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1998-417AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE GREATER DENTON ARTS COUNCIL FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE, AND PROVIDING AN EFFECTIVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the Mayor ~s hereby authorized to execute an agreement between the C~ty of Denton and the Greater Denton Arts Council for the payment and use of hotel tax revenue, under the terms and eondat~ons eontmned ~n the agreement, a copy of which ~s attached hereto and made a part hereof SECTION II That th~s ordinance shall become effective ~mmedmtely upon ~ts passage and approval PASSED AND APPROVED thls the ~ dayof ~~j , 1998 ATTEST, JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM AGREEMENT BETWEEN THE CITY OF DENTON AND GREATER DENTON ARTS COUNCIL (CY1999-2001) 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 Greater Denton Arts Council, a non-profit corporation incorporated under the laws of the State of Texas (the "COUNCIL") 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 considerat~on 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) anthonzes the CITY to use revenue fi.om its mumclpal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting sohcltattons and promotional programs to attract tourists and convenuon delegates or registrants to the mumclpallty or its vlcunty, and the encouragement, promotion, improvement, and apphcatton of the arts including instrumental and vocal music, dance, drama, folk art, creative writing, arebatecture, design and allied fields, painting, sculpture, photography, grapluc and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and extubitlon of these major art forms, and WHEREAS, the COLrlqCIL is well eqmpped to perform those acttvmes, and WHEREAS, Tex Tax Code {}351 101(c) authorizes the CITY to delegate by contract w~th the COUNCIL, as an independent entity, the management and supervision of programs and activities of the type described herelnabove funded wth revenue from the mumclpal hotel occupancy tax, NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contamed herein, the CITY and the COUNCIL agree and contract as follows I HOTEL TAX REVENUE PAYMENT 1.1 Conslderatmn. For and in constderat~on of the activities to be performed by the COUNCIL under this Agreement, the CITY agrees to pay to the COUNCIL a portion of the hotel tax revenue collected by the CITY at the rates and in the manner specified herem (such payments by the CITY to the COUNCIL sometimes herem referred to as the "agreed payments" or "hotel tax funds") 1 2 Amount of Payments (a) As used mttus Agreement, the following terms shall have thc follow~ng specific meanings 0) The term "hotel tax revenue" shall mean the gross momes collected and received by the C~ty as mumc~pal hotel occupancy tax at the rate of seven pement (7%) of the pnco prod for a room m a hotel, pursuant to Texas Tax Code 351 002 and C~ty Ordinance Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer (n) The term "Collectton period" will 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 follouang 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 during any relevant period of tune (t e, fiscal year or fiscal quarter), less (1) attorney and auditing costs recurred dunng such relevant period of ttme for costs of collection or auchtmg of hotel taxpayers Attorney and auchtmg costs include fees prod to attorneys or agents not in the regular employ of the CITY for wbach attorneys or agents effect comphance or collection of the hotel tax from taxpayers, and (2) court costs and other expenses recurred ~n ht~gatlon against or anchung of such taxpayers 0v) The term "contract quarter" shall refer to any quarter of the calendar year m wluch th~s A/~ement ~s m force Contract quarters wall end on March 31st, June 30t~, September 30~, and December 31~t of each contract year (b) In return for satisfactory performance of the act~vmes set forth m flus Agreement and all attachments hereto, the CITY shall pay to COUNCIL an amount of money m each contract year equal to the lesser amount of Thirteen and Twenty-E~ght One Hundredths percent (13 28%) of the annual base payment amount or the fixed contract amount of One Hundred Ten Thousand Two Hundred Nmety-e~ht Dollars ($110,298) Tlus amount will be d~wded 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 Jess than originally estimated for the fiscal year The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 13 28% of the base payment amount, whichever ~s less Each quarterly payment m subject to recexpt of