2000-304 NO 000-/
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
EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
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 eondttlons eontmned in the agreement, a copy of which is attached hereto
and made ~a part hereof
S]~CTION II That this ordinance shall become effective immediately upon its passage
and approval
PASSED AND APPROVED tlus the ~ dayof (SZ?~/l~eff~ ,2000
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
H~ORNEY
AGREEMENT BETWEEN THE CITY OF DENTON AND
THE DENTON FESTIVAL FOUNDATION (CY2001)
PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE
THIS AGREEMENT made between the City of Denton, Texas, a mumclpal corporation
(the "CITY"), and the Denton Festival Foundauon, Inca legal entity incorporated under the laws of
the State of Texas (the "FOUNDATION")
WHEREAS, TI~x TAX Coon §351 002 authorizes the CITY to levy by ordanance a
munlclpalihotol occupancy tax ("hotel tax") not exeeechng seven percent (7%) of the consideration
pond by a hotel occupant, and
WHEREAS, by ordinance, the CITY has provided for the assessment and colleelaon of a
mumelpal,hotel occupancy tax in the City of Denton of seven percent (7%), and
WHEREAS, TEx TAX Cor)n §351 101(a) anthonzes the CITY to use revenue from its
mumc~pal, hotel occupancy tax to promote tourism and the convention and hotel industry by
advemsmg and conducting sohe~tat~ons and promotional programs to attract tourists and convention
delegates or registrants to the mumclpahty or ~ts wcnuty, and
WHEREAS, the FOUNDATION ~s well equipped to perform those actlwt~es, and
WHEREAS, Tnx TAx Coon §351 101(e) authorizes the CITY to delegate by contract w~th
the FOUNDATION, as an independent entity, the management and supervision of programs and
activities Iof the type described heremabove funded w~th revenue from the mumelpal hotel
occupancy tax,
NOW, THEREFORE, m cons~derataon 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 C~nsideraflon For and in consideration of the actiwt~es to be performed by the
FOUNDATION under this Agreement, the CITY agrees to pay to the FOUNDATION a porUon of
the hotel ~ax revenue collected by the CITY at the rates and m the manner specified herein (such
payments] by the CITY to the FOUNDATION sometimes heron referred to as the "agreed
payments" or "hotel tax funds")
1 2 Amount of Payments.
(a) As used in flus Agreement, the following terms shall have the following specxfic
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 thc rate of seven percent (7%) of
the price pa~d for a room m a hotel, pursuant to Texas Tax Code 351 002 and City
Ordmance Hotel tax revenue wall ~nclude penalty and ~nterest related to the late
payments of the tax revenue by the taxpayer
0t) The term "Collection 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
(nO 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 tnne (t e,
fiscal year or fiscal quarter), less (1) attorney and auchtmg costs ~ncurred dunng such
relevant period of tune for costs of collection or auditing of hotel taxpayers Attorney and
auchtmg costs include fees p~ud 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 mcurred m htigatlon agmnst or aucht~ng of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year m
which ttus Agreement ~s in force Contract quarters will end on March 31st, June 30th,
September 30th, and December 31 st of each contract year
(b) In return for satisfactory performance of the act~mt~es set forth in th~s Agreement
and all attachments hereto, the CITY shall pay to FOUNDATION an amount of money ~n each
contract year equal to the lesser amount of Seven and Forty-Five One Hundredths percent
(7 45%) of the annual base payment amount or the fixed contract amount of E~ghty Thousand
Dollars ($80,000) Thxs amount wall be divided ~nto quarterly payments equal to 25% of the
annual fixed contract amount, unless the CITY can show w~th 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 remmnder of
7 45% of the base payment amount, whmhever ~s less Each quarterly payment ~s subject to
receipt of unused funds from the prior contract period and the receapt of the reqmred 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 ~n ¶1 2, above, as deterunned by the hotel tax revenue
collected
(b) Each quarterly payment shall be prod upon receipt of the reqmred reports and after the
25th day followmg the last day of the contract quarter If quarterly financaal and performance
reports are not received w~tlun tlurty (30) days of the end of the apphcable contract quarter, the
recipient may be held m breach of ttus Agreement The CITY may withhold the quarterly
payment(s) until the appropriate reports are received and approved, wtuch approval shall not
unreasonably be wtthheld
P~e2
1 4 Other hmitations regarding consideration
(a) The funding of flus project an no way commits the CITY to future funding of flus
program beyond the current contract period Any future funding ~s solely the respons~bthty of the
FOUNDATION
Co) It is expressly understood that flus contract ~n no way obhgates the General Fund or any
other momes or crechts 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 conszdoratzon of the payment by the CITY to the FOUNDATION of
the agreed payments of hotel tax funds speczfied above, thc FOUNDATION agrees to use such
hotel tax funds only for advertising and conducting sol~cltattons and promotzonal programs to attract
tourists azld convention delegates or registrants to the mumc~pahty or its v~cunty as authorized by
TEX TAX CODE §351 101(a) Funds for any calendar year winch are unused by mzdmght December
31tt of that year shall be refunded to CITY within flurry (30) days
2.2 Administrative Costs. The hotel tax funds recezved from the CITY by the FOUNDATION
may be spent for day-to-day operations, supphes, salaries, office rental, travel expenses, and other
athmmstrat~ve costs that are zncurred dtrectly ~n the performance by the FOUNDATION of those
actxwtlcs specified m ¶2 1 above and are allowed by TEX TAX CODE § 351 101 (f)
