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1999-300O =ANCENO q q- O0 AN ORDINANCE AUTHORIZING THE MAYOR 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 I That the Mayor ~s hereby authorized to execute an agreement between the C~ty of Denton and the Denton Hohday Festival AssocmUon, Inc for the payment and use of hotel tax revenue, under the terms and conditions contmned ~n the agreement, a copy of wNch ~s attached hereto and made a part hereof SECTION II and approval PASSED AND APPROVED tNs the 1999 That tNs ordinance shall become effective ~mmedlately upon ~ts passage ¢LtS~/~ day of ~_~r)7~~ , ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON HOLIDAY FESTIVAL ASSOCIATION, INC (CY2000) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the C~ty of Denton, Texas, a mtmacipal corporation (the "CITY"), and the Denton Hohday Festival Assocmtton, Inc, a legal entity incorporated under the laws of the State of Texas (the "ASSOCIATION") WHEREAS, Tex Tax Code §351 002 authorizes the CITY to levy by orchnance a mumclpal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the conmderat~on paid by a hotel occupant, and WHEREAS, by ordinance, the CITY has prowded for the assessment and collection of a mummpal hotel occupancy tax m 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 sohc~tattons and promotional programs to attract tourists and convention delegates or regnstrants to the mummpahty or its wmmty, and WHEREAS, the ASSOCIATION is well eqmpped to perform those acttvlt~es, 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 w~th revenue from the mumc~pal hotel occupancy tax, NOW, THEREFORE, ~n cons~deration of the performance of the mutual covenants and promises contained here~n, the CITY and the ASSOCIATION agree and contract as follows I. HOTEL TAX REVENUE PAYMENT 1 1 Consideration For and m consideration of the acUvmes to be performed by the ASSOCIATION under fins Agreement, the CITY agrees to pay to the ASSOCIATION a pomon of the hotel tax revenue collected by the CITY at the rates and in the manner specffied herein (such payments by the CITY to the ASSOCIATION sometumes herein referred to as the "agreed payments" or "hotel tax funds") 1 2 Amount of Payments (a) meanings As used in tins Agreement, the followxng terms shall have the following specific 0) The term "hotel tax revenue" shall mean the gross momes collected and received by the City as municipal hotel occupancy tax at the rate of seven pement (7%) of the price prod for a room ~n a hotel, pursuant to Texas Tax Code 351 002 and C~ty Ordinance Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer (n) 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 (m) 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 0 e, fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred dunng such relevant period of time for costs of collection or and~tlng of hotel taxpayers Attorney and andltmg costs include fees prod to attorneys or agents not in the regular employ of the CITY for which attorneys or agents effect eomphance or collectmn of the hotel tax fi.om taxpayers, and (2) court costs and other expenses incurred in htlgatlon agamst or auditing of such taxpayers 0v) The term "contract quarter" shall refer to any quarter of the calendar year m which flus Agreement ~s ~n force Contract quarters will end on March 31st, June 30th, September 30t~, and December 31st of each contract year (b) In return for satisfactory performance of the act~vltles set forth in tfus Agreement and all attachments hereto, the CITY shall pay to ASSOCIATION an amount of money in each contract year equal to the fixed contract amount of Three Thousand Dollars ($3,000) This amount will be divided ~nto no more than two payments Each payment ~s subject to receipt of unused funds fi.om the prior contract period and the receipt of the reqmred quarterly reports 1 3 Dates of Payments. (a) The term "payments" shall mean payments by the CITY to the ASSOCIATION of those amounts specified m ¶1 2, above, as determined by the hotel tax revenue collected (b) In return for the satasfactory performance of the activities set forth in this contract and all attachments thereto, CITY shall pay the ASSOCIATION the agreed payments specified ~n ¶1 2 above by no more than two payments, paying the fixed contract amount dunng the 1st and 2nd quarter of the calendar year If a second payment is due, that payment shall be prod upon receipt th 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 wlttun tturty (30) days of the end of the applicable quarter, the recipient may be held in breach of th~s