Loading...
2011-2081lcodadldepartmentsllegallour documentslordinances1111hot fundlfestival foundation ord.doc o�nv�.vcE No. 2�11-208 AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON FESTNAL 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 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and the Denton Festival 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 2. This ordinance shall become effective immediately upon its passage and approval. s� �i'��'r���li° PASSED AND APPROVED this the �` day of � C� , 2011. MARK A.'B�R�OUG�, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: r APPROVED AS TO LEGAL FORM: AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON FESTIVAL FOUNDATION (PY2012) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Festival Foundation, Inc. a legal entity incorporated under the laws of the State of Texas (the "FOLTNDATION"): WIIEREAS, 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 provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7%); and WHEREAS, TEx. T� CoDE §351.101(a) 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 aud convention delegates or registrants to the municipality or its vicinity; and WI IEREAS, the FOUNDATION is well equipped to perform those activities; and t WI�REAS, TEx. T� CoDE §351.101(c) authorizes�the CITY to delegate by contract with the FOITNDATION, 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 t�; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, the CITY and the FOLTNDATION agree and contract as follows: I. HOTEL TAX REVENUE PAYIVIENT 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 speciiied 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. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by the City as municipal hotel occupancy tax at the rate of seven percent (7%) of the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City Festival Foundation HOT Funding PY2012 - Page 1 Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. (ii) The term "Collection period" will mean the collection period for the CITY's fiscal year. It will include hotel ta�c revenue due to the City for the relevant fiscal year •and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) 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 time (i. e., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel t�payers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of the CITY for which attorneys or agents effect compliance or collection of the hotel t� from taxpayers); and (2) court costs and other expenses incurred in litigation against or auditing of such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Ag�reement is in force. Contract quarters will end on March 31St, June 30�', September 30 , and December 315t of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, the CITY shall pay to FOLTNDATION an amount of money in each contract yeax equal to the lesser amount of Six and Thirty One Hundredths percent (6.30%) of the annual base payment amount, or the fixed contract amount of Eighty-Two Thousand Eight Hundred Twenty Dollars ($82,820). This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless the CITY can show with reasonable certainty that the annual base payment amount will be less than originally estimated for the fiscal year. The fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of 6.30% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget projection, CITY may reduce the FOUNDATION's current budget at any time during the contract period. Each quarterly payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "quarterly payments" shall mean payments by the CITY to the FOiJNDATION of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. The CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. Festival Foundation HOT Funding PY2012 - Page 2 1.4 Other limitations regarding consideration. (a) 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. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of the CITY. (c) CITY may withhold further allocations if CITY determines that FOUNDATION's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by the CITY to the FOiJNDATION of the agreed payments of hotel taY 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 registrants to the municipality or its vicinity; as well as the promotion of tourism through the encouragement, promotion, improvement, and application of the arts, including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major arts forms, as authorized by TEx. T.v� CoDE §351.101(a�. Funds for any calendar year which are unused by midnight December 31St of that year sha11 be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited, to signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel t� funds received �rom the CITY by the FOIJNDATION may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by TEX. TAX CODE 351.101( fl, but only if specified in FOUNDATION's budget (Exhibit "A") and each are directly attributable to work on programs which promote tourism and the hotel and convention industry, and if each promotes at least one of the six statutory purposes enumerated within TEX. TAX CODE 351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of the FOLTNDATION for which hotel t� fiinds may be used shall not exceed that portion of the FOUNDATION's adinuustrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel t� 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 local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manner. Festival Foundation HOT Funding PY2012 - Page 3 III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) The FOUNDATION shall adhere to the budget (E�ibit "A") as approved by the City Council for each calendar year, for all operations of the FOUNDATION funded by hotel tax revenues. In other words, the CITY should be able to audit specifically the purpose of each individual expenditure of hotel t� funds from the separate account relating to hotel t� funds. The CITY shall not pay to the FOUNDATION any hotel t� revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget far such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. (b) The FOLTNDATION acknowledges that approval of the budget (E�ibit "A") by the Denton City Council creates a iiduciary duty in the FOLTNDATION with respect to the hotel taY funds paid by the CITY to the FOUNDATION under this Agreement. The FOUNDATION shall expend hotel taY funds only in the manner and for the purposes specified in this Agreement, TEx. T� CoDE §351.101(a), 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 or with segregated fund accounting, such that any reasonable person can review the source of expenditures of tax funds. 