MINUTES

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

A regular meeting of the Board of Directors ("Board") of the Houston Ship Channel SecurityDistrict ("District") was convened on March 13, 2018, open to the public, at the Port of HoustonAuthority Port Coordination Center, Houston, Texas in accordance with the duly posted Notice ofPublic Meeting. The roll was called of the officers and members of the Bo^rd as follows:

Niels AalundTodd Adamec, SecretaryEric Bass, Assistant Secretary

Chris BennettBrian Blanchard, Treasurer

Jarrod Boehme

Jimmy BurkeCraig NelsonRaymond RussellGary Scheibe, ChairMarcus Woodring, Vice Chair

and all said persons were present, except Directors Aalund, Adamec, Bass and Scheibe, thus

establishing a quorum. Also present were Diana Miller of Schwartz, Page & Hardlng, LLP("SPH"), legal counsel for the District, and Bill Diehl, Mike Cunningham and Al Cusick of theGreater Houston Port Bureau ("GHPB"), administrators for the District.

L Call to OrderVice Chair Woodring called the meeting to order at 2:01 PM, and, upon requests for a volunteer,appointed Director Burke to serve as Secretary Pro-Tem for the meeting.

2. Appearances

Vice Chair Woodring called for appearances. Galena Park's new Chief of Police, Rick Gonzales,introduced himself to the Board.

3. Approval of Minutes of January 9,2018 Board of Directors MeetingVice Chair Woodring noted that the draft minutes of the February 13, 2018, Board of Directorsmeeting had been distributed to the Board members in advance of today's meeting and asked ifthere were any comments or suggested revisions to the said minutes. Director Boehme moved toapprove the minutes, as presented. Director Blanchard seconded the motion, which passedunanimously without further discussion.

4. Chair Comments on Industry Regulations and Related MattersVice Chair Woodrmg reported the Intel Analyst positions were posted on the Texas DPS website.He noted he would be attending the National Maritime Security Advisory Committee (NMSAC)meeting the week of March 19, 2018.

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5. Acceptance of Qualification Statements, Bond, Oaths of Office and Election Not to DiscloseCertain Information and Swearing in of Director Jimmy BurkeMs. Miller advised the Board that Director Burke has been re-appointed as Municipal Director andthat all necessary documents have been signed. Vice Chair Woodrmg then administered the Oathof Office. Director Blanchard moved that Director Burke's oath of office, bond, and otherqualification documentation be accepted and he be seated for his 2-year term. Director Boehmeseconded the motion, which passed unanimously without further discussion.

6. Legal ReportMs. Miller advised the Board that Purdue, Brandon, Fielder, Collins & Mott, LLP, the District'sdelinquent assessment collection attorney, has advised that the Preferential Demand for the return

of an assessment payment made by SunEdison prior to bankruptcy was being withdrawn, without

prejudice.

7. 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 two checks required Board approval: Greater Houston PortBureau" $16,840.34; and Harris County - $47,313.84. Director Blanchard moved approval of thebookkeeping report and payment of the checks. Director Burke seconded the motion, which passed

unanimously.

B. Project Management Report

CAPT Cunningham advised the Board he continues to meet with the District's facility owners andpartners.

C. Management and Outreach Report

CAPT Diehl advised the Board he had had been contacted by Port Houston requesting contactinformation for waterside facilities within the District for use by the Army Corps of Engineers(ACOE) in their Houston Ship Channel Expansion Channel Improvement Project. He advised PortHouston that the GHPB are seeking Board approval to release such information to the U.S. ACOE.Du-ector Bennett moved the contact information be made available to Port Houston/U.S. ACOE

for the purpose of this project. The motion was seconded by Director Blanchard. After additionaldiscussion, the motion passed unanimously pending an opinion from the District's attorney on the

legality of releasing the information.

8. Status Report - City ofBaytownNo one was present from the City ofBaytown.

9. Status Report - City of HoustonNo one was present from the City of Houston.

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10. Status Report - Harris County

Mr. Nick Palumbo reported that Harris County CTS has completed successful tests with videodown links from the SAFE boat and helicopters. He also advised that the County has added acamera to view the Precinct 2 pumping station. He noted that CTS is awaiting CommissionersCourt approval of the purchase of the replacement air conditioning units for the camera enclosures,and is also awaiting a bid for the correction of the camera tower soil erosion. No one was in

attendance from Harris County Engineering.

Sergeant Jeffery Easthagen reported Deputy D'Abbraccio had been re-assigned within theSheriffs Department. Sgt. Easthagen will be providing future reports to the Board.

11. Status Report - Texas Game Wardens - TPWK

Captain Eric Minter advised that the quarterly report was included in the Board Book and he hadnothing additional to report.

12. Status Report - U.S. Coast Guard

CAPT Rick Howes, Deputy Commander, Sector Houston-Galveston, reported on water security

zone violations within the Sector and the assistance of the SMAG relative to same. The cameras

are also being used as an aid in their certain dangerous cargo (CDC) escort requirements. He also

reported on meetings with Senator Cruz, Vice Admiral Schultz and Vice Admiral Ray, Dave Fluty,DHS Deputy Assistant Secretary - Countering Weapons of Mass Destruction, DHS UnderSecretary Glawe, and members of Senator McCalPs senior staff.

