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1998-426AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN INTERLOCAL AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE IN SUPPORT OF THE COURTHOUSE- ON-THE SQUARE MUSEUM, AND PROVIDING AN EFFECTIVE DATE WHEREAS, Tex Tax Code §351 101(a) authorizes the City of Denton, Texas to use revenue from its mume~pal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the mumelpallty or its wclmty, as well as to engage in historical restorataon and preservation projects and actlwt~es and advert~amg and conducting sohcltat~ons and promotional programs to encourage tourists and convention delegates to wslt preserved tnstonc rotes and museums, and WHEREAS, the County of Denton, Texas is well eqmpped to perform those activities by its operation of the Courthouse-on-the-Square Museum, and WHEREAS, Tex Tax Code §351 101(c) authonzes the C~ty of Denton, Texas to delegate by contract wath the County of Denton, Texas, as a governmental entity, the management and supervision of programs and activities of the type described heremabove funded w~th revenue from the mumc~pal hotel occupancy tax, and WHEREAS, both the City of Denton, Texas and the County of Denton, Texas have a secondary source of authority to enter mto an lnterlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as the agreement is authorized by both governmental bodies, the agreement states the purpose, terms, rights, and duties of the contracting parties, the conslder~on is being pa~d by City of Denton, Texas out of current revenues, the compensation is fmr, and the services to be performed are "museum services" authonzed under §791 003(3)(F) of the Texas Government Code, which each party ~s authorized to perform lnchvldually, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS ~ That the Mayor is hereby authorized to execute an lnterlocal agreement between the C~ty of Denton and Denton County for the payment and use of hotel tax revenue ~n support of the Courthouse-On-The Square Museum, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof S_~ That this ordmanco shall become effective ~mmedlately upon ats passage and approval 1998 JAC~I~LLEP,, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY,_GIT3/ATTORNEY PAGE 2 AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY, TEXAS (COURTHOUSE ON THE SQUARE MUSEUM) (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 County of Denton, Texas, a governmental entity ex~stang under the laws of the State of Texas, contractmg on behalf of ~ts Courthouse-on-the-Square Museum (eollecttvely, the "MUSeUm") WHEREAS, Tex Tax Code §351 002 authorizes the CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the consideration p0ad by a hotel occupant, and WHEREAS, by ordinance, the CITY has provided for the assessment and collection of a municapal 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 mumcipal hotel occupancy tax to promote tourism and the convention and hotel mdustry by adve~smg and ennductmg soheitat~ons and promotional programs to atlract tourists and convention delegates or registrants to the mumcipahty or its w¢lmty, as well as to engage in tustoneal restoration and preserv~on projects and actawt~es and adve~smg and conducting soheitatlons and promotional programs to encourage tourists and convention delegates to visit preserved h~stonc sites and museums, and WHEREAS, the MUSEUM is well equipped to perform those act~wt~es, and WHEREAS, Tex Tax Code §351 101(c) authorizes the CITY to delegate by contract w~th the MUSEUM, as a governmental entity, the management and supervision of programs and act~wt~es of the type described heremabove funded w~th revenue from the mumclpal hotel occupancy tax; and WHEREAS, both CITY and MUSEUM have a secondary source of authority to enter into flus Agreement as an lnterlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as the Agreement ~s anthonzed by both governmental bodies, the Agreement states the purpose, terms, rights, and duties of the contracting part~es, the consideration is being ptud by CITY out of current revenues, the compensation is f0ar, and the serwces to be performed are "museum serwces" authorized under §791 003(3)(F) of the Texas Government Code, wluch each party is authorized to perform mdivldually, NOW, THEREFORE, ~n considerat~on of the performance of the mutual covenants and prormses contained herein, the CITY and the MUSEUM agree and contract as follows I. HOTEL TAX REVENUE PAYMENT 1.1 Consideration For and in consideration of the act~wt~es to be performed by the MUSEUM under flus Agreement, the CITY agrees to pay to the MUSEUM a port~on of the hotel tax revenue collected by the CITY at the rates and m the manner specified hereto (such payments