Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2021-07-26 - Agendas - Final
Fayetteville Advertising and Promotion Commission July 26th, 2021 2:00 p.m. Location: Fayetteville Town Center, 15 West Mountain, Fayetteville AR Commissioners: Katherine Kinney, Chair, Tourism & Hospitality Representative Todd Martin, Tourism & Hospitality Representative Chrissy Sanderson, Tourism & Hospitality Representative Elvis Moya, Tourism & Hospitality Representative Andrew Prysby, Commissioner at -large Matthew Petty, City Council Representative Sarah Bunch, City Council Representative Staff: Molly Rawn, Chief Executive Officer; Jennifer Walker, Vice President of Finance; and Hazel Hernandez, Vice President of Marketing and Communications Agenda I. Call to order at 2:00 p.m. II. Old Business A. Review and approval of June 2021 minutes III. New Business A. CEO Report, Molly Rawn B. Financial Report from Jennifer Walker, Vice President of Finance C. Presentation of 2020 Audit, BKD, Cynthia Burns. D. Marketing Report presented by Hazel Hernandez, Vice President of Marketing and Communications E. Vote. Budget Amendment, Dickson Street Art Court. Staff is seeking permission to adjust the budget to reflect the revenue from the Tyson Family Foundation Grant and the associated art court expenses. F. Vote. Spartan Agreement and budget adjustment. Staff is seeking authority to enter into an Agreement with Spartan to host the Spartan U.S. Trail Running World Championships in Fayetteville and to make the associated budget adjustment. G. Vote. Fayetteville Town Center tower repair quotes and Budget Amendment. Seeking authorization to accept a bid from Nabholz Construction for $54, 900 and to make the associated budget adjustment. H. Vote. Walton Family Personal Philanthropy Group amendment to Cyclo-cross grant. Vote to accept an amendment of $1,400,000 to the original Cyclo-cross grant due to revised expenses and scope. 1. Vote. Cyclo-cross Vendor payments and Contract request. A vote authorizing a limited amendment to the Financial Policies permitting the Experience Fayetteville CEO to execute Cyclo-cross grant contracts and payments on an individual basis prior to Commission approval with a summary reporting to the Commission in December 2021 and March 2022. J. Recommendation to the City of Fayetteville to develop a matching funds program for employers who incentivize employee vaccinations. Commissioner Petty is bringing forward this item for discussion and possible vote, due to the ongoing public health crisis and the risks posed by low vaccination rates. K. Agenda Additions. Additions to the agenda may be added upon request from a majority of commissioners. IV. Announcements V. Adjourn Fayetteville Advertising and Promotion Commission Minutes from June 28, 2021 Fayetteville Town Center Commissioners Katherine Kinney, Chair, Chrissy Sanderson, Elvis Moya, Present: Sarah Bunch, Todd Martin Commissioners Andrew Prysby and Matthew Petty Absent: Staff: Molly Rawn, Chief Executive Officer; Jennifer Walker, Vice President of Finance; and Hazel Hernandez, Vice President of Marketing and Communications Chairperson Kinney called the meeting to order at 2:01 p.m. Old Business A. Commissioner Bunch motioned to approve the May 2021 minutes with Commissioner Moya seconding. The minutes were unanimously approved. III. New Business A. CEO Report, Molly Rawn Hotel occupancy up 74% in May 2021 versus May 2020 and is up 20% YTD compared to 2020. Restaurant collections for May have nearly doubled from last year. April was a good month for Fayetteville with 13 home Razorback baseball games. This HMR data does not include regionals or super regionals but does capture the Oz Trails Pro Cup presented by Experience Fayetteville. Visitors in Visitors Center: 685 for May, which is down from 2018, however, at the end of May we opened back up on Saturdays. We sold more than $1,000 in Pride merchandise in May; all of these sales will go to NWA Equality. Additionally, we've heard estimates of 22,000 people at the Pride Parade. Our sales team, Tina and Julie, brought Lace, Grace and Gears, a women's motorcycle event, to Drake Field. The Fayetteville Town Center hosted 27 meetings/events in May. We continue to operate at 2/3 capacity for events and hope to offer you a sneak peek at our next meeting of some ballroom renovations. Two full time openings at Fayetteville Town Center have been filled. Griffin Stroupe has been hired to be our Sales Manager and Madison Hurley is serving as our Event Services Manager. The town center has many events scheduled for the fourth quarter. Upcoming events: We are partnering with Latinas en Bici for the Tour de Frida, a cycling event on July 17 to honor Frida Kahlo's life and the anniversary of her passing. The route goes along many pieces of public art. The Joe Martin Stage Race and Experience Fayetteville Criterium is August 26t" to 29' and the Spartan Trail Running Championship is October 31st Commissioner Moya asked when we planned to go back to full capacity events at the town center. Rawn answered we currently have the ability to do so, but the events being booked are below our full capacity. We continue to evaluate booking requests as they come in. B. Financial Report, Jennifer Walker, Vice President of Finance Our target for budget is 42% for the end of May. Our revenues are at 39% and expenditures are at 35%. Looking more specifically at HMR tax revenue, we are exceeding our YTD budget by 1 %. On our balance sheet, you will see that cash and investments are just over three million dollars. We have now expended all of our PPP funds, with a breakdown included in the meeting packet. We are working on the loan forgiveness application and might have that for commission's review at an upcoming meeting. C. Marketing Report presented by Hazel Hernandez, Vice President of Marketing and Communications Through May our website numbers are up significantly from last year. Especially our landing page views, up 107% which shows the efforts of our increased advertising. Interesting website traffic trends: 89% of traffic to the website are new visitors, with increasing percentages of international site visitors. This is to be expected as cyclo-cross is very popular in Europe. Hernandez showed the top content draws from our website thus far with /visitfayetteville being the highest, followed by /46-things-to-do, /guide, /experience/events and then /eat. We served 56,000 paid search impressions in May with 5,358 clicks to the Experience Fayetteville website, for an overall CTR of 9.5%. Top search phrase was "Festivals Fayetteville." D. Vote. Approving a quote from Multi -Craft Contractors for replacement of a Town Center roof top HVAC unit. Rawn shared that we've been working since 2017 to replace each of the 7 RTUs at the town center and are on track to do that. The quote of $45,760 is from Multi -Craft Contractors. As the commission approved a maintenance contract with MCC, giving us competitive pricing, we do not seek multiple bids. Commissioner Moya made a motion to accept the bid with Commissioner Martin seconding it. It passed unanimously. E. Presentation on the Dickson Street Art Court from Jordan Garner, Tyson Family Foundation Rawn introduced Jordan Garner to discuss the 227 Dickson Street art project, formerly known as the Dickson Street Theater. Garner showed a picture of the outside and the inside, stated that this is an adaptive use project, utilizing existing elements when possible to create an experience for the public. Garner stated that they are asking to enter into a three-year partnership with Experience Fayetteville on this project to attract even more people to downtown. Rawn continued the discussion by commending Garner and the foundation for doing this project. This yet -to -be named space will be a short-term basketball space with Experience Fayetteville providing daily maintenance, oversight, and promotion. As the city looks to do more programming in the Cultural Arts Corridor space, this is a good test to see what works and how it works. We have found that people are looking for outdoor activity space. Rawn asked for questions. Commissioner Bunch asked how the building's structure would be changed. Rawn said that three walls would remain with the front wall being open and the front courtyard will be completely redone. Commissioner Moya asked about the open-air concept as it relates to how security will be handed. Rawn answered that we intend to have a gate to secure it and do not plan for it to be open all night. Commissioner Bunch asked Jordan Garner how the concept was decided upon. Garner replied that this idea came up from the Project Public Spaces conference and referenced the Pigalle basketball court in Paris. Commissioner Moya asked if Rawn envisioned new staff members coming on board. Rawn answered that it may create opportunities for more part time or contract team, but not additional full time. Commissioner Sanderson asked what the completion timeline is with the answer being hopefully this fall. Rawn continued that this will open as a space that is not formally programmed; she wants to see how the space is used before we layer in anything more formal like reservations or events. F. Vote to accept a grant for $236,566 from the Tyson Family Foundation over a three-year period to support communications and operations of the space. Experience Fayetteville is asking the commission for permission to accept the funds so that we can go forward with planning, marketing and working with the partners on this project. Commissioner Bunch made a motion for Experience Fayetteville to accept the funds for the intended use and Commissioner Moya seconded it, it passed unanimously via a roll call vote. G. CEO Rawn closed out the meeting with an announcement that she has been asked to chair a subcommittee of the city's Economic Recovery and Vitality Steering Committee which will focus on revitalization of the hospitality industry. She and Tyler Wilson are assembling a group to talk about pertinent issues, including third party restaurant delivery providers. Commissioner Sanderson is on the steering committee and Rawn plans to ask Commissioner Martin for input. H. Commissioner Kinney adjourned the meeting at 2:37pm. Minutes submitted by Amy Stockton, Director of Operations, Experience Fayetteville. Fayetteville A&P Commission CEO's Report July 22, 2021 HMR Growth over 2020 YTD 26% Growth over 2019, YTD 1.4% June lodging collections: Down approximately 18% from 2019 June restaurant collections: Up approximately 10% from 2019 Lodging Data Occupancy % June 2020 — 66.0% Occupancy % June 2021 — 38.6% - Occupancy is up approximately 71 % ADR (Average Daily Rate) June 2021 is up approximately 41 %over last year Year-to-date Occupancy % 2020 — 41.8% Year-to-date Occupancy % 2021 — 54.5% January — June 2021 we have collected more than $28,438K from our agreement with AirBnb January — June 2020 $11,880 January — June 2019 $14,398 Visitor Center Sales and Attendance • VC saw 1325 visitors in June 2021 o Up 93% from May 2021(685 visitors) o Up 23% from (last historical data) June 2018 (1077 visitors) • VC had $8709 in sales in June 2021 o Up 33% from May 2021 ($5769) o Up 75% from (last historical data) June 2018 ($2196) • NWA Equality: we were happy to be their bricks and mortar store front for almost 5 weeks and are going to be writing them a check for $2,075 total for all PRIDE merch sales. Fayetteville Town Center • We hosted two external events, including Connie Edmonston's retirement party and three internal events. Connie served as the city's Parks and Recreation Director and retired July 8th after 35 years with the city. • We have finalized the airwall punch list, and the airwall project is now complete. • We are taking advantage of our light event bookings in July to make facility upgrades and repairs including an inventory of the fixtures and furniture to determine what requires repair or replacement. • We have met with Chris McNamara, Sustainability Facilities Project Manager for the City of Fayetteville, on getting an energy audit for the facility to determine what future projects can lower energy costs and the carbon footprint of the facility. • We are currently working with Justin Clay in the city's Parking department to renew the parking deck lease for the FTC parking deck • We have had water intrusion continue in the FTC tower (entrance) area. As a result, we have received quotes for necessary repairs to repair and seal the roof of the Tower. • We are continuing to help facilitate clients who want to host masked events and maintain a two-thirds capacity limit with minimal client displacement due to this limitation. Experience Fayetteville Sales • In the last month as planners confidence has risen, Experience Fayetteville sales team has secured two new conferences: Stronger Together: NWA Expedition and U of A International Alumni. Both will arrive this fall and bring with them between 150-200 people for an average of 2 days. Estimated El per group is $50K. • As of this last (June 2021) Fayetteville hosted multiple sporting events each weekend. Sports is/ has been stated to be the fastest road to recovery in tourism. • June 21 st — 24th, Experience Fayetteville assisted w/ the 2021 KPMG Stacy Lewis Junior All -Star Invitational put on alongside the American Junior Golf Association at The Blessings Golf Course. This event hosted the top 56 Junior golfers seeking to advance to the Symetra Tour. • June 26th — one day event Experience Fayetteville in conjunction with Arkansas State Tourism, our partners at Drake Field, AR Air & Military Museum and Pig Trail Harley hosted 300+ women motorcyclist in Fayetteville from for the 1 st annual parade of sisters supporting women veterans. • We just launched our new attractions and itinerary sheets with planners, which we trialed on a recent group of association executives. With the addition of Pedal Pub and Big Box Karaoke we have received an overwhelming amount of positive feedback about the downtown experiences. We are excited for these future groups coming to Fayetteville. Cycling • Arkansas Enduro Series hosted a two-day mountain bike event at Centennial Park and Kessler Mountain July 9-10. The Fayetteville Enduro sold out with 300 participants and estimated 500 in total attendance. • Experience Fayetteville partnered with Latinas en Bici for the Tour de Frida! a ride combining cycling and public art in a celebration of artist Frida Kahlo. This event has been rescheduled to July 31 • August 26-291h: the 44th Annual Joe Martin Stage Race culminates in Downtown with Stage 4, The Experience Fayetteville Criterium. • September 14th: in partnership with the City and Fayetteville Chamber, Experience Fayetteville is planning to host another Bicycle Friendly Business Bootcamp targeting Fayetteville businesses. This successful partnership has led to Fayetteville amassing 30 designated Bicycle Friendly Businesses including several restaurants and hotels — 6th most in the United States. Community Engagement Community Engagement this month has been focused on the upcoming First Thursday season to be launched Thursday, August 5th. o We have been in regular contact with the city's public health officer and are working to secure a mobile vaccine unit at some or all of the events o This year's events will be weather dependent; due to COVID-19, we will not move inside in case of rain o Staff, despite being fully vaccinated, will be masked when in close proximity to others o We have approximately 70% of our First Thursday revenue pledged in sponsorship dollars. Thanks to Adventure Subaru, First Security Bank, Cox Communications, and Startup Junkie for their financial support Molly is chairing the hospitality sub -committee as part of the city's economic development steering committee. The first meeting is next week. Monthly A&P Tax Collect'ions 2021 CC= L_" C=_ S263,665 May Activity L-.