2017-353sAlegal\our documents\ordinances\17\hot funds py201 Mchamber ordinance.doc
ORDINANCE NO. 2017-353
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER OF
COMMERCE (CONVENTION AND VISITORS BUREAU) 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 Chamber of Commerce (Convention and
Visitors Bureau) 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 the day of j mbe , 2017.
WN
CFlyISA TTS, A YOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY AT -l' SRN 1 a'1Y .
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER
OF COMMERCE (CONVENTION & VISITORS BUREAU) (PY 2018) PROVIDING FOR
THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the "CITY"), and the Denton Chamber of Commerce (Convention & Visitors Bureau), a non-profit
corporation incorporated under the laws of the State of Texas (the "BUREAU"):
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, TEX. TAX CODE §351.101(a)(1) authorizes the expenditure of municipal hotel
tax revenue for construction, improvement, enlarging, equipping, repairing, operating, and
maintaining convention center facilities managed in part by the CITY, visitor information centers,
or both; and
WHEREAS, BUREAU is well equipped to perform those activities through its Denton
Convention and Visitor's Bureau; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
BUREAU, 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 BUREAU agree and contract as follows:
1.1 Consideration. For and in consideration of the activities to be performed by BUREAU
under this Agreement, CITY agrees to pay to BUREAU a portion of the hotel tax revenue collected
by CITY at the rates and in the manner specified herein (such payments by CITY to BUREAU
sometimes herein referred to as the "agreed payments" or "hotel tax funds").
CVB HOT Funds, PY2018 -- Page 1
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 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
relevant period of time 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 "cotrlracl gLlarter" shall refcr to any grtarter of'thc calendar year in
which this Agreement is in force.. CoWract t:lmr te,rs will end oil P arcfi 31St, ,lune 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 BUREAU an amount of money in each contract
year equal to the lesser amount of Forty and Twenty -Six Hundredths percent (40.26%) of the
annual base payment amount, or the fixed contract amount of One Million, Three Hundred
Twenty -Three Thousand Five Hundred and Forty -Five Dollars ($1,323,545). This amount will
be divided into quarterly payments equal to 25% 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 fourth quarterly payment will represent 25% of the
fixed contract amount or the unpaid remainder of 40.26% 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 BUREAU'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.
CVB HOT Funds, PY2018 -- Page 2
(a) The term "quarterly payments" shall mean payments by CITY to BUREAU 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.
(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 BUREAU.
(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 BUREAU's
expenditures deviate materially from their approved budget.
2.1 Use of Funds. For and in consideration of the payment by CITY to BUREAU of the agreed
payments of hotel tax funds specified above, BUREAU agrees to use such hotel tax funds only for
(1) 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) ; and (2) constructing, improving, enlarging, equipping, repairing, operating, and
maintaining a visitor information center on the downtown Denton Square, as authorized by TEX.
TAX CODE §351.101(x)(1). Funds for any calendar year which are unused by midnight December
31" 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.
(a) Advertise and conduct solicitations and promotional programs to attract
tourists and convention delegates or registrants to the Denton Convention
Center, including, but not limited to:
i. Marketing at the state and local level (including market analysis,
campaign development, branding, promotion, etc.);
ii. Collecting and reporting metrics on marketing activity;
CVB HOT Funds, PY2018 -- Page 3
iii. Sales missions developed in conjunction with the Owner's hotel sales
team to pre -identify and pre -qualify business -appropriate meetings for the
Property; and
iv. Partnership development to create collaborative opportunities with local
private, public, and non-profit sector entities.
(b) Provide meeting, event, and pre -convention services, including, but not
limited to:
i. Conducting site visits and familiarization tours for potential
clients;
ii. Customized servicing for groups (registration assistance,
delegate name badge preparation, welcome packets, off-site
function arrangements, etc.); and
iii. Serving as liaison between meeting planner client and hotel,
local business, and transportation.
(c) Identifying, collecting rate bids from, and securing overflow hotels in Denton for
convention delegates.
2.2 Administrative Costs. The hotel tax funds received from CITY by BUREAU 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 BUREAU'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) BUREAU agrees to demonstrate strict compliance with the record keeping and
apportionment limitations imposed by TEX. TAX CODE §351.101(f) and §351.108 (c) and (d).
BUREAU shall not utilize hotel tax funds for any expenditure which has not been specifically
documented to satisfy the purposes set forth in ¶¶2.1 and 2.2 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
professional manner.
CVB HOT Funds, PY2018 -- Page 4
3.1 Budget.
(a) BUREAU shall adhere to the budget (Exhibit "A") as approved by the City Council
for each calendar year, for all operations of BUREAU funded by hotel tax revenue. 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 funds. CITY shall not pay to BUREAU 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) BUREAU acknowledges that approval of the budget (Exhibit "A") by the Denton
City Council creates a fiduciary duty in BUREAU with respect to the hotel tax funds paid by CITY
to BUREAU under this Agreement. BUREAU 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 BUREAU, 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 11.2(b), extend the
term, or otherwise alter the performance obligations of BUREAU, without approval of the City
Council by ordinance.
3.2 Separate Accounts. BUREAU shall maintain any hotel tax funds paid to BUREAU by
CITY in a separate checking account or with segregated fund accounting, such that any reasonable
person can review the revenue source of any given expenditure.
3.3 Financial Records. BUREAU shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by BUREAU. These funds shall be classified as
restricted funds for audited financial purposes, and may not be used for contracted services,
including, but not limited to, auditing fees and attorney fees. Upon reasonable advance written
request of the Denton City Council, the City Manager or designate, or any other person, BUREAU
shall make such financial records available for inspection and review by the party making the
request. BUREAU understands and accepts that all such financial records, and any other records
relating to this Agreement shall be subject to the Public Information Act, TEX. Gov'T CODE, ch.
