2003-273ORDINANCE NO. ~"~"~"'/d
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER OF COIVI/ViERCE
(CONVENTION AND VISITOR BUREAU) 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 Denton Chamber of Commerce (Convention and Visitor Bureau) 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 ~___d dayof
,2003.
EUL1NE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
I-IERB ~E..R.~_L.-PROUTY, CITY AT~DR~
AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON CHAMBER
OF COMMERCE (CONVENTION & VISITOR BUREAU) (CY- 2004) 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 Denton Chamber of Commerce (Convention & Visitor's Bureau), a non-
profit corporation incorporated under the laws of the State of Texas (the "BUREAU"):
WHEREAS, Tax. 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, 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; and
WHEREAS, the BUREAU is well equipped to perform those activities through its Denton
Convention and Visitor's Bureau; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes the CITY to delegate by contract with
the BUREAU, as an independent entity, the management and supervision of programs and activities
of the type described hereinabove funded with revenue fi:om the municipal hotel occupancy tax;
NOW, THEREFORE, in cousidemtion of the performance of the mutual covenants and
promises contained herein, the CITY and the BUREAU 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 BUREAU
under this Agreement, the C1TY agrees to pay to the BUREAU 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 BUREAU 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 bythe CITY during any relevant period of time (i.e.,
fiscal year or fiscal quarter), less (1) attorney and auditing costs inctme, d 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~reement is in force. Contract quarters will end on March 31st, June 30~',
September 30tn, 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 BUREAU an amount of money in each
contract year equal to the lesser amount of Forty Six and Twenty Six One Hundredths percent
(46.26%) of the annual base payment amount or the fixed contract amount of Three Hundred
Seventy One Thousand Seven Hundred Eighty Three Dollars ($371,783).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 46.26% 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 BUREAU 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 requked 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
BUREAU.
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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 BUREAU'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 BUREAU of the
agreed payments of hotel tax funds specified above, the BUREAU agrees to use such hotel tax
funds only for advertising and conducting solicitations and promotional programs to attract tourists
and convention delegates or registrants to the municipality or its vicinity as authorized by Tex. T^x
CODE §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 CITY by BUREAU may be spent
for day-to-day operations, office supplies, salaries, travel expenses and other administrative costs
allowed by Tflx. T^x 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 TEX. TAX CODE §35 I. 101 (a).
2.3 Specific Restrictions on Use of Funds.
(a) BUREAU agrees to demonstrate strict compliance with the record keeping end
apportionment limitations imposed by TEX. T^x CODE §351.101(0 and §351.108 (c) and (d).
BUREAU 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.
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget
(a) The BUREAU 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 BUREAU in which the hotel tax funds shall be used by the BUREAU. This
budget shall specifically identify proposed expenditures of hotel tax funds by the BUREAU. 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 BUREAU 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 con~aet, and if not remedied is considered grounds for termination of this Agreement as
stated in paragraph 4.2.
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(b) The BUREAU acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in the BUREAU with respect to the hotel tax funds paid by the
CITY to the BUREAU under this Agreement. The BUREAU shall expend hotel tax funds only in
the manner and for the purposes specified in this Agreement, T~x. T^x CODa §351.101(a) and in
the budget as approved by the CITY.
3.2 Separate Accounts. The BUREAU shall maintain any hotel tax funds paid to the
BUREAU 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 FinaneiaiRecords. The BUREAU shall maintain complete and accurate financial
records of each expenditure of the hotel tax funds made by the BUREAU. 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. BUREAU understands and accepts that all such financial records, and any other records
relating to this Agreement shall be subject to the Public Information Act, T~x. GOV'T CODa, ch.
552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of the hotel tax funds, and within thirty days al~er
the end of every contract quarter, BUREAU shall furnish to CITY: (1) a completed financial report,
(2) a list of the expenditures made or copies of the invoice or receipts with regard to hotel tax funds
pursuant to T~x. T^x COt)E §351.101(c), and (3) a copy of all fmancial records (e.g., copies of front
and back cleared checks or bank statements, and other relevant documentation). BUREAU shall
prepare and deliver all reports in a form and manner approved by the City Manager or designate.
BUREAU 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 BUREAU shall give the City Manager of the CITY reasonable
advance written notice of the time and place of all meetings of BUREAU's Board of Directors, as
well as any other meeting of any constituency of the BUREAU at which this Agreement or any
matter the subject of this Agreement shall be considered. This provision shall not be deemed to
require the BUREAU to give notice of any executive session of the Executive Committee of the
BUREAU.
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 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.
