2013-278\ \codad \departments \legal \our documents \ordinances \13 \hot funds py14 \dct ord.doc
ORDINANCE NO. 2013 -278
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON COMMUNITY
THEATRE, 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 1. The City Manager, or his designee, is hereby authorized to execute an
agreement between the City of Denton and the Denton Community Theatre, 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 2. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the day of m , 2013..
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY: ................
�F
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
MARK A 131J1: R U I'1S,�MAYOR
AGREEMENT BETWEEN THE CITY OF DENTON AND
DENTON COMMUNITY THEATRE, INC. (PY2014)
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 Community Theatre, Inc., a legal entity incorporated under the laws
of the State of Texas (the "THEATRE "):
WHEREAS, TEX. TAX CODE §351.002 authorizes 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, 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 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 municipality or its vicinity; and
WHEREAS, THEATRE is well equipped to perform those activities; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
THEATRE, 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, CITY and THEATRE agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by THEATRE
under this Agreement, CITY agrees to pay to THEATRE a portion of the hotel tax revenue
collected by CITY at the rates and in the manner specified herein (such payments by CITY to
THEATRE 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 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
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
DCT HOT Funding PY2014 - 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" shall 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 30th,
September 30 , and December 31St 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 THEATRE an amount of money in each contract
year equal to the lesser amount of. One and Twenty One Hundredths percent (1.20 %) of the
annual base payment amount, or the fixed contract amount of Twenty -Three Thousand Ten
Dollars ($23,010). 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..20% 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 THEATRE'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 THEATRE 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. CITY may withhold the quarterly payment(s) until the
appropriate reports are received and approved, which approval shall 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 THEATRE.
DCT HOT Funding PY2014 - 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 THEATRE'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 THEATRE of the
agreed payments of hotel tax funds specified above, THEATRE 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) (3). Funds for any calendar year which are unused by midnight December 31St 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 THEATRE 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 THEATRE'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 THEATRE for which hotel tax funds
may be used shall not exceed that portion of the THEATRE'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 local tourism and
the convention and hotel industry or the performance of the person's job in an efficient and
professional manner.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) THEATRE shall adhere to the budget (Exhibit "A ") as approved by the City Council for
each calendar year, for all operations of THEATRE in which the hotel tax funds shall be used by
THEATRE. In other words, CITY should be able to audit specifically the purpose of each
individual expenditure of hotel tax funds from the separate account relating to hotel tax funds.
CITY shall not pay to THEATRE any hotel tax revenues as set forth in Section I of this contract
DCT HOT Funding PY2014 - Page 3
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.
(b) THEATRE acknowledges that approval of the budget (Exhibit "A ") by the Denton
City Council creates a fiduciary duty in THEATRE with respect to the hotel tax funds paid by CITY
to THEATRE under this Agreement. THEATRE shall 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.
(c) Upon the application or consent of THEATRE, the City Manager or his designate
may authorize minor amendments to the approved budget as necessary to carry out the intent of this
Agreement, in a manner consistent with efficient use of public funds, and in accordance with State
law. Such minor amendments may not increase the overall funding set forth in ¶1.2(b), extend the
term, or otherwise alter the performance obligations of THEATRE, without approval of the City
Council by ordinance.
3.2 Separate Accounts. THEATRE shall maintain any hotel tax funds paid to THEATRE 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. THEATRE shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by THEATRE. These funds are required to be
classified as restricted funds for audited financial purposes, and may not be used for contracted
services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance
written request of the Denton City Council, the City Manager or designate, or any other person,
THEATRE shall make such financial records available for inspection and review by the party
making the request. THEATRE 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'T
CODE, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the
end of every quarter thereafter, until all funds have been expended and reported to CITY,
THEATRE shall 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 tax funds pursuant to TEX. TAX CODE
§351.101(c), and (3) a copy of all financial records (e. g., copies of front and back of 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. THEATRE shall
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. THEATRE shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of THEATRE's Board of
Directors, as well as any other meeting of any constituency of THEATRE, at which this Agreement
or any matter subject to this Agreement shall be considered.
DCT HOT Funding PY2014 - Page 4
IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2014 and terminate at
midnight on January 31, 2015. However, the program period shall commence on January 1, 2014
and terminate at midnight on December 31, 2014. Only those expenditures authorized by Chapter
351 of the Texas Tax 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.
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 THEATRE for any contractual obligations of THEATRE undertaken
by THEATRE in satisfactory performance of those activities specified in T ¶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 THEATRE, or to assume the performance of any contractual obligations of
THEATRE, for or under any contract entered into by THEATRE as contemplated herein, shall
not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), THEATRE 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 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 all expenditures and tax funds on the day of
termination. THEATRE will be obligated to return any unused funds, or funds determined to be
used improperly. Any use of remaining funds by THEATRE 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:
DCT HOT Funding PY2014 - Page 5
(a) The termination of the legal existence of THEATRE;
(b) The insolvency of THEATRE, the filing of a petition in bankruptcy, either voluntarily
or involuntarily, or an assignment by THEATRE 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 THEATRE 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 THEATRE 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.
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 terminating party reasonably believes that such activities are required
or prohibited under this Agreement.
4.5 In the event that this Agreement is terminated pursuant to ¶ ¶4.3 or 4.4, THEATRE 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 THEATRE with another private entity, person, or organi-
zation for the performance of those services described in ¶2.1 above. In the event that THEATRE
enters into any arrangement, contractual or otherwise, with such other entity, person or organization,
THEATRE 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 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. THEATRE 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. THEATRE shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same, and THEATRE shall
be solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. THEATRE shall not be considered a partner or joint venturer with CITY, nor shall
THEATRE be considered, nor in any manner hold itself out as, an agent or official representative of
CITY.
5.3 Indemnification. THEATRE 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
DCT HOT Funding PY2014 - Page 6
OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION
WITH THE PERFORMANCE BY THEATRE 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 THEATRE, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND INVITEES.
5.4 Assignment. THEATRE shall not assign this Agreement without first obtaining the written
consent of 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
Denton Community Theatre, Inc.
ATTN: Mike Barrow
214 West Hickory
Denton, Texas 76201
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 THEATRE 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 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 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.
DCT HOT Funding PY2014 - 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. THEATRE shall 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 1$500,000 1$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.
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 15t day of 2013.
ATTEST:
B w ...
,If,, 11:1 ",]l A1.,TERS,
CIf1' S111CIZ _ *TARY
THE CITY OF DENTON, TEXAS
B y
G l__,.1'ORG'E C CAM 1 B F11,
CITY MANAGER
APPROVED AS f' L1 IGAC.. FORM:
AN,r1 BURGESS,
CITY ATTORNEY
DENTON COMMUNITY THEATRE, INC.
By
1tl /f) ire
DCT HOT Funding PY2014 - Page 8
CIUM"
APPROVED AS TO LEGAL FORM:
By:_ By:
Secretary
DCT HOT Funding PY2014 - Page 9
Denton Community Theatre
Annual Performance Season 2014
ADVERTISING
Exhibit A
Brochures and Postcards $ 9,010
Internet 14,000
TOTAL $ 23,010