2003-270ORDINANCE N0. ~0~ ~ 70
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE KIWANIS CLUB OF DENTON, TEXAS,
INC. FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN
EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. That the Mayor is hereby authorized to execute an agreement between the
City of Denton and the Kiwanis Club of Denton, Texas, Inc. for the payment and use of hotel tax
revenue, under the terms and conditions contained in the agreement, a copy of which is attached
hereto and made a part hereof.
SECTION 2. That this ordinance shall become effective immediately upon its passage
and approval.
,2003.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
AGREEMENT BETWEEN THE CITY OF DENTON AND
KIWANIS CLUB OF DENTON, TEXAS, INC. (CY2004)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a murficipal corporation
(the "CITY"), and the Kiwanis Club of Denton, Texas, Inc., a legal entity incorporated on
September 6, 1939 under the laws of the State of Texas (the "CLUB"):
WHEREAS, TEX. TAX CODE §351.002 authorizes the 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, the 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. T~x CODE §351.101(a) authorizes the 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, the CLUB is well equipped to perform those activities; and
WHEREAS, TEX. TAX CODE §351.101(C) authorizes the CITY to delegate by contract with
the CLUB, 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, the CITY and the CLUB agree and contract as follows:
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and in consideration of the activities to be performed by the CLUB
under this Agreement, the CITY agrees to pay to the CLUB a portion of the hotel tax revenue
collected by the CITY at the rates and in the manner specified herein (such payments by the CITY
to the CLUB sometimes herein referred to as the "agreed payments" or "hotel tax funds").
1.2 Amount of Payments.
(a)
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 the 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 the CITY's
fiscal year. It will include hotel tax revenue due to the 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 the 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 the 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 A~eement is in fome. Contract quarters will end on March 31st, June 30~,
September 30 , and December 31 of each contract year.
Co) In return for satisfactory performance of the activities set forth in this Agreement
and all attachments hereto, the CITY shall pay to CLUB an amount of money in each contract
year equal to the lesser amount of Thirty Seven One Hundredths percent (0.37%) of the annual
base payment amount or the fixed contract amount of Three Thousand Dollars ($3,000). This
amount will be divided into quarterly payments equal to 25% of the annual fixed contract
amount, unless the 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 0.37% of the base
payment amount, whichever is less. Each quarterly payment is subject to receipt of unnsed 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 the CITY to the CLUB 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 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. The CITY may withhold the quarterly payment(s) until the
appropriate reports are received and approved, which approval shall not unreasonably be withheld.
1.4 Other Hmitations regarding consideration.
(a) The funding of this project in no way commits the CITY to future funding of this
program beyond the current contract period. Any future funding is solely the responsibility of the
CLUB.
CO) It is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of the CITY.
Page 2
(c) CITY may withhold further allocations if CITY determines that CLUB'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 the CITY to the CLUB of the
agreed payments of hotel tax funds specified above, the CLUB agrees to use such hotel tax funds
only for advertising and conducting solicitations and promotional programs to attract tourists and
convention delegates as authorized by TEx. TAX COD~ §351.101(a). 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 the CITY by the CLUB 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, which also promote at least
one of the six statutory purposes enumerated within TEX. TAX CODE §351.101 (a).
2.3 Spec'fi.lC Restrictions on Use of Funds.
(a) That portion of total administrative costs of the CLUB for which hotel tax funds may
be used shall not exceed that portion of the CLUB's administrative costs actually incurred in
conducting the activities specified in ¶2.1 above.
(b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an activity the primary purpose of which is not directly related to the promotion of local tourism and
the convention and hotel industry or the performance of the person's job in an efficient and
professional manner.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The CLUB shall prepare and submit to the City Manager of the CITY an annual budget
(see Exhibit "A") as approved by the City Council for each calendar year, for such operations of the
CLUB in which the hotel tax funds shall be used by the CLUB. This budget shall specifically
identify proposed expenditures of hotel tax funds by the CLUB. In other words, the CITY should
be able to audit specifically where the funds in the separate account relating to hotel tax funds will
be expended. The CITY shall not pay to the CLUB 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 bythe Denton City Council author/zing 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) The CLUB acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in the CLUB with respect to the hotel tax funds paid by the CITY
to the CLUB under this Agreement. The CLUB shall expend hotel tax funds only in the manner
Page 3
and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as
approved by the CITY.
3.2 Separate Accounts. The CLUB shall maintain any hotel tax funds paid to the CLUB by
the CITY in a separate checking account or with segregated fund accounting, such that any
reasonable person can review the source of expenditures of tax funds.
3.3 Financial Records. The CLUB shall maintain complete and accurate financial records of
each expenditure of the hotel tax funds made by the CLUB. 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. CLUB 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 emended.
3.4 Quarterly Reports. A~er initial receipt of hotel tax funds, end within thirty days atler the
end of every quarter thereafter, until all funds have been expended and reported to the CITY,
CLUB shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or
copies of 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., front and back copies 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. The CLUB shall
respond promptly to any request from the City Manager of the CITY, or designate, for additional
information relating to the activities performed under this Agreement.
