2000-303 O~rNANCE NO ~0-~
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 is hereby authonzed 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 condmons contained m the agreement, a copy of which is attached
hereto and made a part hereof
SECTION II That thru ordmance shall become effective immediately upon ~ts passage
and approval
PASSED ~ APPROVED th~s the ~ dayof~ ~ ~e~j~er~ ,2ooo
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
AGREEMENT BETWEEN THE CITY OF DENTON AND
DENTON COMMUNITY THEATRE, INC. (CY2001)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT mede between the City of Denton, Texas, a mummpal corporation
(the "CITY"), and the Denton Commurnty Theatre, Inc, a legal entity incorporated under the laws
of the State of Texas (the "THEATRE")
WHEREAS, Tgx TAx CODE §351 002 authorizes the CITY to levy by ordinance a
mummpal ~hotel occupancy tax ("hotel tax") not exceechng seven percent (7%) of the consideration
prod by a hotel occupant, and
WHEREAS, by ordinance, the CITY has prowded for the assessment and collection of a
mummpal'hotel occupancy tax m the C~ty of Denton of seven percent (7%), and
WHEREAS, 'l~x TAx CODg §351 101(a) authonzes the CITY to use revenue from ~ts
mumclpall hotel occupancy tax to promote tounsm and the conventmn and hotel industry by
edvemmng and conducting sohcltatmns and promotmnal programs to attract tounsts and convention
delegates or registrants to the mumc~pallty or ~ts vmlmty, and the encouragement, promotion,
~mprovement, and apphcatmn of the arts mcluchng instrumental and vocal musm, dance, drama, folk
art, creative writing, arclutecture, design and allied fields, pmntmg, sculpture, photography, grapluc
and craft arts, motion pictures, racho, telewsmn, tape and sound recording, and other arts related to
the presentation, performance, execution, and exNNtlon of these major art forms, and
W~IEREAS, the THEATRE m well eqmpped to perform those act~wtles, and
WHEREAS, Tgx TAX COD~. §351 101(c) authorizes the CITY to delegate by contract w~th
the THEATRE, as an independent enttty, the management and supervm~on of programs and
actlvmes ,of the type descnbed herelnabove funded w~th revenue from the mumc~pal hotel
occupancy tax,
NOW, THEREFORE, m consideration of the performance of the mutual covenants and
prormses ~ontamed hereto, the CITY and the THEATRE agree and contract as follows
I. HOTEL TAX REVENUE PAYMENT
1.1 Consideration. For and m conmderat~on of the act~wt~es to be performed by the
THEATRE under ti'ns Agreement, the CITY agrees to pay to the THEATRE a port~on of the hotel
tax revenue collected by the CITY at the rates and m the manner specified hereto (such payments by
the CITY to the THEATRE sometunes 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
meamngs.
0) The term "hotel tax revenue" shall mean the gross monies collected and
received by the City as mumeipal hotel occupancy tax at the rate of seven percent (7%) of
the price prod for a room in a hotel, pursuant to Texas Tax Code 351 002 and City
Or0anance Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer
(n) The term "Collection period" will mean the collection period 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 during any relevant period of time (t e,
fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred dunng such
relevant period of time for costs of collection or auditing of hotel taxpayers Attorney and
auditing costs include fees paid to attorneys or agents not m the regular employ of the CITY
for which attorneys or agents effect comphance or collection of the hotel tax from taxpayers,
and (2) court costs and other expenses recurred ~n httgat~on against or auditing of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year m
which fins A~eement ~s m force Contract quarters will end on March 31st, June 30~,
September 30"', and December 31st of each contract year
(b) In return for satisfactory performance of the activities set forth an this Agreement
and all attachments hereto, the CITY shall pay to THEATRE an amount of money m each
contract year equal to the lesser amount of One and Sixty-Eight One Hundredths percent
(1 68%) of the annual base payment amount or the fixed contract amount of Eighteen Thousand
Dollars ($18,000) This amount will be divided into quarterly payments equal to 25% of the
annual fixed enntract mount, unless the CITY can show with reasonable certasnty 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 remmnder of
1 68% of the base payment amount, whichever IS 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 THEATRE of
those amounts specified m ¶1 2, above, as determmed 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 followmg the last day of the contract quarter If quarterly financial and performance
reports are not received within tturty (30) days of the end of the applicable contract quarter, the
recipient may be held m breach of flus Agreement The CITY may withhold the quarterly
payment(s) until the eppropnate reports are received and approved, which approval shall not
unreasonably be w~thheld
Page 2
1 4 Other limitations regarding consideration.
