2012-2741lcodadldepartmentsllegallour documentslordinances112�hot fund py131black chamber ordinance.doc
ORDINANCE NO. 2012-274
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON BLACK
CHAMBER OF COMMERCE 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 Blacic Chamber of Commerce 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.
PASSED AND APPROVED this the � day of �!(iLL'lS�G�i , 2012.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
B�,:
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AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON BLACK CHAMBER OF COMMERCE (PY2013)
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 Black Chamber of Commerce, a legal entity existing under the laws
of the State of Texas (the "CHAMBER"):
WHEREAS, T�x. T�,x CoDE §351.002 authorizes CITY to levy by ordinance a municipal
hotel occupancy t� ("hotel tax") not exceeding seven percent (7%) of the consideration paid by a
hotel occupant; and
WHEREAS, by ordinance, 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) authorizes CITY to use revenue from its
municipal hotel occupancy t� 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 municipality or its vicinity; and
WHEREAS, CHAMBER is well equipped to perform those activities; and
WHEREAS, TEx. Tn�c CoDE §35 L 101(c) authorizes CITY to delegate by contract with
CHAMBER, 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, CITY and CHAMBER agree and contract as follows:
L HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by CHAMBER
under this Agreement, CITY agrees to pay to CHAMBER a portion of the hotel t� revenue
collected by CITY at the rates and in the manner specified herein (such payments by CITY to
CHAMBER, 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
meatungs:
(i) The term "hotel tax revenue" sha11 mean the gross monies collected and
received by 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 3 51.002 and City
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
Black Chamber HOT Funding PY2013 - Page 1
(ii) The term "Collection period" will mean the collection period for CITY's
fiscal year. It will include hotel tax revenue due to 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" sha11 mean a net amount of money equal
to the total hotel tax revenue collected by 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 taxpayers. (attorney and
auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for
which attorneys or agents effect compliance or collection of the hotel tax 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 A�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, CITY shall pay to CHAMBER an amount of money in each contract
year equal to the lesser amount of One and Ten One Hundredths percent (1.10%) of the annual
base payment amount, or the fixed contract amount of Sixteen Thousand Five Hundred and
Eighty Dollars ($16,580). This amount will be divided into quarterly payments equal to 25% of
the annual fixed contract amount, unless 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
1.10% 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 proj ection,
CITY may reduce CHAMBER'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 CITY to CHAMBER 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 withui thirty (30) days of the end of the applicable contract quarter, the recipient may
be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the
appropriate reports are received and approved, which approval sha11 not be unreasonably withheld.
1.4 Other limitations regarding consideration.
(a) The funding of this project in no way commits CITY to future funding of this
program beyond the current contract period. Any future funding is solely the responsibility of
CHAMBER.
Black Chamber HOT Funding PY2013 - Page 2
(b) It is expressly understood that this contract in no way obligates the General Fund or
any other monies or credits of CITY.
(c) CITY may withhold further allocations if CITY determines that CHAMBER'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 CITY to CHAMBER of the
agreed payments of hotel tax funds specified above, CHAMBER 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 authorized by TEx. TAx
CoDE §351.101(a). Funds for any calendar year which are unused by midnight December 315t of
that year shall 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 tax funds received from the CITY by the CHAMBER
may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other
administrative costs allowed by TEX. TAX CODE 351.101(e), but only if specified in
CHAMBER's budget (E�ibit "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 CHAMBER for which hotel tax
funds may be used shall not exceed that portion of the CHAMBER's administrative costs actually
incurred in conducting the activities specified in ¶2.1 above.
(b) Hotel ta�c 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 eff'icient and
professional manner.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) CHAMBER sha11 adhere to the budget (E�ibit "A") as approved by the City Council
for each calendar year, for all operations of CIIAMBER funded by hotel tax revenues. In other
words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel
ta�c funds from the separate account relating to hotel t� funds. CITY shall not pay to CHAMBER
any hotel ta�c revenues as set forth in Section I of this contract during any program year of this
Agreement unless a budget for such respective program year has been approved in writing by the
Denton City Council, authorizing the expenditure of funds.
Black Chamber HOT Funding PY2013 - Page 3
(b) CI�AMBER acknowledges that approval of the budget (E�ibit "A") by the Denton
City Council creates a fiduciary duty in CHAMBER with respect to the hotel t� funds paid by
CITY to CHAMBER under this Agreement. CHAMBER sha11 expend hotel tax funds only in the
manner and for the purposes specified in this Agreement, TEx. TAx CoDE §351.101(a), and in the
budget as approved by CITY.
3.2 Separate Accounts. CHAMBER sha11 maintain any hotel tax funds paid to CH�IMBER by
CITY in a separate account, or with segregated fund accounting, such that any reasonable person
can ascertain the revenue source of any given expenditure.
3.3 Financial Records. CHAMBER shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by CHAMBER. These funds shall be classified as
restricted funds for audited financial 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,
CI�AMBER shall make such financial records available for inspection and review by the party
making the request. CIIAMBER understands and accepts that a11 such financial records, and any
other records relating to this Agreement shall be subject to the Public Information Act, TEx. Gov'T
CoDE, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel taac funds, and within thirty days after the
end of every quarter thereafter, until all funds have been expended and reported to CITY,
CHAMBER 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 t� funds, pursuant to TEx. TAX CODE
§351.101(c), and (3) a copy of all financial records (e.g., front and back copies of cleared checks or
banlc 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. CHAMBER sha11
respond promptly to any request from the City Manager of CITY, or designate, for additional
information relating to the activities performed under this Agreement.