unused funds from the prior contract period and the receipt of the reqmred quarterly reports Fun&rig for calendar year 2000 and calendar year 2001 is dependent upon, and subject to, budget approval by the City Council for those periods Upon, and subject to, budget approval, the budgeted annual payment for calendar years 2000 and 2001 are subject to an annual escalation of not more than 4% 1.3 Dates of Payments (a) The term "quarterly payments" shall mean payments by the CITY to the COUNCIL of those amounts specffied xn ¶1 2, above, as deterrmned by the hotel tax revenue collected Co) 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 w~flun tbarty (30) days of the end of the applicable contract quarter, the recipient may be held m breach of tlus Agreement The CITY may w~thhold the quarterly Page 2 payment(s) untal the appropriate reports are received and approved, wbach approval shall not unreasonably be w~thheld 1 4 Other hmitat~ons regarding consideration. (a) The funchng of tlus project m no way commats the CITY to future funding of flus program beyond the current contract period Any future funding is solely the respouslbfllty of the COUNCIL (b) It is expressly understood that flus contract m no way obhgates the General Fund or any other momas or crechts of the CITY Further, COUNCIL understands that funding for the CY2000 and CY 2001 years is expressly contingent upon the avtulabllaty and allocation of budgeted hotel tax funds dunng CITY's FY1999-2000 and FY2000-2001 budget years, respectively (c) CITY may wathhold further allocataons if CITY determines that COUNCIL's expenditures dewate materially from their approved budget IL USE OF HOTEL TAX REVENUE 2.1 Use of lhmds. For and m consideration of the payment by the CITY to the COUNCIL of the agreed payments of hotel tax funds specified above, the COUNCIL agrees to use such hotel tax funds only for adverhsmg and conducting sohcltations and promotional programs to attract tourists and convantion delegates or registrants to the mumclpality or its Vlclmty by the encouragement, promotion, unprovement, and application of the arts including instrumental and vocal music, dance, drama, folk art, creative writing, arcbateeture, design and allied fields, pmntmg, sculpture, photography, grapbac and craft arts, motion pictures, racho, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exlubltion of these major art forms, as authorized by TEx TAx CODE §351 101(a) (3) & (4) Funds for any calendar year wbach are unused by mldmght December 31st of that year shall be refunded to CITY w~thln flurry (30) days 2 2 Administrative Costs. The hotel tax funds received from the CITY by the COUNCIL may be spent for day-to-day operations, supphes, salaries, office rental, travel expenses, and other admlmstrative costs that are recurred directly in the performance by the COUNCIL of those activities specified m ¶2 1 above and are allowed by TEX TAx CODE §351 101 (f) 2 3 Specific Restrictions on Use of Funds. (a) That portion of total adrmmstrattve costs of the COUNCIL for which hotel tax funds may be used shall not exceed that portion of the COUNCIL's adrmmstrative costs actually recurred in conducting the actlwtles specified m ¶2 1 above Co) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an actiwty the primary purpose of wtueh is not directly related to the promotion of local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manner P~e3 IH. RECORDKEEPING AND REPORTING REQUIREMENTS 3 1 Budget. (a) The COUNCIL shall prepare and subrmt to the City Manager of the CITY an annual budget (see Exbablt "A") as approved by the City Cotmcfl for each calendar year, for such operations of the COUNCIL m wluch the hotel tax funds shall be used by the COUNCIL Tlus budget shall specifically identify proposed expenditures of hotel tax funds by the COUNCIL In other words, the CITY should be able to aucht specifically where the funds m the separate account relating to hotel tax funds will be expended The CITY shall not pay to the COUNCIL any hotel tax revenues as set forth m Section I of flus 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 authorizing the expanchture of funds Fmlure to subrmt an annual budget may be eousldered a breach of conlxaet, and if not remeched is considered grounds for temunat~on of flus Agreement as stated in paragraph 4 2 (b) The COUNCIL acknowledges that the approval of such budget by the Denton City Council creates a fiduciary duty m the COUNCIL w~th respect to the hotel tax funds prod by the CITY to the COUNCIL under flus Agreement The COUNCIL shall expend hotel