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1999-301 OmNANCENO AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEE 51 THE CITY OF DENTON AND THE DENTON COMMUNITY THEATRE, INC, FOR TH]I PAYMENT AND USE OF HOTEL TAX REVENUE, AND PROVIDING AN EFFECTI CE DATE THE CO[ NCIL OF THE CITY OF DENTON HEREBY ORDAINS SE CTION I That the Mayor is hereby anthonzed to execute an agreement between the City of D ,mton and the Denton Commumty Theatre, Inc for the payment and use of hotel tax revenue, nder the terms and conchtlons contained in the agreement, a copy ofwbach ~s attached hereto and made a part hereof ~gCTION II That tins ordinance shall become effective ~mmedmtely upon its passage and approval 1999 ATTEST~ JENNIFER WALTERS, CITY SECRETARY APPRO¥ ED AS TO LEGAL FORM AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COMMUNITY THEATRE, INC (CY2000) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a mumclpal 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 the CITY to levy by ordinance a mumclpal 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 prowded for the assessment and collection of a mumc~pal hotel occupancy tax m the City of Denton of seven percent (7%), and WHEREAS, Tex Tax Code §351 101(a) authonzes the CITY to use revenue from its mummpal hotel occupancy tax to promote tourism and the convention and hotel mdustry by advertls~ng and conducting sohcltataons and promotional programs to attract tourists and convention delegates or regustrants to the mumclpahty or ~ts wmmty, and the encouragement, promotion, ~mprovement, and apphcatlon of the arts including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, grapbac and craft arts, motion p~etures, ra~ho, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exlmblt~on of these major art forms, and WHEREAS, the THEATRE ~s well eqmpped to perform those actlvlt~es, and WHEREAS, Tex Tax Code §351 101(c) authorizes the CITY to delegate by contract with the THEATRE, as an independent entity, the management and supervision of programs and act~vmes of the type described heremabove funded with revenue from the municipal hotel occupancy tax, NOW, THEREFORE, m consideration of the performance of the mutual covenants and promises contamed herem, the CITY and the THEATRE agree and contract as follows I. HOTEL TAX REVENUE PAYMENT ! 1 Consideration For and m consideration of the activities to be performed by the THEATRE under this Agreement, the CITY agrees to pay to the THEATRE a po~on of the hotel tax revenue collected by the CITY at the rates and m the manner specified hereto (such payments by the CITY to the THEATRE sometlmas herein referred to as the "agreed payments" or "hotel tax funds") 1 2 Amount of Payments (a) As used ~n this Agreement, the following terms shall have the following specific meanings 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 percent (7%) of the price prod for a room in a hotel, pursuant to Texas Tax Code 351 002 and City Orthnance Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer (10 The term "Collectton 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 followang the close of the relevant fiscal year (u0 The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by the CITY dunng any relevant period of tune (t e, fiscal year or fiscal quarter), less (1) attorney and auditing costs ~ncurred dunng such relevant period of t~me for costs of collection or auditing of hotel taxpayers Attorney and andat~ng costs include fees paid to attorneys or agents not ~n the regular employ of the CITY for which attorneys or agents effect comphance or collection of the hotel tax from taxpayers, and (2) court costs and other expenses incurred ~n ht~gat~on against or and~tang of such taxpayers 0v) The term "contract quarter" shall refer to any quarter of the calendar year m wluch tlus A~eement is m force Contract quarters will end on March 31st, June 30th, September 30~, and December 31st of each contract year (b) In remm for satisfactory performance of the activities set forth m this Agreement and all attachments hereto, the CITY shall pay to THEATRE an amount of money in each contract year equal to the lesser amount of One and Twenty-Eight One Hundredths percent (1 28%) of the annual base payment amount