board of directors meeting – agenda · 2019-10-21 · ii. consent agenda – cici rojas, chairman...

BOARD OF DIRECTORS MEETING Tuesday, April 23, 2019 3:00 p.m.

– Agenda –

I. CALL TO ORDER - CiCi Rojas, Board Chair

II. CONSENT AGENDAA. Approval of January 22, 2019 Minutes _____________________________________ Pages 2-4B. Review of Checks in excess of $5,000 (March) ____________________________ Page 9-11C. Industry Statistical Reports ________________________________________________ Page 5D. New Members ______________________________________________________________ Page 8

III. ACTION ITEMS - CiCi Rojas, Board ChairA. YTD Financial Statement of Revenues & Expenditures ___________________ Pages 12-16B. 2018 Audit __________________________________________________________________ Pages 18-33C. Administrative Resolution

• 457(b) Plan – Change of Trustees ______________________________ Page 34

IV. DISCUSSION ITEMS - Jason Fulvi, President & CEOA. Organizational Updates

V. CLOSED SESSIONPursuant to the following subsections of Section 610.021 of the Revised Statutes of Missouri, there may be a closed session to discuss:1) legal matters, litigation, or privileged communications with attorneys, pursuant to subsection 1; 2) personnel, pursuant to subsection 3 and 13; and/or3) confidential or privileged communications with auditors, pursuant to subsection 17.

VI. NEW BUSINESS

VII. OLD BUSINESS

VIII. ADJOURNMENT

2019 Board Meeting Dates (3 pm) July 23 October 29 December 17

Executive Committee Meeting Dates (10:30 am) June 18

September 17 November 19

BOARD OF DIRECTORS MEETING Tuesday, January 22, 2019 3:00 p.m. 1321 Baltimore Ave. Kansas City MO

-MINUTES- I. CALL TO ORDER – CiCi Rojas, Chairman

Rojas called the meeting to order at 3:03 p.m. with a quorum represented by Lee Barnes, Dan Fowler, Belinda Harrison, Gloria Leathers-Jackson (via conference call), Jenny Kincaid, Steve Klika, Riccardo Lucas, Kathy Nelson, Kurt Mayo, Pat Macdonald, Rachel Merlo, Stacey Paine, Kevin Pistilli, Jeanette Prenger, CiCi Rojas, Jim Snow, Philip Strnad, Jeffrey Stewart (via conference call), Keli Wenzel, Randy Wisthoff and Amy Jordan-Wooden. Also, present were the following Visit KC team members: Jason Fulvi, President & CEO; Teresa Martinez, Special Assistant to the President/Government Affairs Manager, and Julie Hart with CFO by Design. Lana Torczon, attorney, City of Kansas City, MO was also present at this meeting.

II. CONSENT AGENDA – CiCi Rojas, ChairmanNo changes were made to the agenda. The consent agenda included 12/18/18 board meeting minutes, YTD financials, checks in excess of $5,000 (Dec.), industry statistical report and list of new members. Motion to approve the consent agenda as presented (A. Jordan). Seconded (K. Pistilli) and passed unanimously.

III. ACTION ITEMSA. 2019 Budget – Jason Fulvi, President & CEO

Fulvi presented the 2019 budget and asked Julie Hart with CFO by Design, to present the draft budget which included the following recommendation:

✓ Visit KC will budget based on the City’s CT Tax projection, which is trending slightly higher from 20018actuals (1% increase).

✓ Arena fees - historically higher yearly, is projected conservatively at 5%.

✓ Marketing and promotional expenses were budgeted 10.4% higher than in 2018 due to sales incentivesand customer engagement investment.

✓ Private revenue will show more conservative compared to 2018 due to housing services expected to belower due to Destination Imagination, as well as some slow partners’’ payments.

Upon motion duly made (R. Merlo) and seconded (J. Snow) the 2019 budget was approved for $13,640,068. B. 2019 Organizational Goals – Jason Fulvi, President & CEO

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Fulvi presented the board the 2019 goals, submitting for approval the following:

Upon a motion duly made and seconded the 2019 Organizational Goals were approved. IV. DISCUSSION ITEMS

A. Organizational Updates – Jason Fulvi, President & CEOFulvi highlighted the following 2018 accomplishment:

✓ Integrated Payroll system with 401(K) system to insure timely and accurate deposits of 401 (K) plancontributions.

✓ Integrated Payroll system with HAS and FSA systems to insure timely and accurate deposits of employeedeductions.

✓ Increased meeting planner interest in KC, amassing 29.5 million impressions in convention marketingthrough trade advertising, earned media, email marketing, paid search and social media.

