1995-173E:\WPDOCS\ORD\FESTIVAL,HOT
ORDINANCE NO. ~
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN
THE CITY OF DENTON AND THE DENTON FESTIVAL 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:
SECTION I. That the Mayor is hereby authorized to execute an
agreement between the City of Denton and the Denton Festival
Foundation, Inc. for the payment and use of hotel tax revenue,
under the terms and conditions contained in the agreement, a copy
of which is attached hereto and made a part hereof.
SECTION II. That this ordinance shall become effective immed-
iately upon its passage and approval./~ ~
PASSED AND APPROVED this the !~,~- uay of 1995.
BOB CASTLEBERRY, MAY~ ~
/
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
AP ED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
AGREEMENT BETWEEN T~E CITY OF DENTON AND
T~E DENTON FESTIVAL FOUNDATION, INC. (95-96)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a muni-
cipal corporation (the "CITY"), and the Denton Festival Foundation,
Inc., 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 86-67, the CITY has provided for the
assessment and collection of a municipal hotel occupancy tax in the
City of Denton of seven percent (7%); and
WHEREAS, TEX. TAX CODE ~351.101 (a) (3) 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 solicitations and promotional programs to attract
tourists and convention delegates or registrants to the munici-
pality or its vicinity; and
WHEREAS, the FOUNDATION is well equipped to perform those
activities; and
WHEREAS, TEX. TAX CODE §351.101 (c) authorizes the CITY to
delegate by contract with the FOUNDATION as an independent entity
the management and supervision of programs and activities of the
type described hereinabove funded with revenue from the municipal
hotel occupancy tax;
NOW, THEREFORE, in consideration of the performance of the
mutual covenants and promises contained herein, the CITY and the
FOUNDATION agree and contract as follows;
I. HOTEL TAX REVENUE PAYMENT TO FOUNDATION
1.1 Consideration. For and in consideration of the activities to
be performed by the FOUNDATION under this 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 sometimes
herein referred to as "the agreed payments" or "hotel tax funds").
1.2 Amount of Payments to Foundation.
(a) As used in this agreement, the following terms shall have
the following specific meanings:
(i) The "hotel tax revenue" shall mean the monies col-
lected and received by the CITY during any relevant period of
time (i.e., fiscal year or fiscal quarter) as municipal hotel
occupancy tax at the rate of seven percent (7%} of the price
paid for a room in a hotel, pursuant to TEX. TAX CODE §351.002
and City Ordinance 86-87, together with and including any sums
of money received by the CITY from taxpayers during any
relevant fiscal quarter or calendar month as attorney's fees,
court costs, or other expenses of collection of hotel tax, but
excluding interest and penalties received by the CITY from
taxpayers.
(ii) The term "base payment amount" shall mean Three
Thousand Dollars ($3,000).
{b) The CITY shall pay to FOUNDATION an amount of money equal
to the base payment amount for the period of October 1, 1995,
through September 30, 1996.
1.3 Dates of Payments to Foundation.
{a) The term "quarterly payments" shall mean payments by the
CITY to the FOUNDATION of four (4) payments totalling the amount
specified in ¶1.2.
(b) CITY shall pay the FOUNDATION quarterly payments of Seven
Hundred Fifty Dollars ($750). Each such quarterly payment shall be
paid to the FOUNDATION on or before the forty-fifth (45th) day
after the last day of such respective fiscal quarter for which such
payment is due. If quarterly financial and performance reports are
not received within thirty (30) days of the end of the applicable
quarter, then CITY may withhold the quarterly payment(s) until the
appropriate reports are received and approved.
(c) The funding of this project in no way commits the CITY to
future funding of this program beyond the current contract period.
Any future funding is solely the responsibility of the FOUNDATION.
(d) It is expressly understood that this contract in no way
obligates the General Fund or any other monies or credits of the
CITY.
PAGE 2
Ii. USE OF HOTEL TAX REVENUE BY FOUNDATION
2.1 Use of Funds. For and in 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 advertising and conducting solicitations and promotional
programs to attract tourists and convention delegates or regis-
trants to the municipality or its vicinity, as authorized by TEX.
TAX CODE § 351.101(a) (3).
2.2 Administrative Costs. The hotel tax funds received from the
CITY by the FOUNDATION may be spent for day-to-day operations, sup-
plies, salaries, office rental, travel expenses, and other admini-
strative costs that are incurred directly in the performance by the
FOUNDATION of those activities specified in ¶2.1 above and are
allowed by TEX. TAX CODE § 351.101{f) .
2.3 Specific Restrictions on Use of Funds.
(a) That portion of total administrative costs of the
FOUNDATION for which hotel tax funds may be used shall not exceed
that portion of the FOUNDATION'S administrative 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
which is not directly related to the promotion of tourism and the
convention and hotel industry or the performance of the person's
job in an efficient and professional manner.
