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18-1969s:\legal\our documents\ordinances118\hot py2019\explorium denton ord.doc ORDINANCE NO. 18-1969 AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND EXPLORIUM DENTON, 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 Explorium Denton 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. SE,CTION„m2, This ordinance shall become effective immediately upon its passage and approval. 'I "1�� i��Ni��r� I.�� .��a�r•��r� tM�i.w �.)rtaa��:a.ro�� k�� k��" _ � �.��`..�� N ��m ��°��-� __ ��i�� ______ _.... ��,��1��Aai+�,�l 1�� .� ��._ �` _��°�� °�� " � --------- � i��r+� t��-r:�l.��tG�� n��w ��4�':��I ;��a� ��g�� rc�� L�� 1�� 1"�.�G9��vi��r�� v��i�,� � "��"�_- �� : 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: � � ��°'" ��, ��. ��o°, ......_. �°' � ,, �'° Abstain Absent PASSED AND APPROVED this the �'��'r� ___ day of l,� �'° �`� �` ��m � � ��.P _ �, �(� 18. -- � _ __. � �� --- - --------- ` �� . � � �°��:..:�; . -__________....._ � .,. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: ��_�� "a� ��.��:� � � "� �f_�"�,��y� �� '�.��M. � _ APPROVED AS TO LEGAL FORM: AARON LEAL, CITY ATTORNEY ��` , ' �'� �``�� . , � � BY• �d� �.�� .��..�*"�� . �.........�.._��..��...��.� ..,��..�.��,�.�_..m��n�........... ,��...�............��m........�...,.�m��,� ....................................................... _ � � � , � �,•�� . � � � � � ' � 1 ; ! �. .. 1 � ! . � THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and Explorium Denton, a legal entity incorporated under the laws of the State of Texas (the 660RGANIZATION"}, WHEREAS, TEx, TAx CoDE §351.002 authorizes CITY to levy by ardinance a municipal hatel occupancy tax ("hatel 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) autharizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the conventian and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates ar registrants to the municipality or its vicinity; and . � � . � �� . . � � - -�� r-��i � �'�� ' . � �'� , �' WHEREAS, T�x. TAx CoDE §351.101(c) authorizes CITY to delegate by contract with ORGANIZATION, 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; �, ' �' •' •- . • � - �- � , . � - . � - , ' , t • • - • . _� . . , w �. . . * ,: -- , • # . . � w i � • . � , � . • � •, . � � - . . � �. �. � .� � � • � • # �' � � '". ' • '' ! �.' � *'� � � * . •� f'' ♦' �'� �# ' � "�� " # " ��• � • . • ' � � ' �. '�� ' '� ' ' ••� �' i #�;) � � � # ' ��' '��' '�' '�� • • �" .� ''• l�� " R�� ' � • : 1.2 Amount of Fayments. (a) As used in this Agreement, the follawing 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%} af the price paid far a room in a hotel, pursuant to Texas Tax Code §351.002 and City Explorium Denton HOT Funds, PY2019 - Page 1 Ordinance, Hatel tax revenue will include penalty and interest related to the late payments af the tax revenue by the taxpayer, (ii) The term c6Collection period" will mean the collectian 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 iiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal ta the tatal hotel tax revenue collected by CITY during any relevant period of time (i.e., fiscal year ar fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period af time for costs af collection or auditing of hatel ta�cpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY far 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 "cantract quarter" shall refer to any quarter of the calendar year in which this Agreement is in farce. Contract quarters will end an March 31St, June 30rn' September 30th, and December 315t af each contract year. (b) In return far satisfactory perfarmance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay ta ORGANIZATION an amaunt of money in each contract year equal to the lesser amount of Twenty-Two Hundredths percent (0.22%) of the annual base payment amount, or the fixed contract amount of Seven Thousand Dollars ($7,000). This amount will be paid in one lump sum after the 25�h of January 2019. If CITY's Chief Financial Officer determines that hotel tax receipts to the CITY are not meeting the anticipated budget projection, CITY may reduce ORGANIZATION'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 cantract period, and CITY's timely receipt af the required quarterly reports. 