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2001-323AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE GREATER DENTON ARTS COUNCIL 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 Greater Denton Arts Council, attached as an exhibit hereto, and incoxporated by reference hereto SECTION II That this ordinance shall become effective immediately upon its passage and approval ,:00 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 GREATER DENTON ARTS COUNCIL (CY2002 - 2004) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a mumclpal corporation (the "CITY"), and the Greater Denton Arts Council, a non-profit corporarton incorporated under the laws of the State of Texas (the "GDAC") WHEREAS, TEX TAX CODE §351 002 authorizes CITY to levy by ordinance a mumclpal hotel occupancy tax ("hotel tax") not exceedang seven percent (7%) of the consideration pa~d by a hotel occupant, and WHEREAS, by ordinance, CITY has provaded for the assessment and collection of a mume~pal hotel occupancy tax m the c~ty of Denton of seven percent (7%), and WHEREAS, TEx TAX COVE §351 101(a) authorizes CITY to use revenue from its mumc~pal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting sohcltatmns and promotaonal programs to attract tounsts and convenlaon delegates or registrants to the mumclpahty or ats wclmty, and by the acqmslt~on of sites for and the construction, enlargement, repamng, operation, and maintenance of visitor information centers, and the furmslnng of facflmes, personnel, and materials for the reglstrataon of eonvenl~on delegates or registrants, and WHEREAS, GDAC as well eqmppcd to perform those actavataes, and WHEREAS, TEx TAX COVE §351 101(c) authonzes CITY to delegate by contract with GDAC, as an independent entity, the management and supervision of programs and activities of the type descnbed heremabove funded wath revenue from the mumc~pal hotel occupancy tax, NOW, THEREFORE, m cons~derataon of the performance of the mutual covenants and pronuses contained herein, CITY and GDAC agree and contract as follows I HOTEL TAX REVENUE PAYMENT 1 1 Consideration. For and m consideration of the actavlt~es to be performed by GDAC under flus Agreement, CITY agrees to pay to GDAC a pomon of the hotel tax revenue collected by CITY at the rates and m the manner specified hereto (such payments by CITY to GDAC sometnnes hereto referred to as the "a~recd payments" or "hotel tax funds") 1 2 Amount of Payments (a) As used an ti'ns Agreement, the following terms shall have the following specific meanings (~) The term "hotel tax revenue" shall mean the gross momes collected and received by CITY as mumclpal hotel occupancy tax at the rate of seven percent (7%) of the pace prod for a room in a hotel, pursuant to Texas Tax Code §351 002 and City Orchnance 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 CITY's fiscal year It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year 0u) The term "base payment mount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY dunng any relevant period of time (t e, fiscal year or fiscal quarter), less (1) attorney and auditing costs ~ncurred dunng such relevant period of tnne for costs of collection or auditing of hotel taxpayers Attorney and auchtmg costs include fees paid to attorneys or agents not m the regular employ of CITY for whtch attorneys or agents effect comphance or collection of the hotel tax fxom taxpayers, and (2) court costs and other expenses incurred m ht~gat~on agmnst or auditing of such taxpayers 0v) The term "contract quarter" shall refer to any quarter of the calendar year in wl-nch th~s Agreement is m force Contract quarters will end °n March 3 l~t, June 30th, September 30th, and December 31 ~t of each contract year Co) In return for satisfactory performance of the actlvit~es set forth in flus Agreement and all attachments hereto, CITY shall pay to GDAC an amount of money in each contract year equal to the lesser amount of Twelve and Thirty Six One Hundredths percent (12 36%) of the annual base payment amount or the fixed contract amount of One Hundred and Nineteen Thousand,Two Hundred and Ninety E~ght Dollars ($119,298) This amount will be divided into quarterly payments equal to 25% of the annual fixed contract amount, unless CITY can show with reasonable certmnty 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 unpmd remmnder of 12 36% of the base payment amount, whichever is less Each quarterly payment ~s subject to receipt of unused funds from the prior contract period and the receipt of the reqmred quarterly reports Fundang 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 ascalat~on of not more than 4% 1.3 Dates of Payments (a) The term "quarterly payments" shall mean payments by CITY to GDAC of those amounts specified ~n ¶1 2, above, as determined by the hotel tax revenue collected (b) Each quarterly payment shall be pa~d upon receipt of the reqmred reports and after the 25th day followng the last day of the contract quarter If quarterly finanexal and performance reports are not receaved wathm tturty (30) days of the end of the appheable contract quarter, the recapaent may be held m breach of tlus Agreement CITY may w~thhold the quarterly payment(s) until the appropriate