1999-306AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE KIWANIS CLUB OF DENTON, TEXAS,
INC FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE, AND PROVIDING AN
EFFECTIVE DATE
THE COLrNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the Mayor is hereby anthonzed to execute an agreement between the
C~ty of Denton and the K~wams Club of Denton, Texas, Inc for the payment and use of hotel tax
revenue, under the terms and condmons contained ~n the agreement, a copy of which ~s attached
hereto and made a part hereof
SECTION II That th~s ordinance shall become effective immediately upon ars passage
and approval
PASSED AND APPROVED thls the 7~--~ dayof ~,r)~7~/27~ ,
1999 ~
JAC~5~liI~LI~R, MAYOR
ATTEST,
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY~ CITY ATTORNEY
AGREEMENT BETWEEN THE CITY OF DENTON AND
KIWANIS CLUB OF DENTON, TEXAS, INC (CY2000)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the C~ty of Denton, Texas, a mumc~pal corporation
(the "CITY"), and the Kawams Club of Denton, Texas, Inc, a legal entity ~ncorpomted on
September 6, 1939 under the laws of the State of Texas (the "CLUB")
WHEREAS, Tex Tax Code §351 002 anthonzes the CITY to levy by ordinance a
mumc~pal,hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the cons~deratton
prod by a hotel occupant, and
WHEREAS, by orthnance, the CITY has prowded for the assessment and collection of a
munm~pal hotel occupancy tax m the C~ty of Denton of seven percent (7%), and
WHEREAS, Tex Tax Code §351 101(a) authorizes the CITY to use revenue from ~ts
mumclpal, hotel occupancy tax to promote tounsm and the conventaon and hotel industry by
advertising and conduclang sohc~tatlons and promotional programs to attract tourists and convention
delegates or registrants to the mummpahty or 1ts wcmaty, and the encouragement, promotion,
~mprovement, and apphcatton of the arts including mstnunental and vocal music, dance, drama, folk
art, creative writing, arclutecture, design and alhed fields, pa~nUng, sculpture, photography, grapbac
and craft arts, motion pictures, radio, telems~on, tape and sound recorthng, and other arts related to
the presentation, performance, executton, and exlub~tton of these major art forms, and
WHEREAS, the CLUB ~s well eqmpped to perform those act~mttes, and
WHEREAS, Tex Tax Code {}351 101(c) anthonzes the CITY to delegate by contract with
the CLUB, as an mdependent entity, the management and supervision of programs and actlvmes of
the type described herelnabove funded w~th revenue from the mummpal hotel occupancy tax,
NOW, THEREFORE, ~n constderat~on of the performance of the mutual covenants and
promises contained hereto, the CITY and the CLUB agree and contract as follows
I. HOTEL TAX REVENUE PAYMENT
1.1 Cons~derataon. For and ~n constderataon of the act~wt~es to be performed by the CLUB
under thts Agreement, the CITY agrees to pay to the CLUB a portion of the hotel tax revenue
collected Iby the CITY at the rates and m the manner spemfied hereto (such payments by the CITY
to the CLUB sometmaes hereto referred to as the "agreed payments" or "hotel tax funds")
