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2008-238sAour documents\ordinances\08\hot funds\black chamber ordinance.doc ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON BLACK CHAMBER OF COMMERCE 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 Black Chamber of Commerce 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 .2~ day of 2008. ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ;Y AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON BLACK CHAMBER OF COMMERCE (PY2009) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAR REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY"), and the Denton Black Chamber of Commerce, a legal entity existing under the laws of the State of Texas (the "CHAMBER'): 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 (70/o); 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, CHAMBER is well equipped to perform those activities; and WHEREAS, TEx. TAX CODE §351.101(c) authorizes CITY to delegate by contract with CHAMBER, 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 CHAMBER agree and contract as follows: L HOTEL TAX REVENUE PAYMENT 11 Consideration. For and in consideration of the activities to be performed by CHAMBER under this Agreement, CITY agrees to pay to CHAMBER a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to CHAMBER, sometimes herein referred to as the "agreed payments" or "hotel tax funds'). 1.2 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. Black Chamber HOT Funding PY2009 - 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) attomey 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 31", June 30`h, 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 CHAMBER an amount of money in each contract year equal to the lesser amount of One and Twenty Eight One Hundredths percent (1.28%) of the annual base payment amount or the fixed contract amount of Eighteen Thousand Dollars ($18,000). 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 1.28% 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 CHAMBER 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 25h 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 firture funding is solely the responsibility of CHAMBER (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. Black Chamber HOT Funding PY2009 - Page 2 (c) CITY may withhold further allocations if CITY determines that CHAMBER'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 CHAMBER of the agreed payments of hotel tax fiords specified above, CHAMBER agrees to use such hotel tax fiords 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 Costs. The hotel tax funds received from CITY by CHAMBER 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). 2.3 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of CHAMBER for which hotel tax funds may be used shall not exceed that portion of CHAMBER's administrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manner. M. RECORDICEEPING AND REPORTING REQ S 3.1 Budget (a) CHAMBER 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 CHAMBER funded by hotel tax revenues. This budget shall specifically identify proposed expenditures of hotel tax funds by CHAMBER 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 fiords. CITY shall not pay to CHAMBER 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. (b) CHAMBER acknowledges that the approval of such budget by the Denton City Council creates a fiduciary duty in CHAMBER with respect to the hotel tax funds paid by CITY to CHAMBER under this Agreement. CHAMBER shall expend hotel tax fiords only in the manner Black Chamber HOT Funding PY2009 - Page 3 and for the purposes specified in this Agreement, TEx. TAX CODE §351.101(a), and in the budget as approved by CITY. 3.2 Separate Accounts. CHAMBER shall maintain any hotel tax funds paid to CHAMBER 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. 33 financial Records. CHAMBER shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by CHAMBER. These funds 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, CHAMBER shall make such financial records available for inspection and review by the party making the request. CHAMBER 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 hotel tax fiords, and within thirty days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, CHAMBER 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), and (3) a copy of all financial records (e.g., front and back copies of cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. CHAMBER 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. CHAMBER shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of CHAMBER's Board of Directors, as well as any other meeting of any constituency of CHAMBER, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMWATION 4.1 Term. The term of this Agreement shall commence on January 1, 2009 and terminate at midnight on January 31, 2010. However, the program period shall commence on January. 1, 2009 and terminate at midnight on December 31, 2009. 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. 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. Black Chamber HOT Funding PY2009 - Page 4 (b) In the event this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse CHAMBER for any contractual obligations of CHAMBER undertaken by CHAMBER in satisfactory performance of those activities specified in 112.1 and 2.2 above and that were approved by the Council through the budget, as noted in 13.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in NN2.1 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 CHAMBER or to assume the performance of any contractual obligations of CHAMBER for or under any contract entered into by CHAMBER as contemplated herein shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to 14.2(a), CHAMBER will provide CITY: 1) Within 10 business 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 the 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. CHAMBER will be obligated to return any unused fimds or funds determined to be used improperly. Any use of remaining funds by CHAMBER 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 CHAMBER; (b) The insolvency of CHAMBER, the filing of a petition in. bankruptcy, either voluntarily or involuntarily, or an assignment by CHAMBER 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 CHAMBER 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 CHAMBER 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 Black Chamber HOT Finding PY2009 - Page 5 CITY CHAMBER City Manager Denton Black Chamber of Commerce City of Denton John Baines 215 E. McKinney P.O. Box 51026 Denton, TX 76201 Denton, Texas 76206 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 CHAMBER 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 the 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 is 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 Severabr7ity. 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. CHAMBER 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 ($100,0001$500,000/$100,000), and 3. $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. Black Chamber HOT Funding PY2009 - Page 7 s_t EXECUTED this 2/2 day of (1G 2008. ATTEST: By: THE CITY OF DENTON, TEXAS B CJ/ GEORGE . CAMPBELL, CITY MANAGER By: Secretary AS TO LEGAL FORM: Black Chamber HOT Funding PY2009 - Page 8 Exhibit A Denton Black Chamber of Commerce Denton Blues Fest 2009 Contract Applicant PY2009 Budget ADVERTISING Brochures/Printing Radio Newspaper $ 10,000 3,000 3,000 $ 16,000 ART Artists $ 2000 2,000 Total Request $ 18,000