bookkeeping Report dated September 12, 2011, a copy of which is attached hereto as Exhibit F, including the checks presented for payment.

Ms. Redden addressed the checks from the last meeting and the additional four checks circulating for signatures. She then reviewed the figures on the report.

Ms. Redden reviewed the payment schedule for the Strategic Partnership Agreement and the corresponding documentation in the report. She then continued to discuss some items of comparison on the draft budget, a copy of which is attached to the bookkeeping report.

Ms. Redden noted that the Board had indicated its intention to adjust the budgeted maintenance tax revenue to $461,000.00. She also verified that the Chasewood fees (line items 41600 and 61900) were to be reduced to $200,000, per the earlier discussion. She further advised that $10,000.00 will be written into the budget for the expenses of the upcoming election and $11,000.00 added for publication costs associated with renewal of the waste discharge permit. Some discussion was had as to the way the breakdown of expenses was labeled.

A motion to adopt the new budget with the noted changes was made by Director Garner and seconded by Director Carlyle. The motion carried without dissent.

After discussion, Director Rhodes moved that the Bookkeeping Report be approved as presented. Director Nicosia seconded said motion, which unanimously carried.

DEVELOPERS' REPORTS

HEWLETT-PACKARD COMPANY

The Board recognized that there was no new business to discuss regarding HP.

GENESIS

No representative of Genesis Capital Partners L.L.C. was present at the meeting.

CENTRE AT CYPRESS CREEK

Ms. Dixon explained that there had been an odd instance of some water discoloration but that the District had responded promptly and that the color change was only temporary and had resolved itself.

LONE STAR COLLEGE SYSTEM (“LONESTAR”)

Director Garner noted that Lonestar is in the process of signing more tenants.

TCH NORTH WEST ASSOCIATES L.P. (Trammell Crowe)

At this time Brian Attaway of Trammell Crowe introduced himself and explained that he would be replacing Mr. Restum. He then briefly noted that his company is interested in getting the backflow preventor approved and installed quickly.

Mr. Eby informed Mr. Attaway that the District does not provide the specifications for the backflow preventers as that is a function of the state. He advised that he would provide the appropriate contact information for Mr. Attaway.

UTILITY COMMITMENT REQUESTS

There were no utility commitment requests presented for consideration.

ATTORNEY’S REPORT

The Board next considered the attorney's report as presented by Mr. Creed.

Mr. Thiry noted that he had been given a box of District records from Sherry Allard, the previous administrative assistant, and the Board advised that he hand them over to Mr. Creed. Mr. Creed accepted the box of documents.

Mr. Creed stated he had no further business to discuss.

CONSIDER STATUS OF DISTRICT WEBSITE

At this time Miss Scott notified the Board that she was unable to solicit a response from Don Dulin who holds certain access authorization for the District’s website. She stated that she had made the requested website corrections to the best of her ability, but could not proceed further until she was able to get more information from the webmaster. She noted that she lacked authorization to make formatting changes as requested by the Board previously. Director Carlyle offered to make some attempts to contact Don Dulin to get the required information and noted that he would advise when contact was made.

SUBMISSION OF CRITICAL LOAD STATUS INFORMATION TO RETAIL ELECTRIC PROVIDER

Mr. Creed reported that House Bill 2619, recently enacted by the 82nd Texas Legislature, amends Section 13.1396, Water Code, to require that a district must annually submit to each electric distribution utility and each retail electric utility provider, on forms reasonably required by each entity, its facilities which qualify for critical load status and various emergency contact information to the county judge of each county in which the district has critical load facilities. After discussion on the matter, Director Garner moved that the District’s operator be authorized to make such annual filings on behalf of the District. Director Nicosia seconded the motion, which carried unanimously.

PARTICIPATION BY DISTRICT IN UPCOMING NATIONAL NIGHT OUT EVENT

Director Nicosia requested that the Board address the issue of the upcoming National Night Out Event and their desired level of participation.

After some discussion, Director Garner made the suggested motion that a sum not to exceed $4,000.00 be allocated towards this event. Director Rhodes seconded the motion which carried unanimously. The Board noted that the meeting is to be held on October 4, 2011 at the park, which is a District facility, and that the Operator will speak to the community about water conservation and related topics. Mr. Thiry advised that he would try to obtain the NHCRWA’s media trailer for that event. The Board noted that the funds allocated for the event were for the purpose of presenting the program materials and to offset associated food costs.

ADJOURNMENT OF BOARD MEETING

Citing no further business to come before the Board at this time, Director Carlyle made a motion to adjourn at 7:47 p.m., duly seconded by Director Nicosia, which carried without dissent.

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Secretary

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