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