2009-267\\codad\departmentsUegahour documents\ordinances\Mhot fund\hot f inds\chamber ordinance.doc
ORDINANCE NO. -2j67
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER OF
COMMERCE (CONVENTION AND VISITOR BUREAU) FOR THE PAYMENT AND USE
OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager, or his designee, is hereby authorized to execute an
agreement between the City of Denton and the Denton Chamber of Commerce (Convention and
Visitor Bureau) 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.
PASSED AND APPROVED this the day of '2009.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
Pr La 1j),L)-m-4
y 0
APPROVED AS TO LEGAL FORM:
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER
OF COMMERCE (CONVENTION & VISITOR BUREAU) (PY 2010) 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 Chamber of Commerce (Convention & Visitor Bureau), a non-profit
corporation incorporated under the laws of the State of Texas (the `BUREAU"):
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°/a); 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. BUREAU is well equipped to perform those activities through its Denton
Convention and Visitor's Bureau; and
WHEREAS, TEx. TAx CoDE §351.101(c) authorizes CITY to delegate by contract with
BUREAU, 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 BUREAU agree and contract as follows:
L HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by BUREAU
under this Agreement, CITY agrees to pay to BUREAU a portion of the hotel tax revenue collected
by CITY at the rates and in the manner specified herein (such payments by CITY to BUREAU
sometimes herein referred to as the "agreed payments" or "hotel tax funds").
11 Amount of Payments.
(a) As used in this Agreement, the following terms shall have the following specific
meanings:
(i) The term "hotel tax revenue" shall mean the gross monies collected and
received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of
the price paid for a room in a hotel, pursuant to Texas Tax Code §351.002 and City
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
CVB PY2010 HOT Fund Contract - Page 1
(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 3I 5 June 30"',
September 30 , and December 31" 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 BUREAU an amount of money in each contract
year equal to the lesser amount of Fifty and Eight Hundredths percent (50.08%). of the annual
base payment amount or the fixed contract amount of Six Hundred Ninety Two Thousand Three
Hundred Eighty Dollars ($692,380). This amount will be divided into quarterly payments equal
to 25% 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
fourth quarterly payment will represent 25% of the fixed contract amount or the unpaid
remainder of 50.08% of the base payment amount, whichever is less. Each quarterly payment is
subject to receipt of unused funds from the prior contract period and the receipt of the required
quarterly reports.
13 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by CITY to BUREAU of those
amounts specified in 11.2, 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 of the contract quarter. If the 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 BUREAU.
CVB PY2010 HOT Fund Contract -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 withhold further allocations if CITY determines that BUREAU'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 BUREAU of the agreed
payments of hotel tax funds specified above, BUREAU 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 as authorized by TEX. Tax CODE
§351.101(a). Funds for any calendar year which are unused by midnight December 31" of that year
shall be refunded to CITY within sixty (60) days.
2.2 Administrative Costa The hotel tax funds received from CITY by BUREAU may be spent
for day-today operations, office supplies, salaries, travel expenses and other administrative costs
allowed by TEx. TAX CODE §351.101(f), but only if 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).
23 Specific Restrictions on Use of Funds.
(a) BUREAU agrees to demonstrate strict compliance with the record keeping and
apportionment limitations unposed by TEx TAX CODE §351.101(f) and §351.108 (c) and (d).
BUREAU shall not utilize hotel tax funds for any expenditure which has not been specifically
documented to satisfy the purposes set forth in ¶¶2.1 and 2.2 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 promotion of local tourism and
the convention and hotel industry or the performance of the person's job in an efficient and
professional manner.
IIL RECORDKEEPING AND REPORTING REQUIREAMM
3.1 Budget
(a) BUREAU 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 such operations of
BUREAU funded by hotel tax revenue. This budget shall specifically identify proposed
expenditures of hotel tax funds by BUREAU In other words, CITY should be able to audit
specifically the purpose of each individual expenditure of hotel tax funds from the separate account
relating to hotel tax funds. CITY shall not pay to BUREAU 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. Failure to submit an annual budget may be considered a breach of contract,
and if not remedied is considered grounds for termination of this Agreement as stated in paragraph
4.2.
