MINUTES

Board of Directors of the Houston Ship Channel Security DistrictFebruary 13, 2018

A regular meeting of the Board of Directors ("Board") of the Houston Ship Channel SecurityDistrict ("District") was convened on February 13, 2018, open to the public, at the Port ofHouston Authority Port Coordination Center, Houston, Texas in accordance with the duly posted

Notice of Public Meeting. The roll was called of the officers and members of the Board asfollows:

Niels AalundTodd Adamec, SecretaryEric Bass, Assistant Secretary

Chris BennettBrian Blanchard, TreasurerJarrod Boehme

Jimmy BurkeCraig NelsonRaymond RussellGary Scheibe, ChairMarcus Woodring, Vice Chair

and all said persons were present, except Directors Adamec, Burke and Nelson, thus establishing

a quorum. Also present were Daniel Ringold of Schwartz, Page & Harding, LLP ("SPH"), legal

counsel for the District, and Bill Diehl, Mike Cunningham and Al Cusick of the Greater HoustonPort Bureau ("GHPB"), administrators for the District.

1. Call to OrderChair Scheibe called the meeting to order at 2:06 PM.

2. Appearances

Chair Scheibe called for appearances. There were none.

3. Approval of Minutes of January 9, 2018 Board of Directors MeetingChair Scheibe noted that the draft minutes of the January 9, 2018, Board of Directors meetinghad been distributed to the Board members in advance of today's meeting and asked if therewere any comments or suggested revisions to the said minutes. Director Woodring moved to

approve the minutes, as presented. Director Blanchard seconded the motion, which passedunanimously without further discussion.

4. Chair Comments on Industry Regulations and Related Matters

Chair Scheibe reported on his meeting with USCG Vice Admiral Charles Ray, DeputyCommandant for Operations. Indications are the August 23, 2018 date for implementation of theTWIC Reader Rule would be enforced for Risk Group A. Director Bennett advised that CoastGuard Sectors are being advised to work with industry on requests for extensions. Interactions

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with Federal Aviation Administration ("FAA") personnel and State senators continue regardingthe formulation of regulations for drones over restricted air space.

5. Acceptance of Qualification Statements, Bond, Oaths of Office and Election Not toDisclose Certain Information and Swearing in of Directors Eric Bass (Zone 4); JimmyBurke (HCMCA); and NielsAalimd (At-Large)Directors Bass and Aalund took their official Oaths of Office and presented their qualificationstatements, bonds, and written elections not to disclose certain information. Director Blanchard

moved that said bonds, and other qualification documentation be accepted and each of saidDirectors be seated for their 2-year terms. Director Boehme seconded the motion which passed

unanimously without further discussion.

6 Approve Renewal of District Insurance Coverage

Mr. Cusick presented the proposal from McDonald & Wessendorff Insurance for the 2018Directors and Officers Liability Insurance. He noted the coverage and the premium were the

same as for 2017. Director Blanchard moved the acceptance of the proposal and payment of thepremium as presented, subject to receipt of a Texas Ethics Commission Form 1295. Director

Boehme seconded the motion, which passed unanimously.

7. Consider Adjustment of Assessment ofTM Chemicals in Accordance with Texas WaterCode, Section 68.311(D)(3) and Authorize Preparation of Revised Assessment RollMr. Cusick explained that TM Chemicals had been included in the 2017 Assessment Roll inerror. Prior to the approval of said assessment plan, TM Chemicals had provided notification andsufficient evidence to the District that the facility was no longer operating. Director Boehmemade a motion to remove TM Chemical from the 2017Assessment Roll and that the GHPB beauthorized to prepare a corrected 2017 Assessment Roll on behalf of the District. DirectorBennett seconded the motion, which passed unanimously.

8. Supplemental Engagement of McCalI Gibson Swedlund Barfoot PLLC to Comply withSenate Bill 625 for Special Purpose Districts and to Authorize and Acknowledge Receipt ofthe corresponding Form 1295.