3.5 Notice of Meetings. The CLUB shall give the City Manager of the CITY reasonable
advance written notice of the tune and place of all meetings of CLUB's Board of Directors, as well
as any other meeting of any constituency of the CLUB at which this Agreement or any matter the
subject of this Agreement shall be considered. This provision shall not be deemed to require the
CLUB to give notice of any executive session of the Executive Committee of the CLUB.
IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2004 and terminate at
midnight on January 31, 2005. However, the program period shall commence on January 1, 2004
and tvmfinate at midnight on December 31, 2004. Only those expenditures authorized by Chapter
351 of the Texas Tax Code end 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 t~m~ination 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.
Page 4
CO) In the event this contract is terminated by either party pursuant to Section 4.2(a),
the CITY agrees to reimburse the CLUB for any contractual obligations of the CLUB undertaken
by the CLUB in satisfactory performance of those activities specified in 9¶2.1 and 2.2 above and
that were approved by the Council through the budget, as noted in 93.1. This reimbursement is
conditioned upon such contractual obligations having been incurred and entered into in the good
faith performance of those services comemplated in 992.1 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 the CITY to reimburse
the CLUB or to assume the performance of any contractual obligations of the CLUB for or under
any contract entered into by the CLUB as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment.
(c) Further, upon termination pursuant to 94.2(a), the CLUB will provide the 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 the City; 3) Within 5
business days of a request from the 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. The CLUB will be obligated to return any unused funds or funds determined to
be used improperly. Any use of remaining funds by the CLUB 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 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 the CLUB;
Co) The insolvency of the CLUB, the filing of a petition in bankruptcy, either voluntarily or
involuntarily, or an assignment by the CLUB for the benefit of creditors;
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
either the CITY or the CLUB 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 the CLUB 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
P~e5
determination, either party shall have the right to terminate this Agreement upon mediate 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, CLUB agrees to
refund any and all unused funds, or funds determined by the 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 the CLUB with another private entity, person, or organi-
zation for the performance of those services described in ¶2.1 above. In the event that the CLUB
enters into any arrangement, contractual or otherwise, with such other entity, person or organization,
the CLUB shall cause such other entity, person, or organization to adhere to, ennform to, and be
subject to all provisions, terms, and conditions &this Agreement and to TEX. 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. The CLUB 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
the CITY. The CLUB shall have exclusive control of its operations and performance of services
hereunder, and such persons, entities, or organizations performing the same and the CLUB shall be
solely responsible for the acts and omissions of its directors, officers, employees, agents, and
subcontractors. The CLUB shall not be considered a partner or joint venturer with the CITY, nor
shall the CLUB be considered nor in any manner hold itself out as an agent or official representative
of the CITY.
5.3 Indemnification. THE CLUB AGREES TO INDEMNIFY, HOLD HARMLESS,
AND DEFEND THE 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 THE CLUB 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 WItOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT
OR INTENTIONAL ACTS OF CLUB, ITS OFFICERS, EMPLOYEES, AGENTS,
SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment. The CLUB shall not assign this Agreement without first obtaining the written
consent of the 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 mall, certified
mall, return receipt requested, or by hand-delivery, addressed to the respective parties as follows:
Page 6
CITY
CLUB
City Manager
City of Denton
215 E. McKinney
Denton, TX 76201
Denton Kiwanis Club, Inc.
Robin Olsen
1701 N. Elm St.
Denton, Texas 76201
5.6 Inurement. This Agreement and each provision hereof, and each and every fight, duty,
obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation
of the CITY and the CLUB and their respective successors and assigns.
5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject
to all applicable federal laws, state laws, the Charter of 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, relating to the subject matter of this Agreement,
which are not fully expressed herein. The terms and conditions of this Agreement shall prevail
notwithstanding any variance in this Agreement from the terms and conditions of any other
document relating to this transaction or these transactions.
5.9 Duplicate Originals. This Agreement is executed in duplicate originals.
5.10 Headings. The headings and subheadings of the various sections and paragraphs of this
Agreement are inserted merely for the purpose of convenience and do not express or imply any
limitation, definition, or extension of the specific terms of the section and paragraph so designated.
5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this
Agreement, or application thereof to any person or circumstance is held invalid by any court of
competent jurisdiction, such holding shall not affect the validity of the remaining portions of this
Agreement, and the parties hereby declare they would have enacted such remaining portions despite
any such invalidity.
5.12 Insurance. The CLUB shall provide insurance as follows:
$500,000 Commercial 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)
The 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.
,2003.
Page 7
THB CITY OF DI~ITON, TFOCa, S
BI.~LINE BROCK, MAYOR
ATrBST:
ATTEST:
?u~PROV Ep
DENTON KIwAN1S CLUB,?,~C
APPROVED AS TO LBGAL FORIVI:
By:
Secretary
By:
Page 8
Denton Kiwanis Club
4th of July Fireworks Show
Program Year 2004
Exhibit A
Advertising
Advertising / Promotion
$ 3,000
Total Budget $ 3,000