2001-330 O INANCE NO
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE KIWANIS CLUB OF DENTON, TEXAS,
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 Kiwanis Club of Denton, Texas, Inc for the payment and use of hotel tax
revenue, under the terms and condmons contained m the agreement, a copy of which is attached
hereto and made a part hereof
SECTION II That this ordinance shall become effective lmme&ately upon its passage
and approval
,2oo
PASSED AND APPROVED this the _ day of
EUL1NE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
AGREEMENT BETWEEN THE CITY OF DENTON AND
KIWANIS CLUB OF DENTON, TEXAS, INC. (CY2002)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
TI-~IS AGREEMENT made between the City of Denton, Texas, a municipal corporation
(the "CITY"), and the Kawams Club of Denton, Texas, Inc, a legal entity incorporated on
September,6, 1939 under the laws of the State of Texas (the "CLUB")
WHEREAS, TEx TAX CODE §351 002 authorizes the CITY to levy by ordinance a
mumcipal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the ennsiderat~on
poad by a hotel occupant, and
WI?IEREAS, by ordinance, the CITY has provided for the assessment and collection of a
mumclpal hotel occupancy tax m the City of Denton of seven percent (7%), and
WHEREAS, TEX TAX CODE §351 101(a) anthonzes the CITY to use revenue from its
mumcipal hotel occupancy tax to promote tourism and the convention and hotel industry by
advertising and conducting sohcItat~ons and promottunal programs to attract tourists and convention
delegates or reg~stxants to the mumclpallty or its VlC~mty, and the encouragement, promotion,
~mprovement, and application of the arts including instrumental and vocal music, dance, drama, folk
art, creative writing, arelutecture, design and alhed fields, pmntang, sculpture, photography, graphic
and eraR arts, motion pictures, racho, telewsxon, tape and sound recording, and other arts related to
the presentation, performance, execution, and exbablt~on of these major art forms, and
WHEREAS, the CLUB is well equipped to perform those activities, and
WHEREAS, TEx T^x CODE §351 101(c) authorizes the CITY to delegate by contract wxth
the CLUB~ as an independent entxty, the management and supervision of programs and actxwties of
the type described heremabove funded w~th revenue from the municipal hotel occupancy tax,
NOW, THEREFORE, xn eonsIderataon of the performance of the mutual covenants and
promises cuntamed hereto, the CITY and the CLUB agree and contract as follows
I HOTEL TAXREVENUE PAYMENT
1.1 Coaslderaflon. For and m consideration of the actIVitxes to be performed by the CLUB
under ttus~ Agreement, the CITY agrees to pay to the CLUB a portion of the hotel tax revenue
collected l~y the CITY at the rates and m the manner specified hereto (such payments by the CITY
to the CLUB sometunes hereto referred to as the "agreed payments" or "hotel tax funds")
1.2 Amount of Payments
(a) As used mttus Agreement, the following terms shall have the following specific
meamngs
(O The term "hotel tax revenue" shall mean the gross monies collected and
received by the Crty as municipal hotel occupancy tax at the rate of seven percent (7%) of
the price paid for a room m 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
0Q The term "Collection period" will mean the collection penod for the CITY's
fiscal year It will 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
(m) 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 auditing costs incurred dunng such
relevant period of time for costs of eollectton or aurhtmg of hotel taxpayers Attorney and
auchtmg costs include fees prod to attorneys or agents not m the regular employ of the CITY
for winch attorneys or agents effect eomphance or collection of the hotel tax fi.om taxpayers,
and (2) court costs and other expenses mcurred m htlgatlon agamst or auditing of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year m
winch ttus A.[grcement is in force Contract quarters will end on March 31st, June 30th,
September 30~', and December 31st of each contract year
Co) In return for satisfactory performance of the activities set forth m this Agreement
and all attachments hereto, the CITY shall pay to CLUB an amount of money in each contract
year equal to the lesser amount of Two and Twenty E~ght Hundredths of a percent (2 28%) of
the annual base payment amount or the fixed contract amount of Twenty-Two Thousand Dollars
($22,000) Tins amount will be divided 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 vall be less than ongmally estimated for the fiscal year The fourth quarterly
payment w~ll represent 25% of the fixed contract amount or the unpaid remainder of 2 28% of
the base payment amount, winchever ~s less Each quarterly payment is subject to receipt of
unused funds from the prior 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 CLUB of those
amounts specified m ¶1 2, above, as deternuned by the hotel tax revenue collected
(b) Each quarterly payment shall be pa~d upon receipt of the required reports and after the
25th day following the last day of the contract quarter If quarterly fmanclal and performance
reports are not received w~tinn tinrty (30) days of the end of the appheable contract quarter, the
recipient may be held m breach of this Agreement The CITY may withhold the quarterly
payment(s) until the appropnate reports are received and approved, which approval shall not
