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November 2, 2010 Agenda
AGENDA CITY OF DENTON CITY COUNCIL November 2, 2010 After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, November 2, 2010 at 4:30 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: WORK SESSION Citizen Comments on Consent Agenda Items This section of the agenda allows citizens to speak on Consent Agenda Items only. Each speaker will be given a total of three (3) minutes to address any items he/she wishes that are listed on the Consent Agenda. A Request to Speak Card should be completed and returned to the City Secretary before Council considers this item. 2. Requests for clarification of agenda items listed on the agenda for November 2, 2010. Receive a report, hold a discussion and give staff direction concerning proposals received for RFP 4576 - Legislative Consulting Services, to assist the City of Denton in advancing its State Legislative Program, assist council and staff in addressing proposed legislation, and make the City aware of any legislative or administrative initiatives believed to be detrimental to the interests of the City. 4. Receive a report, hold a discussion, and give staff direction on proposed revisions to the new Animal Care and Adoption Center Master Plan. Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. When items for consideration are not listed under the Closed Meeting section of the agenda, the City Council will not conduct a Closed Meeting and will convene at the time listed below for its regular or special called meeting. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the TEXAS GOVERNMENT CODE, as amended, as set forth below. ANY FINAL ACTION, DECISION, OR VOTE ON A MATTER DELIBERATED IN A CLOSED MEETING WILL ONLY BE TAKEN IN AN OPEN MEETING THAT IS HELD IN COMPLIANCE WITH TEXAS GOVERNMENT CODE, CHAPTER 551, EXCEPT TO THE EXTENT SUCH FINAL ACTION, DECISION, OR VOTE IS TAKEN IN THE CLOSED MEETING IN ACCORDANCE WITH THE PROVISIONS OF §551.086 OF THE TEXAS GOVERNMENT CODE (THE `PUBLIC POWER EXCEPTION-). THE CITY COUNCIL RESERVES THE RIGHT TO ADJOURN INTO A CLOSED MEETING OR EXECUTIVE SESSION AS AUTHORIZED BY TEX. GOVT. CODE, §551.001, ET SEQ. (THE TEXAS OPEN MEETINGS ACT) ON ANY ITEM ON ITS OPEN MEETING AGENDA OR TO RECONVENE IN A CONTINUATION OF THE CLOSED MEETING ON THE CLOSED MEETING ITEMS NOTED ABOVE, IN ACCORDANCE WITH THE TEXAS OPEN MEETINGS ACT, INCLUDING, WITHOUT LIMITATION §551.071-551.086 OF THE TEXAS OPEN MEETINGS ACT. Regular Meeting of the City of Denton City Council at 6:30 p.m. in the Council Chambers at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: City of Denton City Council Agenda November 2, 2010 Page 2 REGULAR MEETING 1. PLEDGE OF ALLEGIANCE A. U. S. Flag B. Texas Flag "Honor the Texas Flag - I pledge allegiance to thee, Texas, one state under God, one and indivisible." 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards 3. CITIZEN REPORTS A. Review of procedures for addressing the City Council. B. Receive citizen reports from the following: 1. Donna Woodfork regarding public access. 4. CONSENT AGENDA Each of these items is recommended by the Staff and approval thereof will be strictly on the basis of the Staff recommendations. Approval of the Consent Agenda authorizes the City Manager or his designee to implement each item in accordance -,-,-ith the Staff recommendations. The City Council has received background information and has had an opportunity- to raise questions regarding these items prior to consideration. Listed below are bids, purchase orders, contracts, and other items to be approved under the Consent Agenda (Agenda Items A - X). This listing is provided on the Consent Agenda to allow Council Members to discuss or withdraw an item prior to approval of the Consent Agenda. If no items are pulled, Consent Agenda Items A - X below will be approved with one motion. If items are pulled for separate discussion, they may be considered as the first items follow,-ing approval of the Consent Agenda. A. Consider approval of a resolution revising Administrative Policy No. 403.07 "Debt Service Management" and providing for an effective date. The Audit/Finance Committee recommends approval (3-0). B. Consider approval of a resolution reviewing and adopting revisions to the Investment Policy regarding funds for the City of Denton; and providing an effective date. The Audit/Finance Committee recommends approval (3-0). C. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Air Fair, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($10,234) The Hotel Occupancy Tax Committee recommends approval (3-0). City of Denton City Council Agenda November 2, 2010 Page 3 D. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Chamber of Commerce (Convention and Visitor Bureau) for the payment and use of hotel tax revenue; and providing an effective date. ($650,076) The Hotel Occupancy Tax Committee recommends approval (3-0). E. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Community Theatre, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($23,003) The Hotel Occupancy Tax Committee recommends approval (3-0). F. Consider adoption of an ordinance authorizing the City Manager to execute an Interlocal Agreement between the City of Denton and Denton County for the payment and use of hotel tax revenue in support of the Courthouse-on-the-Square, the Bayless-Selby House, African American, Old No. 14 Fire House, Elm Ridge Church, Welcome Center and Outhouse Museums; and providing an effective date. ($98,039) The Hotel Occupancy Tax Committee recommends approval G. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Festival Foundation for the payment and use of hotel tax revenue; and providing an effective date. ($82,811) The Hotel Occupancy Tax Committee recommends approval (3-0). H. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Holiday Festival Association, Inc. for the payment and use of hotel tax revenue; and provide an effective date. ($7,638) The Hotel Occupancy Tax Committee recommends approval (3-0). L Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Central Business District Association of Denton, Texas, d/b/a Denton Main Street Association for the payment and use of hotel tax revenue; and providing an effective date. ($23,003) The Hotel Occupancy Tax Committee recommends approval (3-0). J. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Greater Denton Arts Council for the payment and use of hotel tax revenue to promote tourism and the convention and hotel industry; and providing an effective date. ($117,776) The Hotel Occupancy Tax Committee recommends approval (3-0). K. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and Denton Dog Days, Inc. for the payment and use of hotel tax revenue, and providing an effective date. ($14,586) The Hotel Occupancy Tax Committee recommends approval (3-0). City of Denton City Council Agenda November 2, 2010 Page 4 L. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the North Texas State Fair Association for the payment and use of hotel tax revenue; and providing an effective date. ($73,610) The Hotel Occupancy Tax Committee recommends approval (3-0). M. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Tejas Storytelling Association, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($50,607) The Hotel Occupancy Tax Committee recommends approval (3-0). N. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Black Chamber of Commerce for the payment and use of hotel tax revenue; and providing an effective date. ($16,572) The Hotel Occupancy Tax Committee recommends approval (3-0). 0. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Music Theatre of Denton for the payment and use of hotel tax revenue; and providing an effective date. ($5,000) The Hotel Occupancy Tax Committee recommends approval (3-0). P. Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Texas Filmmakers Corporation for the payment and use of hotel tax revenue; and providing an effective date. ($5,000) The Hotel Occupancy Tax Committee recommends approval (3-0). Q. Consider approval of revisions to an ordinance of the City of Denton, Texas amending Section 22-32 of the Code of Ordinances of the City of Denton relating to the use of tobacco products on City of Denton playgrounds; providing a severability clause, a penalty clause and an effective date. The Parks, Recreation and Beautification Board recommend approval (5-1). R. Consider approval of a resolution allowing the Denton Community Theatre to be the sole participant allowed to sell alcoholic beverages at the Beaujolais on November 18, 2010, upon certain conditions; authorizing the City Manager or his designee to execute an agreement in conformity with this resolution; and providing for an effective date. S. Consider adoption of an ordinance of the City Council of the City of Denton, Texas approving an Interlocal Cooperative Agreement between the University of North Texas and the City of Denton to provide for the operation of the City's public access cable television channel; and providing for an effective date. T. Consider adoption of an ordinance accepting competitive sealed proposals and awarding a contract for the constriction of a new operations building for Denton Municipal Electric (DME); providing for the expenditure of funds therefor and providing an effective date (RFSCP 4523-Best Value for a New Operations Building for DME awarded to Crossland Constriction Company, Inc. in an amount not to exceed $2,117,000). The Public Utilities Board recommends approval (6-0). City of Denton City Council Agenda November 2, 2010 Page 5 U. Consider adoption of an ordinance authorizing the City Manager to execute Change Order Number Seven to the contract between the City of Denton and Corbet Group, Inc.; providing for the expenditure of funds therefor; and providing an effective date (Bid 4444-Downtown Denton Transit Center Change Order Number Seven in the amount of $44,822.79 for a total contract award of $2,002,796.75). V. Consider adoption of an ordinance accepting a proposal for consulting services with JMB Consulting to oversee Denton Municipal Electric (DME) and the City of Denton compliance activities with Texas Regional Entity (TRE) and North American Electric Reliability Corporation (NERC) for an amount not to exceed $32,000 per quarter for a two year total of $256,000; and providing an effective date (This purchase falls under DME specialized procurement policy in accordance with Ordinance 2009-189). (The Public Utilities Board approved this item by a vote of (6-0). W. Consider adoption of an ordinance approving and authorizing the City Manager of the City of Denton, Texas to execute and deliver a Third Amendment to Master Lease Agreement, by and between the City of Denton, as lessor and the Denton County Transportation Authority ("DCTA"), as lessee, amending that certain Master Lease Agreement, dated on or about September 30, 2005, by and between the City of Denton, Texas, as lessor and the DCTA, as lessee, pertaining to certain leased premises located in the G. Walker survey, abstract number 1330, Denton County, Texas, as more particularly described in such master lease agreement; and providing an effective date. X. Consider approval of the minutes of: October 4, 2010 October 5, 2010 October 12, 2010 October 19, 2010 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. Consider approval of a resolution nominating members to the Appraisal Review Board of the Denton Central Appraisal District; and declaring an effective date. 6. PUBLIC HEARINGS A. Hold a public hearing and consider adoption of an ordinance regarding a Comprehensive Plan Amendment from the future land use designation of Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). (('A10-0001) The Planning and Zoning Commission recommends denial (6-0. City of Denton City Council Agenda November 2, 2010 Page 6 7. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. B. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. C. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of 2010 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL CHAMBERS IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1-800-RELAY- TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: General Government CM/DCM/ACM: George Campbell, City Manager SUBJECT: Receive a report, hold a discussion and give staff direction concerning proposals received for RFP 4576 - Legislative Consulting Services, to assist the City of Denton in advancing its State Legislative Program, assist council and staff in addressing proposed legislation, and make the City aware of any legislative or administrative initiatives believed to be detrimental to the interests of the City. BACKGROUND: As we prepare for the 82nd Texas Legislature, staff has been evaluating options for engaging legislative consulting services. The trend of the Texas Legislature has been that each new session brings an increased number of city-related bills filed, with the majority proposing impediments to the ability of cities to govern from a local perspective. For the last several sessions, legislative leaders have continued to file and support bills that would lower or broaden the current cap on annual increases in property tax appraisals, impose a local revenue cap, enact costly unfunded mandates, or erode municipal authority to conduct local affairs. As Denton continues to grow, our legislative exposure continues to increase with potentially greater negative impacts to our budget, and more importantly, on our ability to deliver services in the best interest of our citizens. A perfect storm is brewing for the 82nd Texas Legislature with a state financial crisis of $10-$25 billion shortfall; redistricting of House, Senate and Congressional districts; and the sunset review of 28 state agencies, several of which have regulatory authority over our municipal functions. One of the biggest concerns for cities is that the legislature will pass unfunded mandates to local governments as they look for ways to move legislation without having a negative financial impact to the state. A good example of the negative impact of unfunded mandates is the approximate $252,000 in lost annual drainage fee revenue that the City is unable to collect from state agencies and public universities due to a legislative exemption. Another concern is that the legislature will look for additional ways to turn cities into collection agents for the state. Municipal courts in Texas are a good example because over the years the legislature has added fees to speeding tickets, such that today the first $82 collected must be submitted to the state to fund various state programs and the state general fund. In addition, redistricting will play a prominent role, and will be the focus of a power struggle, which will probably distract the membership and cause considerable political posturing. We will have to guard against cities becoming collateral damage, through the passage of any bad public policy bill resulting from political deal-making. Staff feels that now, more than ever, it is important to utilize legislative consultants as part of our legislative strategy. Given the history of bad policy bills that our consultants have helped us defeat, we feel that the benefits of having legislative consultants outweigh the costs. The City of Denton began using legislative consultants to assist with general government issues during the 86th Regular Session of the Texas Legislature (2007). Prior to that, only Denton Municipal Electric (DME) had used a legislative consultant to assist them with utility issues. Staff felt that the volume of bills being filed, approximately 6,374 in 2007, and the number of city-related bills that could have an impact on Denton, approximately 1,200 in 2007, were becoming difficult for staff to manage alone. Staff also felt that the benefit of having a consultant to assist the City in minimizing its legislative exposure was greater than the cost. Denton has been actively involved with the Texas Municipal League's (TML) Big City Lobby group since 2003. This group brings together representatives from TML and major Texas cities to work together on legislative strategy, and coordinate support of beneficial legislation and opposition of detrimental legislation to cities. However, due to unique characteristics of each city, Denton sometimes found itself without allies on proposed legislation, such as on the college textbook sales tax exemption bills. For the 81st Regular Session of the Texas Legislature (2009), legislators filed 7,609 bills, and approximately 1,700 were city-related. The City's legislative consultant contracts for this session totaled $199,500 for: Solutions for Local Control, LLC; Hi11Co Partners; and Herrera & Boyle, PLLC (DME's legislative consultant). With the exception of Solutions for Local Control, LLC, the legislative consultant contracts expired in 2009. The biggest victory of the legislative session for Denton and other Texas cities was the defeat of hundreds of bad policy bills that would have lowered or broadened the current cap on annual increases in property tax appraisals, imposed a revenue cap on local governments, enacted costly unfunded mandates, or eroded municipal authority to conduct local affairs. It is difficult to place a dollar amount to the cost avoidance for the defeat of bad policy bills during the 81st Session, but the amount can easily run into several million dollars. With the assistance of our consultants, we were successful in opposing sales tax holidays for textbooks bills that could have cost approximately $1,620,000 in annual sales tax revenue loss for the City. We were also successful in opposing bills that could have had a negative cost impact to our organization including: mandated mailed boiled water notices, broadening sales tax and ad valorem tax exemptions, solar mandates, cap and trade programs for carbon dioxide, and impact and water meter fee exemptions for independent school districts. The passage of any one of these bad policy bills could have easily cost more than the total cost of our legislative consultant contracts. During the 81st Texas Legislature Interim Session, numerous "interim charges," were given to the legislature by the Speaker of the House and the Lt. Governor to study and report back to the House and Senate members. Typically, these studies identify possible legislative actions relating to such topics and often result in the filing of bills in the next regular legislative session. Several of these interim charges could have had an impact on the City of Denton. There were also several issues that were being considered that could have had negative impacts to Denton Municipal Electric (DME) and its rate payers. As a result, staff determined that it is essential that the City and DME have some legislative consulting assistance to address these issues and hopefully minimize or eliminate any negative impacts prior to the start of the 82nd Legislative Session. In April 2010, staff entered into a six- month contract with Focused Advocacy, LLC for legislative services for general government issues and DME electric issues. The contract cost was $52,500, in addition to a not-to-exceed $2,000 for reimbursable expenses. The cost of the contract was split between the General Fund and the Electric Fund. The City also maintained its contract with Solutions for Local Control, for specific work being performed on appraisal and revenue cap issues, sales tax issues, and Community Housing Development Organization issues. Both of these contracts expired at the end of September 2010. For the reasons stated above, a Request for Proposals for Legislative Consulting Services (R-FP 4 4576) was sent out to several qualified individuals and firms in September 2010. The RFP was structured so that a proposal could be submitted to provide legislative services for only general government issues, legislative services for only DME electric issue, or legislative services for both general government and DME issues. Seven proposals were submitted. Two submitted services for only general government issues, one submitted for only DME issues, and the remainder submitted proposals for representation of both general government and DME issues. Representatives from the City Manager's Office and DME reviewed and evaluated the proposals, based on the criteria listed below. The criteria for the evaluation of proposals for legislative consulting services for general government issues were based on the following: 1. Demonstrates a specialty or expertise in certain areas that is best suited to represent the City's legislative needs. FACTOR: 40% 2. Demonstrates a successful experience as a legislative consultant for municipalities or other organizations of a similar size, or with similar needs as the City. FACTOR: 20% 3. Demonstrates a long and proven track record protecting and advocating for North Texas transportation issues, especially those similar to the City of Denton's position. FACTOR: 20% 4. Demonstrates a proven legislative consulting experience with an established professional reputation as being a very effective advocate of successful legislation. FACTOR: 10% 5. Cost of services FACTOR: 10% The criteria for the evaluation of proposals for legislative consulting services for DME issues were based on the following: 1. Demonstrates a specialty or expertise in certain areas that is best suited to represent DME's legislative needs. FACTOR: 40% 2. Demonstrates a competent knowledge of municipal electric utility operation, state electric generation and distribution systems, and electric regulatory environment and current major issues. FACTOR: 15% 3. Demonstrates a long and proven track record protecting and advocating for electric utility issues, especially those similar to DME's position. FACTOR: 25% 4. Demonstrates a proven legislative consulting experience with an established professional reputation as being a very effective advocate of successful legislation. FACTOR: 10% 5. Cost of services FACTOR: 10% RECOMMENDATION: No single proposal met all the general government legislative needs, however, Focused Advocacy, LLC, did receive the highest evaluation rating. Their proposed cost to provide legislative services for only general government was $82,200 annually, plus an annual not to exceed $3,500 for reimbursable expenses. Focused Advocacy, LLC, also received the highest evaluation rating from DME. Their proposed cost to provide legislative services for only DME was $94,200 annually, plus an annual not-to-exceed $3,500 for reimbursable expenses. However, Focused Advocacy, LLC did offer a price break if they were selected to provide legislative services for both general government and DME. That proposed cost is $129,000 annually, plus an annual not-to-exceed $3,500 for reimbursable expenses. There is a potential savings of $47,400 annually to the City if they are selected to provide legislative services to both general government and DME. This reduction in cost was given with the knowledge that the City may engage the services of another legislative consultant on certain critical legislative issues. The proposal that received the next highest ranking for general government legislative needs was Solutions for Local Control, LLC. This is former State Representative Fred Hill's firm. Mr. Hill served ten terms in the Texas House of Representatives, and Chaired the Committees on Urban Affairs and on Local Ways and Means. He also served on the Transportation Committee for sixteen years and on the Legislative Budget Board for three terms. He led a coalition in opposition to the appraisal cap and revenue cap legislation in the 2003, 2005, and 2007 sessions. He was named legislator of the year by the Texas Municipal League, the Council of Urban Counties and the Texas Association of Counties several times, and is one of only three legislators ever named to the Texas Municipal League Hall of Fame. His knowledge of key finance issues of interest to the City, and his relationship with current members of the legislature, make him an invaluable consultant. The Solutions for Local Control, LLC proposal for legislative services for general government only was $42,000 annually, plus an annual not-to-exceed $3,000 for reimbursable expenses. Due to the critical issues being faced by the City and DME this next session, legislative consulting services are going to be critical to protect us from bad public policy legislation. Focused Advocacy, LLC and Solutions for Local Control, LLC have proven track records with the City and DME. For these reasons, staff recommends approval of a contract with each of these firms. Staff also recommends that both contracts have a term of two (2) years commencing on October 1, 2010, that may be extended for not more than one (1) additional two (2) year term upon the prior written agreement of the parties. PRIOR ACTIONNIEW (COUNCIL, BOARDS, COMMISSIONS): Informal Report 410-012 dated March 19, 2010 Informal Report 410-025 dated April 2, 2010 FISCAL INFORMATION: JDE Account Number 160099.7850 EXHIBITS: Powerpoint Presentation Legislative Consultant RFP-General Government Evaluation Legislative Consultant RFP-DME Evaluation Respectfully submitted: John Cabrales Jr. Public Information/Intergovernmental Relations Officer ors; u 0 c d ~ y = d ~ U ~ y L ~ ~ d J FM a c N 0 O a) . N L o a) aL- (D ) N 0 N U E C: a) ~ ~ 0 O oz E 0 U r 0 r rs~, u r O 13 L O Cl) V L E cn ~ o CL o co CD to N ti co . a) A- C: V c~ E 0 0 o rs~ u 0 0 ~ m J Cl) ~ v H = U N • co N Q Y 0 3 pC v LL 0 'APr o ~r;ry rs~ u 0 .y N d ~4-E m J N X H C N co N L V 0 U E L 0 7r' L V Y c~ O Q a) a) m a) CU U O O J Cn ~ O O O > L. C: C: O a) C: L. a) D 0. 0~ w LO M i L. 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N ~ I I N m C co v N O O C7 76 Lu 0 C N Yl CC 0 ^~I ^~yy 0 i..l ~i 0 W ~I 0 W y V TT~^ V1 ~W~yy1 0 U a A d Y Y 3 •O = - , 4 H _ 77 lf~ y O ~ O O w O O a .4. ~ ^e o ~ w W U U U ~.U ~ U y QI ~ C. ~ U ~ O U a It iU O U b A ^O U 3 a T M T - N M 'T w CC W 0 0 U U U U II II II II ~ O O O O iG U M _ _ N O O T _ - T AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Police, ACM: Fred Greene ' it SUBJECT Receive a report, hold a discussion, and give staff direction on proposed revisions to the new Animal Care and Adoption Center Master Plan. BACKGROUND In December 2005, the City Council received the results of a feasibility study by Connolly Architects, Inc. concerning the City of Denton Animal Shelter. This study identified critical needs for the City's Animal Shelter and compared the costs for renovating the current shelter with the costs to constrict a new shelter. The study indicated that renovation was both more costly and offered less overall improvement to increased levels of service. Rough estimates in the study provided an approximate need of 14,000 square feet for a new shelter at a cost of approximately $4 million dollars. This space estimate was made to allow the shelter to continue performing the same relative level of services while alleviating overcrowding and addressing identified operational deficiencies. In September 2006, the Denton Animal Shelter Foundation, Inc. (DASF), a new non-profit 501(c)3 tax-exempt foundation was formed. The mission of DASF is to raise funds to support building a new city animal shelter and to provide improvements needed in the existing shelter that are not able to be accommodated in the City's operating budget. The City of Denton entered into a formal agreement with DASF in August 2007. The agreement formalized the roles of DASF and the City of Denton with regard to the design, constriction, and funding of a new animal shelter. Of particular note, the agreement allowed DASF to conduct a capital campaign that included the use of naming opportunities at the future shelter. In May 2007, City staff began an examination of potential locations for a new shelter. Criteria for the new location came directly from the feasibility study. Emphasis was initially placed on land that was already owned by the City of Denton. Staff identified seven locations that provided sufficient acreage for the shelter. Only one of these sites met the full criteria from the feasibility study, but this location was not available due to property restrictions. Staff then turned to available land parcels that could be acquired for the shelter. In March 2009, the City purchased a 20.596 acre parcel of land just to the north of North Lakes Park for the location of the new animal shelter and lighted soccer fields for the Parks and Recreation Department. In July 2007, the City of Denton contracted with Connolly Architects, Inc for the development of a Master Plan for a new Animal Care and Adoption Center. The Master Plan was intended to provide a comprehensive approach to the planning, design, and eventual constriction of the new Agenda Information Sheet November 2, 2010 Page 2 facility. This plan was developed with input from a Building Subcommittee that consisted of members of the DASF Board and representatives from the City of Denton. The Master Plan was approved by the DASF Board and subsequently presented to City Council on December 1, 2008. Council directed staff to move forward with the plan as presented. The primary component of the Master Plan was the development of a floor plan and a determination of the approximate square footage required to meet the service needs of the new facility. Based on historic data and current trends in shelter design, the Master Plan called for a facility of just less than 22,350 square feet. Using estimated constriction costs at that time, the cost range for the new facility was projected to be $8 - $9.2 million. In the Master Plan, the square footage summary is divided in to three distinct categories of space: After Hours - areas that can be opened to the general public outside of normal shelter business hours, such as a community education and training room. Front Stage - areas accessible to the general public during the operating hours of the shelter, such as administrative offices and animal adoption spaces. Back Stage - areas that are generally inaccessible to the public, such as quarantine, stray animal holding, and support functions. These areas are further subdivided into categories showing "DASF space" and "City of Denton space." The space designated as "City of Denton" are those areas that are necessary to meet the legal and functional requirements for animal services. The spaces designated as "DASF" are primarily those areas that are above these minimum requirements. These "nice to have" features include the majority of the animal adoption space and a veterinarian spay/neuter clinic. The division of these spaces is not intended to be an official separation of space or otherwise indicate a division of function or supervision. It should be noted that the "Back Stage" area totaled just over 14,000 square feet, which follows the original recommendations from the Feasibility Study. The additional square footage in the "front stage" included efforts to enhance the adoption services that could be offered by the shelter. Attachments 41 and 42 provide a conceptual floor plan and square footage summary. In March 2010, the DASF Board met with City staff to discuss an alternative plan for the new shelter. Given the existing economic conditions, particularly the anticipated delay of the next CIP bond package, the DASF Board members were concerned about the impact of additional delays on their ability to raise donations and apply for private grant opportunities. The uncertainty associated with the financial delays and the lack of a clearly identified constriction timeline was viewed as a barrier to the on-going capital campaign. The DASF Board suggested that it would be wise to examine existing vacant buildings in the city that could be renovated and retrofitted to meet the size and service needs of the new shelter plan. Several potential sites were examined jointly by City staff and DASF Board members, but none proved to be viable options. At the conclusion of this exercise, it was suggested that the economic situation might dictate the need to constrict the new shelter in several phases as a means to delay the full financial impact. Agenda Information Sheet November 2, 2010 Page 3 By starting with the critical components, phased to match the immediate financial capabilities, the new shelter could be built and later expanded to meet growing needs. While this approach is not ideal in terms of the overall costs, it might be the best approach to meet the expectations of the private donors and granting foundations that have a reasonable expectation that their funds will be used in a timely manner. This approach would allow DASF to provide a more concrete timeline while also offering a much needed solution to the current shelter concerns. Examination of the Master Plan In July 2010, the City contracted with Connolly Architects, Inc to examine the feasibility of reducing the overall square footage of the shelter in the Master Plan. The initial goal was to determine the minimum square footage required for the new shelter to meet service needs for the next 5 - 10 years. The plan would also include adequate space for future growth. Connolly Architects, Inc met with City staff to review the original floor plan and made several suggestions on areas that could be reduced and/or delayed. Emphasis was placed on reductions to areas other than animal habitats. Efforts were also made to save those "front stage" elements that had already been "sold" as naming opportunities. The result was a redesign of the shelter that provides a total of 15,216 square feet. The revised plan retains 95% of the animal habitat from the original Master Plan design. Reductions were made to storage areas, offices, lobby areas, and a general reduction in overall room sizing. Other areas were eliminated for the initial design phase. Fundraising and Construction Timeline DASF is currently in the midst of a $2 million capital campaign for the new shelter. This target figure was determined by the DASF Board based on a number of factors, including the breakdown of "City Space" and "DASF Space" as described above. The board members felt that it was unlikely they foundation would raise the entire projected cost through the initial campaign. The $2 million figure represents fifty-three to sixty-one percent of the estimated constriction cost (excluding design, equipment, and contingency fees). It also is on target to cover the estimated construction cost of the "DASF Space." To date, the campaign has received more than $900,000 in donations and pledges. There are additional fundraising events planned through the end of this year. DASF anticipates donations to be close to the $1 million mark by the end of the year. Beginning in January 2011, DASF will embark on a new phase of the campaign with grant funding requests to specific foundations. The DASF Board would like to conclude the initial phase of the capital campaign by the end of 2011 if possible. DASF is committed to a continuing fundraising program for adoption and medical programs at the new shelter, as well as future campaigns for new additions to the shelter as needed. One of the primary issues in requesting funds from individuals, businesses, and grant-awarding foundations is the establishment of an approximate start date for the constriction of the new shelter. Some foundations have specific deadlines for the expenditure of awarded funds and require DASF to provide an estimated start time for the project as a condition of any grant award. Because of this requirement, the DASF Board proposes a tentative start date of January 2012 for the selection of an architect and the start of constriction documents. Ideally, this would be followed by a formal "groundbreaking" towards the end of 2012. To accomplish this, the DASF Board is seeking confirmation from the City to establish these dates for use in future grant applications. Agenda Information Sheet November 2, 2010 Page 4 Estimated Construction Costs Estimates for constriction have dropped significantly from those used in the original Master Plan. Current estimates are $215 - $250 per square foot, down from the $270 - $300 per square foot quoted in the original presentation of the Master Plan to Council. The reduction in cost per foot, along with the decrease in overall square footage, provides a new shelter that offers a greatly enhanced level of service at a much more affordable cost. The table below provides a comparison of the project costs for the new shelter in the original Master Plan and with the new revisions. Construction Cost $6.000,000 - $6.900.000 $3.271,440 - $3.804.000 Furniture, Fixtures, & Equipment (10%) Design Services (12%) Project Sub Total Project Contingency (10%) Total Estimated Cost $600,000 - $690,000 $720,000 - $828,000 $7,320,000 - $8,418,000 $732,000 - $841,800 $8,052,000 - $9,259,800 $327,144 - $380,400 $392,573 - $456,480 $3,991,157 - $4,640,880 $399,116 - $464,088 $4,390,273 - $5,104,968 These cost estimates are based on the current financial climate and are considered firm through the beginning of the next year. Economic developments in the next year could certainly have additional impact on constriction estimates - either positive or negative to this project. To help provide some flexibility for potential cost changes, there are some areas of the shelter than could be bid as "add alternates" or built simply as shell space to be finished at a later date. The project contingency includes owner-requested change orders during constriction and applicable internal service fees. OPTIONS 1. Council can direct staff to move forward with the proposed revisions to the Master Plan and establish a tentative start date of January 2012 for the selection of an architect and the development of constriction documents. 2. Council can direct staff to make additional changes or modifications to the Master Plan. 3. Council can direct staff to make additional changes or modifications to the tentative start date for the initial phase of constriction. PRIOR ACTION/REVIEW 12/13/05 - Council Work Session on Animal Shelter Feasibility Study. 02/14/06 - Council Work Session on Denton Animal Shelter Foundation. 08/07/07 - Council Work Session on Denton Animal Shelter Foundation Agreement. 12/01/08 - Council Work Session on Animal Care and Adoption Center Master Plan. FISCAL IMPACT The City of Denton has an existing agreement with the Denton Animal Shelter Foundation to work cooperatively on the planning and constriction of a new animal shelter. The agreement provides that DASF will conduct a capital campaign to raise funds for the constriction of the new facility. The City of Denton has agreed to consider additional funding sources for the Agenda Information Sheet November 2, 2010 Page 5 constriction of the new facility. The City previously purchased the land for the shelter as part of a larger $1 million land acquisition. Using the revised shelter plans, the current constriction cost estimates, and provided that DASF meets their capital campaign goal of $2 million, the fiscal impact to the City of Denton for the constriction of the new shelter is projected to be $2.4 - $3.1 million. This estimate can be impacted by changes to construction costs or by the use of the "add alternate" approach when conducting the bidding for the shelter constriction. There are various options to consider in providing funds for the constriction of the animal shelter. Most importantly, staff will need to prioritize the City's Capital Improvement Program (CIP) spending over the next several years to accommodate any associated debt issuance. In addition, the possibility of using one-time funds, such as non-airport gas well funds, should be considered in the overall financial evaluation of the project. These issues, and potential solutions, are discussed in more detail in the attached PowerPoint presentation prepared by Bryan Langley, Chief Financial Officer. On-Going Costs In addition to constriction costs for the new facility, it must be noted that the opening of the new Animal Care and Adoption Center will also incur increased annual operating expenses. The largest increase in operating expense will come from staffing needs. The layout of the new facility is in keeping with modern standards, and affords the best arrangement for the care and overall health of the animals. The new shelter will also be twice the size of the current facility and provide an overall increase in animal habitats of more than 300%. Initial estimates have identified the need to add 3 FTEs to provide adequate daily staffing levels. With current salary and benefits, these positions would result in an annual increase of $166,477. These additional costs have not been included in the five year financial forecast that was approved as part of the FY 2010-11 budget. Utility and maintenance costs for the new shelter facility are difficult to gauge. Given the overall condition of the current shelter, it is not feasible to make any type of comparative analysis for utility consumption. It is likely that these costs for the new shelter will be equal to or perhaps lower than the utility and maintenance costs for the current facility due to the vast improvement in design, materials, insulation, HVAC systems, and plumbing. Projections for these costs will be much clearer with the completion of constriction documents. Respectfully submitted, Roy W. Minter, Jr. Chief of Police Prepared by: Scott Fletcher, Captain Attachment #1 EXPANSION EXPANSION C21~ I r C7.. C3 C1 B1 BHlf J J 1 1 P17 B1 1j1 f~ ll~f~ C8 C2 B16 ! ! 61 813', 24 1~ { B B18 09 C13 014 C 16 C 10', ~ C15 B6 B6 C 5 ~i 2D C19 B'S B1 611 39 138 C1.8 R7 A5 A7 AD AZ l C17 Al it A3 AA` P+ C4 4 EXPANSION 0" 10" 50` I Attachment 42 DENTON ANIMAL CARE & ADOPTION CENTER SQUARE FOOTAGE SUMMARY FUNCTION ROOM NUMBER AREA DASF SQ FT CITY SQ FT TOTAL SQ FT Al AFTER HOURS LOBBY 166 166 A2 SPAY S NEUTER CLINIC 20 620 A3 PUBLIC EDUCATION AND TRAINING 866 866 A4 COFFEE BAR 65 65 AFTER A5 PUBLIC RESTROOM 433 433 HOURS A6 VENDING AREA 30 30 A7 STORAGE ROOM 90 90 A8 JANITOR'S CLOSET 75 75 SUBTOTAL 2,345 B1 ADOPTION DOG ROOf,,I (20 8-0 70 B2 ADOPTION SMALL DOG ROOM (16) 170 170 B3 SHELTER LOBBY (32) 580 580 B4 CUSTOMER SERVICE COUNTER 240 240 ANIMAL VIEWING AREAS 1,790 1,790 B5 DOG DISPLAY ROOM 55 55 B6 CAT DISPLAY COLONY (2) 111 111 B7 CAT GET AQUAINTED 60 60 B8 CAT SCREENED PORCH 150 150 FRONT B9 CAT STRAY/ ADOPTION ROOM (36) 351 351 STAGE ADOPT! B10 DOG GET ACQUAINTED (4) 250 250 ( ADMIT ADMINISTRATION AREA 0 0 ) Bll KENNEL MANAGER'S OFFICE 130 130 B12 ANIMAL SERVICES SUPERVISOR 140 140 B13 CONFERENCE ROOM 240 240 B14 RECORD STORAGE 85 85 B15 STORAGE 110 110 B16 GET ACQUAINTED YARDS (2) B17 GET ACQUAINTED PATIO B18 MAIN ENTRANCE SUBTOTAL 5,332 C1 STRAY DOG (LARGE) (20y STRAY DOG (A1ED) (13) STRAY DOG (SRr1.ALL) (16) 1,560 1.560 C2 DOG QUARANTINE (15) 5i i0 500 C3 DOG ISOLATION (15) 5rn 500 C4 PUBLIC RECEIVING ROOM 200 200 C5 EVALUATION/ DOG PREP ROOM 200 200 C6 EUTHANASIA EXAM ROOM 150 150 NIA EUTHANASIA HOLDING ROOM 0 0 C7 CAT QUARANTINE (18) 130 130 C8 CAT HOLDING (54) 336 336 BACK C9 CAT ISOLATION (9) 82 82 STAGE STRAY/ C10 STAFF BREAKROOM wl LOCKERS 265 265 ( SPAY/ C11 SQUAD ROOM 310 310 REC'V C12 FREEZER ROOM 75 75 ) C13 LAUNDRY ROOM 230 230 C14 UNISEX RESTROOM 100 100 C15 MECHANICAL 269 269 C16 FOOD PREP/ STORAGE ROOM 240 240 C17 SALLY PORT (2) 0 0 N/A LIVESTOCK SHED 0 0 C18 INFORMATION SYSTEMS ROOM 90 90 C19 EQUIPMENT ROOM 93 93 C20 JANITOR'S CLOSETS 60 60 C21 STORAGE ROOMS 164 164 SUBTOTAL 5,554 8 O t 10 SUBTOTAL 7,558 5,673 13,231 - c - CIRCULATION & WALLS 15% 1,134 851 1,985 TOTAL 8,692 6,524 15,216 ry t~ { 'd€; ~''r~, , _ ~~i I'il n~i `ice y ~t~ fa i f6 U ca a 0 a~ 0 L a--+ U O Q O a i,_..s. . 1 _ t., k.J W vl ^V) rf a--j . > E E a -o 4- ago a~ U p Q V LL Co V) U Q i C U cn -o V) E ~ ~ ~ ~ < Q Co (1) foj X LL U C) w Features She ter • Change of Focus • Em phasis on Adoption • Positive Environment • Emphasis on Anima Ha bitats • Improved Service - - - - ~ - - - - _ _ - co t r .4 u~ J f - ~ ~ cL 7 m m m I r TFFFT-H 47 a 77 l~ O ct O ct co f6 co U CA CA O ct - O = x O ~ C/'f 0 L m 1 o~ co 77 O O 00 00 O O O 00 00 (ID ' lD ' O O 00 00 00 0 ) 0 ) Rt 971- Rt O O q:zj- qt N 00 1 CD ~ ~lt lD Rt ~ O D m m R Rt Ln o M QD V)- V- i!)- V- iJ)- V- V- I I I 1 1 R qt ~ ~ ~ ~ O 0 ~ ~ rl Lr) rl rl " (V " rl I~ N rl Ol O O m m N m m 0l M 4-j M m N v1 0 U D D D D O O O O O O O O O O O 0 00 O O O O w 00 m 0l 0 (3) O (3) 00 r14 r--l r-I Rt Lr) 0 Lr) 4-j lD 00 00 00 (3) 00 1~ • " V - V m O O O O 0 O 0 O 0 O 0 O 0 . 0 O N " 0 CD o CD O O irq O O O O O r14 (Ili (,-A 0 m ~ O O 0 QDD r*_ 4--j ~D to r 00 lD O o U o r u N vI N U O O N N ~ O b.0 C - w ~ X U O > ~ QJ cn U N ro E N 4-j z5 E w U vI O c}'n b.0 N N - IL U 0 U LL u D ~ U W V_ i a--j 0 a--j ca C- 0 0. 4--j 0 Co L)-O 0 ca 4~ V i Ln V cv 0 O = -0 - N ~ N O . 0 -0 O b.0 4-j C: Ln Q~ O E Ln m Q _0 n E O rI n! 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N r-I AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider approval of a resolution revising Administrative Policy No. 403.07 "Debt Service Management" and providing for an effective date. The Audit/Finance Committee recommends approval (3-0). BACKGROUND The City's Debt Service Management Policy ("Debt Policy") 403.07 was originally developed in 1995 and adopted by the City Council on March 5, 1996. On April 20, 2010, the City Council adopted revisions to the policy, including the requirement that the policy be reviewed at least annually to ensure compliance with statutory and Securities and Exchange Commission (SEC) requirements. The Debt Service Management Policy provides general guidelines by which the City will issue debt and addresses the issues of process, use and limitations. In conjunction with the City's Financial Advisor and Bond Counsel, staff is bringing to the City Council revisions to the City's Debt Service Management Policy. The following is a listing of the changes being proposed: 1. Changes to staff titles as a result of the City's recent reorganization. 2. Revisions to disclosure requirements that meet or exceed new requirements adopted by the SEC. 3. Clarification that variable rate debt is not expressly permitted unless the City Council approved the use along with a written policy on variable rate debt. The revisions outlined above represent changes that allow for both flexibility and accountability in meeting the City's financing needs. RECOMMENDATION Staff recommends approval of the revised Debt Service Management Policy. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On March 5, 1996, the City Council approved Resolution No. 96-013 adopting Administrative Policy No. 403.07 "Debt Service Management." On February 14, 2006, the Audit Committee unanimously recommended approval of revisions to the Debt Service Management Policy. Agenda Information Sheet November 2, 2010 Page 2 On June 20, 2006, the City Council approved Resolution No. 2006-024 revising Administrative Policy No. 403.07 "Debt Service Management." On February 15, 2010, the Audit/Finance Committee unanimously recommended approval to forward the revised Debt Service Management Policy to the City Council for consideration. On March 2, 2010, the City Council approved Resolution No. 2010-007 revising the Debt Service Management Policy. On April 5, 2010, the Audit/Finance Committee unanimously recommended approval to forward the revised Debt Service Management Policy to the City Council for consideration. On April 20, 2010, the City Council approved Resolution No. 2010-012 revising the Debt Service Management Policy. On October 19, 2010, the Audit/Finance Committee unanimously recommended approval to forward the revised Debt Service Management Policy to the City Council for consideration. EXHIBITS Red-line version of Debt Service Management Policy Resolution Respectfully submitted: Bryan Langley Chief Financial Officer CITY OF DENTON Page 1420 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE SECTION: FINANCE REFERENCE NLJ1\IBER: 403.07 SUBJECT: DEBT MANAGEMENT INITIAL EFECTIVE DATE: 03 05196 TITLE: DEBT SERVICE MANAGEMENT LAST REVISION DATE: I1? 10 POLICY STATEMENT This policy shall provide general guidelines by which the City of Denton (the City) will issue debt. In as much as this policy may be in conflict or inconsistent with state law, state law will prevail. Furthermore, state law will prevail on matters not specifically addressed in this policy. It is the objective of this policy that (1) the City obtain financing only when necessary, (2) the process for identifvina the timing and amount of debt or other financing proceed as efficiently as possible, and (3) the Citv_ seek the most favorable interest rate and competitive costs. This debt management policy applies to the financing activities of the City of Denton, Texas. It also addresses the issues of process, use and limitations. Proceeds from debt issuances will be delivered as closely as possible to the time that contracts are expected to be awarded so that the proceeds are spent in the most efficient manner. The City Council shall review and approve the debt management policy at least annually and be documented by ordinance or resolution, which shall include anv chances made. ADMINSTRATIVE PROCEDURES 1. DEBT MANAGEMENT COMMITTEE A. Members The Debt Management Committee (the Committee) will consist of the Citv Manager. Assistant Citv Managers, and the T4" 4 4r,:.,°•fe-°Chief Financial Officer. The City's financial advisor and bond counsel shall act as consultants to the Committee. B. Scope The Committee shall meet at least annually to review the debt program or as necessary. Topics for discussion should include: the Capital Improvement Proaram, status of outstanding debt, unspent bond proceeds, and unissued voter authorized debt, timing of additional financing needs and financing options, and the effect of proposed financing activity on the related rates supporting the debt (i.e., property tax rate, utility rates, user fees, etc.). Page 2 of 22 II. RESPONSIBILITY AND STANDARD OF CARE The Finance Department will coordinate all activities required for the issuance of all debt. A. Delegation The hief Financial Officer shall have primay responsibility for developing financing recommendations. The ;4+-- e-- HF :r,+•,°•+e-°Chief Financial Officer shall: • Meet no less than annually with Department Directors to consider the need for financing, review debt capacity and assess progress on the Capital Improvement Program; • Review changes in state and federal legislation; • Review annually the provisions of ordinances authorizing issuance of obligations; • Periodically review the City's Charter to ensure compliance with state law, and • Annually review services provided by the financial advisor, bond counsel, paying agent, and other service providers to evaluate the extent and effectiveness of the services being provided. B. Conflicts of Interest All participants in the debt management process shall seek to act responsibly as custodians of public assets. Officers and employees involved in the debt management process shall refrain from personal business activity that could conflict with proper execution of the financing program, or which could impair their ability to make impartial financing decisions. C Reporting The ;4we ~H4-:+ &eChief Financial Officer shall include in the Comprehensive Annual Financial Report (CAFR) a report summarizing all debt outstanding by type (tax supported and revenue backed), remaining balance of bond proceeds, update of arbitrage liability, and update of pertinent legislative changes. D. Investor Relations The Citv shall endeavor to maintain a positive relationship with the investment community. The T4" HF ~+wi-i,°Chief Financial Officer and the City's financial advisor shall, as necessary, prepare reports and other forms of communications regarding the City's indebtedness, as well as its future financing plans. This includes information presented to the press and other media. The information includes, but is not limited to, the annual program of services. Page 3 of 22 comprehensive annual financial report, financial plans, capital improvement plans, and comprehensive development plans. All forms of media deemed appropriate and immediately available to the City will be utilized to disseminate information to all investors. Examples include the Texas Municipal Report. The Bond Buyer. Electronic Municipal Market Access (EMMA) and the Municipal Advisory Council of Texas (MAC). Bond counsel will advise on the use of electronic media in connection with the Citv_'s debt program. E. Financial Advisor The Citv shall retain an independent financial advisor for advice on the structuring of new debt financial analysis of various options, the rating review process, the marketing of debt issues, marketability of City obligations, sale and post-sale services, the review of the official statement and other services, as necessary. The Citv will seek the advice of the financial advisor on an onaoina basis. The financial advisor will perform other services as defined by the agreement approved by the City Council. The financial advisor will not bid on nor underwrite any city debt issues without requesting and obtaining a written consent to bid prior to submitting a bid in accordance with the provisions of Rule G-23 of the Municipal Securities Rulemakina Board (MSRB). The ~ Chief Financial Officer shall be the responsible person to receive such a request and will make the final written recommendation to the City Council. Bond Counsel The Citv shall retain bond counsel for legal and procedural advice on all debt issues. Bond counsel shall advise the Citv Council in all matters pertaining to its bond ordinance(s) and or resolution(s). No action shall be taken with respect to anv obligation until a written instrument (i.e.. Certificate of Ordinance or other prevailing instrument) has been prepared by the bond attorneys certifying the legality of the proposal. The bond attorneys shall prepare all ordinances and other legal instruments required for the execution and sale of anv bonds issued which shall then be reviewed by the Citv Attornev and the Di-p-t,., Hf ~P:., °Chief Financial Officer. The Citv will also seek the advice of bond counsel on all other types of debt and on any other questions involving federal tax or arbitrage law. Special counsel mav_ be retained to protect the City's interest in complex negotiations. III. OFFICIAL STATEMENT The preparation of the Official Statement is the responsibility of the financial advisor in concert with the r,",,.4, 4 mr,+ , i'w~eChief Financial Officer. Information for the Official Statement is gathered from departments.' divisions throughout the City. The Citv will take all appropriate steps to comply with the federal disclosure rules (i.e.. Securities and Exchanae Commission Rule 15c2-12). The Citv will provide annual and Page 4 of 22 material event disclosure to information repositories throughout the term of securities for the benefit of the primary and secondary municipal markets as required by Rule 15c2-12. IV. DISCLOSURE A. With each bond offering, and at least annually, in the preparation of Financial Reports or Official Statements or any other offering document the City will follow a policy of full and complete disclosure of operating, financial and legal conditions of the Citv, in conformance with- the Government Finance Officers Association Disclosure Guideline, and as advised bv_ disclosure counsel or financial advisor. B. Notice of Events Securities and Exchanae Commission (SEC) Rule 15c2-12 lists certain events that 4 ~ tefial, must be reported in a timely fashion to the Municipal Security Rulemaking Board (MSRB) via the Electronic Municipal Market Access (EMMA) system and, if required by Rule 15c2-12, to the State Information Depository (SID), the Municipal Advisory Council of Texas (MAC). On May 26, 2010_ the SEC made amendments to Rule 17c2-12_ which only apply- to primary offerings that occur on or after December L 2010. While not required, the Cite will make ever effort to apply the new requirements to existing bond issuances since the amendments make Rule 17c2-12 more stringent. 1 Dr:., ,.I ld :.,t"' t f .,t delitiquef, , .,t., „gt et:.J. tl„ twi - .,t status, 4the ~ .a.-. 7TR, di fi,.,.t:,..,, to fights ef`.,,.,,..:t,. heldefs. Q. Tl+ 10 :[4010'4-0 "111;4+ tilt+ H-4 H.- "'410 4vfHveft~- sweufint~ feva~-Iiqent 44140 Page _5 of 22 C 1. The events that mast be reported, if material are: Nonpayment related defaults, Modifications of rights of securitN- holders; Bond calls; Release, substitution, or sale of property securing repayment of the sectli'ities: Mer-ers, consolidations, acquisitions, the sale of all or substantially- all of the assets of the obligated person or their termination, Appointment of a successor or additional trustee or the change of the name of a trustee. 2. The events that mast be reported_ regardless of materiality_ are: a. Principal and interest payment delinquencies, b. Nonpayment related defaults, e. Unscheduled draws on debt service reserves reflecting financial dlffictllties, d. Unscheduled draws on credit enhancements reflecting financial difficulties, e. Substittition of credit or liquidity prodders, or their failure to perform, f Adverse tax opinions or events affectin- the tax-exempt states of the security, r. I3efeasances: 11. Ratin<- clean-es: i. The issuance by the IRS of proposed or final determinations of taxability_ Notices of Proposed Issue (IRS Form 7701-TEB) or other material notices or determinations with respect to the ta-x status of the securities: j. Tender offers, Ik. Bankruptcy, insolvency. receivership or similar proceeding. In addition, the SEC has approved the following proposals to become effecti within the next rear: Formatted: Numbered + Level: 1 + Numbering Style: 1, 2, 3, + Start at: 1 + Alignment: Left + Aligned at: 1" + Indent at: 1.25° Formatted: Indent: Left: 1.75' Formatted: Numbered + Level: 2 + Numbering Style: a, b, c, + Start at: 1 + Alignment: Left + Aligned at: 1.5 + Indent at: 1.75' Formatted: Indent: Left: 1.75' Formatted: Numbered + Level: 1 + Numbering Style: 1, 2, 3, + Start at: 1 + Alignment: Left + Aligned at: 1" + Indent at: 1.25° Formatted: Indent: Left: 1.75' Formatted: Numbered + Level: 2 + Numbering Style: a, b, c, + Start at: 1 + Alignment: Left + Aligned at: 1.5 + Indent at: 1.75' Formatted: Numbered + Level: 1 + Numbering Style: A, B, C, + Start at: 1 + Alignment: Left + Aligned at: 0.5 + Tab after: 1" + Indent at: 1" UnderNNTitel'3 311£111 indicate oil the EMMA sN-stela whether the issuerFormatted: Indent: Left: 1" has agreed to Provide secondary market disclostli'e inforniatioiL R'11 e11 Formatted: Numbered + Level: 1 + it will be provided. and the name of the obligated entity. Numbering Style: a, b, c, + Start at: 1 + The MSRB shall indicate oil the EMMA sxstein the issuers that Alignment: Left + Aligned at: 1.5` + Indent at: 1.75' volnntarily agree to Provide the following: I. AiliIDal financial information within 120 daN-s ( 170 daN-s niltil~ - Formatted: Numbered + Level: 1 + December 1 2013) after the fiscal year ends-, Numbering Style: 1, 2, 3, + Start at: 1 + Alignment: Left + Aligned at: 2" + Indent at: 2. An undertaking to prepare audited financial statements in 2.2 5" compliance with accountin- standards established by the Governmental Accounting Standards Board, and 3. The wellsite link to the issuer's financial information. Formatted: Indent: Left: 0.5' Page 6 of 22 Full disclosure of the operations will be made to the bond rating agencies. The Cite staff. with the assistance of the financial advisors and bond counsel, will prepare the necessary materials for and presentation to the rating agencies. V. RATING AGENCY COMMUNICATIONS & CREDIT OBJECTIVES The Citv will seek to maintain and improve its current bond rating so its borrowing costs are reduced to a minimum and its access to credit is preserved. In conjunction with the financial advisor, the City shall maintain a line of communication with at least two of the rating agencies (Moody's. Standard & Poor's. and Fitch), informing them of major financial events in the City as they occur. The Comprehensive Annual Financial Report. Annual Program of Services, and Capital Improvement Plan, shall be distributed to the rating agencies after they, have been accepted' adopted by the Citv Council on an annual basis. When necessary, a conference call or personal meeting with representatives of the rating agencies will be scheduled when a major capital improvement program is initiated, or to discuss economical and or financial developments which might impact credit ratings. The following documents may be required by the rating agencies: Most recent annual audit reports, including a description of accounting practices. Accounting changes in the past three years and the impact on financial results should be explained. Current budget. Current Capital Improvement Program. Official statements for new financings. Description of projects being financed. Sources and uses statement for bond issuance. If additional funds are required to complete specific projects being financed, the source of the funds and anv, conditional requirements may be discussed. Engineering and feasibility report (if applicable). Zoning or land-use map (if applicable). Cash flow statement, in the case of interim borrowing. Statement of long - and short-term debt with annual and monthly maturity dates as appropriate. Also, a report of any lease obligations, their nature and term. Indication of appropriate authority for debt issuance Investment policy (if applicable). Statement concerning remaining borrowing capacity plus tax rate and levy, capacity or other revenue capacity. VI. LIMITATIONS OF INDEBTEDNESS City staff, in conjunction with the financial advisor and bond counsel, will present to the Citv Council, and anv city committee as appropriate, a comprehensive analysis of debt capacity prior to issuing bonds. This analysis should cover a broad range of factors, including: Page 7 of 22 • Legal debt limits, tax or expenditure ceilings. • Coverage requirements or additional bonds tests in accordance with bond covenants. • Measures of the tax and revenue base, such as projections of relevant economic variables (e.g., assessed property values, employment base, unemployment rates, income levels, and retail sales). • Population trends. • Utilization trends for services underlvina revenues. • Factors affecting tax collections, including types of property, goods, or services taxed, assessment practices and collection rates, evaluation of trends relating to the City's financial performance, such as revenues and expenditures, net revenues available after meeting operating requirements. • Reliability of revenues expected to pay debt service. • Unreserved fund balance levels. • Debt service obligations, such as existing debt service requirements. • Debt service as a percentage of expenditures or tax or system revenues. • Measures of debt burden on the community, such as debt per capita, -debt as a percentage of full or equalized assessed property value, and overlapping or underlvina debt. • Tax-exempt market factors affecting interest costs, such as interest rates, market receptivity, and credit rating. The Citv has revenue bonds and other indebtedness of the Electric, Water, and Wastewater Funds. The Citv will maintain coverage ratios as dictated by the City's outstanding bond covenants (e.g. 1.25 times the maximum principal and interest of all outstanding revenue bonds and or 1.50 times the average annual principal and interest of all outstanding revenue bonds, or as required by individual bond covenants). The Electric Water, and Wastewater Funds' total Iona-term debt outstanding shall not exceed the amount of combined fund equity. VII. CAPITAL IMPROVEMENT PLAN A. The Citv will seek all possible federal and state reimbursement for mandated projects and or programs. The City will pursue a balanced relationship between issuing debt and pay-as-you-go financing as dictated by prevailing economic factors and as directed by the Citv Council B. Current operations will not be financed with Iona-term debt. C. Debt incurred to finance capital improvements will be repaid within the useful life of the project or earlier, if callable. D. High priority will be assigned to the replacement of capital improvements when they have deteriorated to the point there they are hazardous, incur high maintenance costs, negatively affect property values, or no longer serve their intended purposes. Page 8 of 22 E. An updated Capital Improvement Plan will be presented to the Cite Council for approval on an annual basis. This plan will be used as a basis for the Iona-range financial planning process. VIII. TYPES OF DEBT The Citv's bond counsel and financial advisor will present the different types of debt best suited and legally permissible under state law for each debt issue and assist in analyzing the use of capital lease purchases or the use of lines of credit. These types may include: • short-term vs. Iona-term debt • general obligation vs. revenue debt, • fixed;- T°*e debt, • lease-backed debt, • special obligation debt such as assessment district debt, • certificates of obliaation debt • combination tax and revenue debt, • tax increment debt, • conduit issues, and • taxable debt. The issuance of variable rate debt requires the approval of the Cite Council and is note - Formatted: Indent: Left: OS" e-xpressly permitted by this policy. The Chief Financial Officer will be responsible for evaluating thin type of debt and will present a recommendation and variable rate debt policy to the City Council as necessary + IX. BOND STRUCTURE Structural features that may be considered are: • maturity of the debt, • setting the final maturity of the debt equal to or less than the useful life of the project. • use of zero coupon bonds, capital appreciation bonds, deep discount bonds, or premium bonds, • debt service structure (level debt service payments, level principal payments or other repayment structure defined by state law), • redemption provisions (mandatory and optional call features), • use of credit enhancement, • use of senior lien and junior lien obligations, and • others, as deemed appropriate in consultation with financial advisor and bond counsel. X. SHORT-TERM DEBT A. General Page 9 of 22 Short-term obligations mav be issued to finance projects or portions of projects for which the Citv ultimately intends to issue Iona-term debt; i.e., it will be used, when appropriate, to provide interim financing which will eventually be refunded with the proceeds of Iona-term obligations. Short-term obliaations mav be backed with a tax and or revenue pledge or a pledge of other available resources. Interim financing may be appropriate when Iona-term interest rates are expected to decline in the future. In addition, some forms of short-term obliaations mav be obtained more quickly than Iona-term obligations and, thus, mav_ be used until Iona-term financing is secured. B. Commercial Paper Due to the financing costs associated with the marketing and placement of commercial paper, programs of less than $25 million may not be cost effective. Should the opportunity to participate in a commercial paper issuance pool present itself or if the establishment of a program becomes cost effective. the advantages and disadvantages shall be evaluated by the r`+T°'*~T HF:p Chief Financial Officer. The use of a commercial paper program requires approval by the City_ Council. C. Anticipation Notes Anticipation notes do not require giving a notice of intent. Anticipation notes mav be secured and repaid by a pledge of revenue, taxes, or the proceeds of a future debt issue. Anticipation notes mav_ be authorized bv_ an ordinance adopted by the Citv Council. Anticipation notes may be used to finance projects or acquisitions that could also be financed using Certificates of Obliaation and have the following restrictions: 1) Anticipation notes mav not be used to repay interfund borrowing or a borrowing that occurred up to or more than 24-months prior to the date of issuance, and 2) A governing body mav not issue anticipation notes that are payable from bond proceeds unless the proposition authorizing the issuance of the general obliaation bonds has already been approved by the voters. D. Line of Credit To the extent authorized by state law and with the approval of the City Council, the Citv mav establish a tax-exempt line of credit with a financial institution Page 10 of 22 selected through a competitive process. Draws shall be made on the line of credit when (1) the need for financing is so urgent that time does not permit the issuance of Iona-term debt, or (2) the need for financing is so small that the total cost of issuance of Iona-term debt including carrying costs of debt proceeds not needed immediately is sianificantly higher. Draws will be made on the line of credit to pay for projects designated for line of credit financing by the City Council. Borrowinas under the line of credit shall be repaid from current revenues. The :P+ ,°•i,-°Chief Financial Officer will authorize all draws on the line of credit as authorized in the agreement approved by the City Council. E. Capital Leasing Capital leasing is an option for the acquisition of a piece or package of equipment Leasina shall not be considered when funds are on hand for the acquisition unless the interest expense associated with the lease is less than the interest that can be earned by investing the funds on hand or when other factors such as budget constraints or vendor responsiveness override the economic consideration. Whenever a lease is arranged with a private sector entity, a tax-exempt rate shall be sought. Whenever a lease is arranged with a government or other tax-exempt entity, the Citv shall obtain an explicitly defined taxable rate so that the lease will not be counted in the City's total annual borrowings subject to arbitrage rebate. The lease agreement shall permit the City to refinance the lease at no more than reasonable cost should the Citv decide to do so. A lease which mav_ be called at will is preferable to one which may merely be accelerated. The Citv shall obtain at least three (3) competitive proposals for any lease financing. The net present value of competitive bids shall be compared, taking into account whether payments are in advance or in arrears, and how frequently payments are made. The purchase price of equipment shall be competitively bid, as required by state law, as well as the financing costs. The Difeetef o Fiti eChief Financial Officer will ensure anv leasing agreement is compared to other financing options to ensure the lease is cost beneficial. Alternate financing options will include certificates of obligation and lines of credit. The Zte.- Ht: Pi•i°•ie-°Chief Financial Officer will be the person responsible for evaluating this financing source, and will make a recommendation to the Citv Council for approval. Interfund Loans As allowed by the Citv, the Piw,_,4Ht ~i•i°•ie°Chief Financial Officer will review opportunities whereby interfund loans may be utilized to meet short-term financing needs. Interfund loans will only be utilized if economically beneficial to the lending fund and only if the rate of return is comparable or higher than the rate of return the lending fund would otherwise receive by keeping funds in the Page II of 22 City's investment pool. Any interfund loan must be approved bv_ the City_ Council. XI. LONG-TERM DEBT A. General Proceeds from the sale of Iona-term obligations will not be used for operating purposes, and the life of the obligations will not exceed the estimated useful life of the projects financed. Voter approved general obligation bonds will strive to have a final maturity of twenty (20) years or less. Revenue bonds and certificates of obliaation will strive to have a final maturity of thirty (30) years or less. If deemed appropriate, staff may present to the Citv Council extraordinary circumstances in which longer final maturities mav_ be necessary but never in excess of the useful life of an individual project. A level debt service structure will be used unless operational matters and marketing considerations dictate otherwise. The cost of issuance of private activity bonds is usually higher than for governmental purpose bonds. Consequently, private activity_ bonds will be issued only when they will economically benefit the Citv. The cost of taxable debt is higher than for tax-exempt debt. However, the issuance of taxable debt may be required or may be more appropriate in some circumstances and mav allow valuable flexibility in subsequent contracts with users or managers of the improvement constructed with the bond proceeds. Therefore, the Citv will usually issue tax-exempt obligations but mav_ occasionally issue taxable obligations. B. Bonds Lona-term General obliaation, including certificates of obliaation, or revenue bonds shall be issued to finance significant and desirable capital improvements. The General obliaation bonds will be used for purposes set forth by voters in bond elections or to refund previously issued general obligation bonds or certificates of obliaation. All bonds shall be sold in accordance with applicable law. C. Certificates of Obliaation Certificates of obliaation mav be issued to: • finance permanent improvements and land acquisition • finance costs associated with capital project overruns • -acquire equipment! vehicles • leverage grant funding • renovate, acquire, construct facilities and facility improvements • construct street improvements • provide funding for master plans studies • address necessary life safety needs Page 12 of 22 • finance revenue producing facilities if determined to be more economical than revenue bonds In accordance with state law, a resolution authorizing publication of notice of intent to issue certificates of obligation shall be presented for the consideration of the Citv Council. The notice of intent shall be published in a newspaper of general circulation in the Citv once a week for two consecutive weeks with the first publication to be at least thirty (30) days prior to the sale date. Certificates of obligation mav be backed by a tax pledge under certain circumstances as defined by law. Thev mav also be backed by a combination tax and revenue pledge eligible under state law. Some revenues are restricted as to the uses for which they may be pledged. Electric, Water, and Wastewater revenues may be pledged without limit for Electric, Water, and Wastewater purposes but may only be pledged to a limit of $1 .000 for anv_ one series of bonds issued for non-utility system purposes. The final maturity of certificates of obligation will be in accordance with Section XI, A. D. Public Property Finance Contractual Obligation Public property finance contractual obligations mav_ be issued to finance the acquisition of personal property. E. Revenue Bonds In addition to the policies set forth above. when cost-beneficial and when permitted under applicable state law, the City may consider the use of surety bonds, letters of credit, or similar instruments to satisfy mandated debt service reserve fund requirements on outstanding and or proposed revenue bonds. Combination Tax and Revenue Bonds In addition to the policies set forth above. when cost-beneficial and when permitted under applicable state law, the City may consider the use of Combination Tax and Revenue Bonds for refunding obligations of the Electric Water and Wastewater combined utility system, and Solid Waste or anv other self-supporting revenue producing City enterprise. Combination Tax and Revenue Bonds will comply with applicable state law and are assigned the full faith and credit of the Citv, thereby enhancing the credit rating otherwise obtained from revenue supported only debt (Revenue Bonds). XII. CREDIT ENHANCEMENTS Credit enhancements are mechanisms which guarantee principal and interest payments. They include bond insurance, lines of credit surety bonds and letters of credit. A credit enhancement, while costly. is intended to bring a lower interest Page 13 of 22 rate on debt and a higher rating from the rating agencies, thus lowerina overall costs. The City's financial advisor will advise the city whether or not a credit enhancement is cost effective under the circumstances and what type of credit enhancement, if any, should be purchased. In a negotiated sale, bids will be taken during the period prior to the pricing of the sale. In a competitive sale, bond insurance mav_ be provided bv_ the purchaser if the purchaser finds it cost effective. Other credit enhancements mav arise in the future, which mav be beneficial. The City's financial advisor will present these options for consideration. XIII. REFUNDING AND RESTRUCTURING OPTIONS In the case of advance refundinas, the Citv shall consider refunding debt whenever an analysis indicates the potential for present value savings of at least 3' o of the par amount being refunded. In the case of current refundinas, the Citv shall consider refunding debt whenever an analysis indicates the potential for present value savings above the costs of refunding the bonds. Refundina for savings should not extend the final maturity of the original obligations, unless specifically approved by the City Council. XIV. REIMBURSEMENT ORDINANCES The H4 m-Pina ee-Chief Financial Officer will review and approve all reimbursement ordinances from City departments, including enterprise fund departments, before forwarding to the Citv Council for consideration. In no event will a reimbursement ordinance exceed the unreserved fund equity of the combined Utility System for Electric, Water or Wastewater requests or the operating fund of anv_ other department making a request. Reimbursement ordinances must be adopted within sixty (60) days of the date the original expenditures were paid. Bonds must be issued and the reimbursement allocation made not later than eighteen (18) months after the later of (1) the date the original expenditures were paid, or (2) the date the project is placed in service or abandoned, but in no event more than three (3) years after the original expenditures were paid. XV. USE OF ANTICIPATED BOND PROCEEDS The use of anticipated bond proceeds will be limited to preliminary (soft) costs, which may include engineering fees, architect fees, feasibility studies, etc... The Director of Finance mav_ provide additional parameters regarding qualifying uses and will review and approve all requests for the use of anticipated bond proceeds. Departments may not use anticipated bond proceeds for preliminary costs earlier than 60 days from the date the Page 14 of 22 City Council adopts an ordinance authorizing the sale of said bonds. In no event Nvill the use of anticipated bond proceeds exceed the unreserved fund equity of the combined Utilitv System for Electric. Water or Wastewater requests or the operating fund of anv_ other department making a request. XVL METHOD OF SALE A. Competitive Sale When feasible and economical, obligations shall be issued by competitive rather than negotiated sale. Favorable conditions for a competitive method of sale include the following: • The market is familiar with the issuer, and the issuer is a stable and regular borrower in the public market. • An active secondary market with a broad investor base for the issuer's bonds. • The issue is neither too large to be easily absorbed by the market nor too small to attract investors without a concerted sales effort. • The issue is not viewed by the market as carrvina overly_ complex features or requiring explanation as to the bonds' soundness. • Interest rates are stable, market demand is strong, and the market is able to absorb a reasonable amount of buvina or selling at reasonable price changes. 1. Biddina Parameters The notice of sale will be carefully constructed so as to ensure the best possible bid for the City, in light of existina market conditions and other prevailing factors. Parameters to be examined may include: a. Limits between lowest and highest coupons b. Coupon requirements relative to the yield curve c. Method of underwriter compensation, discount or premium coupons d. Use of true interest cost (TIC) versus net interest cost (NIC) e. Use of bond insurance f Serial bonds vs term bonds with mandatory sinking fund redemptions Deep discount bonds h. Call provisions B. Negotiated Sale Bonds issued for the purpose of refunding and or restructuring outstanding debt may appropriately be sold on a negotiated basis when maximum flexibility is required in order for the City to respond to day-to-day nuances in the marketplace and other complications peculiar to the issuance of refunding debt. Whenever the option exists to sell an issue on a negotiated basis, an analysis of the options shall be performed to aid in the decision-making process. The City will present the reasons and will actively participate in the selection of the underN~Titer or direct purchaser. Page 15 of 22 In a negotiated sale, the underwriter mav be selected through a request for proposals (RFP) or because of a relationship established by previous debt transactions. The criteria used to select an underwriter in a negotiated sale mav_ include the following: • Overall experience • Participation in the City's past competitive sales • Marketing philosophy • Capability • Previous experience as manaQina or co-manaaina partner • Financial statement • Public fmance team and resources • Breakdown of underwriter's discount, which includes management fee, underwritina fee, average takedown and other administrative expenses C. Private Placement When cost-beneficial, the Citv may privately place its debt. Since no underwriter participates in a private placement, it may result in lower cost of issuance. Private placement is sometimes an option for small issues. The opportunity may be identified by the financial advisor. XVII. INVESTMENT OF BOND PROCEEDS A. Strategy The Citv should actively monitor its investment practices to ensure maximum returns on its invested bond funds while complying with federal arbitrage guidelines. Specific investment strategies for the investment of bond proceeds are provided in the City's Investment Policy w 403.06. B. Arbitrage Compliance The City will follow a policy of full compliance with all arbitrage rebate requirements of the federal tax code and Internal Revenue Service regulations, and will perform (internally or by contract consultants) arbitrage rebate calculations for each issue subject to rebate on an annual basis. All necessary rebates will be filed and paid when due. C. Arbitrage Liabilitv Management The r4+w,_#~T Ht ~+,ia+-°Chief Financial Officer will maintain a system for tracking arbitrage rebate liability and ensuring that required calculations are performed on a timely basis. These calculations will be performed annually. Funds should be set aside in anticipation of potential rebate liabilities. Due to the Page 16 of 22 complexity of the arbitrage calculations and regulations, and to the severity of the penalties for noncompliance, the advice of Bond Counsel and qualified experts will be pursued on an ongoing basis. D. All bond proceeds Nvill be separately accounted for in the financial accounting system to facilitate arbitrage tracking and reporting. The 4" 4 Chief Financial Officer shall include in the CAFR a report summarizing the City's arbitrage rebate liability. Page 17 of 20 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued) REFERENCE N1 J1\I13ER: TITLE: DEBT SERVICE MANAGEMENT 403.07 GLOSSARY AntortiZation - The planned reduction of a debt obligation according to a stated maturitv or redemption schedule Arbitrage - The gain which may be obtained by borrowing funds at a lower (often tax-exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax-exempt securities has been severely curtailed bv_ the Tax Reform Act of 1986, as amended Average Life - The average length of time debt is expected to be outstanding. Generally, a level debt service structure will limit the average life of a bond issue (i.e., a 20 year final maturity will have an approximate average life of 12 years, and a 30 year final maturity will have an approximate average life of 18 years). Basis Point - One one-hundredth of one percent (0.0001) BBI - Bond Buver Index. Comparison of current rates for various maturities Bid Form - The document used by an underN~Titer to submit his bid at a competitive sale Bond - A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments Bond Counsel - An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel's opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation Bond Insurance - Bond insurance is a type of credit enhancement whereby a monoline insurance company indemnifies an investor against a default by the issuer to pay principal and interest in-full and on-time. