2000-308 ORDINANCE 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 conditions contained in the agreement, a copy of whaeh is attached
hereto and made a part hereof
SECTION II That this orchnanee shall become effective lmmechately upon its passage
and approval
F^SSED ~ APPROVED thlsthe ~'~ day of &/~~ ,2000
EULINE 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 (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 K~wams Club of Denton, Texas, Inc, a legal entity ~ncorporated on
September 6, 1939 under the laws of the State of Texas (the "CLUB")
WHEREAS, TEX T^x Cor)E {}351 002 authorizes the CITY to levy by ordinance a
mumc~pal ~hotel occupancy tax ("hotel tax") not exceeding seven percent (7%) of the conslderataon
prod by a hotel occupant, and
WHEREAS, by ordinance, the CITY has pmwded for the assessment and collection of a
mumc~pal hotel occupancy tax m the C~ty of Denton of seven percent (7%), and
WHEREAS, Tnx T^x Cor)~ §351 101(a) authonzes the CITY to use revenue from ~ts
mmnc~pal, hotel occupancy tax to promote tourism and the convention and hotel industry by
advertlsmg and conducting sohc~tatmns and promotional programs to attract tourists and co^ventron
delegates or regtstrants to the mumc~pahty or ~ts vmlmty, and the encouragement, promotion,
improvement, and apphcat~on of the arts meludmg instrumental and vocal music, dance, drama, folk
art, creatave writing, arcbateeture, design and alhed fields, pmntmg, sculpture, photography, grapluc
and craft arts, motmn p~ctures, racho, telewsmn, tape and sound recording, and other arts related to
the presentataon, performance, execution, and exbabmon of these major art forms, and
WHEREAS, the CLUB ~s well eqmpped to perform those aet~wtaes, and
WHEREAS, T~x TAX COD£ §351 101(c) authorizes the CITY to delegate by contract w~th
the CLUB, as an independent enttty, the management and superv~smn of programs and aetavmes of
the type deserlbed heremabove funded w~th revenue from the mummpal hotel occupancy tax,
NOW, THEREFORE, m cons~deratmn of the performance of the mutual covenants and
promises contained hereto, the CITY and the CLUB agree and contract as follows
I HOTEL TAX REVENUE PAYMENT
1 1 Consideration For and m consideration of the actlvltaes to be performed by the CLUB
under flu~ Agreement, the CITY agrees to pay to the CLUB 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 CLUB sometunes herem 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 specffic
meanings
(Q The term "hotel tax revenue" shall mean the gross momes collected and
received by the C~ty as munlmpal hotel occupancy tax at the rate of seven percent (7%) of
the price pard for a room ~n a hotel, pursuant to Texas Tax Code 351 002 and C~ty
Ordinance Hotel tax revenue will include penalty and interest related to the late
payments of the tax revenue by the taxpayer
(10 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
On) 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 time (t e,
fiscal year or fiscal quarter), less (1) attorney and auditing costs incurred dunng such
relevant period of ttme for costs of collection or auditing of hotel taxpayers Attorney and
audttang costs mclude fees prod to attorneys or agents not in the regular employ of the CITY
for wluch attorneys or agents effect comphance or collection of the hotel tax from taxpayers,
and (2) court costs and other expenses recurred in htagat~on agmnst or auditing of such
taxpayers
0v) The term "contract quarter" shall refer to any quarter of the calendar year m
wbach flus Agreement is m force Contract quarters will end on March 31st, June 30th,
September 30th, and December 31st of each contract year
(b) In return for satisfactory performance of the actlwt~es set forth in this Agreement
and all attachments hereto, the CITY shall pay to CLUB an amount of money m each contract
year equal to the lesser amount of Two and F~ve One-Hundredths of a percent (2 05%) of the
annual base payment amount or the fixed contract amount of Twenty-Two Thousand Dollars
($22,000). Tlus amount w~ll be d~wded rote 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 ongmally estimated for the fiscal year The fourth quarterly
payment will represent 25% of the fixed contract amount or the unpmd remmnder of 2 05% of
