18-1965s:\legal\our documents\ordinances\18\hot py2019\dct ord.doc
ORDINANCE NO. 1 g-19C S
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON COMMUNITY
THEATRE, 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 Community Theatre, 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.
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���� tl��lic�w�irt� vc;r�� � ..� ` ��`�_ 1;
Chris Watts, Mayor:
Gerard Hudspeth, District 1:
Keely G. Briggs, District 2:
Don Duff, District 3:
John Ryan, District 4:
Deb Armintor, At Large Place 5:
Paul Meltzer, At Large Place 6:
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PASSED AND APPROVED this the �� ��°�_ day of
Abstain Absent
����°°������,�� � �'�°&°. , 2018.
CHRIS W.�"C°"I"�, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
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BY:. ���'�����'��..m ��...���.�'������m.�__��'�:���+�� ° �M'�
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APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
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THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the 66CITY99), and the Denton Community Theatre, Inc., a legal entity incorporated under the laws
of the State of Texas (the "THEATRE").
WHER.EAS, TEx. T� CoDE §351.002 authorizes CITY to levy by ordinance a municipal
hotel occupancy tax ("hotel tax") nat exceeding seven percent (7%) of the consideration paid by a
hotel occupant; and
WHEREA5, by ordinance, CITY has provided far the assessment and collection of a
municipal hotel occupancy tax in the City of Denton of seven percent (7%); aud
WHEREAS, TEx. T�,x CoDE §351.101(a) authorizes CITY to use revenue from its
municipal hatel occupancy tax to prarnote tourism and the convention and hotel industry by
advertising and conducting solicitations and promotianal programs to attract tourists and convention
delegates ar registrants to the municipality or its vicinity; and
EREAS, THEA is we11 equipped to perform those activities; and
WHEREAS, T'�x. TAx CoDE §351.101(c) authorizes CITY to delegate by contract with
THEATRE, as an independent entity, the management and supervision of programs and activities of
the type described hereinabove funded wit�i revenue from the municipal hatel occupancy tax;
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1.1 ConsideraHan. For and in consideration of the activities to be performed by THEATRE
under this Agreement, CITY agrees to pay to THEATRE a portion of the hotel t� revenue
callected by CITY at the rates and in the manner specified herein (such payrnents by CITY to
THEATRE sometunes herein referred to as the "agreed payments" OI� 66hotel 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 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. Hatel tax revenue will include penalty and interest i°elated to the late
payments af the tax revenue by the taxpayer.
DCT HOT Funds, PY2019 - Page 1
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(b) It is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of CITY.
(c) CIT'Y may withhold further allocations if CITY deternvnes that THEATRE's
expenditures deviate materially from their approved budget.
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2.1 Use of Funds. For and in consideration af the payment by CIT'Y to THEATRE of the
agreed payments of hotel tax funds specified above, THEATRE agrees to u.se 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 authoi-ized by �x. T�
CoDE §351.101(a) (3). Funds for any calendar year which ai°e unused by rnidnight December 31st af
that year shall be refunded to CITY within sixty (60} days.
Advertising materials purchased with the hotel accupancy 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, print advertising, digital marketing, billboards, radio and television.
2.2 Ad °nistrative Costs. The hotel tax funds received from the CITY by the THEATRE may
be spent for day-to-day operations, office supplies, salaries, travel expenses, and ather
administrative costs allowed by TEx. TAx Co�E §351.101(e), but only if specified in THEATRE's
budget attached hereto as Exhibit 66A" and incotporated herein faY• all purposes and each are directly
attributable to work on programs which pramote tourism and the hotel and convention industiy, and
if each pramotes at least one of the six statutory purposes enlunerated within TEx. T.�xx ConE
§351,101(a).
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(a) That portion of total administrative costs of the THEATRE for which hotel tax funds
may be used sha11 nat exceed that portion of the THEATRE's administrative costs actually incurred
in conducting the activities specified in ¶2.1 above.
