18-1977s:\legal\our documents\ordinancesU 8\hot py2019\texas filmmakers ord.doc
ORDINANCE NO, 18-1977
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND TEXAS FILMMAKERS'
CORPORATION FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND
PROVIDING AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION l, The City Manager, or his designee, is hereby authorized to execute an
agreement between the City of Denton and Texas Filmmakers' Corporation 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.
ON 2. This ordinance shall become effective immediately upon its passage and
S.E.C.T.I.....
approval.
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Chris Watts, Mayor:
Gerard Hudspeth, District 1:
Keely G. Briggs, District 2:
Don Duff, District 3:
John Ryan, District 4:
Deb Arrnintor, At Large Place 5:
Paul Meltzer, At Large Place 6:
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Abstain Absent
PASSED AND APPROVED this the y �� �r ,
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CHRIS WATTS, MAYOR
ATTEST:
JENNIPER WALTERS, CITY SECRETARY
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APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
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1.2 Amount of Payments.
(a) As used in this Agreement, the following terms shall have the following speciiic
meanings:
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TX Filmmakers HOT Funds, PY2019 - Page 1
Ordinance. Hatel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
(ii) The term 66Callection period99 will mean the collectian periad far CITY's
fiscal year. It will include hotel tax revenue due to CITY far the relevant fiscal year and
callected through the 22nd day af the month fallowing the close of the relevant fiscal year.
(iii) The term 66base payment amount99 shall mean a net amaunt af money equal
to the tatal hatel tax revenue collected by CITY during any relevant periad of time (i.e.,
fiscal year or fiscal quarter), less: (1) attarney and auditing casts incurred during such
relevant period af time far casts af collectian ar auditing af hatel t�payers (attorney and
auditing casts include fees paid ta attarneys ar agents nat in the regular employ of CITY for
which attarneys or agents effect campliance ar callectian of the hotel tax fram 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 af the calendar year in
which this Agreement is in farce. Cantract quarters will end on March 31 St, June 30�',
September 30`�', and December 31St of each cantract year.
(b) In return for satisfactary perfarmance af the activities set farth in this Agreement
and all attachments hereta, CITY shall pay ta CORPORATION an amount af money in each
contract year equal ta the lesser amaunt of Fifty-One Hundredths percent (0.51 %) af the annual
base payment amount, or the fixed contract amount af Sixteen Thousand Five Hundred Sixty-
Seven Dallars ($16,567). This amount will be divided inta twa payments equal ta 50% af the
annual fixed contract amaunt, unless CITY can show with reasanable certainty that the annual
base payment amount will be less than originally estimated far the fiscal year. The iinal payment
will represent 50% of the fixed contract amaunt or the unpaid remainder af 0.51% af the base
payment amount, whichever is less. The final payment will be made after the 25th af Apri12019.
If CITY's Chief Financial Officer determines that hotel tax receipts by the CITY are nat meeting
the anticipated budget projection, CITY may reduce CORPORATION's current budget at any
time during the cantract periad. Each payment is subject to refund af any unused ar improperly
expended funds fram the prior cantract period, and CITY's timely receipt af the required
quarterly reparts.
1 i "
(a) The term "payments" shall mean payments by CITY to CORPORATION af thase
amaunts specified in ¶1.2, abave, as determined by the hatel tax revenue collected.
(b) Each payment shall be paid upon receipt af the required reparts and after the 25�' af
3anuary 2018 and after the 25�' af Apri12018. If any quarterly financial report is nat received within
thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach af
this Agreement. CITY may withhold payment(s) until the appropriate reports are received and
appraved, which approval shall not be unreasonably withheld.
TX Filmmakers HOT Funds, PY2019 - Page 2
''' � 1 • � . 1 +' � f • 1
(a) The funding of this praject in na way commits CITY ta future funding of this program
beyond the current cantract periad. Any future funding is solely the respansibility af
CORPORATION.
(b) It is expressly understood that this cantract in no way abligates the General Fund or any
ather monies or credits of CITY.
(c) CITY may withhold further allocatians if CITY determines that CORPORATION's
expenditures deviate materially from their appraved budget.
