On the agenda: Johnson City Minutes — data center (Aug 20)

[_ niet Blanco-Pedernales Groundwater Conservation District
\ Poa oN THE ) 601 West Main Street, Johnson City, TX 78636 - (830) 868-9196
Sa [email protected]
Board Meeting Minutes

Thursday, August 20, 2026
Present: President Jimmy Klepac, Vice President Tom Murrah, Directors James Sultemeier,
Gregory Stevens and George Cofran
Staff: Erik Kubinski (GM), Danielle Mauldin and Erin Elizabeth (Admin. Assts.)
Greg Ellis, General Counsel; Natasha Martin, Legal Counsel

Citizens: Sign-In Sheets filed separately

1. Call to Order

The Board President called the meeting to order at 1:30 PM on Thursday, August 20, 2026.

2. Invocation

The invocation was led by Director Gregory Stevens, followed by the Pledge of Allegiance.

3. Public Comments

Three members of the public spoke during general public comment, and three additional
speakers addressed the Board in connection with Agenda Item 7 (Lagom Ranch Permit).
Victor Tellez, a former Precinct 2 Commissioner, acknowledged past skepticism about the
District but recognized its growing importance. He urged the Board to do a better job
communicating its rules and purpose to residents in plain language, noting that most public

resistance stems from a lack of understanding.

The following speakers addressed Agenda Item 7 ahead of its formal consideration:

Doug McIntyre asked the Board to reject the hearing examiner's July 24 Proposal for Decision
(PFD) and grant him standing as an affected person.

Donna Lee asked the Board to deny the permit as submitted.

Leslie Martin, co-founder of Lagom Retreat, spoke in support of her application and expressed

willingness to accept any conditions the Board chose to impose.

BPGCD 1 Meeting Minutes: Aug. 20, 2026

4. Consent Agenda

The consent agenda, including approval of meeting minutes from July 17, 2026, monthly

financial reports, and monthly operational reports, was approved by unanimous vote.

General Manager Erik Kubinski briefly noted that a report from Security State Bank and Trust
reflecting the District's transition to IntraFi’s Insured Cash Sweep (ICS) services. Interest

earnings remain tied to the TexPool and were unchanged by the transition.

5. Public Hearing for Rule Amendment to Rule 4.1.D.

A public hearing on the proposed rule was held. No public comments were received.
The Board discussed the Rule and proposed adding the following provision to the Rule

Amendment:

Single-family residence exclusion. A permitted well that is connected to one single-family
residence is not required to separately meter the connection to the residence or report the

usage for the residence.

It was agreed that this provision shall be included as part of the original rule amendment and
will be taken up during the October regular board meeting to provide adequate time for public
notices. The Board further discussed fine-tuning the proposed rule amendment so that the

amendment includes no reporting requirements when there are two homes attached to an ag

well.

6. Discuss and possible action on Rule Amendment 4.1.D.

Following the public hearing, the Board instructed the General Manager and General Counsel to
fine-tune the rule amendment so that the amendment includes no reporting requirements when

there are two homes attached to an ag well.

Director James Sultemeier moved to direct the General Manager and General Counsel to refine
the proposed Rule Amendment 4.1.D. language and re-post it for the required 20-day public
comment period, with action to be taken at the next eligible board meeting. Director Tom

Murrah seconded the motion. The motion carried unanimously.

BPGCD 2 Meeting Minutes: Aug. 20, 2026

7. Discuss and possible action Lagom Ranch Permit P-20250112.

General Manager Kubinski introduced Special Counsel Natasha Martin, who participated
remotely, to summarize the contested case hearing process and the hearing examiner's
Proposal for Decision (PFD).

Attorney Martin explained that the Board had previously delegated authority to a hearing
examiner to conduct a preliminary hearing to determine which protestants had legal standing to
proceed to a full evidentiary hearing on the merits. On July 20, 2026, two parties—Mr. Mcintyre
and Ms. Lee—appeared and presented evidence. The hearing examiner found that neither party
demonstrated a personal, justiciable interest distinct from the general public's interest, which is
the legal standard required for standing under Texas law. The examiner issued the PFD on July
24, 2026, recommending that the Board deny both requests for a contested case hearing. All

other protestants had either not appeared or had withdrawn.

Attorney Martin advised the Board that she found no factual errors or legal misapplication in
the PFD and therefore did not recommend modifying it. She further clarified that the PFD
addresses only the standing question; the Board retains full authority to issue the permit with

conditions different from those in the original application, or to deny it.

General Manager Kubinski summarized the key conditions contained in the proposed Board

Order (No. 2026-0820-1):

e The permitted well shall be used solely as a public water supply for a commercial lodging

operation consisting of 20 cabins.
e Authorized withdrawal is up to 977,553 gallons per year (3.0 acre-feet per year).

e The permittee shall maintain the existing monitoring well located 554 feet southwest of the

production well; that well may not be used for any other purpose.
e The District may install telemetry or other monitoring equipment on the monitoring well.

e The permittee must complete all TCEQ notifications and certifications before commencing

commercial withdrawals.

