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1998-428AN 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 DENTON COUNTY HISTORICAL COMMISSION, AND PROVIDING AN EFFECTIVE DATE WHEREAS, Tex Tax Code §351 101(a) anthonzes the Caty of Denton, Texas to use revenue from ats mumeapal hotel occupancy tax to promote tourism and the convenUon and hotel industry by advertising and conducting sohcatat~ons and promotional programs to attract tourists and convention delegates or registrants to the mumeapahty or ats Vleunty, as well as to engage m hastoncal restoration and preservalaon projects and actlwt~es and advettasmg and condueUng sohcltat~ons and promotional programs to encourage tourists and convention delegates to vas~t preserved lustone sates and museums, and WHEREAS, the County of Denton, Texas as well eqmpped to perform those actlvat~es by ars operation of the Denton County Hastoneal Commxssaon, and WHEREAS, Tex Tax Code §351 101(c) anthonzes the C~ty of Denton, Texas to delegate by contract with the County of Denton, Texas, as a governmental entaty, the management and supervlsaon of programs and act~wtaes of the type described herelnabove funded w~th revenue fi'om the mumeapal hotel occupancy tax, and WHEREAS, both the Caty of Denton, Texas and the County of Denton, Texas have a secondary source of authority to enter into an anterlocal cooperataon agreement, pursuant to Chapter 791 of the Texas Government Code, as the agreement as authorized by both governmental bodaes, the agreement states the purpose, terms, rights, and duties of the contracting partaes, the cons~derataon as bemg prod by Caty of Denton, Texas out of current revenues, the compensation ~s fair, and the services to be performed are "museum services" authorized under §791 003(3)(F) of the Texas Government Code, Much each party ~s authorized to perform mdavadually, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS ~ That the Mayor is hereby authorized to execute an agreement between the Caty of Denton and Denton County for the payment and use of hotel tax revenue ~n support of the Denton County Hastoneal Commission, under the terms and cond~txons contained an the agreement, a copy ofwhach as attached hereto and made a part hereof ~ECTION II That thas ordinance shall become effective ~mmed~ately upon ~ts passage and approval 1998 ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM PAGE 2 AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY, TEXAS (DENTON COUNTY HISTORICAL COMMISSION) (CY1999) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the C~ty of Denton, Texas, a muracapal corporation (the "CITY"), and County of Denton, Texas, a governmental enUty exastang under the laws of the State of Texas, contracting on behalf of ars Denton County Fastoncal Commission (collectavely, the "DCHC") WHEREAS, Tex Tax Code §351 002 authorizes the CITY to levy by ordinance a mumc~pal hotel oceupeney tax ("hotel tax") not exceeding seven percent (7%) of the consaderat~on poad by a hotel oeenpant, and WHEREAS, by ordinance, the CITY has provided for the assessment and collectaon of a mumcapal hotel occupancy tax m the Caty of Denton of seven percent (7%), and WHEREAS, Tex Tax Code §351 101(a) authorizes the CITY to use revenue from ars mumcapal hotel occupancy tax to promote tourism and the convention and hotel industry by advertasmg and conducting sohcatat~ons and promotional programs to attract tourists and convention delegates or registrants to the mumcapallty or its Vlcamty, as well as to engage an tustoncal restoration and preservation projects and aetawt~es and adverUsmg and conducting soheltataons and promotaonal programs to encourage tourists and conventaon delegates to v~sat preserved h~stonc sates and museums, and WHEREAS, the DCHC is well eqmpped to perform those actavat~es, and WHEREAS, Tex Tax Code §351 101(c) authorizes the CITY to delegate by contract with the DCHC, as a governmental entaty, the management and supervasaon of programs end acUvatles of the type described heremabove funded with revenue from the mume~pal hotel oceupency tax, and WHEREAS, both CITY end DCHC have a secondary source of authority to enter mto ttus Agreement as an mterlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as the Agreement as authorized by both governmental bodies, the Agreement states the purpose, terms, rights, and duties of the contracting pames, the cons~derataon as being poad by CITY out of current revenues, the eompensataon ~s fair, and the servaces to be performed are "museum serwces" authorized under §791 003(3)(F) of