1.3 ates of Payrnents. (a) The term bbpayments" shall mean payments by CITY to ORGANIZATION 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 25`�' day following the last day af the contract quarter, If any quarterly financial report is not received within thirty (30} days af the end of the applicable cantract quarter, the recipient may be held in breach of this Agreement. CI"I°Y may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 ther li itations regarding consideration. (a) The funding of this project in no way commits CITY to future funding af this program beyond the current contract period. Any future funding is solely the responsibility of ORGANIZATION. Explorium Denton HOT Funds, PY2019 - Page 2 (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 withhald further allacations if CITY determines that ORGANIZATION'S expenditures deviate materially from their approved budget. � 1 ' - 2.1 Use of Funds. Far and in consideration of the payment by CITY to ORGANIZATION of the agreed payments of hotel tax funds specified above, ORGANIZATION agrees to use such hotel tax funds only for advertising and conducting solicitatians and promotional programs to attract tourists and convention delegates ar registrants ta 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 S� of that year shall be refunded ta CITY within sixty (60) days. Advertising materials purchased with the hotel accupancy tax funds must be targeted ta 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 Administrative Costs. The hotel tax funds received from the CITY by the ORGANIZATION 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 ORGANIZATION'S budget attached hereto as (Exhibit "A" and incorparated herein for all purposes and each are directly attributable to work on pragrams which promote tourism and the hotel and canventian industry, and if each promotes at least one of the six statutory purposes enumerated within TEx. TAx Cor�E §351.101(a}. � � •> . � a � r i , , (a) That portian of total administrative costs of the THEATRE for which hotel tax funds may be used shall not exceed that portion of the ORGANIZATION' S administrative costs actually incurred in conducting the activities specified in ¶2.1 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 promation of local tourism and the conventian and hotel industry or the perfarmance of the person's job in an efficient and professional manner. I � �, 1 ,' , 1 • '�• • � • - : ��• (a) ORGANIZATION shall prepare and submit to the City Manager of CITY an annual budget (see Exhibit "A") as approved by the City Council for each calendar year, for all operatians of ORGANIZ,ATION in which the hotel tax funds shall be used by ORGANIZATION. In other words, CITY shauld be able to audit speciiically the purpose of each individual expenditure of hotel Explorium Denton HOT Funds, PY2019 - Page 3 tax funds from the separate account relating to hotel tax. CITY shall not pay to ORGANIZATION any hotel tax revenues as set forth in Section I af this contract during any pragram year of this Agreement unless a budget far such respective program year has been approved in writing by the Dentan City Cauncil, authorizing the expenditure of funds, (b) ORGANIZATION acknowledges that approval af the budget (Exhibit "A"} by the Denton City Cauncil creates a fiduciary duty in ORGANIZATION with respect ta the hotel tax funds paid by CITY to ORGANIZATION under this Agreement. ORGANIZATION shall expend hotel tax funds anly in the manner and for ihe purposes specified in this Agreement, TEx. TAx CoDE §351.101(a) and in the budget as appraved by CITY. (c) Upon the application or consent of ORGANIZATION, the City Manager or his designate may authorize minor amendments to the approved budget as necessary to carry out the intent af this Agreement, in a manner consistent with efficient use of public funds, and in accordance with State law. Such minar amendments may not increase the overall fiznding set forth in ¶1.2(b}, extend the term, ar otherwise alter the performance obligatians af ORGANIZATION, without appraval of the City Council by ordinance. 3.2 Separate Accounts. ORGANIZATION shall maintain any hotel tax funds paid to ORGANIZATION by CITY in a separate account or with segregated fund accounting, such that any reasonable persan can ascertain the revenue source of any given expenditure. 