[AYE IFEVILLI (:jan � 5225,7ss $411418 + $2930,844 � S2919852 Lodging Restaurant ( apr 5350,555 (may 3 $24FOOZ S Prior Dues Collected S3599813 (jul aug Total HMR Collected sep wious YTD (Jan -June) HMR A&P Tax Collection Totalsoct ?017 2018 2019 2020 2n2I �1,662,691 $1,744,138 $1,808,921 $1,455,289 519834994UL1KA 01111 % change over previous year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o a o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 LC) C9 I� 00 G) O T_ N m q Ln QO I� 00 Cr O N CY) � LJO Q0 I- 00 6) 0 N N N N N N (Iq N N N C`) C'7 C`7 C`') C`') CY') C'7 C`7 C`') C`) 171- -10.20% -18.43% 9.21 % 59.93% 100.72 % 58.21 % change from 2020 ** This represents one half of the total HMR collections. The other half supports the Parks and Recreation department. Memo P l[AY� To: Molly Rawn, CEO, Experience Fayetteville Fayetteville Advertising & Promotion Commissioners From: Jennifer Walker, VP Finance, Experience Fayetteville Date: July 12, 2021 Re: Financial Statements — June 2021 This packet contains Experience Fayetteville Financial Statements for the month ended June 30, 2021. The following reports are included in the packet: • Summary P&L Financials for month ended June 30, 2021 • Balance Sheet for month ended June 30, 2021 Target Budget June — 50% • Revenue target 50% of budget or higher by the end of June 2021. Expenditures target 50% or lower at June 2021. Total Revenue YTD: $1,919,264 or 48.3%; We are running 2% below target. Tax Receipts - $1,834,940 Town Center - $46,205 (note $145k+ unearned revenue on Balance Sheet) Other - $38,119 Total Operating Expenditure YTD: $1,699,726 or 42.8%; 7% below budget target. EF Main - $1,433,403 Town Center - $266,323 Overall, HMR tax continued to rebound in June Collections (May activity), and YTD collections now exceed budget expectations by 3% and more than $100,000. We are not meeting overall revenue budget targets due to the Town Center shortfalls, but spending is very well positioned with an Operating Net Income of $219,538 year to date. Modified Accrual Fayetteville A and P Commission Statement of Budget, Revenue and Expense Year -to -Date @ June 30, 2021 CONSOLIDATED Year -to -Date Actual Budget Over/(Under) Budget %of Budget Revenue Hotel, Motel, Restaurant Taxes Revenue 1,834,940 3,460,576 (1,625,636) 53.0% Rental Revenue 46,205 350,250 (304,045) 13.2% Event Revenue 5,252 37,500 (32,248) 14.0% Visitor Center Store Revenue 18,352 45,258 (26,906) 40.5% Parking Revenue 6,040 21,500 (15,460) 28.1% Advertising Revenue 200 8,000 (7,800) 2.5% Other Revenue 2,918 - 2,918 0.0% WFF Cycling Coordinator Grant - 31,190 (31,190) 0.0% Interest and Investment Revenue 5,356 21,500 (16,144) 24.9% Total Revenue 1,919,264 3,975,774 (2,056,510) 48.3% Expenses Operating Expenses Rental Expenses 8,322 68,690 (60,368) 12.1% Event Expenses 13,769 73,800 (60,031) 18.7% Visitor Center & Museum Store 22,051 41,560 (19,509) 53.1% Personnel 558,365 1,329,680 (771,315) 42.0% Sales & Marketing 375,371 961,675 (586,304) 39.0% Office and Administrative 266,351 593,369 (327,018) 44.9% Bond Payments 350,497 707,000 (356,503) 49.6% Clinton House Museum 5,000 - 5,000 0.0% TheatreSquared Contribution 100,000 200,000 (100,000) 50.0% Total Operating Expenses 1,699,726 3,975,774 (2,276,048) 42.8% Net Operating Income/(Loss) 219,538 - 219,538 0.0% Other Income Unrealized Gain/(Loss) on Investments 365,340 0.0% Other Expenses FIFE & Improvements 82,462 155,000 (72,538) 53.20o Depreciation Expense 70,000 0.0% Cost of Goods Sold (4,130) 0.0% Net Income/(Loss) (without Cyclocross Grants) 436,547 (155,000) 226,206 -281.6% Net Income/(Loss) for Cyclocross Events (283,707) Total Net Income/(Loss) 152,840 Modified Accrual Fayetteville A and P Commission Statement of Budget, Revenue and Expense Year -to -Date @ June 30, 2021 Experience Fayetteville Year -to -Date Actual Budget Over/(Under) Budget % of Budget Revenue Hotel, Motel, Restaurant Taxes Revenue 1,834,940 3,460,576 (1,625,636) 53.0% Event Revenue 5,997 26,500 (20,503) 22.6% Visitor Center Store Revenue 18,352 45,258 (26,906) 40.5% Advertising Revenue 200 8,000 (7,800) 2.5% WFF Cycling Coordinator Grant 2,918 31,190 (28,272) 9.4% Interest and Investment Revenue 4,731 19,000 (14,269) 24.9% Total Revenue 1,867,139 3,590,524 (1,723,385) 52.0% Expenses Operating Expenses Event Expenses 12,037 62,800 (50,763) 19.2% Visitor Center & Museum Store 22,051 41,560 (19,509) 53.1% Personnel 417,845 910,718 (492,873) 45.9% Sales & Marketing 374,847 942,375 (567,528) 39.8% Office and Administrative 151,125 302,799 (151,674) 49.9% Bond Payments 350,497 707,000 (356,503) 49.6% Clinton House Museum Contribution 5,000 - 5,000 0.0% TheatreSquared Contribution 100,000 200,000 (100,000) 50.0% Total Operating Expenses 1,433,403 3,167,252 (1,733,849) 45.3% Net Income/(Loss) Before Other Revenue and Expenses 433,736 423,272 10,464 102.5% Other Income Unrealized Gain/(Loss) on Investments 365,340 - 365,340 0.0% Other Expenses FFE & Improvements - 15,000 (15,000) 0.0% Depreciation Expense 37,667 Cost of Goods Sold (4,130) Net Income/(Loss) 765,540 408,272 (8,072) 187.5% Modified Accrual Fayetteville A and P Commission Statement of Budget, Revenue and Expense Year -to -Date @ June 30, 2021 Town Center Year -to -Date Actual Budget Over/(Under) Budget o of Budget / Revenue Rental Revenue 43,778 350,250 (306,472) 12.5% Event Revenue 1,682 11,000 (9,318) 15.3% Parking Revenue 6,040 21,500 (15,460) 28.1% Interest and Investment Revenue 625 2,500 (1,875) 25.0% Total Revenue 52,125 385,250 (333,125) 13.5% Expenses Operating Expenses Rental Expenses 7,122 68,690 (61,568) 10.4% Event Expenses 2,931 11,000 (8,069) 26.6% Personnel 140,520 418,962 (278,442) 33.5% Sales & Marketing 524 19,300 (18,776) 2.7% Office and Administrative 115,226 290,570 (175,344) 39.7% Total Operating Expenses 266,323 808,522 (542,199) 32.9% Net Income/(Loss) Before Other Revenue and Expenses (214,198) (423,272) 209,074 50.6% Other Expenses FFE & Improvements 82,462 140,000 (57,538) 41.1% Depreciation Expense 32,334 Net Income/(Loss) (328,994) (563,272) 234,278 58.4 1 Modified Accrual Fayetteville A and P Commission Statement of Budget, Revenue and Expense Year -to -Date @ June 30, 2021 Cyclocross Events Year -to -Date Actual Budget Over/(Under) Budget o / of Budget Revenue Other Revenue Cyclocross Grant Funds 150,000 675,000 (525,000) 22.2% Cyclocross Events Revenue - 288,500 (288,500) 0.0% Interest and Investment Revenue 942 3,000 (2,058) 31.4% Total Revenue 150,942 966,500 (815,558) 15.6% Expenses Operating Expenses Marketing 1,448 - 1,448 0.0% Office and Administrative Expenses 17,374 2,500 14,874 694.9% Cyclocross Events 415,827 1,342,089 (926,262) 31.0% Total Operating Expenses 434,649 1,344,589 (909,940) 32.3% Net Income/(Loss) (283,707) (378,089) 94,382 75.0% Grant Carry -Forward 766,069 Cumulative Net Income / (Loss) 482,362 Fayetteville A&P Commission Balance Sheet As of June 30, 2021 ASSETS Current Assets Cash 1,967,509 Investments 1,208,336 Accounts Receivable 383,233 Prepaid Expenses 40,255 Deposits 30,617 Visitors Guide Trade 3,402 Inventory Asset 16,196 Total Current Assets 3,649,549 Other Assets Capital Assets Furniture & Fixtures 96,641 Equipment 498,597 EF/CVB Building 940,410 EF/CVB Land 198,621 Building Additions 971,952 Walker -Stone House 1,167,218 Accumulated Depreciation (1,291,281) Total Other Assets 2.582.158 TOTAL ASSETS 6,231,706 LIABILITIES AND EQUITY Current Liabilities Accounts Payable 41,177 Unearned Revenue 145,275 PPP Loan Payable 245,900 Total Liabilities 432,351 Equity Unreserved Fund Balance 3,280,660 Operating Reserve 1,000,000 Capital Reserve 1,000,000 Temporarily Restricted Funds 365,855 Net Revenue Gain/(Loss) on Investments 365,340 Net Revenue without Cyclocross 70,163 Net Revenue for Cyclocross (282,664) 152,840 Total Equity 5,799,355 TOTAL LIABILITIES AND EQUITY 6,231,706 Memo To: Molly Rawn, CEO, Experience Fayetteville Fayetteville Advertising & Promotion Commissioners From: Jennifer Walker, VP Finance, Experience Fayetteville Date: July 15, 2021 Re: Presentation of the 2020 Audit Report PAY The Fayetteville A&P Commission has engaged the audit firm BKD, LLP to perform an annual financial audit for the fiscal year ending December 31, 2020. This audit work was completed Spring 2021 and the final audit report and financial report is now available for review and publication. BKD Director Cynthia Burns will present the 2020 auditor's report. The completed 2020 Independent Auditor's Report, Financial Statements, and Management Letter are attached for reference. .................................................... J N-DUNE 202 JANmJUNE 20 New Visitors p� Returning Visitors JAI .......... N-J NE 20 JAN m JUNE 20 Arkansas - Texas a • OklahoM Missouri, i Colorado Kansas - Tenness Illinois Califor North Caro pay, las) koH an. due offs icac osev ille) ;hart otte) JANmJUNE 202 JAN m JUNE 202 • 25=34 Down 6% 35=44 Up 18% 45=54 Up 21% 18=24 Up 23% N-J NE 202 JAN m JUNE 20 First Interaction Guid,P 59% Ad Even Up 84% Eat r bp 8% Second Interaction Ev Ea up oc Up 4 n 12% 11' Experience Fayetteville 2021 Budget Adjustment Jennifer Walker Submitted By 7/26/2021 Commission Meeting Date - Agenda Item Only N/A for Non -Agenda Item 7/1/2021 Submitted Date Action Recommendation: EF - ADMIN Department A&P Commission approved a grant proposal between Tyson Family Foundation and Experience Fayetteville to manage Basketball Art Court on Dickson Street at the June 2021 meeting. Tyson Family Foundation proposes to fund the maintenance and management costs of the court. 2021 Estimated Funding and Costs are detailed below. Budget Impact: TOTAL 91,230.00 (91,230.00) Increase Decrease Account Number 77330 77310 77200 76100 77400 61000 62000 71300 48501 Expense 2,500.00 1,500.00 2,500.00 500.00 26,000.00 40,000.00 4,370.00 13,860.00 Revenue Class Account Name DSAC DSAC DSAC DSAC DSAC DSAC DSAC DSAC (91,230.00) DSAC Molly Rawn, CEO Approved By Approval Signature 7/1/2021 Approval Date Water and Trash Electric Internet Insurance Repairs and Maint Wages Taxes Marketing Grant Revenue Fayetteville Advertising & Promotion Commission Memo To: Molly Rawn, CEO, Fayetteville Advertising and Promotion Commission; Fayetteville Advertising and Promotion Commissioners From: Tina Archer -Cope, VP of Sales Date: July 20, 2021 Re: Spartan Race Background: Staff has been working to bring the 2021 Spartan Trail U.S. Championships to Fayetteville this October to coincide with the U.S. Trail Running Association annual conference. Spartan is a global experiential sport and wellness brand with 250 events across more than 40 countries on six continents. Fayetteville will be a new location for Spartan Trail and has potential to grow over the next three years. We expect a spend on room nights of approximately $50,000, exceeding our investment through lodging costs alone. In addition, the Spartan Race organization spends an average of $125,000 directly through staff lodging and meals, volunteer meals, sourcing local materials and equipment, employing local contractors, venue fees, sales tax on registrations and merchandise sold. This does not include spending by registrants beyond lodging. On the marketing front, Spartan's combined social media channels have over 6 million followers, which broadens our reach. There is also the potential to directly recover some of the investment for Experience Fayetteville if we are able to secure sponsorships. October 31. Runners can choose to sign up for a 10k night run, a 10K morning run, a Half Marathon (Trail Run Championship) and 50k (Trail Ultra Championship). Recommendation: Staff is recommend we execute a contract with Spartan Race, Inc. in the amount of $45,000 to secure Fayetteville as the host location for the 2021 World Championship Trail Run. Experience Fayetteville 2021 Budget Adjustment 7/26/2021 Commission Meeting Date - Agenda Item Only N/A for Non -Agenda Item Jennifer Walker 7/1/2021 EF - SPORTS Submitted By Submitted Date Department Action Recommendation: Staff recommends approval of a budget transfer to move funding for Spartan Race sponsorship to the Sports Line for spending. This budget transfer supports the proposed agreement for Spartan Race sponsorship at the July 2021 meeting. Budget Impact: TOTAL - - Increase Decrease Account Number Expense Revenue Class Account Name 71110 (45,000.00) EF Agency Advertising 72400 45,000.00 EF Sports and Cycling Molly Rawn, CEO Approved By Approval Signature 7/1/2021 Approval Date Agreement for Sponsorship and Advertising 2021 Spartan Trail US Championship This Agreement for Sponsorship and Advertising ("Agreement") is dated this 8th day of June, 2021 ("Effective Date'), and is by and between Spartan Race, Inc., a Delaware corporation with a principal business address of 234 Congress Street, 5"' Fl., Boston, MA 02110 ("Spartan") and Fayetteville Advertising and Promotion Commission, d.b.a. Experience Fayetteville, a governmental agency established by Ordinance No. 2310 of the City of Fayetteville pursuant to Arkansas law (Ark. Code Ann. 26-75-605) , with a principal address of 21 South Block Ave, Suite 100, Fayetteville, AFAR 72701 ("Sponsor') (each a "Party" and together, the "Parties"). Spartan organizes an annual series ("Season") of timed races for adults known as the "Spartan Sprint", "Spartan Super", "Spartan Beast", or "Spartan Trail" (each a "Race"), each featuring a variety of exhibitions, displays and related marketing and promotional elements. A Season shall commence with the first Race of a calendar year and conclude on the last Race of that calendar year. Through this Agreement, the Parties desire to establish a sponsorship and advertising relationship in connection with the Fayetteville Spartan Trail U.S. Championship at in Fayetteville, Arkansas October 30 and 31, 2021 (the "Event"). Furthermore, Spartan may be in a partnership with a broadcasting partner ("Media Partner") in connection with exhibiting the Races (each such exhibition, a "Pry"). The Parties hereby agree as follows: 1. Term. The term of this Agreement shall begin on the Effective Date and expire on December 31, 2021, unless terminated earlier as provided herein (the "Term"). 2. Sponsorship Benefits. a. Commencing at the beginning of the Term, and subject to the performance of Sponsor's obligations under this Agreement, Spartan is to provide (or cause to be provided, as the case may be) the sponsorship and promotional benefits described in "Exhibit A" attached hereto for each Event (collectively, the "Sponsorship Benefits"). b. Sponsor shall be solely responsible for all production costs, clearances, and licenses related to any commercial units provided hereunder. Furthermore, all activation costs and other expenses related to any exhibition of Sponsor's products and services at each Event shall be the sole responsibility of Sponsor, including the cost of tents, signage, personnel to set up staff - designated activation areas, flyers, transportation costs and product costs (for samples or otherwise). C. The form, content, and presentation of all Sponsorship Benefits (including, without limitation, advertising creative or any material to be designed, constructed, distributed, exhibited, or otherwise published or displayed) is subject to the prior written approval of Spartan, the standard terms and conditions of the platforms on which they are exhibited, the rules and regulations of any relevant governing body or regulatory agency having jurisdiction over the activities or sporting events referenced in this Agreement, Spartan's brand standards and guidelines, and all laws and governmental rules and regulations of any nature as they presently exist or as they will exist in the future, including any modifications or amendments. Approval of the form, content, and presentation of the Sponsorship Benefits will be rendered by Spartan no later than ten (10) days after submission by Sponsor. Failure by Spartan to communicate approval within ten (10) days shall constitute disapproval. d. During the Term of this Agreement, Sponsor will provide (or cause to be provided, as the case may be) to Spartan the marketing and trade support labeled as "Co -Marketing & Trade Support" set forth in Exhibit A attached hereto for each Event. 3. Sponsorship Fees. The Sponsors shall pay to Spartan the fee ("Sponsorship Fees"), to be paid as set forth in the attached Exhibit B. Sponsorship Fees will be paid to Spartan without deduction or set-off of any kind whatsoever, including, without limitation, deductions for advertising agency fees or commissions. 4. Unavailable Benefits. Due to events or circumstances beyond the control of a Parry, or due to the rules, regulations, or laws of any city, state, country, or other relevant governing body or regulatory agency having jurisdiction over the activities, sporting events, or media platforms referenced in this Agreement, it may be or become impossible or impractical for Spartan to provide Sponsor with all of the rights and benefits contemplated herein ("Unavailable Benefit"). The occurrence of an Unavailable Benefit will not be deemed a breach of this Agreement and, as Sponsor's sole remedy, the Parties will cooperate, in good faith, to ensure that their respective rights and obligations will be fulfilled by rescheduling, substitution, alternative performance or similar means of comparable value. 5. Intellectual Property. a. Sponsor hereby grants to Spartan a limited, non-exclusive license to use any service marks, logos, trademarks, word marks, symbols, emblems, trademark designs, indicia provided by Sponsor ("Sponsor Marks") to Spartan solely for the purpose of exercising their rights or carrying out their obligations set forth herein or any other purpose expressly approved by Sponsor. Spartan shall not acquire any proprietary or other right, title, or interest in or to the Sponsor Marks, or any goodwill associated with the Sponsor Marks, except the right to use the Sponsor Marks as provided hereunder. The Sponsor Marks shall be used only in the form, size and type prescribed and approved by Sponsor without deviation from Sponsor's style guide. Spartan's use of any trade names, logos, trademarks, service marks and other marks of Sponsor are subject to Sponsor's prior written approval. Sponsor will communicate a decision to Spartan no later than ten (10) days after Spartan's request. Failure by the Sponsor to communicate disapproval within that ten (10)-day period shall constitute approval. Any goodwill arising out of the use thereof shall inure to the benefit of the Sponsor. b. Spartan, in its sole discretion, may re -exhibit or authorize the re -exhibition (via any and means and forms of media distribution (now known or hereafter devised) and via any and all devices (now known or hereafter devised)) of any Sponsorship Benefits in any replay, photograph, or video footage of any sporting event or other programming or content in which such Sponsorship Benefits appear. Sponsor acknowledges and agrees that nothing in this Agreement shall preclude the appearance of the Sponsor Marks in photographs, video footage, or programs of the Races, in perpetuity, when used for any reason in any and all forms of media whether now or hereafter developed. C. As between Spartan on the one hand and Sponsor on the other hand, the copyrights, service marks, logos, trademarks, word marks, symbols, emblems, trademark designs, indicia, uniforms, identifications, and other intellectual property of Spartan, (collectively, the "Spartan Marks") (the Spartan Marks together with the Sponsor Marks, collectively referred to as "Marks") are the property of Spartan and nothing in this Agreement is intended to convey to Sponsor any ownership rights or, except for the limited license granted in this Section 5(c), other interest in or to the Spartan Marks, whether by implication, estoppel or otherwise, even if such Spartan Marks are included in or on items owned or produced by Sponsor. Subject to the terms and conditions set forth in this Agreement, Spartan hereby grants Sponsor a non-exclusive, non -transferable, non -sub - licensable license to use the Spartan Marks and related designations as provided to Sponsor by Spartan solely in connection with the pre -approved Sponsorship Benefits set forth in Exhibit A or as otherwise agreed amongst the Parties. Sponsor shall not display or otherwise use such Spartan Marks or related designations under any circumstances without the prior written consent of Spartan in each instance. The Spartan Marks shall be used only in the exact form, size, style, and type prescribed and approved by Spartan without deviation. Sponsor shall not, nor shall Sponsor permit others to, use the Spartan Marks in combination with any other trademark, service mark, logo, prefix, suffix or other modifying words, designs, or symbols without the prior written approval of Spartan. E-mail notification (as it relates to Spartan, from an officer having an Executive Vice President title or higher) shall suffice for any written consents or approvals required