1.2 Amount of Payments.
(a) As used m flus Agreement, the followmg terms shall have the following speeffic
meamngs
(0 The term "hotel tax revenue" shall mean the gross momes collected and
received by the C~ty as mtmm~pal hotel occupancy tax at the rate of seven percent (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 ~nterest related to the late
payments of the tax revenue by the taxpayer
00 The term "Colleetaon period" wdl mean the collection period for the CITY's
fiscal year It will include hotel tax revenue due to the C~ty 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 during any relevant period of ttme (t e,
fiscal year or fiscal quarter), less (1) attorney and auditing costs ~ncurred during such
relevant period of tune for costs of collection or auditing of hotel taxpayers Attorney and
auditing costs include fees prod to attorneys or agents not m the regular employ of the CITY
for winch attorneys or agents effect comphance or collectaon of the hotel tax from taxpayers,
and (2) court costs and other expenses ~ncurred ~n ht~gat~on against or aucht~ng of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year ~n
winch tins 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~wt~es set forth ~n th~s Agreement
and all attachments hereto, the CITY shall pay to CLUB an amount of money ~n each contract
year equal to the lesser amount of Two and One One-Hundredth of a percent (2 01%) of the
annual base payment mount or the fixed contract amount of Twenty-Two Thousand Dollars
($22,000) Th~s amount wall be d~v~ded ~nto 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 estimated for the fiscal year The fourth quarterly
payment wall represent 25% of the fixed contract amount or the unpmd remmnder of 2 01% of
the base payment amount, whmhever ~s less Each quarterly payment ~s subject to receipt of
unused funds from the pnor 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 CLUB of those
amounts specffied m ¶1 2, above, as determined by the hotel tax revenue collected
(b) Each quarterly payment shall be prod upon recetpt 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 w~ttun tinrty (30) days of the end of the apphcable contract quarter, the
recipient may be held m breach of tins Agreement The CITY may wtthhold the quarterly
payment(s) until the appropriate reports are received and approved, winch approval shall not
unreasonably be w~thheld
Page 2
1 4 Other hmitations regardmg consideration.
(a) The funding of th~s project m no way commits thc CITY to future funchng of tbas
program beyond the current contract period Any future funding ~s solely the respons~bthty of the
CLUB
(b) It ~s expressly understood that flus contract m no way obhgates the General Fund or any
other momes or erechts of the CITY
(c) CITY may w~thhold further allocations ff CITY determines that CLUB's expenditures
dewate materially fi.om the:r 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 CLUB of the
agreed payments of hotel tax funds specified above, the CLUB agrees to use such hotel tax funds
only for advert~slng and conducting sohc~tatlons and promotuonal programs to attract tourists and
conventaon delegates or registrants to the mumc~pahty or ~ts wc~mty by the encouragement,
promotion, nnprovement, and apphcat~on of the arts ~ncludmg msmarnental and vocal music, dance,
drama, folk art, creaUve wnUng, arcbateeture, design and alhed fields, painting, sculpture,
photography, grapbae and craft arts, motion pictures, radio, television, tape and sound recordang, and
other arts related to the presentation, performance, execution, and exbab~t~on of these major art
forms, as authonzed by TEx T^x Co~)e §351 101(a) (3) & (4) Funds for any calendar year which
are unused by m~dmght December 31st of that year shall be refunded to CITY w~tl~n tlurty (30)
days
2.2 Administrative Costs The hotel tax funds received f~om the CITY by the CLUB may be
spent for day-to-day operations, supphes, salaries, office rental, travel expenses, and other
admunstratlve costs that are ~ncurred dtrecfly ~n the performance by the CLUB of those aet~wtles
specified m ¶2 1 above and are allowed by T~x T^x Co~)n §351 101 (f)
2 3 Specific Restrictions on Use of Funds.
(a) That port,on of total adrmmstrat~ve costs of the CLUB for wl~ch hotel tax funds may
be used shall not exceed that po~on of the CLUB's admunstrat~ve costs actually recurred m
conducting the aet~wt~es 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 act~wty the prunary purpose of wluch ~s not directly related to the promotion of local tourism and
the conventmn and hotel mdnstry or the performance of the person's job m an efficient and
professional manner
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3 1 Budget.
