ARIZONA EXPOSITION AND STATE FAIR BOARD BOARD MEETING March 16, 2017

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1 ARIZONA EXPOSITION AND STATE FAIR BOARD BOARD MEETING March 16, 2017 PRESENT: Joanne Keene, '17-'21 Wanell Costello, Executive Director Sharon Petterson, '15-'20 Michael Searle, Deputy Director Kay Gale, '12-'17 Jen Yee, Assistant Executive Director Fran Parker, '13-'19 Doris Fung, Chief Financial Officer Gary Johns, '13-'19 Meg Anema, Administrative Services Officer MEMBERS OF THE PUBLIC: ABSENT: CALL TO ORDER: APPROVAL OF MINUTES: LEGISLATIVE & GOVERNMENT UPDATES: G.G. George, Phoenix Historical Neighborhood Coalition Jim McPherson, Arizona Preservation Foundation None Ms. Keene called the meeting to order at 1:00 P.M. Ms. Petterson made a motion to approve the December 14, 2016, Board Meeting minutes. Mr. Johns seconded the motion. The motion carried unanimously. Ms. Costello asked to amend the agenda to move the "Legislative and Government Updates" to the first order of business. No motion was necessary. Ms. Costello highlighted the recent announcement by Governor Ducey's office to take significant steps to evolve and grow the Arizona State Fair and Fairgrounds. Ms. Costello indicated that the press release had been shared with all AESF staff and partners, and an invitation to provide input extended. Ms. Costello reported that the Governor's website for recommendations would be available until June 1, 2017, and that the AESF website would remain open as long, if not longer, to gather useful information. Ms. Costello

2 indicated that the primary goal of AESF Executive staff was to disseminate information to AESF stakeholders. Ms. Costello shared that the next steps in the process were the issuance of a Request for Information (RFI), that would extend approximately 30 days, and the gathering/compilation/filtering of the submitted information. Ms. Costello reported that AESF would have at least two (2) positions on any committee involved in the process, and that one position should be filled by a Board member. Ms. Keene recommended that once a process and time line were confirmed for filtering information from the RFI, the Board should be called together to determine the best strategy for filling Board member obligations. Ms. Costello reported that AESF Executive staff was tracking several relevant bills up for consideration in the State Legislature. Ms. Costello shared that the Sunset Review bill had passed through both the House and Senate, and was currently before the Governor. Ms. Costello additionally shared that the budget hearing had gone well. Mr. Searle explained that the budget had been presented in a decision package, and that AESF was seeking greater spending authority. The Board further discussed how AESF planned to manage the Fair Operating Capital and fit within the State's budgetary and spending restrictions. Ms. Costello provided an update on HB2074, which was an appropriation for $200,000 for the preservation of historic buildings on the Fairgrounds. Ms. Costello shared that the bill had passed the House and was in the Senate for a second reading. Ms. Costello added that to her knowledge, the bill was intended to match funds provided by the City of Phoenix; however, the City was still requesting an easement as part of the agreement and the State's policy to not sign easements continued. Ms. Costello indicated that she would provide more information to the Board on the status and impact of HB2074 as it came available. Ms. Costello announced the appointment of Ms. Joanne Keene to the Arizona Exposition & State Fair Board by the Governor for another five (5) years. FINANCIALS: Ms Fung reviewed the set of financial statements provided to the Board that included the year-to-date total revenue and sources of revenue analysis, balance sheet as of February 28, 2017, and profit-loss statement from July February Ms. Fung also reviewed the 2017 ASF Revenue and Expense projections for both fair and interim events.

