2001-322 ORDIN~CE NO ~00/- 6~ ~
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 I That the Mayor is hereby authorized to execute an agreement between the
City of Denton and the North Texas State Fair Association, attached as an exhibit hereto, and
incorporated by reference hereto
SECTION II That this ordinance shall become effective immediately upon its passage
and approval
PASSED AND APPROVED this the _ day of
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 THE NORTH TEXAS
STATE FAIR ASSOCIATION (CY2002 - 2004) PROVIDING FOR THE PAYMENT
AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a mnnlclpal
corporation (the "CITY"), and the North Texas State Fair Assoclataon, 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
mumc~pal hotel occupancy tax (''hotel tax") not exceeding seven percent (7%) of the
consideration pond by a hotel occupant, and
WHEREAS, by ordinance, the CITY has prowded for the assessment and collection
ofa mumc~pal hotel occupancy tax m the City of Denton of seven percent (7%), and
WHEREAS, TEX TAX COOE §351 101(a) authorizes the CITY to use revenue fi.om
its mumelpal hotel occupancy tax to promote tourism and the convention and hotel industry
by advertasmg and conducting sohcltat~ons and promotional programs to attract tounsts and
conventlnn delegates or registrants to the mumelpahty or its vlelmty, and by the acqmslt~on
of sites for and the construction, enlargement, repalnng, operation, and maintenance of
visitor information centers, and the funusbang of facdmes, personnel, and materials for the
reg~strataon of convention delegates or registrants, and
WHEREAS, the ASSOCIATION is well equipped to perform those actlvitues, 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 heremabove funded with
revenue fi.om the mumclpal hotel occupancy tax,
NOW, THEREFORE, m consideration 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 m cons~deration of thc 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 hereto (such payments by the CITY to the ASSOCIATION sometmaes herein
referred to as the "agreed payments" or "hotel tax funds")
1.2 Amount of Payments
(a) As used in tbas Agreement, the followmg terms shall have the following
specific meamngs
(0 The term "hotel tax revenue" shall mean the gross monies
collected and received by the City as mumc~pal hotel occupancy tax at the rate of
seven percent (7%) of the price paid for a room ~n 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
00 The term "Collection period" will mean the collection period for the
CITY's fiscal year It w~ll 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 txme (t e, fiscal year or fiscal quarter), less (1) attorney and an~htmg costs
incurred during such relevant period of time for costs of collection or andxt~ng of
hotel taxpayers Attorney and amhtmg costs include fees prod 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 recurred m litigation agmnst or audmng of such taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar
year m wluch ttus Agreement is m force Contract quarters will end on March 31st,
June 30th, September 30th, and December 31~t of each contract year
(b) In return for saUsfactory performance of the act~vmes set forth m thxs
Agreement and all attachments hereto, the CITY shall pay to ASSOCIATION an amount
of money m each contract year equal to the lesser amount of Nine and Fffieen One
Hundredths percent (9 15%) of the annual base payment amount or the fixed contract
amount of Eighty Eight Thousand,Two Hundred and S~xty Dollars ($88,260) This
amount will be dxvlded 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 cremated for the fiscal year The fourth
quarterly payment will represent 25% of the fixed contract amount or the unpmd
remainder of 9 15% 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 Funding for calendar year 2003 and calendar year
2004 Is dependent upon, and subject to, budget approval by the City Council for those
periods Upon, and subject to budget approval, the budgeted annual payment for calendar
years 2003 and 2004 are subject to an annual escalation of not more than 4%
1 3 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by the CITY to the
ASSOCIATION of those amounts specified xn "HI 2, above, as determined by the hotel tax
revenue collected
1 3 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by the CITY to the
ASSOCIATION of those mounts specified m ¶1 2, above, as deterrmned by the hotel tax
revenue collected
(b) Each quarterly payment shall be prod upon receipt of the required reports and
after the 25th day following the last day of the contract quarter If quarterly financial and
performance reports are not receaved w~ttun tlurty (30) days of the end of the apphcable
contract quarter, the recipient may be held ~n breach of th~s Agreement The CITY may
w~thhold the quarterly payment(s) until the appropnate reports are received and approved,
