2001-327AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON HOLIDAY FESTIVAL
ASSOCIATION, INC 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 anthonzed to execute an agreement between the
City of Denton and the Denton Holiday Festival Association, Inc for the payment and use of
hotel tax revenue, under the terms and conditions contmned in the agreement, a copy of which is
attached hereto and made a part hereof
SECTION II That this orthnanee shall become effective lmmedtately upon its passage
and approval
d yo, ,2oo
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
DENTON HOLIDAY FESTIVAL ASSOCIATION, INC (CY2002)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a mumc~pal corporation
(the "CITY"), and the Denton Hohday Festival Assoemt~on, Inc, a legal entity incorporated under
the laws oft.he State of Texas (the "ASSOCIATION")
WHEREAS, Tax T^x CODE §351 002 authorizes the CITY to levy by ordinance a
mumclpal hotel occupancy tax (''hotel tax") not exceeding seven percent (7%) of the considerat~on
prod by a hotel occupant, and
WHEREAS, by ordinance, the CITY has provided for the assessment and collection of a
municipal hotel occupancy tax m the City of Denton of seven percent (7%), and
WHEREAS, TEX TAx CODE §351 101(a) anthonzas the CITY to use revenue fi:om its
mumclpal hotel occupancy tax to promote tourism and the convention and hotel industry by
adverhsmg and conducting sohcltataons and promotional programs to attract tourists and convention
delegates or registrants to the mumclpahty or its vlcmaty, and
WHEREAS, the ASSOCIATION is well equapped to perform those aCtlVmes, and
WHEREAS, TEX TAX CODe §351 101(c) authonzes 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, an consideration of the performance of thc 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 conslderaUon of the activities to be performed by the
ASSOCIATION under flus Agreement, the CITY agrees to pay to the ASSOCIATION a portmn 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 sometimes herein referred to as the "agreed
payments" or "hotel tax funds")
1.2 Amount of Payments.
(a) As used m flus Agreement, the following terms shall have the following specific
meanings
(1) The term "hotel tax revenue" shall mean the gross momes collected and
reeewed by the C~ty as mumelpal hotel occupancy tax at the rate of seven percent (7%) of
the pnee pa~d for a room m 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 "Collactlon period" will mean the collection period for the CITY's
fiscal year It will include hotel tax revenue due to the C~ty for the relevant fiscal year and
collected through the 22nd day of the month following the close of the relevant fiscal year
0~0 The term "base payment amount" shall mean a net amount of money equal
to the total hotel tax revenue collected by the CITY dunng any relevant period of t~me (t e,
fiscal year or fiscal quarter), less (1) attorney and aurhtmg costs lncun'ed dunng such
relevant period of tune for costs of collection or auditing of hotel taxpayers Attorney and
andatmg costs include fees prod to attorneys or agents not in the regular employ of the CITY
for wluch attorneys or agents effect comphance or collection of the hotel tax from taxpayers,
and (2) court costs and other expenses recurred m htlgat~on agmnst or auditing of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year m
wluch flus Agreement ~s in force Contract quarters will end on March 31st, June 30th,
September 30t~, and December 31st of each contract year
(b) In return for satisfactory performance of the activities set forth ~n this Agreement
and all attachments hereto, the CITY shall pay to ASSOCIATION an amount of money ~n each
contract year equal to the fixed contract amount of Seven Thousand Five Hundred Dollars
($7,500) This amount will be dlwded into no more than two payments Each payment ~s
subject to receipt of unused funds from the prior contract period and the receipt of the reqmred
quarterly reports
1 3 Dates of Payments.
