2017-352sAlegal\our documents\ordinances\17\hot funds py2018\daasf ordinance.doc
ORDINANCE NO. 2017-352
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON AFRICAN
AMERICAN SCHOLARSHIP FOUNDATION, 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 of Denton and the Denton African American Scholarship
Foundation, 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 upon its passage and
approval.
PASSED AND APPROVED this theday of kv- LIA -r , 2017.
Ull�TTS MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY: w
APPROVED AS TO LEGAL FORM
AARON LEAL, CITY A"1"TOk'N ,Y"" &
THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the "CITY"), and the DENTON AFRICAN AMERICAN SCHOLARSHIP FOUNDATION,
INC., a legal entity incorporated under the laws of the State of Texas (the "AFRICAN AMERICAN
SCHOLARSHIP"):
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 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 solicitations and promotional programs to attract tourists and convention
delegates or registrants to the municipality or its vicinity; and
WHEREAS, AFRICAN AMERICAN SCHOLARSHIP is well equipped to perform those
activities; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
AFRICAN AMERICAN SCHOLARSHIP, 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
promises contained herein, CITY and AFRICAN AMERICAN SCHOLARSHIP agree and contract
as follows:
1.1 Consideration. For and in consideration of the activities to be performed by AFRICAN
AMERICAN SCHOLARSHIP under this Agreement, CITY agrees to pay to AFRICAN
AMERICAN SCHOLARSHIP a portion of the hotel tax revenue collected by CITY at the rates and
in the manner specified herein (such payments by CITY to AFRICAN AMERICAN
SCHOLARSHIP 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:
Denton African American Scholarship HOT Funds, PY2018 - Page 1
(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.
(ii) The term "Collection 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 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
period for costs of collection or auditing of hotel 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 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 31St, June 30th,
September 30th, 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 AFRICAN AMERICAN SCHOLARSHIP an
amount of money in each contract year equal to the lesser amount of Twenty -Five Hundredths
percent (0.25%) of the annual base payment amount, or the fixed contract amount of Eight
Thousand Two Hundred Forty Dollars ($8,240). This amount will be paid in one lump sum after
the 25th of January 2018. If CITY's Chief Financial Officer determines that hotel tax receipts to
the CITY are not meeting the anticipated budget projection, CITY may reduce AFRICAN
AMERICAN SCHOLARSHIP's current budget at any time during the contract period. 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 i '
(a) The term "payments" shall mean payments by CITY to AFRICAN AMERICAN
SCHOLARSHIP 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 financial 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.
Denton African American Scholarship HOT Funds, PY2018 - Page 2
1.4 Other limitations regarding consideration.
(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 AFRICAN
AMERICAN SCHOLARSHIP.
(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 AFRICAN
AMERICAN SCHOLARSHIP's expenditures deviate materially from their approved budget.
1
2.1 Use of Funds. For and in consideration of the payment by CITY to AFRICAN
AMERICAN SCHOLARSHIP of the agreed payments of hotel tax funds specified above,
AFRICAN AMERICAN SCHOLARSHIP agrees to use such hotel tax funds only for advertising
and conducting solicitations and promotional programs to attract tourists and convention delegates
or registrants to the municipality or its vicinity; as well as the promotion of tourism through the
encouragement, promotion, improvement, and application of 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 arts forms, 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 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 Administrative Costs. The hotel tax funds received from the CITY by the AFRICAN
AMERICAN SCHOLARSHIP 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 AFRICAN AMERICAN SCHOLARSHIP 's budget (Exhibit "A") and each are
directly attributable to work on programs which promote tourism 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).
2.3 Specific Restrictions on Use of Funds.
(a) That portion of total administrative costs of the AFRICAN AMERICAN
SCHOLARSHIP for which hotel tax funds may be used shall not exceed that portion of the
AFRICAN AMERICAN SCHOLARSHIP's administrative costs actually incurred in conducting
the activities specified in ¶2.1 above.
Denton African American Scholarship HOT Funds, PY2018 - Page 3
(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
professional manner.
