MINUTES OF BOARD OF DIRECTORS MEETING SEPTEMBER 16, 2014 THE STATE OF TEXAS COUNTY OF HARRIS HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO.

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1 MINUTES OF BOARD OF DIRECTORS MEETING SEPTEMBER 16, 2014 THE STATE OF TEXAS COUNTY OF HARRIS HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 109 The Board of Directors (the "Board") of Harris County Municipal Utility District No. 109 (the "District") met in regular session, open to the public, at the Atascocita Volunteer Fire Station Training Complex, Timber Forest, Humble, Texas, 77346, at 6:00 p.m. on September 16, 2014, whereupon the roll was called of the members of the Board, to wit: Owen Parker, President Glenn R. Bogs, Vice President Chris Green, Secretary Robin Sulpizio, Assistant Secretary Cheryl Moore, Treasurer/Investment Officer All members of the Board were present. Also attending all or parts of the meeting were Mr. Paul Villarreal and Mr. Clinton Gehrke of Water Waste Water Management Services, Inc. ("WMS"), operator for the District; Mr. Matt Froehlich of Brown & Gay Engineers ("Brown & Gay"), engineer for the District; Mr. Tim Spencer of Ad Valorem Appraisals, tax assessor and collector for the District; Mr. Greg Sissel of BKD, LLP, auditor for the District; and Ms. Emerald Lagow, paralegal, of Fulbright & Jaworski LLP, attorneys for the District. The President called the meeting to order in accordance with notice posted pursuant to law, copies of the Certificates of Posting are attached hereto as Exhibit "A," and the following business was transacted: 1. Minutes. The Board considered the proposed minutes of the meeting of August 19, 2014, copies of which were previously distributed to the Board. Upon motion by Director Moore, seconded by Director Sulpizio, after full discussion and the question being put to the Board, the Board voted unanimously to approve the minutes of the meeting of August 19, 2014, as presented. 2. Receive comments from the public. There were no members of the public present at this time. 3. Review Tax Collector's Report and authorize payment of certain bills. Mr. Spencer presented to and reviewed with the Board the Tax Assessor and Collector's Report for the month of August 2014 and the 2014 Certification of Appraisal Roll from HCAD, copies of which are attached hereto as Exhibit "B." Mr. Spencer noted that 98.57% of the District's 2013 taxes had been collected as of August 31, Mr. Spencer reviewed with the Board the detail explaining a new coding system for delinquent accounts, a copy of which is attached to his Report. the question being put to the Board, the Board voted unanimously to approve the Tax Assessor and Collector's Report, and to authorize payment of check numbers 1555 and 1556 from the Tax Account to the persons, in the amounts, and for the purposes listed therein. 4. Adopt Order Designating Officer to Calculate and Publish Tax Rate. Mr. Spencer presented to and reviewed with the Board a 2014 Effective Tax Rate Worksheet, a

2 copy of which is attached to the Tax Assessor and Collector's Report. Discussion ensued regarding the potential for a rollback election. The Board then reviewed the Order Designating Officer to Calculate and Publish Tax Rates and Taking Other Actions In Connection With the Levy of a Tax for 2014, a copy of which is attached hereto as Exhibit "C." Upon motion by Director Green, seconded by Director Sulpizio, after full discussion and the question being put to the Board, the Board voted unanimously to adopt the Order Setting Tax Rate and Levying Tax for 2014, thereby levying a tax rate of $0.52 per $100 assessed valuation ($0.42 for debt service and $0.10 for operations and maintenance). Mr. Spencer noted he will inform the Board if any protests are filed. 5. Approve audit for fiscal year ended May 31, The President recognized Mr. Sissel, who presented to and reviewed with the Board the audit management and material weakness letters, and the draft of the audit for fiscal year ended May 31, 2014, copies of which are attached hereto as Exhibit "D." Upon motion by Director Moore, seconded by Director Sulpizio, after full discussion and the question being put to the Board, the Board voted unanimously to approve the audit for the fiscal year ended May 31, Review Bookl^eeper's Report. The President noted that Mr. Rutt was not able to attend the meeting today, and reviewed with the Board the Bookkeeper's Report for the month of August 2014 and a summary of the Strategic Partnership Agreement revenues, a copy of which is attached hereto as Exhibit "E." The Board reviewed a Resolution Reviewing Investment Policy and Making Any Desirable Changes Thereto (the "Resolution"), a copy of which is attached hereto as Exhibit "F." Ms. Lagow noted that no changes to the Investment Policy are recommended at this time. the question being put to the Board, the Board voted unanimously to approve the Bookkeeper's Report and authorize the payment of checks to the persons and for the purposes listed therein, and to adopt the Resolution, as presented. 7. Review Investment Policy and accept related party disclosures from bookkeeper and investment officer. This item was addressed under the Bookkeeper's Report. 8. Engineer's Report. Mr. Froehlich presented to and reviewed with the Board the Engineer's Report, a copy of which is attached hereto as Exhibit "G." Mr. Froehlich reported that Brown & Gay reviewed final plans and issued a letter of no objection regarding expansion of the Atascocita Car Care facility at 5725 FM 1960, a copy of which is attached to the Engineer's Report. Mr. Froehlich reported that Brown & Gay reviewed final plans and issued a letter of no objection for the proposed addition to Lakeway Baptist Church at 5801 FM 1960, a copy of which is attached to the Engineer's Report. the question being put to the Board, the Board voted unanimously to approve the Engineer's Report

