2003-279O NANCE NO.
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE NORTH TEXAS STATE FAIR
ASSOCIATION 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 North Texas State Fair Association 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.
EULINEBROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBE~ORI~Y
AGREEMENT BETWEEN THE CITY OF DENTON AND THE NORTH TEXAS
STATE FAIR ASSOCIATION (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 North Texas State Fair Association, a non-profit
corporation incorporated under the laws of the State of Texas (the "ASSOCIATION"):
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. TAX 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 ASSOCIATION is well equipped to perform those activities; and
WHEREAS, TEX. TAX CODE §351.101(c) authorizes the CITY to delegate by
contract with the ASSOCIATION, 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 conalderation of the performance of the mutual covenants
and promises contained herein, the CITY and the ASSOCIATION 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
ASSOCIATION under this Agreement, the CITY agrees to pay to the ASSOCIATION 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 ASSOCIATION sometimes herein
referred to as the "agreed payments" or "hotel tax funds").
1.2 Amount of Payments.
(a) As used in this Agreement, the following terms shall have the following
specific meanings:
(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
Pagel
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 mount" 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 Agreement is in force. Contract quarters will end on March 31st,
June 30th, September 30th, and December 31st 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 ASSOCIATION an amount
of money in each contract year equal to the lesser amount of Eight and Thirty Four One
Hundredths percent (8.34%) of the annual base payment amount or the fixed contract
amount of Sixty Seven Thousand Dollars ($67,000). 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 quarteriy payment will represent 25%
of the fixed contract amount or the unpaid remainder of 8.34% 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
ASSOCIATION of those amounts specified in ¶1.2, above, as determined by the hotel tax
revenue collected.
00) Each quarterly payment shall be paid upon receipt of the required reports and
afier 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.
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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 ASSOCIATION.
(b) 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
ASSOCIATION'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
ASSOCIATION of the agreed payments of hotel tax funds specified above, the
ASSOCIATION 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 T~x. TAX 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 Specific Restrictions on Use of Funds.
(a) ASSOCIATION agrees to demonstrate strict compliance with the record
keeping and apportionment limitations imposed by TEx. TAx CODE §351.101(f) and
§351.108 (c) and (d). ASSOCIATION 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.
m. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The ASSOCIATION 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 ASSOCIATION in which the hotel tax funds shall be used
by the ASSOCIATION. This budget shall specifically identify proposed expenditures of
hotel tax funds by the ASSOCIATION. 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 ASSOCIATION any hotel tax revenues as set
forth in Section I of this contract during any fiscal year of this Agreement unless a budget
Page3
for such respective fiscal year has bean approved in writing by the Danton City Council
authorizing the expanditure 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 ASSOCIATION acknowledges that the approval of such budget by the
Denton City Council creates a fiduciary duty in the ASSOCIATION with respect to the
hotel tax funds paid by the CITY to the ASSOCIATION under this Agreemant. The
ASSOCIATION shall expend hotel tax funds only in the manner and for the purposes
specified in this Agreemant, TEX. TAX CODE §351.101(a) and in the budget as eppmved by
the CITY.
3.2 Separate Accounts. The ASSOCIATION shall maintain any hotel tax funds paid
to the ASSOCIATION 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 ASSOCIATION shall maintain complete and accurate
financial records of each expenditure of the hotel tax funds made by the ASSOCIATION.
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 reasonably advance wfittan 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. ASSOCIATION 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 CODE, ch. 552, as herea_Rer
amended.
3.4 Quarterly Reports. Aider initial receipt of hotel tax fund, and within thirty days
after the end of every contract quarter, ASSOCIATION shall furnish to CITY: (1) a
completed financial report, (2) a list of the expanditures or copies of invoices or receipts
made with regard to hotel tax funds pursuant to T~x. TAx CODE §3 51.101 (c), and (3) a copy
of all financial records (e.g., copies of front and back cleared checks or bank statemants, and
other relevant documentation). ASSOCIATION shall prepare and deliver all reports in a
form and manner approved by the City Manager or designate. The ASSOCIATION shall
respond promptly to any request from the City Manager of the CITY, or designate, for
additional information relating to the activities performed under ftds Agreemant.
3.5 Notice of Meetings. The ASSOCIATION shall g/ve the City Manager of the
CITY reasonable advance written notice of the time and place of all meetings of
ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of
the ASSOCIATIONat which this Agreemant or any matter the subject of this Agreement
shall be considered. This provision shall not be deemed to require the ASSOCIATION to
give notice of any executive session of the Executive Committee of the ASSOCIATION.
