1998-427AN 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 anthonzed to execute an agreement between the
City of Donton and the Scholars Phmr Foundation, Inc for the payment and use of hotel tax
revenue, under the terms and eonchtlons contained in the agreement, a copy of which ~s attached
hereto and made a part hereof
~ That this ordinance shall become effective immediately upon its passage
and approval
1998
JA~ei~LLER, MAYOR
ATTEST
JENNIFI~R WALTERS, CITY SECRETARY
AGREEMENT BETWEEN THE CITY OF DENTON AND
SCHOLARS PHAIR FOUNDATION, INC (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 Scholars Phaxr Foundation, Ine, a legal entity existing under the laws of the
State of Texas (the "FOUNDATION")
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
paid by a hotel occupant, and
WHEREAS, by ordinance, the CITY has pmwded 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) authorizes the CITY to use revenue from its
municipal hotel occupancy tax to promote tourism and the convention and hotel mdustry by
advertising and conducting soheltataons and pmmotaonal programs to attract tourists and convention
delegates or registrants to the mumclpahty or its vlematy, and
WHEREAS, the FOUNDATION is well eqrupped to perform those activities, and
WHEREAS, Tex Tax Code §351 101(c) authorizes the CITY to delegate by contract w~th
the FOUNDATION, as an mdependent entity, the management and supervision of programs and
activities of the type desunbed heremabove funded with revenue from the mumclpal hotel
occupancy tax,
NOW, THEREFORE, m consideration of the performance of the mutual covenants and
promises contained herem, the CITY and the FOUNDATION agree and contract as follows
I. HOTEL TAX REVENUE PAYMENT
I I Consideration. For and m consideration of the aet~vmes to be performed by the
FOUNDATION under fins 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 sometunes herem referred to as the "agreed
payments" or "hotel tax funds")
1.2 Amount of Payments.
(a) As used m fins Agreement, the following terms shall have the followmg specific
meamngs
(0 The term "hotel tax revenue" shall mean the gross momes collected and
received by the City as municipal 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
Ordinance Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer
0O The term "Collection period" will mean the collection period for the CITY's
fiscal year It will mclude hotel tax revenue due to the Cxty for the relevant fiscal year and
collected through the 22nd day of the month following the close of the relevant fiscal year
0n) The term "base payment amount" shall mean a net amount of money equal
to the total hotel tax revenue collected by the CITY dunng any relevant period of tune (t e,
fiscal year or fiscal quarter), less (1) attorney and auchtmg costs recurred during such
relevant period of ttme for costs of eollectaon or auditing of hotel taxpayers Attomey and
auditing costs include fees prod to attorneys or agents not m the regular employ of the CITY
for winch attorneys or agents effect comphanee or collection of the hotel tax from taxpayers,
and (2) court costs and other expenses recurred m htlgatxon against or auchtmg of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year m
winch tins Agreement ~s m force Contract quarters will end on March 31st, June 30th,
September 30~, and December 31st of each contract year
(b) In return for satisfactory performance of the aet~wtxes set forth m tins Agreement
and all attachments hereto, the CITY shall pay to FOUNDATION an amount of money ~n each
contract year equal to the fixed contract amount of Ten Thousand Dollars ($10,000) Th~s
amount will be divided xnto no more than two payments Each payment ~s subject to receipt of
unused funds from the prior contract period 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 m ¶1 2, above, as determined by the hotel tax revenue collected
(b) In return for the satisfactory performance of the act~vmes set forth m tins 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 1st and 2nd
quarter of the calendar year Ifa second payment ~s due, that payment shall be pa~d upon receipt
of the reqmred reports and after the 25tl~ day following the last day of the contract quarter If
quarterly financxal and performance reports are not received w~tinn tinrty (30) days of the end of the
apphcable quarter, the recxp~ent may be held m breach of tins Agreement The CITY may wxthhold
the quarterly payment(s) unttl the appropriate reports are received and approved, winch approval
shall not unreasonably be vothheld
1 4 Other limitations regarding consideration.