unreasonably be w~thheld
1.4 Other limitations regarding consideration.
(a) The fundang of tlus project an no way commits the CITY to future fundang of tfus
program beyond the current contract penod Any future funchng is solely the responslbahty of the
CLUB
Co) It as expressly understood that tlus contract m no way obhgates the General Fund or any
other momes or ered~ts of the CITY
(c) CITY may wathhold further allocations af CITY detenmnes that CLUB's expenditures
deviate materially from thear approved budget
II. USE OF HOTEL TAX REVENUE
:l 1 Use of Funds. For and m consaderat~on of the payment by the CITY to the CLUB of the
agreed payments of hotel tax funds specified above, the CLUB agrees to use such hotel tax funds
only for advertising and conducting sohcltataons and promotional programs to attract tounsts and
convention delegates or registrants to the mumcapahty or ats wcunty by the encouragement,
promotion, improvement, and apphcat~on of the arts including instrumental and vocal musac, dance,
drama, folk art, ereat~ve wntmg, arclutecture, design and alhed fields, painting, sculpture,
photography, graptuc and erail arts, motion pictures, radio, telcvas~on, tape and sound recording, and
other arts related to the presentation, performance, execution, and exbab~tlon of these major art
forms, as authonzed by TEx TAX CODE §351 101(a) (3) & (4) Funds for any calendar year which
are unused by madmght December 31st of that year shall be refunded to CITY within thirty (30)
days
2 2 Administrative Costs The hotel tax funds received from the CITY by the CLUB may be
spent for day-to-day operataons, office supphes, salaries, travel expenses, and other adnumstrat~vc
costs that are recurred darectly m the performance by the CLUB of those activities specified m ¶2 1
above and are allowed by TEX TAX CODE §351 101(f)
:~ 3 Specific Restrictions on Use of Funds
(a) That portaon of total admmastrative costs of the CLUB for wbach hotel tax funds may
be used shall not exceed that posen of the CLUB's admunstratlve costs actually incurred m
conducting the activities specified m ¶2 1 above
Co) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an actavlty the pnmary purpose ofwfuch ~s not darectly related to the promotion of local tourism and
the convention and hotel industry or the performance of the person's job m an efficaent and
professaonal manner
IH. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Budget.