(a) The CLUB 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
Page 3
CLUB m whmh the hotel tax funds shall be used by the CLUB Tlus budget shall specifically
ldenttfy proposed expenditures of hotel tax funds by the CLUB In other words, the CITY should
be able to audit specifically where the funds m the separate account relating to hotel tax funds will
be expended The CITY shall not pay to the CLUB any hotel tax revenues as set forth m Section I
of ttus contract during any fiscal year of tlus Agreement unless a budget for such respecttve fiscal
year has been approved m wntang by the Denton City Council authorizing the expenditure of funds
Fmlure to submat an annual budget may be considered a breach of contract, and if not remedied is
considered grounds for termmatmn oftlus Agreement as stated m paragraph 4 2
(b) The CLUB acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty m the CLUB with respect to the hotel tax funds prod by the CITY
to the CLUB under this Agreement The CLUB shall expend hotel tax funds only m the manner
and for the purposes specified m tins Agreement, Tex TAX CODE §351 101(a) and m the budget as
approved by the CITY
3 2 Separate Accounts The CLUB shall mamtmn any hotel tax funds prod to the CLUB by
the CITY m a separate bank account w~th segregated accounting, such that any reasonable person
can review the source of expenditures of tax funds A bank reconciliation report (see Exinbit "B")
is reqmmd with each quarterly report
3.3 Financial Records. The CLUB shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by the CLUB These funds are reqmred to be
classified as restricted funds for audited finanmal purposes, and may not be used for supporting
services, including, but not bunted 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 avtulable for inspection and remew by the party makang the
request CLUB understands and accepts that all such financial records, and any other records
relating to tins Agreement shall be subject to the Public Information Act, TEx GOV'T CODe, ch
552, as hereafter amended
3.4 Quarterly Reports. After lmtial receipt of hotel tax funds, and within thaw days aRer the
end of every quarter thereafter, until all funds have been expended and reported to the CITY,
CLUB shall furmsh to CITY (1) a performance report of the work performed under tbas Agreement
describing the acttvltaes performed pursuant to tlus Agreement during that contract quarter, and (2) a
list of the expenditures mede vnth regard to hotel tax funds pursuant to Tex T^x 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 Exhibit "B") The CLUB shall respond promptly
to any request from the City Manager of the CITY, or designate, for additional information relating
to the activities performed under fins Agreement
3 5 Notice of Meetings The CLUB shall give the City Manager of the CITY reasonable
advance written notice of the t~me and place of all meetings of CLUB's Board of Directors, as well
as any other meeting of any constitmmey of the CLUB at wbach tins Agreement or any matter the
subject of ttus Agreement shall be considered Tlus provlsmn shall not be deemed to reqmre the
CLUB to give not,ce of any executive session of the Executive Committee of the CLUB
Page 4
IV TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2000 and terminate at
mtdmght on December 31, 2000 Tlus term shall be a period of one year
4 2 Termination Without Cause
(a) Tbas Agreement may be termmated by etther party, with or without cause, by gtvlng
the other party stxty (60) days advance written notme
(b) In the event this contract is termmated by etther party pursuant to Section 4 2(a),
the CITY agrees to retmburse the CLUB for any contractual obhgattons of the CLUB undertaken
by the CLUB in satisfactory performance of those actlvttles spectfied tn ¶¶2 1 and 2 2 above and
that were approved by the Counml through the budget, as noted tn ¶3 1 This reimbursement is
conditioned upon such contractual obligations having been tncurred and entered into tn the good
faith performance of those services contemplated m ¶¶2 1 and 2 2 above, and further condmoned
upon such contractual obligations having a term not exceedtng the full term of thas Agreement
Notwithstanding any provision hereof to the contrary, the obligation of the CITY to retmburse
the CLUB or to assume the performance of any contractual obligations &the CLUB for or under