(a) The funding of tins project m no way comnuts the CITY to future funding of tins
program beyond the cmTent contract period Any future funding xs solely the respons~bthty of the
FOUNDATION
Page 2
(b) It is expressly understood that tins contract m no way obhgates the General Fund or any
other momes or credits of the CITY
(c) CITY may withhold further allocations if CITY detenmnes that FOUNDATION's
expenditures deviate materially from their approved budget
II. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and m conslderalaon 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 adverttsmg and conducting sohmtat~ons and promotional programs to attract
tourists and convention delegates or registrants to the mumclpahty or 1ts v~cunty as authorized by
TEX TAx CODe §351 101(a) Funds for any calendar year which are unused by nudmght December
31st of that year shall be refunded to CITY wainn tinrty (30) days
2 2 Administrative Costs. The hotel tax funds received from the CITY by the FOUNDATION
may be spent for day-to-day operations, supphes, salaries, office rental, travel expenses, and other
admunstrative costs that are incurred dtrectly in the performance by the FOUNDATION of those
activities specffied m ¶2 1 above and are allowed by TEx TAX CODE §351 101(f)
2.3 Speeffie Restrictions on Use of Funds.
(a) That port,on of total admmastrative costs of the FOUNDATION for winch hotel tax
funds may be used shall not exceed that portion of the FOUNDATION's admmastraUve costs
actually recurred m conducting the act~xataes 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 chrectly 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
III RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The FOUNDATION shall prepare and subrmt to the Cl~y Manager of the CITY an
annual budget (see Exbaint "A") as approved by the City Council for each calendar year, for such
operations of the FOUNDATION m winch the hotel tax funds shall be used by the FOUNDATION
Tins budget shall specifically denttfy proposed expenditures of hotel tax funds by the
FOUNDATION In other words, the CITY should be able to audit specifically where the funds in
the separate account relatmg 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 this contract dunng any fiscal
year of tins Agreement unless a budget for such respective fiscal year has been approved in writing
by the Denton City Council authorizing the expenchture of funds Failure to submit an annual
budget may be considered a breach of contract, and if not reme&ed is considered grounds for
termination of tins Agreement as stated tn paragraph 4 2
Page 3
(b) The FOUNDATION acknowledges that the approval of such budget by the Denton
C~ty Council creates a fiduciary duty m the FOUNDATION w~th respect to the hotel tax funds prod
by the CITY to the FOUNDATION under this Agreement The FOUNDATION shall expend hotel
tax funds only in the manner and for the purposes specified ~n tins Agreement, TEx T^x Cove
§351 101(a) and m the budget as approved by the CITY
3 2 Separate Accounts The FOUNDATION shall mmntaln any hotel tax funds prod to the
FOUNDATION by the CITY m a separate bank account w~th segregated accounting, such that any
reasonable person can review the source of expenthtures of tax funds A bank reconcflmt~on report
(see Exhibit "B") ~s reqmred vath each quarterly report
3.3 Financial Records. The FOUNDATION shall mmntaln complete and accurate financial
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
suppo~ng serwces, mcludang, but not hrmted to, auditing 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 financial records, and
any other records relating to this Agreement shall be subJeCt to the Public Information Act, T~x
Gov'? CovE, ch 552, as hereafter emended
3.4 Qnarterly Reports. At, er ~mttal receipt of hotel tax funds, and wltlmn tinrty days after the
end of every 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 tins
Agreement describing the act~wt~es performed pursuant to tins Agreement dunng that contract
quarter, and (2) a hst of the expenditures made w~th regard to hotel tax funds pursuant to T~x T^x
COOE §351 101(c) Both the performance and expendature reports will be m a form either
determined or approved by the C~ty Manager or des~gnste (see Exlmint "B") The FOUNDATION
shall respond promptly to any request from the C~ty Manager of the CITY, or designate, for
additional mformat~on relating to the acmat~es performed under this Agreement
3.5 NotleeofMeetings. The FOUNDATION shall g~ve the C~ty Manager of the CITY
reasonable advance written nottce of the tune and place of all meetings of FOUNDATION's Board
of D~rectors, as well as any other meeting of any constituency of the FOUNDATION at winch tins
Agreement or any matter the subj eot of tins Agreement shall be considered Tins pmwslon 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 tins Agreement shall commence on January 1, 1999 and terminate at
nudmght on December 31, 1999 Tins term shall be a period of one year
4 2 Termination Without Cause.
