2016-371s:\legal\our documents\ordinances\16\hot funds py2017\holiday festival ord.doc
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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.
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ATTEST:
JENNIFER WALTERS, CITY SECRETARY
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AN
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CHRIS WATTS, �vi.r� 'OR
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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
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1.2 Amount of Payments.
(a) As used in this Agreement, the following terms shall have the following specific
meanings:
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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.
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(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.
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(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.
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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).
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(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.
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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.
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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.
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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.
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(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.
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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.
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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:
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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.
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THE CITY OF DENTON, TEXAS
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By: � � , � �� �� �r.
HowAx� �[��e:��°t�rr�,
CITY MANAGER
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By: �
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Holiday Festival HOT Fu
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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