2003-272No. OFZ- gT
AN ORDiNANCE AUTHORIZING THE MAYOR TO EXECUTE AN INTERLOCAL
AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY FOR THE
PAYMENT AND USE OF HOTEL TAX REVENUE IN SUPPORT OF THE BAYLESS-
SELBY HOUSE AND THE COURTHOUSE-ON-THE-SQUARE MUSEUMS; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, Tex. Tax Code §351.I01(a) authorizes the City of Denton, Texas 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 to visit preserved historic sites
and museums; and
WHEREAS, the County of Denton, Texas is well equipped to perform those activities by its
operation of the Bayless-Selby House and Courthouse-on-the-Square Museums; and
WHEREAS, Tex. Tax Code {}351.101 (c) authorizes the City of Denton, Texas to delegate
by contract with the County of Denton, Texas, as a governmental entity, the management and
supervision of programs and activities of the type described hereinabove funded with revenue from
the municipal hotel occupancy tax; and
WHEREAS, both the City of Denton, Texas and the County of Denton, Texas have a
secondary source of authority to enter into an interlocal cooperation agreement, pursuant to Chapter
791 of the Texas Government Code, as: the agreement is authorized by both governmental bodies;
the agreement states the purpose, terms, rights, and duties of the contracting parties; the
consideration is being paid by City of Denton, Texas out of current revenues; the compensation is
fair; and the services to be performed are "museum services" authorized under {}791.003(3)(F) of
the Texas Government Code, which each party is author/zed to perform individually; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. That the Mayor is hereby authorized to execute an interlocal agreement
between the City of Denton and Denton County for the payment and use of hotel tax revenue in
support of the Bayless-Selby House and Courthouse-On-The Square Museums, 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.
Page 1
2003.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERB ERT ~.J~PR(YU'~'Y, C IT-~/'-A.TTORNEY
EULINE BROCK, MAYOR
Page 2
AGREEMENT BETWEEN THE CITY OF DENTON AND
DENTON COUNTY, TEXAS (COURTHOUSE ON THE SQUARE
AND THE BAYLESS-SELBY HOUSE MUSEUMS) (CY2004)
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 County of Denton, Texas, a govemmental entity existing under the laws of the
State of Texas, contracting on behalf of its Courthouse-on-the-Square and the Bayless-Selby House
Museums (collectively, the "MUSEUMS"):
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 pement (7%); and
WHEREAS, TEX. TAX CODE §351.101(a) authorizes the CITY to use revenue fi:om 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 advertising and conducting solicitations and
promotional programs to encourage tourists and convention delegates to visit preserved historic
sites and museums; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes the CITY to delegate by contract with
the MUSEUMS, as a governmental entity, the management and supervision of programs and
activities of the type dascfibed hereinabove funded with revenue from the municipal hotel
occupancy tax; and
WHEREAS, the MUSEUMS are well equipped to perform those activities; and
WHEREAS, both CITY and MUSEUMS have a secondary source of authority to enter into
this Agreement as an interlocal cooperation agreement, pursuant to Chapter 791 of the Texas
Government Code, as: the Agreement is authorized by both governmental bodies; the Agreement
states the purpose, terms, fights, and duties of the contracting parties; the consideration is being paid
by CITY out of current revenues; the compensation is fair; and the services to be performed are
"museum services" authorized under {}791.003(3)(F) of the Texas Government Code, which each
party is authorized to perform individually;
NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, the CITY and the MUSEUMS 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
MUSEUMS under this Agreement, the CITY agrees to pay to the MUSEUMS 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 MUSEUMS 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 st of each contract year.
(b) In return for satisfactory performance of the activities set forth in this Agreement
and all attachments hereto, the CITY shall pay to MUSEUMS an amount of money in each
contract year equal to the lesser amount of Eleven and Fifty Seven One Hundredths percent
(11.57%) of the annual base payment amount or the fixed contract amount of Ninety Three
Thousand Dollars ($93,000). 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
11.57% 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 the CITY to the MUSEUMS of
those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected.