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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 fund'mg 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 ASSOCIATION for any contractual obligations
of the ASSOCIATION undertaken by the ASSOCIATION 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. Notwithstand'mg any provision hereof to the contrary, the obligation
of the CITY to reimburse the ASSOCIATION or to assume the performance of any
contractual obligations of the ASSOCIATION for or under any contract entered into by
the ASSOCIATION as contemplated herein shall not exceed 66 2/3% of the current
quarterly payment.
(c) Further, upon termination pursuant to ¶4.2(a), the ASSOCIATION 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 at~er 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
accounfmg 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 ASSOCIATION will be obligated to return any unused funds
or funds determined to be used improperly. Any use of remaining funds by the
ASSOCIATION 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.
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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 ASSOCIATION;
Co) The insolvency of the ASSOCIATION, the filing of a petition in bankruptcy,
either voluntarily or involuntarily, or an assignment by the ASSOCIATION for the benefit
of creditors;
(c) The continuation of a broach of any of the terms or conditions of this Agreement
by either the CITY or the ASSOCIATION for more than thirty (30) days atter written notice
of such breach is given to the breaching party by the other party; or
(d) The failure of the ASSOCIATION 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 temainated pursuant to ¶¶4.3 or 4.4,
ASSOCIATION agrees to refund any and all unused funds, or funds determined by the
CITY to have been used improperly, within 30 days atter termination of this Agreement.
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Services. Nothing in this Agreement shall
prohibit, nor be eonstraed to prohibit, the agreement by the ASSOCIATION with another
private entity, person, or organization for the performance of those services described in
¶2.1 above. In the event that the ASSOCIATION enters into any arrangement, contractual
or otherwise, with such other entity, person or organization, the ASSOCIATION 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 T~x. TAx CODE eh. 351,
including reporting requirements, separate funds maintenance, and limitations and
prohibitions pertainm' g to expenditure of the agreed payments and hotel tax funds.
5.2 Independent Contractor. The ASSOCIATION 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 ASSOCIATION shall have exclusive control
of its operations and performance of services hereunder, and such persons, entities, or
organizations performing the same and the ASSOCIATION shall be solely responsible for
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the acts and omissions of its directors, officers, employees, agents, and subcontractors. The
ASSOCIATION shall not be considered a partner or joint venturer with the CITY, nor shall
the ASSOCIATION be considered nor in any manner hold itself out as an agent or official
representative of the CITY.
5.3 Indemnilicafion. THE ASSOCIATION AGREES TO INDEMNIFY, HOLD
HARMLESS, AND DEFEND THE CITY, ITS OFFICERS, AGENTS, AND
EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR
IN.JURIES, DAMAGE, LOSS, OR LIABILITY OF WItATEYER KIND OR
CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE
PERFORMANCE BY THE ASSOCIATION 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 ASSOCIATION,
ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES
AND INVITEES.
5.4 Assignment. The ASSOCIATION shall not assign this Agreement without first
obtaining the written consent of the CITY.
5.5 Notice. Any notice required to be given under tiffs Agreement or any statute,
ordinance, or regulation, shall be effective when given in writing and deposited in the
United States mail, certified mall, return receipt requested, or by hand-delivery, addressed to
the respective parties as follows:
CITY ASSOCIATION
City of Denton
215 E. McKinney
Denton, TX 76201
North Texas State Fair Association
Ken Burdick
Executive Director
P.O. Box 1695
Denton, Texas 76202
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 ASSOCIATION 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
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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 ~om the texms and conditions of any other document relating to this transaction
or these transactions.
5.9 Duplicate Originals. This Agreement is e~ecuted in duplicate ori~nals.
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 specLfic temps of the section and
paragraph so designated.
5.11 Severabfli~y. 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 tho 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. Thc ASSOCIATION shall, at a minimum, provide insurance as follows:
$500,000 Commercial General Liability
Statutory Workers' Compensation and Employers' Liability
($ ~ 00,000/$500,000/$ ~ 00,000)
$500,000 Bus'mess Automob'de Liability on any owned, non-owned or hired
vehicles
The CITY must be named as an additional iusumd on all policies (exert Workers'
Comp~usation) and proof of coverage shall be submitted prior to any payment by the CITY.
EXECUTED this ~/~ day of
THE CITY OF DENTON, TEXAS
EULINE BROCK, MAYOR
ATTEST: ~
L. PROUTY,
CITY ATTORNEY
Page8
ATTEST: -. -.
By:
NORTH TEXAS STATE FAIR
ASSOCIATION
By: /'
APPROVED AS TO LEGAL FORM:
By:
Page9
North Texas State Fair and Rodeo Assocation, Inc.
North Texas State Fair and Rodeo
Program Year 2004
Exhibit A
Advertising
Internet
Radio
Newspaper
Billboard
Printing
6,000
27,000
20,000
10,000
4,000
Total Budget $ 67,000