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2005-141 ,"'.. ""'om.""'..' & M"""'~"",,"",",""d 0,""",",'",'"""'" """"""",.,""",,OOC ORDINANCE NO. cf{ {)fJ 5 - / t/ / AN ORDINANCE OF THE CITY OF DENTON, TEXAS AMENDING THE FISCAL YEAR 2004-2005 BUDGET AND ANNUAL PROGRAM OF SERVICES OF THE CITY OF DENTON TO ALLOW FOR AN ADJUSTMENT OF SIXTEEN THOUSAND DOLLARS ($16,000); DECLARING AN EMERGENCY; APPROVING THE AMENDMENT OF THE CY 2005 HOTEL TAX FUNDING AGREEMENT WITH THE DENTON CHAMBER OF COMMERCE; PROVIDING FOR PUBLICATION OF THIS ORDINANCE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, pursuant to Ordinance No. 2004-274, the City Council of the City of Denton, Texas approved the Fiscal Year 2005-2006 Budget and Annual Program for Services (the "Budget"); and WHEREAS, for the first year ever, the City Council elected to allocate the majority of Hotel Tax revenues to the Denton Chamber of Commerce, Convention and Visitor Bureau, to be used for the production, publication, and distribution of the Denton Live magazine to promote tourism for a number of local events; and WHEREAS, in taking this unprecedented step, the Council diverted advertising funds which had previously been allocated directly to the individual organizations sponsoring their respective events, such that the success or failure of each of these events depends directly upon the success of the Denton Live publication, with no alternative source of funding for advertising to draw tourism; and WHEREAS, much of the local economy, particularly in travel industries, such as restaurants and lodging, but also in other non-travel businesses which benefit indirectly from tourism, depends directly upon the success of each of these events, and their ability to draw tourists into the community year after year; and WHEREAS, the impact upon the local economy if these tourism-focused events were to fail this year, or even cease to exist, as a consequence of inadequate advertising, could be devastating, causing losses of revenue in the private sector and the public sector as well, such that hotel occupancy and sales tax receipts could plummet, and revenues from ad valorem taxes might begin to reflect the reduced property value of a community recently deprived of local artistic and cultural events; and WHEREAS, since the Budget was adopted, the Convention and Visitor Bureau of the Denton Chamber of Commercc reports that it needs an additional sixteen thousand dollars ($16,000) for distribution of the Denton Live publication; and WHEREAS, surplus receipts to date from hotel occupancy taxes alone could satisfy this need, thereby avoiding the risk of economic calamity; and WHEREAS, as required by Section 8.08 of the Denton City Charter, the City Council finds that the potential and irreversible consequences of this funding shortfall for the distribution of this publication creates a grave public necessity, requiring emergency expenditures to meet unusual and unforeseen conditions associated with this previously untried fonTI of advertising, which could not by diligent thought and attention be included in the Budget, such that a budget amendment is both necessary and appropriate; and WHEREAS, the Council finds that this budget amendment also serves an important municipal purpose already contemplated as an eligible item for expenditure in the current Budget, consistent with §102.010 of the Texas Local Government Code; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the findings set forth in the above preamble to this ordinance are true and correct, and are hereby adopted. SECTION 2. That the Budget is hereby amended by the City Council to allow sixteen thousand dollars ($16,000) in previously unallocated surplus hotel occupancy tax receipts for fiscal year 2004-05 to be reallocated to the Denton Chamber of Commerce Convention and Visitor Bureau, for the purpose of supplementing the distribution of the Denton Live magazine, to advertise local artistic and cultural events for the purpose of promoting tourism. SECTION 3. That this ordinance shall be filed with the City Secretary, who is directed to attach a copy of this ordinance to the Budget and cause this amendment to be published once in the Denton Record-Chronicle. SECTION 4. That this ordinance was approved by at least five members of the City Council, as required by Section 8.08 of the City Charter. SECTION 5. That the revised CY2005 hotel tax funding agreement with the Denton Chamber of Commerce is hereby approved, and the Mayor or City Manager are hereby authorized to execute this revised agreement, or such othcr instruments as may be approved by the City Attorney, to effect the purposes of this ordinance. SECTION 6 That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the J. L/-fIJ day of VlZMf ,2005. ë~âoe( EULINE BROCK, MAYOR Page 2 ATTEST: JENNIFER WALTERS, CITY SECRETARY BY~~t \JG 21-. \.,J APPROVED AS TO LEGAL FORM: EDWIN SNYDER;- INTERIM CITYATTORNEY {~~ ~: ~~ Page 3 SECOND REVISED AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER OF COMMERCE (CONVENTION & VISITOR BUREAU) (CY- 2005) 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's 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%); and WHEREAS, TEX. TAX CODE §351.10l(a) authorizes CITY to use revenue ITom 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 perfonTI 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 ITom the municipal hotel occupancy tax; WHEREAS, the parties agree that this revised agreement shall supersede the previous CY2005 agreement, for the purpose of providing additional funding to advertise eligible events; NOW, THEREFORE, in consideration of the perfonTIance of the mutual covenants and promises contained herein, CITY and BUREAU agree and contract as follows: 1. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be perfonTIed 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"). 1.2 Amount of Payments. (a) meanmgs: As used in this Agreement, the following tenTIS shall have the following specific (i) The tern1 "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 tenTI "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 tenTI "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 (I) 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 ttom taxpayers; and (2) court costs and other expenses incurred in litigation against or auditing of such taxpayers. (iv) The tenTI "contract quarter" shall refer to any quarter of the calendar year in which this A¡reement is in force. Contract quarters will end on March 31", June 30th, September 30' , and December 31 5t of each contract year. (b) In return for satisfactory perfonTIance 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 Forty-Six and Seventy Two One Hundredths percent (46.72%) of the annual base payment amount or the fixed contract amount of Four Hundred Thirty-two Thousand Two Hundred and Eighty-Three Dollars ($432,283). 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 46.72% 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. 1.3 Dates of Payments. (a) The tenTI "quarterly payments" shall mean payments by CITY to BUREAU of those amounts specified in '11.2, above, as detenTIined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th 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 unreasonably be withheld. CVB CY200S HOT Fund Contract (Second Revised) -- Page 2 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. (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 detenTIines that BUREAU's expenditures deviate materially from their approved budget. 11. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration ofthe 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 st of that year shall be refunded to CITY within sixty (60) days. 2.2 Administrative Costs. The hotel tax funds received from CITY by BUREAU 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), only if they are directly attributable to work on programs which promote tourism and the hotel and convention industry, and which also promote at least one of the six statutory purposes enumerated within TEX. TAX CODE §351.10I(a). 2.3 Specific Restrictions on Use of Funds. (a) BUREAU agrees to demonstrate strict compliance with the record keeping and apportionment limitations imposed 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 '1'12.1 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 oflocal tourism and the convention and hotel industry or the perfonTIance of the person's job in an efficient and professional manner. III. RECORD KEEPING AND REPORTING REQUIREMENTS 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 in which the hotel tax funds shall be used by BUREAu. This budget shall specifically identify proposed expenditures of hotel tax funds by BUREAu. In other words, CITY should be able to audit specifically where the funds in the separate account relating to hotel tax funds will be expended. CITY shall not pay to BUREAU any hotel tax revenues as set forth in Section I of this CVB CY2005 HOT Fund Contract (Second Revised) -- Page 3 contract during any fiscal year of this Agreement unless a budget for such respective fiscal 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 tenTIination of this Agreement as stated in paragraph 4.2. (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. 3.2 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. 3.3 Financial Records. BUREAU shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by BUREAu. 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 and attorney's 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 InfonTIation Act, TEX. GOy'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 fumish to CITY: (I) 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 fonTI 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 infonTIation relating to the activities perfonTIed under this Agreement. 3.5 Notice of Meetings. BUREAU shall give the City Manager of CITY 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 TERMINA nON 4.1 Term. The tenTI of this Agreement shall commence on January I, 2005 and tenTIinate at midnight on January 31, 2006. However, the program period shall commence on January 1, 2005 and tenTIinate at midnight on Dccember 31, 2005. 