the Texas Government Code, wluch each party is authorized to perform mdivadually, NOW, THEREFORE, m eonsaderat~on of the performance of the mutual covenants and promases enntamed hereto, the CITY and the DCHC agree and contract as follows I. HOTEL TAX REVENUE PAYMENT 1 1 Consideration. For and m consideration of the act~vatxes to be performed by thc DCHC under flus Agreement, the CITY agrees to pay to the DCHC a portaon of the hotel tax revenue collected by the CITY at the rates and m the manner specafied herean (such payments by the CITY to the DCHC sometimes hereto referred to as the "agreed payments" or "hotel tax funds") 1.2 Amount of Payments (a) As used an tins Agreement, the following terms shall have the followang specafic meanings (0 The term "hotel tax revenue" shall mean the gross morons collected and receaved by the Caty as mummpal hotel occupancy tax at the rate of seven percent (7%) of the puce prod for a room an a hotel, pursuant to Texas Tax Code 351 002 and Caty Orchnanee Hotel tax revenue wall mcinde penalty and anterest related to the late payments of the tax revenue by the taxpayer 0t) The term "Collectaon period" will mean the collectaon period for the CITY's fiscal year It wall include hotel tax revenue due to the City for the relevant fiscal year and collected through the 22nd day of the month followang the close of the relevant fiscal year (hi) 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 0 e, fiscal year or fiscal quarter), less (1) attorney and auditing costs tncurred dunng such relevant period of tame for costs of collectton or andatmg of hotel taxpayers Attorney and auchtmg costs mclude fees prod to attorneys or agents not m the regular employ of the CITY for winch attorneys or agents effect comphance or collectaon of the hotel tax fxom taxpayers, and (2) court costs and other expenses mcurred an htagatton against or andltmg of such taxpayers 0v) The term "contract quarter' shall refer to any quarter of the calendar year m winch tins Agreement as m force Contract quarters will end on March 31st, June 30th, September 30~, and December 31st of each contract year Co) In return for satasfactory performance of the actavmes set forth tn this Agreement and all attachments hereto, the CITY shall pay to DCHC an amount of money ~n each contract year equal to the lesser amount of Four and Twenty-One One Hundredths percent (4 21%) of the annual base payment amount or the fixed contract amount of Thirty-Fare Thousand Dollars ($35,000) This amount wall be davaded anto quarterly payments equal to 25% of the annual fixed contract amount, unless the CITY can show with reasonable certmnty that the annual base payment amount wall be less than originally estamated for the fiscal year The fourth quarterly payment wall represent 25% of the fixed contract amount or the unpmd remmnder of 4 21% of the base payment amount, winehever as less Each quarterly payment as subject to receapt of unused funds fi.om the prior contract period and the receipt of the reqmred quarterly reports 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the DCHC of those amounts specafied m ¶1 2, above, as determined by the hotel tax revenue collected P~e2 (b) Each quarterly payment shall be prod upon receipt of the reqmred reports and after the 25th day following the last day of the contract quarter If quarterly, financial and performance reports are not received w~ttnn thirty (30) days of the end of the apphcable contract quarter, the recipient may be held m breach of tins Agreement The CITY may w~thhold the quarterly payment(s) untal the appropriate reports are received and approved, wluch approval shall not unreasonably be wtthheld 1.4 Other hmitations regarding consideration. (a) The funding of tins project m no way comnuts the CITY to future funding of this program beyond the current contract period Any future funding ~s solely the responslbthty of the DCHC (b) It is expressly understood that flus contract in no way obhgates the General Fund or any other momes or credits of the CITY (c) CITY may w~thhold further allocations ~f CITY determines that DCHC's expenditures dewate materially from their approved budget II. USE OF HOTEL TAX REVENUE 2 1 Use of Funds For and m conslderatmn of the payment by the CITY to the DCHC of the agreed payments of hotel tax funds specified above, the DCHC agrees to use such hotel tax funds only for advemsmg and conducting sohcitatmns and promotmnal programs to attract tourists and conventton delegates or registrants to the mumclpahty or 1ts wclmty, as well as to engage ~n lustoncal restoration and preservatmn projects and actlwt~es and advertising and conducting solicitations and promotmnal programs to encourage tourists and convention delegates to wmt preserved instonc sites and museums, as authorized by Tex TAX CODe §351 101(a)(3) and (a)(5) Funds for any calendar year winch are unused by mldmght December 31st of that year shall be refunded to CITY wltlun thrty (30) days 2.2 Administrative Costs The hotel tax funds received from the CITY by the DCHC may be spent for day-to-day operations, supphes, salaries, office rental, travel expenses, and other admlmstmtlve costs that are recurred chrectly ~n the performance by the DCHC of those act~wt~es specffied ln¶2 1 above and are allowed by TI/x TAx CODe §351 101(f) 2.3 Specific Restrictions on Use of Funds. (a) That portion of total adrmmstratlve costs of the DCHC for wtuch hotel tax funds may be used shall not exceed that pomon of the DCHC's administrative costs actually ~ncurred tn conducting the act~wt~es 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 activity the primary purpose ofwluch ~s not d~rectly related to the promotmn 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 IH. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) The DCHC shall prepare and subrmt to the City Manager of the CITY an annual budget (see Exlubtt "A") as approved by the City Council for each calendar year, for such operations of the DCHC m wluch the hotel tax funds shall be used by the DCHC This budget shall specifically identify proposed expendttures of hotel tax funds by the DCHC In other words, the CITY should be able to aucht specifically where the funds m the separate account relating to hotel tax funds w~ll be expended The CITY shall not pay to the DCHC any hotel tax revenues as set forth m Section I of tlus contract during any fiscal year of tlus Agreement unless a budget for such raspect~ve fiscal year has been approved m writing by the Denton C~ty Council authorizing the expenditure of funds Failure to subnut an annual budget may be considered a breach of contract, and ~f not remedied ~s considered grounds for ternunat~on oftlus Agreement as stated m paragraph 4 2 (b) The DCHC acknowledges that the approval of such budget by the Denton City Cotmc~l ereatas a fiduciary duty m the DCHC w~th respect to the hotel tax funds pa~d by the CITY to the DCHC under tlus Agreement The DCHC shall expend hotel tax funds only m the manner and for the purposes specified m tlus Agreement, TEX TAX CODE §351 101(a) and m the budget as approved by the CITY 3.2 Separate Accounts. The DCHC shall maintain any hotel tax funds p~ud to the DCHC by the CITY m a separate bank account w~th segregated accounting, such that any reasonable person can rewew the source of expenditures of tax funds A bank recone~hatlon report (see Exlubtt "B") is requtrod w~th each quarterly report 3.3 Financial Records. The DCHC shall mamtam complete and accurate financial records of each expenditure of the hotel tax funds made by the DCHC These funds are required to be classified as restricted funds for audtted financial purposes, and may not be used for suppo~ng serwcas, including, but not lm~ted to, auchtmg fees and attorney's fees Upon reasonably advance written request of the Denton Ctty Council, the C~ty Manager or designate, or any other person, shall make such financial records avmlable for inspection and review by the party malang the request DCHC understands and accepts that all such financial records, and any other records relating to th~s Agreement shall be subject to the Pubhc Information Act, TEX GOV'T CODE, eh 552, as hereafter amended 3.4 Quarterly Reports. W~tinn tYarty days after the end of every contract quarter, DCHC shall furmsh to CITY (1) a performance report of the work performed under tlus Agreement describing the acttwt~es performed pursuant to ttus Agreement dunng that contract quarter, and (2) a hst of the expenchtures made with regard to hotel tax funds pursuant to T£x TAX CODE §351 101(C) Both the performance and expenchture reports w~ll be m a form e~ther determined or approved by the C~ty Manager or designate (see Exlublt "B") The DCHC shall respond promptly to any request from the C~ty Manager of the CITY, or designate, for adcht~onal mformat~on relating to the actlvmes performed under tlus Agreement 3 5 Notice of Meetings The DCHC shall g~ve the C~ty Manager of the CITY reasonable advance written not,ce of the t~me and place of all meetings of DCHC's Board of Directors, as well Page 4 as any other meeting of any constituency of