✓ Generated 540 articles about Kansas City through public relations—accumulating a record 207 millionimpressions in publications such as National Geographic, Forbes, The Wall Street Journal, The New YorkTimes and more.

✓ Realized significant growth in Visit KC’s social influence, securing 438,000 referrals to VisitKC.com anda record 1 million brand engagements through social media.

✓ Assisted 222 productions through the KC Film Office, including the local filming of the third season ofNetflix’s high-profile series Queer Eye and HGTV’s Bargain Mansions.

✓ Partnerships: We signed 137 new partnerships in 2018 versus 80 in 2017 and 57 in 2016. We now have1,054 active partners that include new expanded partnerships with Heartland Coca-Cola, ChristopherElbow Chocolates, LLC, and Made in KC.

✓ Advertising Revenue: P & E achieved $114,469 in advertising revenue or 114% of goal!

✓ KC BBQ Experience App Revenue: P & E sold $10,670 in new partnership and advertising revenue toeleven new customers supporting this new program.

✓ CRM evaluation

✓ Achieved 105% of Visit KC’s room-night production goal—generating 295 bookings and 444,763 roomnights for future meetings. This accounts for more than $330 million in future economic impact.

✓ Hosted 62 clients during three dynamic sales missions to the markets of DC, Virginia and Dallas.

✓ Hosted 94 personalized site visits to Kansas City, as well as three “KC Experience” familiarization trips,which cumulatively attracted 60 clients.

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V. CLOSED SESSIONThere was no need to go into closed session during this meeting.

VI. NEW BUSINESSRojas acknowledge the ongoing work of the Foundation and reminded all directors to fill out the conflict of interests forms as well as the board expectations forms. Budgets for Spark and foundation expected to be presented during the April 2019 meeting. VII. OLD BUSINESSNone.VIII. ADJOURNMENTThere being no further business, the meeting was adjourned at 4:20 p.m.

Respectfully submitted,

Teresa Martinez Recorder

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March 2019

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• Partner Relations – YMCA, TGS, HLA, Loews, Restaurant Association Ball, Zoo, Aviation Department,Intercontinental Hotel, UNESCO Creative City Network, Nelson Atkins Museum, Country Club Plaza, H&R Block,Big 12, KCADC, and Visit OP.

• Community Engagement – Port KC, ArtsKC, MCC Luncheon, Downtown Council, Commercial Real StateForecast, Boys & Girls Scotts, Green Wave Tech, PCMA Heartland Chapter, James Beard Foundation Dinner,Mayor’s Prayer Breakfast, HLA Mayoral Forum, Mo Dept of Tourism, NAIA, KCI Groundbreaking, and State of theCity Address.

• Speaking Engagement – Pistilli Hotel Educational Series, Nonprofit Executive Breakfast, KMBZ Interview,Tourism Outlook, Fox4 Interview.

• Board/Executive Meetings – KCStat, Visit KC Board Meeting and Executive Committee Meeting, DI Foundation,Chamber’s Aviation Committee, Downtown Council Executive Committee, Visit KC Foundation Meeting, and P2P.

SALES & SERVICES

• Booked 68,570 room nights:o Most room nights booked in Q1 since 2014 (72,119)o Includes three citywides (2019 Under Armour Basketball National Championship; 2021 NeighborWorks

America, and 2022 Big 12 Men’s)o Definite room nights booked in Q1 equate to an estimated economic impact of $52 Million

• Tentative pipeline is currently at 1,277,625 room nightso Highest number of tentative room nights in pipeline since Sep 2017 (1,330,109)o Net addition of 296,180 room nights to pipeline since January 1 of this year

• Hosted 25 siteso Most sites hosted in Q1 since 2016 (25 also)o Clients hosted during these Q1 sites represent a total of nearly 70,000 room nights with a potential

combined economic impact of $48 Million• Serviced at total of 66 events/conferences

o Combined economic impact of $77 Million; 83,000 total room nightso Citywides serviced include:

American Choral Directors Association: $8 Million Big 12 Conference Men’s Basketball: $14.5 Million Church of the Nazarene: $2.1 Million Heart of America Volleyball: $2.9 Million NCAA Men’s Regional: $10.6 Million ESEA Network: $3.3 Million Triple Crown Sports: $4.8 Million

PARTNERSHIPS & EVENTS

• Signed 23 new partnerships in the first quarter of 2019 (YTD 954 active partners. Partnership revenue increasedfrom $47,042 to $132,946 with the addition of 21C’s partnership and higher average partnership agreementskicking in for 2019.

• Coop Media and Marketing partnerships went from $883,500 to $835,000 with the addition of Loews Hotels as apartner, several partners downsizing their commitments and Hollywood Casino and Schlitterbahn dropping off for2019.

