2001-329 O OIN CE NO
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON FESTIVAL FOUNDATION FOR
THE PAYMENT AND USE OF HOTEL TAX REVENUE, AND PROVIDING AN
EFFECTWE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDA1NS
SECTION I That the Mayor is hereby authorized to execute an agreement between the
City of Denton and the Denton Festival Foundation for the payment and use of hotel tax revenue,
under the terms and conditions contained m the agreement, a copy of which is attached hereto
and made a part hereof
SECTION II That this ordinance shall become effective immediately upon its passage
and approval
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON FESTIVAL FOUNDATION (CY2002)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the C~ty of Denton, Texas, a mummpal corporatmn
(the "CITY"), and the Denton Festival Fotmdat~on, Inca legal entity ~ncorporated under the laws of
the State of Texas (the "FOUNDATION")
WHEREAS, TEx TAX CODE §351 002 authorizes the CITY to levy by ordinance a
mume~pal hotel occupancy tax ("hotel tax") not excead~ng seven percent (7%) of the consideration
prod by a hotel occupant, and
WHEREAS, by ordinance, the CITY has provided for the assessment and collection of a
mumc~pal hotel occupancy tax m the C~ty of Denton of seven percent (7%), and
WHEREAS, TEx TAX COOE §351 101(a) authorizes the CITY to use revenue from ~ts
mtm~c~pal hotel occupancy tax to promote totmsm and the cunvent~on and hotel industry by
advertising and conducting sohc~tat~ons and promotional programs to attract tourists and convention
delegates or registrants to the mumc~pahty or ~ts wclmty, and
WHEREAS, the FOUNDATION ~s well eqmpped to perform those activities, and
WHEREAS, T~x TAX CODE §351 101(c) authorizes the CITY to delegate by contract wth
the FOUNDATION, as an independent entity, the management and superws~on of programs and
act~wt~es of the type described heremabove funded w~th revenue from the mumclpal hotel
occupancy tax,
NOW, THEREFORE, ~n cons~deratmn of the performance of the mutual covenants and
promises contained herein, the CITY and the FOUNDATION agree and contract as follows
I HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and m cons~deratlon of the activities to be performed by the
FOUNDATION under flus Agreement, the CITY agrees to pay to the FOUNDATION a port~on of
the hotel tax revenue collected by the CITY at the rates and in the manner specffied hereto (such
payments by the CITY to the FOUNDATION sometimes hereto 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 specffic
meamngs
(0 The term "hotel tax revenue" shall mean the gross momes collected and
received by the City as munm~pal hotel occupancy tax at the rate of seven percent (7%) of
the price prod for a room ~n a hotel, pursuant to Texas Tax Code 351 002 and C~ty
Ordinance Hotel tax revenue wall include penalty and xnterest related to the late
payments of the tax revenue by the taxpayer
(u) The term "Collectaon period" will mean the collection period for the CITY's
fiscal year It wall 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
(all) The term "base payment mount" 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 and~tmg costs incurred dunng such
relevant period of me for costs of collection or auditing of hotel taxpayers Attorney and
auchtmg costs include fees pard to attorneys or agents not in the regular employ of the CITY
for wbach attorneys or agents effect eomphance or collection of the hotel tax from taxpayers,
and (2) court costs and other expenses incurred an litigation against or audatmg of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year in
wbaeh tins A~eement is m force Contract quarters will end on March 31st, June 30th,
September 30% and December 31st of each contract year
(b) In return for satasfactory performance of the activities set forth m this Agreement
and all attachments hereto, the CITY shall pay to FOUNDATION an amount of money in each
contract year equal to the lesser amount of Eight and Twenty Nane One Hundredths percent
(8 29%) of the annual base payment amount or the fixed contract amount of E~ghty Thousand
Dollars ($80,000) This amount will be divided ~nto 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 estimated for the fiscal year The fourth
quarterly payment will represent 25% of the fixed contract amount or the unpaid remainder of