tax funds only In the manner and for the purposes specxfied m flus Agreement, TEX TAX CODE §351 101(a) and m the budget as approved by the CITY 3 2 Separate Accounts. The COUNCIL shall mmntam any hotel tax funds prod to the COUNCIL by the CITY m a separate bank account w~th segregated accounting, such that any reasonable person can review the source of expend~tnres of tax funds A bank reconciliation report (see Extubit "B") is reqmred w~th each quarterly report 3 3 Financial Records. The COUNCIL shall maintain complete and accurate finanaial records of each expenditure of the hotel tax funds made by the COUNCIL These funds are required to be classified as reslneted funds for audited financial purposes, and may not be used for supporting services, including, but not lumted 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 avoalable for mspectlon and review by the party making the request COUNCIL understands and accepts that all such fmanaial 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 Within thu~ days after the end of every contract quarter, COUNCIL shall furmsh to CITY (1) a performance report of the work performed under flus Agreement describing the act~vities performed pursuant to flus Agreement dunng that contract quarter, and (2) a list of the expenditures made vath regard to hotel tax funds pursuant to TEX TAX CODE §351 101(C) Both the performance and expenchture reports will be in a form either determined or approved by the City Manager or designate (see Extublt "B") The COUNCIL shall respond promptly to any request from the City Manager of the CITY, or designate, for adcht~onal mformatton relating to the act~wt~es performed under flus Agreement P~e4 3 5 Notice of Meetmgs. The COUNCIL shall give the City Manager of the CITY reasonable advance written not,ce of the time and place of all meetings of COUNCIL's Board of Du'ectors, as well as any other meeting of any constituency of the COUNCIL at which flus Agreement or any matter the subject of tins Agreement shall be considered This provision shall not be deemed to reqmre the COUNCIL to give noUce of any executive session of the Executive Comrmttee of the COUNCIL IV. T~RM AND TERMINATION 4 1 Term. The term of flus Agreement shall commence on January 1, 1999 and terminate at mldmght on December 31, 2001 Tins term shall be a period of three years 4 2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party stay (60) days advance written not~ee (b) In the event flus contract is terminated by either party pursuant to Section 4 2(a), the CITY agrees to reimburse the COUNCIL for any contractual obligations of the COUNCIL undertaken by the COUNCIL in 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 in ¶3 1 This reimbursement is condmoned upon such contractual obligations having been incurred and entered into in the good froth performance of those services contemplated in ¶¶2 1 and 2 2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement Notwithstanding any provision hereof to the contrary, the obligation of the CITY to reimburse the COUNCIL or to assume the performance of any contractual obligations of the COUNCIL for or under any contract entered into by the COUNCIL as contemplated herein shall not exceed 66 2/3% of the current quarterly payment (c) Further, upon termination pursuant to ¶4 2(a), the COUNCIL will provide the CITY 1) Wlflun 10 business days from the termination notification, a short-term budget of probable ~expenchturas for the rematmng 60 day period between termination notification and contract termination This budget will be presented to Council for approval within 10 business days after receipt by CITY If formal approval is not given within 10 business days and the budget does not contain 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 approve{t, 2) Within 30 days, a full accounting of all expenditures not previously audited by the City, 3) Within 5 business days of a request from the CITY, a hsUng of expenditures that have occurred since the last reqmred reporting period, 4) a final accounting of all expenditures and tax funds omthe day of termination The COUNCIL will be obligated to return any unused funds or funds determined to be used improperly Any use of remaining funds by the COUNCIL after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in 2 1 and 2 2 above, mad further conditioned upon such contractual obligations having a term not exceeding the full term of flus Agreement P~e5 4 3 Automatic Termination. Th~s Agreement shall automatically terrmnate upon the occurrence of any of the following events (a) The