2013-289\\codad\departments\iegai\ our documents \ordinances \13 \hot funds pyWdenton county ordinance.doc
ORDINANCE NO. 2013 -289
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
1NTERLOCAL AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON
COUNTY FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE IN SUPPORT OF
THE DENTON COUNTY OFFICE OF HISTORY AND CULTURE; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, Tex. Tax Code §351.101(a) authorizes the City of Denton, Texas 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 to visit preserved historic sites
and museums; and
WHEREAS, the County of Denton, Texas is well equipped to perform those activities by its
operation of the Courthouse on the Square, the Bayless -Selby House, the African American, the Old
No. 14 Fire House, the Elm Ridge Church, the Welcome Center and the Outhouse Museums; and
WHEREAS, Tex. Tax Code §351.101(c) authorizes the City of Denton, Texas to delegate
by contract with the County of Denton, Texas, as a governmental entity, the management and
supervision of programs and activities of the type described hereinabove funded with revenue from
the municipal hotel occupancy tax; and
WHEREAS, both the City of Denton, Texas and the County of Denton, Texas have a
secondary source of authority to enter into an interlocal cooperation agreement, pursuant to Chapter
791 of the Texas Government Code, as: the agreement is authorized by both governmental bodies;
the agreement states the purpose, terms, rights, and duties of the contracting parties; the
consideration is being paid by City of Denton, Texas out of current revenues; the compensation is
fair; and the services to be performed are "museum services" authorized under §791.003(3)(F) of
the Texas Government Code, which each party is authorized to perform individually; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager, or his designee, is hereby authorized to execute an
interlocal agreement between the City of Denton and Denton County for the payment and use of
hotel tax revenue in support of the Denton County Office of History and Culture 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.
PASSM.�D AND �'�'1�()4'E this (lie ..... day c� "._ � � 2013.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:�
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, C'1,;T ]l' ()1 1.,xY ..,....
Page 2
AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY, TEXAS
( DENTON COUNTY OFFICE OF HISTORY AND CULTURE) (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 County of Denton, Texas, a governmental entity existing under the laws of the
State of Texas, contracting on behalf of its Courthouse -on- the - Square, African American, Bayless -
Selby House, Old No. 14 Fire house, Elm Ridge Church, Welcome Center and Outhouse Museums
(collectively, the "MUSEUMS "):
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; as well as to engage in historical
restoration and preservation projects and activities and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
MUSEUMS, as a governmental entity, the management and supervision of programs and activities
of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; and
WHEREAS, MUSEUMS are well equipped to perform those activities; and
WHEREAS, both CITY and MUSEUMS have a secondary source of authority to enter into
this Agreement as an interlocal cooperation agreement, pursuant to Chapter 791 of the Texas
Government Code, as: the Agreement is authorized by both governmental bodies; the Agreement
states the purpose, terms, rights, and duties of the contracting parties; the consideration is being paid
by CITY out of current revenues; the compensation is fair; and the services to be performed are
"museum services" authorized under §791.003(3)(F) of the Texas Government Code, which each
party is authorized to perform individually;
NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, CITY and MUSEUMS agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by MUSEUMS
under this Agreement, CITY agrees to reimburse a portion of the eligible expenditures by
MUSEUMS during the 2014 calendar year, from hotel tax revenue collected by CITY during its
2013 -14 fiscal year, at the rates and in the manner specified herein (such payments by CITY to
MUSEUMS sometimes herein referred to as the "agreed payments" or "hotel tax funds ").
HOT Funds PY2014 Denton County Office of History and Culture Page 1
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.
(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 Agreement is in force. Contract quarters will end on March 31St, June 30th, and
September 30th and December 31St
(b) In return for satisfactory performance of the activities set forth in this Agreement
and all attachments hereto, CITY shall reimburse to MUSEUMS, a portion of eligible
expenditures made during calendar year 2013, in an amount equal to the lesser amount of: Five
and Sixty Six One Hundredths percent (5.66 %) of the annual base payment amount, or the fixed
contract amount of One Hundred Eight Thousand, Five Hundred and Seventy Dollars
($108,570). This amount will be divided into three quarterly payments equal to 33% 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 third quarterly
payment will represent 33% of the fixed contract amount, or the unpaid remainder of 5.66% 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 projections, CITY may
reduce MUSEUMS' budget at any time during the contract period. Each of the three scheduled
quarterly payments is subject to receipt of funds, confirmation of eligibility, and CITY's timely
receipt of the required quarterly reports.
HOT Funds PY2014 Denton County Office of History and Culture Page 2
1.3 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by CITY to MUSEUMS of those
amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected during that report
quarter. Quarterly payments will be made in the first three quarters of the calendar year only.
(b) Each of the three quarterly payments shall be paid within twenty -one (21) days after
receipt of the required quarterly reports for the first three quarters. 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
corresponding reports are received and approved, and such 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 MUSEUMS.
(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 MUSEUMS'
expenditures deviate materially from its approved budget.
H. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in consideration of the payment by CITY to MUSEUMS of the
agreed payments of hotel tax funds specified above, MUSEUMS agree 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 to engage in
historical restoration and preservation projects and activities to encourage tourists and convention
delegates to visit preserved historic sites and museums, as authorized by TEX. TAX CODE
§351.101(a)(3) and (a)(5). Funds for any calendar year which are unused by midnight December
31" 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 CITY by MUSEUMS 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 MUSEUMS' budget (Exhibit
"A ") and each such expenditure is directly attributable to work on programs, which promote
tourism and the hotel and convention industry, and promotes at least one of the six statutory
purposes enumerated within TEX. TAX CODE §351.101(a).