(a) The funding of flus project m no way commits the CITY to future funchng of flus
program b~eyond the current contract penod Any future funding is solely the responsibility of the
THEATRE
Co) It rs expressly understood that flus contract in no way obhgates the General Fund or any
other monies or erethts of the CITY
(c) CITY may w~thhold further allocations if CITY deternunes that THEATRE's
expenditures dewate matenally from their approved budget
II USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and in consideration of the payment by the CITY to the THEATRE of the
agreed payments of hotel tax funds specffied above, the THEATRE agrees to use such hotel tax
funds only for edvertxsmg and conducting sohcltat~ons and promottonal programs to attract tourists
and convention delegates or registrants to the mumclpallty or its vlcunty by the encouragement,
promotmn, improvement, and apphcatmn of the arts including instrumental and vocal music, dance,
drama, f01k art, ereat~ve venting, architecture, design and alhed fields, painting, sculpture,
photography, graptuc and craft arts, motmn pictures, radio, television, tape and sound recomhng, and
other artsl related to the presentataon, performance, exccutmn, and extubitton of these major art
forms, as authorized by T~x T^x CODE §351 101(a) (3) & (4) Funds for any calendar year wbach
are unused by m~dmght December 31~t of that year shall be refunded to CITY within tturty (30)
days
2.2 Administrative Costs. The hotel tax funds received from the CITY by thc THEATRE may be
spent for! day-to-day operations, supphas, salaries, office rental, travel expenses, and other
admunstratlve costs that are recurred threcfly m the performance by the THEATRE of those
actlwt~es specffied m ¶2 1 above and are allowed by TEx TAX CODE §351 101(f)
2.3 Specific Rastrietions on Use of Funds.
(a) That portaon of total adrmmstrat~ve costs of the THEATRE for wbach hotel tax funds
may be u~ed shall not exceed that portmn of the THEATRE's admlmstratlve costs actually ~ncurred
m conducting the actava~es 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 activity the primary purpose of which ~s not d~rectly related to the promotmn of local tourism and
the conventton and hotel industry or the performance of the person's job m an efficient and
professional manner
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3 1 BUdget.
(a) The THEATRE shall prepare and submat to the C~ty Manager of the CITY an annual
budget (see Exlub~t "A") as approved by the City Council for each calendar year, for such
Page 3
operations of the THEATKE m Much the hotel tax funds shall be used by the THEATRE Tlus
budget shall specifically identify proposed expenchtures of hotel tax funds by the THEATRE In
other words, the CITY should be able to audit specifically where the funds m the separate account
relatmg to hotel tax funds will be expended The CITY shall not pay to the THEATRE any hotel
tax revenues as set forth m Section I of tins contract dunng any fiscal year of tins Agreement unless
a budget for such respective fiscal year has been approved in wn'ang by the Denton City Council
authorizing the expenrhture of funds Failure to submit an annual budget may be considered a
breach of ~ontract, and if not remeched is considered grounds for terunnat~on of tins 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 pond by the
CITY to the THEATRE under tins Agreement The THEATRE shall expend hotel tax funds only
m the manner and for the purposes specified in tins Agreement, TEX T^x CODE §351 101(a) and m
the budget as approved by the CITY
3 2 Separate Accounts. The THEATRE shall maintain any hotel tax funds pad to the
THEATRE by the CITY m a separate bank account with segregated accounting, such that any
reasonable person can review the source of expenchtures of tax funds A bank reconcthat~on report
(see Extnblt "B") is reqmred with each quarterly report
3.3 FlnanelaiReeords. The THEATRE shall monnttan complete and accurate financial
records of each expenditure of the hotel tax funds made by the THEATRE These funds are
reqmred to be classified as restncted funds for audited financial purposes, and may not be used for
supportmg sermces, including, but not lnnlted 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 financxal records available for inspection and review by the party
making the request THEATRE understands and accepts that all such financial records, and any
other records relating to tins Agreement shall be subject to the Public Informatuon Act, TEx GOV'T
CO~)E, ch 552, as hereafter amended
3 4 Quarterly Reports After mat~al 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,
THEATRE shall furmsh to CITY (1) a performance report of the work performed under tins
Agreement describing the activities performed pursuant to tbas Agreement during that contract
quarter, (2) a hst of the expenchtures made with regard to hotel tax funds pursuant to TEx T^x
