2016-372s:\legal\our documents\ordinances\16\hot funds py2017\kiwanis club ord.doc
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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 Kiwanis Club of Denton, Breakfast, Denton,
Texas, for the payment and use of hotel tax revenue, under the terms and conditions contained in
the agreement, a copy of which is attached hereta and made a part hereof.
SECTION 2. This ordinance shall became effective immediately upon its passage and
approval.
PASSED AND APPROVED this the r���y° of _� �_ �, 2016,
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Cn�l� VV i�� 1 1J' LV1�1 i o� .�.'.,...m' m......_.
A 1 1 Li� 1.
JENNIFER WALTERS, CITY SECRETARY
:
11F'I'l�[.)
AG EE ENT ETWEEN T E CITY F ENT N AN
ANIS CLU F ENT N, A AST, ENT N, TE S(TU Y LL
ICYCLE LI'} (PY2017) P VI ING F T E PAY ENT USE F TEL
TAX NUE
THIS AG EMENT made between the City of Dentan, Texas, a municipal corporation
(the 66CITY9g), and Kiwanis Club of Denton, Breakfast, Denton, Texas, a legal entity incarporated
under the laws of the State of Texas (the "CLUB"):
WHEREAS, TEx. TAx CoDE §351.002 authorizes CITY to levy by ordinance a municipal
hotel occupancy tax ("hotel t�") 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 §35 L 101(a) authorizes CITY to use revenue from its
municipal hotel occupancy tax to promote tourism and the canvention 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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WHEREAS, TEx. TAx CoDE §351.101(c) authorizes CITY to delegate by contract with
CLUB, 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
prornises contained herein, CITY and CLUB agree and contract as follows:
1 ' '•
1.1 Consideration. For and in consideration of the activities to be performed by CLUB under
this Agreement, CITY agrees to pay to CLUB a portion of the hotel tax revenue collected by CITY
at the rates and in the manner specified herein (such payments by CITY to CLUB sometimes herein
referred to as the "agreed payments" or "hotel tax funds").
1.2 A ount of Pay ents.
(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
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
Kiwanis Club Breakfast HOT Funds, PY2017 - Page 1
(ii) The term 66Callection 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 terrn "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 af collection or auditing of hotel taxpayers (attorney and
auditing costs include fees paid to attorneys or agents nat 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
t�payers.
(iv) The term "co��tr�zc�t q�i��i l��'" sh�tl� �°�.��� tc� �i���� ���a4z�'��r ���° 1��� calen���i� y�ar in
which this Agreement is in I'��r�.�.. C'c�a�tr-act c������•k�a•s �viP1 �.��c� carl �'[�ar�l� 31St, .I��z�� 30t�',
September 30th, and December 315Y 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 CLUB an amount of money in each contract year
equal to the lesser amount of Twenty-Three Hundredths percent (0.23%} of the annual base
payment amount, or the fixed contract amount of Five Thousand Three Hundred Twenty-Five
Dollars ($5,325}. This amount will be paid in one lump sum after the 25c" of January 2017. If
CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are not meeting
the anticipated budget projection, CITY may reduce CLUB's current budget at any time during
the contract period. Payment is subject to refund of any unused or irnproperly 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 66payments" shall mean payments by CITY to CLUB 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
25t" day following the last day of the contract quarter. If any quarterly iinancial 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 na way commits CITY to future funding of this program
beyond the current contract period. Any future funding is solely the respansibility of CLUB.
(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 allocatians if CITY determines that CLUB's expenditures
deviate materially from their approved budget.
Kiwanis Club Breakfast HOT Funds, PY2017 - Page 2
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Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach
audience outside the Denton city limits. These materials include, but are not limited to, signs,
posters, postcards, newsletters and print advertising.
2.2 Ad inistrative Costs. The hotel tax funds received from the CITY by the CLUB may be
spent for day-to-day operations, ofiice supplies, salaries, travel expenses, and other administrative
costs allowed by T�x. Tax CoDE §351.101(e), but only if specified in CLUB's budget (Exhibit
"A") and each are directly attributable to work on programs which promote taurism 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).
(a) That portion of total administrative costs of the CLUB for which hotel t� funds may
be used shall not exceed that portion of the CLUB'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 or the performance of the person's job in an efficient and
professianal manner.
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(c} Upan the application or consent of CLUB, 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 CLUB, without approval of the City Council
by ordinance.
