23-2285ORDINANCE NO. 23-2285
AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE CITY MANAGER TO
EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE KIWANIS
CLUB OF DENTON, BREAKFAST, DENTON, TEXAS FOR THE PAYMENT AND USE OF
HOTEL TAX REVENUE IN SUPPORT OF THE TURKEY ROLL BICYCLE RALLY; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, TEX. TAX CODE §351.101(a) authorizes the 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 §35 1.101 (c) authorizes the CITY to contract with independent
entities, for programs and activities of the type funded with revenue from the municipal hotel
occupancy tax; and
WHEREAS, the agreements and amounts have been reviewed and approved by the
Community Partnership Committee and the City Council deems use of the funds are in the public
interest; NOW THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager, or designee, is hereby authorized to execute an
agreement between the City of Denton and the Kiwanis Club of Denton, Breakfast, Denton,
Texas 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.
Th, m,ti,„ t, ,pp„„, thi, Ordjnance was made by c;Cf'+ J hD Jj r&l L and
„„„d,dby B,,..J,...,. CC„, bcG,, ; th, O,di„„„dby
the following vote [] -b]:
Nay Abstain Absent
Mayor Gerard Hudspeth:
Vicki Byrd, District 1 :I
„/Brian Beck, District 2 :
Paul Meltzer, District 3 :xl
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Joe Holland, District 4:
Brandon Chase McGee, At Large Place 5 :
Chris Watts, At Large Place 6:
i +b + R n\
PASSED AND APPROVED thI, th, it d,y ,f DCce„~be/. 2023.
dAd{d
ATTEST:
JESUS SALAZAR, CITY SECRETARY
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APPROVED AS TO LEGAL FORM:
MACK RE[NWAND, CITY ATTORNEY
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Susan Keller ;i*xiisHaD’
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Page 2 of 2
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AGREEMENT BETWEEN THE CITY OF DENTON AND
KIWANIS CLUB OF DENTON, BREAKFAST, DENTON, TEXAS (TURKEY ROLL
BICYCLE RALLY) (PROGRAM YEAR 2024) 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 Kiwanis Club of Denton, Breakfast, Denton, Texas, Inc., a legal entity
incorporated under the laws of the State of Texas (the “CLUB”):
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, CLUB is well equipped to perform those activities; and
WHEREAS, TEX. TAX CODE §351.101 (c) authorizes CITY to delegate by contract with
CLUB, 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 CLUB agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by CLUB under
this Agreement, CITY agrees to pay to CLUB a portion of the hotel tax revenue collected by CITY
at the rates and in the manner specified herein (such payments by CITY to CLUB sometimes herein
referred to as the “agreed payments” or “hotel tax funds”).
1.2 Amount of Payments.
(a)
meanIngs:
As used in this Agreement, the following terms shall have the following specific
(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.
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(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 “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 31 st 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 CLUB an amount of money in each contract year
equal to the lesser amount of Eighteen Hundredths percent (0.18%) of the annual base payment
amount, or the fixed contract amount of Six Thousand Two Hundred Dollars ($6,200). This
amount will be paid in one lump sum after the 25th of January 2024. If CITY’s Chief Financial
Officer determines that hotel tax receipts by the CITY are not meeting the anticipated budget
projection, CITY may reduce CLUB’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.
1.3 Dates of Payments.
(a) The term “payments” shall mean payments by CITY to CLUB of those amounts
specified in Section 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.
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 CLUB.
(b) it is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of CITY.
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(c) CITY may withhold further allocations if CITY determines that CLUB’s expenditures
deviate materially from their approved budget.
II. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in consideration of the payment by CITY to CLUB of the agreed
payments of hotel tax funds specified above, CLUB 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 to directly enhance and promote tourism
and the convention and hotel 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 3 1;t of that year
shall be refunded to CITY within thirty (30) days.
Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach
audience 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 CLUB 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 CLUB’s budget attached
hereto as Exhibit “A“ and incorporated herein for all purposes 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 CLUB for which hotel tax funds may
be used shall not exceed that portion of the CLUB’s administrative costs actually incurred in
conducting the activities specified in Section 2.1 above.
(b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an activity except where such travel is directly related to the performance of the person’s job in an
efficient and professional manner and the primary purpose of which is directly related to the
promotion of local tourism and the convention and hotel industry.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) CLUB shall adhere to the budget (Exhibit “A”) as approved by the City Council for
each calendar year, for all operations of CLUB in which the hotel tax funds shall be used by CLUB.
