1998-422AN ORBINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEI~N THE CITY OF DENTON AND THE DENTON FESTIVAL FOUNDATION FOR
THE P3~YMENT 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 Denton Festival Foundatton for the payment and use of hotel tax revenue,
under the terms and eoncht~ons eontmned ~n the agreement, a copy of which ~s attached hereto
and made~ a part hereof
SECTION II That th~s ordanance shall become effective ~mmechately upon ~ts passage
and apprc~val
PASSED AND APPROVED th~sthe ~-'~ day of ~-~~ .,
1998
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L P~Y
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON FESTIVAL FOUNDATION (CY1999)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a mumclpal corporation
(the "CITY"), and the Denton Festival Foundation, Inca legal entity mcorporated under the laws of
the State of Texas (the "FOUNDATION")
WHEREAS, Tex Tax Code §351 002 authorizes the CITY to levy by orchnanee a
mumclpal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration
pard by a hotel occupant, and
WHEREAS, by orchnance, the CITY has provided for the assessment and collection of a
municipal hotel occupancy tax m the City of Denton of seven percent (7%), and
WHEREAS, Tex Tax Code §351 101(a) authorizes the CITY to use revenue from its
municipal hotel occupancy tax to promote tourism and the convention and hotel industry by
advertising and conducting sohcltat~uns and promotional programs to a~act tourists and convention
delegates or registrants to the mumelpahty or its wclmty, and
WHEREAS, the FOUNDATION is well eqmpped to perform those actmvmes, and
WHEREAS, Tex Tax Code §351 101(c) authorizes the CITY to delegate by contract w~th
the FOUNDATION, as an mdependant entity, the management and supervision of programs and
activities of the type described heremabove funded with revenue from the mumelpal hotel
occupancy tax,
NOW, THEREFORE, m eonslderat~on of the performance of the mutual covenants and
promises contained hereto, the CITY and the FOUNDATION agree and contract as follows
I HOTEL TAX REVENUE PAYMENT
1.1 Consideratmn. For and in eonslderatmn of the activities to be performed by the
FOUNDATION under flus Agreement, the CITY agrees to pay to the FOUNDATION a portion of
the hotel ~ax revenue collected by the CITY at the rates and in the manner specified herein (such
payments by the CITY to the FOUNDATION sometunes hereto referred to as the "agreed
payments" or "hotel tax funds")
1 2 Amount of Payments.
(a) As used in flus Agreement, the following terms shall have the following specific
meanings
0) The term "hotel tax revenue" shall mean the gross monies collected and
r~eeived by the City as mum¢lpal hotel occupancy tax at the rate of seven percent (7%) of
the price prod for a room in a hotel, pursuant to Texas Tax Code 351 002 and City
Oi'dinance Hotel tax revenue will tnclude penalty and interest related to the late
p~iyments of the tax revenue by the taxpayer
(u) The term "Collection period" will mean the collection period for the CITY's
fiscal year It will include hotel tax revenue due to the City for the relevant fiscal year and
collected through the 22nd day of the month follopang the close of the relevant fiscal year
(ill) 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 time (t e,
fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred dunng such
relevant period of t~me for costs of eolleetmn or auditing of hotel taxpayers Attorney and
anchtmg costs malude fees pa~d to attorneys or agents not in the regular employ of the CITY
for wtuch attorneys or agents effect compliance or collection of the hotel tax fi.om taxpayers,
and (2) court costs and other expenses recurred m htlgal~on against or auchtmg of sach
taxpayers
Ov) The term "contract quarter" shall refer to any quarter of the calendar year m
~wtuch this A[rcement is m force Contract quarters pall end on March 31st, June 30th,
September 30~', and December 31 st of each contract year
(b) In return for satisfactory performance of the actavit~es set forth in this Agreement
and all atlachments hereto, the CITY shall pay to FOUNDATION an amount of money in each
contract year equal to the lesser amount of Six and Two One Hundredths percent (6 02%) of the
annual base payment amount or the fixed contract amount of Fffiy Thousand Dollars ($50,000)
This amount will be dlvtded into quarterly payments equal to 25% of the annual fixed contract
amount, unless the CITY can show path reasonable certainty that the annual base payment
amount Will be less than originally estimated for the fiscal year The fourth quarterly payment
will represent 25% of the fixed contract amount or the unpmd remmnder of 6 02% of the base
payment ;amount, whichever ~s less Each quarterly payment is subject to receipt of unused funds
from the prior contract period and the receipt of the required quarterly reports
1 3 Date~ of Payments.