the base payment amount, whichever ~s less Each quarterly payment ~s 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 Specffied 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 after the
25th day following the last day of the contract quarter If quarterly financial and performance
reports are not received w~tlun tturty (30) days of the end of the applicable contract quarter, the
rempxent may be held m breach of fins Agreement The CITY may withhold the quarterly
payment(s) until the appropriate reports are received and approved, wbach approval shall not
unreasonably be w~thheld
P~e2
1.4 Other limitations regarding consideration
(a) The funding of this project m no way commits the CITY to future funding of flus
program beyond the current contract period Any future funding is solely the responsibility of the
CLUB
Co) It ~s expressly understood that flus contract ~n no way obligates the General Fund or any
other monies or crc&ts of the CITY
(c) CITY may withhold further allocations if CITY determines that CLUB's expenchtures
dewate materially from their approved budget
II. USE OF HOTEL TAX REVENUE
2.1 Use of Funds. For and m consideration 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 adve~smg and conducting sohcltatlons and promotional programs to attract tourists and
convention delegates or registrants to the mummpahty or ~ts wc~mty by the encouragement,
promotion, nnprovement, and apphcat~on of the arts including instrumental and vocal music, dance,
drama, folk art, creattve writing, arctutecture, design and alhed fields, pmnt~ng, sculpture,
photography, grapluc and craft arts, morton pictures, radio, telews~on, tape and sound recording, and
other arts, related to the presentation, performance, execution, and extubiUon of these major art
forms, as authorized by TEx TAX CooE §351 101(a) (3) & (4) Funds for any calendar year which
are unused by nudmght December 31st of that year shall be refunded to CITY within flurry (30)
days
2 2 Administrative Costs The hotel tax funds received fi.om the CITY by the CLUB may be
spent forI day-to-day operations, supplies, salaries, office rental, travel expenses, and other
admlmstrat~ve costs that are incurred directly ~n the performance by the CLUB of those act~wttes
spemfied ~n ¶2 1 above and are allowed by TEx TAX CODE §351 101(f)
2.3 Speeffie Restrictions on Use of Funds.
(a) That portion of total admimstrat~ve costs of the CLUB for wluch hotel tax funds may
be used shall not exceed that posen of the CLUB's admlmstratlvc costs actually recurred m
conductmg thc acttvit~es specffied in ¶2 1 above
CO) Hotel tax funds may not be spent for travel for a person to attend an event or conduct
an activity the primary purpose of wtuch is not rhrectly related to the promotion of local tourism and
the convention and hotel industry or the performance of the person's job ~n an effiment and
professional manner
III. RECORDKEEPING AND REPORTING REQUIREMENTS
3.1 Bridget.
(a) The CLUB shall prepare and submit to the C~ty Manager of the CITY an annual budget
(see Exlublt "A") as approved by the City Council for each calendar year, for such operations of the
Page 3
CLUB in which the hotel tax funds shall be used by the CLUB This budget shall specifically
identify proposed expenditures of hotel tax funds by the CLUB In other words, the CITY should
be able to audit specifically where the funds in the separate account relating 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 tins contract during any fiscal year of this Agreement unless a budget for such respective fiscal
year has been approved m writing by the Denton City Council authorizing the expenditure of funds
Failure to .submit an annual budget may be considered a breach of contract, and ffnot remeched ~s
considered grounds for termination of this Agreement as stated in paragraph 4 2
(b) The CLUB acknowledges that the approval of such budget by the Denton City
Council creates a fiduciary duty in the CLUB with respect to the hotel tax funds pa~d by the CITY
to the CLUB under tbas Agreement The CLUB shall expend hotel tax funds only m the manner
and for the purposes specified m tl~s Agreement, TEx T^x CODE §351 101(a) and ~n the budget as
