2015-350\\codad\departmentsUegaRour documents \ordinances \15 \hot funds py16 \tejas ord.doc
ORDINANCE NO. 2015 -350
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE TEJAS STORYTELLING
ASSOCIATION, INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND
PROVIDING AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION ... 11. The City Manager, or his designee, is hereby authorized to execute an
agreement between the City of Denton and The Tejas Storytelling Association, Inc. 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
day of — --------- 2015.
rn
C��"��lS � WATTS, MAYOR ....
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE TEJAS STORYTELLING ASSOCIATION, INC. (PY2016),
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT madc between the City of Denton, Texas, a municipal corporation
(the "CITY "), and The Tejas Storytelling 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 5,o) 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, TFX TAX CODE §351.1.01(a) authorizes CITY to use revenue from its
111unicipal hotel occrrl ancy tax to promote tour sin 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 managerrrcnt and scrp(- Tvision of programs and
activities of the type described hereinabove funded with revenue front 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 rnwiner specified herein (such payments
by CITY to ASSOCIATION ;sonietinies 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 severe percent (7 %) of
the price paid for a room in a hotel, pursuant to Texas Tax Code §351.00 and City
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
Tejas HOT Funding PY2016 - Page 1
(ii) The term "Collection period" will mean the collection period for CITY's
fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and
collected through the 22nd day of the month following the close of the relevant fiscal year.
(iii) The term "base payment amount" shall mean a net amount of money equal
to the total hotel tax revenue collected by CITY during any relevant period of time (i.e.,
fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such
relevant period of time for costs of collection or auditing of hotel 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 31' of each contract year.
(b) In return for satisfactory performance of the activities set forth in this Agreement
and all attachments hereto, CITY shall pay to ASSOCIATION an amount of money in each
contract year equal to the lesser amount of: Two and Forty-Six Hundredths percent (2.46 %) of
the annual base payment amount, or the fixed contract amount of Fifty -Two Thousand Seven
Hundred Forty -Seven Dollars ($52,747). 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 2.46% 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 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
25a' 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
ASSOCIATION.
Tejas HOT Funding PY2016 - Page 2
(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
agi u- d 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 vicinitys; as well as the
encouragement, promotion, improvement, and application of the arts including instrumental and
vocal music, dance, draina, folk art, creative writing, architecture, design and allied fields, painting,
sculpture, plioto&y°apby, graphic and craft arts, mation pictures, radio, television, tape and sound
recordhig, and other arts related to the presentation, performance, execution, and exhibition of these
major al forins as authorized byTEX. 1'AX Com-, §351.101(a). Funds for any calendar year which
are unused by midnight December 31" 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 the CITY by the ASSOCIATION
may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other
administrative costs allowed by TEX. TAX Cotx, §351.101(e), but only if' specified in
ASSOCIATION's budget (Exhibit "A") and each are directly attributable to work on prognanis
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 ASSOCIATION for which hotel tax
funds may be used shall not exceed that portion of the ASSOCIATION's administrative costs
actually incurred in conducting the activities specified in 12.1 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) 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
Tejas HOT Funding PY2016 - Page 3
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 iri ASSOCIATION with respect to the hotel tax fiflicls
paid by CITY to ASSOCIATION u,nde r this Ag;reenient. ASSOCIATION shall expend hotel twx
funds only in the manner and fbir the purposes specified in this Agreement, °11A. '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 11,2(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 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, ASSOCIATION shall fizrnish 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 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
Tejas HOT Funding PY2016 - Page 4
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 ¶ 12.1
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 ¶ 12.1 and 2.2 above,
and further conditioned upon such contractual obligations having a term not exceeding the full
term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of
CITY to reimburse ASSOCIATION, or to assume the performance of any contractual
obligations of ASSOCIATION, for or under any contract entered into by ASSOCIATION as
contemplated herein, shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to 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, 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
by ASSOCIATION after notification of termination is conditioned upon such contractual
obligations having been incurred and entered into in the good faith performance of those services
contemplated in ¶ 12.1 and 2.2 above, and further conditioned upon such contractual obligations
having a term not exceeding the full term of this Agreement.