any contract entered into by the CLUB as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment
(c) Further, upon termmatlon pursuant to ¶4 2(a), the CLUB will provide the CITY 1)
Wtthln 10 business days from the termination notification, a short-term budget of probable
expenchtures for the remmmng 60 day period between termmatlon notification and contract
termtnatlon Tlus budget will be presented to Council for approval wtthtn 10 business days after
receipt by CITY If formal approval is not gtven wtthln 10 business days and the budget does
not contain any expenditures that would be prohtblted by the Texas Tax Code, and is wtthm the
current contractual period approved budget, the budget wall be constdered approved, 2) Wltlun
30 days, a full accounting of all expenditures not previously audited by the Ctty, 3) W~thtn 5
bustness days of a request from the CITY, a listing of expenditures that have occurred stnce the
last reqmred reporting period, 4) a final accounting of all expenditures and tax funds on the day
of termination The CLUB will be obligated to retum any unused funds or funds determmed to
be used improperly Any use of remmmng funds by the CLUB at~er notfficatlon of termmatlon is
conditioned upon such contractual obhgatlons having been tncurred and entered into in the good
faith performance of those servmes contemplated in 2 1 and 2 2 above, and further condttloned
upon such contractual obligations having a term not exceedtng the full term ofth~s Agreement
4 3 Automatic Termmatlon Tbas Agreement shall automattcally terminate upon the
occurrence of any of the following events
(a) The termanatlon of the legal existence of the CLUB,
(b) The msolvency of the CLUB, the fihng of a petition m bankruptcy, either voluntarily or
mvoluntanly, or an asstgnment by the CLUB for the benefit of credttors,
Page 5
(c) The continuation of a breach of any of the terms or conditions of flus Agreement by
either the CITY or the CLUB for more than flurty (30) days niter written not,ce of such
breach is g~ven to the breaching party by the other party, or
(d) The failure of the CLUB to subnut a financial quarterly report which comphes w~th the
repo~ng procedures reqtared hereto and generally accepted accounting pnnc~ples prior to
the beg~nmng of the next contract term, or quarterly as reqtared by Sectqon 1 3 hereof
4 4 Right to Immediate Termination Upon Litigation Notwithstanding any other pmvis~on
of tlus Agreement, to mitigate damages and to preserve evidence and ~ssues for judicial
determination, e~ther party shall have the right to tenmnate flus Agreement upon lmme&ate
not,ce to the other party m the event that any person has tamtuted llt~gatmn concerning the
act~wtles of the non-terunnatmg party, and the terminating party reasonably believes that
such activities are reqtared or prohtblted under ttus Agreement
4 $ In the event that tlus Agreement is terminated pursuant to ¶¶4 3 or 4 4, CLUB agrees to
refund any and all unused funds, or funds determined by the CITY to have been used improperly,
within 30 days after termination of this Agreement
V GENERAL PROVISIONS
5.1 Subcontract for Performance of Services. Nothing ~n this Agreement shall protublt, nor
be construed to prolub~t, the agreement by the CLUB with another private entity, person, or orgam-
zatmn for the performance of those services described in ¶2 1 above In the event that the CLUB
enters into any arrangement, contractual or otherwise, w~th such other entity, person or orgamzat~on,
thc CLUB shall cause such other entity, person, or orgamzatlon to adhere to, conform to, and bc
subJeCt to all provisions, terms, and conditions of flus Agreement and to TEX TAX CODE ch 351,
mcluchng reporting reqtarements, separate funds mmntenance, and lunltatlons and probabltions
pertmmng to expenditure of the agreed payments and hotel tax funds
5 2 Independent Contractor. The CLUB shall operate as an ~ndependent contractor as to all
services to be performed under this Agreement and not as an officer, agent, servant, or employee of
the CITY The CLUB shall have exclusive control of ~ts operations and performance of serrates
hereunder, and such persons, ent~t~es, or organtzatlons performing the same and the CLUB shall be
solely responsible for the acts and omissions of ~ts drrectors, officers, employees, agents, and
