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1999-307AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE SCHOLARS PHAIR FOUNDATION, INC 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 is hereby authorized to execute an agreement between the City of Denton and the Scholars Phmr Foundation, Inc for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which ~s attached hereto and made a part hereof ~ That this ordinance shall become effective immediately upon ~ts passage and approval PASSED AND APPROVED tins the ~--~ day of ~ , 1999 JAC~LLER,-MA O ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY AGREEMENT BETWEEN THE CITY OF DENTON AND SCHOLARS PHAIR FOUNDATION, INC (CY2000) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a mumc~pal corporation (the "CITY"), and Scholars Pha~r Foundation, Inc, a legal entity ex~stmg under the laws of the State of Texas (the "FOUNDATION") WHEREAS, Tex Tax Code §351 002 authorizes the CITY to levy by ordanance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration paad by a hotel occupant, and WHEREAS, by orchnance, the CITY has prowded for the assessment and collection of a mumc~pal hotel occupancy tax m the C~ty of Denton of seven percent (7%), and WHEREAS, Tex Tax Code §351 101(a) authonzes the CITY to use revenue from ~ts municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solle~tations and promotional programs to a~aet tourists and convention delegates or registrants to the mumc~pahty or ~ts wcmlty, and WHEREAS, the FOUNDATION ~s well equipped to perform those aetlwtles, and WHEREAS, Tex Tax Code §351 101(c) authorizes the CITY to delegate by contract with the FOUNDATION, as an independent entity, the management and supervls~on of programs and aetiwtles of the type described herelnabove funded w~th revenue from the mumcipal hotel occupancy tax, NOW, THEREFORE, ~n consideration of the performance of the mutual covenants and promises contained herean, the CITY and the FOUNDATION agree and contract as follows I. HOTEL TAX REVENUE PAYMENT I 1 Consideration. For and m conslderat~on of the activities to be performed by the FOUNDATION under tlus Agreement, the CITY agrees to pay to the FOUNDATION a portion of the hotel tax revenue collected by the CITY at the rates and in the manner specified herein (such payments by the CITY to the FOUNDATION sometimes herem referred to as the "agreed payments" or "hotel tax funds") 1.2 Amount of Payments. (a) As used m flus Agreement, the following terms shall have the following specific meamngs 0) The term "hotel tax revenue" shall mean the gross momes collected and received by the C~ty as murac~pal hotel occupancy tax at the rate of seven percent (7%) of the price prod for a room m a hotel, pursuant to Texas Tax Code 351 002 and C~ty Ordinance Hotel tax revenue will ~nclude penalty and interest related to the late payments of the tax revenue by the taxpayer 0Q The term "Collectaon period" w~ll 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 (nO 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 tune (t e, fiscal year or fiscal quarter), less (1) attorney and auchlang costs recurred during such relevant period of t~me for costs of collection or auchtmg of hotel taxpayers Attorney and auditing costs include fees p0ad to attorneys or agents not m the regular employ of the CITY for wbaeh attorneys or agents effect comphance or collection of the hotel tax from taxpayers, and (2) court costs and other expenses recurred in lmgat~on against or authtmg of such taxpayers (iv) The term "contract quarter" shall refer to any quarter of the calendar year m wbach tins A~eement ~s in force Contract quarters w~ll end on March 31~t, June 30tl~, September 30~", and December 31st of each contract year (b) In return for satisfactory performance of the actlwt~es set forth m th~s Agreement and all attachments hereto, the CITY shall pay to FOUNDATION an amount of money in each contract year equal to the fixed contract amount of Ten Thousand Dollars ($10,000) This amount will be divided into no more than two payments Each payment ~s subject to receipt of unused funds from the prior contract per~od 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 FOUNDATION of those amounts specified in ¶1 2, above, as determined by the hotel tax revenue collected (b) In return for the satisfactory performance of the act~wtles set forth in this contract and all attachments thereto, CITY shall pay the FOUNDATION the agreed payments specified m ¶1 2 above by no more than two payments, paying the fixed contract amount dunng the 1 st and 2nd quarter of the calendar year If a second payment ~s due, that payment shall be pa~d upon receipt of the required reports and after the 25t~ day following the last day of the contract quarter If quarterly financial and performance reports are not received within ttur~y (30) days of the end of the appheable