2014-358\\codad\departments\legal\our documents\ordinances\14\hot funds pyl5�ntsf ord.doc
ORDINANCE NO. 2014-358
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE NORTH TEXAS STATE
FAIR ASSOCIATION 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 North Texas State Fair Association 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.
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CHRIS WATTS, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
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BY: ..���`� ::m� ;� -� �,
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
:
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE NORTH TEXAS STATE FAIR ASSOCIATION (PY2015)
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 North Texas State Fair Association, a non-profit
corporation incorporated under the laws of the State of Texas (the "ASSOCIATION"):
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, ASSOCIATION is well equipped to perform those activities; and
WHEREAS, TEx. Tax CoDE §351.101(c) authorizes CITY to delegate by contract
with ASSOCIATION, 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 ASSOCIATION agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by
ASSOCIATION under this Agreement, CITY agrees to pay to ASSOCIATION a portion of
the hotel ta�c revenue collected by CITY at the rates and in the manner specified herein (such
payments by CITY to ASSOCIATION 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.
North Texas State Fair PY2015 HOT Funds — 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
t�payers (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 t�payers); and (2) court costs and other expenses
incurred in litigation against, or auditing of, such taxpayers.
(iv) 7�1��� t����� `����s�t�'���t c.7�i���-��r" shall refer to any quarter of the calendar
year in which t�3�� .���`�c�����,t i� ��a ic,��°�c�. Contract quarters will end on March 31St,
June 30�', Sep�������l��r �d'N��', ���c� [)���.����t��r 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 ASSOCIATION an amount of
money in each contract year equal to the lesser amount of Four and Twenty-Seven
Hundredths percent (4.27%) of the annual base payment amount, or the fixed contract
amount of Seventy-Seven Thousand Three Hundred One Dollars ($77,301). 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
4.27% 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 ASSOCIATION'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
ASSOCIATION 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 25t�' day following the last day of trre 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.
North Texas State Fair PY2015 HOT Funds — Page 2
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 ASSOCIATION.
(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
ASSOCIATION'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
ASSOCIATION of the agreed payments of hotel tax funds specified above,
ASSOCIATION agrees to use such hotel t� 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 t� funds inust 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 ta�c funds received from the CITY by the
ASSOCIATION 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 ASSOCIATION'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 T�x. TAx CoDE
§351.101(a).
2.3 Specific Restrictions on Use of Funds.
(a) That portion of total administrative costs of the ASSOCIATION for which
hotel tax funds may be used shall not exceed that portion of the ASSOCIATION'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.
North Texas State Fair PY2015 HOT Funds — Page 3
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) ASSOCIATION shall adhere to the budget (Exhibit "A") as approved by the
City Council for each calendar year, for all operations of ASSOCIATION in which the hotel
t� funds shall be used by ASSOCIATION. In other words, CITY should be able to audit
specifically the purpose of each individual expenditure of hotel t� funds from the separate
account relating to hotel tax funds. CITY shall not pay to ASSOCIATION 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) ASSOCIATION acknowledges that approval of the budget (Exhibit "A") by
the Denton City Council creates a fiduciary duty in ASSOCIATION with respect to the
hotel tax funds paid by CITY to ASSOCIATION under this Agreement. ASSOCIATION
shall expend hotel t� 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 ASSOCIATION, 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 ASSOCIATION, without approval of the City Council by ordinance.
3.2 Separate Accounts. ASSOCIATION shall maintain any hotel tax funds paid to
ASSOCIATION 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. ASSOCIATION shall maintain complete and accurate
financial records of each expenditure of the hotel tax funds made by ASSOCIATION.
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 reasonably advance written request of the Denton City Council, the
City Manager or designate, or any other person, ASSOCIATION shall make such financial
records available for inspection and review by the party making the request.
ASSOCIATION understands and accepts that all such financial records, and any other
records relating to this Agreement shall be subject to the Texas Public Information Act, TEx.
Gov'T CoDE, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel taY fund, and within thirty (30)
days after the end of every contract quarter, ASSOCIATION shall furnish to CITY: (1) a
completed financial report, (2) a list of the expenditures or copies of 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 cleared checks or bank statements, and
other relevant documentation). ASSOCIATION sha11 prepare and deliver all reports in a
form and manner approved by the City Manager or designate. ASSOCIATION shall
North Texas State Fair PY2015 HOT Funds — Page 4
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. ASSOCIATION shall give the City Manager of CITY, or his
designate, reasonable advance written notice of the time and place of all meetings of
ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of
ASSOCIATION, at which this Agreement or any matter subject to this Agreement sha11 be
considered.
IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2015, and
terminate at midnight on January 31, 2016. However, the program period shall commence
on January 1, 2015 and terminate at midnight on December 31, 2015. 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 ¶4.2(a),
CITY agrees to reimburse ASSOCIATION for any contractual obligations of
ASSOCIATION undertaken by ASSOCIATION 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 ASSOCIATION or to assume the performance of any contractual
obligations of ASSOCIATION, for or under any contract entered into by
ASSOCIATION as contemplated herein, shall not exceed 66 2/3% of the current
quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), ASSOCIATION will provide
CITY: 1) within ten (10) business days from the termination notification, a short-term
budget of probable expenditures for the remaining sixty (60) day period between
termination notification and contract termination. This budget will be presented to
Council for approval within ten (10) business days after receipt by CITY. If formal
approval is not given within ten (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
thirty (30) days, a full accounting of all expenditures not previously audited by CITY; 3)
North Texas State Fair PY2015 HOT Funds — Page 5
within five (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. ASSOCIATION will be obligated to return any
unused funds, or funds determined to be used improperly. Any use of remaining funds by
ASSOCIATION 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 ASSOCIATION;
(b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by ASSOCIATION 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 ASSOCIATION for more than thiriy (30) days after written notice of
such breach is given to the breaching party by the other party; or
(d) The failure of ASSOCIATION 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 ¶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,
ASSOCIATION agrees to refund any and all unused funds, or funds determined by CITY
to have been used improperly, within thirty (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 ASSOCIATION with another
private entity, person, or organization for the performance of those services described in
¶2.1 above. In the event that ASSOCIATION enters into any arrangement, contractual or
otherwise, with such other entity, person or organization, ASSOCIATION 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.
North Texas State Fair PY2015 HOT Funds — Page 6
5.2 Independent Contractor. ASSOCIATION 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. ASSOCIATION shall have exclusive control of its
operations and performance of services hereunder, and such persons, entities, or
organizations performing the same, and ASSOCIATION shall be solely responsible for the
acts and omissions of its directors, officers, employees, agents, and subcontractors.
ASSOCIATION shall not be considered a partner or joint venturer with CITY, nor shall
ASSOCIATION be considered, nor in any manner hold itself out as, an agent or official
representative of CITY.
5.3 Indemnification. ASSOCIATION 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 HIND OR CHARACTER,
ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY
ASSOCIATION 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 ASSOCIATION, ITS OFFICERS, EMPLOYEES,
AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. ASSOCIATION 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
ASSOCIATION
North Texas State Fair Association
Glenn Carlton
P.O. Box 1695
Denton, Texas 76202
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 ASSOCIATION and their respective successors and assigns.
5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are
subject to a11 applicable federal laws, state laws, the Charter of the City of Denton, all
ordinances passed pursuant thereto, and all judicial determinations relative thereto.
North Texas State Fair PY2015 HOT Funds — Page 7
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.
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. ASSOCIATION shall, at a minimum, 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' Coinpensation 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.
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 �;'� day of �����""��� �� � �� � _, 2014.
THE CITY OF DENTON, TEXAS
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G� �Z��T C. (.'��r'31�"ii�k 9 ��,
CITY MANAG�R
North Texas State Fair PY2015 HOT Funds — Page 8
ATTEST:
APPROVED
By: �' .. ������ �� �,����.���`"���������� r�����.. ` � . : � �
,q�� �'���1�1 �L,�t� WALTERS, ��I,! 1,� BURGESS,
CITY SECRETARY ������� � �� �� �� CITY ATTO:I�� �Fs";,�
ATTEST:
NORTH TEXASI�°�`�TE FAIR
�
ASSOCIATI�:�`"
:
President
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APPROVED AS TO LEGAL FORM:
...... By:
BY� ...�.�.�.� ...................................s�..m_ __...._�. ...�_�..__.....
Secretary
North Texas State Fair PY2015 HOT Funds — Page 9
Exhibit A
North Texas State Fair Association
North Texas State Fair & Rodeo
Budget 2015
ADVERTISING
Internet
Radio
Hispanic Radio
Newspaper / Magazines
Billboards
Television
$5,500
45, 000
0
1,801
10,000
15,000
Total $77,301