(a) The term "quarterly payments" shall mean payments by the CITY to the
FOLrNDATION of those amounts specffied m ¶1 2, above, as determined by the hotel tax revenue
collected
(b) Each quarterly payment shall be prod upon receipt of the required reports and after the
25th day Ifollowang the last day of the contract quarter If quarterly financial and performance
reports a~e not received patlmn tturty (30) days of the end of the applicable contract quarter, the
recipient imay be held m breach of tbas Agreement The CITY may pathhold the qumerly
payment(s) until the appropriate reports are received and approved, wbach approval shall not
unreasonably be pathhald
Page 2
1.4 Other hm~tatlons regarding consideration
(a) The funchng of tins project m no way comnuts the CITY to future funchng of tins
program beyond the current contract period Any future funding ~s solely the responsibility of the
FOUNDATION
Co) It ~s expressly understood that ttus contract ~n no way obligates the General Fund or any
other momes or erechts of the CITY
(c) CITY may w~thhold further allocations ff CITY determines that FOUNDATION's
expemhtures deviate materially bom their approved budget
II. USE OF HOTEL TAX REVENUE
2 1 Usc of Funds. For and m consideration of the payment by the CITY to the FOUNDATION of
the agreed payments of hotel tax funds specified above, the FOUNDATION agrees to use such
hotel tax funds only for advemsmg and conducting sohcltaUons and promoUonal programs to attract
tourists and convention delegates or registrants to the mumc~pal~ty or ~ts wcunty as authorized by
Tex TAXCOOS §351 101(a) Funds for any calendar year whmh are unused by m~dmght December
31st of that year shall be refunded to CITY w~ttun thrty (30) days
2 2 Administrative Costs The hotel tax funds received from the CITY by the FOUNDATION
may be spent for day-to-day operataons, supplies, salaries, office rental, travel expenses, and other
admunstrat~ve costs that are recurred d~recfly ~n the performance by the FOUNDATION of those
activities specified m ¶2 1 above and are allowed by T~x TAX CODS §351 101(f)
2.3 Specific Restrictions on Use of Funds
(a) That po~on of total adrmmstrat~ve costs of the FOUNDATION for wluch hotel tax
funds may be used shall not exceed that pomon of the FOUNDATION's admunstrat~ve costs
actually incurred in conducting the act~vit~es specified ~n ¶2 1 above
Co) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an act~wty the primary purpose of wlueh is not d~rectly related to the promotion of local tourism and
the convention and hotel industry or the performance of the person's job ~n an efficient and
professional manner
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The FOUNDATION shall prepare and subrmt to the City Manager of the CITY an
annual budget (see Ex}nba "A") as approved by the C~ty Council for each calendar year, for such
operations of the FOUNDATION ~n wbach the hotel tax funds shall be used by the FOUNDATION
Tins bu~lget shall specifically ~denUfy proposed expenthtures of hotel tax funds by the
FOUNDATION In other words, the CITY should be able to audit spemfically 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 tlus contract dunng any fiscal
Page 3
year of this Agreement unless a budget for such respective fiscal year has been approved m writing
by the Denton C~ty Council authorizing the expenditure of funds Fmlure to submit an annual
budget may be considered a breach of contract, and if not remedied is considered grounds for
termlnataon oftlus Agreement as stated m paragraph 4 2
(b) The FOUNDATION acknowledges that the approval of such budget by the Denton
C~ty Comacd creates a fiducmry duty m the FOUNDATION with respect to the hotel tax funds prod
by the CITY to the FOUNDATION under tlus Agreement The FOUNDATION shall expend hotel
tax funds only m the manner and for the purposes specified in th~s Agreement, TEX TAX CODE
§351 101 (a) and in the budget as approved by the CITY
3.2 Separate Accounts. The FOUNDATION shall mmntam any hotel tax funds prod to the
FOUNDATION by the CITY in a separate bank account w~th segregated accounting, such that any
reasonable person can rewew the source of expendxtures of tax funds A bank reconclhat~on report
