2016-377s:\legal\our documents\ordinances\16\hot funds py2017\gdac ordinance 1 st.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 the Greater Denton Arts Council, 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 hereta and made a part hereof.
SECTION 2. This ordinance shall become 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: � � � � ,Y. ,�...
APPR � ] �;1� AS ' �� LEGAL FORM:
day c�#` �' . 2016.
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CHRIS WATTS, MAYOR
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THIS AGREEMENT made between the City of Denton, Texas, a municipal
corporation (the 66CITY99), and the Greater Dentan Arts Council, Inc., a non-profit
corporation incorporated under the laws of the State of Texas (the "GDAC"):
WHEREAS, TEx. TAx CoDE §351.002 authorizes CITY to levy by ordinance a
municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the
consideration paid by a hotel occupantg and
WHEREAS, by ordinance, CITY has provided for the assessment and collection of
a municipal hotel occupancy ta� in the city of Dentan of seven percent (7%); and
WHE AS, 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
' � � � -• •�-� '� •- � a - . . �
WHEREAS, TEx. TAx CoDE §351.101(c) authorizes CITY to delegate by contract
with GDAC; as an independent entity, the management and supervision of programs and
activities of the type described hereinabove funded with revenue from the municipal hotel
occupancytax;
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1.1 Consideration. For and in consideration of the activities to be performed by GDAC
under this Agreement, CITY agrees to pay to GDAC a portion of the hotel tax revenue
collected by CITY at the rates and in the manner specified herein (such payments by CITY
to GDAC sometimes 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 hatel 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.
GDAC HOT Funds, PY2017 - Page 1
(ii} The term 66Collection period" will mean the collection period far
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 66base 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., iiscal 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 casts 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 ta� 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 31 St
June 30th, 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 hereta, CITY shall pay to GDAC an amount of money in
each contract year equal to the lesser amount of: Six and Two Hundredths percent
(6.02%) of the annual base payment amaunt, or the fixed contract amount of One
Hundred Forty Thousand Dollars ($140,000}. This amount will be divided inta quarterly
payments equal to 25% of the annual fixed contract amount, unless CITY can show with
reasonable certairity 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 6.02% of the base payment amount,
whichever is less. If CITY's Chief Financial Ofiicer determines that hotel tax receipts by
the CITY are not meeting the anticipated budget projection, CITY may reduce the
GDAC'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.
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(a) The term "quarterly payments" shall mean payments by CITY to GDAC 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 25th day following the last day of the contract quarter. If any quarterly finarncial
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.
GDAC HOT Funds, PY2017 - Page 2
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(a) The funding of this praject in na way commits CITY ta future funding of this
program beyond the current contract period. Any future funding is salely the responsibility
of GDAC.
(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 GDAC's
expenditures deviate materially fram their approved budget.
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2.1 Use of Funds. For and in consideration of the payment by CITY to GDAC of the
agreed payments of hotel tax funds specified above, GDAC agrees to use such hotel ta�c
funds only for advertising and conducting solicitations and pramotional programs to attract
tourists and convention delegates or registrants to the municipality or its vicinity and by the
encouragernent, promation, improvement, and application af the arts, including instrumental
and vocal music, dance, drama, folk art, creative writing, architecture, design and allied
fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio,
television, tape and sound recording, and other arts related to the presentation, performance,
execution, and exhibition of these major art forms. 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 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 Ad rnistrative Costs. The hotel ta�c funds received from CITY by GDAC 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
GDAC's budget (Exhibit "A") and each such expenditure is directly attributable to work on
programs which promote tourism and the hotel and convention industry, and promotes at
least one of the six statutory purposes enumerated within TEx. TAx Cor�E §351.101(a).
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(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
GDAC HOT Funds, PY2017 - Page 3
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4.2 Termination Without Cause.
