2004-271ORDNANCE NO.
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE HISTORICAL PARK FOUNDATION OF
DENTON COUNTY, 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 I. That the Mayor is hereby authorized to execute an agreement between the
City of Denton and the Historical Park Foundation of Denton County, 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 II. That this ordinance shall become effective immediately upon its passage
and approval.
PASSED AND APPROVED this the c7~/~''~c day of O~m~
/
,2004.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
AGREEMENT BETWEEN THE CITY OF DENTON AND
HISTORICAL PARK FOUNDATION OF DENTON COUNTY, INC. (CY2005)
PROVIDING FOR ~ PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the "CITY"), and the Historical Park Foundation, Inc., a legal entity incorporated under the laws of
the State of Texas (the "FOUNDATION"):
WHEREAS, T~x. 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, T~x. Tax CODE §351.101(a) authorizes CITY to use revenue from its
municipal hotel occupancy tax to promote tourism and the convention and hotel industry by
advertising and conducting solicitations and promotional programs to attract tourists and convention
delegates or registrants to the municipality or its vicinity; as well as to engage in historical
restoration and preservation projects and activities and
WHEREAS, FOUNDATION is well equipped to perform those activities; and
WHEREAS, TEX. Tax CODE §351.101(c) authorizes CITY to delegate by conUact with
FOUNDATION, 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 cousidemtion of the performance of the mutual covenants and
promises contained herein, CITY and FOUNDATION agree and contract as follows:
L HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by
FOUNDATION under this Agreement, CITY agrees to pay to FOUNDATION a portion of the
hotel tax revenue collected by CITY at the rotes and in the manner specified herein (such paYments
by CITY to FOUNDATION sometimes herein referred to as the "agreed payments" or "hotel tax
1.2 Amount of Payments.
meanings:
As used in this Agreement, the following terms shall have the following specific
(i) The term "hotel tax revenue" shall mean the gross monies collected and
received by CITY as municipal hotel occupancy tax at the rate of seven percent (7%) of
the price paid for a room in a hotel, pursuant to Texas Tax Code 351.002 and City
Ordinance. Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer.
(ii) The term "Collection period" will mean the collection period for CITY's
fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and
collected through the 22nd day of the month following the dose 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
myers.
(iv) The term "contract quarter" shall refer to any quarter of the calendar year in
which this A~eement is in force. Contract quarters will end on March 31~t, June 30t~,
September 30"', and December 31st of each contract year.
(b) In remm for satisfactory performance of the activities set forth in this Agreement
and all attachments hereto, CITY shall pay to FOUNDATION an amount of money in each
contract year equal to Twenty Thousand Dollars ($20,000). This amount will be paid in one
lump sum on February 1, 2005.
1.3 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by CITY to FOUNDATION of
those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected.
Co) Each quarterly payment shall be paid upon receipt of the required reports and at, er the
25t~ 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 withhel&
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
FOUNDATION.
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 determines that FOUNDATION's
expenditures deviate materially fi.om their approved budget.
H. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in consideration of the payment by CITY to MUSEUMS of the
agreed payments of hotel tax funds specified above, MUSEUMS agree to use such hotel tax funds
only for advertising and conducting solicitations and promotional programs to attract tourism and
convention delegates or registrants to the municipality or its vicinity, and-or to engage in historical
restoration and preservation projects and activities to encourage tourists and convention delegates to
visit preserved historic sites and museums, as authorized by T~x. TAx COD£ §351.101(aX3) and
(a)(5). Funds for any calendar year which are unused by midnight December 31~t of that year shall
be refunded to CITY within sixty (60) days.
2.2 Administrative Costs. The hotel tax funds received from CITY by FOUNDATION may
be spent for day-to-day operations, office supplies, salaries, travel expenses, and other
administrative costs allowed by TEX. TAX CODE 351.101(0, 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) That portion of total admini~hative costs of FOUNDATION for which hotel tax
funds may be used shall not exceed that portion of FOUNDATION'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 wh/ch 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.
HI. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) FOUNDATION 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 FOUNDATION in which the hotel tax funds shall be used by FOUNDATION. This
budget shall specifically identify proposed expenditures of hotel tax funds by FOUNDATION. In
other words, CITY should be able to audit specifically where the funds in the separate account
relating to hotel tax funds will be expendeA CITY shall not pay to the FOUNDATION 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) FOUNDATION acknowledges that the approval of such b-tlget by the Denton City
Council creates a fiduciary duty in FOUNDATION with respect to the hotel tax funds paid by
CITY to FOUNDATION under this Agreement. FOUNDATION shall expend hotel tax funds only
in the manner and for the purposes specified in this Agreement, T~x. TAx Coos §351.101 (a) and in
the budget as approved by CITY.