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 CVB CY2005 HOT Fund Contract (Second Revised) -- Page 4 funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon tenTIination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be tenTIinated 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 BUREAU for any contractual obligations of BUREAU undertaken by BUREAU in satisfactory perfonTIance of those activities specified in '11'112.1 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 perfonTIance of those services contemplated in '11'112.1 and 2.2 above, and further cOllditioned upon such contractual obligations having a tenTI not exceeding the full tenTI of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse BUREAU or to assume the perfonTIance 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 tenTIination pursuant to '14.2(a), BUREAU will provide CITY: 1) Within 10 business days from the tenTIination notification, a short-tenTI budget of probable expenditures for the remaining 60 day period between tenTIination notification and contract tenTIination. This budget will be presented to Council for approval within 10 business days after receipt by CITY. If fonTIal 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 tenTIination. BUREAU will be obligated to return any unused funds or funds detenTIined to be used improperly. Any use of remaining funds by BUREAU after notification of tenTIination is conditioned upon such contractual obligations having been incurred and entered into in the good faith perfonTIance 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 tenTI of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically tenTIinate upon the occurrence of any of the following events: (a) The tenTIination of the legal existence of BUREAU; (b) The insolvency of BUREAU, the filing ofa 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 tenTIS 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 party; or CVil CY2005 HOT Fund Contract (Second Revised) -- 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 tenn, 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 detenTIination, either party shall have the right to tenTIinate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation conceming the activities ofthe non-tenTIinating party, and the tenTIinating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this A¡"feement is tenTIinated pursuant to '1'14.3 or 4.4, BUREAU agrees to refund any and all unused funds, or funds detenTIined by CITY to have been used improperly, within 30 days after tenTIination 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, person, or organization for the perfonTIance of those services described in '12.1 above. In the event 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, confonTI to, and be subject to all provisions, tenTIs, 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 ofthe agreed payments and hotel tax fimds. 5.2 Independent Contractor. BUREAU shall operate as an independent contractor as to all services to be perfonTIed under this Agreement and not as an officer, agent, servant, or employee of CITY. BUREAU shall have exclusive control of its operations and perfonTIance of services hereunder, and such persons, entities, or organizations perfonTIing 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 hoid itself out as an agent or official representative of CITY. 5.3 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 OR 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 BUREAU, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. CVB CY2005 HOT Fund Contract (Second Revised) -- Page 6 5.4 Assignment. BUREAU 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 BUREAU City of Denton 215 E. McKinney Denton, TX 76201 Denton Chamber of Commerce Denton Convention & Visitor Bureau Kim Phillips Vice President P.O. Box Drawer P Denton, Texas 76202-1719 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 BUREAU and their respective successors and assigns. 5.7 Application of Laws. All tenTIs, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of thc City of Denton, all ordinances passed pursuant thereto, and all judicial detenTIinations 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 tenTIS and conditions of this Agreement shall prevail notwithstanding any variance in this Agreement from the tenTIS 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 purposc of convenience and do not express or imply any limitation, definition, or extension of the specific tenTIS of the section and paragraph so designated. 5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. CVB CY2005 HOT Fund Contract (Second Revised) -- Page 7 5.12 Insurance. BUREAU shall, at a minimum, provide insurance as follows: $500,000 Commercial General Liability Statutory Workers' Compensation ($100,000/$500,000/$100,000) $500,000 Business Automobile Liability on vehicles and Employers' Liability any owned, non-owned or hired 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 CITY. EXECUTED this ~t/i~ay of 1 ~ ,2005. THE CITY OF DENTON, TEXAS By: ¿~to~ EULlNE BROCK, MAYOR ~B .~T~::~ ~WlN SNYD~R, ~ INTERIM CITY ATT Y .(L) ATTEST: APPROVED AS TO LEGAL FORM: By: Secretary By: CYB CY2005 HOT Fund Contract (Second Revised) -- Page 8 . Denton Chamber of Commerce Convention and Visitor Bureau Advertising Print Advertising Convention Advertising Tourism Promotion Material Brochures Travel Shows Tourism Services Special Projects "Event" Magazine "Event" Magazine Distribution "Event" Magazine Printing Administration Administration Salaries Retirement Car Allowance. Accounting Salary Payroll Taxes Health Insurance Liability Insurance Travel & Training Computer Equipment Copy Machine Warehouse Storage Destop Copier Lease Office Supplies Telephone Memberships Printing Postage Office Rent SPORTS ADVERTISING Convention & Trade Shows SPORTS ADMINISTRATION Sales Manager Salary Car Allowance Health Insurance Payroll Taxes Postage Travel & Training Memberships Printing $ 37,350 2,500 5,000 10,000 2,500 11,000 2,000 80,000 6,000 16,000 $ 172,350 $ 106,518 2,800 5,500 5,603 15,000 11,800 800 5,000 6,000 500 700 750 1,500 7,500 2,100 1,000 3,500 14,055 $ 190,626 $ 7,500 $ 44,350 1,800 6,157 3,000 500 4,000 1,000 1,000 $ 61,807 Total Budget $ 432,283 Exhibit A