approved by the CITY
3.2 Separate Accounts The CLUB shall maintain any hotel tax funds paid to the CLUB by
the CITY m a separate bank account w~th segregated accounting, such that any reasonable person
can rewew the source of expenditures of tax funds A bank reconciliation report (see Exhibit "B")
~s required w~th each quarterly report
3.3 Financial Records. The CLUB shall maintain complete and accurate financial records of
each expenchture of the hotel tax funds made by the CLUB These funds are reqmred to be
classified as restricted funds for audited financial purposes, and may not be used for supporting
services, including, but not lmalted to, and~ting fees and attorney's fees Upon reasonably advance
written request of the Denton C~ty Council, the C~ty Manager or designate, or any other person,
shall make such financml records available for ~nspect~on and rewew by the party making the
request CLUB understands and accepts that all such financial records, and any other records
relating to flus Agreement shall be subject to the Pubhc Information Act, TEx GOV'T CODE, ch
552, as hereafier amended
3 4 Quarterly Reports After m~tial receipt of hotel tax funds, and w~th~n tlurty days after the
end of every quarter thereafter, until all funds have been expended and reported to the CITY,
CLUB shall furmsh to CITY (1) a performance report of the work performed under th~s Agreement
describing the actiwtaes performed pursuant to this Agreement dunng that contract quarter, (2) a list
of the expenditures made with regard to hotel tax funds pursuant to TEx T^x CODE §351 101(e),
and (3) a copy of all financial records (e g, receipts, invoices, bank statements, and other relevant
documentation) Both the performance and expenditure reports will be in a form e~ther determined
or approved by the C~ty Manager or designate (see Exhibit "B") The CLUB shall respond
promptly to any request from the C~ty Manager of the CITY, or designate, for additional
information relating to the activities performed under flus Agreement
3 5 Notice of Meetings The CLUB shall give the C~ty Manager of the CITY reasonable
advance written notice of the tmae and place of all meetings of CLUB's Board of Dxreetors, as well
as any other meeting of any constituency of the CLUB at wluch flus Agreement or any matter the
subject of this Agreement shall be considered Tbas provision shall not be deemed to reqmre the
CLUB to,g~ve notice of any execuUve session of the Executive Comrmttee of the CLUB
Page 4
IV. TERM AND TERMINATION
4 1 To, rm. The term of ttus Agreement shall commence on January 1, 2001 and terminate at
madmght on December 31, 2001 This term shall be a period of one year
4.2 Termination Without Cause.
(a) Tlus Agreement may be terminated by eather party, with or w~thout came, by glwng
the other party s~xty (60) days advance written notice
(b) In the event thas contract as ternunated by eather party pursuant to Sectaon 4 2(a),
the CITY agrees to reamburse the CLUB for any contractual obhgat~ons of the CLUB undertaken
by the CLUB m satasfactory performance of those actav~taes specified an ¶¶2 1 and 2 2 above and
that were approved by the Courted through the budget, as noted m ¶3 1 Th~s reambursement ~s
conrhtaoned upon such contractual obhgataons havmg been ancurred and entered into an the good
froth performance of those services contemplated an ¶¶2 1 and 2 2 above, and further conditioned
upon such contractual obhgatlons having a term not exceeding the full term of flus Agreement
Notwathst0~ndmg any prowsaon hereof to the contrary, the obllgat~on of the CITY to reimburse
the CLUB or to assume the performance of any contractual obllgataons of the CLUB for or under
any contract entered into by the CLUB as contemplated herean shall not exceed 66 2/3% of the
current quarterly payment
(c) Further, upon tennmatton pursuant to ¶4 2(a), the CLUB wall provade the CITY 1)
Wathm 10 busaness days from the termmataon notification, a short-term budget of probable
expenthtures for the remaining 60 day period between termination notfficataon and contract
termlnataon Th~s budget will be presented to Council for approval w~th~n 10 busaness days after
receapt by CITY If formal approval as not g~ven wathm 10 bmlness days and the budget does
