2007-221s \our documents\erdinances\07Viot\holiday festival orddoc
ORDINANCE NO. ~~~~ oSoS ~
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON HOLIDAY
FESTIVAL ASSOCIATION, INC. 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 Holiday Festival Association, 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 became effective immediately upon its passage and
approval.
PASSED AND APPROVED this the ps,j ~/ day of~~Q,/T/~ir~ , 2007.
i
PERRY cNEILL, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
J
APPROVED AS TO LEGAL FORM:
AGREEMENT BETWEEN THE CITY OF DENTON AND
DENTON HOLIDAY FESTIVAL ASSOCIATION, INC. (PY2008)
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 Holiday Festival Association, Inc., a legal entity incorporated under
the laws of the SCate of Texas (the "ASSOCIATION"):
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, TFx. Tax Cooe §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, ASSOCIATION is well equipped to perform those activities; and
WHEREAS, TFx. Tnx CODE §351.101(c) authorizes CITY to delegate by contract with
ASSOCIATION, 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 ASSOCIATION agree and contract as follows:
L HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by
ASSOCIATION under this Agreement, CITY agrees to pay to ASSOCIATION a portion of the
hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments
by CITY to ASSOCIATION 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
Holiday Festival HOT Funding PY2008 -Page I
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 C[TY during fiscal year 2005, 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 yeaz in
which this Agreement is in force. Contract quarters will end on March 31s`, 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 ASSOCIATION an amount of money in each
contract year equal to the lesser amount of Fifty-Nine One Hundredths percent (0.59%) of the
annual base payment amount, or the fixed contract amount of Eight Thousand Three Hundred
Dollars ($8,300). This amount will be paid in one lump sum on or before July 25, 2007.
1.3 Dates of Payments.
(a) The term "payments" shall mean, payments by CITY to ASSOCIATION of those
amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected.
(b) Each quarterly payment shall be paid upon receipt of the required reports and after the
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.
i
(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
ASSOCIATION.
(b) It is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of CITY.
Holiday Festival H01` Funding PY2008 -Page 2
(c) CITY may withhold further allocations if CITY determines that ASSOCIATION'S
expenditures deviate materially from their approved budget.
IL USE OF HOTEL TAX REVENUE
2.l Use of Funds. For and in consideration of the payment by CITY to ASSOCIATION of the
agreed payments of hotel tax funds specified above, ASSOCIATION 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 31s` of
that year shall be refunded to CITY within sixty (60) days.
2.2 Administrative Costs. The hotel tax funds received from CITY by ASSOCLATION may
be spent for day-to-day operations, office supplies, salaries, travel expenses, and other
administrative costs allowed by TEX. TAX CODE 351.101(f), and 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).
2.3 Specific Restrictions on Use of Funds.
(a) That portion of total administrative costs of ASSOCIATION for which hotel tax
funds may be used shall not exceed that portion of ASSOCIATION'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 and the performance of the person's job in an efficient and
professional manner.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) ASSOCIATION 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 ASSOCIATION in which the hotel tax funds shall be used by ASSOCIATION. This
budget shall specifically identify proposed expenditures of hotel tax funds by ASSOCIATION. 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. CITY shall not pay to
ASSOCIATION 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 authorizirig the expenditure of funds. Failure to submit an
annual budget maybe considered a breach of contract, and if not remedied is considered grounds for
termination of this Agreement as stated in paragraph 4.2.
Holiday Festival HOT Funding PY2008 -Page 3
(b) ASSOCIATION acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in ASSOCIATION with respect to the hotel tax funds paid by
CITY [o ASSOCIATION under this Agreement. ASSOCIATION 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. ASSOCIATION shall maintain any hotel tax funds paid to
ASSOCIATION 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. ASSOCIATION shall maintain complete and accurate financial
records of each expenditure of the hotel tax funds made by ASSOCIATION. 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, ASSOCIATION shall make such financial records available for inspection and review by
the party making the request. ASSOCIATION 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 Co~F, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the
end of every quarter thereafter, until all funds have been expended and reported to CITY,
ASSOCIATION 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
TPx. 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). Both the financial and
expenditure reports will be in a form either determined or approved by the City Manager or
designate. ASSOCIATION 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. ASSOCIATION shall give the City Manager of CITY, or his
designate, reasonable advance written notice of the time and place of all meetings of
ASSOCTATION's Board of Directors, as well as any other meeting of any constituency of
ASSOCIATION, at which this Agreement or any matter subject to this Agreement shall be
considered.
