JIM MATTOX Attorney General

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# The Attorney General of Texas
Auglst 31, 1984

Honorable Charles Evr.ns Chairman OpinionNo. .JM-199 Committeeon House !Klministration Texas House of Reprcxientatives P. 0. Box 2910 Austin, Texas 787fi!l Ik: Statutoryregulationof a water district's construction contracts

Dear RepresentativeIbans:
You have asked i:he followingquestions: 1. Is there any reason under case law or the statutes 0'7constitutionwhy section51.146 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 51.146until at least fiftypercent 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 theTexas Water Code?
We know of no reasonwhy the district In question is not required by section 51.146 elfthe Water Code to retain ten percent of the estimatedamount of a constructioncontractuntil at least 50 percent of the work has been completed satisfactorily. We believe that article 6252-5bdoes not relieve the districtof its obligationsunder section 51.146. The Tarrant Ccs,nty Water Control and ImprovementDistrict Number One is createdund#+ the provisionsnow 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 codifiedas section 51.146 of theWater Code in 1973. Section 51.146 reads, in pertinentpart, as follows:

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551.146. PaymentsUnder ConstructionContract (a) The distr:lctshall pay the contractprice of such contractsLLS hereinafterprovided.

. . . . (c) In making such progress payments, there shall be retained 10 percent of the estimated amount until fin&l completion and acceptance of the contractwork. 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 remainingprogresspayments to be made in full.
In 1981, the legislatucsenacted article 6252-5b.V.T.C.S.,which requires that retainage in contractsbetween a governmentalentity and a prime contractorbe deposited in an interestbearing account for the benefit of the contractor. The Tarrant County Water Control and ImprovementDistrict Number One ia a governmental entity within the meaning of the act. Sec. l(A). Retainageunder the act is the part of a contract payment withha!:.d by a governmental entity to secure performanceof the contract. Sec. l(D). Section 2 of theact 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-bearingaccount, 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 statutoryconstruction 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.ng at the intentionof the legislatureand 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);Lingnerv. 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,nconflict with each other. When read together, section 51.146 mandates that the water control and

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improvementdistrict retain ten percent of the estimated amount of a construction contract until Einal completion and acceptance of the contract work, or until at l.eastfifty percent of the work of the project is completeand the &rectors, on determining thatprogress 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 interestbealr:.ng accountwith both the retainedamount and the interestearned on that amount to be paid to the contractor. Section 3 of article ti252-5bexcepts from its provisions a contract executed before August 31. 1981, a contract with a price estimated to be less than $41)0,000, a contractby 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 improvementdistrict createdunder chapter 51 of theWater Code and articleXVI, section 59 of the constitution.
A brief submittedwith )'ourquestions also discusseswhether the district should deposit the fundswithheld in accordancewith section 51.146 in an interestbearing account that segregatesthose 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 prescribedby the originalbill. As finallypassed, House Bill No. 1815 requires only that the governmentalentity "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 legislaturewould have said so. The courts freouentlvhave ouotamithe statement that "if narliament does not mean what it-says, it mll:rt say so." Railroad Commissionof Texas v. Miller, 434 S.W.2d 670, fi;'2 (Tex. 1968);Brazes River Authorityv. 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 theplain languageof 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

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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 completionof the contract.

VeryItrulyyourj 

# LJlh/h

JIM MATTOX -- AttorneyGeneral of Texas TOM GREEN FirstAssistantAttorneyGetwral
DAVID R. RICHARDS ExecutiveAssistantAttorney General Preparedby Nancy Sutton AssistantAttorney General
APPROVED: OPINION COMMITTEE Rick Gilpin, Chairman David Brooks Colin Carl SusanGarrison JimMoellinger Nancy Sutton

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