2015-177ORDINANCE NO. 2015-177
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE A
SUPPLEMENTAL AGREEMENT BETWEEN THE CITY OF DENTON, AND THE DENTON
CHAMBER OF COMMERCE (CONVENTION & VISITORS BUREAU) (PY 2015)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE IN SUPPORT OF
A NEW VISTORS INFORMATION CENTER; AND PROVIDING AN EFFECTIVE DATE.
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, BUREAU is well equipped to perform those activities through its Denton
Convention and Visitor's Bureau; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
BUREAU, 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; and
WHEREAS, after the annual hotel tax funding contract between the CITY and BUREAU
for PY 2015 had already been budgeted and approved, an opportunity arose for the BUREAU to
lease building space on the downtown square (a popular tourist destination in its own right) for the
construction and operation of a new visitor information center, where tourists and visitors can come
and learn of local events, attractions and performances occurring in Denton, some of which might
encourage visitors to stay another night or two in Denton, and thereby benefit the hotel and tourism
industry; and
WHEREAS, apart from the eligible expenditures previously budgeted and approved for
PY 2015, TEX. TAX CODE §351.101(a)(1) specifically authorizes, without limitation, the
expenditure of hotel tax revenue for the acquisition of sites for and the construction, improvement,
enlarging, equipping, operation, and maintenance of visitor information centers, of the type
proposed; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager, or his designee, is hereby authorized to execute a
supplemental agreement between the City of Denton and the Denton Chamber of Commerce
(Convention & Visitors Bureau) 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. u
PASSED AND APPROVED this the w day of � 'L q," t, 2015.
.... .. ....... ...,_
-,=
(1 IRIS, WATTS, MAY OR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
ffiffi
PPR(WF'1D AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
Page 2
SUPPLEMENTAL AGREEMENT BETWEEN THE CITY OF DENTON AND THE
DENTON CHAMBER OF COMMERCE (CONVENTION & VISITORS BUREAU)
(PY 2015) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
IN SUPPORT OF A NEW VISITOR INFORMATION CENTER
THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the "CITY "), and the Denton Chamber of Commerce (Convention & Visitors Bureau), a non - profit
corporation incorporated under the laws of the State of Texas (the "BUREAU "):
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, BUREAU is well equipped to perform those activities through its Denton
Convention and Visitor's Bureau; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
BUREAU, 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; and
WHEREAS, after the annual hotel tax funding contract between the CITY and BUREAU
for PY 2015 had already been budgeted and approved, an opportunity arose for the BUREAU to
lease building space on the downtown square (a popular tourist destination in its own right) for the
construction and operation of a new visitor information center, where tourists and visitors can come
and learn of local events, attractions and performances occurring in Denton, some of which might
encourage visitors to stay another night or two in Denton, and thereby benefit the hotel and tourism
industry; and
WHEREAS, apart from the eligible expenditures already budgeted and approved for
PY 2015, TEX. TAX CODE §351.101(a)(1) specifically authorizes, without limitation, the
expenditure of hotel tax revenue for the acquisition of sites for and the construction, improvement,
enlarging, equipping, operation, and maintenance of visitor information centers, of the type
proposed;
NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, CITY and BUREAU agree and contract as follows:
CVB PY2015 Supplementary HOT Fund Contract -- Page 1
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by BUREAU
under this Agreement, CITY agrees to pay to BUREAU a portion of the hotel tax revenue collected
by CITY at the rates and in the manner specified herein (such payments by CITY to BUREAU
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.
(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 Areement is in force. Contract quarters will end on March 31St, June 30th,
September 30t , 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 BUREAU the fixed contract amount of Two
Hundred and Eighty -Four Thousand Dollars, as a lump sum payment. If CITY's Chief Financial
Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget
projection, CITY may reduce BUREAU's current budget at any time during the contract period.
1.3 Dates of Payments.
The lump sum payment of $284,000 to the BUREAU will be paid within two weeks of this
executed contract.
CVB PY2015 Supplementary HOT Fund Contract -- 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 BUREAU.
(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 BUREAU'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 BUREAU of the agreed
supplementary payment of hotel tax funds specified above, BUREAU agrees to use such hotel tax
funds only for the construction, improvement, enlarging, equipping, operation, and maintenance of
visitor information centers as authorized by TEX. TAX CODE §351.101(a)l). Funds for any calendar
year which are unused by midnight December 31" of that year shall be refunded to CITY within
sixty (60) days.
2.2 Specific Restrictions on Use of Funds.
(a) BUREAU agrees to demonstrate strict compliance with the record keeping and
apportionment limitations imposed by TEX. TAX CODE §351.101(f) and §351.108 (c) and (d).
BUREAU shall not utilize hotel tax funds for any expenditure which has not been specifically
documented to satisfy the purposes set forth 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) BUREAU shall adhere to the supplementary budget (Exhibit "A ") as approved by
the City Council for each calendar year, for all operations of BUREAU funded by hotel tax revenue.
