2001-332 ORDINANCE NO 00/-
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT
BETWEEN THE CITY OF DENTON AND THE DENTON COMMUNITY THEATRE, 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 m hereby authorized to execute an agreement between the
City of Denton and the Denton Commumty Theatre, Inc for the payment and use of hotel tax
revenue, under the terms and conditions contained m the agreement, a copy of winch m attached
hereto and' made a part hereof
SECTION II That thru ordmance shall become effective ~mmed~ately upon its passage
and approval
PASSED AND APPROVED tins the ~'~ dayof .~ ~/~ ,2001
EUL1NE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERB~~Y
AGREEMENT BETWEEN THE CITY OF DENTON AND
DENTON COMMUNITY THEATRE, INC (CY2002)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the C~ty of Denton, Texas, a munmlpal corporation
(the "CITY"), and the Denton Community Theatre, Inc, a legal entity incorporated under the laws
of the State of Texas (the "THEATRE")
WHEREAS, Tax T^x CODE §351 002 anthonzes the CITY to levy by ordinance a
mummpal hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the cons~deratlon
paid by a hotel occupant, and
WHEREAS, by ordinance, the CITY has prowded for the assessment and collection of a
mumc~pal hotel occupancy tax m the City of Denton of seven percent (7%), and
WHEREAS, Tax T^x COD~ §351,101(a) authorizes the CITY to use revenue from ~ts
mummpal, hotel occupancy tax to promote tourism and the convention and hotel industry by
advemsmg and conducting sollcaat~ons and promotional programs to attract tourists and convention
delegates or registrants to the mumclpahty or its wcmaty, and the encouragement, promotion,
lmprovemant, and appheation of the arts mcluchng instrumental and vocal music, dance, drama, folk
art, creative wntmg, architecture, demgn and alhed fields, pmnting, sculpture, photography, graphic
and craft arts, motmn pictures, radio, telewsion, tape and sound recording, and other arts related to
the presentation, performance, execution, and exhibition &these major art forms, and
WHEREAS, the THEATRE ~s well eqmpped to perform those activities, and
WHEREAS, Tax T^x CoD~ §351 101(c) authorizes the CITY to delegate by contract w~th
the THEATRE, as an independent antlty, the management and supervls~on of programs and
activities of the type described herelnabove funded w~th revenue from the mumclpal hotel
occupancy tax,
NOW, THEREFORE, m consideration of the performance of the mutual covenants and
promises Contained hereto, the CITY and the THEATRE agree and contract as follows
I. HOTEL TAX REVENUE PAYMENT
1.1 COnsideration. For and m consideration of the activities to be performed by the
THEATRE under flus Agreement, the CITY agrees to pay to the THEATRE a portion of the hotel
tax revenue collected by the CITY at the rates and m the manner specified here~n (such payments by
the CITY to the THEATRE sometimes hereto referred to as the "agreed payments" or "hotel tax
funds")
1 2 Amount of Payments.
(a) As used m ttus Agreement, the following terms shall have the following specific
meamngs
0) The term "hotel tax revenue" shall mean the gross momes collected and
received by the C~ty as municipal hotel occupancy tax at the rate of seven percent (7%) of
the price pa~d for a room m a hotel, pursuant to Texas Tax Code 351 002 and C~ty
Orrhnanoe Hotel tax revenue will ~nclude penalty and interest related to the late
payments of the tax revenue by the taxpayer
(n) The term "Collactmn penod" 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~O 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 auditing costs recurred dunng such
relevant penod of t~me for costs of eollectmn or auditing of hotel taxpayers Attorney and
au~htang 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 from taxpayers,
and (2) court costs and other expenses recurred m ht~gat~on against or auditing of such
taxpayers
0v) The tcn'm "contract quarter" shall refer to any quarter of the calendar year m
winch tins Agreement ~s m fome Contract quarters will end on March 31st, June 30th,
September 30~, and December 31st of each contract year
(b) In return for satisfactory performance of the act~wt~es set forth ~n th~s Agreement
and all attachments hereto, the CITY shall pay to THEATRE an mount of money ~n each
contract year equal to the lesser mount of One and E~ghty Seven One Hundredths pement
(1 87%) of the aunual base payment amount or the fixed contract amount of E~ghteen Thousand
Dollars ($18,000) Tins amount will be d~wded ~nto quarterly payments equal to 25% of the
annual fixed contract amount, unless the CITY can show w~th 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
1 87% of the base payment amount, winchever ~s less Each quarterly payment ~s subject to
receipt of unused funds from the prior contract period and the receipt of the mqmred quarterly