3 9. Award contract for clearing, grubbing and construction of interim drainage facilities to serve Rivergrove Sections 5 and 6. Mr. Froehlich reported that Brown & Gay received one bid on the contract for Rivergrove Sections 5 and 6 Clearing and Interim Drainage project on Monday, September 15, Brown & Gay is recommending award of the contract to Double Oak Construction in the amount of $232, Mr. Froehlich reported that the utility projects in Rivergrove Sections 1 through 3 are complete, and that paving construction is currently underway. Mr. Froehlich reported that Brown & Gay will be working to obtain agency approvals on the plans for Rivergrove Section 4, and noted that the plat is scheduled to be recorded by the end of October. the question being put to the Board, the Board voted unanimously to approve and authorize award of the contract for clearing, grubbing and construction of interim drainage facilities to serve Rivergrove, Sections 5 and 6 to Double Oak Construction in the amount of $232, Authorize capacity commitments. There was no report on this item. 11. Discuss and take any action in connection with annexation matters (18- Acre Tract). There was no report on this item. 12. Developer's Report. There was no report on this item. 13. Review and authorize execution of Reimbursement Agreement with KL-5, LLC for development of Kings Lake Estates, Section 8. Discussion ensued regarding the percentage completion required prior to reimbursement. The President noted that this item Is pending revision of the percentage completion required prior to reimbursement to 30% of the projected value, and requested that the attorney prepare a revised draft for consideration at the next Board meeting. 14. Accept easements from KL-5 LLC for a storm sewer and water line to serve Kings Lake Estates, Section 8. Mr. Froehlich presented to the Board two easements for review and execution; copies of the easement exhibits are attached to the Engineer's Report. He noted the easements are for an offsite water line and a storm sewer to serve Kings Lake Estates, Section 8 for the Board's review and execution. Mr. Froehlich reported that Brown &Gay obtained City approval of the drainage plan and plat for Section 8 on August 21, He noted that plans for the Lift Station are being finalized for submittal for approvals. the question being put to the Board, the Board voted unanimously to accept and authorize filing of the easements from KL-5 LLC for a water line and a storm sewer to serve Kings Lake Estates, Section 8 in the Harris County Real Property Records. 15. Discuss status of preparation of GIS System by GIS Solutions (Wilson McCoy). There was no update at this time. 16. Review Operations Report and authorize repairs. Mr. Villarreal presented to and reviewed with the Board the Operations Report for the month of August 2014, the lift station flow report, and a list of delinquent accounts, copies of which are attached hereto as Exhibit "H."

4 Mr. Villarreal reported that 92,88% of the water pumped was billed for the period ending September 1, Mr. Villarreal reported that there were no new tap requests this month. Mr. Villarreal previously reviewed with the Board a quote from Today's Integration for installation and maintenance of new video surveillance and alarm systems at the District's facilities. He presented to and reviewed with the Board a proposal from McCann Investigations, a copy of which is attached to the Operations report. Upon motion by Director Green, seconded by Director Sulpizio, after full discussion and the question being put to the Board, the Board voted unanimously to accept the proposal from Today's Integration as presented. Mr. Villarreal estimated that the system will be installed by the end of the month. Mr. Villarreal reported that three main line breaks occurred in the District at Oak Green Ct., Pioneer Ct., and Oak Branch Ct. Mr. Villarreal reviewed with the Board a letter from a resident at 5303 Straight Arrow Drive requesting extension on their water bill until October 3, 2014, a copy of which is attached to the Operations Report. It was the consensus of the Board to grant the extension. Mr. Villarreal reviewed with the Board a letter from a resident at Climbing Oaks Drive requesting extension on their water bill until Friday, September 19, 2014, a copy of which is attached to the Operations Report. It was the consensus of the Board to grant the ejrtension. Mr. Villarreal previously reported several incidents involving the theft of water service by a resident at 4906 Woodland Meadows Lane. Mr. Villarreal reported that the resident's outstanding water bill was paid this month, and a new account was opened to restore service to the residence. Mr. Villarreal reported that WMS excavated the driveway and sidewalk at 5518 Green Timbers Drive. He noted that a root had penetrated the water line beneath the sidewalk. Upon motion by Director Moore, seconded by Director Sulpizio, after full discussion and the question being put to the Board, the Board voted unanimously to approve the Operations Report and to authorize termination of service to those accounts on the delinquent list. 17. Discuss and take necessary action in connection with electricity contract. This item was deferred. 18. Executive Session pursuant to Section , Texas Government Code. The Board did not convene in executive session at this time. 19. Other matters. There were no other matters at this time. THERE BEING NO FURTHER BUSINESS TO COME BEFORE THE BOARD, the meeting was adjourned

5 The above and foregoing minutes were passed and approved by the Board of Directors on October 21, President, Board of Directors ATTEST: Secretary, of Directors ' <i> y A yx ^