Court Opinion

ID: 4130430
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:04:12.038593+00
Date Added: 2024-06-11T14:32:18.011684
License: Public Domain

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                           April 11, 1989

    Honorable James M. Kuboviak   Opinion No. JM-1039
    Brazes County Attorney
    300 East 26th Street          Re: Distribution of tax funds
    Suite 325                     remaining  after   dissolution
    Bryan, Texas 77803            of water control and improve-
                                  ment district,   and   related
                                  questions  (RQ-1520)

    Dear Mr. Kuboviak:

         You have asked about the right of Brazos County to
    contract with a water control and improvement district  to
    receive and use the surplus tax funds of the district
    remaining at  the time of its dissolution if the county
    agrees to carry out certain of the district's    functions
    after the dissolution.   The water control and improvement
    district is located wholly within Brazos County.

         You explain:

               Brazes County Water Control and Improve-
            ment District No. 1, Big Creek,   (hereinafter
            "Big Creek") was validated for organization
            and creation by Act on June 27, 1959, Chapter
            10, 1st C.S., .$l-12, 1959 Tex. Gen. Laws 30,
            and under the legislative duties conferred
            thereby at Tex. Const., Art. XVI, 4 59. Sev-
            eral events now warrant dissolution of Big
            Creek. A federal district court order has
            enjoined Big Creek from completing any fur-
            ther construction of flood control    improve-
            ments or of carrying out its         statutory
            purposes   until it has complied with the
            applicable provisions of the National    Envi-
            ronmental Policy Act and the Environmental
            Quality Improvement Act by completing,       in
            association   with  the   Soil    Conservation
            Service, a NEPA study of the water       sheds
            within   its boundaries.   The district    has
            found that the study and cost of the comple-
            tion of improvements as necessitated by that
            study would be prohibitive.     Prior to this

                                  P. 5385
Honorable James M. Kuboviak - Page 2   (JM-1039)

        date, Big Creek, because of continuous  court
        proceedings and litigation, has failed to
        complete the flood control and       drainage
        structures within the ten     (10) year time
        period from its date of creation as set forth
        in 5 51.793 of the Texas Water Code.

           The district must now contract with some
        government entity to maintain and repair the
        structures it has completed, it must contract
        to pay for such services and then it must
        dispose of its surplus tax funds upon     its
        dissolution.

           .   .   .   .

           It has been determined by Big Creek, that,
        even after contracting with the County,    if
        the districts   debts and obligations    were
        satisfied  upon its dissolution,    including
        allowances for the maintenance   of existing
        improvements until their retirement, a cash
        surplus would exist.

     We are advised that the Big Creek district has existed
for approximately 30 years; that it issued bonds many years
ago: that the issued bonds and other obligations have been
retired or else previously collected tax money is available
to retire all outstanding   district obligations and antici-
pated expenses; and that approximately $30,000 will     remain
after such payments.   It is also our understanding that the
only "district   functions" to be discharged    following the
dissolution of the district will be the maintenance of dams,
for which Brazos County is willing to assume responsibili-
ty.1

   1. The opinion process of this office is designed      to
furnish legal opinions based upon a stated fact situation,
and not to resolve fact disputes. A recitation of facts in
an opinion is a not an affirmation   of their accuracy,  but
merely a recital of the basis upon which the legal opinion
is offered.  See senerallv Roteilo v. Brazos Countv -Water
Control & Imnrovement Dist. No. 1, 511 S.W.Zd 392 (Tex. Civ.
APP. - Houston    [lst Dist.],  1974, writ ref'd, n.r.e.)
(historical background regarding the district).

                             p. 5386
Honorable James M. Kuboviak - Page 3   (JM-1039)

     Title 4 of the Texas Water Code governs     districts,
including the Big Creek District, created by the authority
of article XVI, section 59, of the Texas Constitution.
Water Code 5 50.001(l). The provisions of the title gener-
ally applicable to all such districts are found in chapter
50 of the Water Code; those particularly concerning   water
control and improvement districts are contained in chapter
51 thereof.

     Subchapter G of chapter 50 (applicable to all dis-
tricts) deals generally with the dissolution    of inactive
districts.  It provides that, after notice and hearing, the
Texas Water Commission may dissolve any district which   is
inactive for a period of five consecutive years and has no
outstanding bonded indebtedness. Water Code 5 50.251. Upon
the dissolution of a district by the commission, the assets
of the district escheat to the state. Id. 950.257.

     Water control and improvement districts may also be
voluntarily dissolved pursuant to subchapter P of chapter 51
of the Code (dealing particularly with water control     and
improvement districts).  Different methods  of doing so are
authorized by subchapter P for several statutorily described
situations.  Section 51.781 of the Code provides:

           (a) If the electors of a district   reject
        the proposal to issue construction bonds by a
        constitutional or statutory majority vote,
        the board must dissolve the district      and
        liquidate the affairs of the district      as
        provided in Sections 51.781-51.792   of this
        code.