• Advertising Revenue: booked over $111,000 of advertising towards our 2019 goal of $105,000 through the firstquarter of the year.

• Visitor Information Center:o In the first quarter 2019, we had 325 visitors from 6 different countries and 28 different states.o We welcomed in March our new Visitor Experience & Events Coordinator, Megan Wright.

• 2019 Restaurant Week Update: We hit our goal of 200 with 201 restaurants participating in 2019 – up from arecord 194 in 2018. To date, we have received over $241,000 so far for the three charities with donations stillcoming. Cash sponsorships were up.

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• Annual Tourism Outlook: We had a sold-out capacity of 700 in attendance for the February 13 event that featured keynote speaker, Adam Sacks, and Jason Fulvi. We achieved $80,000 in sponsorships versus $58,500 in 2018.

MARKETING & COMMUNICATIONS

• Created and launched KCRW2019 marketing campaign featuring a record 201 participating local restaurants January 11 – 20, 2019. Over 218k unique users visited the website from 12/1 – 1/20; more than 9k downloads of the app.

• Visit KC and H2R Market Research hosted a presentation detailing the findings of our most recent Advertising Effectiveness Study on Feb. 20th & Mar. 6th; highlights sheet provided in board packet.

• Launched integrated marketing campaign The New Midwest in partnership with agency of record MMGY Global.

• Incorporated The New Midwest campaign local launch during Big 12; KC Aviation Department - KCI digital screens, KC Streetcar stops and Power & Light District video boards.

• Deployed PR and marketing tactics to welcome college basketball back to Kansas City – MIAA, NAIA, Big 12 and NCAA Regionals.

• Launched the first Quarterly Digital Convention Marketing Recap providing a top-line overview of Visit KC marketing executions targeted at the convention audience.

• Film in KC: Missouri House Bill 923 and Senate Bill 366 passed both committees supporting the reinstatement of a statewide film incentive. Leading advocacy efforts to urge house & senate leader to move the Missouri Film Incentive bill to a floor vote.

• Hosted official watch party with a screening of Netflix’s Queer Eye Season 3 first episode honoring the talented local KC crew that helped bring this season to life.

ADMINISTRATION & HR

• Human Resources o Facilitated renewals of Property, Casualty, and Liability lines of coverage o Recruitment and selection of Partnership Development Specialist o Installed system upgrade to PTO tracking systems o Integrated 2019 benefits premiums to align with 2019 Open Season elections o Facilitation of performance appraisal systems and processes

• IT o Completion of a 5-month CRM Software evaluation and selection from RFP. o Completion and selection of a new copier/printer vendor from RFP

TEAM SHOUT-OUT

• Accepted a Gold Adrian Award from Hospitality Sales & Marketing Association International recognizing Visit KC’s 2017 speakeasy-themed brand activation in Chicago.

• The 2018 edition of Visit KC Magazine, the city’s official visitor guide, won a Gold Addy Award last week at a reception for the Arizona chapter of the American Advertising Federation. The magazine is produced in collaboration with Madden Media, based in Tucson. This marks the 10th honor received by the publication in the last 15 years, joining accolades from PRSA, The Bulldog Reporter, HSMAI and U.S. Travel/ESTO.

• Traci Moon, Senior Vice President of Marketing & Communications, was honored last week as the Kansas City’s B2C Marketer of the Year, an award bestowed to her by the American Marketing Association Kansas City and ANA Business Marketing.

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NEW MEMBERS

3 Trails Brewing Berkley Riverfront Bliss Beauty & Brow Boutique Brew Lab Casual Animal Brewing Company Farm to Market Bread Co. Fringe Beerworks Grains & Taps Hampton Inn and Suites Kansas City Downtown Crossroads Holiday Inn Express & Suites-Lenexa Holiday Inn Express Kansas City Downtown Home2 Suites by Hilton KCI Airport Jarocho Pescados Y Mariscos Jazzy B's BBQ Kansas City Box Kansas City Graffiti Tour Limitless Brewing Mission Taco Joint-South Plaza New Axiom Brewing Company Parlor Prestige Transportation LLC Pruehs & Associates, LLC. Richardson Communications Group Strange Days Brewing Co Studio Dan Meiners The Polished Edge Fine Jewelry Uber Wonderscope Children's Museum of Kansas City Youth Symphony of Kansas City Zone 6 Fitness

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BUDGET & STATISTICAL REPORT JANUARY 2019