subcontractors The CLUB shall not be considered a partner or joint venturer w~th the CITY, nor
shall the CLUB be considered nor in any manner hold itself out as an agent or official representative
of the CITY
5 3 Indemnification The CLUB agrees to lndcmmfy, hold harmless, and defend the CITY, its
officers, agents, and employees from and agmnst any and all clmms or stats for injuries, damage,
loss, or habfllty of whatever kmd or character, arising out of or m connection with the performance
by the CLUB or those sermces contemplated by ttus Agreement, ~nclud~ng all such clmms or causes
of action based upon common, constitutional or statutory law, or based, m whole or m part, upon
allegations ofneghgent or intentional acts of CLUB, its officers, employees, agents, subcontractors,
licensees and mwtees
Page 6
5 4 Assignment. The CLUB shall not assagn fi'us Agreement wathout first obtaining the written
consent of the CITY
5 $ Notice. Any not,ce requared to be gaven under th~s Agreement or any statute, ordinance, or
regulation, shall be effectave when g~ven m writing and deposited in the Umted States mail, certified
mai1, return receipt requested, or by hand-dehvery, addressed to the respective part, es as follows
CITY CLUB
Caty Manager Denton Yowanas Club, Inc
Caty of Denton Greg Sawko
215 E MeKmney 1100 Dallas Drive, State 100
Denton, TX 76201 Denton, Texas 76205
5.6 Inurement. Tbas Agreement and each provasaon hereof, and each and every right, duty,
oblagataon, and laabalaty set forth hereto shall be binding upon and anure to the benefit and obhgatton
of the CITY and the CLUB and their respective successors and assagns
5.7 Application of Laws. All terms, conditions, and provaslons of tbas Agreement are subject
to all applaeable federal laws, state laws, the Charter of the City of Denton, all ordinances passed
pursuant thereto, and alljudieaal datermmat~ons relative thereto
5.8 Exclusive Agreement. Tbas Agreement contains the entire understanding and eonstatutes
the enUre agreement between the pames hereto concermng the subject matter contained hereto
There are no representataons, agreements, arrangements, or understandings, oral or written, express
or lmphed, between or among the part, es hereto, relating to the subject matter of thas Agreement,
whach are not fully expressed hereto The terms and conditions of this Agreement shall prevail
notwithstanding any variance ~n tbas Agreement from the terms and conditions of any other
document relaang to fins transaction or these transactions
5 9 Duplicate Originals. Tlus Agreement ~s executed ~n duplaeate onganals
5.10 Headings. The headings and subheadings of the various sections and paragraphs of tbas
Agreement are inserted merely for the purpose of convemence and do not express or amply any
hlmtat~on, defimtlon, or extensaon of the specific terms of the section and paragraph so designated
5.11 Severability. If any sectaon, subsection, paragraph, sentence, clause, phrase or word m flus
Agreement, or applaeataon thereof to any person or carcumstanee ~s held ~nvalad by any court of
competent jurisdiction, such holding shall not affect the valadaty of the remaamng portaons of th~s
Agreement, and the partaes hereby declare they would have enected such remairang portsons despate
any such invalidity
5 12 Inanranee The CLUB shall provade insurance as follows
1 $500,000 Commercaal General L~abalaty, or $1,000,000 Event Insurance, covering
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 adchtaonal insured on all pohmes (except Workers' Compensataon)
and proof of coverage shall be submitted prior to any payment by the CITY
EXECUTED this 7~i~day of ~.~62-~.~ ,1999
THE CITY OF DENTON, TEXAS
By
JACK~,~ER: MAYOR
ATTEST ~ APPROVED ~_S_TO bEGAL~
J~l~]~l~ ~P~TERS, ~--I4EI~RT L PROUTY, ~
Cha~rman/D~reet&, iO~~-
ATTEST APPROVED AS TO LEGAL FORM
Page 8
Exhibit A
Denton Kiwanis Club
Budget Proposal
Program Year 2000
Requested
Program I Activity Amount
Advertlalng
, Fireworks July 4th Fireworks $ 20,000
Program/Advertising July 4th Fireworks 2,000
Total $ 22~000
Exhibit B
EXAMPLE
FINANCIAL REPORT
Program Year 2000
1ST 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 $1o.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 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
M! 0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
Oate Submitted Program D~rector