the DCHC at which flus Agreement or any matter the subJeCt of flus Agreement shall be considered This provision shall not be deemed to reqmre the DCHC to g~ve nottce of any executive session of the Executive Committee of the DCHC IV. TERM AND TERMINATION 4 1 Term The term of fins Agreement shall commence on January 1, 1999 and tenmnate at mldmght on December 31, 1999 Tlus term shall be a period of one year 4 2 Termination Without Cause. (a) Tins Agreement may be terminated by either party, w~th or without cause, by giving the other party sixty (60) days advance written notice (b) In the event this contract as terminated by either party pursuant to Section 4 2(a), the CITY agrees to reimburse the DCHC for any contractual obligations of the DCHC undertaken by the DCHC m satisfactory performance of those activities specified 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 obligations having been recurred and entered into m the good froth performance of those services contemplated in ¶¶2 1 and 2 2 above, and further eondmoned upon such contractual obligations having a term not exceeding the full term of tlus Agreement Notwithstanding any provision hereof to the contrary, the obligation of the CITY to reimburse the DCHC or to assume the performance of any contractual obligations of the DCHC for or under any contract entered into by the DCHC as contemplated herein shall not exceed 66 2/3% of the current quarterly payment (c) Further, upon termmatmn pursuant to ¶4 2(a), the DCHC will provide the CITY l) Within 10 business days from the termination notification, a short-term budget of probable expenditures for the remalmng 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 l0 business days and the budget does not contain any expenditures that would be prolublted by the Texas Tax Code, and is wltinn 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 hstmg of expenditures that have occurred since the last required reporting period, 4) a final accounting of all expenditures and tax funds on the day of termlnatmn The DCHC will be obhgated to return any unused funds or funds determined to be used improperly Any use ofremmnmg funds by the DCHC 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, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement 4 3 Automatic Termination. Tlus Agreement shall automatically terrmnate upon the occunence of any of the following events (a) The termination of the legal existence of the DCHC, Page 5 (b) The insolvency of the DCHC, the fihng of a pet,t~on m bankruptcy, e~ther voluntarily or ~nvoluntanly, or an assignment by the DCHC for the benefit of creditors, (c) The continuation of a breach of any of the terms or condmons of tins Agreement by either the CITY or the DCHC for more than tlm'ty (30) days after written notice of such breach is given to the breaching party by the other party, or (d) The failure of the DCHC to submat a financial quarterly report winch complies with the reporting procedures reqmred hereto and generally accepted accounting pnnmples prior to the begammg of the next contract term, or quarterly as required by Sectaon 1 3 hereof 4 4 Right to Immediate Termmation Upon Litigation. Notwithstanding any other provision of flus Agreement, to rmtagate damages and to preserve evidence and issues for judicial determmatmn, either party shall have the right to temunate flus Agreement upon munechate notace to the other party in the event that any person has instituted llt~gation concermng the activities of the non-temunatmg party, and thc terminating party reasonably believes that such act~wties are required or protublted under flus Agreement 4.5 In the event that tins Agreement is tenmnated pursuant to '~¶4 3 or 4 4, DCHC agrees to refund any and all unused funds, or funds determined by the CITY to have been used improperly, wlthm 30 days after termmaUon of this Agreement V. GENERAL PROVISIONS 5 1 Subcontract for Performance of Serwees. Nothing in this Agreement shall pminint, nor be construed to prohibit, the agreement by the DCHC with another private entity, person, or orgam- zatlon for the performance of those sermces described in ¶2 1 above In the event that the DCHC enters rote any arrangement, contractual or otherwise, with such other entity, person or orgamzatlon, the DCHC shall cause such other entity, person, or orgamzataon to adhere to, conform to, and be subject to all provisions, terms, and conditions of tins Agreement and to TEX TAX CODE ch 351, including reporting reqmremants, separate funds memtenance, and lmutat~ons and proinintlons