under this subsection. Sponsor agrees that: (i) any use of the Spartan Marks shall be in accordance with the approvals provided by Spartan without change, (ii) each use of the Spartan Marks will not disparage, denigrate, tarnish or reflect adversely on the Spartan, or their businesses, officers, directors, executives, employees, events, activities, suppliers and/or products, and (iii) Sponsor shall not use, nor shall Sponsor authorize others to use, the Spartan Marks or any marks confusingly similar thereto for any unauthorized use or in any unauthorized manner. Sponsor shall not transfer, assign, or sublicense any of the rights granted under this Section without Spartan's express prior written consent. Sponsor agrees not to apply for any state, federal or foreign trademark or service mark registration pertaining to or including any Spartan Marks or any confusingly similar trademarks. Unless Sponsor receives Spartan prior written approval, Sponsor shall not depict Spartan, and/or the Spartan Marks in any manner that would suggest and/or indicate endorsement of any product or services by Spartan or any of their affiliated or related entities. Sponsor warrants and represents that Sponsor will not infringe Spartan's right, title, or interest in or to the Spartan Marks or any other form of Spartan's intellectual property. d. Sponsor shall not be permitted to use Program footage or images unless Spartan provides its prior written consent which may be withheld in its sole discretion. If such consent is granted, Sponsor shall be solely responsible for obtaining any third -party licenses, consents, and/or releases that are required at any time in connection with Sponsor's use of such footage or images. Additionally, any permitted use of footage or images by Sponsor pursuant to this Agreement is subject to the standard usage and duration guidelines of the Media Partner (if any) as they currently exist or may be modified from time to time. If applicable, Spartan, in its sole discretion, may require execution of a separate Footage Agreement between the Media Partner and Sponsor, with the understanding that Sponsor will not have to pay any additional monetary consideration to the Media Partner under such Footage Agreement. Notwithstanding the foregoing, Sponsor specifically acknowledges that: (i) any use of the names, likenesses or other intellectual property of athletes, musicians, broadcast announcers or spectators which might be construed to constitute an endorsement of Sponsor's products (either express or implied) will require Sponsor to negotiate for such rights separately with each such Party or their agent, and that payment for any such negotiated rights with be the sole responsibility of Sponsor, and (ii) any reuse of music incorporated into the television broadcasts of the Programs will require Sponsor to obtain clearance for the use of such music in the context and media contemplated by Sponsor and payment for such usage will be the sole responsibility of Sponsor. 6. Territory; Local and Re -Exhibition Commercial Inventory; Athletes; Non -Compete. a. The Sponsorship Benefits shall be provided solely in the Territory. For purposes hereof, the "Territory" (x) as it relates to Media Benefits shall mean the United States, its possessions, and territories and (y) as it relates to any other Sponsorship Benefits shall mean the continental United States. The appearance of any signage, content, features, and other Sponsorship Benefits in any exhibition of the Programs shall be limited to the exhibition of such Programs in the Territory, and Sponsorship Benefits may be removed, obscured covered over or replaced during distribution of the Programs outside the Territory, at the sole discretion of Spartan or its Media Partner. b. Any exclusivity provided herein shall apply only within the Territory and shall not apply to: (i) any contractually allotted advertising inventory allocated to distribution and/or broadcast affiliates (the "Local Commercial Inventory") of any network or other platform on which the sporting events or other activities referenced this Agreement may be exhibited or re -exhibited, or (ii) advertising inventory during any re -exhibition of or any Program following the initial exhibition ("Re -Exhibition Commercial Inventory"). Spartan shall have no liability to Sponsor as a result of the sale of Local or Re -Exhibition Commercial Inventory even if sold to advertisers that compete with Sponsor and such occurrence shall not be deemed an Unavailable Benefit. C. Spartan is not granting Sponsor any right to use the names, signatures, photographs, footage, or likenesses of any athlete or other Race participants in connection with any Sponsorship Benefit, and any use by Sponsor must be approved by the individual athlete or Race participant in each instance. Sponsor expressly understands and agrees that any athlete or other Race participant has the right to use, accept, or endorse any product from anyone in competition with Sponsor. Termination. In addition to any other rights and remedies which may be available to the Parties, this Agreement may be terminated by Spartan or Sponsor if the other Party materially breaches this Agreement. If such a breach occurs, the non -breaching Party shall provide the breaching Party with written notice of the breach, including specific details regarding the nature of the breach. The non -breaching Party's obligations under this Agreement may be suspended when such notice is provided and will not be resumed until the breach is cured; provided, however, that all payments under this Agreement which were due before or on the date of receipt of the written notice of breach, shall be made. If the breaching Party does not cure the breach within thirty (30) days of receipt of notice of the breach, then the non -breaching Party may provide the breaching Party with written notice of the immediate termination of this Agreement. 8. LIMITATION OF DAMAGES. EACH PARTY AND THEIR AFFILIATED AND RELATED ENTITIES WILL NOT BE LIABLE UNDER ANY CIRCUMSTANCES FOR CONSEQUENTIAL (INCLUDING WITHOUT LIMITATION, ANY PAYMENT FOR LOST BUSINESS, FUTURE PROFITS, LOSS OF GOODWILL, REIMBURSEMENT FOR EXPENDITURES OR INVESTMENTS MADE OR COMMITMENTS ENTERED INTO, TERMINATION OF EMPLOYEES OR EMPLOYEE SALARIES, OR OVERHEAD OR COSTS INCURRED OR ANTICIPATED UNDER THIS AGREEMENT (WHETHER FORESEEABLE OR NOT), INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE PERFORMANCE OR FAILURE TO PERFORM THIS AGREEMENT REGARDLESS OF WHETHER SUCH LIABILITY ARISES FROM BREACH OF CONTRACT, TORT, OR ANY OTHER THEORY OF LIABILITY. THE AGGREGATE AMOUNT OF DAMAGES RECOVERABLE BY SPONSOR WITH RESPECT TO ANY AND ALL BREACHES, PERFORMANCE, NON-PERFORMANCE, ACTS OR OMISSIONS HEREUNDER WILL NOT EXCEED THE CASH AMOUNTS ACTUALLY PAID TO SPARTAN BY SPONSOR UNDER THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT ANY MONETARY VALUE ASSIGNED TO PROMOTIONAL CONSIDERATIONS PROVIDED HEREIN IS NOT INTENDED TO BE USED AS A MEASURE OF DAMAGES IN CONNECTION WITH THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, NOTHING IN THE AGREEMENT SHALL LIMIT THE LIABILITY OF THE PARTIES FOR: (I) THE INDEMNIFICATION OBLIGATIONS SET OUT UNDER SECTION 9, (II) BREACHES OF CONFIDENTIALITY, (III) DEATH OR PERSONAL INJURY RESULTING FROM NEGLIGENCE, (IV) GROSS AND WILLFUL MISCONDUCT OF DIRECTORS AND OFFICERS, (V) FRAUD OR FRAUDULENT MISREPRESENTATION, AND (VI) ANY OTHER LIABILITY WHICH CANNOT BE EXCLUDED BY LAW. 9. Indemnification. Each Party (the "Indemnifying Party") will at all times indemnify and hold the other Parties and each of their respective affiliates, owners, members, directors, shareholders, officers, employees, servants, agents, sponsors, contractors and media partners (specifically with regard to Spartan, and its respective affiliates, and licensors (together with each of the foregoing's heirs, successors and assigns, the "Indemnified Parties") harmless from and against any and all third -party claims, controversies, damages, causes of action, judgments, liens, losses, costs, fines, penalties, and liabilities including, without limitation, attorneys' fees, consulting fees, and other dispute resolution expenses (collectively "Claims and Losses") arising out of or related to: (a) any breach or alleged breach by the Indemnifying Party of any warranty, representation, covenant, obligation or agreement made by the Indemnifying Party hereunder, (b) any acts, omissions, or intentional misconduct by the Indemnifying Party (or the Indemnifying Party's employees, representatives, agents, contractors, or volunteers), (c) any use of the Indemnified Party's service marks, logos, trademarks, word marks, symbols, emblems, trademark designs, content, or other materials supplied by or on behalf of the Indemnified Parties in a manner inconsistent with this Agreement, or (d) any claim by a third party that the Indemnifying Party's performance hereunder or the Indemnified Party's use of the Indemnifying Party's service marks, logos, trademarks, word marks, symbols, emblems, trademark designs, content or other materials infringes upon, misappropriates or otherwise violates the intellectual property rights or other proprietary rights of such third party. Notwithstanding anything herein to the contrary, Sponsor further specifically agrees to indemnify and hold Spartan and its Indemnified Parties, harmless from and against all Claims and Losses arising out of or related to (x) the exhibition or display of Sponsor Content, Sponsor's commercial units, or other material provided by or on behalf of Sponsor and (y) Sponsor's administration of any sweepstakes or contest held in connection with this Agreement and the awarding by Sponsor, or use by any prize winner, of any prize in connection therewith. Each Party's indemnification obligations shall survive the expiration or early termination of this Agreement. 10. Insurance. a. Sponsor shall carry at all times during the Term and for two (2) years after the expiration of the Term: i. Commercial General Liability Insurance with a minimum of $1,000,000 per occurrence covering bodily injury, property damage, and personal, and advertising liability insurance with a combined single limit of $2,000,000 general aggregate and $2,000,000 products and completed operations aggregate. Such policy shall be written on an occurrence basis; ii. Automobile Liability Insurance with a limit not less than $1,000,000 per occurrence and covering all owned, non -owned, and hired vehicles operated by Sponsor and Spartan on -site; iii. Statutory Workers' Compensation including Employer's Liability Insurance, subject to limits of not less than $500,000 affording coverage under the workers' compensation laws of the applicable state of operation with respect to employees operating on -site at a Race; and b. Sponsor shall deliver to Spartan satisfactory evidence of the aforementioned insurance coverage in form of a certificate of insurance and any policy endorsements as may be requested. Sponsor shall add as additional insured Spartan, and its respective parents, subsidiaries, affiliates, officers, directors, employees, representative and agents and the heirs, successors and assigns of each of the foregoing. Sponsor shall also add as additional insured such other third parties as reasonably identified by Spartan in writing prior to the Races. To the extent permitted by law, each required insurance policy shall provide a waiver of subrogation in favor of each Spartan and its additional insured parties. All required insurance will be placed with reputable carriers licensed to do business in the applicable state. Notice of cancellation will be given in accordance with policy provisions, and Sponsor will promptly notify Spartan of any change to its insurance program which results in noncompliance with this Agreement. Failure by a Spartan to request a certificate shall not be construed as waiver of the obligations outlined above. C. If, in accordance with Exhibit A, Sponsor is granted the right to exhibit its products and services at the Races or otherwise have a presence on -site, Sponsor shall be required to furnish Spartan certificates of insurance evidencing all required insurance prior to the Race. In the event that any required policy is cancelled, reduced, or non -renewed during the Tenn of this Agreement, Sponsor shall immediately notify Spartan, and Sponsor shall suspend participation in the Race until insurance has been placed in compliance with all insurance requirements. If Sponsor's on -site exhibition includes the use of vehicles or if other mobile equipment is driven, operated, or displayed in connection with Sponsor's presence on -site, then the required automobile and commercial general liability insurance shall be increased to an amount not less than $2,000,000 per occurrence and $5,000,000 aggregate, which may be met by any combination of primary and excess insurance policies. Spartan, in its reasonable discretion and upon written notice to Sponsor, reserves the right to increase or decrease the amount of insurance required by Sponsor or require additional coverages based on the nature of Sponsor's activities in or around the Races, or as may be required by any local venue or authority having jurisdiction over the Races. d. Spartan shall upon request, name Sponsor and Sponsor's Affiliates, including in each case, all successors and permitted assigns, as additional insureds; and waive any right of subrogation of the insurers against Sponsor or any of its Affiliates. e. Upon the written request of Sponsor, Spartan shall provide Sponsor with the copies of the certificates of insurance and policy endorsements for all required insurance coverage, and shall not do anything to invalidate such insurance. Failure by Sponsor to request a certificate shall not be construed as waiver of the obligations outlined above. 11. Dispute Resolution. a. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Arkansas without regard to the conflicts of law principles thereof. The Parties shall resolve any dispute, controversy or claim arising out of or relating to the Agreement, or the breach, termination, or invalidity hereof (each, a "Dispute"), under the provisions of this Section 11. The procedures in this Section shall be the exclusive mechanism for resolving any Dispute that may arise from time to time. b. The Parties shall first attempt in good faith to resolve any Dispute by negotiation and consultation between themselves. In the event that such dispute is not resolved on an informal basis within fourteen (14) days after one Party provides notice to the other Party of such Dispute ("Dispute Notice"), either Party may, by written notice to the other Party ("Escalation to Executive Notice"), refer such dispute to the executives of each Party. If the executives cannot resolve any Dispute during the time period ending fourteen (14) days after the date of the Escalation to Executive Notice (the last day of such time period, the "Mediation Escalation Date"), either Parry may initiate mediation. C. The Parties may, at any time after the Mediation Escalation Date, submit the Dispute to any mutually agreed to mediation service for mediation by providing the mediation service a joint, written request for mediation, setting forth the subject matter of the dispute and the relief requested. The Parties shall cooperate with the mediation service and with one another in selecting a neutral mediator and in scheduling the mediation proceedings. The Parties covenant that they will use commercially reasonable efforts in participating in the mediation. The Parties agree that the mediator's fees and expenses and the costs incidental to the mediation will be shared equally between the Parties. d. The Parties further agree that all offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the Parties, their agents, employees, experts and attorneys, and by the mediator and any employees of the mediation service are confidential, privileged and inadmissible for any purpose, including impeachment, in any litigation, arbitration or other proceeding involving the Parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non -discoverable as a result of its use in the mediation. e. If the Parties cannot resolve for any reason, including but not limited to, the failure of either Party to agree to enter into mediation or agree to any settlement proposed by the mediator, any Dispute within thirty days after the Mediation Escalation Date, either Party may commence arbitration. f. The Parties hereby agree that any arbitration will be conducted in Boston, MA pursuant to the Commercial Arbitration Rules of the American Arbitration Association by an arbitrator agreed upon by the Parties or, in the absence of such agreement, selected in accordance with such rules. The Parties acknowledge that any monetary value assigned to promotional considerations provided herein is not intended to be used as a measure of damages in connection with this Agreement. Neither the Parties nor the arbitrator shall disclose, describe, or characterize any proceeding hereunder, including, without limitation, any demand, discovery, testimony, evidence, settlement, or award therein, to any other person or entity, except as may be required in any judicial proceeding brought to enforce this paragraph or any award rendered in a proceeding hereunder. The record of any proceeding shall be sealed. 12. Entire Agreement; Amendment; Conflict Assignment. a. This Agreement constitutes the entire agreement between the Parties and supersedes all prior agreements, understandings and representations relating to the subject matter hereof, whether written or oral. All exhibits attached hereto are incorporated into this Agreement by reference. This Agreement may only be amended, modified, or supplemented by a written agreement duly executed by the Parties. To the extent that any of the terms and conditions of Spartan's agreement(s) with, or related to, a Race, (the "Venue Contracts") conflict or are otherwise incompatible with the terms and conditions of this Agreement, Spartan shall uphold the terms and conditions of the applicable Venue Contracts, and such Venue Contracts' applicable terms and conditions shall supersede the conflicting terms and conditions of this Agreement without owing any liability to Sponsor. b. This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. A Party may not assign this Agreement or any part hereof or any benefit or interest therein without the prior written consent of the other Parties; provided, that: (i) a Spartan may assign its rights and obligations under this Agreement to any successor to substantially all of the business of such Spartan, and (ii) Spartan may assign its rights and obligations under this Agreement to any of its affiliates. 