2004-270O CENO.70
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE GREATER DENTON ARTS COUNCIL 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. That the Mayor is hereby authorized to execute an agreement between the
City of Denton and the Greater Denton Arts Council 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. That this ordinance shall become effective immediately upon its passage
and approval.
PASSED AND APPROVED this the a~/~°~z- dayof (I~_/D~ ,2004.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. ~PRO~Y-~CIT~A~TT~Y
AGREEMENT BETWEEN THE CITY OF DENTON AND THE GREATER
DENTON ARTS COUNCIL (CY2005) 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 Greater Denton Arts Council, a non-profit corporation
incorporated under the laws of the State of Texas (the "GDAC"):
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 §351.101(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, GDAC is well equipped to perform those activities; and
WHEREAS, TEX. T^x CODE §351.101(C) authorizes CITY to delegate by contract
with GDAC; 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 GDAC agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by GDAC
under this Agreement, CITY agrees to pay to GDAC a portion of the hotel tax revenue
collected by CITY at the rates and in the manner specified herein (such payments by CITY
to GDAC sometimes herein referred to as the "agreed payments" or "hotel tax fimds").
1.2 Amount of Payments.
(a) As used in this Agreement, ~e following terms shall have the following
specific meanings:
(i) The term "hotel tax revenue" shall mean the gross mouies
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.
GDAC CY2005 HOT Funds Contract - Page 1
(ii) The term "Collection period" will mean the collection period for
CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant
fiscal year and collected through the 22nd day of the month following the close of
the relevant fiscal year.
(iii) The term "base payment amount" shall mean a net amount of money
equal to the total hotel tax revenue collected by CITY during any relevant period of
time (i.e., fiscal year or fiscal quarter), less (1) 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 31st,
June 30th, September 304, and December 31st 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 GDAC an amount of money in
each contract year equal to the lesser amount of Eleven and Ninety-Six One Hundredths
percent (11.96%) of the annual base payment amount or the fixed contract amount of One
Hundred Eight Thousand Dollars ($108,000). This amount will be divided into quarterly
payments equal to 25% of the annual fixed contract amount, unless CITY can show with
reasonable certainty that the annual base payment amount will be less than originally
estimated for the fiscal year. The fourth quarterly payment will represent 25% of the
fixed contract amount or the unpaid remainder of 11.96% of the base payment amount,
whichever is less. Each quarterly payment is subject to receipt of unused funds fi-om 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 GDAC 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
alter 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.
GDAC CY2005 HOT Funds Contract - 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 GDAC.
CO) 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 detemaines that GDAC's
expenditures deviate materially from their approved budget.
II. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in consideration of the payment by CITY to GDAC of the
agreed payments of hotel tax funds specified above, GDAC 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; by the
encouragement, promotion, improvement, and application of the arts, including instrumental
and vocal music, dance, drama, folk art, creative writing, architecture, design and allied
fields, painting, sculpture, photography, graphic and craft arts, motion pictures, radio,
television, tape and sound recording, and other arts related to the presentation, performance,
execution, and exhibition of these major art forms and the acquisition of sites for and the
construction, improvement, enlarging, equiPPing, repairing, operation, and maintenance of
convention center facilities or visitor information center, or both as authorized by TEX. TAX
CODE §351.101 Funds for any calendar year which are unused by midnight December 31st
of that year shall be refunded to CITY within sixty (60) days.
2.2 Administrative Costs. The hotel tax funds received from CITY by GDAC may be
spent for day-to-day operations, office supplies, salaries, travel expenses and other
administrative costs allowed by TEX. TAX Cone §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 §351.101(a).
2.3 Specific Restrictions on Use of Funds.
(a) GDAC agrees to demonstrate strict compliance with the record keeping and
apportionment limitations imposed by TEX. T^x CODE §351.101(0 and §351.108 (c) and
(d). GDAC 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 2.2 above.
Co) Hotel tax funds may not be spent for travel for a person to attend an event or
conduct an activity the primary purpose of which is not directly related to the promotion of
local tourism and the convention and hotel industry or the performance of the person's job
in an efficient and professional manner.
GDAC CY2005 HOT Funds Contract - Page 3
HI. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) GDAC 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 GDAC in which the hotel tax funds shall be used by GDAC. This budget shall
specifically identify proposed expenditures of hotel tax funds by GDAC. In other words,
CITY should be able to audit specifically where the funds in the separate account relating to
hotel tax fimds will be expended. CITY shall not pay to GDAC any hotel tax revenues as
set forth in Section I of this 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 termination of
this Agreement as stated in paragraph 4.2.
(b) GDAC acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in GDAC x~ith respect to the hotel tax funds paid by CITY
to GDAC under this Agreement. GDAC shall expend hotel tax funds only in the manner
and for the purposes specified in this Agreement, TEX. T^x CODE §351.101 (a) and in the
budget as approved by CITY.