pertamang to expendature of the agreed payments and hotel tax funds 5.2 Independent Contractor. The DCHC shall operate as an independent contractor as to all services to be performed under tins Agreement and not as an officer, agent, servant, or employee of the CITY The DCHC shall have exclusive control of its operations and performance of services hereunder, and such persons, entlt~es, or orgamzatmns perfonmng the same and the DCHC shall be solely responsible for the acts and omissions of its du'ectors, oftieers, employees, agents, and subcontractors The DCHC shall not be considered a partner or joint venturer vath the CITY, nor shall the DCHC be considered nor m any manner hold itself out as an agent or official representattve of the CITY 5 3 Indemnification. To the extent authorized by law, the DCHC agrees to mdemmfy, hold harmless, and defend the CITY, its officers, agents, and employees from and agamst any and all cloams or stats for lnjunes, damage, loss, or liability of whatever kind or character, ansmg out of or m connection with the performance by the DCHC or those serwces contemplated by tins Agreement, mcludmg all such clmms or causes of acUon based upon common, constitutional or Page 6 statutory law, or based, m whole or m part, upon allegations of negligent or intentional acts of DCHC, its officers, employees, agents, subcontractors, licensees and mvltees 5 4 Assignment. The DCHC shall not assign tlus Agreement without first obtalmng the written consent of the CITY 5 5 Notice. Any notice reqmred to be g~ven under tbas Agreement or any statute, ordinance, or regulation, shall be effective when g~ven m writing and deposited m the Umted States mall, cemfied mall, tatum receipt requested, or by hand-dehvery, addressed to the respectave parties as follows CITY DCHC City Manager Denton County Historical Commission City of Denton Courthouse-On-The-Square 215 E McKmney Dr Mary Evelyn Blagg-Huey Denton, TX 76201 110 W Hickory St Denton, Texas 76201 5 6 Inurement. Tins 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 obhgatlon of the CITY and the DCHC and their respective successors and assigns 5.7 Appheat~ou 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 judlcml determinations relative thereto 5.8 EXclusive Agreement. Tins Agreement contmns the entire understanding and consl~tutes the entare agreement between the part, es hereto concermng the subject matter contained hereto There are no representataons, agreements, arrangements, or understandings, oral or written, express or implied, between or among the part, es hereto, relating to the subject matter of tins Agreement, which are not fully expressed hereto The terms and conditions of this Agreement shall prevail notwithstanding any variance m flus Agreement f~om the terms and conditions of any other document relating to flus transaction or these transactions 5 9 DUplicate Originals. Tlus Agreement is executed m duphcate originals 5 10 Iteadlngs. The headings and subheadings of the various sections and paragraphs of tins Agreement are inserted merely for the purpose of convemence and do not express or imply any hnutatlon, defimtton, or extension of the specific terms of the section and paragraph so designated 5 11 Severabillty. If any section, subseCtion, paragraph, sentence, clause, phrase or word in tins Agreement, or apphcataon thereof to any person or circumstance is held invalid by any court of competent junsdictaon, such holding shall not affect the validity of the remalmng portions of flus Agreement, and the part, es hereby declare they would have enacted such remaining portions despite any such invalidity EXECUTED this ~-'-~ day of ~~ ,1998 Page 7 THE CITY OF DENTON, TEXAS By JAC~,I~ER, ~&~YOR ATTEST CIT~ SEC~T~Y CI~ ATTO~ DE~ON CO~, TE~S A~EST ~P~VED Page 8 Denton Cty Hist. Comm. - Kiln HOT Compliance icy 98.99 Amount Kiln Materials 4,500 Labor 20,500 Pottery Shed Materials 3,200 Labor 6,800 35,000 Total 35,000 35,000 DENTON COUNTY HISTORICAL COMMISSION FINANCIAL REPORTS Program Year 1999 15T 2ND 3RD 4TH BUDGET QUARTER QUARTER QUARTER QUARTER YEAR TO VS ti~,~ 'Jen.Mar) (Apr-Jun) (JuI.Sep) (Oct-Dec) DATE ACTUAL $o $o $o $o $o $o ~,~o $0 $0 $0 $0 $0 $35,000 0 0 0 0 0 0 0 "~.eea $0 $0 $0 $0 $0 $35,000 ~,4,a~3 $0 $0 $0 $0 $0 $4,500 ~0,~ 0 0 0 0 0 20,500 3~00 0 0 0 0 0 3,200 ~ 0 0 0 0 0 6,800 ~ $0 $0 $0 $0 $0 $35,000 ~,~3~ $0 $0 $0 $0 $0 $35,000 $o $o $o $o $o $o $o $o $o $o $o $o ~m~, ~ $o $o $o $o $o $o ,b~ ~muua~ c~ o o o o o o e~ ,~lJm~uum~a o o o o o o I~1~ ~ $o $o $o $o $o $o $o $o $o $o $o $o Date Submitted Program Director