quarter, the reclpxent may be held m breach of this Agreement The CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not tmreasonably be w~thheld 1 4 Other hmitations regarding consideration (a) The funding of tbas project in no way commats the CITY to future fundmg of tl~s program beyond the current contract period Any future funding is solely the responslblhty of the FOUNDATION Page 2 (b) It is expressly understood that tlus contract m no way obligates the General Fund or any other momes or crexhts of the CITY (c) CITY may withhold further allocations if CITY determines that FOUNDATION's expenchtures deviate materially from their approved budget II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds, For and m conslderatxon 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 sohcltatlons and promotional programs to attract tourists and convention delegates or registrants to the mumclpahty or its vicinity as authorized by TEX TAX Cor)E §351 101(a) Funds for any calendar year which are unused by n~dmght December 31st of that year shall be refunded to CITY within tlurty (30) days 2.2 Administrative Costs. The hotel tax funds received from the CITY by the FOUNDATION may be spent for day-to-day operaUons, supphes, salaries, office rental, travel expenses, and other admlmstrat~ve costs that are incurred d~rectly ~n the performance by the FOUNDATION of those activities specified m ¶2 1 above and are allowed by Tex T^x CooE §351 101(1) 2.3 Specific Restrictions on Use of Funds. (a) That portion of total adm~mstrattve costs of the FOUNDATION for wtuch hotel tax funds may be used shall not exceed that portion of the FOUNDATION's admanstrat~ve costs actually incurred in conducting the acttvlttes specified tn ¶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 ofwhmh is not directly relatexl to the promotmn of local tourism and the conventton and hotel ~ndustry or the performance of the person's job m an efficient and professmnal manner III. RECORDKEEPING AND REPORTING REQUIREMENTS 3 1 Budget (a) The FOUNDATION shall prepare and submit to the C~ty Manager of the CITY an annual budget (see Exinba "A") as approved by the C~ty Council for each calendar year, for such operations of the FOUNDATION ~n wluch the hotel tax funds shall be used by the FOUNDATION This budget shall specifically identify proposed expenditures of hotel tax funds by the FOUNDATION In other words, the CITY should be able to audit specifically where the funds ~n 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 in Section I of flus contract dunng any fiscal year of t!us Agreement unless a budget for such respective fiscal year has been approved m wntmg by the Denton City Council authorizing the expenditure of funds Fmlure to submit an annual budget may be considered a breach of contract, and if not remedted is considered grounds for termination oftlus Agreement as stated in paragraph 4 2 P~¢3 (b) The FOUNDATION acknowledges that the approval of such budget by the Denton City Council ereatas a fiduciary duty m the FOUNDATION w~th respect to the hotel tax funds pa~d by the CITY to the FOUNDATION under this Agreement The FOUNDATION shall expend hotel tax funds only m the manner and for the purposes specified ,n this Agreement, TEX T^x 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 ptud to the FOUNDATION by the CITY in a separate bank account wath segregated accounting, such that any reasonable person can rewew the source of expenditures of tax funds A bank reconc~hat~on report (see Extnbxt "B") la required with each quarterly report 3.3 Financial Records. The FOUNDATION shall mamttun complete and accurate financial records of each expenditure of the hotel tax funds made by the FOUNDATION These funds are reqtured to be classified as restricted funds for audited financial purposes, and may not be used for supportm$ sennces, including, but not hm~ted to, auchtmg 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 mspect~un and rewew by the party malnng the request FOUNDATION 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, eh 552, as hereafter amended 3 4 Quarterly Reports After tmttal receipt of hotel tax funds, and within tlurty days after the end of evel3' quarter thereafter, until all funds have been expended and reported to the CITY, FOUNDATION shall furmsh to CITY (1) a performance report of the work performed under th~s Agreement dasenb~ng the aet~vmes performed pursuant to tbas Agreement dunng that contract quarter, and (2) a hst of the expenchtures made w~th regard to hotel tax funds pursuant to TEX T^x CODE §351 101(e) Both the performance and expen(hture reports w~ll be m a form either determm~)d or approved by the City Manager or designate (see Exlub~t "B") The FOLrNDATION shall respond promptly to any request f~om the City Manager of the CITY, or designate, for adcht~onal mformat~on relating to the activities