Mr. Ringold advised the Board of the requirements of SB 625, passed in the 85th TexasLegislature, Regular Session, regarding reporting of certain additional information to the State,

and the appropriateness of the District's auditors preparing and filing this information on behalfof the District. This effort is outside the scope to the existing engagement letter with McCallGibson Swedlund Barfoot PLLC and requires approval of a supplemental agreement for thework, which will be billed on an hourly basis and is estimated to cost approximately $400-$600.Director Aalund move approval of the supplemental agreement subject to receipt of a Texas

Ethics Commission Form 1295, which was seconded by Director Woodring and passedunanimously without further discussion.

9. Approval of Amendment to Interlocal Agreement with Harris County for funding ofFMO HazMat Training and Equipment.Mr. Ringold advised the Board that the Fire Marshall's Office had asked for an extension of theprevious agreement in order to complete the purchase of the previously approved equipment. He

explained that only the performance period for the agreement was being extended by this

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amendment. Director Blanchard moved approval of the amendment as presented. Director

Bennett seconded the motion, which passed unanimously.

10. Approval of Interlocal Agreement with Texas Parks and Wildlife DepartmentMr. Ringold advised the Board that this was a renewal of the previous year's agreement with the

exception that the total funding was reduced from $200,000 to $100,000 at the request ofTPWDto more closely reflect their performance availability. All other conditions of the agreementremain the same. Director Blanchard moved approval of the agreement as presented. Director

Boehme seconded the motion, which passed unanimously.

11. Legal ReportMr. Ringold advised the Board that the report from Purdue Brandon, Felder Collins and Mott,collection attorney was previously distributed. There was nothing additional to report.

12. Status Report - Greater Houston Port Bureau

A. Financial and Investment Reports

Mr. Cusick advised the Board there was nothing to add to the reports previously distributed. Acopy of the bookkeeping report is attached hereto as Exhibit A, and a copy of the AssessmentAnalysis Report is included as Exhibit B.

Mr. Cusick advised the Board that four checks required Board approval. City of Houston$74,365.64; Greater Houston Port Bureau - $18,379.16; Harris County - $76,961.57; and TexasDepartment of Public Safety - $215,180.00. Chair Scheibe asked if the payment to TDPS was anannual payment. Director Woodring advised that it was, and equal payments would be made thenext two years, as required by the agreement. Director Blanchard moved approval and paymentof the checks. Director Boehme seconded the motion which passed unanimously. Chair Scheibe

said the agreement with TDPS was another step in the direction of increased collaboration, andthe membership and the public should be informed of this newsworthy event.

B. Project Management Report

CAPT Cunningham advised the Board he continues to meet with the District's facility ownersand partners and continues to work on the 2018 annual magazine.

C. Management and Outreach Report

CAPT Diehl advised the Board he had nothing additional to report.

13. Status Report" City of BaytownSgt. Russell White reported that Baytown is amending its training schedule for its emergencypersonnel to mirror the HPD training schedule in an effort to increase joint drills and coordinatedefforts.

14. Status Report - City of Houston

Rick Retz advised there was nothing additional to report.

15. Status Report - Harris County

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Mr. Patrick Gonzalez asked if the Board would be interested in an update report comparing thePort Information Network camera system to what was indicated in the report prepared several

years ago by Schrader Engineering to existing conditions today. Chair Scheibe suggested thepresentation could be scheduled for the April meeting,

No one was in attendance from Harris County Engineering or the Harris County Sheriffs Office.

16. Status Report - Texas Game Wardens - TPWD

Captain Eric Minter advised that he would be representing TPWD at future District meetings. Headvised he had nothing additional to report on behalf of TPWD.

17. Status Report - U.S. Coast GuardNo one was present from the Coast Guard.

18. Recess to Executive Session to discuss matters relating to security devices and personnel

or security audits pursuant to §551.076, Texas Government Code; emergency response

providers, risk or vulnerability assessments, encryption codes and security keys forcommunications systems, information prepared for the United States, information relating

to critical infrastructure, and information relating to security systems, all pursuant to

§418.183(f), Texas Government Code; and to consult with the District's attorney pursuantto matters authorized by §551.071, Texas Government Code

No Executive Session was necessary.

19. Reconvene in Open Session and Take Any Action Regarding Items Discussed inExecutive Session

No Executive Session was held.

20. Consider Items for Future Meeting Agendas

Other than the presentation from CTS at the April meeting, there were no items noted.