13. Relationship of the Parties. The relationship of the Parties under this Agreement is that of independent contractors and nothing herein or in any related document or representation shall be construed to create or imply any relationship of employment, agency, joint venture, partnership or any other relationship other than that of independent contractors. The Parties acknowledge and agree that each is engaged in a separate and independent business and neither will state, represent, or imply any interest in or control over the business of the other. 14. Force Majeure. A Party will not be in breach of this Agreement if any performance required under this Agreement, or the presentation or exhibition of the any Race is prevented or preempted because of an act of God, natural disaster, inclement weather, catastrophe, accident, fire, labor dispute, lockout, strike, riot or civil commotion, act of public enemy, governmental act, regulation or rule, failure of technical facilities, a day of national mourning, emergency or other circumstance or event beyond the control of such Party. If any event of the type described in the preceding sentence constitutes an Unavailable Benefit, then the provisions of Section 4 hereof shall apply. 15. Confidentiality. The Parties agree that the terms of this Agreement shall be kept confidential (except as may be required by law, rule or regulation of any governmental authority) and will not be disclosed to any individual or entity, except that a Party may disclose such terms as are reasonably necessary to their respective affiliates, members, lenders, officers, directors, employees, accountants, counsel and agents with a reasonable need to know such information in their representative capacities, and all persons acting by, though, under or in concert with any of them. 16. Remedies. All rights and remedies of the Parties under this Agreement are cumulative, and none shall exclude any other right or remedy available at law or in equity and such rights or remedies may be exercised and enforced concurrently. The Parties may seek emergency relief (including injunctive relief) in a court of competent jurisdiction seated in Boston, MA, without first resorting to the appointment of an arbitrator; provided, however, that no monetary relief of any kind may be sought or awarded through such proceedings. 17. Waiver. The waiver of any breach of this Agreement shall not constitute a waiver of any other prior or subsequent breach of this Agreement. No waiver is effective unless made in writing and signed by the Parties. The failure of any Party hereto to insist upon strict compliance with this Agreement, or any of the terms and conditions hereof, shall not be deemed a waiver of any rights or remedies that such Party may have. 18. Severability. In the event that any provision of this Agreement shall be held invalid or unenforceable, such provision shall be severed and the remainder of the Agreement shall continue in full force and effect. 19. Notices. Unless otherwise expressly provided, any notice, request, demand, waiver, or other communication required or permitted to be given under this Agreement shall be by (a) PDF with confirmation of transmission, (b) registered or certified mail, or (c) overnight courier to the receiving Party at the address set forth below: To Spartan: Spartan Race, Inc. 234 Congress Street, 5 h Floor Boston, MA 02110 Attn: General Counsel Email: legal@spartan.com To Sponsor: Fayetteville Advertising and Promotion Commission 21 South Block Avenue, Suite 100 Fayetteville, ARIA 72701 Attn: Molly Rawn Email: mrawn@experiencefayetteville.com Any Party may change the address to which notices are required to be sent by giving notice of such change in accordance with this Section to the other Parties. 20. No Construction against Drafting Party. The Parties and their respective counsel have had the opportunity to review this Agreement, and this Agreement will not be construed against any Party merely because any provisions of the Agreement were prepared by a particular Party. 21. Agency Representation. If this Agreement is executed by an agent on behalf of Sponsor ("A¢encX"), Agency represents and warrants that it is the duly authorized agent of Sponsor for the purposes of this Agreement and the matters contemplated hereby and that its arrangements with Sponsor specifically contemplate the placement of the Sponsorship Benefits herein. Agency and Spartan acknowledge that all Sponsorship Benefits provided hereunder are exercisable by Agency, acting as an agent on behalf of its principal, Sponsor. Sponsor and Agency shall be jointly and severally liable for all liabilities and obligations hereunder. 22. Survival. The terms of the Agreement and any exhibits and attachments that by reasonable implication contemplate continued performance, rights, or compliance beyond expiration or termination of the Agreement survive the Agreement and will continue to be enforceable. 23. Representations and Warranties. a. Each Party represents and warrants to the others that it: (i) is duly incorporated or organized and validly existing under the laws of its jurisdiction of incorporation or organization and it has the legal capacity to enter into this Agreement and to perform each of its obligations hereunder, (ii) has duly authorized, executed and delivered this Agreement and this Agreement constitutes a legally valid and binding obligation of it enforceable against it in accordance with its terms, and (iii) shall comply with all applicable federal, state and local laws, rules and regulations in connection with its performance hereunder. b. Sponsor represents and warrants to Spartan that: (i) the Sponsor Marks, Sponsor Content, Sponsor's commercial units, or other material provided by or on behalf of Sponsor (collectively, "Sponsor Materials"), shall not infringe upon, misappropriate or otherwise violate the intellectual property rights or other proprietary rights of Spartan or any third -party, (ii) Sponsor has obtained all licenses, agreements, permits, waivers, releases, registrations, approvals, authorizations and clearances necessary in connection with the Sponsor Materials, and that such licenses, agreements, permits, waivers, releases, registrations, approvals and/or authorizations will be valid and sufficient for the performance of its obligations hereunder and (iii) there are no additional costs, royalties, residuals, license fees, or other third -party expenses associated with the use of the Sponsor Materials. 24. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. Signatures of the Parties transmitted by PDF shall be deemed to be their original signatures for all purposes. [signature page follows] 10 The Parties are signing this Agreement on the Effective Date stated in the introductory clause. FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION By: Name: Title: SPARTAN RACE, INC. By: Name: Jeffrey Connor Title: Chief Operating Officer EXHIBIT A SPONSORSHIP BENEFITS COVERED SEASON AND RACE. The Sponsorship Benefits will be provided in connection with the 2021 U.S. Spartan Trail Seasons, starting on January 1', 2021, and ending on December 31s1, 2021, however, more specifically, with the Fayetteville Spartan Trail US Championship to be hosted in Fayetteville, Arkansas, starting on October 30ffi and ending on 31s`, 2021. 1. LOGO. Spartan will display destination name, as provided by Sponsor, in or around the official Spartan Trail U.S. Championship weekend logo lock -up. A. Sponsor -approved logo/destination name to appear on Spartan website for the Spartan Trail U.S. Championship webpage, and other collateral where other Spartan Trail U.S. Championship sponsors receive mentions. 2. ON -SITE ACTIVATION. During the Event, Sponsor will have the right to the following On - Site Activation benefits at the Event. Sponsor's On -Site Activation rights are further subject to the terms and conditions set forth in the Exhibit C: A. Exhibit Space. Spartan will provide Sponsor with one (1) 20-foot x 20-foot exhibit space in a high traffic area at the festival associated with the Event for Sponsor's use (the "Tent"). Sponsor will keep exhibit open and staffed at all times during Event hours. B. Barrier Jackets. (15) 1.. ffie« :....Lets 1 anne«.. or A f et ., I F ..t 1.anne«.. t.. he i t..11e.l in the-, festival approved by Spartan Exeept .. otherwise provided : this Agreement C`....nsor ..h lbe responsible fer the initial preduetion of on site bafrier jaekets and eempafable Any .. alterations desired by Sponsor during the TeFffl following initia4 production, ineluding, without limitation,logo .. ..1..gan ..1 ange.. shall be ..t C. Course Map Inclusion. Sponsor logo to be included in the Event course map; provided that Sponsor must provide a black and white logo in a commercially reasonable period prior to the Event date(s). D. MC Announcements. Spartan shall provide Sponsor with at least one (1) MC announcement during the Event; provided that Sponsor provide an up to forty (40) word announcement at least two (2) weeks prior to the Event. E. Athletes Guide. With respect to its pre -race athletes guide to be distributed to all racers prior to the Event, Spartan shall provide Sponsor with (i) a display of its destination name and logo on the front page and (ii) one (1) full page advertisement. Content to be mutually approved by the Parties. F. Media Wall. Spartan will incorporate a destination identifier in (i) the "Step and Repeat" media wall and (ii) other locations to be mutually agreed upon by the parties at least one hundred and sixty (160) days prior to the Event; provided that Sponsor must provide content for inclusion on the medial wall in a commercially reasonable period prior to the Event date(s). 12 G. Co -Branded Collateral. Both Parties will collaborate to develop certain co -branded collateral to be distributed at the Event, ultimately approved by Spartan which approval shall not be unreasonably withheld, including: i. Medals and/or medal lanyards; ii. Finisher t-shirts to be distributed to race finishers; iii. Barrier jackets; and iv. Blades. 3. DIGITAL & MEDIA. During the Term, Spartan will provide the following benefits: A. Host Destination Media Rights. Spartan will designate Sponsor as the host of the "Spartan Trail U.S. Championship" in applicable media and mentions, including, but not limited to. i. E-mail marketing of the Event to all e-mail recipients in Spartan's marketing database; ii. The Spartan Trail U.S. Championship race page on www.spartan.com; iii. Facebook posts promoting the Event; and iv. Other co -branded marketing collateral which promotes the Event. B. Online and Media Promotion. i. Spartan will mention, tag, or incorporate Sponsor in applicable social media posts, email blasts, and blog posts relating to the Event. ii. Spartan will collaborate with Sponsor to promote Fayetteville, as well as activities located near the Event, including, but not limited to: 1. Social media promotion, including up to ten (10) destination specific posts; provided that Sponsor must provide content at least two (2) weeks prior to mutually agreed upon post date; 2. Distribution of travel guide(s), content to be mutually approved by both Parties; and 3. Distribution including vacation options/"things to do" in the identified regions during the week leading up to the Event and during Event weekend. iii. Spartan will provide Sponsor with certain broadcast benefits which will highlight Fayetteville as the host of the Event and as a travel destination, including in: 1. Live Event coverage to be broadcasted via Spartan TV and other Spartan -owned media platforms; and 13 2. Two (2) fifteen (15) second destination footage integrations into the Event broadcast via Spartan platforms. C. E-mail Promotion. Spartan will include Sponsor in Event -related email blast to the e- mail recipients in Spartan's Event -specific marketing database to promote Fayetteville, with content to be mutually approved by the Parties. 4. CO -MARKETING AND TRADE SUPPORT. During the Term, the Parties agree to provide at no additional cost (unless otherwise specified below). A. Lodging Promotion. Spartan will provide a direct link from the Spartan website to participating Fayetteville lodging properties via a microsite. Links and discount codes must be provided to Spartan at least six (6) months prior to the Event. B. Race Entries. Spartan will provide Sponsor with up to twenty (20) complimentary Event race entries, at Spartan's sole expense, to use for promotional purposes; provided that those redeeming such Race entries are required to register using Spartan's online registration system; sign the Spartan race waiver; pay any processing and/or administrative fees thereto; and pay for any cost or purchase of the individual supplemental Event race insurance offered through the Event registration platform. For the avoidance of doubt, the start time for such race entries shall be determined in Spartan's sole discretion. C. Post -Event Survey. Spartan will include demographic, geographic, spending patterns and lodging questions into the post -race survey in order to gain an accurate ROI analysis of the annual Event. Sponsor will develop survey questions in coordination with Spartan and tailor subsequent annual marketing plans accordingly. Spartan agrees to provide the response data to Sponsor to such questions, however Sponsor understands and agrees that such response data shall be aggregated and anonymized in compliance with all applicable consumer protection and data privacy laws before Spartan provides the data to Sponsor. Sponsor acknowledges and agrees that Spartan shall own such data provided to Sponsor and in no instance shall Sponsor license, sell, or otherwise make such data available to any third party unless approved by Spartan in writing. 14 EXHIBIT B SPONSORSHIP FEE Payment Terms. As good and valuable consideration for the Sponsorship Benefits provided by Spartan, Sponsor agrees to provide Spartan a sponsorship fee payable on the date and in the amount described in the table below. Sponsor acknowledges and agrees that payments will be made by check or wire to Spartan agrees to provide wire details to Sponsor upon execution of this Agreement. Amount Due Date $45,000.00 Total Sponsorship Fee to be paid within 30 days of invoice date from Spartan, such invoice to be sent upon execution hereof. EXHIBIT C Exhibitor Terms and Conditions Sponsor agrees and acknowledges that it will always keep its activation space open and staffed during Race hours. Spartan will communicate the exhibitor hours to Sponsor prior to the event. Formatted: Strikethrough . Event tear down begins on the last day of the Race as soon as the last racer exits the Race. Early tear down is not allowed. Sponsor may distribute samples and other Sponsor materials on -site at the activation space; provided that such samples are approved by Spartan at a commercially reasonable time prior to the Race. 16 Fayetteville Advertising & Promotion Commission Memo To: Molly Rawn, CEO, Fayetteville Advertising and Promotion Commission; Fayetteville Advertising and Promotion Commissioners From: Tyler Wilson, General Manager, Fayetteville Town Center Miletus Callahan-Barile, Facilities Manager, Fayetteville Town Center Date: July 19, 2021 Re: Tower Roof Repair at Fayetteville Town Center Background: Upon inspection of water intrusion and mold growth, Fayetteville Town Center must repair damage to the roof and seals of the tower at the entrance to the building. The weight limits on the re -designed plaza necessitate quotes include the cost of scaffolding to repair the internal components of the tower and placement of an articulated bucket truck to repair the exterior components. The Director of Bond Projects and Facilities at the city was consulted in this process. Fayetteville Town Center staff sought three quotes that included repair to the tower roof, window, and drywall for the complete restoration of this intrusion area. Nabholz Construction offered the most competitive pricing. Recommendation: Staff recommends the commission accept a quote from Nabholz Contractors in the amount of $54,900 for repair to the Fayetteville Town Center tower and to make the necessary budget adjustments. Experience Fayetteville 2021 Budget Adjustment Jennifer Walker Submitted By 7/26/2021 Commission Meeting Date - Agenda Item Only N/A for Non -Agenda Item 7/16/2021 _ Submitted Date Action Recommendation: Town Center Department Staff recommends approval of a budget amendment to provide funding for Town Center tower repairs. This budget adjustment supports the proposed quote with Nabholz Construction. Funding will come from the Capital Reserve Fund. TOTAL Account Number Budget Impact: 55,000.00 - Increase Decrease Expense Revenue Class Account Name 77800 55,000.00 TC Approved By Approval Signature Approval Date FFE & Improvements �w u�rrr 1 CONSTRUCTION SERVICES Proposal Number: 21-4545-20 Revision: 1 Lump Sum Proposal / Agreement Proposal For: Miletus Callahan-Barile Fayetteville Town Center P.O. Box 4157 Fayetteville, Arkansas, United States 72701 E-mail: miletus@twncenter.com Project Information: Project Title: Fayetteville Town Center Repairs Location: Proposal Number: 21-4545-20 Revision: 1 Proposal Date: 10/19/2020 Nabholz Construction Services ("Nabholz") is pleased to submit this Lump Sum Proposal/Agreement (inclusive of the General Terms and Conditions attached hereto) ("Agreement") for the above referenced project. This pricing is valid for 15 day(s). If acceptable, please sign where indicated, date and fax (or return) a copy to Nabholz. Thank you for the opportunity to be of service. The pricing and terms of the Agreement are confidential. SCOPE OF WORK is based on our site visit and as clarified below. Nabholz shall furnish all labor, materials and equipment unless otherwise noted, for the following specific scope of work: Fayetteville Town Center Repairs Roof Repairs 1. Provide equipment and/or scaffolding as required for safe repair of roofing system 2. Install a fleece back TPO to the existing modified roof system 3. Install new drip edge metal (choice of color) Window Repairs $24,900.00 $26,200.00 1. Provide equipment and/or scaffolding as required for safe repair of leaks in the storefront system 2. Remove and replace 1 ea broken glass lite and 2 ea broken seal lites of glass. 