(b) Hotel tax funds may nat be spent for travel foi• a person to attend an event or conduct
an activity the primary purpose of which is not directly related to the promotion of local taurism and
the convention and hotel industry or the perfarmance of the person's job in an efficient and
professional manner.
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3.1 Budget.
(a) THEA shall adhere to the budget (Exhibit 66A") as approved by the City Council for
each calendar year, for all operations of THEA in which the hotel tax funds shall be used by
THEATRE. 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 THEATRE any hotel tax revenues as set forth in Section I of this contract
DCT HOT Funds, PY2019 - Page 3
during any program year af this Agreement unless a budget far such respective program year has
been approved in writing by the Denton City Cauncil, authorizing the expenditure of funds.
(b) THEATRE acknawledges that approval of the budget (Exhibit "A") by the Denton
City Council creates a fiduciary duty in THEATRE with respect to the hotel tax funds paid by CITY
to THEATRE under this Agreement. THEATRE shall expend hotel tax ftw.ds only in the manner
and foy the purposes specified in this Agreement, TEx. TAX CnDE §351.101(a) and in the budget a.S
appi•oved by CITY.
(c) Upon the application or consent of THEATRE, the City Manager or his designate
may autharize minor amendments ta the appraved budget as necessary to carry out the intent of this
Agreernent, in a manner consistent with efficient use of public funds, and in accordance with State
law. Such tninor amendments tnay not increase the averall funding set forth in ¶1.2(b), extend the
term, or otherwise alter the performance obligations of THEATRE, without approval of the City
Council by ordinance.
3.2 5eparate Accounts. THEATRE shall maintain any hotel tax funds paid to THEATRE by
CITY in a separate account or with segregated fund accounting, such that any reasonable pei•son can
ascertain the revenue source of any given expenditure.
3.3 Financial Records. THEATRE shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by THEATRE. These funds are required ta 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,
THEATRE shall make such financial records available for inspection and review by the party
making the request. THEATRE understands and accepts that all such financial records, and any
other recards relating to this Agreement shall be subject to the Public Information Act, TEx. Gov'T
CobE, 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 CITI',
THEATRE 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. Ta� CoDE
§351.101(c), social media and/or digital marketing expenditures require invoices to be provided and
shall include performance measures, and (3) a copy of all financial records (e.g., copies of front and
back af cleared checks or bank statements, and other relevant documentation). Both the financial
and expenditure reports will be in a form either determined ar approved by the City Manager or
designate. THEATRE shall respond promptly to any request ftom the City Manager of CITY, or
designate, for additional information relating to the activities performed under this Agreement.
3.5 Not�ce of Meetings. THEATRE shall give the City Manager af CITY, or his designate,
reasanable advance written natice of the time and place of all meetings of THEATRE's Board of
Directors, as well as any other meeting of any canstituency of THEATRE, at which this Agreement
or any matter subj ect ta this Agreement shall be considered.
DCT HOT Punds, PY2019 - Page 4
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4.1 Term. The term of this Agreement shall commence on Januaty 1, 2019 and terminate at
midnight on January 31, 2020. However, the program period shall commence on January l, 2019
and terminate at midnight on December 31, 2019. 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 this 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 THEATRE for any cont�•actual obligations of THEATRE undertaken by
THEATRE 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 conternplated in ¶¶2.1 and 2.2 above, and further conditioned
upon such contractual obligations having a tertn not exceeding the full term of this Agreement.
Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse
THEATRE, or to assume the performance of any contractual obligations of THEATRE, for or
under any contract entered into by THEATItE as contemplated herein, shall not exceed 66 2/3%
of the current quarterly payment.
