1999-302 O IN CENO
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON FESTIVAL FOUNDATION FOR
THE PAYMENT AND USE OF HOTEL TAX REVENUE, AND PROVIDING AN
EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
~ That the Mayor ~s hereby authorized to execute an agreement between the
C~ty of Denton and the Denton Festival Foundation for the payment and use of hotel tax revenue,
under the terms and eondmons contained m the agreement, a copy of which ~s attached hereto
and made a part hereof
SECTION II That th~s ordinance shall become effective lmmedmtely upon ~ts passage
and approval
PASSED AND APPROVED thls the 7~--/~ dayof ([~-~rj~/~ ,
1999
JAC~LER, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
BY ~
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON FESTIVAL FOUNDATION (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 Festival Foundatmn, Inca legal entity incorporated under the laws of
the State of Texas (the '~FOUNDATION")
WHEREAS, Tex Tax Code §351 002 authorizes the CITY to levy by ordinance a
mumclpal hotel occupancy tax ("hotel tax') not exceechng seven percent (7%) of the consideration
prod by a hotel occupant, and
WHEREAS, by orchnance, the CITY has provided for the assessment and collection of a
mumclpal 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 ~ts
munlmpal hotel occupancy tax to promote tourism and the convention and hotel mdustry by
advertising and conducting sohc~tat~ons and promotuonal programs to attract tourists and convention
delegates or registrants to the mamc~pahty or its mcunty, and
WHEREAS, the FOUNDATION is well eqmpped to perform those act~wtles, and
WHEREAS, Tex Tax Code §351 101(c) anthonzes the CITY to delegate by contract w~th
the FOUNDATION, as an independent entity, the management and supervision of programs and
act~wt~es of the type described heremabove funded voth revenue from the mumc~pal hotel
occupancy tax,
NOW, THEREFORE, m consideration of the performance of the mutual covenants and
promises contained hereto, the CITY and the FOUNDATION agree and contract as follows
I HOTEL TAX REVENUE PAYMENT
1 1 Consideration For and m consideration of the act~wt~es to be performed by the
FOUNDATION under ti'ns Agreement, the CITY agrees to pay to the FOUNDATION a portion of
the hotel tax revenue collected by the CITY at the rates and ~n the manner specffied herem (such
payments by the CITY to the FOUNDATION somettmas hereto referred to as the "agreed
payments" or "hotel tax funds")
1 2 Amount of Payments.
(a) As used ~n tlus Agreement, the following terms shall have the following spemfic
meanings
0) The term "hotel tax revenue" shall mean the gross momes collected and
received by the C~ty as mummpal hotel occupancy tax at the rate of seven percent (7%) of
the price prod for a mom m 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
(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
(n0 The term "base payment mount" shall mean a net amount of money equal
to the total hotel tax revenue collected by the CITY dunng any relevant period of time (t e,
fiscal year or fiscal quarter), less (1) attorney and auchtmg costs incurred dunng such
relevant period of tame for costs of collection or auditing of hotel taxpayers Attorney and
audxtang costs mclude fees paid to attorneys or agents not m the regular employ of the CITY
for which attorneys or agents effect eomphance or collection of the hotel tax fi.om taxpayers,
and (2) court costs and other expenses incurred in litigation against or Inditing of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year in
winch tins Agreement is m force Contract quarters will end on March 31st, June 30th,
September 30t~, and December 31st of each contract year
(b) In return for satisfactory perfomaance of the activities set forth ~n this Agreement
and all attachments hereto, the CITY shall pay to FOUNDATION an amount of money in each
contract year equal to the lesser amount of Slx and Tinrty-Elght One Hundredths percent
(6 38%) of the annual base payment amount or the fixed contract amount of Seventy Thousand
Dollars ($70,000) 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 remmnder of
6 38% 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
1 3 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by the CITY to the
FOUNDATION of those amounts specified m ¶1 2, 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
25th day following the last day of the contract quarter If quarterly financial and performance
reports are not received wltlun tinrty (30) days of the end of the applicable contract quarter, the
recipient may be held m breach of tls Agreement The CITY may withhold the quarterly
payment(s) until the appropriate reports are received and approved, wbaeh approval shall not
unreasonably be withheld
Page 2
1 4 Other limitations regarding consideration.