(see Exlub~t "B") ~s reqarred w~th each quarterly report
3 3 Financial Records. The FOUNDATION shall mmntmn complete and accurate finanmal
records of each expenditure of the hotel tax funds made by the FOUNDATION These funds are
reqmred to be classffied as restricted funds for and~ted financial purposes, and may not be used for
supporting servaces, including, but not limited to, audltarg fees and attorney's fees Upon
reasonably advance written request of the Denton City Council, the C~ty Manager or designate, or
any other person, shall make such financial records avmlable for inspection and rewew by the party
making the request FOUNDATION understands and accepts that all such finanmal records, and
any other records relating to tbas Agreement shall be subject to the Public Information Act, TEX
GOV'T CODE, ch 552, as hereafter amended
3 4 Quarterly Reports. W~thm thirty days atter the end of every contract quarter,
FOUNDATION shall furmsh to CITY (1) a performance report of the work performed under tlus
Agreement dascnbmg the actawt~es performed pursuant to tlus Agreement dunng that contract
quarter, and (2) a hst of the expenchtures made w~th regard to hotel tax funds pursuant to TEX TAX
CODE §351 101(c) Both the performance and expenditure reports will be in a form either
determined or approved by the C~ty Manager or designate (see Exhibit "B") The FOUNDATION
shall respond promptly to any request from the C~ty Manager of the CITY, or desagnate, for
addltaonal mformat~on relating to the acttvattes performed under tlus Agreement
3 5 Not~ee of Meetings. The FOUNDATION shall give the City Manager of the CITY
reasonable advance wnttan notme of the tame and place of all meetangs of FOUNDATION's Board
of D~reet0rs, as well as any other meeting of any constituency of the FOUNDATION at whmh this
Agreement or any matter the subject oftlus Agreement shall be considered Tlus provision shall not
be deemed to reqmre the FOUNDATION to give notme of any executive session of the Executive
Committee of the FOUNDATION
IV. TERM AND TERMINATION
4 1 Term. The term of thas Agreement shall commence on January 1, 1999 and terminate at
m~dmght,on December 31, 1999 This term shall be a period of one year
P~e4
4.2 Termination Without Cause.
(a) Thts Agreement may be tenmnated by either party, with or without cause, by giving
the other party sixty (60) days advance written not,ce
(b) In the event flus contract is tenmnated by either party pursuant to Section 4 2(a),
the CITy agrees to reimburse the FOUNDATION for any contractual obligations of the
FOUNDATION undertaken by the FOUNDATION m 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 m ¶3 1 Tlus reimbursement is condlttoned upon such contractual obligations
having been incurred and entered into m the good faith performance of those services
contemplated an ¶¶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 obhgatton of the CITY to reimburse the FOUNDATION or to assume
the performance of any contractual obhgat~ons 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 termination pursuant to ¶4 2(a), the FOUNDATION will provide the
CITY 1) Within 10 business days from the termination notification, a short-term budget of
probable expenditures for the remaining 60 day period between termination nottficatton and
contract tenmnatlon This budget will be presented to Council for approval wltflun l0 business
days after receipt by CITY If formal approval is not given within 10 business days and the
budget does not eontmn 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 previously audited by the
City, 3) Within 5 business days of a request from the CITY, a listing of expenditures that have
occurred since the last required repomng period, 4) a final accounting of all expenditures 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 remmmng funds by the
FOUNDATION after notification of termination is conditioned upon such contractual
obhgatlohs having been incurred and entered into in the good froth performance of those services
eontemplltted in 2 1 and 2 2 above, and further conditioned upon such contractual obligations
having a term not exeee&ng the full term of flus Agreement
4 3 Automatic Termination. Tins Agreement shall automatically terminate upon the