reports
1.3 Dates of Payments.
(a) The term "quarterly payments" shall mean payments by the CITY to the THEATRE of
those amounts speeafied m ¶1 2, above, as determined by the hotel tax revenue collected
(b) Each quarterly payment shall be prod upon receipt of the required reports and aider the
25th day following the last day of the contract quarter If quarterly finanmal and performance
reports are not received within tinrty (30) days of the end of the applicable contract quarter, the
recipient imay be held m breach of tins Agreement The CITY may w~thhold the quarterly
payment(s) until the appropriate reports are received and approved, winch approval shall not
unreasonably be w~thheld
1 4 Other limitations regardmg consideration.
(a) The fun&ng of th~s project m no way commats the CITY to future fimd~ng of tins
program beyond the current contract period Any future Rmd~ng ~s solely the responsibility of the
THEATRE
(b) It ~s expressly understood that tbas contract an no way obhgates the General Fund or any
other momes or crethts of the CITY
(c) CITY may w~thhold further allocations ff CITY determines that THEATRE's
expenthmres dewate materially from their approved budget
II. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in cons~deratlon of the payment by the CITY to the THEATRE of the
agreed payments of hotel tax funds specified above, the THEATRE agrees to use such hotel tax
funds only for advertising and conducting sohc~tattons and promotional programs to attract tourists
and conventaon delegates or registrants to the mumclpahty or its Vlclmty,as authorized by TEx TAX
CooE §351 101(a) (3) Funds for any calendar year wluch are unused by midnight December 31st of
that year shall be refunded to CITY wtthm tturty (30) days
2.2 Administrative Costs. The hotel tax funds received from the CITY by the THEATRE may be
spent for day-to-day operations, office supphes, salaries, travel expenses, and other admunstrat~ve
costs that are recurred directly m the performance by the THEATRE of those activities specified ~n
¶2 I above and are allowed by TEX T^x CODE §351 101(f)
2.3 Specffie Restrictions on Use of Funds.
(a) That po~on of total admmastrattve costs of the THEATRE for which hotel tax funds
may be used shall not exceed that port,un of the THEATRE's adm~mstratlve costs actually incurred
m conducting the aet~v~tles specified m ¶2 1 above
(b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an aet~wty the primary purpose of wbach ~s not chreetly related to the promotion of local tourism and
the conventaun and hotel industry or the performance of the person's job m an efficient and
professional manner
HI. RECORDKEEPING AND REPORTING REQUIREMENTS
3 1 Budget.