3 Ms. Fung also provided an update on the Asset List Project and indicated that a combined, master capital asset list had been compiled and the maintenance engineer was currently locating and inventorying assets. Mr. Searle added that the process was midway through and that the goal was to complete a physical asset inventory by the end of the month. AGENCY AND FAIR UPDATES: Ms. Yee reported that in response to the Board's goal to initiate an image campaign, data had been collected both during and after the fair to determine the best approach to improving the image and perception of AESF. Ms. Yee pointed out that the primary questions of how important AESF is to the community and how millennials feel about AESF affected the mode of messaging and building of an image. Ms. Yee added that grounds beautification and shade were also points of high priority for image perception, and that AESF staff was strategizing on how to best send the message and increase awareness of how AESF benefits the community (i.e. though St Mary's Food Bank, AZ First, school field trips, Read & Ride program, and the Scouts), as well as getting AESF partners to share the story from their vantage point. Mr. Searle updated the Board on recent staff changes which included the moving on to another position by Athena Sanchez, Marketing Specialist, and the anticipated retirement of HR Director, Pam Stocksdale. Mr. Searle indicated that Ms. Stocksdale had agreed to transition out of her position with a final date at the end of April. Discussion followed on the challenges with finding suitably qualified applicants through the state application system, and suggestions were made for the consideration of additional hiring resources. Ms. Costello briefly explained the changes made at the State Procurement Office (SPO) level for the bid process in buying media. Mr. Searle added that the State's intention had been to streamline the marketing process and increase the buying power for all state agencies. Mr. Searle further explained that whereas AESF had been direct buying media the last several years, AESF would most likely be working within the restrictions of buying media through the state contracted agencies. Mr. Searle commented that two significant negatives of the change would be a loss of autonomy and greater cost for buying media. Ms. Costello introduced the discussion on the Fair Budget by noting that the budget would be significantly impacted by the recent increase in minimum wage, as well as the $500,000 requested appropriation. Mr. Searle noted that the minimum wage increase was expected to result in a $450,000 increase in temporary wages for the current year alone. Mr. Searle added

4 that in further analysis of the minimum wage impact, an additional expense of $101,096 was expected for the remainder of FY17, and an increased expense of $475,135 was anticipated for FY18. Mr. Searle explained that the expected wage increase included not only the immediate increase of minimum wage to $10.00/hour, but also a parity adjustment for employees currently being paid less than $16/hour. Mr. Searle noted that there were enough funds in the appropriation to cover the increase for FY17, and that AESF would be asking for an appropriate adjustment for FY18 after the Governor's budget was disclosed. Mr. Searle also added that the minimum wage was scheduled to increase every year until 2020, at which time, would be $12/hour. Mr. Searle expounded on the $500,000 Decision Package that had been submitted for approval as part of the AESF budget. Mr. Searle indicated that a portion of the decision package was intended to be spent on capital asset investments such seating/shade and decorations, while a portion was to be spent on disposable assets such as sound, lights, and entertainment. Mr. Searle explained that the primary intent of the package was to improve grounds and purchase goods/services that would increase guest stay time at events and consequently increase overall revenue. STRATEGIC PLAN UPDATE: CAPITAL IMPROVEMENTS: Ms. Costello reviewed the updated Strategic Plan/Goals with the Board members, and pointed out that action steps had been identified for the majority of the goals and objectives. Ms. Costello stated that the revised Strategic Plan focused on goals/objectives for 2017, and that completed action steps for 2016 had been archived into a completed plan. Ms. Costello noted that AESF Executive staff would continue to update and revise the Strategic Plan as appropriate and would provide revised plans at Board meetings. Mr. Searle discussed the need to replace emergency panic hardware, handles, and locks on several of the buildings on the fairgrounds. Mr. Searle pointed out that the replacements were necessary to remain compliant with regulations, ensure customer/event/facility safety, and critical to business operation continuity. Mr. Searle asked the Board to consider a request for $40,000 to replace the emergency panic hardware, handles, locks and closure motors on the Ag Center, Bolin Building, Home Ec Building and Exhibit Building doors. Ms. Petterson made a motion to approve $40,000 for capital improvement repairs to the outbuilding doors as listed by Mr. Searle; Ms. Gale seconded the motion. The motion passed unanimously.

5 Mr. Searle added that a five (5) year plan was being formulated that would meld capital investments needed on the fairgrounds with respect to the possible relocation of the facility. Mr. Searle also noted that the bulk of the Capital Improvements to be considered for the next Fiscal Year would be presented at the next Board meeting. OTHER BUSINESS: SET NEXT MEETING DATE: ADJOURN: No other business was noted. The next meeting will tentatively be scheduled for Thursday, May 4, 2017, at 1:00 P.M. Ms. Parker made a motion to adjourn. Mr. Johns seconded; motion carried unanimously. Meeting adjourned at 2:26 P.M. DATED THIS 20th DAY OF March, 2017 ARIZONA EXPOSITION & STATE FAIR BOARD BY: Meg Anema Executive Management Assistant