Attorney General Opinion JM-0199

JIM MATTOX Attorney General Supreme Court Building P. 0. BOX 12548 Austin, TX. 78711.2548 5121475-2501 Telex 9101874.1367 Telecopier 5121475-0266 714 Jackson, Suite 700 Dallas, TX. 75202.4506 2141742.8944 4824 Alberta Ave., Suite 160 El Paso, TX. 79905.2793 915/533-3484 plOl Texas, Suite 700 .o”ston, TX. 77002-3111 7131223.5886 SO6 Broadway, Suite 312 Lubbock. TX. 79401.3479 aow747.5238 4309 N. Tenth, Suite S +&Allen, TX. 78501-1685 5121682.4547 200 Main Plaza, Suite 400 San Antonio. TX. 76205.2797 512/225-4191 An Equal Opportunity/ Affirmative Action Employer The Attorney General of Texas Auglst 31, 1984 Honorable Charles Evr.ns Chairman Opinion No. .JM-199 Committee on House !Klministration Texas House of Reprcxientatives P. 0. Box 2910 Austin, Texas 787fi!l Ik: Statutory regulation of a water district's construction contracts Dear Representative Ibans: You have asked i:he following questions: 1. Is there any reason under case law or the statutes 0'7 constitution why section 51.146 of the Texas Wal:c!r Code does not require the Tarrant County W,%:er Control and Improvement District Number One to retain ten percent of the estimated amount of any construction contract covered by section 51.146 until at least fifty percent of the work has Daen completed satisfactorily? 2. Does article 6252-5b in any manner relieve the dist.c:lct of its obligations under section 51.146 of the Texas Water Code? 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 estimated amount of a construction contract until at least 50 percent of the work has been completed satisfactorily. We believe that article 6252-5b does not relieve the district of its obligations under section 51.146. The Tarrant Ccs,nty Water Control and Improvement District Number One is created und#+ the provisions now codified as chapter 51 of the Texas Water Code ar.C pursuant 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: p. 875 Honorable Charles Evans - Page 2 (JM-199) 551.146. Payments Under Construction Contract (a) The distr:lct shall pay the contract price of such contracts LLS hereinafter 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!:.d by 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.ernmental entity 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,cle of statutory construction that statutes dealing with the same general subject are considered in pari materia though they contain no reE,:rence to 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.ng at 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 )'our questions 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:lnage in 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:rt say 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. Very I truly yourj LJlh/h 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 p. 878