3. Also remove or replace any caulking in leaking areas. 4. All resealing of systems to be done in partnership with Harness Roofing. 5. Broken lite of glass will have to be removed and plywood installed in its place 6. The broken piece must be used for glass fabricator to match patterned frit on glass. 7. Nabholz, Building Manager and ACE will have to agree on lift equipment capable of getting our workers to the upper areas of the curtainwall. Reglazing must be done from exterior Drywall Repairs & Paint �X $3,800.00 1. Provide lift and floor protection in the areas where work will be performed 2. Patch drywall at water damage 3. Skim the drywall at repair to closely match surrounding finishes 4. Spot prime as necessary at patched areas 5. Paint the whole bulkhead one standard color EXCLUSIONS from the scope of work in this proposal are as follows: 1. Excludes any item not specifically called out in the scope 2. Any item discovered during the course of the work not specifically addressed will be subject to additional charges 3. Excludes any damages to asphalt, concrete or greenscapes due to normal construction and delivery traffic 4. HVAC work is excluded 5. Plumbing work is excluded 3301 North Second Street Rogers, Arkansas 72756 1 Phone: 479-659-7802 1 Fax: 479-621-8089 1 www.nabholz.com Page 1 This page contains information Nabholz deems trade secret, proprietary or otherwise confidential and exempt from disclosure to third parties. Such information is also designated as excepted from disclosure under applicable Freedom of Information Act(s) for publicly funded projects. © 2015 Nabholz Construction Corp Fayetteville Town Center Miletus Callahan-Barile Proposal Number: 21-4545-20 Revision: 1 6. Electrical work is excluded. 7. Dumpster fees are excluded 8. Medical containment is excluded. 9. Sprinkler work is excluded 10. A clean clear work area must be provided for Nabholz craftsmen, Subcontractors, and the use of mobile equipment. 11. Masonry. 12. Eifis/ Stucco Repairs. SCHEDULE for the above scope of work ("Work"), is based on Nabholz Normal Working Hours and Work Days, and shall not exceed N/A work days from the project start date. Unless otherwise agreed, Normal Working Hours and Work Days are defined as Monday through Friday, 8 a.m. — 4 p.m. Upon receipt of your written acceptance of this proposal and receipt of applicable permits and governmental approvals, up to 15 work days shall be required as lead time prior to the project start date. If Nabholz is delayed at any time in the commencement or progress of the Work by an act or neglect of the Owner, or of an employee, or separate contractor or designer employed by the Owner; or by changes ordered in the Work, or by labor disputes, fire, weather, access to work areas, unusual delay in deliveries, unavoidable casualties or other causes beyond the control of Nabholz; or by delay authorized by the Owner; or by other causes which may justify delay in the Owner's reasonable discretion, then the Schedule shall be extended and additional general conditions costs resulting from the delay shall be paid by Owner. PAYMENT TERMS for this proposal shall be based on monthly progress invoices, no retainage withheld, submitted by Nabholz with payments due in full no later than 30 day(s) from the invoice date. LUMP SUM PRICE OF THIS PROPOSAL $54,900.00 3301 North Second Street Rogers, Arkansas 72756 1 Phone: 479-659-7802 1 Fax: 479-621-8089 1 www.nabholz.com Page 2 This page contains information Nabholz deems trade secret, proprietary or otherwise confidential and exempt from disclosure to third parties. Such information is also designated as excepted from disclosure under applicable Freedom of Information Act(s) for publicly funded projects. © 2015 Nabholz Construction Corp Fayetteville Town Center Miletus Callahan-Barile Proposal Number: 21-4545-20 Revision: 1 LUMP SUM PROPOSAL/AGREEMENT GENERAL TERMS AND CONDITIONS Agreement For: Project Information: Fayetteville Town Center Project Title: Fayetteville Town Center Repairs Contract Documents: Upon execution of this Agreement by the Owner or commencement of Work, whichever occurs first, this Lump Sum Proposal/Agreement ("Agreement"), shall constitute the Contract Documents and shall govern the rights of the parties hereto. In the event of any inconsistencies this Agreement shall control. Scope of the Work: shall be per the Contract Documents and shall constitute the "Work". Nabholz shall exercise the degree of care, skill and diligence in the performance of the Work, to assure its Work is performed in a good and workmanlike manner, consistent with construction industry standards for similar projects and circumstances in the same geographic area (hereinafter the "Standard of Care"). Nabholz shall have responsibility and control over the performance of the Work, including construction methods, techniques, manner, and sequences for coordinating and completing the various portions of the Work. Nabholz' Standard of Care specifically excludes any design or design -related responsibilities, and any action taken by Nabholz under this Agreement does not and shall not be construed to approve, represent or warrant the adequacy and suitability of the plans and specifications for the purpose for which they are provided. Owner expressly warrants that any plans, drawings, specifications, surveys, soil test and reports, and hazardous material studies furnished by the Owner are true, correct and complete; and Nabholz is entitled to rely upon the adequacy, accuracy and completeness of such documents. Payment: Owner agrees to pay Nabholz for the performance of the Work, subject to additive or deductive modifications requested by the Owner. Payments are due in full no later than 30 days from the invoice date. Payments due and unpaid invoices shall bear interest at the rate of six percent (6%) per annum or highest rate allowed by law, whichever is less. Final Payment shall be due when the Work is completed, and final invoice is submitted. IMPORTANT NOTICE TO OWNER IF BILLS FOR LABOR, SERVICES, OR MATERIALS USED TO CONSTRUCT OR PROVIDE SERVICES FOR AN IMPROVEMENT TO REAL ESTATE ARE NOT PAID IN FULL, A CONSTRUCTION LIEN MAY BE PLACED AGAINST THE PROPERTY. THIS COULD RESULT IN THE LOSS, THROUGH FORECLOSURE PROCEEDINGS, OF ALL OR PART OF YOUR REAL ESTATE BEING IMPROVED. THIS MAY OCCUR EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL. YOU MAY WISH TO PROTECT YOURSELF AGAINST THIS CONSEQUENCE BY PAYING THE ABOVE NAMED PROVIDER OF LABOR, SERVICES, OR MATERIALS DIRECTLY, OR MAKING YOUR CHECK PAYABLE TO THE ABOVE NAMED PROVIDER AND CONTRACTOR JOINTLY. Insurance & Waiver of Subrogation: Nabholz shall maintain insurance for Workers' Compensation, Builders Risk, Employer's Liability, Comprehensive Automobile Liability, and Comprehensive or Commercial General Liability on an occurrence basis. Owner and Nabholz waive all rights against each other and any of their subcontractors, sub -subcontractors, agents, and employees, each of the other, for damages caused by fire or other causes of loss, to the extent those losses are covered by insurance required by the Agreement or other property insurance applicable to the Work, except such rights as they have to proceeds of such insurance. The policies of insurance purchased and maintained by Owner and Nabholz shall not prohibit this waiver of subrogation. This waiver of subrogation shall be effective as to an Owner and Nabholz (1) even though the party would otherwise have a duty of indemnification, contractual or otherwise, (2) even though the party did not pay the insurance premium directly or indirectly, or (3) whether or not the party had an insurable interest in the damaged property. Disputes: If a dispute arises out of or relates to this Agreement, including the breach thereof, the parties shall first attempt to settle the dispute through direct discussions, then by mediation as a condition precedent to binding arbitration. Unless parties mutually agree otherwise, mediation shall be conducted in accordance with the current Construction Mediation Rules of the American Arbitration Association (AAA). Disputes not resolved by discussion or mediation shall be decided by binding arbitration in accordance with the Construction Industry Arbitration Rules of the AAA then in effect. The arbitration shall be held in the county and state in which the Project is located unless otherwise agreed in writing. Termination: Owner and Nabholz may terminate this Agreement only in the event of a material breach and only after providing ten (10) calendar days prior written notice to the address stated herein (i) delivered by facsimile or electronic mail, provided sender can provide evidence of successful transmission and that such day is a business day, or (ii) by registered or certified U.S. Mail, return receipt requested. In the event either party fails to cure or fails to diligently commence to cure an alleged material default to the reasonable satisfaction of the non -defaulting party within ten (10) calendar days of receipt of such written notice, the non - defaulting party may terminate this Agreement. Notwithstanding, Nabholz may terminate this Agreement upon ten (10) days prior written notice to Owner if the Work is stopped for a period of 120 consecutive days through no act or fault of Nabholz, including but not limited to when the Work is stopped due to an order of a court or other public authority having jurisdiction, actions by government agencies, or declaration of a national emergency. 3301 North Second Street Rogers, Arkansas 72756 1 Phone: 479-659-7802 1 Fax: 479-621-8089 1 www.nabholz.com Page 3 This page contains information Nabholz deems trade secret, proprietary or otherwise confidential and exempt from disclosure to third parties. Such information is also designated as excepted from disclosure under applicable Freedom of Information Act(s) for publicly funded projects. © 2015 Nabholz Construction Corp Fayetteville Town Center Miletus Callahan-Barile Proposal Number: 21-4545-20 Revision: 1 Exclusion of Warranties: NABHOLZ MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED. ALL IMPLIED COVENANTS ARE HEREBY WAIVED. WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED. Miscellaneous: This Agreement is severable, and any part deemed unenforceable shall not render the remaining part unenforceable. All covenants of the Agreement shall be subject to all federal and state laws, executive orders, rules, or regulations, and this Agreement shall not be terminated, in whole or in part, nor the parties held liable in damages, for failure to comply therewith, if compliance is prevented by, or if such failure is the result of any such law, order, rule, or regulation or acts of God. Notwithstanding, Nabholz will be entitled to an extension of the time to complete its Work and an equitable adjustment of the contract Price, due to labor shortages, material escalation, or otherwise, for the performance of Nabholz' Work due to events and conditions beyond Nabholz' control, including but not limited to direct and indirect impacts from the Coronavirus pandemic, epidemics, and actions by government agencies. Nabholz will employ efforts to mitigate such delays and increased costs, in consultation with Owner, and will provide updates to Owner as to any time or cost impacts resulting from this provision. Disputes as to the entitlement of extensions of time to complete the Work or increases in the contract Price shall be resolved pursuant to the Disputes provisions of this Agreement. In the event of an Owner -related or third -party union -related dispute or activities on or near the Project, not directly involving Nabholz or its Subcontractors, affecting the schedule or cost of the Project, Owner shall agree to an equitable adjustment of the schedule and cost by Change Order and take all appropriate actions to assure the Work is not disrupted. This Agreement is intended to be the final expression of the parties, and there are no other written or oral agreements relating to the subject thereof. This Agreement may only be amended by a further written agreement signed by both parties. This Proposal/Agreement, when signed by both parties, constitutes the entire agreement and contract between the parties for the performance of the Work described in this Proposal. Faxes of signed Proposal/Agreement are acceptable. As proof of such Agreement, Owner is hereby notified of Nabholz's objection to any terms inconsistent herewith and to any additional terms proposed by Owner in accepting or acknowledging this Proposal/Agreement or otherwise and such terms shall not become a part of this Agreement unless accepted in writing by Nabholz. Neither Nabholz's subsequent lack of objection to any such terms, nor the beginning of Work shall constitute or be deemed an agreement by Nabholz to any such terms. Nabholz will not be responsible for consequential damages of any type under any circumstances. Unless otherwise noted in the Proposal, Nabholz excludes performance and payment bonds; rock excavation; asbestos or any other hazardous material removal, disposal, or encapsulation; services of licensed professionals such as attorneys, architects, or engineers; costs for the after -hour work, shift work, weekend or holiday work. Market Fluctuations: The price is based on material prices at the time of the Proposal. Any significant price increase (meaning a price increase exceeding 5%) in materials necessary to perform the Work, that occur after the date of this Proposal, shall cause the contract Price to be adjusted by an amount reasonably necessary to cover any increase in costs or to pay for an acceptable substitute and associated costs. Price increases shall be documented through quotes, invoices, or receipts. Nabholz will not be liable for additional costs or damages associated with delays in material deliveries not occasioned by the fault of Nabholz. EEO: Nabholz complies with both Federal and State laws pertaining to Equal Employment Opportunity (EEO) and does not discriminate in employment opportunities or practices on the basis of race, color, religion, sex, national origin, age (except as otherwise required by child labor statutes), disability, genetic information, sexual orientation, gender identity, veteran status, or any other characteristic protected by law. Additional Work: Unless otherwise provided in writing between the parties, any additional work requested directed by Owner or its representative(s) shall be governed by the General Terms and Conditions of this Agreement. Confidential & Competitive Information: Owner acknowledges that certain information provided to it by Nabholz contains information deemed trade secret, proprietary or otherwise confidential. Such information includes but is not limited to Nabholz' research, development, methods, processes, techniques, operations, computer programs; pricing/price modeling, and financial data of Nabholz, its related companies, for payment, change orders, or commercial information, including value engineering and constructability studies; current and prospective clients, subcontractors, and/or competitors; and proposals. Recipient acknowledges the value of such information to Nabholz and agrees to use reasonable diligence in protecting this information from unauthorized disclosures to third parties (excluding any governmental regulatory bodies entitled to access such information by law, or Recipient's parent, subsidiary or affiliated companies, or Recipient's auditors or lenders to the extent such disclosure is necessary). The Recipient agrees it shall not use the information provided in this proposal, in whole or part, for any purpose other than to evaluate the proposal, except that if a contract is awarded to Nabholz as a result of or in connection with the submission of the proposal, Recipient may use the information to the extent provided and consistent with the terms and conditions stated in the contract. Governing Law: This Proposal/Agreement shall be construed, and its performance governed, by the laws of the state in which the Work is performed. 3301 North Second Street Rogers, Arkansas 72756 1 Phone: 479-659-7802 1 Fax: 479-621-8089 1 www.nabholz.com Page 4 This page contains information Nabholz deems trade secret, proprietary or otherwise confidential and exempt from disclosure to third parties. Such information is also designated as excepted from disclosure under applicable Freedom of Information Act(s) for publicly funded projects. © 2015 Nabholz Construction Corp Fayetteville Town Center Miletus Callahan-Barile Proposal Number: 21-4545-20 Revision: 1 Respectfully Submitted: James Scantlin Project Manager Nabholz Construction Services Accepted by Owner: Signature/Title: Acceptance Date: Desired Project Start Date: 3301 North Second Street Rogers, Arkansas 72756 1 Phone: 479-659-7802 1 Fax: 479-621-8089 1 www.nabholz.com Page 5 This page contains information Nabholz deems trade secret, proprietary or otherwise confidential and exempt from disclosure to third parties. Such information is also designated as excepted from disclosure under applicable Freedom of Information Act(s) for publicly funded projects. © 2015 Nabholz Construction Corp Fayetteville Advertising & Promotion Commission Memo To: Fayetteville Advertising and Promotion Commissioners From: Molly Rawn, CEO, Fayetteville Advertising and Promotion Commission Date: July 19, 2021 Re: Grant amendment Background: Experience Fayetteville received a grant from the Walton Family Foundation's Personal Philanthropy Group (WPPG) to produce, promote and host a series of Cyclo-cross race events with funding of $2.3 Million. With two of the three events remaining and the hiring of a new race production company, we have refined the total budget for the three race events at $3.7 Million. WPPG has approved a grant amendment to increase the funding by $1.4 Million. Recommendation: Staff recommends the CEO execute Cyclo-cross grant amendment with Walton Family Foundation and accept the additional $1.4 million in funds. DocuSign Envelope ID: 74844F41-F322-4A69-AB23-2B686925E352 WALTON FAMILY F O U N D A T I O N July 19, 2021 Molly Rawn Fayetteville Advertising and Promotion Commission 21 South Block Avenue Fayetteville, AR 72701 RE: Amendment to Grant 00001521 (formerly 2019-505) Dear Molly, The Walton Family Foundation, Inc. ("Foundation") issued a $2,300,000.00 grant to the Fayetteville Advertising and Promotion Commission ("Grantee") on July 16, 2019 (the "Original Grant Agreement"). This letter (the "Grant Amendment") represents an amendment to the original grant agreement to support a change in purpose, an increase in the amount of the grant, and a reschedule of the Final Report. Sections 1 ("Purpose"), 2 ("Amount") and 5 ("Reporting and Evaluation") are hereby restated and amended as follows: 1. Purpose: The purpose of the grant is to support a series of three Cyclocross events in Fayetteville between 2019-2022. This grant is more fully described in Grantee's proposal dated July 10, 2019, and supplemented on June 6, 2021. Grantee agrees to use all grant funds exclusively for the grant's purpose. Any changes in the purpose must be authorized in advance by the Foundation in writing. 