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@ The permit expires December 31, 2028, if a final TCEQ approval is not received by
September 26, 2028.

e The permittee shall comply with all District rules and Chapter 36 of the Texas Water Code,

including metering, reporting, conservation, and well construction standards.

Director Tom Murrah moved to grant the commercial water production permit to Lagom Ranch
under Board Order No. 20260820-1. Director Gregory Stevens seconded the motion. The

motion carried unanimously.

8. Discuss and possible action on proposed FY2027 budget, fee schedule and tax rate.

General Manager Kubinski presented the proposed FY2027 budget, which was built on a zero-
based budgeting approach. Key highlights included:

Tax Rate: The proposed ad valorem tax rate is $0.015899 per $100 of assessed valuation,
representing a reduction of approximately 1.7% from the current rate of $0.016118. Because
the proposed rate does not raise new tax revenue, the District is not required to hold or publish
notice of a public budget hearing.

Staffing: The budget includes one new staff hire (a position already filled on a contract basis)
and one internal promotion to strengthen the District's technical and database management
capacity.

Legal Services: Legal costs increased approximately 69%, distributed across General Counsel,
Special Counsel, and Legislative Representative. General Manager Kubinski noted he anticipates
increased legal activity in coming years.

Reserve Funds: The election reserve was increased from $12,000 to $30,000 to prepare for the
next election cycle. A legal expense reserve fund was significantly increased, and a vehicle
replacement fund was increased to plan for eventual replacement of the District's aging truck.
Director Compensation (Line 62): General Manager Kubinski proposed a $100-per-meeting
flat fee for Board directors, noting that comparable districts use similar provisions. Director
Cofran argued that the increasingly complex nature of the Board's work— involving legal,
technical, financial, and regulatory matters—will make it difficult to attract qualified future
candidates without some form of compensation, even if current members decline it. Directors
Stevens, Sultemeier, and others stated they personally did not wish to receive compensation

and preferred to serve on a volunteer basis. After discussion, a consensus emerged among four

BPGCD 4 Meeting Minutes: Aug. 20, 2026

of the five directors to remove the line item. General Manager Kubinski confirmed it would be
struck from the budget.

Fee Schedule: Only changes to out-of-county water testing fees were proposed to the current
fee schedule. The District will absorb credit card transaction fees rather than passing them to
the public.

Grant Funding (Line 33): A $180,000 TWDB grant remains in the budget as a pass-through
item. Its inclusion is contingent on resolving agreement issues that supplier raised with the

standard TWDB Grant Agreement.

Director Sultemeier moved to continue the budget process at the proposed no-new-revenue tax
rate of $0.015899 per $100 of valuation, and to instruct the General Manager that publication
of a public hearing or budget notice in the newspaper is not required. Director Stevens

seconded the motion. The motion carried unanimously.

General Manager Kubinski agreed to circulate a revised budget draft by email before the
September 10 meeting, at which the full budget, fee schedule, and tax rate will be formally

adopted.

9. Discuss and possible action on Drought Conditions.

General Manager Kubinski reported that monitoring well measurements captured in August
reflect continued Drought Stage 2 conditions across the District. The Blanco watershed is more
affected than the Pedernales watershed, with the Pedernales barely remaining in Stage 2.
Surface drought data from the Texas Water Development Board indicates that only the eastern
portion of Blanco County shows abnormally dry conditions.

Canyon Lake has reached full conservation storage (elevation 909 feet) following heavy rains in
July, a significant improvement from the prior year. General Manager Kubinski noted ongoing
public confusion about the Army Corps of Engineers’ management of flood storage versus
conservation storage.

The Board took no action and agreed to maintain the current Drought Stage 2 designation.

10. Discuss and possible action on vehicle disposal: 2012 Toyota 4Runner.

General Manager Kubinski reported that the District's new vehicle was received in late July at a

final equipped cost of approximately $64,000. The 2012 Toyota 4Runner, previously used as

BPGCD 5 Meeting Minutes: Aug. 20, 2026

the District's field vehicle, is now surplus property. The dealership's trade-in offer dropped from

the originally quoted $8,900 to $4,400 by the time of delivery.

General Manager Kubinski presented Resolution No. 20260820-3, drafted by General Counsel
Greg Ellis, which authorizes the District to post the vehicle for public bidding on the District's
website for two weeks to establish fair market value. If no bids are received, the vehicle may be
disposed of through a private sale or donated to another governmental entity or qualifying

nonprofit. Proceeds will be deposited into the general fund.

