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HomeMy WebLinkAbout2001-322ORDINANCE NO Mal- J 211 AN ORDINANCE AUTHORIZING THE MAYOR 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 I That the Mayor is hereby authorized to execute an agreement between the City of Denton and the North Texas State Fair Association, attached as an exhibit hereto, and incorporated by reference herein SECTION II That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the ATTEST JENNIFER WALTERS, CITY SECRETARY BY f OL APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY i dayof�I ' / '!li.' 00 EULINE BROCK, MAYOR AGREEMENT BETWEEN THE CITY OF DENTON AND THE NORTH TEXAS STATE FAIR ASSOCIATION (CY2002 - 2004) 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 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 by the acquisition of sites for and the construction, enlargement, repairing, operation, and maintenance of visitor information centers, and the f imishmg of facilities, personnel, and materials for the registration of convention delegates or registrants, and WHEREAS, the ASSOCIATION is well equipped to perform those activities, and WHEREAS, TEX TAX CODE §351 101(c) authorizes the CITY to delegate by contract with the ASSOCIATION, as an independent entity, the management and supervision of programs and activities of the type described heremabove 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 ASSOCIATION agree and contract as follows I HOTEL TAX REVENUE PAYMENT 11 Consideration. For and in consideration of the activities to be performed by the ASSOCIATION under this Agreement, the CITY agrees to pay to the ASSOCIATION 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 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 tern "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%) 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 (u) The term "Collection penod" 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 (ill) 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 (ie, 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 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, the CITY shall pay to ASSOCIATION an amount of money in each contract year equal to the lesser amount of Nine and Fifteen One Hundredths percent (9 15%) of the annual base payment amount or the fixed contract amount of Eighty Eight Thousand,Two Hundred and Sixty Dollars ($88,260) 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 9 15% of the base payment amount, whichever is less Each quarterly payment is subject to receipt of unused funds from the prior contract period and the receipt of the required quarterly reports Funding for calendar year 2003 and calendar year 2004 is dependent upon, and subject to, budget approval by the City Council for those periods Upon, and subject to budget approval, the budgeted annual payment for calendar years 2003 and 2004 are subject to an annual escalation of not more than 4% 13 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the ASSOCIATION of those amounts specified in ¶l 2, above, as determined by the hotel tax revenue collected 13 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the ASSOCIATION of those amounts specified in 112, 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 quarterly financial and performance reports are 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 unreasonably be withheld 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 future funding is solely the responsibility of the ASSOCIATION (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 ASSOCIATION's expenditures deviate materially from their approved budget Il. USE OF HOTEL TAX REVENUE 21 Use of Funds. For and in consideration of the payment by the CITY to the ASSOCIATION of the agreed payments of hotel tax funds specified above, the 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 31si of that year shall be refunded to CITY within thirty (30) days 2.2 Specific Restrictions on Use of Funds. (a) ASSOCIATION agrees to demonstrate strict compliance with the recordkeepmg and apportionment limitations imposed by TEx TAX CODE §351 101(f) and §351 108 (c) and (d) ASSOCIATION 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 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) The ASSOCIATION shall prepare and submit to the City Manager of the CITY an annual budget (see Exhibit "A") as approved by the City Council for each calendar year, for such operations of the ASSOCIATION in which the hotel tax funds shall be used by the ASSOCIATION This budget shall specifically identify proposed expenditures of hotel tax funds by the ASSOCIATION hi other words, the CITY should be able to audit specifically where the funds in the separate checking account relating to hotel tax funds will be expended The CITY shall not pay to the ASSOCIATION any hotel tax revenues as set forth in Section I of this contract during any fiscal year of this Agreement unless a budget for such respective fiscal year has been approved in writing by the Denton City Council authorizing the expenditure of funds Failure to submit an annual budget may be considered a breach of contract, and if not remedied is considered grounds for temunation of this Agreement as stated in paragraph 4 2 (b) The ASSOCIATION acknowledges that the approval of such budget by the Denton City Council creates a fiduciary duty in the ASSOCIATION with respect to the hotel tax funds paid by the CITY to the ASSOCIATION under this Agreement The 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 the CITY 32 Separate Accounts. The ASSOCIATION shall maintain any hotel tax funds paid to the ASSOCIATION by the CITY in a separate checking bank account with segregated accounting, such that any reasonable person can review the source of expenditures of tax funds A bank reconciliation