HOT Funds CY 2004 Denton County Museums Page 2
Co) Each quarterly paymem 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 limitations 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
MUSEUMS.
CO) It is expressly understood that this contract in no way obligates the General Fund or any
other monies or credits of the CITY.
(c) CITY may withhold further allocations if CITY determines that MUSEUMS'
expenditures deviate mater/ally fi:om 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 MUSEUMS of
the agreed payments of hotel tax funds specified above, the MUSEUMS agree 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 vieimty, as well as to engage in
historical restoration and preservation projects and activities and advertising and conducting
solicitations and promotional programs to encourage tourists and convention delegates to visit
preserved historic sites and museums, as authorized by T£x. TAx COOE §351.101(a)(3) and (a)(5).
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 fi:om the CITY by the MUSEUMS
may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other
administrative costs allowed by T~x. 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 T~x. TAx CODE §351.101 (a).
2.3 Specific Restrictions on Use of Funds.
(a) MUSEUMS agree to demonstrate strict compliance with the record keeping and
apportionment limitations imposed by T~x. TAX CODI~ §351.101(0 and §351.108 (c) and (d).
MUSEUM 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.
HOT Funds CY 2004 Denton County Museums Page 3
IlL RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The MUSEUMS 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 MUSEUMS in which the hotel tax funds shall be used by the MUSEUMS. This
budget shall specifically identify proposed expenditures of hotel tax funds by the MUSEUMS. 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 MUSEUMS any hotel
tax revenues as set forth in Section I of this contract during any fiscal year of th/s 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) The MUSEUMS acknowledge that the approval of such budget by the Denton City
Council creates a fiduciary duty in the MUSEUMS with respect to the hotel tax funds paid by the
CITY to the MUSEUMS under this Agreement. The MUSEUMS shall expend hotel tax funds only
in the manner and for the purposes specified in this Agreement, T~x. T^x CODe {}351.101(a) and in
the budget as approved by the CITY.
3.2 Separate Accounts. The MUSEUMS shall maintain any hotel tax funds paid to the
MUSEUMS 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 MUSEUMS shall maintain complete and accurate financial
records of each expenditure of the hotel tax funds made by the MUSEUMS. 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. MUSEUMS understand and accept 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, MUSEUMS shall famish 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., fi.om
and back copies of cleared checks or bank statements, and other relevant documentation),
MUSEUMS shall prepare and deliver all reports in a form and manner approved by the City
Manager or designate. The MUSEUMS 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.
HOT Funds CY 2004 Denton County Museums Page 4
3.5 Notice of Meetings. The MUSEUMS shall give the City Manager or its designate of the
CITY reasonable advance written notice of the time and place of all meetings of MUSEUMS'
Board of Directors, as well as any other meeting Of any constituency of the MUSEUMS at which
this Agreement or any matter the subject of this Agreement shall be considered. This provision
shall not be deemed to require the MUSEUMS to give notice of any executive session of the
Executive Committee of the MUSEUMS.
IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on January 1, 2004 and terminates at
midnight on January31, 2005. However, the program period shall commence on January 1, 2004
and terminate at midnight on December 31, 2004. 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),
the CITY agrees to reimburse the MUSEUMS for any contractual obligations of the MUSEUMS
undertaken by the MUSEUMS 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
the CITY to reimburse the MUSEUMS or to assme the performance of any contractual
obligations of the MUSEUMS for or under any contract entered into by the MUSEUMS as
contemplated herein shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), the MUSEUMS will provide the
CITY: 1) Within 10 business days fi.om 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 MUSEUMS will be obligated to return any unused funds or
funds determined to be used improperly. Any use of remaining funds by the MUSEUMS after
notification of termination is conditioned upon such contractual obligations having been incurred
HOT Funds CY 2004 Denton County Museuma Page 5
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 MUSEUMS;
Co) The insolvency of the MUSEUMS, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by the MUSEUMS 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 MUSEUMS 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 MUSEUMS 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 tiffs 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, MUSEUMS agree 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 MUSEUMS with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that the
MUSEUMS enter into any arrangement, contractual or otherwise, with such other entity, person or
organization, the MUSEUMS 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 of the agreed payments and hotel tax funds.