21. AdjournThe meeting was adjourned at 2:55 PM upon a motion by Director Blanchard, seconded byDirector Boehme, which passed unanimously.

Next Meeting -March 13,2018The next regular meeting of the Board is scheduled for March 13, 2018 at 2:00 PM at the PortCoordination Center at the Port of Houston, 111 East Loop North, Houston, Texas

The above is a correct copy of the Minutes of the February 13, 2018, regular meeting of theBoard of Directors of the Houston Ship Channel Security District.

: T^^Eric Bass, Assistant Secretary

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LIST OF ATTACHMENTS

A. Bookkeeping ReportB. Assessment Collection Report

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^a-/- "^'

GREATER HOUSTON PORT BUREAU, INC.

HSCSD Administrative ReportFebruary 13, 2018

Financial and Investment Reports

• Bank Statements as of January 31,2018• Operating Account Reconciliation and Cash Flow Statements show:

" The bank balance was $117,299.85• Deposits were $134,569.53• Transfers from Money Market were $ 150,000.00• Cleared checks were $195,347.83• Checks outstanding were $0.00

• Money Market Account Reconciliation shows:

• The invested balance was $10,482,150.18• Deposits were $641,600.00• Transfers to Checking were $150,000.00• Deposits in Transit were $0.00" Interest earned was $458.98

• Disbursements for December 2017• Disbursements totaled $ 1 95,404.85

• Checks Requiring Board Approval• City of Houston - $74,365.64 for January O&M and 2015, 2016, & 2017 PSGP• Greater Houston Port Bureau - $18,379.16 for January Administrative Services

• Harris County ~ $76,961.57 for July, October & November O&M and Fire Marshal• Texas DPS - $215,180.00 for Analyst Position Donation

Education Report• CFATS Workshop will be February 20, 2018.

Delinquent Assessments Update as of December 29,2017• 2017 Assessment- 192 companies were assessed $1,671,600. Receipts total $1,380,600

from 158 companies. Remaining current receivables total $291,000 from 34 companies• 2013-2016 Assessment

• Three companies have assessment receivables totaling $44,808.41 with accruedand unpaid penalty & interest totaling $19,238.30

" One company is in bankruptcy proceedings9 One Company is paying monthly through January 2019" One company has been non-responsive to collection efforts

" All delinquent accounts were referred to PBFC&M for collection.

Ill E. Loop N. • Houston, TX 77029 • 7.13 678-4300 4 Fax 713 678-4839 • www.txaulf.orCT

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Houston Ship Channel Security District

Delinquent Assessment Analysis

as of

January 31, 2018

2017 Assessment Analysis2017 Assessment Roll 192 Companies $1,671,600.00Receipts to Date Assessments - 158 Companies $1,380,600.00

Penalty & Interest 0.00Total Related Receipts $1,380,600.00Receivables Cun-ent-34 Companies $291,000.00

Delinquent Assessment - 0 Companies ' 0.00

Accrued Penalty & Interest 0.00Total 2017 Receivables $291,000.00

Total 2016 Receivables2016 Assessment Analysis

$ 0.00

2015 Assessment AnalysisReceivables Delinquent - 2 Companies $13,400.00

Accrued Penalty & Interest 1,813.50Total 2015 Receivables $15,213.50

One company filed for Chapter 11 banlauptcy on April 27, 2016 owing $1,463.28 in penalty & interest.No further penalty and interest can be accrued or collection activity taken. The accounts have been

referred to Perdue, Brandon, Fielder, Collins &MottL.L.P. to file proof of claim on behaLf of theDistrict.

2014 Assessment AnalysisReceivables Delinquent -2 Companies $15,750.00

Accrued Penalty & Interest 7,402.50Total 2014 Receivables $23,152.50

Both companies were turned over to the collection attorney on July I, 2015. Interest continues to accrue

on these accounts. Legal action is being combined with the 2013 receivables.

2013 Assessment AnalysisReceivables Delinquent - 2 Companies $15,658.41

Accrued Penalty & Interest 9864.80Total 2013 Receivables $25,523.21

Both companies were turned over to the collection attorney on July 1, 2014. Interest continues to accrue

on these accounts. One company is paying in installments.

Total Accounts with collection attorney - 3 companies owing $64,046.71