wfuch approval shall not unreasonably be withheld
1.4 Other limitations regarding consideration.
(a) The funding of tbas project m no way commits the CITY to future fun&ng of
tlus program beyond the current contract period Any future fimd~ng ~s solely the
respons~bthty of the ASSOCIATION
(b) It ~s expressly understood that this contract in no way obligates the General Fund
or any other momes or ere&ts of the CITY
(c) CITY may w~thhold further allocations if CITY determines that
ASSOCIATION's expenditures dewate materially from their approved budget
II. USE OF HOTEL TAX REVENUE
2 1 Use of Funds. For and m consideration of the payment by the CITY to the
ASSOCIATION of the agreed payments of hotel tax funds specffied above, the
ASSOCIATION agrees to use such hotel tax funds only for advems~ng and conducting
sohmtattons and promotional programs to attract tourists and convention delegates or
registrants to the mumc~pahty or 11,8 vicinity, as authorized by TEX TAx CODE §351 101(a)
Funds for any calendar year winch are unused by mldmght December 31st of that year shall
be refunded to CITY within thirty (30) days
2.2 Specific Restrictions on Use of Funds.
(a) ASSOCIATION agrees to demonstrate strict comphance with the
recordkeepmg and apportaonment hrmtatmns imposed by TEX TAX CODE §351 101(f) and
§351 108 (c) and (d) ASSOCIATION shall not utthze hotel tax funds for any expenditure
wfuch has not been specifically documented to satisfy the purposes set forth m ~2 1 and 2 2
above
(b) Hotel tax funds may not be spent for travel for a person to attend an event or
conduct an act~wty the pnmary purpose of which ~s 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 effiment and professional manner
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The ASSOCIATION shall prepare and submit to the C~ty Manager of the
CITY an annual budget (see Exlub~t "A") as approved by the C~ty Council for each calendar
year, for such operations of the ASSOCIATION ~n whmh the hotel tax funds shall be used
by the ASSOCIATION Th~s budget shall specifically ~dent~fy proposed expenchtures of
hotel tax fimds by the ASSOCIATION In other words, the CITY should be able to aucht
specffically where the funds m the separate cheekmg account relattng to hotel tax funds will
be expeaded The CITY shall not pay to the ASSOCIATION any hotel tax revenues as set
forth m Sact~on I of flus contract dunng any fiscal year of ttus Agreement unless a budget
for such respective fiscal year has been approved m writing by the Denton C~ty Courted
authorizing the expenthture of funds Fmlure to submit an annual budget may be considered
a breach of contract, and ff not remedied ~s considered grounds for tenmnat~on of tins
Agreement as stated ~n paragraph 4 2
(b) The ASSOCIATION acknowledges that the approval of such budget by the
Denton Cxty Cotmcd creates a fiducmry duty m the ASSOCIATION w~th respect to the
hotel tax funds prod by the CITY to the ASSOCIATION under tins Agreement The
ASSOCIATION shall expend hotel tax funds only m the manner and for the proposes
specffied m flus Agreement, TEx TAX CODE §351 101(a) and ~n the budget as approved by
the CITY
3 2 Separate Accounts. The ASSOCIATION shall mamtmn any hotel tax funds poad
to the ASSOCIATION by the CITY m a separate checlang bank account w~th segregated
accounting, such that any reasonable person can rewew the source of expenditures of tax
funds A bank reconcthat~on report (see Exlub~t "B") ~s reqmred wtth each quarterly report
3.3 Financial Records. The ASSOCIATION shall mmntmn complete and accurate
financial records of each expend~tture of the hotel tax funds made by the ASSOCIATION
These funds are reqmred to be classified as resmcted funds for audited financml purposes,
and may not be used for suppomng sormces, ~ncludmg, but not hnuted to, auchtlng fees and
attorney's fees Upon reasonably advance written request of the Denton City Council, the
C~ty Manager or designate, or any other person, shall make such financial records available
for ~nspeet~on and remew by the party making the request ASSOCIATIONunderstands and
accept~ that all such financml records, and any other records relating to tins Agreement shall
be subJeCt to the Pubhc Information Act, TEx Gov'T CODE, ch 552, as hereafter amended
3.4 Quarterly Reports. Wxthm flurty days after the end of every contract quarter,
ASSOCIATION shall furmsh to CITY (1) a performance report of the work performed
under flus Agreement describing the actlmt~es performed pursuant to flus Agreement dunng
that contract quarter, (2) a hst of the expenditures made w~th regard to hotel tax funds
pursuant to T~x TAX COVE §351 101(c), and (3) a copy of all financial records (eg,
receipts, mvomas, checks, bank statements, and other relevant documentatmn)
ASSOCIATION shall prepare and dehver all reports m a form and manner approved by the
C~ty Manager or designate (see Extub~t "B") The ASSOCIATION shall respond promptly
to any request from the City Manager of the CITY, or designate, for additional information
relating to the act~wtaes performed under this Agreement
3.5 Notice of Meetings. The ASSOCIATION shall g~ve the C~ty Manager of the
CITY reasonable advance written not~ee of the tune and place of all meetings of
ASSOCIATION's Board of Directors, as well as any other meeting of any constituency of
the ASSOCIATIONat which flus Agreement or any matter the subject of tbas Agreement
shall be considered Tlus provision shall not be deemed to reqmre the ASSOCIATION to
give not,ce of any executive session of the Executive Committee of the ASSOCIATION
IV. TERM AND TERMINATION
4 1 Term. The term of thas Agreement shall commence on January 1, 2002 and
terminate at mldmght on December 31, 2004 This term shall be a period of three years
4 2 Termination Without Cause.