reports are receaved and approved, whach approval shall not unreasonably be withheld 1.4 Other llmitataons regarding consaderation (a) The funding ofth~s project m no way eommats CITY to future funding ofth~s program beyond the current contract period Any future funding as solely the responsabfl~ty of GDAC (b) It as expressly understood that tfus contract m no way obhgates the General Fund or any other momes or credits of CITY (e) CITY may wathhold further allocataons ~fCITY detenmnes that GDAC's expenchtures devmte materially from their approved budget II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and m consaderataon of the payment by CITY to GDAC of the agreed payments of hotel tax funds specafied above, GDAC agrees to use such hotel tax funds only for advertasmg and conducting soheatat~ons and promotional programs to attract tourists and eonventmn delegates or registrants to the mumcapal~ty or ~ts wcunty, by the encouragement, promotaon, ~mprovement, and appllcataon of the arts, mcluchng instrumental and vocal musac, dance, drama, folk art, creative writing, arcbatecture, design and alhed fields, painting, sculpture, photography, grapbac and craft arts, motion pxctures, radao, televaston, tape and sound recording, and other arts related to the presentation, performance, execution, and exhxbltaon of these major art forms, as authorized by TEX TAX CODE §351 101 Funds for any ealandar year wbach are unused by mldmght December 31 st of that year shall be refunded to CITY watlun tturty (30) days 2.2 Allowable Administrative Costs. The hotel tax funds received from CITY by GDAC may be spent for day-to-day operations, office supphes, salaries, and other admlmstratave costs allowed by TEX TAx CODE §351 101(f), only ffthey are chreetly attributable to work on programs wluch promote tourism and the hotel and convention industry, and which also promote at least one of the five statutory purposes enumerated wltfun TEX TAX CODE §351 101(a) 2.3 Specific Restrictions on Use of Funds (a) GDAC agrees to demonstrate strict comphance w~th the recordkeepmg and apportionment lumtat~ons ~mposed by TEX TAX CODE §351 101(f) and §351 108 (c) and (d) GDAC shall not utfuze hotel tax funds for any expenditure w?uch has not been specafically documented to satisfy the purposes set forth m ¶¶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 actlmty the primary purpose ofwtuch is not directly related to the promotxon 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) GDAC shall prepare and submit to the City Manager of CITY an annual budget (see Exhibit "A") as approved by the City Council for each calendar year, for such operattons of GDAC m which the hotel tax funds shall be used bY GDAC Tlus budget shall specifically ~dentffy proposed expemhtures of hotel tax funds by GDAC In other words, CITY should be able to audit specifically where the funds m the separate checl~ng account relating to hotel tax funds w~ll be expended CITY shall not pay to GDAC any hotel tax revenues as set forth m Section I of this contract dunng any fiscal year of tlus Agreement unless a budget for such respecttve fiscal year has been approved m writing by the Denton City Council anthonzmg the expenditure of funds Fmlure to submit an annual budget may be considered a breach of contract, and ~fnot remedied is considered grounds for termination oftlus Agreement as stated m paragraph 4 2 Co) GDAC acknowledges that the approval of such budget by the Denton City Council creates a fiducmry duty m GDAC w~th respect to the hotel tax funds pa~d by CITY to GDAC under tins Agreement GDAC shall expend hotel tax funds only ~n the manner and for the purposes specified m tins Agreement, TEX TAX CODE §351 101(a) and in the budget as approved by CITY 3 2 Separate Accounts. GDAC shall mmntmn any hotel tax funds ptud to GDAC by CITY m a separate chackmg bank account with segregated accounting, such that any reasonable person can review the source of expenditures o f tax funds A bank raconmhatmn report (see Exhtbit "B") is reqmred w~th each quarterly report 3 3 Financial Records. GDAC shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made bY GDAC These funds are mqmred to be classified as resmcted funds for audited financial purposes, and may not be used for supporting servxces, mcluchng, but not hm~ted to, auditing fees and attorney's fees Upon reasonably advance wntten request of the Denton City Council, the City Manager or designate, or any other person, shall make such financial records avmlable for mspect~on and rexaew by the party making the request GDAC understands and accepts that all such financial records, and any other records relating to ttus Agreement shall be subject to the Pubhc Information Act, T~x GOV'T CODE, ch 552, as hereafter amended 3.4 Quarterly Reports. W~tlun thirty days after the end of every contract quarter, GDAC shall furmsh to CITY (1) a performance report of the work performed under fins Agreement describing the activities performed pursuant to this Agreement during that contract quarter, (2) a hst of the expenchtures made w~th regard to hotel tax funds pursuant to TEx TAX CODE §351 101 (c), (3) a copy of all financial records (e g. receipts, invoices, bank statements, end