3.5 Notice of Meetings. CHAMBER shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of CHAMBER's Board of
Directors, as well as any other meeting of any constituency of CHAMBER, at which this
Agreement or any matter subject to this Agreement shall be considered.
IV. TERM AND TERMINATION
41 Term. The term of this Agreement sha11 commence on January 1, 2013 and terminate at
midnight on January 31, 2014. However, the program period shall commence on January 1, 2013
and terminate at midnight on December 31, 2013. Only those expenditures authorized by Chapter
351 of the Texas T� 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 this agreement, and any ineligible expenditures or unspent funds shall be forfeited to
CITY upon termination of the Agreement.
Black Chamber HOT Funding PY2013 - Page 4
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),
CITY agrees to reimburse CHAMBER for any contractual obligations of CHAMBER
undertaken by CHAMBER 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 ¶3.1. 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
CITY to reimburse CHAMBER or to assume the performance of any contractual obligations of
CHAMBER for or under any contract entered into by CHAMBER as contemplated herein shall
not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), CHAMBER will provide 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 CITY, a listing of expenditures that have occurred since the last
required reporting period; 4) a final accounting of a11 expenditures and tax funds on the day of
termination. CHAMBER will be obligated to return any unused funds or funds determined to be
used improperly. Any use of remaining funds by CHAMBER 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. This Agreement shall automatically terminate upon the
occurrence of any of the following events:
(a) The ternunation of the legal existence of CHAMBER;
(b) The insolvency of CI-IAMBER, the filing of a petition in banlcruptcy, either
voluntarily or involuntarily, or an assignment by CHAMBER for the benefit of creditors;
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
either CITY or CHAMBER 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 CHAMBER to submit a financial 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.
Black Chamber HOT Funding PY2013 - Page 5
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 immediate notice
to the other party in the event that any person has instituted litigation concerning the activities of the
non-terminating party, and the tertninating party reasonably believes that such activities are required
or prohibited under this Agreement.
4.5 In the event that this Agreement is ternunated pursuant to ¶¶43 or 4.4, CHAMBER agrees
to refund any and all unused funds, or funds determined by 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 CHAMBER with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
CIIAMBER enters into any arrangement, contractual or otherwise, with such other entity, person or
organization, CHAMBER 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 T�x.
T� CoDE ch. 351, including reporting requirements, separate funds maintenance, and limitations
and prohibitions pertainulg to expenditure of the agreed payments and hotel tax funds.
5.2 Independent Contractor. CHAMBER 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
CITY. CHAMBER shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same and CHAMBER shall
be solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. CHAMBER sha11 not be considered a partner or joint venturer with CITY, nor shall
CHAMBER be considered nor in any manner hold itself out as an agent or official representative of
CITY.
5.3 Indemnification. CHAMBER AGREES TO INDEMNIFY, HOLD HARMLESS,
AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND
AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR
LIABILITY OF WHATEVER K1ND OR CHARACTER, ARISING OUT OF OR IN
CONNECTION WITH THE PERFORMANCE BY CHAMBER 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 CHAMBER, ITS OFFICERS, EMPLOYEES, AGENTS,
SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. CHAMBER shall not assign this Agreement without first obtaining the
written consent of CITY.
Black Chamber HOT Funding 1'Y2013 - Page 6
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. McKiimey
Denton, TX 76201
CHAMBER
Denton Black Chamber of Commerce
John Baines
P.O. Box 51026
Denton, Texas 76206
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 CITY and C�BER and their respective successors and assigns.
5.7 Application of Laws. All tertns, conditions, and provisions of this Agreement are subject
to a11 applicable federal laws, state laws, the Charter of the City of Denton, a11 ordinances passed
pursuant thereto, and all judicial determinations 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 fixlly 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. T'his 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.
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. CHAMBER shall, at a minunum, provide insurance as follows:
1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property,
2. Statutory Workers' Compensation and Employers' Liability
($100,000/$500,000/$100,000), and
3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned
property where alcohol will be provided or served.
Black Chamber HOT Funding PY2013 - Page 7
CITY must be named as an additional insured on all policies (except Workers' Compensation), and
proof of coverage sha11 be submitted prior to any payment by the CITY.
EXECUTED this ���L day of �,�'��� , 2012.
THE CITY OF DENTON, TEXAS
By:
GEORGE C. CAMP ELL,
C� �VIAI� G R
Y� �� ��
ATTEST: APPROVED AS TO.LEGA� �O,RM:
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By: B3c: _ _ _. _ - , -
IFE ALTER , /:.= ='�NITA BURGESS,
C SEC TARY ' CITY ATTORNE
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DENTON LACK CHAMBER OF
COMMERC �
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APPROVED AS TO LEGAL FORM:
By:
Secretary
Black Chamber HOT Funding PY2013 - Page 8
Denton Black Chamber of Commerce
Denton Blues Festival
Program Year 2013 Budget
Ad�ertising
Internet
Radio
Printed Material
Billboards
Art
Musicians
Exhibit A
$1,500
4,000
4,080
4,000
$13,580
$3,�00
Total Budget $16,580