III. RECORD KEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) On or about September 1 and prior to the disbursement of
any funds for the 1995-96 fiscal year, the FOUNDATION shall prepare
and submit to the City Manager of the CITY an annual budget for
such fiscal year for the FOUNDATION and any other operation or
function of the POUNDATION in which the hotel tax funds shall be
used by the FOUNDATION. This budget shall specifically identify
proposed expenditure 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 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 this contract during any
fiscal year of this Agreement unless a budget for such respective
fiscal year has been approved in writing by the Denton City Council
authorizing the expenditure of funds in such Section I.
PAGE 3
(b) The FOUNDATION acknowledges that the approval of such
budget by the Denton City Council creates a fiduciary duty in the
FOUNDATION with respect to the hotel tax funds paid 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
in § 351.101(a) TEX. TAX CODE and in the budget as approved by the
CITY.
3.2 Separate Accounts. The FOUNDATION shall maintain any hotel
tax funds paid to the FOUNDATION by the CITY in a separate account.
3.3 Financial Records. The FOUNDATION shall maintain complete and
accurate financial records of each expenditure of the hotel tax
funds made by the FOUNDATION and, upon reasonably advance written
request of the Denton City Council or the City's Executive Director
of Finance or his designee, shall make such financial records
available for inspection and review by the Denton City Council or
the City's Executive Director of Finance or his designee.
3.4 Quarterly Reports. Within thirty days after the end of every
quarter, the FOUNDATION shall furnish to the CITY (1) a performance
report of the work performed under this Agreement, in the form
determined by the City Manager describing the activities performed
under this Agreement during that quarter, and (2) a list of the
expenditures made with regard to hotel tax funds pursuant to the
TEX. TAX CODE ANN. § 351.101(c) (Vernon 1994). The FOUNDATION
shall promptly respond to any request from the City Manager of the
CITY for additional information relating to the activities
performed under this Agreement.
3.5 Notice of Meetings. The FOUNDATION shall give the City Manager
of the CITY reasonable advance written notice of the time and place
of general meetings of the Denton Festival Foundation, Inc. Board
of Directors, as well as any other meeting of any constituency of
the FOUNDATION at which this Agreement or any matter the subject of
this Agreement shall be considered. This provision shall not be
deemed to require the FOUNDATION to give notice of any executive
session of the Executive Committee of the FOUNDATION.
IV. REIMBURSEMENT AND INDEMNIFICATION
4.1 Reimbursement of Association for Administrative Costs. In the
event that this Agreement is terminated pursuant to Section 5.2{a),
the CITY agrees to reimburse the FOUNDATION for any and all
expenses and costs undertaken by the FOUNDATION in performance of
those activities specified in ¶2.1 above or expenses or costs
incurred by the FOUNDATION as described in ¶2.2 above. The CITY is
obligated to reimburse the FOUNDATION for expenses and costs as
described in ¶2.2 above only for the period commencing upon the
date notice of termination is given and ending upon the date of
PAGE 4
termination. Further, this obligation shall be limited to the
lesser of the actual expenses and costs incurred by the FOUNDATION
during the one hundred eighty day period preceding termination or
the agreed payments otherwise due and payable to the FOUNDATION for
such period.
4.2 Reimbursement of Foundation for Contractual Obligations. In
the event that this Agreement is terminated pursuant to Section
5.2(a), the CITY agrees to reimburse the FOUNDATION for any and all
contractual obligations of the FOUNDATION undertaken by the
FOUNDATION in performance of those services specified in ¶2.1
above, conditioned upon such contractual obligations having been
incurred and entered into in the good faith performance of those
services contemplated in ¶2.1 above, and further conditioned upon
such contractual obligations having a term not exceeding the full
term of this Agreement. Notwithstanding any provision hereof to
the contrary, the obligation of the CITY to reimburse the FOUNDA-
TION or to assume the performance of any contractual obligations of
the FOUNDATION for or under any contract entered into by the
FOUNDATION as contemplated herein shall not exceed FIVE HUNDRED
DOLLARS ($500.00). Such monetary limitation is cumulative of all
contractual obligations and shall not be construed as a monetary
limitation on a per contract basis.
4.3 Payment of Reimbursement to Foundation.
(a) With respect to expenses and costs incurred by the
FOUNDATION for which the CITY is obligated to reimburse the
FOUNDATION pursuant to ¶4.1 above, the CITY shall pay such
reimbursement amount due, if any, to the FOUNDATION on or before
the forty-fifth (45th) day after the date of termination of this
Agreement.
(b) With respect to contractual obligations undertaken by the
FOUNDATION for which the CITY is obligated to reimburse the
FOUNDATION as provided in ¶4.2 above, the CITY shall reimburse the
FOUNDATION for such monetary obligations required in such contrac-
tual obligation in such amounts and at those times such contractual
costs and expenses are due and payable according to the terms of
such contract limitation set forth in ¶4.2 above.