not contain any expenthtures that would be prohabated by the Texas Tax Code, and ~s watban the
current contractual period approved budget, the budget wall be considered approved, 2) Wattun
30 days, a full acoountmg of all expendatures not previously audited by the City, 3) Wath~n 5
busanass days of a request from the CITY, a hstmg of expenditures that have occurred since the
last reqmred reporting period, 4) a final accountmg of all expenditures and tax funds on the day
of termination The CLUB wall be obhgated to return any unused funds or funds determmed to
be used amproperly Any use of rema~mng funds by the CLUB after notfficataon of termanataon as
condataoned upon such contractual obllgataons hawng been ~ncurred and entered into in the good
froth performance of those servmes contemplated in 2 1 and 2 2 above, and further contht~oned
upon such contractual obhgatlons hawng a term not exceeding the full term of th~s Agreement
4.3 Automatic Termination. Tlus Agreement shall automatacally termmate upon the
occurrenc~ of any of the following events
(a) The tenmnat~on of the legal exastence of the CLUB,
(b) The insolvency of the CLUB, the fihng ofa pet~taon ~n bankruptcy, e~ther voluntarily or
mvoluntanly, or an assignment by the CLUB for the benefit of creditors,
Page 5
(c) The continuation of a breach of any of the terms or condlt~ons of tins Agreement by
either the CITY or the CLUB for more than tturty (30) days after written not~ce of such
breach ~s g~ven to the breaching party by the other party, or
(d) The fmlure of the CLUB to submit a fmancml quarterly report wtuch comphes w~th the
repomng procedures reqmred hereto and generally accepted accountmg principles prior to
the begnnnng of the next contract term, or quarterly as reqmred by Section 1 3 hereof
4.4 Right to Immefllate Termination Upon L~t~gatlon Notwithstanding any other provision
of tins Agreement, to rmt~gate damages and to preserve ewdence and ~ssues for judaclal
determination, e~ther party shall have the right to tenmnate tbas Agreement upon ~mmechate
nottce to the other party m the event that any person has instituted litigation concermng the
act~wtaes of the non-terminating party, and the term~nattng party reasonably beheves that
such acttwtles are reqmred or prohibited under thas Agreement
4.5 In the event that flus Agreement ~s terminated pursuant to ¶¶4 3 or 4 4, CLUB agrees to
refund any and all unused funds, or funds determmed by the CITY to have been used improperly,
w~th~n 30 days after tenmnatlon of th~s Agreement
V. GENERAL PROVISIONS
5.1 Subcontract for Performance of Services Nothing m this Agreement shall prohlb~t, nor
be construed to protub~t, the agreement by the CLUB w~th another private entity, person, or orgam-
zat~on for the performance of those semces described ~n ¶2 1 above In the event that the CLUB
enters mto any arrangement, contractual or otherwise, with such other enuty, person or orgamzaUon,
the CLUB shall cause such other entity, person, or organization to adhere to, conform to, and be
subject to all pmws~ons, terms, and conditions ofttus Agreement and to TEx TAX CODE ch 351,
mcludmg reporting reqmrements, separate funds maintenance, and lunltat~ons and prohlbltaons
perttumng to expenchture of the agreed payments and hotel tax funds
5.2 Independent Contractor The CLUB shall operate as an independent contractor as to all
services to be performed under th~s Agreement and not as an officer, agent, servant, or employee of
the CITY, The CLUB shall have exclusive control of ~ts operataons and performance of serwces
hereunder, and such persons, ent~t~es, or orgamzat~ons performing the same and the CLUB shall be
solely responsible for the acts and otmss~ons of ~ts d~rectors, officers, employees, agents, and
subcontractors The CLUB shall not be considered a partner or jmnt venturer with the CITY, nor
shall the CLUB be considered nor in any manner hold ~tself out as an agent or officml representative
of the CITY
5.3 Indemnification. 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
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OR INTENTIONAL ACTS OF CLUB, ITS OFFICERS, EMPLOYEES, AGENTS,
SUBCONTRACTORS, LICENSEES AND INVITEES.