(a) Tlus Agreement may be terminated by either party, with or without cause, by g~wng
the other party s~xty (60) days advance written nottce
Page 4
(b) In the event th~s contract ~s termmated by either party pursuant to Sectxon 4 2(a),
the CITY agrees to reimburse the FOUNDATION for any contractual obhgatlons of the
FOUNDATION undertaken by the FOUNDATION m satisfactory performance of those
act~wtles speeffied m ¶¶2 1 and 2 2 above and that were approved by the Council through the
budget, as noted m ¶3 1 This reimbursement is conditioned upon such contractual obhgatlons
having been meurred and entered into xn the good froth performance of those servaces
contemplated m ¶¶2 1 and 2 2 above, and further condmoned upon such contractual obhgations
having a term not exceeding the full term of th~s Agreement Notwithstanding any prowsaon
hereof to the contrary, the obhgatmn of the CITY to reimburse the FOUNDATION or to assume
the performance of any contractual obhgatmns of the FOUNDATION for or under any contract
entered into by the FOUNDATION as contemplated here~n shall not exceed 66 2/3% of the
current quarterly payment
(e) Further, upon termmat~on pursuant to ¶4 2(a), the FOUNDATION wall provide the
CITY 1) W~thm 10 busmess days from the termmatlon notification, a short-term budget of
probable expenchtures for the remtunmg 60 day period between termination notlficat~on and
contract termination Tins budget will be presented to Council for approval wxthin 10 business
days aller receipt by CITY If formal approval is not given within 10 business days and the
budget does not contmn any expenchturas that would be prohxblted by the Texas Tax Code, and
is waban the current contractual period approved budget, the budget will be considered
approved, 2) W~thm 30 days, a full accounting of all expenditures not prevxously and~ted by the
Cxty, 3) Wxtinn 5 business days of a request from the CITY, a hsting of expendatures that have
occurred since the last required reporting period, 4) a final accounting of all expenditures and tax
funds on the day of termmatmn The FOLrNDATION will be obligated to return any unused
funds or funds detormmed to be used improperly Any use of remmmng funds by the
FOUNDATION after not~fieatxon of termxnatxon is condmoned upon such contractual
obllgataons having been mcurred and entered into in the good faith performance of those services
contemplated m 2 1 and 2 2 above, and further condmoned upon such contractual obhgat~ons
hawng a term not exceedmg the full term of this Agreement
4.3 Automatic Termination. Tins Agreement shall automatacally tenmnate upon the
occurrence of any of the following events
(a) The tenmnatmn of the legal existence of the FOUNDATION,
(b) The msolvency of the FOUNDATION, the filmg of a petition m bankruptcy, e~ther
voluntarily or involuntarily, or an assignment by the FOUNDATION for the benefit of
creditors,
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
e~ther the CITY or the FOUNDATION for more than tturty (30) days after written not,ce of
such breach is given to the breaching party by the other party, or
(d) The fmlure of the FOUNDATION to submit a financial quarterly report wtuch complies
w~th the reportmg procedures required herein and generally accepted aceountang pnnclples
Page 5
prior to the begmmng of the next contract term, or quarterly as required by Section 1 3
hereof
4.4 Right to Immediate Termination Upon Litigation Notw:thstandmg any other prov:s~on
of flus Agreement, to rmtagate damages and to preserve exqdence and ~ssues for judicial
determmatmn, eather party shall have the right to terminate flus Agreement upon mmaechate
notice to the other party in the event that any person has anstituted ht~gation concerning the
aetiwt~es of the non-terminating party, and the terminating party reasonably beheves that
such acUv~taes are reqmred or pmtubated under flus Agreement
4.5 In the event that flus Agreement as 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, w~tlun 30 days after termination of flus Agreement
V. GENERAL PROVISIONS
$.1 Subcontract for Performance of Services. Noflung m this Agreement shall probabat, nor
be construed to prolubtt, the agreement by the FOUNDATION w~th another private entity, person,
or organazataon for the performance of those servaces described ~n ¶2 1 above In the event that the
FOUNDATION enters into any arrangement, contractual or otherwise, wath such other entity,
person or orgamzation, the FOUNDATION shall cause such other entity, person, or orgamzat~on to
adhere to, conform to, and be subject to all prowsaons, terms, and condlt~ons of flus Agreement and
to TEx T^x Coos ch 351, mcludmg reporUng reqmrements, separate funds maintenance, and