2.3 Specific Restrictions on Use of Funds.
(a) That posen of total admunstratzve costs of the FOUNDATION for winch hotel tax
funds may be used shall not exceed that posen of the FOUNDATION's adrmmstrat~ve costs
actually recurred ~n conducting the actlVlttes 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 wluch is not chreetly related to the promotion of local tourism and
the convention and hotel industry or the performance of the person's job an an efficient and
professional manner
III. RECORDKEEPING A_ND REPORTING REQUIREMENTS
3 1 Budget.
(a) The FOUNDATION shall prepare and subnut to the City Manager of the CITY an
annual budget (see Extuint "A") as approved by the City Councd for each calendar year, for such
operations of the FOUNDATION in winch the hotel tax funds shall be used by the FOUNDATION
This budget shall specifically Identify proposed expenditures of hotel tax funds by the
FOUNDATION In other words, the CITY should be able to audit specifically where the funds in
the separate account relalmg to hotel tax funds will be expended The CITY shall not pay to the
FOUNDATION any hotel tax revenues as set forth ~n Section I of flus contract during any fiscal
Page 3
year of tlu~ Agreement unless a budget for such respective fiscal year has been approved in wrltmg
by the Denton City Council authorizing the expemhture of funds Failure to submit an annual
budget may be considered a breach of contract, and if not remedied is considered grounds for
termination of this Agreement as stated m paragraph 4 2
(b) The FOUNDATION acknowledges that the approval of such budget by the Denton
City Council creates a fiduciary duty m the FOUNDATION with respect to the hotel tax funds prod
by the CITY to the FOUNDATION under tbas Agreement The FOUNDATION shall expend hotel
tax funds only m the manner and for the proposes specified in ttus Agreement, TEx TAX CODE
§ 3 51 101 (a) and m the budget as approved by the CITY
3 2 Separate Accounts. The FOUNDATION shall mmntam any hotel tax funds prod to the
FOUNDATION by the CITY in a separate bank account w~th segregated accounting, such that any
reasonable person can review the source of expenditures of tax funds A bank reconclhatton report
(see Exlublt "B") is reqmred with each quarterly report
3.3 Financial Records. The FOUNDATION shall mmntam complete and accurate financial
records of each expendtture of the hotel tax funds made by the FOLrNDATION These funds are
reqmred tO be elassffied as restricted funds for audited financial purposes, and may not be used for
supportm8 services, including, but not luntted to, auditing 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 financial records avmlable for mspectmn and review by the party
makdng the request FOUNDATION understands and accepts that all such financial records, and
any other ,reeords relating to this Agreement shall be subject to the Public Informatmn Act, TEx
GOV'T COBB, eh 552, as hereafter emended
3.4 QlmrterlyReports Wl~h~/1 thirty days after the end of every contract quarter,
FOUNDATION shall furmsh to CITY (1) a performance report of the work performed under tbas
Agreement describing the activities performed pursuant to ttus Agreement during that contract
quarter, (2) a hst of the expenditures made with regard to hotel tax funds pursuant to TEX TAX
CODE §351 101(e), and (3) a copy of all financial records (e g, receipts, invoices, bank statements,
and other relevant doeumentatwn) Both the performance and expenditure reports will be in a form
either de~ermmed or approved by the City Manager or designate (see Exlubtt "B") The
FOUNDATION shall respond promptly to any request from the City Manager of the CITY, or
designate~ for additional mformaUon relating to the actlwt~es performed under tbas Agreement
3 5 Notice of Meetings The FOUNDATION shall give the City Manager of the CITY
reasonable advance written notice of the tune and place of all meetings of FOUNDATION's Board
of Directors, as well as any other meetmg of any constituency of the FOUNDATION at wtuch flus
Agreemeat or any matter tha subJeCt of ttus Agreement shall be considered Ttus prowslon shall not
be deemed to reqmre the FOUNDATION to give notice of any executive session of the Executtve
Committee of the FOUNDATION
IV. TERM AND TERMINATION
4 1 Term. The term of tlus Agreement shall commence on January 1, 2001 and temunate at