IV. TERM AND TERMINATION
4.l Term. The term of this Agreement shall commence on January 1, 2008, and terminate at
midnight on January 31, 2009. However, the program period shall commence on January 1, 2008
and terminate at midnight on December 31, 2008. 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.
Holiday Festival HOT Funding PY2008 -Page 4
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4.2 Termination Without Cause.
(a) This Agreement maybe terminated by either party, with or without cause, by giving
the other party sixty (60) days advance written notice.
(b) [n the event this contract is terminated by either party pursuant to Section 4.2(a),
CITY agrees to reimburse ASSOCIATION for any contractual obligations of ASSOCIATION
undertaken by ASSOCIATION 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 ASSOCIATION, or to assume the performance of any contractual
obligations of ASSOCIATION, for or under any contract entered into by ASSOCIATION as
contemplated herein, shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), ASSOCIATION will provide CITY:
1) Within 10 business days from the termination notification, ashort-teen 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 C[TY. 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 S
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
ternlination. ASSOCIATION will be obligated to return any unused funds, or funds determined
to be used improperly. Any use of remaining funds by ASSOCIATION 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 teen
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 ASSOCIATION;
(b) The insolvency of ASSOCIATION, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by, ASSOCIATION 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 ASSOCIATION for more than thirty (30) days alter written notice of such breach is
given to the breaching party by the other party; or
Holiday Festival HOT Funding PY2008 -Page S
(d) The failure of ASSOCIATION 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, ASSOCIATION
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 ASSOCIATION with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
ASSOCIATION enters into any arrangement, contractual or otherwise, with such other entity,
person or organization, ASSOCIATION 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 TFx. Tnx CO~e ch. 351, including reporting requirements, separate funds maintenance, and
limitations and prohibitions pertaining to expenditure ofthe agreed payments and hotel tax funds.
5.2 Independent Contractor. ASSOCIATION 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. ASSOCIATION shall have exclusive control of its operations and performance of
services hereunder, and such persons, entities, or organizations performing the same, and
ASSOCIATION shall be solely responsible for the acts and omissions of its directors, officers,
employees, agents, and subcontractors. ASSOCIATION shall not be considered a partner or joint
venturer with CITY, nor shall ASSOCIATION'be considered, nor in any manner hold itself out as,
an agent or official representative of CITY.
i
Additionally, no employee, volunteer or contractor of the ASSOCIATION shall be considered or
deemed to be an employee of the CITY. The ASSOCIATION expressly understands,
acknowledges and agrees that employees, volunteers or contractors of the ASSOCIATION are not
entitled to any benefits from the CITY including but not limited to health or life insurance, workers'
compensation benefits, or unemployment benefits, any claim to such benefit or compensation being
expressly waived.
5.3 IndemniTication. ASSOCIATION 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 ASSOCIATION OF THOSE
Holiday Festival HO"B Funding PY2008 -Page 6
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 ASSOCIATION, ITS OFFICERS,
EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. ASSOCIATION 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 byhand-delivery, addressed to the respective parties as follows:
CITY ASSOCIATION
City Manager Julie Glover
City of Denton Denton Holiday Festival Foundation, Inc.
215 E. McKinney P.O. Box 2765
Denton, TX 76201 Denton, Texas 76202-2765
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 ASSOCIATION 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 alljudicial 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 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
Holiday Festival HOT Funding PY2008 -Page 7
Agreement, and the parties hereby declare they would have enacted such remaining portions despite
any such invalidity.
5.12 Insurance. ASSOCIATION shall 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
($100,000/$500,000/$100,000) OR an Occupational Accident Insurance program if
approved by the City's Risk Manager
3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned
property where alcohol will be provided or served
EXECUTED this o~J~~day of tt~n~ia,~,r~ , 2007.
ATTEST:
B
ATTEST:
By:
Secretary
THE CITY OF DENTON, TEXAS
By: ~ '-~
GEORGE .CAMPBELL, CITY MANAGER
APPROVED AS TO LEGAL FORM:
EDWIN M. SNYD.E~, CITY ATTORNEY
DENTON ~ HOLIDAY FESTIVAL
ASSOCIATION, INC.
ByL-OI
airman/Director
APPROVED AS TO LEGAL FORM:
By:
Holiday Festival HOT Funding PY2008 -Page 8
Exhibit A
Denton Holiday Festival Association, Inc.
Denton Holiday Lighting Festival
Advertising
Newspapers
Magazines, Guides & Calendar
$ 3,500
4,800
$ 8,300
Total $ 8,300