other relevant documentation), and (4) and a quarterly salary audit complying w~th Tex T^x COD£ §351 108(c) and CITY's pubhshed gmdehnes, detathng the tune spent by each employee(s) in promotaon of tourism through any of the five statutory purposes anthonzed under Tex T^x CODe §351 101(a) GDAC shall prepare and deliver all reports m a form and manner approved by the City Manager or designate (see Exhlbat "B") GDAC shall respond promptly to any request from the City Manager of the CITY, or designate, for addmonal mformataon relating to the act~mtaes performed under ttus Agreement 3 5 Notice of Meetings, GDAC shall gxve the C~ty Manager of CITY reasonable advance w~tten notme of the t~me and place of all meetings of GDAC's Board of Darectors, as well as any other meeting of any constatuency o£ GDAC at which th~s Agreement or any matter the subJeCt of th~s Agreement shall be consadered Tbas prowsxon shall not be deemed to reqmre GDAC to g~ve not~ce of any executive session of the Executtve Committee of GDAC IV TERM AND TERMINATION 4,1 Term, The term of thas Agreement shall commence on January 1, 2002 and termanate at mxdmght on December 31, 2004 Tl~s term shall be a period of three years 4.2 Terminnt~on W~thout Cause. (a) Tlus Agreement may be terminated by eather party, wah or w~thout cause, by gavmg 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), CITY agrees to reimburse GDAC for any contractual obhgatlons of GDAC undertaken by GDAC m satmfactory performance of those actawUes spemfied m ¶¶2 1 and 2 2 above and that were approved by the Council through the budget, as noted in ¶3 1 Ttus reambursement as condatmned upon such contractual obhgat~ons having been ancurred and entered into an the good froth performance of those services contemplated m ¶¶2 1 and 2 2 above, and further eondltaoned upon such contractual obhgataons hawng a term not exceedmg the full term of this Agreement Notw~thstandang any provasaon hereof to the contrary, the obhgataon of CITY to reamburse GDAC or to assume the performance of any contractual obhgataons of GDAC for or under any contract entered into by GDAC as contemplated herein shall not exceed 66 2/3% of the current quarterly payment (c) Further, upon termmatlon pursuant to ¶4 2(a), GDAC will provide CITY 1) Wathm 10 business days from the termmataon notification, a short-term budget of probable expendatures for the remoamng 60 day period between termanatlon notification and contract termmataon This budget wall be presented to Council for approval wlthan 10 busmess days after receipt by CITY If formal approval as not g~ven within l0 business days and the budget does not contmn any expendatures that would be prohlbated by the Texas Tax Code, and as wathm the current contractual period approved budget, the budget wall be consadered approved, 2) Wathm 30 days, a full accounting of all expenchtures not previously audited by CITY, 3) Within 5 business days of a request from CITY, a hstmg of expenthtures that have occurred since the last required reporting period, 4) a final accounting of all expenditures and tax funds on the day of tenmnation GDAC wall be obligated to return any unused funds or funds determined to be used improperly Any use of remmmng funds by GDAC after notification of termination rs conrhtloned upon such contractual obhgatlons having been incurred and entered into the good faith performance of those services contemplated in 2 1 and 2 2 above, and further eontht~oned upon such contractual obligations having a term not exceeding the full term ofttus Agreement 4.3 Automatic Termmnt~on Tins Agreement shall automalacally terminate upon the occurrence of any of the following events (a) The ternunatlon of the legal existence of GDAC, (b) The insolvency of GDAC, the fihng of a petition m bankruptcy, either voluntarily or involuntarily, or an assignment by GDAC for the benefit of erechtors, (c) The contmuatton of a breach of any of the terms or conditions of this Agreement by either CITY or GDAC for more than tlurty (30) days after written notme of such breach as given to the breaclung party by the other party, or (d) The failure of GDAC to subnut a financial quarterly report which complies with the repo~ng procedures reqmred hereto and generally accepted accountmg pnncxples prior to the begnanng of the next contract term, or quarterly as reqmred by Section 1 3 hereof 4.4 Right to Immediate Termination Upon Litigation. Notw~thstanchng any other provision oftbas Agreement, to war,gate damages and to preserve evidence and issues for juchelal determination, either party shall have the right to terminate tfus Agreement upon lmmedmte notice to the other party in the event that any person has instituted ht~gatlon concermng the actlxqt~es of the non-ternunatmg party, and the tm-tranatmg party reasonably believes that such actlmttes are reqmred or prohtbited under flus Agreement 4.5 In the event that tins Agreement as terminated pursuant to ¶¶4 3 or 4 4, GDAC agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, witlun 30 days after termination of this Agreement V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services Nottung in this Agreement shall probab~t, nor be ennstrued to prohtblt, the agreement