(a} This Agreement may be terrninated 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 GDAC for any contractual obligations undertaken by GDAC
in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above, and that
were appraved 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 GDAC, or to assume the performance of any contractual
obligations of GDAC, for or under any contract entered into by GDAC as contemplated
herein, shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), GDAC 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
appraval 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
appraved budget, the budget will be considered approved; 2) within thirty (30) days, a
GDAC HOT Funds, PY2017 - Page 5
full accounting af all expenditures not previously audited by CITY; 3} within iive (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. GDAC will be obligated to return any unused funds, or funds
determined to be used improperly. Any use of remaining funds by GDAC 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.
4.3 Auto atiic Ter rnation. This Agreement shall automatically terminate upon the
occurrence of any of the following events:
(a) The termination of the legal existence of GDAC;
(b) The insolvency of GDAC, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by GDAC 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 GDAC 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 GDAC to submit a financial quarterly report which complies with
the reporting pracedures required herein and generally accepted accounting principles prior
to the beginning of the next contract term, or quarterly as required by ¶1.3 hereof.
4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other
pravision 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, GDAC
agrees to refund any and all unused funds, or funds determined by CITY to have been
used impraperly, within thirty (30) days after termination of this Agreement.
5.1 Subcontract for Perforrnance of Services. Nothing in this Agreement shall
prohibit, nor be construed to prohibit, the agreement by GDAC with another private entity,
person, or organization for the performance of those services described in ¶2.1 above. In the
event that GDAC enters into any arrangement, contractual or otherwise, with such other
entity, person or organization, GDAC shall cause such other entity, person, or organization
to adhere to, confartn 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
GDAC HOT Funds, PY2017 - Page 6
maintenance, and limitations and prahibitions pertaining to expenditure of the agreed
payments and hotel tax funds.
5.2 Independent Contractor. GDAC shall operate as an independent contractor as to
all services to be performed under tlus Agreement and not as an officer, agent, servant, or
employee of CITY. GDAC shall have exclusive control of its operations and performance
af services hereunder, and such persons, entities, or organizatians performing the same, and
GDAC shall be solely responsible for the acts and omissions af its directors, officers,
employees, agents, and subcontractors. GDAC shall not be considered a partner or joint
venturer with CITY, nor shall GDAC be considered, nar in any manner hold itself out as, an
agent or official representative of CITY.
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5.4 Assignment. GDAC shall not assign this Agreement without first obtaining the
written consent of CITY.
5.5 Natice. 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:
C�l�r'/
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City Manager Tracy Bays-Boothe
CITY OF DENTON GREATER DENTON ARTS COUNCIL,
215 E. McKinney INC.
Denton, TX 76201 400 E. Hickory
Denton, TX 76201
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 of CITY and GDAC and their respective successors and assigns.
GDAC HOT Funds, PY2017 - Page 7
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 thereta.
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 na representations, agreements, arrangements, or
understandings, oral or written, express or implied, between ar among the parties hereto,
relating to the subject matter af 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 af 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 variaus 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.
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 portians despite any such invalidiiy.
5.12 Insurance. GDAC shall, at a minimum, 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
(�{/ d oo'000/yJ`7oo'000/�l d ooy000)9
3, $250,000 Liquor/Dram Shop Liability for any event occurring on City-
owned property where alcohol will be provided or served, and
4. $500,000 Business Automobile Liability on any owned, non-owned or hired
vehicles.
CITY must be named as an additional insured on all policies (except Workers'
Compensation) and proof af coverage shall be submitted prior to any payment by CITY.
EXECUTED this ���� day of �: ,, ,,��.�� ��� n we. , 2016.
GDAC HOT Funds, PY2017 - Page 8
ATTEST:
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Secretary
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By:
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H0 � � �� 1 � MARTIN,
CITY MANAGER
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GDAC HOT Funds, PY2017 - Page 9
Gre�ter Denton Arts Council
Program Year 2017 Budget
Advertising
Website Partial Salary
Direct Promotion: Print, Internet, News/Mag
Convention Center
Exhibit A
$ 15,000
2,000
$ 17,000
Facility Staff $ 30,000
Art
Executive Director Partial Salary
Administrative Staff Partial Salary
Exhibition Partial Salary
Exhibition Honorees and Displays
Office Supplies
$ 33,000
10,000
20,000
25,000
5,000
$ 93�000
Total Budget $ 140,000