3.1 Budget.
(a) AFRICAN AMERICAN SCHOLARSHIP shall adhere to the budget (Exhibit "A") as
approved by the City Council for each calendar year, for all operations of AFRICAN AMERICAN
SCHOLARSHIP in which the hotel tax funds shall be used by AFRICAN AMERICAN
SCHOLARSHIP . 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 AFRICAN AMERICAN SCHOLARSHIP 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) AFRICAN AMERICAN SCHOLARSHIP acknowledges that approval of the
budget (Exhibit "A") by the Denton City Council creates a fiduciary duty in AFRICAN
AMERICAN SCHOLARSHIP with respect to the hotel tax funds paid by CITY to AFRICAN
AMERICAN SCHOLARSHIP under this Agreement. AFRICAN AMERICAN SCHOLARSHIP
shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement,
TEX. TAX CODE §351.101(a) and in the budget as approved by CITY.
(c) Upon the application or consent of AFRICAN AMERICAN SCHOLARSHIP, 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 AFRICAN AMERICAN SCHOLARSHIP, without approval of the City Council by ordinance.
3.2 Separate Accounts. AFRICAN AMERICAN SCHOLARSHIP shall maintain any hotel
tax funds paid to AFRICAN AMERICAN SCHOLARSHIP 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 Records. AFRICAN AMERICAN SCHOLARSHIP shall maintain complete
and accurate financial records of each expenditure of the hotel tax funds made by AFRICAN
AMERICAN SCHOLARSHIP. 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, AFRICAN AMERICAN
SCHOLARSHIP shall make such financial records available for inspection and review by the party
making the request. AFRICAN AMERICAN SCHOLARSHIP understands and accepts that all
Denton African American Scholarship HOT Funds, PY2018 - Page 4
such financial records, and any other records relating to this Agreement shall be subject to the Texas
Public Information Act, TEX. Gov'T CODE, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty (30) days
after the end of every quarter thereafter, until all funds have been expended and reported to CITY,
AFRICAN AMERICAN SCHOLARSHIP 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 records (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. AFRICAN AMERICAN SCHOLARSHIP 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 Meetings. AFRICAN AMERICAN SCHOLARSHIP shall give the City
Manager of CITY, or his designate, reasonable advance written notice of the time and place of all
meetings of AFRICAN AMERICAN SCHOLARSHIP 's Board of Directors, as well as any other
meeting of any constituency of AFRICAN AMERICAN SCHOLARSHIP , at which this
Agreement or any matter subject to this Agreement shall be considered.
IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2018, and terminate at
midnight on January 31, 2019. However, the program period shall commence on January 1, 2018
and terminate at midnight on December 31, 2018. Only those expenditures authorized by Chapter
351 of the Texas Tax 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 AFRICAN AMERICAN SCHOLARSHIP for any contractual obligations of
AFRICAN AMERICAN SCHOLARSHIP undertaken by AFRICAN AMERICAN
SCHOLARSHIP 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 AFRICAN AMERICAN SCHOLARSHIP, or to assume the performance of any
contractual obligations of AFRICAN AMERICAN SCHOLARSHIP, for or under any contract
Denton African American Scholarship HOT Funds, PY2018 - Page 5
entered into by AFRICAN AMERICAN SCHOLARSHIP as contemplated herein, shall not
exceed 66 2/3% of the current payment.
(c) Further, upon termination pursuant to ¶4.2(a), AFRICAN AMERICAN
SCHOLARSHIP 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 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 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. AFRICAN AMERICAN SCHOLARSHIP will be obligated to return any unused
funds, or funds determined to be used improperly. Any use of remaining funds by AFRICAN
AMERICAN SCHOLARSHIP 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 Automatic Termination. This Agreement shall automatically terminate upon the
occurrence of any of the following events:
(a) The termination of the legal existence of AFRICAN AMERICAN SCHOLARSHIP;
(b) The insolvency of AFRICAN AMERICAN SCHOLARSHIP, the filing of a petition in
bankruptcy, either voluntarily or involuntarily, or an assignment by AFRICAN AMERICAN
SCHOLARSHIP 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 AFRICAN AMERICAN SCHOLARSHIP 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 AFRICAN AMERICAN SCHOLARSHIP to submit a financial
quarterly report which complies with the reporting procedures 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 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.