by GDAC with another private entity, person, or orgamzatton for the performance of those services described in ¶2 1 above In the event that GDAC enters into any arrangement, contractual or otherwise, with such other entity, person or orgamzatton, GDAC shall cause such other entity, person, or orgamzatton to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEX T^x CODE ch 351, including repo~ng requrrements, separate funds mmntenance, and lmntat~ons and prolnbltmns pertmmng to expenditure of the agreed payments and hotel tax funds 5.2 Independent Contractor. GDAC shall operate as an independent contractor as to all sermces to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY GDAC shall have exclusive control of its operations and performance of services hereunder, and such persons, enttt~es, or orgamzataons perfonmng the same and GDAC shall be solely responsible for the acts and omissions of its chreetors, officers, employees, agents, and subcontractors GDAC shall not be considered a parlner or Joint venturer voth CITY, nor shall GDAC be considered nor in any manner hold itself out as an agent or official representative of CITY 5 3 Indemnification. GDAC AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND 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 GDAC 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 GDAC, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5 4 Assignment. GDAC shall not assign tins Agreement without first obtmmng the written consent of CITY 5.5 Notice Any notme required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when g~ven in writing and deposited ~n the Umted States marl, certffied mml, retum receipt requested, or by hand-dehvery, addressed to the respective parties as follows CITY ~GDAC City 0fDenton Greater Denton Arts Council 215 E McKmney Herbert Holl Denton, TX 76201 Executive D~rector 207 South Bell Denton, Texas 76201 5 6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obhgat~on, and hablhty set forth herein shall be blnrhng upon and inure to the benefit and obligation of CITY and GDAC and their respective successors and assigns 5 ? Application of Laws All terms, concht~ons, and prows~ons of tlus Agreement are subject to all apphcable federal laws, state laws, the Charter of the C~ty of Denton, all ordinances passed pursuant thereto, and all jud~cml determinations relative thereto 5.8 Exclusive Agreement. Tlus Agreement contaans the entire understanding and constitutes the enUre agreement between the part, es hereto concermng the subject matter contained here~n There are no representations, agreements, arrangements, or understandangs, oral or written, express or lmphed, between or among the part, es hereto, relating to the subject matter of tlus Agreement, wluch are not fully expressed hereto The terms and conditions oftlus Agreement shall prevad notwithstanding any variance ~n flus Agreement from the terms and conchtaons of any other document relating to tlus transaction or these transacUons 5.9 1)upheate Origiuals. Tins Agreement ~s executed m duphcate ong~nals 5.10 Headings. The headings and subheadings of the various sections and paragraphs of flus Agreement are inserted merely for the purpose of convemence and do not express or ~mply any hnutalaon, defimt~on, or extension of the specific terms of the section and paragraph so designated 5 11 Severability If any section, subsectaon, paragraph, sentence, clause, phrase or word in flus Agreement, or apphcat~on thereef to any person or c~rcumstance is held invalid by any court of enmpetent jurisdiction, such holding shall not affect the validity of the remaining portions of flus Agreement, and the part,es hereby declare they would have enacted such rema~mng portions despite any such ~nvahd~ty 5 1:~ Insurance. GDAC shall, at a m~nlmtun, provide insurance as follows $500,000 Commercml General Lmb~llty Statutory Workers' Compensation and Employers' Lmluhty ($100,000/$500,000/$100,000) $500,000 Bus~ness Automobile Lmbthty on any owned, non-owned or lured velucles CITY must be named as an additional insured on all pohc~es (except Workers' Compensataon) and proof of coverage shall be subrmtted pnor to any payment by CITY THE CITY OF DENTON, TEXAS By ~..t~/~ EULINE BROCK, MAYOR ATTEST APPROVED AS T_~O ~ GREATER DENT,~TS COUNCIL ATTEST ~PROVED AS TO LEG~ FO~ By By S~'etary Exhibit A Greater Denton Arts Council Program Year 2002 ADVERTISING Calendars and Promotional Materials $ 3,000 00 $ 3,OOO 00 ART $ 8,000 00 Exhibit Pro,rams $ 8,000 00 BUILDING' $ 13,000 00 Fac~hty Properties $ 13,000 00 ADMINISTRATION $ 91,298 00 Salaries $ 5,000 00 Office Supplies $ 96,298 00 $120,298 00 Interest Income $ (1,000 00) $119,298 00 SAMPLE FINANCIAL REPORT Exhibit B Program Year 2002 1ST 2ND 3RD 4TH YEAR QUARTER QUARTER QUARTER QUARTER to (APR - JUN) (JUL - SEP) (OCT - DEC) DATE $o oo $o oo $o oo $o oo $0 O0 $o oo $o oo $o OO $o OO $000 $o oo $o oo $o oo $o oo $0 oo $o oo $o OO $o oo $o oo $0 O0 $0 oo $0 oo $o oo $o OO $000 $o oo $o oo $o oo $o oo $0 oo $o oo $0 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 oo $o oo $0 oo $o oo $o oo $0 oo $o oo $o oo $o OO $0 O0 $o oo $o oo $o oo $000 $o OO $o O0 $o oo $o oo $o oo $0 oo Date Submitted Program Director