STATE OF TEXAS COUNTIES OF DENTON AND TARRANT. Kevin R. Carr Greg Wilson Jim Hase Jim Thomas Bill Rose

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1 Trophy Club Municipal Utility District No. 1 September 20, 2016 Regular Meeting Minutes PUBLIC HEARING AND REGULAR MEETING MINUTES- Amended** TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 BOARD OF DIRECTORS September 20, 2016 at 6:00P.M. 100 Municipal Drive, Trophy Club, Texas The Trophy Club Municipal Utility District No. 1 Board of Directors, of Denton and Tarrant Counties, met for a Public Hearing followed by a Regular Meeting on September 20, 2016 at 6:00 P.M., in the Boardroom of the Administration Building, 100 Municipal Drive, Trophy Club, Texas The meeting was held within the boundaries ofthe District, and was open to the public. STATE OF TEXAS COUNTIES OF DENTON AND TARRANT DISTRICT BOARD MEMBERS PRESENT Kevin R. Carr Greg Wilson Jim Hase Jim Thomas Bill Rose President Vice President Secretary/Treasurer Director Director STAFF PRESENT: Laurie Slaght Renae Gonzales Mike McMahon Karl Schlielig Paul Liston District Secretary Finance Manager Water Superintendent Wastewater Superintendent General Legal Counsel CALL TO ORDER AND ANNOUNCE A QUORUM PUBLIC HEARING 1. Trophy Club Municipal Utility District No. 1 will conduct a Public Hearing regarding adoption of the District Tax Rate for Fiscal Year 2017 beginning on October 1, 2016 and ending on September 30, President Carr opened the Public Hearing at 6:02 p.m. There were no speakers President Carr closed the Public Hearing at 6:03 p.m. CITIZEN COMMENTS There were no speakers REPORTS & UPDATES 2. Fire Department Report for August 2016 a.operations Report 1 of9

2 Trophy Club Municipal Utility District No. 1 September 20, 2016 Regular Meeting Minutes Interim Fire Chief Lasky presented the August fire report to the board and answered questions related thereto. Lasky stated that the staff has improved response times. Lasky thanked the Board and Jennifer McKnight for their support with the 9-11 memorial. CONSENT AGENDA 3. Consider and take appropriate action to approve the Consent Agenda. a. August 2016 Check Register b. August 4, 2016 Special Meeting Minutes c. August 12, 2016 Special Meeting Workshop Minutes d. August 30, 2016 Special Meeting Minutes e. State of Texas CO-OP Purchasing Program renewal f. lnterlocal Agreement with Town oftrophy Club for Utility Billing Services. Director Rose requested items a. and b. be removed from the Consent Agenda for further consideration. Motion made by Director Thomas and seconded by Director Rose to approve agenda items c, d, e, and f as presented. Staff and legal counsel provided clarification regarding item a. August 2016 Check Register. Director Rose asked Director Carr for clarification regarding item b. August 4, 2016 Special Meeting Minutes as to his motion regard ing agenda item no. 2 in which he stated the "Town Secretary and Town Manager" would be included in the committee to fill the position of General Manager. Director Carr stated that he misspoke and asked to have the minutes amended at the dais to state the "District Secretary" and not the Town Secretary. Motion made by Director Carr and seconded by Director Rose to correct the motion from August 4, 2016 and replace the "Town Secretary'' with "District Secretary". Motion made by Director Rose and seconded by Director Thomas to approve Consent Agenda items a. and b. as amended. REGULAR SESSION 4. Consider and take appropriate action regarding proposed sewer rates including: a. Summary and review of sewer models developed by NewGen Strategies. b. Provide direction to staff regarding proposed sewer rates for inclusion in an amended rate order. Chris Ekrut with NewGen Strategies stated that he created 3 new scenarios as was requested by the Board. Chris stated that the scenario sheet provided in the agenda packet had been updated thus the wrong information was included in the agenda packet that the board received. 2 of 9

