2005-278
FILE REFERENCE FORM
2005-278
FILE(S) Date Initials
Amended of Agreement - Ordinance No. 2005-347 1 IllS/OS JR
S:\Our Documents\Ordinanccs\05\HOliHistorical Commission.doc
ORDINANCE NO. 2005- Z 18
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON COUNTY HISTORICAL
COMMISSION, INe. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND
PROVIDING AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the Mayor is hereby authorized to execute an agreement between the
City of Denton and the Denton County Historical Commission 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 II. That this ordinance shall become effective immediately upon its passage
and approvaL
PASSED AND APPROVED this the
c!AotiJ day of ~~
,2005.
~A~
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY: CfdAtt Ilt/M J)lo!JAJ71,' aut
APPROVED AS TO LEGAL FORM:
EDWIN M. SNYDER,nT-Y-AT-'F0R Y
,~'~
/
~Y:
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON COUNTY HISTORICAL COMMISSION, INC., FOR THE PAYMENT
AND USE OF HOTEL TAX REVENUE IN SUPPORT OF THE DENTON COUNTY
HISTORICAL COMMISSION, INC. (PY2006)
THIS AGREEMENT is made between the City of Denton, Texas, a municipal corporation
(the "CITY"), and THE DENTON COUNTY HISTORICAL COMMISSION, INC., a legal
entity incorporated under the laws of the State of Texas (the "DCHC"):
WHEREAS, TEX. TAX CODE 9351.002 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 9351.l01(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, DCHC is well equipped to perform those activities; and
WHEREAS, TEX. TAX CODE !j351.l01(c) authorizes CITY to delegate by contract with
DCHC, 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 DCHC agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by DCHC under
this Agreement, CITY agrees to pay to DCHC a portion of the hotel tax revenue collected by CITY
at the rates and in the manner specified herein (such payments by CITY to DCHC sometimes herein
referred to as the "agreed payments" or "hotel tax funds").
1.2 Anionnt of Payments.
(a) As used in this Agreement, the following terms shall have the following specific
meamngs:
(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
HOT Funds PY2006 Denton County Historical Commission - Page 1
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 Areement is in force. Contract quarters will end on March 31s" June 30'h,
September 30' , and December 31 st 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 DCHC an amount of money in each contract year
equal to the lesser amount of: One and Sixteen One Hundredths percent (1.16%) of the annual
base payment amount, or the fixed contract amount of Twelve Thousand Five Hundred Dollars
($12,500). 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. I 6% 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 term "quarterly payments" shall mean payments by CITY to DCHC 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. I f 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 DCHC.
HOT Funds PY2006 Denton County Historical Commission - Page 2
(b) It is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of CITY.
(c) CITY may withhold further allocations if CITY determines that DCHC 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 DCHC of the agreed
payments of hotel tax funds specified above, DCHC 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 well as activities to encourage tourists
and convention delegates to visit preserved historic sites and museums, as authorized by TEX. TAX
CODE 9351.l01(a)(3) and (a)(5). Funds for any calendar year which are unused by midnight
December 31 sl of that year shall be refunded to CITY within sixty (60) days.
2.2 Administrative Costs. The hotel tax funds received from CITY by DCHC may be spent
for day-to-day operations, office supplies, salaries, travel expenses, and other administrative costs
allowed by TEX. TAX CODE 9351.101(1), 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 935L101(a).
2.3 Specific Restrictions on Use of Funds.
(a) DCHC agrees to demonstrate strict compliance with the record keeping and
apportionment limitations imposed by TEX. TAX CODE 9351.101(1) and 9351.108 (c) and (d).
DCHC shall not utilize hotel tax funds for any expenditure which has not been specifically
documented to satisfy the purposes set forth in "11"112.1 and 2.2 above.
(b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an activity, the primary purpose of which is not directly related to the promotion of local tourism
and the convention and hotel industry and the performance of the person's job in an efficient and
professional manner.
III. RECORD KEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) DCHC 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 ofDCHC
in which the hotel tax funds shall be used by DCHC. This budget shall specifically identify
proposed expenditures of hotel tax funds by DCHC. In other words, CITY should be able to audit
specifically the purpose of each individual expenditure of hotel tax funds in the separate account
relating to hotel tax funds. CITY shall not pay to DCHC 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
HOT Funds PY2006 Denlon Co~nty Historical Commission - Page 3
"-
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) DCHC acknowledges that the approval of such budget by the Denton City Council
creates a fiduciary duty in DCHC with respect to the hotel tax funds paid by CITY to DCHC under
this Agreement DCHC shall expend hotel tax funds only in the manner and for the purposes
specified in this Agreement, TEX. TAX CODE !i35U01(a) and in the budget as approved by CITY.