by the CITY to the MUSEUM sometimes hereto referred to as the "agreed payments" or "hotel tax funds") 1 2 Amount of Payments. (a) As used m tbas Agreement, the following terms shall have the followtng specffic meamngs 0) The term "hotel tax revenue" shall mean the gross monies collected and received by the C~ty as mumc~pal hotel occupancy tax at the rate of seven percent (7%) of the puce prod for a room m a hotel, pursuant to Texas Tax Code 351 002 and City Ordinance Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer 00 The term "Collectton period" will mean the collectton period for the CITY's fiscal year It will include hotel tax revenue due to the Ctty 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 '"oase payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by the CITY dtmng any relevant period of ttme (t e, fiscal year or fiscal quarter), less (1) attorney and auditing costs ~ncurred dunng such relevant period of t~me for costs of collectton or auditing of hotel taxpayers Attorney and audltmg costs include fees pa~d to attorneys or agents not tn the regular employ of the CITY for wl~ch attorneys or agents effect comphance or collectton of the hotel tax from taxpayers, and (2) court costs and other expenses recurred m httgatton against or auditing of such taxpayers 0v) The term "contract quarter" shall refer to any quarter of the calendar year m wluch th~s A~eement ~s ~n force Contract quarters wtll end on March 31st, June 30t~, September 30'", and December 31st of each contract year (b) In return for satisfactory performance of the aettwt~es set forth m thts Agreement and all attachments hereto, the CITY shall pay to MUSEUM an amount of money tn each contract year equal to the lesser amount of Etght and Thirty-One One Hundredths percent (8 31%) of the annual base payment amount or the fixed contract amount of S~xty-N~ne Thousand and S~xty-four Dollars ($69,064) Th~s amount will be divided tnto quarterly payments equal to 25% of the annual fixed contract amount, unless the CITY can show w~th reasonable certamty that the annual base payment amount will be less than originally esttmated for the fiscal year The fourth quarterly payment wtll represent 25% of the fixed contract amount or the unpmd remmnder of 8 31 °A of the base payment amount, whmhever ~s less Each quarterly payment ~s subject to receipt of unused funds from the prior contract period and the recetpt of the required quarterly reports 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the MUSEUM of those amounts specffied ~n ¶1 2, above, as determined by the hotel tax revenue collected Page 2 (b) Each quarterly payment shall be prod 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 within tinrty (30) days of the end of the applicable contract quarter, the recipient may be held m breach of tlus Agreement The CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, winch approval shall not unreasonably be w~thheld 1 4 Other limitations regarding consideration. (a) The funchng of this project in no way commits the CITY to future funding of tins program beyond the current contract period Any future funding is solely the responsibility of the MUSEUM (b) It is expressly understood that tbas contract in no way obligates the General Fund or any other momes or credits of the CITY (c) CITY may withhold further allocations if CITY deternnnes that MUSEUM's expenditures deviate materially fi.om their approved budget II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and m consideration of the payment by the CITY to the MUSEUM of the agreed payments of hotel tax funds specified above, the MUSEUM agrees to use such hotel tax funds only for advertising and conducting sohcltat~ons and promotional programs to attract tourists and convention delegates or registrants to the munlmpahty or its viclmty, as well as to engage in historical restoration and preservation projects and activities and advertising and conducting solicitations and promotional programs to encourage tourists and convention delegates to xasit preserved instonc sites and museums, as authorized by TEx T^x CODE §351 101(a)(3) and (a)(5) Funds for any calendar year winch are unused by nudmght December 31st of that year shall be refunded to CITY within thirty (30) days 2 2 Administrative Costs. The hotel tax funds received fi.om the CITY by the MUSEUM may be spent for day-to-day operatmns, supphes, salaries, office rental, travel expenses, and other admlmstratlve costs that are incurred directly m the performance by the MUSEUM of those actlvltles specified m ¶2 1 above and are allowed by Tl~x T^x CODE §351 101(0 2.3 Specific Restrictions on Use of Funds. (a) That po~on of total admlmstrative costs of the MUSEUM for winch hotel tax funds may