                                    The Attorney        General of Texas

   JIM MATTOX
                                                   Auglst 31, 1984
   Attorney General



   Supreme Court Building
   P. 0. BOX 12548                                                       Opinion No. .JM-199
                                  Honorable Charles Evr.ns
   Austin, TX. 78711.2548
   5121475-2501
                                  Chairman
   Telex 9101874.1367             Committee on House !Klministration     Ik: Statutory regulation of a
   Telecopier   5121475-0266      Texas House of Reprcxientatives        water district's construction
                                  P. 0. Box 2910                         contracts
   714 Jackson, Suite 700
                                  Austin, Texas   787fi!l
   Dallas, TX. 75202.4506
   2141742.8944                   Dear Representative Ibans:

                                      You have asked i:hefollowing questions:
   4824 Alberta Ave., Suite 160
   El Paso, TX. 79905.2793
   915/533-3484
                                              1. Is there any reason under case law or the
                                           statutes 0'7constitution why section 51.146 of the
                                           Texas Wal:c!rCode does not require the Tarrant
plOl    Texas, Suite 700                   County W,%:er Control and Improvement District
    .o”ston, TX. 77002-3111                Number One to retain ten percent of the estimated
   7131223.5886
                                           amount of any construction contract covered by
                                           section 51.146 until at least fifty percent of the
   SO6 Broadway, Suite 312                 work has Daen completed satisfactorily?
   Lubbock. TX. 79401.3479
   aow747.5238
                                               2. Does article 6252-5b in any manner relieve
                                            the dist.c:lctof its obligations under section
   4309 N. Tenth, Suite S                   51.146 of the Texas Water Code?
   +&Allen, TX. 78501-1685
   5121682.4547                        We know of no reason why the district In question is not required
                                  by section 51.146 elf the Water Code to retain ten percent of the
   200 Main Plaza, Suite 400      estimated amount of a construction contract until at least 50 percent
   San Antonio. TX. 76205.2797    of the work has been completed satisfactorily. We believe that
   512/225-4191                   article 6252-5b does not relieve the district of its obligations under
                                  section 51.146.
   An Equal Opportunity/
   Affirmative Action Employer
                                       The Tarrant Ccs,ntyWater Control and Improvement District Number
                                  One is created und#+ the provisions now codified as chapter 51 of the
                                  Texas Water Code ar.Cpursuant to article XVI, section 59 of the Texas
                                  Constitution. Acccsxdingly,since 1971, the construction contracts of
                                  the district have teen governed by chapter 898 of the Sixty-second
                                  Legislature, which &as codified as section 51.146 of the Water Code in
                                  1973. Section  51.146 reads, in pertinent part, as follows:




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Honorable Charles Evans - Page 2   (JM-199)




          551.146. Payments Under Construction Contract

             (a) The distr:lctshall pay the contract price
          of such contracts LLShereinafter provided.

             .   .   .   .

             (c) In making such progress payments, there
          shall be retained 10 percent of the estimated
          amount until fin&l completion and acceptance of
          the contract work. However, if the directors, at
          any time after 50 percent of the work has been
          completed, find zhat satisfactory progress is
          being made, they may authorize any of the
          remaining progress payments to be made in full.

     In 1981, the legislatucs enacted article 6252-5b. V.T.C.S., which
requires that retainage in contracts between a governmental entity and
a prime contractor be deposited in an interest bearing account for the
benefit of the contractor. The Tarrant County Water Control and
Improvement District Number One ia a governmental   entity within the
meaning of the act. Sec. l(A). Retainage under the act is the part of
a contract payment withha!:.dby a governmental entity to secure
performance of the contract. Sec. l(D).

     Section 2 of the act provides that

          [inI  any contract providing for retainage of
          greater than five! percent of periodic contract
          payments, the gclx.ernmentalentity shall deposit
          the retainage in ;m interest-bearing account, and
          Interest earned ~1 such retainage funds shall be
          paid to the prirlc!contractor upon completion of
          the contract.