occurrence of any of the following events
(a) The temunauon of the legal eyastence of the FOUNDATION,
(1~) The insolvency of the FOUNDATION, the filing of a petttlon m bankruptcy, either
voluntarily or involuntarily, or an assignment by the FOUNDATION for the benefit of
creditors,
(e) The continuation of a breach of any of the terms or conditions of flus Agreement by
either the CITY or the FOUNDATION for more than flurty (30) days after written nottce of
such breach is given to the breactung party by the other party, or
Page 5
(d) The failure of the FOUNDATION to submit a financial quarterly report wtuch complies
with the reporting procedures required herein and generally accepted accounting pnnclples
prior to the beglnmng of the next contract term, or quarterly as reqmred by Section 1 3
hereof
4 4 Right to Immediate Termination Upon Lltlgataon. Notwithstanding any other provision
of tbas Agreement, to nut,gate damages and to preserve evidence and issues for juchclal
determination, either party shall have the right to terminate flus Agreement upon unmedlate
notice to the other party in the event that any person has instituted ht~gat~on concenung the
activities of the non-terminating party, and the terminating party reasonably believes that
such activities are reqmred or prohibited under t[us Agreement
4.5 In the event that flus Agreement is termanated 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
improperly, vathm 30 days after termination of this Agreement
V. GENERAL PROVISIONS
5 1 Subcontract for Performance of Services Nothing in this Agreement shall probablt, nor
be construed to probab~t, the agreement by the FOUNDATION wath another private entity, person,
or orgamzatlon for the performance of those services described in ¶2 1 above In the event that the
FOUNDATION enters into any arrangement, contractual or othemnse, with such other entity,
person or orgamzatmn, the FOUNDATION shall cause such other entity, person, or orgamzataon to
adhere to, conform to, and be subject to all prov~smns, terms, and conditions oftlus Agreement and
to Tsx TAX COD~, ch 351, including reporung requirements, separate funds mmntenance, and
limitations and protublt~ons pertanung 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 sarwces to be performed under this Agreement and not as an officer, agent, servant, or
employee of the CITY The FOUNDATION shall have exclusive control of ~ts oparatmns and
performance of services hereunder, and such persons, entatles, or orgamzataons performing the same
and the FOUNDATION shall be solely responsible for the acts and omissions of its d~rectors,
officers, employees, agents, and subcontractors The FOUNDATION shall not be considered a
partner or joint venturer w~th the CITY, nor shall the FOUNDATION be considered nor in any
manner hold itself out as an agent or official representative of the CITY
5 3 Indemnification. The FOUNDATION agrees to indemnify, hold harmless, and defend the
CITY, its officers, agents, and employees from and agmnst any and all clmms or stats for mjunes,
damage, loss, or liability of whatever land or character, ansmg out of or in connection vath the
performance by the FOUNDATION or those services contemplated by this Agreement, including
all such elmms or causes of action based upon common, constitutional or statutory law, or based, in
whole or m part, upon allegations of neghgent or lntentmnal acts of FOUNDATION, its officers,
employees, agents, subcontractors, licensees and mvltees
$ 4 Assignment. The FOUNDATION shall not assign thts Agreement w~thout first obtmmng
the written consent of the CITY
Page 6
5.5 Notice. Any notaee required to be g~ven under tbas Agreement or any statute, ordinance, or
regulatton, shall be effective when g~ven m writing and deposited m the Umted States mall, certified
mall, return receipt requested, or by hand-dehvery, addressed to the respective parties as follows
CITY ~
City Manager Denton Festival Foundation, Inc
City of Denton Carol Short
215 E McKmney Festival Coordinator
Denton, TX 76201 P O Box 2104
Denton, Texas 76202-2104
5.6 Inurement. This Agreement and each prowslon hereof, and each and every nght, duty,