(a) The CLUB shall prepare and submat to the City Manager of the CITY an annual budget
(see Exlublt "A") as approved by the Caty Council for each calendar year, for such operations of the
CLUB In wbach the hotel tax funds shall be used by the CLUB Tbas budget shall specffically
~dent~fy proposed expenditures of hotel tax funds by the CLUB In other words, the CITY should
be able to audit epecffically where the funds in the separate checking account relatang to hotel tax
funds will be expended The CITY shall not pay to the CLUB any hotel tax revenues as set forth in
Section I of this contract dunng any fiscal year of tbas Agreement unless a budget for such
respecttve fiscal year has been approved ~n writing by the Denton C~ty Council authonzmg the
expenditure of fimds Fmlure to submit an annual budget may be considered a breach of contract,
and if not remedied is considered grounds for tenmnation of flus Agreement as stated m paragraph
42
(b) The CLUB acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty ~n the CLUB with respect to the hotel tax funds prod by the CITY
to the CLUB under th~s Agreement The CLUB shall expend hotel tax funds only m the manner
and for the purposes specffied m tbas Agreement, T~x T^x CooE §351 101(a) and ~n the budget as
approved by the CITY
3 2 Separate Accounts. The CLUB shall mmntaln any hotel tax funds paid to the CLUB by
the CITY m a separate bank checking account w~th segregated accounting, such that any reasonable
person can review the source of expenchtures of tax funds A bank reconcthat~on report (see Exlublt
"B') is reqmred with each quarterly report
3.3 Financial Records. The CLUB shall mmntaln complete and accurate finanmal records of
each expenditure of the hotel tax funds made by the CLUB These funds are required to be
classified as restricted funds for audited financial purposes, and may not be used for supporting
services, including, but not lmalted to, aucht~ng fees and attomey's fees Upon reasonably advance
written request of the Denton C~ty Council, the City Manager or designate, or any other person,
shall make, such financial records avmlable for inspection and remew by the party making the
request CLUB understands and accepts that all such financial records, and any other records
relating to this Agreement shall be subJeCt to the Public Information Act, TEx Gov'q' CODE, ch
552, as hereafter amended
3.4 Quarterly Reports After ~mttal receipt of hotel tax ftmds, and within thirty days at%r the
end of every quarter thereaRer, untal all funds have been expended and reported to the CITY,
CLUB shall fiarmsh to CITY (1) a performance report of the work performed under flus Agreement
describing the actawt~es performed pursuant to th~s Agreement dunng that contract quarter, (2) a hst
of the expendatures made w~th regard to hotel tax funds pursuant to TEx T^x 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 end expendtture reports will be in a form either detenmned
or approved by the C~ty Manager or designate (see ExtUblt "B") The CLUB shall respond
promptly to any request from the C~ty Manager of the CITY, or designate, for adcht~onal
information relating to the actlmt~es performed under th~s Agreement
3.5 Notice of Meetings The CLUB shall 10ve the Ctty Manager of the CITY reasonable
advance written not,ce of the time and place of all meetings of CLUB's Board of D~rectors, as well
as any other meeting of any constituency of the CLUB at which th~s Agreement or any matter the
subject of this Agreement shall be considered Ttus prowsmn shall not be deemed to reqmre the
CLUB to love notate of any executive sessmn of the Executive Committee of thc CLUB
IV TERM AND TERMINATION
4 1 Term. The term of tins Agreement shall commence on January 1, 2002 and terminate at
rmdmght on December 31, 2002 Tlus term shall be a period of one year
4.2 Termination Without Cause.
(a) Ttus Agreement may be terminated by e~ther party, w~th or w~thout cause, by g~vlng
the other party saxty (60) days advance written not,ce
(b) In the event th~s contract ~s terminated by either party pursuant to Section 4 2(a),
the CITY agrees to reimburse the CLUB for any contractual obhgat~ons of the CLUB undertaken
by the CLUB ~n satisfactory performance of those actxwt~es spemfied ~n ¶¶2 1 and 2 2 above and
