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2008-241sAour documents\ordinances\08\hot funds\denton county ordinance.doc ORDINANCE NO. 2DVS 2 1 AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN INTERLOCAL AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE IN SUPPORT OF THE COURTHOUSE-ON-THE-SQUARE, THE BAYLESS-SELBY HOUSE, AFRICAN AMERICAN, OLD NO. 14 FIRE HOUSE, ELM RIDGE CHURCH, WELCOME CENTER AND OUTHOUSE MUSEUMS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Tex. Tax Code §351.101(a) authorizes the City of Denton, Texas 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 to visit preserved historic sites and museums; and WHEREAS, the County of Denton, Texas is well equipped to perform those activities by its operation of the Courthouse on the Square, the Bayless-Selby House, the African American, the Old No. 14 Fire House, the Elm Ridge Church, the Welcome Center and the Outhouse Museums; and WHEREAS, Tex. Tax Code §351.101(c) authorizes the City of Denton, Texas to delegate by contract with the County of Denton, Texas, as a governmental entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; and WHEREAS, both the City of Denton, Texas and the County of Denton, Texas have a secondary source of authority to enter into an interlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as: the agreement is authorized by both governmental bodies; the agreement states the purpose, terms, rights, and duties of the contracting parties; the consideration is being paid by City of Denton, Texas out of current revenues; the compensation is fair; and the services to be performed are "museum services" authorized under §791.003(3)(F) of the Texas Government Code, which each party is authorized to perform individually; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an interlocal agreement between the City of Denton and Denton County for the payment and use of hotel tax revenue in support of the Courthouse on the Square, the Bayless-Selby House, the African American, the Old No. 14 Fire House, the Elm Ridge Church, the Welcome Center and the Outhouse Museums, 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. S~ PASSED AND APPROVED this the 21'd ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: JOHN M. KNIGHT, INTERIM CITY ATTORNEY of 4:~ah&- '2008. A. YOR Page 2 AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY, TEXAS (COURTHOUSE ON THE SQUARE, THE BAYLESS-SELBY HOUSE, AFRICAN AMERICAN, OLD NO. 14 FIRE HOUSE, ELM RIDGE CHURCH, WELCOME CENTER AND OUTHOUSE MUSEUMS) (PY2009) 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 County of Denton, Texas, a governmental entity existing under the laws of the State of Texas, contracting on behalf of its Courthouse-on-the-Square, African American, Bayless- Selby House, Old No. 14 Fire house, Elm Ridge Church, Welcome Center and Outhouse Museums (collectively, the "MUSEUMS"): WHEREAS, TEx. TAx CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%o) 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, )Ex. 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; as well as to engage in historical restoration and preservation projects and activities and WHEREAS, TEx. Tax CODE §351.101(c) authorizes CITY to delegate by contract with MUSEUMS, as a governmental entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; and WHEREAS, MUSEUMS are well equipped to perform those activities; and WHEREAS, both CITY and MUSEUMS have a secondary source of authority to enter into this Agreement as an interlocal cooperation agreement, pursuant to Chapter 791 of the Texas Government Code, as: the Agreement is authorized by both govemmental- bodies; the Agreement states the purpose, terns, rights, and duties of the contracting parties; the consideration is being paid by CITY out of current revenues; the compensation is fair, and the services to be performed are "museum services" authorized under §791.003(3)(F) of the Texas Government Code, which each party is authorized to perform individually; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and MUSEUMS agree and contract as follows: I. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by MUSEUMS under this Agreement, CITY agrees to pay to MUSEUMS a portion of the hotel tax revenue HOT Funds PY2009 Denton County Museums Page 1 Sep 18, 2008 11:20 AM Denton County p. 144 of 308 collected by CITY at the rates and in the manner specified herein (such payments by CITY to MUSEUMS 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. (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 31", June 3e, September 30 , and December 31s` 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 MUSEUMS an amount of money in each contract year equal to the lesser amount of Seven and Fifty Seven One Hundredths percent (7.57%) of the annual base payment amount, or the fixed contract amount of One Hundred Six Thousand Five Hundred and Fifty Dollars ($166,550). 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 7.57% 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. HOT Funds PY2009 Denton County Museums Page 2 Sep 18, 2008 11:20 AM Denton County p. 145 of 308 13 Dates of Payments. (a) The term "quarterly payments" shall mean payments by CITY to MUSEUMS 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`h 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 MUSEUMS. (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 MUSEUMS' 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 MUSEUMS of the agreed payments of hotel tax funds specified above, MUSEUMS agree 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 well as to engage in historical restoration and preservation projects and activities to encourage tourists and convention delegates to visit preserved historic sites and museums, as authorized by T )DC. TAX CODE §351.101(a)(3) and (ax5). 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 MUSEUMS may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by T)Ex. TAx CODE §351.101(f), but only if each such expenditure is directly attributable to work on programs, which promote tourism and the hotel and convention industry, and promotes at least one of the six statutory purposes enumerated within TEX. TAx CODE §351.101(a)-. 23 Sic Restrictions on Use of Funds. (a) MUSEUMS agree to demonstrate strict compliancewith the record keeping and apportionment limitations imposed by TEx. TAx CODE §351.101(f) -and §351.108 (c) and (d). MUSEUMS 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 22 above. HOT Funds PY2009 Denton County Museums Page 3 Sep 18, 2008 11:20 AM Denton County p. 146 of 308 (b) Hotel tax fiords 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 and the performance of the person's job in an efficient and professional manner. lE RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget (a) MUSEUMS 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 MUSEUMS in which the hotel tax funds shall be used by MUSEUMS. This budget shall specifically identify proposed expenditures of hotel tax fiords by MUSEUMS. 