2. Amount: $3,700,000.00 Grant payments have been and will be made as follows: Installment Installment Amounts Installment Dates and Notes #1 $500,000.00 Paid to Grantee on or about August 1, 2019 #2 $750,000.00 Paid to Grantee on or about June 23, 2020 #3 $2,050,000.00 Upon signature and return to the Foundation of this Amendment To be requested via email submission of informal #4 $400,000.00 Progress Report at any point before the grant period ends, but preferably prior to 11/2/2021 3. Reporting and Evaluation: Grantee has provided and will continue to provide the Foundation with financial and narrative reports by the due dates listed in the report schedule below. Each report shall include an account of expenditures of grant funds and a brief narrative of what was accomplished (including a description of progress made in fulfilling the purpose of the grant and a confirmation of Grantee's compliance with the terms of the grant). P.O. Box 2030, Bentonville, AR 72712 I Tel: 479.464.1570 Fax: 479.464.1580 www.waltonfamilyfoundation.org DocuSign Envelope ID: 74844F41-F322-4A69-AB23-2B686925E352 Report Type Approved and/or Scheduled Date 1 Progress Report Approved on 6/11/2021 2 Progress Report Approved on 7/7/2021 3 Final Report Due on or before 2/28/2022 All reports will be submitted electronically using the Foundation's online grants management system. Any questions regarding this process should be addressed to your contact below or by emailing smartsimplehelp(a_wffmail.com. Please reference Grant 00001521 on all reports submitted. Grantee payments are always contingent upon the Foundation's approval of Grantee's operations based on the above reports and the Foundation's satisfaction with such information as it chooses to obtain from other sources. Except as otherwise expressly modified by the terms of this Grant Amendment, the Original Grant Agreement shall remain unchanged and continue in full force and effect. All terms, covenants and conditions of the Original Grant Agreement not expressly modified herein are hereby confirmed and ratified and remain in full force and effect, and, as further amended hereby, constitute valid and binding obligations of the Grantee enforceable according to the terms thereof. By electronically signing this letter, the Grantee acknowledges and agrees to the terms and conditions herein. A copy of the completed document will be emailed to the Grantee through DocuSign. If the electronic signing of this letter is not completed by August 15, 2021, the Foundation will consider the Grantee to have declined the grant amendment. On behalf of the Foundation, I extend every good wish for the success of your organization's endeavors. Sincerely, EDocuSigned by: FBB26445 Caryl M. Stern Executive Director ACKNOWLEDGED AND AGREED Molly Rawn, Fayetteville Advertising and Promotion Commission cc: Sally Fisher Fayetteville Advertising & Promotion Commission Memo To: Molly Rawn, CEO, Fayetteville Advertising and Promotion Commission; Fayetteville Advertising and Promotion Commissioners From: Jennifer Walker, VP Finance, Experience Fayetteville Date: July 19, 2021 Re: Limited Amendment to Financial Policies — Presentation of Cyclo-cross Grant Funded Vendor Payments Background: Experience Fayetteville has contracted with Union Cycliste Internationale (UCI) to host the 2021 Cyclo-cross World Cup and 2022 Cyclo-cross World Championships. Expenditures for these events are funded through a WPPG grant. The budget for these events and grant is approximately $3.7 Million. As we approach the October 2021 event and January 2022 event, there will be some vendor payments greater than $20,000. Our financial policies require contracts and/or payments greater than $20,000 to be presented to the A&P Commission for approval prior to execution. In order to expedite contracts and payments, Experience Fayetteville staff is requesting Commission approval to make a limited amendment to our Financial Policies in order to include a "batch" notification to the A&P Commission of vendor contracts and payments for the purposes of the grant spending. This would entail the Experience Fayetteville CEO executing contracts after legal review on a weekly basis and then providing a summary of contract approvals and payments to the A&P Commission twice — once in December 2021 after the World Cup event; and, again in March 2022 after the World Championship event. Recommendation: A vote authorizing a limited amendment to the Financial Policies permitting the Experience Fayetteville CEO to execute Cyclo-cross grant contracts and payments on an individual basis prior to Commission approval with a summary reporting to the Commission in December 2021 and March 2022. Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Independent Auditor's Report and Financial Statements December 31, 2020 and 2019 BKD CPAs & Advisors 400 W. Capitol Avenue, Suite 2500 1 P.O. Box 3667 1 Little Rock, AR 72203-3667 501.372.1040 1 Fax 501.372.1250 1 bkd.com Board of Commissioners and Management Fayetteville Advertising and Promotion Commission Fayetteville, Arkansas As part of our audit of the financial statements of the Fayetteville Advertising and Promotion Commission (the Commission) as of and for the year ended December 31, 2020, we wish to communicate the following to you. AUDIT SCOPE AND RESULTS Auditor's Responsibility Under Auditing Standards Generally Accepted in the United States of America and the Standards Applicable to Financial Audits Contained in Government Auditing Standards Issued by the Comptroller General of the United States An audit performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States is designed to obtain reasonable, rather than absolute, assurance about the financial statements. In performing auditing procedures, we establish scopes of audit tests in relation to the financial statements taken as a whole. Our engagement does not include a detailed audit of every transaction. Our engagement letter more specifically describes our responsibilities. These standards require communication of significant matters related to the financial statement audit that are relevant to the responsibilities of those charged with governance in overseeing the financial reporting process. Such matters are communicated in the remainder of this letter or have previously been communicated during other phases of the audit. The standards do not require the auditor to design procedures for the purpose of identifying other matters to be communicated with those charged with governance. An audit of the financial statements does not relieve management or those charged with governance of their responsibilities. Our engagement letter more specifically describes your responsibilities. Qualitative Aspects of Significant Accounting Policies and Practices Significant Accounting Policies The Commission's significant accounting policies and use of regulatory basis of accounting are described in Note 1 of the audited financial statements. PRAXITY �� Empowering Business Globally Board of Commissioners and Management Fayetteville Advertising and Promotion Commission Page 2 The Commission's financial statements are presented in accordance with accounting practices permitted by Arkansas Code Section 10-4-202, which is a regulatory basis of accounting that differs from accounting principles generally accepted in the United States of America. Alternative Accounting Treatments We had discussions with management regarding alternative accounting treatments within the regulatory basis of accounting prescribed or permitted by the State of Arkansas for policies and practices for material items, including recognition, measurement and disclosure considerations related to the accounting for specific transactions as well as general accounting policies, as follows: • Utilization of the modified accrual basis of regulatory accounting Management Judgments and Accounting, Estimates Accounting estimates are an integral part of financial statement preparation by management, based on its judgments. The following areas involve significant areas of such estimates for which we are prepared to discuss management's estimation process and our procedures for testing the reasonableness of those estimates: • Estimated useful lives of capital assets Financial Statement Disclosures The following areas involve particularly sensitive financial statement disclosures for which we are prepared to discuss the issues involved and related judgments made in formulating those disclosures: • Commitments • Related party transactions • Regulatory accounting • Basis of accounting and presentation Audit Adjustments No matters are reportable. Auditor's Judgments About the Quality of the Entity's Accounting Principles No matters are reportable. Board of Commissioners and Management Fayetteville Advertising and Promotion Commission Page 3 Disagreements with Management No matters are reportable. Significant Issues Discussed with Management No matters are reportable. Difficulties Encountered in Performing the Audit No matters are reportable. Other Material Communication Listed below is a material communication between management and us related to the audit: • Management representation letter (attached) INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements of the Commission as of and for the year ended December 31, 2020, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, we considered the Commission's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Commission's internal control. Accordingly, we do not express an opinion on the effectiveness of the Commission's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Commission's financial statements will not be prevented or detected and corrected on a timely basis. Board of Commissioners and Management Fayetteville Advertising and Promotion Commission Page 4 A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We observed the following matters that we consider to be deficiencies. Deficiencies Segregation of duties issues were noted arising due to the size of the entity. Below is a list of positions that have conflicting duties in the cash flows and/or cash outflows areas: Cash Inflows • Visitor Center Manager • Events Director Town Center • Town Center Sales Coordinator • VP Finance • Finance Director Cash Outflows • Finance Director We recommend that the Commission review duties assigned to all personnel to minimize conflicts in internal controls, including those listed above regularly. We observed another matter that we consider to be a deficiency that we communicated to management verbally. This communication is intended solely for the information and use of management, Board of Commissioners, and others within the organization and is not intended to be and should not be used by anyone other than these specified parties. June 25, 2021 Enclosure Representatimi of: FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION 21 South Block Avenue, Suite 100 Fayetteville, Arkansas 72701 Provided to: BKD, LLP Certified Public Accountants P.O. Box 1893 Rogers, Arkansas 72757 The undersigned ("We") are providing this letter in connection with BKD's audits of our financial statements as of and for the years ended December 3 I, 2020 and 2019. Our representations are current and effective as of the date of BKD's report: June 25, 2021. Our engagement with BKD is based on our contract for services dated: December 31, 2020. Our Responsibility and Consideration of Material Matters We confine that we are responsible for the fair presentation of the financial statements subject to BKD's report in conformity with accounting practices permitted by Arkansas Code 10-4-412, which is a regulatory basis of accounting that differs from accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies; establishing and maintaining effective internal control over financial reporting, operations, and compliance; and preventing and detecting fraud. We understand that you will not render an unmodified opinion on the financial statements due to lack of conformity with accounting principles generally accepted in the United States of America regarding our accounting for regulatory basis. Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION Page 2 Confirmation of Matters Specific to the Subject Matter of BKD's Report We confirm, to the best of our knowledge and belief, the following: 1. We have fulfilled our responsibilities, asset out in the terms of our contract, for the preparation and fair presentation of the financial statements in accordance with accounting practices permitted by Arkansas Code 10-1-412, which is a regulatory basis of accounting that differs from accounting principles generally accepted in the United States of America. 2. We acknowledge our responsibility for the design, implementation, and maintenance of a. Internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. b. Internal control to prevent and detect fraud. We have reviewed and approved a draft of the financial statements and related notes referred to above, which you prepared in connection with your audit of our financial statements. We acknowledge that we are responsible for the fair presentation of the financial statements and related notes. 4. We have provided you with: a. Access to all information of which we are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters. b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. d. All minutes of meetings of the governing body held through the date of this letter or summaries of actions of recent meetings for which minutes have not yet been prepared. All unsigned copies of minutes provided to you are copies of our original minutes approved by the governing body, if applicable, and maintained as part of our records. e. All significant contracts and grants. 5. All transactions have been recorded in the accounting records and are reflected in the financial statements. 6. We have informed you of all current risks of a material amount that are not adequately prevented or detected by our procedures with respect to: a. Misappropriation of assets. b. Misrepresented or misstated assets, liabilities or fund balance. 7. We understand the potential penalties for failure to disclose reportable tax transactions to the taxing authorities and have fully disclosed to BKD any and all known reportable tax transactions. FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION Page 3 8. We have no knowledge of any known or suspected fraudulent financial reporting or misappropriation of assets involving: a. Management or employees who have significant roles in internal control, or b. Others, where activities of others could have a material effect on the financial statements. 4. We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, customers, regulators, suppliers, or others. 10. We have assessed the risk that the financial statements may be materially misstated as a result of fraud and disclosed to you any such risk identified. 11. We have disclosed to you the identity of the entity's related parties and all the related party relationships and transactions of which we are aware. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with accounting principles generally accepted in the United States of America. We understand that the term related party refers to an affiliate, management and members of their immediate families, component units, and any other party with which the entity may deal if the entity can significantly influence, or be influenced by, the management or operating policies of the other. The term affiliate refers to a party that directly or indirectly controls, or is controlled by, or is under common control with, the entity. 12. Except as reflected in the financial statements, there are no: a. Plans or intentions that may materially affect carrying values or classifications of assets and liabilities. b. Material transactions omitted or improperly recorded in the financial records. c. Material gain/loss contingencies requiring accrual or disclosure, including those arising from environmental remediation obligations. d. Events occurring subsequent to the statements of assets, liabilities and fund balance date through the date of this letter requiring adjustment or disclosure in the financial statements. e. Agreements to purchase assets previously sold. f. Restrictions on cash balances or compensating balance agreements. g. Guarantees, whether written or oral, under which the entity is contingently liable. 13. We have disclosed to you all known instances of noncompliance or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements. 14. We have no reason to believe the entity owes any penalties or payments under the Employer Shared Responsibility Provisions of the Patient Protection and Affordable Care Act nor have we received any correspondence from the IRS or other agencies indicating such payments may be due. FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION Page 4 15. We are not aware of any pending or threatened litigation or claims whose effects should be considered when preparing the financial statements. We have not sought or received attorney's services related to pending or threatened litigation or claims during or subsequent to the audit period. Also, we are not aware of any litigation or claims, pending or threatened, for which legal counsel should be sought. 