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2016-371s:\legal\our documents\ordinances\16\hot funds py2017\holiday festival ord.doc ;� � � , . � � •, AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON HOLIDAY FESTIVAL 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 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City af Denton and the Denton Holiday Festival 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 upan its passage and approval. .. �. �....� � ATTEST: JENNIFER WALTERS, CITY SECRETARY � " BY: � , � : .. ;;�_ . � �: _..._ r����'C�� �vT�:C) AS =1"(�} LEGAL FORM: AN : day of �_...4� �m..._ � . 2016. �: � , .�� r '�{ � � F �-�,v.. � � ..... � -��,r�. .�" ,�..,,. .......�......,.... ...�,.. ..............._...__.. . CHRIS WATTS, �vi.r� 'OR � � ' . j ; � � i � ..,.. � ,.;: ♦ i.i f ,.,, � ',: � �. . ; � � , .: a � ♦ : , , ., �� � ''.,. � I" I 1 !' ' `• , � � � ; , ! THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Holiday Festival Association, Inc., a legal entity incorporated under the laws of the State of Texas (the 66ASSOCIATION9g): WHEREAS, TEx. TAx Cor�E §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hatel tax") not exceeding seven percent (7%) of the cansideration paid by a hotel accupant; and WHEREAS, by ordinance, CITY has pravided for the assessment and callection 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 • . . � . � -� r�'� ,� �- �, � - , , � ' � •�' . 1 . • • •-'-�, - � � . � ... �:• � '� � � � i '. �: � ' 1,..' � ' . " r �,. �� ' r ���� � ' � * ��. .�' • L �' �. • #'��. + ' �, ' �,' �' ��� " ' r�, " �'� ' _ ' •, - •� • - • •� r � , � . � •,' �'' � � f l' � , � • r, •' � � ! • � : - ...�, � ,..'.� � *; � �� � :� r��' "' �.��I� � '�'��� 1,... • ��'�.�. � 1 ' 1 ; • . �' • #"1. � • � �' •_ • "�' • � • • ', � �' • � '- ' ��,,'' �, �� ,, � , • � � �� ' � �' " � • � .. � �" * � � i : � � ', �: � " a ', •� �' - ���. � . � � c i• a ' • � -�' � � �r ''� !'� �" • ' � II'' #' 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: �,- . -, . t • � ' .�' . � - - -• r . �. •'- • •. . , - ,�- w . _ �_ _ , � �; � •, w � , ,• . , - � . • , . •�- , 11 ' . + Holiday Festival HOT Funds, PY2017 - Page 1 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 ta�c 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 t� revenue collected by CITY during fiscal year 2005, less: (1) attorney and auditing costs incurred during such period for costs of collection or auditing of hatel 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 fram taxpayers}; and (2) court costs and other expenses incurred in litigation against, or auditing of, such taacpayers. (iv) The term "cot�t����ct c�����r�+��Y�' sh�tlt i°�1��• to any c�u��i•t�.�• �aI` il�� calen�i���• ��ar in which this Agreement is in .(��t��e. �`°��ta�act c��.��3r���•s will �11�1 c��� l�'I����c,l� 31St, I�7��c 30tn September 30th, and December 31St of each cantract 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: Seventy-Six Hundredths percent (0.76%) of the annual base payment amount, or the fixed contract amount of Seventeen Thousand Seven Hundred Dollars ($17,700}. This amount will be divided into two payments equal to 50% of the annual fixed contract amount, unless CITY can show with reasonable certainty that the annual base payment amount will be less than ariginally estimated for the fiscal year. The final payment will represent 50% of the fixed contract amount or the unpaid remainder of 0.76% of the base payment amount, whichever is less. If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not rneeting the anticipated budget projection, CITY may reduce ASSOCIATION's current budget at any time during the contract period. Each 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 � ' (a) The term "payments" shall mean payments by CITY to ASSOCIATION of those amounts specified in ¶1.2, above, as determined by the hotel t� revenue collected. • . •. ' . •' r. � r• . - � • - '� -� '�• . � . ' ' � ' • 1 , , � . - - � 1 . • . ,. . .', - �• r . . -• 1 �, t � � .••' ,• - � . � � - . �- ' - � � -, • � � t � •. .�• ••',. - -�• ' '� . a .�r'• '�i .�• • . ! r- ^. ! .r - �' Holiday Festival HOT Funds, PY2017 - Page 2 � 1 1 '�. 1 a 1 1;• � (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. ! � . 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 ta3c funds only for advertising and conducting solicitations and prornotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as autharized by TEx. TAx CoDE §351.101(a}. Funds for any calendar year which are unused by midnight December 31St 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 advertisrng. 2.2 Ad inistrative Costs. The hotel t� funds received from the CITY by the ASSOCIATION may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative casts allowed by TEx. TAx CoDE §351.101(e), but only if specified in ASSOCIATION's budget (Exhibit "A"} and each are directly attributable to work on programs which promote tourism and the hotel and corivention industry, and if each promotes at least one of the six statutory purposes enumerated within TEx. TAx CoDE §351.101(a). ',. ; � �; • , �., (a) That portion of total administrative costs of the ASSOCIATION for which hotel taY funds may be used shall not exceed that portion of the ASSOCIATION's admirustrative costs actually incurred in conducting the activities specified in ¶2.1 above. r �- r • •- �- � � � � �- • •.' �. '• � �' . . - � , . • �• - • • � -'. -� • - � � � s • '� . '• . � � - � .; � r - �; r - �- � . - w - �- • �� . . w • • - • . . Holiday Festival HOT Funds, PY2017 - Page 3 . �. �,, � � .: ��. . � � 3.1 Budget. (a) ASSOCIATION shall adhere to the budget (Exhibit 66A") as appraved by the City Council for each calendar year, for all operations of ASSOCIATION in which the hotel t� 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. 