Agreement The CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not unreasonably be w~thheld 1 4 Other limitations regardmg consideration (a) The funding of this project ~n no way comrmts the CITY to future fumhng of flus program beyond the current contract period Any future funding ~s solely the respons~bthty of the ASSOCIATION Page 2 (b) It ~s expressly understood that tlus contract ~n no way obhgates the General Fund or any other momes or crechts of the CITY (c) CITY may w~thhold further allocations ~f CITY determines that ASSOCIATION's expenditures devmte materially from their approved budget II USE OF HOTEL TAX REVENUE 2 1 Use of Funds. For and ~n conslderat~on of the payment by the CITY to the ASSOCIATION of the agreed payments of hotel tax funds speeffied above, the ASSOCIATION agrees to use such hotel tax funds only for adve~smg and eonductmg sohmtataons and promotaonal programs to attract tourists and convention delegates or registrants to the mun~c~pahty or ~ts wmmty as authorized by TEX T^x CODI~ §351 101(a) Funds for any calendar year which are unused by rmdmght December 31st of that year shall be refunded to CITY w~thm thu'ty (30) days 2 2 Administratave Costs The hotel tax funds received from the CITY by the ASSOCIATION may be spent for day-to-day operattuns, supphes, salaries, office rental, travel expenses, and other adm~mstrat~ve costs that are recurred directly ~n the performance by the ASSOCIATION of those act~wt~es specffied ~n ~[2 1 above and are allowed by TEx T^x CODI~ §351 101(f) 2.3 Specific Restrictions on Use of Funds (a) That port~on of total adm~mstrat~ve costs of the ASSOCIATION for wbach hotel tax funds may be used shall not exceed that port,on of the ASSOCIATION's adrmmstrat~ve costs actually ~ncurred m conducting the act~wt~es specified ~n ¶2 1 above (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an act~wty the primary purpose of wtuch is not d~rectly related to the promotion of local tourism and the convention and hotel ~ndustry or the performance of the person's job m an efficient and professional manner III. RECORDKEEPING AND REPORTING REQUIREMENTS 3 1 Budget. (a) The ASSOCIATION shall prepare and submit to the C~ty Manager of the CITY an annual budget (see Extub~t "A") as approved by the C~ty Council for each calendar year, for such operations of the ASSOCIATION m which the hotel tax funds shall be used by the ASSOCIATION Tins budget shall specifically identify proposed expenthtures of hotel tax funds by the ASSOCIATION In other words, the CITY should be able to audit specffically where the funds m the separate account relatang to hotel tax funds will be expended The CITY shall not pay to the ASSOCIATION any hotel tax revenues as set forth ~n Section I of th~s contract dunng any fiscal year of flus Agreement unless a budget for such respective fiscal year has been approved ~n writing by the Denton C~ty Couned authorizing the expenthture of funds Fmlure to submit an annual budget may be considered a breach of contract, and ffnot remedied is considered grounds for termination oftlus Agreement as stated m paragraph 4 2 P~e3 (b) The ASSOCIATION acknowledges that the approval of such budget by the Denton City Council creates a fiduciary duty m the ASSOCIATION with respect to the hotel tax funds prod by the CITY to the ASSOCIATION under this Agreement The ASSOCIATION shall expend hotel tax funds only m the manner and for the purposes specified in tlus Agreement, TEx T^x CODE §351 101(a) and m the budget as approved by the CITY 3 2 Separate Accounts The ASSOCIATION shall mmntmn any hotel tax funds prod to the ASSOCIATION by the CITY m a separate bank account with segregated accounting, such that any reasonable person can review the source of expenditures of tax funds A bank reconcthat~on report (see Exlub~t "B") is required w~th each quarterly report 3 3 F~nancml Records. The ASSOCIATION shall maintain complete and accurate financial records of each expenrhture of the hotel tax funds made by the ASSOCIATION These funds are required to be classffied as resmcted funds for audited financial purposes, and may not be used for supporting services, lncludmg, but not lumted 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 avmlable 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 ttus Agreement shall be subject to the Public Information Act, TEx Gov'? CODE, ch 552, as hereafter amended 3 4 Quarterly Reports After unreal receipt of hotel tax funds, and wlttun tlurty days after the end of every quarter thereafter, until all funds have been expended and reported to the CITY, ASSOCIATION