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