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued Book-Entry-Only - Bonds that are issued in fully-registered form but without certificates of ownership. The ownership interest of each actual purchaser is recorded on computer Bond Fears - $1000 of debt outstanding for one vear used to compute average life and net interest cost Call Option - The right to redeem a bond prior to its stated maturity, either on a given date or continuously. The call option is also referred to as the optional redemption provision Page 18 of 20 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued) REFERENCE N1 J1\I13ER: TITLE: DEBT SERVICE MANAGEMENT 403.07 Capital Appreciation Bond - A bond without current interest coupons that is sold at a substantial discount from par. Investors are provided with a return based upon the accretion of value in the bond through maturity Capital Lease - The acquisition of a capital asset over time rather than merely paying a rental fee for temporary use. A lease-purchase agreement in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease Certificates of Obligation - A type of debt authorized to be issued pursuant to the Certificates of Obligation Act of 1971 (Subchapter C of Chapter 271, Texas Government Code). Closing - When bonds are exchanged for money (a: k a delivery or settlement) Commercial Paper (Tax-Exempt) - By convention, short-term, unsecured promissory notes issued in either registered or bearer form with a stated maturity of 270 days or less Competitive Sale - A sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost Coupon Rate - The interest rate on specific maturities of a bond issue. While the term "coupon" derives from the days when virtually all municipal bonds were in bearer form with coupons attached, the term is still frequently used to refer to the interest rate on different maturities of bonds in registered form Cover Bid - The runner-up in a competitive bond sale Credit Enhancements - Credit enhancements are mechanisms which guarantee principal and interest payments. They include bond insurance and a line or letter of credit. A credit enhancement, while costly, will usually brina a lower interest rate on debt and a higher rating from the rating agencies, thus lowering overall costs. Cost effectiveness of credit enhancement will be evaluated for each debt issue CDSIP Number - The term CUSIP is an acronym for the Committee on Uniform Securities Identification Procedures. An identification number is assigned to each maturity of an issue, and is usually printed on the face of each individual certificate of the issue. The CUSIP numbers are intended to help facilitate the identification and clearance of municipal securities. As the municipal market has evolved, and the new derivative products are devised, the importance of the CUSIP system for identification purposes has increased Dated Date - A defined date at which interest begins to accrue from Page 19 of 20 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued) REFERENCE NLJAIBER: TITLE: DEBT SERVICE MANAGEMENT 403.07 Debt Burden - The ratio of outstanding tax-supported debt to the market value of property within a jurisdiction. The overall debt burden includes a jurisdiction's proportionate share of overlapping debt as well as the municipality's direct net debt Debt Limitation - The maximum amount of debt that is legally permitted by a jurisdiction's charter, constitution, or statutory requirements Debt Service - The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years Debt Service Reserve Fund - The fund into which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds, or it may only be partly funded at the time of the issuance and allowed to reach its full funding requirement over time, due to the accumulation of pledged revenues. If the debt service reserve fund is used in whole or part to pay debt service, the issuer usually is required to replenish the funds from the first available funds or revenues. A typical reserve requirement might be the maximum aggregate annual debt service requirement for anv year remaining until the bonds reach maturity. The size of the reserve fund, and the manner in which it is invested, may be subject to arbitrage regulations. Default - The failure to pay principal or interest in full or on time. An actual default should be distinauished from technical default. The latter refers to a failure by an issuer to abide by certain covenants but does not necessarily result in a failure to pay principle or interest when due. Defeasance - Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. government obligations Depository Trust Company (DTC) - A limited purpose trust company organized under the New York Bankina Law. DTC facilitates the settlement of transactions in municipal securities Downgrade - A reduction in credit rating Enterprise Activity -A revenue-generating project or business. The project often provides funds necessary to pay debt service on securities issued to finance the facility. The debts of such projects are self-liquidating when the projects earn sufficient monies to cover all debt service and other requirements imposed under the bond contract. Common examples include water and sewer treatment facilities and utility facilities Page 20 of 20 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued) REFERENCE N1 J1\I13ER: TITLE: DEBT SERVICE MANAGEMENT 403.07 Electronic,lunicipal,llarlfet Access (E_11,114) - Effective Jule 1. 2009, the SEC implemented amendments to SEC Rule 15c2-12 which approved the establishment by the MSRB of EMMA, the sole successor to the nationally recognized municipal securities information repositories with respect to filings made in connection with disclosure undertakings. Access to filings are made free of charge to the general public by the MSRB. Final Official Statement (FO.S) - A document published by the issuer which generally discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities Flow of Funds - The order in which pledged revenues must be disbursed, as set forth in the trust indenture or bond resolution. In most instances, the pledged revenues are deposited into a general collection account or revenue fund as they are received and subsequently transferred into the other accounts established by the bond resolution or trust indenture. The other accounts provide for payment of the costs of debt service, debt service reserve deposits, operation and maintenance costs, renewal and replacement, and other requirements General Obligation Debt- Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Good Faith Deposit - A sum of money given by the Underwriter to assure his bid Institutional Buyer - Banks, financial institutions, insurance companies, and bond funds Issuance Costs - The costs incurred by the bond issuer during the planning and sale of securities. These costs include but are not limited to financial advisory and bond counsel fees, printing and advertising costs, rating agencies fees, and other expenses incurred in the marketing of an issue Junior Lien Bonds - Bonds which have a subordinate claim against pledged revenues Letter of Credit - Bank credit facility whereby a bank will honor the payment of an issuer's debt, in the event that an issuer is unable to do so, thereby providing an additional source of security for bondholders for a predetermined period of time. A letter of credit often is referred to as an L/C or an LOC. Letter of Credit can be issued on a "stand-by" or "direct pay" basis Level Debt Service - When annual payments are substantially the same each year Line of Credit - Bank credit facility wherein the bank agrees to lend up to a maximum amount of funds at some date in the future in return for a commitment fee Page 21 of 20 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued) REFERENCE N1 J1\I13ER: TITLE: DEBT SERVICE MANAGEMENT 403.07 Alanager - The member (or members) of an underwriting svndicate charged with the primary responsibility for conducting the affairs of the syndicate. The managers take the largest underN~Titina commitment Lead Manager or Senior Manager The underwriter serving as head of the syndicate. The lead manager generally handles negotiations in a negotiated underwritina of a new issue of municipal securities or directs the process by which a bid is determined for a competitive underN~Titina. The lead manager also is charged with allocating securities among the members of the syndicate in accordance with the terms of the sv_ ndicate agreement or agreement among underN~Titers Joint Manager or Co-Manager Anv member of the management group Municipal Advisory Council of Texas (_AT4C) - The designated State of Texas Information Depository as approved bv_ the SEC with respect to filings made in connection with undertakings. Alunieipal Securities Rulenzaking Board (AISRB) - A self-regulating organization established on September 5. 1975 upon the appointment of a 15-member Board by the Securities and Exchanae Aareement. The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of N~Titina rules of conduct for the municipal securities market. New Board members are selected by the MSRB pursuant to the method set forth in Board rules Negotiated Sale - A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding Net Interest Cost - The average interest cost of a bond issue calculated on the basis of simple interest. Paying Agent - An agent of the issuer with responsibility for timely payment of principal and interest to bond holders Preliminary Official Statement (POS) - The POS is a preliminary version of the official statement which is used by an issuer or underwriters to describe the proposed issue of municipal securities prior to the determination of the interest rate(s) and offering prices(s). The preliminary official statement, also called a "red herring", often is examined upon by potential purchasers prior to making an investment decision Present Value - The value of a future amount or stream of revenues or expenditures in current dollars Page 22 of 20 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE (Continued) REFERENCE NLJAIBER: TITLE: DEBT SERVICE MANAGEMENT 403.07 Refunding - An advance refunding is a refunding that occurs more than 90 days before the call date of the refunded bonds. A current refunding is a process of selling a new issue of securities to obtain funds needed to retire existina securities. Debt refunding is done to extend maturitv and or to reduce debt service cost Retail Buyer - Individual investors Revenue Bond - A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise activity. Generally. no voter approval is required prior to issuance of such obligations Secondary Alarket - The market in which bonds are sold after their initial sale in the new issue market Senior Lien Bonds - Bonds having a prior, or first claim on pledged revenues Serial Bonds - A bond issue in which the principal is repaid in periodic installments over the issue's life Split ratings - Different rating levels from different rating agencies Surety Bond - A bond guaranteeing performance of a contract or obligation Term Bonds - Term bonds usually refer to a particularly large maturity of a bond issue that is created by aaareaatina a series of maturities. A provision is often made for the mandatory redemption of specified amounts of principal during several years prior to the stated maturity, which effectively simulates serial bonds True Interest Cost (TIC) - An expression of the average interest cost in present value terms. The true interest cost is a more accurate measurement of the bond issue's effective interest cost and should be used to ascertain the best bid in a competitive sale Variable Rate Bond - A bond on which the interest rate is reset periodically, usually no less often than semi-annually. The interest rate is reset either bv_ means of an auction or through an index Lpgrade - An increase in credit rating sNegaNur documentsVesolutions1101debt policy.doc RESOLUTION NO. A RESOLUTION REVISING ADMINISTRATIVE POLICY NO. 403.07 "DEBT SERVICE MANAGEMENT" AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, on the 5t` day of March, 1996, the City Council passed Resolution No. 96-013 adopting Administrative Policy No. 403.07 "Debt Service Management"; and WHEREAS, the policy was most recently amended on the 20'' day of April, 2010, when the City Council passed Resolution No. 2010-012 adopting the current version of the Debt Service Management Policy; and WHEREAS, the Chief Financial Officer for the City of Denton has presented a proposed revision of the Debt Service Management Policy for the Council's consideration; and WHEREAS, the City Manager recommends adoption of the revised policy and the City Council desires to adopt such policy as the official policy regarding Debt Service Management; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The following policy entitled "Policy No. 403.07 "Debt Service Management", attached hereto and made a part hereof, is hereby adopted as an official policy of the City of Denton, Texas and shall replace the existing Debt Service Management Policy. SECTION 2. The attached policy shall be filed in the official records with the City Secretary. SECTION 3. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: CITY OF DENTON Page 1 of 21 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE SECTION: FINANCE REFERENCE NUMBER: 403.07 SUBJECT: DEBT MANAGEMENT INITIAL EFECTIVE DATE: 03/05/96 TITLE: DEBT SERVICE MANAGEMENT LAST REVISION DATE: 11/2/10 POLICY STATEMENT This policy shall provide general guidelines by which the City of Denton (the City) will issue debt. In as much as this policy may be in conflict or inconsistent with state law, state law will prevail. Furthermore, state law will prevail on matters not specifically addressed in this policy. It is the objective of this policy that (1) the City obtain financing only when necessary, (2) the process for identifying the timing and amount of debt or other financing proceed as efficiently as possible, and (3) the City seek the most favorable interest rate and competitive costs. This debt management policy applies to the financing activities of the City of Denton, Texas. It also addresses the issues of process, use and limitations. Proceeds from debt issuances will be delivered as closely as possible to the time that contracts are expected to be awarded so that the proceeds are spent in the most efficient manner. The City Council shall review and approve the debt management policy at least annually and be documented by ordinance or resolution, which shall include any changes made. ADMINSTRATIVE PROCEDURES 1. DEBT MANAGEMENT COMMITTEE A. Members The Debt Management Committee (the Committee) will consist of the City Manager, Assistant City Managers, and the Chief Financial Officer. The City's financial advisor and bond counsel shall act as consultants to the Committee. B. Scope The Committee shall meet at least annually to review the debt program or as necessary. Topics for discussion should include: the Capital Improvement Program, status of outstanding debt, unspent bond proceeds, and unissued voter authorized debt, timing of additional financing needs and financing options, and the effect of proposed financing activity on the related rates supporting the debt (i.e., property tax rate, utility rates, user fees, etc.). Page 2 of 21 II. RESPONSIBILITY AND STANDARD OF CARE The Finance Department will coordinate all activities required for the issuance of all debt. A. Delegation The Chief Financial Officer shall have primary responsibility for developing financing recommendations. The Chief Financial Officer shall: • Meet no less than annually with Department Directors to consider the need for financing, review debt capacity and assess progress on the Capital Improvement Program; • Review changes in state and federal legislation; • Review annually the provisions of ordinances authorizing issuance of obligations; • Periodically review the City's Charter to ensure compliance with state law; and • Annually review services provided by the financial advisor, bond counsel, paying agent, and other service providers to evaluate the extent and effectiveness of the services being provided. B. Conflicts of Interest All participants in the debt management process shall seek to act responsibly as custodians of public assets. Officers and employees involved in the debt management process shall refrain from personal business activity that could conflict with proper execution of the financing program, or which could impair their ability to make impartial financing decisions. C. Reporting The Chief Financial Officer shall include in the Comprehensive Annual Financial Report (CAFR) a report summarizing all debt outstanding by type (tax supported and revenue backed), remaining balance of bond proceeds, update of arbitrage liability, and update of pertinent legislative changes. D. Investor Relations The City shall endeavor to maintain a positive relationship with the investment community. The Chief Financial Officer and the City's financial advisor shall, as necessary, prepare reports and other forms of communications regarding the City's indebtedness, as well as its future financing plans. This includes information presented to the press and other media. The information includes, but is not limited to, the annual program of services, comprehensive annual financial report, financial plans, capital improvement plans, and comprehensive development plans. Page 3 of 21 All forms of media deemed appropriate and immediately available to the City will be utilized to disseminate information to all investors. Examples include the Texas Municipal Report, The Bond Buyer, Electronic Municipal Market Access (EMMA) and the Municipal Advisory Council of Texas (MAC). Bond counsel will advise on the use of electronic media in connection with the City's debt program. E. Financial Advisor The City shall retain an independent financial advisor for advice on the structuring of new debt, financial analysis of various options, the rating review process, the marketing of debt issues, marketability of City obligations, sale and post-sale services, the review of the official statement, and other services, as necessary. The City will seek the advice of the financial advisor on an ongoing basis. The financial advisor will perform other services as defined by the agreement approved by the City Council. The financial advisor will not bid on nor underwrite any city debt issues without requesting and obtaining a written consent to bid prior to submitting a bid in accordance with the provisions of Rule G-23 of the Municipal Securities Rulemaking Board (MSRB). The Chief Financial Officer shall be the responsible person to receive such a request and will make the final written recommendation to the City Council. F. Bond Counsel The City shall retain bond counsel for legal and procedural advice on all debt issues. Bond counsel shall advise the City Council in all matters pertaining to its bond ordinance(s) and/or resolution(s). No action shall be taken with respect to any obligation until a written instrument (i.e., Certificate of Ordinance or other prevailing instrument) has been prepared by the bond attorneys certifying the legality of the proposal. The bond attorneys shall prepare all ordinances and other legal instruments required for the execution and sale of any bonds issued which shall then be reviewed by the City Attorney and the Chief Financial Officer. The City will also seek the advice of bond counsel on all other types of debt and on any other questions involving federal tax or arbitrage law. Special counsel may be retained to protect the City's interest in complex negotiations. III. OFFICIAL STATEMENT The preparation of the Official Statement is the responsibility of the financial advisor in concert with the Chief Financial Officer. Information for the Official Statement is gathered from departments/divisions throughout the City. The City will take all appropriate steps to comply with the federal disclosure rules (i.e., Securities and Exchange Commission Rule 15c2-12). The City will provide annual and material event disclosure to information repositories throughout the term of securities for the benefit of the primary and secondary municipal markets as required by Rule 15c2-12. Page 4 of 21 IV. DISCLOSURE A. With each bond offering, and at least annually, in the preparation of Financial Reports or Official Statements or any other offering document, the City will follow a policy of full and complete disclosure of operating, financial and legal conditions of the City, in conformance with the Government Finance Officers Association Disclosure Guideline, and as advised by disclosure counsel or financial advisor. B. Notice of Events Securities and Exchange Commission (SEC) Rule 15c2-12 lists certain events that must be reported in a timely fashion to the Municipal Security Rulemaking Board (MSRB) via the Electronic Municipal Market Access (EMMA) system and, if required by Rule 15c2-12, to the State Information Depository (SID), the Municipal Advisory Council of Texas (MAC). On May 26, 2010, the SEC made amendments to Rule 15c2-12, which only apply to primary offerings that occur on or after December 1, 2010. While not required, the City will make every effort to apply the new requirements to existing bond issuances since the amendments make Rule 15c2-12 more stringent. 1. The events that must be reported, if material are: a. Nonpayment related defaults; b. Modifications of rights of security holders; c. Bond calls; d. Release, substitution, or sale of property securing repayment of the securities; e. Mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated person or their termination; £ Appointment of a successor or additional trustee or the change of the name of a trustee. 2. The events that must be reported, regardless of materiality, are: a. Principal and interest payment delinquencies; b. Nonpayment related defaults; c. Unscheduled draws on debt service reserves reflecting financial difficulties; d. Unscheduled draws on credit enhancements reflecting financial difficulties; e. Substitution of credit or liquidity providers, or their failure to perform; f. Adverse tax opinions or events affecting the tax-exempt status of the security; g. Defeasances; h. Rating changes; Page 5 of 21 i. The issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the securities; j. Tender offers; k. Bankruptcy, insolvency, receivership or similar proceeding. C. In addition, the SEC has approved the following proposals to become effective within the next year: a. Underwriters shall indicate on the EMMA system whether the issuer has agreed to provide secondary market disclosure information, when it will be provided, and the name of the obligated entity. b. The MSRB shall indicate on the EMMA system the issues that voluntarily agree to provide the following: 1. Annual financial information within 120 days (150 days until December 31, 2013) after the fiscal year ends; 2. An undertaking to prepare audited financial statements in compliance with accounting standards established by the Governmental Accounting Standards Board; and 3. The website link to the issuer's financial information. Full disclosure of the operations will be made to the bond rating agencies. The City staff, with the assistance of the financial advisors and bond counsel, will prepare the necessary materials for and presentation to the rating agencies. V. RATING AGENCY COMMUNICATIONS & CREDIT OBJECTIVES The City will seek to maintain and improve its current bond rating so its borrowing costs are reduced to a minimum and its access to credit is preserved. In conjunction with the financial advisor, the City shall maintain a line of communication with at least two of the rating agencies (Moody's, Standard & Poor's, and Fitch), informing them of major financial events in the City as they occur. The Comprehensive Annual Financial Report, Annual Program of Services, and Capital Improvement Plan, shall be distributed to the rating agencies after they have been accepted/adopted by the City Council on an annual basis. When necessary, a conference call or personal meeting with representatives of the rating agencies will be scheduled when a major capital improvement program is initiated, or to discuss economical and/or financial developments which might impact credit ratings. The following documents may be required by the rating agencies: Most recent annual audit reports, including a description of accounting practices. Accounting changes in the past three years and the impact on financial results should be explained. Current budget. Current Capital Improvement Program. Page 6 of 21 Official statements for new financings. Description of projects being financed. Sources and uses statement for bond issuance. If additional funds are required to complete specific projects being financed, the source of the funds and any conditional requirements may be discussed. Engineering and feasibility report (if applicable). Zoning or land-use map (if applicable). Cash flow statement, in the case of interim borrowing. Statement of long - and short-term debt with annual and monthly maturity dates as appropriate. Also, a report of any lease obligations, their nature and term. Indication of appropriate authority for debt issuance - Investment policy (if applicable). Statement concerning remaining borrowing capacity plus tax rate and levy capacity or other revenue capacity. VI. LIMITATIONS OF INDEBTEDNESS City staff, in conjunction with the financial advisor and bond counsel, will present to the City Council, and any city committee as appropriate, a comprehensive analysis of debt capacity prior to issuing bonds. This analysis should cover a broad range of factors, including: • Legal debt limits, tax or expenditure ceilings. • Coverage requirements or additional bonds tests in accordance with bond covenants. • Measures of the tax and revenue base, such as projections of relevant economic variables (e.g., assessed property values, employment base, unemployment rates, income levels, and retail sales). • Population trends. • Utilization trends for services underlying revenues. • Factors affecting tax collections, including types of property, goods, or services taxed, assessment practices and collection rates, evaluation of trends relating to the City's financial performance, such as revenues and expenditures, net revenues available after meeting operating requirements. • Reliability of revenues expected to pay debt service. • Unreserved fund balance levels. • Debt service obligations, such as existing debt service requirements. • Debt service as a percentage of expenditures or tax or system revenues. • Measures of debt burden on the community, such as debt per capita, debt as a percentage of full or equalized assessed property value, and overlapping or underlying debt. • Tax-exempt market factors affecting interest costs, such as interest rates, market receptivity, and credit rating. The City has revenue bonds and other indebtedness of the Electric, Water, and Wastewater Funds. The City will maintain coverage ratios as dictated by the City's outstanding bond covenants (e.g. 1.25 times the maximum principal and interest of all Page 7 of 21 outstanding revenue bonds and/or 1.50 times the average annual principal and interest of all outstanding revenue bonds, or as required by individual bond covenants). The Electric, Water, and Wastewater Funds' total long-term debt outstanding shall not exceed the amount of combined fund equity. VII. CAPITAL IMPROVEMENT PLAN A. The City will seek all possible federal and state reimbursement for mandated projects and/or programs. The City will pursue a balanced relationship between issuing debt and pay-as-you-go financing as dictated by prevailing economic factors and as directed by the City Council. B. Current operations will not be financed with long-term debt. C. Debt incurred to finance capital improvements will be repaid within the useful life of the project or earlier, if callable. D. High priority will be assigned to the replacement of capital improvements when they have deteriorated to the point there they are hazardous, incur high maintenance costs, negatively affect property values, or no longer serve their intended purposes. E. An updated Capital Improvement Plan will be presented to the City Council for approval on an annual basis. This plan will be used as a basis for the long-range financial planning process. VIII. TYPES OF DEBT The City's bond counsel and financial advisor will present the different types of debt best suited and legally permissible under state law for each debt issue and assist in analyzing the use of capital lease purchases or the use of lines of credit. These types may include: • short-term vs. long-term debt, • general obligation vs. revenue debt, • fixed debt, • lease-backed debt, • special obligation debt such as assessment district debt, • certificates of obligation debt • combination tax and revenue debt, • tax increment debt, • conduit issues, and • taxable debt. The issuance of variable rate debt requires the approval of the City Council and is not expressly permitted by this policy. The Chief Financial Officer will be responsible for evaluating this type of debt and will present a recommendation and variable rate debt policy to the City Council as necessary. Page 8 of 21 IX. BOND STRUCTURE Structural features that may be considered are: • maturity of the debt, • setting the final maturity of the debt equal to or less than the useful life of the project, • use of zero coupon bonds, capital appreciation bonds, deep discount bonds, or premium bonds, • debt service structure (level debt service payments, level principal payments or other repayment structure defined by state law), • redemption provisions (mandatory and optional call features), • use of credit enhancement, • use of senior lien and junior lien obligations, and • others, as deemed appropriate in consultation with financial advisor and bond counsel. X. SHORT-TERM DEBT A. General Short-term obligations may be issued to finance projects or portions of projects for which the City ultimately intends to issue long-term debt; i.e., it will be used, when appropriate, to provide interim financing which will eventually be refunded with the proceeds of long-term obligations. Short-term obligations may be backed with a tax and/or revenue pledge or a pledge of other available resources. Interim financing may be appropriate when long-term interest rates are expected to decline in the future. In addition, some forms of short-term obligations may be obtained more quickly than long-term obligations and, thus, may be used until long-term financing is secured. B. Commercial Paper Due to the financing costs associated with the marketing and placement of commercial paper, programs of less than $25 million may not be cost effective. Should the opportunity to participate in a commercial paper issuance pool present itself or if the establishment of a program becomes cost effective, the advantages and disadvantages shall be evaluated by the Chief Financial Officer. The use of a commercial paper program requires approval by the City Council. C. Anticipation Notes Anticipation notes do not require giving a notice of intent. Anticipation notes may be secured and repaid by a pledge of revenue, taxes, or the proceeds of a Page 9 of 21 D future debt issue. Anticipation notes may be authorized by an ordinance adopted by the City Council. Anticipation notes may be used to finance projects or acquisitions that could also be financed using Certificates of Obligation and have the following restrictions: 1) Anticipation notes may not be used to repay interfund borrowing or a borrowing that occurred up to/or more than 24-months prior to the date of issuance, and 2) A governing body may not issue anticipation notes that are payable from bond proceeds unless the proposition authorizing the issuance of the general obligation bonds has already been approved by the voters. Line of Credit To the extent authorized by state law and with the approval of the City Council, the City may establish a tax-exempt line of credit with a financial institution selected through a competitive process. Draws shall be made on the line of credit when (1) the need for financing is so urgent that time does not permit the issuance of long-term debt, or (2) the need for financing is so small that the total cost of issuance of long-term debt including carrying costs of debt proceeds not needed immediately is significantly higher. Draws will be made on the line of credit to pay for projects designated for line of credit financing by the City Council. Borrowings under the line of credit shall be repaid from current revenues. The Chief Financial Officer will authorize all draws on the line of credit, as authorized in the agreement approved by the City Council. E. Capital Leasing Capital leasing is an option for the acquisition of a piece or package of equipment. Leasing shall not be considered when funds are on hand for the acquisition unless the interest expense associated with the lease is less than the interest that can be earned by investing the funds on hand or when other factors such as budget constraints or vendor responsiveness override the economic consideration. Whenever a lease is arranged with a private sector entity, a tax-exempt rate shall be sought. Whenever a lease is arranged with a government or other tax-exempt entity, the City shall obtain an explicitly defined taxable rate so that the lease will not be counted in the City's total annual borrowings subject to arbitrage rebate. The lease agreement shall permit the City to refinance the lease at no more than reasonable cost should the City decide to do so. A lease which may be called at will is preferable to one which may merely be accelerated. The City shall obtain at least three (3) competitive proposals for any lease financing. The net present value of competitive bids shall be compared, taking Page 10 of 21 into account whether payments are in advance or in arrears, and how frequently payments are made. The purchase price of equipment shall be competitively bid, as required by state law, as well as the financing costs. The Chief Financial Officer will ensure any leasing agreement is compared to other financing options to ensure the lease is cost beneficial. Alternate financing options will include, certificates of obligation and lines of credit. The Chief Financial Officer will be the person responsible for evaluating this financing source, and will make a recommendation to the City Council for approval. F. Interfund Loans As allowed by the City, the Chief Financial Officer will review opportunities whereby interfund loans may be utilized to meet short-terra financing needs. Interfund loans will only be utilized if economically beneficial to the lending fund and only if the rate of return is comparable or higher than the rate of return the lending fund would otherwise receive by keeping funds in the City's investment pool. Any interfund loan must be approved by the City Council. Xl. LONG-TERM DEBT A. General Proceeds from the sale of long-term obligations will not be used for operating purposes, and the life of the obligations will not exceed the estimated useful life of the projects financed. Voter approved general obligation bonds will strive to have a final maturity of twenty (20) years or less. Revenue bonds and certificates of obligation will strive to have a final maturity of thirty (30) years or less. If deemed appropriate, staff may present to the City Council extraordinary circumstances in which longer final maturities may be necessary but never in excess of the useful life of an individual project. A level debt service structure will be used unless operational matters and marketing considerations dictate otherwise. The cost of issuance of private activity bonds is usually higher than for governmental purpose bonds. Consequently, private activity bonds will be issued only when they will economically benefit the City. The cost of taxable debt is higher than for tax-exempt debt. However, the issuance of taxable debt may be required or may be more appropriate in some circumstances and may allow valuable flexibility in subsequent contracts with users or managers of the improvement constructed with the bond proceeds. Therefore, the City will usually issue tax-exempt obligations but may occasionally issue taxable obligations. Page 11 of 21 B. Bonds Long-term general obligation, including certificates of obligation, or revenue bonds shall be issued to finance significant and desirable capital improvements. The general obligation bonds will be used for purposes set forth by voters in bond elections or to refund previously issued general obligation bonds or certificates of obligation. All bonds shall be sold in accordance with applicable law. C. Certificates of Obligation Certificates of obligation may be issued to: • finance permanent improvements and land acquisition • finance costs associated with capital project overruns • acquire equipment/vehicles • leverage grant funding • renovate, acquire, construct facilities and facility improvements • construct street improvements • provide funding for master plans/studies • address necessary life safety needs • finance revenue producing facilities if determined to be more economical than revenue bonds In accordance with state law, a resolution authorizing publication of notice of intent to issue certificates of obligation shall be presented for the consideration of the City Council. The notice of intent shall be published in a newspaper of general circulation in the City once a week for two consecutive weeks with the first publication to be at least thirty (30) days prior to the sale date. Certificates of obligation may be backed by a tax pledge under certain circumstances as defined by law. They may also be backed by a combination tax and revenue pledge eligible under state law. Some revenues are restricted as to the uses for which they may be pledged. Electric, Water, and Wastewater revenues may be pledged without limit for Electric, Water, and Wastewater purposes but may only be pledged to a limit of $1,000 for any one series of bonds issued for non-utility system purposes. The final maturity of certificates of obligation will be in accordance with Section XI, A. D. Public Property Finance Contractual Obligation Public property finance contractual obligations may be issued to finance the acquisition of personal property. Page 12 of 21 E. Revenue Bonds In addition to the policies set forth above, when cost-beneficial and when permitted under applicable state law, the City may consider the use of surety bonds, letters of credit, or similar instruments to satisfy mandated debt service reserve fund requirements on outstanding and/or proposed revenue bonds. F. Combination Tax and Revenue Bonds In addition to the policies set forth above, when cost-beneficial and when permitted under applicable state law, the City may consider the use of Combination Tax and Revenue Bonds for refunding obligations of the Electric, Water and Wastewater combined utility system, and Solid Waste or any other self-supporting revenue producing City enterprise. Combination Tax and Revenue Bonds will comply with applicable state law and are assigned the full faith and credit of the City, thereby enhancing the credit rating otherwise obtained from revenue supported only debt (Revenue Bonds). XII. CREDIT ENHANCEMENTS Credit enhancements are mechanisms which guarantee principal and interest payments. They include bond insurance, lines of credit, surety bonds and letters of credit. A credit enhancement, while costly, is intended to bring a lower interest rate on debt and a higher rating from the rating agencies, thus lowering overall costs. The City's financial advisor will advise the city whether or not a credit enhancement is cost effective under the circumstances and what type of credit enhancement, if any, should be purchased. In a negotiated sale, bids will be taken during the period prior to the pricing of the sale. In a competitive sale, bond insurance may be provided by the purchaser if the purchaser finds it cost effective. Other credit enhancements may arise in the future, which may be beneficial. The City's financial advisor will present these options for consideration. XIII. REFUNDING AND RESTRUCTURING OPTIONS In the case of advance refundings, the City shall consider refunding debt whenever an analysis indicates the potential for present value savings of at least 3% of the par amount being refunded. In the case of current refundings, the City shall consider refunding debt whenever an analysis indicates the potential for present value savings above the costs of refunding the bonds. Refunding for savings should not extend the final maturity of the original obligations, unless specifically approved by the City Council. Page 13 of 21 XIV. REIMBURSEMENT ORDINANCES The Chief Financial Officer will review and approve all reimbursement ordinances from City departments, including enterprise fund departments, before forwarding to the City Council for consideration. In no event will a reimbursement ordinance exceed the unreserved fund equity of the combined Utility System for Electric, Water or Wastewater requests or the operating fund of any other department making a request. Reimbursement ordinances must be adopted within sixty (60) days of the date the original expenditures were paid. Bonds must be issued and the reimbursement allocation made not later than eighteen (18) months after the later of (1) the date the original expenditures were paid, or (2) the date the project is placed in service or abandoned, but in no event more than three (3) years after the original expenditures were paid. XV. USE OF ANTICIPATED BOND PROCEEDS The use of anticipated bond proceeds will be limited to preliminary (soft) costs, which may include engineering fees, architect fees, feasibility studies, etc... The Director of Finance may provide additional parameters regarding qualifying uses and will review and approve all requests for the use of anticipated bond proceeds. Departments may not use anticipated bond proceeds for preliminary costs earlier than 60 days from the date the City Council adopts an ordinance authorizing the sale of said bonds. In no event will the use of anticipated bond proceeds exceed the unreserved fund equity of the combined Utility System for Electric, Water or Wastewater requests or the operating fund of any other department making a request. XVI. METHOD OF SALE A. Competitive Sale When feasible and economical, obligations shall be issued by competitive rather than negotiated sale. Favorable conditions for a competitive method of sale include the following: • The market is familiar with the issuer, and the issuer is a stable and regular borrower in the public market. • An active secondary market with a broad investor base for the issuer's bonds. • The issue is neither too large to be easily absorbed by the market nor too small to attract investors without a concerted sales effort. • The issue is not viewed by the market as carrying overly complex features or requiring explanation as to the bonds' soundness. • Interest rates are stable, market demand is strong, and the market is able to absorb a reasonable amount of buying or selling at reasonable price changes. Page 14 of 21 1. Bidding Parameters The notice of sale will be carefully constructed so as to ensure the best possible bid for the City, in light of existing market conditions and other prevailing factors. Parameters to be examined may include: a. Limits between lowest and highest coupons b. Coupon requirements relative to the yield curve c. Method of underwriter compensation, discount or premium coupons d. Use of true interest cost (TIC) versus net interest cost (NIC) e. Use of bond insurance f. Serial bonds vs term bonds with mandatory sinking fund redemptions g. Deep discount bonds h. Call provisions B. Negotiated Sale Bonds issued for the purpose of refunding and/or restructuring outstanding debt may appropriately be sold on a negotiated basis when maximum flexibility is required in order for the City to respond to day-to-day nuances in the marketplace and other complications peculiar to the issuance of refunding debt. Whenever the option exists to sell an issue on a negotiated basis, an analysis of the options shall be performed to aid in the decision-making process. The City will present the reasons and will actively participate in the selection of the underwriter or direct purchaser. In a negotiated sale, the underwriter may be selected through a request for proposals (RFP) or because of a relationship established by previous debt transactions. The criteria used to select an underwriter in a negotiated sale may include the following: • Overall experience • Participation in the City's past competitive sales • Marketing philosophy • Capability • Previous experience as managing or co-managing partner • Financial statement • Public finance team and resources • Breakdown of underwriter's discount, which includes management fee, underwriting fee, average takedown and other administrative expenses C. Private Placement When cost-beneficial, the City may privately place its debt. Since no underwriter participates in a private placement, it may result in lower cost of issuance. Private placement is sometimes an option for small issues. The opportunity may be identified by the financial advisor. Page 15 of 21 XVII. INVESTMENT OF BOND PROCEEDS A. Strategy The City should actively monitor its investment practices to ensure maximum returns on its invested bond funds while complying with federal arbitrage guidelines. Specific investment strategies for the investment of bond proceeds are provided in the City's Investment Policy # 403.06. B. Arbitrage Compliance The City will follow a policy of full compliance with all arbitrage rebate requirements of the federal tax code and Internal Revenue Service regulations, and will perform (internally or by contract consultants) arbitrage rebate calculations for each issue subject to rebate on an annual basis. All necessary rebates will be filed and paid when due. C. Arbitrage Liability Management The Chief Financial Officer will maintain a system for tracking arbitrage rebate liability and ensuring that required calculations are performed on a timely basis. These calculations will be performed annually. Funds should be set aside in anticipation of potential rebate liabilities. Due to the complexity of the arbitrage calculations and regulations, and to the severity of the penalties for noncompliance, the advice of Bond Counsel and qualified experts will be pursued on an ongoing basis. D. All bond proceeds will be separately accounted for in the financial accounting system to facilitate arbitrage tracking and reporting. The Chief Financial Officer shall include in the CAFR a report summarizing the City's arbitrage rebate liability. r Page 16of 21 rvi,ik,x/A. YM'41,U AIIV.l' rKVC EDUKLIAU UNISTRATIVE DIRECTIVE Continued TITLE: DEBT SERVICE MANAGEMENT REFERENCE NUMBER: 403.07 GLOSSARY Amortization - The planned reduction of a debt obligation according to a stated maturity or redemption schedule Arbitrage - The gain which may be obtained by borrowing funds at a lower (often tax-exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax-exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended Average Life The average length of time debt is expected to be outstanding. Generally, a level debt service structure will limit the average life of a bond issue (i.e., a 20 year final maturity will have an approximate average life of 12 years, and a 30 year final maturity will have an approximate average life of 18 years). Basis Point - One one-hundredth of one percent (0.0001) BBI - Bond Buyer Index. Comparison of current rates for various maturities Bid Form - The document used by an underwriter to submit his bid at a competitive sale Bond - A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments Bond Counsel - An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel's opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation Bond Insurance - Bond insurance is a type of credit enhancement whereby a monoline insurance company indemnifies an investor against a default by the issuer to pay principal and interest in-full and on-time. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued Book-Entry-Only - Bonds that are issued in fully-registered form but without certificates of ownership. The ownership interest of each actual purchaser is recorded on computer Bond Years - $1,000 of debt outstanding for one year used to compute average life and net interest cost Call Option - The right to redeem a bond prior to its stated maturity, either on a given date or continuously. The call option is also referred to as the optional redemption provision Page 17of 21 rvLtt, II/1V" JLL1N1n1xcAJLJ1VE YKMEDUKE/A111VUNISTRATIVE DIRECTIVE Continued TITLE: DEBT SERVICE MANAGEMENT REFERENCE NUMBER: 403.07 Capital Appreciation Bond - A bond without current interest coupons that is sold at a substantial discount from par. Investors are provided with a return based upon the accretion of value in the bond through maturity Capital Lease - The acquisition of a capital asset over time rather than merely paying a rental fee for temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease Certificates of Obligation T- A type of debt authorized to be issued pursuant to the Certificates of Obligation Act of 1971 (Subchapter C of Chapter 271, Texas Government Code). Closing - When bonds are exchanged for money (alkla delivery or settlement) Commercial Paper (Tax Exempt) - By convention, short-term, unsecured promissory notes issued in either registered or bearer form with a stated maturity of 270 days or less Competitive Sale - A sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost Coupon Rate - The interest rate on specific maturities of a bond issue. While the term "coupon" derives from the days when virtually all municipal bonds were in bearer form with coupons attached, the term is still frequently used to refer to the interest rate on different maturities of bonds in registered form Cover Bid - The runner-up in a competitive bond sale Credit Enhancements - Credit enhancements are mechanisms which guarantee principal and interest payments. They include bond insurance and a line or letter of credit. A credit enhancement, while costly, will usually bring a lower interest rate on debt and a higher rating from the rating agencies, thus lowering overall costs. Cost effectiveness of credit enhancement will be evaluated for each debt issue CUSIP Number - The term CUSIP is an acronym for the Committee on Uniform Securities Identification Procedures. An identification number is assigned to each maturity of an issue, and is usually printed on the face of each individual certificate of the issue. The CUSIP numbers are intended to help facilitate the identification and clearance of municipal securities. As the municipal market has evolved, and the new derivative products are devised, the importance of the CUSIP system for identification purposes has increased Dated Date - A defined date at which interest begins to accrue from Page 18of 21 ruiul%-x/rviviuri6]Lm itlvE rKUUEUUKE/AI)M1NISTRATIVE DIRECTIVE Continued TITLE: DEBT SERVICE MANAGEMENT REFERENCE NUMBER: 403.07 Debt Burden - The ratio of outstanding tax-supported debt to the market value of property within a jurisdiction. The overall debt burden includes a jurisdiction's proportionate share of overlapping debt as well as the municipality's direct net debt Debt Limitation - The maximum amount of debt that is legally permitted by a jurisdiction's charter, constitution, or statutory requirements Debt Service - The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years Debt Service Reserve Fund - The fund into which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds, or it may only be partly funded at the time of the issuance and allowed to reach its full funding requirement over time, due to the accumulation of pledged revenues. If the debt service reserve fund is used in whole or part to pay debt service, the issuer usually is required to replenish the funds from the first available funds or revenues. A typical reserve requirement might be the maximum aggregate annual debt service requirement for any year remaining until the bonds reach maturity. The size of the reserve fund, and the manner in which it is invested, may be subject to arbitrage regulations. Default The failure to pay principal or interest in full or on time. An actual default should be distinguished from technical default. The latter refers to a failure by an issuer to abide by certain covenants but does not necessarily result in a failure to pay principle or interest when due. Defeasance - Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. government obligations Depository Trust Company (DTQ - A limited purpose trust company organized under the New York Banking Law. DTC facilitates the settlement of transactions in municipal securities Downgrade - A reduction in credit rating Enterprise Activity -A revenue-generating projector business. The project often provides funds necessary to pay debt service on securities issued to finance the facility. The debts of such projects are self-liquidating when the projects earn sufficient monies to cover all debt service and other requirements imposed under the bond contract. Common examples include water and sewer treatment facilities and utility facilities Page 19of 21 YD/-%Y T '%71A T%X ffYWl [ l .YRrc ter. r ivLi~ irtivlrlu~i.7R[C~iivr rn%Jq-El)uliL'/"iV NINI'KA'1'1VEll1RECTIVE Continued TITLE: DEBT SERVICE MANAGEMENT REFERENCE NUMBER: 403.07 Electronic Municipal Market Access (EMMA) - Effective July 1, 2009, the SEC implemented amendments to SEC Rule 15c2-12 which approved the establishment by the MSRB of EMMA, the sole successor to the nationally recognized municipal securities information repositories with respect to filings made in connection with disclosure undertakings. Access to filings are made free of charge to the general public by the MSRB. Final Official Statement (FOS) - A document published by the issuer which generally discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities Flow of Funds - The order in which pledged revenues must be disbursed, as set forth in the trust indenture or bond resolution. In most instances, the pledged revenues are deposited into a general collection account or revenue fund as they are received and subsequently transferred into the other accounts established by the bond resolution or trust indenture. The other accounts provide for payment of the costs of debt service, debt service reserve deposits, operation and maintenance costs, renewal and replacement, and other requirements General Obligation Debt- Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Good Faith Deposit - A sum of money given by the Underwriter to assure his bid Institutional Buyer - Banks, financial institutions, insurance companies, and bond funds Issuance Costs - The costs incurred by the bond issuer during the planning and sale of securities. These costs include but are not limited to financial advisory and bond counsel fees, printing and advertising costs, rating agencies fees, and other expenses incurred in the marketing of an issue Junior Lien Bonds - Bonds which have a subordinate claim against pledged revenues Letter of Credit - Bank credit facility whereby a bank will honor the payment of an issuer's debt, in the event that an issuer is unable to do so, thereby providing an additional source of security for bondholders for a predetermined period of time. A letter of credit often is referred to as an L/C or an LOC. Letter of Credit can be issued on a "stand-by" or "direct pay" basis Level Debt Service - When annual payments are substantially the same each year Line of Credit - Bank credit facility wherein the bank agrees to lend up to a maximum amount of funds at some date in the future in return for a commitment fee Page 20of 21 TAY Yf l / l - AY-- a rvi ]L%-X/11L 11VM'1JL3IItaIIVh rm"g- LUKE/AlKV1LVla1'KA'11VjE DIRECTIVE Continued TITLE: DEBT SERVICE MANAGEMENT REFERENCE NUMBER: 403.07 Manager - The member (or members) of an underwriting syndicate charged with the primary responsibility for conducting the affairs of the syndicate. The managers take the largest underwriting commitment Lead Manager or Senior Manager The underwriter serving as head of the syndicate. The lead manager generally handles negotiations in a negotiated underwriting of a new issue of municipal securities or directs the process by which a bid is determined for a competitive underwriting. The lead manager also is charged with allocating securities among the members of the syndicate in accordance with the terms of the syndicate agreement or agreement among underwriters Joint Manager or Co-Manager Any member of the management group Municipal Advisory Council of Texas (MAC) - The designated State of Texas Information Depository as approved by the SEC with respect to filings made in connection with undertakings. Municipal Securities Rulemaking Board (MSRB) - A self-regulating organization established on September 5, 1975 upon the appointment of a 15-member Board by the Securities and Exchange Agreement. The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of writing rules of conduct for the municipal securities market. New Board members are selected by the MSRB pursuant to the method set forth in Board rules Negotiated Sale - A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding Net Interest Cost The average interest cost of a bond issue calculated on the basis of simple interest. Paying Agent - An agent of the issuer with responsibility for timely payment of principal and interest to bond holders Preliminary Official Statement (POS) The POS is a preliminary version of the official statement which is used by an issuer or underwriters to describe the proposed issue of municipal securities prior to the determination of the interest rate(s) and offering prices(s). The preliminary official statement, also called a "red herring", often is examined upon by potential purchasers prior to making an investment decision Present Value - The value of a future amount or stream of revenues or expenditures in current dollars R Page 21 of 21 DC%T ir*'x7jA TN%A ATF&irv" . mi. rr, r v~.i~ irr~Lirlu~i.711tHilY1'J rnu%- mullr L/A111VM-IlblKA1'1VE Ull~'CTIVE Continued TITLE: DEBT SERVICE MANAGEMENT REFERENCE NUMBER: 403.07 Refunding - An advance refunding is a refunding that occurs more than 90 days before the call date of the refunded bonds. A current refunding is a process of selling a new issue of securities to obtain funds needed to retire existing securities. Debt refunding is done to extend maturity and/or to reduce debt service cost Retail Buyer - Individual investors Revenue Bond - A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise activity. Generally, no voter approval is required prior to issuance of such obligations Secondary Market - The market in which bonds are sold after their initial sale in the new issue market Senior Lien Bonds - Bonds having a prior, or first claim on pledged revenues Serial Bonds - A bond issue in which the principal is repaid in periodic installments over the issue's life Split ratings - Different rating levels from different rating agencies Surety Bond - A bond guaranteeing performance of a contract or obligation Term Bonds - Term bonds usually refer to a particularly large maturity of a bond issue that is created by aggregating a series of maturities. A provision is often made for the mandatory redemption of specified amounts of principal during several years prior to the stated maturity, which effectively simulates serial bonds True Interest Cost (TIC) - An expression of the average interest cost in present value terms. The true interest cost is a more accurate measurement of the bond issue's effective interest cost and should be used to ascertain the best bid in a competitive sale Variable Rate Bond - A bond on which the interest rate is reset periodically, usually no less often than semi-annually. The interest rate is reset either by means of an auction or through an index Upgrade - An increase in credit rating AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance All ACM: Jon Fortune SUBJECT Consider approval of a resolution reviewing and adopting revisions to the Investment Policy regarding funds for the City of Denton; and providing an effective date. The Audit/Finance Committee recommends approval (3-0). BACKGROUND Since at least 1996, the City of Denton has had a formal Investment Policy to guide decision making in managing and investing public funds. The City's Investment Policy is modeled after, and in compliance with, the provisions of the Public Funds Investment Act (PFIA) of Texas Government Code Chapter 2256. In accordance with the Code, and in order of importance, are the following prioritized objectives for managing the portfolio's fixed income investments: safety of principal, liquidity, and yield. It is the City's practice to hold securities until they mature, making any temporary gains and losses unlikely to be realized. The general investment strategy, while taking into account the current interest rate environment, is to ladder out securities to meet cash flow needs. At least annually, the City Council and the Audit/Finance Committee are requested to review and approve the Investment Policy per the PFIA. The focus of the revisions is to clarify the language in the Policy, improve the overall management of the investment portfolio, and to reflect any procedural or administrative changes. It is important to note, concerning revisions to the Policy, that the overall investment strategy has not changed. The key elements of the proposed changes are outlined below. The primary proposed change to the Investment Policy is the incorporation of the utility reserve fund into the City's internal investment pool which means that it will no longer be managed as a separate portfolio. The utility reserve fund was originally separated from the pooled fund group to maximize returns by fully investing in securities, and was never expected to contract in size due to yearly revenue bond issuances. However, with the recent demise of the bond insurance industry, it is now more cost effective for the City to issue general obligation debt in place of utility revenue bonds. As a result, the utility reserve fund will decrease in size each year. In addition, continual bond refundings in a lingering low interest rate environment will require the reserve fund to be much more liquid than originally contemplated since excess reserves are applied to reduce outstanding debt. For these reasons, it is staff s opinion that the reserve fund would be better served as part of the City's internal investment pool. The investment pool has a liquidity component that makes it easy to meet any required financial obligations of a refunding, yet has a sufficiently long weighted average maturity to provide some increased yield. From an Agenda Information Sheet November 2, 2010 Page 2 accounting standpoint, the utility reserve balance will continue to be maintained, but it will no longer be separately invested in securities outside of the investment pool. Other noted revisions to the Policy include: 1. A change in staff titles as a result of the City's recent reorganization and a change in the composition of the Investment Committee. (Page 5) 2. The removal of required formal minutes for staff held Investment Committee meetings. (Page 5) 3. The designation of the Investment Policy as the primary guideline for the City's investment program and procedures. (Page 5 & 6) 4. The Securities and Exchange Commission (SEC) required change for all AAAm, Aaa, or equivalently rated money market mutual funds to maintain a 60 day or less weighted average maturity. (Page 10) 5. The inclusion of bank balances in the definition of investment pool liquidity. (Page 10) 6. The establishment of bidding procedures for purchases of certificates of deposit. (Page 11 & 12) First Southwest Asset Management, Inc., the City's investment advisor, has reviewed and approved the revised Investment Policy. RECOMMENDATION Staff recommends approval of Investment Policy 403.06 with the recommended changes. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On February 3, 2009, the Investment Committee reviewed and unanimously recommended approval of revisions to the City's Investment Policy. On March 3, 2009, the City Council approved a resolution adopting the revised Investment Policy. On October 20, 2009, the Audit/Finance Committee reviewed and unanimously recommended approval of revisions to the City's Investment Policy. On November 3, 2009, the City Council approved a resolution adopting the revised Investment Policy. Agenda Information Sheet November 2, 2010 Page 3 On October 19, 2010, the Audit Finance Committee reviewed and unanimously recommended approval of revisions to the City's Investment Policy. EXHIBITS Red-line version of Investment Policy Resolution Respectfully submitted: Bryan Langley Chief Financial Officer CITY OF DENTON POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 1 of 15 SECTION: FINANCE POLICIES REFERENCE NUMBER: 403.06 INITIAL EFFECTIVE DATE: SUBJECT: INVESTMENTS 02 1787 REVISION DATE: TITLE: INVESTMENT POLICY 11 2 1011 (411 1. PURPOSE It is the objective of the City of Denton to invest public funds in a manner which Nyill provide maximum security and the best commensurate vield while meetin, the dailv cash flow demands of the Citv and conformin, to all federal, state, and local statutes, rules, and regulations ,overnin, the investment of public funds. This Policy serves to satisfy the statutory requirements of defining and adopting a formal investment police. The Policy and investment strategies shall be reviewed annually by the Audit Finance Committee and Citv Council Nyho will formally approve any modifications. This Investment Policv, as approved, is in compliance Nyith the provisions of the Public Funds Investment Act of Tex. Gov't. Code Chapter 2256. II. SCOPE A. This Investment Police applies to the investment activities of the City of Denton, Texas. The specific funds cited hereafter in Section IID, shall be excluded from this Investment Policv. All financial assets of all funds, includin, the General Fund and anv other accounts of the City not specifically excluded in these police guidelines are included. These funds are accounted for in the City's Comprehensive Annual Financial Report (CAFR). These funds, as well as funds that may be created from time-to-time, shall be administered in accordance -vyith the provisions of this Policy. All funds Nyill be pooled for investment purposes except for those listed under IIC. In addition to this Policv, the investment of bond proceeds and other bond funds (including debt service and reserve funds) shall be governed and controlled by their governing ordinance and by the provisions of the Tax Reform Act of 1986, including all regulations and rulings promulgated there under applicable to the issuance of tax-exempt obligations. B. Funds covered by this Policv and managed as a pooled fund group: 1. General Fund - used to account for resources traditionally associated -vyith ,ovemment, which are not required to be accounted for in another fund. 2. Special Revenue Funds - used to account for the proceeds from specific revenue sources which are restricted to expenditures for specific purposes. 3. Debt Service Fund used to account for resources to be used for the payment of principal, interest and related costs on general obligation debt. 4. Capital Project Funds - used to account for resources to enable the acquisition or construction of major capital facilities which are not financed by enterprise funds, internal service funds, or trust funds. 5. Enterprise Funds - used to account for operations that are financed and operated in a POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 2 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 manner similar to private business enterprises. 6. Internal Service Funds - used to account for the cost of providing goods or services between City departments. 7. Trust and A,encv Funds - used to account for assets held by the Citv in a trustee capacity or as an agent for individuals, private organizations, other governments, and or other funds. - - - Formatted: Indent: Left: 1.13", No bullets or 8. ond Reserve Funds - finds set at prescribed levels by certain bond ordinances topav numbering principal and or interest if required to prevent default. - Formatted: Underline, Font color: Red 4 Formatted: Underline 4~79. New funds available for investment by the City, such as (but not limited to) resources Formatted: Indent: Left: 1.13", No bullets or associated with Public Improvement Districts or Tax Increment Financing zones, numbering unless specifically excluded herein. C. Funds covered by this Policv and managed as separately invested assets: Bond Funds - funds established with the proceeds from specific bond issues when it is determined that se,re,atin, these funds from the pooled funds' portfolio will result in maximum interest eamin, retention under the provisions of the Tax Reform Act of 1986. 24. Endowment Funds - funds ,iven to the Citv with the instructions that the principal is to remain intact, unless otherwise a,reed to, and the income generated by the investments will be used for specified purposes. 34. Trust or Escrowed Funds - funds held outside the Citv_ by a trust or escrow agent but belon,in, to the Citv. D. This Policv shall not govern funds, which are managed under separate investment programs in accordance with the Tex. Gov't. Code Sec. 2256.004. Such programs currently include all funds related to employee retirement programs, other funds established by the City for deferred employee compensation, and certain private donations. The City shall and will maintain responsibility for these funds to the extent required by Federal and State Law, the Citv Charter, and donor stipulations. III. INVESTMENT OBJECTIVES & STRATEGIES It is the police of the City that, giving due regard to the safety and risk of investments, all available funds shall be invested in conformance with State and Federal Regulations, applicable Bond Ordinance requirements, adopted Investment Policy and adopted Investment Strategies. In accordance with the Public Funds Investment Act, the following prioritized objectives (in order of importance) in accordance with the Tex. Gov't. Code Sec. 2256.005(d) appIv for each of the Citv's investment strategies. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 3 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 A. Suitability - Understanding the suitability of the investment to the financial requirements of the City is important. Any investment eligible in the Investment Policy is suitable for all Citv funds. B. Safety - Preservation and safety of principal are the primary objectives of the Investment Policy. All investments will be in high quality securities with no perceived default risk. C. Liquidity - The City's investment portfolio will remain sufficiently liquid to meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements and by investing in securities with active secondary markets. Short-term investment pools and money market mutual funds provide daily liquidity and may be utilized as a competitive yield alternative to fixed income investments. D. 1Larketabdity - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer prices of a particular security type of less than a quarter of a percentage point shall define an efficient secondary market. E. Diversification - Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated needs of the City. Diversifying the appropriate maturity structure will reduce market cycle risk. Field - Attaining a competitive market yield, commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio, is the desired objective. The goal of the City's investment portfolio is to regularly meet or exceed the average rate of return on U.S. Treasure Bills at a maturity level comparable to the portfolio's weighted average maturity in days. The vield of an equally weighted, rolling six-month Treasure Bill portfolio shall be the minimum vield objective or "benchmark". Six-month U.S. Treasury Bill information is derived from the Federal Reserve Statistical Release H.15 for constant maturities. A secondary objective will be to obtain a vield equal to or in excess of a local government investment pool or money market mutual fund. The first measure of success in this area will be the attainment of enough income to offset inflationary increases. Although steps will be taken to obtain this goal, the City's staff will follow the "Prudent Person" statement relating to the standard of care that must be exercised when investing public funds as expressed in the Tex. Gov't. Code Sec. 2256.006(a-b). The Investment Officers shall avoid anv transactions that might impair public confidence in the City's abilitv to govern effectively. The governing body recognizes that in diversifving the portfolio, occasional measured unrealized losses due to market volatility are inevitable, and must be considered within the context of the overall portfolio's investment return, provided that adequate diversification has been implemented. The prudence of the investment decision shall be measured in accordance with the tests set forth in the Tex. Gov't. Code Sec. 2256.006(b). IV. INVESTMENT STRATEGY FOR SPEC'IFI'FUND GROUPS In order to better diversify, maximize interest earnings and otherwise meet stated objectives, fund groups may be combined into one or more internal investment pools. Although fund monies may be combined into a single asset portfolio, proportional fund ownership will be accounted for separately. The City maintains separate portfolios for some individual funds or groups of funds (as POLI Y/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRE('TIV'E Page 4 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 listed under Section II) that are managed in accordance with the terms of this Policv and by the corresponding investment strategies listed below. A. Investment Pool Strategy - The City's Investment Pool is an aggregation of the majority of Citv funds which includes tax receipts, enterprise fund revenues, fine and fee revenues, as well as some, but not necessarily all, bond proceeds, grants, gifts and endowments. This portfolio is maintained to meet anticipated daily cash needs for the City's operations, capital projects and debt service. In order to ensure the ability of the City to meet obligations and to minimize potential liquidation losses, the dollar-weighted average stated maturity of the Investment Pool shall not exceed 1.5 vears or 550 days. The objectives of this portfolio are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flows are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible vield commensurate with the objectives and restrictions set forth in this Policv by actively managing the portfolio to meet or exceed the six month moving average vield on a six month U.S. Treasurv Bill as derived from the Federal Reserve Statistical Release H.15 for constant maturities. B. Bond Funds Strategy - Occasionally, separate non-pooled portfolios are established with the proceeds from bond sales in order to maximize earnings within the constraints of arbitrage regulations. The objectives of the portfolios are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flows are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible vield commensurate with the objectives and restrictions set forth in this Policv and the bond ordinance by actively managing the portfolio to meet or exceed the bond vield. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 Se, Formatted- Font: Italic a Formatted: Indent: Left: 0.38" Endowment Fund Strategy - Funds received as gifts to the City -north instructions that the income generated by the investment of said funds be used for specified purposes are invested, Formatted: No bullets or numbering as separate non-pooled portfolios in order to maximize return. The objectives of the D- portfolios are to: 1. Ensure safety of principal by investing in only high quality securities for vyhich a strong secondary market exists. 2. Ensure that anticipated cash flovys are matched Nyith adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible vield commensurate Nyith the objectives and restrictions set forth in this Policv. V. INVESTMENT COMMITTEE Members - The Investment Committee vyill consist of the Citv Manager, Assistant Citv Manager - Utilities,zn~ for Finance, Assistant Citt~ Manager for r ;...,i.. n n- L~rt ,.c'~an-ec City Controller, T .,R . , Treasure Apt rraF and the Citv's investment advisor. The investment advisor is a non- voting member , a, Scope - The Investment Committee shall meet at least quarterly to determine general strategies, investment guidelines and to monitor results. Included in its deliberations vyill be such topics as: economic outlook, portfolio diversification, maturity structure, potential risk to the City's funds, authorized broker dealers (if applicable), and the target rate of return on the investment portfolio. Pro.. Jm, s - The Investment Committee shall provide- ire ~ Anv triyo members of the Investment G,mmittee may request a special meeting, and four members shall constitute a quorum. The Investment Committee shall establish its o-,yn rules of procedures. VI. RESPONSIBILITY" AND STANDARD OF CARE A. Delegation & Training - The management responsibility for the investment program is delegated to the . r,:..., . r:,, , .i, The primary individual -,yho shall be involved in investment activities Nyill be Aw T...,...., n_ Debt D,4tfifii-eF+ The a'f°f Debt M : may delceate the day to day activities to a re~p,m,ihlc individual(s) «ho has received the appropriate training required by state statute POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 6 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 111C Cily The Assistant Citv Manager who oversees financial operations, r....., tof + r:na ff are designated as the Investment Officers, pursuant to Tex Gov't. Code Sec. 2256.005(f). Accordingly, the Investment Officers and persons authorized to execute investment transactions shall attend at least one training session relating to their responsibilities under the Public Funds Investment Act within 12 months after assuming duties and receive no less than 10 hours of instruction relatin, to investment functions every two vears. The trainin; must include education in investment controls, security risks, strate,v risks, market risks, and compliance with the Public Funds Investment Act. The investment trainin, session shall be provided by an independent source approved by the Investment Committee. For purposes of this police, an "independent source" from which investment trainin, shall be obtained shall include a professional organization, an institute of higher learning or any other sponsor other than a business organization with whom the City may engage in an investment transaction. Thus, these independent sources will be trainin, sessions sponsored by the Government Treasurers Organization of Texas (GTOT), Center For Public Management at the Universitv of North Texas (UNT), Government Finance Officers Association of Texas (GFOAT), Texas Municipal League (TML), North Central Texas Council of Governments (NCTCOG), Association of Public Treasurers United States & Canada (APT US & C), and Government Finance Officers' Association (GFOA). No persons may engage in investment transactions except as provided under the terms of this Policv. The Assistant Citv Manager shall require an annual compliance review by an external auditor that will consist of an audit of management controls on investments, adherence to the Citv's Investment Policv and a review of the quarterly investment reports. The reviews will provide internal control by assuring compliance with policies and procedures. The Assistant City Manager, r.....,etof Of r.._..ffee Mavor, Citv Council, Citv Manager and other Finance employees shall be personally indemnified in the event of investment loss provided the Investment Policv_ has been followed. B. Conflicts of Interest - All participants in the investment process shall seek to act responsibIv as custodians of public assets. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability_ to make impartial investment decisions. C. Disclosure - Anvone involved in investin, Citv funds shall file with the Investment Committee a statement disclosin, any personal business relationship with a business organization offering to engage in investment transactions with the Citv or is related within the second de,ree by affinity or consan,uinity as determined under the Tex. Gov't. Code Ch. 573, to an individual seekin, to transact investment business with the Citv. A disclosure statement must also be filed with the Texas Ethics Commission and the Citv Council. An Investment Officer or other employee has a personal business relationship with a business organization if anv one of the followin, three conditions are met: 1. The Investment Officer or employee owns 100 o or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization. 2. Funds received by the Investment Officer or employee from the business organization exceed 100 o of the investment officers gross income for the prior year. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 7 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 The Investment Officer or employee has acquired from the business organization during the prior year investments with a book value of $2,500 or more for their personal account. D. Prudence - The standard of prudence to be used by the investment officials shall be the "Prudent Person Rule", as set forth in Tex. Gov't. Code Sec. 2256.006 and will be applied in the context of managing an overall portfolio: "Investments shall be made with judgment and care under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person's oNvil affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." Investment officials acting in accordance with the Investment Policv and exercising due diligence shall be relieved of personal responsibilities for an individual security's credit risk or market price change, provided deviations from expectations are reported in a timelv fashion and appropriate action is taken to control adverse developments. In determining whether an investment official has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration the investment of all funds over which the official had responsibility rather than consideration as to the prudence of a single investment and, whether, the investment decision was consistent with the Citv_ 's Investment Policv. E. Reporting Quarterly - Not less than quarterly, the r'ii-4-- rshall submit to the Citv Manager, Mavor and Citv Council a i\ritten report of the City's investment transactions within one hundred twenty (120) days of the preceding reporting period. The report shall: 1) describe in detail the investment position of the City as of the end of the reporting period, 2) be prepared jointly by all Investment Officers, 3) be signed by each Investment Officer, 4) contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group including a) beginning market value for the reporting period: b) additions and changes to the market value during the period: c) ending market value for the period: and d) fully accrued interest for the reporting period, 5) state the book value and market value of each separately invested asset at the beginning and end of the reporting period by type of asset and fund type invested, 6) state the maturity date of each separately invested asset that has a maturity date, 7) state the account or fund or pooled fund group for which each individual investment was acquired, and 8) state the compliance of the investment portfolio as it relates to the investment strateg~- expressed in the Investment Policv_ and with relevant provisions of the Tex. Gov't. Code Ch. 2256. Annually - The City Council shall review and approve the Investment Policy and investment strategies at least annually and be documented by rule, order, ordinance or resolution which shall include anv changes made. Compliance Audit - The City's external-, independent auditor will conduct an annual review of the quarterly reports in conjunction with the annual financial audit. The results of the audit will be reported to City Council. The audit will also review compliance with management controls on investments and adherence to this Policv. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 8 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 The guidelines of retaining records for seven vears as recommended in the Teaas Stare Library 1Iitnicipal Records Manual should be followed. The r, + r.._.... shall oversee the filing and or storing of investment records. G. Market prices for all public fund investments swill be obtained and monitored through the use of Interactive Data Inc., an on-line data service or a similar qualified successor agency. N"II. SUITABLE AND AUTHORIZED INVESTMENT SECURITIES A. Active Poryblio Management - The City intends to pursue an active versus a passive investment management philosophy. That is, securities may be sold before they mature if market conditions present an opportunity for the Citv to benefit from the trade. (Refer to Section VIII of this Policy.) In addition, the Investment Officers may at times restrict or prohibit the purchase of specific types of investments or issuers due to current market conditions. The Citv shall take all prudent measures consistent with this Investment Policy to liquidate an investment that no longer meets the required minimum rating standards, as per the Tex. Gov't. Code Sec. 2256.021. However, if it is determined by the Investment Committee that the Citv would benefit from holding the securities to maturity to recapture its initial investment then the Investment Officers may act accordingly. The City is not required to liquidate investments that were authorized investments at the time of purchase. (Tex Gov't. Code Sec. 2256.017) B. Authorized Investments - Citv funds governed by this Policy may be invested in the instruments described below, all of which are authorized by the Public Funds Investment Act. 1. Direct obligations of the United States of America, its agencies and instrumentalities (maturing in less than five (5) years). 2. Other obligations, the principal and interest of which are unconditionally guaranteed or insured bv, or backed by the full faith and credit of, the United States of America (maturing in less than five (5) years). 3. Direct obligations of the State of Texas or its agencies thereof, Counties, Cities and other political subdivisions rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent (maturing in less than two (2) years). 4. Other obligations , the principal and interest of which are unconditionally guaranteed or insured bv, or backed by the full faith and credit of, the State of Texas, rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent (maturing in less than two (2) years). 5. Fully insured or collateralized certificates of deposit share certificates issued by state and national banks or savings bank or a state or federal credit union (having its main POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 9 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 or branch office in Texas) guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor: and secured by obligations in accordance with Section XII herein (maturing in less than trivo (2) years). In addition to the City's authority to invest funds in certificates of deposit and share certificates stated above, an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under Tex. Govt Code Sec. 2256.010 (b): (1) the funds are invested by the City through a depository institution that has its main office or a branch office in this state and that is selected by the Citv: (2) the depository institution selected by the Cite under Subdivision (1) arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located for the account of the Citv: (3) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States: (4) the depository institution selected by the Citv under Subdivision (1) acts as custodian for the City with respect to the certificates of deposit issued for the account of the Citv: and (5) at the same time that the funds are deposited and the certificates of deposit are issued for the account of the City, the depository institution selected by the City under Subdivision (1) receives an amount of deposits from customers of other federally insured depository institutions, wherever located, that is equal to or greater than the amount of the funds invested by the Citv_ through the depository institution selected under Subdivision (1). 6. Fullv collateralized repurchase agreements provided the City has on file a signed Master Repurchase Agreement, approved by the City Attornev, which details eligible collateral, collateralizations ratios, standards for collateral custodv and control, collateral valuation, and conditions for agreement termination. The repurchase agreement must have a defined termination date and be secured by obligations in accordance with Section XII of this Policy. It is required that the securities purchased by the Citv be assigned to the Citv, held in the City's name and deposited at the time the investment is made with the City or with a third party selected and approved by the City. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve or a financial institution doing business in this State (termination date must be thirty (30) days or less). An exception to the thirty day (30) days or less termination date may be made with respect to bond proceeds. The City may specifically authorize in the bond ordinance investments in repurchase agreements, such as a flexible repurchase agreement, with maturities in excess of 30 days subject to any required approvals from bond insurers. 7. Commercial paper that has a stated maturity of 270 days or less from the date of issuance and is rated A-1 or P-1 or an equivalent rating by at least two nationally recognized rating agencies. 8. Public (Local) Fund Investment Pools with a dollar weighted average maturity of 60 days or less. The pool must be approved (by resolution) by the Citv Council to provide services to the City. The pool must be continuously rated no lower than Aaa or AAAm or at an equivalent rating by at least one nationally recognized rating service. A public funds investment pool created to function as a monev market mutual fund must mark to market dailv and stabilize at a $1 net asset value. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 10 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 To be eligible to receive funds from and invest funds on behalf of the Citv, an investment pool must furnish to the Investment Officer or other authorized representative an offering circular or other similar disclosure instrument that contains information required by the Tex. Gov't. Code Sec. 2256.016. Investments will be made in a local government investment pool only after a thorough investigation of the pool and approval by the Investment Committee which shall at least annually review, revise and adopt the local government investment pool(s). A Securities and Exchange Commission (SEC) registered, no load monev market mutual fund which has a dollar weighted average stated maturity of 0044 davs or less and whose investment objectives includes the maintenance of a stable net asset value of $1 for each share. Furthermore, it must be rated not less than Aaa, AAAm or an equivalent rating by at least one nationally recognized rating service and the City must be provided with a prospectus and other information required by the SEC Act of 1934 or the Investment Company Act of 1940. Investments will be made in a money market mutual fund only after a thorough investigation of the fund and approval by the Investment Committee which shall, at least annually, review, revise and adopt the monev market mutual fund(s). C. Prohibited Investments - The Citv's authorized investment options are more restrictive than those allowed by state law. Furthermore, this policy specifically prohibits investment in the securities listed below: 1. Obligations, whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal. 2. Obligations whose payment represents the principal stream of cash flow from the underlving mortgage-backed security collateral and bears no interest. 3. All collateralized mortgage obligations 4. Reverse repurchase agreements. D. Diversification - It is the police of the City to diversify its investment portfolios. The diversification will protect interest income from the volatility of interest rates and the avoidance of undue concentration of assets in a specific maturity sector: therefore, portfolio maturities shall be staggered. In establishing specific diversification strategies, the following general policies and constraints shall apple: Risk of market price volatility shall be controlled through maturity diversification and by controlling unacceptable maturity extensions and a mismatch of liabilities and assets. The maturity extension will be controlled by limiting the weighted average maturity of the internal investment pool portfolio to 550 days afid 'he~befi' fe ~=o dw, All long-term maturities will be intended to cover long-term liabilities. In addition, at least five (50o) percent of the funds in the investment pool portfolio Neill be liquid at all times. Investment pool liquidity is defined as shares in a local government investment pool ands money market mutual fund,- POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page I I of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 2. The Investment Committee shall establish strate,ies and ,uidelines for the percentage of the total portfolio that may be invested in U.S. Treasurv Securities, federal a,encies.~instumentalities, repurchase agreements, and insured collateralized certificates of deposit and other securities or obligations. The Investment Committee shall conduct a quarterly review of these ,uidelines, and shall evaluate the probability of market and default risk in various investment sectors as part of its considerations. 3. Risk of principal loss in the portfolio as a vyhole shall be minimized by diversifying investment types according to the following limitations: Investment Type 00 of Portfolio • U.S. Treasurv Notes Bills 10000 • U.S. Agencies & Instrumentalities 10000 • State of Texas Obli,ations, Agencies & Local Gov't. 150o • Local Government Investment Pools 500o • Repurchase Agreements 200o • Certificates of Deposit (fully insured or collateralized) 350o • U. S. Monev Market Mutual Fund 350o • Callable U.S.A,encies.~Inst-umentalities 200o • Commercial Paper 50o By Institution: Repurchase Agreements No more than 1000 All Other No more than 350o 4. Purchases of securities -vyith stated maturities greater than the maximum authorized under this section require prior City Council approval. VIII. SALE OF SECURITIES The City's police is to hold all securities to maturity. Flo-ovever, securities may be sold to minimize the potential loss of principal on a security whose credit quality has declined, to swap into another security which Nvould improve the quality, yield or target duration of the portfolio or to meet unanticipated liquidity needs of the portfolio. A horizon analysis is required for each swap proving benefit to the Citv before the trade decision is made, and Nyill be held in the file for record keeping. IX. COMPETITIVE BIDDING It is the police of the Citv to require competitive bidding for all individual security purchases and sales r'"scept A. Transactions i\ ith monev market mutual funds and local government investment pools which are deemed to be made at prevailing market rates. B. Treasurv and agency securities purchased as nevv issues through an approved broker dealer, financial institution or investment advisor. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 12 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 C. Automatic overnight "sweep" transactions with the City's depository bank. At least three bids or offers must be solicited for all other transactions involving individual securities. The City's investment advisor is also required to solicit at least three bids or offers when transacting trades on the City's behalf. In situations where the exact security is not offered bv other broker dealers, offers on the closest comparable investment may be used to establish a fair market price for the security. The quotes may be accepted oralE in writing, electronicalE or any combination of these methods. The Investment Committee may approve exceptions on a case by case basis or on a general basis in the form of guidelines. These guidelines shall take into consideration the investment type, maturity date, amount and potential disruptiveness to the City's investment strategy. 1. ARBITRAGE The Tax Reform Act of 1986 provided limitations restricting the City's investing of tax-exempt General Obligation Bond proceeds and debt service income. Revised arbitrage rebate provisions require that the City compute earnings on investment from each issue of bonds on an annual basis to determine if a rebate is required. To determine the City's arbitrage position, the City is required to perform specific calculations relative to the actual vield earned on the investment of the funds and the vield that could have been earned if the funds had been invested at a rate equal to the vield on the bonds sold by the City. The rebate provision states that periodically (not less than once ev erv five years, and not later than sixty days after maturity of the bonds), the Citv is required to pay the U.S. Treasure a rebate of excess earnings based on the City's positive arbitrage position. The Tax Reform restrictions require precision in the monitoring and recording facets of investments as a whole, and particularly as they relate to vields and computations so as to insure compliance. Failure to comply may dictate that the bonds become taxable, retroactively from the date of issuance The City's investment position, relative to the revised arbitrage restrictions, is the continued pursuit of maximizing vield on applicable investments while ensuring the safety of capital and liquidity. It is fiscally prudent to continue the maximization of vield and rebate excess earnings, if necessary. XI. SELECTION OF BANKS, BROKER/DEALERS AND INVESTMENT ADVISORS A. Depository - Cite Council shall, by ordinance, "select and designate one or more banking institutions as the depository for the monies and funds of the City" in accordance with the requirement of Tex. Loc. Gov't. Code Ch. 105. At least every five years a depository shall be selected through the City's banking services procurement process, which shall include a formal request for proposal (RFP). The selection of a depository will be determined by a competitive W4 and evaluaf.,d',~ii + k;d --;l ke', ,j on the following criteria: 1. Qualified as a depository for public funds in accordance with state and local laws. 2. Provided requested information or financial statements for the periods specified. 3. Complied with all requirements in the banking RFP. 4. Completed responses to all required items on the W4_ _ form. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 13 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 Offered lowest net bankin, service cost, consistent with the ability to provide an appropriate level of service. 6. Met credit worthiness and financial standards. B. Investment Broker Dealers - T lie Investment Committee shall be responsible for adopting the list of qualified brokers dealers and financial institutions authorized to engage in investment transactions with the Citv. Authorized firms may include primary dealers or regional broker dealers that qualify under SEC Rule 15C3-I (uniform net capital rule) and qualified depositories as established by the Tex. Loc. Gov't. Code Ch. 105. The Investment Committee shall base its evaluation of security broker dealers and financial institutions upon: 1. Financial condition, stren,th and capability to fulfill commitments. 2. Overall reputation with other broker dealers or investors. 3. Re,ulatorv status of the broker dealer. 4. Back,round and expertise of the individual representatives. 5. Ability to provide additional advisory services. The Investment Committee must annually review the list of qualified broker dealers authorized to engage in investment transactions with the Citv. Investment Officers, or their authorized representatives, shall not conduct business with anv firm with whom public entities have sustained realized losses on investments or whose name the Investment Committee has removed from an approved list. C. Investment Advisor - The Citv may retain the services of an investment advisory firm re,istered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-I et seq.) or with the State Securities Board to assist in the review of cash flow requirements, the formulation of investment strategies, and the execution of security purchases, sales and deliveries. The investment advisory contract with the Citv may not be for a term longer than two vears and its renewal or extension must be approved by the City_ Council by ordinance or resolution as required by the Tex. Gov't. Code Sec.2256.003(b). D. Compliance - A qualified representative from any firm offering to engage in investment transactions with the City is required to sign a written instrument upon receiving and reviewing a cope of the City's Investment Policy. Investments shall only be made with those business organizations (including monev market mutual funds and local government investment pools) which have provided the Citv with this written instrument executed by a qualified representative of the firm, acknowledging that the business organization has: Received and reviewed the City's Investment Policv. 2. Implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the Citv and the organization that are not authorized by the City's Investment policy, except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio or requires an interpretation of subjective investment standards. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 14 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 If the Citv has contracted with an investment advisor, the advisor shall be responsible for performin, financial due dili,ence on the City's behalf. On an annual basis, the advisor will provide the City_ with a list of its authorized broker dealers as well as the written instrument above. III. COLLAT ERALIZAT ION, SAFEKEEPING AND CUSTODY A. Collateralization - The City requires that all uninsured collected balances plus accrued interest, if any, in depository accounts be secured in accordance with the requirements of state law. Financial institutions servin, as City depositories will be required to sign a depository agreement with the City which details eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution and conditions for agreement termination. The City requires that all securities purchased under the terms of a repurchase agreement be assigned to the Citv in accordance with state law. Dealers and financial institutions wishing to transact repurchase agreements with the City will be required to sign a Master Repurchase Agreement which details eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. The City requires that all uninsured certificates of deposit plus accrued interest held with a depository be secured in accordance with the requirements of state law. Financial institutions will be required to sign a written depository and security agreement which stipulates eligible collateral, collateral ization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. Collateral will al-,,,°ays be held by an independent third party with which the City has a current custodial agreement and shall be reviewed at least monthly to ensure that the market value of the pledged securities is adequate. All deposits and investments of Citv funds, other than direct security purchases, money market mutual funds and local ,oyernment investment pools shall be secured by pledged collateral set at no less than 102 percent of the market value of the principal and accrued interest on the deposits or investments less an amount insured by FDIC. Eligible collateral to secure the City's deposits include: 1. Direct obligations of the United States ,ovemment. 2. Other obligations, the principal and interest of which are unconditionally guaranteed or insured bv, or backed by the full faith and credit of, the United States ,oyernment. Direct obligations of a,encies or instrumentalities of the United States "oyernment, including letters of credit. The City will reject adjustable rate mortgages (ARMs), collateralized mortgage obligations (CMOs), rs4tep-ups, variable rate instruments (except U.S. Treasure inflation protected securities), or securities that are not found on common pricing systems. B. Safekeeping acrd Custody - Safekeeping and custody of the City's investment securities shall be in accordance with state law. All security transactions, except local government investment pool and money market mutual fund transactions, shall be conducted on a POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 15 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 delivery versus payment ([)VP) basis. Investment securities will be held by a third partN custodian designated by the City, and be required to issue safekeeping receipts clearIN detailing that the securities are owned by the Citv. Safekeeping and custody of collateral shall be in accordance with state law. Collateral will be held by a third party custodian designated by the City, and pledged to the City_ as evidenced by safekeeping receipts from the institution holding the securities. C. S7rbject to Ail, lit - All collateral shall be subject to inspection and audit by the r 4 F+ft,....I, , or designee, as well as the Citv's independent auditors. VIII. MANAGEMENT AND INTERNAL CONTROLS Controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by employees or Investment Officers of the City. Controls and managerial emphasis deemed most important that shall be employed include the followinP: Imperative Controls Custodian safekeeping receipts records management Avoidance of bearer-form securities - Documentation of investment bidding events - Written confirmation of telephone transactions - Reconcilements and comparisons of security receipts with the investment records Compliance with Investment Policy Verification of all interest income and security purchase and sell computations Controls Where Practical - Control of Collusion - Separation of duties Separation of transaction authoritN Clear delegation of authority Accounting and 14ecord-keeping - Accurate and timely reports POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 16 of 16 TITLE: INVESTMENT POLICY" REFERENCE NUMBER: 403.06 Validation of investment maturity decisions -vyith supporting cash flo-,y data Adequate training and development of Investment Officials ReVievy of financial conditions of all brokers dealers, and depository institutions Staving informed about market conditions, changes and trends that require adjustments to investment strategies. XIV. INVESTMENT POLICY ADOPTION The Investment Policv shall be formally approved and adopted by resolution of the City Council and reVievyed annually in accordance -vyith the provisions of the Public Funds Investment Act of the Texas Government Code Chapter 2256. salegaflour documentslresolutions\10\investment policy.doc RESOLUTION NO. A RESOLUTION REVIEWING AND ADOPTING REVISIONS TO THE INVESTMENT POLICY REGARDING FUNDS FOR THE CITY OF DENTON; AND PROVIDING AN EFECTIVE DATE. WHEREAS, the City Council passed Resolution No. 96-061 on October 15, 1996, which adopted an Investment Policy for the City, in compliance with the Public Funds Investment Act, 74th Leg., ch. 402, 1995 Tex. Sess. Law Serv. 2958 (Vernon) (TEX. GOV'T CODE Ann. Ch. 2256); and WHEREAS, the Investment Policy was most recently amended on the P day of November, 2009, when the City Council passed Resolution No. 2009-028 adopting the current version of the Investment Policy; and WHEREAS, the City Council desires to revise the Investment Policy in order to reflect changes in the Public Funds Investment Act (PFIA), as well as incorporate needed administrative and procedural modifications which have occurred over time; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The following policy entitled "Policy No. 403.06 "Investment Policy", attached hereto and made a part hereof, is hereby adopted as an official policy of the City of Denton, Texas and shall replace the existing Investment Policy. SECTION 2. The attached Policy shall be filed in the official records with the City Secretary. SECTION 3. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY. CITY OF DENTON POLICY/ADMINISTRATIVE PROCEDURE/ADMIlVISTRATIVE DIRECTIVE Page I of 15 SECTION: FINANCE POLICIES REFERENCE NUMBER: 403.06 SUBJECT: INVESTMENTS INITIAL EFFECTIVE DATE: 02/17/87 REVISION DATE: TITLE: INVESTMENT POLICY 11/2/I0 1. PURPOSE It is the objective of the City of Denton to invest public funds in a manner which will provide maximum security and the best commensurate yield while meeting the daily cash flow demands of the City and conforming to all federal, state, and local statutes, rules, and regulations governing the investment of public funds. This Policy serves to satisfy the statutory requirements of defining and adopting a formal investment policy. The Policy and investment strategies shall be reviewed annually by the Audit/Finance Committee and City Council who will formally approve any modifications. This Investment Policy, as approved, is in compliance with the provisions of the Public Funds Investment Act of Tex. Gov't. Code Chapter 2256. II. SCOPE A. This Investment Policy applies to the investment activities of the City of Denton, Texas. The specific funds cited hereafter in Section IID, shall be excluded from this Investment Policy. All financial assets of all funds, including the General Fund and any other accounts of the City not specifically excluded in these policy guidelines are included. These funds are accounted for in the City's Comprehensive Annual Financial Report (CAFR). These funds, as well as funds that may be created from time-to-time, shall be administered in accordance with the provisions of this Policy. All funds will be pooled for investment purposes except for those listed under IIC. In addition to this Policy, the investment of bond proceeds and other bond funds (including debt service and reserve funds) shall be governed and controlled by their governing ordinance and by the provisions of the Tax Reform Act of 1986, including all regulations and rulings promulgated there under applicable to the issuance of tax-exempt obligations. B. Funds covered by this Policy and managed as a pooled fund group: General Fund - used to account for resources traditionally associated with government, which are not required to be accounted for in another fund. 2. Special Revenue Funds - used to account for the proceeds from specific revenue sources which are restricted to expenditures for specific purposes. Debt Service Fund used to account for resources to be used for the payment of principal, interest and related costs on general obligation debt. 4. Capital Project Funds used to account for resources to enable the acquisition or construction of major capital facilities which are not financed by enterprise funds, internal service funds, or trust funds. Enterprise Funds - used to account for operations that are financed and operated in a POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE Page 2 of 15 TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 manner similar to private business enterprises. 6. Internal Service Funds used to account for the cost of providing goods or services between City departments. Trust and Agency Funds - used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds. Bond Reserve Funds - funds set at prescribed levels by certain bond ordinances to pay principal and/or interest if required to prevent default. 9. New funds available for investment by the City, such as (but not limited to) resources associated with Public Improvement Districts or Tax Increment Financing zones, unless specifically excluded herein. C. Funds covered by this Policy and managed as separately invested assets: 1. Bond Funds - funds established with the proceeds from specific bond issues when it is determined that segregating these funds from the pooled funds' portfolio will result in maximum interest earning retention under the provisions of the Tax Reform Act of 1986. 2. Endowment Funds - funds given to the City with the instructions that the principal is to remain intact, unless otherwise agreed to, and the income generated by the investments will be used for specified purposes. Trust or Escrowed Funds - funds held outside the City by a trust or escrow agent but belonging to the City. D. This Policy shall not govern funds, which are managed under separate investment programs in accordance with the Tex. Gov't. Code Sec. 2256.004. Such programs currently include all funds related to employee retirement programs, other funds established by the City for deferred employee compensation, and certain private donations. The City shall and will maintain responsibility for these funds to the extent required by Federal and State Law, the City Charter, and donor stipulations. III. INVESTMENT OBJECTIVES & STRATEGIES It is the policy of the City that, giving due regard to the safety and risk of investments, all available funds shall be invested in conformance with State and Federal Regulations, applicable Bond Ordinance requirements, adopted Investment Policy and adopted Investment Strategies. In accordance with the Public Funds Investment Act, the following prioritized objectives (in order of importance) in accordance with the Tex. Gov't. Code Sec. 2256.005(d) apply for each of the City's investment strategies. A. Suitability - Understanding the suitability of the investment to the financial requirements of the City is important. Any investment eligible in the Investment Policy is suitable for all City funds. Page 3 of 15 POLICY/ADMINISTRATNE PROCEDURE/ADMINISTRATME DMFC.TTVF TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 B. Safety - Preservation and safety of principal are the primary objectives of the Investment Policy. All investments will be in high quality securities with no perceived default risk. C. Liquidity - The City's investment portfolio will remain sufficiently liquid to meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements and by investing in securities with active secondary markets. Short-term investment pools and money market mutual funds provide daily liquidity and may be utilized as a competitive yield alternative to fixed income investments. D. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer prices of a particular security type of less than a quarter of a percentage point shall define an efficient secondary market. E. Diversification - Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated needs of the City. Diversifying the appropriate maturity structure will reduce market cycle risk. F. Yield - Attaining a competitive market yield, commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio, is the desired objective. The goal of the City's investment portfolio is to regularly meet or exceed the average rate of return on U.S. Treasury Bills at a maturity level comparable to the portfolio's weighted average maturity in days. The yield of an equally weighted, rolling six-month Treasury Bill portfolio shall be the minimum yield objective or "benchmark". Six-month U.S. Treasury Bill information is derived from the Federal Reserve Statistical Release H.15 for constant maturities. A secondary objective will be to obtain a yield equal to or in excess of a local government investment pool or money market mutual fund. The first measure of success in this area will be the attainment of enough income to offset inflationary increases. Although steps will be taken to obtain this goal, the City's staff will follow the "Prudent Person" statement relating to the standard 'of care that must be exercised when investing public funds as expressed in the Tex. Gov't. Code Sec. 2256.006(a-b). The Investment Officers shall avoid any transactions that might impair public confidence in the City's ability to govern effectively. The governing body recognizes that in diversifying the portfolio, occasional measured unrealized losses due to market volatility are inevitable, and must be considered within the context of the overall portfolio's investment return, provided that adequate diversification has been implemented. The prudence of the investment decision shall be measured in accordance with the tests set forth in the Tex. Gov't. Code Sec. 2256.006(b). N. INVESTMENT STRATEGY FOR SPECIFIC FUND GROUPS In order to better diversify, maximize interest earnings and otherwise meet stated objectives, fund groups may be combined into one or more internal investment pools. Although fund monies may be combined into a single asset portfolio, proportional fund ownership will be accounted for separately. The City maintains separate portfolios for some individual funds or groups of funds (as listed under Section Il) that are managed in accordance with the terms of this Policy and by the corresponding investment strategies listed below. POLICY/ADAMWSTRATYVE PROCEDURE/ADMVgSTRATT F DTRVCTYVl Page 4 of 15 TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 A. Investment Pool Strategy - The City's Investment Pool is an aggregation of the majority of City funds which includes tax receipts, enterprise fund revenues, fine and fee revenues, as well as some, but not necessarily all, bond proceeds, grants, gifts and endowments. This portfolio is maintained to meet anticipated daily cash needs for the City's operations, capital projects and debt service. In order to ensure the ability of the City to meet obligations and to minimize potential liquidation losses, the dollar-weighted average stated maturity of the Investment Pool shall not exceed 1.5 years or 550 days. The objectives of this portfolio are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flows are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy by actively managing the portfolio to meet or exceed the six month moving average yield on a six month U.S. Treasury Bill as derived from the Federal Reserve Statistical Release H.15 for constant maturities. B. Bond Funds Strategy - Occasionally, separate non-pooled portfolios are established with the proceeds from bond sales in order to maximize earnings within the constraints of arbitrage regulations. The objectives of the portfolios are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flows are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy and the bond ordinance by actively managing the portfolio to meet or exceed the bond yield. C Endowment Fund Strategy - Funds received as gifts to the City with instructions that the income generated by the investment of said funds be used for specified purposes are invested as separate non-pooled portfolios in order to maximize return. The objectives of the portfolios are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flows are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATRIF nTRF.rTTVR Page 5 of IS . TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 V. INVESTMENT COMMITTEE Members - The Investment Committee will consist of the City Manager, Assistant City Manager for Finance, Assistant City Manager for Utilities, Chief Financial Officer, City Controller, Assistant Director of Finance, Treasury Administrator, and the City's investment advisor. The investment advisor is a non-voting member. When needed, the City Attorney will act as a legal advisor to the Investment Committee. Scope - The Investment Committee shall meet at least quarterly to determine general strategies, investment guidelines and to monitor results. Included in its deliberations will be such topics as: economic outlook, portfolio diversification, maturity structure, potential risk to the City's funds, authorized broker/dealers (if applicable), and the target rate of return on the investment portfolio. Procedures - The Investment Committee shall provide meeting summations to all members. Any two members of the Investment Committee may request a special meeting, and four members shall constitute a quorum. The Investment Committee shall establish its own rules of procedures. VI. RESPONSIBILITY AND STANDARD OF CARE A. Delegation & Training - The management responsibility for the investment program is delegated to the Chief Financial Officer. The primary individual who shall be involved in investment activities will be his designee. The designee may delegate the day to day activities to a responsible individual(s) who has received the appropriate training required by state statute. The Chief Financial Officer and department designees will use this Policy as the primary guideline for the City's investment program, procedures, and internal control issues. The Assistant City Manager who oversees financial operations and the Chief Financial Officer are designated as the Investment Officers, pursuant to Tex Gov't. Code Sec. 2256.005(f). Accordingly, the Investment Officers and persons authorized to execute investment transactions shall attend at least one training session relating to their responsibilities under the Public Funds Investment Act within 12 months after assuming duties and receive no less than 10 hours of instruction relating to investment functions every two years. The training must include education in investment controls, security risks, strategy risks, market risks, and compliance with the Public Funds Investment Act. The investment training session shall be provided by an independent source approved by the Investment Committee. For purposes of this policy, an "independent source" from which investment training shall be obtained shall include a professional organization, an institute of higher learning or any other sponsor other than a business organization with whom the City may engage in an investment transaction. Thus, these independent sources will be training sessions sponsored by the Government Treasurers Organization of Texas (GTOT), Center For Public Management at the University of North Texas (UNT), Government Finance Officers Association of Texas (GFOAT), Texas Municipal League (TML), North Central Texas Council of Governments (NCTCOG), Association of Public Treasurers United States & Canada (APT US & C), and Government Finance Officers' Association (GFOA). No persons may engage in investment transactions except as provided under the terms of this Policy. The Assistant City Manager shall require an annual compliance review by an external auditor that will consist of an audit of management controls on investments, adherence to the City's Investment Policy and a review of the quarterly investment reports. The reviews will provide internal control by assuring compliance with policies and procedures. The Assistant City Manager, Chief Financial Officer, Mayor, City Council, City Manager and other Finance Department employees shall be personally indemnified in the event of investment loss provided the Investment Policy has been followed. POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRFCTn V Page 6 of 15 TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403,06 B. Conflicts of Interest - All participants in the investment process shall seek to act responsibly as custodians of public assets. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the invcstment program, or which could impair their ability to make impartial investment decisions. C. Disclosure - Anyone involved in investing City funds shall file with the Investment Committee a statement disclosing any personal business relationship with a business organization offering to engage in investment transactions with the City or is related within the second degree by affinity or consanguinity as determined under the Tex. Gov't. Code Ch. 573, to an individual seeking to transact investment business with the City. A disclosure statement must also be filed with the Texas Ethics Commission and the City Council. An Investment Officer or other employee has a personal business relationship with a business organization if any one of the following three conditions are met: 1. The Investment Officer or employee owns 10% or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization. 2. Funds received by the Investment Officer or employee from the business organization exceed 10% of the investment officers gross income for the prior year. The Investment Officer or employee has acquired from the business organization during the prior year investments with a book value of $2,500 or more for their personal account. D. Prudence - The standard of prudence to be used by the investment officials shall be the "Prudent Person Rule", as set forth in Tex. Gov't. Code Sec. 2256.006 and will be applied in the context of managing an overall portfolio: "Investments shall be made with judgment and care under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." Investment officials acting in accordance with the Investment Policy and exercising due diligence shall be relieved of personal responsibilities for an individual security's credit risk or market price change, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. In determining whether an investment official has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration the investment of all funds over which the official had responsibility rather than consideration as to the prudence of a single investment and, whether, the investment decision was consistent with the City's Investment Policy. E. Reporting Quarterly - Not less than quarterly, the Chief Financial Officer shall submit to the City Manager, Mayor and City Council a written report of the City's investment transactions within one hundred twenty (120) days of the preceding reporting period. The report shall: 1) describe in detail the investment position of the City as of the end of the reporting period, 2) Page 7 of 15 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DMVCTrvF TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.66 be prepared jointly by all Investment Officers, 3) be signed by each Investment Officer, 4) contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group including a) beginning market value for the reporting period; b) additions and changes to the market value during the period; c) ending market value for the period; and d) fully accrued interest for the reporting period, 5) state the book value and market value of each separately invested asset at the beginning and end of the reporting period by type of asset and fund type invested, 6) state the maturity date of each separately invested asset that has a maturity date, 7) state the account or fund or pooled fund group for which each individual investment was acquired, and 8) state the compliance of the investment portfolio as it relates to the investment strategy expressed in the Investment Policy and with relevant provisions of the Tex. Gov't. Code Ch. 2256. Annually - The City Council shall review and approve the Investment Policy and investment strategies at least annually and be documented by rule, order, ordinance or resolution which shall include any changes made. Compliance Audit - The City's external independent auditor will conduct an annual review of the quarterly reports in conjunction with the annual financial audit. The results of the audit will be reported to City Council. The audit will also review compliance with management controls on investments and adherence to this Policy. F. The guidelines of retaining records for seven years as recommended in the Texas State Library Municipal Records Manual should be followed. The Chief Financial Officer shall oversee the filing and/or storing of investment records. G. Market prices for all public fund investments will be obtained and monitored through the use of Interactive Data Inc., an on-line data service or a similar qualified successor agency. VII. SUITABLE AND AUTHORIZED INVESTMENT SECURITIES A. Active Portfolio Management - The City intends to pursue an active versus a passive investment management philosophy. That is, securities may be sold before they mature if market conditions present an opportunity for the City to benefit from the trade. (Refer to Section VIII of this Policy.) In addition, the Investment Officers may at times restrict or prohibit the purchase of specific types of investments or issuers due to current market conditions. The City shall take all prudent measures consistent with this Investment Policy to liquidate an investment that no longer meets the required minimum rating standards, as per the Tex. Gov't. Code Sec. 2256.021. However, if it is determined by the Investment Committee that the City would benefit from holding the securities to maturity to recapture its initial investment then the Investment Officers may act accordingly. The City is not required to liquidate investments that were authorized investments at the time of purchase. (Tex Gov't. Code Sec. 2256.017) B. Authorized Investments - City funds governed by this Policy may be invested in the instruments described below, all of which are authorized by the Public Funds Investment Act. Direct obligations of the United States of America, its agencies and instrumentalities (maturing in less than five (5) years). Page 8 of 15 POLICY/ADMMSTRATIVE PROCFDI]RF,/ADMTNPgTR ATnr1. nruFrrYVV TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the United States of America (maturing in less than five (5) years). Direct obligations of the State of Texas or its agencies thereof, Counties, Cities and other political subdivisions rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent (maturing in less than two (2) years). 4. Other obligations , the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas, rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent (maturing in less than two (2) years). 5. Fully insured or collateralized certificates of deposit/share certificates issued by state and national banks or savings bank or a state or federal credit union (having its main or branch office in Texas) guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor; and secured by obligations in accordance with Section XII herein (maturing in less than two (2) years). In addition to the City's authority to invest funds in certificates of deposit and share certificates stated above, an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under Tex. Govt. Code Sec. 2256.010 (b): (1) the funds are invested by the City through a depository institution that has its main office or a branch office in this state and that is selected by the City; (2) the depository institution selected by the City under Subdivision (1) arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located for the account of the City; (3) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; (4) the depository institution selected by the City under Subdivision (1) acts as custodian for the City with respect to the certificates of deposit issued for the account of the City; and (5) at the same time that the funds are deposited and the certificates of deposit are issued for the account of the City, the depository institution selected by the City under Subdivision (1) receives an amount of deposits from customers of other federally insured depository institutions, wherever located, that is equal to or greater than the amount of the funds invested by the City through the depository institution selected under Subdivision (1). 6. Fully collateralized repurchase agreements provided the City has on file a signed Master Repurchase Agreement, approved by the City Attorney, which details eligible collateral, collateralizations ratios, standards for collateral custody and control, collateral valuation, and conditions for agreement termination. The repurchase agreement must have a defined termination date and be secured by obligations in accordance with Section XII of this Policy. It is required that the securities purchased by the City be assigned to the City, held in the City's name and deposited at the time the investment is made with the City or with a third party selected and approved by the City. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve or a financial institution doing POLICY/ADM NISTRATfVE PROCEDURE/ADMTly' TRATrv_ . nMVCTTVF Page 9 of 15 TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 business in this State (termination date must be thirty (30) days or less). An exception to the thirty day (30) days or less termination date may be made with respect to bond proceeds. The City may specifically authorize in the bond ordinance investments in repurchase agreements, such as a flexible repurchase agreement, with maturities in excess of 30 days subject to any required approvals from bond insurers. 7. Commercial paper that has a stated maturity of 270 days or less from the date of issuance and is rated A-1 or P-1 or an equivalent rating by at least two nationally recognized rating agencies. 8. Public (Local) Fund Investment Pools with a dollar weighted average maturity of 60 days or less. The pool must be approved (by resolution) by the City Council to provide services to the City. The pool must be continuously rated no lower than Aaa or AAAm or at an equivalent rating by at least one nationally recognized rating service. A public funds investment pool created to function as a money market mutual fund must mark to market daily and stabilize at a $1 net asset value. To be eligible to receive funds from and invest funds on behalf of the City, an investment pool must furnish to the Investment Officer or other authorized representative an offering circular or other similar disclosure instrument that contains information required by the Tex. Gov't. Code Sec. 2256.016. Investments will be made in a local government investment pool only after a thorough investigation of the pool and approval by the Investment Committee which shall at least annually review, revise and adopt the local government investment pool(s). 9. A Securities and Exchange Commission (SEC) registered, no load money market mutual fund which has a dollar weighted average stated maturity of 60 days or less and whose investment objectives includes the maintenance of a stable net asset value of $ I for each share. Furthermore, it must be rated not less than Aaa, AAAm or an equivalent rating by at least one nationally recognized rating service and the City must be provided with a prospectus and other information required by the SEC Act of 1934 or the Investment Company Act of 1940. Investments will be made in a money market mutual fund only after a thorough investigation of the fund and approval by the Investment Committee which shall, at least annually, review, revise and adopt the money market mutual fund(s). I C. Prohibited Investments - The City's authorized investment options are more restrictive than those allowed by state law. Furthermore, this Policy specifically prohibits investment in the securities listed below: Obligations, whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal. 2. Obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest. All collateralized mortgage obligations. 4. Reverse repurchase agreements. POLICY/ADMPUSTRATTVE PROCEDURE/ADMTNTSTR A TTVF DMVrTYVIW Page 10 of 15 TITLE: INVESTMENT POLICY __[REFERENCE NUMBER: 403.06 D. Diversification It is the policy of the City to diversify its investment portfolios. The diversification will protect interest income from the volatility of interest rates and the avoidance of undue concentration of assets in a specific maturity sector; therefore, portfolio maturities shall be staggered. In establishing specific diversification strategies, the following general policies and constraints shall apply: 1. Risk of market price volatility shall be controlled through maturity diversification and by controlling unacceptable maturity extensions and a mismatch of liabilities and assets. The maturity extension will be controlled by limiting the weighted average maturity of the internal investment pool portfolio to 550 days. All long-term maturities will be intended to cover long-term liabilities. In addition, at least five (5%) percent of the funds in.the investment pool portfolio will be liquid at all times. Investment pool liquidity is defined as shares in a local government investment pool and money market mutual fund, as well as bank balances. 2. The Investment Committee shall establish strategies and guidelines for the percentage of the total portfolio that may be invested in U.S. Treasury Securities, federal agencies/instrumentalities, repurchase agreements, and insured/collateralized certificates of deposit and other securities or obligations. The Investment Committee shall conduct a quarterly review of these guidelines, and shall evaluate the probability of market and default risk in various investment sectors as part of its considerations. 3. Risk of principal loss in the portfolio as a whole shall be minimized by diversifying investment types according to the following limitations: Investment Type Of Portfolio • U.S. Treasury Notes/Bills 100% • U.S. Agencies & Instrumentalities 100% State of Texas Obligations, Agencies & Local Gov't. 15% • Local Government Investment Pools 50% • Repurchase Agreements 20% • Certificates of Deposit (fully insured or collateralized) 35% • U.S. Money Market Mutual Fund 35% • Callable U.S. Agencies/Instrumentalities 20% • Commercial Paper 5% By Institution: Repurchase Agreements No more than 10% All Other No more than 35% 4. Purchases of securities with stated maturities greater than the maximum authorized under this section require prior City Council approval. VIII. SALE OF SECURITIES The City's policy is to hold all securities to maturity. However, securities may be sold to minimize the potential loss of principal on a security whose credit quality has declined, to swap into another security which would improve the quality, yield or target duration of the portfolio or to meet POLICY/.A,DMINISTRATNE PROCEDURE/ADMMTRTR ATrV-F nm-.rrrvF Page 1 1 of 15 TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 unanticipated liquidity needs of the portfolio. A horizon analysis is required for each swap proving benefit to the City before the trade decision is made, and will be held in the file for record keeping. IX. COMPETITIVE BIDDING It is the policy of the City to require competitive bidding for all individual security purchases and sales, as well as for certificates of deposit. Exceptions include; A. Transactions with money market mutual funds and local government investment pools which are deemed to be made at prevailing market rates. B. Treasury and agency securities purchased as new issues through an approved broker/dealer, financial institution or investment advisor. C. Automatic overnight "sweep" transactions with the City's depository bank. At least three bids or offers must be solicited for all other transactions involving individual securities. The City's investment advisor is also required to solicit at least three bids or offers when transacting trades on the City's behalf. In situations where the exact security is not offered by other broker/dealers, offers on the closest comparable investment may be used to establish a fair market price for the security. In the case of a certificate of deposit purchase, at least two other offers should be solicited to provide a comparison. When few, if any, banks wish to participate then staff may use another authorized investment of similar maturity for evaluation purposes. The quotes may be accepted orally, in writing, electronically, or any combination of these methods. The Investment Committee may approve exceptions on a case by case basis or on a general basis in the form of guidelines. These guidelines shall take into consideration the investment type, maturity date, amount and potential disruptiveness to the City's investment strategy. X. ARBITRAGE The Tax Reform Act of 1986 provided limitations restricting the City's investing of tax-exempt General Obligation Bond proceeds and debt service income. Revised arbitrage rebate provisions require that the City compute earnings on investment from each issue of bonds on an annual basis to determine if a rebate is required. To determine the City's arbitrage position, the City is required to perform specific calculations relative to the actual yield earned on the investment of the funds and the yield that could have been earned if the funds had been invested at a rate equal to the yield on the bonds sold by the City. The rebate provision states that periodically (not less than once every five years, and not later than sixty days after maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of excess earnings based on the City's positive arbitrage position. The Tax Reform restrictions require precision in the monitoring and recording facets of investments as a whole, and particularly as they relate to yields and computations so as to insure compliance. Failure to comply may dictate that the bonds become taxable, retroactively from the date of issuance The City's investment position, relative to the revised arbitrage restrictions, is the continued pursuit of maximizing yield on applicable investments while ensuring the safety of capital and liquidity. It is fiscally prudent to continue the maximization of yield and rebate excess earnings, if necessary. XI. SELECTION OF BANKS, BROKERIDEALERS AND INVESTMENT ADVISORS A. Depository - City Council shall, by ordinance, "select and designate one or more banking institutions as the depository for the monies and funds of the City" in accordance with the POLICY/ADMINISTRATIVE PROCEDURE/ADMTNTSTRATTVFY)MFrT Page 12 of 15 . TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 requirement of Tex. Loc. Gov't. Code Ch. 105. At least every five years a depository shall be selected through the City's banking services procurement process, which shall include a formal request for proposal (RFP). The selection of a depository will be determined by a competitive process and evaluated on the following criteria: Qualified as a depository for public funds in accordance with state and local laws. 2. Provided requested information or financial statements for the periods specified. 3. Complied with all .requirements in the banking RFP. 4. Completed responses to all required items on the proposal form. Offered lowest net banking service cost, consistent with the ability to provide an appropriate level of service. 6. Met credit worthiness and financial standards. B. Investment Broker/Dealers - If the City has not retained an investment advisor, then the Investment Committee shall be responsible for adopting the list of qualified brokers/dealers and financial institutions authorized to engage in investment transactions with the City. Authorized firms may include primary dealers or regional broker/dealers that qualify under SEC Rule 150-1 (uniform net capital rule) and. qualified depositories as established by the Tex. Loc. Gov't. Code Ch. 105. The Investment Committee shall base its evaluation of security broker/dealers and financial institutions upon: Financial condition, strength and capability to fulfill commitments. 2. Overall reputation with other broker/dealers or investors. 3. Regulatory status of the broker/dealer. 4. Background and expertise of the individual representatives. 5. Ability to provide additional advisory services. The Investment Committee must annually review the list of qualified broker/dealers authorized to engage in investment transactions with the City. Investment Officers, or their authorized representatives, shall not conduct business with any firm with whom public entities have sustained realized losses on investments or whose name the Investment Committee has removed from an approved list. C. Investment Advisor - The City may retain the services of an investment advisory firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to assist in the review of cash flow requirements, the formulation of investment strategies, and the execution of security purchases, sales and deliveries. The investment advisory contract with the City may not be for a term longer than two years and its renewal or extension must be approved by the City Council by ordinance or resolution as.required by the Tex. Gov't. Code Sec.2256.003(b). POLICY/ADMINISTRATIVE PROCFDTTRF./ADNHNTC'`R A'rrv-F "MPd-'rrt71W Page 13 of 15 TITLE: INVESTMENT POLICY :1!! RENCE NUMBER: 40106 D. Compliance - A qualified representative from any firm offering to engage in investment transactions with the City is required to sign a written instrument upon receiving and reviewing a copy of the City's Investment Policy. Investments shall only be made with those business organizations (including money market mutual funds and local government investment pools) which have provided the City with this written instrument executed by a qualified representative of the firm, acknowledging that the business organization has: Received and reviewed the City's Investment Policy. 2. Implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the City and the organization that are not authorized by the City's Investment Policy, except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio or requires an interpretation of subjective investment standards. If the City has contracted with an investment advisor, the advisor shall be responsible for performing financial due diligence on the City's behalf. On an annual basis, the advisor will provide the City with a list of its authorized broker/dealers as well as the written instrument above. XII. COLLATERALIZATION, SAFEKEEPING AND CUSTODY A. Collateralization - The City requires that all uninsured collected balances plus accrued interest, if any, in depository accounts be secured in accordance with the requirements of state law. Financial institutions serving as City depositories will be required to sign a depository agreement with the City which details eligible collateral, collateral ization ratios, standards for collateral custody and control, collateral valuation, rights of substitution and conditions for agreement termination. The City requires that all securities purchased under the terms of a repurchase agreement be assigned to the City in accordance with state law. Dealers and financial institutions wishing to transact repurchase agreements with the City will be required to sign a Master Repurchase Agreement which details eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. The City requires that all uninsured certificates of deposit plus accrued interest held with a depository be secured in accordance with the requirements of state law. Financial institutions will be required to sign a written depository and security agreement which stipulates eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. Collateral will always be held by an independent third party with which the City has a current custodial agreement and shall be reviewed at least monthly to ensure that the market value of the pledged securities is adequate. All deposits and investments of City funds, other than direct security purchases, money market mutual funds and local government investment pools shall be secured by pledged collateral set at no less than 102 percent of the market value of the principal and accrued interest on the deposits or investments less an amount insured by FDIC. Eligible collateral to secure the City's deposits include: Direct obligations of the United States government. Page 14 of 15 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the United States government. Direct obligations of agencies or instrumentalities of the United States government, including letters of credit. The City will reject adjustable rate mortgages (ARMs), collateralized mortgage obligations (CMOs), step-ups, variable rate instruments (except U.S. Treasury inflation protected securities), or securities that are not found on common pricing systems. B. Safekeeping and Custody - Safekeeping and custody of the City's investment securities shall be in accordance with state law. All security transactions, except local government investment pool and money market mutual fund transactions, shall be conducted on a delivery versus payment (DVP) basis. Investment securities will be held by a third party custodian designated by the City, and be required to issue safekeeping receipts clearly detailing that the securities are owned by the City. Safekeeping and custody of collateral shall be in accordance with state law. Collateral will be held by a third party custodian designated by the City, and pledged to the City as evidenced by safekeeping receipts from the institution holding the securities. C. Subject to Audit - All collateral shall be subject to inspection and audit by the Chief Financial Officer, or designee, as well as the City's independent auditors. XM. MANAGEMENT AND INTERNAL CONTROLS Controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by employees or Investment Officers of the City. Controls and managerial emphasis deemed most important that shall be employed include the following: Imperative Controls - Custodian safekeeping receipts records management Avoidance of bearer-form securities Documentation of investment bidding events - Written confirmation of telephone transactions - Reconcilements and comparisons of security receipts with the investment records Compliance with Investment Policy Verification, of all interest income and security purchase and sell computations Controls Where Practical Page 15 of 15 POLICY/ADMINISTRATIVE PROCEDURE/ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Control of Collusion Separation of duties Separation of transaction authority between Accounting and record-keeping Clear delegation of authority - Accurate and timely reports - Validation of investment maturity decisions with supporting cash flow data - Adequate training and development of Investment Officials - Review of financial conditions of all brokers/dealers, and depository institutions - Staying informed about market conditions, changes and trends that require adjustments to investment strategies. XIV. INVESTMENT POLICY ADOPTION The Investment Policy shall be formally approved and adopted by resolution of the City Council and reviewed annually in accordance with the provisions of the Public Funds Investment Act of the Texas Government Code Chapter 2256. AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Air Fair, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($10,234 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $10,234 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: Bryan Langley Chief Financial Officer llcodad*partmentsUegallour 4ocumentslordinances1101hot fim&air fair ordinance.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON AIR FAIR, INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Air Fair, Inc. for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: AT BY AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON AIR FAIR, INC. (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Air Fair, Inc., a legal entity incorporated under the laws of the State of Texas (the "AIR FAIR"): WHEREAS, TEx. TAx CoDE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (70/o); and WHEREAS, TEx. TAx CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, AIR FAIR is well equipped to perform those activities; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes CITY to delegate by contract with AIR FAIR, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and AIR FAIR agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by AIR FAIR under this Agreement, CITY agrees to pay to AIR FAIR a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to AIR FAIR sometimes herein referred to as the "agreed payments" or "hotel tax funds'). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351,002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Denton Air Fair, Inc PY2011 - Page I (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i. e., fiscal year or fiscal quarter), less: (1)-attorney and auditing costs incurred during such period for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agentsreffect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Afeement is in force. Contract quarters will end on March 31", June 30th, September 30 , and December 31st of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to AIR FAIR an amount of money in each contract year equal to the lesser amount of. Seventy-Eight One Hundredths percent (0.78%) of the annual base payment amount, or the fixed contract amount of Ten Thousand Two Hundred and Thirty- Four Dollars ($10,234). This amount will be divided into two payments equal to 50% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The final payment will represent 50% of the fixed contract amount or the unpaid remainder of 0.78% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce AIR FAIR's current budget at any time during the contract period. Each payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "payments" shall mean payments by CITY to AIR FAIR of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each payment shall be paid upon receipt of the required reports and after the 25t` day following the last day of the contract quarter. Payments to AIR FAIR will occur after the 25t' of January 2011 and after the 25' of April 2011. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of AIR FAIR. Denton Air Fair, Inc PY2011 - Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that AIR FAIR'S expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to AIR FAIR of the agreed payments of hotel tax funds specified above, AIR FAIR agrees to use such hotel tax fluids only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEx. TAx CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31' of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy audiences outside the Denton city limits. These materials posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. tax funds must be targeted to reach include, but are not limited to, signs, (a) That portion of total administrative costs of AIR FAIR for which hotel tax fluids may be used shall not exceed that portion of AIR FAIR's administrative costs actually incurred in conducting the activities specified in 12.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORD KEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) AIR FAIR shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of AIR FAIR in which the hotel tax funds shall be used by AIR FAIR. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax. CITY shall not pay to AIR FAIR any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) AIR FAIR acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in AIR FAIR with respect to the hotel tax funds paid by CITY to AIR FAIR under this Agreement. AIR FAIR shall expend hotel tax funds only in the manner and Denton Air Fair, Inc PY2011 - Page 3 for the purposes specified in this Agreement, TEx. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. AIR FAIR shall maintain any hotel tax funds paid to AIR FAIR by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. AIR FAIR shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by AIR FAIR. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, AIR FAIR shall make such financial records available for inspection and review by the party making the request. AIR FAIR understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEX. GOVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax fluids, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, AIR FAIR shall famish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEX. TAX CoDE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. AIR FAIR shall respond promptly to any request from the City Manager of CITY, or designate, for additional infon-nation relating to the activities performed under this Agreement. 3.5 Notice of Meetings. AIR FAIR shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of AIR FAIR's Board of Directors, as well as any other meeting of any constituency of AIR FAIR, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. Denton Air Fair, Inc PY2011 - Page 4 (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse AIR FAIR for any contractual obligations of AIR FAIR undertaken by AIR FAIR in satisfactory performance of those activities specified in ' T2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in' 12.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse AIR FAIR, or to assume the performance of any contractual obligations of AIR FAIR, for or under any contract entered into by AIR FAIR as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), AIR FAIR will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. AIR FAIR will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by AIR FAIR after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of AIR FAIR; (b) The insolvency of AIR FAIR., the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by AIR FAIR for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or AIR FAIR for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of AIR FAIR to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial Denton Air Fair, Inc PY2011 - Page 5 determination, either party shall have the right to terminate this Agreement upon immediate notice to the other parry in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating parry reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T¶4.3 or 4.4, AIR FAIR agrees to reftmd any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by AIR FAIR with another private entity, person, or organi- zation for the performance of those services described in X2.1 above. In the event that AIR FAIR enters into any arrangement, contractual or otherwise, with such other entity, person or organization, AIR FAIR shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEX. TAx CoDE ch. 351, including reporting requirements, separate fluids maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. AIR FAIR shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. AIR FAIR shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and AIR FAIR shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. AIR FAIR shall not be considered a partner or joint venturer with CITY, nor shall AIR FAIR be considered, nor in any manner hold itself out as, an agent or official representative of CITY 5.3 Indemnification. AIR FAIR AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY AIR FAIR OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF AIR FAIR, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. AIR FAIR shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: Denton Air Fair, Inc PY201 I - Page 6 CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 AIR FAIR Amanda Addington Denton Air Fair, Inc. 3201 Montecito Rd Denton, Texas 76205 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and AIR FAIR and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of CITY of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied,, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 511 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. AIR FAIR shall, at a minimum, provide insurance as follows: 1. $5,000,000 Commercial General Liability, or $5,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000) OR an Occupational Accident Insurance program if approved by the City's Risk Manager, and 3. $500,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. Denton Air Fair, Inc PY2011 - Page 7 CITY must be named as an additional insured on all policies (except Workers' Compensation) and proof of coverage shall be submitted prior to any payment by CITY, EXECUTED this 6a' day of , 2M. THE CITY OF DENTON, By: GEORGE C. CAMPBELL, CITY MANAGER ATTEST: APPROVED AS TO LEGAL By: ~ JENNIFER WALTERS, L ESS, CITY SECRETARY CITY ATTORNEY DENTON AIR FAIR, By: ~ -j Chairman/Director ATTEST: APPROVED AS TO LEGAL FO By: By: Secretary Denton Air Fair, Inc PY2011 - Page 8 Exhibit Denton Air Fair, Inc Denton Air Shaw PY 2011 Budget Advertising Radio Print Advertising Internet Advertising $ 5,1170 $ 1 Total $ 1 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Chamber of Commerce (Convention and Visitor Bureau) for the payment and use of hotel tax revenue; and providing an effective date. ($650,076 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $650,076 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: Bryan Langley Chief Financial Officer Ilc0dadldepartments\1ega1\our documentslordinances1I(Ahot fundlchamber ordinance.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER OF COMMERCE (CONVENTION AND VISITOR BUREAU) FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Chamber of Commerce (Convention and Visitor Bureau) for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A..BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER OF COMMERCE (CONVENTION & VISITOR BUREAU) (PY 2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Chamber of Commerce (Convention & Visitor Bureau), a non-profit corporation incorporated under the laws of the State of Texas (the "BUREAU'): WHEREAS, TEx. TAx CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. TAx CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, BUREAU is well equipped to perform those activities through its Denton Convention and Visitor's Bureau; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes CITY to delegate by contract with BUREAU, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and BUREAU agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by BUREAU under this Agreement, CITY agrees to pay to BUREAU a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to BUREAU sometimes herein referred to as the "agreed payments" or "hotel tax funds). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: . (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code §351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. CVB PY2011 HOT Fund Contract Page 1 (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less. (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against or auditing of such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 315, June 30`x', September 30 , and December 31st of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to BUREAU an amount of money in each contract year equal to the lesser amount of Forty-Nine and Fifty-One Hundredths percent (49.51 of the annual base payment amount, or the fixed contract amount of Six Hundred Fifty Thousand Seventy-Six Dollars ($650,076). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 49.51 % of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce BUREAU's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to BUREAU of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to fixture funding of this program beyond the current contract period. Any future funding is solely the responsibility of BUREAU. CVB PY2011 HOT Fund Contract Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that BUREAU's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to BUREAU of the agreed payments of hotel tax funds specified above, BUREAU agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity as authorized by TEX. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31't of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax fluids received from CITY by BUREAU may be spent for day-to-day operations, office supplies, salaries, travel expenses and other administrative costs allowed by TEx. Tax CODE §351.101(1), but only if specified in BUREAU's budget (Exhibit o A and each are directly attributable to work on programs, which promote tourism and the hotel and convention industry, and if each promotes at least one of the six statutory purposes enumerated within TEx. TAx CODE §351.101(a). 2.3 Specific Restrictions on Use of Funds (a) BUREAU agrees to demonstrate strict compliance with the record keeping and apportionment limitations imposed by TEx. TAx CoDE §351.101(f) and §351.108 (c) and (d). BUREAU shall not utilize hotel tax fiends for any expenditure which has not been specifically documented to satisfy the purposes set forth in ¶¶2.1 and 2.2 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manager. M. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) BUREAU shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of BUREAU funded by hotel tax revenue. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to BUREAU any hotel tax revenues as set forth in Section I of this contract during any program year of this CVB PY2011 HOT Fund Contract Page 3 Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) BUREAU acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in BUREAU with respect to the hotel tax funds paid by CITY to BUREAU under this Agreement. BUREAU shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEx. TAx CODE §351.101(a), and in the budget as approved by CITY. 3.2 Separate Accounts. BUREAU shall maintain any hotel tax funds paid to BUREAU by CITY in a separate checking account or with segregated fund accounting, such that any reasonable person can review the revenue source of any given expenditure. 3.3 Financial Records. BUREAU shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by BUREAU. These funds shall be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees and attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, BUREAU shall make such financial records available for inspection and review by the party making the request. BUREAU understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEX. GOVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of the hotel tax funds, and within thirty days after the end of every contract quarter, BUREAU shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures made or copies of the invoice or receipts with regard to hotel tax funds pursuant to TEx. TAx CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). BUREAU shall prepare and deliver all reports in a form and manner approved by the City Manager or designate. BUREAU shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. BUREAU shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of BUREAU's Board of Directors, as well as any other meeting of any constituency of BUREAU at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011 and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. CVB PY2011 HOT Fund Contract Page 4 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse BUREAU for any contractual obligations of BUREAU undertaken by BUREAU in satisfactory performance of those activities specified in ¶x[2.1 and 2.2 above and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 1' 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse BUREAU or to assume the performance of any contractual obligations of BUREAU for or under any contract entered into by BUREAU as contemplated herein shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to ¶4.2(a), BUREAU will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. BUREAU will be obligated to return any unused funds or funds determined to be used improperly. Any use of remaining funds by BUREAU after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of BUREAU; (b) The insolvency of BUREAU, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by BUREAU for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or BUREAU for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or CVB PY2011 HOT Fund Contract Page 5 (d) The failure of BUREAU to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T' 4.3 or 4.4, BUREAU agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1. Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by BUREAU with another private entity, person, or organization for the performance of those services described in ¶2.1 above. In the event that BUREAU enters into any arrangement, contractual or otherwise, with such other entity, person or organization, BUREAU shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to T>~x. Tax CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. BUREAU shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. BUREAU shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same and BUREAU shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. BUREAU shall not be considered a partner or joint venturer with CITY, nor shall BUREAU be considered nor in any manner hold itself out as an agent or official representative of CITY. 5.3 Indemnification. BUREAU AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY BUREAU OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF BUREAU, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. CVB PY2011 HOT Fund Contract Page 6 5.4 Assignment. BUREAU shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 BUREAU Denton Chamber of Commerce Denton Convention & Visitor Bureau Kim Phillips P.O. Box 1719 Denton, TX 76202 5.6 inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and BUREAU and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section "and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. CVB PY2011 HOT Fund Contract Page 7 512 Insurance. BUREAU shall, at a minimum, provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served, and 4. $500,000 Business Automobile Liability on any owned, non-owned or hired vehicles. CITY must be named as an additional insured on all policies (except Workers' Compensation) and proof of coverage shall be submitted prior to any payment by CITY. EXECUTED this day of ATTEST: By: JENNIFER WALTERS, CITY SECRETARY ATTEST: By: Secretary 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER APPROVED AS TO ANTA.-BURGESS, CITY ATTORNEY DENTON CHAMBER OFF By: lR , President APPROVED AS TO LEGAL FORM: By: CVB PY2011 HOT Fund Contract Page 8 Exhibit A Denton Chamber of Commerce Convention & Visitor Bureau PY 2011 Budget Advertising Adverisina: Print $ 43,215 Internet 25,000 Tourism Promotional Material 15,000 Brochures 15,000 Tavel & Trade Shows 10,000 Tourism & PR Services 14,000 Special Projects 2,000 Event Magazine (Denton Live) 100,000 Denton Live Distribution 12,000 $ 236,215 Administation: Salaries & Benefits $ 167,000 Liability Insurance 720 Travel & Training 11,000 Memberships & Subscriptions 3,500 Computer Equipment 9,026 Copy Machine 3,800 Office Supplies 7,500 Telephone 13,500 Printing Charges 1,000 Postage 6,500 Office Rent 14,055 $ 237,601 Meeting & Convention Marketina: Print Advertising $ 10,000 Sales & Marketing Missions 9,615 Trade Shows & Conferences 8,225 Membership & Professional Development 2,745 $ 30,585 Group Tour Marketina: Print Advertising $ 8,350 Sales & Marketing Missions 7,600 Trade Shows & Conferences 7,250 Memberhsip & Professional Development 975 $ 24,175 Administration of Meeting & Convention and Group Tour: Salaries and Benefits $ 90,000 Travel & Training 6,000 Printing Charges 500 $ 96,500 Sports Marketin : Print Advertising $ 15,000 Convention & Trade Show 10,000 $ 25,000 Total $ 650,076 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Community Theatre, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($23,003 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $23,003 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 3'- C~- - Bryan Langley Chief Financial Officer IlcodadWepartmentsllegahour documentslordinancesUftot findldct ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON COMMUNITY THEATRE, INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Community Theatre, Inc. for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of a 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FO ANITA BURGES TTORNEY AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COMMUNITY THEATRE, INC. (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY'), and the Denton Community Theatre, Inc., a legal entity incorporated under the laws of the State of Texas (the "THEATRE"): WHEREAS, TEX. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (71/o) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (711/o); and WHEREAS, TEX. TAx CODE §351.101(x) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, THEATRE is well equipped to perform those activities; and WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with THEATRE, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and THEATRE agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by THEATRE under this Agreement, CITY agrees to pay to THEATRE a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to THEATRE sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. DCT HOT Funding PY2011 e Page 1 (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i. e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and ,(2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31St, June 30th, September 30th, and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to THEATRE an amount of money in each contract year equal to the lesser amount of One and Seventy-Five One Hundredths percent (1.75%) of the annual base payment amount, or the fixed contract amount of Twenty-Three Thousand Three Dollars ($23,003). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 1.75% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce THEATRE's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to THEATRE of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement.. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of THEATRE. DCT HOT Funding PY2011 - Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that THEATRE's expenditures deviate materially from their approved budget. U. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to THEATRE of the agreed payments of hotel tax funds specified above, THEATRE agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity, as authorized by TEx. Tax CODE §351.101(a) (3). Funds for any calendar year which are unused by midnight December 31' of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. (a)' That portion of total administrative costs of THEATRE for which hotel tax funds may be used shall not exceed that portion of THEATRE's administrative costs actually incurred in conducting the activities specified in 12.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) THEATRE shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of THEATRE in which the hotel tax funds shall be used by THEATRE. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax fluids from the separate account relating to hotel tax funds. CITY shall not pay to THEATRE any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) THEATRE acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in THEATRE with respect to the hotel tax funds paid by CITY to THEATRE under this Agreement. THEATRE shall expend hotel tax funds only in the manner DCT HOT Funding PY2011 - Page 3 and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. THEATRE shall maintain any hotel tax funds paid to THEATRE by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. THEATRE shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by THEATRE. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, THEATRE shall make such financial records available for inspection and review by the party making the request. THEATRE understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEX. GOVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, THEATRE shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEX. TAX CODE §351.101(c), and (3) a copy of all financial records (e. g, copies of front and back of cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. THEATRE shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. THEATRE shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of THEATRE's Board of Directors, as well as any other meeting of any constituency of THEATRE, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011 and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other parry sixty (60) days advance written notice. DCT HOT Funding PY2011 - Page 4 (b) In the event this contract is terminated by either parry pursuant to Section 4.2(a), CITY agrees to reimburse THEATRE for any contractual obligations of THEATRE undertaken by THEATRE in satisfactory performance of those activities specified in ¶12.1 and 2.2 above, and that were approved by the Council through the budget, as noted in 13.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in I¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse THEATRE, or to assume the performance of any contractual obligations of THEATRE, for or under any contract entered into by THEATRE as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), THEATRE will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. THEATRE will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by THEATRE after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of THEATRE; (b) The insolvency of THEATRE, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by THEATRE for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or THEATRE for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of THEATRE to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. DCT HOT Funding PY2011 - Page 5 4.4 Right to Immediate Tcrmination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to ¶¶43 or 4.4, THEATRE agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by THEATRE with another private entity, person, or organi- zation for the performance of those services described in X2.1 above. In the event that THEATRE enters into any arrangement, contractual or otherwise, with such other entity, person or organization, THEATRE shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEX. TAx CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. THEATRE shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. THEATRE shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and THEATRE shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. THEATRE shall not be considered a partner or joint venturer with CITY, nor shall THEATRE be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. THEATRE AGREES TO INDEMNIFY, HOLD HARM LESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THEATRE OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF THEATRE, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. THEATRE shall not assign this Agreement without first obtaining the written consent of CITY. DCT HOT Funding PY2011 - Page 6 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY THEATRE City Manager Denton Community Theatre, Inc. City of Denton ATTN: Mike Barrow 215 E. McKinney 214 West Hickory Denton, TX 76201 Denton, Texas 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and THEATRE and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. THEATRE shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and DCT HOT Funding PY2011 - Page 7 s 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this day of 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER ATTEST: By: JENNIFER WALTERS, CITY SECRETARY TO LEGAL FORM: CITY ATTO DENTON f~OMMUNITY THEATRE, INC. ,-f By: Chairman/Director ATTEST: By: Secretary APPROVED AS TO LEGAL FORM: By: DCT HOT Funding PY20I I - Page 8 Exhibit A Denton Community Theatre 2010111 Performance Season PY 2011 Budget Advertising Radio Brochures & Postcards Internet $ 12,000 4,003 7,000 $ 23,003 Total $ 23,003 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an Interlocal Agreement between the City of Denton and Denton County for the payment and use of hotel tax revenue in support of the Courthouse-on-the-Square, the Bayless-Selby House, African American, Old No. 14 Fire House, Elm Ridge Church, Welcome Center and Outhouse Museums; and providing an effective date. ($98,039 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this agency is $98,039 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: Bryan Langley Chief Financial Officer l\codadldepartmentsllegallour d(0cumentslordinances\1Mhot fundldenton county ordinance. doe ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN INTERLOCAL AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE IN SUPPORT OF THE COURTHOUSE-ON-THE-SQUARE, THE BAYLESS-SELBY HOUSE, AFRICAN AMERICAN, OLD NO. 14 FIRE HOUSE, ELM RIDGE CHURCH, WELCOME CENTER AND OUTHOUSE MUSEUMS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Tex. Tax Code §351.101(a) authorizes the City of Denton, Texas to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity to visit preserved historic sites and museums; and WHEREAS, the County of Denton, Texas is well equipped to perform those activities by its operation of the Courthouse on the Square, the Bayless-Selby House, the African American, the Old No. 14 Fire House, the Elm Ridge Church, the Welcome Center and the Outhouse Museums; and WHEREAS, Tex. Tax Code §351.101(c) authorizes the City of Denton, Texas to delegate by contract with the County of Denton, Texas, as a governmental entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; and WHEREAS, both the City of Denton, Texas and the County of Denton, Texas have a secondary source of authority to enter into an interlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as. the agreement is authorized by both governmental bodies; the agreement states the purpose, terms, rights, and duties of the contracting parties; the consideration is being paid by City of Denton, Texas out of current revenues; the compensation is fair; and the services to be performed are "museum services" authorized under §791.003(3)(F) of the Texas Government Code, which each parry is authorized to perform individually; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an interlocal agreement between the City of Denton and Denton County for the payment and use of hotel tax revenue in support of the Courthouse on the Square, the Bayless-Selby House, the African American, the Old No. 14 Fire House, the Elm Ridge Church, the Welcome Center and the Outhouse Museums, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 7 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: Page 2 AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY, TEXAS (COURTHOUSE ON THE SQUARE, THE BAYLESS-SELBY HOUSE, AFRICAN AMERICAN, OLD NO. 14 FIRE HOUSE, ELM RIDGE CHURCH, WELCOME CENTER AND OUTHOUSE MUSEUMS) (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and County of Denton, Texas, a governmental entity existing under the laws of the State of Texas, contracting on behalf of its Courthouse-on-the-Square, African American, Bayless- Selby House, Old No. 14 Fire house, Elm Ridge Church, Welcome Center and Outhouse Museurns~ (collectively, the "MUSELTMS"): WHEREAS, TEX. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEX. TAX CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity, as well as to engage in historical restoration and preservation projects and activities and WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with MUSEUMS, as a governmental entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; and WHEREAS, MUSEUMS are well equipped to perform those activities; and WHEREAS, both CITY and MUSEUMS have a secondary source of authority to enter into this Agreement as an interlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as: the Agreement is authorized by both governmental bodies; the Agreement states the purpose, terms, rights, and duties of the contracting parties; the consideration is being paid by CITY out of current revenues; the compensation is fair; and the services to be performed are "museum services" authorized under §791.003(3)(F) of the Texas Government Code, which each parry is authorized to perform individually; NOW, THEREFORE; in consideration of the performance of the mutual covenants and promises contained herein, CITY and MUSEUMS agree and contract as follows: L HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by MUSEUMS under this Agreement, CITY agrees to reimburse a portion of the eligible expenditures by MUSEUMS during the 2011 calendar year, from hotel tax revenue collected by CITY during its HOT Funds PY2011 Denton County Museums Page 1 2010-11 fiscal year, at the rates and in the manner specified herein (such payments by CITY to MUSEUMS sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The terra "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31st, June 30tt, September 30'`, and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall reimburse to MUSEUMS, a portion of eligible expenditures made during calendar year 2011, in an amount equal to the lesser amount of. Seven and Forty-Seven One Hundredths percent (7.47%) of the annual base payment amount, or the fixed contract amount of Ninety-Eight Thousand and Thirty-Nine Dollars ($98,039). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount, or the unpaid remainder of 7.47% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projections, CITY may reduce MUSEUM's budget at any time during the contract period. Each quarterly payment is subject to receipt of fiends, confirmation of eligibility, and CITY's timely receipt of the required quarterly reports. HOT Funds PY2011 Denton County Museums Page 2 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to MUSEUMS of those amounts specified in 11.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports prior to the 25' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of MUSEUMS. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that MUSEUMS' expenditures deviate materially from its approved budget. 11. USE OF HOTEL TAX REVENUE 21 Use of Funds. For and in consideration of the payment by CITY to MUSEUMS of the agreed payments of hotel tax funds specified above, MUSEUMS agree to use such hotel tax finds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity, as well as to engage in historical restoration and preservation projects and activities to encourage tourists and convention delegates to visit preserved historic sites and museums, as authorized by TEx. TAX CODE §351.101(a)(3) and (a)(5). Funds for any calendar year which are unused by midnight December 31St of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax finds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax funds received from CITY by MUSEUMS may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by TEx. TAx CODE §351.101(f), but only if specified in MUSEUM's budget (Exhibit "A") and each such expenditure is directly attributable to work on programs, which promote tourism and the hotel and convention industry, and promotes at least one of the six statutory purposes enumerated within TEX. TAx CODE §351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) MUSEUMS agree to demonstrate strict compliance with the record keeping and apportionment limitations imposed by TEx. TAx CODE §351.101(f) and §351.108 (c) and (d). HOT Funds PY2011 Denton County Museums Page 3 MUSEUMS shall not utilize hotel tax funds for any expenditure which has not been specifically documented to satisfy the purposes set forth in 112.1 and 2.2 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. M. RECORDKEEPING AND REPORTING REQUIREMENTS 31 Budget. (a) MUSEUMS shall adhere to the annual budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of MUSEUMS in which the hotel tax funds shall be used by MUSEUMS. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to MUSEUMS any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. . (b) MUSEUMS acknowledge that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in MUSEUMS with respect to the hotel tax funds paid by CITY to MUSEUMS under this Agreement. MUSEUMS shall expend hotel tax fiords only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. MUSEUMS shall maintain any hotel tax funds paid to MUSEUMS by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. MUSEUMS shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by MUSEUMS. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, MUSEUMS shall make such financial records available for inspection and review by the party making the request. MUSEUMS understand and accept that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEx. Gov'T CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. Within thirty days after the end of every contract quarter, MUSEUMS shall furnish to CITY: (1) a completed financial report , (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEx. TAX CODE §351.101(c), and (3) a copy of all financial records (e. g., front and back copies of cleared checks or bank statements, and other relevant documentation), MUSEUMS shall prepare and deliver all reports in a form and manner approved by the City Manager or designate. MUSEUMS shall HOT Funds PY2011 Denton County Museums Page 4 respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. MUSEUMS shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of MUSEUMS' Boards of Directors, as well as any other meeting of any constituency of MUSEUMS, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERINUNATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse MUSEUMS for any contractual obligations of MUSEUMS undertaken by MUSEUMS in satisfactory performance of those activities specified in 1~ 2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in 13.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 12.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse MUSEUMS, or to assume the performance of any contractual obligations of MUSEUMS, for or under any contract entered into by MUSEUMS as contemplated herein, shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), MUSEUMS will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. MUSEUMS will be obligated to return any unused funds, or fiends determined to be used improperly. Any use of remaining funds by MUSEUMS after notification of termination is HOT Funds PY2011 Denton County Museums Page 5 conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 21 and 2.2 above, and fi rther conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of MUSEUMS; (b) The insolvency of MUSEUMS, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by MUSEUMS for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or MUSEUMS for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of MUSEUMS to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T14.3 or 4.4, MUSEUMS agree to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by MUSEUMS with another private entity, person, or organization for the performance of those services described in 12.1 above. In the event that MUSEUMS enter into any arrangement, contractual or otherwise, with such other entity, person or organization, MUSEUMS shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAX CODE ch. 351, including reporting requirements, separate fiords maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. MUSEUMS shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. MUSEUMS shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and MUSEUMS shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and HOT Funds PY2011 Denton County Museums Page 6 subcontractors. MUSEUMS shall not be considered a partner or joint venturer with CITY, nor shall MUSEUMS be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. TO THE EXTENT AUTHORIZED BY LAW, MUSEUMS AGREE TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY MUSEUMS OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF MUSEUM, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. MUSEUMS shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 MUSEUMS Denton County Museums Georgia Caraway, Director 110 W. Hickory St. Denton, TX 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and MUSEUMS and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. HOT Funds PY2011 Denton County Museums Page 7 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. MUSEUMS shall provide insurance as follows: 1. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000). Proof of coverage shall be submitted prior to any payment by CITY. 513 Waiver of Immunity for Suit to Enforce. By executing and authorizing the execution of this contract, DENTON COUNTY, TEXAS expressly waives immunity from any suit brought by CITY for the enforcement of the provisions contained herein, and further expressly waives the presentment required of Tex. Loc. Gov't Code sec. 89.004 as a prerequisite to such suit. EXECUTED this day of 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER ATTEST: By: JENNIFER WALTERS, CITY SECRETARY HOT Funds PY2011 Denton County Museums Page 8 APPROVED AS TO LEGAL FORM: ATTEST: By: tfz A, = c) APPROVED AS TO LEGAL FORM: By: HOT Funds PY2011 Denton County Museums Page 9 DENT(-IN COT TNTV TF`V e c Exhibit A Denton County Museums Courthouse on-the-Square, Bayless-Selby House, African American, Old No. 14 Fire House, Elm Ridge Church, Welcome Center, barn, outhouse and windmill PY 2011 Budget Advertising Block Ads $ 5,000 (MSA Visitors Guide and Chamber Map) Brochures 2,500 Magazines & Newspaper 20,539 (CVB Coop - TX Coop Power, Denton Live, Our TX, AAA Journey, TX HWYS, TX Monthly, DFWATC, True West) $ 28,039 Historical Archival Supplies, Furnishings & Equipment $ 5,000 Restoration, Repairs & Maintenance 13,900 (Elm Ridge Church and Old No.14 Firehouse) Contract Labor 18,000 Historical Park Manager, Partial Salary 32,500 Membership Dues 600 (Texas Assoc of Museums and DFWATC) $ 70,000 Total $ 98,039 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Festival Foundation for the payment and use of hotel tax revenue; and providing an effective date. ($82,811 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $82,811 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 3'- C~- - Bryan Langley Chief Financial Officer UodadWepartmentsllegahour documentslordinances\Mhot fundWestival foundation ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON FESTIVAL FOUNDATION FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Festival Foundation for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON FESTIVAL FOUNDATION (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Festival Foundation, Inc. a legal entity incorporated under the laws of the State of Texas (the "FOUNDATION")- WHEREAS, TEx. TAX CODE §351.002 authorizes the CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, the CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS,. TEx. TAx CODE §351.101(a) authorizes the CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, the FOUNDATION is well equipped to perform those activities; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes the CITY to delegate by contract with the FOUNDATION, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, the CITY and the FOUNDATION agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by the FOUNDATION under this Agreement, the CITY agrees to pay to the FOUNDATION a portion of the hotel tax revenue collected by the CITY at the rates and in the manner specified herein (such payments by the CITY to the FOUNDATION sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings- (i) The term "hotel tax revenue" shall mean the gross monies collected and received by the City as municipal hotel occupancy tax at the rate of seven percent (7%0) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Festival Foundation HOT Funding PY2011 - Page 1 Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. (ii) The term "Collection period" will mean the collection period for the CITY's fiscal year. It will include hotel tax revenue due to the City for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by the CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of the CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against or auditing of such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31 June 30,11 , September 30 , and December 31"of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, the CITY shall pay to FOUNDATION an amount of money in each contract year equal to the lesser amount of Six and Thirty-One One Hundredths percent (6.31 of the annual base payment amount, or the fixed contract amount of Eighty-Two Thousand Eight Hundred Eleven Dollars ($82,811). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless the CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 6.31% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce the FOUNDATION's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the FOUNDATION of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. The CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. Festival Foundation HOT Funding PY2011 - Page 2 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits the CITY to future funding of this program beyond the current contract period. Any fixture funding is solely the responsibility of the FOUNDATION. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of the CITY. (c) CITY may withhold further allocations if CITY determines that FOUNDATION's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by the CITY to the FOUNDATION of the agreed payments of hotel tax funds specified above, the FOUNDATION agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as well as the promotion of tourism through the encouragement, promotion, improvement, and application of the arts, including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major arts forms, as authorized by TEx. TAx CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31St of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited, to signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax funds received from the CITY by the FOUNDATION may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by TEX. TAX CODE 351.101(f), but only if specified in FOUNDATION's budget (Exhibit "A") and each are directly attributable to work on programs which promote tourism and the hotel and convention industry, and if each promotes at least one of the six statutory purposes enumerated within TEX. TAX CODE 351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of the FOUNDATION for which hotel tax funds may be used shall not exceed that portion of the FOUNDATION's administrative costs actually incurred in conducting the activities specified in 12.1 above. (b) Hotel tax fiznds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manner. Festival Foundation HOT Funding PY2011 - Page 3 III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) The FOUNDATION shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of the FOUNDATION funded by hotel tax revenues. In other words, the CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. The CITY shall not pay to the FOUNDATION any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) The FOUNDATION acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in the FOUNDATION with respect to the hotel tax funds paid by the CITY to the FOUNDATION under this Agreement. The FOUNDATION shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a), and in the budget as approved by the CITY. 3.2 Separate Accounts. The FOUNDATION shall maintain any hotel tax funds paid to the FOUNDATION by the CITY in a separate account or with segregated fund accounting, such that any reasonable person can review the source of expenditures of tax funds. 3.3 Financial Records. The FOUNDATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by the FOUNDATION. These funds shall be classified as restricted fiends for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees and attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, shall make such financial records available for inspection and review by the party making the request. FOUNDATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEx. GOV'T CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds and within thirty days after the end of every contract quarter, FOUNDATION shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEx. TAX CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. The FOUNDATION shall respond promptly to any request from the City Manager of the CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. The FOUNDATION shall give the City Manager of the CITY, or his designate, reasonable advance written notice of the time and place of all meetings of FOUNDATION's Board of Directors, as well as any other meeting of any constituency of the FOUNDATION at which this Agreement or any matter the subject of this Agreement shall be Festival Foundation HOT Funding PY201 l - Page 4 considered. This provision shall not be deemed to require the FOUNDATION to give notice of any executive session of the Executive Committee of the FOUNDATION. N. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011 and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either parry pursuant to Section 4.2(a), the CITY agrees to reimburse the FOUNDATION for any contractual obligations of the FOUNDATION undertaken by the FOUNDATION in satisfactory performance of those activities specified in 112.1 and 2.2 above and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in TT2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of the CITY to reimburse the FOUNDATION or to assume the performance of any contractual obligations of the FOUNDATION for or under any contract entered into by the FOUNDATION as contemplated herein shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to ¶4.2(a), the FOUNDATION will provide the CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by the City; 3) within 5 business days of a request from the CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. The FOUNDATION will be obligated 'to return any unused funds or funds determined to be used improperly. Any use of remaining funds by the FOUNDATION after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Festival Foundation HOT Funding PY2011 -Page 5 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of the FOUNDATION; (b) The insolvency of the FOUNDATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by the FOUNDATION for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either the CITY or the FOUNDATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of the FOUNDATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term; or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T~4.3 or 4.4, FOUNDATION agrees to refund any and all unused funds, or funds determined by the CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by the FOUNDATION with another private entity, person, or organization for the performance of those services described in 12.1 above. In the event that the FOUNDATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, the FOUNDATION shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. The FOUNDATION shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of the CITY. The FOUNDATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same and the FOUNDATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. The FOUNDATION shall not be considered a partner or joint venturer with the CITY, nor shall the FOUNDATION be considered nor in any manner hold itself out as an agent or official representative of the CITY. Festival Foundation HOT Funding PY201 I - Page 6 5.3 Indemnification. THE FOUNDATION AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THE FOUNDATION OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF FOUNDATION, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. The FOUNDATION shall not assign this Agreement without first obtaining the written consent of the CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery,. addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 FOUNDATION Denton Festival Foundation, Inc. Carol Short P.O. Box 2104 Denton, Texas 76202-2104 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the CITY and the FOUNDATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. Festival Foundation HOT Funding PY2011 - Page 7 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. The FOUNDATION shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,000/$100,000), and 3. $500,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this day of , 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER ATTEST: By: JENNIFER WALTERS, CITY SECRETARY DENTON FESTIVAL FOUNDATION, INC. By: d el= Chairman/Director Festival Foundation HOT Funding PY2011 - Page 8 ATTEST: By: Secretary APPROVED AS TO LEGAL FORM: By: . Festival Foundation HOT Funding PY2011 - Page 9 Exhibit A Denton Festival Foundation, Inc Denton Ats & Jazz Festival PY 2011 Budget Advertising Brochures $ 4,000 Magazines 4,500 Newspapers & Internet Ads 4,311 Salaries 3,000 $ 15,811 Art Musicians $ 45,000 Site Operations 22,000 $ 67,000 Total $ 82,811 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Holiday Festival Association, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($7,638 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $7,638 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 3'- C~- - Bryan Langley Chief Financial Officer Ilcodadldepartmcntsllegallour documentslordinancesA Mot fund%oliday festival ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON HOLIDAY FESTIVAL ASSOCIATION, INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Holiday Festival Association, Inc. for the payment and use of hotel tax revenue, under the terms and conditions contained in the f agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON HOLIDAY FESTIVAL ASSOCIATION, INC. (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Holiday Festival Association, Inc., a legal entity incorporated under the laws of the State of Texas (the "ASSOCIATION"):. WHEREAS, TEX. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. TAx CoDE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, ASSOCIATION is well equipped to perform those activities; and WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with ASSOCIATION, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and ASSOCIATION agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by ASSOCIATION under this Agreement, CITY agrees to pay to ASSOCIATION a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to ASSOCIATION sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Holiday Festival HOT Funding PY2011 -Page I Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during fiscal year 2005, less: (1) attorney and auditing costs incurred during such period for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this AIeement is in force. Contract quarters will end on March 315`, June 30t', September 30 , and December 315 of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to ASSOCIATION an amount of money in each contract year equal to the lesser amount of Fifty-Eight One Hundredths percent (0.58%) of the annual base payment amount, or the fixed contract amount of Seven Thousand Six Hundred Thirty-Eight Dollars ($7,638). This amount will be paid in one lump sum on or before August 1, 2011. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce the ASSOCIATION's current budget at any time during the contract period. Payment is subject to refund of any unused. or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "payments" shall mean payments by CITY to ASSOCIATION of those amounts specified in T1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25"' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of ASSOCIATION. Holiday Festival HOT Funding PY2011 - Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that ASSOCIATION's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to ASSOCIATION of the agreed payments of hotel tax funds specified above, ASSOCIATION agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEX. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31" of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of ASSOCIATION for which hotel tax funds may be used shall not exceed that portion of ASSOCIATION's administrative costs actually incurred in conducting the activities specified in ¶2:1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) ASSOCIATION shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of ASSOCIATION in which the hotel tax funds shall be used by ASSOCIATION. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax. CITY shall not pay to ASSOCIATION any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) ASSOCIATION acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in ASSOCIATION with respect to the hotel tax funds paid by CITY to ASSOCIATION under this Agreement. ASSOCIATION shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as approved by CITY. Holiday Festival HOT Funding PY2011 - Page 3 3.2 Separate Accounts. ASSOCIATION shall maintain any hotel tax funds paid to ASSOCIATION by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. ASSOCIATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by ASSOCIATION. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, ASSOCIATION shall make such financial records available for inspection and review by the party making the request. ASSOCIATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEX. GoVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, ASSOCIATION shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEX. TAX CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. ASSOCIATION shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. ASSOCIATION shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of ASSOCIATION, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent fiends shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. Holiday Festival HOT Funding PY2011 - Page 4 (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse ASSOCIATION for any contractual obligations of ASSOCIATION undertaken by ASSOCIATION in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶12.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse ASSOCIATION, or to assume the performance of any contractual obligations of ASSOCIATION, for or under any contract entered into by ASSOCIATION as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), ASSOCIATION will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. ASSOCIATION will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by ASSOCIATION after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 -and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the fall term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of ASSOCIATION; (b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by ASSOCIATION for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or ASSOCIATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of ASSOCIATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. Holiday Festival HOT Funding PY2011 - Page 5 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating parry reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T¶43 or 4.4, ASSOCIATION agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by ASSOCIATION with another private entity, person, or organization for the performance of those services described in X2.1 above. In the event that ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, ASSOCIATION shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAx CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. ASSOCIATION shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. ASSOCIATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. ASSOCIATION shall not be considered a partner or joint venturer with CITY, nor shall ASSOCIATION be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. ASSOCIATION AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY ASSOCIATION OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF ASSOCIATION, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the written consent of CITY. Holiday Festival HOT Funding PY2011 - Page 6 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY ASSOCIATION City Manager Denton Holiday Festival Association, Inc. City of Denton P.O. Box 2765 215 E. McKinney Denton, Texas 76202-2765 Denton, TX 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and ASSOCIATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of CITY of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 511 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. ASSOCIATION shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned properly, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and Holiday Festival HOT Funding PY2011 - Page 7 3. $250,000 Liquor/Drain Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. EXECUTED this day of , 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CANIPBELL, CITY NIANAGER ATTEST: APPROVED AS TO LEGAL FORM: By: Y: _ JENNIFER WALTERS, _ S~ CITY SECRETARY CITY ATTORNEY DENTON HOLIDAY FESTIVAL ASSOCIATION, INC. By: Chairman/Director ATTEST: APPROVED AS TO LEGAL FORM: By: By: Secretary Holiday Festival HOT Funding PY2011 - Page 8 Exhibit A Denton Holiday Festival Association Inc Denton Holiday Lighting PY 2011 Budget Advertising Magazines $ 3,069 (AAA Journey, Festivals of TX, TX Events Calendar, TX HYWS) Internet 500 (Tourtexas.com and Texashighways_com) Newspaper (Dallas Morning News) 4,069 $ 7,638 Total $ 7,638 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Central Business District Association of Denton, Texas, dba Denton Main Street Association for the payment and use of hotel tax revenue; and providing an effective date. ($23,003 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $23,003 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 3'- C~- - Bryan Langley Chief Financial Officer Ilcodadldepartmentsllegallour documcntslordinances1i01hot fundlmain street ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE CENTRAL BUSINESS DISTRICT ASSOCIATION OF DENTON, TEXAS, d/b/a DENTON MAIN STREET ASSOCIATION FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Central Business District Association of Denton, Texas, d/b/a Denton Main Street Association for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY AGREEMENT BETWEEN THE CITY OF DENTON AND THE CENTRAL BUSINESS DISTRICT ASSOCIATION OF DENTON, TX, d/b/a DENTON MAIN STREET ASSOCIATION (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Central Business District Association of Denton, Texas, Inc., a legal entity incorporated under the laws of the State of Texas (the "ASSOCIATION'): WHEREAS, TEx. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. TAX CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, ASSOCIATION is well equipped to perform those activities; and WHEREAS, TEx. TAX CODE §351.101(c) authorizes CITY to delegate by contract with ASSOCIATION, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and ASSOCIATION agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by ASSOCIATION under this Agreement, CITY agrees to pay to ASSOCIATION a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to ASSOCIATION sometimes herein referred to as the "agreed payments" or "hotel tax funds'). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant, to Texas Tax Code 351.002 and City Main Street HOT Funding PY2011 - Page 1 Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31St, June 30`x, September 30 , and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay ASSOCIATION an amount of money in each contract year equal or lesser amount of One and Seventy-Five One Hundredths percent (1.75%) of the annual base payment amount, or the fixed contract amount of Twenty Three Thousand Three Dollars ($23,003). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year.. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 1.75% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce the ASSOCIATION's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended finds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to ASSOCIATION of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. Main Street HOT Funding PY2011 - Page 2 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of ASSOCIATION. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that ASSOCIATION's expenditures deviate materially from their approved budget. H. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to ASSOCIATION of the agreed payments of hotel tax funds specified above, ASSOCIATION agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity, as authorized by TEx. TAX CODE §351.101(a) (3). Funds for any calendar year which are unused by midnight December 31" of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax funds received from CITY by ASSOCIATION may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by TEX. TAX CODE 351.101(f), but only if specified in ASSOCIATION's budget (Exhibit "A") and each such expenditure is directly attributable to work on programs which promote tourism and the hotel and convention industry, and promotes at least one of the six statutory purposes enumerated within. TEX. TAX CODE 351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of ASSOCIATION for which hotel tax funds may be used shall not exceed that portion of ASSOCIATION's administrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. Main Street HOT Funding PY2011 - Page 3 III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) ASSOCIATION shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of ASSOCIATION in which the hotel tax funds shall be used by ASSOCIATION. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to ASSOCIATION any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) ASSOCIATION acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in ASSOCIATION with respect to the hotel tax funds paid by CITY to ASSOCIATION under this Agreement. ASSOCIATION shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEx. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. ASSOCIATION shall maintain any hotel tax funds paid to ASSOCIATION by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. ASSOCIATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by ASSOCIATION. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, ASSOCIATION shall make such financial records available for inspection and review by the party making the request. ASSOCIATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEx. Gov'T CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, ASSOCIATION shall furnish to CITY; (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEx. TAX CODE §351.101(c), and (3) a copy of all financial records (e. g., copies of front and back of cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. ASSOCIATION shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. ASSOCIATION shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of Main Street HOT Funding PY2011 - Page 4 ASSOCIATION, at which this Agreement or any matter subject to this Agreement. shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse ASSOCIATION for any contractual obligations of ASSOCIATION undertaken by ASSOCIATION in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in X3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶x[2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse ASSOCIATION or to assume the performance of any contractual obligations of ASSOCIATION, for or under any contract entered into by the ASSOCIATIION as contemplated herein shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to ¶4.2(a), ASSOCIATION will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. ASSOCIATION will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by the ASSOCIATION after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Main Street HOT Funding PY2011 - Page 5 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of ASSOCIATION; (b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by ASSOCIATION for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or ASSOCIATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of ASSOCIATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to 114.3 or 4.4, ASSOCIATION agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by ASSOCIATION with another private entity, person, or organization for the performance of those services described in ¶2.1 above. In the event that ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, ASSOCIATION shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. ASSOCIATION shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. ASSOCIATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. ASSOCIATION shall not be considered a partner or joint venturer with CITY, nor shall ASSOCIATION be considered, nor in any manner hold itself out as, an agent or official representative of CITY. Main Street HOT Funding PY20I I - Page 6 5.3 Indemnification. ASSOCIATION AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THE ASSOCIATION OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF ASSOCIATION, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 ASSOCIATION Denton Main Street Association ATTN: Christine Gossett PO Box 2017 Denton, Texas 76202 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and ASSOCIATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections-and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. Main Street HOT Funding PY2011 - Page 7 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. ASSOCIATION shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this day of ATTEST: By: JENNIFER WALTERS, CITY SECRETARY ATTEST: By: Secretary 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER k-9URGESS, ATTORNEY CENTRAL ASSOCIATION (Denton Main St By: FORM: VINESS DISTRICT ' DENTON, TEXAS, INC. Association) APPROVED AS TO LEGAL FORM: By: Main Street HOT Funding PY2011 - Page 8 Exhibit A Denton Central Business District Association, Inc. Denton Main Street: Arts, Antiques & Auto and Downtown PY 2011 Advertising A, A & A Brochures $ 1,200 Downtown Visitors Guide (40,000) 8,000 Postage 300 Internet 1,000 DFW Area Tourism Membership 300 Magazines 3,203 Printing 2,000 Contract Labor 7,000 $ 23,003 Total $ 23,003 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Greater Denton Arts Council for the payment and use of hotel tax revenue to promote tourism and the convention and hotel industry; and providing an effective date. ($117,776 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $117,776 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 3'- C~- - Bryan Langley Chief Financial Officer IlcodadldepartmentsVegallour documentslordinances1101hot fundlgdac ordinance.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE GREATER DENTON ARTS COUNCIL FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE TO PROMOTE TOURISM AND THE CONVENTION AND HOTEL INDUSTRY; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Tex. Tax Code §351.101(a) authorizes the City of Denton, Texas to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and Z< G ' WHEREAS, Tex. Tax Code §351.101(c) authorizes the City of Denton, Texas to delegate by contract with the Greater Denton Arts Council, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Greater Denton Arts Council for the payment and use of hotel tax revenue to promote tourism and the convention and hotel industry, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS. C B Page 2 AGREEMENT BETWEEN THE CITY OF DENTON AND THE GREATER DENTON ARTS COUNCIL (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Greater Denton Arts Council, a non-profit corporation incorporated under the laws of the State of Texas (the "GDAC"): WHEREAS, TEX. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the city of Denton of seven percent (7%); and WHEREAS, TEX. TAX CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, GDAC is well equipped to perform those activities; and WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with GDAC; as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and GDAC agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by GDAC under this Agreement, CITY agrees to pay to GDAC a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to GDAC sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code §351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. GDAC PY2011 HOT Funds Contract - Paget 7i (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31St, June 30th, September 30th, and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this 'Agreement and all attachments hereto, CITY shall pay to GDAC an amount of money in each contract year equal to the lesser amount of Eight and Ninety-Seven One Hundredths percent (8.97%) of the annual base payment amount, or the fixed contract amount of One Hundred Seventeen Thousand Seven Hundred Seventy-Six Dollars ($117,776). This amount will be divided into quarterly payments equal to 25% of the annual-fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 8.97% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce the GDAC's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to GDAC of those amounts specified in 11.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports, and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. GDAC PY2011 HOT Funds Contract - Page 2 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to fixture funding of this program beyond the current contract period. Any future funding is solely the responsibility of GDAC. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that GDAC's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to GDAC of the agreed payments of hotel tax funds specified above, GDAC agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity and by the encouragement, promotion, improvement, and application of the arts, including instrumental and vocal music, dance, drarna, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major art forms. Funds for any calendar year which are unused by midnight December 31't of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax funds received from CITY by GDAC may be spent for day-to-day operations, office supplies, salaries, travel expenses and other administrative costs allowed by TEx. TAx CODE §351.101(f), but only if specified in GDAC's budget (Exhibit "A") and each such expenditure is directly attributable to work on programs which promote tourism and the hotel and convention industry, and promotes at least one of the six statutory purposes enumerated within TEx. TAx CODE §351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) GDAC agrees to demonstrate strict compliance with the record keeping and apportionment limitations imposed by TEx. TAx CODE §351.101(f) and §351.108 (c) and (d). GDAC shall not utilize hotel tax funds for any expenditure, which has not been specifically documented to satisfy the purposes set forth in ¶¶2.1 and 2.2 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of GDAC PY2011 HOT Funds Contract - Page 3 local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) GDAC shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of GDAC in which the hotel tax funds shall be used by GDAC. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to GDAC any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) GDAC acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in GDAC with respect to the hotel tax funds paid by CITY to GDAC under this Agreement. GDAC shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAx CODE, §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. GDAC shall maintain any hotel tax funds paid to GDAC by CITY in a separate account or with segregated fluid accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. GDAC shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by GDAC. These funds are required to be classified as restricted fiends for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, GDAC shall make such financial records available for inspection and review by the party making the request. GDAC understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEx. GoVT CoDE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax fiends, and within thirty days after the end of every contract quarter, GDAC shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEx. TAx CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). GDAC shall prepare and deliver all reports in a form and manner approved by the City Manager or designate. GDAC shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. GDAC PY2011 HOT Funds Contract - Page 4 3.5 Notice of Meetings. GDAC shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of GDAC's Board of Directors, as well as any other meeting of any constituency of GDAC, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either parry, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse GDAC for any contractual obligations undertaken by GDAC in satisfactory performance of those activities specified in 112.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse GDAC, or to assume the performance of any contractual obligations of GDAC, for or under any contract entered into by GDAC as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to ~4.2(a), GDAC will provide CITY: 1) within 10 business days from the termination notification, a short-term budget, of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget, the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. GDAC will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by GDAC after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in GDAC PY2011 HOT Funds Contract - Page 5 the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 43 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of GDAC; (b) The insolvency of GDAC, the filing of a petition in bankruptcy, either voluntarily or involuntarily; or an assignment by GDAC for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or GDAC for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of GDAC to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T¶4.3 or 4.4, GDAC agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by GDAC with another private entity, person, or organization for the performance of those services described in 12.1 above. In the event that GDAC enters into any arrangement, contractual or otherwise, with such other entity, person or organization, GDAC shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to Tex. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. GDAC shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. GDAC shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and GDAC PY2011 HOT Funds Contract - Page 6 GDAC shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. GDAC shall not be considered a partner or joint venturer with CITY, nor shall GDAC be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. GDAC AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY, OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY GDAC OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON,' CONSTITUTIONAL OR STATUTORY LAW, OR BASED; IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF GDAC, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. GDAC shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 GDAC Greater Denton Arts Council ATTN: Margaret Edge Chalfant 400 East Hickory Denton, Texas 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and GDAC and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this GDAC PY2011 HOT Funds Contract - Page 7 Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. GDAC shall, at a minimum, provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,000/$500,000/$100,000), 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City- owned property where alcohol will be provided or served, and 4. $500,000 Business Automobile Liability on any owned, non-owned or hired vehicles. CITY must be named as an additional insured on all policies (except Workers' Compensation) and proof of coverage shall be submitted prior to any payment by CITY. EXECUTED this day of , 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER GDAC PY2011 HOT Funds Contract - Page 8 ATTEST: By: JENNIFER WALTERS, CITY SECRETARY ATTEST: By: Secretary APPROVED AS TO LEGAL FORM: By: ANITA BURGESS, CITY ATTORNEY GDAC PY2011 HOT Funds Contract Page 9 GREATER DENTON ARTS COUNCIL A Exhibit A Greater Denton Arts Council Annual Operations and Annual Programs & Exhibits PY 2011 Budget Advertising Website Salary Support Direct Promotion of Programs & Exhibits $ 20,000 Convention Center Facility Salary Support Art $ 9,000 11,000 $ 19,000 Administrative Salary Support Executive Director $ 24,000 Administrative Assistant 11,000 Office Supplies 4,776 Exhibition/Program Salary Support 19,000 Exhibition and Programs 20,000 $ 78,776 Total $ 117,776 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and Denton Dog Days, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($14,586 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as a part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $14,586 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 5 Bryan Langley Chief Financial Officer Ilcodadldepartments\1egallour documentslordinances1101hot fundldog days ord. doe ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON DOG DAYS, INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and Denton Dog Days, Inc. for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY _ Y. rte. AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON DOG DAYS, INC. (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Dog Days, Inc., a legal entity incorporated under the laws of the State of Texas (the "ENTITY"): WHEREAS, TEx. TAx CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax {"hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. TAx CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, ENTITY is well equipped to perform those activities; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes CITY to delegate by contract with ENTITY, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and ENTITY agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by ENTITY under this Agreement, CITY agrees to pay to ENTITY a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein. (such payments by CITY to ENTITY sometimes herein referred to as the "agreed payments" or "hotel tax funds'). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Dog Days HOT Funding PY2011 - Page 1 (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i. e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31St, June 30`h, September 30'h, and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to ENTITY an amount of money in each contract year equal to the lesser amount of One and Eleven One Hundredths percent (1.11%) of the annual base payment amount, or the fixed contract amount of Fourteen Thousand and Five Hundred Eighty-Six Dollars ($14,580. This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 1.12% of the base payment amount, whichever is less. If CITY'S Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY will reduce the ENTITY's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to ENTITY of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future Rmding of this program beyond the current contract period. Any future funding is solely the responsibility of ENTITY. Dog Days HOT Funding PY2011 - Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that ENTITY's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to ENTITY of the agreed payments of hotel tax fiends specified above, ENTITY agrees to use such hotel tax fonds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity, as authorized by TEX. Tax CODE §351.101(a) (3). Funds for any calendar year which are unused by midnight December 31't of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax fiends must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax funds received from CITY by ENTITY may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by TEX. TAX CODE 351.101(f), but only if specified in ENTITY's budget (Exhibit "A") and each such expenditure is directly attributable to work on programs which promote tourism and the hotel and convention industry, and promotes at least one of the six statutory purposes enumerated within TEX. TAX CODE 351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of ENTITY for which hotel tax funds may be used shall not exceed that portion of ENTITY's administrative costs actually incurred in conducting the activities specified in 12.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. Dog Days HOT Funding PY2011 - Page 3 III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) ENTITY shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of ENTITY in which the hotel tax fluids shall be used by ENTITY. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to ENTITY any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. . (b) ENTITY acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in ENTITY with respect to the hotel tax funds paid by CITY to ENTITY under this Agreement. ENTITY shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEx. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. ENTITY shall maintain any hotel tax funds paid to ENTITY by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. ENTITY shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by ENTITY. These funds are required to be classified as restricted fimds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, ENTITY shall make such financial records available for inspection and review by the party making the request. ENTITY understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEX. GOVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, ENTITY shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEx. TAX CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back of cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. ENTITY shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. ENTITY shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of ENTITY's Board of Dog Days HOT Funding PY2411 - Page 4 Directors, as well as any other meeting of any constituency of ENTITY, at which this Agreement or any matter subject to this Agreement shall be considered. N. TERM AND TERNUNATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011 and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse ENTITY for any contractual obligations of ENTITY undertaken -by ENTITY in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ~T2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse ENTITY, or to assume the performance of any contractual obligations of ENTITY, for or under any contract entered into by ENTITY as contemplated herein, shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to ~4.2(a), ENTITY will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between. termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. ENTITY will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by ENTITY after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Dog Days HOT Funding PY2011 - Page 5 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of ENTITY; (b) The insolvency of ENTITY, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by ENTITY for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or ENTITY for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of ENTITY to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to 114.3 or 4.4, ENTITY agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by ENTITY with another private entity, person, or organi- zation for the performance of those services described in ¶2.1 above. In the event that ENTITY enters into any arrangement, contractual or otherwise, with such other entity, person or organization, ENTITY shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAx CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. ENTITY shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. ENTITY shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and ENTITY shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. ENTITY shall not be considered a partner or joint venturer with CITY, nor shall ENTITY be considered, nor in any manner hold itself out as, an agent or official representative of CITY. Dog Days HOT Funding PY2011 - Page 6 5.3 Indemnification. ENTITY AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY ENTITY OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF ENTITY, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. ENTITY shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 ENTITY Denton Dog Days, Inc. ATTN: Christine Gossett 1400 Oak Shores Ct. Cross Roads, TX 76227 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and ENTITY and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. Dog Days HOT Funding PY2011 - Page 7 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. ENTITY shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this 4' day of ar kizAA2 , 2010. THE CITY OF DENTON, TEXAS- By: ATTEST: By: GEORGE C. CAMPBELL, CITY MANAGER TO LEGAL FORM: JENNIFER WALTERS, TKBURGESS, CITY SECRETARY CITY ATTORNEY DENTON D)OCybAYS, INC. By: Dog Days HOT Funding PY2011 - Page 8 ATTEST: Secretary By: APPROVED AS TO LEGAL FORM: By: Dog Days HOT Funding PY2011 - Page 9 Exhibit A Denton Dog Days, Inc. Dog Days of Denton Celebration PY 2011 Budget Advertising Fesitval Brochures $ 1,300 Internet 1,000 Billboard 2,086 Print Advertising 1,200 Magazines and Other Publications 2,000 Contract Labor 7,000 $ 14,586 Total $ 14,586 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the North Texas State Fair Association for the payment and use of hotel tax revenue; and providing an effective date. ($73,610 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as a part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $73,610 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 3'- C~- - Bryan Langley Chief Financial Officer llcodadldeparanents4ega1lour documentAordinances11 Mot fundlntsf ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE NORTH TEXAS STATE FAIR ASSOCIATION FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the North Texas State Fair Association for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITE' ~4 RNEY i a AGREEMENT BETWEEN THE CITY OF DENTON AND THE NORTH TEXAS STATE FAIR ASSOCIATION (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the North Texas State Fair Association, a non-profit corporation incorporated under the laws of the State of Texas (the "ASSOCIATION"): WHEREAS, TEX. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax"} not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (71/o); and WHEREAS, TEx. TAx CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, ASSOCIATION is well equipped to perform those activities; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes CITY to delegate by contract with ASSOCIATION, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and ASSOCIATION agree and contract as follows: I. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by ASSOCIATION under this Agreement, CITY agrees to pay to ASSOCIATION a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to ASSOCIATION sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code §351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. North Texas State Fair PY2011 HOT Funds Page 1 (ii) The term "Collection. period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 3 V% June 3e, September 30'', and December 31" of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to ASSOCIATION an amount of money in each contract year equal to the lesser amount of Five and Sixty-One One Hundredths percent (5.61%) of the annual base payment amount, or the fixed contract amount of Seventy-Three Thousand Six Hundred Ten Dollars ($73,610). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 5.61 % of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce the ASSOCIATION's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds.from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to ASSOCIATION of those amounts specified in X1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25t' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. North Texas State Fair PY2011 HOT Funds - Page 2 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of ASSOCIATION. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that ASSOCIATION's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to ASSOCIATION of the agreed payments of hotel tax funds specified above, ASSOCIATION agrees to use such hotel tax fluids only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEX. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31St of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. (a) ASSOCIATION agrees to demonstrate strict compliance with the record keeping and apportionment limitations imposed by TEX. TAX CODE §351.101(f) and §351.108 (c) and (d). ASSOCIATION shall not utilize hotel tax fiords for any expenditure, which has not been specifically documented to satisfy the purposes set forth in ¶¶2.1 and 2.2 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) ASSOCIATION shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of ASSOCIATION in which the hotel tax funds shall be used by ASSOCIATION. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to ASSOCIATION any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement North Texas State Fair PY2011 HOT Funds - Page 3 1, unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) ASSOCIATION acknowledges that approval of the budget (Exhibit 'W') by the Denton City Council creates a fiduciary duty in ASSOCIATION with respect to the hotel tax funds paid by CITY to ASSOCIATION under this Agreement. ASSOCIATION shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. ASSOCIATION shall maintain any hotel tax funds paid to ASSOCIATION by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. ASSOCIATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by ASSOCIATION. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonably advance written request of the Denton City Council, the City Manager or designate, or any other person, ASSOCIATION shall make such financial records available for inspection and review by the party making the request. ASSOCIATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEX. GOVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax fund, and within thirty days after the end of every contract quarter, ASSOCIATION shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of invoices or receipts made with regard to hotel tax funds pursuant to TEX. Tax CoDE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). ASSOCIATION shall prepare and deliver all reports in a form and manner approved by the City Manager or designate. ASSOCIATION shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. ASSOCIATION shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of ASSOCIATION, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Terns. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible North Texas State Fair PY2011 HOT Funds - Page 4 expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse ASSOCIATION for any contractual obligations of ASSOCIATION undertaken by ASSOCIATION in satisfactory performance of those activities specified in JT2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ~T2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse ASSOCIATION or to assume the performance of any contractual obligations of ASSOCIATION, for or under any contract entered into by ASSOCIATION as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to ~4.2(a), ASSOCIATION will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. ASSOCIATION will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by ASSOCIATION after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of ASSOCIATION; (b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by ASSOCIATION for the benefit of creditors; North Texas State Fair PY2011 HOT Funds - Page 5 (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or ASSOCIATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of ASSOCIATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any.person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to ¶¶4.3 or 4.4, ASSOCIATION agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by ASSOCIATION with another private entity, person, or organization for the performance of those services described in ¶2.1 above. In the event that ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, ASSOCIATION shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEX. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. ASSOCIATION shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. ASSOCIATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. ASSOCIATION shall not be considered a partner or joint venturer with CITY, nor shall ASSOCIATION be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. ASSOCIATION AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY ASSOCIATION OF THOSE SERVICES CONTEMPLATED BY THIS North Texas State Fair PY2011 HOT Funds - Page 6 AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF ASSOCIATION, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 ASSOCIATION North Texas State Fair Association Glenn Carlton P.O. Box 1695 Denton, Texas 76202 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and ASSOCIATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by North Texas State Fair PY2011 HOT Funds Page 7 any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance, ASSOCIATION shall, at a minimum, provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City- owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this day of 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER ATTEST: APPROVED By: B JENNIFER WALTERS, GESS, CITY SECRETARY CITY ATTORNEY NORTH TEXAS STI E FAIR ASSOCIATION By: ATTEST: APPROVED AS TO LEGAL FORM: By: Bye Secretary North Texas State Fair PY2011 HOT Funds - Page 8 Exhibit A North Texas State Fair Association North Texas State Fair and Rodeo PY 2011 Budget Advertising FAIR AND RODEO Internet Radio Newspaper & Magazine Billboards Television $ 4,000 43,500 1,110 10,000 15,000 $ 73,610 Total $ 73,610 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Tejas Storytelling Association, Inc. for the payment and use of hotel tax revenue; and providing an effective date. ($50,607 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $50,607 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 5 Bryan Langley Chief Financial Officer l\codadldepartments4cga1lour documentslordinances\l Mot fundltejas ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE TEJAS STORYTELLING ASSOCIATION, INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Tejas Storytelling Association., Inc. for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: AP A~ BN AGREEMENT BETWEEN THE CITY OF DENTON AND TEJAS STORYTELLING ASSOCIATION, INC. (PY2011), PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Tejas Storytelling Association, Inc., a legal entity incorporated under the laws of the State of Texas (the "ASSOCIATION"): WHEREAS, TEx. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (71/o) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. TAx CODE §351.101(x) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, ASSOCIATION is well equipped to perform those activities; and WHEREAS, TEx. TAx CoDe §351.101(c) authorizes CITY to delegate by contract with ASSOCIATION, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and ASSOCIATION agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by ASSOCIATION under this Agreement, CITY agrees to pay to ASSOCIATION a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to ASSOCIATION sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Tejas HOT Funding PY2011 - Page i (ii) The term "Collection period'.-' will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i. e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31st, Tune 30th, September 30th, and December 31" of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to ASSOCIATION an amount of money in each contract year equal to the lesser amount of. Three and Eighty-Five One Hundredths percent (3.85%) of the annual base payment amount, or the fixed contract amount of Fifty Thousand Six Hundred Seven Dollars ($50,607). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 3.85% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce ASSOCIATION's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended finds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to ASSOCIATION of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25"' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of ASSOCIATION. Tejas HOT Funding PY2011 - Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that ASSOCIATION's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of funds. For and in consideration of the payment by CITY to ASSOCIATION of the agreed payments of hotel tax funds specified above, ASSOCIATION agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinitys; as well as the encouragement, promotion, improvement, and application of the arts including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major art forms as authorized by TEX. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31St of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Speck Restrictions on Use of Funds. (a) That portion of total administrative costs of ASSOCIATION for which hotel tax funds may be used shall not exceed that portion of ASSOCIATION's administrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. 111. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) ASSOCIATION shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of ASSOCIATION in which the hotel tax funds shall be used by ASSOCIATION. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax funds. CITY shall not pay to ASSOCIATION any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. Tejas HOT Funding PY2011 - Page 3 (b) ASSOCIATION acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in ASSOCIATION with respect to the hotel tax funds paid by CITY to ASSOCIATION under this Agreement. ASSOCIATION shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. ASSOCIATION shall maintain any hotel tax funds paid to ASSOCIATION by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. ASSOCIATION shall maintain complete and accurate financial records of each expenditure of the hotel tax fimds made by ASSOCIATION. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, ASSOCIATION shall make such financial records available for inspection and review by the party making the request. ASSOCIATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEx. Gov'T CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of the hotel tax funds, and within thirty days after the end of every contract quarter, ASSOCIATION shall furnish to CITY. (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEX. TAX CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back of cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. ASSOCIATION shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. ASSOCIATION shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of ASSOCIATION, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011 and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. Tejas HOT Funding PY2011 - Page 4 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse ASSOCIATION for any contractual obligations of ASSOCIATION undertaken by ASSOCIATION in satisfactory performance of those activities specified in ~T2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse ASSOCIATION, or to assume the performance of any contractual obligations of ASSOCIATION, for or under any contract entered into by ASSOCIATION as contemplated herein, shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), ASSOCIATION will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget, the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. ASSOCIATION will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by ASSOCIATION after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of ASSOCIATION; (b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by ASSOCIATION for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or ASSOCIATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or Tejas HOT Funding PY2011 - Page 5 (d) The failure of ASSOCIATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to TT43 or 4.4, ASSOCIATION agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by ASSOCIATION with another private entity, person, or organization for the performance of those services described in T2.1 above. In the event that ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, ASSOCIATION shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAx CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. ASSOCIATION shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. ASSOCIATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. ASSOCIATION shall not be considered a partner or joint venturer with CITY, nor shall ASSOCIATION be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. ASSOCIATION AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY ASSOCIATION OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF ASSOCIATION, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND 11-4VITEES. 5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the written consent of CITY. Tejas HOT Funding PY2011 - Page 6 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 ASSOCIATION Texas Storytelling Association, Inc. Elizabeth Ellis P.O. Box 2806 Denton, Texas 76202-2806 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and ASSOCIATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Seveirability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. ASSOCIATION shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. Tejas HOT Funding PY2011 - Page 7 CITY must be named as an additional insured on all policies (except Workers' Compensation) and proof of coverage shall be submitted prior to any payment by CITY. EXECUTED this day of 2010. THE CITY OF DENTON, TEXAS By, GEORGE C. CAMPBELL, CITY MANAGER ATTEST: By: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY TEJAS STOR~LING ASSOCIATION, INC. ATTEST: By: Secretary By: Chairm ector APPROVED AS TO LEGAL FORM: By: Tejas HOT Funding PY2011 - Page 8 Exhibit A Texas Storytelling Association Texas Storytelling Festival P.Y 2011 Budget Advertising Magazines & Newspapers $ 10,658 Printed Materials 5,400 Marketing & Promotion 6,000 Direct Mail 1,000 Radio & N 12,849 Photography 300 Internet 2,400 $ 38,607 Art Performers Site Operations $ 9,000 3,000 $ 12,000 Total $ 50,607 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Denton Black Chamber of Commerce for the payment and use of hotel tax revenue; and providing an effective date. ($16,572 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $16,572 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: Bryan Langley Chief Financial Officer llcodadldepartmentsllegahour documentslordinancesll Mot furiftlack chamber ordinance.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON BLACK CHAMBER OF COMMERCE FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Black Chamber of Commerce for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY 9 AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON BLACK CHAMBER OF COMMERCE (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Black Chamber of Commerce, a legal entity existing under the laws of the State of Texas (the "CHAMBER"): WHEREAS, TEx. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEX. TAx CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, CHAMBER is well equipped to perform those activities; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes CITY to delegate by contract with CHAMBER, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and CHAMBER agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by CHAMBER under this Agreement, CITY agrees to pay to CHAMBER a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to CHAMBER, sometimes herein referred to as the "agreed payments" or "hotel tax fiends"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Black Chamber HOT Funding PY2011 - Page 1 (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers. (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against or auditing of such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31St, June 30tt', September 30 , and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to CHAMBER an amount of money in each contract year equal to the lesser amount of One and Twenty-Six One Hundredths percent (1.26%) of the annual base payment amount, or the fixed contract amount of Sixteen Thousand Five Hundred and Seventy-Two Dollars ($16,572). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 1.26% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce CHAMBER's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to CHAMBER of those amounts specified in x[1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25"' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of CHAMBER. Black Chamber HOT Funding PY2011 - Page 2 (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. (c) CITY may withhold further allocations if CITY determines that CHAMBER's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to CHAMBER of the agreed payments of hotel tax funds specified above, CHAMBER agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEX. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31 " of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy audiences outside the Denton city limits. These materials posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. tax funds must be targeted to reach include, but are not limited to, signs, (a) That portion of total administrative costs of CHAMBER for which hotel tax funds may be used shall not exceed that portion of CHAMBER's administrative costs actually incurred in conducting the activities specified in 12.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) CHAMBER shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of CHAMBER funded by hotel tax revenues. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax fluids from the separate account relating to hotel tax funds. CITY shall not pay to CHAMBER any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) CHAMBER acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in CHAMBER with respect to the hotel tax funds paid by CITY to CHAMBER under this Agreement. CHAMBER shall expend hotel tax fiuids only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a), and in the budget as approved by CITY. Black Chamber HOT Funding PY2011 - Page 3 3.2 Separate Accounts. CHAMBER shall maintain any hotel tax funds paid to CHAMBER by CITY in a separate account, or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. CHAMBER shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by CHAMBER. These funds shall be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees and attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, CHAMBER shall make such financial records available for inspection and review by the party making the request. CHAMBER understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEx. GOVT CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, CHAMBER shall furnish to CITY. (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds, pursuant to TEx. TAx CODE §35L101(c), and (3) a copy of all financial records (e, g., front and back copies of cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. CHAMBER shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. CHAMBER shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of CHAMBER's Board of Directors, as well as any other meeting of any constituency of CHAMBER, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011 and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and tenninate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. Black Chamber HOT Funding PY2011 - Page 4 (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse CHAMBER for any contractual obligations of CHAMBER undertaken by CHAMBER in satisfactory performance of those activities specified in ~T2.1 and 2.2 above and that were approved by the Council through the budget, as noted in X3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 72.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse CHAMBER or to assume the performance of any contractual obligations of CHAMBER for or under any contract entered into by CHAMBER as contemplated herein shall not exceed 66 213% of the current quarterly payment. (c) Further, upon termination pursuant to ~ 4.2(a), CHAMBER will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by the City; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. CHAMBER will be obligated to return any unused funds or funds determined to be used improperly. Any use of remaining funds by CHAMBER after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of CHAMBER; (b) The insolvency of CHAMBER, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by CHAMBER for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or CHAMBER for more than thirty (30) days after written notice of such breach is given to the breaching parry by the other parry; or (d) The failure of CHAMBER to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the Black Chamber HOT Funding PY2011 - Page 5 non-termainating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to ¶¶4.3 or 4.4, CHAMBER agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by CHAMBER with another private entity, person, or organization for the performance of those services described in ' 2.1 above. In the event that CHAMBER enters into any arrangement, contractual or otherwise, with such other entity, person or organization, CHAMBER shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEX. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. CHAMBER shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. CHAMBER shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same and CHAMBER shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. CHAMBER shall not be considered a partner or joint venturer with CITY, nor shall CHAMBER be considered nor in any manner hold itself out as an agent or official representative of CITY. 5.3 Indemnification. CHAMBER AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY CHAMBER OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF CHAMBER, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. CHAMBER shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: Black Chamber HOT Funding PY20I I - Page 6 CITY CHAMBER City Manager Denton Black Chamber of Commerce City of Denton John Baines 215 E. McKinney P.O. Box 51026 Denton, TX 76201 Denton, Texas 76206 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and CHAMBER and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. CHAMBER shall, at a minimum, provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability (S 100,000/$ 500,0005100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event. occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. Black Chamber HOT Funding PY2011 - Page 7 EXECUTED this day of .2010. THE CITY OF DENTON, TEXAS By: ATTEST: By: JENNIFER WALTERS, CITY SECRETARY ATTEST: By: GEORGE. C. CAMPBELL, CITY MANAGER APPROVED ASIO LEGAL FO BY. AMT~VBURGES S, CITY ATTORNEY DENTON BLAC CHAMBER OF COMMERCE By: i IhaTDAS hector APP TO LEGAL FORM: By: Secretary Black Chamber HOT Funding PY2011 - Page 8 Exhibit A Denton Black Chamber of Commerce Denton Blues Festival PY 2011 Budget Advertising Brochures Radio Billboards $ 1,072 5,000 6,500 $ 12,572 Art Musicians $ 4,000 Tota 1 $ 16,572 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Music Theatre of Denton for the payment and use of hotel tax revenue; and providing an effective date. ($5,000 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $5,000 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 5 Bryan Langley Chief Financial Officer llcodadldepattments1cga1\our documentslordinances1101hot fundlmusic theatre ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND MUSIC THEATRE OF DENTON FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and Music Theatre of Denton for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 52010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: AGREEMENT BETWEEN THE CITY OF DENTON AND MUSIC THEATRE OF DENTON (PY2011) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Music Theatre of Denton, a legal entity incorporated under the laws of the State of Texas (the "THEATRE"): WHEREAS, TEx. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (70/o); and WHEREAS, TEx. TAX CoDE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, THEATRE is well equipped to perform those activities; and WHEREAS, TEx. TAX CODE §351.101(c) authorizes CITY to delegate by contract with THEATRE, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and THEATRE agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by THEATRE under this Agreement, CITY agrees to pay to THEATRE a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to THEATRE sometimes herein referred to as the "agreed payments" or "hotel-tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Music Theatre of Denton HOT Funding PY2011 - Page 1 f (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this AFeement is in force. Contract quarters will end on March 30, June 30"', September 30 , and December 315 of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to THEATRE an amount of money in each contract year equal to the lesser amount of Thirty-Eight One Hundredths percent (0.3$%) of the annual base payment amount, or the fixed contract amount of Five Thousand Dollars ($5,000). This amount will be paid in one lump sum after the 25th of January 2011. If CITY's Chief Financial Officer determines that hotel tax receipts to the CITY are not meeting the anticipated budget projection, CITY may reduce THEATRE's current budget at any time during the contract period. Payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "payments" shall mean payments by CITY to THEATRE of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25'~' day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of THEATRE. . (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. Music Theatre of Denton HOT Funding PY2011 - Page 2 (c) CITY may withhold further allocations if CITY determines that THEATRE's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to THEATRE of the agreed payments of hotel tax funds specified above, THEATRE agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEx. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31' of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of THEATRE for which hotel tax funds may be used shall not exceed that portion of THEATRE's administrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) THEATRE shall prepare and submit to the City Manager of CITY an annual budget (see Exhibit "A") as approved by the City Council for each calendar year, for all operations of THEATRE in which the hotel tax funds shall be used by THEATRE. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax. CITY shall not pay to THEATRE any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) THEATRE acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in THEATRE with respect to the hotel tax funds paid by CITY to THEATRE under this Agreement. THEATRE shall expend hotel tax fluids only in the manner and for the purposes specified in this Agreement, TEx. TAX CoDE §351.101(a) and in the budget as approved by CITY. Music Theatre of Denton HOT Funding PY2011 - Page 3 3.2 Separate Accounts. THEATRE shall maintain any hotel tax fluids paid to THEATRE by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. THEATRE shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by THEATRE. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, THEATRE shall make such financial records available for inspection and review by the party making the request. THEATRE understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEX. Gov'T CODE., ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax fluids, and within thirty days after the end of every quarter thereafter, until all fluids have been expended and reported to CITY, THEATRE shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEX. TAX CODE §351.101(c), and (3) a copy of all financial records (e. g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. THEATRE shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. THEATRE shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of THEATRE's Board of Directors, as well as any other meeting of any constituency of THEATRE, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. Music Theatre of Denton HOT Funding PY2011 - Page 4 (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse THEATRE for any contractual obligations of THEATRE undertaken by THEATRE in satisfactory performance of those activities specified in X12.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶T2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse THEATRE, or to assume the performance of any contractual obligations of THEATRE, for or under any contract entered into by THEATRE as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to ~4.2(a), THEATRE will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days; a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax finds on the day of termination. THEATRE will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by THEATRE after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of THEATRE; (b) The insolvency of THEATRE, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by THEATRE for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or THEATRE for more than thirty (30) days after written notice of such breach is given to the breaching party by the other parry; or (d) The failure of THEATRE to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial Music Theatre of Denton HOT Funding PY2011 - Page 5 determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to 114.3 or 4.4, THEATRE agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by THEATRE with another private entity, person, or organi- zation for the performance of those services described in 12.1 above. In the event that THEATRE enters into any arrangement, contractual or otherwise, with such other entity, person or organization, THEATRE shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAx CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. THEATRE shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. THEATRE shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and THEATRE shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. THEATRE shall not be considered a partner or joint venturer with CITY, nor shall THEATRE be considered, nor in any manner hold itself out as, an agent or official representative of CITYe 5.3 Indemnification. THEATRE AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THEATRE OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF THEATRE, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. THEATRE shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: Music Theatre of Denton HOT Funding PY2011 - Page 6 CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 THEATRE Music Theater of Denton 214 West Hickory Denton, Texas 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and THEATRE and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of CITY of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. THEATRE shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. Music Theatre of Denton HOT Funding PY2011 - Page 7 EXECUTED this day of , 2010. ATTEST: By: JENNIFER WALTERS, CITY SECRETARY ATTEST: By: Secretary THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER APPROVED AS TO LEGAL FORM: APPROVED AS TO LEGAL FORM: By: Music Theatre of Denton HOT Funding PY2011 - Page 8 By: _ K• vC.l-t~_-_e Cha-=' an/Director Exhibit A Music Theatre of Denton Season 26 PY 2011 Budget Advertising Newspapers Internet Theatre Advertisements (Ardmore & Granbury) Printed Materials $ 1,100 600 1,300 2,000 $ 5,000 Total $ 5,000 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance n ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and the Texas Filmmakers Corporation for the payment and use of hotel tax revenue; and providing an effective date. ($5,000 - Hotel Occupancy Tax Committee recommends approval 3-0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2011 through midnight January 31, 2012. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2010-2011 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $5,000 for FY 2010-2011 and has been included in the Annual Program of Services. EXHIBITS Ordinance with contract Respectfully submitted: 4 5 Bryan Langley Chief Financial Officer %\codadldcpartmentsllegallour documentslordinances\l Mot fundltexas filmmakers ord.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND TEXAS FILMMAKERS CORPORATION FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and Texas Filmmakers Corporation for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: AGREEMENT BETWEEN THE CITY OF DENTON AND TEXAS FILMMAKERS CORPORATION (PY201 t) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY'), and Texas Filmmakers Corporation, a legal entity incorporated under the laws of the State of Texas (the "CORPORATION"): WHEREAS, TEX. TAX CoDE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. TAX CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, CORPORATION is well equipped to perform those activities; and WHEREAS, TEx. TAx CODE §351.101(c) authorizes CITY to delegate by contract with CORPORATION, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and CORPORATION agree and contract as follows: I. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by CORPORATION under this Agreement, CITY agrees to pay to CORPORATION a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to CORPORATION sometimes herein referred to as the "agreed payments" or "hotel tax funds"). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Texas Filmmakers HOT Funding PY2011 - Page 1 (ii) The term "Collection period'' will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (i. e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this AFeement is in force. Contract quarters will end on March 31St, June 30th, September 30 , and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to CORPORATION an amount of money in each contract year equal to the lesser amount of Thirty-Eight One Hundredths percent (0.38%) of the annual base payment amount, or the fixed contract amount of Five Thousand Dollars ($5,000). This amount will be paid in one lump sum after the 25th of January 2011. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce CORPORATION's current budget at any time during the contract period. Payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "payments" shall mean payments by CITY to CORPORATION of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future finding is solely the responsibility of CORPORATION. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY, Texas Filmmakers HOT Funding PY2011 - Page 2 (c) CITY may withhold further allocations if CITY determines that CORPORATION's expenditures deviate materially from their approved budget. U. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to CORPORATION of the agreed payments of hotel tax funds specified above, CORPORATION agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEX. TAX CODE §351.101(x). Funds for any calendar year which are unused by midnight December 31St of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audience outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of CORPORATION for which hotel tax funds may be used shall not exceed that portion of CORPORATION's administrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity, the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry and the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) CORPORATION shall adhere to the budget (Exhibit "A") as approved by the City Council for each calendar year, for all operations of CORPORATION in which the hotel tax fluids shall be used by CORPORATION. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax. CITY shall not pay to CORPORATION any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) CORPORATION acknowledges that approval of the budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in CORPORATION with respect to the hotel tax funds paid by CITY to CORPORATION under this Agreement. CORPORATION shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAx CODE §351.101(a) and in the budget as approved by CITY. 3.2 Separate Accounts. CORPORATION shall maintain any hotel tax fiends paid to CORPORATION by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. Texas Filmmakers HOT Funding PY2011 - Page 3 3.3 Financial Records. CORPORATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by CORPORATION. These funds are required to be classified as restricted fiends for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, CORPORATION shall make such financial records available for inspection and review by the party making the request. CORPORATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEx. Gov'T CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax fluids, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, CORPORATION shall fin-nish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax fluids pursuant to TEx. TAx CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. CORPORATION shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. CORPORATION shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of CORPORATION's Board of Directors, as well as any other meeting of any constituency of CORPORATION, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2011, and terminate at midnight on January 31, 2012. However, the program period shall commence on January 1, 2011 and terminate at midnight on December 31, 2011. Only those expenditures authorized by Chapter 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. Texas Filmmakers HOT Funding PY2011 - Page 4 (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse CORPORATION for any contractual obligations of CORPORATION undertaken by CORPORATION in satisfactory performance of those activities specified in J¶2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse CORPORATION, or to assume the performance of any contractual obligations of CORPORATION, for or under any contract entered into by CORPORATION as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), CORPORATION will provide CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If formal approval is not given within 10 business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within 30 days, a full accounting of all expenditures not previously audited by CITY; 3) within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. CORPORATION will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by CORPORATION after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of CORPORATION; (b) The insolvency of CORPORATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by CORPORATION for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or CORPORATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of CORPORATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice Texas Filmmakers HOT Funding PY2011 - Page 5 to the other party in the event that any person has instituted litigation concerning the activities of the non-terminating parry, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to T¶4.3 or 4.4, CORPORATION agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by CORPORATION with another private entity, person, or organization for the performance of those services described in ¶2.1 above. In the event that CORPORATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, CORPORATION shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEx. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. CORPORATION shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. CORPORATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and CORPORATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. CORPORATION shall not be considered a partner or joint venturer with CITY, nor shall CORPORATION be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. CORPORATION AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY CORPORATION OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF CORPORATION, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. CORPORATION shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows: Texas Filmmakers HOT Funding PY2011 - Page 6 CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 CORPORATION Texas Filmmakers Corporation 405 South Elm Street SO 102 Denton, Texas 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and CORPORATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of CITY of Denton, all. ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. CORPORATION shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,0005500,0005100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. Texas Filmmakers HOT Funding PY2011 - Page 7 EXECUTED this ATTEST: By: JENNIFER WALTERS, CITY SECRETARY ATTEST: By: Secretary day of 2010. THE CITY OF DENTON, TEXAS By: GEORGE C. CAMPBELL, CITY MANAGER APPROVED AS TO LEGAL FORM: ITA BURGESS, CITY ATTORNEY TEXAS By: CORPORATION APPROVED AS TO LEGAL FORM: By: Texas Filmmakers HOT Funding PY2011 - Page 8 Exhibit A Texas Filmmakers Corporation Thin Line Film Festival PY 2011 Budget Advertising Print $ 2,500 (Dallas Observer, DMN, Austin Statesman, Houston Chronicle Indie Slate & Movie Maker) Radio (W RR and The Bone) 1,500 Television 1,000 (Sanger/Pilot Point, Lewisville, Ft. Worth & Dallas Cable) $ 5,000 Total $ 5,000 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Parks and Recreation ACM: Fred Greene SUBJECT Consider approval of revisions to an ordinance of the City of Denton, Texas amending Section 22-32 of the Code of Ordinances of the City of Denton relating to the use of tobacco products on City of Denton playgrounds; providing a severability clause, a penalty clause and an effective date. The Parks, Recreation and Beautification Board recommends approval with a vote of 5-1. BACKGROUND The changes to the ordinance include changing the prohibition of the use of tobacco products on City playgrounds. Council member Heggins requested that the Parks and Recreation Department look at prohibiting the use of all tobacco products on city playgrounds. A similar ban currently exists in the dugouts and bleacher areas of all youth sports fields. OPTIONS Council options include approval or denial of the ordinance as submitted. Council may also opt to amend the wording to include additional or modified requirements. PRIOR ACTION/REVIEW At the October 4, 2010 meeting, the Parks, Recreation and Beautification Board recommends approval with a vote of 5-1. FISCAL INFORMATION Changes to the ordinance will have no impact on the budget. EXHIBITS 1. Proposed Ordinance 2. October 4, 2010 Park, Recreation and Beautification Board Meeting Minutes Respectfully submitted: Emerson Vorel, Director Parks and Recreation s:\legallour documents ordinances\10\piaygroundsmokingord.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS AMENDING CHAPTER 22 OF THE CODE OF ORDINANCES BY ADDING SECTION 22-31.1, PROHIBITING SMOKING OR OTHER USE OF TOBACCO PRODUCTS WITHIN 25 FEET OF ANY CONCRETE PERIMETER STRUCTURE THAT SERVES TO CONTAIN PLAYGROUND FALL ATTENUATION MATERIAL; PROVIDING A SAVINGS CLAUSE; PROVIDING FOR A PENALTY NOT TO EXCEED $200.00 FOR VIOLATIONS OF THIS ORDINANCE; AND PROVIDING FOR AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. Chapter 22 "Parks and Recreation" of the Code of Ordinances of Denton, Texas, is hereby amended by adding Section 22-31.1 prohibiting the smoking or use of tobacco products within twenty-five (25) feet of any concrete structure that serves to contain playground fall attenuation material and which shall read as follows: Sec 22-31.1 Smoking or other use of tobacco products prohibited It shall be unlawful for any person to smoke or otherwise use tobacco products within twenty-five (25) feet of any concrete perimeter structure that serves to contain playground fall attenuation material. SECTION 2. If any section, subsection, paragraph, sentence, clause, phrase, or word in this ordinance, or application thereof to any person or circumstances is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this ordinance, and the City council of the City of Denton, Texas hereby declares it would have enacted such remaining portions despite any invalidity. SECTION 3. Save and except as amended hereby, all the provisions, sections, subsections, paragraphs, sentences, clauses, and phrases of the Code of Ordinances shall remain in full force and effect. SECTION 4. Any person found guilty of violating this Ordinance by a court of competent jurisdiction shall be fined a sum not to exceed two hundred dollars ($200). SECTION 5. This ordinance providing for a penalty shall become effective fourteen (14) days from the date of its passage, and the City Secretary is hereby directed to cause the caption of this Ordinance to be published twice in the Denton Record-Chronicle, the official newspaper of the City of Denton, Texas, within ten (10) days of the date of its passage. PASSED AND APPROVED this the day of 2010. MARK A. BURROUGHS, MAYOR s:\legal\our documents\ordinances\10\playgroundsmokingord,doc ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Parks, Recreation and Beautification Board Minutes October 4, 2010 Civic Center Community Room DRAFT Members present: Carol Brantley, Vicki Byrd, Alex Lieban, Derrick Murray, Dave Rowley, Jennifer Wages Members absent: Janet Shelton Staff present: Emerson Vorel, Amanda Green, Bob Tickner, Maiv Aukerman, Kathy Schaeffer REGULAR MEETING 1. CALL TO ORDER- Derrick Murray, Chairperson, called the meeting to order at 6:00 p.m. 2. APPROVAL OF MINUTES OF September 13, 2010 MEETING: Murray asked the Board if there -,were any changes to the minutes from the September meeting. Hearing none, Rowley made a motion that the minutes be accepted as written, Brantley seconded the motion and it carried with a vote of 6-0. 3. AWARDS AND RECOGNITIONS: - None 4. ACTION ITEMS: A. No Smoking on Playgrounds Ordinance - Vorel stated that Councilmember Heggins asked the Parks and Recreation Department to consider prohibiting smoking on playgrounds in all City- parks. Vorel explained to the Board that after discussions with staff and the City's Legal Department, it was decided that a playground area would be defined by the concrete barrier or perimeter that keeps the wood chips contained and that a smoker would have to be 25 feet away from that barrier on any side of the playground. Some discussion was had as to whether smoking should be prohibited in all parks areas, but it -,vas agreed that that would be too restrictive especially at large events held in the parks. Brantley asked if Vorel knew what other towns were doing in this regard, to which he said that they did not review other cities' policies. Murray felt that it may put parents using tobacco products even farther away when tip-ing to supervise their children using the playgrounds. Lieban asked if new signage would designate that as a non-smoking area and Vorel confirmed. Byrd asked if there was money in the budget for the new signage. Vorel said that the signs would be erected in increments. MOTION: Bvrd made a motion to end the discussion and proceed with the voting. Wages seconded the motion and Murray asked for a motion to vote. Brantley moved that the Board approval the recommendation to prohibit the use of tobacco products within 25 feet of playgrounds in all parks. Lieban seconded the motion. The motion carried with a vote of 5-1. B. Denton Standards of Care 2010-2011 - Schaeffer explained that since 1999 the City's recreational care opportunities operated with a Standards of Care. In the last Texas legislative session, it was mandated that these Standards of Care for municipalities had to be updated and presented with an ordinance to the City- Council each calendar year. Schaeffer explained that the City of Denton's Standards of Care are more rigid than what the state calls for, i.e. the state ratio of 1 care giver to 25 children is exceeded by the City's 1:17 ratio. She also pointed out that the programs operated by the City are recreational in nature and are not day care programs, so they do not need licensing. Care for children below the age of 5 have to be licensed by the state, such as those at MLK, Denia and North Lakes. This year the changes were the inclusion of administering the Epi-pen for participants with allergies, eliminating the Youth/Teen Services Recreation Specialist responsibilities (frozen position) and reassigning them to the Youth/Teen Services Manager and Program Area Manager, and eliminating all DISD sites since they are not used by the City-. Lieban asked if child booster seats were used, to which Schaeffer replied that all participants below the age of 8 have to be in a booster eat. MOTION: Murray asked for a motion to approve the recommendation for the Denton Standards of Care for 2010-2011. Wages made the motion, Rowley seconded the motion and it carried with a vote of 6-0. C. Dissemination of Park Board Packets - Aukerman stated that historically, the packets have been emailed and a printed copy mailed at the post office. At last month's meeting, it was suggested that the packets continue to be emails, but that printed packets be available at each meeting and not mailed to the individual homes. When it was brought up that a confirmation be sent to Aukerman when each Board member receives the packet, Murray stated that most email servers allow for an automatic deliver or read message be returned to the sender. Aukerman will test that out this week. MOTION: Rowley made a motion send the Park, Recreation and Beautification Board packets by email as a PDF (electronic delivery) and to have printed copies available at each meeting, Brantley seconded the motion and the motion carried with a vote of 6-0. 5. DISCUSSION ITEMS: A. Proposed 2011 Meeting Dates for the Parks, Recreation and Beautification Board - Vorel explained that the Park Board currently meets on the first Monday of each month as outlined in the proposed schedule. A few exceptions are made to accommodate City holidays and requests by the Board. The City Secretary needs the proposed schedule for the next calendar year by the end of November the schedule will be put as an Action Item at the November meeting. B. Park Foundation Duck Race Fund Raiser - Vorel explained the first Duck Derby by the Park Foundation was a success with approximately $7,000 being raised. It is the intent of the Park foundation to hold this event on an annual basis and may include a fun run (Duck Waddle) in the future. 6. OTHER BUSINESS: A. Parks Department Projects Status Report Briercliff Park Design and Development Project - This park project is almost completed. The playground is up and being used and the multi-purpose court will be ready soon. Denton Branch Rail Trail Bridges Project - The City- contract is set to be submitted to the City- council on October 19~'. Ticlcner stated that the public meeting held in September was very- successful. B. Public Art Committee Meeting Minutes Draft - Vorel stated that the Harmony sculptures of 2 herons by George Cadell were installed in South Lakes Park and can be seen from the road alongside the park. After the fast of the year, Vorel will ask the local newspaper to do an article on Public Art and will include the Cadell crane sculptures. With no further items on the agenda, Murray asked for a motion to adjourn the meeting. Brantley made the motion to adjourn, Lieban seconded and the meeting was adjourned at 6:46 p.m. AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Parks and Recreation ACM: Fred Greene SUBJECT Consider approval of a resolution allowing the Denton Community Theatre to be the sole participant allowed to sell alcoholic beverages at the Beaujolais on November 18, 2010, upon certain conditions; authorizing the City Manager or his designee to execute an agreement in conformity with this resolution; and providing for an effective date. Staff recommends approval of the Denton Community Theatre's request. BACKGROUND Beaujolais and More will be held for the fourth year in the Civic Center. The Civic Center is the only facility in Quakertown Park where alcohol is permitted, with City Council's approval. RECOMMENDATION Staff recommends approval of the resolution and agreement as submitted, which is consistent with agreements for other events serving alcoholic beverages. PRIOR ACTION/REVIEW (Council, Boards, Commissions) An ordinance was adopted on October 6, 2009, requiring approval by City Council for an event to have alcohol in the Civic Center building. This will be the second request by Denton Community Theatre since the adoption of the ordinance. The request for the 2009 Beaujolais and More was approved on November 3, 2009. FISCAL INFORMATION None. EXHIBITS 1. Letter of Request 2. Resolution 3. Civic Center Agreement Respectfully submitted: Emerson Vorel Director of Parks and Recreation Prepared by: Janie McLeod Community Events Coordinator i Wine and Focul ` riling October 15, 2010 To The City Council of Denton, Texas, The Denton Community Theatre is requesting as a part of our fund raising event for The Campus Theatre, "Beaujolais and More" to be held at the Denton Civic Center on November 18, 2010, from 5:30 pm until 7:30 pm, with approximately 300 people in attendance, to serve wine. Thank you for your consideration. Sincerely, Mike Barrow Managing Director Denton Community Theatre s:llegallour documentAresolutions1101heaujolais alcohol sell use this for 2010.doc RESOLUTION NO. A RESOLUTION ALLOWING THE DENTON COMMUNITY THEATRE TO BE THE SOLE PARTICIPANT ALLOWED TO SELL ALCOHOLIC BEVERAGES AT THE BEAUJOLAIS ON NOVEMBER 18, 2010, UPON CERTAIN CONDITIONS; AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE AN AGREEMENT IN CONFORMITY WITH THIS RESOLUTION; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City of Denton ("City") is the owner of the Civic Center; and WHEREAS, the consumption of alcoholic beverages is allowed in the Civic Center pursuant to City of Denton Code, §22-32 (b); and WHEREAS, the City Council finds that it is in the public interest to select only one vendor of alcoholic beverages at the Beaujolais; and WHEREAS, the Denton Community Theatre has requested that they be the sole participant allowed to distribute/sell alcoholic beverages at this year's Beaujolais on November 18, 2010; and WHEREAS, the Parks, Recreation, and Beautification Board has recommended that Denton Community Theatre be the sole participant allowed to distribute/sell alcoholic beverages at the Beaujolais; and WHEREAS, the City agrees with the recommendation of the Parks, Recreation, and Beautification Board; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. Denton Community Theatre shall be the sole participant allowed to distribute/sell alcoholic beverages at the Beaujolais on November 18, 2010 at the Civic Center upon the following conditions: 1. They shall be responsible to obtain the temporary license and permit for distributing/selling alcoholic beverages approved by appropriate state agency; 2. They shall provide the security necessary for the distribution/sale of alcoholic beverages; 3. They shall provide general comprehensive liability insurance from a responsible carrier, with the City as an additional insured, in the amount of $500,000.00; 4. They agree to indemnify the City of Denton against any liability incident to the distributing/selling of alcoholic beverages at the Beaujolais. s:llegallour documentslresolutions1101beaujolais alcohol sell use this for 2010.doc SECTION 2. The City Manager or his designee is authorized to execute an agreement in conformity with this Resolution, which shall be substantially in the form of the agreement attached hereto and made a part hereof by reference. SECTION 3. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 2 of 2 cAdocuments and settingslmharrow1ocal settings%temporary intemet fi1eslolk6albeaujolais 2010 alcohol contract.doc CIVIC CENTER AGREEMENT FOR DENTON COMMUNITY THEATRE BEAUJOLAIS EVENT STATE OF TEXAS COUNTY OF DENTON This Agreement, made this 18 day of dC: pd~ rZ , 2010, by and between the City of Denton, a municipal corporation, hereinafter referred to as the "CITY" and DENTON COMMUNITY THEATRE. WITNESSETH, that in consideration of the covenants and agreements herein contained, the parties hereto do mutually agree as follows: ARTICLE 1 GENERAL The City grants to DENTON COMMUNITY THEATRE the exclusive privilege to distribute/sell alcoholic beverages, subject to the exceptions and conditions hereinafter set forth, for the BEAUJOLAIS on NOVEMBER 18, 2010 to be held at the Civic Center. This privilege does not extend beyond the date of the BEAUJOLAIS for the year 2010. ARTICLE 2 SCOPE OF SERVICES DENTON COMMUNITY THEATRE in order to exercise the privilege to distribute/sell alcoholic beverages must perform the following: A. DENTON COMMUNITY THEATRE shall be solely responsible for the rental and payment for any booth space necessary for the distribution/sale of alcoholic beverages at the BEAUJOLAIS. B. DENTON COMMUNITY THEATRE shall be solely responsible to obtain any temporary license and permit necessary for the distribution/sale of alcoholic beverages at the BEAUJOLAIS. C. DENTON COMMUNITY THEATRE shall be solely responsible for the obtaining and paying for any security necessary for their distribution/sale of alcoholic beverages at the BEAUJOLAIS. DENTON COMMUNITY THEATRE'S failure to do any of the above and to show proper proof of compliance shall waive their right to exercise the privilege of distributing/selling alcoholic beverages at the BEAUJOLAIS. ARTICLE 3 LOCAL RULES AND REGULATION DENTON COMMUNITY THEATRE agrees to abide by all municipal, county, state and federal laws, ordinances, rules and regulations and specifically, without limitation, the Denton Civic Center Rules and Regulations, to obtain all necessary and proper licenses, permits and authorizations, and to comply with the requirements of any duly authorized person acting in connection therewith. DENTON COMMUNITY THEATRE shall pay all taxes, if any, of every nature and description arising out of or in any manner connected with the distribution/sale of alcoholic beverages. DENTON COMMUNITY THEATRE will exercise reasonable care and due diligence in their distribution/sale of alcoholic beverages at the BEAUJOLAIS. ARTICLE 4 INDEMNITY AGREEMENT DENTON COMMUNITY THEATRE shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all liability, claims, demands, losses, and expenses, including but not limited to, court costs and reasonable attorney fees incurred by the CITY, and including, without limitation, damages for bodily and personal injury, death and property damage, resulting from the negligent acts or omissions of DENTON COMMUNITY THEATRE or its officers, shareholders, agents, or employees in the execution, operation, or performance of this Agreement. Nothing in this Agreement shall be construed to create a liability to any person who is not a parry to this Agreement, and nothing herein shall waive any of the parties' defenses, both at law or equity, to any claim, cause of action, or litigation filed by anyone not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved. ARTICLE 5 INSURANCE During the performance of the Agreement, DENTON COMMUNITY THEATRE shall maintain the following insurance with an insurance company licensed to do business in the State of Texas by the State Insurance Commission or any successor agency that has a rating with Best Rate Carriers of at least an A- or above: A. Comprehensive General Liability Insurance with bodily injury limits of not less than $500,000 for each occurrence and not less than $500,000 in the aggregate, and with property damage limits of not less that $100,000 for each occurrence and not less than $100,000 in the aggregate. B. Liquor/Dram Shop Liability in the amount of $250,000 per occurrence for any event occurring on City-owned property where alcohol will be provided or served. Beaujolais - Page 2 C. DENTON COMMUNITY THEATRE shall furnish insurance certificates or insurance policies at the CITY'S request to evidence such coverages. The insurance policies shall name the CITY as an additional insured on all such policies, and shall contain a provision that such insurance shall not be canceled or modified without written notice to the CITY and DENTON COMMUNITY THEATRE. In such event, DENTON COMMUNITY THEATRE shall, prior to the effective date of the change or cancellation, serve substitute policies furnishing the same coverage. ARTICLE 6 NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mail to the address shown below, certified mail, return receipt requested, unless otherwise specified herein. Mailed notices shall be deemed communicated as of three (3) days' mailing: To DENTON COMMUNITY THEATRE: To CITY: DENTON COMMUNITY THEATRE CITY OF DENTON: Mike Barrow, Managing Director City Manager 214 W. Hickory 215 E. McKinney Denton, TX 76201 Denton, Texas 76201 All notices shall be deemed effective upon receipt by the party to whom such notice is given, or within three (3) days' mailing. ARTICLE 7 ENTIRE AGREEMENT This Agreement, consisting of five (5) pages and no exhibits, constitutes the complete and final expression of the agreement of the parties, and is intended as a complete and exclusive statement of the terms of their agreements, and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communications, and agreements which may have been made in connection with the subject matter hereof. ARTICLE 8 SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable. In such event, the parties shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision. Beaujolais -Page 3 ARTICLE 9 DISCRIMINATION PROHIBITED In performing the services required hereunder, DENTON COMMUNITY THEATRE shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. ARTICLE 10 PERSONNEL DENTON COMMUNITY THEATRE represents that it has or will secure, at its own expense, all personnel required to perform all the services required under this Agreement. Such personnel shall not be employees or officers of, or have any contractual relations with the CITY. ARTICLE 11 ASSIGNABILITY DENTON COMMUNITY THEATRE shall not assign any interest in this Agreement, and shall not transfer any interest in this Agreement (whether by assignment, novation, or otherwise) without the prior written consent of the CITY. ARTICLE 12 MODIFICATION No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the parry to be charged therewith, and no evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the parties hereunder, and unless such waiver or modification is in writing and duly executed; and the parties further agree that the provisions of this section will not be waived unless as set forth herein. ARTICLE 13 MISCELLANEOUS A. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas. This Agreement shall be construed in accordance with the laws of the State of Texas. B. The captions of this Agreement are for informational purposes only, and shall not in any way affect the substantive terms or conditions of this Agreement. Beaujolais - Page 4 IN WITNESS HEREOF, the City of Denton, Texas has caused this Agreement to be executed by its duly authorized City Manager, and DENTON COMMUNITY THEATRE has executed this Agreement through its duly authorized undersigned officer on this the day of .2010. CITY OF DENTON, TEXAS GEORGE C. CAMPBELL, CITY MANAGER ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: DENTON COMMUNITY THEATRE BY MIKE BARRO ANAGING DIR. WITNESS: BY: Beaujolais - Page 5 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: City Manager's Office CMM: George Campbell, City Manager *51- SUBJECT Consider the adoption of an ordinance of the City Council of the City of Denton, Texas approving an Interlocal Cooperative Agreement between the University of North Texas and the City of Denton to provide for the operation of the City's public access cable television channel; and providing for an effective date. BACKGROUND Due to the passage of Chapter 66 in the Public Utility Regulatory Act in September of 2005 (better known as Senate Bill 5), upon expiration of existing local franchise agreements, cable operators in the State of Texas will be required to obtain franchise certificates from the Public Utility Commission rather than renewing agreements with local municipalities. When the local franchise agreement with Charter Communications expires on January 1, 2011, Charter will obtain the appropriate State franchise certificate, and no longer be required to operate the City's public access channel. FILE INFORMATION Staff submitted 4 options to City Council which included: letting the channel go dark, the City operating the channel, the Texas Filmmakers proposal, and a proposal from the Mayborn School of Journalism at the University of North Texas. Due to exposure to the general fund, it was clear that the City running the channel was not likely; and if the City was to preserve the channel, the 2 remaining options needed exploration. After the hiring of a professional consultant, stakeholder meetings with citizens, the thorough review of both proposals, and a City Council work session on October 5, City Council gave staff direction to proceed with the proposal submitted by The Mayborn School of Journalism at the University of North Texas. The Mayborn proposal is an interlocal cooperative agreement at a cost in PEG fees not to exceed $75 thousand in year one, and estimated not to exceed $175 thousand over 10 years. This proposal averages $17,500 in PEG fund expenditures annually. RECOMMENDATION Staff recommends the Mayborn School of Journalism at the University of North Texas take over operations of the City's public access channel effective January 1, 2011. FISCAL INFORMATION The project will be funded from account 212002.6506 (PEG Equipment). All of the capital improvements will be made with funds collected from the Public, Education, and Government (PEG) fees. No other City funds will be needed. Pursuant to City of Denton Ordinance 95-191 and pursuant to section 66.009 of the Texas Utility Code, all cable providers within the Denton city limits are required to collect a Public, Education, and Government (PEG) fee from every cable subscriber. Our PEG fee is $0.50 per subscriber, per month and remitted to the City on a quarterly basis. The FCC restricts the use of this PEG fee, allowing the funds only to be used to acquire additional PEG production equipment, capital, and other lawful PEG purposes. Respectfully submitted: 4zt- z4L~ Betty Williams Director of Administrative Services Prepared by: s Billy Matthews Cable Television Supervisor salegallour documentslordinancesll Ulunt interlocal public access channel ordinance.doc It ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO ENTER INTO AN INTERLOCAL AGREEMENT WITH THE UNIVERSITY OF NORTH TEXAS FOR THE OPERATION OF THE CITY'S PUBLIC ACCESS CABLE TELEVISION CHANNEL; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, due to the passage of Chapter 66 of the Public Utility Regulatory Act in September, 2005 (Senate Bill 5), upon the expiration of existing local franchise agreements, cable operators in the State of Texas will be required to obtain franchise certificates from the Public Utility Commission rather than renewing agreements with local municipalities; and WHEREAS, as required by Senate Bill 5, when the local franchise agreement with Charter Communications expires on January 1, 2011, Charter will obtain the appropriate State of Texas franchise certificate; and WHEREAS, upon obtaining a State of Texas franchise certificate, Charter will no longer be required to maintain a local operating agreement with the City nor to continue operation of the public access channel and has advised the City that it intends to terminate the provision, maintenance and operation of the public access channel effective January 1, 2011; and WHEREAS, it is in the best interest of the City, and the residents thereof, that the provision, maintenance and operation of the said cable television public access channel continue after January 1, 2011; and WHEREAS, UNT has agreed to cause the Mayborn School of Journalism to provide, maintain and operate the said cable television public access channel for and on behalf of the City; WHEREAS, the City Council finds that the Interlocal Agreement is in the public interest; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this Ordinance are incorporated herein by reference. SECTION 2. The City Manager, or his designee, is hereby authorized to execute the Interlocal Agreement of behalf of the City with the University of North Texas. The City Manager, or his designee, is hereby authorized to carry out the rights and duties of the City under the Interlocal Agreement including the expenditure of funds provided for therein. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 2010. r sAlegallour documenmordinances1101unt interlocal public access channel ordinance,doc MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Page 2 s:\legal\our documents\contracts\10\2010 untcatvpeg,doc THE STATE OF TEXAS § COUNTY OF DENTON § INTERLOCAL COOPERATION AGREEMENT BETWEEN THE UNIVERSITY OF NORTH TEXAS AND THE CITY OF DENTON TEXAS THIS AGREEMENT is made and entered into by and between The University of North Texas, hereinafter "UNT," and the City of Denton, Texas, a corporate and political body duly organized and existing under the laws of the State of Texas, hereinafter the "City." UNT and the City are referred to individually as "Party" and are collectively referred to herein as "Parties." This Agreement is for the purpose of providing for the operation of the City's public access cable television channel, as described in attached Exhibit "A," hereinafter "the Project." WHEREAS, UNT and the City mutually desire to be subject to the provisions of Texas Government Code Chapter 791, the Interlocal Cooperation Act, which provides authorization for a local government to contract with one or more local governments or other state agencies to perform governmental functions and services under the terms of the Act; and WHEREAS, Charter Communications ("Charter") currently has a franchise agreement with the City for the provision of cable television service within the City; and WHEREAS, pursuant to the said franchise agreement Charter provides, maintains and operates a public access channel on its cable television network; and WHEREAS, due to the passage of Chapter 66 of the Public Utility Regulatory Act in September, 2005 (Senate Bill 5), upon the expiration of existing local franchise agreements, cable operators in the State of Texas will be required to obtain franchise certificates from the Public Utility Commission rather than renewing agreements with local municipalities; and WHEREAS, as required by Senate Bill 5, when the local franchise agreement with Charter Communications expires on January 1, 2011, Charter will obtain the appropriate State of Texas franchise certificate; and WHEREAS, upon obtaining a State of Texas franchise certificate, Charter will no longer be required to maintain a local operating agreement with the City nor to continue operation of the public access channel and has advised the City that it intends to terminate the provision, maintenance and operation of the public access channel effective January 1, 2011; and WHEREAS, it is in the best interest of the City, and the residents thereof, that the provision, maintenance and operation of the said cable television public access channel continue after January 1, 2011; and sAlegaAour documentslcontracts11012010 untcatvpeg.doc WHEREAS, UNT has agreed to cause the Mayborn School of Journalism to provide, maintain and operate the said cable television public access channel for and on behalf of the city; NOW, THEREFORE, UNT and the City, for the mutual consideration stated herein, agree and understand as follows: WITNESSETH: 1. This Agreement shall be effective on January 1, 2011. Unless otherwise terminated as provided herein, the term of this Agreement shall continue for an initial term of three years and shall automatically renew and continue thereafter until terminated. II. Pursuant to Texas Government Code §791.011, the Parties hereto agree that the purpose of this Agreement is to ensure that certain governmental functions and services in the area of the provision, maintenance and operation of cable television public access channels to the citizens of the City of Denton continue to be performed. The Parties further agree that each of them is authorized to perform the functions and services individually. III. A. As described in this Agreement and in Exhibit A attached hereto and incorporated by reference into this Agreement for all purposes, UNT will cause the Mayborn School of Journalism to manage and conduct all day-to-day operations of the City's public access channel ("Channel") on two cable systems (Charter Channel 25 and Verizon Channel 39). Programming will originate from the UNT campus pursuant to the operational guidelines attached hereto as Exhibit B, which are incorporated by reference into this Agreement for all purposes. In order for UNT to be able to operate the Channel, the City shall ensure the continued right to broadcast on the specified cable systems. In the event the City is unable to do so, this Agreement shall terminate. The City also will provide all capital equipment required for the launch of the Channel and shall be responsible for the ongoing maintenance and repair of such equipment. Said capital equipment shall at all times remain the property of City and shall be covered by the City's insurance. Other provisions of this Agreement notwithstanding, UNT shall be responsible for repairing or replacing the equipment if it is damaged by the willful or negligent act of UNT, its agents, employees, officers or representatives. Upon termination of this Agreement said equipment shall be returned to City. This exchange of services and equipment is deemed adequate consideration for the obligations exchanged by the Parties herein. Page 2 s:Ucga1\our documentslcontracts11012010 untcatvpeg.doc IV. UNT shall not be obligated to expend a certain amount of funds in the performance of its obligations as herein specified and this Agreement shall not be interpreted or construed as an obligation to expend a certain amount of fields towards the Project. V. In the performance of their respective duties hereunder, the Parties hereto and their respective employees and agents, are at all times acting and performing' as independent contractors of each other. No Party will have the authority to act for or bind another Party in any respect or to incur or assume any expense, debt, obligation, liability, tax, or responsibility on behalf of or in the name of another Party hereto. UNT agrees and understands that LINT, its employees, servants, agents and representatives shall at no time represent themselves to be employees, servants, agents and/or representatives of the City. The City agrees and understands that the City, its employees, servants, agents and representatives shall at no time represent themselves to be employees, servants, agents and/or representatives of UNT. VI. UNT shall be responsible for the acts, negligence and/or omissions of all UNT employees, agents, subcontractors and/or contract laborers and for all other persons doing work under a contract or agreement with UNT. VII. The City shall be responsible for the acts, negligence and/or omissions of all City employees, agents, subcontractors and/or contract laborers and for all other persons doing work under a contract or agreement with the City. VIII. This Agreement is not intended to extend the liability of the Parties beyond that provided by law. Neither UNT nor the City waive, nor shall be deemed to have hereby waived, any immunity or defense that would otherwise be available to it against claims made by third parties. IX. The validity of this Agreement and of any of its terms or provisions, as well as the rights and duties of the Parties hereto, shall be governed by the laws of the State of Texas. Further, this agreement shall be performable in Denton County, Texas. Page 3 salegahour documentslcontracts110\2010 untcatvpeg.doc X. In the event that any portion of this Agreement shall be found to be contrary to law, it is the intent of the Parties hereto that the remaining portions shall remain valid and in full force and effect to the extent possible. XI. The undersigned officer and/or agents of the Parties hereto are the properly authorized officials and have the necessary authority to execute this Agreement on behalf of the Parties hereto, and each party hereby certifies to the other that any necessary resolutions extending said authority have been duly passed and are now in full force and effect. XII. This Agreement represents the entire agreement between UNT and the City and supersedes all prior negotiations, representations and/or agreements, either written or oral. This Agreement may be amended only by written instrument signed by the governing bodies of both UNT and the City or those authorized to sign on behalf of those governing bodies. XIII. This Agreement becomes .effective when signed by the last party whose signing makes the respective Agreement fully executed. Xv. This Agreement may be terminated by the written agreement of the Parties. This Agreement may also be terminated in whole or in part by UNT or the City upon one hundred eighty (180) days written notice to the other Party, with or without cause. Written notice shall be delivered via certified mail, return receipt requested. Notices shall be directed as follows: For City: George C. Campbell City Manager 215 E. McKinney Street Denton, Texas 76201 For UNT: Michelle Williams Associate General Counsel University of North Texas 1155 Union Circle, #31.0907 Denton, Texas 76203-5017 Copy To: Dr. Mitch Land, Interim Dean, Mayborn School of Journalism University of North Texas 1155 Union Circle, #311460 Denton, Texas 76203-5017 Page 4 s:Uegailour documentslcontracts11012010 untcatvpeg.doc Executed in duplicate originals this day of .2010. CITY OF DENTON, TEXAS City of Denton 215 E. McKinney Denton, Texas 76201 George C. Campbell City Manager ATTEST JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY By: VERSITY OF NORTH TEXAS 1155 U ' n Circle, #311460 Den ,~'exas 76 13„5017 Jean Bush, Acting Senior Associate Vice President for Finance AS TO LEGAL FORM: By: Associate Genera ounsel Page 5 Olegahour documentslcontracts11012010 untcawpeg.doc Exhibit A The Frank W. and Sue Mayborn School of Journalism ("Mayborn") at the University of North Texas CUNT") will operate the City of Denton's public access channel, currently referred to as Charter Channel 25 and Verizon Channel 39 ("Channel") on a schedule of 24 hours a day, 7 days a week, via an automated system. The City of Denton ("City") will be responsible for ensuring the continued right to broadcast Channel programming via Charter and Verizon. The name of the Channel to be operated by Mayborn will be mutually agreed to by the City and Mayborn. PEG funds from the City of Denton will be used for all capital expenses related to the launch of Channel. The City will be responsible for the provision of equipment necessary to operate the Channel and for the ongoing maintenance and repair of such equipment. The City of Denton and Mayborn will meet annually to discuss equipment upgrades, maintenance needs, and Exhibit B. In the performance of the Agreement, the City and Mayborn will work in accordance with the guidelines provided under Exhibit B or as otherwise agreed to between the Parties, regarding expectations and opportunities for the public to use facilities and provide content. In the event an issue arises related to a conflict between the guidelines used in the operation of Channel and guidelines followed by other UNT departments in the operation of other channels, then Mayborn and the City shall work together to find a mutually agreeable resolution to the conflict. The guidelines may also be revised in order to address a legal issue that arises related to their usage. Under this Agreement, the channel will be operated by assigned staff and faculty of the Mayborn School of Journalism, with oversight by the Dean of the Mayborn School of Journalism and the Chair of the Mayborn Department of News. The assigned faculty and staff of Mayborn will make all programming decisions, including but not limited to, decisions regarding appropriate content, time of day specific programming will be shown, how often programming will be shown and use of Mayborn produced programming. The assigned faculty and staff of Mayborn will also oversee the facilities and equipment, production, programming, studio production, and make emergency contacts with the appropriate entities in case of technical difficulties. Additional volunteer staffing will be provided by undergraduate students taking classes in the Mayborn School of Journalism and graduate students in the Mayborn Graduate Institute of Journalism. The image of the Channel will clearly reflect that it is a local/community public access channel, open to the citizens of Denton. The Mayborn School of Journalism will create programming including news, sports and general information programming, provide an outlet for community programming that reflects the needs and interests of the greater Denton community, provide access to studios at the Mayborn to those who meet specific criteria set up in guidelines, offer journalism classes in which students learn writing, reporting, shooting, editing, producing and production skills. If funding is available, the Mayborn faculty and staff might teach media production workshops for youth, the public, and media professionals, in part, to create content for the Channel. Page 6 sAlegallour documentslcontracts110120I0 untcatvpeg.doc Exhibit B OPERATIONAL GUIDELINES PURPOSE The purpose of the City's public access channel is to provide a cable television channel ("Channel") on which Denton citizens can cablecast recorded programming produced with their own resources, or recorded programming produced elsewhere but sponsored by a Denton citizen. The use includes content produced by and/or provided by students or classes affiliated with the Mayborn School of Journalism at the University of North Texas ("UNT"). MISSION Giving voice to the people of Denton, as provided by the First Amendment, while providing educational opportunities in community media to citizens, students and professionals. GENERAL GUIDELINES Any person utilizing the Channel for programming must be 18 years of age, a resident of Denton, Texas, and/or a Mayborn student or faculty member or a person or group approved by the Mayborn School of Journalism. Proof of eligibility is required in order to use the channel. 2. Individuals or Non-Profit Organizations that are not citizens of Denton but wish to produce a program for the Channel may do so by securing the required sponsorship. Individuals from within the Metroplex must secure 5 Denton citizen sponsors. Non-profit organizations groups from within the Metroplex must secure 5 Denton citizen sponsors. Individuals from outside the Metroplex must secure 10 Denton citizen sponsors. Signed Declaration of Sponsorship forms are required for each program produced by a non-resident. 3. Before a program is scheduled on the Channel, each participant must sign a Statement of Compliance indicating that the participant has read and is in agreement with the. requirements contained in this pamphlet. Failure to sign and follow the terms of the Statement of Compliance will result in denial of Channel privilege. 4. Channel privilege will be suspended if the individual appears to be under the influence of drugs or alcohol in person or in the program, interferes with the orderly conduct of business, refuses to cooperate with or abuses staff, or abuses in any way the privilege of showing video programming on the Channel. 5. A user of the Channel must not represent to any other party that he or she, or any other person involved in the Channel's cable casting, represents the Channel in any manner. Violation of this rule will subject the user to immediate forfeiture of all privileges. 6. The Channel cannot be utilized by participants for direct financial gain, commercial purpose, or political endorsement. Page 7 s:llegallodr documentslcontracts11012010 unteatvpeg.doc • 7. Ownership of the creative rights to programming shown on the Channel belongs to the producer of the program. 8. If there is a complaint about the content of a program running on the Channel, a committee from the Mayborn School of Journalism with representation from the City of Denton will review the program. If it is determined that the content of the program is indecent according to FCC standards, considered indecent by the community standards, includes obscene material, sexually explicit conduct or material soliciting or promoting unlawful conduct, or contains material otherwise prohibited by FCC regulations, it may result in the program being removed. Questions, problems or complaints about the operation of the Channel should be addressed first to the designated staff at the Mayborn School of Journalism. The Mayborn staff will work with the complainant to resolve the problems. The Mayborn staff will keep a file of complaints and resolutions, which will be copied to the City of Denton. Should the complainant not be satisfied, s/he may then contact the Cable Television Supervisor at the City of Denton. 9. Fees for participation will be set by The Mayborn School of Journalism, and will be reviewed by the operator on an annual basis. 10. The studio used to produce the Channel will be used for other purposes of the Mayborn School of Journalism. However, notwithstanding the foregoing, equipment purchased with PEG funds will be used solely for programming that is intended to be shown on the Channel (in accordance with these guidelines, programming may be reviewed prior to being aired on the Channel and some programming may not be shown due to failure to meet content and technical standards as set forth herein). Usage of equipment purchased with PEG funds will be monitored by the Mayborn staff. 11. Contact information for the Mayborn School of Journalism and the City of Denton will be plainly posted in the studio used to produce programming for the Channel. PROGRAM CONTENT REQUIREMENTS 1. All programming cablecast on the Channel must be noncommercial in nature; i.e. not supported by paid advertising unless in an appropriate PBS-like sponsorship; or endorsements for individuals or businesses. 2. The user is responsible for obtaining all copyrights and or permissions necessary to cablecast any program material on the cable system and is liable for any violation of law which results from unauthorized use. 3. All programming cablecast on the Channel will not include obscene material, sexually explicit conduct or material soliciting or promoting unlawful conduct.I 1 Sec. 76.701 Leased access channels. (a) Notwithstanding 47 U.S.C. 532(b)(2) (Communications Act of 1934, as amended, section 612), a cable operator, in accordance with 47 U.S.C. 532(h) (Cable Consumer Protection and Competition Act of 1992, section 10(a)), may adopt and enforce prospectively a written and published policy of prohibiting programming which, it reasonably believes, describes or depicts sexual or excretory activities or organs in a patently offensive manner as measured by.contemporary community standards. (b) A cable operator may refuse to transmit any leased access program or portion of a leased access program that the operator reasonably believes contains obscenity, indecency or nudity. Note to paragraph(b): "Nudity" in paragraph (b) is interpreted to mean nudity that is obscene or indecent. [ 62 FR 28373 , May 23, 1997, as amended at 64 FR 35950, July 2, 1999] Page 8 sAegallour documentslcontracts1Io12olo untcatvpeg.doc z 4. All programming cablecast on the Channel will not include promotional material concerning products or services presented for the purpose of any solicitation of money or other items of value. 5. All programming cablecast on the Channel will not include political endorsements. 6. All programming cablecast on the Channel will not include material which constitutes libel, slander, invasion of privacy or publicity rights, unfair competition, violation of trademark or copyright, or which might violate any local, state, or federal law. 7. According to federal law, program providers are responsible for the content of programs they submit. 8. In the case of denied access to the Channel according to federal guidelines, disputes are to be settled by the federal district courts before the FCC will entertain complaint procedures. 9. All programming scheduled on the Channel will be subject to all laws, rules and regulations present in the Cable Television Consumer Protection and Competition Act of 1992 and subsequent FCC regulations. SCHEDULING REQUIREMENTS All studio usage, equipment usage and programs shown on the City's public access channel are scheduled by the staff, faculty, students or persons designated by the Mayborn School of Journalism who are so assigned to the Channel's duties. DVD REQUIREMENTS 1. All DVDs submitted must meet the Channel's technical requirements. 2. All DVDs submitted must be clearly labeled. 3. Any DVD that is rejected by the channel operator because of a playback problem will be returned to the producer with a copy of the discrepancy report. 4. The preferred length of programming is 28, 58 or 88 minutes. 5. Programs may be reviewed in advance of running on the cable system. 6. All completed and properly labeled DVDs submitted for cablecast on the Channel should be brought or mailed to an address determined in conjunction by UNT and the City of Denton. 7. If the DVD is to be returned by mail, a self-addressed, stamped mailing envelop is required. 8. All DVDs must meet the Channel's technical standards. Programs will preferable be a 4:3 format. All programs must be submitted on DVD - R discs. Only one program per disc, do not use chapters or titles. The preferred length of programming is 28, 58 or 88 minutes. Page 9 sAlegaRour documentskontracts11012010 untcatvpeg.doc 9. AUDIO: Audio must be sufficient to produce good sound on television sets with minimum sound quality unless low or distorted sound is part of the artistic element of the program. Audio must not have audio levels that are too hot (loud, distorted, hard to understand.) or too low (faint, in the distance, cannot hear person speaking.). 10. VIDEO: Video must be of high enough quality to produce a good image on home television sets with low resolution, and can be easily seen by viewers. 11. LIGHTING: Lighting on the location must be sufficient to produce a good image on home television.sets with low resolution, unless dark images are part of the artistic element of the program. 12. Copies of programs are due by 5 p.m. Monday the week before they are to be cablecast, unless an agreement is made for special circumstances with the staff, faculty, students or persons designated by the Mayborn School of Journalism to schedule programming. 13. Labeling of each DVD must be correct, consistent and contain the following information on the disc: Program title: Date submitted: Length: Producer: PRODUCER AND STATEMENT OF COMPLIANCE/DENTON PUBLIC ACCESS TV Name: City: State: Zip: Phone: Program Title: STATEMENT OF COMPLIANCE 1.. I have received, read, and am familiar with the contents of guidelines and requirements. I understand that the Channel, operated by the Mayborn School of Journalism at the University of North Texas, reserves the right to suspend or revoke the privilege of any user to utilize the Channel if that user is in violation of any of the requirements. 2. I will thoroughly familiarize myself with the contents of any program material I submit for cablecast and certify that it does not contain: a. obscene material, sexually explicit conduct or material soliciting or promoting unlawful conduct; Page 10 salegahour documentslcontracts1I012010 untcaNpeg.doc b. promotional material concerning products or services presented for the purpose of any solicitation of money or other items of value; c. political endorsements; d. material which constitutes libel; slander, invasion of privacy or publicity rights, unfair competition, violation of trademark or copyright, or which might violate any local, state, or federal law. 3. I assume full responsibility for the content of all program material cablecast and will ensure that such program material will not violate any right of any third party. 