be used shall not exceed that portion of the MUSEUM's admlmstrative costs actually incurred in conducting the activities specified in ¶2 1 above (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of winch 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 in an efficient and professional manner Page 3 III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) The MUSEUM shall prepare and subunt to the City Manager of the CITY an annual budget (see Exbablt "A") as approved by the City Council for each calendar year, for such operations of the MUSEUM in wtuch the hotel tax funds shall be used by the MUSEUM Tins budget shall epecffieally identify proposed expendatures of hotel tax funds by the MUSEUM In other words, the CITY should be able to audit specifically where the funds in the separate account relating to hotel tax funds will be expended The CITY shall not pay to the MUSEUM any hotel tax revenues as set forth in Section I of flus contract dunng any fiscal year of flus Agreement unless a budget for such respectave fiscal year has been approved m writing by the Denton Caty Council authonzang the expenditure of funds Failure to submat an annual budget may be considered a breach of contract, and if not remedied is considered grounds for termination of flus Agreement as stated an paragraph 4 2 (b) The MUSEUM acknowledges that the approval of such budget by the Denton City Council creates a fiduciary duty in the MUSEUM with respect to the hotel tax funds prod by the CITY to the MUSEUM under this Agreement The MUSEUM shall expend hotel tax funds only m the manner and for the purposes specified in flus Agreement, Tex TAX COVE §351 101(a) and in the budget as approved by the CITY 3 2 Separate Accounts. The MUSEUM shall mmntam any hotel tax funds prod to the MUSEUM by the CITY in a separate bank account with segregated accounting, such that any reasonable person can review the source of expenditures of tax funds A bank reconcthation report (see Exinbit "B") is reqmred with each quarterly report 3.3 Finaneial Records. The MUSEUM shall mamtmn complete and accurate financial records of each expenditure of the hotel tax funds made by the MUSEUM These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for supporting sermees, including, but not hunted 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 available for inspection and review by the party malong the request MUSEUM understands and accepts that all such financial records, and any other records relating to tins Agreement shall be subject to the Public Information Act, TEX GOV'T CODE, ch 552, as hereafter amended 3.4 Quarterly Reports. Within flurry days after the end of every contract quarter, MUSEUM shall furmsh to CITY (1) a performance report of the work performed under ttus Agreement describing the activities performed pursuant to tins Agreement during that contract quarter, and (2) a list of the expenditures made w~th regard to hotel tax funds pursuant to TEx TAX CoD~. §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 Extnblt "B") The MUSEUM shall respond promptly to any request from the City Manager of the CITY, or designate, for adchtaonal information relating to the activities performed under fins Agreement 3.5 Notice of Meetings. The MUSEUM shall gtve the Cnty Manager of the CITY reasonable advance written not, ce of the ttme and place of all meetings of MUSEUM's Board of Directors, as well as any other meeting of any constttuency of the MUSEUM at which this Agreement or any matter the subject of tins Agreement shall be consndered This provlsnon shall not be deemed to require the MUSEUM to g~ve notice of any executive session of the Executive Commnttee of the MUSEUM IV. TERM AND TERMINATION 4.1 Term. The term of tins Agreement shall commence on January 1, 1999 and termnnate at mndmght on December 31, 1999 This term shall be a period of one year 4.2 Termination Without Cause. (a) This Agreement may be terminated by enther party, wnth or without cause, by g~ving the other party sixty (60) days advance written not~ce (b) In the event this contract ns terminated by enther party pursuant to Sectmn 4 2(a), the CITY agrees to renmburse the MUSEUM for any contractual oblngatlons of the MUSEUM undertaken by the MUSEUM nn satisfactory performance of those actlvitnes specnfied 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 conditnoned upon such contractual oblngatnons having been incurred and entered into m the good faith performance of those servnces contemplated nn ¶¶2 1 and 2 2 above, and further condntmned upon such contractual obhgatlons having a term not exceeding the full term of tins Agreement Notwlthstandnng any provnsnon hereof to the contrary, the oblngatlon of the CITY to reimburse the MUSEUM