8 29% of the base payment amount, whmhever as less Each quarterly payment is subject to
receapt of unused fiands from the pnor contract period and the receipt of the required quarterly
reports
1 3 Dates of Payments
(a) The term "quarterly payments" shall mean payments by the CITY to the
FOUNDATION of those amounts specffied m ¶1 2, above, as detenmned by the hotel tax revenue
collected
(b) Each quarterly payment shall be paid upon receipt of the required reports and after the
25th day following the last day of the contract quarter If quarterly fmanmal and performance
reports are not receaved wlttun tlurty (30) days of the end of the apphcable contract quarter, the
reclpaent may be held in breach of flus Agreement The CITY may w~thhold the quarterly
payment(s) until the appropriate reports are received and approved, whmh approval shall not
unreasonably be w~thheld
1.4 Other Hmltations regarding consideration
(a) The funding of flus proJect ~n no way commits the CITY to future funding of fins
program beyond the current contract period Any future funding ~s solely the responmbfuty of the
FOUNDATION
CO) It ns expressly understood that flus contract in no way obhgates the General Fund or any
other momes or credits of the CITY
(c) CITY may w~thhold further allocations if CITY detenmnes that FOUNDATION's
expenditures dewate materially from their approved budget
II. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and m cons~deratmn of the payment by the CITY to the FOUNDATION of
the agreed payments of hotel tax funds specified above, the FOUNDATION agrees to use such
hotel tax funds only for adve~s~ng and conducting sohc~tat~ons and promotmnal programs to attract
tourists and conventmn delegates or registrants to the mun~mpallty or ~ts wc~mty, as well as thc
promotion of tourism through the encouragement, pmmotmn, ~mprovement, and apphcatmn of the
arts, ~ncludmg ~nstrumental and vocal music, dance, drama, folk art, creative writing, amlutecture,
design and alhed fields, painting, sculpture, photography, graphic and eraf~ arts, motlun pmtures,
radio, telewston, tape and sound recording, and other arts related to the presentation, performance,
execution, and exfubxtmn of these major arts forms, as authorized by TEx TAX CODI~ §351 101(a)
Funds for any calendar year wluch are unused by m~dmght December 31st of that year shall be
refunded to CITY w~thm tlurty (30) days
2.2 Administrative Costs. The hotel tax funds recexved from the CITY by the FOUNDATION
may be spent for day-to-day operatmns, office supphes, salaries, travel expenses, and other
admuustrat~ve costs that are recurred chreetly m the performance by the FOUNDATION of those
act~wt~es spemfied la ¶2 1 above and are allowed by Tsx TAX CODI~ §351 101 (f)
2.3 Specific Restrictions on Use of Funds.
(a) That portmn of total admmastratlve costs of the FOUNDATION for whmh hotel tax
funds may be used shall not exceed that portmn of the FOUNDATION's admLmstratxve costs
actually recurred m conducting the actlwl~es specffied m ¶2 1 above
Co) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an act~wty the primary purpose of wtueh ~s not chrectly related to the promotmn of local tourism and
the eonventmn and hotel industry or the performance of the person's job m an efficient and
professmnal manner
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The FOUNDATION shall prepare and submxt to the C~ty Manager of the CITY an
annual budget (see Exbab~t "A") as approved by the C~ty Council for each calendar year, for such
operations of the FOUNDATION m wbach the hotel tax funds shall be used by the FOUNDATION
Th~s budget shall specffically identify proposed expenchtures of hotel tax funds by the
FOUNDATION In other words, the CITY should be able to aucht specifically where the funds m
the separate checlang account relatang to hotel tax funds will be expended The CITY shall not pay
to the FOUNDATION any hotel tax revenues as set forth an Section I of tlus contract dunng any
fiscal year of tins Agreement unless a budget for such respective fiscal year has been approved in
wntmg by the Denton City Council anthonzmg the expenditure of funds Fmlure to subnut an
annual budget may be considered a breach of contract, and ~fnot remedaed ~s considered grounds for
term~nataon ofttus Agreement as stated m paragraph 4 2