3.3 Financial Records. ORGANIZATION shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by ORGANIZATION. These funds are required to be classified as restricted funds for audited financial purpases, and may not be used for contracted services, including, but not limited ta, auditing fees or attorney fees. Upon reasanable advance written i°equest of the Denton City Cauncil, the City Manager or designate, or any other persan, ORGANIZATION shall make such financial records available for inspection and review by the party making the request. ORGANIZATION understands and accepts that all such financial recards, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEx. Gov'T CotiE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel t� funds, and within thirty (30) days after the end af every quarter thereafter, until all funds have been expended and reparted to CITY, ORGANI7_ATION shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or capies of the invoices ar receipts made with regard to hotel tax funds pursuant to TEx, TAx CoDE §351,101(c), social media and/ar digiial marketing expenditures require invoices to be provided and shall include performance measures, and (3) a copy of all financial recards (e.g., capies 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. ORGANIZATION 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. ORGANIZATION shall give the City Manager af CITY, or his designate, reasonable advance written notice of the time and place of all meetings of Explorium Denton HOT Funds, PY2019 - Page 4 ORGANIZATION'S Baard af Directars, as well as any ather meeting of any canstituency of ORGANIZATION, at which this Agreement ar any matter subject to this Agreement shall be considered, ' 1 ' 1 4.1 Term. The term of this Agreement shall commence on January 1, 2019, and terminate at midnight on January 31, 2020, Hawever, the program period shall cammence on January 1, 2019 and terminate at midnight an 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 pragram period, for events and activities taking place within the program periad, are eligible for funding under this Agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upan terminatian of this Agreement. 4.2 Terrnination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other parly sixty (60) days advance written natice. (b) In the event this cantract is terminated by either party pursuant ta ¶4.2(a), CITY agrees ta reimburse ORGANIZATION for any contractual abligations of THEATRE undertaken by ORGANIZATION in saiisfactory performance of thase activities specified in ¶¶2.1 and 2,2 abave, and that were appraved by the Council through the budget, as nated in ¶3.1. This reimbursement is conditioned upan such contractual obligations having been incurred and entered inta in the gaad faith performance of thase services contemplated in ¶¶2.1 and 2.2 above, and further conditianed upan such contractual abligations having a term not exceeding the full term of this Agreement. Notwithstanding any pravision hereof ta the contrary, the abligation of CITY to reimburse ORGANIZATION, or to assume the perfarmance af any contractual obligatians of ORCrANIZATION, far ar under any contract entered inta by THEATRE as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upan termination pursuant to ¶4.2(a), ORGANIZATION will provide CITY; 1) within ten (10) business days from the termination notification, a shart-term budget af prabable expenditures far the remaining sixty (60) day periad between termination notificatian and contract termination. This budget will be presented to Cauncil far approval within ten (10) business days after receipt by CITY. If formal approval is not given within ten (10) business days, and the budget daes not contain any expenditures that wauld be prohibited by the Texas Tax Cade, and is within the current contractual period appraved budget; the budget will be considered appraved; 2) within thirty (30) days, a full accaunting af all expenditures nat previausly audited by CITY; 3) within five (5) business days af a request from CITY, a listing af expenditures that have accurred since the last required reparting period; 4) a final accounting of all expenditures and tax funds an the day of termination. ORGANIZATION will be abligated ta return any unused funds, or funds determined to be used improperly. Any use of remaining funds by ORGANIZATION after notificatian af termination is conditioned upon such contractual abligatians having been incurred and entered inta in the goad faith performance af those services contemplated in ¶¶2.1 and 2.2 above, and further conditioned upon such contractual obligatians having a term not exceeding the full term of this Agreement. Explorium Denton HOT Funds, PY2019 - Page 5 4.3 AutomatYc Termination. This Agreement shall automatically terminate upon the occurrence of any af the following events: (a) The termination of the legal existence af ORGANIZATION; (b) The insolvency of ORGANIZATION, the filing of a petition in