3.2 Separate Accounts. GDAC shall maintain any hotel tax funds paid to GDAC 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. GDAC shall maintain complete and accurate financial
records of each expenditure of the hotel tax funds made by GDAC. 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, shall make such financial records available for inspection
and review by the party making the request. GDAC understands and accepts that all such
financial records, and any other records relating to this Agreement shall be subject to the
Public Information Act, TEX. GOV'T CODE, ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days
after the end of every contract quarter, GDAC shall furnish to CITY: (1) a completed
financial report, (2) a list of the expenditure5 or copies of the invoices or receipts made with
regard to hotel tax funds pursuant to TEX. T^x 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). GDAC shall prepare and deliver all reports in a form and manner
approved by the City Manager or designate. GDAC 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. ,
GDAC CY2005 HOT Funds Contract - Page 4
3.5 Notice of Meetings. GDAC shall give the City Manager of CITY reasonable
advance vaitten notice of the time and place of all meetings of GDAC's Board of Directors,
as well as any other meeting of any constituency of GDAC 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, 2005 and
terminate at midnight on January 31, 2006. However, the program period shall commence
on January 1, 2005 and terminate at midnight on December 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 fimding 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 GDAC for any contractual obligations of GDAC
undertaken by GDAC in satisfactory performance of those activities specified in ¶¶2. I
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 GDAC or to assme the
performance of any contractual obligations of GDAC for or under any contract entered
into by GDAC as contemplated herein shall not exceed 66 2/3% of the current quarterly
payment.
(c) Further, upon termination pursuant to ¶4.2(a), GDAC 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 required reporting
period; 4) a final accounting of all expenditures and tax funds on the day of termination.
GDAC will be obligated to return any unused funds or funds determined to be used
improperly. Any use of remaining funds by GDAC after notification of termination is
GDAC CY2005 HOT Funds Contract - Page 5
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.
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 GDAC;
Co) The insolvency of GDAC, the filing of a petition in bankmptcy, either
voluntarily or involuntarily, or an assignment by GDAC 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 GDAC 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 GDAC to submit a financial quarterly report which compiles with
the report'mg 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 fight 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 term'mating 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, GDAC
agrees to retired 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 tiffs Agreement shall
prohibit, nor be construed to prohibit, the agreement by GDAC with another private entity,
person, or organization for thc performance of those services described in ¶2.1 above. In the
event that GDAC enters into any arrangement, contractual or otherwise, with such other
entity, person or organization, GDAC 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 lmiitafions and prohibifiohs pertaining to expenditure of the agreed
payments and hotel tax funds.
5.2 Independent Contractor. GDAC 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. GDAC shall have excltisive control of its operations and performance
GDAC CY2005 HOT Funds Contract - Page 6
of services hereunder, and such persons, entities, or organizations performing the same and
GDAC shall be solely responsible for the acts and omissions of its directors, officers,
employees, agents, and subcontractors. GDAC shall not be considered a partner or joint
venturer with CITY, nor shall GDAC be considered nor in any manner hold itself out as an
agent or official representative of CITY.
5.3 Indemnification. GDAC 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 GDAC 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
GDAC, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND INVITEES.
5.4 Assignment. GDAC 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, rettma receipt requested, or by hand-delivery, addressed to
the respective parties as follows:
CITY. GDAC
City of Denton
215 E. McKinney
Denton, TX 76201
Greater Denton Arts Council
Herbert Holl
Executive Director
207 South Bell
Denton, Texas 76201
5.6 Inurement. This Agreement and each provision hereof, and each and every right,
duty, obligation, and liabihty set forth herein shall be binding upon and inure to the benefit
and obligation of C1TY and GDAC 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 lgws, the Charter of the City of Denton, all
ordinances passed pursuant thereto, and all judicial determinations relative thereto.
5.8 Exclusive Agreement. This Agreement contains the entire understanding and
constitutes the entire agreement between the parties hereto concerning the subject matter
contained herein. There are no representations, agreements, arrangements, or
understandings, oral or written, express or implied, between or among the parties hereto,
GDAC CY2005 HOT Funds Contract - Page 7
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 f~om 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 subhead'mgs 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 remaining portions despite any such invalidity.
5.12 Insurance. GDAC shall, at a minimum, provide insurance as follows:
$500,000 Commercial General Liability
Statutory Workers' Compenoation and Employers' Liability
($100,000/$500,000/,$100,000)
$500,000 Business Automobile Liability on any owned, non-owned or hired
vehicles
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 ~/~9'~day of ~d~~ ,2004.
THE CITY OF DENTON, TEXAS
By: d/~a~~~
EULINE BROCK, MAYOR
ATTEST:
APPROVED AS TO LEGAL FORM:
J'~qIFER ~TERS, -
HERBERT~Y,
GDAC CY2005 HOT Funds Contract~> Page 8
CITY SECRETARY
ATTEST:
Secretary
CITY ATTORNEY
GREATER DENTON ARTS COUNCIL
APPROVED AS TO LEGAL FORM:
-By:
GDAC CY2005 HOT Funds Contract - Page 9
Greater Denton Arts Council
Exhibit A
Advertising
Direct Promotion
Website Salary
Convention Center
Salary Support
Art
Exhibitions & Programs
Administration Salary
Exhibition & Program Salary
Office Supplies
$ 6,000
10,000
$16,000
$15,000
$10,000
30,000
30,000
7,000
$ 77,000
Total Budget $108,000