(b) The FOUNDATION acknowledges that the approval of such budget by the Denton
C~ty Counml creates a fidumary duty m the FOUNDATION with respect to the hotel tax funds p/ud
by the CITY to the FOUNDATION under th~s Agreement The FOUNDATION shall expend hotel
tax funds only m the manner and for the purposes speeffied ~n this Agreement, TEx TAX CODE
§ 351 101 (a) and m the budget as approved by the CITY
3.2 Separate Accounts. The FOUNDATION shall maintain any hotel tax funds prod to the
FOUNDATION by the CITY m a separate bank checking account w~th segregated accounting, such
that any reasonable person can review the source of expenditures of tax funds A bank
reconclhat~on report (see Exhibit "B") ~s required w~th each quarterly report
3.3 Financial Records. The FOUNDATION shall mmntam complete and accurate financml
records of each expenditure of the hotel tax funds made by the FOUNDATION These funds are
required to be classified as restricted funds for audited financial purposes, and may not be used for
supporting services, ~ncludmg, but not lun~ted to, auchtmg fees and attorney's fees Upon
reasonably advance written request of the Denton C~ty Council, the C~ty Manager or designate, or
any other person, shall make such finanmal records avmlable for inspection and rewew by the party
maktng the request FOUNDATION understands and accepts that all such financial records, and
any other records relating to this Agreement shall be subject to the Public Informatmn Act, TEx
GOV'T CoDI~, ch 552, as hereafier amended
3 4 Quarterly Reports WlthlB tlurty days after the end of every contract quarter,
FOUNDATION shall furnish to CITY (1) a performance report of the work performed under tbs
Agreement descnbmg the activities performed pursuant to this Agreement during that contract
quarter, (2) a hst of the expenditures made w~th regard to hotel tax funds pursuant to TEx TAx
CODE §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 in a form
either determined or approved by the City Manager or designate (see Exhibit "B") The
FOUNDATION shall respond promptly to any request from the City Manager of the CITY, or
designate, for adcht~onal mformat~on relating to the activities performed under this Agreement
3.5 Notice of Meetings. The FOUNDATION shall g~ve the C~ty Manager of the CITY
reasonable advance written notice of the tune and place of all meetings of FOUNDATION's Board
of D~reetors, as well as any other meeting of any constituency of the FOUNDATION at which tins
Agreement or any matter the subjeet of tins Agreement shall be considered Tlus prowsmn shall not
be deemed to requtre the FOUNDATION to g~ve notme of any executive session of the Executive
Committee of the FOUNDATION
IV. TERM AND TERMINATION
4 1 Term. The term of tlus Agreement shall commence on January 1, 2002 and terminate at
m~dmght on December 31, 2002 Ttus term shall be a per~od 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~vmg
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),
the CITY agrees to reimburse the FOUNDATION for any contractual obhgat~ons of the
FOUNDATION undertaken by the FOUNDATION m satisfactory performance of those
actlwties specified m ¶¶2 1 and 2 2 above and that were approved by the Council through the
budget, as noted m ¶3 1 Tbas reimbursement ~s conditioned upon such contractual obligations
having been incurred and entered into in the good faith performance of those services
contemplated m ¶¶2 1 and 2 2 above, and further cond~twned upon such contractual obligations
hawng a term not exceeding the full term of this Agreement Notwithstanding any provision
hereof to the contrary, the obhgatlon of the CITY to reimburse the FOUNDATION or to assume
the performance of any contractual obhgatlons of the FOUNDATION for or under any contract
entered into by the FOUNDATION as contemplated herein shall not exceed 66 2/3% of the
current quarterly payment
(c) Further, upon terrmnat~on pursuant to ¶4 2(a), the FOUNDATION will prowde thc
CITY 1) Within 10 business days from the termination notification, a short-term budget of
probable expenditures for the rema~mng 60 day period between termination notification and
contract termination This budget will be presented to Council for approval w~thm 10 bus~ness
days after receipt by CITY If formal approval is not given wlttun 10 business days and the