(a) The THEATRE shall prepare and submat to the City Manager of the CITY an annual
budget (see Exfublt "A") as approved by the C~ty Council for each calendar year, for such
operattons of the THEATRE m which the hotel tax funds shall be used by the THEATRE This
budget shall specifically ~dentffy proposed expenchtures of hotel tax funds by the THEATRE In
other words, the CITY should be able to aucht specifically where the funds m the separate checking
account relating to hotel tax funds will be expended The CITY shall not pay to the THEATRE any
hotel tax revenues as set forth in Section I of this contract dunng any fiscal year of this Agreement
unless a budget for such respective fiscal year has been approved in writing by the Denton C~ty
Council authorizing the expenditure of funds Failure to submit an annual budget may be
considered a breach of contract, and if not remedied ~s considered grounds for termination of flus
Agreement as stated in paragraph 4 2
(b) The THEATRE acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty m the THEATRE with respect to the hotel tax funds prod by the
CITY to the THEATRE under flus Agreement The THEATRE shall expend hotel tax funds only
in the manner and for the purposes specffied m flus Agreement, Tex T^x Cor>a §351 101(a) and m
the budget as approved by the CITY
3 2 Separate Accounts. The THEATRE shall maintain any hotel tax funds prod to the
THEATRE by the CITY m a separate bank eheckang account with segregated accounting, such that
any reasonable person can rewew the source of expenditures of tax funds A bank reconciliation
report (see Exl~blt "B") is required w~th each quarterly report
3 3 Financial Records. The THEATRE shall mmntmn complete and accurate financml
records of each expenditure of the hotel tax funds made by the THEATRE These funds are
mqmred to be classified as restricted funds for audited financial purposes, and may not be used for
supporting serrates, including, but not hmlted to, andatmg fees and attorney's fees Upon
reasonably advance written request of the Denton City Council, the City Manager or designate, or
any other person, shall make such financml records avadable for ~nspect~on and review by the party
makang the request THEATRE understands and accepts that all such financial records, and any
other records relating to flus Agreement shall be subject to the Pubhc Information Act, Tax Gov'T
Cot>a, eh 552, as hereafter emended
3.4 Quarterly Reports. After initial recexpt of hotel tax funds, and w~thln tturty days after the
end of every qumer thereafter, until all funds have been expended and reported to the CITY,
THEATRE shall fumash to CITY (1) a performance report of the work performed under thas
Agreement describing the act~wtaes performed pursuant to tbas Agreement during that contract
quarter, (2) a hst of the expenditures made with regard to hotel tax funds pursuant to TBX T^x
CODB §351 101(c), and (3) a copy of all financml records (e g, receipts, lnvolcas, 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 THEATRE
shall respond promptly to any request from the City Manager of the CITY, or designate, for
additional mformataon relating to the aclamtaes performed under flus Agreement
3.5 Notice of Meethags. The THEATRE shall gxve the Cxty Manager of the CITY reasonable
advance written hOrace of the tame and place of all meetangs of THEATRE's Board of Directors, as
well as any other meeting of any constttuency of the THEATRE at which this Agreement or any
matter the subJeCt of thts Agreement shall be considered Tlus provision shall not be deemed to
reqmre the THEATRE to give nottce of any executive session of the Executive Conumttee of the
THEATRE
IV. TERM AND TERMINATION
4 1 Term~ The term of ttus Agreement shall commence on January 1, 2002 and terminate at