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In other words, CITY may 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 CLUB 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) CLUB acknowledges that approval of the budget (Exhibit “#’) by the Denton City
Council creates a fiduciary duty in CLUB with respect to the hotel tax funds paid by CITY to
CLUB under this Agreement. CLUB 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 CLUB, the City Manager or their designee 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 Section 1.2(b),
extend the term, or otherwise alter the performance obligations of CLUB, without approval of the
City Council by ordinance.
3.2 Separate Accounts. CLUB shall maintain any hotel tax funds paid to CLUB 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. CLUB shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by CLUB. 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 their designee, or any other person, CLUB
shall make such financial records available for inspection and review by the party making the
request. CLUB understands and accepts that all 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 nrnds have been expended and reported to CITY,
CLUB 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), 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 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 their
designee. CLUB shall respond promptly to any request from the City Manager of CITY, or their
designee, for additional information relating to the activities performed under this Agreement.
3.5 Notice of Meetings. CLUB shall give the City Manager of CITY, or their designee,
reasonable advance written notice of the time and place of all meetings of CLUB’s Board of
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Directors, as well as any other meeting of any constituency of CLUB, 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, 2024, and terminate at
midnight on January 31, 2025. However, the program period shall commence on January 1, 2024
and terminate at midnight on December 31, 2024. 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 Section 4.2(a),
CITY agrees to reimburse CLUB for any contractual obligations of CLUB undertaken by CLUB
in satisfactory performance of those activities specified in Sections 2.1 and 2.2 above, and that
were approved by the Council through the budget, as noted in Section 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 Sections 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 CLUB, or to assume the performance of any contractual obligations of CLUB, for or
under any contract entered into by CLUB as contemplated herein, shall not exceed 66 2/3% of
the current quarterly payment.
(c) Further, upon termination pursuant to Section 4.2(a), CLUB 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. CLUB will be obligated to return any
unused funds, or funds determined to be used improperly. Any use of remaining funds by CLUB
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
Sections 2.1 and 2.2 above, and further conditioned upon such contractual obligations having a
term not exceeding the full term of this Agreement.
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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 CLUB;
(b) The insolvency of CLUB, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by CLUB 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 CLUB 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 CLUB 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 Section 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 Sections 4.3 or 4.4, CLUB 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.
V, GENERAT I PROVISIONS
5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor
be construed to prohibit, the agreement by CLUB with another private entity, person, or organi-
zation for the performance of those services described in Section 2.1 above. In the event that CLUB
enters into any arrangement, contractual or otherwise, with such other entity, person or organization,
CLUB 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. CLUB 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. CLUB shall have exclusive control of its operations and performance of services hereunder,
and such persons, entities, or organizations performing the same, and CLUB shall be solely
responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. CLUB shall not be considered a partner or joint venturer with CITY, nor shall
CLUB be considered, nor in any manner hold itself out as, an agent or official representative of
CITY
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5.3 Indemnification. CLUB AGREES TO INDEMNIFY, HOLD HARMT,ESS, AND
DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST
ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABnITY
OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION
WITH THE PERFORMANCE BY CLUB 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 CLUB, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND IFWITEES, OR ANY FEES, FINES OR PENALTIES ASSESSED
AGAINST CITY DUE TO MISUSE OF FUNDS BY CLUB.
5.4 Assignment. CLUB 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 CLUB
City Manager
CITY OF DENTON
215 E. McKinney
Denton, TX 76201
Daniel Clanton
KIWANIS CLUB OF DENTON BREAKFAST
DENTON, TEXAS, INC
P. O. Box 14
Denton, TX 76205
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 CLUB 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 may be executed in duplicate originals.
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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. CLUB shall provide insurance for the term of this Agreement as follows:
1.
2.
$ 1,000,000 Commercial General Liability, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property,
$500,000 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 made to CLUB by the CITY.
EXECUTED this 12th day of December _, 2023.
THE CITY OF DENTON, TEXAS
.„: the:a
SARA HENSLEY,
CITY MANAGER
KIWANIS CLUB OF DENTON, BREAKFAST,
DENTON, TEXAS, INC.ATTEST:
JESUS SALAZAR, CITY SECRETARY
B y : b:E:i
Vice President
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APPROVED AS TO LEGAL FORM:
MACK REINWAND, CITY ATTORNEY
THIS AGREEMENT HAS BEEN
BOTH REVIEWED AND APPROVED
as to financial and operational obligations
and business terms.
.„:
Jessica Williams
PRINTED NAMESIGNATURE
Chief Financial Officer
TITLE
Finance
DEPARTMENT
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Exhibit A
Denton Breakfast Kiwanis
Turkey Roll
Budget 2024
Advertising
Publicity through Visitor
Center
Print and postage
Booth Rental, Magazine Ads, and Van Rental
$
$
$
$
$
2,000
2,800
1,400
6,200
6, 200
subtota I
Total Budget
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