2003-275ORDINANCE NO. ~003-~ ~-
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON COMMUNITY THEATRE 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 Community Theatre 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 ~ ff---~ dayof ~'~'-~-~
,2003.
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
DENTON COiVIMUNITY THEATRE, INC. (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 the Denton Community Theatre, Inc., a legal entity inenrporated under the laws
of the State of Texas (the "THEATRE"):
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 t~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 THEATRE is well equipped to perform those activities; and
WHEREAS, T~x. T^x CODE §351.101(c) authorizes the CITY to delegate by contract with
the THEATRE, as an independent entity, the management and supenSsion of programs and
activities of the type described hereinabove funded with revenue t~om the municipal hotel
occupancy tax;
NOW, THEREFORE, in consideration of the performance of the mutual covenants and
promises contained herein, the CITY and the THEATRE 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
THEATRE under this Agreement, the CITY agrees to pay to the THEATRE 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 THEATRE 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. Attomey 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 force. Contract quarters will end on March 31st, June 30~,
September 30u', and December 31st of each contract year.
(b) In return for satisfactory performance of the activities set forth in this Agreement
and all attachments hereto, the CITY shall pay to THEATRE an amount of money in each
contract year equal to the lesser amount of One and Eighteen One Hundredths percent (1.18%) of
the annual base payment amount or the fixed contract amount of Nine Thousand Five Hundred
Dollars ($9,500). 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
1.18% 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 THEATRE of
those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected.
(b) Each quarterly payment shall be paid upon receipt of the required reports and 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.
DCT HOT Funding CY 2004 - Page 2
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
THEATRE.
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 THEATRE's
expenditures deviate materially from their approved budget.
H. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in consideration of the payment by the CITY to the THEATRE of
the agreed payments of hotel tax funds specified above, the THEATRE agrees to use such hotel tax
funds only for advertising and conducting solicitations and promotional programs to attract tom/sm
and convention delegates or registrants to the municipality or its vicinity; as authorized by TEX. TAx
CODe §351.101(a) (3). 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 THEATRE 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 tom/sm 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 administrative costs of the THEATRE for which hotel tax funds
may be used shall not exceed that portion of the THEATRE's administrative costs actually incurred
in conducting the activities specified in ¶2.1 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 tom/sm and
the convention and hotel industry or the performance of the person's job in an efficient and
professional manner.
m. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The THEATRE 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 THEATRE in which the hotel tax funds shall be used by the THEATRE. This
budget shall specifically identify proposed expenditures of hotel tax funds by the THEATRE. 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 THEATRE any hotel
DCT HOT Funding CY 2004 - Page 3
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.
Co) The THEATRE acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in the THEATRE with respect to the hotel tax funds paid by the
CITY to the THEATRE under this Agreement. The THEATRE 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 THEATRE shall maintain any hotel tax funds paid to the
THEATRE by the CITY in a separate checking account or with segregated fund accounting, such
that any reasonable person can review the source of axpenditures of tax funds.
3.3 Financial Records. The THEATRE shall maintain complete and accurate financial
records of each expenditure of the hotel tax funds made by the THEATRE. 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. THEATRE understands and accepts that all such financial records, and any other
records relating to this Agreement shall be subject to the Public Information Act, TEX. GOV'T CODE,
ch. 552, as hereafter amended.
3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty days after the
end of every quarter thereafter, until all funds have been expended and reported to the CITY,
THEATRE 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 front 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. The THEATRE
shall respond promptly to any request fxom 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 THEATRE shall give the City Manager or its designate of the
CITY reasonable advance written notice of the time and place of all meetings of THEATRE's
Board of Directors, as well as any other meeting of any constituency of the THEATRE at which this
Agreement or any matter the subject of this Agreement shall be considered. This provision shall not
be deemed to require the THEATRE to give notice of any executive session of the Executive
Committee of the THEATRE.
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 pmgram period shall commence on January 1, 2004
DCT HOT Funding CY 2004 - Page 4
and t~mdnate 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 THEATRE for any contractual obligations of the THEATRE
undertaken by the THEATRE 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 THEATRE or to assume the performance of any contractual
obligations of the THEATRE for or under any contract entered into by the THEATRE as
contemplated herein shall not exceed 66 2/3% of the current quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), the THEATRE 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 I0 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 THEATRE will be obligated to return any unused funds or
funds determined to be used improperly. Any use of remaining funds by the THEATRE 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 &the following events:
(a) The temaination of the legal existence of the THEATRE;
(b) The insolvency of the THEATRE, the filing of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by the THEATRE for the benefit of creditors;
DCT HOT Funding CY 2004 - Page 5
(c) The continuation of a breach of any of the terms or conditions of this Agreement by
either the CITY or the THEATRE 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 the THEATRE 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, THEATRE 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 THEATRE with another private entity, person, or
organization for the performance of those services described in ¶2.1 above. In the event that the
THEATRE enters into any arrangement, contractual or otherwise, with such other entity, person or
organization, the THEATRE 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 eh. 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 THEATRE 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 THEATRE shall have exclusive control of its operations and performance of
services hereunder, and such persons, entities, or organizations performing the same and the
THEATRE shall be solely responsible for the acts and omissions of its directors, officers,
employees, agents, and subcontractors. The THEATRE shall not be considered a partner or joint
venturer with the CITY, nor shall the THEATRE be considered nor in any manner hold itself out as
an agent or official representative of the CITY.
5.3 Indemnification. THE THEATRE 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 THEATRE OR THOSE
SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH
CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR
DCT HOT Funding CY 2004 - Page 6
STATUTORY LAW, OR BASED, IN WHOLE OR IN PART, UPON ALLEGATIONS OF
NEGLIGENT OR INTENTIONAL ACTS OF THEATRE, ITS OFFICERS, EMPLOYEES,
AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5.4 Assignment The THEATRE 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 THEATRE
City Manager
City of Denton
215 E. McKinney
Denton, TX 76201
Denton Community Theatre, Inc.
Scot Wilkinson
P.O. Box 1931
Denton, Texas 76202-1931
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 THEATRE 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.
DCT HOT Funding CY 2004 - Page 7
5.12 Insurance. The THEATRE shall provide insurance ~ follows:
$500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property
Statutory Workers' Compev. sation and Employers' Liability
($100,000/$$00,000/$100,000)
The CITY must be nm'ned ~ an additional insured on all policies (except Workers' Compensation)
and pwof of coverage shall be submitted prior to any payment by the CITY.
THE CITY OF DENTON, TEXAS
By: f~ ~'~j
EULINE BROCK, MAYOR
ATTEST:
By:
C ' ~D~o
ATTEST:
APPROVED AS TO LEGAL FORM:
By: By:
Secretary
DCT HOT Funding CY 2003 - Page 8
Denton Community Theatre Exhibit A
Program Year 2004
Advertising
DCT
Cable
Print Advertising
Website
Campus Theatre
Cable
Pied Pipers
Cable
Website
3,000
1,000
2,000
1,500
1,000
1,000
Total Budget $ 9,500.00