5 4 Assignment. The CLUB shall not assign tins Agreement without first obtalmng the written
consent of the CITY
5 5 Notice. Any notme required to be given under flus Agreement or any statute, ordinance, or
regulation, shall be effective when given m writing and deposited in the Umted States mml, certffied
mml, return receipt requested, or by hand-dehvery, addressed to the respective parties as follows
CITY CLUB
City Manager Denton mawams Club, Inc
City of Denton Joyce George
215 E McKmney 1701 N Elm St
Denton, TX 76201 Denton, Texas 76205
5 6 Inurement. Tins Agreement and each provision hereof, and each and every right, duty,
obhgat~on, and hainhty set forth hereto shall be bmchng upon and inure to the benefit and obligation
of the CITY and the CLUB and their respective successors and assigns
5.7 Application of Laws. All terms, conditions, and provisions of tins Agreement are subJeCt
to all apphcable federal laws, state laws, the Charter of the City of Denton, all ordinances passed
pursuant thereto, and all judaclal determinations relative thereto
5 8 EXclusive Agreement. Tins Agreement contatns the entare understanding and constitutes
the enttre, agreement between the part, es hereto concemmg the subject matter contmncd hereto
There are.no representataons, agreements, arrangements, or understandings, oral or written, express
or lmphcd, 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 this Agreement shall prevail
notwithstanding any variance in tins Agreement l~om the terms and conditions of any other
document relating to this transaction or these transactmns
5 9 DUplicate Originals. This Agreement is executed m duphcate originals
5 10 Headings. The headings and subheadings of the various sections and paragraphs of this
Agreement are inserted merely for the purpose of convenience and do not express or maply any
hnutatlon, definlttun, or extension of the specific terms of the sectlun and paragraph so designated
5.11 Severabliity. If any section, subsection, paragraph, sentence, clause, phrase or word in tins
Agreemeat, or apphcatmn thereof to any person or circumstance is held mvahd by any court of
competent junschctlon, such holding shall not affect thc validity of the remmumg portions of this
Agreemeat, and the parties hereby declare they would have enacted such rematmng portions despite
any such invalldaty
Page 7
$12 Insurance. The CLUB shall provide insurance as follows
1 $500,000 Commemlal General Liability, or $1,000,000 Event Insurance, covenng
all events taking place on C~ty-owned property
2 Statutory Workers' Compensation and Employers' Liability
($100,000/$500,000/$100,000)
The CITY must be named as an addmonal ~nsured on all pohmes (except Workers' Compensation)
and proof of coverage shall be submitted prior to any payment by the CITY
EXECUTED tlms ~r~¢ day of ~rb~ ,2000
THE CITY OF DENTON, TEXAS
By ~~t~ ~~-
ATTEST' ~_AP PRO V F.E~ S~T~ GAL~F~RM
/~qNIFE~ WALTERS, - ~-~'~i~Ei2BERT L PR~q~,
"CITY SEC~T~Y ~ ~;I~~~L~, ~C
A~EST ~PROV~S TO LEG~ FO~
ByS~~ By
Page 8
Exhibit A
KIWANIS CLUB
BUDGET PROPOSAL
PROGRAM YEAR 2001
REQUESTED
PROGRAM/ACTIVITY AMOUNT
ADVERTISING
Advertlsing/Promohons $ 3,500
F~rewon~,s 18,500
$ 22,OOO
Exhibit B
THE KIWANIS CLUB
FINANCIAL REPORT
Program Year 2001
15T 2ND 3RD 4TH YEAR BUDGET
QUARTER QUARTER QUARTER QUARTER to vs
(OCT- DEC) DATE ACTUAL
$o $o $o $o $o $o
$0 $0 $0 $0 $0 $22,000
0 0 0 0 0 0
$0 $0 $0 $0 $0 $22,000
$0 $0 $0 $0 $0 $18,500
0 0 0 0 0 3,500
$0 $0 $0 $0 $0 $22,000
$0 $0 $0 $0 $0 $22,000
, $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 Submitted Program Director