552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of the hotel tax funds, and within thirty (30) days
after the end of every contract quarter, BUREAU shall furnish to CITY: (1) a completed financial
report, (2) a list of the expenditures made or copies of the invoice or receipts 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). BUREAU
shall prepare and deliver all reports in a form and manner approved by the City Manager or
designate. BUREAU 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.
CVB HOT Funds, PY2018 -- Page 5
3.5 Notice of Meetings. BUREAU shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of BUREAU's Board of
Directors, as well as any other meeting of any constituency of BUREAU at which this Agreement
or any matter subject to this Agreement shall be considered.
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 BUREAU for any contractual obligations of BUREAU undertaken by
BUREAU 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
BUREAU or to assume the performance of any contractual obligations of BUREAU for or under
any contract entered into by BUREAU as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), BUREAU 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. BUREAU will be obligated to return
any unused funds or funds determined to be used improperly. Any use of remaining funds by
BUREAU after notification of termination is conditioned upon such contractual obligations
having been incurred and entered into in the good faith performance of those services
CVB HOT Funds, PY2018 -- Page 6
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 BUREAU;
(b) The insolvency of BUREAU, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by BUREAU 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 BUREAU 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 BUREAU 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.
4.5 In the event that this Agreement is terminated pursuant to ¶¶4.3 or 4.4, BUREAU 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 BUREAU with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
BUREAU enters into any arrangement, contractual or otherwise, with such other entity, person or
organization, BUREAU 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. BUREAU 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. BUREAU shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same and BUREAU shall be
solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. BUREAU shall not be considered a partner or joint venturer with CITY, nor shall
CVB HOT Funds, PY2018 -- Page 7
BUREAU be considered nor in any manner hold itself out as an agent or official representative of
CITY.
5.4 Assignment. BUREAU 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:
CITY, BUREAU
City Manager Kim Phillips
CITY OF DENTON DENTON CHAMBER OF COMMERCE
215 E. McKinney Denton Convention & Visitors Bureau
Denton, TX 76201 P.O. Box 1719
Denton, TX 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 BUREAU 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 the 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.
CVB HOT Funds, PY2018 -- Page 8
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. BUREAU shall, at a minimum, provide insurance as follows:
1. $500,000 Commercial General Liability,
2. $1,000,000 Event Insurance, covering all events taking place on City -owned
property,
3. Statutory Workers' Compensation and Employers' Liability ($100,000/$500,000/
$100,000),
4. $250,000 Liquor/Dram Shop Liability for any event occurring on City -owned
property where alcohol will be provided or served, and
5. $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 of coverage shall be submitted prior to any payment by CITY.
r y , 2017.
EXECUTED this da of a „�,"�
ATTEST:
By:. .
J1, ll' F',R ALTERS,
Y SI C 11;.TARY
THE CITY OF DENTON, TEXAS
J`ODD HILEMAN,
CITY MANAGER
APPROVED AS TO LF.QAL I"4:)R .-
AA)ON LEAL,
C ITY ATTORNEY
CVB HOT Funds, PY2018 -- Page 9
M.
i=
By:
President
RUINI-PITSITIN�.'- • . �411 AS
0
CVB HOT Funds, PY2018 -- Page 10
Denton Chamber of Commerce
Convention and Visitors Bureau
Program Year 2018
EYhlbh A
Salaries & Benefits
$
165,000
Liability Insurance
Print,Webslte,Digital & Social Media
800
Travel & Training
18,000
15,000
Memberships & Subscriptions
Research, Mining, Lead Gen & Tracking
9,000
Computer Equipment
8,000
35,000
Copy Machine
Bid Fees
6,000
Office Supplies
12,000
5,800
Telephones
19,000
Postage
$
5,000
Office Rent
16,155
operatlons & Maintenance
$
276,75555
Program Disbursements:
^
Print Advertising
$
30,000
DentonRadlo.Com
12,000
Internet Marketing
40,000
Tourism Promotional Material
10,000
Brochures
$
10,000
Travel & Trade Shows
24,000
Tourism & PR Services
9,000
Event Magazine
Event Magazine Distribution
$
135,000
Communicatio_ns_& Social Media
................-.µ.....
.Sala
ries.&..Benelfts
$
las,000
Memberships & Professional Development
15,000
Website
15,000
Communications
7,500
Soclal & Digital Media
65,000
Conv tl & Grou�u Sales &Servicing
Salaries and Benefits
230,000
Travel & Training
10,000
Print,Webslte,Digital & Social Media
35,000
Sales & Marketing Missions
18,000
Trade Shows & Conferences
22,000
Research, Mining, Lead Gen & Tracking
10,000
Site Visits & Fam Tours
8,000
Servicing
30,190
Bid Fees
10,000
Memberships & Professional Development
12,000
$ 385,190
Group Tour Marketing
Print, Website, Digital & Social Media
$
10,000
Sales & Marketing Missions
5,000
Trade Shows & Conferences
12,000
Site Visits & Fam Tours
3,000
Servicing
1,000
Memberships & Professional Development2
100
DowntownWelcome Center & Denton Store!
,
Lea......_.....,,... ....�
se m�.
$
22,000
Computer Equipment
-
operatlons & Maintenance
Insurance
^
Office Supplies
F/T Manager
135,000
Professional Development
4,000
P/T Assistant & Paid Interns
45,000 _
$
206,000
1,323,545