(a) The funchng of tins project m no way commits the CITY to future funding of ttus
program beyond the current contract period Any future funding is solely the respuns~blhty of the
FOUNDATION
(b) It m expressly understood that tins contract m no way obligates the General Fund or any
other momcs or crethts of the CITY
(c) CITY may withhold further allocations if CITY deternunes that FOUNDATION's
expenditures deviate materially from their approved budget
II. USE OF HOTEL TAX REVENUE
2 1 Use of Funds. For and m consideration of the payment by the CITY to the FOUNDATION of
the agreed payments of hotel tax funds specified above, the FOUNDATION agrees to use such
hotel tax funds only for advertising and conducting sobc~tat~ons and promoUonal programs to attract
tourists and convention delegates or regtstrants to the mumclpality or its mcunty as authorized by
TEx TAX COOE §351 101(a) Funds for any calendar year which are unused by nudmght December
31st of that year shall be refunded to CITY w~tlun tturty (30) days
2.2 Administrative Costs The hotel tax funds received from the CITY by the FOUNDATION
may be spent for day-to-day operations, supphes, salaries, office rental, travel expenses, and other
admlmstrattve costs that are incurred d~rectly m the performance by the FOUNDATION of those
activities specffied m ¶2 1 above and are allowed by TEx TAX Cooe §351 101(f)
2 3 Specffic Restrictions on Use of Funds.
(a) That porttun of total admuustrat~ve costs of the FOUNDATION for wluch hotel tax
funds may be used shall not exceed that port~on of the FOUNDATION's admunstrat~ve costs
actually incurred m conducting the activities specified m ¶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 ofwtneh is not d~rectly related to the promotton of local tourism and
the convention and hotel industry or the performance of the person's job m an efficient and
professional manner
IH. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The FOUNDATION shall prepare and submit to the City Manager of the CITY an
annual budget (see Exlublt "A") as approved by the City Council for each calendar year, for such
operations of the FOUNDATION m wtuch the hotel tax funds shall be used by the FOUNDATION
This budget shall specifically identify proposed expenrhtures of hotel tax funds by the
FOUNDATION In other words, the CITY should be able to audit specffically where the funds m
the separate account relating to hotel tax funds will be expended The CITY shall not pay to the
FOUNDATION any hotel tax revenues as set forth m Section I of tins contract dunng any fiscal
Page 3
year of tht$ Agreement unless a budget for such mspect~ve fiscal year has been approved in writing
by the Denton City Council authorizing the expenrhture of funds Fmlure to submit an annual
budget may be considered a breach of contract, and if not remedied is considered grounds for
termination of flus Agreement as stated in paragraph 4 2
(b) The FOUNDATION acknowledges that the approval of such budget by the Denton
City Council creates a fiduciary duty m the FOUNDATION with respect to the hotel tax funds ptud
by the CITY to the FOUNDATION under tins Agreement The FOUNDATION shall expend hotel
tax funds only m the manner and for the purposes specified in flus Agreement, TEX TAX CODE
§351 101 (a) and m the budget as approved by the CITY
3 2 Separate Accounts. The FOUNDATION shall maintain any hotel tax funds prod to the
FOUNDATION by the CITY in a separate bank account with segregated accounting, such that any
reasonable person can review the source of expenchtures of tax funds A bank reconcthatmn report
(see Exhablt "B") is reqmred with each quarterly report
3 3 Financial Records. The FOUNDATION shall maintain complete and accurate financial
records of each expenchture of the hotel tax funds made by the FOUNDATION These funds are
requrred to be classified as restricted funds for audated financial purposes, and may not be used for
supporting sevaces, including, but not hmlted 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 FOUNDATION understands and accepts that all such financial records, and
any other records relating to flus Agreement shall be subject to the Public Informataon Act, TEx
GOV'T CODE, ch 552, as hereafter amended
3.4 Quarterly Reports. Within thirty days after the end of every contract quarter,
FOUNDATION shall furmsh to CITY (1) a performance report of the work performed under flus
Agreement describing the activities performed pursuant to this Agreement dunng that contract
quarter, and (2) a hst of the expenchtures 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 Extublt "B") The FOUNDATION
shall respond promptly to any request t~om the City Manager of the CITY, or designate, for
additional mformatton relattng to the acUwUes performed under flus Agreement
3 5 NOt,ce of Meetings. The FOUNDATION shall give the City Manager of the CITY
reasonable advance written notme of the tune and place of all meetangs of FOUNDATION's Board
of Directors, as well as any other meeting of any constituency of the FOUNDATION at wtuch flus
Agreement or any matter the subject of flus Agreement shall be considered This promsion shall not
be deemed to requrre the FOUNDATION to give notme of any executive session of the Executive
Comrmttee of the FOUNDATION
IV TERM AND TERMINATION
4 1 Term. The term of flus Agreement shall commence on January 1, 2000 and terminate at
mldmght on December 31, 2000 Th~s term shall be a period of one year
Page 4
4 2 Termination Without Cause.