     It is a well settled I,cleof statutory construction that statutes
dealing with the same general subject are considered in pari materia
though they contain no reE,:renceto each other and were enacted at
different sessions of the legislature. C.A. Dunham Co. v. McKee, 57
S.W.2d 1132, 1135 (Tex. C:i(r.App. - El Paso 1933, writ ref'd). It
also is well settled that statutes in pari materia are to be read and
construed together in arrivj.ngat the intention of the legislature and
must be harmonized, if pour:ible,so as not to destroy the effect of
either statute. Calvert-v- Fort Worth National Bank,-356 S.W.2d 918,
921 (Tex. 1962); Lingner v. Haley, 277 S.W.2d 302, 306 (Tex. Civ. App.
- Amarillo 1954, writ dismissed). We believe that section 51.146 and
article 6252-56 are not i,n conflict with each other. When read
together, section 51.146 mandates that the water control and




                               p. 876
.   .


        Honorable Charles Evans - Page 3    (JM-199)




        improvement district retain ten percent of the estimated amount of a
        construction contract  until Einal completion and acceptance of the
        contract work, or until at l.east fifty percent of the work of the
        project is complete and the &rectors, on determining that progress is
        satisfactory, authorize payment to be made in full, and article
        6252-5b requires that the retainage prescribed by section 51.146 be
        deposited in an interest bealr:.ng
                                         account with both the retained amount
        and the interest earned on that amount to be paid to the contractor.

             Section 3 of article ti252-5b excepts from its provisions a
        contract executed before August 31. 1981, a contract with a price
        estimated to be less than $41)0,000,a contract by the State Department
        of Highways and Public Tran:;portation,and, until June 1, 1983, a
        contract by a political subdvision funded by certain bonds pursuant
        to sections 49-c, 49-d, or 49-d-l of article III of the Texas
        Constitution or pursuant to chapter 54 of the Texas Water Code.
        Except for a contract in an amount less than $400,000, none of those
        exceptions in article 6252-5b applies to currently executed contracts
        of a water development and improvement district created under chapter
        51 of the Water Code and article XVI, section 59 of the constitution.

             A brief submitted with )'ourquestions also discusses whether the
        district should deposit the funds withheld in accordance with section
        51.146 in an interest bearing account that segregates those funds from
        other funds of the district. As introduced, House Bill No. 1815 of
        the Sixty-seventh Legislature, which enacted article 6252-5b, would
        have required that the reta:lnagein question be deposited in a state
        or national bank, savings and loan association, or credit union
        pursuant to a trust agreement which designated the financial
        institution to serve as escrow agent and to invest the retainage in
        the manner prescribed by the original bill. As finally passed, House
        Bill No. 1815 requires only that the governmental entity "deposit the
        retainage in an interest-bturing account." We believe that if the
        legislature intended that the retained funds be deposited in a
        separate interest bearing account that segregates the retainage from
        other funds of the district, the legislature would have said so. The
        courts freouentlv have ouotami the statement that "if narliament does
        not mean what it-says, it mll:rtsay so." Railroad Commission of Texas
        v. Miller, 434 S.W.2d 670, fi;'2(Tex. 1968); Brazes River Authority v.
        City of Graham, 354 S.W.2d 59, 109 (Tex. 1961). We conclude that a
        district that deposits fund!;withheld pursuant to section'51.146  with
        the district's other funds in an interest bearing account complies
        with the plain language of section 2, article 6252-5b.

                                     SUMMARY

                     Construction contracts of water control and
                  improvement districts are governed by both the
                  provisions of section 51.146 of the Texas Water




                                           p. 877
Honorable Charles Evans - Page 4     (JM-199)




          Code, which specifies the retainage of funds in
          construction contracts, and the provisions of
          article 6252~Sb, ‘I.T.C.S., which requires that
          such retained funds be deposited in an interest
          bearing account, with the interest earned on the
          retained funds tc be paid to the contractor on
          completion of the contract.




                                       LJlh/h
                                            VeryItruly yourj



                                            JIM     MATTOX           --
                                            Attorney General of Texas

TOM GREEN
First Assistant Attorney Getwral

DAVID R. RICHARDS
Executive Assistant Attorney General

Prepared by Nancy Sutton
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
David Brooks
Colin Carl
Susan Garrison
Jim Moellinger
Nancy Sutton




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