1990-043ORDINANCE NO. 'U%1,5
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN
THE CITY OF DENTON AND THE DENTON COUNTY HISTORICAL FOUNDATION 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 County
Historical Foundation 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 the City Council hereby authorizes the
expenditure of funds as set forth in the agreement.
SECTION III. That this ordinance shall become effective
l.
immediately upon its passage and app
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PASSED AND APPROVED this the O. day of , 1990.
RAY STE Fi3 S, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPR V D AS O LEGAL FORM:
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
BY: kj w ~L
DCHF.ord
2928L
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON COUNTY HISTORICAL FOUNDATION
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 County Historical
Foundation, a non-profit corporation incorporated 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 ex-
ceeding 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)(5) authorizes the City to
use revenue from its municipal hotel occupancy tax to promote
tourism and the convention and hotel industry by performing his-
torical restoration and preservation projects or activities or
advertising and conducting solicitations and promotional programs
to encourage tourists and convention delegates to visit preserved
historic sites or museums at or in the immediate vicinity of con-
vention center facilities, or located elsewhere in the municipality
or its vicinity that would be frequented by tourists, convention
delegates, or other visitors to the municipality; 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 a private organization
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, fiscal quarter, or
calendar month) 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 an
amount of money equal to twelve hundredths (12/100ths)
of one seventh (1/7th) of the total hotel tax revenue
collected by the City during any relevant period of
time (i.e. fiscal year, fiscal quarter, or calendar
month), less (1) such amounts incurred during such
relevant period of time for costs of col lection of
hotel taxes from taxpayers or auditing tax payers for
tax payment compliance, such collection and auditing
costs to include fees paid to attorneys or other agents
not in the regular employ of the City and which
attorneys or agents effect collection of the hotel tax
from taxpayers or audit such taxpayers, and (2) court
costs and expenses incurred in litigation against or
auditing of such taxpayers.
(iii) In the event that the municipal hotel occupancy
tax rate is reduced from the current rate of 7% to 6%,
the term "base payment amount" shall be deemed to mean
an amount of money equal to twelve hundredths
(12/100ths) of one sixth (1/6th) of the total hotel
tax revenue, as defined above, collected by the City
during any relevant period of time (i.e. fiscal year,
fiscal quarter, or calendar month), less (1) such
amounts incurred during such relevant period of time
for costs of collection of hotel taxes from taxpayers
or auditing taxpayers for tax payment compliance, such
collection and auditing costs to include fees paid to
attorneys or other agents not in the regular employ of
the City and which attorneys or agents effect collec-
tion of the hotel tax from taxpayers or audit such
taxpayers, and (2) court costs and expenses incurred
in litigation against or auditing of such taxpayers.
PAGE 2
(b) The City shall pay to the Foundation an amount of
money equal to one hundred percent (100%) of the base payment
amount for the period April 1, 1990 until September 30, 1990.
(c) The City shall pay to the Foundation an amount of
money equal to ninety eight percent (98%) of the base payment
amount for the first (lst) full fiscal year of this contract,
such fiscal year being October 1, 1990 to September 30, 1991.
(d) The City shall pay to the Foundation an amount of
money equal to ninety five percent (95%) of the base payment
amount for the second, third, and fourth (2nd, 3rd, and 4th) full
fiscal years of this contract, such fiscal years being October 1,
1991 to September 30, 1992, October 1, 1992 to September 30,
1993, and October 1, 1993 to September 30, 1994, and for the
period from September 30, 1994 to March 31, 1995.
1.3 Dates of Payments to Foundation.
(a) The term "quarterly payments" shall mean payments by
the City to the Foundation of those amounts specified in 41.2
above as determined by the hotel tax revenue collected by the
City during any one fiscal quarter during the term of this
Agreement. The term "monthly payments" shall mean payments by
the City to the Foundation of those amounts specified in 41.2
above as determined by the hotel tax revenue collected by the
City during any one calendar month during the term of this
Agreement.
(b) City shall pay the Foundation the agreed payments
specified in 41.2 above quarterly. 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.
(c) Should the City, by amendment to the Code of Ordi-
nances of the City of Denton, require that the hotel tax be paid
on a monthly basis, the agreed payments by the City to the Foun-
dation specified in 41.2 above shall be paid monthly. Each such
monthly payment shall be paid to the Foundation on or before the
forty-fifth (45th) day after the last day of such respective
calendar month for which such payment is due.
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 the purpose of performing historical restor-
ation and preservation projects or activities or advertising and
PAGE 3
conducting solicitations and promotional programs to encourage
tourists and convention delegates to visit preserved historic
sites or museums located in the City of Denton or its vicinity
that would be frequented by tourists, convention delegates, or
other visitors to the City of Denton, as authorized by TEX. TAX
CODE 4351.101 (a)(5).
2.2 Administrative Costs. The hotel tax funds received from
the City by the Foundation may be spent for day-to-day operations,
supplies, salaries, office rental, travel expenses, and other
administrative costs that are incurred directly in the performance
by the Foundation of those activities specified in 42.1 above.
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 42.1 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 before July 31st of each calendar year during
the term of this Agreement, the Foundation shall prepare and
submit to the City Manager of the City an annual budget for the
next ensuing fiscal year of this Agreement for the Foundation.
The City shall not pay to the Foundation any agreed payments or
hotel tax funds during any fiscal year of this Agreement unless
such budget for such respective fiscal year has been approved in
writing by the Denton City Council.