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2.1 Use of Funds. Far and in cansideratian af the payment by CITY to CORPORATION af
the agreed payments af hotel tax funds specified abave, CORPORATION agrees ta use such hatel
tax funds only for advertising and conducting solicitatians and pramotianal pragrams ta attract
tourists and convention delegates ar registrants to the municipality or its vicinity; as authorized by
TEx. TAx CoDE §351.101(a). Funds far any calendar year which are unused by midnight December
31 St af that year shall be refunded ta CITY within sixty (60) days.
Advertising materials purchased with the hatel accupancy tax funds must be targeted ta reach
audience outside the Denton city limits. These materials include, but are not limited to, signs,
posters, pastcards, newsletters, print advertising, digital marketing, billbaards, radia and television.
2.2 Adminrstrative Costs. The hotel tax funds received from the CITY by the
CORPORATION may be spent far day-ta-day aperatians, affice supplies, salaries, travel expenses,
and other administrative costs allowed by TEx. TAx CovE §351.101(e), but anly if specified in
CORPORATION's budget attached hereta as E�ibit "A" and incorparated herein far all purposes
and each are directly attributable ta wark an pragrams which pramate taurism and the hatel and
canvention industry, and if each promotes at least ane of the six statutary purpases enumerated
within TEx. TAx CoDE §351.101(a).
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(a) That portian af tatal administrative costs of the CORPORATION far which hotel
tax funds may be used shall nat exceed that partion af the CORPORATION's administrative casts
actually incurred in conducting the activities specified in ¶2.1 above.
(b) Hotel tax funds may not be spent for travel far a persan to attend an event ar conduct
an activity the primary purpose of which is nat directly related to the promatian of local taurism and
the conventian and hatel industry or the perfarmance af the persan's jab in an efficient and
professianal manner.
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TX Filmmakers HOT Funds, PY2019 - Page 3
(a) CORI'ORATION shall adhere to the budget (Exhibit 66 �g 99� as approved by the City
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Council far each calendar year, for all operations of CORF'ORATION in which the hatel tax funds
shall be used by CORPORATION. In other wards, CITY shauld be able to audit specifically the
purpase af each individual expenditure of hotel tax funds from the separate account relating ta hatel
tax. CITY shall nat pay to CORPORATION any hotel tax revenues as set forth in Section I af this
cantract during any program year af this Agreement unless a budget for such respective pragram
year has been appraved in writing by the Denton City Council, autharizing the expenditure of funds.
(b) CORPORATION acknowledges that appraval af the budget (Exhibit "A") by the
Dentan City Cauncil creates a fiduciary duty in CORPORATION with respect ta the hotel tax funds
paid by CITY to CORPORATION under this Agreement. CORPORATION shall expend hatel 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 appraved by CITY.
(c) Upon the applicatian or consent af CORPORATION, the City Manager or his
designate may autharize minor amendments ta the appraved budget as necessary to carry out the
intent of this Agreement, in a manner cansistent with efficient use af public funds, and in
accardance with State law. Such minar amendments may nat increase the averall funding set farth
in ¶1.2(b), extend the term, ar atherwise alter the perfarmance abligatians of CORPORATION,
withaut appraval of the City Cauncil by ardinance.
3.2 Separate Accounts. CORPORATION shall maintain any hotel tax funds paid ta
CORPORATION by CITY in a separate account ar with segregated fund accaunting, such that any
reasonable persan can ascertain the revenue source of any given expenditure.
3.3 Financial Records. CORPORATION shall maintain camplete and accurate financial
records of each expenditure af the hatel tax funds made by CORPORATION. These funds are
required ta be classified as restricted funds far audited financial purposes, and may nat be used far
cantracted services, including, but nat limited to, auditing fees ar attarney fees. Upon reasonable
advance written request af the Denton City Cauncil, the City Manager ar designate, ar any ather
person, CORPORATION shall make such financial recards available far inspectian and review by
the party making the request. CORPORATION understands and accepts that all such financial
recards, and any ather records relating to this Agreement shall be subject to the Texas Public
Informatian 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,
CORPORATION shall furnish to CITY: (1) a completed financial repart, (2) a list of the
expenditures or copies of the invaices or receipts made with regard to hatel tax funds pursuant ta
TEx. TAx CoDE §351.101(c), social media and/or digital marketing expenditures require invoices ta
be pravided and shall include perfarmance measures, and (3) a capy af all financial records (e.g.,
capies af frant and back cleared checks or bank statements, and other relevant documentation).
