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