CODE §351 101(c), and (3) a copy of all financial records (eg, receipts, invoices, bank statements,
and otherxelevant documentation) Both the performance and expenchture repons will be in a form
either det~nmned or approved by the City Manager or designate (see Exinblt "B') The THEATRE
shall respond promptly to any request fi:om the City Manager of the CITY, or designate, for
addltaonal mformataon relating to the actlwtles performed under tins Agreement
3.5 Notice of Meetings The THEATRE shall give the City Manager of the CITY reasonable
advance wntten notice of the t~me and place of all meetings of THEATRE's Board of Directors, as
well as any other meeting of any constatuency of the THEATRE at winch tins Agreement or any
matter the subject of ti'ns Agreement shall be considered Tlus provision shall not be deemed to
Page 4
require th~ THEATRE to gave notice of any executive sesmon of the Executive Comamttee of the
THEATRE
IV TERM AND TERMINATION
4.1 Term. The term of th~s Agreement shall commence on January 1, 2001 and terminate at
m~dnlght on December 31, 2001 Thru term shall be a period 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 mxty (60) days advance written not~ee
(b) In the event thru contract m terminated by e~ther party pursuant to Sectmn 4 2(a),
the CITY agrees to rmmburse the THEATRE for any contractual obhgatmns of the THEATRE
undertaken by the THEATRE m satmfactory performance of those achwt~es specffied ~n ¶¶2 1
and 2 2 above and that were approved by the Counml through the budget, as noted m ¶3 1 Thru
rmmbursement m cond~tmned upon such contractual obhgatmns hawng been ~ncttrred and
entered into ~n the good froth performance of those servmes contemplated ~n ¶¶2 1 and 2 2 above,
and further eoncht~oned upon such contractual obhgatmns hawng a term not exceeding the full
term of th~s Agreement Notw~thstanchng any prowmon hereof to the contrary, the obhgatmn of
the CITY to rmmburse the THEATRE or to assume the performance of any contractual
obhgat~ons 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
(e) Further, upon termmatmn pursuant to ¶4 2(a), the THEATRE will prowde the
CITY 1) Wlthm 10 bumness days from the terra,natron notfficatmn, a short-term budget of
probable expenditures for the remaining 60 day period between termlnatmn notfficatmn and
contract termination Thru budget will be presented to Council for approval w~thln 10 business
days after recmpt by CITY If formal approval m not g~ven w~thln 10 bumness days and the
budget does not contmn any expenchtures that would be prohibited by the Texas Tax Code, and
m w~ttun, the current contractual period approved budget, the budget wdl be conmdered
approvedI 2) W~ttun 30 days, a full accounting of all expenditures not prewously audited by the
C~ty, 3) W~ttun 5 business days of a request from the CITY, a hst~ng of expenditures that have
occurred mnoe the last reqmred reporting period, 4) a final accounting of all expenditures and tax
funds on the day of terra,natron The THEATRE wdl be obhgated to return any unused funds or
funds determined to be used unproperly Any use of remaunng funds by the THEATRE after
notfficatmn of ternunatmn ~s eond~tmned upon such contractual obhgatmns hawng been ~neurred
and entered ~nto m the good froth performance of those servmes contemplated ~n 2 1 and 2 2
above, arid further eond~tmned upon such contractual obhgatmns hawng a term not exceeding
the full term of flus Agreement
4.3 A~tomatic Termmatmn Tlus Agreement shall automatmally terminate upon the
occurrence of any of the following events
(a) The temunatmn of the legal exmtence of the THEATRE,
P~e5
(b) The insolvency of the THEATRE, the fihng of a petition ~n bankruptcy, e~ther
voluntarily or involuntarily, or an assignment by the THEATRE for the benefit of credxtors,
(c) The continuation of a breach of any of the terms or conditions of flus Agreement by
eather the CITY or the THEATRE for more than thirty (30) days after written notate of such
breach as g~ven to the breaching party by the other party, or
(d) The failure of the THEATRE to submit a financml quarterly report winch comphes with
the reportmg procedures reqmred here~n and generally accepted accounting pnnmples prior
to the beglnmng of the next contract term, or quarterly as mqmred by Sectaon 1 3 hereof
4.4 Right to Immedmte Termination Upon L~t~gat~on. Notwathstandmg any other provlsaon
of tlus Agreement, to rmttgate damages and to preserve ewdence and ~ssues for judmml
determination, exther party shall have the right to terminate tbas Agreement upon ~mmedmte
notme to the other party ~n the event that any person has mstatuted ht~gataon concerning the
act~wt~es of the non-tenmnatmg party, and the terminating party reasonably beheves that
such actavat~es are reqmred or prohibited under thts Agreement
4 5 In the event that tbas Agreement as tenmnated 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, w~thm 30 days after termination ofthas Agreement
V GENERAL PROVISIONS