mldmght on December 31, 2002 This term shall be a period of one year
4.2 Ternflnation Without Cause.
(a) Th~s Agreement may be tenmnated by either party, with or without cause, by giving
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 THEATRE for any contractual obligations of the THEATRE
undertaken by the THEATRE in satisfactory performance of those activities specified in ¶¶2 1
and 2 2 above and that were approved by the Council through the budget, as noted in ¶3 1 This
reimbursement is conditioned upon such contractual obhgatlons having been incurred and
entered into in the good faith performance of those services contemplated in ¶¶2 1 and 2 2 above,
and further condat~oned upon such contractual obhgatlons having a term not exceeding the full
term of tbas Agreement Notwlthstanchng any provision hereof to the contrary, the obligation of
the CITY to reimburse the THEATRE or to assume the performance of any contractual
obhgatlons of the THEATRE for or under any contract entered into by the THEATRE as
contemplated hereto shall not exceed 66 2/3% of the current quarterly payment
(c) Further, upon termination pursuant to ¶4 2(a), the THEATRE will provide the
CITY 1) Wltban 10 business days from the termination notfficatlon, a short-term budget of
probable expenditures for the remalmng 60 day period between termination notification and
contract termination This budget will be presented to Council for approval w~thm 10 business
days after receipt by CITY If formal approval is not given w~thin 10 business days and the
budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and
is within the current contractual period approved budget, the budget will be considered
approved, 2) Within 30 days, a full accounting of all expenditures not previously audited by the
City, 3) Within 5 business days of a request from the CITY, a listing of expenditures that have
occurred since the last required repomng period, 4) a final accounting of all expenditures and tax
funds on the day of termination The THEATRE will be obligated to retum any unused funds or
funds determined to be used improperly Any use of remalmng funds by the THEATRE after
notification of termination is conditioned upon such contractual obligations having been incurred
and entered into in the good froth performance of those services contemplated in 2 1 and 2 2
above, and further conditioned upon such contractual obhgat~ons having a term not exceeding
the full term of tlus Agreement
4.3 Automatic Termination. Tlus Agreement shall automatacally terminate upon the
occurrence of any of the following events
(a) The termlnat~on of the legal eyastence of the THEATRE,
(b) The insolvency of the THEATRE, the fihng of a petition m bankruptcy, either
voluntarily or lnvoluntanly, or an assignment by the THEATRE for the benefit of creditors,
(c) The continuation of a breach of any of the terms or conditions of tins Agreement by
either the CITY or the THEATRE for more than tlurty (30) days after written notme of such
breach is given to the breaching party by the other party, or
(d)' The f~ulure of the THEATRE to subrmt a financial quarterly report wbach comphes vath
the reporting procedures reqmred hereto and generally accepted accounting pnnclples prior
to the begummg of the next contract term, or quarterly as required by Section 1 3 hereof
4 4 Right to Immediate Termination Upon Litigation Notwithstanding any other provision
of tlus Agreement, to mitigate damages and to preserve ewdence and issues for judamal
determmataon, either party shall have the right to terminate fins Agreement upon immediate
notme to the other party m the event that any person has instituted ht~gataon concermng the
actlwt~es of the non-terminating party, and the terrmnatmg party reasonably beheves that
such activities are reqmred or protublted under th~s Agreement
4 5 In the event that tins Agreement is terrmnated pursuant to ¶¶4 3 or 4 4, THEATRE agrees
to refund any and all unused funds, or funds determined by the CITY to have been used
~mproperly, within 30 days after termination ofth~s Agreement
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Services Notl~ng ~n thas Agreement shall probab~t, nor
be construed to probablt, the agreement by the THEATRE with another private entity, person, or
orgamzat~on for the performance of those serxaces described m ¶2 1 above In the event that the
THEATRE enters into any arrangement, contractual or otherwise, w~th such other entity, person or
orgamzatt~n, the THEATRE shall cause such other entaty, person, or organization to adhere to,
conform t9, and be subJeCt to all proms~ons, terms, and conditions of ttus Agreement and to Tax