(a) Tins Agreement may be terminated by either party, with or w~thout cause, by glwng
the other party sixty (60) days advance written notice
(b) In the event flus contract as terminated by either party pursuant to SecUon 4 2(a),
the CITY agrees to reimburse the FOUNDATION for any contractual obligations of the
FOUNDATION undertaken by the FOUNDATION ~n satisfactory performance of those
activities specified m ¶¶2 1 and 2 2 above and that were approved by the Cotmcfl through the
budget, as noted in ¶3 1 This reimbursement as conditioned upon such contractual obhgataons
having been incurred and entered into m the good faith performance of those services
contemplated m ¶¶2 1 and 2 2 above, and further conditioned upon such contractual obhgat~ons
hawng a term not exceeding the full term of this Agreement Notwithstanding any prowsaon
hereof to the contrary, the obhgataon of the CITY to reimburse the FOUNDATION or to assume
the performance of any contractual obhgataons of the FOUNDATION for or under any contract
entered into by the FOUNDATION as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment
(e) Further, upon termination pursuant to ¶4 2(a), the FOLrNDATION will provide the
CITY 1) Within 10 business days from the termination notification, a short-term budget of
probable expenthtures for the remaining 60 day period between termination notification and
contract termination This budget will be presented to Council for approval within l0 bus~ness
days after receipt by CITY If formal approval is not given w~thm l0 business days and the
budget does not contain any expenthtures that would be prohibited by the Texas Tax Code, and
is w~thin the current contractual period approved budget, the budget will be considered
approved, 2) Within 30 days, a full accounting of all expenditures not previously Indited by the
C~ty, 3) W~th~n 5 business days of a request from the CITY, a hsUng of expenditures that have
occurred since the last required reporting period, 4) a final accounting of all expenthtures and tax
funds on the day of termination The FOUNDATION will be obligated to return any unused
funds or funds determined to be used improperly Any use of remaining funds by the
FOUNDATION after notification of termination is conditioned upon such contractual
obhgataons hawng been mcurred and entered into in the good faith performance of those services
contemplated m 2 I and 2 2 above, and further conditioned upon such contractual obhgations
having a term not exceethng the full term oftlus Agreement
4.3 Automatic Termination Tbas Agreement shall automatically terminate upon the
occurrence of any of the following events
(a) The terrmnataon of the legal existence of the FOUNDATION,
(b) The msolvency of the FOUNDATION, the filing of a petition in bankruptcy, e~ther
voluntarily or mvoluntanly, or an assignment by the FOUNDATION for the benefit of
creators,
(e) The continuation of a breach of any of the terms or conthtlons of this Agreement by
e~ther the CITY or the FOUNDATION for more than thmy (30) days after written notice of
such breach as gtven to the breaching party by the other party, or
Page 5
(d) The failure of the FOUNDATION to submit a finanmal quarterly report winch comphes
w~th the reporting procedures reqmred here~n and generally accepted accounting pnnc~ples
prior to the begmmng of the next contract term, or quarterly as reqmred by Section 1 3
hereof
4 4 Right to Immediate Termination Upon Litagat~on Notw~thstanchng any other prows~on
of this Agreement, to m~t~gate damages and to preserve ewdence and ~ssues for judm~al
determination, either party shall have the right to terminate tlus Agreement upon lmmechate
notice to the other party ~n the event that any person has ~nstatuted htagat~on concerning the
act~wlaes of the non-tenmnatmg party, and the termmat~ng party reasonably beheves that
such act~wties are reqmred or prohibited under this Agreement
4.5 In the event that th~s Agreement ~s tenmnated pursuant to ¶¶4 3 or 4 4, FOUNDATION
agrees to refund any and all unused funds, or funds determined by the CITY to have been used
~mproperly, wltlun 30 days after termination of tlus Agreement
V GENERAL PROVISIONS
5.1 Subcontract for Performance of Serwees. Nothing ~n th~s Agreement shall probablt, nor
be construed to protub~t, the agreement by the FOUNDATION w~th another private entity, person,
or orgamzat~on for the performance of those services described ~n ¶2 1 above In the event that the
FOUNDATION enters into any arrangement, contractual or otherwise, w~th such other entity,
person or orgamzatlon, the FOUNDATION shall cause such other entity, person, or organ~zataon to
adhere to, conform to, and be subject to all provisions, terms, and conditions of tins Agreement and
to Tax TAX CODa ch 351, including reporting requirements, separate funds mmntenance, and
hlmtatlon$ and pmbabltlons pertalmng to expenditure of the agreed payments and hotel tax funds
5 2 Independent Contractor. The FOLrNDATION shall operate as an independent contractor