or the fixed contract amount of Fourteen Thousand Dollars ($14,000) Th~s amount will be dlwded into quarterly payments equal to 25% of the annual fixed contract amount, unless the CITY can show w~th reasonable certmnty that the annual base payment amount will be less than originally estnmated for the fiscal year The fourth quarterly payment will represent 25% of the fixed contract amount or the unpmd remmnder of 1 28% of the base payment amount, whmhever ns less Each quarterly payment ns subject to receipt of unused funds from the prior contract period and the receipt of the reqmred quarterly reports 1 3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the THEATRE of those amounts specffied m ¶1 2, above, as determined by the hotel tax revenue collected (b) Each quarterly payment shall be paid upon recenpt of the reqmred reports and after the 25th day following the last day of the contract quarter If quarterly financial and performance reports are not received within tturty (30) days of the end of the appheable contract quarter, the recnpnent~may be held m breach of ttus Agreement The CITY may w~thhold the quarterly payment(s) until the appropriate reports are recenved and approved, wluch approval shall not unreasonably be w~thheld Page 2 1 4 Other limitations regarding consideration (a) The fundang of flus project in no way commats the CITY to future fun&ng of tbas program beyond the current contract period Any future fimdlng is solely the respons~blhty of the THEATRE (b) It is expressly understood that flus contract in no way obligates the General Fund or any other momes or ere&ts of the CITY (e) CITY may with_hold further allocations if CITY determines that THEATRE's expenchtures deviate materially from their approved budget II USE OF HOTEL TAX REVENUE :2 1 Use of l~nds. For and m cons~derataon of the payment by the CITY to the THEATRE of the agreed payments of hotel tax funds specified above, the THEATRE agrees to use such hotel tax funds only for advertising and conducting sohcaatlons and promotional programs to attract tourists and convention delegates or registrants to the mumcipallty or its vlcunty by the encouragement, promotion, improvement, and application of the arts mcludmg instrumental and vocal music, dance, drama, folk art, creative wntang, arcbatecture, design and allied fields, pmnt~ng, sculpture, photography, grapfuc and craf~ arts, motaon pictures, racho, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exbablUon of these major art forms, as authorized by Tex TAX Cove §351 101(a) (3) & (4) Funds for any calendar year wluch are unused by mldmght December 31st of that year shall be refunded to CITY within thirty (30) days 2:2 Administrative Costs. The hotel tax funds received from the CITY by the THEATRE may be spent for day-to-day operations, supplies, salaries, office rental, travel expenses, and other admlmstratlve costs that are incurred directly m the performance by the THEATRE of those actlvatles specified m ¶2 1 above and are allowed by Tex TAX CODS §351 101 (f) 2 3 Specific Restrictions on Use of Funds. (a) That portion of total admunstratlve costs of the THEATRE for winch hotel tax funds may be used shall not exceed that poVaon of the THEATRE's adrmmstrative 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 actlwty the primary purpose ofwluch is not directly related to the promotaon of local tourism and the conventton and hotel industry or the performance of the person's job m an efficient and professional manner III. RECORDKEEPING AND REPORTING REQUIREMENTS 3 1 Budget (a) The THEATRE shall prepare and submit to the City Manager of the CITY an annual budget (see Extnblt "A") as approved by the City Council for each calendar year, for such Page 3 operations of the THEATRE m wluch the hotel tax funds shall be used by the THEATRE TI'ns budget shall specifically identify proposed expenditures of hotel tax funds by the THEATRE In other words, the CITY should be able to audit specifically where the funds m the separate account relatang to hotel tax funds will be expended The CITY shall not pay to the THEATRE any hotel tax revenues as set forth m Section I oftl~s contract dunng any fiscal year of flus Agreement unless a budget for such respective fiscal