3.3 Financial Records. The FOiJNDATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by the FOUNDATION. These funds sha11 be classified as restricted funds for audited fmancial purposes, and may not be used for contracted services, including, but not limited to, auditing fees and attorney fees. Upon reasonable 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 making the request. FOiJNDATION understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Public Information Act, TEx. Gov'`r CoDE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel t� funds and within thirty days after the end of every contract quarter, FOUNDATION sha11 furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel taar funds pursuant to TEx. TAx CoDE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. The FOUNDATION shall respond promptly to any request from the City Manager of the CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. The FOIJNDATION shall give the City Manager of the CITY, or his designate, reasonable advance written notice of the time and place of all meetings of FOLTNDATION's 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 Festival Foundation HOT Funding PY2012 - Page 4 considered. This provision shall not be deemed to require the FOUNDATION to give notice of any executive session of the Executive Committee of the FOIJNDATION. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement sha11 commence on January 1, 2012 and terminate at midnight on January 31, 2013. However, the program period shall commence on January 1, 2012 and terminate at midnight on December 31, 2012. Only those expenditures authorized by Chapter 351 of the Texas TaY Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under tlus agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), the CITY agrees to reimburse the FOUNDATION for any contractual obligations of the FOUNDATION undertaken by the FOLJNDATION in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above and that were approved by the Council through the budget, as noted in ¶�.1. This reimbursement 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. Notwithstanding any provision hereof to the contrary, the obligation of the CITY to reimburse the FOIJNDATION or to assume the performance of any contractual obligations of the FOLTNDATION for or under any contract entered into by the FOUNDATION as contemplated herein shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon ternunation pursuant to ¶4.2(a), the FOLTNDATION will provide the CITY: 1) within 10 business days from the termination notification, a short-term budget of probable expenditures for the remaining 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 10 business days and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within 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 listing 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 termination. The FOIJNDATION will be obligated to return any unused funds or funds determined to be used improperly. Any use of remaining funds by the FOUNDATION 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. Festival Foundation HOT Funding PY2012 - Page 5 4.3 Automatic Termination. This Agreement shall automatically tertninate upon the occurrence of any of the following events: (a) The tertnination of the legal existence of the FOLTNDATION; (b) The insolvency of the FOUNDATION, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by the FOiJNDATION for the benefit of creditors; (c) The continuation of a breach of any of the terms or conditions of this Agreement by either the CITY or the FOLTNDATION for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of the FOLTNDATION to submit a fmancial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by Section 1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon unmediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non-ternunating party, and the terminating party reasonably believes that such activities are required or prohibited�under this Agreement. � 4.5 In the event that this Agreement is terirllnated 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 improperly, within 30 days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by the FOLTNDATION with another private entity, person, or organization for the performance of those services described in �2.1 above. In the event that the FOiJNDATION enters into any arrangement, contractual or otherwise, with such other entity, person or organization, the FOLJNDATION 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. T� CoDE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. The FOiINDATION 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, a.nd such persons, entities, or organizations perfornling the same and the FOLINDATION sha11 be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. The FOtTNDATION shall not be considered a partner or joint venturer with the CITY, nor shall the FOLJNDATION be considered nor in any manner hold itself out as an agent or official representative of the CITY. Festival Foundation HOT Funding PY2012 - Page 6 5.3 Indemnification. THE FOLTNDATION 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 HIND OR CHARACTER, 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. 5.4 Assignment. The FOUNDATION shall not assign this Agreement without first obtaining the written consent of the CITY. 5.5 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 City Manager City of Denton 215 E. McKinney Denton, TX 76201 FOUNDATION Denton Festival Foundation, Inc. Carol Sho�t P.O. Box 2104 Denton, Texas 76202-2104 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 FOUNDATION 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 deterniinations relative thereto. 5.8 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 understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions 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. 5.9 Duplicate Originals. This Agreement is executed in 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 convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. Festival Foundation HOT Funding PY2012 - Page 7 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. 5.12 Insurance. The FOLTNDATION sha11 provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events talcing place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability �$loo,000i�soo,000i$loo,000�, �a 3. $500,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this /`�L day of 2011. ATTEST: THE CITY OF DENTON, TEXAS By: _ GEOR E C. CAMPBELL, CITY MANAGER APPROVED AS TO_LEGAL ' ,�� �.,�� By: By � �� J IFER ALTERS, � URGESS, Y SEC TARY CITY ATTORNEY DENTON FESTIVAL FOUNDATION, INC. ,, �oi� By: Chairman/Director Festival Foundation HOT Funding PY2012 - Page 8 ATTEST: APPROVED AS TO LEGAL FORM: By: By: Secretary Festival Foundation HOT Funding PY2012 - Page 9 Denton Festival Foundation, Int. Denton Arts and lazz Festival HOT Budget PY12 Advertising Brochures Magazines Newspaper Salaries Exhibit A $4,000 4,5D0 4,320 3,OOQ Art Musicians 5ite Operations Advertising �otal $15,82U $45,000 22,000 Art Total $67,000 TOTAL $82,820