termination of the legal erastence of the COUNCIL, (b) The ~usolvency of the COUNCIL, the filing of a petition m bankruptcy, either voluntarily or ~nvoluntanly, or an assignment by the COUNCIL for the benefit of erechtors, (c) The conttnuation of a breach of any of the terms or condmons of flus Agreement by either the CITY or the COUNCIL for more than tturty (30) days after written not~ee of such breach is g~ven to the breaching party by the other party, or (d) The fmlure of the COUNCIL to subrmt a financial quarterly report wluch complies w~th the reporting procedures reqmred herein and generally accepted accounting pnnciples prior to the beginning of the next euntract term, or quarterly as reqtured by Section 1 3 hereof 4.4 Right to Immediate Termmation Upon Litigation. Notw~thstanahng any other pmwsiun of tlus Agreement, to nutigate damages and to preserve ex~dence and ~ssues for judicial detemunation, either party shall have the right to terrmnate ttus Agreement upon unmechate notice to the other party m the event that any person has instituted htigation concermng the activities of the non-terminating party, and the ternunating party reasonably believes that such actiwties are reqtured or protublted under ttus Agreement 4 5 In the event that flus Agreement is terminated pursuant to ¶¶4 3 or 4 4, COUNCIL agrees to refund any and all unused funds, or funds determined by the CITY to have been used improperly, within 30 days after termination nf this Agreement V GENERAL PROVISIONS 5 1 Subcontract for Performance of Services. Noflung in flus Agreement shall prolublt, nor be construed to prolub~t, the agreement by the COUNCIL with another private entity, person, or orgamzation for the performance of those services described m ¶2 1 above In the event that the COUNCIL enters into any arrangement, contractual or otherwise, w~th such other entity, person or orgamzaUon, the COUNCIL shall cause such other entity, person, or orgamzation to adhere to, conform to, and be subject to all provisions, terms, and conditions of flus Agreement and to TE× TAX CODE ch 351, including reporting requirements, separate funds mmntenanee, and hrmtations and probabntons pertmmng to expenditure of the agreed payments and hotel tax funds 5.2 Independent Contractor The COUNCIL shall operate as an independent contractor as to all services to be performed under ttus Agreement and not as an officer, agent, servant, or employee of the CITY The COUNCIL shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or orgamzations performing the same and the COUNCIL shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors The COUNCIL shall not be considered a partner or joint venturer vnth the CITY, nor shall the COUNCIL be considered nor m any manner hold itself out as an agent or official representative of the CITY P~e6 5.3 Indemnification. The COUNCIL agrees to mdemmfy, hold harmless, and defend the CITY, 1ts officers, agents, and employees from and agmnst any and all clmms or stats for inJUries, damage, loss, or habthty of whatever kind or character, arising out of or tn connection w~th the performance by the COUNCIL or those sermces contemplated by ttus Agreement, including all such clarms or causes of actton based upon common, conmntt~onal or statutory law, or based, m whole or tn part, upon allagataons of neghgent or intentional acts of COUNCIL, tts officers, employees, agents, subcontractors, hcensees and ~nv~tees 5.4 Assignment. The COUNCIL shall not asstgn ttus Agreement w~thout first obtaining the written consent of the CITY 5 5 Notice. Any horace reqmred to be given under tlus Agreement or any statute, ordinance, or regulatton, shall be effective when g~ven m writing and depomed m the Umted States marl, comfied marl, return receipt requested, or by hand-dehvery, addressed to the respective parties as follows CITY COUNCIL C~ty Manager Greater Denton Arts Councd City of Denton Herbert Holl 215 E McKmney Executive Dtrector Denton, TX 76201 207 S Bell Denton, Texas 76201 5 6 Inurement. Tbas Agreement and each provtston hereof, and each and every right, duty, obhgat~on, and habthty set forth hereto shall be binding upon and tnure to the benefit and obhgat~on of the CITY and the COUNCIL and their respective successors and assigns 5 7 Apphcatmn of Laws. All terms, conchttons, and provtstons of thts Agreement are subJeCt to all apphcable federal laws, state laws, the Charter of the C~ty of Denton, all ordinances passed pursuant thereto, and all juche~al determinations relative thereto 5 8 Exclusive Agreement. Tlus Agreement contmns the entare