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 § 3 51.101(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 rninor 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 ecords. 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 Inforrnation Act, TEX. GOV'T CODE, ch. 552, as hereafter amended. ,' � ..��; . ,', - �, � * - . • , w 1 �. , • � �' . -. . � - �-- �- •-• , � -�� -• � . � . � * , � . • r - -� , , -r• r � �_ � � t� _ � � � _ �' ��- -•. • ,� •'- . � r . � �R' � 1 . • � �s • . . � � • • a� - s • � r. - .. I � - • •' '�. � � . . . - . �� •� .. � . '.. � • �'� '. • • '�:: • �� �'�. . .. 'I . I��.. ��-,..�� '��:. �� � .���:� �..".�" ._� �':� •��:����.'� Y� �:� ��".. �... Holiday Festival HOT Funds, PY2017 - Page 4 �' � � � a , � � I. �� � /'I � • � � I -� � II+ � �", � � t' � • .#� •'' '!' . ,! � •' ' ," ! ' '� '�- ♦ � ' 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. . ; � • � . � � . � • . . 1 , w .' + � : • . . 1 : �� - - -,�:, �- •. . • _ -r , . 1 � .-. • +' • l' '�' �, � • •-,s . � '• � .•- • r � ��" � � • ••'• �" �' *' ^ "� � t' I• •� � �" �1 • r � • a � � � f •� � •" •�' r ' � � ' �' ! � �- •� -- � • r'' � � ' •' �, �' •' 1 � s �- � '� � •� • • � s 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other parly 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 ASSOCIATION for any cantractual obligations of ASSOCIATION undertaken by ASSOCIATION in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse ASSOCIATION, or to assume the performance of any contractual obligations of ASSOCIATION, for or under any cantract entered into by ASSOCIATION as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to ¶4.2(a), ASSOCIATION will provide CTTY: 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 cantract 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 Cade, and is within the current contractual period approved budget; the budget will be cansidered 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 af 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 Haliday Festival HOT Funds, PY2017 - Page 5 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 ¶¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. . . � � � . - . ' . � . i . ' �•' • • � • � � + (a) The termination of the legal existence af 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 conditians of this Agreement by either CITY or ASSOCIATION for more than thirty (30} days after written notice of such breach is given ta 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 beginning af the next contract term, or quarterly as required by ¶1.3 hereof. 4.4 Right to Imrnediate 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, 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. 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 ¶2.1 above. In the event that ASSOCIATION enters into any arrangernent, contractual or otherwise, with such other entity, person or organization, ASSOCIATION shall cause such other entity, person, or organization to adhere ta, conform to, and be subject ta all provisions, terms, and conditions of this Agreement and to TEx. Tax CoDE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prahibitions pertaining to expenditure af the agreed payments and hotel tax funds. � • � • r i � ` �; ' • . ��- , - . . •-�- �' � ' . � . � , . _ � �- �- • -w �- • : -- - . • t . . • - ,;- _ � � _ � � _. � • � • i� _ � � • •r- . • . • •- r , - • Holiday Festival HOT Funds, PY2017 - Page 6 services hereunder, and such persans, 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. �. � 1 I,, ' I 1 I 1 .•� 1 1 ! I ; . . :� ! � �� , �, . .�, . . �; . �, �,� , � . . � �; , , # � ., � : 1 ' 1 ,1' . � . , . � � � . � � � .. � ' . �. .: ; • � . 'i � , � � . � � 1- � . ' 1 � 1' � I 1 �. 1 `, "1 , 1 � 1 I . �� �,• �• ;, �, � �• �, • �� • '1 1, I' 1 ,• �' ,1 I ; I ' ' 1 � I ' • 1' 1 5.4 Assignment. ASSOCIATION shall not assign this Agreement without first obtaining the written cansent of CITY. 5.5 Notice. Any notice required ta 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: � , ,�- • � • �- • . 1 Warren Dane DENTON HOLIDAY FESTIVAL ASSOCIATION, INC. P. O. Box 2765 Denton, TX 76202 5.6 Inure ent. 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 af CITY and ASSOCIATION and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject ta all applicable federal laws, state laws, the Charter of CITY of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, Holiday Festival HOT Funds, PY2017 - Page 7 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 af this Agreement are inserted merely for the purpose of convenience and do nat 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 ar circumstance is held invalid by any court af 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 (� 1 ooy000��P50oyo0o��D 1 ooyoo0)' G�ll 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 �e „ _ � � � e� • 2016. � THE CITY OF DENTON, TEXAS � ��� � � ������ �� �. By: � � , � �� �� �r. HowAx� �[��e:��°t�rr�, CITY MANAGER ....• � � • � t' By: � �C �Il�'L;�� �`�LTERS, +C.' ' '�` �l C' -1'1`�lt�` Holiday Festival HOT Fu I� � • ! !� •' � • ' • ,f �� � �° , ,r , � �- PA , , BY� �� M......_ � ��rt'��',�.� ��.� _ �..�.._��_ �'���� u��i�� r�'II�i�•�c� ��r . . . . � ! • • • ;� . BY� _� _mmm,�� � __ By: Secretary Holiday Festival HOT Funds, PY2017 - Page 9 Denton Holiday Lighting Festival Association, Inc. Denton Hollday Lighting Festival Program Year 2017 Budget Advertising Magazines Internet Newspaper / Radio Art Site Operations (Stages, Generators, Fencing & Port A Potties) Orchestra Fee $ 750 4,325 2,625 $ 7,700 $ 8,000 2,p00 $ 10,000 Total Budget $ 17,700