3 Trophy Club Municipal Utility District No. 1 September 20, 2016 Regular Meeting Minutes Director Wilson stated that the tiered rate structure achieves all the District goals and that it minimizes the rate increase for the low water user while providing a disincentive for high water users on the sewer rates. Motion made by Director Wilson and seconded by Director Rose to accept the tiered rate structure for sewer rates using scenario 3. For: Hase, Rose, Thomas and Wilson Oppose: Carr Motion passed Consider and take appropriate action regarding ethics complaint submitted by Danny Mayer against Director Jim Thomas dated June 15, Attorney Liston read the section of the ethics policy that pertained to Mr. Mayer's grievance. President Carr asked if Mr. Mayer was present, he was not, President Carr then gave the floor to Director Thomas. Director Thomas then presented his case. Speaking on behalf of Director Thomas: Irma Thomas 7 Meadowbrook Drive, Trophy Club Texas. President Carr referred to Attorney Liston for procedure on Board action. Attorney Liston stated the options for discipline if the Board chose to do so. President Carr read applicable sections of the ethics policy. President Carr called a vote of the Board of Directors as to whether Director Thomas violated ethics policy For: Rose, Wilson Oppose: Thomas, Hase and Carr The vote is 3-2 opposed. No further action is required or will be taken on this matter. President Carr called recess at 8:07p.m. Reconvene into Regular Session at 8:17 p.m. 6. Consider and take appropriate action to adopt Rate Order No A amending water and sewer rates and setting an effective date of October 1, Motion made by Director Rose and seconded by Director Wilson to adopt a new proposed section to the rate order of9

4 Trophy Club Municipal Utility District No. 1 September 20, 2016 Regular Meeting Minutes Director Rose states that he realizes this would necessitate staff time and changes to our billing software. He would like to have time for staff to make changes and also to inform the residents about the changes and how they will affect them. Director Thomas and Director Hase asked Chris Ekrut for clarification as to what they are. Ekrut explained that this is adopting winter averaging and applying the tiered rates from scenario 3 to that winter average. Motion made by Director Hase seconded by Director Thomas to revisit agenda item No. 4 b. for clarification. For: Hase, Thomas and Carr Oppose: Wilson and Rose Motion passed 3-2 Agenda Item No. 4b. - Consider and take appropriate action regarding proposed sewer rates b. Provide direction to staff regarding proposed sewer rates for inclusion in an amended rate order. Discussion ensued regarding the reasoning for tiered rate structure and the individual Director's methodology as to the benefits to low volume users.. Motion made by Director Wilson and seconded by Director Rose to adopt scenario 3 for the sewer rate structure. For: Rose, Hase, Thomas and Wilson Oppose: Carr Motion passed 4-1 The Board resumes discussion to agenda item no Consider and take appropriate action regarding Resolution amending Fiscal Year 2017 Budget to include Exhibit "B". Finance Manager Gonzales stated that item was placed on the agenda to include the amounts being carried forward into fiscal year 2017 from capital projects budgeted in fiscal year Motion made by Director Wilson and seconded by Director Thomas to approve Resolution No amending Fiscal Year 2017 Budget. 8. Consider and take appropriate action regarding Resolution A, fixing and levying Trophy 4 of9

5 Trophy Club Municipal Utility District No.1 September 20, 2016 Regular Meeting Minutes Club Municipal Utility District No. 1 tax rate for debt service for the fiscal year beginning October 1, 2016 and ending, September 30, Motion made by Director Wilson and seconded by Director Thomas, to approve Resolution A fixing and levying Trophy Club Municipal Utility District No. 1 tax rate of $ for debt service per $100 of taxable value of each property included on the 2016 appraisal roll for the District for the fiscal year beginning October 1, 2016 and ending September 30, Consider and take appropriate action regarding Resolution B, fixing and levying Trophy Club Municipal Utility District No. 1 tax rate for Operation and Maintenance, including the portion of such tax rate to support the Fire Department for the fiscal year beginning October 1, 2016 and ending, September 30, Motion made by Director Thomas and seconded by Director Wilson to approve Resolution B, fixing and levying Trophy Club Municipal Utility District No. 1 tax rate for Operation and Maintenance, is hereby set at $ per $100 of taxable value of each property included on the appraisal roll for the District for the 2016 tax year, of which $ per $100 of taxable value shall be used to support the Fire Department and the remaining $ per $100 of taxable value shall be used to fund other Operation and Maintenance Expenditures of the District. 10. Consider and take appropriate action to approve Resolution C approving FY Tax Roll for Trophy Club Municipal Utility District No. 1. Motion made by Director Wilson and seconded by Director Rose to approve Resolution C Tax rate for {total of $ /$100 assessed value) approved by the Board of Directors of Trophy Club Municipal Utility District No. 1, which has been imposed on each property included on the certified appraisal roll for the District for 2016, totals $1,770,109 actual levy. The Board hereby declares that such appraisal roll with amounts of tax entered shall constitute the District's tax roll for the 2016 tax year. 11. Consider and take appropriate action regarding allocated capacity from the Town of Trophy Club elevated storage tank. Motion made by Director Rose and seconded by Director Carr to have the official minutes of the meeting reflect that the District received an official letter from Town Manager Seidel stating the District does have an allotment of 69,165 gallons within the tank. 5 of9