(a) The term "payments" shall mean payments by the CITY to the ASSOCIATION of those
amounts spacffied m ¶1 2, above, as determined by the hotel tax revenue collected
(b) In return for the satisfactory performance of the activities set forth m flus contract and
all attachments thereto, CITY shall pay the ASSOCIATION the agreed payments specffied in ¶l 2
above by no more than two payments, paying the fixed contract amount dunng the 1st and 2nd
quarter of the calendar year If a second due, that payment shall be prod upon receipt
25thPayment as
of the reqmred reports and after the day following the last day of the contract quarter If
quarterly financial and performance reports are not received w~tl~n thirty (30) days of the end of the
apphcable quarter, the recxpxent may be held m breach of ttus Agreement The CITY may withhold
the quarterly payment(s) until the appropriate reports are received and approved, which approval
shall not unreasonably be w~thheld
1.4 Other limitations regarding consideration
(a) The funchng of th~s project in no way commits the CITY to future funding of this
program beyond the current contract period Any future funding ~s solely the responsththty of the
ASSOCIATION
(b) It ts expressly understood that flus contract m no way obhgates the General Fund or any
other momes or credits of the CITY
(c) CITY may wtthhold further allocatmns ff 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 m constderat~on of the payment by the CITY to the ASSOCIATION of
the agreed payments of hotel tax funds speeffied above, the ASSOCIATION agrees to use such
hotel tax funds only for advertising and conducting sollettatlons and promottonal programs to attract
tourists and convention delegates or registrants to the mumctpahty or tts vlmmty, as well as the
promotaon of tuunsm through the encouragement, promotaon, ~mprovement, and appheataon of the
arts, tncludmg msmunental and vocal music, dance drama, folk art, creaUve writing, arcbatecture,
destgn and alhed fields, pmntmg, sculpture, photography grapbac and craft arts, motion ptcmres,
radio, telexaston, tape and sound recording, and other arts related to the presentation, performance,
execution and exlublt~on of these major art forms, as authorized by TEx TAx CODn §351 101(a)
Funds fo~ any calendar year wluch are unused by mtdmght December 31st of that year shall be
refunded to CITY w~thm flurty (30) days
2 2 Administrative Costs. The hotel tax funds recetved from the CITY by the ASSOCIATION
may be spent for day-to-day operations, office supplies, salaries, travel expenses, and other
admlmstrattve costs that are incurred d~rectly ~n the performance by the ASSOCIATION of those
activities specified m ¶2 1 above and are allowed by T~x T^x CoDe §351 101(f)
2 3 Specific Restrictions on Use of Funds.
(a) That pomon of total adnmustratlve costs of the ASSOCIATION for wtuch hotel tax
funds may be used shall not exceed that portton of the ASSOCIATION's admunstratlve costs
actually recurred tn conducting the act~mtaes specffied in ¶2 1 above
(b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an acttvtty the primary purpose of wtuch ts not directly related to the promotion of local tourism and
the conventton and hotel industry or the performance of the person's job m an effictent and
professtonal manner
III. RECORDKEE?ING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The ASSOCIATION shall prepare and submit to the City Manager of the CITY an
annual btldget (see Exbabtt "A") as approved by the C~ty Council for each calendar year, for such
operataon~ of the ASSOCIATION m which the hotel tax funds shall be used by the
ASSOCIATION Tlus budget shall specifically identify proposed expenditures of hotel tax funds
by the ASSOCIATION In other words, the CITY should be able to audit spemfically where the
funds m the separate checking account relating to hotel tax funds will be expended The CITY shall
not pay to the ASSOCIATION any hotel tax revenues as set forth m Sectton I of flus contract during
any fiscal year of tins Agreement unless a budget for such respective fiscal year has been approved
~n writing by the Denton C~ty Council authorizing the expenditure of funds Fmlure to submat an
annual budget may be considered a breach of contract, and if not remedied is considered grounds for
termination of tins Agreement as stated m paragraph 4 2
(b) The ASSOCIATION acknowledges that the approval of such budget by the Denton
City Council creates a fiduciary duty m the ASSOCIATION with respect to the hotel tax funds prod
by the CITY to the ASSOCIATION under this Agreement The ASSOCIATION shall expend
hotel tax funds only m the manner and for the purposes specified m flus Agreement, TEX TAx
CODE §351 101(a) and in the budget as approved by the CITY
3 2 Separate Accounts The ASSOCIATION shall mmntmn any hotel tax funds prod to the
ASSOCIATION by the CITY ~n a separate bank checlang account w~th segregated accounting,
such that any reasonable person can rewew the source of expenditures of tax funds A bank
reconcthatlon report (see Exinb~t "B") Is reqmred with each quarterly report
3 3 Financial Records. The ASSOCIATION shall mmntmn 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
suppo~ng services, ~ncluding, but not Inmted to, auditing fees and attorney's fees Upon
reasonably advance wntten request of the Denton C~ty Council, the City Manager or designate, or
any other,person, shall make such financial records avmlable for mspectmn and review by the party
making the request ASSOCIATION understands and accepts that all such financial records, and
any other, records relating to tins Agreement shall be subject to the Pubhc Informatmn Act, TEx
GOV'T CODE, ch 552, as hereafter emended
3.4 Quarterly Reports. After untlal receipt of hotel tax funds, and within thirty days after the
end of every quarter thereafter, until all funds have been expended and reported to the CITY,
ASSOCIATION shall furmsh to CITY (1) a performance report of the work performed under tins
Agreement describing the activities performed pursuant to this Agreement dunng that contract
quarter, (2) a hst of the expenditures made w~th regard to hotel tax funds pursuant to TEx TAX
Cove §351 101(c), and (3) a copy of all financial records (e g, receipts, invoices, bank statements,
and other relevant documentation) Both the performance and expenditure reports will be ~n a form
either determined or approved by the City Manager or designate (see Exhibit "B") The
ASSOCIATION shall respond promptly to any request from the City Manager of the CITY, or
designate, for additaonal reformation relating to the activities performed under tins Agreement
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 ASSOCIATION at winch this
Agreement or any matter the subject of th~s Agreement shall be considered This provision shall not
be deemed to require the ASSOCIATION to give notice of any executive session of the Executive
Commattee of the ASSOCIATION
IV. TERM AND TERMINATION
4 1 Term. The term of this Agreement shall commence on January 1, 2002 and terminate at
rmdmght on December 31, 2002 TI'ns term shall be a penod of one year
4 2 Termination Without Cause.