shall funush to CITY (1) a performance report of the work performed under ttus Agreement describing the activities performed pursuant to tl~s Agreement dunng that contract quarter, and (2) a last of the expenditures made with regard to hotel tax funds pursuant to TEx TAX CODE §351 101(c) Both the performance and expenditure reports will be in a form either determined or approved by the City Manager or designate (see Exlublt "B") The ASSOCIATION shall respond promptly to any request fi.om the City Manager of the CITY, or designate, for additional mformataon relating to the activities performed under ttus Agreement 3 5 Not~ce of Meetings The ASSOCIATION shall give the City Manager of the CITY reasonable advance written notice of the ttme and place of all meetings of ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of the ASSOCIATION at winch ttus Agreement or any matter the subject of tbJs Agreement shall be considered This promslon shall not be deemed to reqmre the ASSOCIATION to gnve notme of any executive session of the Executive Committee of the ASSOCIATION IV TERM AND TERMINATION 4 1 Term. The term of this Agreement shall commence on January 1, 2000 and terminate at mldmght on December 31, 2000 Tbas term shall be a period of one year 4.2 Termination Without Cause (a) TI'ns Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written not,ce Page 4 (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 m ¶3 I This reimbursement is conditioned upon such contractual obhgatlons having been incurred and entered mto 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 tins Agreement Notwithstanding any promslon hereof to the contrary, the obligation of the CITY to reimburse the ASSOCIATION or to assume the performance of any contractual obligations of the ASSOCIATION for or under any contract entered into by the ASSOCIATION as contemplated herein shall not exceed 66 2/3% of the current quarterly payment (c) Further, upon termmalaon pursuant to ¶4 2(a), the ASSOCIATION will provide the CITY 1) Wltinn 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 60 day period between termination notfficatlon and contract termination This budget will be presented to Council for approval wltinn 10 business days after receipt by CITY If formal approval is not given within 10 business days and the budget does not contmn any expenditures that would be prohibited by the Texas Tax Code, and is wltinn 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) Wltinn 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 termmatlon The ASSOCIATION will be obligated to return any unused funds or funds determined to be used improperly Any use of remmnlng funds by the ASSOCIATION after notification of termination is conditioned upon such contractual obhgatlons having been recurred and entered into in the good froth 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 contunuatlon of a breach of any of the terms or condltaons of tins Agreement by either the CITY or the ASSOCIATION for more than tinny (30) days after written not, ce of such breach is gaven to the breaching party by the other party, or (d) The fmlure of the ASSOCIATION to submit a financial quarterly report winch complies with the reporting procedures required herein and generally accepted accounting pnnclples P~e5 prior to the begmmng of the next contract term, or quarterly as reqmred by Section 13 hereof 44 Right to Immediate Termination Upon Lmgat~on Notwithstanding any other pmmslon of flus Agreement, to mitigate damages and to preserve evidence and issues for jU&Clal determination, either party shall have the right to temunate tlus Agreement upon unmed~ate nottce to the other party in the event that any person has instituted htlgatlon concerning the activities of the non-ternunatmg party, and the terminating party reasonably believes that such activities are required or prohibited under tins Agreement 4.5 In the event that ttus Agreement is temunated pursuant to ¶¶43 or 44, ASSOCIATION agrees to refund any and all unused funds, or funds determined by the CITY to have been used improperly, w~thln 30 days after termination of this Agreement V. GENERAL PROVISIONS 5 1 Subcontract for Performance of Services Nothing in this Agreement shall probabit, nor be construed to protublt, the agreement by the ASSOCIATION with another private entity, person, or orgamzatmn for the performance of those services described m ¶2 1 above In the event that the ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity, person or orgamzatlon, the ASSOCIATION shall cause such other entity, person, or