6 Trophy Club Municipal Utility District No.1 September 20, 2016 Regular Meeting Minutes 12. Consider and take appropriate action regarding Non-Standard Water and Wastewater Service Agreement with RR Webster Family LLC for the development known as Trophy Club Village Centre MOB, Phase 2, Trophy Club Animal Hospital and to approve Non-Standard Water and Wastewater Agreement for service commitment. The Board approved this NSA on the July Regular meeting contingent upon an allocation agreement from the Town of Trophy Club and that has been received and is attached hereto. Therefore, no action is required on this agenda item. Discussion only, no action taken. 13. Consider and take appropriate action regarding proposal from CP&Y for preparation of a nitrification action plan for the water system. Motion made by Director Carr and seconded by Director Rose to approve the proposal by CP&Y for preparation of a nitrification action plan for an amount not to exceed $ 10,000 but first directs staff to go to TCEQ for guidance first and then seek assistance from the engineer. 14. Consider and take appropriate action to approve Change Order No. 5 as submitted by Webber Cadagua for the wastewater treatment plant project. Kevin Glover, P.E. explained that this has been in wait for 10 months. Kevin explained that there are several issues with Webber and that he has been spending many hours checking the submitted invoices. Glovier stated that Webber has agreed to go by the RS Means cost estimating data which is alleviating some of his time. The Board directed Mr. Glovier that all change orders must be approved by the Board of Directors and they would like him to reiterate that to Webber. Motion made by Director Rose and seconded by Director Carr to approve Change Order No. 5 as submitted by Webber Cadagua for the Wastewater Treatment Project $236, Consider and take appropriate action regarding amendment to engineering contract agreement with CP&Y. Motion made by Director Hase and seconded by Director Rose for amendment to engineering contract agreement with CP&Y for an amount not to exceed $454, of9

7 Trophy Club Municipal Utility District No.1 September 20, 2016 Regular Meeting Minutes 16. Consider and take appropriate action to set a public meeting date of December 6, 2016 or December 8, 2016 for a TCEQ Public Meeting regarding the wastewater treatment plant renewal and designate Representative Scott Wetzel, P.E. from CP&Y as District Spokesperson. Motion made by Director Hase and seconded by Director Carr to set the TCEQ Public Meeting date to December 6, 2016 and to designate Scott Wetzel, P.E. from CP&Y as District Spokesperson and have the District Secretary notify TCEQ of the date. 17. Consider and take appropriate action to award the bid for the Svore Building Restroom remodel project and approve Contract No ** Darrell Vickers recommends that the Board accept the Bid from SCM Construction which includes a $15,000 contingency. The contractor did offer a contingency to reduce the construction time from 80 to 45 days. Motion made by Director Thomas and seconded by Director Rose to accept the bid from SCM Construction for $117,000 and approve additional engineering fees of $15,000. For: Rose, Carr, Thomas and Hase Oppose: Wilson Motion passed Consider and take appropriate action regarding lnterlocal Agreement between Trophy Club Municipal Utility District No.1 and The Town of Westlake for use of and transfer of water through a 21" water main. (Carr) ** Motion made by Director Wilson and seconded by Director Carr to direct staff to confirm with Fort Worth water the amount of water that has been removed from the 21" line and that the tap be removed from the line and that when the final amount of usage is calculated and billed. For: Carr, Thomas, Hase and Wilson Oppose: Rose Motion passed Consider and take appropriate action regarding Data Logging fees. Director Rose would like to allow customers one data log at no cost per year. Motion made by Director Rose and seconded by Director Wilson to amend Rate Order No A, Section 3.02 G. Meter Data Logging Fee. Inserting the following sentence "each customer will 7 of9

8 Trophy Club Municipal Utility District No.1 September 20, 2016 Regular Meeting Minutes be allowed one data log at no cost per year". 20. Consider and take appropriate action regarding procedure for handling contested billing statements. (Rose/Wilson) Director Ro~e asked for this item to be tabled and be brought back on a future agenda. Tabled, no discussion 21. Consider and take appropriate action regarding the August 2016 combined financials and variance report. a. Combined financials b. Variance report Motion made by Director Hase and seconded by Director Carr to approve the August 2016 combined financials and variance report. REPORTS & UPDATES 22. Receive search committee update (Carr & Wilson) Director Wilson stated that final negotiations are in place with Aerotek. Director Carr stated that SGR requested funding up front and he believes that Aerotek is a better fit. Director Carr gave direction to Staff to keep the open positions posted on employment sites as discussed. 23. Staff Reports a. Water System Operation b. Meter Head Change Out Program c. Wastewater System Operation d. Website Analytics e. Finance Update Utility Billing Reports Permits Collected f. Project Status Updates Wastewater Treatment Plant Upgrade Project PD-30 Town Center Water Superintendent, Mike McMahon updated the board on the status of the Town Center project. Staff will update the Board as needed and work with legal to review any contracts. 24. Items for future agendas: PD 30- Carr Ethics Policy- Board 8 of9

