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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