2014-361\\codad\departmentsUegal\our documents\ordinances\14\hot funds py15\texas filmmakers ord.doc
ORDINANCE NO. 2O 14-361
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND TEXAS FILMMAKERS'
CORPORATION FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND
PROVIDING AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTIONmm 1. The City Manager, or his designee, is her�by authorized to execute an
agreement between the City of Denton and Texas Filmmakers' Corporation 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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ATTEST:
JENNIFER WALTERS, CITY SECRETARY
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APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
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CHRIS WATTS, MAYOR
AGREEMENT BETWEEN THE CITY OF DENTON AND
TEXAS FILMMAKEI7S' CORPaRATION (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 Texas Filmmakers' Corporation, a legal entity incorporated under the laws of the
State of Texas (the "CORPORATION"):
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, CORPORATION is well equipped to perform those activities; and
WHEREAS, TEx. TAx CoDE §351.101(c) authorizes CITY to delegate by contract with
CORPORATION, as an independent entity, the management and supervision of programs and
activities of the type described hereinabove funded with revenue from the mLUlicipal hotel
occupancy tax;
NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, CITY and CORPORATION agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by
CORPORATION under this Agreement, CITY agrees to pay to CORPORATION a portion of the
hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments
by CITY to CORPORATION sometimes herein referred to as the "agreed payments" or "hotel t�
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.
Texas Filmmakers HOT Funding PY2015 - Page 1
(ii) The term "Collection period" will mean the collection period for CITY's
tiscal year. It will include hotel tax revenue due to CITY for the relevaril fiscal year� ai�el
collected through the 22nd day of the month following the close of the relevant fiscal year.
(iii) The term "base payrnent 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
t�payers.
(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 315` 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 CORPOR.ATION an amount of money in each
contract year equal to the lesser amount of Forty-Four Hundredths percent (0.44%) of the annual
base payment amount, or the iixed contract amount of Seven Thousand Eight Hundred Seventy-
Five Dollars ($7,875). This amount will be paid in one lump sum after the 25th of January 2015.
If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting
the anticipated budget projection, CITY may reduce CORPORATION's current budget at any
time during the contract period. 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 "payments" shall mean payments by CITY to CORPORATION 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
25�' 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
CORPORATION.
(b) It is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of CITY.
Texas Filmmakers HOT Funding PY2015 - Page 2
(c) CITY may withhold further allocations if CITY determines that CORPORATION'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 CORPORATION of
the agreed payments of hotel tax funds specified above, CORPORATION 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
T�x. TAx CoDE §351.101(a). Funds for any calendar year which are unused by midnight December
31 St 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
audience 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
CORPORATION 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
CORPORATION'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 CORPORATION for which hotel
t� funds may be used shall not exceed that portion of the CORPORATION'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.
IIL ItECORDKEEPING AND REPORTING REQUI1tEMENTS
3.1 Budget.
(a) CORPORATION shall adhere to the budget (Exhibit "A") as approved by the City
Council for each calendar year, for all operations of CORPORATION in which the hotel t� funds
shall be used by CORPORATION. In other words, CITY should be able to audit specifically the
purpose of each individual expenditure of hotel taY funds from the separate account relating to hotel
tax. CITY shall not pay to CORPORATION any hotel t� 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.
Texas Filmmakers HOT Funding PY2015 - Page 3
(b) CORPORATION acknowledges that approval of the budget (Exhibit "A") by the
Denton City Council creates a tiduciary duty in CUF�YURATION with respect to the hotel tax funds
paid by CITY to CORPORATION under this Agreement. CORPORATION 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 CORPORATION, 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 perfortnance obligations of CORPORATION,
without approval of the City Council by ordinance.
3.2 Separate Accounts. CORPORATION shall maintain any hotel tax funds paid to
CORPORATION 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. CORPORATION shall maintain complete and accurate financial
records of each expenditure of the hotel t� funds made by CORPORATION. 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, CORPORATION shall make such financial records available for inspection and review by
the party making the request. CORPORATION understands and accepts that all such financial
records, and any other records relating to this Agreement shall be subj ect to the Texas Public
Information Act, TEX. GOV'T CODE, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel t� funds, and within thirty (30) days
after the end of every quarter thereafter, until all funds have been expended and reported to CITY,
CORPORATION 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
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. CORPORATION 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. CORPORATION shall give the City Manager of CITY, or his
designate, reasonable advance written notice of the time and place of all meetings of
CORPORATION's Board of Directors, as well as any other ineeting of any constituency of
CORPORATION, at which this Agreement or any matter subject to this Agreement shall be
considered.
Texas Filmmakers HOT Funding PY2015 - Page 4
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 CORPORATION for any contractual obligations of CORPORATION
undertaken by CORPORATION 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 CORPOR.ATION, or to assume the performance of any contractual
obligations of CORPORATION, for or under any contract entered into by CORPORATION as
contemplated herein, shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), CORPORATION 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) 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. CORPORATION will be obligated to
return any unused funds, or funds determined to be used improperly. Any use of remaining funds
by CORPORATION 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 CORPORATION;
Texas Filmmakers HOT Funding PY2015 - Page 5
(b) The insolvency of C;(�l�'U1ZAT'IUN, the filing of a petition in bankruptcy, eilher
voluntarily or involuntarily, or an assignment by CORPORATION 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 CORPORATION 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 CORPORATION 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, CORPORATION
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 CORPORATION with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
CORPORATION enters into any arrangement, contractual or otherwise, with such other entity,
person or organization, CORPORATION 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
t0 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. CORPORATION 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. CORPORATION shall have exclusive control of its operations and
performance of services hereunder, and such persons, entities, or organizations performing the
same, and CORPORATION shall be solely responsible for the acts and omissions of its directors,
officers, employees, agents, and subcontractors. CORPORATION shall not be considered a partner
or joint venturer with CITY, nor shall CORPORATION be considered, nor in any manner hold
itself out as, an agent or official representative of CITY.
5.3 Indemnification. CORPORATION 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 CORPORATION OF THOSE
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SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH
CLAIMS OR CAU�E� UN A(:'1'lUN IiASEU UpON �COMMON, CONSTITUTIONAL OR
STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF
NEGLIGENT OR INTENTIONAL ACTS OF CORPORATION, ITS OFFICERS,
EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. CORPORATION 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
CORPORATION
Texas Filmmakers' Corporation
Joshua Butler
5012 Pebble Beach Trail
Denton, Texas 76208
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 CORPORATION 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 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.
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
Texas Pilmmakers HOT Funding PY2015 - Page 7
Agreement, and the parties hereby declare they would have enacted such remaining portions despite
any such invalidity.
5.12 Insurance. CORPORATION 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/$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.
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EXECUTED this _:� day of _����"��,��" � 2014.
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THE CITY OF DENTON, TEXAS
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Texas Filmmakers HOT Funding PY2015 - Page 8
Exhibit A
Texas Filmmakers
Thin Line Fest
Budget 2015
ADVERTISING
Internet
$7,875
Total $7,875