performed under tins Agreement 3 5 Notice of Meetings. The FOUNDATION shall g~ve the City Manager of the CITY reasonable advance written notice of the t~me and place of all meetings of FOUNDATION's Board of Directors, as well as any other meeting of any constituency of the FOUNDATION at whxch tins Agreemelat or any matter the subject of tins Agreement shall be considered Th~s prowslon shall not be deemed to reqmre the FOLTNDATION to give not,ce of any executive session of the Executive Comrmttee of the FOUNDATION IV TERM AND TERMINATION 4.1 Term The term of th~s Agreement shall commence on January 1, 2000 and terminate at mldmght on December 31, 2000 Tlus term shall be a period of one year 4 2 Termination Without Cause. (a) Tins Agreement may be terminated by e~ther party, with or w~thout cause, by g~vmg the other party sixty (60) days advance written unttce Page 4 (b) In the event th~s contract ~s termxnated by either party pursuant to Section 4 2(a), the CITY agrees to reimburse the FOUNDATION for any contractual obhgatlons of the FOLrNDATION undertaken by the FOUNDATION in satisfactory performance of those actxvIties 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 obhgatIons having been mettrred and entered into xn the good faith performance of those serwces contemplated in ¶¶2 1 and 2 2 above, and further conditioned upon such contractual obllgatxons having a term not exceeding the full term of thxs Agreement Notwithstanding any provision hereof to the contrary, the obligation of the CITY to reimburse the FOUNDATION or to assume the performance of any contractual obligatmns 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 (c) Further, upon termmatxon pursuant to ¶4 2(a), the FOUNDATION will provide the CITY l) Within l0 business days f~om the termination notxficatIon, a short-term budget of probable expenditures for the remaining 60 day period between termination notification and contract termination Tlus budget will be presented to Council for approval within 10 business days after receipt by CITY If formal approval ~s not given w~thin 10 business days and the budget does not cont~un any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget, the budget will be considered approved; 2) Within 30 days, a full accounting of all expenditures not prewously audited by the City, 3) Wltlun 5 business days of a request from the CITY, a hstlng of expenditures that have occurred since the last required reporting period, 4) a final accounting of all expenchtures 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 remalnmg funds by the FOUNDATION after notfficat~on of termination is conditioned upon such contractual obligations having been ~ncurred and entered into in the good froth performance of those servtces contemplated in 2 1 and 2 2 above, and further conditioned upon such contractual obhgatIons having a term not exceeding the full term of this Agreement 4 3 Automatic Termination. This Agreement shall automatically ternunate upon the occurrence of any of the followmg events (a) The tenmnation of the legal existence of the FOUNDATION, (b) The insolvency of the FOUNDATION, the fihng of a petition m bankruptcy, either voluntarily or involuntarily, or an assignment by the FOLrNDATION for the benefit of creditors, (c) The continuation of a breach of any of the terms or contht~ons of this Agreement by e~ther the CITY or the FOUNDATION for more than thirty (30) days after written not. ce of such breach is g~ven to the breactung party by the other party, or (d) The fmlure of the FOUNDATION to submit a financial quarterly report whmh complies w~th the reporting procedures reqmred herein and generally accepted accounting pnncIples Page 5 prior to the begmmng of the next contract term, or quarterly as required by Section 1 3 hereof 4 4 RJght to Immediate Termination Upon L~tlgat~on Notw~thstanchng any other provision of ttus Agreement, to mitigate damages and to preserve evidence and ~ssues for jud~cml determination, e~ther party shall have the right to terminate tbas Agreement upon unmethate nottce to the other party m the event that any person has instituted ht~gat~on concerning the act~wtaes of the non-terrmnatmg party, and the terminating party reasonably beheves that such act~wt~es are reqmred or probabated under ttus Agreement 4 5 In the event that thas Agreement is terminated 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, within 30 days after termination of tins Agreement V. GENERAL PROVISIONS 5 1 Subcontract for Performance of Serwees Nothing in th~s Agreement shall pmbab~t, nor be construed to prolub~t, the agreement by the FOUNDATION with another private entity, person, or orgamzatmn for the performance of those services described ~n ¶2 1 above In the event that the FOUNDATION enters ~nto any arrangement, contractual or otherwise, wath such other entity, person or orgamzat~on, the FOUNDATION