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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
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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)
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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.
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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
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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