Mr. Gary Messmer advised the Board the Coast Guard would be hosting an Industry Day on April24, 2018. The nextAMSC meeting will be April 26, 2018. On April 17, 2018 theAMSC SteeringCommittee will conduct a tabletop drill. He advised the was nothing to report on the Port SecurityGrant Program.

13. 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.l83(f), Texas Government Code; and to consult with the District's attorney pursuant tomatters authorized by §551.071, Texas Government CodeNo Executive Session was necessary.

14. Reconvene in Open Session and Take Any Action Regarding Items Discussed in ExecutiveSession

No Executive Session was held.

15. Consider Items for Future Meeting AgendasCTS report at the April meeting.

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16. AdjournThe meeting was adjourned at 2:45 PM upon a motion by Director Boehme, seconded by DirectorBlanchard, which passed unanimously.

Next Meeting -April 10,2018The next regular meeting of the Board is scheduled for April 10, 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 March 13, 2018, regular meeting of the Boardof Directors of the Houston Ship Channel Security District.

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LIST OF ATTACHMENTS

A. Bookkeeping ReportB. Assessment Collection Report

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GREATER HOUSTON PORT BUREAU, INC.

HSCSD Administrative ReportMarch 13,2018

Financial and Investment Reports

• Bank Statements as of February 28, 2018• Operating Account Reconciliation and Cash Flow Statements show:

" The bank balance was $25,934.98" Deposits were $0,00" Transfers from Money Market were $3 00,000.00" Cleared checks were $391,364.87" Cliecks outstandmg were $0.00

• Money Market Account ReGonciliation shows:- The invested balance was $10,482,330,08" Deposits were $245,779.00" Transfers to Checking were $300,000.00• Deposits in Transit were $0.00• Interest earned was $400.90

• Disbursements for February 2017• Disbursements totaled $397,580.57

• Checks Requiring Board Approval• Greater Houston Port Bureau - $16,840.34 for February Administrative Services• Hams County - $47,3 13.84 for November, December & January O&M

Education Report• Certified MTSA FSO Training March 13-14, 2018. Max attendance 20• CFATS FSO Training April 3-4, 2018. Max attendance 25• TWIC Reader Final Rule Compliance Workshop March 19, 2018

Delinqxieni Assessments Update as of February 28,20.17

• 2017 Assessment- 192 companies were assessed $1,67,200. Receipts total

$ 1,570,202.00 from I 77 companies. Remainmg current receivables total $99,998.00 from14 companies. Accrued penalty & Interest was $20,272.00. $13,377.00 was receivedfrom 22 companies. Penalty & Interest receivables total $6,895.00

» 2013-2016 Assessment• Three companies have assessment receivables totaling $43,487.27 with accrued

and unpaid penalty & interest totaling $18,729.35.• One company is in bankruptcy proceedingsa One company is paying monthly through January 2019• One company has been non-responsive to collection efforts

" $62,216,62 with PBPC&M for coUection.

Ill E. Loop N. • Houston, TX 77029 • 713 678-4300 4 Fax 713 678-4839 • www.txoulf.ora

^^^/ Houston Ship Channel Security District

Delinquent Assessment Analysis

as of

February 28, 2018

2017 Assessment Analysis2017 Assessment Roll 191Receipts to DateReceivables

Penalty *& Interest

Receipts to Date

P&I Receivables

Total Receivable

Total 2016 Receivables

Receivables

Companies177 Companies14 Companies

Accrued P&I on February 1, 201822

2016 Assessment Analysis

2015 Assessment Analysist- 2 CQmvt

1,570,202.00

20,272.0013,377.00

,400.00

$1,670,200.00

$99,998.00

$6,895.00$106,893.00

$ 0.00

Accrued Penalty & Interest 1,836.00Total 201S Receivables $15,236.00

One company filed for Chapter 11 bankruptcy on April 27, 2016 owing $1,463.28 in penalty & interest.No farther penalty and interest can be accrued or collection activity taken. The accounts have beenreferred to Perdue, Brandon, Fielder, Collins & Mott L.L.P. to iile proof of claim on behalf of theDistrict.

2014 Assessment AnalysisReceivables Delinqnent - 2 Companies $15,750.00

Accrued Penalty & Interest 7,717.50Total 2014 Receivables $23,467,50

Both companies were turned over to the collection attorney on July 1, 2015 . Interest continues to accrueon these accounts. Legal action- is being combined with the 2013 receivables.

2013 Assessment AnalysisReceivables Delinquent - 2 Companies $14,337.27

Accrued Penalty & Interest 9,175.85Total 2013 Receivables $23,513.12

Both companies were turned over to the collection attorney on July 1,2014. Interest continues to accmeon these accounts. One company is paying in installments.

Total Accounts with collection attorney - 3 companies owing $62,216.62