budget does not contain any expenditures that would be protub~ted by the Texas Tax Code, and
~s within the current contractual period approved budget, the budget will be considered
approved; 2) Wltlun 30 days, a full accounting of all expenditures not previously audited by the
City, 3) Within 5 busmess days of a request from the CITY, a hstmg of expenditures that have
occurred since the last reqmred reportmg period, 4) a final accounting of all expenditures and tax
funds on the day of termination The FOUNDATION w~ll be obligated to return any unused
funds or funds determmed to be used ~mproperly Any use of rema~mng funds by the
FOUNDATION after notification of termination ~s conditioned upon such contractual
obhgat~ons having been recurred and entered ~nto ~n the good faith performance of those services
contemplated ~n 2 1 and 2 2 above, and further cond~tloned upon such contractual obhgat~ons
hawng a term not exceeding the full term of this Agreement
4 3 Automatic Termination. Tlus Agreement shall automatically terminate upon the
occurrence of any of the following events
(a) The termination of the legal existence of the FOUNDATION,
(b) The insolvency of the FOUNDATION, the fihng of a petition in bankruptcy, either
voluntarily or involuntarily, or an assignment by the FOUNDATION for the benefit of
crethtors,
(c) The contmuataon of a breach of any of the terms or conditions of ttus Agreement by
e~ther thc CITY or the FOUNDATION for more than thirty (30) days after written notice of
such breach is g~ven to the breactung party by the other party, or
(d) The fmlure of the FOUNDATION to submit a financial quarterly report winch complies
with the reporting procedures mqmred herein and generally accepted accounting pnnmples
prior to the begmmng of the next contract term, or quarterly as reqmred by Section 1 3
hereof
4 4 Right to Immedmte Termination Upon Lit~gation Notwithstanding any other provision
of ttus Agreement, to mitigate damages and to preserve ewdence and ~ssues for judicial
determmat~on, either party shall have the right to terminate th~s Agreement upon ~mmedlate
not,ce to the other party m the event that any person has instituted ht~gatlon concerning the
act~vmes of the non-terrmnatmg party, and the terminating party reasonably beheves that
such acttmttes arc reqmred or pmlublted under tins Agreement
4.5 In the event that thru Agreement is ternunated pursuant to ¶¶4 3 or 4 4, FOUNDATION
agrees to refund any and all unused funds, or funds determined by the CITY to have been used
~mproperly, wlthm 30 days after termination of this Agreement
V. GENERAL PROVISIONS
5 1 Subcontract for Performance of Services. Nothing in this Agreement shall prolublt, nor
be construed to prohibit, the agreement by the FOUNDATION with another private entity, person,
or orgamzatmn for the performance of those services described m ¶2 1 above In the event that the
FOUNDATION enters ~nto any arrangement, contractual or otherwise, with such other entity,
person or orgamzatmn, the FOUNDATION shall cause such other entity, person, or orgamzatlon to
adhere to, ennform to, and be subject to all pmms~ons, terms, and conditions of this Agreement and
to T~x T^x Co~)E eh 351, including repomng requirements, separate funds mmntenanee, and
bnutatlons and probab~ttons pertmnmg to expenditure of the agreed payments and hotel tax funds
5 2 Independent Contractor. The FOUNDATION shall operate as an independent contractor
as to all services to be performed under tins Agreement and not as an officer, agent, servant, or
employee of the CITY The FOUNDATION shall have exclusive control of its operatmns and
performance of services hereunder, and such persons, entat~es, or orgamzatlons performing the same
and the FOUNDATION shall be solely responsible for the acts and onussions of ~ts directors,
officers, employees, agents, and subcontractors The FOUNDATION shall not be considered a
partner or joint venturer w~th the CITY, nor shall the FOUNDATION be considered nor m any
manner hold ~tselfout as an agent or official representative of the CITY
5.3 Indemnification. THE FOUNDATION 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 FOUNDATION 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 FOUNDATION, ITS OFFICERS,
EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES.