4. I have obtained, or before any program material is cablecast I will obtain, all approvals, clearances, licenses, etc., for the use of any program which I cablecast, including but not limited to approvals by broadcast stations, networks, sponsors, music licensing organizations, copyright owners, performers' representatives, all in or referred to in the program material, and any other approvals that to transmit program material over the cable system. Proof of those permissions will be provided to the Mayborn School of Journalism. 5. I HEREBY INDEMNIFY AND HOLD HARMLESS THE CITY OF DENTON, THE UNIVERSITY OF NORTH TEXAS, THE UNIVERSITY OF NORTH TEXAS SYSTEM AND THE UNIVERSITY OF NORTH TEXAS SYSTEM BOARD OF REGENTS, AND ALL EMPLOYEES, STUDENTS, VOLUNTEERS AND AGENTS OF EACH OF THE FOREGOING PARTIES AGAINST ANY MATERIAL THAT I CABLECAST OR ANY BREACH NOT LIMITED, TO ANY CLAIMS IN THE NATURE RIGHT, NON-COMPLIANCE WITH APPLICABLE MATERIAL. 6. I agree that I shall not represent myself or any other person involved in my program as an employee, representative or agent of the City of Denton, the University of North Texas, or the University of North Texas System. 7. I agree that the Channel will not be used for any personal gain or other commercial purpose. 8. I understand that I am responsible for the content of any programming I produce with my own equipment or with the Channel's equipment, should the Mayborn School of Journalism provide that resource to me. 9. I understand that false or misleading statements made in this statement are grounds for forfeiture of the right to use the Channel in the future. I am am not a resident of the City of Denton. Signature of Producer: Date: Page 1 i AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ( ACM: Jon Fortune n SUBJECT Consider adoption of an ordinance accepting competitive sealed proposals and awarding a contract for the constriction of a new operations building for Denton Municipal Electric (DME); providing for the expenditure of funds therefor and providing an effective date (RFSCP 4523- Best Value for a New Operations Building for DME awarded to Crossland Constriction Company, Inc. in an amount not to exceed $2,117,000). (The Public Utilities Board approved this item by a vote of (6-0). BID INFORMATION This bid is for the constriction of a new operations building to be located at 1701 Spencer Road for Denton Municipal Electric (DME) to house DME system operators and dispatchers. A complete description of the project is included in the attached Public Utilities Board agenda information sheet (Exhibit 1). The City received eight proposals for this project and the top four were ranked by a committee consisting of employees from Facilities Management, Planning, DME, and Kirkpatrick Architectural Studios (Exhibit 2). Crossland Constriction Company, Inc. was ranked the highest based upon the criteria listed on the attached ranking sheet (Exhibit 3). PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Public Utilities Board approved this item at its October 25, 2010 meeting. RECOMMENDATION Award a contract to Crossland Constriction, Inc. in an amount not to exceed $2,117,000. PRINCIPAL PLACE OF BUSINESS Crossland Constriction, Inc. Columbus, KS ESTIMATED SCHEDULE OF PROJECT Constriction of the building is estimated to be completed within 240 calendar days from notice to proceed. Agenda Information Sheet November 2, 2010 Page 2 FISCAL INFORMATION This project, which was approved in the 2010-11 budget, will be funded from account 602421496.1365.3610. Requisition 100770 has been entered in the Purchasing software system. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet Without Exhibits Exhibit 2: Tabulation Sheet Exhibit 3: Committee Ranking Sheet Respectfully submitted: Antonio Puente, Jr., 349-7283 Assistant Director of Finance I-RFSC -4523 Exhibit 1 PUBLIC UTILITIES BOARD AGENDA ITEM #4 AGENDA INFORMATION SHEET AGENDA DATE: October 25, 2010 DEPARTMENT: Electric Utility ACM: Howard Martin, Utilities 349-8232 SUBJECT Consider a recommendation of approval of an ordinance accepting proposal and awarding a contract for the constriction of a new DME System Operations building for $2,117,000. BACKGROUND In mid 2007, Denton Municipal Electric was audited by the ERCOT/TRE audit committee. During that process, ERCOT learned that Denton Municipal Electric Dispatchers had the responsibility of answering for most of the City Services during the day and all City Departments during the evening and night time hours. It was the recommendation of the THE Committee that Denton Municipal Electric work toward the separation of the duties between monitoring the electric grid and the other City Departments. THE also recommended adding additional personnel and the space to accommodate that separation. Today, Denton Municipal Electric System Operators and Dispatchers share a common area of just over 300 square feet with two side by side consoles, housed in the DME Substation metal Building that was not designed to be storm proof and is not conducive to full time occupancy. Quite often during the course of a shift, radio transmissions from the System Operator in contact with a crew, have to be repeated or even paused to allow a dispatcher to complete a phone conversation with a customer. This not only causes irritation for our customers and our crews, it also impedes the System Operators ability to receive and transmit clear and accurate information. The Professional Services of Kirkpatrick Architectural Studio was awarded the contract for the design of a new System Operations Building through PUB and City Council approval on February 2"d, 2010. This design will provide Denton Municipal Electric with a facility that will withstand an F-3 Tornado and that will be suitable for full time occupancy of the System Operators and Dispatchers and will allow full separation of the consoles to ensure safety and better service our customers. This building is approximately 9500 square feet and in addition to the System Operations and Dispatch will house DME's Operations Administration and allow for future growth to meet our future NERC compliance requirements. AIS - PUB Agenda Item 44 October 25, 2010 Page 2 of 2 OPTIONS 1. Award a contract to Crossland Constriction Company, INC. for constriction of DME System Operations building 2. Do not award a contract to Crossland Constriction Company, INC. for constriction of DME System Operations building RECOMMENDATION DME recommends awarding the contract to Crossland Constriction Company, INC. with Bid amount of $2,117,000. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Professional Services of Kirkpatrick Architectural Studio was awarded the contract for the design of a new System Operations Building through PUB and City Council approval on February 2, 2010 DATE SCHEDULED FOR COUNCIL APPROVAL November 2, 2010 FISCAL INFORMATION Funded from 2009/2010 CIP Budget 4 602.421.496 VV HIRITC 1. Bid Tabulation Sheet Respectfully submitted, Phil Williams General Manager Denton Municipal Electric Prepared by: Jeff Morris Operations Division Manager Denton Municipal Electric W A 04 t X W C ^I •^y M~ I~ 0 ~I O 4 0 N n•l 4.6 M M~ I~ O I~ O M A ~ U U ~ V1 ~ V1 V1 V1 V1 V1 N Q ~ N U 6 9 U O H ~ Q O _ x p v U O O U ~ ~ N M 44 ~ m N ~ O N U 69 O O w ~ M ~ as o U w 0 0 U ~C ° W .0 W W W W W N N U ~ 6 9 W U O O O ^ U o _ Q C CA w N N ~ ~ O O O 00 O ~ N U ~ 69 "O O O O O H o U U a N 69 z o O ~ 0) C m ~ N O O co M Co L CO > !E CL W W 0 N M p L O d U) LL LLJ L.] LLJ J O O O v', ' ~n O 7t O N O , ~c 7t d\ d\ d\ d\ v'~ O v'~ O O 00 a 7t O d\ d\ d\ d\ ~ O M N N 00 M O ~ ch ch --i d\ d\ d\ d\ O O O O O O ~n O O N O O ~ ~ O O M N O O d\ d\ d\ d\ O o O W ~ O ~ U O W W C U ~ O U U N ~ Cd ~ O N U Ga V U ~ . U Q un 0 0 0 0 O n O v~ N M O 'O v~ N O bA N v~ U O O C~j Q U N o'~ ..O C/1 C~j O N C~j U U W ~ cn cn r" O O O O N ~ 0 0 U .O 'C O U 'C O cl U w -cn O O ORDINANCE NO. AN ORDINANCE ACCEPTING COMPETITIVE SEALED PROPOSALS AND AWARDING A CONTRACT FOR THE CONSTRUCTION OF A NEW OPERATIONS BUILDING FOR DENTON MUNICIPAL ELECTRIC (DME); PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR AND PROVIDING AN EFFECTIVE DATE (RFSCP 4523-BEST VALUE FOR A NEW OPERATIONS BUILDINGFORDME AWARDED TO CROSSLAND CONSTRUCTION COMPANY, INC. IN AN AMOUNT NOT TO EXCEED $2,117,000). WHEREAS, the City has solicited, received and evaluated competitive sealed proposals for the constriction of public facilities in accordance with the procedures authorized by State law and City ordinances; and WHEREAS, the City Manager, and the selection evaluation committee appointed by the City Manager, have received and recommend that the herein described proposal offers the City the best value based on the published selection criteria and the ranking evaluation for the constriction of the Denton Municipal Electric Operations Building; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following competitive sealed proposal for the constriction of a new operations building for Denton Municipal Electric, as described in the "Request for Competitive Sealed Proposals" and plans and specifications on file in the Office of the City's Purchasing Agent filed according to the proposal number assigned hereto, is hereby accepted and approved as the proposal offering the City the best value based on the published selection criteria and the ranking evaluation for the constriction of the Denton Municipal Electric Operations Building: RFSCP NUMBER CONTRACTOR AMOUNT 4523 Crossland Constriction Company, Inc. $2,117,000 SECTION 2. The acceptance and approval of the above competitive proposal shall not constitute a contract between the City and the person submitting the bid for constriction of such public works or improvements herein accepted and approved, until such person shall comply with all requirements specified in the Notice to Bidders including the timely execution of a written contract and furnishing of performance and payment bonds, and insurance certificate after notification of the award of the bid. SECTION 3. The City Manager is hereby authorized to execute all necessary written contracts for the performance of the constriction of the public works or improvements in accordance with the bids accepted and approved herein, provided that such contracts are made in accordance with the Notice to Bidders and Bid Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. SECTION 4. Upon acceptance and approval of the above competitive proposal and the execution of contracts for the public works and improvements as authorized herein, the City Council hereby authorizes the expenditure of funds in the manner and in the amount as specified in such approved bids and authorized contracts executed pursuant thereto. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY h BY: 5-oRD-RFSCP 4523 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 DRAFT MINUTES PUBLIC UTILITIES BOARD October 25, 2010 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas is present, the Chair of the Public Utilities Board will thereafter convene into an open meeting on Monday, October 25, 2010 at 9:00 a.m. in the Service Center Training Room, City of Denton Service Center, 901-A Texas Street, Denton. Present: Chair Dick Smith, Vice Chair Bill Cheek, Bill Grubbs, Phil Gallivan, Randy Robinson and Barbara Russell Ex Officio Member: George Campbell, City Manager Howard Martin, ACM Utilities Absent: John Baines, excused OPEN MEETING: ITEMS FOR INDIVIDUAL CONSIDERATION: 3) Consider a recommendation of approval of an ordinance accepting proposal and awarding a contract for the constriction of a new DME System Operations building for $2,117,000. Bill Cheek pulled this item from the consent items to items for individual consideration for further discussion. Cheek stated that there was an estimate of $2,117,000; he didn't see anything in the back up from contractors actually putting numbers together. Phil Williams, General Manager DME, stated that information is on the bid tab sheet. Smith stated that on the back-up it stated the cost of $223 a square foot, what makes it so expensive. Herman Lawson, Project Constriction Administrator Facilities Management, responded that he was involved in the contractor's selection process. The security and ability to withstand F-2 tornado made the cost higher. Smith asked if DME actually needs that. Williams stated that by NERC standards it is required. Smith asked if staff had the cost from the different vendors, Lawson stated he does have the tab sheet. There were 8 proposals that ranged up to $2.7 Million. Cheek asked if there was an issue with local bidder selection 5%, just wondered how this might weigh in this scenario. Bryan Langley, CFO and Director of Strategic Services, stated that the State Law does not allow you to use local firms if over $100,000, it is strictly low bid. Gallivan asked if there were special equipment in this $2.1 million. Williams stated there is, the backup generation among others. Russell asked for the location of the new building, Williams stated it will be on Spencer Road between the admin building and the operations building. Russell asked who Crossland Constriction Co. is. Lawson stated they are out of Prosper. Gallivan stated that we talk about TO and that kind of thing, will those people eventually be in there. Williams stated there would be room for them in there the building will house 20-30 people. I Board Member Cheek moved to approve item 2 with a second from Board Member 2 Grubbs. The motion was approved by a 6-0 vote. 4 5 Adjoumment was at 10:1 oam 6 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 Questions concerning this acquisition may be directed DEPARTMENT: Transportation Operations to Mark Nelson 349-7702 AI-L ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute Change Order Number Seven to the contract between the City of Denton and Corbet Group, Inc.; providing for the expenditure of funds therefor; and providing an effective date (Bid 4444-Downtown Denton Transit Center Change Order Number Seven in the amount of $44,822.79 for a total contract award of $2,002,796.75). BACKGROUND Change Order Number Seven proposes the replacement and upgrade of the existing Heating, Ventilation and Air Conditioning (HVAC) units for the administrative offices of the Downtown Denton Transit Center. The existing units were originally planned to be reused, however, due to positive budget capacity in the grant funded project, Denton County Transportation Authority (DCTA) officials requested that new and more energy efficient units, along with new ventilation be added as part of this project. The new units will reduce some yearly operating expenses due to the higher efficiency of the new units and also decrease maintenance costs as some of the existing units were more than ten years old. The Change Order document is included as Exhibit 1. PRIOR ACTION/REVIEW (Council, Boards, Commissions) Bid 4444 was approved by Council on March 2, 2010 in the amount of $1,736,000 (Ordinance 2010-078) Change Order Number One in the amount of $151,254.86 was approved by Ordinance 2010-140) on June 15, 2010. Change Orders Two through Six were smaller dollar amounts within the Purchasing Department's approval limits. The attached Transit Center Change Order Log (Exhibit 3) provides a summary of these change orders. RECOMMENDATION Approve Change Order Number Seven for the amount of $44,822.79 for a total contract award of $2,002,796.75. PRINCIPAL PLACE OF BUSINESS Corbet Group, Inc. Dallas, TX Agenda Information Sheet November 2, 2010 Page 2 ESTIMATED SCHEDULE OF PROJECT The Denton Downtown Transit Center is estimated to be completed by February 2011. FISCAL INFORMATION This Change Order will be funded from account 950293001.1360.10100. A line will be added to Purchase Order 148568 upon Council approval. F 'VHIRTT C Exhibit 1: Change Order Number Seven Exhibit 2: Transit Center Change Order Log Respectfully submitted, Mark Nelson Transportation Director Respectfully submitted: Antonio Puente, Jr., 349-7283 Assistant Director of Finance 1-AIS-Bid 4444 Change Order 7 Exhibit 1 ff-AIA Document G701t"- 2001 A Change Order PROJECT (Nameand address): Denton Transit Center 604 East Hickory Denton, Texas 76201 TO CONTRACTOR (Name and address): Corbet Group, Inc. 1027 Dragon Street Dallas, 'rexas 75207 CHANGE ORDER NUMBER: 007 DATE: 10-04-10 ARCHITECT'S PROJECT NUMBER: "W820100 CONTRACT DATE: March 02, 2010 CONTRACT FOR: General Construction OWNER: ARCHITECT: CONTRACTOR: FIELD: [f OTHER: ❑ THE CONTRACT IS CHANGED AS FOLLOWS: (Include, where applicable, a)v undisptrted ainowit attributable to previously erecuied Constnrctiorr Change Dir•evives) The original Contract Sunt was $ 1,736,000.00 The net change by previously authorized Change Orders $ 221,97196 The Contract Sum prior to this Change Order was $ 1,957,973.96 The Contract Sum will be increased by this Change Order in the amount of $ 44,822.79 The new Contract Sum including this Change Order will be $ 2,002,796.75 The Contract Time will be increased by Ten (10) clays. The date of Substantial Completion as of the date of this Change Order therefore is 2-1-2011 NOTE: This Change Ordcrdoes not include changes in the Contract Sum, Contract Tinteor Guaranteed Maximurn Price which have been authorized by Construction Change Directive until the cost and time have been agreed upon by both the Owner and Contractor, in which we a Change Order is executed to supersede (he Construction Change Directive.. NOT VALID UNTIL SIGNED BY THE ARCHITECT, CONTRACTOR AND OWNER. Jacobs Corbet Group, Inc. City of Denton ARCHITECT (Firnr name) CONTRACTOR (Firm name) OWNER (Finn name) 6688 Nordt Central Expressway Dalla as 75206 D RE Y (Sign rr 1027 Dragon Street Dallas, Texas 75207 ADOR B i rre) Rcee Parsons 901-8 Street Denton, Texas 76209 ADDRESS BY (Signature) Robert Manley (Typed name) /0,4,10 DATE (Typed ; n e)/ DATE (Typed name) DATE AIA Document 6701 >K-2001. Copyrighl @ 1979, 1987, 2000 and 2001 by The American Urstitute of AruN(etls. All rights reserved. WARNING: This AIA ()pcurnant is protected by U.5, Copyright Law and tntornational Treaties, Unauthorized roproduction or distribution of this WAe Document, or any portion of it, may result in severe civif artd criminal panaltles, and MR be prosecuted to the maxfmum extent possible under the law.TNs documentwas produced by AlA software at 18:07:27 on 1011312010 under Order No.0652847300 1 which expires on091191201 t, and Is nottor resale. User Notas: {1668272663) 3 cr O1 oc R 4+ O H 3 O a O1 R 0 c .Q- D w - 00 y R L t p U L W O C: U Lu a \ \ 0 O U U 0 0 U O LI UU U 0 U U 0 U Q 0 ~ rq 0 0 O ~ n (n c; N 06 M M N ° cm cm rl. N L o to o m O Ln m ri 011 011 011 wt r rl Ln rI rl rl N rl N 00 00 O O N Ln Ln Ln M ~t M r- O O Rt r- Ol N N N Ln 6 O N 00 rl rl rn to Ln Cb r14 O M N c-1 1- Rt to Ol to Ol O 1- 00 c-I Ol N l Ol Ol RZF l Ln rn r-I r-I r-I O O O O O O O O O rl rl rl rl rl rl rl rl rl 1" r" ~t Rt rn o o m rn N N\\ \ N N N -i \ \ l0 l0 l0 \ \ \ \ Ln Ln 00 NC C O W C a) U CL L L O O 0 ~ w (6 C N C: s a~ U = CL L O CL - Q 00 a~ 1° E E E 3 o L a, C: a; U -a a) C C: a) an O to - N ~ a'.i VI L 1,~0 an o a) C O > O W c C. L S Q CL -CS s C: U D to Q Lu r-I c-I... N....N ci C O i N cI d L 7 O 4 0 = a) O N a) C 0 Ln O CL E C C 0 N _ I - C: O ca a+ c s i U , CL C: 6 E > a, 4, C U L 0 O m X C I L co co M c N 'O N N 'L N f I 3 > = L > > O i U U C U U a ` ~n -a s 2 - c N E C f6 U 7 N c\-I l O f6 ° M rl N 3 C: a 4~ O L f6 (6 CL q0 E a~ U 0.0 C I L CL (1) O L 0 C o a ! > a' CL CO U Q M ~t L U j O J N J 4~ J C U_ -a > o N 'C 4- s c6 U O O O _ 4~ C Q E (1) U -a U C: n U U a) J U a) s > > CL 4' a 'a o 4O+ (6 3 O VI 3 C C: L L O CL 6 CL > C I~ N Q VI I l0 l0__.. ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE CHANGE ORDER NUMBER SEVEN TO THE CONTRACT BETWEEN THE CITY OF DENTON AND CORBET GROUP, INC., PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE (BID 4444-DOWNTOWN DENTON TRANSIT CENTER CHANGE ORDER NUMBER SEVEN IN THE AMOUNT OF $44,822.79 FOR A TOTAL CONTRACT AWARD OF $2,002,796.75). WHEREAS, on March 2, 2010 by Ordinance No. 2010-078, the City- awarded apublic works contract to Corbet Group, Inc., in the amount of $1,736,000 for the DoN-,mtoN-,n Denton Transit Center; and WHEREAS, the Staff having recommended, and the City- Manager having recommended to the Council that a change order be authorized to amend such contract agreementwith respect to the scope ofworlc and an increase in the payment amount, and said change order fees under the proposed contract are fair and reasonable and are consistent with and not higher than the recommended practices and fees published by the professional associations applicable to the Provider's profession and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The Change Order No. Seven, increasing the amount of the contract between the City and Corbet Group, Inc., which is on file in the office of the Purchasing Agent, in the amount of Foie- Four Thousand Eight Hundred Twenty Two and 79/100 ($44,822.79) Dollars, is hereby approved and the expenditure of funds therefor is hereby authorized in accordance Nvith said change order. The total purchase order amount increases to $2,002,796.75. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY _ h BY: 4-ORD-Bid 4444 Change Order 7 AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance accepting a proposal for consulting services with JMB Consulting to oversee Denton Municipal Electric (DME) and the City of Denton compliance activities with Texas Regional Entity (TRE) and North American Electric Reliability Corporation (NERC) for an amount not to exceed $32,000 per quarter for a two year total of $256,000; and providing an effective date (This purchase falls under DME specialized procurement policy in accordance with Ordinance 2009-189). (The Public Utilities Board approved this item by a vote of (6-0). FILE INFORMATION This agreement is for consulting services to oversee Denton Municipal Electric and the City of Denton compliance activities with Texas Regional Entity (TRE) and North American Electric Reliability Corporation (NERC). DME is now in the final stages of completion for all processes and procedures associated with NERC compliance for its registration as a DP (Distribution Provider), LSE ( Load Serving Entity), TO ( Transmission Owner), TP ( Transmission Planner), and TOP ( Transmission Operator). This should be completed by the end of November, 2010. Jeff Morris, DME Operations Division Manager has elected to retire as November 30, 2010. He will be doing business as JMB Consulting and has agreed to continue to oversee our compliance activities. Jeff is one of six people from across the nation being inducted into the International Lineman Hall of Fame in 2011, and has invested considerable time and training into becoming familiar with current compliance requirements. This proposal represents a much more economical alternative to DME than expanding our current contract with KEMA1. A summary of the project is included in the attached Public Utilities Board agenda information sheet (Exhibit 1). It is in the best interest of DME to enter into an agreement with JMB Consulting in order to make sure DME conforms to the NERC/TRE Reliability Standards. This will include multiple tasks such as documentation control within our software program, compliance training, and representation at multiple compliance related groups and during NERC Audits and/or certifications, and the complete oversight of the compliance program. This will be crucial moving forward because of the ever-changing environment of NERC Compliance and changing standards. 1 KEMA started in 1927 as a Dutch electric industry testing house. KEMA is an abbreviation of the company's full Dutch name of "the NV tot Keuring van Elektrotechnische Materialen," which translates to "Electrical Engineering Equipment Testing Company." Agenda Information Sheet November 2, 2010 Page 2 FILE INFORMATION(CONTINUED) This purchase falls under the DME specialized procurement policy in accordance with ordinance 2009-189. The policy allows DME to enter into contracts for highly technical services related to the electric system. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Public Utilities Board approved this item at its October 25, 2010 meeting. RECOMMENDATION Award a contract for consulting services to JMB Consulting in the amount of $32,000 per quarter for a two year total not to exceed $256,000. PRINCIPAL PLACE OF BUSINESS JMB Consulting Sanger, TX ESTIMATED SCHEDULE OF PROJECT This agreement will become effective December 1, 2010 and shall terminate twenty-four months after the effective date. FISCAL INFORMATION This project will be funded from account 600001.7854.9210A. Requisition 100767 has been entered in the Purchasing software system. VV HIRITC Exhibit 1: Public Utilities Board Agenda Information Sheet Without Exhibits Respectfully submitted: Antonio Puente, Jr., 349-7283 Assistant Director of Finance I AIS-File 4606 EXHIBIT 1 PUBLIC UTILITIES BOARD AGENDA ITEM #5 AGENDA INFORMATION SHEET AGENDA DATE: October 25, 2010 DEPARTMENT: Electric Utility ACM: Howard Martin, Utilities 349-8232 SUBJECT Receive a report and hold a discussion and recommend approval of an ordinance accepting a proposal for consulting services with JMB Consulting to oversee DME and the City of Denton compliance activities with THE (Texas Regional Entity) and NERC (North American Electric Reliability Corporation) for an amount not to exceed $32,000 per quarter for a two year total of $256,000. BACKGROUND DME is now in the final stages of completion for all processes and procedures associated with NERC compliance for its registration as a DP (Distribution Provider), LSE ( Load Serving Entity), TO ( Transmission Owner), TP ( Transmission Planner), and TOP ( Transmission Operator). This should be completed by the end of November, 2010. It is in the best interest of DME to enter into an agreement with JMB Consulting in order to make sure DME conforms to the NERC/TRE Reliability Standards. This will include multiple tasks such as documentation control within our software program, compliance training, and representation at multiple compliance related groups and during NERC Audits and/or certifications, and the complete oversight of the compliance program. This will be crucial moving forward because of the ever-changing environment of NERC Compliance and changing standards. This purchase falls under the DME specialized procurement policy in accordance with ordinance 2009-189. The policy allows DME to enter into contracts for highly technical services related to the electric system. OPTIONS 1. Award a contract for Professional Services to JMB Consulting 2. Do not award a contract for Professional Services to JMB Consulting AIS - PUB Agenda Item 45 October 25, 2010 Page 2 of 2 RECOMMENDATION DME recommends awarding the contract for consulting services to JMB Consulting. PRIOR ACTION/REVIEW (Council, Boards, Commissions) None DATE SCHEDULED FOR COUNCIL APPROVAL November 2, 2010 FISCAL INFORMATION Funded from 2010/2011 administration Budget 4600001.7854.92 10 EXHIBITS 1. Scope of Work 2. JMB Consulting Contract Respectfully submitted, Z.n-'Tug. Phil Williams General Manager Denton Municipal Electric ORDINANCE NO. AN ORDINANCE ACCEPTING A PROPOSAL FOR CONSULTING SERVICES WITH JMB CONSULTING TO OVERSEE DENTON MUNICIPAL ELECTRIC (DME) AND THE CITY OF DENTON COMPLIANCE ACTIVITIES WITH TEXAS REGIONAL ENTITY (TRE) AND NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION (NERC) FOR AN AMOUNT NOT TO EXCEED $32,000 PER QUARTER FOR A TWO YEAR TOTAL OF $256,000; AND PROVIDING AN EFFECTIVE DATE (THIS PURCHASE FALLS UNDER DME SPECIALIZED PROCUREMENT POLICY IN ACCORDANCE WITH ORDINANCE 2009-189). WHEREAS, The consulting services provider (the "Provider) mentioned in this ordinance is being selected as the most highly qualified on the basis of its demonstrated competence and qualifications to perform the proposed professional services; and WHEREAS, The fees under the proposed contract are fair and reasonable and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION L The City Manager is hereby authorized to enter into a consulting services contract with JMB Consulting, to oversee DME and the City of Denton compliance activities with THE and NERC, a copy of which is attached hereto and incorporated by reference herein. SECTION II. The City Manager is authorized to expend funds as required by the attached contract. SECTION III. The findings in the preamble of this ordinance are incorporated herein by reference. SECTION IV. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: s: legal our documents`, ordinances`,10`jmb consulting dme.doc STATE OF TEXAS § COUNTY OF DENTON § AGREEMENT FOR CONTRACT SERVICES This Agreement is between 3MB Consulting (hereinafter referred to as "Contractor"), himself, his executor or his assigns, and the CITY OF DENTON (hereinafter referred to as the "City"), its elected and appointed officials, Contractors, agents, affiliates and subsidiaries, and constitutes the full and complete terms of their agreement, and supersedes any and all other oral or written agreements which the parties may have made concerning this same subject matter. ARTICLE I ENGAGEMENT OF CONSULTANT The CITY hereby contracts with CONTRACTOR, as an independent contractor, and CONTRACTOR hereby agrees to continue to perform the services herein in connection with the Scope of Services as stated in the Articles to follow, with diligence and in accordance with the professional standards customarily obtained for such services in the State of Texas. ARTICLE II SCOPE OF SERVICES A. CONTRACTOR shall provide to the CITY consulting services to assist Denton Municipal Electric ("DME") related to NERC Compliance issues and to consult with DME staff as further described in Attachment A, Scope of Work. B. To consult with the City Manager, Assistant City Manager/Utilities, the General Manager of DME, the Operations Division Manager, and any other designated administrative personnel regarding any and all aspects of the services to be performed pursuant to this Agreement. ARTICLE III PERIOD OF SERVICE This Agreement shall become effective December 1", 2010 and shall terminate twenty-four months after the effective date. Time is of the essence in this Agreement. CONTRACTOR shall make all reasonable efforts to return phone calls and provided information as needed by the DME General Manager or Operations Division Manager. Either parry may terminate this agreement upon 30 days written notice to the other party. ARTICLE IV COMPENSATION A. DIRECT NON-LABOR EXPENSE: "Direct Non-Labor Expense" is defined as that expense, at cost, for any assignment incurred hereunder by CONTRACTOR for supplies, long-distance telephone, facsimile, reproduction expense, overnight courier, photocopy expense, transportation, travel, communications, subsistence and lodging away from home and similar incidental expenses reasonably incurred in connection with that assignment. B. BILLING AND PAYMENT: 1. For and in consideration of the professional services to be performed by CONTRACTOR herein, the CITY agrees to pay CONTRACTOR, a total fee, of not-to-exceed $32,000 per quarter including reimbursement for direct non-labor expense. 2. Payments to CONTRACTOR will be made by the CITY on the basis of quarterly statements to the CITY through its General Manager of DME. The bills, as submitted, shall be allowed and approved by the General Manager of DME. 3. It is specifically understood and agreed that CONTRACTOR shall not be authorized to undertake any work pursuant to this agreement, which would require additional payments by CITY for any charge, expense, or reimbursement above the fee as stated without first having obtained written authorization from CITY. C. PAYMENT If the CITY fails to make payments due CONTRACTOR for services and expenses within thirty (30) days after receipt of CONTRACTOR 'S undisputed statement thereof, the amounts due CONTRACTOR will be increased by the rate of one percent (1%) per month from the said thirtieth (30th) day, and in addition, CONTRACTOR may, after giving ten (10) days' written notice to the CITY, suspend services under this Agreement until CONTRACTOR has been paid in full all amounts due for services, expenses and charges provided. ARTICLE V OBSERVATION AND REVIEW OF THE WORK CONTRACTOR will exercise reasonable care and due diligence in discovering and promptly reporting to the CITY any defects or deficiencies in his work that is performed hereunder. ARTICLE VI OWNERSHIP OF DOCUMENTS All documents, analyses and other data prepared by CONTRACTOR under this Agreement ("Work Products") are instruments of service and are and shall remain the property of CITY. CONTRACTOR shall have the right to make and retain copies and use all Work Products; provided, however, the use shall be limited to the intended use for which the services and Work Products are provided under this Agreement. CONTRACTOR may use and may copyright certain non-sensitive Work Products as property of CONTRACTOR, but not confidential materials; provided that prior written approval is obtained from CITY, whose approval shall not be unreasonably withheld, and providing that copywriting will not restrict CITY'S right to retain or make copies of the Work Products for its information, reference and use on the Project or services under the Agreement. ARTICLE VII INDEPENDENT CONTRACTOR CONTRACTOR shall provide services to the CITY as an independent contractor, not as an employee of the CITY. CONTRACTOR shall not have or claim any right arising from employee status. CONTRACTOR will be responsible for all taxes applicable under the law. ARTICLE VIII INDEMNITY AGREEMENT CONTRACTOR shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all liability, claims, demands, damages, losses and expenses, including but not limited .to court costs and reasonable attorney's fees incurred by the CITY, and including without limitation, damages for bodily and personal injury, death and property damage, and damage for professional malpractice resulting from the negligent acts or omissions of CONTRACTOR or any sub-consultants, in performance of this Agreement. Nothing in this Agreement shall be construed to create a liability to any person who is not a party to this Agreement and nothing herein shall waive any of the party's defenses, both at law or equity, to any claim, cause of action or litigation filed by anyone not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved. ARTICLE IX INSURANCE CONTRACTOR shall provide or cause to be provided the insurance described below upon execution of this Agreement: A. COMMERCIAL GENERAL LIABILITY This coverage must include premises/operations, products/completed operations, blanket contractual liability, broad form property damage, independent contractors, and personal injury. This coverage should be a minimum Combined Single Limit of $1,000,000, per occurrence, for Bodily Injury and Property Damage. B. AUTOMOBILE LIABILITY Minimum Combined Single Limit of $300,000 per occurrence for Bodily Injury and Property Damage; and C. GENERAL PROVISIONS 1. All policies shall be endorsed to read "THIS POLICY WILL NOT BE CANCELLED OR NON-RENEWED WITHOUT 30 DAYS ADVANCED WRITTEN NOTICE TO THE OWNER AND THE CITY EXCEPT WHEN THIS POLICY IS BEING CANCELLED FOR NONPAYMENT OF PREMIUM, IN WHICH CASE 10 DAYS ADVANCE WRITTEN NOTICE IS REQUIRED". 2. Commercial General Liability and Automobile Liability insurance shall be written by companies with A: VIII or better rating in accordance with the current AM Best Key Rating Guide. 3. Commercial General Liability and Automobile Liability insurance policies shall name as "Additional Insured" the CITY and its officials, agents, employees, and volunteers. 4. Certificates of insurance must reflect all coverages and endorsements required by this section. 5. Coverage shall be placed with insurance carriers licensed to do business in the State of Texas or with nonadmitted carriers that have a financial rating comparable to carriers licensed to do business in Texas approved by the CITY. ARTICLE IX ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The parties agree to settle any disputes under this Agreement by submitting the dispute to arbitration or other means of alternate dispute resolution such as mediation. No arbitration or alternate dispute resolution arising out of or relating to, this Agreement involving one party's disagreement may include the other party to the disagreement without the other's approval. ARTICLE X CONSEQUENTIAL DAMAGES In no event and under no circumstances shall CONTRACTOR be liable to CITY for any interest, loss of anticipated revenues, earnings, profits, or increased expense of operations, or fines due to NERC Non-Compliance, or for any consequential, indirect or special damages. ARTICLE XI PROFESSIONAL STANDARDS CONTRACTOR will perform services under this Agreement with the degree of skill and diligence normally practiced by professional consultants performing the same degree of similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. ARTICLE XII NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mail at the address shown below, certified mail, return receipt requested unless otherwise specified herein. Mailed notices shall be sent to the parties at the following addresses: To CONTRACTOR: To CITY: JMB Consulting Attn: General Manager, DME P.O. Box 99999 1659 Spencer Rd. Sanger, Texas 76266 Denton, Texas 76205 All notices shall be deemed effective upon receipt by the party to whom such notice is given. ARTICLE XIII ENTIRE AGREEMENT This agreement constitutes the complete and final expression of the agreement of the parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communications and agreements which may have been made in connection with the subject matter hereof. ARTICLE XIV SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable. In such event, the party shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision. ARTICLE XV COMPLIANCE WITH LAWS CONTRACTOR shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereinafter be amended. ARTICLE XVI DISCRIMINATION PROHIBITED In performing the services required hereunder, CONTRACTOR shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. ARTICLE XVII PERSONNEL A. CONTRACTOR represents that if it secures any additional personnel required to perform the services required under this Agreement. Such personnel shall be sub-consultants of CONTRACTOR and shall not be employees or officers of, nor have any contractual relations with the CITY. CONTRACTOR shall inform the CITY of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement. B. All services required hereunder will be performed by CONTRACTOR or under its supervision. All personnel engaged in work shall be qualified and shall be authorized and permitted under state and local laws to perform such services. ARTICLE XVIII ASSIGNABILITY CONTRACTOR shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the CITY. ARTICLE XIX MODIFICATION No waiver or modification of this Agreement or of any covenant, condition, limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith and no evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the parties hereunder, and unless such waiver or modification is in writing, duly executed; and, the parties further agree that the provisions of this section will not be waived unless as herein set forth. ARTICLE XX MISCELLANEOUS A. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas. This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. B. CONTRACTOR shall commence, carry on, and complete the work required by this engagement with all applicable dispatch, in a sound, economical, efficient manner and in accordance with the provisions hereof. In accomplishing the work, CONTRACTOR shall take such steps as are appropriate to ensure that the work involved is properly coordinated with related work being carried on by the CITY. C. The captions of this Agreement are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Agreement. Agreed to and Accepted by: Representative of the City of Denton: W Contractor City Manager C - 22- L0 - Date ATTEST: JENNIFER WALTERS, CITY SECRETARY By: Date APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY By: Attachment A Compliance Scope of Work ■ Acknowledge and respond to NERC alerts ■ Monitor NERC website for revisions of standards ■ Monitor THE website for updates to standards ■ Complete TREINERC self-certification forms ■ Complete TRECNERC self reports related to all registrations ■ Complete DME Mitigation Plans related to all self reports ■ Meets with Subject Matter Expert's related to DME compliance manual changes ■ Maintenance of DME Compliance SharePoint Software ■ Send out notification to Subject Matter Expert's related to documentation needs in SharePoint ■ Review compliance manual and make necessary changes as required ■ Send out bi-weekly reports to all Subject Matter Expert's, General Manager and Operations Division Manager ■ Meet monthly with General Manager to give updates related to compliance ■ Represent DME @ NERC/TRE Compliance related workshops ■ Attend NERC workshops to stay updated on compliance standard changes ■ Represent DME on NERC standard review subcommittee ■ Represent DME on TMPA Compliance Working Group ■ Monitor compliance standards related to Electronic Security Perimeter and Physical Security Perimeter ■ Monitor and give input related to compliance on new construction of DME's Operation building ■ Oversee the completion of all documentation related to NERC compliance ■ Review and change processes and procedures as required ■ Attend annual meetings with compliance oversight committee ■ Train Subject Matter Expert's and employees on all 34 processes and procedures related to both cyber and non-cyber standards ■ Represent DME at all TRE/NERC audits ■ Represent DME at Transmission Operator Certification ■ Respond to all request for information related to NERC compliance as related to approximately 1,116 requirements ■ Monitor NERC audit schedule and prepare DME accordingly ■ Complete Reliability Standard Audit Worksheet's as related to NERC audits ■ Manage Approval roles within TRE's Portal website ■ Develops standards, guidelines and reports to help maintain compliance measures that will effect the overall operation of DME's transmission and generation assets Will maintain expert knowledge and assist in interpretation of ERCOT Protocols, Operating Guides, and NERC Standard that form about utility industry trends and practices • Annually verify Protective Relay System Testing ■ Monthly Verify Training schedules ■ Monthly Verify Operator Training Monthly Verify Outage Schedules Quarterly check Vegetation Schedules ■ Annually review 14 Cyber Process Documents ■ Annually review 25 non-cyber Documents ■ Annually check for Annual Load Data Report Track Under Frequency Load Shed documentation ■ Update Signature pages as changes are made Monthly verify Transmission One-line DRAFT MINUTES PUBLIC UTILITIES BOARD October 25, 2010 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas is present, the Chair of the Public Utilities Board will thereafter convene into an open meeting on Monday, October 25, 2010 at 9:00 a.m. in the Service Center Training Room, City of Denton Service Center, 901-A Texas Street, Denton. Present: Chair Dick Smith, Vice Chair Bill Cheek, Bill Grubbs, Phil Gallivan, Randy Robinson and Barbara Russell Ex Officio Member: George Campbell, City Manager Howard Martin, ACM Utilities Absent: John Baines, excused OPEN MEETING: ITEMS FOR INDIVIDUAL CONSIDERATION: 5) Receive a report and hold a discussion and recommend approval of an ordinance accepting a proposal for consulting services with JMB Consulting to oversee DME and the City of Denton compliance activities with THE (Texas Regional Entity) and NERC (North American Electric Reliability Corporation) for an amount not to exceed $32,000 per quarter for a two year total of $256,000. Phil Williams, General Manager DME, presented this item. Williams started out by giving an update on the NERC Compliance. NERC (North American Electric Reliability Corporation) is tasked with enforcement of reliability riles set by the Energy Policy Act of 2005. NERC delegated audit and enforcement activities to THE (Texas Reliability Entity). There are multiple types of entities with different requirements. We initially brought in KEMA to help us be compliant with 341 requirements (DP, LSE, TP), then added scope to become Transmission Owner and Operator which expanded requirements to 1,116. Timeline: October 6, 2009; approved KEMA Agreement, February 1, 2010; SharePoint (Compliance Documentation Software), March 31, 2010; Completed Compliance Manual, July 1, 2010; Expanded KEMA contract for TO and TOP, December, 2010; Processes, procedures, training to be complete, and new CA's (Critical Assets) identified, February 2011; Document new control center ESP's (Electronic Security Perimeters) and PSPs (Physical Security Perimeters); January 2011; New Control Center constriction underway, August 2011; Network / Equipment will be installed in Control Center, February 2012; Building and move in completed. Williams stated that the security system has to be up to date and also a six wall security. There will be scheduled full audits every three years. DME is registered for five functions; larger utilities will expect audits every year. Any function not audited in a year is required to perform self audits. DME has to be prepared to significantly increase the compliance budgets and staff, spend more time on documentation and procedures and to be assessed penalties for NERC and ERCOT violations. DME tried to add an additional management resource. Jeff Morris, Operations Division Manager, has announced retirement to pursue his long term plan to establish an electric operations consulting business. JMB Consulting has agreed to a two year contract to continue to oversee DME NERC Compliance activities. This is the most economical, reliable and flexible alternative for addressing our compliance needs. Board Member Russell moved to approve item 5 with a second from Board Member Robinson. The motion was approved by a 6-0 vote. Adj ournment was at 10:1 Oam AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Solid Waste ACM: Howard Martin, Utilities 349-8232 SUBJECT Consider an ordinance approving and authorizing the City Manager of the City of Denton, Texas to execute and deliver a third amendment to the Master Lease Agreement, by and between the City of Denton, as Lessor and the Denton County Transportation Authority ("DCTA"), as the Lessee, amending that certain Master Lease Agreement, dated on or about September 30, 2005, by and between the City of Denton, Texas as Lessor and DCTA, as Lessee, pertaining to certain leased premises located in the G. Walker Survey, Abstract Number 1330, Denton County, Texas; and providing an effective date. BACKGROUND The Denton County Transportation Authority (DCTA) Master Lease Agreement was entered into on September 30, 2005, and provides for an initial term of three (3) years from that date, ending on September 30, 2008. The agreement provided for two (2) additional one-year renewal terms, which would be available to DCTA, provided that they are not in default in their performance of the lease. These options to extend the lease mainly provide that if DCTA has not completed or made arrangements for its new facility, they may continue in possession for the extension term or terms. The First Amendment to Master Lease Agreement with an effective date of December 12, 2006 was adopted by Council. It added additional acreage necessary to accommodate DCTA's expanded operations. In October 2008 the PUB recommended to the City Council that the DCTA lease be extended under the terms of the Master Lease Agreement for one year. The City Council adopted the First Extension to the Master Lease Agreement in November 2008. DCTA requested a Second Amendment to the Master Lease Agreement for the placement of an additional modular building within the leased premises. The monthly lease payment to the City of Denton Solid Waste Department increased an additional $1,168.92, bringing the lease payment to $7,634.52 per month. DCTA has deferred the constriction of their new Denton bus facility and are negotiating a new lease with city staff. DCTA would like a three month extension of the current lease at a monthly rate of $7,634.52 through December 31, 2010 to provide sufficient time to complete the new lease agreement. OPTIONS The City Council may approve the lease amendment for an extension in the term or direct that the existing lease agreement terms apply. RECOMMENDATION Staff recommends the approval of the lease amendment. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The City Council adopted an ordinance on September 30, 2005 authorizing the City Manager to execute the Master Lease Agreement. The First Extension to the Master Lease Agreement was adopted by the City Council at their meeting of November 4, 2008. The Second Amendment of the Master Lease was adopted by the City Council on August 18, 2009. EXHIBITS 1. Ordinance 2. Third Amendment of the Master Lease Agreement Respectfully submitted: A. Vance Kemler General Manager, Solid Waste Services A s:llegallour documentslordinancesll Oldcta third amendment to cola-ordinance.doc_ EXHIBIT 1 ORDINANCE NO.2010- AN ORDINANCE APPROVING AND AUTHORIZING THE CITY MANAGER OF THE CITY OF DENTON, TEXAS TO EXECUTE AND DELIVER A THIRD AMENDMENT TO MASTER LEASE AGREEMENT, BY AND BETWEEN THE CITY OF DENTON, AS LESSOR AND THE DENTON COUNTY TRANSPORTATION AUTHORITY ("DCTA"), AS LESSEE; AMENDING THAT CERTAIN MASTER LEASE AGREEMENT, DATED ON OR ABOUT SEPTEMBER 30, 2005, BY AND BETWEEN THE CITY OF DENTON, TEXAS, AS LESSOR AND THE DCTA, AS LESSEE, PERTAINING TO CERTAIN LEASED PREMISES LOCATED IN THE G. WALKER SURVEY, ABSTRACT NUMBER 1330, DENTON COUNTY, TEXAS, AS MORE PARTICULARLY DESCRIBED IN SUCH MASTER LEASE AGREEMENT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Denton has determined that the Third Amendment to the Master Lease Agreement ("Third Amendment") (i) prescribing the extension of the term of the Master Lease Agreement so as to provide sufficient time to complete negotiations for a new lease agreement; and (ii) modifying certain rents payable under the Master Lease Agreement, will further the objectives of the Master Lease Agreement, by and between the City and DCTA, as amended by the First and Second Amended Master Lease Agreements; WHEREAS, the City Council of the City of Denton finds that the Third Amendment is for the public good and in the best interest of the citizens of the City of Denton, Texas by complementing the existing DCTA transportation facilities in the City; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference. SECTION 2. The City Council hereby approves, and authorizes the City Manager to execute the Third Amendment to Master Lease Agreement, substantially in the form of the document attached hereto as Exhibit "A." SECTION 3. A true and correct executed copy of this Ordinance will be transmitted to the appropriate officials of the DCTA by the City Manager or his designee, immediately upon its passage and approval. SECTION 4. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY 1 By: EXHIBIT 2 THIRD AMENDMENT TO MASTER LEASE AGREEMENT This Third Amendment to Master Lease Agreement (the "Third Amendment") is made and entered into as of the dates indicated below, but effective for all purposes as of October 1, 2010, by and between the City of Denton, Texas, a Texas home rule municipal corporation (the "Lessor") and Denton County Transportation Authority, a political subdivision and coordinated county transportation authority created pursuant to Chapter 460 of the Texas Transportation Code (the "Lessee"). WHEREAS, Lessor and Lessee entered into that certain Master Lease Agreement ("Master Lease"), dated on or about September 30, 2005 (the "Master Lease Agreement"), pertaining to certain Lease Premises, as defined in the Master Lease, located within the City of Denton, Denton County, Texas, as more particularly described in the Master Lease; WHEREAS, Lessor and Lessee entered into that certain First Amendment to Master Lease Agreement (the "First Amendment"), dated effective December 12, 2006, amending the Master Lease to add certain tracts of land to the Lease Premises, to modify rent due during or applicable to the Initial Term, the Extension Terms and Holding Over, as said terms are defined in the Master Lease, and amending other matters as set forth therein; WHEREAS, Lessor and Lessee entered into that First Extension to the Master Lease Agreement (the "First Extension"), made and entered into as of September 30, 2008, extending the term of the Master Lease as set forth in Section 2.2 of the Master Lease; WHEREAS, Lessor and Lessee entered into that certain Second Amendment to the Master Lease Agreement (the "Second Amendment"), dated on or about August 18, 2009, Third Amendment to Master Lease Agreement - Page 1 46114 relating to the use of the Modular Building and rent payable for such use, as prescribed therein, and other matters related thereto; WHEREAS, Lessor and Lessee now desire to amend the Master Lease, as amended by the First Amendment and Second Amendment, and as extended by the First Extension, to provide one additional Extension Period from October 1, 2010 to December 31, 2010 and to provide the rent payable for such additional Extension Period. NOW, THEREFORE, for and in consideration of the matters set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee agree as follows: 1. Article 2, Term, Section 2.2 of the Master Lease, as amended by the First Amendment and Second Amendment, and as extended by the First Extension, is hereby amended to read as follows: "2.2 Extensions. The Initial Term may be extended (i) for up to two (2) successive one (1) year periods; and (ii) in the event the Initial Term is extended for the two (2) successive one (1) year periods, for one (1) additional period from October 1, 2010 to December 31, 2010 (with each of such extension periods being called herein an "Extension Period") upon Lessee, with respect to the two (2) successive annual extension periods, providing written notice to Lessor in accordance with Article 13, below, not less than sixty (50) days prior to (i) the Expiration Date, if applicable, or (ii) the last day of the applicable Extension Term. Holding over by Lessee after the expiration of the second one (1) year Extension Period, as described in Section 2.2 (ii), above, shall constitute notice Third Amendment to Master Lease Agreement - Page 2 46114 of the extension of the Term of this Lease through and including Nevemb°r 30 241-0-December 31, 2010. During any Extension Period hereunder, the terms and conditions of this Lease shall remain unchanged and continue to be effective and in full force, subject to the change in monthly rental provided below or any written agreement otherwise entered into between Lessor and Lessee (with the Initial Term and the applicable Extension Periods being collectively known as the "Term")." 2. Article 3, Rent, Section 3.2 of the Master Lease, as amended by the First Amendment and Second Amendment, and as extended by the First Extension, is hereby amended to read as follows: "3.2 Rental in Extension Terms. If Lessee exercises its right to extend the Initial Term of this Lease in accordance with Section 2.2 herein, (i) beginning on or before the first day of the applicable one (1) year Extension Period, which shall be December 12, 2008 and December 12, 2009, respectively, Lessee shall pay to Lessor the sum of Six Thousand Four Hundred and Eighty Nine Dollars ($6,489.00) per month; and (ii) beginning on October 1, 2010, Lessee shall pay to Lessor, on or before October 1, 2010, November 1, 2010 and December 1, 2010, the sum of Seven Thousand Six Hundred Thirty Four Dollars and Fifty Two/ 100 ($7,634.52)." 3. Article 3, Rent, Section 3.4 of the Master Lease, as amended by the First Amendment and Second Amendment, and as extended by the First Extension, is hereby amended to read as follows: Third Amendment to Master Lease Agreement - Page 3 46114 "3.4 Holding Over. The Term of this Lease (including the Initial Term and each Extension Period if exercised, as provided herein) shall expire no later than December 31, 2010. However, if the Lessee does not vacate the Premises upon the expiration of the Term, the Lessee's occupancy of the Premises shall be a month-to-month tenancy, subject to all of the terms of the Lease applicable to a month-to-month tenancy, except the monthly rental during such tenancy shall be Ten Thousand Nine Hundred Fifty and NO/100 Dollars ($10,950.00) per month, on a month to month lease, plus any additional sums agreed to in writing by the Parties hereto between the effective date of this Agreement and the expiration of the Lease Term, and shall be due and payable beginning on January 1, 2011 and shall be due and payable thereafter on the first day of each month until such tenancy terminates; however, if such tenancy ends on a day other than the last calendar day of the month, the rental for any fractional calendar month of the tenancy shall be prorated by days." 4. Lessor and Lessee herein stipulate that notice of the two (2) successive one (1) year Extension Periods, has been timely provided by Lessee to Lessor, and that Lessee has exercised its right to extend the Term of the Master Lease, as amended by the First Amendment and Second Amendment, and as extended by the First Extension, through and including December 31, 2010, in accordance with the terms of Section 2.2 thereof. 5. Except as expressly amended by this Third Amendment, the terms and provisions of the Master Lease, as amended by the First Amendment and Second Amendment, and as extended by the First Extension, shall remain unchanged and shall be valid and subsisting and remain in full force and effect. Third Amendment to Master Lease Agreement Page 4 46114 6. This Third Amendment shall be binding upon and inure to the benefit of the Lessor and Lessee, and their respective successors and assigns. 7. This Third Amendment embodies the entire agreement and understanding between the Lessor and Lessee with respect to the matters addressed herein and supersedes all prior agreements, consents and understandings with respect to such subject matter. EXECUTED BY LESSOR AND LESSEE as of the dates set forth below, but effective for all purposes as of OCTOBER 1, 2010. LESSOR: CITY OF DENTON, TEXAS By: Mark A. Burroughs, Mayor Date: ATTEST: Jennifer Walters, City Secretary By: APPROVED AS TO LEGAL FORM: Anita Burgess, City Attorney By: L-t-L-~IA. 11244 Third Amendment to Master Lease Agreement - Page 5 46114 LESSEE: DENTON COUNTY TRANSPORTATION AUTHORITY By: of Executive Officer Date: Third Amendment to Master Lease Agreement - Page 6 46114 CITY OF DENTON CITY COUNCIL MINUTES October 4, 2010 After determining that a quorum was present, the City Council convened in a Joint Session with the Denton Independent School District Board of Trustees on Monday, October 4, 2010 at 11:30 a.m. in the Council Work Session Room at City Hall. PRESENT: Council Member Watts, Council Member Heggins, Council Member Gregory, Council Member Engelbrecht, and Mayor Burroughs. ABSENT: Mayor Pro Tem Kamp; Council Member King. 1. Call to order; announce quorum, introductions. Mayor Burroughs announced a quorum of the council present and introductions were made by the Council and Board of Trustees. 2. Receive a report and hold a discussion regarding legislative issues of interest to the Denton ISD and the City of Denton. Fred Hill, Legislative Consultant, presented updated information on the upcoming session. He felt that the main focus of the session would deal with passing the budget and redistricting. Other topics that could be considered included (1) a study on how fees were collected on behalf of the State in order to help balance the budget, (2) there probably would be large cuts in the budget particularly in the area of school districts, (3) cities should be on the alert for unfunded mandates, (4) redistricting would be a fight for political control of the state for the next 10 years, (5) oil and gas valuation, (6) as there was no money for new transportation projects there was the possibility of bills advocating county-wide toll authority for all counties in the state, (7) an increase in the gas tax for the purpose of reducing the debt, (8) possible attempt at the diversion of Fund 6 of the transportation funds, (9) managed lanes on I-35 and tolling HOV lanes and, (10) local debt. Transparency could be another topic for the session such as putting check registers on the Internet. The State had to present a balanced budget and would do it by whatever means possible, even if it meant unfunded mandates to cities. 3. Receive a report and hold a discussion regarding the current status of the Rayzor Ranch Retail/Housing development. Chuck Russell, Interim Planning Manager, presented an update on the Rayzor Ranch Project. In terms of retail/housing development, he indicated that the South Campus could not exceed 185 single-family detached dwellings, 496 single-family attached dwellings, and 1,800 multi-family units with a maximum of three bedrooms per unit. The first 750 multi-family units would not be permitted until the Town Center commercial site plan was approved and the first 100,000 commercial square feet had received building permits and had been inspected and issued a green tag for foundations. Of the total amount of multi-family units, 1,050 could not be rented by the room. Projects in the development process included Fry Street, Gardens of Denton, Retreat at Denton, Eagle Village, Victoria Square, BB/Willowwood, Aspen Heights, and Central Villages Estates. City of Denton City Council Minutes October 4, 2010 Page 2 Council and the Board discussed the various projects and potential effects on the DISD and City. 4. Adjourn. With no further business, the meeting was adjourned at 1:30 p.m. MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES October 5, 2010 After determining that a quorum was present, the City Council convened in a Work Session on Tuesday, October 5, 2010 at 4:00 p.m. in the Council Work Session Room at City Hall. PRESENT: Council Member Watts, Council Member King, Council Member Heggins, Council Member Gregory, Council Member Engelbrecht, Mayor Pro Tem Kamp, and Mayor Burroughs. ABSENT: None. 1. Requests for clarification of agenda items listed on the agenda for October 5, 2010. Council Member Watts questioned Consent Agenda Item B which was the reallocation of CIP funds to Hickory Street. He asked why staff was asking for this transfer. Linda Ratliff, Director of Economic Development, stated that the request was for funds from all three surrounding streets including Austin Street for $2.7 million. This was a rough estimate for the constriction of Hickory with the intention that any remaining funds to go back to one of the three streets. Mayor Burroughs asked about Consent Agenda Item D, uniform purchase. File 4584 was not about uniforms. Karen Smith, Purchasing, stated that there was a different numbering system not relative to the bid number for Exhibit A. Mayor Burroughs clarified that the item was just for uniforms and nothing else. Smith replied correct. Mayor Burroughs asked about Consent Agenda Item E and using a local preference for awarding the bid. Item 14A showed that a Dallas company was awarded the bid but the lowest bid was a Denton bidder. He questioned why the local preference consideration was not used. Smith stated that the local preference was used for a total contract and not on individual items. Council Member Gregory asked about a time frame for constriction for Consent Agenda Item A. Jim Coulter, General Manager-Water Administration, stated that the actual constriction of the project would probably start after school was out for the summer. Council adjourned into Closed Session at 4:15 p.m. to consider Item IAl. 1. Closed Meeting: A. Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Receive a briefing from City's attorneys and hold a discussion, pursuant to City of Denton City Council Minutes October 5, 2010 Page 2 Section 551.071 of the Texas Government Code, of legal issues associated with the expiration of the City's agreement with Charter Communications regarding a public, educational, or governmental (PEG) cable television channel and the potential award of an agreement for the operation of a PEG channel to a new operator where public discussion of this legal matter would clearly conflict with the duty of the city's attorneys to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. Council returned to Open Session at 5:40 p.m. to consider the remaining Work Session Items. 2. Receive a report, hold a discussion and give staff direction regarding the operation of the public access channel beginning January 1, 2011. Billy Matthews, Cable TV Manager, stated that the Overview and Purpose of his presentation would be to present information on (1) the history and timeline of the cable franchise in Denton, (2) the history and timeline of PEG subscriber fees, (3) the history and financials of the PEG fund, (4) public access in other cities, (5) outline the staff process, (6) discuss the proposals, and (7) next steps needed. The term PEG stood for public access channels, educational access channels, and governmental access channels. PEG channels were not mandated by federal law with the right for the channels given to the franchise authority. The requirement for the channels must be set out in the franchise agreement. The City had five PEG channels which included the Denton DTV channel, the Access channel, TWU channel, NTTV channel and the DISD channel. He reviewed the history and timeline for the creation of the access channels and the associated wording from the franchise agreement. Currently all three cable providers collected the PEG subscriber fee. The City's fee was $.50 per subscriber per month. The FCC restricted the use of the PEG subscriber fee to only be used to acquire additional PEG production equipment, capital and other PEG purposes. Matthews reviewed the PEG revenues and expenses since 2004 to present. He noted that the PEG subscriber fee revenue average over the last two fiscal years was $137,748. Some of the uses of the fees included the DTV Control Room, fiber optics, broadcast equipment, studio, cameras, monitors, recorders, audio, lighting, editing stations and maintenance. The ten year PEG revenue forecast was reviewed versus the cost of each proposal. The City's options included (1) allowing the public access channel to go "dark" and cease operations at the end of the current local franchise agreement on January 1, 2011. Once the City vacated a PEG channel, cable operators would no longer be required to provide a public access channel at a later date. (2) Assuming the responsibility for the public access channel. This option would not include building a studio or producing any programs for the public. It would be an automated playback channel only. (3) Entering into an agreement with a third party to operate the City's public access channel. While the City could assist with the capital and equipment associated with the PEG channel, this option would not include additional general funds or staff. City of Denton City Council Minutes October 5, 2010 Page 3 Staff began working on this issue in March and had received proposals from the Texas Filmmakers and Mayborn School of Journalism at UNT. Staff criteria for evaluation of the proposals included legal consideration, economic consideration, facility, accessibility, and processes. Staff was recommending the Mayborn School of Journalism to operate the Denton public access channel effective January 1, 2011. The City would use PEG funds for capital expenditures including equipment, and the Mayborn School would handle the operations. No city General Fund money would be needed, and the channel would be preserved. Staff was requesting direction on how to proceed with a target date for an agreement no later than the first Council meeting in November. He indicated that if the Mayborn proposal was selected, they would finish a studio at their expense and the City could provide equipment, a fiber optic line, studio cameras and prompters. An individual would call to schedule a time produce a show, tape the program, edit it down as needed and get it ready for automated playback. Mayor Pro Tem Kamp asked what would happen to left over peg funds. Matthews indicated that it could be used to purchase equipment and/or provide grant funds. Mayor Pro Tem Kamp stated that the First United Methodist Church was the only entity with a live feed. She asked how that would work with both proposals. Matthews indicated that programming was secured in both proposals. Charter had an automated switch for the programming which would be in place regardless of who was running the channel. Council Member Gregory stated that one proposal called for using 92% of annual PEG funds and the other only 12% but use funds to upgrade equipment, to broadcast council meetings, Planning and Zoning Commission meetings, etc. He questioned what percentage would be needed for anticipated upgrades, replacement of equipment. Matthews stated that if more than 90% of the funds were granted, money would be needed from the General Fund for city business. Council Member Gregory asked about the legal limitations for use of the PEG funds. Matthews stated that they could be used for any type of television equipment. They could not be spent on such things as people, operational costs, or utilities. Council Member Gregory stated that with either proposal, if PEG funds were used for a building or equipment, that building or equipment could only be used for PEG purposes. He questioned how that would be ensured. Matthews stated that in the case of the Mayborn proposal, the City would buy the equipment and the vendor would install it on site. The City would have overview in that process. The Texas Filmmakers proposal called for granting of funds to them which would be harder to oversee. Council Member Gregory asked about a building funded with PEG funds or a studio with PEG funds and possible use for non-PEG activities. City of Denton City Council Minutes October 5, 2010 Page 4 City Attorney Burgess stated that PEG funds must be used for PEG purposes. The money must be spent on capital expenditures or costs. If not for those purposes, then there would be a dollar for dollar offset penalty from the 5% franchise fee. Capital costs did not include salaries. It was for equipment but not operational issues. Council Member Watts stated that the Mayborn proposal included building a studio for the public to use and also talked about equipment in the studio with PEG funds available to the public and UNT students associated with the school. Matthews stated that the Mayborn proposal would allow UNT to produce a newscast for the public access channel which would give an outlet for their news. Council Member Watts verified that a newscast by UNT on the channel was permissible. Matthews replied correct. Council Member Gregory asked about a situation where an individual in the city made his own show and in the course of filming, made liable comments about his neighbors. According to the two proposals would both providers just take film and run it or what would happen. Matthews stated that one proposal had checks and balances for reviewing materials while the other did not. Council would have to weigh in as a gatekeeper. The FCC was very clear on what was acceptable. Mayor Burroughs asked about projected uses for the PEG fees for the next ten years. Matthews stated that in the current budget there was equipment scheduled to be purchased. Unused PEG fees could be granted to other PEG entities in the city. Mayor Burroughs stated that in one proposal, all the PEG funds would be obligated for a 10 year period but not so with the other proposal. He questioned if there were already intended uses for the PEG funds and would the higher obligation interfere with any projected uses going forward. Matthews replied that the proposal with 90% usage of the PEG fees would affect future plans for the funds. There was ongoing maintenance, an editing of the system this year and a recommendation for grants to other PEG channels in the future. Mayor Burroughs asked about the control for the look of the channel. One concern he had heard was that if the Mayborn School's proposal was accepted, the channel would look like a university channel and would lose the identity of an access channel. Matthews replied that it would be the city's channel and only operated by the Mayborn School. Mayor Burroughs asked if the Mayborn School were chosen as the primary operator, would there be a limitation to Council to consider other proposals for a remote access production facility to produce shows and provide them to the Mayborn School. Matthews stated that it would be the City's channel and that could be done. City of Denton City Council Minutes October 5, 2010 Page 5 Mayor Burroughs asked about the contract length of the Mayborn School as the other proposal was a ten year proposal. Matthews stated that the Mayborn School proposal was for three years with a six month out clause if needed. Council Member Engelbrecht asked about video production issues. He questioned how to keep a handle on people who became frustrated with the system and walked away. He asked if there would be a stricture to find out how many people might not be satisfied with the provider. Matthews stated that Mayborn School had a board with citizen stakeholders plus also other checks and balances. Mayor Burroughs asked if it could be built into the contract that all complaints about the PEG channel would be forwarded to the city. Matthews replied it could be done. Council Member Engelbrecht asked if there could be some type of required notification to anyone into the studio, that this was a city channel and to call the city with a problem. Matthews stated that could be done. Mayor Burroughs asked what type of direction staff needed. City Manager Campbell stated that staff would proceed with the proposed recommendation and bring back the appropriate documents for council consideration. They would take into consideration the comments made at this meeting Council returned to the Closed Session at 4:55 p.m. to consider the following: A. Consultation with Attorney -Under Texas Government Code Section 551.071. Consultation, discussion, deliberation, and receipt of information from the City's attorneys regarding contemplated litigation with Denton Count- Electric Cooperative, Inc. d/b/a CoServ Electric and CoServ Gas, Ltd. relating to disputes concerning franchise issues, where public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the Citv of Denton and the Denton Cit- Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. Receive a status report regarding the litigation entitled: The Universit- of North Texas, Appellant v. The City of Denton, Texas, Appellee, Cause No. 02-09-00395- CV, now pending before the Fort Worth Court of Appeals; and discuss, deliberate and provide the City's attorneys with direction and any recommendations regarding such legal matter. A public discussion of this legal matter would conflict with the dut- of the City's Attorneys to the Cit- Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. City of Denton City Council Minutes October 5, 2010 Page 6 B. Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071; Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Mayor Pro Tem Kamp motioned, Council Member Gregory seconded that this item was appropriate for a Closed Session discussion under the Public Power Utilities Competitive Matter exception. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. 1. Discuss, deliberate, and receive information from Staff and provide Staff with direction pertaining to the acquisition or the condemnation of permanent and temporary constriction easement tracts for the Jim Christal Double Circuit and Combined Heat and Power projects, the location of which being north and west of the Denton Municipal Airport area in the City of Denton, Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the acquisition or condemnation of the tracts referenced above where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the Denton City Council under the Texas Rules of Disciplinary Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceedings or potential litigation. Regular Meeting of the City of Denton City Council at 6:30 p.m. in the Council Chambers at City Hall. 1. PLEDGE OF ALLEGIANCE The Council and members of the audience recited the Pledge of Allegiance to the U. S. and Texas flags. 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards 1. United Way Proclamation Mayor Burroughs presented a proclamation for United Way. 2. Fire Prevention Week Mayor Burroughs presented a proclamation for Fire Prevention Week. 3. White Cane Day City of Denton City Council Minutes October 5, 2010 Page 7 Mayor Burroughs presented a proclamation for White Cane Day. 3. CONSENT AGENDA Speaker cards were submitted by Bob Clifton, 1800 Morse, Denton, 76205 for Consent Agenda Items B, C, L and M. Mayor Pro Tem Kamp motioned, Council Member King seconded to approve the Consent Agenda and accompanying ordinances and resolution including the amended ordinance provided during the Work Session. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Resolution No. R2010-036 A. Consider approval of a resolution of the City Council of the City of Denton, Texas accepting the recommendations made by the Citizens Advisory Oversight Committee appointed by the City Council on April 19, 2005, regarding the five-year capital improvements program, respecting the reallocation of funding of street improvements from the FY 2007-2008 miscellaneous roadways, the FY 2008-2009 miscellaneous roadways, and from the 2008-2009 sidewalk installations funds to the Paisley Street extension project; and providing an effective date. Resolution No. R2010-037 B. Consider approval of a resolution of the City Council of the City of Denton, Texas accepting the recommendations made by the Citizens Advisory Oversight Committee appointed by the City Council on April 19, 2005, regarding the five-year Capital Improvements Program, respecting the reallocation of funding of street improvements from Walnut Street and Pecan Street to the Hickory Street Grand Project; and providing an effective date ($1,777,970). Ordinance No. 2010-243 C. Consider adoption of an ordinance authorizing the City Manager to execute Amendment No. 1 to amended lease agreement between the City of Denton ("City") and the Denton County Transportation Authority ("DCTA"), amending that certain amended lease agreement, dated on or about September 18, 2007, by and between the City and DCTA, related to the lease of parking spaces located at the Williams Trade Square; and providing for an effective date. The Mobility Committee recommends approval (3-0). Ordinance No. 2010-044 D. Consider adoption of an ordinance of the City of Denton authorizing the City Manager or his designee to execute a purchase order through the Buy Board Cooperative Purchasing Network (Contract# 340-10) for the acquisition of uniform purchase and rental for City employees by way of an Interlocal Agreement with the City of Denton; and providing an effective date (File 4584-Employee Uniform Rental and Purchase awarded to G&K Services in the annual estimated amount of $200,000). City of Denton City Council Minutes October 5, 2010 Page 8 Ordinance No. 2010-245 E. Consider adoption of an ordinance accepting competitive bids and awarding an annual contract for the purchase of soil, sand, aggregate and lime for various City departments; providing for the expenditure of funds therefor; and providing an effective date (Bid 4564- Annual Contract for Soil, Sand, Aggregate and Lime awarded to the lowest responsible bidder meeting specification for each item in the annual estimated amount of $2,000,000). Resolution No. R2010-038 F. Consider approval of a resolution appointing members to the Board of Directors of the North Texas Higher Education Authority; and declaring an effective date. Ordinance No. 2010-246 G. Consider adoption of an ordinance of the City Council of the City of Denton, Texas authorizing the City Manager to execute a Second Amendment to Agreement for Professional Legal Services with Michael J. Whitten & Associates formerly known as The Whitten Law Firm, P.C. for professional legal services relating to litigation entitled: The University of North Texas, Appellant v The City of Denton, Texas, Appellee, Cause No. 02-09-00395-CV, now pending before the Fort Worth Court of Appeals; authorizing the expenditure of funds therefor; providing for retroactive approval thereof, and providing an effective date. Ordinance No. 2010-247 H. Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager to execute an agreement between the City and Fred Moore Day Nursery School to provide Community Development Block Grant funds for improvements to the facility at 821 Cross Timber Street, Denton, Texas; authorizing the expenditure of funds therefor, not to exceed $120,400; and providing for an effective date. Ordinance No. 2010-248 L Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving a funding agreement between the City of Denton and the Denton Affordable Housing Corporation; providing for the terms of said contract; authorizing the City Manager to execute the agreement and to expend Home Investment Partnership Program funds with respect to the agreement; and providing for an effective date. Ordinance No. 2010-249 J. Consider adoption of an ordinance finding that a public purpose and necessity exists and finding that public welfare and convenience requires the acquisition through agreement or eminent domain of an approximate 0.787 acre utility easement, and a 1.431 acre temporary constriction easement for the relocation and installation of municipal utilities relating to the Jim Christal Double Circuit, and the Combined Heat and Power utility projects situated in the John Scott Survey, Abstract Number 1222, City of Denton, Denton County, Texas; authorizing the expenditure of funds therefor; and providing an effective date. The Public Utilities Board recommends approval (6-0). City of Denton City Council Minutes October 5, 2010 Page 9 Approved the minutes listed below. K. Consider approval of the minutes of. August 10, 2010 August 17, 2010 September 7, 2010 September 14, 2010 September 21, 2010 Ordinance No. 2010-250 L. Consider adoption of an ordinance approving an employment agreement for the City Manager and authorizing the Mayor to execute said agreement setting the compensation and terms of that employment; authorizing expenditures and actions; and providing an effective date. Ordinance No. 2010-251 M. Consider adoption of an ordinance approving an employment agreement for the City Attorney and authorizing the Mayor to execute said agreement setting the compensation and terms of that employment; authorizing expenditures and actions; and providing an effective date. Ordinance No. 2010-252 N. Consider adoption of an ordinance approving an amendment to the easement agreement for joint driveway access by and between the City of Denton, Denton Independent School District and Teasley Commons, LTD. related to the appropriation of additional easement area for driveway widening purposes; and providing an effective date. (South Branch Library, Fire Station No. 6, and Sam Houston Elementary bus loop - 3200 block Teasley Lane) 4. PUBLIC HEARINGS Ordinance No. 2010-253 A. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas, approving a Detailed Plan to allow a public park located on 15378 acres within the Preserve Planned Development District (PD 132), generally located south of Lakeview Boulevard and north of the existing Denton Branch Rail Trail; and providing for a penalty in the maximum amount of $2,000.00 for violations thereof, severability and an effective date (Z10-0008). The Planning and Zoning Commission recommends approval (7-0). Mark Cunningham, Director of Planning and Development, stated that this proposal was a detailed plan associated with the Preserve at Pecan Creek Planned Development to permit the transfer of ownership of an existing 1538 acre park from the Homeowners Association to the City of Denton. The property was located in the Preserve Planned Development with a future land use of Neighborhood Center. The Planning and Zoning Commission and the Development Review Committee both recommended approval. Mayor Burroughs noted that some opposition was due to late mailing notices. City of Denton City Council Minutes October 5, 2010 Page 10 Ron Menguita, Planning Supervisor, stated that the Planning staff had received information that two notices were received late by the homeowners. He indicated that there was a sign up for three to four weeks about the proposal. Staff had notified the community in the appropriate time. Mayor Burroughs stated that there were complaints that the sign was not placed in a prominent location. Menguita stated that the sign was posted in the best possible location due to the ongoing constriction on the Rail Trail. Council Member Gregory asked if the land being transferred to the City was part of the park dedication process. Menguita stated that it was above and beyond what the developer would be required to dedicate. Bob Tickner, Parks Planning Administrator, stated that a site with 1700 homes would have been required to dedicate 10 acres. This development was not completely built out and the City had already received over 10 acres. This portion had long been planned for as a dedication to the City and was above the required acres of the developer. Council Member Gregory asked who would be paying for the pedestrian access bridge. Tickner stated that it would be funded from Park Development fees that had been collected from the two multi-family portions of the development and the lots on the south side. Council Member Gregory asked if there would be any other improvements or amenities to the park. Tickner stated that the property was located in the flood plain and the developer had built trails throughout the area. Mayor Burroughs asked if there were plans for parking in the area. Tickner stated that there was no parking planned for the park. Citizens could park at the nearby school. He indicated that the park would connect to the Denton branch of the Rail Trail. Mayor Burroughs asked if there would be any facilities such as a playground at the park. Tickner stated this was a passive park for trails only with no facilities included. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. Council Member Gregory motioned, Mayor Pro Tem Kamp seconded to adopt the ordinance. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member City of Denton City Council Minutes October 5, 2010 Page 11 Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Ordinance No. 2010-254 B. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas regarding a Concept Plan amendment and a Detailed Plan amendment (Ordinance No. 2009-302) within the Wheeler Ridge Planned Development District (PD-176). The Concept Plan contains approximately 9.08 acres and the Detailed Plan contains approximately 4.05 acres located within the boundaries of the Concept Plan. The subject site is located at the southeast corner of Teasley Lane (FM 2181) and Robinson Road; and providing for a penalty in the maximum amount of $2,000.00 for violations, thereof, severability and an effective date. (PDA10-0003) The Planning and Zoning Commission recommends approval (5-0). Chuck Russell, Planning Manager, stated that this was a request for an amendment to the concept and detailed plans in the Wheeler Ridge Planned Development. The specific purpose of the proposal was to amend Condition 44 in Ordinance 2009-302 regarding limited access from the site to Robinson Road. Ordinance No. 2009-302 amended Tract 1 of the concept plan and approved a detailed plan for a portion of Tract 1 for a storage facility on 4.05 acres. The previous concept plan/detailed plan was for a proposed self-storage facility. The issue in 2009 was access into and out of the site. The proposed retail development would be comprised of a convenience store, a fuel station with four fuel dispensers and two underground fuel storage tanks. Ordinance No. 2009-302 approved two driveway access points onto Robinson Road with a condition that the western-most access would be prohibited until the City Engineer verified that the total traffic count exceeded ten thousand trips per day for the development. That condition was the one the applicant was requesting be changed without providing the traffic count required to warrant such access. The Planning and Zoning Commission recommended approval subject to the condition that the western-most access on Robinson Road be granted with the installation of a traffic signal at the corner of Teasley Lane and Robinson Road. Council Member Watts questioned whether the western driveway was to be a right-in and right- out but the presentation did not address that. Russell indicated that might have involved the Teasley Lane drive and did not involve Robinson Road. Council Member Watts questioned if submitted or built, would there be a right-in, right-out only at that location. PS Arora, Division Manager-Wastewater Administration, stated that a future median would not allow a left turn at the site. However, at this time, there was no median. Council Member Watts questioned if the detailed plan did not show a right-in, right-out and the plan was approved without it, how could that be required later. Arora stated that Council could make that a condition for approval. City of Denton City Council Minutes October 5, 2010 Page 12 Council Member Watts stated that the plan was to install a suspended signal light at the site. Arora stated that the suspended signal would probably be installed early next year. A span wire signal would be used until the expansion of Teasley Lane was completed. The warrants were there for the signal to be installed. Mayor Burroughs stated that if the convenience store was not built, the access would already be there. Russell stated that the condition, as it currently read, was not specific for development of the corner but was tied to getting the traffic signal constricted. If the convenience store was not built, once the signal was installed, access to a driveway would be allowed. The developer would still have to comply with the detailed plan requirement. Mayor Burroughs stated that if the convenience store was not built and the detailed plan was already approved, then anything else would have to come back to Council unless it met the detailed plan requirements. Russell stated if the store was not built and a plan submitted for another tract, the developer would still have to come back to Council. Mayor Burroughs stated if the detailed plan were approved, the convenience store would have to be built or Council would see the proposal again whether or not the traffic counts justified the driveway. Russell stated that if a substantial change was made to the layout of the detailed plan, it would have to come back to Council. Council Member Engelbrecht stated that the western most driveway was a right-in, right-out. Russell stated that was not a condition but a function of how Robinson Road would be developed. Arora stated that the road would be designed with a split for restricted movement. He suggested that be included as a condition of approval. Council Member Watts stated that if there was a median at that location there could not be a left turn but that was a way off until the reconstruction was completed. He questioned if in the meantime was Robinson Road wide enough put a strip in the middle so there couldn't be a left turn. He questioned if that could be done now. Arora stated that there would only be a right-in, right-out. Russell presented information on 4C. The proposed amendment to the detailed plan would allow a convenience store with four fuel dispensers and two underground storage tanks. The Planning and Zoning Commission recommended approval with conditions. The Mayor opened the public hearing for Items B and C. City of Denton City Council Minutes October 5, 2010 Page 13 The following individuals spoke during the public hearing: James Massey, applicant, spoke in favor. He questioned if development would have to wait for the completion of the signal before starting constriction. Mayor Pro Tem Kamp asked if the condition of the signal was acceptable to Mr. Massey. Massey replied it was. Council Member Watts questioned if the western drive was a right-in, right-out, where would be the connecting street. Massey stated that in the future there would be a hard median at the location but felt it was easier to not put anything in at this point. Jeremy Yee, Civil Engineer for the project, indicated he would answer any questions from Council. Greg Johnson, 3813 Granada Trail, Denton, 76205 - in support Council Member Heggins questioned the 10,000 trips for the proposed retail in the area. Johnson stated that not everything in the development would be retail on Robinson Road. They were also targeting neighborhood services. Bob Clifton, 1800 Morse, Denton, 76201- in opposition The Mayor closed the public hearings City Attorney Burgess recommended that the Council consider items B and C together. Council Member Engelbrecht stated that the recommendation was to allow the curb cut with the installation of the traffic light and the traffic light would be installed by the first of the year. Russell replied correct. Council Member Engelbrecht suggested approving the items as presented. In the event an accident problem started to occur at the western entrance and there was room to install a median, it should be done as soon as possible. Arora stated that as part of the platting approval process, an intersection analysis of Robinson Road and Teasley Lane would be done on the traffic on each lane. That would determine if there was a need to add additional lanes for traffic. Council Member King motioned, Mayor Pro Tem Kamp seconded to adopt the ordinances for Items B and C as recommended by the Planning and Zoning Commission. City of Denton City Council Minutes October 5, 2010 Page 14 Council Member Watts requested clarification of the motion which was to recommend 4B and C which included tying the western access point to the traffic signal. Council Member King and Mayor Pro Tem Kamp agreed that was the motion and second. Council Member Watts stated that the plan showed the storage facility had an eastern driveway which would be there when the facility was built. However, it was not there now and there was no requirement for the storage facility to constrict a connection between the eastern and western most parts of the development. Arora stated that was correct. Mayor Burroughs stated that there was already a turning lane on Robinson to go north. He questioned if there was enough space to extend a turning lane farther to make a stacking lane for a left turn into the western most driveway. Arora stated that there was room to add a lane at this time. The eastern most driveway already had a left turn lane. Mayor Burroughs stated that the developer had questioned the starting of constriction in connection with the timing of the installation of the signal light. Arora replied that it would depend on their time table for submission. The light would be completed in the early part of January. Mayor Burroughs asked if constriction could be initiated before the light was installed. Arora stated that the signal light should not have an impact on the development. Council Member Gregory wanted to make sure there was plenty of access in a way that did not create more traffic problems. He stated that this proposal did not include the provision of constricting the eastern-most driveway off Robinson Road. He questioned if there was a connection to the eastern most driveway from the proposed convenience store. Russell indicated that the final plan approved for the storage facility had a permit issued for that. The driveway was under constriction now but that did not guarantee connectivity to the convenience store. Johnson stated that the applicant would not be in favor of a requirement to connect the southeast corner of the convenience store lot to the eastern driveway. Mayor Burroughs stated that the properties which it crossed were not controlled by the convenience store. Council would be imposing conditions on the seller which would no longer be the buyer with control over it. Johnson stated that the storage facility would be required to have the access go all the way across. City of Denton City Council Minutes October 5, 2010 Page 15 Council Member King motioned, Mayor Pro Tem Kamp seconded to adopt the ordinances for Items 4B and 4C. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. C. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas regarding creation of a Detailed Plan to allow a convenience store with fuel dispensers on property located within the Wheeler Ridge Planned Development District (PD-176). The proposed retail development is comprised of a 2,940 square- foot building, a fuel station with four (4) fuel dispensers and two (2) underground fuel storage tanks. The subject site is located at the southeast corner of Teasley Lane (FM 2181) and Robinson Road; and providing for a penalty in the maximum amount of $2,000.00 for violations, thereof, severability and an effective date. (Z10- 0006) The Planning and Zoning Commission recommends approval (5-0). This item was considered with Public Hearing B and the ordinance was combined with the ordinance for 4B. Ordinance No. 2010-255 D. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas, providing for a zoning change from a Neighborhood Residential 3 (NR-3) zoning district classification and use designation to a Neighborhood Residential 1 (NR-1) zoning district classification and use designation on approximately 4037 acres of land located on the west and east sides of Ector Street, between Emery Street to the north and Sena Street to the south; providing for a penalty in the maximum amount of $2,000.00 for violations thereof, severability and an effective date. (SI10-0002) The Planning and Zoning Commission recommends approval (7- 0). Mark Cunningham, Director of Planning and Development, presented the details of the proposal. This was a staff initiated rezoning request of 4037 acres containing 39 single family residential lots. The rezoning request and establishment of the Ector Street Neighborhood Association directly resulted from opposition to a 2009 variance request to allow two driveways at 805 Ector Street to Panhandle and replat the lot. A second request for the property proposed to subdivide via a residential replat, the lot into three lots in excess of 10,000 square feet each that would share one driveway. Both of those proposals were denied by the Planning and Zoning Commission. In June, 2009 residents of the Ector Street Neighborhood Association presented a Citizen's Report petitioning the city to rezone the Roberts Addition from NR-3 to NR-1 to allow an increase in the minimum lot size from 10,000 square feet to 32,000 square feet, which would have the effect of preventing the future subdivision of lots along Ector Street. He presented the general regulations for minimum lot size, minimum lot width, minimum lot depth, and front yard setbacks. The Planning and Zoning Commission recommended approval. Mayor Burroughs stated that NR-1 had a minimum lot size of 32,000 square feet. He found that one of the lots was less than 32,000 square feet. He asked if that lot would be a legal non- conforming lot. City of Denton City Council Minutes October 5, 2010 Page 16 Cunningham stated that was correct. Mayor Burroughs asked about circumstances where that might be a problem. Cunningham stated that would put limitations on an expansion. If the home were destroyed by fire, there would be a limit on how long the owner could wait to rebuild. The lot would be a non conforming lot but not a non conforming use. Council Member Watts questioned as this was a city initiated request, could a condition be put in the ordinance regarding the non-conforming lot so that if something happened to the home on that lot, an exception would be made. City Attorney Burgess stated that staff would research it for Council. Mayor Burroughs stated that if the house burned down, the owner would not be able to rebuild because the lot would be too small. Cunningham stated that there would still be plenty of buildable area to rebuild but he was not sure about the lot size. The Mayor opened the public hearing. The following individuals spoke during the public hearing: Jerry Clark, 1121 Ector, Denton, 76201 - in favor Jake Hendricks, 1014 Hillcrest, Denton, 76201 - in favor Comment cards in favor of the proposal were received from: Lindsay and Marsha Keffer, 815 Ector, Denton, 76201 Catherine Dawson, 1015 Ector, Denton, 76201 The Mayor closed the public hearing. City Attorney Burgess indicated that the Zoning Board of Adjustment could grant a variance for rebuilding on the lot should the need ever arise. Council Member Engelbrecht asked that staff speak to the landowner and recognize the issue of the lot size being too small. Council Member Gregory stated that he was in support of the proposal and hoped something could be worked out with the one lot. He suggested the minutes reflect that the Council was concerned that the home could be rebuilt if something ever happened to the home on the lot that was under the minimum size. City Manager Campbell stated that he would write a letter to the homeowner and note that the Council would work on the building lines if necessary. City of Denton City Council Minutes October 5, 2010 Page 17 Council Member Engelbrecht motioned, Mayor Pro Tem Kamp seconded to adopt the ordinance. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Ordinance No. 2010-256 E. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas designating a certain area within the city limits of Denton as Target Corporation Reinvestment Zone IX for commercial/industrial tax abatement; establishing the boundaries of such Zone; making findings required in accordance with Chapters 311 and 312 of the Texas Tax Code; ordaining other matters relating thereto; providing a severability clause; providing for repeal; and providing an effective date. Linda Ratliff, Director of Economic Development, stated that she would be speaking on this item and on Item 5A. The Tax Code required that businesses that receive tax abatements must be located within a reinvestment zone, a designated area where economic development was encouraged. City Council's adoption of the ordinance establishing the reinvestment zone would allow Council to consider a tax abatement agreement with Target Corporation. The company planned to constrict a distribution center at the site. The Mayor opened the public hearing. Bob Clifton, 1800 Morse, Denton, 76201, spoke in opposition. The Mayor closed the public hearing. Mayor Pro Tem Kamp motioned, Council Member King seconded to adopt the ordinance. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. 5. ITEMS FOR INDIVIDUAL CONSIDERATION Ordinance No. 2010-257 A. Consider adoption of an ordinance authorizing the Mayor to execute a Tax Abatement Agreement with Target Corporation, a Minnesota corporation; setting forth all the required terms of the Tax Abatement Agreement in accordance with the terms of Chapter 312 of the Texas Tax Code; setting forth the various conditions precedent to Target Corporation receiving the Tax Abatement; providing for a severability clause; and providing an effective date. The Economic Development Partnership Board recommends approval (6-0). Linda Ratliff, Director of Economic Development, stated that a revised document had been provided Council with three minor changes that did not change the incentive. Target Corporation would be constricting a 400,000 square foot distribution center on the corner of City of Denton City Council Minutes October 5, 2010 Page 18 Airport and Corbin Roads. The tax abatement represented five-year abatement at 65% each year for a total estimated incentive of $1.7 million. Council Member Heggins motioned, Council Member King seconded to adopt the ordinance with the updated language changes in the agreement. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. B. Continue consideration of adoption of an ordinance of the City of Denton, Texas, providing for a zoning change from a Neighborhood Residential 3 (NR-3) zoning district classification and use designation to a Neighborhood Residential Mixed Use (NRMU) zoning district classification and use designation on tracts 256, 257, 258, 260 and 261 of the E. Puchalski survey, with an overlay district on those same tracts, plus tract 263, containing additional restrictions as noted; the area for the zoning change encompasses approximately 4.678 acres of land located at the northeast corner of North Bonnie Brae Street and West Oak Street, in the City of Denton, Denton County, Texas (Z09-0013) The Planning and Zoning Commission recommended approval of the rezoning of six (6) of the seven lots from Neighborhood Residential 3 (NR-4) to Neighborhood Residential Mixed Use (NRMU) subject to overlay conditions (5-1). Chuck Russell, Planning Supervisor, stated that this request was a zoning change from RN-3 to NRMU with consideration being given to a restrictive overlay. The property located at 2286 West Oak was not included in the request. The conditions for approval indicated that prior to obtaining a final plat, a site plan must be submitted to and approved by City Council. The site plan must address architecture of the strictures, buffering of adjacent single family property and prohibition of access from Houston Place. The only permitted use on the property was professional services and offices and would be limited to no more than 25,000 square feet of gross floor area per use. Building heights would be limited to 40 feet and/or two stories. A six foot high solid screen fence would be installed per the requirements of the Denton Development Code, constricted with steel posts and decorative caps, in the location specified within Exhibit C of the ordinance. Access to the property would be from Bonnie Brae Street and West Oak Street. No access would be allowed from Houston Place and Houston Place would not be extended to become a thri street to Bonnie Brae Street. Architectural standards were listed in the proposed ordinance. Council Member Engelbrecht expressed a concern regarding the restrictions on Houston Place. He questioned if at some later date a developer could request a variance and force Houston Place to go through to Bonnie Brae. Russell stated that the normal procedure for a subdivision variance would go to the Planning and Zoning Commission for the variance to not put the road through. That condition would prohibit access to the area. If a plat or site plan came in with a through street, it would be in violation of that condition. City of Denton City Council Minutes October 5, 2010 Page 19 Council Member Watts stated that in terms of the fence at Houston Place, if the City required a cul-de-sac or a hammerhead turn around, there could be no ingress/egress to Houston Place into the development. Russell stated correct that the draft ordinance addressed that situation. Speaker cards were submitted by the following individuals: Larry Reichhart, 2405 Mustang Drive, Grapevine, - indicated that their only remaining issue was site plan approval prior to obtaining a building permit. Currently the site plan had to be in conjunction with the plat. Willie Hudspeth, 623 Newton, Denton - in support Joann Nunnelly, 2215 Houston Place, Denton - in opposition Bob Clifton, 1800 Morse, Denton, 76205 - in support Eugene Hargrove, 2025 Houston Place, Denton, 76201 - in opposition Rahna Raney, 2316 Houston Place, Denton, 76201 - in opposition Jake Hendricks, 1014 Hillcrest, Denton, 76201 - in opposition Steve Friedson, 2044 W. Oak, Denton, 76201 - in opposition Elise Ridenour, 2044 W. Oak, Denton, 76201 - in opposition Dave Lynn, 2120 Houston Place, Denton, 76201 - in opposition Comment cards were received from the following: Mike and Lynda Nolen, 2280 West Oak, Denton, 76201 - in support Jeff and Terri Talbot, 324 Bonnie Brae, Denton, 76201 - in support Peter Hulstrand, 320 Bonnie Brae, Denton, 76205 - in support Catherine Dawson, 1015 Ector, Denton, 76201 - in support Marsha and Lindsay Keffer, 815 Ector, Denton, 76201 - in opposition Brian Besier, 2224 Houston Place, Denton, 76201 - in opposition Cecil Atkins, Houston Place, Denton, - in opposition Dora Sloan, 2207 Houston Place, Denton, - in opposition Leona Langford, 2219 Houston Place, Denton - in opposition Mrs. Tom Harpool, 2222 Houston Place, Denton - in opposition Michelle Lynn, 2120 Houston Place, Denton, 76201 - in opposition Jerry Clark, 1121 Ector, Denton, 76201 - in opposition Kevin Roden, 322 Texas Street, Denton, 76201 - in opposition Elizabeth Gunter, 225 Jagoe, Denton, 76201 - not certain based on current proposal Council Member Engelbrecht asked Ms. Ridenour about the issue of the fence at the end of Houston Place. The proposed fence would be open and he had a great deal of concern about the spill-over from the potential medical site. He questioned if the neighborhood would want a solid fence instead of an open stricture. Ms. Ridenour stated that the neighborhood had requested a solid fence of stone or brick for the entire length of the Houston Place neighborhood. Council Member Engelbrecht stated they would like a solid fence instead of open fence. City of Denton City Council Minutes October 5, 2010 Page 20 Ms. Ridenour stated that a solid fence would provide a demarcation between the residential and commercial areas. Mayor Burroughs asked about landscaping that would block the view between the two. Ridenour stated they would like both so that there was a substantial barrier between residential and commercial. Council Member Watts questioned the change from the site plan being approved prior to obtaining a final plat versus before obtaining a building permit. The Planning and Zoning Commission recommendation did not have that as a condition. Russell stated that was a change from the last meeting. Staff changed the requirement back to the plat stage. The previous version of the ordinance considered by the Commission had the site plan approval at the building permit stage. Staff was concerned that if the plat was approved late it might encourage permit issues and their hands would be tied once the plat was approved. They felt the site plan should happen before platting. Council Member Watts stated that once the applicant agreed at the last meeting to restrict the proposal to offices, this meeting was to bring back the proposal in a clean form. He did not want to draft an ordinance during a meeting. He questioned if the applicant was informed of the change. Russell stated that he assumed that the applicant had a copy of the changes but he did not tell the applicant of the change. Council Member Watts stated that the reasoning for staff to have the site plan approval at the platting was to provide more opportunity to have input on how the site would be developed. Deputy City Attorney Drake stated that it was his suggestion to make the change. He was trying to find ways around the Denton Development Code requirement for the transportation requirement to extend the street through. He had a concern that if the applicant or someone who bought the property came forward to the Planning and Zoning Commission with a plat application that met all of the requirements of the Denton Development Code, that the Commission would have little choice but to accept and approve the plat. A site plan approved by the City Council would be associated with the ultimate development. The idea was to give more control by the Council to approve the site plan. By the time a plat was approved and taken to Council for site plan approval, it might be too late for Council to make a configuration different from the approved plat. Mayor Burroughs questioned if Drake was saying that if the Planning and Zoning Commission saw a condition that a street was not go through, the Commission would still be obligated to approve the plat with a through street. The Council would be putting a specific condition identifying what was required and what was prohibited, and the Planning and Zoning Commission would not consider that. Drake stated that the legal standard was if a plat went before the Planning and Zoning Commission and met the development standards, ordinarily the Commission must approve it. City of Denton City Council Minutes October 5, 2010 Page 21 Mayor Burroughs and Drake debated the opinion on whether or not the Planning and Zoning Commission could disregard conditions placed on a proposal by the Council. Mayor Burroughs suggested making the language clearer in the conditions that there was to be no access to Houston Place for the site. City Attorney Burgess stated that language was already in place. Mayor Burroughs stated that there was no vote by Council at the last meeting in order to clean up the language in the ordinance. That had been done with additional language added. He felt the issues were not straight forward. The Denton Development Code provided for the protection of neighborhoods and for development. Residential development was not compatible with Bonnie Brae. This proposal had come a long way with the changes made and which had limited the scope of the development. Bonnie Brae was not a single-family residential street in the long term future. How to transition in the area was critical and by excluding the home site on Oak Street a demarcation line was provided. A transition was between heavy commercial and residential was very well done with office. A proposed site plan for the area would come to Council to make sure the transition was correct. Council Member Gregory stated that he did not like speculative zoning. Staff, Council, and the Planning and Zoning Commission had placed restrictions on the proposal to try and accommodate and protect the neighborhood. But he did not know if the restrictions would be enough to protect the neighborhood and did not know if the restrictions would be too much to hamper development. He was afraid that if this type of speculative zoning were approved, it would encourage more in the future. He found it hard to support this type of zoning. Council Member Heggins questioned if the proposal should be tabled again as new information had been presented and in order to clarify the proposal. Council Member Watts talked about the approval process and equity in the process. When the proposal was first before Council with the requirement of a supermajority vote of approval, he struggled with the applicant buying property in the neighborhood. He understood buying the property for a change in the opposition but it was the integrity of the process that was important. He struggled with the fact that money could change the process. He was in favor keeping the site plan in the platting process. Council Member King motioned to approve the ordinance with the conditions as presented. Russell indicated that the applicant was not in favor of the motion as it currently stood. He questioned if a simple majority vote was still needed or if it changed to a supermaj ority vote. Drake stated that if a proposed rezoning of property was protested in writing by owners of at least 20% of the area within 200 feet, an amendment could not be effective except by a three- fourths vote of all members of Council qualified to vote. Mayor Burroughs asked if the site plan approval provision was the same as the last time the proposal was considered. City of Denton City Council Minutes October 5, 2010 Page 22 Russell stated that it was worded differently. The first proposal was prior to obtaining a building permit; the site plan would have to be approved by the Planning and Zoning Commission. The current proposal was prior to obtaining a final plat; a site plan had to be approved by the City Council. Mr. Reichhart presented a written protest by the applicant of the amendment regarding the site plan. That protest represented 20% of the area within 200 feet. City Attorney Burgess stated that the supermajority vote involved the issue in the ordinance dealing with the timing of the site plan approval and whether that would be at the time of building permitting or at the time of platting. If council pursued the proposal in accordance with the last council meeting discussion with placing the overlay condition in Section 7 for the site plan, the applicant was opposed so a supermajority vote would be required. Council Member King's motioned died for lack of a second. Council Member Engelbrecht asked if a supermajority vote would be needed to deny the rezoning request. City Attorney Burgess stated that a simple majority vote would be required for denial. Council Member Watts motioned, Council Member Engelbrecht seconded to deny the ordinance. On roll call vote, Council Member Watts "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", Mayor Burroughs "aye" and Council Member King "nay". Motion carried with a 6-1 vote. C. Citizen Reports 1. Review of procedures for addressing the City Council. 2. Receive citizen reports from the following: a. Bob Clifton regarding a Fry Street and Bonnie Brae update. Mr. Clifton felt that Council was doing things at dais that they did not need to be doing. They had not paid any attention to Fry Street but spent all this time on Bonnie Brae. They were taking up time and were of no benefit to citizens. b. Ashley Oates m4ardin a smoke free ordinance. Ms. Oates presented information for 100% smoke free environment in terms of municipal buildings, private worksites, bars and restaurants. She presented a handout on effects of smoking and health concerns. Mayor Burroughs suggested coordinating an approach with representatives at the state government level such as Myra Crownover. City of Denton City Council Minutes October 5, 2010 Page 23 Ms. Oates stated that she had already been in conversations with them at a recent cardiovascular summit. This was a first step to bolster the movement. Council Member Heggins stated that she was in support of Ms. Oates and her proposal. c. Donna Woodfork regarding lack of customer service from the City Council. Ms. Woodfork was not at the meeting. D. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. Council Member Heggins asked that staff look into moving citizen reports earlier in the agenda as she did not feel that they should have to wait through the entire meeting. Mayor Burroughs requested a summary of the 2005 CIP bond projects and the use of those funds. Council Member Gregory requested staff research the bill that Rep. Myra Crownover presented in the legislature last session regarding smoking and possibly consider it at the local level. E. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no continuation of the Close Meeting. F. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no official action on Closed Meeting items. With no further business, the meeting was adjourned 11:15 p.m. City of Denton City Council Minutes October 5, 2010 Page 24 MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES October 12, 2010 After determining that a quorum was present, the City Council convened in a Work Session on Tuesday, October 12, 2010 at 4:00 p.m. in the Council Work Session Room at City Hall. PRESENT: Council Member Watts, Council Member Heggins, Council Member Gregory, Council Member Engelbrecht, Council Member King and Mayor Burroughs. ABSENT: Mayor Pro Tem Kamp 1. Receive a report, hold a discussion and give staff direction regarding the Council agenda process. City Manager Campbell stated that Council had requested this item when some of the recent meeting started getting long. Today's discussion would center on a discussion of the purpose of city council meetings; examine the current agenda process; brainstorm potential options, suggestions or ideas for improvement; provide direction to staff and/or reach consensus on a process going forward. Purpose of city council meetings - The primary function of a city council meeting was to conduct the formal business of the city of Denton. It also provided a forum for open dialogue among members of the council and staff, provided a forum for citizen comment regarding the business of the city government and made formal policy decisions by approving or denying ordinances, resolutions, etc. Current agenda process - The current agenda process was governed by the Council's Rules of Procedure which contained the basic elements of work session, closed meetings and regular meetings. Some potential changes might require a change in the Rules of Procedure. Efficiencies currently in place - Efficiencies in place included (1) informal reports, (2) the Consent Agenda, (3) provided concise information in a standard format in the form of the Agenda Information Sheet, (4) included presentations such as power points in the backup, and (5) enforced time limits for presenters/speakers. Options, suggestions, ideas for improvement - (1) Re-format the agenda in terms of (a) include citizen appearances at/near the beginning of the agenda to accommodate citizens. Citizens wishing to address consent items or items for individual consideration would be limited to a total of xx minutes per person. Comments would be received from the citizens before the Council took up the Consent Agenda or individual items. (b) Citizen addressing items not on the agenda and who had not so addressed the Council within the previous xx months (all others who had signed up with City Secretary would speak at the end of the agenda). Other options included (2) permit citizen comments on zoning cases only during open public hearings. It was unusual to allow citizen input on public hearings after the public hearing had been closed and could present a problem with both sides not being noticed. If public input was desired at future meetings, don't close the public hearing. (3) Withhold substantive questions of staff regarding public hearings until after the applicant had presented the case and citizens had addressed council. (4) Announce that non-speaker card submitted for public hearings would be entered into the record but refrain from reading those cards during the hearing. City of Denton City Council Minutes October 12, 2010 Page 2 Council Member King asked if individuals not in attendance could have cards submitted for them. Campbell stated that the Rules of Procedure prohibited that. Council Member Engelbrecht asked about individuals who came to the meeting but who had to leave before their item was considered. Mayor Burroughs felt that scenario was allowed but that it was not right to submit cards with people's names of those who were not there. Campbell continued that another issue was to (5) limit the number of public hearings on agenda to four. That could be a plus or minus depending on how many cases were in the zoning process. (6) Post public hearings to follow the Consent Agenda, Items for Individual Consideration and citizen appearances. That would get all topics done before getting to the public hearings. (7) Limit complex work sessions to the 2nd Tuesday sessions such as bike paths, gas wells, DTIP, etc. (8) hold zoning case hearings on 2nd Tuesday meetings only. Zoning cases would be the only items on the agenda. (9) Set an ending time for city council meeting at which time the meetings would be recessed to another date. City Attorney Burgess stated that the Open Meetings Act allowed the Council to recess the meeting to the next day. If it were to go to another date, the meeting would have to be reposted. Campbell continued with options and suggestions. (10) Re-assess the summer recess, and (11) consider all Closed Session items that related to action items at the first of the Closed Session to assure adjournment/recess of the Closed Session by 6:25 p.m. Mayor Burroughs stated that re-opening public comment on zoning cases where the public hearings had been closed should probably not be done. The public comment section was over and Council should not have received comments again. Council Member Engelbrecht stated that frequently happened in zoning cases because Council would suggest that the developer go back to make changes. If changes were made, residents should have another opportunity to speak on a plan that was different than before. Council Member Gregory stated that if the riles were followed, something needed to be done with the public hearing rather than close it. Mayor Burroughs stated that if the Council was going to send the item back for public comment, the public hearing should be reopened. City Manager Campbell stated that the discussion should be limited to that issue and not rehash everything. Mayor Burroughs stated that if Council realized that it was going to table and continue an item, they should think about what they were going to do and perhaps allow the public hearing to be re-opened for future citizen comment. City of Denton City Council Minutes October 12, 2010 Page 3 Council Member Watts felt that an item for a public hearing had almost two segments. One was for staff presentation and public input and the second was for council discussion. He questioned if a public hearing that had been closed but still needed discussion could be listed as a public hearing but not receive public input rather than have it listed under Items for Individual Consideration. City Attorney Burgess stated that public hearings with zoning cases were a creature of state law and local ordinance. There was the factor of the ability of the public to speak and the impact of citizens to make comments. There was also the factor of publication and obligation to notify so as the Council looked at an item it might want to consider for additional public comment as a part of zoning case but not part of blue card process, it might consider continuing the item and public hearing and leave it open and re-open it at the next meeting. If the public hearing was closed, it could not be reopened as it would be a violation of state law. Mayor Burroughs asked if there could be a separate agenda item indicating that the public hearing had been closed and it was a separate item to be listed as a continuance of debate. Council would have the option at that time to table, re-open the public hearing or not give back to the public and council just needed more debate. City Attorney Burgess indicated that could be done. Council Member Gregory stated that he found it helpful when the applicant changed a request to hear more input from citizens because the change might be significant enough that it might have other consequences for people. He was not sure he would want to limit comments only to the Blue Cards. Mayor Burroughs felt that there were two circumstances when dealing with public hearings and it would be difficult to make an automatic rile regarding them. One circumstance dealt with making changes to a proposal during the public hearing and whether to table the item or continue having discussion on it. In that circumstance, it would be better to reopen the public hearing and continue it to another meeting. The second circumstance was more technical in nature and could be continued with no public input to be accepted. Council Member Gregory expressed concern about limiting public hearings to the second Tuesdays of the month. Developers were sometimes under time constraints and limiting public hearings to one meeting a month might present a hardship. Campbell stated it could create a hardship on developers and on staff to schedule those types of meetings. Council Member Gregory stated he was not in favor of that option. Mayor Burroughs suggested that if a meeting was loaded with zoning cases and some cases were ready that they be considered on a 2nd Tuesday meeting to relieve time for the next meetings. Campbell stated that staff would have to look at that option in terms of publishing notices. There might be a problem with scheduling on a short notice. City of Denton City Council Minutes October 12, 2010 Page 4 Council Member Watts stated that Council might come a point where 2" d Tuesday meetings might have to be changed to action meetings in order to get business done. He was in agreement with the option to move complicated items to the 2nd Tuesday meetings and waiting to ask staff questions until citizens had input in public hearings. He was also in favor of not announcing non-speaker cards during the meeting but rather put them in the official record of the meeting. Council Member Engelbrecht stated that someone could read the number of cards in favor and the number of cards in opposition. Campbell stated that staff would indicate the total number of cards and indicate the number in favor and the number in opposition. Consensus of the Council was to proceed with that option. Council Member Gregory suggested setting up two times for citizen reports. One at the beginning for people to make comments about the Consent Agenda with a limit of 5-7 speakers and limit the speakers to those who had not spoken to Council in the last six months. Mayor Burroughs suggested having public comments on the Consent Agenda during the Work Session because that was when Council discussed it. Then Council could pull an item during the regular meeting because of earlier commentary. Council Member Gregory cautioned that the Work Session might start at 3:00 in the afternoon and some citizens might not be able to attend the meetings. He suggested limiting the comments to a set number of minutes. Mayor Burroughs suggested a total of three minutes at the Work Session to bring up why a Consent Agenda item was an issue and then the item could then be pulled if needed. Council Member King stated that an individual who worked might not be able to make an early meeting and would not be heard. Council Member Gregory stated that he appreciated that concern but there always would be people who would not be able to attend a meeting. Council Member Watts asked if there was a way to limit speakers either by time or number of items. Mayor Burroughs asked about the legality of timing of public comments. City Attorney Burgess stated that it was not a state law issue but was in the Council's Rules of Procedure. The overall issue was a First amendment question and when a time was created for public comment to be sure it was not a restriction on speech. Mayor Burroughs suggested trying the procedure and see how it worked and how difficult it might be. City of Denton City Council Minutes October 12, 2010 Page 5 Campbell stated that the first item on the Work Session would be modified to indicate that there was an opportunity to speak at that time. Council Member Gregory stated that it needed to be clear that this was not an attempt to stifle public input but rather a way to be more convenient for public comment. Mayor Burroughs agreed that it would also be more meaningful when the public comment was given. Campbell stated that then there would be no comment at the 6:30 meeting for public comment on the Consent Agenda Council Member King noted that he liked all of the suggestions except for the setting of an ending time for the meeting. Mayor Burroughs suggested putting public hearings at end of the meeting and splitting citizen reports. It was good to have a meaningful time for citizens to speak but he didn't want to have repeaters speaking all the time at the beginning of the meetings. He suggested having a first session of citizen reports at the beginning of the meeting with three speakers scheduled on a first come first served basis and who have not spoken to Council in the past six months or a year, just as long as they were not repetitive speakers. When the first three speakers were scheduled, everyone else who wanted to do a citizen report would be at the end of the meeting. Reports would be limited to four minutes. Council Member Heggins asked about the times when Council spoke too long. She suggested Council condense comments and not speak so long. The Council's consensus for the options included: (1) public comments on Consent Agenda items would be taken during the Work Session with comments limited to three minutes per speaker. There would be no citizen comments during the regular meeting on Consent Agenda items. (2) Citizen reports would be split with a time at the beginning for up to three speakers who had not spoken to Council in the past six months and a limit of four minutes for the report. All others would be at the end of the meeting. (3) Council would decide during the meeting on whether or not more citizen input would be needed for a public hearing and would either close the public hearing and not receive further public comment or re-open the public hearing and continue it to a future meeting. (4) Council would withhold substantive questions of staff during public hearings until after the applicant had presented his case and the citizens had addressed Council. (5) Non-Speaker comment cards would be entered into the record but not read during the meeting. The cards would be passed around for Council to read should they desire to do so. (6) There would be no limiting the number of public hearings on a particular agenda. (7) Public hearings would be posted after the Consent Agenda, Items for Individual Consideration and public comments. (8) Complex work session items would be scheduled as much as possible on 2" d Tuesdays. (9) Additional zoning cases could be scheduled for a 2" d Tuesday session as an option but additional staff input was needed in this area. (10) There would be no setting of an ending time for the meetings. (11) An additional meeting would be scheduled for July to help limit the length of the July/August meetings. (12) Staff would work with the Close Meeting schedule to try and schedule items that related to action items at the first of the Closed Session to try and adjourn the Closed Meeting by 6:25 p.m. City of Denton City Council Minutes October 12, 2010 Page 6 2. Receive a report, hold a discussion, and give staff direction regarding the Employee Healthy Incentives Program. Scott Payne, Risk Manager, stated that the cost to provide comprehensive health care benefits continued to increase each year. Staff was looking at ways to deal with these rising costs. Over the past five years, the City had increased member deductibles and the copayments for urgent care facilities, the emergency room and specialist office visits. The City had also made changes to the prescription drug program by increasing the copayments for some medications. The City moved from a fully-insured health program to a self-funded program that had saved an estimated $2.6 million when compared with the equivalent premiums the city would have paid if remained fully-insured. The City's Healthy Incentives Program was an attempt to motivate employees to change their behavior when it came to their health by offering financial incentives to motivate them into a more active role. Kari Zika, Benefits Administrator, presented information and statistics on why it was important to focus on wellness. She also reviewed risk factors for every 100 employees. The first step in the program was to educate the employees and to communicate the message of wellness to employees. Step 2 involved getting numbers in terms of blood pressure and cholesterol. This was a service that was provided through the annual Wellness and Benefits Fair. Employees could also get their numbers from their own physician. Step 3 of the program was to complete an on-line health assessment through United Health Care. Those employees who completed the assessment would receive a $120 differential in premiums for next year. The assessment would provide a personal results report, an opportunity to enroll in online coaching programs, and an opportunity for telephone-based health coaching programs. The Planning for the Future portion of the program involved continuing the Healthy Incentives Program for 2012, increasing premium differentials, adding additional measures to qualify for the premium reductions and the addition of an employee Health and Wellness Clinic. It was the hope that employees would take advantage of this opportunity to improve health and be rewarded with lower premium costs. Council Member Gregory suggested that staff consider adding walking or biking to work to the list of incentives. Council Member Gregory asked about employee privacy in terms of the screening and the information that was collected about employees. Payne replied that Denton Regional collected the blood samples and mailed the results to the employees. In terms of the on-line assessment, staff would only receive aggregate numbers and no information on individuals. Council Member Engelbrecht asked about vending machines that would dispense healthy foods such as juices and fruits. City of Denton City Council Minutes October 12, 2010 Page 7 Payne stated that he had looked at that a number of years ago but no vendor would provide it as it was too hard to keep fresh food in it. There was a lot of waste and was not cost effective. Mayor Burroughs suggested having a city sponsored 5k run/walk and co-sponsor it with a charitable organization. He had been approached by Seniors in Motion to do such a program before the start of the Arts and Jazzfest. He asked about the possibility of the Council opting in to the City's health benefits group. They would pay their way the same as the employees did. Council Member Watts suggested moving forward with the clinic. He asked if employees would also receive incentives if they used the clinic. Payne stated that there would be no cost to employees who used the clinic. Council Member King asked what portion of the premium an employee only paid. Payne stated that an employee on the lower plan did not pay anything and the cost went higher with the increase in the type of plan. Council Member King felt that until employees paid a larger portion of their health insurance there was no incentive to do better with their costs. With no further business, the meeting was adjourned at 6:12 p.m. MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES October 19, 2010 After determining that a quorum was present, the City Council convened in a Work Session on Tuesday, October 19, 2010 at 3:30 p.m. in the Council Work Session Room at City Hall. PRESENT: Council Member Watts, Council Member King, Council Member Heggins, Council Member Gregory, Council Member Engelbrecht, Mayor Pro Tem Kamp, and Mayor Burroughs. ABSENT: None. Item 4 was considered first during the Work Session. 4. Receive a report, hold a discussion and give staff direction regarding the creation of a Tax Increment Financing (TIF) District for Downtown. Linda Ratliff, Director of Economic Development, presented the history of the Downtown TIF from 2002-2010. She indicated that a TIF was a defined area that met three criteria for a TIF: (1) the area was predominately open, (2) the area was in or adjacent to a federally assisted new community, or (3) the present condition of the area impaired the city's growth. The qualifying criteria for the Downtown area was the area substantially impaired or arrested the sound growth or constituted an economic or social liability in its present condition and use because of the presence of (1) a substantial number of deteriorated or deteriorating strictures, (2) deterioration of the site or other improvements, (3) defective or inadequate sidewalks or street layout and (4) conditions that endangered life or property by fire or other causes, such as flooding. Ratliff stated that a TIF identified the base year's valuations, and the city continued to allocate those property tax dollars to the General Fund. TIFs could fund any of these types of projects (1) public improvements, (2) new buildings, strictures and fixtures, (3) existing strictures, (4) utilities, water and sewer facilities, flood and drainage facilities, (5) streets and street lights, (6) pedestrian malls, walkways or parking facilities, and (7) parks and educational facilities. With the City Council's approval, a TIF Board could enter into Chapter 380 Economic Development agreement using TIF revenue funds. The city could also allocate TIF funds to pay the incremental costs of providing municipal services incurred as a result of the creation of the TIF. Costs for rapid transit projects would be eligible even if the expense was incurred outside the TIF, as long as the project benefited the TIF. The funds could be used for a new solid waste collection plan or supplement the Parks Department for new planters, etc, in the area. Assumptions used with the TIP were that (1) final reports would reflect the 2010 valuation/tax rate, (2) there would be no increase in the tax rate over the life of the TIF, (3) there would be a 2% increase in the valuation each year, and (4) there would be no participation by the County or the DISD. TIF revenue projections were $23.6 million over the 30 year life of the TIF. Proposed projects included parking, complete streets, drainage/utilities, and economic development projects. Parking might include parking lots or strictures for $14 million, complete streets as designed in the DTIP for $5.6 million, drainage/utilities projects for $2.0 million and economic development projects which included miscellaneous projects for $2.0 million. City of Denton City Council Minutes October 19, 2010 Page 2 The next steps for the TIF would be to present the information to the Downtown Task Force and the Economic Development Board. A public hearing would be held on December 7, 2010 for the ordinance to form the TIF which would include determining the board stricture as appointed by Council. It was suggested that the board be comprised of seven members and could include council members. The Board would develop the final project and finance plans for council approval. Mayor Burroughs asked if there were rigid divisions between the allocations of estimated costs. Ratliff stated that the funds could be divided in any way the Council desired. There had to be a plan and as long as the item was in the approved plan, the Board could request to amend the plan to increase the dollars in one section and reduce in another section. Mayor Burroughs asked if dollars could be allocated to any kind of operation and maintenance costs such as maintenance for a trolley system. Ratliff replied she would have to check on that issue. Council Member Gregory asked if the TIF was included in any budget projections. Ratliff replied the impact was not included in the five year projections. Council Member Watts expressed concern about the project. He was not anti-Downtown development. However, this was all the city's own money as the County was not providing any money to the TIF. When he looked at the suggested projects, he didn't see anything that was proposed for the TIF that couldn't be done with bond programs. The TIF would encumber $23 million of future revenue when the same thing could be done with a different mechanism at a faster rate. He questioned if this was the best mechanism to obtain the results that was desired. He did not like putting a large amount of money for a specific area of the city. The issue was the methodology to do the projects. The funding could not be done fast enough and then the city would have to bring in outside money to help finance the project. His preference would be to use the next CIP Committee rather than the Downtown Task Force or the Economic Development Partnership Board. The citizens would have an opportunity to vote on a project if included in the CIP. He was not opposed to what was proposed for the funds but he opposed how it would be done. He felt TIFs were for blighted areas which he felt the Downtown was not. Mayor Burroughs asked if the issuance of bonds or other obligations based on a TIF would be more expensive. Ratliff stated that certificates of obligation could be issued but they would not be more expensive. They did require a 1.25 x the revenue established before issuing the bonds. Mayor Burroughs asked if the TIF financing more expensive than General Government financing. Bryan Langley, Chief Financial Officer, stated that there were several different ways to finance; a certificate of obligation was the least expensive and revenue bonds were tied specifically to revenues coming in. City of Denton City Council Minutes October 19, 2010 Page 3 Mayor Burroughs asked if the financing of projects was under the plan, how the projects would be done sooner rather than later. Langley stated that debt could be issued with or without the TIF. This was just another tool to use for financing. Mayor Burroughs stated that it got down to how to do that and the money to be committed. He would hope that private business would assist with the projects. Council Member Gregory stated that Council Member Watts had argued that anything that could be done with TIF money could be done with other funding. The only thing a TIF did was obligate future councils to set aside that much money for future improvements. He questioned what was an anticipated investment with a TIF that could not be done otherwise. Mayor Burroughs stated that an example might be a downtown convention center. In the past one had been discussed but consultants had indicated that the infrastructure was too bad. This would be used to try and attract certain types of development and spark it now rather than later, Ratliff stated that another example might be a large transit-oriented development that might require a parking stricture. A TIF would signify to the developer who may be putting up the development that there was the possibility of dollars in a fund to assist with the project. Council Member Watts stated that the backup materials indicated that projects would be on a pay as you go basis. A project could be presented as TIF dollars to do the project but there was no way to be able to do it until further out as dollars would be slow in coming in. Mayor Burroughs stated that the Downtown paid for itself as there was no residential there. He might worry that the rest of the community might feel that the Council was over investing in the Downtown. Council Member Watts stated that this was all the city's own money with no outside money available. Ratliff stated that if certificates of obligation were issued, the revenue from the TIF could still be dedicated to pay back that funding. Council Member Gregory provided an example of a developer building apartments with retail and a parking garage. Some of the parking might be public and some reserved for tenants and customers. He questioned if TIF money would be the only avenue to support and encourage or help supplement such a project. Ratliff stated that a Chapter 380 agreement could also be done in that type of situation; however, those were usually performance based. A TIF did not have to rely on dollars generated. Council Member Engelbrecht asked if a 30 year TIF was approved, would there be anything to preclude a future council to cancel that TIF. Ratliff stated it could be cancelled as long as there was no debt or dollars committee to a project. City of Denton City Council Minutes October 19, 2010 Page 4 Mayor Burroughs stated that it was difficult to determine with how much a TIF really provided the Downtown. It was a lot cheaper and easier for developers to build projects where there wasn't anything and harder to do in the Downtown. He questioned how much of a tool was a TIF and how was it perceived. Ratliff stated that just the fact that there was a TIF in place made a statement that the city had a commitment to that area. Mayor Pro Tem Kamp felt that Chapter 380 agreements were reserved for very large projects. She saw a TIF on a much smaller scale for projects. This was a way to have a tool that would make a large difference to the Downtown and was necessary for the future of the Downtown. Council Member King saw a TIF used for small projects. Certificates of obligation might be the way to go as dollars would be up front and the funds later. Mayor Pro Tem Kamp asked how many cities with a similar population did not have a TIF. Ratliff stated that many cities had several TIFs. The proposed TIF was very conservative with the amount of funds. Council Member Watts left the meeting. Council Member Engelbrecht stated that the Downtown was the core of the city and Council had been committed to it for years. There was a goal of infill for the area which the TIF fit right in. The TIF would send a signal that the city had an additional commitment to the Downtown. He asked staff to review the current valuation of the properties on Hickory in order to determine what the TIF might be doing to their value in advance. Ratliff stated that she would proceed to present the issue to the Downtown Task Force and the Economic Development Board for input back to the Council. She asked if the Council had any direction on the number of members for the TIF Board if Council decided to proceed with the TIF. Consensus of the Council was to have seven members on the Board, five community members and two council members. They also agreed that the proposal should be presented to the Downtown Task Force and the Economic Development Board. The Council returned to the regular agenda order. Ordinance No. 2010-258 1. Consider adoption of an ordinance suspending certain portions of Section 2-29 of the City Code relating to Rules of Procedure for the City Council of the City of Denton, Texas, until January 1, 2011 and substituting alternative provisions through December 31, 2010 for the purpose of testing interim Rules of Procedure herein established and declaring an effective date. City of Denton City Council Minutes October 19, 2010 Page 5 City Attorney Burgess stated that following the Council's discussion at the last council meeting, she had reviewed Rules of Procedure and recommended the Council move forward with the revised provisions for a few months. The proposed ordinance would provide for a suspension of limited provisions of the current riles and substitution for a couple of months. Council Member Engelbrecht motioned, Council Member King seconded to adopt the ordinance. On roll call vote, Council Member Watts "aye", Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Item 43 was considered. 3. Citizen Comments on Consent Agenda Items There were no citizen comments on Consent Agenda Items. Council returned to the regular agenda order. 2. Requests for clarification of agenda items listed on the agenda for October 19, 2010. Council Member Engelbrecht stated that the two noise exception requests for Consent Agenda H and I were recommended for denial by staff. He questioned why those items were on the Consent Agenda if they were recommended for denial. City Manager Campbell stated that the Consent Agenda was approving the staff recommendation. If Council approved the Consent Agenda, they would be approving the staff denial. Council Member Engelbrecht asked why the items were recommended for denial. He assumed it was due to too high of decibels or the hours were too late. Emerson Vorel, Director of Parks and Recreation, stated that the requests recommended for denial were in residential neighborhoods. Staff was recommending denial based on the hours requested and the requested increase in noise level because of the location in a neighborhood. Mayor Pro Tem Kamp stated that both requests had letters indicating that if the hours were too long, to contact the requestors. She asked if that had been done. Janie McLeod, Special Event Coordinator stated that one of the requestors had been contacted but he did not want to change the hours. Mayor Pro Tem Kamp stated that one of the requests was from the One O'clock Lab Band alumni. They had indicated that if the proposed event was too long or too late that they would be willing to shorten it or move it up. Vorel stated that even if the Police Department received a complaint after the Council approved an exception, the requestors could still be ticketed if they were disturbing the neighbors. He City of Denton City Council Minutes October 19, 2010 Page 6 stated that the requestor could still move forward and have the event but be aware of the noise levels. Mayor Pro Tem Kamp stated that the requestor for Item I could have the event and start earlier without permission. Vorel replied correct but they might be running the risk of officers coming to the house. Council could also overturn the staff s recommendation. Mayor Burroughs stated that Items G, H and I were the only ones with no recommendation given whether considering approval or denial. He suggested in the future that be included in the agenda caption. Council Member Gregory asked if the DISD was charged a franchise fee for Consent Agenda Item J. Howard Martin, Assistant City Manager, stated that the DISD was charged a right of use fee which represented a small amount of street crossings. Council convened in a Closed Meeting at 5:00 p.m.to consider the following: 1. Closed Meeting: A. Deliberations Regarding Real Property - Under Texas Government Code Section 551.072; Consultation With Attorneys - Under Texas Government Code Section 551.071. 1. Discuss, deliberate, and receive information from Staff and provide Staff with direction pertaining to the acquisition of a fee simple tract, being Lot 1, Block 2, College Beauty Addition, in the City of Denton, Denton County, Texas, according to the plat thereof recorded in Volume 198, Page 365 of the Deed Records of Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the acquisition or condemnation of the tract referenced above where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the Denton City Council under the Texas Rules of Disciplinary Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceedings or potential litigation. 2. Discuss, deliberate, and receive information from Staff and provide Staff with direction pertaining to the acquisition of permanent sanitary sewer easements and temporary constriction easements in the B.B.B & C.R.R. Company Survey, Abstract No. 185 and the Hiram Sisco Survey, Abstract No. 1184, generally along the Pecan Creek Tributary in the City of Denton, Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the acquisition or condemnation of the necessary easement tracts where a public discussion of these legal matters would City of Denton City Council Minutes October 19, 2010 Page 7 conflict with the duty of the City's attorneys to the Denton City Council under the Texas Rules of Disciplinary Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceedings or potential litigation. (Pecan Creek Sanitary Sewer Project - Phase 11) B. Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Consult with City's attorneys regarding: (1) legal issues associated with the regulation of gas well drilling and production within the City Limits and the extraterritorial jurisdiction, including Constitutional limitations, statutory limitations upon municipal regulatory authority and statutory preemption of municipal regulatory authority; (2) Federal preemption (and limitations on that preemption) of certain municipal regulations relating to the compression and transmission of natural gas, and the location of gas pipelines; (3) analysis of risks and enforceability of such regulations, including impacts and strategies associated with local permit protections; (4) legal limitations associated with the setting of fees for administration, inspection, enforcement, and other governmental or proprietary services related to gas well drilling and production, both within the City and its extraterritorial jurisdiction and, (5) discussion of legal bases, legal risks, and possible responsive legal strategies, associated with recent feedback to the City's gas well code provisions and associated permitting, platting and regulatory practices, both in general and as specifically applied to unplatted portions of proposed developments. This item was not considered. 2. Consultation, discussion, deliberation, and receipt of information from the City's attorneys regarding contemplated litigation with Denton County Electric Cooperative, Inc. d/b/a CoServ Electric and CoServ Gas, Ltd. relating to disputes concerning franchise issues, where public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. Regular Meeting of the City of Denton City Council at 6:30 p.m. in the Council Chambers at City Hall. 1. PLEDGE OF ALLEGIANCE The Council and members of the audience recited the Pledge of Allegiance to the U. S. and Texas flags. 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards City of Denton City Council Minutes October 19, 2010 Page 8 1. Goodwill Industries of Fort Worth Helping People with Disabilities Day Mayor Burroughs presented the proclamation for Goodwill Industries of Fort Worth Helping People with Disabilities Day. 2. Presentation of grant from Keep America Beautiful and Waste Management to Keep Denton Beautiful. Keep Denton Beautiful accepted the check from Waste Management for their Think Green Community project. 3. National Breast Cancer Awareness Month Mayor Burroughs presented the proclamation to the African American Cancer Support Group for Breast Cancer Awareness Month. 4. Amy Pelzel Appreciation Day Mayor Burroughs presented the proclamation for Amy Pelzel Appreciation Day. 3. CITIZEN REPORTS A. Review of procedures for addressing the City Council. B. Receive citizen reports from the following: 1. Willie Hudspeth regarding the Bonnie Brae rezoning. Mr. Hudspeth stated that Council was not being respectful to citizens during their presentations. He stated that he would return for several meetings to show the Council their reactions to citizens during the meetings. He also did not agree with the way the Council handled the zoning proposal for the property on Bonnie Brae. 4. CONSENT AGENDA Mayor Pro Tem Kamp motioned, Council Member King seconded to approve the Consent Agenda and accompanying ordinances and resolutions. On roll call vote, Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Ordinance No. 2010-259 A. Consider adoption of an ordinance accepting competitive bids and awarding an annual contract for the purchase of tricking services for various City of Denton departments; providing for the expenditure of funds therefor; and providing an effective date (Bid 4453- City of Denton City Council Minutes October 19, 2010 Page 9 Annual Contract for Tricking Services awarded to the lowest responsible bidder meeting specification, Jagoe-Public Company in the annual estimated amount of $200,000). Ordinance No. 2010-260 B. Consider adoption of an ordinance accepting competitive bids and awarding an annual contract for the rental of heavy equipment for various City of Denton departments; providing for the expenditure of funds therefor; and providing an effective date (Bid 4582- Annual Contract for Rental of Heavy Equipment awarded to the lowest responsible bidder meeting specification for each item, in the annual estimated amount of $750,000) Ordinance No. 2010-261 C. Consider adoption of an ordinance of the City of Denton, Texas authorizing the expenditure of funds for payments by the City of Denton for electrical energy transmission fees to those cities and utilities providing energy transmission services to the City of Denton; and providing an effective date (File 4596-2010-11 Electrical Energy Transmission Fees in the total amount of $1,403,633.03). Ordinance No. 2010-262 D. Consider adoption of an ordinance authorizing the City Manager to execute a Professional Services Agreement with Lockwood, Andrews & Newman, Inc. for engineering design and constriction phase services in connection with the Loop 288 Pedestrian Bridge Project; authorizing the expenditure of funds therefor; and providing an effective date (File 4585 in an amount not to exceed $134,067). Ordinance No. 2010-263 E. Consider adoption of an ordinance rejecting any and all competitive bids for a public works contract for the constriction of drainage improvements for the City of Denton as specified in Bid 4554-Eagle Drive Drainage Improvements Phase I; and providing an effective date. Ordinance No. 2010-264 F. Consider adoption of an ordinance accepting competitive bids and awarding a public works contract for the constriction of a concrete lined channel, pilot channels, and two outlet strictures for the Magnolia Drainage Improvements Phase 1 Detention Pond Project; providing for the expenditure of funds therefor; and providing an effective date (Bid 3516- awarded to the lowest responsible bidder meeting specification, Floyd Smith Concrete, Inc. in the amount of $149,911.14). Approved the request listed below. G. Consider a request for an exception to the Noise Ordinance for the purpose of performing live music during a fundraiser held at the North Texas State Fairgrounds on Sunday, October 24, 2010. The concert will begin at 1:00 p.m. and conclude at 10:00 p.m. This request is for an exception to the sound ordinance for amplified sound on Sunday. Denied the request listed below. H. Consider a request for an exception to the Noise Ordinance for the purpose of performing live music at the residence of 1604 N. Elm Street on Sunday, October 31, 2010, beginning at 9:00 p.m. and concluding at 1:00 a.m. This request is for amplified sound on Sunday, an City of Denton City Council Minutes October 19, 2010 Page 10 extension of hours from 10:00 p.m. for amplified sound, and for the amplified sound to be increased up to 75 decibels. Denied the reauest listed below. L Consider a request for an exception to the Noise Ordinance for the purpose of performing live music during two outdoor concert events in residential areas hosted by Scott Mulvahill. The first concert would be located at 1709 W. Oak Street on Friday, October 22, beginning at 9:00 p.m. and concluding at 12:00 a.m. The second concert would be located at 3000 Montecito on Saturday, October 23, beginning at 8:00 p.m. and concluding at 10:00 p.m. This request is for an extension of hours for amplified sound from 10:00 p.m. to 12:00 midnight and for an increase in decibels from 65 to 80 for both concerts. Ordinance No. 2010-265 J. Consider adoption of an ordinance of the City of Denton, Texas, authorizing the Mayor to execute an amendment to Interlocal Cooperation Agreement, by and between the City of Denton, Texas ("City") and the Denton Independent School District ("DISD"), amending that certain Interlocal Cooperation Agreement, dated on or about July 20, 2004, by and between the City and DISD, granting the right to utilize additional street right of way for the DISD fiber optic system; and providing an effective date. Ordinance No. 2010-266 K. Consider adoption of an ordinance finding that a public purpose and necessity exists to acquire sanitary sewer easements and temporary constriction easements and authorizing the acquisition through agreement or eminent domain of variable width sanitary sewer easements and variable width temporary constriction easements on the hereinafter described parcels of real property situated in the City and County of Denton, Texas, and all being embraced within the limits of the Buffalo Bayou, Brazos and Colorado Railroad Company Survey, Abstract Number 185 and the Hiram Sisco Survey, Abstract Number 1184 for the installation of utilities relating to the "Pecan Creek Interceptor - Phase II Project"; providing a severability clause; providing an effective date. The Public Utilities Board recommends approval (6-0). Ordinance No. 2010-267 L. Consider adoption of an ordinance authorizing the City Manager or his designee to execute a real estate contract by and between the City of Denton, Texas and Philip R. Tharp and Joe B. Moore, and any other documents and conveyances that are necessary to acquire 602 Rose Street being Lot 1, Block 2, College Beauty Addition, an addition to the City of Denton, Denton County, Texas, according to the plat thereof recorded in Volume 198, Page 365 of the Deed Records of Denton County, Texas; authorizing the expenditure of funds therefor; providing an effective date. (Paisley Street Drainage Improvements) 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager to execute a professional services agreement for design and engineering services relating to the Bonnie Brae Road Widening and Improvements project: providing for the expenditure of funds therefor; and providing an effective date (File City of Denton City Council Minutes October 19, 2010 Page 11 4520 - awarded to Graham Associates, Inc. in an amount not-to-exceed $5,444,253.00). Frank Payne, City Engineer, reviewed the history of the project and the funding of the project. This item was for the design and engineering services related to the widening of Bonnie Brae. There were ten proposals for the project which were screened and ranked by a panel of city staff. Four firms were interviewed and made presentations for the project. The selection team chose Graham Associates for the project. This was a sole source contract with all aspects being performed by the company. Council Member Gregory asked if the specifications for the project included sidewalks and the size of the sidewalks. Payne stated that all alternate routes would be code compliant for sidewalks and bike accessibility if possible. Mayor Burroughs stated that this was a sole source contract because it was a professional services contract. Payne stated that the request for proposal included the services the city wanted to see and that the firms would need to bring to the table with the efficiencies needed. Once a short list was determined, staff asked for references and history of working in the industry. The contract was negotiated on the basis of deliverables and experience in providing the services. Mayor Pro Tem Kamp asked how much of the total funding was from regional toll revenue funds. Payne stated that the total amount funded was $57 million with $46 million coming from the State and $11 million provided by local match. Denton County approved $2 million from Precinct 4 as part of their Transportation Road Improvement Program. A total of $9 million of the required local match would need to be provided from the City. Mayor Pro Tem Kamp motioned, Council Member Engelbrecht seconded to adopt the ordinance. On roll call vote, Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Ordinance No. 2010-269 B. Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager to execute a professional services agreement for design and engineering services relating to the Mayhill Road Widening and Improvements project: providing for the expenditure of funds therefor; and providing an effective date (File 4511 - awarded to Freese and Nichols, Inc. in an amount not-to-exceed $4,501,530.00). Frank Payne, City Engineer, stated that the City had applied for regional toll revenue funding for several major transportation projects in August 2007. In August 2008, the city was notified that the Mayhill Road project was selected for this funding. The total funded amount of the project City of Denton City Council Minutes October 19, 2010 Page 12 was $56 million with $45 million coming from the State and $11 million provided by local match. Denton County approved the expenditure of $5 million from Precincts 1 and 4 as part of their Transportation Road Improvement Program. A total of $5 million of the required local match would be provided from the City. This proposed ordinance was for a professional services agreement for design and engineering services for the project. Ten proposals were received and four were shortlisted and included presentations regarding the project. A selection team chose Freese and Nichols for the project. This was a sole source contract with all aspects being performed by the company. Mayor Pro Tem Kamp motioned, Council Member Heggins seconded to adopt the ordinance. On roll call vote, Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. C. Consider nominations/appointments to the City's Boards and Commissions: 1. Zoning Board of Adjustment Mayor Pro Tem Kamp nominated Greg Johnson. Council Member Heggins nominated John Morris. On roll call vote, Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. 6. PUBLIC HEARINGS Ordinance No. 2010-270 A. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas, amending Ordinances 86-173 and Ordinance No. 98-324 to amend the boundaries, concept plan and conditions associated with roughly 235.65 acres of land designated as Planned Development 120 (PD-120), located at the southeast corner of the intersection of F.M. 2164/Locust Street and Loop 288, in the City of Denton, Denton County, Texas; providing for a penalty in the maximum amount of $2,000.00 for violations thereof, defining the applicability of obsolete zoning use standards and designations referenced herein; and providing a severability clause and an effective date. (PDA10-0001, Gardens of Denton) The Planning and Zoning Commission recommends approval with conditions (7-0). Mark Cunningham, Director of Planning and Development, stated that the request was to amend Ordinance 86-173 and Ordinance No. 98-432 to revise the boundaries, concept plan and conditions of approval associated with the 235.65 acres designated as Planned Development 120. The original planned development was approved in 1986 and as time progressed, the bottom portion of the planned development was removed and was currently part of the Hills of Denton Planned Development. Staff was also taking this opportunity to update the official map of Planned Development 120 to reflect current boundaries as several pieces of property were removed which the map never reflected. The applicant was proposing to amend Planned City of Denton City Council Minutes October 19, 2010 Page 13 Development 120 by removing the roadway improvements that were required to be completed with Phase II of the development. The applicant was also requesting to amend the masonry standards in to include cement fiberboard as a permitted facade material. PS Arora, Division Manager-Wastewater Administration, stated that in 1980, Loop 288 and Highway 77 had not been improved. Since then the improvements had been made and conditions had changed in the area. Staff wanted to apply current regulations to the planned development. The developer had submitted a traffic impact analysis and based on that analysis the following improvements would be required: (1) Locust Street from Loop 288 to Hercules would be built to four lanes, (2) Beall Street would be constricted during Phase I and continue through Phase 11, (3) collector streets would provide right and left turn lane, (4) signalization cost participation at the Loop 288 service roads and Locust Street, (5) another driveway in the development might be warranted for another signalization for the future and (6) constrict a right turn lane. Mayor Burroughs stated that the masonry condition recommended by the Development Review Committee varied slightly from the Planning and Zoning Commission recommendation. The Planning and Zoning Commission had stricken the cement fiberboard and he asked what their objection was. Cunningham stated that cement fiberboard was never included in the original terms and was one that the applicant was requesting. Mayor Pro Tem Kamp asked for the timing of the roadway plan with four lanes. Arora stated that it scheduled for build out around 2015. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. Council Member Heggins motioned, Council Member King seconded to adopt the ordinance. On roll call vote, Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Ordinance No, 2010-271 B. Hold a public hearing and consider adoption of an ordinance granting approval of a sub-surface use of a portion of Mack Park for the purpose of a Utility Easement in accordance with Chapter 26 of the Texas Parks and Wildlife Code; providing for the issuance of a utility easement; and providing an effective date. The Parks, Recreation and Beautification Board recommends approval (6-0). Bob Tickner, Parks Planning Administrator, stated that the City had requested to use park land for the purpose of relocating a water transmission line to service this section of the city. A City of Denton City Council Minutes October 19, 2010 Page 14 public hearing was required by the Texas Parks and Wildlife Code to determine that there was no other reasonable alternative to the use or taking of the land. There would be no major impact on current park operations or programs. Staff had reviewed the request and recommended approval as did the Parks Board. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. Mayor Pro Tem Kamp motioned, Council Member Engelbrecht seconded to adopt the ordinance. On roll call vote, Council Member King "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. Ordinance No. 2010-272 C. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas, adopting Standards of Care for Youth/Teen Programs administered by Denton's Parks and Recreation Department pursuant to Texas Human Resources Code Section 42.041 (b)(14); and providing an effective date. The Parks, Recreation and Beautification Board recommends approval (6-0). Kathy Schaeffer, Special Projects and Field Operations Manager, presented the history of the program. This ordinance would approve the Standards of Care for the City's Youth/Teen Programs. It provided for minimum standards by which the Parks and Recreation Department would operate those programs. These programs were recreational in nature and were not day care programs. The public hearing was a requirement of the Texas Human Resources Code. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. Council Member Gregory motioned, Council Member King seconded to adopt the ordinance. On roll call vote, Council Member King "aye", Council Member Heggins "aye", Council Member Gregory "aye", Council Member Engelbrecht "aye", Mayor Pro Tem Kamp "aye", and Mayor Burroughs "aye". Motion carried unanimously. 7. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, City of Denton City Council Minutes October 19, 2010 Page 15 to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. Mayor Pro Tem Kamp invited citizens to the Saturday Denton Animal Shelter Foundation Fund Raiser. Council Member Gregory requested a work session on the mandatory parks dedication policy for development. B. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no continuation of Closed Meeting. C. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no official action on Closed Meeting Items. With no further business, the meeting was adjourned at 7:50 p.m. MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Finance A~T ACM: Jon Fortune SUBJECT Consider approval of a Resolution nominating members to the Appraisal Review Board of the Denton Central Appraisal District; and declaring an effective date. BACKGROUND The Appraisal Review Board (ARB) is a body specifically charged with the responsibility of reviewing protested appraisal records. They meet primarily between May and July and as needed thereafter. Members of the ARB serve two-year staggered terms. Approximately half the member's terms expire each year. Terms begin January 1. Nominations to this Board are provided by the taxing jurisdictions and appointed by the Denton Central Appraisal District (DCAD) Board of Directors by a majority vote. The City Council may submit as many nominations as they desire. Attached is a brief summary of qualifications for appointment to the ARB. After receiving the nominations from the taxing jurisdictions, the Board of Directors is scheduled to make their selection during their December meeting. Attached is a listing of the current ARB members, and a brief summary of qualifications for appointment to the ARB. There are eight members whose terms will expire in December 2010. Of the eight, three members are ineligible for re-appointment. Jimmy Ray, whose term expires on December 31, 2011, has also indicated that he no longer wishes to serve on the board for another term. FISCAL INFORMATION There is no fiscal impact to the City. EXHIBITS Appraisal Review Board Information Resolution Respectfully submitted: 4 3s~ Bryan Langley Chief Financial Officer DENTON CENTRAL APPRAISAL DISTRICT 3911 MORSE STREET, P O Box 2816 DENTON, TEXAS 76202-2816 WWW.DENTONCAD.COM MEMO TO: FROM: DATE: SUBJECT: All Jurisdictions DCAD Board of Directors October 8, 2010 Candidates for Appraisal Review Board The Board of Directors of the Denton Central Appraisal District is requesting candidates for possible appointment to the Appraisal Review Board. We have enclosed the qualifications for appointment to the Appraisal Review Board. Please return your Candidate List by October 29, 2010. All candidates will be mailed an application. The Board of Directors will make their decision at their December meeting. If you have any questions please call Kathy Williams at (940) 349-3974. PHONE: (940) 349-3800 METRO: (972) 434-2602 FAX: (940) 349-3801 October 8, 20 10 APPRAISAL REVIEW BOARD Appraisal Review Board (ARB) Meetings Beginning in January, the ARB will meet on the third Wednesday of each month (except in May, June, and July). Meetings are held at the offices of Denton CAD. ARB reappraisal hearings will start on a daily basis, as needed, from late May until the appraisal roll is approved usually in late July. Meetings will normally be from 8:00 A.M. to 5:00 P.M. Currently the ARB meets one night a week in May, June and July. Qualifications To serve on the ARB, you must have lived in Denton County for at least two years before taking office. You do not need any special qualifications. The Comptroller's office will provide a course for training ARB members. All ARB members must complete the course to participate in ARB hearings. Persons Ineligible 1. Those who have served all or part of three previous terms on the ARB. 2. Current or former members of the Board of Directors, officers, or employees of the appraisal district. 3. Those who serve or have served as a member of the governing body or officer of a taxing unit for which the appraisal district appraises property, until the 4th anniversary of the date the person ceased to be a member or officer. (Our attorney has interpreted an officer to be a member of a Planning and Zoning Board, a member of a Zoning Board of Adjustments, an election official or any other officer that has decision- making authority for any entity that the Appraisal District serves). 4. Those who have ever appeared before the ARB for compensation or if a relative appears, or their work product is used before the ARB for compensation. 5. Employees of the Comptroller's Office or a taxing unit. 6. Those who contract with the appraisal district or with a taxing unit that participates in the appraisal district. Also, if the person or a business entity in which the person has substantial interest contracts with the appraisal district or a taxing unit that participates in the appraisal district. 7. Those with Delinquent Property Taxes. Appointment The Board of Directors will appoint ARB members by a majority vote and record their decision in a resolution. Terms begin January 1, 2011. Members serve two-year staggered terms; approximately half of the member's terms expire each year. ARB Compensation The ARB receives $87.50 for a half day or $175.00 for all day. Candidate List Please return this form to DCAD no later than October 29, 2010. Your jurisdiction may nominate more than one candidate, the appointments will be made at DCAD's December Board of Director's meeting. An application form will be mailed to each candidate to complete. Name of Your Jurisdiction Name and address of Candidate: Name Address city zip Daytime Phone Number Evening Phone Number Please return this form to: Kathy Williams Denton Central Appraisal District P.O. Box 2816 Denton, Texas 76202 (940) 349-3974 10/12/2010 2010 APPRAISAL REVIEW BOARD Current Term Term Be-q. Term End Expires 1. Original Term - January 2005 12/31/2010 1St Term: 01/01/2005 12/31/2006 WILLIAM E. HOSKINS 2nd Term: 01/01/2007 12/31/2008 4305 Essex Ct.. 3rd Term: 01 /01 /2009 12/31/2010 Flower Mound, TX 75028 972-539-7574 2. Original Term - January 2005 12/31/2010 1St Term: 01/01/2005 12/31/2006 WAYNE GILLUM 2nd Term: 01101/2007 12/31/2008 504 South Kirby 3rd Term: 01/01/2009 12/31/2010 Pilot Point, TX 76258 940-686-2708 3. Original Term - January 2005 12/31/2010 1St Term: 01/01/2005 12/31/2006 DONALD L. MILLER 2nd Term: 01/0112007 12/31/2008 6710 Oliver Creek Road 3rd Term: 01/01/2009 12/31/2010 Justin, TX 76247 940-648-3387 4. Original Term - January 2007 12/31/2011 1ST Term: 01/01/2007 12/31/2007 JOHN DUFFY 2nd Term: 01/01/2008 12/31/2009 1513 Vista Verde 3rd Term: 01/01/2010 12/31/2011 Denton, TX 76210 940-387-2601 5. Original Term - January 2007 12/31/2011 1St Term: nd 01/01/2007 12/31/2007 JACKIE CARPENTER 2 Term: 01/01/2008 12/31/2009 P.O. Box 214 3rd Term: 01/01/2010 12/31/2011 Argyle, TX 76226 940-464-1120 6. Original Term - January 2008 12/31/2011 1St Term: 01/0112008 12/31/2009 JIMMY RAY 2nd Term: 01/01/2010 12/31/2011 403 Hogans Drive 3rd Term: Trophy Club, TX 76262 817-491-3608 7. Original Term - January 2008 12/31/2011 1St Term: 01/01/2008 12/31/2009 JOHN H. MORRIS 2nd Term: 01/01/2010 12/31/2011 918 West Oak St. 3rd Term: Denton, TX 76201 940-565-6414 8. Original Term - June 2008 12/31/2011 1St Term nd 06/01/2008 12/31/2009 RISHIYUR K. MOHAN 2 Term 01/01/2010 12/3112011 3612 Lavorton Place 3rd Term Flower Mound, TX 75022 972-355-3653 9. Original Term - January 2009 12/31/2010 1St Term nd 01/01/2009 12/31/2010 JOANNE BASTIAN 2 Term d 645 Melody Lane 3r Term Lakewood Village, TX 75068 972-987-4433 10. Original Term - January 2009 12/31/2010 1St Term nd 01101/2009 12/31/2010 JOHN J. GREENSLADE 2 Term rd 3951 Spinnaker Run Pointe 3 Term Little Elm, TX 75068 469-525-.0420 11. Original Term - January 2009 12/31/2010 1St Term 01/01/2009 12/31/2010 GARRY M. LEACH 2ND Term 3302 Ashleaf Dr. 3rd Term Carrollton, TX 75007 972-492-6891 12. Original Term - January 2009 12/31/2010 1St Term 01/01/2009 12/31/2010 CURTIS L. REESE 2nd Term `d 1816 Sandstone Dr. 3 Term Sanger, TX 76266 940-231-5848 13. Originial Term - January 2009 12/31/2010 1St Term 01101/2009 12/31/2010 DOROTHY A. TRUEX 2ND Term 1322 College Parkway 3rd Term Lewisville, TX 75077 972-434-2345 14. Original Term - January 2010 12/31/2011 1St Term: 01/01/2010 12/31/2011 TIM MANGRUM 2ND Term: 3528 Sundown Blvd. 3`d Term: Denton, TX 76210 940-239-0564 1.5. Original Term - January 2010 12/31/2011 1St Term: 01/01/2010 12/31/2011 CHARLOTTE MAGNO 2ND Term: 402 Brockett Street 3`d Term: Aubrey, TX 76227 817-909-9402 16. Original Term - January 2010 12/31/2011 18t Term: 01/01/2010 12/31/2011 JOYCE G. FREY 2ND Term: 214 Durango Dr. 3rd Term: Trophy Club, TX 76262 682-237-7070 17. Original Term -January 2010 12/31/2011 1St Term: ND 01/01/2010 12/31/2011 ROBERT F. GALLAGHER 2 Term: 7070 Glen Abbey Court 3`d Term: Frisco, TX 75034 214-469-2195 18. Original Term - January 2010 12/31/2011 1St Term: 01/01/2010 12/31/2011 ND GEORGE W. DAVIS 2 Term: d 10300 Murray S. Johnson St. 3` Term: Denton, TX 76207 940-262-0871 19. Original Term - January 2010 12/31/2011 1St Term: 01/01/2010 12/31/2011 JAMES S. GRANT 2ND Term: 1621 Castle Creek 3`d Term: Little Elm, TX 75068 817-832-9596 20 Original Term - January 2010 12/31/2011 1St Term: 01/01/2010 12/31/2011 DANNY J CHAMBERS 2ND Term: 720 W. 2ND Street 3rd Term: Justin, TX 76247 940-648-1627 SALega1\0ur Documents\Resolutions1101Appraisal Review Board 2010. doe RESOLUTION NO. A RESOLUTION NOMINATING MEMBERS TO THE APPRAISAL REVIEW BOARD OF THE DENTON CENTRAL APPRAISAL DISTRICT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the term of office for various Appraisal Review Board members of the Denton Central Appraisal District will expire on December 31, 2010; and WHEREAS, the City of Denton, Texas wishes to nominate members to said Board; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The City of Denton, Texas, hereby nominates , and as members to the Appraisal Review Board of the Denton Central Appraisal District. SECTION 2. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of } 2010. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: ;K 7-"~ AGENDA INFORMATION SHEET AGENDA DATE: November 2, 2010 DEPARTMENT: Planning and Development ACM: Fred Greene SUBJECT - McDonald's (CAI0-0001) Hold a public hearing and consider adoption of an ordinance regarding a Comprehensive Plan Amendment from the future land use designation of Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). (CA10-0001) The Planning and Zoning Commission recommends denial (6-0). A SUPERMAJORITY VOTE BY COUNCIL IS REQUIRED FOR APPROVAL. PROPOSAL The applicant has submitted an application to rezone the aforementioned property from a Neighborhood Residential Mixed Use (NRMU) zoning district to a Community Mixed Use General (CM-G) zoning district to accommodate a restaurant with a drive-through facility. One of the criteria for approval of a rezoning request is that the new zoning district shall be consistent with its underlying future land use designation in the adopted Comprehensive Plan (the Denton Plan). Therefore, the Denton Plan must also be amended before the proposed rezoning request, to change the underlying land use category from Existing Land Use to Community Mixed Use Centers. BACKGROUND The subject property is being used as a temporary drainage area and is unplatted. A summary of a neighborhood meeting that took place regarding this request is provided in Exhibit 7. Nine public notices were sent to residents within 200 feet of the site (Exhibit 9). As of this writing, staff has received four responses to the Notice of Public Hearing from property owners within this boundary area. PRIOR ACTION/REVIEW 1. Planning and Zoning Commission October 6, 2010 OPTIONS 1. Approve as submitted. 2. Approve subject to conditions 3. Deny. 4. Postpone consideration. 5. Table item. City Council Staff Report Page I of 46 ] - I 3 19.43 PnI Case#: CAIO-0001 RECOMMENDATION The Planning and Zoning Commission recommends DENIAL of this Comprehensive Plan Amendment request (6-0). The Development Review Committee recommends DENIAL of this Comprehensive Plan Amendment request. EXHIBITS 1. Site Location/Aerial Map 2. Zoning Map 3. Existing Future Land Use Map 4. Proposed Future Land Use Map 5. Site Plan (non-binding) 6. Letter from the Applicant 7. Neighborhood Meeting Summary 8. Site Photos 9. Notice of Public Hearing Responses 10. Letter to Elk River 11. October 6, 2010 P&Z Meeting Minutes 12. Ordinance Prepared by: Erica Marohnic, AICP Senior Planner Respectfully submitted: Marls Cunningham, AICP, CPM Planning and Development Division Director City Council Staff Report Page 2 of 46 ] - I 3 19.43 PnI Case#: CAIO-0001 CITY OF DENTON DEVELOPMENT REVIEW COMMITTEE STAFF REPORT P&Z Date: October 6, 2010 TYPE: Comprehensive Plan Amend. CC Date: November 2, 2010 PROJECT CA10-0001 Project Number: CA10-0001 Request: Comprehensive Plan Amendment from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. Applicant: McDonald's 511 East Carpenter Freeway, Suite 375 Irving, TX 75062 Property Owner: Teasley Commons, Ltd. 2925 Country Club Road, Suite 106 Denton, TX 76210 Location: The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (EM. 2181). Size: Zoning Designation: Future Land Use: Case Planner: P&Z Recommendation: DRC Recommendation: Summary of Analysis: 1.22 acres Neighborhood Residential Mixed Use (NRMU) Existing Land Use Erica Marohnic, AICP The Planning and Zoning Commission recommends DENIAL of this request (6-0). The Development Review Committee recommends DENIAL of this request. During the pre-application process, the applicant sought information regarding the ability to develop a 4,790 square foot restaurant with a drive-through on approximately 1.22 acres within a Neighborhood Residential Mixed Use (NRMU) zoning district. Per Subchapter 5 of the Denton Development Code (DDC), restaurants are permitted within the NRMU zoning district subject to Limitation L(11) which states "Limited to sit down only, and no drive up service permitted. They are also limited to no more than one hundred seats and no more than 4,000 square feet." The applicant has requested information regarding the ability to rezone the property to a Community Mixed Use General (CM-G) district to accommodate the proposed restaurant and City Council Staff Report Page 3 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 drive-through. A Comprehensive Plan Amendment would first be required before a rezoning request could be brought before P&Z and City Council. One of the criteria for approval of a rezoning request is that the new zoning district shall be consistent with its underlying future land use designation by the adopted Comprehensive Plan, the Denton Plan. If the applicant pursued a rezoning of the subject property to CM-G, then an amendment of the future land use designation associated with the subject property from Existing Land Use to Community Mixed Use Centers would need to be requested as well. The future land use amendment must be approved prior to the requested rezoning. The subject property was part of a preliminary plat (Teasley Commons, PP02-0047), however, this plat has since expired and no final plats have been received on the subject property. Therefore, the property is unplatted. Submittal and approval for a preliminary plat for the remainder tract (this includes property outside of the 1.22 acre subject site) and a final plat for the 1.22 acres will be required prior to issuance of any building permits. It should be noted the property owner has entered into an interlocal cooperation agreement with Denton County, for future widening of the existing public access and fire lane easement along the site's southern boundary, the existing driveway onto Teasley Lane, and the existing median opening. Additional land area will need to be conveyed for the easement and driveway that the South Branch Library, Fire Station No. 6 and Sam Houston Elementary School utilize for access from Teasley Lane and that this proposed development would utilize as well. It is staff's determination that this request to amend the future land use designation from Existing Land Use to Community Mixed Use Centers would result in creation of an isolated district unrelated to adjacent and nearby districts (NRMU to the north, south, east and west and other residential zoning districts on the boundaries of the NRMU), thus resulting in spot zoning. In City of Pharr v. Tippitt, the Texas Supreme Court observed that the term "spot zoning" is used in Texas "to connote an unacceptable amendatory ordinance that singles out a small tract for treatment that differs from that accorded similar surrounding land without proof of changes in conditions." (616 S.W.2d at 177). "Spot zoning is regarded as a preferential treatment which defeats a pre-established comprehensive plan. It is piecemeal zoning, the antithesis of planned zoning." The Court noted certain criteria against which zoning ordinances should be reviewed. 1. First, the approved zoning plan should be respected and not altered for the special benefit of the landowner when the change will cause substantial detriment to the surrounding lands or serve no substantial public purpose. Tippitt, 616 S.W.2d at 176. 2. Second, the nature and degree of an adverse impact upon neighboring lands is important. Tippitt, 616 S.W.2d at 177. Lots that are rezoned in a way that is substantially inconsistent with the zoning of the surrounding area, whether more or less restrictive, are likely to be invalid. 3. Third, the suitability or unsuitability of the tract for use as presently zoned must be considered. The size, shape and location of a lot may render a tract unusable or even confiscatory as zoned. This factor, like the others, must often be weighed in relation to the other standards, and instances can exist in which the use for which land is zoned may be rezoned upon proof of a real public need or substantially changed conditions in the neighborhood. 4. Fourth, the amendatory ordinance must bear a substantial relationship to the public health, safety, morals or general welfare or protect and preserve historical and cultural City Council Staff Report Page 4 of 46 ] - I 3 19.43 PnI Case#: CAIO-0001 places and areas. The rezoning ordinance may be justified, however, if a substantial public need exists, and this is so even if the private owner of the tract will also benefit. In this particular instance, there is no indication that the subject property is zoned in a way inconsistent with the zoning of the surrounding area, nor are there any evidence that the proposed rezoning would benefit an important public need. In a letter from the Director of Planning and Development to the property owner dated July 10, 2009, the director expressed several concerns (including the issue of spot zoning) germane to the proposed rezoning. The concerns expressed are as follow: 1. Traffic Impact: While true of all development types, drive-through facilities tend to generate higher than normal vehicular traffic. This is especially true for fast-food facilities. This should be given careful consideration given the heavy traffic volume at the Teasley Lane/Wind River Drive and Lillian B. Miller intersection. Vehicular traffic is of concern at this intersection and in the immediate area in general, given the close proximity of Sam Houston Elementary School on Teasley Lane. Many of the elementary aged students that attend this school must cross this busy intersection on their way to school. It is the Planning Division's determination that a drive-through fast-food facility will further exacerbate the identified traffic issue. Additional traffic may also increase the vehicular stacking along Teasley Lane and could potentially impede ingress/egress of the nearby fire station and EMS facility. 2. Sense of Place: Sense of Place is the characteristics of a location that make it readily recognizable as being unique and different from its surroundings and that provides a feeling of belonging to, or being identified with that particular place. Notwithstanding the existing non- residential uses, the area surrounding the subject site is truly not commercial in nature. As previously stated, there was a deliberate effort to keep the area looking residential as much as possible. This determination is based on the type of uses, and the architectural vernacular of the non-residential development in the vicinity. This is consistent with the purpose and intent of the NRMU zoning district. 3. Neighborhood Opposition to Existing and Additional Non-Residential Uses: It is our opinion that any additional proposed non-residential development in the area will face strong organized community opposition. While community sentiments are not the sole deciding factor of any proposed development, it is most certainly an important one and will be given serious consideration. A copy of the referenced letter is attached as Exhibit 10. The applicant, property owner and City as a whole should be cognizant that in the event the proposed Comprehensive Plan Amendment and subsequent rezoning were approved, a list of potential uses that are not currently permitted by-right or through the conditional use process (SUP) would result and cannot be curtailed. Compatibility concerns may arise with the surrounding residential subdivision(s) and institutional uses. City Council Staff Report Page 5 of 46 ] - I 3 19.43 PnI Case#: CAIO-0001 Findings of Fact 1. The request is for a Comprehensive Plan Amendment on approximate 1.22 acres located in the Neighborhood Residential Mixed Use (NRMU) zoning district. 2. The property has historically been vacant except for an access easement and drivewav to the south providing ingress 'egress to Sam Houston Elementary School, a Fire Station and South Branch Librarv. The subject property was part of an approved preliminary plat (PP02-0047). Several final plats have resulted from the overall parent tract including the (J'S (FP03-0028) at the corner of Teaslev Lane and Lillian Miller Parkicav and Denton Area Teachers Credit Union (DATCU) (FP03-00 l3) to the south of the (J'S. The (J'S (Z03-0007), DATCU (Z03-0013) and most recently, First State Bank (510- 0001) have received Specific Use Permits (SUPS) for drive-thru facilities. 3. The siubjectproperty is developed as a temporary drainage area and unplatted -l. The siublect site is within the Existing Land U.se f uture land iuse category which inchides existing residential rises and new infill compatibility. Nell' development should respond to existing development with compatible land uses patterns and design standards. The plan recommends that existing neighborhoods 11'ithin the city be vigorously protected and preserved Housing that is compatible with the existing density, neighborhood service and commercial land uses is allowed. 5. The NRMU zoning district is within the Neighborhood Residential group of zoning districts whose intent is to preserve and protect existing neighborhoods to ensure that an new development is compatible with the existing land uses, patterns and design standards. This district has seven zoning districts within its land use category. These include Neighborhood Residential I (NR-1), Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR-3), Neighborhood Residential 4 (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed ()se 12 (NRHU-12) and Neighborhood Residential Mixed Use (NRMU). 6 Adjacent zoning districts include Neighborhood Residential Mixed Use (NRMU) to the north, south, east and west of the subject site. 7. The subject site is not located within any special overlay districts or areas of concern. 8. There are no planned public improvements for potable water, sanitary sewer, and drainage or transportation facilities serving the siublect site beyond right-of--wav dedication and a detention pond off-site. 9. Teasley Lane (F.M. 2181) is classified as a Primary Major Arterial per the City's Mobilitv Plan ichich requires 135 feet of right of-icav. 10. The subject site has frontage along Teasley Lane (FM. 2181) with one shared driveway present on Teasley Lane. 11. An existing 8 inch potable water main along Teasley Lane will serve the site. 12. An existing 8 inch gravity sewer main along Teasley Lane will serve the site. City Council Staff Report Page 6 of 46 - 3 19.43 PnI Case#: CA10-0001 13. Anticipated water demand is approximately 13 gallons per minute ((;PM). 14. Anticipated ivasteirater demand is approximately 13 GPM. 13. Anticipated storm water demand is approximately 11 cubic feet per second ((FS). 16 Anticipated transportation demand is 1,290 vehicle trips per day. Development Review Committee Based upon the information provided by the applicant and a recent site visit, the Development Review Committee finds that with the recommended conditions the request IS INCONSISTENT with the surrounding land uses and general character of the area, IS INCOSISTENT with the Denton Plan, and IS INCOSISTENT with the Denton Development Code. The Development Review Committee recommends DENIAL of this comprehensive plan amendment. GENERAL NOTES A-OTE: Approval of this request shall not constitute a ivaiver or variance from any applicable development requirement unless specifically noted in the conditions of approval and consistent with the Denton Development Code. A-OTE: All written comments made in the application and subsequent submissions of information made during the application review process, which are on file with the Cio) of Denton, shall be considered to be binding upon the applicant, provided such comments are not at variance with the Denton Plan, Denton Development Code or other development regulations in effect at the time of development. City Council Staff Report Page 7 of 46 - 3 19.43 PnI Case#: CA10-0001 Section 35.3.3.B.2, Approval Criteria: The application shall address the impact of the proposed change on the following: a. The Goals and Objectives of the Denton Plan; The Denton Plan requires that distribution of various types of uses be present in well- located settings. The amendment would increase the number of potential uses permitted on site that would not otherwise be permitted within the surrounding area. The Community Mixed Use Centers designation is meant to create a cohesive activity center serving retail sales and service needs over a larger land area than 1.22 acres. b. The Future Land Use element of the Denton Plan; The land use designation amendment has an adverse impact on the Future Land Use Element of the Denton Plan. c. The balance of land uses in the Citv; All areas surrounding the site are designated Existing Land Use which states that new development should respond to existing development with compatible land uses patterns and design standards. The plan recommends that existing neighborhoods within the City be vigorously protected and preserved. The Community Mixed Use Centers designation is essentially two steps-up in intensity compared to the Existing Land Use and Neighborhood Centers designations. There is also an abundance of the Community Mixed Use Centers designation present to the south along Teasley Lane at the intersection of Teasley Lane and Hickory Creek Road which received a comprehensive plan amendment and rezoning approval in 2009. While this request does not create an overabundance of Community Mixed Use Centers within the City, the proposed location and interaction with existing uses and patterns is questionable. d. Adequate Public Facility elements of the Denton Plan and hole the proposed change hill affect the provision of the services anticipated in the Denton Plan; The availability of adequate public facilities will be evaluated during the platting process for potable water, wastewater, storm water drainage, transportation, electric service and solid waste service. DRC has not indicated that existing facilities will be unable to accommodate the proposal. The actions in Section 3533.A shall be further evaluated under the following factors to balance the interest in promoting the public health, safety, morals or general welfare against the right to the use of the property in issue. City Council Staff Report Page 8 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 Section 35.3.3.B.3, Further Approval Criteria: a. The existing land use pattern surrounding the property and the possible impact on existing or f uture development or uses that are in accordance with existing regulations; The compatibility of the existing surrounding uses of fire station, library, school, banks, drug store and the surrounding residential development to the list of potential uses introduced with Community Mixed Use Centers is uncertain. While some non-residential uses within the Existing Land Use category are permitted by-right or with limitations, these same uses would be wholly permitted without limitation in a Community Mixed Use Centers designation. The approval of a comprehensive plan amendment in an area this small may be the catalyst for future land use changes and rezones in this area. The proposed development may also have an impact on the continued development and functioning of the surrounding properties. b. The possible creation of an isolated district unrelated to adjacent and nearbv districts; The proposed land use district acts as an isolated district and is not related to adjacent future land use designations. c. The population density in order to facilitate the adequate provision of transportation, water, seuver, schools, parks, public convenience and other public requirements; The comprehensive plan amendment will allow an increase in commercial development floor area ratio. d The cost to the Cirv and other governmental entities in providing, improving, increasing or maintaining public utilities, schools, streets and other public safer; measures; It is indicated through the information provided by the applicant and verified by DRC, existing public facilities servicing the subject site are adequate. The proposed comprehensive plan amendment will not impact schools related to generating school aged children or other public safety measures such as generating an increase in population for the overall City. e. The possible impact on the environment, including but not limited to drainage, soil erosion and sedimentation, flooding, air qualirv and irater quantity; No environmental impacts were identified that required mitigation. There is currently an existing temporary detention area located on this property. A permanent detention pond is required to serve the overall Teasley Commons development in accordance with the City's Drainage Criteria Manual. The proposed detention pond will be required to be located within a drainage easement on this development's property or within a separate lot with a Property Owners' Agreement for all properties that the pond accommodates within this development. f. Whether there are substantial reasons why the property cannot be used in accordance with existing zoning or that proposed by the Future Land Use Map; and The subject site has a future land use designation of Existing Land Use. Restaurants are a permitted use under the existing zoning; however, the scale of the proposed development exceeds that allowed in the existing Future Land Use category. The current designation does restrict the type of commercial development possible at this location. City Council Staff Report Page 9 of 46 ] - I 3 19.43 PnI Case#: CAIO-0001 Without a more intense designation and rezone, the proposed use would not be permitted in the area. g. The action shall be made frith reasonable consideration of the character of the district and its peculiar suitability for particular uses, and with a view of conserving the value of buildings and encouraging the most appropriate use of land throughout the City. The subject site is vacant and surrounded by institutional, professional office, retail and residential uses. The original concept for this property within Teasley Commons was contemplated as largely office development. This has not happened and instead the property has been parceled off to end users one at a time without a concentrated focus. The intensity of uses allowed within Community Mixed Use Centers could far surpass the types and that allowed to surrounding development. Surrounding Zoning Designations and Current Land Use Activity: Northwest: North: Northeast: NRMU; Office development NRMU; DATCU and CVS NRMU; Vacant and Sam Houston Elementan- School West: East: NRMU: Vacant and Sam Houston NRMU: Office development Elementan- School Southwest: South: Southeast: NRMU: Vacant and Fire Station NRMU: Fire Station and South NRMU: North Star bank of Texas Branch Libran- Source: City ofDenton Geographical 11#6nnatior System and site visit by City staff Comprehensive Plan: A. Consistency with Goals, Objectives and Strategies The subject site is within the Existing Land Use future land use category which includes existing residential uses and new infill compatibility. New development should respond to existing development with compatible land uses patterns and design standards. The plan recommends that existing neighborhoods within the city be vigorously protected and preserved. Housing that is compatible with the existing density, neighborhood service and commercial land uses is allowed. "The purpose of the Community Mixed Use Centers is to provide the necessary shopping, services, recreation, employment and institutional facilities that are required and supported by the surrounding community." Community Mixed-Use Activity Centers are proposed to accommodate shopping, services, recreation, employment and institutional facilities that are required and supported by the surrounding community. A community activity center could contain uses such as a supermarket, drug store, specialty shop, service stations, one or more large places of worship, community park, midsize offices, high to moderate density housing and even elementary and middle schools. Based on the proposed future use of the site, the applicant would be filling a regional need, not wholly community oriented. The facility would attract persons from outside of the immediate area where there are currently only community oriented retail sales and services, professional service and office and institutional uses. The Existing Land Use future land use category surrounds the subject site to the north, south, east and west and is primarily developed. City Council Staff Report Page 10 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 B. Land use analysis The NRMU zoning district is within the Neighborhood Residential group of zoning districts whose intent is to preserve and protect existing neighborhoods to ensure that any new development is compatible with the existing land uses, patterns and design standards. This district has seven zoning districts within its land use category. These include Neighborhood Residential 1 (NR-1), Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR-3), Neighborhood Residential 4 (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12) and Neighborhood Residential Mixed Use (NRMU). If a comprehensive plan amendment were approved for the subject site, a rezoning to a compatible zoning district would also be required, either Community Mixed Use General (CM-G) or Community Mixed Use Employment (CM-E). These districts would allow many more intense uses that are not currently permitted. C. Future Land Use Allocation/Current Zoning District Allocation Subject Property Future land Use/Zoning allocation Change Based Upon 1.22 f acres Current Allocation in the City Request Existing Land Use 11,490.84 11,489.62 Community Mixed Use Centers 300.72 301.94 Source: City of'Dentolr Nearest Fire, and EMS Station Name of Station I I Approximate Distance From Fire/EMS Fire Station #6 Less than 1 mile Source: Cite ofDeritori (;IS, Fire Dej)artmerit, alid EAIS Water and Wastewater Demand and Capacity: A. Estimated Demand and Service Provider: Subject Property Estimated Im ract Analvsis 1.22 f acres Proposed Demand Adequate to Serve (Yes or No Permitted DensitA- (per CM-G) (per CM-G) Potable Water 15 Yes Consumption (GPM) Wastewater Generation (GPM) 13 Yes City Council Staff Report Page 11 of 46 - 3 19.43 PnI Case#: CA10-0001 B. Available Capacity: Water is available from an existing 8-inch main along Teasley Lane (east of the site). Per DDC Section 35.21.2, the applicant would have to extend a water main to the proposed west property line of the property being developed. Wastewater is available from an existing 8-inch main along Teasley Lane (east of the site). Per DDC Section 35.21.2, the applicant would have to extend a gravity wastewater main to the proposed west property line of the property being developed. C. CIP Planned Improvements: The only Water and Wastewater CIP Improvements currently planned in this area are the relocations of the water and wastewater mains along Teasley Lane, along the east side of the property. It is currently anticipated that this project will be designed in 2012 and constricted in 2013. However, the existing water and wastewater mains are adequate to serve this development. Roadways/Transportation Network: A. Estimated Demand: Subject Property Estimated Im pact Analysis 1.22 f acres Proposed Demand Adequate to Serve (Yes or No) Permitted Densit-v 79,714.8 sq. ft. Yes Average Annual 1 290 Yes Dailti- Trips (AADT) , PM Peak Hour Trips 187 Yes B. Available Capacity: Teasley Lane is a TxDOT roadway and has the capacity to accommodate this development. A right turn lane will be required along Teasley Lane to serve the development. A Traffic Impact Analysis (TIA) will also be required to determine any additional street improvement requirements. C. Roadway Conditions: Teasley Lane is in good condition and is also a TxDOT roadway. D. CIP Planned Improvements: There are no CIP improvements planned. Teasley Lane is a TxDOT right-of-way. Environmental Conditions: A. Surface Water: There is no surface water on site. City Council Staff Report Page 12 of 46 - 3 19.43 PnI Case#: CAIO-0001 B. Environmentally Sensitive Areas: There are no environmentally sensitive areas on site. Wells (Public/Private): There are no wells, public or private on site. Any future development would be served by City potable water. Airports: The subject site is not located within the Denton Municipal Airport's ACLUD zones. Electric: Any Denton Municipal Electric (DME) facilities will be placed within on-site easements to be determined and reviewed during the platting process. Comments from other Departments: None. City Council Staff Report Page 13 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 Exhibit 1 Site Location/Aerial Map r _ I M Wpm 4 m i Subject Site .47 ZgF ~ W A M 9 r i 4 1 -1 ~ Legend McDonald's m^^^^^^^^^^ - I I . III I.- 0 ;gar -1' 0 65 130 2(50 390 City Council Staff Report Page 14 of 46 1 - 1 3 19.43 PI I Case#: CA10-0001 Exhibit 2 Zoning Map - , I NR 2 E r,r,,i r; c ,l N r I i I UR-3 I I 1.1 I v t rt- i NRMU L L, NRMU T I TE4-iLEY L - ; - a r y , L1 ~ " _ _ II NRMU - -Er N -2 ~ NRMU dl,a > E--- I _,.i.. L.. ~ . y r-- 1 s I_ ~ f ~~.r rnu, ~ kr - Subject Site NRMU - } - I f - MR}3 r " riJ LI EY" I - ~ I ' ~ T~lildi - --J I " i [ 1` r I S NRMU ~c NRMU`'' r NR-2 I Y N1~-4 r- NR-3 CA10-0001 McDo a Ld `s m ol c on lds Centerline 0 parcels 0 170 340 660 1,020 1,360 Beet City Council Staff Report Page 15 of 46 1 I 3 19:43 PI I Case#: CA10-0001 Exhibit 3 Existing Future Land Use Map ~i ~J L-LJ ~isti~q ya6d Use T I r~a,r;LEY i I i I s L 9 Subject Site I Legend mcclonalds Centerline parcels CAI 0-0001 McDonald`s 170 340 N A 680 1,020 1,360 Feet City Council Staff Report Page 16 of 46 ] 1 3 19:43 PM Case#: CA10-0001 Exhibit 4 Proposed Future Land Use Map Legend mcdonalds Centerline 0 parcels cA10-0001 Mc©onald's 0 130 260 hT 520 780 1,040 Feet City Council Staff Report Page 17 of 46 ] - I 3 19.43 Pn4 Case#: CA10-0001 W1 ~i ~i ~i O W AAISVAi w II W. J 1 v L ey I CL CL 11 l Y L L LL f 1 i L # ~ ~ ~ I ~ tea ' I l F fi J i ~ v U) UJ x C QL ~,G'Ei-SIT- I ,G'L t' w. I # z, ~ ~ n m f V V , I 94, r os ..1 N J c C, cr b L CD Li U3 0 EL C6 LU LIJ a :r• I uJUJ II II IJ,I-~ - ~-•II _.w 2C C) 0 oc rl K cz a r O O O O r r~ V O ~ 0.. U U Exhibit 6 Letter from the Applicant I.N(T'IN1:1'.RING July 02, 2010 Planning and Development Department City of Denton 221 N. Elm Street Denton, Tx 76201 Comprehensi rt. Platt ARrnerdmc-it ki vl t,r Umr ittee McDonald'r CorpCFation is proposing try build a 11,790 spuaru feat res~aurant at the M %'C of the mntrr ^(tian of lraslCy lane (-M2181) and Sunduo)n Nvd. (hn: C ui€riing shall t hi ill in fnmpiianrw with all current Iritematjonal Fir, and Ijilding Codes. The splitdrlva-thru is a MCF)onEfld'S stand'jfd configuration which facilitates the smooth flaw of traffic arourid the buiidinq and dri%e thrta area igrtrficarttly redr.icing parking lut traffic r_onyustion_ Thp McDonald's will be constJU(Ai-,d in a singlc phase. Construction indulles a paved parking smfoce and all utilities assnriated kvith a re- aurant evel[sprnent. If this CPA is app[ovc,d, construction ariticipotEr to 'uryin in about a year. Currently the proposed location is ~,,acant land V,lititout StrLjr tunes and s~~r~rTs d,, d toy rpcari.rv drainage dptention pond for the s'urroundinr: dr^vclopmPnts. 5rnrm water sheds south ,ward tram tha adjdctr,t development to the north and collected withln [hie deLtntlun pond. The prcrpcrt}, j4 t irrently zoned Nridhborhnod Residential Mixed H5v NPMU i ti,,hirh will not support a restaiurdnt usage, The proposed development must be re -orcd CM C (Community Mixed Use General]. Thy: proposed `+-F)onald's de,,relcprrtent will drain wc_s ward to an uffs+te detontion pored tlesic}nr Ci for M( L)onald's run-a f and the s.~rroundirg d velopment's storm water per existinn, conditions. Tire storsT~ water wllI trrost likely bu cow qed by means of an underground storm sy tcr°~ to the c,ffi5i'~ (lelention pond_ C'ity' wdt-r and sewer b,dill be brought to the proposed braildinq from acjirort city lines and coordinated with city entities accordingly. Adjacent city water and sewer rnai t sizes arr. adequate for the propcispd McDonald's development. %'Jatcr and sewer shall he cxtc?ndrd to th+, wdtit prop(-,rty~ line of the subject trac-t per City [)PC c'oniniunts to so~ti~lcc tfrc adjacent trrac'L to the weSJ. Franef+ise utilr;des such as eiect°ic, phone dnd gas will be brnUCiht to the building ir,d ccordlnated with the apprnpri :I.-y rompanie-s prior to the begirrning of building construction. `,I(Dornald's shall lnitiat• Ind noise centrol duririg dll phases of const,iuctian. 5itw liyhtin~, landscaping, and screening shall by compliant to all current city standards stL tnrLh within the, O- L" of Denton Development Code, Tt . ' iF i, Lance ilof`nian, RE. . City Council Staff Report Page 19 of 46 3 19.43 PnI Case#: CA10-0001 Exhibit 7 Neighborhood Meeting Summary A neighborhood meeting was held prior to submittal of the comprehensive plan amendment on June 2, 2010 at 7 PM in the Sam Houston Elementary School cafeteria. There were approximately three residents in attendance. Concerns included: resale value of adjacent properties next to a McDonald's, bottleneck at school and traffic associated with school, hours of operation, drainage conditions (existing and future), if the restaurant would be franchisee operated and overhead lighting. The applicant declined to have a second meeting after the amendment request was submitted. City Council Staff Report Page 20 of 46 - 3 19.43 PnI Case#: CA10-0001 Exhibit 8 Site Photos Ctit FAC111_' tl1C Slt(2 Facing SoutIlWest tovvL-1CCIS the 111)],11A City Council Staff Report Page 21 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 wa. I111)"1 III J L, l 1)I I01 ~ s; I lj' l North facing the site , , (Ql lJ ti} 1)91 Northeast facing the site City Council Staff Report Page 22 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 Exhibit 9 Notice of Public Hearing Responses Within 200 feet: NOTICE of PUBLIC HEARING CAI 0-0001 The Planning and Zoning Commission of the City of Denton will hold a public hearing on October 6, 2010 and consider making a recommendation to City Council, regarding a Comprehensive Plan Amendment from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (FM. 2181). The public hearing will start at 6:30 p.m. in the City Council Chambers of City Hall located at 215 E. McKinney Street, Denton, Texas. Because you own property within two hundred (200) feet of the subject property, the Planning and Zoning Commission would like to hear how you feel about this request and invites you to attend the public hearing. Please, in order for your opinion to be taken into account, return this form with your comments prior to the date of the public hearing. (This in no way prohibits you from attending and participating in the public hearing.) You may fax it to the number located at the bottom or mail it to the address below or drop it off in-person: Planning and Development Department Attn: Erica Marohnic, Project Manager 221 N. Elm ST Denton, Texas 76201 These forms are used to calculate the percentage of landowners that support and oppose the request. The Commission is informed of the percent of responses in support and in opposition. Please circle one: In :favor of reques Neutral to request Opposed to request Reasons for p osi ion: 7 Signature: c~QT1Fs i8ri>< F 1i x~ Printed Name: RE ,c ,U 7- Det_ Ev P Mailing Address: x/oo A ,4.PRv e c dc,' City, State Zip: ` ).rnTori, 1-7- 764,01 Telephone Number; _ S 4a 0 Physical Address of Property within 200 feet: 3301 SC£E - 76 CITY OF DENTON, TEXAS CITY HALL WEST • DENTON, TEXAS 76201 940.349.8541 (F) 940.349.7707 200' P&Z Notice City Council Staff Report Page 23 of 46 - 3 19.43 PnI Case#: CA10-0001 NOTICE OF PUBLIC HEARING ca10-0001 The Planning and Zoning Commission of the City of Denton will hold a public hearing on October 6, 2010 and consider making a recommendation to City Council, regarding a Comprehensive Plan Amendment from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). The public hearing will start at 6:30 p.m. in the City Council Chambers of City Hall located at 215 E. McKinney Street, Denton, Texas. Because you own property within two hundred (200) feet of the subject property, the Planning and Zoning Commission would like to hear how you feel about this request and invites you to attend the public hearing. Please, in order for your opinion to be taken into account, return this form with your comments prior to the date of the public hearing. (This in no way prohibits you from attending and participating in the public hearing.) You may fax it to the number located at the bottom or mail it to the address below or drop it off in-person: Planning and Development Department Attn: Erica Marohnic, Project Manager 221 N. Elm ST Denton, Texas 76201 These forms are used to calculate the percentage of landowners that support and oppose the request. The Commission is informed of the percent of responses in support and in opposition. Please circle one: In favor of request Neutral to request Opposed to request Reasons for Opposition: Signature: Printed Name: `4G, r Mailing Address: 2_1i25- C'14 5">'Vle /06' City, State Zip: e g e'rn l- Y "7 G .4 / o Telephone Number: 1) c 0 4 3 Physical Address of Property within 200 feet: CITY OF DENTON, TEXAS CITY HALL WEST • DENTON, TEXAS 76201 • 940.349.8541 • (F) 940.349.7707 200' P&Z Notice City Council Staff Report Page 24 of 46 3 19.43 PnI Case#: CA10-0001 NOTICE OF PUBLIC HEARING CA10-0009 The Planning and Zoning Commission of the City of Denton will hold a public hearing on October 6, 2010 and consider making a recommendation to City Council, regarding a Comprehensive Plan Amendment from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). The public hearing will start at 6:30 p.m. in the City Council Chambers of City Hatt-:located-at15 E. McKinney Street, Denton, Texas. Because you own property within two hundred (200) feet 5f the subject property, the Planning and Zoning Commission would like to hear how you feet about this request and invites you to attend the public hearing. Please, in order for your opinion to be taken into account, return this form with your comments prior to the date of the public hearing. (This in no way prohibits you from attending and participating in the public hearing.) You may fax it to the number located at the bottom or mail it to the address below or drop it off in-person: Planning and Development Department Attn: Erica Marohnic, Project Manager 221 N. Elm ST Denton, Texas 76201 These forms are used to calculate the percentage of landowners that support and oppose the request. The Commission is informed of the percent of responses in support and in opposition. Please circle one: In favor of request Neutral to request Opposed to request . r-0ppositt n: ReasonsJ _fo ~ Signature: Printed Name: t~tz ~~~.t'Z (ti2:tt i t~~ xcnns"tt€ Mailing Address: '72.1 e.'J tlvC fJ City, State Zip: -~-y Telephone Number: rat - -iou3 l Physical Address of Property within 200 feet: 'a z-, "zt I i `c ' CITY OF DENTON, TEXAS CITY HALL WEST • DENTON, TEXAS 76201 • 940.349.8541 (F) 940.349.7707 200' P&Z Notice City Council Staff Report Page 25 of 46 - 3 19.43 PnI Case#: CA10-0001 3403495443 FIRST STATE BANK a 02-40-57 p.m_ 10.05-2610 1 A City Council Staff Report Page 26 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 Outside 200 feet: Marohnic, Erica L. From: Lauren [lew_762@yahoo.com] Sent: (Monday, September 27, 2010 127 PM To: (Marohnic, Erica L. Subject: OPPOSED to Plan Amendment south of Teasley and Lillian Miller Attachments: CA10-0001 PZ 200 FT Notice.doc Hi Erica. I'm responding to the public hearing announcement (CAI 0-0001) regarding a Comprehensive Plan Amendment from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land at the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). I'm opposed to the amendment. Sincerely, Lauren Womack 716 Ponder St Denton. TX 76201 940.383.4689 Lauren Womack 716 Ponder St Denton. TX 76201 940.383.4689 City Council Staff Report Page 27 of 46 - 3 19.43 PnI Case#: CAIO-0001 From: Anyah Martinez [--._ilto:anyahr,artinezCcyahoo.com] Sent: Tuesday, October 05, 2010 1:18 PF, To: Appah, Nana K. Cc: Watts, Chris Subject: Notice of Hearing for McDonald's Hi Erica, plan on attending the meeting tomorrow night, but I thought I'd send you my thoughts ahead of time in case I can't make it, or there is no time for me to speak. Thank you for your time. -Anyah Martinez anyah.scentsy. us City Council Staff Report Page 28 of 46 - 3 19.43 PnI Case#: CA10-0001 In opposition to the amendment proposing a McDonald's on Teasley Lane As a homeowner in the Indian Ridge Subdivision, I strongly oppose the proposal to build a McDonald's on the lot between the South Branch and the DATCU on Teasley Lane. My home sits approximately 1000 feet from the proposed location. There are several reasons I do not approve of this. 1. The idea of a fast food drive through restaurant sharing a driveway with the South Branch Library, Fire Station #6 and the bus lane for Sam Houston Elementary School is reckless. Public service vehicles, library and fire station patrons, and numerous children and parents deserve their own outlet onto Teasley Lane. 2. The outlet onto Teasley from the Library/Fire Station/Bus lane is already difficult to navigate. There is no room for a traffic signal. The traffic from the proposed restaurant would no doubt add to the congestion, creating a very dangerous intersection. 3. The distraction of a busy fast food establishment in plain sight of the playground and athletic fields at Sam Houston Elementary School, and the study areas at the Library, is not fair to our children and educators. 4. Neither the smell of grease, nor the potential for litter in my neighborhood, my children's school, or my local library branch are attractive to me. The light pollution isn't attractive either. 5. Research has shown that additives in fast foods sold at establishments such as McDonald's are manufactured for the sole purpose of addiction. These additives, first detected by taste buds, release gasses in foods that trigger your olfactory glands to approve of the taste. Once exposed to these gasses your brain recognizes them and craves them. Some alternative locations: Unicorn Lake, near Cinemark or other retail'; the former Tia's or Red Lobster on Lillian Miller; Denton Crossing, which is better suited for this type of business. Thank you for your time! Anyah Martinez 708 Smokerise Circle Denton, Texas 76205 940-595-4001 Stay at home mom, homemaker City Council Staff Report Page 29 of 46 - 3 19.43 PnI Case#: CA10-0001 OCT 05 2020 6:5BPM HP LRSERJET 3~U0 p.l City Council Staff Report Page 30 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 s 1 s y ti~.y.. 4.:11% _-ii.,• ..i 5... f._ i ..~e 1--rh eX 1G'x i. ..v-Io . ti'xn' l„ il-k 'o-~rlt~r7 1.61 .Sr-. il^:t [ xk_k w a ♦ ~ ~~r'ir r ~X .:1 rl~ i .4R"~.f .w w1 1 r it- . 7,r t / . ~v'S1. rr- r iGr'~it} ~4. l:'. '4"/•.K rfv,. r ' . . f 3.11 - ~i "i% . 'l c rf S : . '-'i I,:,;" City Council Staff Report Page 31 of 46 - 3 19.43 PM Case#: CA10-0001 NOTICE OF PUBLIC HEARING CA10-0001 The Planning and Zoning Commission of the City of Denton will hold a public hearing on October 6, 2010 and consider making a recommendation to City Council, regarding Comprehensive Plan of Amendment from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). The public hearing will start at 6.30 p.m. in the City Council Chambers of City Ball located at 215 E. McKinney Street, Denton, Texas. Because you own property within two hundred (200) feet of the subject property, the Planning and Zoning Commission would like to hear how you feel about this request and invites you to attend the public hearing. Please, in order for your opinion to be taken into no way account, return this form with your comments prior to the date of the public may ring, it( his i number fax to the prohibits you from attending and participating in the public hearing.) You located at the bottom or mail it to the address below or drop it off in-person: Planning and Development Department Attn: Erica Marohnic, Project Manager 221 N. Elm ST Denton, Texas 76201 These forms are used to calculate the percentage of landowners that support and oppose the request. The Commission is informed of the percent of responses in support and in opposition, In favor of request Reasons for opposition: Please circle one, Neutral to request Opposed to request ~a' .1 Signature: .t` „-J v L& t -vim Printed Name Mailing Address D' r 15 e. City, State Zip: D 0- Telephone Num r: 9110 -921 ~-7 (~e 1 Physical Address of Property within 200 feet: -et 4u,'1 CITY OF DENTON, TEXAS CITY HALL WEST • DENTON, TEXAS 76201 • 940.349.8541 • (F) 940.349,7707 zoo, p&Z Notice City Council Staff Report Page 32 of 46 - 3 19.43 PnI Case#: CA10-0001 34 7~~,5lK~ Let 3 44,0 L City Council Staff Report Page 33 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 NOTICE OF PUBLIC HEARING CAI O-0001 The Planning and Zoning Commission of the City of Denton will hold a public hearing on October 6, 2010 and consider making a recommendation to City Council, regarding a Comprehensive Plan Amendme+nt from Existing Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller Parkway, on the west side of Teasley Lane (F.M. 2181). The public hearing will start at 6:30 p.m. in the City Council Chambers of City Hall located at 215 E. McKinney Street, Denton, Texas. Because you own property within two hundred (200) feet of the subject property, the Planning and Zoning Commission would like to hear how you feel about this request and invites you to attend the public hearing. Please, in order for your opinion to be taken into account, return this form with your comments prior to the date of the public hearing. (This in no way prohibits you from attending and participating in the public hearing.) You may fax it to the number located at the bottom or mail it to the address below or drop it off in-person: Planning and Development Department Attn: Erica Marohnic, Project Manager 221 N. Elm ST Denton, Texas 76201 These forms are used to calculate the percentage of landowners that support and oppose the request. The Commission is informed of the percent of responses in support and in opposition. Please circle one: f In favor of request Neutral to request Opposed to re nest Reasons for Opposition: Traffic at the interception of Sundown and Teasley horrible. Turning onto or oft Teasley for the be innin or at the end of a school day is treacherous. It is almost impossible to safely cross Teasley to go to the library from. Sundown, It is almost alwa s necessary to go around so that a right turn can be made into the library and leaving, one must almost always turn right onto Teasley, and turn left onto Ranch man to et into Sundown Ranch. IF a business as bus as McDonald's must be allowed to be built on that site a TRAFFIC LIGHT will be a MUST HAVE for the safety of all citizens especially children. Most drivers have not slowed from the 50 MPH speed limit further south on Teasley. Denton has many other available sites in the general vicinity, which would be safer and would not Pri ted dme: Joanne B. Wineinger Mai ing'Address: 2113 Spur Ct. City, State Zip: Denton, TX 76210 Telephone Number: 940 271-4816 Physical Address of Property within 200 feet: Spur Ct approx. 800-900 feet away CITY OF DENTIN, TEXAS CITY MALL WEST • DENTON, TEXAS 76201 • 940349.$541 - (E) 940.349.7707 200 P&Z Notice City Council Staff Report Page 34 of 46 - 3 19.43 PnI Case#: CA10-0001 Russell, Charles F. From: Lawson, Sandra J Sent: Tuesday, October 05, 2010 8:59 AM To: Russell, Charles F- CC: Coles, Jennifer Subject: FW: Proposed McDonald's on Teasley in South Denton fyi From: Rosanne Ciccia [maiito:RCiccia@collin.edu] Sent: Tuesday, October 05, 2010 8:34 AM To: Planning and Zoning Mail Subject: Proposed McDonald's on Teasley In South Denton PU Committee Members, I am writing to you about the proposed McDonald's on Teasley and Wlndriver In South Denton. In this day, when obesity is rampant and a great health concern for our children, this is the last thing we need around the corner from Sam Houston Elementary school and next door to the public library. Many children walk home every day and walk right by the proposed area for this store. We do not need to add an easily accessible, unhealthy option to their lives. Second concern, of course, is the increase in traffic and noise at all times of day and night, and potential safety hazardous (children crossing a busy driveway, possible robberies, etc). I know your committee is meeting on Wed evening and I ask that you do not approve this request by McDonald's to place a restaurant in our residential neighborhood. Thank you for listening to my concerns, Rosanne Ciccia Rosanne M. Ciccla, Ph.D. Director SCC Science Labs Collin College 2800 E. Spring Creek Pkwy H111 Piano, TX 75074 (972) 881-5988 (972) 881-5519 (fax) R-.tS.cia@Coilin.edu City Council Staff Report Page 35 of 46 - 3 19.43 PnI Case#: CA10-0001 Exhibit 10 Letter to Elk River 4, f D ENT ON 221.,N-. EL4I.STREETDE'S°TON TEVAS *(.9 6) 349-8541 "FAX-046) 349-770- PLA 4 NING S DE G ELOPME 1'T DIUSION Rik 10.. 2009 Elk River Lavestlnents 3311 N. H-~vv 35 State 140 Denton. Texas 76207 Attn: Jeremv Sain, P.E. Good Aftemoon Jeremy: It is my miderstanding that you are desirous of developing the site in the vicinity of Teasley Lane (acliacent to the existing CVS) with a 'McDonald fast-food restaurant with a drive- throuab facility. However, the cirrrerlt Neighborhood Residential Mixed-Use {NR-NN) zoning of the site limits a restaurant or private club in the NRI\MT district to "sit dovni only. and no drive IT service permitted.- Tlierefcre, your proposed drive through restatrantt is not pen pitted within the NPA U district. As .such. you have expressed interest in a DDC Comprehensive Plan text amendment that would perutit the development. Consistent with what was cone ntulicated to you via Ron Mengtlita. the Planning Division will not pursue a city initiate text amertchnent in this regard clue to its city--wide impact. There are also potential unintended consequences that are uualrlown at this time clue to a lack of a detailed study and data collection. I further uuidel.stand that You also inquired about a possible rezoning of the property to permit a drive-tlroitgli use in association -,vith a restaurant. Relative to this rezoning inquest, I offer that you consider the following: Spot Zoning: The zoning of the subject site could be considered "Spot Zoning." Spot zoning is a change in zoning district botutdaiies variances. and other amendments to the zoning code and use and area neaps that violate somid principles of zoning and are characterized bN- the followrtt,: (a) Individuals seek to have property rezoned for their private use_ "Dedicated to Quality Service" www.cityofdenton.com City Council Staff Report Page 36 of 46 - 3 19.43 Pn4 Case#: CA10-0001 (b) Usually the amount of land involved is small and limited to one or two oivllershrps' (c) The proposed rezoning -%vould give privileges not generally extended to property similarly located in the area: or.. (d) applications usually show little or no evidence of, or interest in, consideration of the general welfare of the public. the effect oil slurou nding property (including :adequate buffers), whether uses permitted ill the classification sought are appropriate in the locations proposed. of coliforniity- to the comprehensive plan or to comprehensive planning principles (including alterations to the population density patterns and increase of load on utilities. schools, and traffic. other public facilities. etc.). Specific to the subject site, "spot zoning" could result from the rezoning of the suljject site to permit a use which differs measurably from the existing zoning/land- rises surrotuiding this area. Rezoning should be in the general public's interest and serve to protect the health, safety, welfare. or morals of the conuntutity. Based on the architectural details of the uses in the inuilediate area. it appears that there ivas a deliberate effort to beep the area looking icsidential as much as possible, and to limit the surrounding uses to primarily low-impact office-type uses, with the exception to the existing CVS store. It may also be noteworthy that the connnu pity has expressed conitinued vexatious against this Ilse. 2. Traffic Impact: Mile hole of all development types, thrive-through facilities tend to generate higher than nornnal vehicular traffic. This is especially tme for fast-food facilities. This should be given careful consideration given the heavy traffic volume at the Teasley Laiie.NVind River Drive and Lillian B. Miller intersection. Vehicular traffic is of concern at this intersection and in the immediate area in general, given the close proximity of Sara Houston Elementary School on Teasley Lane. Many of the eleiilentarv aged students that attend this school must cross this busy intersection oil their way to school. It is the Plarniing Division's determination that a drive-through fast-food facility will further exacerbate the identified traffic issue. Additional traffic may also increase the vehicular stacking along Teasley Lan and could potentially impede ingressregress of the nearby fire station and EMS facility. 3.. Sense of Place:. Sense of Place is the characteristics of a location that make it readily rec.o?liizable as being tuiique and different from its sti roundi ius and that provides a feeling of belonging to, or tieing identI led with that particular place. Not-,vithstariding the existing lion-residential uses, the area surroluiding the subaject site is trurly not connnercial in nature. As previously stated. there was a celiberate effort to keep the area looking residential as much as possible. This deteiniiin ntioll is based oil the tyre of uses, and the architectural -,-erriacular of the non-residential development in the vicinity. This is consistent w-ith the ptupose and intent of the NR-\,,I ° zoning district. City Council Staff Report Page 37 of 46 - 3 19.43 Pn4 Case#: CA10-0001 4. Neighborhood Opposition to Existing and Additional \en-Residential Uses: It is our opinion that any additional proposed non-residential development in the area will face strong organized core mmuty opposition. -VU le conurrrurity sentiments are not the sole deciding factor of any proposed development. it is most certainly an important one and will be given serious consideration. I do not ill any ray represent that the above be considered as art all inclusive list. however, due consideration should be given. Ill addition, given the above, the Plarnring Division will most likely be inclined to reconunend denial of any rezoning request that would result in air increase in density or intensity at this particular location. Nomitlrstanding, you do have the right to sulrnrit a rezoning application that will he processed ilia timely manner. In addition. I azn more than willing to schedule a meeting so you can consult with the Cite of Denton Economic Development Department Director and the Plamritra Department R-tanager to find a more suitable location where a fast-food restaurant with a drive-throu0r facility nrav be located. If you have any questions regarding the matters stated herein, please do not hesitate to call me 940-349-8304. Sincerely. Marl A. Cuuurin-bassi.. MCP, C-M City Council Staff Report Page 38 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 Exhibit 11 October b, 2010 P&Z Minutes MINUTES CITY OF DENTON PLANNING AND ZONING October 6, 2010 After determining that a quolum was present, the Planning and Zoning Conunission convened a Work Session on Wednesday, October 5, 2010, in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas. 9 PRESENT: Chairman Walter Eagleton, Commissioners: Brian Bentley, Jean Schaake, Jay 10 Thomas, Patrice Lyke and John Ryan. 11 12 ABSENT: Thom Reece 13 14 STAFF: Fred Greene, Mark Cunningham, Jerry Drake, Chuck Ru.sse'l'l, Jennifer Coles, Ron 15 Menguita, Erica Marohnic, P.S. Arora, Katia Boykin and Cindy Jackson. 16 17 WORK SESSION 18 19 Eagleton opened the work session at 5:37 p.m. 20 1. Clarification of agenda items listed in the Regular Session agenda for this meeting, and. discussion of issues not briefed in the written backup materials. 21 22 Ryan requested. clarification on Public Hearing Item 4B in a reference to the backup material of 23 an LII restriction defined in 35.5.8 Limitations of the Denton Development Code (DDC) as 24 limiting restaurants "to sit down only, and no drive up service permitted." Eagleton stated that he 25 thought that referred to restaurants like Sonic, where there is not a drive-thiti, rather customer's 26 drive up and are served in their vehicles. Cunningham stated that "drive up" or "drive thrn°' both 27 meet the spirit and intent of the limitation as they are both deemed heavy traffic generators. 28 29 Ryan requested that next time staff reviews changing language in the DDC to add clarification 30 for drive up versus drive-thru service. 31 2. Receive a report, hold. a discussion, and give staff direction concerning proposed. amendments to the Denton Development Code, including Subchapter 13, regarding tree preservation and mitigation. (DCA08-0006, Tree Code Amendments, Chuck Russell) 32 33 Russell provided an update on the Tree Code Sub Committee meetings and the Tree Canopy 34 Project. Russell highlighted the items identified by this Commission from 2008-2010 in relation 35 to the tree code as: agricultural exemptions, building pad mitigation, secondary trees, incentives 36 for preservation, iron floor (minimum preservation requirements), commonality with 37 comparative cities tree codes, caliper inch versus percentage of canopy coverage, tree surveys 38 and the creation of a Tree Fund Committee. 39 40 In April 2010 the Commission directed staff to create a Tree Code Subcommittee to begin work 41 on the identified items. The Tree Code Subcommittee, consisting of Lyke, Thomas and Bentley, 42 began meeting in May 2010 on an almost weekly basis and determined. the following action 43 items: a major philosophical shift is needed in the Tree Code, a need for a definition of the true 44 value of trees, the Tree Code must be simple, Landscape and Criteria Manuals must be updated, City Council Staff Report Page 39 of 46 - 3 19.43 PnI Case#: CA10-0001 2 On roll call vote: Commissioner Ryan "aye", Commissioner Thomas "aye", Commissioner 3 Schaake "aye", Chairman Eagleton "aye", Commissioner Bentley "aye", and Commissioner 4 Lyke "aye". Motion carried unanimously. (6-0). 5 4. PUBLIC HEARINGS: 6 7 A. Hold a public hearing; and consider malting a recommendation to the City Council regarding a rezoning from a Neighborhood Residential 3 (NR-3) zoning district to a Neighborhood Residential Mixed Use 12 (NRMU-12) zoning district with a restrictive overlay on approximately 6.836 acres. The property is located at the northeast corner of Glenwood Lane and East University Drive (U. S. 380). (Z10-0007, 1411 East University Drive, Erica Marohnic) On September 8, 2010, this item was continued to a date certain of October- 6, 2010. The applicant has requested that this item be continued again until October 20, 2010 8 9 Commissioner Thomas motioned, Commissioner Lyke seconded to table this item to a date 10 certain of October 20, 2010. On roll call vote: 11 12 On roll call vote: Commissioner Ryan "aye", Commissioner Thomas "aye", Commissioner 13 Schaake "aye", Chairman Eagleton "aye", Commissioner Bentley "aye", and Commissioner 14 Lyke "aye". Motion carried unanimously. (6-0). 15 B. Hold a public hearing and. consider makinz a recommendation to City Council regarding a Comprehensive Plan Amendment from Existina Land Use to Community Mixed Use Centers on approximately 1.22 acres of land. The subject property is located approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller- Parkway, on the west side of Teasley Lane (F.M. 2181). (CAI 0-0001, McDonalds, Erica Marohnic) 16 17 Marohnic presented this item. Marohnic stated that this request is from McDonalds to be located 18 approximately 375 feet south of the intersection of Teasley Lane (F.M. 2181) and Lillian Miller 19 Parkway, on the west side of Teasley Lane (F.M. 2181). The area is zoned Neighborhood 20 Residential Mixed Use (NRMLT). The applicant desires to construct and operate a 5,400 sq. ft. 21 restaurant with drive-through. The NRMU zoning district limits restaurants to 4,000 sq. ft. and 22 sit-down only. The applicant would need. to rezone the property to a more intense zoning district 23 to allow the anticipated use however; a comprehensive plan amendment is required before or in 24 concert with the rezoning. Marohnic presented site photos and an unbinding site plan as well as 25 the future use designation for this area. Marohnic stated that this request would create an 26 isolated district unrelated. to adjacent uses and nearby districts and staff feels that there could be 27 some unintended consequences if the property is not developed as proposed. 28 29 Marohnic stated that 9 notices were sent to property owners within 200' of the subject site and 30 30 courtesy notices were sent to property owners within 500' of the subject site. At the time of 31 the presentation 4 notices were received in favor, none in opposition and none were neutral to the 32 request. In the work session Marohnic distributed additional emails and faxes that were received 33 in relation to this project. None of those distributed were in the 500' radius of the subject site 34 and were not calculated to determine percentage of approval. The comments were distributed to 35 make the Commission aware of concerns by area residents. The Development Review 36 Committee recommends denial of this request. The applicant was present to speak. 4 City Council Staff Report Page 40 of 46 3 19.43 PnI Case#: CA10-0001 1 2 John P. Christon, Applicant 3 4 Christon stated that sunou.nding uses include retails sales and more specifically a restaurant to 5 show that a restaurant is an allowable use in this district. Christon presented information to the 6 Commission regarding lot coverage, landscaping, lighting and property access. 7 8 Schaake stated that Christon noted that a restaurant is among adjacent uses, however, City Staff 9 stated that although restaurants are allowed they are limited to sit-down only. Schaake also 10 questioned if the square footage of the proposed restaurant was not in violation of the restriction 11 to keep square footage to a maximum of 4,004 square feet. Christon stated that the square 12 footage provided is erroneous. The correct square footage is 4,900 square feet, not 5,900 square 13 feet. The traditional building without a play place is 3,900 square feet. The play place area can 14 be removed to keep it under the maximum square footage, but from past experience locations 15 near neighborhoods are disappointed when there is not a play place. Schaake stated the only 16 other criteria is that it is sit down only and that is not the case. 17 18 Eagleton opened the Public Hearing. 19 20 Speaking in favor of the request: 21 22 Sparky Pearson, 309 Mosswood Drive. 23 24 Spoke in opposition of the request: 25 26 David Lebsack, 2605 Clubhouse Drive 27 Michael Tav are, 1135 Oakhurst Street 28 Harry Phillips, 1138 Oakhurst Street 29 Sherilen Scoggins, 1150 Oakhurst Street 30 Joseph laia, 1132 Bent Oaks 31 Cynthia Beard, 2100 Loon Lake Road 32 Anyah Martinez, 708 Smokerise Circle 33 34 Provided cards in opposition, but did not wish to speak: 35 36 Dale Jorgensen, 1135 Bent Oaks Drive 37 Mary Metzgar, 2417 Natchez Trace 38 Steven Ferde, 2417 Natchez Trace 39 Jennifer Carpenter, 3006 Manor N Ct 40 Jay Seiler, 1140 Bent Oaks 41 Travis Grigg, 2804 Pinto Drive 42 43 Additional speakers in favor of request: 44 45 Marty Rivers, 2000 Whitefish Court 46 47 John P. Christon, Applicant, spoke in rebuttal. Christon addressed some of the concerns noted 48 by residents in opposition to the request. Christon stated that McDonald's is willing to do a 49 Traffic Control Plan including a deceleration lane, the fence will be along 2 sides of the property 50 and either be wood or masonry. Christon continued that McDonalds is willing to be a good 5 City Council Staff Report Page 41 of 46 ] - I 3 19.43 PnI Case#: CA10-0001 I neighbor and get third party residents in the area involved. Christon also discussed issues related 2 to lighting and drainage. 3 4 There was a limited discussion with the Commission regarding parking spaces and access. 5 Eagleton closed the public hearing. 6 7 Drake stated that the Commission has heard comments from the public and applicant, but wanted 8 to re-iterate that this request is not whether to allow or not allow a McDonald's, as there no 9 guarantee a McDonald's would go in there. This request is for a Comprehensive Plan 10 Amendment to allow a zoning change in that area. 11 12 Commissioner Ryan motioned, Commissioner Lyke seconded to recommend denial for this case. 13 On roll call vote: 14 15 On roll call vote: Commissioner Ryan "aye", Commissioner Thomas "aye", Commissioner 16 Schaake "aye", Chairman Eagleton "aye", Commissioner Bentley "aye", and Commissioner 17 Lyke "aye". Motion carried unanimously. (6-0). 18 5. FUTURE AGENDA ITEMS: Under Section 551.042 of the Texas Oven Mectinas Act, respond to inquiries from the Planning and. Zoning Commission or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting. 19 20 Ryan requested that staff look at a clarification of the L- l l restriction in the DDC to clear up the 21 definition of drive-up versus drive-thru.. Eagleton stated that there have been several issues for 22 clarification that have come up recently and requested. that the Commission review the DDC for 23 issues of clarification and bring those forward to Planning staff. 24 25 Seeing no other business, Eagleton adjourned the meeting at 7:35 p.m. 26 27 6 City Council Staff Report Page 42 of 46 - 3 19.43 PnI Case#: CA10-0001 Exhibit 12 Ordinance s:llegallourdocumentsiordinances\10~caln-OWI ordinance.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, PROVIDING FOR A COMPREHENSIVE PLAN AMENDMENT FROM AN "EXISTING LAND USE" FUTURE LAND USE CLASSIFICATION TO A "COMMUNITY MIXED USE CENTERS" FUTURE LAND USE CLASSIFICATION ON 1.22 ACRES OF LAND LOCATED 375 FEET SOUTH OF THE INTERSECTION OF TEASLEY LANE (F.M. 2181) AND LILLIAN MILLER PARKWAY, ON THE EAST SIDE OF TEASLEY LANE (F.M. 2181), WITHIN THE CITY OF DENTON, DENTON COUNTY, TEXAS; PROVIDING FOR SEVERABILITY AND ESTABLISHING AN EFFECTIVE DATE. (CAIa-0001) WHEREAS, McDonald's Corporation, a Delaware corporation., has applied for a change in the Comprehensive Plan for approximately 1.22 acres of land described in Exhibit "A", attached hereto and incorporated herein by reference (hereinafter, the "Property"); from an "Existing Land Use" future land use classification to a "Community Mixed Use centers" future land use classification; and WHEREAS, on October 6, 2010, the Planning and Zoning Commission concluded public hearing as required by law, and recommended denial of the requested amendment; and WHEREAS, the City Council finds that the change complies with criteria for such a change, as set forth in Section 353.3 of the Denton Development Code, and is consistent with the Comprehensive Plan; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference as true. SECTION 2. The future land use designation for the Property is hereby changed from the "Existing Land Use" classification to the "Community Mixed Use Centers" classification; Notwithstanding the attached real property description, the Property being amended includes all property to the centerline of all adjacent street rights-of-way. SECTION 3. The City's official land use map is amended to show the change in the future land use classification. SECTION 4. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid by any court, such invalidity shall not affect the validity of other provisions or applications, and to this end the provision of this ordinance are severable. SECTION 5. This ordinance shall become effective immediately upon passage and approval. PASSED AND APPROVED this the day of T 2010. City Council Staff Report Page 43 of 46 - 3 19.43 PnI Case#: CA10-0001 s:llcgallour documentslordinances1101ca10-0001 ordinance.doc MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: City Council Staff Report Page 44 of 46 - 3 19.43 PnI Case#: CA10-0001 EXHIBIT A LEGAL DESCRIPTION F-AiNIV City Council Staff Report Page 45 of 46 ] - I 3 19.43 PnI Case#: CAIO-0001 EXHIBIT B City Council Staff Report Page 46 of 46 ] - I 3 19.43 PnI Case#: CA10-0001