(a) Tlus Agreement may be terminated by e~ther party, w~th or w~thout cause, by g~wng
the other party s~xty (60) days advance wntten not~ce
(b) In the event th~s contract ~s terminated by e~ther party pursuant to Section 4 2(a),
the CITY agrees to reimburse the ASSOCIATION for any contractual obhgat~ons of the
ASSOCIATION undertaken by the ASSOCIATION ~n satisfactory performance of those
acttvlt~es specified ~n ¶¶2 1 and 2 2 above and that were approved by the Councd through the
budget, as noted ~n ¶3 1 Th~s reimbursement is conditioned upon such contractual obhgat~ons
hawng been ~ncurred and entered ~nto ~n the good faith performance of those services
contemplated ~n ¶¶2 1 and 2 2 above, and further conditioned upon such contractual obhgatmns
hawng a term not exceeding the full term of th~s Agreement Notwithstanding any prows~on
hereof to the contrary, the obhgat~on of the CITY to reunburse the ASSOCIATION or to assume
the performance of any contractual obhgat~ons of the ASSOCIATION for or under any contract
entered ~nto by the ASSOCIATION as contemplated here~n shall not exceed 66 2/3% of the
current quarterly payment
(c) Further, upon termination pursuant to ¶4 2(a), the ASSOCIATION w~ll prowde the
CITY 1) W~th~n 10 business days from the termination notification, a short-term budget of
probable expendxtures for the remaining 60 day period between termination notlfiCat~on and
contract tenmnatlon Th~s budget wall be presented to Councd for approval within 10 business
days aiter receipt by CITY If formal approval is not g~ven within 10 bus~ness days and the
budget does not contain any expenditures that would be prohlb~ted by the Texas Tax Code, and
~s within the current contractual period approved budget, the budget wall be considered
approved; 2) W~th~n 30 days, a full accotmtmg of all expenditures not prewously audited by the
C~ty, 3) Wxthm 5 bus~ness days of a request from the CITY, a hst~ng of expenditures that have
occurred since the last reqmred reporting penod, 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 funds determined to be used improperly Any use of rema~mng funds by the
ASSOCIATION after notification of termination ~s conditioned upon such contractual
obhgatmns having been incurred and entered ~nto ~n the good faith performance of those servtces
contemplated ~n 2 1 and 2 2 above, and further conditioned upon such contractual obhgat~ons
having a term not exceeding the full term of th~s Agreement
4 3 Automatic Termmatiun. Tlus Agreement shall automatacally termmato upon the
occurrence of any of the following events
(a) The tenmnat~on of the legal ex~stonce of the ASSOCIATION,
(b) The insolvency of the ASSOCIATION, the fihng of a petition ~n bankruptcy, e~ther
voluntarily or ~nvoluntanly, or an assignment by the ASSOCIATION for the benefit of
crodltors,
(c) Tho contmuatton of a breach of any of the terms or conditions of flus Agreement by
either the CITY or the ASSOCIATION for more than thirty (30) days after written notice of
such breach is g~ven to the breaching party by the other party, or
(d) The fmlure of the ASSOCIATION to submit a financial quarterly report whach comphes
with the reporting procedures reqmred here~n and generally accepted accountang pnnc~ples
prior to the begmmng of the next contract term, or quarterly as reqmred by Section 1 3
hereof
4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other prows~on
of flus Agreement, to m~t~gate damages and to preserve evidence and ~ssues for jud~mal
determination, e~ther party shall have the right to terminate tins Agreement upon lmmechate not,ce
to the other party m the event that any person has mstttuted htlgat~on concermng the activities of the
non-terrmnattng party, and the tenmnatmg party reasonably behoves that such act~wt~es are reqmred
or probab~ted under this 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, w~thm 30 days after termination of th~s Agreement
V. GENERAL PROVISIONS
5 1 Snbeontraet for Performance of Services. Nothing in flus Agreement shall prolublt, nor