5 4 Assignment. The FOUNDATION shall not assign tins Agreement w~thout first obtmnmg
the written consent of the CITY
5 5 Notice. Any hOraCe reqmred to be g~ven under tins Agreement or any statute, ordinance, or
mgulatton, shall be effective when gtven m writing and deposited m the Umted States mml, ce~fied
mml, return receipt requested, or by hand-dehvery, addressed to the respective parties as follows
CITY FOUNDATION
C~ty Manager Denton Festival Foundation, Inc
C~ty of De~ton Carol Short
215 E MeKn'mey Festival Coordinator
Denton, TX 76201 P O Box 2104
Denton, Texas 76202-2104
$ 6 Inurement. Tins Agreement and each prowsmn hereof, and each and every right, duty,
obhgatmn, and habthty set forth hereto shall be bmchng upon and inure to the benefit and obligation
of the CITY and the FOUNDATION and their respective successors and assigns
$.7 Application of Laws. All terms, condmons, and prowsmns of tins Agreement are subJeCt
to all apphcable federal laws, state laws, the Charter of the C~ty of Denton, all ordtnances passed
pursuant thereto, and all judm~al determinations relative thereto
5.8 EXclusive Agreement. Tins Agreement contmns the entire understanding and constitutes
the entire agreement between the part~es hereto concenung the subject matter contmned here~n
There are no representations, agreements, arrangements, or understandings, oral or wntten, express
or ~mphed, between or among the part~es hereto, relating to the subject matter of tins Agreement,
winch are not fully expressed here~n The terms and conditions of tins Agreement shall prevml
notw~thstanchng any variance m tins Agreement from the terms and conrhttons of any other
document relating to tlus transaction or these transactions
5 9 Duplicate Originals. Tins Agreement ~s executed ~n duphcate originals
5.10 Headings. The headings and subheadings of the various sections and paragraphs of this
Agreement are ~nserted merely for the purpose of convenience and do not express or maply any
hnutat~on, defimt~on, or extension of the specffic terms of the section and paragraph so designated
5.11 Severabillty. If any section, subsection, paragraph, sentence, clause, phrase or word m tins
Agreement, or apphcatton thereof to any person or circumstance is held mvahd by any court of
competent junschct~on, such holding shall not affect the validity of the remalmng pomons of flus
Agreement~ and the pames hereby declare they would have enacted such rema~mng por'aons despite
any such lnvahdlty
5 12 Insurance. The FOUNDATION shall provxde insurance as follows
1 $500,000 Commercial General Lxablhty, or $1,000,000 Event Insurance, covenng
all events takang place on City-owned property
2 Statutory Workers' Compensation and Employers' Lmblhty
($100,000/$500,000/$100,000)
The CITY must be named as an addat~onal insured on all pohc~es (except Workers' Compensation)
and proof of enverage shall be submitted prior to any payment by the CITY
, ool
THE CITY OF DENTON, TEXAS
Chmrman/D~rector
ATTEST APPROVED AS TO LEGAL FORM
By By
Secretary
Exhibit A
Denton Festival Foundation Inc
Arts and Jazz Festival 2002
Program Year 2002
ADVERTISING
Newspaper, TV and Magazines $ 30,000 00
Brochures $ 6,200 00
Pnnt~ng $ 2,000 00
$ 38,200 00
ADMINISTRATION
Postage $ 2,000 00
Office Supplies $ 1,300 00
$ 3,300 00
ART
Stage, Sound and Electricity $ 18,500 00
Musicians $ 20,000 00
$ 38,500 00
$ 80,000 00
SAMPLE FINANCIAL REPORT Exhibit B
Program Year 2002
1 ST 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 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
$o oo $o oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo $o oo
$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 $o oo $o oo $o oo
$0 00 $o oo $o 0o $o oo $o oo
$0 oo $o oo $o oo $o oo
$o oo $o oo $o oo $o oo
$0 00 $0 oo $o oo $o oo
$o oo $o oo $o oo $o oo
$0 0o $o oo $o oo $o oo
Date Submitted Program Director