bai�lcri.iptcy, either valuntarily ar involuntarily, or an assignment by ORGANIZATION for the benefit of creditors; (c) The cantinuation of a breach af any af ihe terms or conditions of this Agreement by either CITY or ORGANIZATION for mare than thirty (30) days after written notice af such breach is given ta the breaching party by the other party; or (d) The failure af ORGANIZATION to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles priar to the beginning af the next contract term, or quarterly as required by ¶1.3 hereo£ 4.4 ight to Immediate Ter ination Upon Litigatron. Notwithstanding any ather provision af 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 ta the other party in the event that any person has instituted litigation concerning the activities of the non-terminating parly, and the terminating party reasanably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant ta ¶¶4,3 or 4.4, ORGANIZATION agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within thirty (30) days after terminatian of this Agreement. 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be canstrued ta prohibit, the agreement by ORGANIZATION with another private entity, person, or organization for the perfarmance of thase services described in ¶2.1 above. In the event that ORGANIZATION enters into any an•angement, contractual or otherwise, with such other entity, person or organization, ORGANIZATION shall cause such other entity, person, or organization to adhere ta, confarm to, and be subject to all provisians, terms, and canditions of this Agreement and ta TFx. TAx Co�E ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitians pertaining to expenditure of the agreed payments and hotel ta�c funds. c� � r• � . � #' ' ' • . ��- . - . , •-�- •- � . '� . � . . - w �- �- * _• •- � • -- - , r � . . � - ,.- , � # - • � -. � ,. . . � . . - - - � r • ��- . • . + �. * , - * - - . . �. , � �_ # _ _ * # ,. . � •- � • . . _ . • !' . . • . r- � - - •� r - * . . , • � r � w - � � - - • � -- .�- . � • � . � �'' ' ` • , � �- #, �- .* r. _ ► � - -_ � . #' ' ` # r- � •- -r � . � _ � • - * . , ... # # . -• - - . - � Explarium Denton HOT Funds, PY2019 - Page 6 �� . i �' . . � . . � 1 � 1 �' � 1 1 1 � , . . � � � . � . 1 �� ;. . � �• .: � ♦ • I �'; �'� ' �" � 1 �' � ,! ' ' 1' � i ; �' . , � � � !�� ,. 1 �.. !; : � R ��. , ♦ .� � ' . . ,. , .:..�. ', �: • 1' ! , '... , .`:- , ��` '; .. ,; ' ,,..: , �,.. ♦, / � ��. . �../ , k. . • 1' .. / : .. . , �.. � •' ! ' � ' ..; . . ... . , .... � ..:.. :, � � .,:: � .. 1 .. , .:�� , � .� ♦ ' � ,. ,�� , j' ... � . � � ��:� '. � �` � � , �., 1 �. 5.4 Assignment. ORGANIZATION shall not assign this Agreement without first obtaining the written cansent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulatian, shall be effeciive 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 City Manager CITY OF DENTON 215 E. McKinney Denton, TX 76201 . • . .. � . . , � 1; + �- � r l 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 ORGANIZATION and their respective successors and assigns. 5.7 Application af 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 determinatians relative thereto. 5.8 Exclusive Agree ent. 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 af this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreernent from the terms and conditions of any other dacument relating ta this transactian ar these transactions. 5.9 uplicate rYginals. This Agreement is executed in duplicate originals. Explorium Denton HOT Funds, PY2019 - Page 7 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. ORGANIZATION 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. 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 the CITY. EXECUTED this ��`�m�, day of ��,�'°,�", �-�' ,,� 2018. ATTEST: THE CITY OF DENTON, TEXAS �W � � g �;;� �� . �.. w�„� .,. Y � .. � �� ......��!"�._ �° ... ....�..— ��;�:... �_ .....__. � _�._�. TODD 111�,��6^vi'�i�„ CITY MANAGER APPROVED AS TO LEGAL FORM: , ;� �: , i „ �, , � �� , � � ,„� �.. .. ��m., � � � � �r� :� � B �. ,,% �� + � � °� � ,�� BY � �w. .R. � �� '� ��" � �. � � �' AARON LEA ..�_...� � � ._... ... ....�...,. ,� ��1� ��1 � ;� WALTERS, L� CITY SECRETARY CITY ATTORNEY Explorium Denton HOT Funds, PY2019 - Page 8 EXPLORIUM DENTON , � �.� � � Y• � , � � B . � Ae � �?� "� ��'�� .�.��,.�� `l�� r��t�.z��7�a�A�tM��^�� Explorium Denton HOT Funds, PY2019 - Page 9 Advertising 9illboards Magazine Ads Radio Explorium Denton Denton Ch!ldren's Museum Program Year 2019 �xplorium Denton HOT Funds, PY2019 - Page 10 Exhibit A 5,300 500 1,200 7, 000