2016-382s:\legal\our documents\ordinances\16\hot funds py2017\texas filmmakers ord.doc
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SECTION 1. The City Manager, or his designee, is hereby authorized to execute an
agreement between the City of Denton and Texas Filmmakers' Corporation 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 became effective immediately upan its passage and
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approval.
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ATTEST:
JENNIFER WALTERS, CITY SECRETARY
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BY: �, �.
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APPROVED AS TO LEGAL FORM:
day of =_µ �. _ , 2016.
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THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the 66CITY"}, and Texas Filmmalcers' Corporation, a legal entity incorporated under the laws of the
State of Texas (the "COR.PORATION"):
WHEREAS, TEx. TAx CoD� §351.002 authorizes CITY to levy by ordinance a municipal
hotel occupancy tax ("hotel taY") not exceeding seven percent (7%) af 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 solicitatians and promotional programs to attract tourists and convention
delegates or registrants to the municipality or its vicinity; and
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NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, CITY and CORPORATION agree and contract as follows:
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1.1 Consideration. For and in consideration of the activities to be performed by
CO ORATION under this Agreement, CITY agrees to pay to CORPO TION a portion of the
hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments
by CITY to CORPORATION sometimes herein referred to as the "agreed payments" or "hotel tax
funds").
1.2 Amount of Payrnents.
(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.
Texas Filmmakers HOT Funds, PY2017 - Page 1
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(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 attarneys 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 ather expenses incurred in litigation against, or auditing of, such
taxpayers.
(iv) The term "co��tr•��s�t q�����-€��°" sh���l �°c�'r:c �c� ����yf �,��a�.�r���• c��`�I�� calencl�sr v�,ar in
which this Agreement is in ��a�We�. t�����t:t�act c����.�ri��°� �u� i l c����� ��i� �v1 s��°c:;f� 31 St, .���i�e 30th,
September 30t", 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 to CORPORATION an amount of money in each
contract year equal to the lesser amount of Sixty-Eight Hundredths percent (0.68%) of the annual
base payment amount, or the iixed contract amount of Fifteen Thousand Seven Hundred Sixty-
Nine Dollars ($15,769). 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 originally estimated for the fiscal year. The final payment
will represent 50% of the fixed contract amount or the unpaid remainder of 0.68% 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
CORPORATION'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 CORPORATION of those
amounts specified in ¶1.2, above, as determined by the hotel taY revenue collected.
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(a) The funding of this project in no way commits CITY to future funding of this prograrn
beyond the current contract period. Any future funding is solely the responsibility of
CO ORATION.
Texas Filmmakers HOT Funds, PY2017 - Page 2
(b) It is expressly understood that this cantract 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 CORPORATION's
expenditures deviate materially from their approved budget.
2.1 Use of Funds. For and in consideration of the payment by CITY to CORPORATION of
the agreed payments of hotel tax funds speciiied above, CO ORATION agrees to use such hotel
tax funds anly 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). Funds for any calendar year which are unused by midnight December
31 St of that year shall be refunded to CITY within sixty (60) days.
Advertising materials purchased with the hotel occupancy tax funds must be targeted ta 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 taY funds received from the CITY by the
CORPORATION 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
CORPORATION's budget (Exhibit "A") and each are directly attributable to work an programs
which promote tourism and the hotel and convention industry, and if each prornotes 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 af the CORPORATION for which hotel
t� funds may be used shall not exceed that portion of the CORPORATION's administrative costs
actually incurred in conducting the activities specified in ¶2.1 above.
(b) Hatel 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 canvention and hotel industry or the performance of the person's job in an efiicient and
professional manner.
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3.1 Budget.
(a) CORPORATION shall adhere to the budget (Exhibit 66A"} as approved by the City
Council for each calendar year, for alI operations of CORPORATION in which the hotel tax funds
shall be used by CORPORATION. In other words, CITY should be able to audit specifically the
purpose of each individual expenditure of hotel t� funds from the separate account relating to hotel
tax. CITY shall not pay to CORPORATION 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, autharizing the expenditure of funds.