report (see Exhibit'B") is required with each quarterly report 3.3 Financial Records. The ASSOCIATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by the ASSOCIATION These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for supporting services, including, but not limited to, auditing fees and attorney's fees Upon reasonably 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 ASSOCIATIONunderstands 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, ASSOCIATION shall fimush to CITY (1) a performance report of the work performed under this Agreement describing the activities performed pursuant to this Agreement during that contract quarter, (2) a list of the expenditures made with regard to hotel tax funds pursuant to TEx TAX CODE §351 101(c), and (3) a copy of all financial records (eg, receipts, invoices, checks, 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 (see Exhibit `B") The ASSOCIATION 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 ASSOCIATION shall give the City Manager of the CITY reasonable advance written notice of the tune and place of all meetings of ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of the ASSOCIATIONat which this Agreement or any matter the subject of this Agreement shall be considered This provision shall not be deemed to require the ASSOCIATION to give notice of any executive session of the Executive Committee of the ASSOCIATION IV. TERM AND TERMINATION 41 Term. The term of this Agreement shall commence on January 1, 2002 and terminate at midnight on December 31, 2004 This term shall be a period of three years 42 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), the CITY agrees to reimburse the ASSOCIATION for any contractual obligations of the ASSOCIATION undertaken by the 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 the CITY to reimburse the ASSOCIATIONor to assume the performance of any contractual obligations of the ASSOCIATION for or under any contract entered into by the ASSOCIATION as contemplated herem shall not exceed 66 2/3% of the current quarterly payment (c) Further, upon termination pursuant to 14 2(a), the ASSOCIATION 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 fiends on the day of termination The 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 4.3 Automatic Termination. Tins Agreement shall automatically terminate upon the occurrence of any of the following events (a) The termination of the legal existence of the ASSOCIATION, (b) The insolvency of the ASSOCIATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by the ASSOCIATION 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 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 the ASSOCIATION to subimt 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 13 hereof 44 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 the CITY to have been used improperly, within 30 days after termination of this Agreement V. GENERAL PROVISIONS 51 Subcontract for Performance of Services Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by the ASSOCIATION with another private entity, person, or organization for the performance of those services described in 12 1 above In the event that the ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, the ASSOCIATIONshall 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 Tax 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 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 the CITY The ASSOCIATION shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations perfomvng the same and the ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors The ASSOCIATION shall not be considered a partner or joint venturer with the CITY, nor shall the ASSOCIATION be considered nor in any manner hold itself out as an agent or official representative of the CITY 53 Indemnification THE ASSOCIATION 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 ASSOCIATION OR 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. 54 Assignment. The ASSOCIATION shall not assign this Agreement without first obtaining the written consent of the CITY 55 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 of Denton 215 E McKinney Denton, TX 76201 ASSOCIATION North Texas State Fair Association Ken Burdick Executive Director 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 the CITY and the 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 58 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 59 Duplicate Originals. This Agreement is executed in duplicate originals 510 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are mserted 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 512 Insurance. The ASSOCIATION shall, at a minimum, provide insurance as follows $500,000 Commercial General Liability Statutory Workers' Compensation and Employers' Liability ($100,0001$500,0001$100,000) $500,000 Business Automobile Liability on any owned, non -owned or hued vehicles The 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 �� �/ 2001 THE CITY OF DENTON, TEXAS By By &� 4tr� EULINE BROCK, MAYOR ATTEST IL-31M I d t n:4 -,7CITY ATTORNEY ATTEST QI Secretary r mnm�L\0.Dacu WCrnue \OZHOT Fm NORTH TEXAS STATE ASSOCIATION ENRON, WIF/I , W-womwoov"voo APPROVED AS TO LEGAL FORM QI North Texas State Fair Association North Texas State Fair and Rodeo Program Year 2002 Exhibit A Amount Internet $ 3,60000 Radio $ 34,000 00 Newspaper $ 23,960 00 Billboards $ 22,000 00 Printing $ 4,00000 Postage $ 70000 88,260 00 $ 88,260 00 SAMPLE FINANCIAL REPORT Exhibit B Program Year 2002 YEAR 1ST 2ND 3RD 4TH QUARTER QUARTER QUARTER QUARTER to (JAN - MAR) (APR - JUN) (JUL - SEP) (OCT - DEC) DATE $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 4i0 00 $0 00 $0 00 $0 00 $0 00 _ $0 00 $0 00 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 $0 00 E,M Rol Date Submitted Program Director