shall cause such other entity, person, or orgamzatton to adhere to, conform to, and be subject to all prows~ons, terms, and conditions oftlus Agreement and to TEx TAx CODE ch 351, including repo~ng requirements, separate funds mmntenance, and hmltat~ons and protublttons pertawang to expenchture of the agreed payments and hotel tax funds 5 2 Independent Contractor. The FOUNDATION shall operate as an independent contractor as to all servmes to be performed under tbas 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, ent~tles, or orgamzatlons performing the same and the FOUNDATION shall be solely responsible for the acts and onusslons of its directors, officers, employees, agents, and subcontractors The FOUNDATION shall not be considered a partner or joint venturer wath the CITY, nor shall the FOUNDATION be considered nor an any manner hold ~tself out as an agent or official representative of the CITY 5 3 Indemnifleataon. The FOUNDATION agrees to indemnify, hold harmless, and defend the CITY, its officers, agents, and employees from and agmnst any and all claims or stats for injuries, damage, loss, or habfl~ty of whatever kind or character, arising out of or in connection w~th the performance by the FOUNDATION or those serwces contemplated by tl~s Agreement, mcluthng all such elatrns or causes of action based upon common, constitutional or statutory law, or based, m whole or m part, upon allegations of neghgent or ~ntent~onal acts of FOUNDATION, ~ts officers, employees, agents, subcontractors, hcensees and mvltees 5.4 Assignment. The FOUNDATION shall not assign flus Agreement without first obtatmng the written consent of the CITY Page 6 5.5 Notice. Any notice reqmred to be g~ven under tins Agreement or any statute, ordinance, or regnlatlon,i shall be effectave when given m writing and deposited xn the Umted States mall, cemfied mall, return recexpt requested, or by hand-dehvery, addressed to the respective parties as follows CITY ~ City Manager Scholars Phmr Foundation of Texas City of Denton Donald Cox 215 E McKmney 210 S Elm St Denton, TX 76201 Suite A Denton, Texas 76201 5.6 Inurement. Tins Agreement and each provision hereof, and each and every right, duty, obhgation, and hainhty set forth herein shall be bmdmg upon and mute to the benefit and obhgat~on of the CITY and the FOUNDATION and their respective successors and assigns 5.7 Application of Laws. All tot'ms, conditions, and provlmons of tins Agreement are subject to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed pursuant thereto, and all judicial detenmnations relative thereto 5.8 EXclusive Agreement. Tbas Agreement contmns the entire understanding and constitutes the entire agreement between the pames hereto concerning the subject matter contained hereto There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subJeCt matter of tins Agreement, winch are not fully expressed hereto The terms and conditions of tins Agreement shall prevail notwithstanding any variance ~n tins Agreement from the terms and conditions of any other document relating to this transaction or these transactions 5 9 Duplicate Originals. This Agreement is executed m duphcate ongmals 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any lmutation, defimt~on, or extension of the specific terms of the section and paragraph so demgnated 5.11 Severablllty. If any section, subsection, paragraph, sentence, clause, phrase or word m th~s Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of tins Agreement, and the pames hereby declare they would have enacted such remaining portions despite any such mvallchty 5 12 Insurance. The FOUNDATION shall promde insurance as follows 1 $500,000 Commercial General Lmblhty, or $1,000,000 Event Insurance, covenng all events taking place on City-owned property The CITY must be named as an additional insured on all pohcles and proof of coverage shall be submitted prior to any payment by the CITY Page 7 THE CITY OF DENTON, TEXAS By JAC~I~ER, MAYOR ATTEST APPROVED AS TO LEGAL FORM ~,rF Y SECRETARY SCHOLARS PHAIR/F, OUNDATION, Chmhnan/D~re~/ ATTEST APPROVED AS TO LEGAL FORM By By Secretary Page 8 Exhibit A The Scholar's Phalr Foundation, Inc, Budget Proposal Program Year 2000 Requested Program ! Activity Amount Advertising Tollfree phone service Texas Youth Expo $ 1,250 Media and outdoor promotions Texas Youth Expo 1,550 Printing Canlval Excel 600 Printing end electronic promotions Justice Parade/First Wodd 2,100 Expo Exhibits Ail programs 2,500 Postage and Me#lng expenses All programs 1,100 Delegate registration supplies All programs 900 Total $ IOTO00 Exhibit B EXAMPLE FINANCIAL REPORT Program Year 2000 1ST 2ND 3RD 4TH BUDGET QUARTER QUARTER QUARTER QUARTER YEAR TO VS (Jen.Mar) (Apr-Jun) (Jul-$ep) (Ocr. 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 l 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Date Submitted Program D~rector