Texas Filmmakers HOT Funds, PY2017 - Page 3
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4.1 Term. The term of this Agreement shall comrnence on January 1, 2017, and terminate at
midnight on January 31, 2018. However, the program periad shall cammence on January 1, 2017
and terminate at midnight on December 31, 2017. Only those expenditures autharized by Chapter
351 of the Texas T� 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 ¶4.2(a), CITY
agrees to reimburse CORPORATION for any contractual obligations of CORPORATION
undertaken by CORPORATION 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 obligatians 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 upan 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 CORPORATION, or ta assume the performance of any contractual
obligations of CORPORATION, for or under any contract entered into by CORPORATION as
contemplated herein, shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination puxsuant to ¶4.2(a}, CORPORATION will provide
CITY: 1) within ten (10) business days from the termination notification, a short-term budget of
prabable 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 nat 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. CO O TION will be obligated to
return any unused funds, or funds determined to be used improperly. Any use of remaining funds
by CORPORATION after notiiication 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 nat exceeding the full term of this Agreement.
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 CORPORATION;
Texas Filrnmakers HOT Funds, PY2017 - Page 5
(b} The insolvency of CO ORATION, the filing of a petition in ba ptcy, either
voluntarily or involuntarily, or an assignment by CORPORATION for the beneiit of creditors;
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
either CITY or CORPORATION 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 CO ORATION ta submit a financial quarterly report which complies
with the reporting procedures required herein and generally accepted accounting principles prior ta
the beginning of the next contract term, or quarterly as required by ¶1,3 hereof.
4.4 'ght to I edrate Ter ination 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 parly, 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 tertninated pursuant to ¶¶4.3 or 4.4, CORPO TION
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 CORPORATION with another private entity, person, or
arganization for the performance of those services described in ¶2.1 above. In the event that
CORPORATION enters into any arrangement, contractual or otherwise, with such other entity,
person or organization, CORPORATION shall cause such other entity, person, or organization to
adhere to, conforrn 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 fiulds.
5.2 Independent Contractor. CORPORATION shall operate as an independent contractar as
ta all services to be performed under this Agreement and not as an officer, agent, servant, or
employee of CITY. CORPORATION shall have exclusive control of its operations and
performance of services hereunder, and such persons, entities, or organizations perforrning the
same, and CORPORATION shall be solely responsible for the acts and omissions of its directors,
officers, employees, agents, and subcontractors. CORPORATION shall not be considered a partner
or joint venturer with CITY, nor shall CORPORATION be considered, nor in any manner hold
itself out as, an agent or official representative of CITY.
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Joshua Butler
TEXAS FILMMAKERS' CORP`ORATION
5012 Pebble Beach Trail
Denton, Texas 76208
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5.8 Exclusive Agreement. This Agreement contains the entire understanding and canstitutes
the entire agreement between the parties hereto concerning the subject matter contained herein,
There are na representations, agreements, arrangements, or understandings, oral ar 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 canditions 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 uplicate riginals. This Agreement is executed in duplicate originals.
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Texas Filmmakers HOT Funds, PY2017 - Page 7
5.12 Insurance. CORPORATION shall pravide insurance as follows:
1, $500,000 Comrnercial General Liability, or $1,000,000 Event Insurance, cavering
all events taking place on City-owned property,
2. Statutory Workers' Compensation and Employers' Liability
�$100,000�$500,000�� 100,000�, 2T1C�
3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned
property where alcahal will be provided or served. �
CITY must be named as an additional insured on all palicies (except Workers' Compensatian), and
praof of coverage shall be submitted prior to any payrnent by the CITY.
EXECUTED this _ �_ day of � _ _ � , 2016.
ATTEST:
By: �
:li� �11�'I��i� I_,'1"C��S, -
C_" � ' ��:C"]�i; °�`1��.Y
ATTEST:
I�
Secretary
THE CITY OF DENTON, TEXAS
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BY _ m_ �� �' � � � � __ �� a.
HOWARD MARTIN,
CITY MANAGER
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:
Texas Filmmakers HOT Funds, PY2017 - Page 8
Texas Filmmakers
Thin Line Fllm Fesfival
Program Year 2017 Budget
Advertising
Digital
Billboard
Regional Publications
Exhibit A
5,000
5,769
5,000
Total Budget $ 15,769