mldmght on December 31, 2001 This term shall be a period of one year
Page 4
4.2 Termination Without Cause.
(a) Tins Agreement may be terminated by eather party, wath or w~thout cause, by gdvmg
the other party s~xty (60) days advance written notate
(b) In the event tins contract as terminated by either party pursuant to Section 4 2(a),
the CITY agrees to reamburse the FOUNDATION for any contractual obhgataons of the
FOUNDATION undertaken by the FOUNDATION an satisfactory performance of those
activities specified m ~[2 1 and 2 2 above and that were approved by the Council through the
budget, as noted an ¶3 1 This reimbursement as conditaoned upon such contractual obhgataons
havang been ~ncurred and entered into an the good faith performance of those services
contemplated m ¶¶2 1 and 2 2 above, and further condataoned upon such contractual obhgat~ons
havang a term not exceeding the full term of tins Agreement Notwathstandmg any provision
hereof to the contrary, the obhgat~on of the CITY to reimburse the FOUNDATION or to assume
the performance of any contractual obhgat~ons of the FOUNDATION for or under any contract
entered into by the FOUNDATION as contemplated herean shall not exceed 66 2/3% of the
current quarterly payment
(c) Further, upon termination pursuant to ¶4 2(a), the FOUNDATION wall provide the
CITY 1) W~tinn 10 business days from the termanataon notlficataon, a short-term budget of
probable expenchtures for the remmmng 60 day period between termanataon not~ficataon and
contract tennmat~on Tins budget will be presented to Council for approval w~tinn l0 business
days after receipt by CITY If formal approval ~s not gaven wlthan l0 business days and the
budget does not contain any expenditures that would be proinblted by the Texas Tax Code, and
as wathm' the current contractual period approved budget, the budget wall be consadered
approved, 2) W~tlun 30 days, a full accounting of all expenditures not prevaously and~ted by the
City, 3) W~thln $ business days of a request from the CITY, a hstang of expenditures that have
occurred smee the last reqmred reporting period, 4) a final accountang of all expenditures and tax
funds on the day of termmataon The FOUNDATION wall be oblagated to return any unused
funds or funds determmed to be used amproperly Any use of remaamng funds by the
FOUNDATION after notaficatlon of termlnataon as condataoned upon such contractual
obhgat~o~s havang been recurred and entered ~nto m the good faath performance of those servaces
contemplated m 2 1 and 2 2 above, and further condatloned upon such contractual obhgataons
having a term not exeeedang the full term of this Agreement
4.3 Automatic Termination. Tins Agreement shall automatically terminate upon the
occurrence of any of the following events
(a) The termlnatton of the legal exastence of the FOUNDATION,
Co) The insolvency of the FOUNDATION, the fihng of a petmon an bankruptcy, e~ther
voluntarily or anvoluntanly, or an assagnment by the FOUNDATION for the benefit of
crechtors,
Page 5
(c) The contlnuatton of a breach of any of the terms or condmons of ttus Agreement by
either the CITY or the FOUNDATION for more than thirty (30) days after written notate of
such breach is gtven to the breacinng party by the other party, or
(d) The fmlure of the FOUNDATION to submit a financml quarterly report which comphes
w~th the reporting procedures required hereto and generally accepted accounting pnnc~ples
prior to the begmmng of the next contract term, or quarterly as required by Section 1 3
hereof
4 4 Right to Immediate Termination Upon Litigation Notwathstandmg any other pmmslon
of,fins~ Agreement, to mmgate damages and to preserve ewdence and ~ssues for judamal
determmatmn, either party shall have the right to terminate tins Agreement upon ~mmedlate
notme to the other party m the event that any person has ~nsttmted htagatlon concermng the
actavmes of the non-terminating party, and the terrmnatlng party reasonably beheves that
such acttvltles are mqmred or proinb~ted under tins Agreement
4.5 In the event that tins Agreement ~s terminated 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
improperly, wrthm 30 days after termination of tins Agreement
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Semces. Notinng ~n tins Agreement shall proinb~t, nor
be construed to pmlublt, the agreement by the FOUNDATION w~th another private entity, person,
or orgamzataon 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 orgamzat~on, the FOUNDATION shall cause such other entity, person, or orgamzat~on to
adhere to,' conform to, and be subJeCt to all pmws~ons, terms, and conchtlons of tins Agreement and
to T£x T^x Corm ch 351, mcludang reporting requirements, separate funds mmntenance, and