            (b) Subject to the provisions of Subchap-
        ter G of Chapter 50 of this code, if a dis-
        trict finds at any time before the author-
        ization of construction bonds or the final
        lending of its credit in another form that
        the proposed undertaking for any reason    is
        impracticable or apparently cannot be suc-
        cessfully and beneficially accomplished,  the
        board may issue notice of a hearing on pro-
        posal to dissolve the district.

           (c) Subject to the provisions of Subchap-
        ter G of Chapter 50 of this code, if 20 per-
        cent of the qualified voters of a district
        petition the board for a hearing on a propos-
        al to dissolve the district and deposit with
        the board an amount estimated to cover the

                             P. 5387
Honorable James M. Kuboviak - Page 4   (JM-1039)

        actual cost of giving notice and holding  the
        hearing, the board shall publish notice    of
        the hearing within 10 days and shall hold the
        hearing within 40 days after the filing of
        the petition,    as provided    in   Sections
        51.782-51.785 of this code. If the finding
        is against the petition, the deposit shall be
        applied to pay the cost of giving notice  and
        holding the hearing.

     The mechanics  of a dissolution effected pursuant   to
section 51.701 of the Water Code are controlled by sections
51.782 through 51.792. Section 51.791 speaks to the dispo-
sition of excess taxes and reads:

            (a) If taxes have been collected by the
        dissolved district  in excess of the amount
        required to liquidate the obligations of the
        district, the excess shall be paid ratably to
        the county treasurer   or treasurers  of the
        county or counties in which the district was
        located.

           (b) The commissioners courts shall credit
        the money received from the dissolved   dis-
        trict to the interest and sinking fund for
        any outstanding county bonds.  If the county
        has no outstanding  bonds, the money may be
        applied as the commissioners court lawfully
        directs.

     However, the situation of the Big Creek district, as we
understand it, does not meet strictly any of the three cir-
cumstances described in section 51.781 because bonds have
not been rejected by voters, construction   bonds have been
authorized, and no voters have petitioned   the board for a
hearing on a proposal to dissolve the district or deposited
funds to cover the costs of such a hearing.

     Subchapter P also authorizes dissolution      in   another
circumstance.  Section 51.793 reads:

           Subject to the provisions of Subchapter   G
        of Chapter 50 of this code if a district   has
        not within  10 years from the date of its
        creation commenced  and completed   the con-
        struction of a plant and improvements       to
        carry out the purposes   of its creation    in
        accordance with the plans adopted by the
        district, the board may enter a resolution in

                             p. 5388
Honorable James M. Kuboviak - Page 5    (JM-1039)

        its minutes   to dissolve the district under
        the provisions of Sections 51.794-51.828   of
        this code.     After compliance  with   these
        provisions, a vote of the electors    of the
        district,   and the payment   of its valid,
        enforceable indebtedness, the district may be
        dissolved.

     The mechanics of dissolution under section 51.793 pro-
visions are much more elaborate, time consuming, and costly
than are those required when dissolution his effected pur-
suant to section 51.781, but the Big Creek district     appar-
ently does meet the section 51.793 condition:      it has not
within 10 years from the date of its creation been able to
carry out the purposes of its creation. The difficulty       is
that the subsequent  sections governing   the dissolution   of
districts under section 51.793 do not specify what is to
become of excess taxes after the district is dissolved      --
unlike the provision of section 51.791 applicable to section
51.781 dissolutions.   Furthermore, the provisions   governing
dissolutions under section 51.793 appear to assume that
outstanding obligations   will remain unpaid and unprovided
for, and that an election approving     additional tax bonds
("dissolution bonds") will be necessary to effect a dissolu-
tion.2

   2. It is after the issuance, sale or delivery of needed
dissolution bonds that a dissolution under section 51.793 is
deemed to have been effected. Section 51.828 states:

           (a) On the issuance and sale or delivery of the
     dissolution bonds and the appointment and qualification
     of the trustee, the secretary shall deposit all avail-
     able existing records of the district in the office of
     the county clerk of the county or one of the counties
     in which the district is located.

           (b) The district immediately  is considered   dis-
     solved for all purposes,  except that the taxes levied
     against the taxable property may be enforced in the
     name of the district on behalf of the bondholders     by
     the trustee or his successors.  The surviving board may
     meet from time to time until the dissolution bonds are
     paid and discharged and may delegate    its powers   and
     give instructions to the trustee or his successors    as
     the board sees fit and circumstances warrant.      After
                                        (Footnote Continued)

                              P. 5389
Honorable James M. Kuboviak - Page 6   (J&1039)

     There is a third avenue for dissolution or abolition of
water control and improvement districts provided by subchap-
ter P, but it is available only to districts located entire-
ly in a county having a population of less than 11,000 ac-
cording to the last preceding federal census. See Water
Code § 51.829.  Brazos County, according to the 1980 census,
has a population of more than 90,000, so the third alterna-
tive procedure is not available to it. Cf. Am
lin County Water Dist., 432 S.W.2d 520 (Tex. 1968)    (eligi-
bility).  Of interest, nevertheless,   in the sections    de-
scribing its mechanism, is section 51.836, which reads:

           If a district has outstanding    bonds or
        other indebtedness maturing beyond the cur-
        rent year in which the dissolution    occurs,
        the commissioners  court of the county     in
        which the district is located shall levy and
        have assessed and collected,   in the manner
        prescribed in the Property Tax Code suffi-
        cient taxes on all taxable property in the
        district to pay the principal of and interest
        on the bonds and other indebtedness when due.