HOT Funds PY2014 Denton County Office of History and Culture Page 3
2.3 Specific Restrictions on Use of Funds.
(a) MUSEUMS agree to demonstrate strict compliance with the record keeping and
apportionment limitations imposed by TEX. TAX CODE §351.101(e) and §351.108 (c) and (d).
MUSEUMS shall not utilize hotel tax funds for any expenditure which has not been specifically
documented to satisfy the purposes set forth in ¶ ¶2.1 and 2.2 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 and the performance of the person's job in an efficient and
professional manner.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) MUSEUMS shall adhere to the annual budget (Exhibit "A ") as approved by the City
Council for each calendar year, for all operations of MUSEUMS in which the hotel tax funds shall
be used by MUSEUMS. 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 MUSEUMS any hotel tax 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.
(b) MUSEUMS acknowledge that approval of the budget (Exhibit "A ") by the Denton
City Council creates a fiduciary duty in MUSEUMS with respect to the hotel tax funds paid by
CITY to MUSEUMS under this Agreement. MUSEUMS 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 MUSEUMS, 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 MUSEUMS, without approval of the City
Council by ordinance.
3.2 Separate Accounts. MUSEUMS shall maintain any hotel tax funds paid to MUSEUMS
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. MUSEUMS shall maintain complete and accurate financial records
of each expenditure of the hotel tax funds made by MUSEUMS. 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
HOT Funds PY2014 Denton County Office of History and Culture Page 4
written request of the Denton City Council, the City Manager or designate, or any other person,
MUSEUMS shall make such financial records available for inspection and review by the party
making the request. MUSEUMS understand and accept 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. Within thirty days after the end of every contract quarter,
MUSEUMS 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., front and back copies of cleared checks or
bank statements, and other relevant documentation), MUSEUMS shall prepare and deliver all
reports in a form and manner approved by the City Manager or designate. MUSEUMS 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. MUSEUMS shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of MUSEUMS' Boards of
Directors, as well as any other meeting of any constituency of MUSEUMS, at which this
Agreement or any matter subject to this Agreement shall be considered.
IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2014, and terminate at
midnight on October 31, 2014. However, the program period shall commence on January 1, 2014
and terminate at midnight on September 30, 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 MUSEUMS for any contractual obligations of MUSEUMS
undertaken by MUSEUMS 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 MUSEUMS, or to assume the performance of any contractual obligations of
MUSEUMS, for or under any contract entered into by MUSEUMS as contemplated herein, shall
not exceed 66 2/3% of the current quarterly payment.
HOT Funds PY2014 Denton County Office of History and Culture Page 5
(c) Further, upon termination pursuant to ¶4.2(a), MUSEUMS 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. MUSEUMS will be obligated to return any unused funds, or funds determined to be
used improperly. Any use of remaining funds by MUSEUMS 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 termination of the legal existence of MUSEUMS;
(b) The insolvency of MUSEUMS, the filing of a petition in bankruptcy, either voluntarily
or involuntarily, or an assignment by MUSEUMS 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 MUSEUMS 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 MUSEUMS 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, MUSEUMS agree 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.
HOT Funds PY2014 Denton County Office of History and Culture Page 6
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor
be construed to prohibit, the agreement by MUSEUMS with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
MUSEUMS enter into any arrangement, contractual or otherwise, with such other entity, person or
organization, MUSEUMS 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. MUSEUMS 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. MUSEUMS shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same, and MUSEUMS shall
be solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. MUSEUMS shall not be considered a partner or joint venturer with CITY, nor shall
MUSEUMS be considered, nor in any manner hold itself out as, an agent or official representative
of CITY.
5.3 Indemnification. TO THE EXTENT AUTHORIZED BY LAW, MUSEUMS AGREE
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 KIND OR CHARACTER,
ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY MUSEUMS
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 MUSEUM, ITS
OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND
INVITEES.
5.4 Assignment. MUSEUMS 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
MUSEUMS
Denton County Museums
Peggy Riddle
110 W. Hickory St.
Denton, TX 76201
HOT Funds PY2014 Denton County Office of History and Culture Page 7
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 MUSEUMS 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 Triplicate Originals. This Agreement is executed in triplicate 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. MUSEUMS shall provide insurance as follows:
1. Statutory Workers' Compensation and Employers' Liability
($100,000 /$500,000 /$100,000).
Proof of coverage shall be submitted prior to any payment by CITY.
5.13 Waiver of Immunity for Suit to Enforce. By executing and authorizing the execution of
this contract, DINTON COUNTY', TEXAS expressly waives immunity from any suit brought by
CITY for the enforcement of the provisions contained herein, and father expressly waives the
presentment required of Tex. Loc. Gov't Code sec. 89.004 as a prerequisite to such suit.
HOT Funds PY2014 Denton County Office of History and Culture Page 8
EXECUTED this day of Q - . `" 2013.
ATTEST:
ATTEST:
LIZA
Secretary
THE CITY OF DENTON, TEXAS
w
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y ..
GELNZ t, C CAMPBELL,
CITY MANAGER
APPROVED AS
NITA BURGESS
CITY ATTOI NI
DENTON COUN'"Y, TEXAS
W
By:
CO UN GE
APPROVED AS TO LEGAL FORM:
By:
DI T 1C i ATTORNEY
HOT Funds PY2014 Denton County Office of History and Culture Page 9
Denton County Office of History and Culture
County Museums 2014
ADVERTISING
Exhibit A
Magazines, Newspapers & Internet
$
9,169
Marketing (Visitors Guide, Brochures)
11,200
$
20,369
HISTORICAL
Archival Supplies
$
8,000
New Exhibits
15,000
Signage Production (CHOS & Historical Park)
11,200
$
34,200
HISTORICAL ADMINISTRATION
Contract Labor
$
24,531
Tourism Coordinator
29,470
$
54,001
TOTAL $ 108,570
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