(c) Further, upon ternunation pursuant to ¶4.2(a), THEATRE 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 wi11 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 thiriy (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 teimination. THEATRE will be obligated to return
any unused funds, or funds determined to be used improperly. Any use of remaining funds by
THEATRE 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 autorna�ically terminate upon the
occurrence of any of the following events:
DCT HOT Funds, PY2019 - Page 5
(a) The termination of the legal existence of THEATRE;
(b) The insolvency of THEATR.E, the filing of a petitian in bankruptcy, either voluntarily
ar involuntarily, or an assigrunent by THEATRE for the benefit of creditors;
(c) The continuation of a breach of any of the terms ar conditions af this Agreement by
either CITY or THEATRE for more than thirty (30) days after written notice of such breach is given
to the breaching pariy by the other party; or
(d) The failure of THEATRE to submit a financial quarterly report which complies with the
i•eporting procedlu•es required herein and generally accepted accounting principles piior to the
beginning of the next contract term, or quarterly as required by ¶1.3 hereof.
4.4 °ght to Immediate Ter °nahon Upon Lifigahon. Notwithstanding any ather provision
of this Agreernent, to mitigate damages and to preserve evidence and issues for judicial
determination, either party sha11 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-tei�minating party, and the terminating party reasonably believes that such activities are requii•ed
ar prohibited undeY• this Agreement.
4.5 In the event that this Agreement is terminated pursuant to ¶¶4.3 or 4.4, THEATRE agg•ees 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 Agreernent.
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5.1 Subcontract for Performance of Services. Nathing in this Agreement shall prohibit, nor
be construed to prohibit, the agreernent by THEATRE with another private entity, person, ar organi-
zation for the performance of those services described in ¶2.1 above. In the event that THEATRE
enters inta any arrangement, contractual or otherwise, with such other entity, persan or organization,
THEATRE shall cause such other entity, person, or organization to adhere to, canform to, and be
subject to all provisions, terms, and conditions of this Agreement and to TEx. TAx Co�E ch. 351,
including reporting requirements, sepau•ate funds maintenance, and limitatians and prohibitions
pertaining to expenditure of the agreed payments and hotel t� funds.
5.2 Independent Contractor. THEATRE shall operate as an independent contractaY• as to all
seivices to be perfo�med under this Agi°eement and not as an officer, agent, seavant, or employee of
CITY. THEATRE shall have exclusive cantrol af its operations and peiformance of services
hereunder, and such persons, entities, or organizations perfornung the same, and THEATRE shall
be solely responsible for the acts and omissions of its directors, ofFcers, employees, agents, and
subcontractors. THEA shall nat be considered a partner or jaint venturer with CITY, nor shall
THEATRE be considered, nar in any manner hold itself out as, an agent or official representative af
CITY.
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5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or
regulation, sliall 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:
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DCT HOT Funds, PY2019 - Page 7
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. THEATRE shall 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. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned
property where alcohol will be provided or served.
3. $500,000 Business Automobile Liability on any owned, non-owned or hired
vehicles.
CITY must be named as an addi�ional insured on all policies (except Workers' Compensation), and
proof of coverage shall be submitted prior to any payment by the CITY.
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EXECUTED tlus �" � _ y �
ATTEST:
THE CITY OF DENTON, TEXAS
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By � .. ���� ��� � �
.�_�.._�" � _.::.:.w_ .____.w���
TODD HILEMAN,
CITY MANAGER
APPROVED AS TO LEGAL FORM;
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By: ���� ��� � ' m��� ,., ��, .�"�.^"��� B �'�"� �.:����W�__�"m.�����_�
�I��l tl�4 �'*� WALTERS_...��...�..... � _.___ .
, � , �.����1`� 1.,�.�re�l,'1.���
CITY SECRETARY CITY ATTORNEY
DENTON COMMUNITY THEATRE, INC.
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DCT HOT Funds, PY2019 - Page 8
Advertising
CVB Coops
Brochures & Postcards
Televlslon
Print Advertising
Art
Royaltles
Costumes
Set Constuction
Denton Community Theatre
Program Year 2019
[�3,'Il,.7[�
$ 5,000
5,000
3,300
2,000
15,300
$ 6,200
2,000
2,000
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10,200
25,500