CVB PY2010 HOT Fund Contract - Page 3
(b) BUREAU acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in BUREAU with respect to the hotel tax funds paid by CITY to
BUREAU under this Agreement. BUREAU 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.
31 Separate Accounts. BUREAU shall maintain any hotel tax funds paid to BUREAU by
CITY in a separate checking account or with segregated fund accounting, such that any reasonable
person can review the revenue source of any given expenditure. `
33 Financial Records. BUREAU shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by BUREAU. These fimds shall be classified as
restricted funds for audited financial purposes, and may not be used for contracted services,
including, but not limited to, auditing fees and attorney fees. Upon reasonable advance written
request of the Denton City Council, the City Manager or designate, or any other person, BUREAU
shall make such financial records available for inspection and review by the party making the
request. BUREAU understands and accepts that all such financial records, and any other records
relating to this Agreement shall be subject to the Public Information Act, TEX. GOV'T CODE, ch.
552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of the hotel tax funds, and within thirty days after
the end of every contract quarter, BUREAU shall fiunish to CITY: (1) a completed financial report,
(2) a list of the expenditures made or copies of the invoice or receipts with regard to hotel tax funds
pursuant to TEx. TAX CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front
and back cleared checks or bank statements, and other relevant documentation). BUREAU shall
prepare and deliver all reports in a form and: manner approved by the City Manager or designate.
BUREAU 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. BUREAU shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of BUREAU's Board of
Directors, as well as any other meeting of any constituency of BUREAU 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, 2010 and terminate at
midnight on January 31, 2011. However, the program period shall commence on January 1, 2010
and terminate at midnight on December 31, 2010. 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 the Agreement.
CVB PY2010 HOT Fund Contract - Page 4
4.2 Termination Without Cause.
the other) sixty. Agreement may be terminated by either party, with or without cause, by giving
party y (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 BUREAU for any contractual' obligations of BUREAU undertaken by
BUREAU in satisfactory performance of those activities specified in ¶¶2.1 and 2.2 above and
that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is
conditioned upon such contractual obligations having been incurred and entered into in the good
faith performance of those services contemplated in ¶¶2.1 and 2.2 above, and further conditioned
upon such contractual obligations having a term not exceeding the full term of this Agreement.
Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse
BUREAU or to assume the performance of any contractual obligations of BUREAU for or under
any contract entered into by BUREAU as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), BUREAU
Within 10 business will provide CITY: 1}
days from the termination notification, a short-term budget of probable
expenditures for the remaining 60 day period between termination notification and contract
termination. This budget will be presented to Council for approval within 10 business days after
receipt by CITY. If formal approval is not given within 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
30 days, a full accounting of all expenditures not previously audited by CITY; 3) Within 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. BUREAU will be obligated to return any unused fiends or funds determined to be
used improperly. Any use of remaining funds by BUREAU after notification of termination is
conditioned upon such contractual obligations having been incurred and entered into in the good
faith performance of those services contemplated in 2.1 and 2.2 above, and further conditioned
upon such contractual obligations having a term not exceeding the full term of this Agreement.
43 Automatic Termination. This Agreement shall automatically terminate upon ' the
occurrence of any of the following events:
(a) The termination of the legal existence of BUREAU;
(b) The insolvency of BUREAU, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by BUREAU 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 BUREAU for more than thirty (30) days after written notice of such breach is given
to the breaching party by the other parry; or
CVB PY2010 HOT Fund Contract - Page 5
(d) The failure of BUREAU 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
determination, either preserve evidence and issues for judicial
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 ¶¶4.3 or 4.4, BUREAU agrees to
refund any and all unused funds, or funds .determined by CITY to have been used improperly,
within 30 days after termination of this Agreement.
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor
be construed to prohibit, the agreement by BUREAU with another private entity,
organization for the performance of those services described in ¶2.1 above. In the even that
BUREAU enters into any arrangement, contractual or otherwise, with such other entity, person or
organization, BUREAU shall cause such other entity, person, or organization to adhere to, conform
to, and be subject to all provisions, terms, and conditions of this A
ch. 351, includin greement and to TEx. TAx CODE
g reporting requirements, separate funds maintenance, and limitations and
prohibitions pertaining to expenditure of the agreed payments and hotel tax funds.
