2015-348\\codad \departments \legal \our documents \ordinances \15 \hot funds py16 \main street ord.doc
ORDINANCE NO. 2015 -348
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CENTRAL
BUSINESS DISTRICT ASSOCIATION, INC., d /b /a DENTON MAIN STREET
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 Denton Central Business District Association,
Inc., d /b /a Denton Main Street 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.
PASSED AND APPROVED this the
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
LOW'
day of 2015.
CHRIS WATTS, MAYOR
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON CENTRAL BUSINESS DISTRICT ASSOCIATION INC., d/b /a
DENTON MAIN STREET ASSOCIATION (PY2016)
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 Denton Central Business District Association, Inc., a legal entity 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 tax 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
■
Main Street HOT Funding PY2016 - Page l
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
(ii) The term "Collection period" will mean the collection period for CITY's
fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and
collected through the 22nd day of the month following the close of the relevant fiscal year.
(iii) The term "base payment amount" shall mean a net amount of money equal
to the total hotel tax revenue collected by CITY during any relevant period of time (i.e.,
fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred during such
relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and
auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for
which attorneys or agents effect compliance or collection of the hotel tax from taxpayers);
and (2) court costs and other expenses incurred in litigation against, or auditing of, such
taxpayers.
(iv) The term "contract quarter" shall refer to any quarter of the calendar year in
which this Agreement is in force. Contract quarters will end on March 31St, June 30th,
September 30th, 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 ASSOCIATION an amount of money in each
contract year equal or lesser amount of. One and Eighteen Hundredths percent (1.18 %) of the
annual base payment amount, or the fixed contract amount of Twenty -Five Thousand Three
Hundred Sixty -Nine Dollars ($25,369). 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 1.18% 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
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.
Main Street HOT Funding PY2016 - 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.
Il. 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 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) (3). Funds for any calendar year which are unused by midnight December 315 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 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 such expenditure is directly attributable to work
on programs which promote tourism and the hotel and convention industry, and promotes at least
one of the six statutory purposes enumerated within TEX. TAX CODE §351.101(a).
2.3 Specific Restrictions on Use of Funds.
(a) That portion of total administrative costs of ASSOCIATION for which hotel tax
funds may be used shall not exceed that portion of 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 and the performance of the person's job in an efficient and
professional manner.
Main Street HOT Funding PY2016 - 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 tax funds
shall be used by ASSOCIATION. 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 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 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 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 reasonable
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 tax funds, and within thirty days after the
end of every quarter thereafter, until all funds have been expended and reported to CITY,
ASSOCIATION 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
of 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
Main Street HOT Funding PY2016 - Page 4 6)
designate. ASSOCIATION 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. 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 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 14.2(a), CITY
agrees to reimburse ASSOCIATION for any contractual obligations of ASSOCIATION
undertaken by ASSOCIATION in satisfactory performance of those activities specified in T ¶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 the ASSOCIATIION as
contemplated herein shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to 14.2(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) 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
Main Street HOT Funding PY2016 - Page 5
by the ASSOCIATION after notification of termination is conditioned upon such contractual
obligations having been incurred and entered into in the good faith perfon-nance of those services
contemplated in TT2.1 and 2.2 above, and further conditioned upon such contractual obligations
havinM a term not exceeding the full term of this Agreement.
4.3 Automatic Termination. This Agreement shall automatically tenninate upon the
occurrence of any of the follovAng events:
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,
Main Street HOT Funding PY2016 ® Page 6
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.
5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the
written consent of CITY.
IN 11116ININI
MA
.-A
City Manager
Denton Main Street Association
City of Denton
ATTN: Christine Gossett
215 E. McKinney
PO Box 2017
Denton, TX 76201
Denton, Texas 76202
loflLawl .101,1104
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 ► Denton, all ordinances pass,41
pursuant thereto, and all judicial determinations relative thereto.
� I III � 11 111 111 11!111 1111111111
b-
Main Street HOT Funding PY2 016 - Page 7 N-Y
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 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.
EXECUTED this ,� ., day of 2015.
ATTEST:
THE CITY OF DENTON, TEXAS
x'
BYm
Gill Gt -° C CA ' P l
CITY MANAGER
APPROVED .AS5R- 1 I l G' Al ['O
msµ.
Y
AL ER , Il.RO SII
.,TARY CITY AU F0111
Dl�i '�I' N i -'I-" "I °l . l., BUSINESS DISTRICT
A aOCICI „ION, INC. (Denton Main Street
Association)
By., f
Main Street HOT Funding PY2016 - Page 8
s
Ya__. ................... ............................... y:
Secretary
0•
Main Street HOT Funding PY2016 ® Page
R- � 0, �,
Historic i =o o
,.
Arts, Antiques & Autos r r
Visitors Guide
Coops &/or Printed
o
Internet & Social Media
Retail Tourism
Billboard
1,
Printed Matter
Postage
2
Memberships
Contract Labor
8,500
Total $25,369