(a) Tbas Agreement may be terminated by either party, with or without cause, by
giving the other party sixty (60) days advance written not,ce
(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 obhgatlons
of the ASSOCIATION undertaken by the ASSOCIATION in satisfactory performance of
those actavttles specified m ¶¶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 m 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 ASSOCIATIONor to assume the performance of any
contractual obligations of the ASSOCIATION for or under any contract entered into by
the ASSOCIATION as contemplated hereto shall not exceed 66 2/3% of the current
quarterly payment
(e) Further, upon terrmnatton 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 expenchtures 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 aRer receipt by CITY If formal approval is
not g~ven wlttun 10 business days and the budget does not contain any expenditures that
would be prohlbtted by the Texas Tax Code, and is within the current contractual period
approved budget, the budget will be considered approved, 2) Wltban 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 reqmred reporting period, 4) a final accounting of all expenditures and tax funds on
the day of termination The ASSOCIATION will be obhgated to return any unused funds
or fuads determined to be used improperly Any use of remammg funds by the
ASSOCIATION after notification of termination is conditioned upon such contractual
obligations having been incurred and entered into m the good faith performance of those
services contemplated in 2 1 and 2 2 above, and further conthtloned upon such
contractual obligations having a term not exceeding the full term of tfus Agreement
4.3 Automatic Termination. Tlus Agreement shall automatmally terminate upon the
occurrence of any of the following events
(a) The termination of the legal existence of the ASSOCIATION,
(b) The insolvency of the ASSOCIATION, the fihng of a petition m bankruptcy,
either voluntarily or involuntarily, or an ass~granent by the ASSOCIATION for the
benefit of erechtors,
(c) The cont~nuataon of a breach of any of the terms or conditions of tbas Agreement
by either the CITY or the ASSOCIATION for more than thirty (30) days after
written notme of such breach is given to the breaching party by the other party, or
(d) The failure of the ASSOCIATION to submat a financial quarterly report wtuch
compiles with the reportmg procedures reqmred hereto and generally accepted
accounting pnnclples prior to the beginning of the next contract term, or quarterly as
reqmred by Section 1 3 hereof
4 4 Right to Immediate Termination Upon Litigation Notwlthstanchng any other
provlslun of flus Agreement, to mitigate damages and to preserve evidence and
issues for judmlal detenmnalaon, either party shall have the right to terminate flus
Agreement upon immediate notice to the other party in the event that any person has
instituted htlgatlon coneermng the actlwtles of the non-terminating party, and the
terminating party reasonably believes that such actavit~es are required or prohfluted
under flus Agreement
4.5 In the event that flus Agreement is terminated 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 after termanatlon of tfus Agreement
V. GENERAL PROVISIONS
5 1 Subcontract for Performance of Services Notfung in flus Agreement shall
prohibit, nor be construed to prohibit, the agreement by the ASSOCIATION with another
private entity, person, or orgamzatmn for the performance of those sermces described in
¶2 1 above In the event that the ASSOCIATION enters into any arrangement, contractual
or otherwise, wqth such other entity, person or organization, the ASSOCIATIONshall cause
such other entity, person, or orgamzatlun to adhere to, conform to, and be subject to all
provlsmns, terms, and conditions of flus Agreement and to TEX TAX COVE ch 351,
lncluchng reporting reqmrements, separate funds maintenance, and hmitatlons and
pmhlbltmns pertaining 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