orgamzat~on to adhere to, conform to, and be subject to all provisions, terms, and conchtlons oftlus Agreement and to TEx TAx CODE ch 351, including repomng reqmrements, separate funds mamtenanco, and lumtatlons and proInbltmns pertaining to expenchture of the agreed payments and hotel tax funds 52 Independent Contractor. The ASSOCIATION shall operate as an independent contractor as to all services to be performed under flus 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, ent~tles, or orgamzatlons performing the same and the ASSOCIATION shall be solely responsible for the acts and omissions of its &rectors, 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 m any manner hold itself out as an agent or official representative of the CITY 5 3 Indemmfieatmn The ASSOCIATION agrees to lndemmfy, hold harmless, and defend the CITY, its officers, agents, and employees from and agmnst any and all chums or suits for mjunes, damage, loss, or hablhty of whatever land or character, arising out of or in connection w~th the performance by the ASSOCIATION or those services contemplated by tins Agreement, including all such elmms or causes of action based upon common, constltutaonal or statutory law, or based, in whole or in part, upon allegatmns of negligent or intentional acts of ASSOCIATION, its officers, employees, agents, subcontractors, heensees and lnvltees 5 4 Assignment. The ASSOCIATION shall not assign tl'ns Agreement without first obtaining the written consent of the CITY Page 6 5.5 Not,ce. Any notice reqmred to be given under tins Agreement or any statute, ordinance, or regulation, shall be effective when gnven m writing and deposited in the Umted States mml, cemfied marl, return receipt requested, or by hand~dehvery, addressed to the respective parties as follows CITY ASSOCIATION City Manager City of Denton 215 E McKmney Denton, TX 76201 Yvonne Jenkins Denton Holiday Festival Foundation, Inc P O Box 2765 Denton, Texas 76202-2765 5 6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obhgatlon, and liability set forth herein shall be binding upon and inure to the benefit and obhgat~on of the CITY and the ASSOCIATION and their respective successors and assigns 5 7 Application of Laws All terms, conditions, and provisions of ttus Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all orchnances passed pursuant thereto, and all judlmal determanat~ons relative thereto 5 8 Exclusive Agreement Tbas Agreement contmns the entire understanchng and constitutes the enUm agreement between the part, es hereto concermng the subject matter contained hereto There are no representations, agreements, arrangements, or understandings, oral or written, express or lmphed, between or among the parties hereto, relating to the subJeCt matter of this Agreement, which are not fully expressed hereto The terms and conditions of flus Agreement shall prevail notwnthstanchng any variance m tbas Agreement from the terms and conditions of any other document relating to flus transaction or these transactions 5 9 Duplicate Originals. Tlus Agreement is executed in duphcate originals 5 10 Headings. The hea(hngs and subheachngs of the various sections and paragraphs of flus Agreement are inserted merely for the purpose of conventence and do not express or imply any limitation, defimtton, or extension of the speeffic terms of the sectton and paragraph so demgnated 5.11 Scverablllty. If any seCtion, subsection, paragraph, sentence, clause, phrase or word in flus Agreement, or application thereof to any person or circumstance ~s held invalid by any court of competent junsrhctton, such holding shall not affect the vahd~ty of the remmmng port~ons of flus Agreement, and the part, es hereby declare they would have enacted such remmnmg portions despite any such invalidity EXECUTED ttus 7'~day of ~ ,1999 THE CITY OF DENTON, TEXAS By JAC~I~ER, MAYOR Page 7 ATTEST ATTEST Secretary APPROV_E~D AS TO LEG.~.L~O'-I~ DENTON HOLII~Y FESTIVAL ASSOCIATION' IN//~/~, By Page 8 Exhibit DENTON HOLIDAY FESTIVAL BUDGET PROPOSAL Program Year 2000 Advertlelng Newspaper Brochures Pro, mm I Activity Holiday Lighting Events Requested Amount Total $ 3~000 EXAMPLE FINANCIAL REPORT Program Year 2000 Exhibit B 15T 2ND 3RD 4TH BUDGET QUARTER QUARTER QUARTER QUARTER YEAR TO VS (Jan-Mad (Apr~u~ (Ju~Sep) (Oct. Dec) DATE ACTUAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1o,ooo o o o o o o 0 0 0 0 0 500 0 0 0 0 0 500 0 0 0 0 0 500 0 0 0 0 0 500 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 0 0 0 0 10,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Date Submitted Program Director