5.1 Snbeontraet for Performance of Sermees Nothing m tins Agreement shall proInbat, nor
be construed to prohibit, the agreement by the THEATRE wath another private entity, person, or
orgamzalaon for the performance of those servmes described ~n ¶2 1 above In the event that the
THEATRE enters into any arrangement, contractual or otherwise, w~th such other entity, person or
orgamzatmn, the THEATRE shall cause such other entity, person, or orgamzat~on to adhere to,
conform to, and be subJeCt to all pmvas~ons, terms, and conditions of tlus Agreement and to TEx
T^x CooI~ ch 351, mcludang reporting reqmrements, separate funds maintenance, and llmatat~ons
and probab~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 flus Agreement and not as an officer, agent, servant, or employee
of the CITY The THEATRE shall have exclusive control of ~ts operations and performance of
servmes hereunder, and such persons, entat~es, or orgamzataons performing the same and the
THEATRE shall be solely msponsable for the acts and omissions of ~ts d~rectors, officers,
employees, agents, and subcontractors The THEATRE shall not be considered a partner or jomt
venturer wath the CITY, nor shall the THEATRE be considered nor m any manner hold ~tself out as
an agent or official representative of the CITY
5 3 Indemnification. 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
Page 6
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 obtalmng the
written consent of the CITY
5.5 Notice. Any notme required to be given under tins Agreement or any statute, ordinance, or
regulation, shall be effective when given m writing and deposited ~n the Umted States mml, ce~fied
marl, return receipt requested, or by hand-dehvery, addressed to the respective part,es as follows
CITY THEATRE
City Manager Denton Community Theatre, Inc
City of Denton Scott Wilkinson
215 E McKmney 214 W Hmkory
Denton, TX 76201 P O Box 1931
Denton, Texas 76202-1931
5 6 Inurement Tins Agreement and each pmws~on hereof, and each and every right, duty,
obligation, and hablhty set forth hereto shall be binding upon and inure to the benefit and obhgat~on
of the CITY and the THEATRE and their respective successors and assigns
5.7 Application of Laws All terms, conditions, and prowslons of th~s 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 judicial determinations relative thereto
$ 8 Exclusive Agreement. Tins Agreement contains the entire understanding and const~tutos
the enttre agreement between the parties hereto concermng the subject matter contmned herein
There arc,no representations, agreements, arrangements, or understandings, oral or written, express
or ~mphed, between or among the pames hereto, relating to the subject matter of tins Agreement,
winch are not fully expressed herein The terms and condmons of tins Agreement shall prevail
notw~thstanthng any variance in tins Agreement from the terms and conditions of any other
document relating to tins transaction or these transactions
5.9 Duplicate Originals. Tins Agreement is executed ~n duplicate originals
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 maply any
hnutat~on, defnnt~on, or extension of the specific terms of the section and paragraph so designated
5.11 Severabillty. If any section, subsection, paragraph, sentence, clause, phrase or word in tins
Agreement, or apphcatlon thereof to any person or c~rcumstance is held lnvahd by any court of
competent junsthct~on, such holding shall not affect the validity of the remaining portions of this
Page 7
Agreement, and the part, es hereby declare they would have enacted such remmning po~ons despite
any such ~nvah&ty
5 12 Insurance. The THEATRE shall prowde insurance as follows
1 $500,000 Commercml General Lmblhty, or $1,000,000 Event Insurance, covenng
all events taking place on City-owned property
2 Statutory Workers' Compensation and Employers' Liability
($100,000/$500,000/$100,000)
The CITY must be named as an addattonal insured on all pohcles (except Workers' Compensation)
and proof of coverage shall be submitted pnor to any payment by the CITY
EXECUTED tlus ~/~ day of ~ ~Pa62/7-eDq.~]~- ,2000
THE CITY OF DENTON, TEXAS
EULINE BROCK, MAYOR
ATTEST APPRO~GAL FO~)
By ~./)q~-~ /~/~J~b/~,J ~~
~C
By
ATTEST ', TO LEGAL FORM
By By
Secretary
Page 8
Exhibit A
DENTON COMMUNITY THEATRE
BUDGETPROPOSAL
PROGRAM YEAR2001
REQUESTED
PROGRAM/ACTIVITY AMOUNT
ADVERTISING Advert;s~ng for DCT 9,000
Promotion of Pied p;per 3,000
Advertising for Campus Theatre 3,000
Advert~s~n~ Minority Production 3,000
$ 18,000
Exhibit B
DENTON COMMUNITY THEATRE
FINANCIAL REPORT
Program Year 2001
15T 2ND 3RD 4TH YEAR BUDGET
QUARTER QUARTER QUARTER QUARTER to vs
(JUL - SEP) DATE ACTUAL
$o $o $o $o $o $o
$o $o $o $o $o $18,ooo
0 0 0 0 0 0
$o $o $o $o $o $18,ooo
$0 $0 $0 $0 $0 9,000
0 0 0 0 0 3,000
0 0 0 0 0 3,000
0 0 0 0 0 3,000
$o $o $o $o $o $18,ooo
$o $o $o $o $o $18,ooo
$o $o $o $o $o $o
$o $o $o $o $o $o
$o $o $o $o $o $o
0 0 0 0 0 0
0 0 0 0 0 0
$o $o
$o $o $o
I:Jate SJJJ~mJtted Program Director