year has been approved m writing by the Denton City Council authonzang the expenditure of funds Fmlure to submit an annual budget may be considered a breach of contract, and if not remedied is considered grounds for ternmiat~on of flus Agreement as stated m paragraph 4 2 (b) The THEATRE acknowledges that the approval of such budget by the Denton City Council creates a fiduciary duty m the THEATRE with respect to the hotel tax funds paid by the CITY to the THEATRE under flus Agreement The THEATRE shall expend hotel tax funds only in the manner and for the purposes specified in flus Agreement, TEX T^x COVE §351 101(a) and m the budget as approved by the CITY 3 2 Separate Accounts The THEATRE shall maintain any hotel tax funds prod to the THEATRE 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 reconelhat~on report (see Exlublt "B") IS requared with each quarterly report 3 3 Fmaneml Records The THEATRE shall mmntmn complete and accurate financial records of each expenditure of the hotel tax funds made by the THEATRE These funds are required to be classified as restricted funds for audated financial purposes, and may not be used for supportang serwees, mcludmg, 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 rewew by the party malang the request THEATRE understands and accepts that all such financial records, and any other records relating to flus Agreement shall be subject to the Public Information Act, TEX GOV'T CODE, ch 552, as hereafter amended 3 4 Quarterly Reports. After unttal receipt of hotel tax funds, and wlflun thirty days after the end of every quarter thereafter, until all fonds have been expended and reported to the CITY, THEATRE shall furmsh to CITY (1) a performance report of the work performed under tlus Agreement describing the activities performed pursuant to flus Agreement dunng that contract quarter, and (2) a hst of the expenchtures made with regard to hotel tax funds pursuant to TEX T^x CODE §351 101(C) Both the performance and expenditure reports will be ~n a form either determined or approved by the C~ty Manager or designate (see Exhibit "B") The THEATRE shall respond promptly to any request from the City Manager of the CITY, or designate, for additional information relatang to the acUwtles performed under flus Agreement 3 5 Notice of Meetings The THEATRE shall give the City Manager of the CITY reasonable advance written not~ee of the time and place of all meetings of THEATRE's Board of Directors, as well as any other meeting of any consUmency of the THEATRE at whtch flus Agreement or any matter the subject of this Agreement shall be considered This prowslon shall not be deemed to require the THEATRE to g~ve not, ce of any execuUve session of the Executive Committee of the THEATRE Page 4 IV TERM AND TERMINATION 4 1 Term. The term of ttus Agreement shall commence on January 1, 2000 and tcmunate at mzdmght on December 31, 2000 Tlus term shall be a period of one year 4 2 Termination Without Cause. (a) Tlus Agreement may be terminated by e~ther party, w~th or without cause, by g~vmg the other party s~xty (60) days advance written not~ce (b) In the event this contract is terminated by e~ther party pursuant to Section 4 2(a), the CITY agrees to reimburse the THEATRE for any contractual obhgat~ons of the THEATRE undertaken by the THEATRE m 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 ~n ¶3 1 This reimbursement is conditioned upon such contractual obhgatlons hawng been mcurred and entered rote m the good faith performance of those servmes contemplated m ¶¶2 1 and 2 2 above, and further cond~tioned upon such contractual obligations having a term not exceeding the full term of this Agreement Notwithstanding any pmvls~on hereof to the contrary, the obligation of the CITY to reimburse the THEATRE or to assume the performance of any contractual obhgat~ons of the THEATRE for or under any contract entered rote by the THEATRE as contemplated here~n shall not exceed 66 2/3% of the current quarterly payment (c) Further, upon terra,natron pursuant to ¶4 2(a), the THEATRE wall prowde the CITY 1) Wlttun 10 business days from the termination notification, a short-term budget of probable expenditures for the rem0amng 60 day period between termination notfficatlon and contract