Untitled Texas Attorney General Opinion ( 1984 )

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:
p. 875
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
p. 878