3.2 Separate Accounts. DCHC shall maintain any hotel tax funds paid to DCHC 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. DCHC shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by DCHC. 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 o~ attorney fees. Upon reasonable advance written
request of the Denton City Council, the City Manager or designate, or any other person, DCHC
shall make such financial records available for inspection and review by the party making the
request DCHC 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. GOy'T CODE, 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 contract quarter, DCHC 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 935 Ll 01 (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), DCHC shall
prepare and deliver all reports in a form and manner approved by the City Manager or designate.
DCHC 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. DCHC shall give the City Manager of CITY, or his designate,
reasonable advance written notice of the time and place of all meetings of DCHC Boards of
Directors, as well as any other meeting of any constituency of DCHC, 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, 2006 and terminate at
midnight on January 31, 2007. However, the program period shall commence on January 1, 2006
and terminate at midnight on December 31, 2006. 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
HOT Funds PY2006 Denlon County Historical Commission - Page 4
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 DCHC for any contractual obligations of DCHC undertaken by
DCHC (or permitted subcontractor) in satisfactory performance 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 performance of those services contemplated in '1'12.1 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 DCHC, or to assume the performance of any contractual obligations of
DCHC, for or under any contract entered into by DCHC as contemplated herein, shall not exceed
662/3% of the current quarterly payment.
(c) Further, upon termination pursuant to '14.2(a), DCHC 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 tennination 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, 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; and, 4) a final accounting of all expenditures and tax funds on the day of
termination. DCHC will be obligated to return any unused funds, or funds determined to be used
improperly. Any use of remaining funds by DCHC 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 tenn not exceeding the full term 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 ofDCHC;
(b) The insolvency of DCHC, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assigrunent by DCHC for the benefit of creditors;
HOT Funds PY2006 Denton Counly Historical Commission - Page 5
(c) The continuation ofa breach of any, of the terms or conditions of this Agreement by any
party 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 DCHC 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, DCHC 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 DCHC with another private entity, person, or
organization for the performance of those services described in ~2.1 above. In the event that DCHC
enters into any arrangement, contractual or otherwise, with such other entity, person or organization,
DCHC 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 ofthe agreed payments and hotel taf funds.
5.2 Independent Contractor. DCHC 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. DCHC shall have exclusive control of it~ operations and performance of services hereunder,
and such persons, entities, or organizations performing the same, and DCHC shall be solely
responsible for the acts and omissions of' its directors, officers, employees, agents, and
subcontractors. DCHC shall not be considered a partner or joint venturer with CITY, nor shall
DCHC be considered, nor in any manner hold itself out as, an agent or official representative of
CITY.
5.3 Indemnification. TO THE EXTENT AUTHORIZED BY LAW, DCHC 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 DCHC OF
THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL
SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON,
HOT Funds PY2006 Denton County Hislorical Commission - Page 6
CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN WHOLE OR IN PART,
UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF DCHC, ITS
OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND
INVITEES.
5.4 Assignment. DCHC 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
DCHC
City Manager
City of Denton
215 E. McKinney
Denton, TX 76201
Denton County Historical Commission, Inc.
ATTN:TomReedy
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 DCHC and their respective successors and assigns.
5.7 Application of Laws. All tenns, 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 detenninations 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 tenns and conditions of this Agreement shall prevail,
notwithstanding any variance in this Agreement from the tenns 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 tenns ofthe 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.
HOT Funds PY2006 Denton County Historical Commission - Page 7
5.12 Insurance. DCHC shall provide insurance as follows:
L $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)
3. $250,000 Liquor/Dram Shop Liability for any event occumng 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.
EXECUTEDthisOiOdidayof ~1/P7Jl ,bA) ,2005.
THE CITY OF DENTON, TEXAS
By: (;~ Av elL
EULINE BROCK, MAYOR
APPJ-OVED-ASTO LEGAL F~
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By: ~11;a iIIfu~tlMk, - Y: ~ -~---- ~-~---. -~
J ER WALTERS, i' =EDWIN M. SNYDE
CITY SECRETARY CITY ATTORNE
ATTEST:
DENTON COUNTY
COMMISSION, INC.
HISTORICAL
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ATTEST:
HOT Funds PY2006 Denton County Historical Commission - Page 8
Exhibit A
Denton County Historical Commission
John B. Denton Days
ADVERTISING
Texas Monthly
Texas Highways
True West
AAA Journey
Heritage Quest
Everton's Genealogical Helper
$
8,000
1 ,460
1,450
1,350
120
120
$
12,500
TOTAL BUDGET $
12,500