termination This budget will be presented to Council for approval within 10 business days after receipt by CITY If formal approval ~s not g~ven w~th~n 10 business days and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is w~tban the current contractual period approved budget, the budget wall be considered approved; 2) Within 30 days, a full accounting of all expenditures not previously audited by the C~ty, 3) Wltlun 5 bus~ness days of a request from the CITY, a listing of expenditures that have occurred since the last required repo~ng period, 4) a final accounting of all expenditures and tax funds on the day of termmatlon The THEATRE wall be obhgated to return any unused funds or funds determined to be used ~mproperly Any use of remmmng funds by the THEATRE after notfficatxon of termination is conditioned upon such contractual obligations having been mcurred and entered into ~n the good faith performance of those services contemplated in 2 1 and 2 2 above, and further condmoned upon such contractual obhgations having a term not exceeding the full term of th~s Agreement 4 3 Automatic Termination. This Agreement shall automatically ternunate upon the occurrence of any of the followmg events (a) The tenmnatlon of the legal existence of the THEATRE, (b) The insolvency of the THEATRE, the fihng of a petitmn in bankruptcy, e~ther voluntarily or involuntarily, or an assignment by the THEATRE for the benefit of creditors, Page 5 (c) The eontmuataon of a breach of any of the terms or condmons of this Agreement by e~ther the CITY or the THEATRE for more than finrty (30) days alter written notme of such breach ~s g~ven to the breaching party by the other party, or (d) The fmlure of the THEATRE to subrmt a financml quarterly report whmh compbes with the reporting procedures reqmred here~n and generally accepted accounting pnnclples pnor to the beg~nmng of the next contract term, or quarterly as reqmred by Section 1 3 hereof 4 4 Right to Immedmte Termmation Upon L~t~gation Notwithstanding any other provision of ttns Agreement, to rmt~gate damages and to preserve evidence and ~ssues for juchcml determination, e~ther party shall have the right to ternunate fins Agreement upon me&ate not,ce to the other party tn the event that any person has instituted lmgataon concermng the act~wt~es of the non-termmattng party, and the term~nalang party reasonably beheves that such act~wt~es are reqtnred or prohlb~ted under fins Agreement 4.5 In the event that tins Agreement ~s tenmnated pursuant to ¶~]4 3 or 4 4, THEATRE agrees to refund any and all unused funds, or funds determtned by the CITY to have been used ~mproperly, w~thtn 30 days after tenntnat~on of this Agreement V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nofinng in flus Agreement shall prolub~t, nor be construed to probab~t, the agreement by the THEATRE w~th another private entity, person, or orgamzat~on for the performance of those servmes described m ¶2 1 above In the event that the THEATRE enters tnto any arrangement, contractual or otherwise, w~th such other entity, person or orgamzataon, the THEATRE shall cause such other entity, person, or orgamzat~on to adhere to, conform to, and be subject to all prowmons, terms, and conditions of fins Agreement and to T~x TAX CODE ch 351, ~ncludtng reporting requirements, separate funds mmntenance, and hm~tatlons and prolub~taons pertarrung to expenchture of the agreed payments and hotel tax funds 5.2 Independent Contractor The THEATRE shall operate as an ~ndependent contractor as to all serv~cas to be performed under tins Agreement and not as an officer, agent, servant, or employee of the CITY The THEATRE shall have exclusive control of ~ts operations and performance of servtces hereunder, and such persons, entlt~es, or orgamzat~ons perforrmng the same and the THEATRE shall be solely responsable for the acts and omass~ons of ~ts directors, officers, employees, agents, and subcontractors The THEATRE shall not be considered a partner or jotnt venturer w~th the CITY, nor shall the THEATRE be considered nor in any manner hold ~tself out as an agent or official representative of the CITY 5.3 Indenmifieat~on The THEATRE agrees to ~ndemmfy, hold harmless, and defend the CITY, ~ts officers, agents, and