3.2 Separate Aceounts. FOUNDATION shall maintain any hotel tax funds paid to
FOUNDATION 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 Finaneial Records. FOUNDATION shall maintain complete and accurate financial
records of each expenditure of the hotel tax funds made by FOUNDATION. 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. FOUNDATION 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 CONE,
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,
FOUNDATION 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 §351.101(C), and (3) a copy of all financial records (e.g., copies of fi.ont and back
of 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. FOUNDATION 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 Mcetings. FOUNDATION shall give the City Manager or its designate of
CITY reasonable advance written notice of the time and place of all meetings of FOUNDATION's
Board of Directors, as well as any other meeting of any constituency of FOUNDATION 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 termite 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
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 FOUNDATION for any contractual obligations of FOUNDATION
undertaken by FOUNDATION 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 FOUNDATION or to assume the performance of any contractual obligations
of the FOUNDATION for or under any contract entered into by FOUNDATION as
contemplated herein shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), FOUNDATION will provide CITY:
1) Within I0 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
t,mdnation. FOUNDATION will be obligated to return any unused funds ur funds determined to
be used improperly. Any use of remaining funds by FOUNDATION 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
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 FOUNDATION;
(b) The insolvency of FOUNDATION, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by FOUNDATION 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 FOUNDATION for more than thirty (30) days at~er written notice of such breach is
given to the breaching party by the other party; or
(d) The failure of FOUNDATION 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, FOUNDATION
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 FOUNDATION with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that
FOUNDATION enters into any arrangemem, contractual or otherwise, with such other entity,
person or organization, FOUNDATION 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 Tv_x. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and
limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds.
5.2 Independent Contractor. FOUNDATION 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. FOUNDATION shall have exclusive control of its operations and performance of
services hereunder, and such persons, entities, or organizations performing the same and
FOUNDATION shall be solely responsible for the acts and omissions of its directors, officers,
employees, agents, and subconWactors. FOUNDATION shall not be considered a partner or joint
vemurer with CITY, nor shall FOUNDATION be considered nor in any manner hold itself out as an
agent or official representative of CITY.
5.3 Indemnification. THE FOUNDATION AGREES TO INDEMNIFY, HOLD
HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES
FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR 1NJUR~ES, DAMAGE,
LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR
IN CONNECTION WITH ~ PERFORMANCE BY ~ FOUNDATION 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 AI.I.EGATIONS OF
NEGLIGENT OR INTENTIONAL ACTS OF FOUNDATION, ITS OFFICERS,
EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND 1NVITEES.
5.4 Assignment. FOUNDATION shall not assign this Agreement without first obtaining the
written consent of CITY.
5.5 Notice. Any notice required to be given under this Agreemem 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 FOUNDATION
City Manager Historical Park Foundation of Denton County,
lnc
City of Denton
215 E. McKinney
Denton, TX 76201
Rod Reeves
110 W. Hickory Street
Denton, Texas 76201
$.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 FOUNDATION and their respective successors and assigns.
5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject
to ail applicable federal laws, state laws, the Charter of the City of Denton, ail ordinances passed
pursuant thereto, and ail judiciai determinations relative thereto.
$.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.
$.9 Duplicate Originals. This Agreement is executed in duplicate ofiginais.
$.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.
&ll 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
competant 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 invaiidity.
$.12 Insurance. FOUNDATION shail provide insurance as follows:
$500,000 Commerciai General Liability, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property
Statutory Workers' Compensation and Employers' Liability
($100,000/$500,000/$100,000)
CITY must be named as an additionai insured on all policies (except Workers' Compensation) and
proof of coverage shail be submitted prior to any payment by CITY.
EXECUTED this ~/ff~-~day of
~ ,2004.
THE CITY OF DENTON, TEXAS
EULINE BROCK, MAYOR
ATTEST:
CITY SECRETARY
ATTEST:
HERB-~ERT L PRO/I,~I~,
CITY ATTO/~
Historical P~rt/ Foundation of Denton County,
Ii1¢. ~
Chairman/Director
APPROVED AS TO LEGAL FORM:
By:
Secretary
By:
Historical Park Foundation CY2005 HOT Funding - Page 8
Historical Park Foundation of Denton County
Denton County African American Museum
Exhibit A
Historical
Restoration of Building
$ 20,000