that were approved by the Council through the budget, as noted ~n ¶3 1 Thru m~mbursement ~s
conditioned upon such contractual obhgat~ons hawng been recurred and entered ~nto ~n the good
froth performance of those servmes contemplated m ¶¶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
Notwithstanding any pmws~on hereof to the contrary, the obhgat~on of the CITY to reimburse
the CLUB or to assume the performance of any contractual obhgat~ons of the CLUB for or under
any contract entered ~nto by the CLUB as contemplated hereto shall not exceed 66 2/3% of the
current quarterly payment
(c) Further, upon termination pursuant to ¶4 2(a), the CLUB will provide the CITY 1)
W~thm 10 business days from the termination notfficat~on, a short-term budget of probable
expenditures for the remmmng 60 day period between termmatxon notfficat~on and contract
termination Th~s budget wall be presented to Counml for approval w~thm 10 bus~ness days after
receipt by CITY If formal approval ~s not g~ven w~th~n 10 business days and the budget does
not contmn any expenditures that would be prohibited by the Texas Tax Code, and ~s w~th~n the
current contractual period approved budget, the budget wall be considered approved, 2) W~tl'nn
30 days, a full accounting of all expenditures not prewously audited by the C~ty, 3) W~th~n 5
bus~ness days of a request from the CITY, a hstmg of expenditures that have occurred s~nce the
last reqmred reporting period, 4) a final accounting of all expenditures and tax funds on the day
of termination The CLUB wall be obhgated to return any unused funds or funds determined to
be used ~mproperly Any use of remaining funds by the CLUB after notfficat~on of termination ~s
conditioned upon such contractual obhgat~ons hawng been recurred and entered ~nto ~n the good
froth performance of those services contemplated m 2 1 and 2 2 above, and further conditioned
upon such contractual obhgat~ons hawng a term not exceeding the full term ofth~s Agreement
4.3 Automatic Termination Thts Agreement shall automatmally terminate upon the
occurrence of any of the following events
(a) The termmatxon of the legal emstence of the CLUB,
(b) The insolvency of the CLUB, the fihng of a petition m bankruptcy, e~ther voluntarily or
~nvoluntanly, or an assignment by the CLUB for the benefit of creditors,
(c) I The contmuatton of a breach of any of the terms or conditions of flus Agreement by
e~er the CITY or the CLUB for more than tlurty (30) days after written not~ee of such
breach rs g~ven to the breachmg party by the other party, or
(d), The fmlure of the CLUB to submit a financml quarterly report wbach comphes w~th the
reportmg procedures required hereto and generally accepted accounting pnne~ples prior to
the begmmng of the next contract term, or quarterly as reqmred by Sectton 1 3 hereof
4.4 Right to Immediate Termination Upon Lmgation Notw~thstandlng any other pmws~on
of tins Agreement, to m~tagate damages and to preserve evidence and ~ssues for jud~cml
determination, e~ther party shall have the right to terminate tlus Agreement upon ~mmedmte
notice to the other party m the event that any person has msttmted httgat~on concerning the
actgnttes of the non-terminating party, and the terminating party reasonably beheves that
such actawt~es are reqmred or probab~ted under tlus Agreement
4.5 In ~he event that thts Agreement is terminated pursuant to ¶¶4 3 or 4 4, CLUB agrees to
refund unYl and all unused funds, or funds determined by the CITY to have been used ~mproperly,
w~th~n 30 days after termination ofttus Agreement
V. GENERAL PROVISIONS
5 1 Subcontract for Performance of Serv~eas. Nothing m th~s Agreement shall prolub~t, nor
be constm~ to prolub~t, the agreement by the CLUB w~th another private entity, person, or orgam-
zat~on for the performance of those serwces described m ¶2 1 above In the event that the CLUB
enters rote any arrangement, contractual or otherwise, w~th such other entity, person or orgamzat~on,
the CLUB Ishall cause such other entity, person, or orgamzat~on to adhere to, conform to, and be
subJeCt to fall pmms~ons, terms, and conditions ofth~s Agreement and to TEx T^x Cove ch 351,
~ncludmg reporting reqmrements, separate funds mmntenance, and llm~tataons and protublt~ons
pertalmng to expenditure of the agreed payments and hotel tax funds