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
BUREAU 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) BUREAU acknowledges that approval of the supplementary budget (Exhibit "A ")
by the Denton City Council creates a fiduciary duty in BUREAU with respect to the hotel tax funds
paid by CITY to BUREAU under this Agreement. BUREAU shall expend hotel tax funds only in
CVB PY2015 Supplementary HOT Fund Contract -- Page 3
the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a)(1), and
in the budget as approved by CITY.
(c) Upon the application or consent of BUREAU, 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 BUREAU, without approval of the City
Council by ordinance.
3.2 Separate Accounts. BUREAU shall maintain any hotel tax funds paid to BUREAU by
CITY in a separate checking account or with segregated fund accounting, such that any reasonable
person can review the revenue source of any given expenditure.
3.3 Financial Records. BUREAU shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by BUREAU. These funds shall be classified as
restricted funds for audited financial purposes, and may not be used for contracted services,
including, but not limited to, auditing fees and attorney fees. Upon reasonable advance written
request of the Denton City Council, the City Manager or designate, or any other person, BUREAU
shall make such financial records available for inspection and review by the party making the
request. BUREAU 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 the hotel tax funds, and within thirty (30) days
after the end of every contract quarter, BUREAU shall furnish to CITY: (1) a completed financial
report, (2) a list of the expenditures made or copies of the invoice or receipts 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). BUREAU
shall prepare and deliver all reports in a form and manner approved by the City Manager or
designate. BUREAU 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. BUREAU shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of BUREAU's Board of
Directors, as well as any other meeting of any constituency of BUREAU 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 upon execution 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.
CVB PY2015 Supplementary HOT Fund Contract -- Page 4
4.2 Termination Without Cause.
(a) This Agreement may be terminated by either party, with or without cause, by giving
the other party sixty (60) days advance written notice.
(b) In the event this contract is terminated by either party pursuant to ¶4.2(a), CITY
agrees to reimburse BUREAU for any contractual obligations of BUREAU undertaken by
BUREAU 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.
(c) Further, upon termination pursuant to ¶4.2(a), BUREAU 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. BUREAU will be obligated to return
any unused funds or funds determined to be used improperly. Any use of remaining funds by
BUREAU 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 BUREAU;
(b) The insolvency of BUREAU, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by BUREAU 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 BUREAU 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 BUREAU 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.
CVB PY2015 Supplementary HOT Fund Contract -- Page 5
4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision
of this Agreement, to mitigate damages and to preserve evidence and issues for judicial
determination, either parry 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, BUREAU 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 BUREAU with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
BUREAU enters into any arrangement, contractual or otherwise, with such other entity, person or
organization, BUREAU 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. BUREAU 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. BUREAU shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same and BUREAU shall be
solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. BUREAU shall not be considered a partner or joint venturer with CITY, nor shall
BUREAU be considered nor in any manner hold itself out as an agent or official representative of
CITY.
5.3 Indemnification. BUREAU 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 BUREAU 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 BUREAU, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND INVITEES.
5.4 Assignment. BUREAU shall not assign this Agreement without first obtaining the written
consent of CITY.
CVB PY2015 Supplementary HOT Fund Contract -- Page 6
5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or
regulation, shall be effective when given in writing and deposited in the United States mail, certified
mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows:
CITY BUREAU
City Manager Denton Chamber of Commerce
City of Denton Denton Convention & Visitors Bureau
215 E. McKinney Kim Phillips
Denton, TX 76201 P.O. Box 1719
Denton, TX 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 BUREAU and their respective successors and assigns. This agreement creates no
obligations to third parties.
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.
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. BUREAU shall, at a minimum, provide insurance as follows:
$500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering
all events taking place on City -owned property,
CVB PY2015 Supplementary HOT Fund Contract -- Page 7
2. Statutory Workers' Compensation and Employers' Liability
($100,000 /$500,000 /$100,000),
3. $500,000 Business Automobile Liability on any owned, non -owned or hired
vehicles.
CITY must be named as an additional insured on all policies (except Workers' Compensation) and
proof of coverage shall be submitted prior tea, any payment by CITY.
EXECUTED thi� day of� 2015.
THE CITY OF DENTON, TEXAS
ATTEST:.
B.
11FE,R AL "1
S1 IC R ° 1 "ARY
By
C.nL (�I'll C. (.'AM I B1.,,'
CITY MANAGER
APPROVED AS TO LEG
&N1 T'A. BURGESS,
CITY ATTORNEY
DENTON (:' E -JAM 1 )f ,�R . OF COMMERCE
By: ..,
.. .. -..
President
CVB PY2015 Supplementary HOT Fund Contract -- Page 8
ATTEST:
APPROVED AS TO LEGAL FORM:
_....... ..... ............�.................. By:
By:
Secretary
CVB PY2015 Supplementary HOT Fund Contract -- Page 9
Exhibit A
DOWNTOWN WEI COME CENTER & D DENTON STORE
A ig ,1 Throe ec 2015
Finish Out
$150,000
Rent
$18,000
Decorator
$25,000
Computer /IT networking (register /software)
$20,000
Supplies - Office /Retail
$5,000
Full time manager
$25,000
Maintenance
$5,000
Part -time / Pd Interns
$13,000
Furnishings and D6cor
$23,000
Total $284,000