understanding and constttutes the entare agreement between the part,es hereto concerning the subject matter contained hereto There are no representations, agreements, arrangements, or understandings, oral or written, express or ~mphed, between or among the partaes hereto, relating to the subject matter of flus Agreement, wluch are not fully expressed hereto The terms and conchtaons of ttus Agreement shall prevml notwithstanding any variance m tins Agreement fi'om the terms and conditions of any other document relating to tlus transaction or these transactions 5 9 Duplicate Originals. Tlus Agreement ts executed m duphcate originals 5.10 Headings. The heachngs and subheachngs of the various sections and paragraphs of ttus Agreement are inserted merely for the purpose of convemence and do not express or ~mply any hrmtatton, defimtton, or extension of the spectfic terms of the section and paragraph so destgnated 5.11 Sevcrab~hty. If any sectton, subsectaon, paragraph, sentence, clause, phrase or word mttus Agreement, or apphcataon thereof to any person or c~rcumstance ~s held ~nval~d by any court of Page 7 competent jtmsthct~on, such holding shall not affect the vahdlty of the remmnmg portions of tlus Agreement, and the part,es hereby declare they would have enacted such remmmng por'aous despite any such mvah&ty 5.12 Insurance The COUNCIL shall, at a mmunum, prowde insurance as follows $500,000 Commercial General Llabthty Statutory Workers' Compensataon and Employers' L~abHay ($ !00,000/$500,000/$100,000) $500,000 Business Automobile L~abthty on any owned, non-owned or lured vebaeles The CITY must be named as an addmonal insured on all pohcles (except Workers' Compansat~on) and proof of coverage shall be subrmtted prior to any payment by the CITY EXECUTED th~s ~ day of ~ ,1998 By JA~IdLER, MAYOR ATTEST, APPROVED AS TO LEGAL FORM By(~ ~ ~...~/~F~ ~A~.~ By ~~~ -- l b'F_~ WALTERS, HERBERT L PROUT'~-/ SI~CRETARY CITY ATTORNEY GREATER DENTON ARTS COUNCIL By Ch~an~D/~r ~'~ ATTEST APPROVED AS TO LEGAL FORM By ~If~ ~ '~~ By Secretary ' Page 8 (3 R E AT E R GDAC Budget Template - HOT Comphance DENTON ARTS rr gs-99 COUNCIL Adverttsmg Amount 207 SOUTH BELL DENTON TX 76201 Art PHONE (940) 382 2787 Salaries Admln 91 FAX (940) 566 t486 rayron ,~o WEB dentonarta corn m~ECrORS Buildings Jo Kuhn Vice Prestdent~ Htstortcai Gerard BaIsley Jim Wheeler Corky Stuckenbmck Admtntstratton Trea~u~erRtehard Stream Operating Office 8,000 Immediate Paat Facthties/Properhes 3,000 Barbara Philips Exhibitions Programs/Exhibitions 9,000 Barbara Ball 20,000 June Berry Jayne Boston Euhne Brock Travel TOTAL 1 George H~ghtlll Jane Jenkzns Carol Kemek ^~a. Ne~on November 24, 1998 Raymond Redmon Note to Lee Ann Bunselmeyer EXECOT[V£ This modified budget reflects a quarterly interest income m~CTOR projection of $250 or $1,000 for the year It is based upon an average balance of $20,000 at 5% interest The I~ additional $1,000 has been allocated to the Administrative Payroll raising the total from $90, 298 to $91,298 Please let me know if you need additional information A always, thank you for your assistance Herbert Holl Executive Director GREATER DENTON ARTS COUNCIL FINANCIAL REPORT Program Year 1999 4TH BUDGET -- QUARTER QUARTER QUARTER QUARTER YEAR TO VS (Jan.Mar) (Apr-Jun) (JuI.Sep) (Oct. Dec) DATE ACTUAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $110,298 0 0 0 0 0 1,000 $0 $0 $0 $0 $0 $111,298 $0 $0 $0 $0 $0 $91,298 $0 $0 $0 $0 $0 8,000 0 0 0 0 0 3,000 0 0 0 0 0 9,000 $0 $0 $0 $0 $0 $20,000 $0 $0 $0 $0 $0 $111,298 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $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 GREATER DENTON AR IH FINANCIAL Ht Program Yea~ 1999 ~UART~R ~UANIi R ~UAAIER QLIARII-N YL AH FO APPROVED BUDGET (Jan-Mad (Apr-Jun) (Jul-sap) (oct-Doc) Begmning Cash $o $o $o $o $o $o Receipts Occupancy Ta, x $110,298 $0 $0 $0 $0 $0 $110,298 Interest Ineorde 1,000 0 0 0 0 0 1,000 Total Receipts .... $111,298' $0 $0 $0 $0 $0 $111,298 Disbursements Salaries Adm~n Payroll $9'1,298 $0 $0 $0 $0 $0 S91,298 AdrQ~lstrat!oq Operat~ncj Off~ce $8,000 $0 $0 $0 $0 $0 8,000 ProgramslFac~l~t~e?/Prop 3,000 0 0 0 0 0 3,000 Exhcblt~ons Programs 9,000 Total Admlr~lstratlor) ~0,000 $0 $0 $0 $0 $o S20,00O total D~sbursements $111,298 $0 $0 $0 $0 $0 $111 298 ExcesS, of Receipts/Disbursemer~ts $0 $0 $0 S0 $o ~E~? m_~_Cash ~ $0 $o $0 $0 $0 $o REcoNCiLIATION Bank Balance $0 S0 S0 So $o $o Less Ol~tstandirlg Checks 0 0 0 0 0 0 Other Adjustments 0 0 0 0 0 0 C~sh on hand $0 ' - $0 $0 $0 ~ ~ $0~ Variance (slb=0) $0 $0 $0 $0 ,, $0 $0 Date Submitted Program D~rector