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1. SERVICES. The City hereby agrees to engage the Association and the <br /> Association hereby agrees to perform the services described in the Attached <br /> "Exhibit A - Scope of Services." <br /> 2. TERM. The term of this Agreement shall commence on January 1, 2001, and <br /> shall continue until terminated as provided herein. <br /> 3. COMPENSATION. The City hereby agrees to pay the Association compensation <br /> for its services as described in the attached"Exhibit B - Compensation." <br /> 4. STATUTORY COMPLIANCE. State law establishes limitations on how <br /> hotel/motel taxes may be spent. Specifically, Laws of 1997 Chapter 452, Section <br /> 4 provides in relevant part: <br /> All revenue from taxes imposed under this chapter shall be <br /> credited to a special fund in the treasury of the municipality <br /> imposing such tax and used solely for the purpose of <br /> paying all or any part of the cost of tourism promotion, <br /> acquisition of tourism-related facilities, or operation of <br /> tourism-related facilities. <br /> Laws of 1977 Chapter 452, Section 2 defines "tourism promotion" as "activities <br /> and expenditures designed to increase tourism, including but not limited to <br /> advertising, publicizing, or otherwise distributing information for the purpose of <br /> attracting and welcoming tourists; developing strategies to expand tourism; <br /> operating tourism promotion agencies; and funding marketing of special events <br /> and festivals designed to attract tourists." Section 2 defines "tourism-related <br /> facility" as "real or tangible personal property with a usable life of three or more <br /> years, or constructed with volunteer labor, and used to support tourism, <br /> performing arts, or to accommodate tourist activities." <br /> The funds for this Agreement are from the hotel/motel tax fund and the <br /> Association agrees to comply with state law for the expenditure of such funds. <br /> 5. RECORDS - REPORTING. The Association shall establish and maintain <br /> accounting and performance records as prescribed by the City. The City, <br /> Washington State Auditor, or designee shall have the right to inspect, audit and <br /> copy said records. The Association shall provide annual reports to the City along <br /> with any and all other reports requested by the City or required herein. <br /> 6. TERMINATION OF AGREEMENT. Each party reserves the right to terminate <br /> this Agreement upon not less than one hundred and eighty (180) days written <br /> notice to the other party. In the event this Agreement is terminated by either party <br /> for other than material breach, the Association shall only be entitled to receive <br /> compensation for any satisfactory work or service completed pursuant to this <br /> Agreement as of the date the Association is notified of termination, less all <br /> payments previously made. In no event shall such compensation exceed the <br /> compensation budgeted and appropriated by Council for the Association as is set <br /> SALTY SEA DAYS ASSOCIATION AGREEMENT 2 <br />