2015-343ORDINANCE NO. 2015 -343
AN ORDINANCE AUTHORIZING THE CITY MANAGER 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; 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; 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.
PASSED AND APPROVED this the . �,... _ day of Ln AjAp, , 2015.
� d
l U A TTS, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
w.aow.�
a.
BY:
Page 2
AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY, TEXAS
( DENTON COUNTY OFFICE OF HISTORY AND CULTURE)) (PY 2016) 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 Office of History and Culture (collectively,
the "COUNTY "):
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, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
COUNTY, 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;
WHEREAS, both CITY and COUNTY have a secondary source of authority to enter into
the 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 COUNTY agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by COUNTY
under this Agreement, CITY agrees to pay to COUNTY a portion of the hotel tax revenue collected
by CITY at the rates and in the manner specified herein (such payments by CITY to COUNTY
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:
County PY2016 HOT Fund Contract -- Page 1
(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 (Le.,
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 30`h,
September 30ffi, 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 COUNTY an amount of money in each contract
year equal to the lesser amount of Six and Ninety -Nine Hundredths percent (6.99 %) of the
annual base payment amount, or the fixed contract amount of One Hundred Fifty Thousand
Dollars ($150,000). 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
6.99% 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 COUNTY'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 COUNTY of those
amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected.
(b) Each quarterly payment shall be paid upon receipt of the required reports and after the
25th day following the last day of the contract quarter. If any quarterly financial report is not
received within thirty (30) days of the end of the applicable contract quarter, the recipient may be
County PY2016 HOT Fund Contract -- Page 2
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
COUNTY.
(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 COUNTY'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 COUNTY of the agreed
payments of hotel tax funds specified above, COUNTY agrees to use such hotel tax funds only for
advertising and conducting solicitations and promotional programs to attract tourists and convention
delegates or registrants to the municipality or its vicinity as authorized by TEX. TAX CODE
§351.101(a). Funds for any calendar year which are unused by midnight December 3111 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 COUNTY 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 COUNTY'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) COUNTY 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).
COUNTY 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 or the performance of the person's job in an efficient and
professional manner.
County PY2016 HOT Fund Contract -- Page 3
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) COUNTY shall adhere to the budget (Exhibit "A ") as approved by the City Council
for each calendar year, for all operations of COUNTY 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 COUNTY 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) COUNTY acknowledges that approval of the budget (Exhibit "A ") by the Denton
City Council creates a fiduciary duty in COUNTY with respect to the hotel tax funds paid by CITY
to COUNTY under this Agreement. COUNTY 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 COUNTY, 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 COUNTY, without approval of the City
Council by ordinance.
3.2 Separate Accounts. COUNTY shall maintain any hotel tax funds paid to COUNTY 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. COUNTY shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by COUNTY. 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, COUNTY
shall make such financial records available for inspection and review by the party making the
request. COUNTY 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, COUNTY 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). COUNTY
shall prepare and deliver all reports in a form and manner approved by the City Manager or
designate. COUNTY 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.
County PY2016 HOT Fund Contract -- Page 4
3.5 Notice of Meetings. COUNTY shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of COUNTY's
Commissioners Court, as well as any other meeting of any constituency of COUNTY 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, 2016 and terminate at
midnight on January 31, 2017. However, the program period shall commence on January 1, 2016
and terminate at midnight on December 31, 2016. 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 COUNTY for any contractual obligations of COUNTY undertaken by
COUNTY 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 T ¶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
COUNTY or to assume the performance of any contractual obligations of BUREAU for or under
any contract entered into by COUNTY as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), COUNTY 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. COUNTY will be obligated to return
any unused funds or funds determined to be used improperly. Any use of remaining funds by
COUNTY after notification of termination is conditioned upon such contractual obligations
having been incurred and entered into in the good faith performance of those services
County PY2016 HOT Fund Contract -- Page 5
contemplated in ¶T2.1 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 COUNTY;
(b) The insolvency of COUNTY, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by COUNTY 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 COUNTY 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 COUNTY 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, COUNTY 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 COUNTY with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
COUNTY enters into any arrangement, contractual or otherwise, with such other entity, person or
organization, COUNTY 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. COUNTY 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. COUNTY shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same and COUNTY shall be
solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. COUNTY shall not be considered a partner or joint venturer with CITY, nor shall
County PY2016 HOT Fund Contract -- Page 6
COUNTY be considered nor in any manner hold itself out as an agent or official representative of
CITY.
5.3 Indemnification. COUNTYAGREES 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 COUNTYOF 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 OFCOUNTY, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND INVITEES.
5.4 Assignment. COUNTY 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 COUNTY
City Manager
Denton County Office of History and Culture
City of Denton
Peggy Riddle
215 E. McKinney
110 West Hickory
Denton, TX 76201
Denton, TX 76201
5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty,
obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation
of CITY and COUNTY and their respective successors and assigns.
5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject
to all applicable federal laws, state laws, the Charter of the City of Denton, all ordinances passed
pursuant thereto, and all judicial determinations relative thereto.
5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes
the entire agreement between the parties hereto concerning the subject matter contained herein.
There are no representations, agreements, arrangements, or understandings, oral or written, express
or implied, between or among the parties hereto, relating to the subject matter of this Agreement,
which are not fully expressed herein. The terms and conditions of this Agreement shall prevail
notwithstanding any variance in this Agreement from the terms and conditions of any other
document relating to this transaction or these transactions.
5.9 Duplicate Originals. This Agreement is executed in duplicate originals.
County PY2016 HOT Fund Contract -- Page 7
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. COUNTY 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' Compensation and Employers' Liability
($100,000 /$500,000!$100,000),
3. $250,000 Liquor/Dram Shop Liability for any event occurring on City -owned
property where alcohol will be provided or served, and
4. $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 to any payment by CITY.
EXECIIT D this 7 day of A 1(A& 1]L , 1 , 2015..
ATTEST:
THE CITY OF DENTON, TEXAS
Al
By: GEORGE C. CAMPBELL,
.
ELL,
CITY MANAGER
APPROVED AS TO
By" B
J NIF E 'v AI.. "I l I S MT R
C � " SI I' '�l I'ARY CITY ATTO
County PY2016 HOT Fund Contract -- Page 8
DENTON COUNTY, TEXAS
By:
COUNTY JUD � -...
ATTEST: APPROVED AS TO LEGAL FORM:
B
Secretary _ .. I'STRI 'T TTORNEY _...
County PY20I 6 HOT Fund Contract -- Page 9
Denton County
Office of History and Culture
Budget 2016
ADVERTISING
Magazines, Newspaper & Internet
Visitors Guide
Brochures
HISTORICAL
Exhibit A
$9,000
1,200
91800
Total Advertising $20,000
Archival Supplies
$10,000
New Exhibits
18,000
Restoration of Taylor Farm House & Barn
15,000
Relocation and Foundation of Woods Home
50,000
Contract Labor
37,000
Total Historical $130,000
Total $150,000