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 MUSEUMS 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 fiords. 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) MUSEUMS acknowledge that the approval of such budget by the Denton City Council creates a fiduciary duty in MUSEUMS with respect to the hotel tax funds paid by CITY to MUSEUMS under this Agreement. MUSEUMS 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. 3.2 Separate Accounts. MUSEUMS shall maintain any hotel tax finds paid to MUSEUMS 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 Mnancial Records. MUSEUMS shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by MUSEUMS. 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 designate, or any other person, MUSEUMS shall make such financial records available for inspection and review by the party making the request. MUSEUMS understand and accept 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. 3A Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the end of every contract quarter, MUSEUMS 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 Rands 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), HOT Funds PY2009 Denton County Museums Page 4 Sep 18, 2008 11:20 AM Denton County p. 147 of 308 MUSEUMS shall prepare and deliver all reports in a form and manner approved by the City Manager or designate. MUSEUMS 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. MUSEUMS shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of MUSEUMS' Boards of Directors, as well as any other meeting of any constituency of MUSEUMS, 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, 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. (b) In the event. this contract is terminated by either party pursuant to Section 4.2(a), CITY agrees to reimburse MUSEUMS for any contractual obligations of MUSEUMS undertaken by MUSEUMS in satisfactory performance of those activities specified in JT2.1 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 I¶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 MUSEUMS, or to assume the performance of any contractual obligations of MUSEUMS, for or under any contract entered into by MUSEUMS as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to ¶4.2(a), MUSEUMS 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 CITY; 3) Within 5 business days of a request from CITY, a listing of expenditures that have occurred since the last HOT Funds PY2009 Denton County Museums Page 5 Sep 18, 2008 11:20 AM Denton County p. 148 of 308 required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. MUSEUMS will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by MUSEUMS 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 MUSEUMS; (b) The insolvency of MUSEUMS, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by MUSEUMS 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 MUSEUMS 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 MUSEUMS 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 ¶¶4.3 or 4.4, MUSEUMS agree 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. Noticing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by MUSEUMS with another private entity, person, or organization for the performance of those services described in 12.1 above. In the event that MUSEUMS enter into any arrangement, contractual or otherwise, with such other entity, person or organization, MUSEUMS 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. HOT Funds PY2009 Denton County Museums Page 6 Sep 18, 2008 11:20 AM Denton County p, 149 of 308 5.2 Independent Contractor. MUSEUMS 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. MUSEUMS shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and MUSEUMS shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. MUSEUMS shall not be considered a partner or joint venturer with CITY, nor shall MUSEUMS be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 53 Indemnification. TO THE EXTENT AUTHORIZED BY LAW, MUSEUMS AGREE 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 MUSEUMS 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 MUSEUM, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. MUSEUMS 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 City Manager City of Denton 215 E. McKinney Denton, TX 76201 MUSEUMS Denton County Museum Georgia Caraway, Director 110 W. Hickory St. Denton, Texas 76201 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 MUSEUMS and their respective successors and assigns. 5.7 Application of Laws. All tenors, 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. HOT Funds PY2009 Denton County Museums Page 7 Sep 18, 2008 11:20 AM Denton County p. 150 of 308 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 HendiingL 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 remammg portions despite any such invalidity. 5.12 Insurance, MUSEUMS shall provide insurance as follows: 1. Statutory Workers' Compensation and Employers' Liability ($100,000/$500,000/$100,000). Proof of coverage shall be submitted prior to any payment by CITY. 5.13 Waiver of Immunity for Suit to Enforce. By executing and authorizing the execution of this contract, DENTON COUNTY, TEXAS expressly waives immunity from any suit brought by CITY for the enforcement of the provisions contained herein, and further expressly waives. the presentment required of Tex. Loc. Gov't Code sec. 89.004 as a prerequisite to such suit. EXECUTED this sdday of , 2008. THE CITY OF DENTON, TEXAS By: ORG C. CAMPBELL, CITY MANAGER HOT Funds PY2009 Denton County Museums Page 8 Sep 18, 2008 11:20 AM Denton County p. 151 of 308 ATTEST: By: 14A (L ~ I)a-truo-.~ R TERS, C SEC ARY APPROVED S T _ v, : A O cal APPROVED AS TO LEGAL FORM: INTERIM CI ATTORNEY DENT COUNTY, TEXAS 0 /j 0"uwnu,,//~,f By: Q UR7 04cv COUNTY JUDc By: HOT Funds PY2009 Denton County Museums Page 9 Sep 18, 2008 11:20 AM Denton County p. 152 of 308 Exhibit A Denton County Courthouse on the Square, African American and Bayless-Selby House Museums, Welcome Center, Elm Ridge United Methodist Church and Outhouse Contract Applicant PY2009 Budget ADVERTISING Block Advertising Brochures Magazines and Internet $ 2,400 3,550 24,000 $ 29,950 HISTORICAL Furnishings, Equipment and Supplies $ 10,000 Restoration/Repairs and Maintenance to Facilities 21,000 Archival Reference Books 500 Contract Labor 15,000 Office Supplies 500 Historical Park Manager - Partial Salary 29,000 Membership Dues 600 $ 76,600 Total Request $ 106,550