(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 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 or accounts established for such purpose and may not
PAGE 4
commingle such hotel tax funds with any other money or maintain
such hotel tax funds in any other account.
3.3 Financial Records. The Foundation shall maintain com-
plete and accurate financial records of each expenditure of the
hotel tax funds made by the Foundation and, upon 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. The Foundation shall furnish to the
City a report of the services performed by the Foundation under
this Agreement within thirty (30) days after the end of each
fiscal quarter of this Agreement. Such report shall summarize
the activities of the Foundation in performance of the activities
specified in 42.1 and 42.2 above and the receipt of the agreed
payments and expenditure of the hotel tax funds received by the
Foundation from the City.
3.5 Notice of Meetings. The Foundation shall give the City
Manager of the City advance written notice of the time and place
of general meetings of the Foundation's Board of Directors. Such
notice shall be given in the same manner and at the same time as
notice is given of such meetings to members of such board. This
provision shall not be deemed to require the Foundation to admit
the City Manager to any executive session of the Executive
Committee of the Foundation.
IV. REIMBURSEMENT AND INDEMNIFICATION
4.1 Reimbursement of Foundation 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 42.1 above or expenses or costs
incurred by the Foundation as described in 42.2 above. The City
is obligated to reimburse the Foundation for expenses and costs
as described in 42.2 above only for the period commencing upon
the date notice of termination is given and ending upon the date
of 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
PAGE 5
all contractual obligations of the Foundation undertaken by the
Foundation in performance of those activities specified in 42.1
above, conditioned upon such contractual obligations having been
incurred and entered into in the good faith performance of those
activities contemplated in 42.1 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
Foundation for or under any contractual obligations of the Foun-
dation for or under any contract entered into by the Foundation
as contemplated herein shall not exceed TWO THOUSAND DOLLARS
($2,000.00). Such monetary limitation is cumulative of all con-
tractual 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 44.1 above, the City shall pay such reim-
bursement amount due, if any, to the Foundation on or before the
forty-fifth (45th) day after the date of termination of this
Agreement. In the event that the agreed payments are such paid
monthly pursuant to 41.3 (c) above, the City shall pay reimburse-
ment amount to the Foundation on or before the forty-fifth (45th)
day after the last day of such respective calendar month in which
this Agreement is terminated.
(b) With respect to contractual obligations undertaken by
the Foundation for which the City is obligated to reimburse the
Foundation provided in 44.2 above, the City shall reimburse the
Foundation for the contractual costs, and monetary obligations
required in such contractual 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 44.2 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 char-
acter, arising out of or in connection with the performance by
the Foundation of 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 or intentional acts of Foundation,
its officers, employees, agents, subcontractors, licensees and
invitees.
PAGE 6
V. TERM AND TERMINATION
5.1 Term. The term of this Agreement shall be for five (5)
years, commencing April 1, 1990 and terminating at midnight on
March 31, 1995. This term shall be comprised of an initial
period of six (6) months and subsequent four (4) fiscal years,
each fiscal year constituting the period from October 1 of a
calendar year to the next ensuing September 30, and a final
period of six months ending on March 31, 1995.
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 corporate existence
of the Foundation;
(ii) The insolvency of the Foundation, the
filing of a petition in bankruptcy,
either voluntarily or involuntarily, or
an assignment by the Foundation for the
benefit of creditors; or
(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.
VI. GENERAL PROVISIONS
6.1 Subcontract for Performance of Services. Nothing in this
Agreement shall prohibit, nor be construed to prohibit, the
agreement by the Foundation with another private entity, person,
or organization for the performance of those services described
in 42.1 above. In the event that the Foundation enters into any
arrangement, contractual or otherwise, with such 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
TEX. TAX CODE Chap. 351, including reporting requirements, sepa-
rate funds maintenance, and limitations and prohibitions pertain-
ing to expenditure of the agreed payments and hotel tax funds.
6.2 Independent Contractor. The Foundation shall operate as
PAGE 7
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 Agree-
ment 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, addressed
to the respective parties as follows:
City: Foundation
City Manager Chair, Board of Trustees
City of Denton Denton County Historical Foundation
215 E. McKinney P.O. Box 2184
Denton, TX 76201 Denton, TX 76202
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 obli-
gation of the City and the Foundation and their respective
successors and assigns.
6.6 Application of Laws. All terms, conditions, and provi-
sions of this Agreement are subject to all applicable federal
laws, state laws, the Charter of the City of Denton, all ordi-
nances 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 condi-
tions of this Agreement shall prevail notwithstanding any variance
in this Agreement from the terms and conditions of any other
document relating to this transaction or these transactions.
PAGE 8
6.8 Duplicate Originals. This Agreement is executed in
duplicate originals.
6.9 Headings. The headings and subheadings of the various
sections and paragraphs of this Agreement are inserted merely for
the purpose of convenience and do not express or imply any limi-
tation, definition, or extension of the specific terms of the
section and paragraph so designated.
EXECUTED this WOO`j day of 7k4xt kl , 1990.
THE CITY OF DENTON, TEXAS
By:
Ray Te'p , Mayor
ATTEST:
APPROVED AS TO LEGAL FORM:
By: By: h'6,"
j4h Walters, Debra a Drayovitc ,
ty S cretary City At ney
DENTON COUNTY HISTORICAL FOUNDATION
Chairman
Board of Directors
ATTEST:
APPROVED AS TO LEGAL FORM:
By: By:
Secretary
David W. B es, Attorney
PAGE 9