TAx Co~>15 ch 351, including reporting requirements, separate funds maintenance, and hrmtat~ons
and protub~t~ons pertaining to expenchture of the agreed payments and hotel tax funds
5.2 Independent Contractor. The THEATRE 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 THEATRE shall have exclns~ve control of ~ts operations and performance of
services l[tereunder, and such persons, enttt~es, or organizations performing the same and the
THEATR~ shall be solely responsible for the acts and omissions of its directors, officers,
employeeg, agents, and subcontractors The THEATRE shall not be considered a partner or jmnt
venturer w~th the CITY, nor shall the THEATRE be considered nor m any manner hold itself out as
an agent or official representative of the CITY
5.3 I~ldemnffieatlon. THE THEATRE 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 THEATRE 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 THEATRE, ITS OFFICERS, EMPLOYEES,
AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES
5.4 Assignment. The THEATRE shall not assign this Agreement without first obtmmng the
written consent of the CITY
$.5 Notice. Any not,ce reqmred to be given under flus Agreement or any statute, ordinance, or
regulatmn, shall be effective when given m writing and deposited m the Umted States marl, certified
mml, return receipt requested, or by hand-dehvery, addressed to the respective pames as follows
CITY THEATRE
City Manager Denton Commumty Theatre, Inc
City of Denton Scot Wilkinson
215 E McKmney P O Box 1931
Denton, TX 76201 Denton, Texas 76202-1931
5.6 Inurement. Tbas Agreement and each provision hereof, and each and every right, duty,
obligation, and hablhty set forth hereto shall be binding upon and inure to the benefit and obligation
of the CITY and the THEATRE and their respective successors and assigns
5 7 Application of Laws. All terms, conditions, and provisions of flus Agreement are subject
to all apphcable 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 eoncermng the subject matter eont0aned hereto
There are no representations, agreements, arrangements, or understandings, oral or written, express
or implied, between or among the paVaes hereto, relating to the subject matter of this Agreement,
which are not fully expressed herein The terms and conditions of flus Agreement shall prevail
notwithstanding any variance ~n ttus Agreement from the terms and conditions of any other
doctunant relating to flus ~ansactlon or these transactions
5.9 Duplicate Originals. This Agreement is executed m duphcate originals
5.10 Headings. The headings and subheadings of the vinous sections and paragraphs of flus
Agreement are inserted merely for the purpose of eonvemence and do not express or imply any
limitation, defimtmn, or extension of the specific terms of the section and paragraph so designated
5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in flus
Agreement, or apphcat~on thereof to any person or circumstance is held mvahd by any court of
competent jurisdiction, such holding shall not affect the validity of the remalumg porUons of flus
Agreement, and the part,es hereby declare they would have enacted such rem0amng portions despite
any such invalidity
5.12 Insurance. The THEATRE shall prowde insurance as follows
1 $500,000 Commercial General Llabihty, or $1,000,000 Event Insurance, covering
all events taking place on City-owned property
2 Statutory Workers' Compensation and Employers' Liability
($100,000/$500,000/$I00,000)
The CITY must be named as an add~ttonal insured on all policies (except Workers' Compensation)
and proof of coverage shall be submitted pnor to any payment by the CITY
EXECUTEDth~s 2~__~_--~dayof ~-~7~-~ ,2001
!
THE CiTY OF DENTON, TEXAS
EULINE BROCK, MAYOR
ATTEST . APPR~O LEGAL FO~TI~
j rn E W XE S, J PROUrY, J
~ SEC~T~Y f CI~ ATOMY ~
DE~ON COM~~AT~, ~C-
By ~~ ~
C~m~fector ~
ATTEST ~PROVgD AS TO LEG~ FO~
By By
Secretary
Exhibit A
Denton Community Theatre, Inc
Program year2002
ADVERTISING
DCT $10 000 00
Pled P~per ( Youth Group) $ 2,000 00
Campus Theatre Performing Arts Group $ 4,000 00
M~nor~ty Performance $ 2,000 00
$18,000 O0
SAMPLE FINANCIAL REPORT Exhibit B
Program Year 2002
1ST 2ND 3RD 4TH YEAR
QUARTER QUARTER QUARTER to
~) (APR - JUN) (JUL - SEP) (OCT - DEC) DATE
SO O0 SO O0 SO O0 SO O0
$o oo SO oo SO oo SO oo SO oo
SO oo SO oo $o oo $o oo SO oo
SO oo SO oo $o oo SO oo SO oo
$o oo $o oo SO oo $o oo $o oo
SO oo SO oo SO oo $o oo $o oo
$o oo $o oo SO oo $o oo SO oo
$o oo $o oo $o oo $o oo $o oo
SO 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
$o oo $o oo $o oo SO oo
$o oo $o oo $o oo $o oo
$o oo SO oo
$0 oo $o oo
Date Submitted Program Director