5.2 Independent Contractor. The CLUB shall operate as an independent contractor as to all
sermees to .be performed under this Agreement and not as an officer, agent, servant, or employee of
the CITY The CLUB shall have exclusive control of 1ts operations and performance of serwces
hereunder, and such persons, ent~t~es, or orgamzataons performing the same and the CLUB shall be
solely responsible for the acts and omxss~ons of ~ts d~rectors, officers, employees, agents, and
subcontractors The CLUB shall not be considered a partner or joint venturer w~th the CITY, nor
shall the CLUB be considered nor in any manner hold ~tself out as an agent or official representative
of the CITY
5 3 In~emnffiention. THE CLUB 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 CLUB 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 CLUB, ITS OFFICERS, EMPLOYEES, AGENTS,
SUBCONTRACTORS, LICENSEES AND INVITEES
5 4 Assignment. The CLUB shall not assign tins Agreement w~thout first obtamang the written
consent of the CITY
5 5 Notice. Any notice requn:ed to be g~ven under this Agreement or any statute, ordinance, or
regulation, shall be effective when g~ven m writing and deposited m the Umted States mall, cerOfied
mall, return receipt requested, or by hand-dehvery, addressed to the respective part,es as follows
CITY CLUB
C~ty Manager Denton Kawams Club, Inc
C~ty of Denton Robin Olsen
215 E McKnmey 1701 N Elm St
Denton, TX 76201 Denton, Texas 76201
5 6 Inurement. Tins Agreement and each provision hereof, and each and every right, duty,
obhgat~on, and habthty set forth hereto shall be binding upon and mute to the benefit and obhgat~un
of the CITY and the CLUB and their respecttve successors and assigns
5 7 Application of Laws. All terms, conditions, and prows~ons of tins Agreement are subject
to all applmable federal laws, state laws, the Charter of the C~ty of Denton, all ordinances passed
pursuant thereto, and all jud~cml detemunat~ons relative thereto
5 8 Exclusive Agreement. Ttus Agreement contains the entire understanchng and constitutes
the entire agreement between the part, es hereto concerning the subject matter contained here~n
There are no representataons, agreements, arrangements, or tmderstandmgs, oral or written, express
or ~mphed, between or among the part, es hereto, relating to the subject matter of tins Agreement,
winch are not fully expressed herein The terms and conditions of tins Agreement shall prevail
notwithstanding any variance m tins Agreement from the terms and conditions of any other
document relating to tins 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 tins
Agreement are inserted merely for the purpose of convemence and do not express or unply any
hm~tatton, defimtton, or extension of the specific terms of the section and paragraph so designated
5 11 Severablllty. If any section, subsection, paragraph, sentence, clause, phrase or word ~n flus
Agreement, or apphcat~on thereof to any person or mrcumstance ~s held ~nvahd by any court of
competent junsdact~on, such holding shall not affect the validity of the remaining po~ons of tins
Agreement, and the parlaes hereby declare they would have enacted such remalmng pomons despite
any such mval~chty
5.12 Insurance. The CLUB shall prowde insurance as follows
1 $500,000 Commercial General Lmbfllty, or $1,000,000 Event Insurance, eovenng
all events taking place on Oty-owned property
2 Statutory Workers' Compensation and Employers' Lmbthty
($100,000/$$00,000/$100,000)
The CITY must be named as an ad(htlonal insured on all pohc~es (except Workers' Compensation)
and proof of coverage shall be subwatted prior to any payment by the CITY
THE CITY OF DENTON, TEXAS
By ~~
EULINE BROCK, MAYOR
ATTEST APPROV~ FO~
J]~qIF~E~.~¥VAL TER S, - ~ ~//~L PROU,
ci~v SECl~T~Y ~ C~TY ATTO~Y ~
DENTON KIWANIS CLU~INC
By ecr~et~~.~7~_~/~._ By
Exhibit A
Denton Kiwanis Club
Fourth of July Fireworks
Program Year 2002
ART
F~reworks $22,000 00
$22,000 00
$22,000 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
$0 00 $o oo $o o0 $o oo $o oo
$o oo $o oo $o oo $o oo $o ou
$o oo $o oo $o oo $o oo $o oo
$0 00 $o oo $o oo $o o0 $o oo
$0 00 $o oo $o oo $o oo $o oo
$0 00 $o oo $o oo $o oo $o oo
$0 oo $0 oo $o oo $o oo $o oo
$0 00 $o oo $o 0o $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