3.2 Separate Accounts. CLUB shall maintain any hotel tax funds paid to CLUB 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. CLUB shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by CLUB. 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, CLUB shall
make such financial records available for inspection and review by the party making the request.
CLUB 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''r CoDE, ch. 552, as
hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel t� funds, and within thirty (30) days
after the end of every quarter thereafter, until all funds have been expended and reported to CITY,
CLUB 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 recards (e.g., copies of front and back 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. CLUB 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 eetings. CLUB shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of CLUB's Board of
Directors, as well as any other meeting of any constituency of CLUB, at which this Agreement or
any matter subject to this Agreement shall be considered.
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Kiwanis Club Breakfast HOT Funds, PY2017 - Page 4
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(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 CLUB for any contractual obligations af CLUB undertaken by CLUB in
satisfactory perforrnance of those activities specified in ¶¶2.1 and 2.2 above, and that were
approved by the Cauncil through the budget, as noted in ¶3.1. This reimbursement is
conditioned upon such contractual obligations having been incurred and entered into in the goad
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 provisian hereof to the cantrary, the obligation of CITY to reimburse
CLUB, or to assume the performance of any contractual obligations of CLUB, for or under any
contract entered into by CLUB as contemplated herein, shall not exceed 66 2/3% of the current
quarterly payment.
(c) Further, upan terrnination pursuant to ¶4.2(a), CLUB will provide CITY: 1) within
ten (10) business days from the termination notiizcation, 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 forrnal 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. CLUB will be obligated to return any
unused funds, or funds determined to be used improperly. Any use of remaining funds by CLUB
after notification of termination is conditioned upon such contractual obligations having been
incurred and entered into in the goad faith performance of those services contemplated in ¶¶2.1
and 2.2 above, and further conditioned upon such contractual obligatians having a term not
exceeding the full term of this Agreement.
4.3 Automatic Termination. This Agreement shall automatically terrninate upon the
occurrence of any of the following events:
(a) The termination of the legal existence of CLUB;
(b) The insolvency of CLUB, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by CORPORATION for the benefit of creditors;
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
either CITY ar CLUB for mare than thirty (30) days after written notice of such breach is given to
the breaching party by the other party; or
Kiwanis Club Breakfast HOT Funds, PY2017 - Page 5
(d} The failure of CLUB 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, ar quarterly as required by ¶1.3 hereof.
4.4 °ght to Im ediate Termination Upan 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-terrninating 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, CLUB agrees to
refund any and all unused funds, or funds deterrnined by CITY to have been used improperly,
within thirty (30) days after termination of this Agreement.
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5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor
be construed to prohibit, the agreement by CLUB with another private entity, person, or organi-
zation for the performance of those services described in ¶2.1 above. In the event that CLUB enters
into any arrangement, contractual or otherwise, with such other entity, person or organization,
CLUB shall cause such other entity, persan, or organization to adhere to, conforrn to, and be subject
to all provisions, terrns, 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 payrnents and hotel t� funds.
5.2 Independent Contractor. CLUB shall operate as an independent contractor as to all
services to be perfarmed under this Agreement and not as an officer, agent, servant, or employee of
CITY. CLUB shall have exclusive control of its operations and perforrnance of services hereunder,
and such persons, entities, or organizations performing the same, and CLUB shall be solely
responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. CLUB shall not be considered a partner or jaint venturer with CITY, nor shall
CLUB be considered, nor in any manner hold itself out as, an agent or official representative of
CITY.
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5.4 Assignment. CLUB shall not assign this Agreement without first obtaining the written
consent of CITY.
Kiwanis Club Breakfast HOT Funds, PY2017 - Page 6
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Mary Harr15
KIWANIS CLUB OF DENTON BREAKFAST
DENTON,TX
P. O. Box 1044
Denton, TX 76205
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1. $500,000 Cornmercial General Liability, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property,
2. Statutary Workers' Compensation and Employers' Liability
($100,000/$500,000/$100,000}, and
Kiwanis Club Breakfast HOT Funds, PY2017 - Page 7
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 �.,,, �� 2016.
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Secretary
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By. � � � ��
HOWARD MARTIN, �� �� �..� �
CITY MANAGER
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:
�1�i]�� A�,��C�T��;ESS,
CITY ATTORNEY
KIWANIS CLUB ��� DENTON, BREAKFAST,
DENTON, °T � �t� `�
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Kiwanis Club Breakfast HOT Funds, PY2017 - Page 8
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Pro ra Year 2017 ud et
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Total Budget $ 5,325