23-2288ORDINANCE NO. 23-2288
AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE CITY MANAGER TO
EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON
COMMUNITY MARKET, INC., FOR THE PAYMENT AND USE OF HOTEL TAX
REVENUE IN SUPPORT OF THE DENTON COMMUNITY MARKET; 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 §351.101 (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 Denton Community Market, 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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Nay Abstain Absent
Mayor Gerard Hudspeth:
Vicki Byrd, District 1 :
Brian Beck, District 2:
Paul Meltzer, District 3 :
Joe Holland, District 4:
Brandon Chase McGee, At Large Place 5 :
Chris Watts, At Large Place 6:
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PASSED AND APPROVED this th, I}+" d,y,f Deccw\be /_, 2023.
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SPETH MAYOR
ATTEST:
JESUS SALAZAR, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
MACK REINWAND, CITY ATTORNEY
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AGREEMENT BETWEEN THE CITY OF DENTON AND
DENTON COMMUNITY MARKET, INC. (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 the Denton Community Market, Inc., a legal entity incorporated under the laws of the
State of Texas (the “MARKET”).
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)(3) and (a)(4) authorize the expenditure of
municipal hotel tax revenues for advertising and promotional programs to attract tourists to the
municipality or its vicinity, and in the promotion, improvement and application of the arts to promote
tourism and the convention and hotel industry; and
WHEREAS, MARKET is well equipped to perform those activities; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with
MARKET, 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; and
NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, CITY and MARKET agree, and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration ofthe activities to be performed by MARKET under
this Agreement, CITY agrees to pay to MARKET a portion of the hotel tax revenue collected by
CITY at the rates and in the manner specified herein (such payments by CITY to MARKET
sometimes herein referred to as the “agreed payments” or “hotel tax funds”).
1.2 Amount of Payments.
(a)
meanlrlgs:
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 20th 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 Q.e. , fiscal
year or fiscal quarter), less: (1) attorney and auditing costs incurred during such period 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 31;t, June 30th,
September 30th, and December 3 lst 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 MARKET an amount of money in each contract year
equal to the lesser amount of: Two and Two Hundredths percent (2.02%) of the annual base
payment amount, or the fixed contract amount of Sixty-Eight Thousand Four Hundred Dollars
($68,400). This amount will be divided into two payments equal to 50% 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 final payment will represent
50% of the fixed contract amount or the unpaid remainder of 2.02% of the base payment amount,
whichever is less. The final payment will be made after the 25th of April 2022. If CITY’s Chief
Financial Officer determines that hotel tax receipts by the CITY are not meeting the anticipated
budget projection, CITY may reduce MARKET’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 MARKET of those amounts
specified in Section 1.2, above, as determined by the hotel tax revenue collected.
(b) Each payment shall be paid upon receipt of the required reports and after the 25th of
January 2023 and after the 25th of April 2023. 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 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 MARKET.
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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) CITY may withhold further allocations if CITY determines that MARKET’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 MARKET of the agreed
payments of hotel tax funds specified above, MARKET 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 well as the promotion of
tourism 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)(4). Funds for any calendar
year which are unused by midnight December 31st 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
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 MARKET may
be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative
costs allowed by TEX. TAX CODE §3 51.101 (e), but only if specified in MARKET’S budget attached
hereto as Exhibit “A” and incorporated 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 MARKET for which hotel tax funds
may be used shall not exceed that portion of the MARKET’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 or the performance of the person’s
job in an efficient and professional manner.
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III. RECORD KEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) MARKET shall adhere to the budget (Exhibit 'W’) as approved by the City Council for
each calendar year, for all operations of MARKET in which the hotel tax funds shall be used by
MARKET. 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 MARKET
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) MARKET acknowledges that approval of the budget (Exhibit “A”) by the Denton
City Council creates a fiduciary duty in MARKET with respect to the hotel tax funds paid by CITY
to MARKET under this Agreement. MARKET 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 MARKET, 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 MARKET, without approval of the City
Council by ordinance.
3.2 Separate Accounts. MARKET shall maintain any hotel tax funds paid to MARKET 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. MARKET shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by MARKET. 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, MARKET shall
make such financial records available for inspection and review by the party making the request.
MARKET 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 funds have been expended and reported to CITY,
MARKET 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
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designee. MARKET 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. MARKET shall give the City Manager of CITY, or their designee,
reasonable advance written notice of the time and place of all meetings of MARKET’s Board of
Directors, as well as any other meeting of any constituency of MARKET, 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 MARKET for any contractual obligations of MARKET undertaken by
MARKET 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 Section 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 MARKET, or to assume the performance of any contractual obligations of
MARKET, for or under any contract entered into by MARKET as contemplated herein, shall not
exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to Section 4.2(a), MARKET 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. MARKET will be obligated to return any unused funds, or funds determined
to be used improperly. Any use of remaining funds by MARKET after notification of termination
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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.
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 MARKET;
(b) The insolvency of MARKET, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by MARKET 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 MARKET 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 MARKET 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, MARKET
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 MARKET with another private entity, person, or organization
for the performance of those services described in Section 2.1 above. In the event that MARKET
enters into any arrangement, contractual or otherwise, with such other entity, person or organization,
MARKET 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. MARKET 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. MARKET shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same, and MARKET shall be
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solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. MARKET shall not be considered a partner or joint venturer with CITY, nor shall
MARKET be considered, nor in any manner hold itself out as, an agent or official representative of
CITY
5.3 Indemnification. MARKET AGREES TO INDEMNIFY, HOLD HARMLESS, AND
DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST
ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY
OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION
WITH THE PERFORMANCE BY MARKET 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 MARKET, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND IIWITEES, OR ANY FEES, FINES OR PENALTIES ASSESSED
AGAINST CITY DUE TO MISUSE OF FUNDS BY MARKET.
5.4 Assignment. MARKET 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 MARKET
City Manager
CITY OF DENTON
215 E. McKinney
Denton, TX 76201
President
DENTON COMMUNITY MARKET, INC.
PO Box 30507
Denton, Texas 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 MARKET 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,
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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.
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. MARKET shall, at a minimum, provide insurance for the term of this Agreement
as follows:
1. $1,000,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events
taking place on City-owned property,
2. $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 MARKET by CITY.
12th December
EXECUTED this day of , 2023 .
THE CITY OF DENTON, TEXAS
.„: L?:,i:#
SARAHENSLEY,
CITY MANAGER
DENTON COMMUNITY MARKET, INC.
~:
Board President
ATTEST:
JESUS SALAZAR, CITY SECRETARY
DocuSigrnd by:
B y : L !! ni8f1A2 1 1:Eyr
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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
PR[NTED NAMESIGNATURE
Chief Financial Officer
TITLE
Finance
DEPARTMENT
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Exhibit A
Denton Community Market
Market Days
Budget 2024
Advertising
Salaries (DCM Social Media Manager)
Advertising Media (Print ads and social media)
Internet (Marketwurks, online graphic design)
$ 5,500
$ 15,800
$ 5,000
subtota I $ 26,300
Art
Salaries (Art Coordinator; staff)
Performers (musicians, bands, performance artists, demos)
Site Operations (sound systems all market days)
$ 16,000
$ 13,050
$ 13,050
subtota I $ 42,100
Total Budget $ 68,400
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