Tejas HOT Funding PY2016 - Page 5
4.3 Automatic Termination. This Agreement shall automatically terminate upon the
occurrence of any of the following events:
(a) The termination of the legal existence of ASSOCIATION;
(b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by ASSOCIATION for the benefit of creditors;
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
either CITY or ASSOCIATION for more than thirty (30) days after written notice of such breach is
given to the breaching party by the other party; or
(d) The failure of ASSOCIATION to submit a financial quarterly report which complies
with the reporting procedures required herein and generally accepted accounting principles prior to
the beginaiing of the nest contract term, or qutulerly as required by 11.3 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 shah have the right to terminate this Agreement upon immediate notice
to the 011ie" paTty 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 114.3 or 4.4, ASSOCIATION
agrees to refund any and all unused funds, or funds determined by CITY to have been used
improperly, within thirty (30) days after termination of this Agreement.
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor
be construed to prohibit, the agreement by ASSOCIATION with another private entity, person, or
organization for the performance of those services described in 12.1 above. In the event that
ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity,
person or organization, ASSOCIATION shall cause such other entity, person, or organization to
adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and
to TEx. TAx CODE ch. 351, including reporting requirements, separate funds maintenance, and
limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds.
5.2 Independent Contractor. ASSOCIATION shall operate as an independent contractor as to
all services to be performed under this Agreement and not as an officer, agent, servant, or employee
of CITY. ASSOCIATION shall have exclusive control of its operations and performance of
services hereunder, and such persons, entities, or organizations performing the same, and
ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers,
employees, agents, and subcontractors. ASSOCIATION shall not be considered a partner or joint
venturer with CITY, nor shall ASSOCIATION be considered, nor in any manner hold itself out as,
an agent or official representative of CITY.
Tejas HOT Funding PY2016 - Page 6
5.3 Indemnification. ASSOCIATION AGREES TO INDEMNIFY, HOLD HARMLESS,
AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND
AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR
LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN
CONNECTION WITH THE PERFORMANCE BY ASSOCIATION OF THOSE
SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH
CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR
STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF
NEGLIGENT OR INTENTIONAL ACTS OF ASSOCIATION, ITS OFFICERS,
EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the
written consent of CITY.
5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or
regulation, shall be effective when given in writing and deposited in the United States mail, certified
mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows:
CITY ASSOCIATION
City Manager The Tejas Storytelling Association, Inc.
City of Denton Elizabeth Ellis
215 E. McKinney P.O. Box 2806
Denton, TX 76201 Denton, Texas 76202 -2806
5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty,
obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation
of CITY and ASSOCIATION and their respective successors and assigns.
5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject
to 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.
Tejas HOT Funding PY2016 - Page 7
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 CITY.
EXECUTED this day of 2015.
ATTEST:
THE CITY OF DENTON, TEXAS
By: "� t �,
GEC )'IZC C. CAM.1)
CITY MANAGER
APPROVED AS TO LEG
By*�� 1.��',� A.. *S',
EC ETA RY CITY A
THE TEJAS tY'J I�" LING
ASSOC IA .. N, INC
Tejas HOT Funding PY2016 - Page 8
ATTEST:
APPROVED AS TO LEGAL FORM:
B:
Secretary
Tejas HOT Funding PY2016 - Page 9
Tejas Storytelling Association
Tejas Storytelling Festival
Budget 2016
ADVERTISING
Exhibit A
Radio & Television $17,937
Photography
550
Print Advertising 10,000
Internet 3,000
Direct Marketing & Promotions 4,660
Contract Labor 3,750
Total Advertising $39,897
ART
Performers $9,600
Site Operations 3,250
Total Art $12,850
Total $52,747