5.2 Independent Contractor. The MUSEUMS 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 MUSEUMS shall have exclusive control of its operations and
performance of services hereunder, and such persons, entities, or organizations performing the same
and the MUSEUMS shall be solely responsible for the acts and omissions of its directors, officers,
HOT Funds CY 2004 Denton County Museums Page 6
employees, agents, and subcontractors. The MUSEUMS shall not be considered a partner or joint
venturer with the CITY, nor shall the MUSEUMS be considered nor in any manner hold itself out
as an agent or official representative of the CITY.
5.3 Indemnffication. TO TglF~ EXTENT AUTHORIZED BY LAW, THE MUSEUMS
AGREE 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 MUSEUMS 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 MUSEUM, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS,
LICENSEES AND 1NVITEES.
5.4 Assignment The MUSEUMS 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 mail, certified
mail, return receipt requested, or by hand-delivery, addressed to the respective parties as follows:
CITY MUSEUMS
City Manager
City of Denton
215 E. McKinney
Denton, TX 76201
Denton County Courthouse-On-The Square
and the Bayless-Selby House Museums
Georgia Caraway, Director
110 W. Hickory 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 MUSEUMS 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.
HOT Funds CY 2004 Denton County Museums Page 7
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 expre~ or imply any
limitation, definition, or extension of the specific terms of the section end paragraph so designated.
5.11 Severability. If any section, sub~tion, paragraph, sentence, clause, phrase or word in this
Agreement, or application thereof to any person or circumstance is held invalid by eny court of
competent jurisdiction, such holding shall not affect the validity of the remalnlno~ por~o~ of this
Agreement, end the parties hereby declare they would have enacted such remaining portions despite
any such invalidity.
5.12 Insurance. The MUSEUMS shall provide insurance as follows:
1. Statutory Workers' Compensation and Employers' Liability
($100,000/$500,000/$100,000)
Proof of coverage shall be submitted prior to eny payment by the CITY.
A'l'r~.$T:
B ;/Z~ ~"
~' CITY SECRETARY
5.13 Waiver of Immunity for Suit to Enforce. By executing end authotizln5 the execution of
this contract, DENTON COUNTY, TEXAS expressly waives immunity from eny suit brought by
CITY for the enforcement of the pwvisions contained h~rdn, end further expressly waives the
presentment required ofTex. Lo~. Gov't Code sec. 89.004 as a prerequisite to such suit.
EXE~his~~--~'~/dayof ~4~.~')7~'/~) ,2003
THE CITY OF DE2~ITON, TEXAS
~ BROCK, MAYOR
C1TY ATTORNEY ~
DENTON COUNTY, TEXAS
HOT Funds CY2003-04 Denton County Museums Page 8
ATTEST: APPROVED AS TO
Hill
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HOT Funds CY 2004 Denton County Museums Page 9
Denton County
Courthouse-on-the-Square & Bayless-Selby House Museums
Program Year 2004
Exhibit A
Advertising
Block Ads
Brochures
Newspapers
Ma~;azines
Total Advertising
1,886
3,000
12,000
8,420
$ 25,306
Historical
Archival Suplies
Reference Books
Furnishings and Equipment
Tourism Director (Partial)
Curator of Collections (Partial)
Contract Labor
BSH Manager
Office Supplies
Membership Dues
Total Historical
$ 7,000
1,000
8,024
20,000
10,000
2,000
19,000
500
170
$ 67,694
Total Museum Budget $ 93,000