be consWaed to probab~t, the agreement by the ASSOCIATION wtth another private entity, person,
or orgamzat~on for the performance of those servmes described ~n ¶2 1 above In the event that the
ASSOCIATION enters into any arrangement, contractual or other~v~se, w~th such other entity,
person or orgamzat~on, the ASSOCIATION shall cause such other entity, person, or orgamzat~on to
adhere to, conform to, and be subject to all prows~ons, terms, and condlt~ons of tlus Agreement and
to Tex T^x CODE ch 351, including reporting reqmrements, separate funds maintenance, and
lmutat~ons and probablt~ons perttunmg 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 servmes to be performed under fins Agreement and not as an officer, agent, servant, or
employee of the CITY The ASSOCIATION shall have exclusmve control of its operations and
performance of sermcas hereunder, and such persons, ent~t~es, or orgamzatlons performing the same
and the ASSOCIATION shall be solely responsible for the acts and onusslons of its d~rectors,
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 ~n any
manner hold ~tself out as an agent or offimal 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 thrs Agreement w~thout first obtalmng
the written consent of the CITY
5 5 Notice. Any notice requtred to be given under this Agreement or any statute, orchnance, or
regulation, shall be effective when g~ven m writing and deposited m the Umted States mall, ce~fied
mail, return receipt requested, or by hand-dehvery, addressed to the respective parties as follows
CITY ASSOCIATION
City Manager Yvonne Jenkins
City of Denton Denton Holiday Festival Foundation, Ine
215 E McKnmey P O Box 2765
Denton, TX 76201 Denton, Texas 76202-2765
5 6 Inurement. Tins Agreement and each provision hereof, and each and every right, duty,
obligation, and hablhty 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. Tlus Agreement contains the entire understanding and constitutes
the entire agreement between the parties hereto concermng the subject matter contained herein
There are no representataons, agreements, arrangements, or understandings, oral or written, express
or implied, between or among the part, es hereto, relating to the subject matter of tins Agreement,
wtuch are not fully expressed herein The terms and conditions of this Agreement shall prevail
notwithstanding any variance in tins Agreement from the terms and condtt~ons of any other
document relating to tins transaction or these transactions
5 9 Duplicate Originals. Ttus Agreement is executed m duplicate originals
5 10 Headings. The headings and subheadings of the venous sections and paragraphs of tins
Agreement are inserted merely for the purpose of convenience and do not express or nnply any
hmatatlon, defimtion, or extension of the specific terms of the sectaon and paragraph so designated
5 11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in thrs
Agreement, or appheatlon thereof to any person or circumstance is held lnvahd by any court of
competent jurisdiction, such holding shall not affect the validity of the remaining po~ons of this
Agreement, and the pames hereby declare they would have enacted such remmmng pomons despite
any such lnval,rhty
THE CITY OF DENTON, TEXAS
EULINE BROCK, MAYOR
ATTEST APPROVED~
CI~ SEC~T~Y f CITY ATTO~
DENTON ~OL~AY FESTW~
ASSOCI~, ~C
ATTEST:
BI/~]~ ~. /~ By
Exhibit A
Denton Holiday Festival Assoc,atlon, Inc
Lighting on the Square
Program Year 2002
Requested Amount
ADVERTISING
Newspaper $ 4,000 00
Brochures $1,500 00
$ 5,500 O0
ART
Brave Combo $ 2,000 00
$ 2,000 00
$ 7,500 00
SAMPLE FINANCIAL REPORT Exh,blt B
Program Year 2002
15T 2ND 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
$0 O0 $0 O0 $0 O0 $0 00 $0 00
$0 00 $0 00 $0 00 $0 00 $0 00
$0 00 $0 O0 $0 00 $0 00 $0 00
$0 00 $0 00 $0 00 $0 O0 $0 O0
$0 00 $0 00 $0 00 $0 00 $0 00
$0 00 $0 O0 $0 00 $0 00 $0 00
$0 00 $0 00 $0 00 $0 O0 $0 00
$0 00 $0 00 $0 00 $0 00
$0 00 $0 00 $0 00 $0 00
$0 00 $0 00 $0 00 $0 00
$0 00 $0 00 $0 00 $0 00
$0 00 $0 O0 $0 00 $0 O0
Date Submitted Program Director