Denton African American Scholarship HOT Funds, PY2018 - Page 6
4.5 In the event that this Agreement is terminated pursuant to ¶¶4.3 or 4.4, AFRICAN
AMERICAN SCHOLARSHIP 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.
GENERAL PROVISIONS
5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor
be construed to prohibit, the agreement by AFRICAN AMERICAN SCHOLARSHIP with another
private entity, person, or organization for the performance of those services described in ¶2.1 above.
In the event that AFRICAN AMERICAN SCHOLARSHIP enters into any arrangement,
contractual or otherwise, with such other entity, person or organization, AFRICAN AMERICAN
SCHOLARSHIP shall cause such other entity, person, or organization to adhere to, conform 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 funds.
5.2 Independent Contractor. AFRICAN AMERICAN SCHOLARSHIP shall operate as an
independent contractor as to all services to be performed under this Agreement and not as an officer,
agent, servant, or employee of CITY. AFRICAN AMERICAN SCHOLARSHIP shall have
exclusive control of its operations and performance of services hereunder, and such persons,
entities, or organizations performing the same, and AFRICAN AMERICAN SCHOLARSHIP shall
be solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. AFRICAN AMERICAN SCHOLARSHIP shall not be considered a partner or
joint venturer with CITY, nor shall AFRICAN AMERICAN SCHOLARSHIP be considered, nor
in any manner hold itself out as, an agent or official representative of CITY.
5.3 Indemnification. AFRICAN AMERICAN SCHOLARSHIP AGREES TO
INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND
EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR
INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER HIND OR CHARACTER,
ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY AFRICAN
AMERICAN SCHOLARSHIP OF THOSE SERVICES CONTEMPLATED BY THIS
AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED
UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN
WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL
ACTS OF AFRICAN AMERICAN SCHOLARSHIP , ITS OFFICERS, EMPLOYEES,
AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. AFRICAN AMERICAN SCHOLARSHIP shall not assign this Agreement
without first obtaining the written consent of CITY.
5.5 Notice. 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:
Denton African American Scholarship HOT Funds, PY2018 - Page 7
CITY A;iJUCA1` `..AMERICAN SC111101 l S1-llP
City Manager Harry Eaddy
CITY OF DENTON DENTON AFRICAN AMERICAN
215 E. McKinney SCHOLARSHIP FOUNDATION, INC.
Denton, TX 76201 P.O. Box 1217
Denton, Texas 76202
5.6 Inurement. 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 AFRICAN AMERICAN SCHOLARSHIP and their respective successors and assigns.
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 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,
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 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 portions despite
any such invalidity.
5.12 Insurance. AFRICAN AMERICAN SCHOLARSHIP shall, at a minimum, provide
insurance as follows:
1. $1,000,000 Commercial General Liability or Event Insurance, covering all events taking
place on City -owned property,
2. $500,000 Liquor/Dram Shop Liability for all events occurring on City -owned property
where alcohol will be provided or served.
Denton African American Scholarship HOT Funds, PY2018 - Page 8
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 CITY.
EXECUTED this /,(/ Xday of K4 V t nA_ b0✓
ATTEST:
By.,
11 , i �h flE
L"I�" �, S,
" "Y S1RY
ATTEST:
Secretary
KIII
THE CITY OF DENTON, TEXAS
r�
By:m.
TODD Iwll .EIA,
CITY MANAGER
APPROVED AS TO LEGAL FORM:
13y:
AARON LEAL
CITY A`rTOlZN,
DENTON AFRICAN AMERICAN
SCHOLARSHIP FOUNDATION, INC.
APPROVED AS TO LEGAL
I�
Denton African American Scholarship HOT Funds, PY2018 - Page 9
Exhibit A
Denton African American Scholarship Foundation, Inc.
Denton Black Film Festival
Program Year 2018
Advertising
Social Media & Coops $ 3,200
Printed Matter 1,000
Billboards 1,800
$ 6,000
Art
Speakers & Performers $ 1,240
Sound Equipment 1,000
$ 2,240
$ 8,240