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