     Until 1929, there was no provision in Texas law for the
dissolution of a water control and improvement district.  In
that year, the substance of section 51.781 and its related
provisions was enacted, and also the alternative   procedure
available under section 51.829.   m   Acts 1929, 41st Leg.,
ch. 87, at 204; ch. 280, at 578. The source law for section
51.793 and the procedure it authorizes was enacted in 1943.
m   Acts 1943, 48th Leg., ch. 328, at 550. That act provid-
ed, inter alia:
           Sec. 18. This Act shall be cumulative of
        all other provisions of law providing for the
        dissolution of water control and improvement
        districts organized under the provisions   of
        Sections 59-a of Article XVI of the Constitu-
        tion of Texas, and shall be applicable   only
        to such districts as may adopt the provisions
        hereof as provided . . . .

     We are of the opinion that the intent of the 1943 act
regarding a method for disposing of excess taxes is implied

(Footnote Continued)
     the payment  of all dissolution bonds,   interest,   and
     costs of collection, the board shall be dissolved.

                             p. 5390
Honorable James M. Kuboviak - Page 7     (JM-1039)

by its proclamation  that its provisions   are cumulative  of
all other provisions of law providing for the dissolution of
water control and improvement districts.   While such a stat-
utory provision does not consolidate laws in d       materia,
it does indicate an intent that they be considered to be in
harmonious co-existence  and cooperation.    State v. Laredo
Ice Co., 73 S.W. 951, 952 (Tex. 1903).      The substance  of
both the provision now found in section 51.791 that excess
taxes be paid to the county treasurer and the provision    of
section 51.836 that authorizes    the county to retire the
obligations of a dissolved district were already part of the
law providing for the dissolution   of such districts at the
time of the 1943 enactment.

     Section 51.802 of the Water Code (one of the sections
supplementing the section 51.793 authorization for dissolu-
tion) specifically allows the board of the district to "con-
tract with trustees, engineers,    attorneys, and others      it
considers necessary or desirable   to properly liquidate     and
wind up the affairs of the district," and we believe it may
contract with the county to accept and maintain the district
facilities in exchange for the district's excess tax monies
remaining after its dissolution.    In doing so, it will be
conforming to the policy of the Water Code as exemplified by
section 51.791. See also Water Code 5 52.501     (dissolution
of underground water conservation districts): id.    5 66.403
(dissolution of storm control districts).      See senerallv
Water Code 55 58.781-58.836     (irrigation districts). .Cf.
Trimmer v. Carlton, 296 S.W. 1070 (Tex. 1927) (&     materla,
same purpose).

     Aside from whatever   the statutory duty of the county
may be upon the dissolution of a water district       located
within its boundaries, if, in the reasonable opinion of the
county commissioners court, the proposed    contract is sup-
ported by adequate consideration   flowing to the county, we
believe that Brazos County may legally contract with Brazos
County Water Control    and Improvement District No. 1 to
continue and carry out district functions after the dissolu-
tion of the district    and, as consideration   therefor,  to
receive the surplus tax funds of the district upon dissolu-
tion of the district.   Section 411.002 of the Local Govern-
ment Code reads:

           (a) The commissioners court of a county
        may contract with a governmental unit,    in-
        cluding a county, municipality, or other pol-
        itical subdivision,   to jointly acquire    a
        right-of-way or to jointly construct or main-
        tain a    canal, drain,     levee, or   other

                               p. 5391
Honorable James M. Kuboviak - Page 8    (JM-1039)

        improvement   for the purpose of providing
        flood control or drainage as it relates to
        flood control or for the purpose of providing
        and maintaining necessary outlets.

           (b) The contract may contain any provi-
        sions that the governing  bodies of the con-
        tracting entities consider necessary.

            (c) The contracting entities may provide
        by contract,  on mutually   agreeable terms,
        that they shall jointly maintain the project
        or that one of them shall maintain the pro-
        ject under its exclusive direction and con-
        trol while the other entity contributes   to
        the expense of maintenance.

See also V.T.C.S.   art. 4413(32c)  (Interlocal Cooperation
Act); ;
      Wi lac
1 v. Abendroth, 177 S.W.2d 936 (Tex. 1944)(classification of
districts). Cf. Attorney General Opinion MW-257 (1980)   (re-
lated duties of county).

           Brazos County may contract with Brazos
        County Water Control Improvement     District
        No. 1 to continue and carry out district
        functions  after the    dissolution  of   the
        district and to receive the surplus tax funds
        of the district upon dissolution      of the
        district.

                                   (zl$$+
                                     Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

                             p. 5392
Honorable James.M. Kuboviak - Page 9     (JM-1039)

RICK GILPIN
Chairman, Opinion Committee

Prepared by Bruce Youngblood
Assistant Attorney General

                               p. 5393