9 Trophy Club Municipal Utility District No.1 September 20, 2016 Regular Meeting Minutes Webber Cadauga - review funding for wastewater treatment plant and change order approval process. -Carr Rate Appeal abatement. Wilson Wiseguys Program -Thomas Implementation of violation process- Rose Emergency Notification System -Carr 25.Announce meeting dates: Regular Meeting on October 18, 2016 at 6:00p.m. Regular meeting date for October was announced. ADJOURN Motion made by Director Wilson and seconded by Director Carr to adjourn the meeting at 10:37 p.m. Kevin R. Carr, President \.. //l/1./\ ~ -~. -. ~ r I. - vim Hase, Secretary/Treasurer 9 of9

10 4055 International Plaza, Suite 200 Fort Worth, Texas fax January 11, 2016 Technical Review and Oversight Team Public Drinking Water Section (MC-159) Texas Commission on Environmental Quality PO Box Austin, Texas Re: Exception Request for TCEQ Chapter (f)(3)(A}(ii)(ll) Town of Trophy Club Public Improvement District Trophy Club, TX PWS ID No To Whom It May Concern: The purpose of this letter is to formally request an exception request for the Town of Trophy Club Public Improvement District (PID) on October 16, 2015, for an exception to a Texas Commission on Environmental Quality (TCEQ) rule, Chapter (f)(3)(A)(ii)(ll}, and provide additional background. Project Background The Town oftrophy Club owns a Public Water System called the Town oftrophy Club Public Improvement District (PWS ID No ). The PID is supplied all of its potable water through a Wholesale Water Supply and Wastewater Treatment Services and Water and Wastewater Operation Services Contract (herein after referred to as the "Wholesale Contract") with the Trophy Club Municipal Utility District (MUD) No.1 (PWS ID No ). This Wholesale Contract amended the 2007 contract. On October 16, 2015, the Town of Trophy Club PID received a Notice of Violation from TCEQ stating that the District failed to record the volume of water distributed each day, not meeting TCEQ requirement 30 TAC (f)(3)(A)(ii)(ll}. The violation was based on a routine investigation conducted on September 9, TCEQ Exception Request Freese and Nichols, Inc. (FNI) and the Town of Trophy Club PID request an exception to TCEQ Chapter (f)(3)(A)(ii)(ll} due to the contractual requirement of the Trophy Club MUD No. 1 to exclusively operate and maintain the PI D's water system, along with reading all of the PI D's individual retail meters, billing the PID's customers and collecting directly from all customers. Due to this contractual arrangement, as detailed further below, Trophy Club MUD No. 1 maintains all records for both systems, including the total water purchased or produced by the MUD and all usage/consumption for both systems, thus meeting the requirements of (f)(3)(A)(ii)(ll) for both systems. Installing additional metering (at eight locations) to record the amount of water treated for the PID would have a detrimental effect on the Trophy Club MUD No.1's system, as it would isolate the MUD's system from the elevated tank located within the PID boundary that was constructed with funds from both systems. 10 of13

