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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