16. Adequate provisions and allowances have been accrued for any material losses from: a. Uncollectible receivables. b. Reducing obsolete or excess inventories to estimated net realizable value. c. Purchase commitments in excess of normal requirements or above prevailing market prices. 17. Except as disclosed in the financial statements, the entity has: a. Satisfactory title to all recorded assets, and they are not subject to any liens, pledges, or other encumbrances. b. Complied with all aspects of contractual and grant agreements, for which noncompliance would materially affect the financial statements. 18. The financial statements disclose all significant estimates and material concentrations known to us. Significant estimates are estimates at the statement of assets, liabilities and fund balance date which could change materially within the next year. Concentrations refer to volumes of business, revenues, available sources of supply, or markets for which events could occur which would significantly disrupt normal finances within the next year. Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable. 19. The fair values of financial and nonfinancial assets and liabilities, if any, recognized in the financial statements or disclosed in the notes thereto are reasonable estimates based on the methods and assumptions used. The methods and significant assumptions used result in measurements of fair value appropriate for financial statement recognition and disclosure purposes and have been applied consistently from period to period, taking into account any changes in circumstances. The significant assumptions appropriately reflect market participant assumptions. 20. We have not been designated as a potentially responsible party (PRP or equivalent status) by the Environmental Protection Agency (EPA) or other cognizant regulatory agency with authority to enforce environmental laws and regulations. 21. With respect to any nonattest services you have provided us during the year, including drafting the financial statements, related notes, and preparation of the form 990: a. We have designated a qualified management -level individual to be responsible and accountable for overseeing the nonattest services. b. We have established and monitored the performance of the nonattest services to ensure they meet our objectives. FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION Page 5 c. We have made any and all decisions involving management functions with respect to the nonattest services and accept full responsibility for such decisions. d. We have evaluated the adequacy of the services performed and any findings that resulted. 22. With regard to deposit and investment activities: a. All deposit, repurchase and reverse repurchase agreements, and investment transactions have been made in accordance with legal and contractual requirements. b. Disclosures of deposit and investment balances and risks in the financial statements are consistent with our understanding of the applicable laws regarding enforceability of any pledges of collateral. c. We understand that your audit does not represent an opinion regarding the enforceability of any collateral pledges. 23. As an entity subject to Government Auditing Standards: a. We acknowledge that we are responsible for compliance with applicable laws, regulations, and provisions of contracts and grant agreements. b. We have identified and disclosed to you all laws, regulations, and provisions of contracts and grant agreements that have a direct and material effect on the determination of amounts in our financial statements or other financial data significant to the audit objectives. We have identified and disclosed to you any violations or possible violations of laws, regulations, and provisions of contracts and grant agreements whose effects should be considered for recognition and/or disclosure in the financial statements or for your reporting on noncompliance. d. We have taken or will take timely and appropriate steps to remedy any fraud, abuse, illegal acts, or violations of provisions of contracts or grant agreements that you or other auditors report. e. We have a process to track the status of audit findings and recommendations. f. We have identified to you any previous financial audits, attestation engagements, performance audits, or other studies related to the objectives of your audit and the corrective actions taken to address any significant findings and recommendations made in such audits, attestation engagements, or other studies. 24. We acknowledge the current economic volatility presents difficult circumstances and challenges for our industry. Entities are potentially facing declines in the fair values of investments and other assets, declines in the volume of business, constraints on liquidity, difficulty obtaining financing, etc. We understand the values of the assets and liabilities recorded in the financial statements could change rapidly, resulting in material future adjustments to asset values that could negatively impact the entity's ability to maintain sufficient liquidity. FAYETTEVILLE ADVERTISING AND PROMOTION COMMISSION Page 6 We acknowledge that you have no responsibility for future changes caused by the current economic environment and the resulting impact on the entity's financial statements. Further, management and governance are solely responsible for all aspects of managing the entity. Molly Rawn, of Executive Officer mrawn@experiencefayetteville.com 1 Je ifer Wal r, Vice President of Finance jNvMker@experiencefayetteville.com Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas December 31, 2020 and 2019 Contents Independent Auditor's Report ...............................................................................................1 Financial Statements Statements of Assets, Liabilities, and Fund Balance — Modified Accrual Basis ................................ 4 Statements of Revenues, Expenditures, and Changes in Fund Balance — ModifiedAccrual Basis.................................................................................................................. 5 Statements of Revenues and Expenditures Modified Accrual Basis Budgetto Actual............................................................................................................................. 7 Notesto Financial Statements............................................................................................................ 9 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards —Independent Auditor's Report ...............................................................................................................20 BKD CPAs & Advisors 400 W. Capitol Avenue, Suite 2500 1 P.O. Box 3667 1 Little Rock, AR 72203-3667 501.372.1040 1 Fax 501.372.1250 1 bkd.com Independent Auditor's Report Board of Commissioners Fayetteville Advertising & Promotion Commission Fayetteville, Arkansas Report on the Financial Statements We have audited the accompanying financial statements of the Fayetteville Advertising and Promotion Commission, a component unit of the City of Fayetteville, Arkansas, as of and for the years ended December 31, 2020 and 2019, and the related notes to the financial statements, which collectively comprise the Commission's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of A.C.A. § 10-4-412, as described in Note 1. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. (� PRAXITV \`�� Empowering Business Globally Board of Commissioners Fayetteville Advertising & Promotion Commission Page 2 Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note I of the financial statements, the financial statements are prepared by the Commission on the basis of accounting practices prescribed or permitted by the State of Arkansas to demonstrate compliance with the State's regulatory basis of accounting and budget laws, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the State. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Commission as of December 31, 2020 and 2019, or changes in financial position thereof for the years then ended. Unmodified Opinion on Regulatory Basis of Accounting In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, and fund balance of the Commission as of December 31, 2020 and 2019, and its respective revenues, expenditures, and the changes in fund balance and budgetary results for the years then ended, in accordance with the basis of accounting practices prescribed or permitted by the State described in Note 1. Other Matters Management has omitted the management's discussion and analysis information that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. Our opinion on the basic financial statements is not affected by this missing information. Board of Commissioners Fayetteville Advertising & Promotion Commission Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we also have issued our report dated June 25, 2021, on our consideration of the Commission's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Commission's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Commission's internal control over financial reporting and compliance. Little Rock, Arkansas June 25, 2021 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Statements of Assets, Liabilities, and Fund Balance - Modified Accrual Basis December 31, 2020 and 2019 Assets Cash and cash equivalents Investments Accounts receivable Deposits Inventory Prepaid expense Capital Assets Buildings Furniture and fixtures Land Office Equipment Construction in progress Less accumulated depreciation Total assets Liabilities Accounts payable Accrued expenses Unearned revenue Accrued payroll Total liabilities Fund Balance Unassigned Restricted Total fund balance Total liabilities and fund balance 2020 2019 $ 1,830,811 1,037,786 183,001 30,617 12,066 29,468 3,079,580 96,641 198,621 498,597 (1,221,281) $ 5,775,907 $ 49,787 779 56,708 22,115 129,389 5,264,087 382,431 5,646,518 $ 5,775,907 $ 1,461,970 1,152,237 43,799 30,617 11,622 33,630 3,014,963 96,641 198,621 371,601 77,693 (1,072,964) $ 5,420,430 $ 114,190 6,875 48,620 18,460 188,145 4,866,430 365,855 5,232,285 $ 5,420,430 See Notes to Financial Statements 4 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Statements of Revenues, Expenditures and Changes in Fund Balances - Modified Accrual Basis Years Ended December 31, 2020 and 2019 Revenues Hotel, motel and restaurant taxes Rental income Visitors center store Visitor guide advertising income Parking income Investment income (loss), net Grant income Miscellaneous event income Total revenues Expenditures Advertising Automobile expense Bank charges Bond payments Collection expense Contract labor Convention development Depreciation Dues and subscriptions Employee benefits Insurance Miscellaneous Office supplies and printing Payroll taxes Postage Professional services Rent Repairs and maintenance Salaries and wages Special projects and events Taxes and licenses Training and meetings Utilities Visitor center store expense Total expenditures 2020 2019 $ 3,008,949 180,369 17,568 25,125 20,330 (43,142) 946,007 65,213 $ 3,701,187 742,509 23,602 18,250 33,594 27,326 565,310 116,203 4,220,419 5,227,981 484,682 2,708 4,590 701,098 60,179 20,389 128,438 148,317 31,137 25,845 138,873 102,969 11,852 64,541 6,966 34,140 41,220 110,909 859,500 668,367 9,894 13,947 117,313 18,312 3,806,186 832,431 3,600 6,639 696,586 74,024 89,710 171,800 137,653 27,127 25,793 142,038 116,641 23,151 75,691 11,831 41,423 39,888 181,799 967,827 749,119 13,828 72,826 129,514 25,055 4,655,994 See Notes to Financial Statements 5 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Statements of Revenues, Expenditures and Changes in Fund Balances — Modified Accrual Basis (Continued) Years Ended December 31, 2020 and 2019 Change in Fund Balance Fund Balance Beginning of year End of year 2020 2019 $ 414,233 $ 571,987 5,232,285 4,660,298 $ 5,646,518 $ 5,232,285 See Notes to Financial Statements 6 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Statement of Revenues and Expenditures - Modified Accrual Basis - Budget to Actual Year Ended December 31, 2020 Variance Favorable Original Budget Final Budget Actual (Unfavorable) Revenues Hotel, motel and restaurant taxes $ 2,399,024 $ 2,399,024 $ 3,008,949 $ 609,925 Rental income 279,000 279,000 180,369 (98,631) Visitors center store 15,700 15,700 17,568 1,868 Visitor guide advertising income 15,000 15,000 25,125 10,125 Parking income 23,800 23,800 20,330 (3,470) Investment income, net 17,800 17,800 (43,142) (60,942) Grant Income 594,052 594,052 946,007 351,955 Miscellaneous event income 16,100 16,100 65,213 49,113 Total revenues 3,360,476 3,360,476 4,220,419 859,943 Expenditures Advertising 497,150 497,150 484,682 12,468 Automobile expense 1,041 1,041 2,708 (1,667) Bank charges 7,650 7,650 4,590 3,060 Bond payments 707,000 707,000 701,098 5,902 Collection expense 47,980 47,980 60,179 (12,199) Contract labor 40,375 40,375 20,389 19,986 Convention development 147,140 147,140 128,438 18,702 Depreciation - - 148,317 (148,317) Dues and subscriptions 24,000 24,000 31,137 (7,137) Employee benefits 34,023 34,023 25,845 8,178 Insurance 151,463 151,463 138,873 12,590 Miscellaneous 107,530 107,530 102,969 4,561 Office supplies and printing 19,600 19,600 11,852 7,748 Payroll taxes 71,800 71,800 64,541 7,259 Postage 7,400 7,400 6,966 434 Professional services 38,500 38,500 34,140 4,360 Rent 39,720 39,720 41,220 (1,500) Repairs and maintenance 254,000 254,000 110,909 143,091 Salaries and wages 838,759 838,759 859,500 (20,741) Special projects 874,336 874,336 668,367 205,969 Taxes and licenses 15,000 15,000 9,894 5,106 Training and meetings 24,600 24,600 13,947 10,653 Utilities 131,117 131,117 117,313 13,804 Visitor center store expense 14,650 14,650 18,312 (3,662) Total expenditures 4,094,834 4,094,834 3,806,186 288,648 Excess of Revenues Over Expenditures $ (734,358) $ (734,358) $ 414,233 $ 1,148,591 See Notes to Financial Statements 7 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Statement of Revenues and Expenditures - Modified Accrual Basis - Budget to Actual Year Ended December 31, 2019 Variance Favorable Original Budget Final Budget Actual (Unfavorable) Revenues Hotel, motel and restaurant taxes $ 3,571,688 $ 3,571,688 $ 3,701,187 $ 129,499 Rental income 867,500 867,500 742,509 (124,991) Visitors center store 26,000 26,000 23,602 (2,398) Visitor guide advertising income 20,000 20,000 18,250 (1,750) Parking income 28,000 28,000 33,594 5,594 Investment income, net 16,700 16,700 27,326 10,626 Grant income 565,310 565,310 565,310 - Miscellaneous event income 81,100 81,100 116,203 35,103 Total revenues 5,176,298 5,176,298 5,227,981 51,683 Expenditures Advertising 839,500 839,500 832,431 7,069 Automobile expense 3,600 3,600 3,600 - Bank charges 8,200 8,200 6,639 1,561 Bond payments 707,000 707,000 696,586 10,414 Collection expense 70,318 70,318 74,024 (3,706) Contract labor 72,633 72,633 89,710 (17,077) Convention development 151,050 151,050 171,800 (20,750) Depreciation - - 137,653 (137,653) Dues and subscriptions 30,847 30,847 27,127 3,720 Employee benefits 33,776 33,776 25,793 7,983 Insurance 161,335 161,335 142,038 19,297 Miscellaneous 119,100 119,100 116,641 2,459 Office supplies and printing 26,900 26,900 23,151 3,749 Payroll taxes 92,918 92,918 75,691 17,227 Postage 9,850 9,850 11,831 (1,981) Professional services 45,700 45,700 41,423 4,277 Rent 38,400 38,400 39,888 (1,488) Repairs and maintenance 352,775 352,775 181,799 170,976 Salaries and wages 1,094,796 1,094,796 967,827 126,969 Special projects 541,120 541,120 749,119 (207,999) Taxes and licenses 9,050 9,050 13,828 (4,778) Training and meetings 57,247 57,247 72,826 (15,579) Utilities 127,020 127,020 129,514 (2,494) Visitor center store expense 22,750 22,750 25,055 (2,305) Total expenditures 4,615,885 4,615,885 4,655,994 (40,109) Excess of Revenues Over Expenditures $ 560,413 $ 560,413 $ 571,987 $ 11,574 See Notes to Financial Statements 8 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Note 1: Nature of Operations and Summary of Significant Accounting Policies As discussed further below, these financial statements are presented in accordance with the regulatory basis of presentation as prescribed by Arkansas state law. The Fayetteville Advertising and Promotion Commission (the Commission) maintains its records on a modified accrual basis of accounting, as discussed below. The regulatory basis of presentation and the modified accrual basis of accounting differ from accounting principles generally accepted in the United States of America. The significant accounting policies of the Commission are as follows: Regulatory Accounting The Arkansas Legislature enacted a law in 2005 that requires municipalities to present their financial statements in a prescribed format and also restricts the basis of accounting for this format to one of three methods. The entity's governing body, however, can adopt a resolution annually to adopt GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments (GASB No. 34) as their reporting model in lieu of reporting on this regulatory basis established by Arkansas Code 10-4412. The Board of Commissioners did not adopt such a resolution for 2020 or 2019. The regulatory presentation is on a fund basis with no distinction being made as to the type of funds (Proprietary, Governmental, etc.) being presented. The required financial statements consist of a balance sheet (or statement of assets, liabilities, and fund balance), statement of revenues, expenditures, and changes in fund balance, and statement of revenues and expenditures - budget to actual. The basis of accounting is limited to cash basis, modified cash basis or modified accrual basis. The Commission has elected to utilize the modified accrual basis of accounting. Nature of Operations The Commission is a component unit of the City of Fayetteville, Arkansas (the "City"), established by Ordinance Number 2310 of the City for the purpose of promoting and advertising the City and its environs. The Commission is presented in the City of Fayetteville's Comprehensive Annual Financial Report as a discretely presented component unit. A Commission consisting of seven members governs the Commission. Four members are owners or managers of hotels, motels or restaurants, and serve for staggered terms of four years. Two members must be members of the governing body of the City, are selected by the City Council and serve at the will of the City Council. One member is from the public at large and is nominated by the Commission and approved by the City Council. All members must reside in the City. Members are voted on by the existing Commissioners and approved by the City Council. The financial statements present only the Commission, and are not intended to present the financial position and results of operations of the City of Fayetteville, Arkansas, in conformity with accounting principles generally accepted in the United States of America. Operations of the Commission include the Fayetteville Convention and Visitors Bureau, the Fayetteville Town Center and the Clinton House Museum. Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Use of Estimates Management used estimates and assumptions in preparing these financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Commission considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2020 and 2019, cash equivalents consisted of money market funds with brokers. Basis of Accounting and Presentation The financial statements are prepared on the modified accrual basis of accounting. As such, revenues are recognized when the underlying exchange takes place and in the accounting period in which the revenue is both measurable and available to finance expenditures of the fiscal period. The Commission considers all tax revenues measurable and available when collected and exchange revenue when the transaction occurs. Expenditures are recorded when the related liability is incurred. Budgets The Commission adheres to the following procedures in establishing the budgets reflected in the accompanying financial statements: Prior to December 1, the budget committee proposes an operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. Prior to January 1, the Commission legally enacts the budget through approval of the Commissioners. Budgets are adopted on a basis consistent with accounting practices prescribed or permitted by the State of Arkansas, which practices differ from accounting principles generally accepted in the United States of America. Budgeted revenues and expenditures represent the formal operating budget adopted by the Commission. Budgetary control is maintained at the operations level. Budgeted amounts not spent by year end lapse. 10 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Investments Investments of the Commission represent the portion of a combined investment pool managed by the City allocable to the Commission. Investments include money market mutual funds, U.S. Treasury obligations, corporate bonds and U.S. Government agency obligations. Money market mutual funds, governmental securities and corporate bonds are recorded at fair market value based on quoted market prices. Income related to investments is recorded when earned. Income earned in the pool is allocated to the various funds and component units weekly. At December 31, 2020 and 2019, the Commission's proportionate share of the investment pool was approximately 0.63% and 0.65%, respectively. The Commission's portion of investments held by the City amounted to $1,037,786 and $1,152,237 at December 31, 2020 and 2019, respectively, and is held at one financial institution in the name of the City. Approximately 90.89% and 90.65% of the pool is invested in direct obligations of the United States of America. The remainder is either insured or collateralized. Accounts Receivable Accounts receivable consist of amounts due from the Fayetteville Town Center customers and the City's Parking Department. For the years ended December 31, 2020 and 2019, accounts receivable were deemed fully collectible; therefore, no allowance for doubtful accounts was considered necessary. If accounts become uncollectible, they will be charged to operations when that determination is made. Determination of uncollectability is made by management based on knowledge of individual accounts and consideration of such factors as current economic conditions. Accounts are generally uncollateralized. Past -due status is based on contractual terms. Past -due accounts are not charged interest. Inventory Inventory is valued at the lower of cost (first -in, first -out method) or market. Inventory consists of items for sale in the Commission's gift shop. Capital Assets Capital assets are carried at historical cost or acquisition value at date of donation if the asset was contributed. The Commission's capitalization policy states that assets with an initial value or cost greater than or equal to $5,000 and an estimated useful life of greater than one year will be capitalized. Depreciation is provided on the straight-line method over the estimated useful lives of the respective assets, which range from 5 to 39 years. 11 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Funding The Commission is funded by a 1% hotel, motel and restaurant tax on all revenue from the renting, leasing or otherwise furnishing of hotel or motel accommodations for profit in the City. The tax also applies to the gross receipts or gross proceeds received by restaurants and similar businesses as may be defined from time to time by ordinance from the sale of prepared foods and beverages for on or off premises consumption. The tax does not apply to such gross receipts or proceeds of organizations qualified under Section 501(c)(3) of the Federal Internal Revenue Code. The taxes are due the 20`h day of the month following the month in which the taxes were collected. If taxes become delinquent, the City Prosecutor seeks to collect the taxes. Delinquent taxes totaled $33,097 and $30,918 at December 31, 2020 and 2019, respectively. Revenues collected from the taxes are to be used for advertising and promotion in the City and its environs. Revenues are also to be used for the construction, reconstruction, equipment, improvement, maintenance, repair and operation of a convention center, for the operation of tourist promotion facilities in the City, and for personnel and agencies necessary to conduct the business of the Commission. Advertising The Commission expenses advertising, marketing and promotion costs as incurred. Income Taxes The Commission is a tax-exempt organization under Section 115 of Internal Revenue Code. Fund Balance — Governmental Funds The fund balances for the Commission's funds are displayed in two components: Restricted — Restricted fund balances may be spent only for the specific purposes stipulated by external resource providers. Restrictions may be changed or lifted only with the consent of resource providers. Funds are externally restricted by contributors. Unassigned — Unassigned fund balance includes all amounts not restricted. The Commission considers restricted amounts to have been spent when an expenditure incurred for purposes for which both restricted and unassigned fund balance is available. The Commission applies restricted amounts first, and then unassigned amounts when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. 12 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Note 2: Commitments During the year ended December 31, 2013, a resolution was proposed that recommended to the City the issuance and sale of (1) approximately $1,500,000 of hotel and restaurant gross receipts tax refunding bonds for the purpose of refunding the City's outstanding hotel and restaurant gross receipts tax refunding bonds, series 2003, (2) approximately $6,900,000 of hotel and restaurant gross receipts tax and tourism revenue capital improvement bonds for the purpose of financing certain capital improvements in connection with the proposed Walton Arts Center expansion and renovation, and (3) approximately $3,500,000 of hotel and restaurant gross receipts tax and tourism revenue capital improvement bonds for the purpose of financing certain capital improvements in connection with a proposed regional park. The resolution was approved by the Commission in May 2013 and approved by the voters in November 2013 in a special election. The bonds were issued in October 2014, will mature in 2039, and bear interest at coupon rates ranging from 2.0% to 5.0%. As a result of the issuance, the City retains $707,313 per year, plus fees, for payments on these bonds. The amount retained for the bond payment would otherwise be remitted to the Commission. Note 3: Deposits, Investments and Investment Income Deposits Custodial State law requires that municipal funds be deposited in federally insured banks located in the State of Arkansas. The municipal deposits may be in the form of checking accounts, savings accounts, and time deposits. Public funds may also be invested in direct obligations of the United States of America and obligations, the principal and interest of which, are fully guaranteed by the United States of America. The Commission maintains separate bank accounts in two banks. Deposits with banks at December 31, 2020 and 2019 amounted to $1,886,045 and $1,540,553, respectively, of which $297,887 and $304,091 was insured and the remaining amount was collateralized by securities held in the Commission's name. Investments The Commission may legally invest in direct obligations of the U.S. Government and agencies, collateralized certificates of deposit, prerefunded municipal bonds, corporate bonds, collateralized repurchase agreements, treasury money markets, local government trusts and savings accounts. 13 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 At December 31, 2020 and 2019, the Commission had the following investments and maturities: December 31, 2020 Maturities in Years Less More Type Fair Value than 1 1-5 6-10 than 10 Money market mutual funds $ 271,607 $ 271,607 $ - $ - $ - U.S. agencies obligations 766,179 126,343 639,836 - - $1,037,786 $ 397,950 $ 639,836 $ - $ - December 31, 2019 Maturities in Years Less More Type Fair Value than 1 1-5 6-10 than 10 Money market mutual funds $ 416,574 $ 416,574 $ - $ - $ - U.S. agencies obligations 735,663 206,230 529,433 - - $1,152,237 $ 622,804 $ 529,433 $ - $ - 14 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates, the Commission's investment policy is to attempt to match investment maturities with cash flow requirements. The Commission's investments are money market mutual funds and U.S. Government agency obligations. Credit Risk — Credit risk is the risk that the issuer or other counterparty to an investment will not fulfill its obligations. It is the Commission's policy to invest no more than 20% in corporate debt or in securities of a management type investment company or investment trust. It is the Commission's policy to limit its investments in corporate bonds to issues that are rated investment grade by Standard & Poor's and Moody's Investors Service and shall maintain an A- average rating or better for Standard & Poor's and an A3 average rating or better for Moody's Investors Service. Investment in commercial paper will berated A-1/P-1. At December 31, 2020 and 2019, the Commission's investments in U.S. agencies obligations were rated an average rate of AA by Standard & Poor rating and an average rate of Aal by Moody's Investors Service. Custodial Credit Rick — Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Commission will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. Concentration of Credit Risk — The Commission's policy states that investments shall be diversified by limiting investments to avoid concentration in securities from a specific issuer less than or equal to 5% of the cost basis of the Commission's portfolio at the time of purchase and limits concentration in any one business sector to 15% of the cost basis of the portfolio excluding U.S. Treasury securities and collateralized certificates of deposit. The Commission had no concentration risk as of December 31, 2020 and 2019. Foreign Currency Risk- This risk relates to adverse effects on the fair value of an investment from changes in exchange rates. The City's investment policy doesn't directly address foreign currency risk. The City's investment manager only buys U.S. dollar pay securities. The Commission had no investments that were denominated in foreign currency at December 31, 2020 and 2019. In compliance with GASB 72, the Commission categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The Commission had the following recurring fair value measurements: • U.S. agencies obligations of $766,179 and $735,662 as of December 31, 2020 and 2019, respectively, are valued using the option -adjusted discounted cash flow model (Level 2 inputs). • Money market mutual funds of $271,607 and $416,574 as of December 31, 2020 and 2019, respectively, are valued using quoted market prices (Level 1 inputs). 15 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Summary of Carrying Values The carrying values of deposits and investments shown above are included in the statement of net position as follows: Carrying value Deposits Cash on hand Investments Included in the following statement of net position captions Cash and cash equivalents Investments 2020 2019 $ 1,829,561 $1,460,770 1,250 1,200 1,037,786 1,152,237 $ 2,868,597 $2,614,207 $ 1,830,811 $1,461,970 1,037,786 1,152,237 $ 2,868,597 $2,614,207 Investment Income Investment income (loss) for the year ended December 31, consisted of: 2020 2019 Interest and dividend income $ 22,009 $ 24,724 Net increase (decrease) in fair value of investments (65,151) 2,602 $ (43,142) $ 27,326 16 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Note 4: Employee Benefit Plan The Commission offers a SIMPLE IRA plan to all employees who meet the eligibility requirements. The Commission matches employee contributions up to 3% of compensation, while the employee may contribute up to 10% of his or her salary. The Board of Commissioners of the Commission has the authority to amend the plan and contribution rate. The Commission made contributions in the amount of $21,346 and $18,981 for the years ended December 31, 2020 and 2019, respectively. Note 5: Related Party Transactions As stated in Ordinance Number 95-1, the board of the Commission consists of seven members, four of which are owners or managers of businesses in the tourism industry which collect the hotel or restaurant taxes levied. Thus, four members of the board are employed by restaurants or hotels that pay the tax which is the primary funding for the Commission. During the years ended December 31, 2020 and 2019, the Commission paid approximately $5,000, for expenses related to operational services performed by the City for the lease of parking spaces. The Commission had accounts receivable from the City's Parking Department of $5,090 and $9,245 at December 31, 2020 and 2019, respectively. The Commission has an agreement to pay the City a collection fee of 2% of the taxes collected. During the years ended December 31, 2020 and 2019, the Commission paid collection expenses of $60,179 and $74,024, respectively, to the City in exchange for the City collecting tax revenue on behalf of the Commission. 17 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Note 6: Capital Assets A summary of changes in capital assets is as follows: 2020 Beginning Additions/ Deletions/ Ending Balance Transfers Transfers Balance Building $ 3,014,963 $ 64,617 $ - $ 3,079,580 Furniture and fbdures 96,641 - - 96,641 Land 198,621 - - 198,621 Equipment 371,601 126,996 - 498,597 Construction in progress 77,693 - 77,693 - 3,759,519 191,613 77,693 3,873,439 Less accumulated depreciation 1,072,964 148,317 - 1,221,281 $ 2,686,555 $ 43,296 $ 77,693 $ 2,652,158 2019 Beginning Additions/ Deletions/ Ending Balance Transfers Transfers Balance Building $ 2,888,921 $ 126,042 $ - $ 3,014,963 Furniture and fudures 96,640 - - 96,641 Land 198,621 - - 198,621 Equipment 362,257 9,343 - 371,601 Construction in progress 5,538 72,155 - 77,693 3,551,977 207,540 - 3,759,519 Less accumulated depreciation 935,311 137,653 - 1,072,964 $ 2,616,666 $ 69,887 $ - $ 2,686,555 18 Fayetteville Advertising & Promotion Commission A Component Unit of the City of Fayetteville, Arkansas Notes to the Financial Statements December 31, 2020 and 2019 Note 7: Economic Uncertainties As a result of the spread of the SARS-CoV-2 virus and the incidence of COVID-19 (COVID-19), economic uncertainties have arisen which may negatively affect the fund balance and changes in financial position of the Commission. The duration of these uncertainties and the ultimate financial effects, if any, cannot be reasonably estimated at this time. Note 8: CARES Act Funding The Coronavirus Aid, Relief, and Economic Security (CARES) Act approved by the United States Congress and signed into law by the President on March 27, 2020, was a legislative action to address the crisis created by the COVID-19 pandemic and includes among its relief measures direct aid in the form of grants to various entities, as well as direct aid, loans and loan guarantees. The Commission was awarded a grant under the CARES Act and requested reimbursement for approximately $147,000 in qualifying expenses expended during fiscal year 2020 under the award, which is a receivable at December 31, 2020. 19 BKD CPAs & Advisors 400 W. Capitol Avenue, Suite 2500 1 P.O. Box 3667 1 Little Rock, AR 72203-3667 501.372.1040 1 Fax 501.372.1250 1 bkd.com Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report Board of Commissioners Fayetteville Advertising & Promotion Commission Fayetteville, Arkansas We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of Fayetteville Advertising and Promotion Commission (the Commission), a component unit of the City of Fayetteville, Arkansas, which comprise the statement of assets, liabilities, and fund balance — modified accrual basis as of December 31, 2020, and the related statements of revenues, expenditures, and changes in fund balance — modified accrual basis and revenues and expenditures — modified accrual basis — budget to actual for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated June 25, 2021, which expressed an adverse opinion on U.S. Generally Accepted Accounting Principles and an unmodified opinion on the Regulatory Basis of Accounting. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Commission's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Commission's internal control. Accordingly, we do not express an opinion on the effectiveness of the Commission's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. (� PRAXITV \`�� Empowering Business Globally 20 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Commission's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Little Rock, Arkansas June 25, 2021 21