orgamzallons performing the same and the ASSOCIATION shall be solely responsible for
the acts and ormsmons of its dareetors, 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 Indemnification 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
INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER 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
obtammg the written consent of the CITY
5 5 Notice. Any notice reqmred to be g~ven under th~s Agreement or any statute,
ordmance, or regulation, shall be effective when given m writing and deposited in the
Umted States mml, certified mml, return receipt requested, or by hand-dehvery, addressed to
the respective parties as follows
CITY ASSOCIATION
City of Denton North Texas State Fmr Association
215 E MeKumey Ken Burdlck
Denton, TX 76201 Executive Director
P O Box 1695
Denton, Texas 76202
5.6 Inurement. Tbas Agreement and each provision hereof, and each and every right,
duty, obhgat~on, and hablllty set forth herem shall be binding upon and inure to the benefit
and obhgalaon of the CITY and the ASSOCIATION and their respective successors and
assigns
5.7 Application of Laws. All terms, conthtsons, and prowsaons of flus Agreement are
subject to all apphcable federal laws, state laws, the Charter of the Caty of Denton, all
or(hnancas passed pursuant thereto, and all juthc~al determmatmns relative thereto
$ 8 Exclusive Agreement. Tins Agreement contains the entire understanding and
constitutes the entire agreement between the part~es hereto concermng the subject matter
contained here~n There are no representations, agreements, arrangements, or
tmderstandmgs, oral or written, express or ~mphed, between or among the parties hereto,
relating to the subject matter of tlus Agreement, which are not fully expressed hereto The
terms and conthtaons of th~s Agreement shall prevail notwlthstanchng any variance m th~s
Agreement from the terms and condatmns of any other document rclatang to thas transaction
or these transaclaons
5 9 Duplicate Originals. Ttus Agreement is executed m duphcate originals
5 10 Headings. The headings and subheathngs of the various sections and paragraphs of
tfus Agreement are mscrted merely for the purpose of convemence and do not express or
~mply any lnmtatmn, defimtmn, or extension of the specific terms of the section and
paragraph so designated
5 11 Severability. If any sectaon, subsectmn, paragraph, sentence, clause, phrase or word
in this Agreement, or apphcat~on thereof to any person or carcumstance is held invalid by
any court of competent junschct~on, such holding shall not affect the vahd~ty of the
remaining portaous of flus Agreement, and the part,es hereby declare they would have
enacted such remmmng pomons despite any such mvahdlty
5 12 Insurance. The ASSOCIATION shall, at a mlramum, provide insurance as follows
$500,000 Commercial General L~abthty
Statutory Workers' Compensation and Employers' L~ab~hty
($100,000/$500,000/$100,000)
$500,000 Bus~ness Automobile nmbthty on any owned, non-owned or h~r~d
vefucles
The CITY must be named as an addlttonal insured on all pohc~es (except Workers'
Compensalaon) and proof of coverage shall be submitted pnor to any payment by the CITY
EXECUTEDttus 4~ dayof ~/)'~-'~f2~ j ,2001
THE CITY OF DENTON, TEXAS
ATTEST AP~
J~I~I~R '~LTEi~S, ~"~RBERT L PROUTY,
CI't~' SECRL:tI'ARY ~'~ CITY ATTORNEY
/
. . _
ATTEST APPROVED AS TO LEGAL FORM
By By
Secretary
Exhibit A
North Texas State Fa,r Association
North Texas State Fair and Rodeo
Program Year 2002
Requested Amount
ADVERTISING
Internet $ 3,600 00
Radio $ 34,000 00
Newspaper $ 23,960 00
B~llboards $ 22,000 00
Pr~nbng $ 4,000 00
$ 700 00
Postage
$ 88,260 00
$ 88,260 00
SAMPLE FINANCIAL REPORT Exhibit B
Program Year 2002
1 ST 2N D 3RD 4TH YEAR
QUARTER QUARTER QUARTER QUARTER to
(APR - JUN) (JUL. SEP) (OCT - DEC) DATE
$o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$0 O0 $0 O0 $0 O0 $0 O0 $0 O0
$o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo
$o oo $o oo
$o oo $o oo
Date Submitted Program Director