Director Tom Murrah moved to adopt Resolution No. 20260820-3 authorizing disposal of
surplus property (2012 Toyota 4Runner). Director George Cofran seconded the motion. The

motion carried unanimously.
11. General Managers Report

a. Erin Elizabeth Update

General Manager Kubinski introduced Erin Elizabeth as the District's newest staff member. She
previously served as office manager for a licensed well driller in Hays County for six years and

resides in Wimberley.

b. CAD Budget Hearing

Director Stevens reported that he attended the Central Appraisal District's public budget
hearing on behalf of the District. He was well-received and was encouraged to attend CAD's
quarterly meetings going forward. He intends to attend in March, June, September, and

December.

c. Grant Update

General Manager Kubinski reported that a letter addressing contractual disputes with the Texas
Water Development Board (TWDB) grant agreement is near final and will be sent to TWDB
shortly after General Counsel Ellis completes his final review. The three primary points of
contention involve deliverable obligations (Article 3), intellectual property rights (Article 5), and
third-party contract provisions (Article 7) in the TWDB template agreement. The basis for the
amendment request will be taken up under Article 6. The vendor, Collier HYDROS, is unwilling

to proceed unless these provisions are modified. If TWDB does not agree to the proposed

BPGCD 6 Meeting Minutes: Aug. 20, 2026

language changes, the General Manager indicated he will not execute the contract and the
$180,000 grant project will not proceed. The grant's anticipated start date is September 1,
2026, with an expiration of August 31, 2028.

d. Vehicle Update

General Manager Kubinski noted that documentation of the new vehicle purchase—including
negotiated removal of a dealership inventory tax and a SiriusXM subscription, plus confirmation

of warranty—was included in the Board packet.

e. City of Johnson City Proposed Budget
General Manager Kubinski noted that the City of Johnson City proposed a budget that lowers
its tax rate below the no-new-tax revenue threshold, one step further than what the District is

also doing with maintaining no-new-tax revenue.

f. Maison Vive

General Manager Kubinski shared correspondence from a Miami-based water company, Maison
Vive, which is seeking to source natural mineral water in the Hill Country for bottling. Their
anticipated volume is approximately 6,600 gallons per year. General Counsel has noted that this
type of activity would require an export permit from the District. General Manager Kubinski

indicated he would add an export permit line item in the proposed budget.

g. Mileage Rate Increase

The IRS mileage reimbursement rate increased in January 2026 from $0.68 to $0.72 per mile,
and again in July 2026 to $0.76 per mile. The Director’s travel allowance line in the proposed

budget was increased accordingly from $3,000 to $4,500.

h. Walnut Springs Subdivision Presentation

General Manager Kubinski reported attending a presentation by a retired oil-industry
hydrogeologist at Walnut Springs Preserve. The presentation covered extensively of the
geological history of the area. Additionally, it covered the subject of well casing and grouting
requirements when drilling through multiple aquifer zones. The presentation prompted him to
identify that the District's current rules may need to be updated to reflect changes to TDLR

standards for casing and grouting in multi-aquifer wells. He is consulting with the District's

BPGCD 7 Meeting Minutes: Aug. 20, 2026

hydrogeologist and benchmarking neighboring districts’ rules. A proposed rule update is

expected in the coming months.

i. HCA Flood Recovery Resources

General Manager Kubinski noted that Hill Country Alliance published flood recovery resource

materials, which were included in the Board packet for reference.

j. HCA Leadership Summit 2026

General Manager Kubinski noted that the Annual Hill Country Alliance Leadership Summit is
scheduled for September 24, 2026, in Dripping Springs, and that both he and Director Stevens
are registered to attend. This scheduling conflict was a factor in moving the September board

meeting to the 10th.

k. News and industry updates

General Manager Kubinski highlighted several items included in the packet: the Texas Parks and
Wildlife water-focused magazine issue; articles about data centers and their potential water
demands; updates on large-scale electrical infrastructure (138 kV transmission lines) being
installed in the southern part of Blanco County, which may indicate planned data center
development; information about widening of US 281 and the use of locally sourced materials;

and an article about a Cypress Creek aquifer study conducted within Blanco County.

12. Set future meeting dates and propose future agenda items

After discussion of scheduling conflicts—including the HCA Leadership Summit on September
24 and Director Sultemeier's unavailability on September 25—the Board agreed to move the
September regular meeting to September 10, 2026. The October meeting was set for October
15, 2026. General Manager Kubinski confirmed that the September 10 date allows sufficient
time to post the meeting agenda and that the budget can be formally adopted at that meeting

ahead of the September 30 statutory deadline.

13. Adjournment

Director Tom Murrah moved to adjourn. The motion was seconded by Director James

Sultemeier and the meeting was adjourned.

BPGCD 8 Meeting Minutes: Aug. 20, 2026

Approved and adopted by the Board of Directors on this 10th day of September 2026.

Date Signed: September 10, 2026

Gregory Stevens, Lo" Secretary-Treasurer

y Klepac, Board President

Date Signed: September 10, 2026

BPGCD 9 Meeting Minutes: Aug. 20, 2026