or to assume the performance of any contractual obhgatlons of the MUSEUM for or under any contract entered into by the MUSEUM as contemplated herein shall not exceed 66 2/3% of the current quarterly payment (e) Further, upon termmat~on pursuant to ¶4 2(a), the MUSEUM will provide the CITY 1) Wnthin 10 busmess days from the termination notnficatnon, a short-term budget of probable expenditures for the remaining 60 day period between termination notnfication and contract terminatmn This budget will be presented to Council for approval within l0 business days after receipt by CITY If formal approval ns not given within l0 business days and the budget does not contain any expenditures that would be prohibnted by the Texas Tax Code, and is within the current contractual period approved budget, the budget will be considered approved, 2) Wnthin 30 days, a full accounting of all expenditures not prevnously audited by the City, 3) Wnthm 5 business days of a request from the CITY, a hstmg of expenditures that have occurred since the last reqtured reporting period, 4) a final accounting of all expendntures and tax funds on the day of termination The MUSEUM will be oblngated to return any unused funds or funds determined to be used ~mproperly Any use of remalnmg funds by the MUSEUM after notlficatnon o~'termmatlon ns conditnonad upon such contractual oblngatnons having been incurred and entered into m the good fatth performance of those services contemplated m 2 1 and 2 2 above, and further conditioned upon such contractual obhgatlons having a term not exceednng the full term of this Agreement Page 4.3 Automatic Termination. Tins Agreement shall automatically temnnate upon the occurrence of any of the following events (a) The tertmnataon of the legal existence of the MUSEUM, (b) The insolvency of the MUSEUM, the fihng of a petition m bankruptcy, e~ther voluntarily or involuntarily, or an assignment by the MUSEUM for the benefit of crechtors, (c) The continuation of a breach of any of the terms or conditions of tins Agreement by e~ther the CITY or the MUSEUM for more than thirty (30) days afier written not,ce of such breach ~s g~ven to the breacinng party by the other party, or (d) The fmlure of the MUSEUM to subnnt a financtal quarterly report winch comphes w~th the reporting procedures reqmred hereto and generally accepted accounting pnnc~ples prior to tho begunnng of the next contract term, or quarterly as reqmred by Section 1 3 hereof 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other pmws~on of tins Agreement, to nnt~gate damages and to preserve exqdence and ~ssues for jud~cml determination, e~ther party shall have the right to tenmnate tins Agreement upon nnmed~ate not,ce to the other party m the event that any person has ~nst~tuted ht~gat~on concerning the act~wt~es of the non-terrmnatmg party, and the tenmnatmg party reasonably behoves that such actlwt~es are reqmred or pmtnb~ted under this Agreement 4 5 In the event that tins Agreement ~s terminated pursuant to ¶¶4 3 or 4 4, MUSEUM agrees to refund any and all unused funds, or funds determined by the CITY to have been used ~mproperly, w~thm 30 days after termination ofth~s Agreement V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing ~n tins Agreement shall proinb~t, nor be construed to pmlnb~t, the agreement by the MUSEUM w~th another private enttty, person, or orgamzatton for the performance of those services described ~n ¶2 1 above In the event that the MUSEUM enters late any arrangement, contractual or otherwise, w~th such other entity, person or organization, the MUSEUM shall cause such other entity, person, or orgamzatton to adhere to, conform to, and be subject to all prowmons, terms, and conchtlons of tins Agreement and to Tax TAX COD£ ch 351, mcludmg reporting reqmrements, separate funds mtnntenance, and hrmtat~ons and proinb~t~ons pertannng to expenditure of the agreed payments and hotel tax funds 5 2 Independent Contractor. The MUSEUM shall operate as an ~ndependent contractor as to all services to be performed under tins Agreement and not as an officer, agent, servant, or employee of the CITY The MUSEUM shall have exclusive control of ~ts operations and performance of services hereunder, and such persons, ent~t~as, or orgamzat~ons performing the same and the MUSEUM shall be solely responsible for the acts and ormss~ons of ~ts d~rectors, officers, employees, agents, and subcontractors The MUSEUM shall not be considered a partner or joint venturer w~th the CITY, nor shall the MUSEUM be considered nor m any manner hold ~tself out as an agent or officml representative of the CITY Page 6 5 3 Indemnification. To the extent authorized by law, the MUSEUM agrees to indemnify, hold harmless, and defend the