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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 BUREAU for any contractual obligations of the BUREAU
undertaken by the BUREAU 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 contracmai 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 BUREAU or to assume the performance of any contractual
obligations of the BUREAU for or under any contract entered into by the BUREAU as
contemplated herein shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), the BUREAU 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 BUREAU will be obligated to remm any unused funds or
funds determined to be used improperly. Any use of remaining funds by the BUREAU after
notification of term'mation 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 BUREAU;
00) The insolvency of the BUREAU, the filing of a petition in bankruptcy, either voluntaxily
or involuntarily, or an assignment by the BUREAU for the benefit of creditors;
(c) The cominuation of a breach of any of the terms or conditions of this Agreement by
either the CITY or the BUREAU for more than thirty (30) days after written notice of such breach is
given to the breaching party by the other party; or
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(d) The failure of the BUREAU 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-temainating 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, BUREAU 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 BUREAU with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that the
BUREAU enters into any arrangement, contractual or othenvise, with such other entity, person or
organization, the BUREAU shall cause such other entity, person, or organization to adhere to,
conform to, and be subject to all previsions, terms, and conditions of this Agreement and to T~x.
TAX CooE 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 BUREAU 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 BUREAU shall have exclusive control of its operations and performance of
services hereunder, and such persons, entities, or organizations performing the same and the
BUREAU shall be solely responsible for the acts and omissions of its directors, officers, employees,
agents, and subcontractors. The BUREAU shall not be considered a partner or joint venturer with
the CITY, nor shall the BUREAU be considered nor in any manner hold itself out as an agent or
official representative of the CITY.
5.3 Indemnification. THE BUREAU 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 BUREAU 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 BUREAU, ITS OFFICERS, EMPLOYEES, AGENTS,
SUBCONTRACTORS, LICENSEES AND INVITEES.
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5.4 Assignment. The BUREAU 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 BUREAU
City of Denton
215 E. McKinney
Denton, TX 76201
Denton Chamber of Commerce
Denton Convention & Visitor Bureau
Kim Dillon-Phillips
Vice President
P.O. Box Drawer P
Denton, Texas 76202-1719
5.6 Inurement. This Agreement and each prevision 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 BUREAU 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.
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5.12 I~suranee. The BUREAU shall, at a min/raum, provide insurance as follows:
$500,000 Commercial Genexal Liability
Statutory Workexs' Compansation and Employers' Liability
($100,000/$500,000/$100,000)
$500,000 Business Automobile Liability on any owned, non-owned or hired
vehioles
The C/IT must be n~med as an additional insured on all policies (except Workers' Compensation)
and proof of coverage shall be submitted prior to any payment by tho CITY.
TH~ CITY OF DENTON, TEXAS
BULiNE BROCK, MAYOR
DENTON C OF COMMERCE
President /
ATTEST:
APPROVED AS TO LEGAL FORM:
By: By:
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Denton Chamber of Commerce
Convention and Vistor Bureau
Program Year 2004
Exhibit A
Advertising
Print Advertising
Convention Advertising
Tourism Promotional Material
Brochures
Travel Shows
Tourism Services
Special Projects
Cooperative Advertising Air Fair
Black Chamber of Commerce
Cinco de Mayo
Denton Community Theatre
Denton Festival Foundation
Denton Holiday Festival
Juneteenth
Kiwanis Club
Main Street Association
Tejas Storytelling Associaton
Total Advertising
37,021
2,500
5,000
10,000
1,000
10,000
1,000
7,500
3,000
6,000
6,000
15,000
2,500
4,500
2,000
6,000
15,000
134,021
Administration
Administration Salaries
VP Retirement
VP Car Allowance
Accounting Salary
Payroll Taxes
Health Insurance
Liability Insurance
Travel and Training
Computer Equipment
Copy Machine
Warehouse Storage
Desktop Copier Lease
Office Supplies
Telephone
Memberships
Printing
Postage
Office Rent
98,000
2,500
5,500
5,337
11,000
9,070
8OO
5,000
3,500
500
700
750
1,500
7,500
2,100
1,000
3,500
14,055
Total Administration $ 172,312
CVB ~ 2
Sports Advertising
Convention and Trade Shows
Total Sports Advertising
$ 7,000
$ 7,000
Sports Administration
Sports Manager
Sports Health Insurance
Sports Payroll Taxes
Manager's Car Allowance
Sports Postage
Sports Printing
Sports Travel and Training
Sports Memberships
Total Sports Administration
42,000
4,700
3,200
1,800
500
1,500
4,000
750
$ 58,450
Total CVB Budget $ 371,783