11 Trophy Club Municipal Utility District No. 1 September 20, Amended Regular Meeting Minutes Town of Trophy Club Public Improvement District- TCEQ Exception Request January 11, 2016 Page2 of4 According to TCEQ Chapter (f)(3)(A)(ii)(ll) Systems that serve 250 or more connections or serve 750 or more people shall maintain a record of the amount of water treated each day. The Notice of Violation {Investigation ) referenced that the water system was only recording the amount of water used by the customers and not the amount of water distributed each day. There are no master meters installed at the eight entry points from Trophy Club MUD No. 1, and therefore no additional metering for the PID to determine how much water is being purchased. The eight entry points are shown on Figure 1 in Appendix A. Due to the system configurations and the operational contract between the Trophy Club Public Improvement District and Trophy Club MUD No. 1, if master meters are installed at the eight entry points, it would isolate Trophy Club MUD No. l's system from the second elevated tank, as the elevated tank is located within the Town of Trophy Club Public Improvement District boundary, and it was constructed with funds from both public water systems (according tci Page 14 of 28, Section 5.6 in the Wholesale Contract). Although the two systems have separate public water system identifiers, they operate as one system. The Wholesale Contract, included as Appendix B The Town of Trophy Club PID pays for construction of infrastructure within its boundaries and owns the infrastructure in its boundaries. o Page 10 of 28, Section 5.1: "Town shall continue to design and construct, at its sole expense, the Town Water Distribution System and a Town Wastewater Collection System to provide retail water and wastewater service to Town Customers." Trophy Club MUD No. 1 operates and maintains the Town of Trophy Club PI D's water system, reads all ofthe individual retail PID customer meters, directly bills and collects from the Town's retail customers, and prepares/files all required operational and compliance reports. o Page 11 of 28, Section 5.2(a): MUD agrees to provide the following contract operation, maintenance, meter reading, billing and reporting functions (collectively, the "Operation Services") to Town in connection with the Town Water Distribution System and Town Wastewater Collection System: 1) Operation and maintaining the Town Water Distribution System and Town Wastewater Collection System in the same manner as the MUD operates and maintains the MUD Water System and the MUD Wastewater System; 2) Repairing and replacing the Town Water Distribution System and Town Wastewater Collection System (but excluding any expansions) in the same manner as the MUD repairs and replaces the MUD Water System and the MUD Wastewater System as necessary to provide continuous and adequate service in accordance with all regulatory requirements; 3) Reading individual meters of Town retail customers on behalf of Town; 4) Billing, collecting from, and responding to service callas from Town Customers; [defined further in Section 7.1(b) and 7.1(c) on Page 15 of 28] 6) Preparing and filing certain operational and compliance reports required by law, including those required by the Commission or EPA relating to operation of the Town Wastewater Collection System or Town Water Distribution System, as more particularly described in Section 5.2(e); o Any water line breaks or leaks found in the system are repaired by the MUD per the contract. 11 of 13

12 Trophy Club Municipal Utility District No.1 September 20, Amended Regular Meeting Minutes Town of Trophy Club Public Improvement District- TCEQ Exception Request January 11, 2016 Page3 of4 The elevated tank in the Town of Trophy Club PI D boundary was constructed with funding from both water systems, benefits both systems and is required to provide pressure to both systems. o Page 14 of 28, Section 5.6: "Elevated Storage Tank. The Parties acknowledge that the Town Water Distribution System includes an elevated storage tank to which both Parties contributed funding. As part of the Operations Services, MUD shall operate the elevated storage tank to provide and maintain pressure to customers of both the Town Water Distribution System and the MUD Water System in accordance with all applicable regulatory requirements applicable to both systems. o The total cost of the elevated tank was $1,445,820.19, and the developer contribution on behalf of the MUD was $200,000. The allocation of capacity between the two entities is: Town oftrophy Club PID- 430,835 gallons Trophy Clul:i MUD No. 1-69,165 gallons o Per the referenced section in the Wholesale Contract, the elevated tank is required to provide and maintain pressure for both public water systems. o This is further documented in Investigation # conducted on TCEQ on March 4, 2015, page 2 of 3, in the section titled "GENERAL FACILITY AND PROCESS INFORMATION", which states "The water system also share a 0.5 million gallon (MG) elevated storage tank with the District.". The contract between the Town of Trophy Club PID and Trophy Club MUD No. 1 is for an initial term of 99 years from the effective date of April 15, 2014, automatically renews for an additional ten years. o Page 21 of 28, Section 8.1 Please let us know if you have any questions or if you need any additional information in regards to this exception request. If you have any questions regarding this project, please contact Jessica Brown, P.E. at or jlb@freese.com. Jessica Brown, P.E. Freese and Nichols, Inc. cc: Stephen Seidel, Town oftrophy Club Pat Cooke, Town oftrophy Club 12 of13

13 Town of Trophy Club Public Improvement District- TCEQ Exception Request January 11, 2016 Page 4 of4 Attachments: TCEQ Exception Request Submittal Form (f)(3)(A)(ii)(ll) Appendix A- Town of Trophy Club PID Water System Connections to Trophy Club MUD No of 13 Appendix B - Wholesale Water Supply and Wastewater Treatment Services and Water and Wastewater Operation Services Contract between the Town of Trophy Club Public Improvement District and Trophy Club MUD No. 1 Trophy Club Municipal Utility District No. 1 September 20, Amended Regular Meeting Minutes