CITY, its officers, agents, and employees from and agmnst any and all clmms or suits for injuries, damage, loss, or liability of whatever lend or character, arising out of or in connection with the performance by the MUSEUM or those services contemplated by this Agreement, including all such clmms or causes of action based upon common, constitutional or statutory law, or based, m whole or in part, upon allegations of negligent or intentional acts of MUSEUM, Its officers, employees, agents, subcontractors, licensees and lnvltees 5.4 Assignment. The MUSEUM shall not assign flus Agreement without first obtmmng the written consent of the CITY 5.5 Notice. Any notice required to be given under flus Agreement or any statute, ordinance, or regulation, shall be effective when g~ven m writing and deposited in the Umted States mall, certified mall, return receipt requested, or by hand-dehvery, addressed to the respective parties as follows CITY MUSE~ City Manager Denton County Courthouse-On-The Square City of Denton Museum 215 E McKumey Courthouse-On-The-Square Denton, TX 76201 Georgia Caraway, Interim Director 110 W Hickory St Denton, Texas 76201 5 6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of the CITY and the MUSEUM and their respective successors and assigns 5.7 Application of Laws. All terms, conditions, and provisions of this 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 deternunations relative thereto 5 8 Exclusive Agreement. Tlus Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concermng the subject matter contained hereto There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the pames hereto, relating to the subject matter of flus Agreement, which are not fully expressed hereto The terms and conditions of this Agreement shall prevail notwithstanding any vanance m flus Agreement from the terms and conditions of any other document relating to this transactmn or these transactions 5 9 Duplicate Originals This Agreement is executed an duplicate originals 5 10 Headings. The headings and subheadings of the vanous sections and paragraphs of flus Agreement are inserted merely for the purpose of convemence and do not express or imply any hrmtation, defimtion, or extension of the specific terms of the section and paragraph so designated Page 7 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word ~n th~s Agreement, or apphcatlon thereof to any person or circumstance ~s held lnvahd by any court of competent junsd~ctmn, such holdmg shall not affect the val,dfly of the remmmng portions of this Agreement, and the parttes hereby declare they would have enacted such remaimng portions despite any such ~nvahdlty ~ EXECUTED tlus _~ day of ~ ,1998 THE CITY OF DENTON, TEXAS By (~~5'~.~A_~ JACI~ER, IVfAYOR ATTEST APPROVED AS TO LEGAL FORM jt~NI~FEI~WALTERS, HERBERT L PROLrFY, - CITY SECRETARY CITY ATTORNEY DENTON COUNTY, TEXAS ATTEST APPI~VED AS TO LEGAL FOR2~ By By /~/~ ~ ~~ Secretary /~ DISTRICT ATTORNEY / Page 8 COURTHOUSE ON THE SQUARE FINANCIAL REPORT Program Year t 999 BUDG=i QUARTER QUARTER QUARTER QUARTER YEAR TO V$ (Jan.Mar) (Apr. Jun) (Jul. Sap) (Oct. Dec) DATE ACTUAL ~~ SO SO SO SO SO SO ~ Tm~ ~ SO So SO $o SO Se~ 064 ~,m~m~ 0 0 0 0 0 0 T"~a~ $o $o $o $o $o $69 064 ~,~t :F~eksts ~ $o $o $o $o $o $8oo ~ 0 0 0 0 0 9~000 ~lr~ SO So $o so $o Sg 800 $~m~ar ~ $o $o $o so $o $6 ooo a~ll~ o o o o o ~ ooo ~ ~ ~ 0 0 0 0 0 2,000 ;umlst~ . .7m'T~, o o o o o 7,500 ~ ~' $0 $0 $0 $0 $0 $23 500 aab, r,,r.Us~a $'t~,~0, $o so So $o SO $12,ooo ~a~e,4,~ 4~'1~A 0 0 0 0 0 4 194 I.m~ sam,,e~ ~ o o o o o lO ooo ~m.~am'~ 4~=~ o o o o o 4,000 amdm,tt Imscms~ ~ o o o o o 3 ooo i~a~a~& rm~ ~o o o o o o 600 ~l~amm ~ o o o o o 17o ~t Fee ~IA~ o o o o o 1,ooo ~ ,,~~ o o o o o ~oo ~~ $o $o $o $o $o S35 764 ~ ~ ~ $0 $0 $0 $0 $0 $69 064 ~~ $o $o $o SO $o $o ~l--~ml~ $o $o $o $o $o so ~r,4m~ $o $o $o $o $o $o ~~~ o o o o o o 1~l~m,~ 0 o o o 0 o ~,~ $o $o $o $o $o $o $o $o $o $o $o $o Date Submitted Program Director EXHIBIT B Revised Proposed Budget for Hotel Tax Expenditures January 1, 1999 -- December 31, 1999 Staff Salary, Tourism Liaison $12,000 Staff Benefits, Tourism L~a~son 4,194 Staff Salary, Tourism-related responsibilities, Museum D~rector, partial 10,000 Staff Salary, Tourism-related responsibilities, Collections Manager 6,000 Staff Salary, Tourism-related responsibilities, Administrative Secretary, partial 4,000 Contract Labor 1,000 Student Interns (2) 3,000 Volunteer Recruitment, Training, Recognition 600 Publicity Packets for Tourists/Students 800 Tourism Promotion and Advertising 9,000 Membershlp Dues 170 Independent Audltor Fee 1,000 Off~ce Supplies 800 Supplies for Archival Preservation 7,000 Reference Books for Preservation 2,000 Furnishings & Archival Equipment 7,500 $69,064