4.4 Indemnification. The FOUNDATION agrees to indemnify, hold
harmless, and defend the CITY, its officers, agents, and employees
from and against any and all claims or suits for injuries, damage,
loss, or liability of whatever kind or character, arising out of or
in connection with the performance by the FOUNDATION or those
services contemplated by this Agreement, including all such claims
or causes of action based upon common, constitutional or statutory
law, or based, in whole or in part, upon allegations of negligent
PAGE 5
or intentional acts of FOUNDATION, its officers, employees, agents,
subcontractors, licensees and invitees.
V. TERM AND TERMINATION
5.1 Term. The term of this Agreement shall commence on October 1,
1995 and terminate at midnight on September 30, 1996. This term
shall be a period of one year.
5.2 Termination.
(a) This Agreement may be terminated by either party by
giving the other party one hundred eighty (180) days advance
written notice.
(b) This Agreement shall automatically terminate upon the
occurrence of any of the following events:
(i) The termination of the legal existence of the
FOUNDATION;
(ii) The insolvency of the FOUNDATION, the filing of a
petition in bankruptcy, either voluntarily or involuntarily,
or and assignment by the FOUNDATION for the benefit of
creditors;
(iii) The continuation of a breach of any of the terms
or conditions of this Agreement by either the CITY or the
FOUNDATION for more than thirty (30) days after written notice
of such breach is given to the breaching party by the other
party; or
(iv) The failure of the FOUNDATION to submit a financial
report which complies with the reporting procedures required
herein and generally accepted accounting principles prior to
the beginning of the next contract term.
VI. GENERAL PROVISIONS
6.1 Subcontract for Performance of Services. Nothing in this
Agreement shall prohibit, nor be construed to prohibit, the agree-
ment by the FOUNDATION with another private entity, person, or
organization for the performance of those services described in
¶2.1 above. In the event that the FOUNDATION enters into any
arrangement, contractual or otherwise, with such other entity,
person or organization, the FOUNDATION shall cause such other
entity, person, or organization to adhere to, conform to, and be
subject to all provisions, terms, and conditions of this Agreement
and to TEX. TAX CODE Chap. 351, including reporting requirements,
separate funds maintenance, and limitations and prohibitions
PAGE 6
pertaining to expenditure of the agreed payments and hotel tax
funds.
6.2 Independent Contractor. The FOUNDATION shall operate as an
independent contractor as to all services 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 its
operations and performance of services hereunder, and such persons,
entities, or organizations performing the same and the FOUNDATION
shall be solely responsible for the acts and omissions of its
directors, officers, employees, agents, and subcontractors. The
FOUNDATION shall not be considered a partner or joint venturer with
the CITY, nor shall the FOUNDATION be considered nor in any manner
hold itself out as an agent or official representative of the CITY.
6.3 Assignment. The FOUNDATION shall not assign this Agreement
without first obtaining the written consent of the CITY.
6.4 Notice. Any notice required to be given under this Agreement
or any statute, ordinance, or regulation, shall be effective when
given in writing and deposited in the United States mail, certified
mail, return receipt requested, or by hand-delivery, addressed to
the respective parties as follows:
CITY FOUNDATION
City Manager Chairman/Director
City of Denton Denton Festival Foundation, Inc.
215 E. McKinney P.O. Box 2104
Denton, TX 76201 Denton, TX 76201
6.5 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 FOUNDATION and their respective successors and
assigns.
6.6 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 determinations relative thereto.
6.7 Exclusive Agreement. This Agreement contains the entire
understanding and constitutes the entire agreement between the
parties hereto concerning the subject matter contained herein.
There are no representations, agreements, arrangements, or under-
standings, oral or written, express or implied, between or among
the parties hereto, relating to the subject matter of this agree-
ment, which are not fully expressed herein. The terms and con-
ditions of this Agreement shall prevail notwithstanding any
PAGE 7
variance in this Agreement from the terms and conditions of any
other document relating to this transaction or these transactions.
6.8 Duplicate Originals. This Agreement is executed in duplicate
originals.
6.9 Headings. The headings and subheadings of the various sec-
tions and paragraphs of this Agreement are inserted merely for the
purpose of convenience and do not express or imply any limitation,
definition, or extension of the specific terms of the section and
paragraph so designated.
EXECUTED this/A~'~day of ~ , 1995.
THE CITY OF DENTON, TEXAS
BOB CASTLEBERRY, MATR ~
ATTEST: APPROVED AS TO LEGAL F~RM:
/
By ,L~, By: /_~ ~: '~ ~'
/~I~R ~TERS, HERBERT L. PROUTY,
~CITY~CRET~Y CITY ATTO~EY
DENTON FESTIVAL FO~DATION, INC.
By: ~~~~
ChaSrman/D~ec~or
By: By:
Secretary
E: \WPDOCS\K\FISTIVAL. K
PAGE 8