llnutat~ons and proinb~taons pertaining to expenchture 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 ~ts operations and
perform~ce of services hereunder, and such persons, entrees, or orgamzatlons performing the same
and the FOUNDATION shall be solely responsxble for the acts and omissions of ~ts directors,
officers, employees, agents, and subcontractors The FOUNDATION shall not be considered a
partner or joint venturer with the CITY, nor shall the FOUNDATION be considered nor in any
manner hold ~tself out as an agent or offimal representative of the CITY
53 Indemnffieatlon. 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
Page 6
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 flus Agreement w~thout first obtaining
the written consent of the CITY
5 5 Notice. Any notme reqmred to be g~ven under flus Agreement or any statute, orrhnance, or
regulatton, shall be effective when gtven m wnOng and deposited ~n the Urated States mml, cemfied
marl, return receipt requested, or by hand-dehvery, addressed to the respective part,es as follows
CITY FOUNDATION
C~ty Manager Denton Festival Foundation, Inc
C~ty of Denton Carol Short
215 E M~Kanney Festival Coordinator
Denton, TX 76201 P O Box 2104
Denton, Texas 76202-2104
5 6 Inurement. Tbas Agreement and each pmvls~on hereof, and each and every right, duty,
obhgatlon, and habfuty set forth hereto shall be bmdlng upon and ~nure to the benefit and obhgat~on
of the CITY and the FOUNDATION and their respective successors and assigns
5.7 Application of Laws. All terms, conrht~ons, and prows~ons of flus Agreement are subject
to all appheable federal laws, state laws, the Charter of the City of Denton, all ordinances passed
pursuant thereto, and all juchclal determinations relative thereto
5 8 Exelnsive Agreement. Tbas Agreement contains the entire understanding and constitutes
the entire a~eement between the part,es hereto concerning the subject matter contained here~n
There are no representattons, agreements, arrangements, or understandings, oral or written, express
or ~mphed, between or among the partaes hereto, relating to the subject matter of flus Agreement,
wluch are not fully expressed herein The terms and concht~ons of th~s Agreement shall prevml
notw~thstandlng any variance ~n tins Agreement from the terms and concht~ons of any other
document, relating to tins transaction or these transactions
5.9 Duplicate Originals. Tlus Agreement ~s executed m duphcate originals
5.10 Headings The headings and subheadings of the various sections and paragraphs of flus
Agreement are inserted merely for the purpose of convenience and do not express or ~mply any
hrmtat~on, defimtton, or extension of the specffic terms of the section and paragraph so designated
5.11 Severability. If any section, subsection, paragraph, sentence, clause, phrase or word in this
Agreement, or application thereof to any person or mrcumstance ~s held mvahd by any court of
competent jurisdiction, such holding shall not affect the vahd~ty of the remalumg pomons of flus
Agreement, and the part,es hereby declare they would have enacted such remmnmg pomons despite
any such ~nvald~ty
Page 7
5.12 Insurance. The FOUNDATION shall provide ~nsurance as follows
1 $500,000 Commercial General L~ab~hty, or $1,000,000 Event Insurance, covenng
all events taking place on C~ty-owned property
2 Statutory Workers' Compensatmn and Employers' Llablhty
($100,000/$500,000/$100,000)
The CITY must be named as an adchtmnal insured on all pohmes (except Workers' Compensatmn)
and proof of coverage shall be submitted prior to any payment by the CITY
EXECUTED tlus ~_~-~ day of ~.~O~f~ f ,2000
THE CITY OF DENTON, TEXAS
EULINE BROCK, MAYOR
By ~~~
Cha~man/D~rect~-
ATTEST APPROVED AS TO LEGAL FORM
By By
Secretary
Page 8
Exhibit A
DENTON FESTIVAL FOUNDATION
BUDGET PROPOSAL
PROGRAM YEAR 2001
REQUESTED
PROGRAM/ACTIVITY AMOUNT
ADVERTISING
Newspaper, tv, magazines 15,000
Brochure for festtval 5,000
Pnntmg 3,000
$ 23,000
ADMINISTRATION
Postage 2,000
D~rector's Salary 15,000
Suppltes 1,500
$ 18,500
ART
Stages/Electflmty/Sound 18,500
Musimans 20,000
$ 38,600
TOTAL $ 80,000
Exhlbtt B
DENTON FESTIVAL FOUNDATION
FINANCIAL REPORT
Program Year 2001
t$T 2ND 3RD 4TH YEAR BUDGET
QUARTER QUARTER QUARTER QUARTER to vs
DATE ACTUAL
$o $o $o $o $o $o
$o $o $o $o $o $80,ooo
0 0 0 0 0 0
$o $o $o $o $o $8o,ooo
$o $o $o $o $o $15,ooo
0 0 0 0 0 5,000
0 0 0 0 0 3,000
$0 $0 $0 $0 $0 $23,000
$o $o $o $o $o $2,ooo
0 0 0 0 0 15,000
0 0 0 0 0 1,500
$0 $0 $0 $0 $0 $18,500
$0 $0 $0 $0 $0 $18,500
0 0 0 0 0 20,000
$0 $0 $0 $0 $0 $38,500
$o $o $o $o $o $80,000
$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 $o
$o $o $o $o $o $o
Date Bubmltted Program Director