Bath the financial and expenditure reports will be in a farm either determined ar appraved by the
City Manager or designate. CORPORATION shall respond pramptly to any request from the City
Manager af CITY, ar designate, far additianal information relating to the activities perfarmed under
this Agreement.
TX Filmmakers HOT Funds, PY2019 - Page 4
3.5 Notice of Meetings. CORPORATION shall give the City Manager of CITY, ar his
designate, reasanable advance written natice af the time and place of all meetings of
CORPORATION's Board af Directars, as well as any other meeting af any canstituency of
CORPORATION, at which this Agreement or any matter subject to this Agreement shall be
considered.
IV. TE AND TE INATION
4.1 Term. The term of this Agreement shall cammence an January 1, 2019, and terminate at
midnight an January 31, 2020. Hawever, the program periad shall cammence an January 1, 2019
and terminate at midnight on December 31, 2019. Only thase expenditures autharized by Chapter
351 of the Texas Ta� Code and the program guidelines, which are actually incurred during the
program period, for events and activities taking place within the program periad, are eligible for
funding under this Agreement, and any ineligible expenditures ar unspent funds shall be forfeited ta
CITY upan termination af this Agreement.
4.2 Terrninatron Without Cause.
(a) This Agreement may be terminated by either party, with ar withaut cause, by giving
the ather 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 ta reimburse CORPORATION far any contractual abligations of CORPORATION
undertaken by CORPORATION in satisfactory performance af thase activities specified in ¶¶2.1
and 2.2 above, and that were appraved by the Cauncil thraugh the budget, as nated in ¶3.1. This
reimbursement is conditioned upon such contractual abligatians having been incurred and
entered inta in the gaad faith performance af thase services contemplated in ¶¶2.1 and 2.2 abave,
and further conditioned upon such contractual abligatians having a term nat exceeding the full
term of this Agreement. Notwithstanding any pravision hereof to the contrary, the obligatian af
CITY to reimburse CORPORATION, ar to assume the perfarmance of any cantractual
obligatians of CORPORATION, far ar under any cantract entered into by CORPORATION as
contemplated herein, shall nat exceed 66 2/3% of the current quarterly payment.
(c) Further, upon terminatian pursuant to ¶4.2(a), CORPORATION will provide
CITY: 1) within ten (10) business days from the terminatian notificatian, a short-term budget af
probable expenditures far the remaining sixty (60) day period between terminatian natification
and contract terminatian. This budget will be presented to Council for appraval within ten (10)
business days after receipt by CITY. If farmal approval is not given within ten (10) business
days, and the budget daes nat contain any expenditures that wauld be prahibited by the Texas
Tax Cade, and is within the current cantractual period appraved budget; the budget will be
considered appraved; 2) within thirty (30) days, a full accaunting of all expenditures not
previously audited by CITY; 3) within five (5) business days af a request fram CITY, a listing of
expenditures that have occurred since the last required reparting period; 4) a final accaunting af
all expenditures and tax funds an the day of termination. CORPORATION will be obligated ta
return any unused funds, or funds determined ta be used improperly. Any use of remaining funds
by CORPORATION after notification af terminatian is canditioned upon such contractual
obligatians having been incurred and entered into in the goad faith performance af those services
TX Filmmakers HOT Funds, PY2019 - Page 5
contemplated in ¶¶2.1 and 2.2 above, and further conditioned upon such contractual abligations
having a term not exceeding the full term af this Agreement.
4.3 Automatic Terminatian. This Agreement shall automatically terminate upon the
occurrence of any of the following events:
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of this Agreement, ta mitigate damages and to preserve evidence and issues for judicial
determination, either party shall have the right to terminate this Agreement upon immediate natice
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 reasanably believes that such activities are required
or prohibited under this Agreement.
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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. CORPORATION shall provide insurance as follows:
l. $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.
, 4�
EXECUTED this � day of �����"� ��,_" ��`'�� J , 2018.
ATTEST:
THE CITY OF DENTON, TEXAS
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y• --��.�- � ������m� .�.,,��� .............
TOL�I� ��l���k�����d�� ..........................
CITY MANAGER
APPROVED AS TO LEGAL FORM:
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By: _ �� �� " :m���� ����'�� ���� �"��������" ���� ., � By:
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:1���]�l fl°#� WALTERS,
CITY SECRETARY
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d�.����)I� LEAL, ........ ...................................... .......
CITY ATTORNEY
TX Filmmakers HOT Funds, PY2019 - Page 8
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