5.2 Independent Contractor. BUREAU 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. BUREAU shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same and BUREAU shall be
solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. BUREAU shall not be considered a partner or joint venturer with CITY, nor shall
BUREAU be considered nor in any manner hold itself out as an agent or official representative of
CITY.
53 Indemnification. BUREAU 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 BUREAU OF THOSE SERVICES CONTEMPLATED
BY THIS AGREEMENT, INCLUDING ALL SUCH
CLAIMS UPON COMMON, CONSTITUTIONAL OR STATUTOROR CAUSES OF ACTION
Y LAW, R BASED, IN
WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR
ACTS OF BUREAU, ITS OFFICERS, EMPLOYEES AGENTS INTENTIONAL
, SUBCONTRACTORS,
LICENSEES AND
MVITEES.
CVB PY2010 HOT Fund Contract - Page 6
5.4 Assignment. BUREAU shall not assign this A
consent of CITY. greement without first obtaining the written
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
City of Denton
215 E. McKinney
Denton, TX 76201
BUREAU
Denton Chamber of Commerce
Denton Convention & Visitor Bureau
Kim Phillips
P.O. Box 1719
Denton, TX 76202
5.6 Inurement. This Agreement and each provision hereof, and each and eve ri
obligation, and liability set forth herein shall be ght, d
binding upon and inure to the benefit and obligation uty,
of CITY and BUREAU and their re spective successors and assigns.
5.7 Application of Laws. All terms, conditions, and provisions of this Agreement to all applicable federal laws, state laws, the Charter of the City of Denton, all orddinances paste
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 is executed in duplicate originals.
5.10 Headings. The headings and subheadings of the various sections and
paragraphs or
Agreement are inserted merely for the purpose of convenience and do not expresp ply any
limitation, definition, or extension of the specific terms of the section and paragraph so designated.
511 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.
CVB PY2010 HOT Fund Contract - Page 7
5.12 Insurance. BUREAU shall, at a minimum, 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. Statutory Workers' Compensation and Employers' Liability
($100,0005500,0005100,000),
3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned
property where alcohol will be provided or served, and
4. $500,000 Business Automobile Liability on any owned, non-owned or hired
vehicles.
CITY must be named as an additional insured on all policies (except Workers' Compensation) and
proof of coverage shall be sued prior to any payment by CITY.
EXECUTED this a3- day of ~2009.
THE CITY OF DENTON, TEXAS
By:
GEORG C
V . CAMPBELL,
CITY MANAGER
ATTEST: APPROVE O LEGAL
BY I A B .
WSEMETARY LTERS, A
CITY A
ATTEST:
By:
Secretary
DENTON CHM18ER OF COMMERCE
•By: [t
President
APPROVED AS TO LEGAL FORM:
By:
CVB PY2010 HOT Fund Contract - Page 8
Denton Chamber of Commerce
Convention and Visitor Bureau
Program Year 2010 Budget
Exhibit A
Advertising
Print Advertising
$ 43,215
Internet Marketing
28,000
Tourism Promotional Material
10,000
Brochures
12,000
Travel & Trade Shows
6,000
Tourism & PR Services
14,000
Special Projects
2,000
Event Magazine
112,000
Event Magazine Distribution / Circulation
16,000
Advertising General Administration
Salaries and Benefits
$ 152,000
Liability Insurance
750
Travel &Training
9,00d
Memberships / Subscriptions
3,500
Computer Equipment
8,000
Copy Machine
3,800
Office Supplies
7,500
Telephone
13,000
Printing
1,000
Postage
6,500
Office Rent
14,055
Sports Marketing Advertising
Convention / Trade Show $ 14,000
Print Advertising 3 000
r
Sports Marketing Administration
Salary and Benefits $ 73,500
Travel / Training 8,200
Membership & Professional Development 750
Printing 1,500
Postage 1,000
Meeting & Convention Marketing
Print $ 9,000
Sales and Marketing Missions 9,615
Trade Shows / Conferences 8,225
Memberships & Professional Development 2,745
Group Tour Marketing
Printing
Sales and Marketing Missions
Trade Shows / Conferences
Memberships & Professional Development
Meeting/Convention/Group Tour Administration
Salary and Benefits
Travel and Training
Printing
$ 8,350
2,500
7,250
975
$ 74,550
4,400
500
Total Request $ 692,380