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