hmltations and protubations pertaining to expendature of the agreed payments and hotel tax funds
5.2 Independent Contractor. The FOUNDATION shall operate as an mdependent contractor
as to all servaees to be performed under flus Agreement and not as an officer, agent, servant, or
employee of the CITY The FOUNDATION shall have exclusave control of its operations and
performance of serwces hereunder, and such persons, entitleS, or orgamzatlons performmg the same
and the FOUNDATION shall be solely responsable for the acts and onussaons of ~ts d~rectors,
officers, employees, agents, and subcontractors The FOUNDATION shall not be consadered a
partner or jomt venturer wath the CITY, nor shall the FOUNDATION be considered nor m any
manner hold atself out as an agent or officaal representative of the CITY
5 3 Indemnification. The FOUNDATION agrees to lndemmfy, hold harmless, and defend the
CITY, ars officers, agents, and employees from and against any and all claims or suits for mjunes,
damage, loss, or habthty of whatever kind or character, arising out of or in connection w~th the
performance by the FOUNDATION or those services contemplated by flus Agreement, mcludmg
all such claims or causes of acUon based upon common, constituUonal or statutory law, or based, an
whole or m part, upon allegataons of neghgent or ~ntent~onal acts of FOUNDATION, ats officers,
employees, agents, subcontractors, hcensees and mwtees
5.4 Assignment. The FOUNDATION shall not assign flus Agreement w~thout first obtaimng
the written consent of the CITY
P~e6
5.5 Notice. Any notice reqmred to be g~ven under tbas Agreement or any statute, orchnance, or
regulation, shall be effectave when g~ven m writing and deposited m the Umted States mail, cemfied
mall, remm receipt requested, or by hand-dehvery, addressed to the respecttve partxes as follows
CITY ~
City Manager Scholars Phalr Foundation of Texas
City of Denton Donald Cox
215 E McKumey 210 S Elm St
Denton, TX 76201 State A
Denton, Texas 76201
5.6 Inurement. This Agreement and each pmwsxon hereof, and each and every right, duty,
obligation, 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 respecUve successors and assigns
5.7 Application of Laws. All terms, condxt~ons, and prowsions of flus Agreement are subJeCt
to all apphcable federal laws, state laws, the Charter of the City of Denton, all ordanances passed
pursuant thereto, and all judicial deterrmnat~ons relative thereto
5.8 Exclusive Agreement. Tlus Agreement contains the entire understanding and consUmtes
the entire agreement between the parttes hereto concermng the subject matter contained hereto
There are no representations, agreements, arrangements, or understandings, oral or written, express
or xmphed, between or among the parttes hereto, relatxng to the subject matter of flus Agreement,
which are not fully expressed hereto The terms and cond~tlons of this Agreement shall prevail
notwithstanding any variance m flus Agreement from the terms and conditions of any other
document relaUng to tins transactton or these transacUons
5.9 Duplicate Originals. Tins Agreement ~s executed m duplicate originals
5.10 Headings. The headings and subheadings of the various seCtions and paragraphs of this
Agreement are inserted merely for the purpose of convemence and do not express or imply any
hnutatlon, defimt~on, or extension of the specific terms of the seCUon and paragraph so designated
5.11 Severabflity. If any section, subseCtion, paragraph, sentence, clause, phrase or word in this
Agreement, or apphcataon thereof to any person or circumstance is held xnvalxd by any court of
competent junschciaon, such holding shall not affect the vahdaty of the remaimng portions of tins
Agreement, and the parties hereby declare they would have enacted such remalmng pomons despite
any such mvallrhty
EXECUTED tlus _~ day of ~,~ ,1998
JAC~J~ER, MAYOR
Page 7
ATTEST APPROVED AS TO LEGAL F. ORM
·
Jt~i~i iO~ER ~VALTERS, - '~ I:~XJUTY,
CITY SEC~T~Y ~Y AXIOMS_
P. O OAT ON,
C~rec~
ATTEST APPROVED AS TO LEGAL FO~
By By
Secretary
Page 8
Scholar Phair
HOT Compliance
FY' 98.99
Advertisino_
Direct Mail/Postg 1,875
Pubhcahons 4,000
Print 1,250
7,125
Build~ngs
Historical
Conv/Xpos/Promo 2,875 2,875
Travel
Total lO, O00 10,000
SCHOLARS PHAIR FOUNDATION
FINANCIAL REPORTS
Program Year 1999
t$T 2ND 3RD 4TH BUDGET
QUARTER QUARTER QUARTER QUARTER YEAR TO VS
(Jan.Mar) (Apr-Jun) (Jul-Sap) (Oct-Dec) DATE ACTUAL
$o $o $o $o $o $o
$0 $0 $0 $0 $0 $10,000
o o o o o o
$0 $0 $0 $0 $0 $10,000
$0 $0 $0 $0 $0 $1 875
0 0 0 0 0 4,000
0 0 0 0 0 1,250
$0 $0 $0 $0 $0 $7,125
$0 $0 $0 $0 $0 $2,875
$o $o $o $o $o $1o,ooo
$o $o $o $o $o $o
$o $o $o $o $o $o
~;~a~ e~ $o $o $o $o $o $o
I~mm ~t~melmll ~ o o o o o o
Ott~,~ o o o o o o
~~ $o $o $o $o $o $o
$o $o $o $o $o $o
Date Submitted Program Director