employees from and agmnst any and all clmms or stnts for tnjunes, damage, loss, or hablhty of whatever k~nd or character, arising out of or tn connection w~th the performance by the THEATRE or those servmes contemplated by fins Agreement, mcludang all such clmms or causes of action based upon common, const~tutaonal or statutory law, or based, ~n whole or ~n part, upon allegations of neghgent or tntent~onal acts of THEATRE, ~ts officers, employees, agents, subcontractors, hcensees and ~nwtees P~e6 5 4 Assignment. The THEATRE shall not assign tins Agreement w~thout first obtaining the written consent of the CITY 5 5 Not~ee. Any notice required to be given under th~s Agreement or any statute, orchnance, or regulation, shall be effective when g~van m writing and deposited m the Umted States marl, ce~fied ma~l, return receipt requested, or by hand-dehvery, addressed to the respective pames as follows CITY THEATRE C~ty Manager Denton Community Theatre, Inc City of Denton Scott Wilkinson 215 E McIQrmey 214 W H~ckory Denton, TX 76201 P O Box 1931 Denton, Texas 76202-1931 5 6 Inurement Th~s Agreement and each provision hereof, and each and every right, duty, obhgatlon, and habfl~ty set forth hereto shall be blndmg upon and inure to the benefit and obhgalaon of the CITY and the THEATRE and their respective successors and assigns 5 7 Application of Laws All terms, conditions, and provisions of tins Agreement are subject to all appheable federal laws, state laws, the Charter of the C~ty of Denton, all ordinances passed pursuant thereto, and all judlcml determinations relative thereto 5 8 Exclusive Agreement Tbas Agreement contains the entire understanding and constatutes the entre agreement between the part,es hereto eoncermng the subject matter contained herein There are no representations, agreements, arrangements, or understanchngs, oral or written, express or ~mphed, between or among the partaes hereto, relating to the subject matter of this Agreement, which are not fully expressed hereto The terms and conditions of tbas Agreement shall prevail notwlthstanchng any variance m this Agreement from the terms and conditions of any other document relating to tl~s transaction or these transactions 5 9 Duplicate Originals Tbas Agreement ~s executed in duplicate originals 5.10 Headmgs. The headings and subheachngs of the various sections and paragraphs of th~s Agreement are inserted merely for the purpose of convemence and do not express or imply any llmltatlun, definition, or extension of the specific terms of the section and paragraph so designated 5.11 Severabd~ty. If any section, subsection, paragraph, sentence, clause, phrase or word m this Agreement, or apphcat~on thereof to any person or circumstance ~s held mval~d by any court of competent junsd~cttun, such holdmg shall not affect the validity of the remalmng portions of this Agreement, and the part, es hereby declare they would have enacted such remmmng portions despite any such lnval~chty 5 12 Insurance. The THEATRE shall prowde insurance as follows 1 $500,000 Commercial General Lmbthty, or $1,000,000 Event Insurance, covenng all events taking place on C~ty-owned property Page 7 2 Statutory Workers' Compensation and Employers' Lmblhty ($100,000/$500,000/$100,000) The CITY must be named as an addatlonal msured on all policies (except Workers' Compensatmn) and proof of coverage shall be submitted pnor to any payment by the CITY EXECUTED flus ~t ~:/r-~ day of ~~ ,1999 THE CITY OF DENTON, TEXAS By JACK~'~gR, MAYOR Chatrman/D~rector ATTEST APPROVED AS TO LEGAL FORM By By Secretary Page 8 Exhibit A Denton Community Theatre Budget Proposal Program Year 2000 Requested Program I Actlvl~ Amount Advertising Advertising for DCT $ 8,000 Azlvertlsing for Campus Theatre -Minority Productions 3,000 -Performing Arts Groups 3~000 Total' $ 14~000 Exhibit B EXAMPLE FINANCIAL REPORT Program Year 2000 t$T 2ND 3RD 4TH BUDGET QUARTER QUARTER QUARTER QUARTER YEAR TO VS (Jan.Mar) (Apr. Jun) (JuI. Sep) (Oct. Dec) DATE ACTUAL $o $o $o $o $o $o $o $o $o $o $o $~o,ooo 0 0 0 0 0 0 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 %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 l 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Date Submitted Program Director