obhgatlon, and liability set forth hereto shall be binding upon and inure to the benefit and obhgat~on
of the CITY and the FOUNDATION and their respective successors and assigns
5.7 Apphcatlon of Laws. All terms, eondltaons, and provisions of flus Agreement are subject
to all appheable federal laws, state laws, the Charter of the City of Denton, all ordinances passed
pursuant thereto, and all judicial deterrmnatlons relative thereto
5 8 Exclusive Agreement. Tbas Agreement eontmns the entire understanding and constttutes
the entire agreement between the pafaes hereto eoncermng the subject matter contmned hereto
There are no representations, agreements, arrangements, or understandings, oral or wntten, express
or ~mphed, between or among the parties hereto, relating to the subject matter of this Agreement,
which are not fully expressed hereto The terms and concht~ons of tbas Agreement shall prevail
notwithstanchng any variance m ttas Agreement from the terms and condmons of any other
document relating to tbas transacUon or these transact~oas
5.9 Duplicate Originals. Tl~s Agreement ~s executed in duphcate originals
5 10 Headings. The heachngs and subheadings of the various sections and paragraphs of flus
Agreemem are inserted merely for the purpose of convemence and do not express or unply any
lumtataon, defimtaon, or extensxon of the specific terms of the section and paragraph so designated
5.11 Severabihty. If any section, subsection, paragraph, sentence, clause, phrase or word m this
Agreement, or appheat~on thereof to any person or circumstance is held invalid by any court of
competent junsdlctaon, such holding shall not affect the valichty of the remaining portions of th~s
Agreement, and the pames hereby declare they would have enacted such remalmng portions despite
any such invalidity
5.12 Insurance. The FOUNDATION shall prowde insurance as follows
$500,000 Commerelal General L~abfl~ty
Statutory Workers' Compensation and Employers' Llabthty
($100,000/$500,000/$100,000)
P~e7
$500,000 Business AutomoNle Lmbthty on any owned, non-owned or lured
velucles
The CITY must be named as an additional insured on all pohmes (except Workers' Compensation)
and proof of coverage shall be submitted prior to any payment by the CITY
THE CITY OF DENTON, TEXAS
By
JACK~LER, MAYOR
ATTEST APPROVED~AS TO L~t~ FORM
JEI~i'~IFER ~ALTERS, - - -- y HERBERT L PRO~,T~,
CITY SECRETARY CITY ATTO~/F,Y
DENTON FES/IIVAL FOUNDATION, 1NC
Chmrman/Dxrector
ATTEST APPROVED AS TO LEGAL FORM
By By
Secretary
Page 8
Denton Festival Found. Budget Template
HOT Compliance
FY 98-99
Advertising_ Amount
Pr~nbng 1,200
Advertising 7,900
Postage 1,100
Telephone 150
Brochures 3,000
13,350
Art Programming 17,500 17,500
Historical
Operating Equipment 5,000
Salanes 13,000
Supplies 350
Audit 800
19,150
Travel
Total $0,OO0
DENTON FESTIVAL FOUNDATION
FINANCIAL REPORT
Program Year 1999
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 $50,000
o o o o o o
$o $o $o $o $o $50,000
$0 $0 $0 $0 $0 $1,200
0 0 0 0 0 7,900
0 0 0 0 0 1,100
0 0 0 0 0 150
0 0 0 0 0 3,000
$0 $0 $0 $0 $0 $13,350
$0 $0 $0 $0 $0 $17,500
$0 $0 $0 $0 $0 $5,000
0 0 0 0 0 13 000
0 0 0 0 0 350
0 0 0 0 0 800
$0 $0 $0 $0 $0 $19,150
$0 $0 $0 $0 $0 $50,000
$o $o $o $o $o $o
$o $o $o $o $o $o
$o $o $o $o $o o
o o o o o o
o o o o o o
o
$o $o $o $o $o
Date Submitted Program Director
DENTON FESTIVAL FOUNDATION
FINANCIAL REPORT
Program Year 1999
l~r 2~'D 3'~D 4TH
QUARTER QUARTER QUARTER QUARTER YEAR TO
APPROVE;l) BUDGET (Jan-Mar) (Apr-Jun) (Jul-Sap) (Oct-Dec) DA t E AC fUAL
~ng Cash $0 $0 $0 $0 $0
~-,oy ~ ~ St~),or~ $0 $0 $0 $0 $0 $50,000
I~te~eat ~ ~ ~m,e 0 0 0 0 0 0 0
Total ~I~"~ -- ~ ~ $0 $0 $0 $0 $0 $50,000
Prlnttng $1,2~0 $0 $0 $0 $0 $0 $1,200
A~lt~ 7,~00 0 0 0 0 0 7,g00
Poe~go 1,100 0 0 0 0 0 1,100
't ~e 150 0 0 0 0 0 150
Broohure:~ 3,000 0 0 0 0 0 3~000
Total Ad~er~.~! $1,J,3,"~3 $0 $0 $0 $0 $0 $13,350
P, mg~md~ $1 / 500 $0 $0 $0 $0 $0 $17,500
Equl[~,c~t $5 ~ $0 $0 $0 $0 $0 $5,000
~aia¢~e~ 13 000 0 0 0 0 0 13,000
8upplle~ 3~) 0 0 0 0 0 350
Audit 800 0 0 0 0 0 800
Total A~lmlni~$r~n - -~[~ $0 $0 $0 $0 $0 $19,150
~ Dl~emm~m Sr~ ~00 $0 $o $0 $0 $o $50,000
t-~a~e~m
Ra~i~rsemen~ , ,, $0 _ __$0 $0 $0 $0 $0
~'t~l~'~ C, ash $0 $0 $0 $0 $0 $0
Date Submitted Program Director