as to all servmes to be performed under tins Agreement and not as an officer, agent, servant, or
employee of the CITY The FOUNDATION shall have exclusive control of ~ts operations and
performance of services hereunder, and such persons, entlt~es, or orgamzat~ons performing the same
and the FOUNDATION shall be solely responsible for the acts and omissions of ~ts directors,
officers, employees, agents, and subcontractors The FOUNDATION shall not be considered a
partner or jomt venturer with the CITY, nor shall the FOUNDATION be considered nor ~n any
manner hold ~tself out as an agent or official representative of the CITY
5 3 Indemnifleat~on. The FOUNDATION agrees to ~ndemmfy, hold harmless, and defend the
CITY, ~ts officers, agents, and employees from and agmnst any and all clmms or stats for injuries,
damage, loss, or habthty of whatever kand or character, arising out of or ~n connection with the
performance by the FOUNDATION or those services contemplated by ti'us Agreement, mcludang
all such claims or causes of action based upon common, constitutional or statutory law, or based, m
whole or m part, upon allegations of negligent or intentional acts of FOUNDATION, its officers,
employees, agents, subcontractors, hcensees and mwtees
5 4 Aas~gnment. The FOUNDATION shall not assign tbas Agreement without first obtamang
the written consent of the CITY
Page 6
5.5 Notice. Any notme reqmred to be g~ven under tins Agreement or any statute, ordinance, or
regulation, shall be effective when given m writing and depomted in the Umted States mml, cemfied
mall, return receipt requested, or by hand-delivery, addressed to the respective part, es as follows
CITY FOUNDATION
City Manager Denton Festival Foundation, Inc
City of Denton Carol Short
215 E McKmney Festival Coordinator
Denton, TX 76201 P O Box 2104
Denton, Texas 76202-2104
5 6 Inurement. Tins Agreement and each prowslon hereof, and each and every right, duty,
obhgat~on, and habthty set forth hereto shall be binding upon and inure to the benefit and obhgalaon
of the CITY and the FOUNDATION and their respective successors and assigns
5 7 Appheaflon of Laws. All terms, conditions, and prov~sions of ttus Agreement are subject
to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed
pursuant thereto, and all jurhclal determlnataons relative thereto
5.8 Exclusive Agreement. Tins Agreement contains the entire understanding and constitutes
the entire agreement between the part,es hereto concermng the subject matter contained herem
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 tins Agreement shall prevail
notwithstanding any variance m th~s Agreement fi:om the terms and condataons of any other
document relating to tins transaction or these transactions
5 9 Dnplleate Originals Ttus Agreement is executed ~n duphcate originals
5 10 Headings. The heachngs and subheadings of the various sections and paragraphs of tins
Agreement are inserted merely for the purpose of convenience and do not express or ~mply any
hnutat~on, defimt~on, or extension of the spac~fic terms of the section and paragraph so designated
5 11 Severabiilty. If any section, subsection, paragraph, sentence, clause, phrase or word in ttus
Agreement, or apphcalaon thereof to any person or circumstance ~s held invalid by any court of
competent junschct~on, such holdmg shall not affect the val~chty of the remalmng portions of ttus
Agreement, and the parties hereby declare they would have enacted such remalmng portions despite
any such lnvalichty
5.12 Insurance. The FOUNDATION shall prowde insurance as follows
1 $500,000 Commercial General Llabthty, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property
2 Statutory Workers' Compensation and Employers' Llainhty
($100,000/$500,000/$100,000)
Page 7
The CITY must be named as an adrhtlonal insured on all pohmes (except Workers' Compensation)
and proof of coverage shall be submitted prior to any payment by the CITY
EXECUTED ttus _~-- day of k~2'7~-~27~//~ , 1999
THE CITY OF DENTON, TEXAS
By JAC~
ATTEST APPROVED AS TO LEGAL FORM
, E rWALTERS, raP*ERTL P OUTY, /
~ITY SECRETARY CITY ATTORNEY /
/
DENTON FESTIVAL FOJZlNDATION, INC
/
By
Chalrman/D~rector
ATTEST APPROVED AS TO LEGAL FORM
BYs ec~r t~~al/~_~ By
Page 8
Exh~bff A
Denton Festival Foundation
Budget Proposal
Program Year 2000
Requested
Program I ACtlv,ty Amount
Advertising Arts & Jazz Feshval
Newspapers, TV, Magazines $ 15,000
Brochures 4,000
Pnntlng 2,000
Postage 2,000
Telephone 500
Salanes- D~rector 9,438
Art Arts & Jazz Feshval
Musicians 25,000
Equipment 5,000
Supplies 1,500
Salaries - D~rector 5,562
$ 70,000
EXAMPLE Exhibit B
FINANCIAL REPORT
Program Year 2000
1BT 2ND 3RD 4TH BUDGET
QUARTER QUARTER QUARTER QUARTER YEAR VS
(Jan-Mar) (Apr-Jun) (JuI-Sep) (Oct-Dec) TO DATE ACTUAL
$o $o $o $o $o $o
$0 $0 $0 $0 $0 $10,000
r~ 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 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
1,000
1,000
10,000
0
0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
Date Submitted Program D,rector