PAYMENTS OVER $5,000

A *^ MMGY Global LLC Advertising expenses $112,788.00A Jones Lang LaSalle Hotel inventory study $24,269.99E AMEX-Carmen Moses PCMA/Sales trips $6,293.39E * AMEX-Derek Byrne Social media advertising $10,567.96E AMEX-Jenny Wilson IPW International travel $13,375.65E * AMEX-Teresa Martinez Chiefs playoff / Sprint suite $10,594.73E AMEX-Stephane Scupham AFCI tradeshow $5,341.91E * Aetna Health insurance premiums $18,462.02E * Metlife Benefit care health insurance $5,867.34100923 CFO by Design Financial consulting services $9,000.00100927 Bukaty Property & Casualty D&O employment practices ins $17,970.00100928 * 435 Magazine KCRW advertising $5,000.00100938 * Connect Convention media advertising $10,000.00100942 Gtr KC Sports Commission 2019 sponsorship pkg $13,000.00100943 Knowland Tap report $7,299.00100946 KC Live Block 124 Retail LLC Prepaid rent $20,607.30100951 * Netlynx Sports Volleyball portable courts $33,675.00100958 Tourism Economics LLC Economic analysis on Tourism $14,000.00100959 Development Finance Marriott/Tif plan $191,327.00100961 PCMA Capital Chapter Golden level sponsorship $5,000.001024 * Outfront Media KCRW billboard advertising $12,500.001028 * Joyal Marketing Group LLC KCRW public relations $7,050.001035 * Steel City Media KCRW radio advertising $5,500.001036 * St Louis Post Dispatch KCRW advertising $5,800.00100967 *^ KC Convention Ctr Facility rental Triple Crown $53,600.00100986 Next Page KC Visitor maps $20,770.74100996 ^ AEG KC Arena LLC NCAA mens basketball $5,840.00100997 Sprout Social Inc Bambu social media tools $5,000.40101001 USAE Membership dues - J Fulvi $7,760.00

* Partial / totally reimbursed^ Board member transactionA (ACH) transactionE Electronic payments

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BUDGET & STATISTICAL REPORT FEBRUARY 2019


A *^ MMGY Global LLC Advertising expenses $308,628.82A Salesforce.com E-mail marketing $29,050.08A CFO by Design Financial consulting services $9,000.00E AMEX-Carl Leonard Computer software $5,727.68E * AMEX-Jenny Wilson Event space rental DC mission $19,279.69E AMEX-Laurn McKee Helmsbrisco registration $6,165.28E * AMEX-Teresa Martinez Sprint suite f&b $17,118.58E * Aetna Health insurance premiums $18,462.02E * Metlife Benefit care health insurance $5,976.66101025 Overland Chauffeured Serv Transp deposit KC Connect $20,833.50101035 KC Live Block 124 Retail Prepaid rent/realestate taxes $33,675.00101046 * CVENT Passkey overages $8,587.25101053 Magnolia Hospitality Group Incentive room booking $50,000.00


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BUDGET & STATISTICAL REPORT MARCH 2019


A *^ MMGY Global LLC Advertising expenses $246,041.23A * CVENT Passkey overages housing serv $11,029.60A *^ MMGY Global LLC Advertising expenses $153,933.83A CFO by Design Financial consulting services $9,000.00E * AMEX-Ashley Rossbach Spark related expenses $19,144.37E * AMEX-Carl Leonard Registration tourism academy $5.811.96E AMEX-Jacob Buchheit NCAA/Experience fly-in $5,209.33E * AMEX-Jenny Wilson International travel $5,663.25E AMEX-Teresa Martinez Big12 sprint suite f&b $18,559.82E AMEX-Stephane Scupham Sundance travel $5,490.23E * Aetna Health insurance premiums $16,591.30E * Metlife Benefit care health insurance $5,743.88101070 * Cision US Inc Media monitoring clipping serv $9,920.00101072 * CVENT Passkey housing fees $32,621.91 101074 Gabriel D Tambio-Yeh 1/2 prod costs shrinners film $8,875.00101076 Kansas City Filmfest Sponsorships $6,000.00101077 * Kuffman Ctr Preforming Arts Production for Annual meeting $47,441.60101081 MIAA Assist group commitment $5,000.00101088 * Overland Chauffeured Serv ACDA transportation $29,656.00101099 *^ Westin Crown Center Shuttle transp agreement $5,000.00101102 KC Live Block 124 Retail Prepaid rent $22,105.45101106 * ASAE Booth registration $6,450.00101120 IPR Software Maintenance digital pressroom $7,885.00101128 * Madden Advertising expense $5,900.00 101135 Tourism Economics LLC Speaker fees Annual meeting $5,421.60101136 Technology Group Solutions Computer equipment $6,184.80101137 Tif Commission Union Hill Tif plan $49,582.00101138 Tif Commission 21C Museum Hotel Tif plan $45,258.00101139 Tif Commission Briarcliff Suites Tif plan $43,871.00


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FINANCIAL STATEMENTS

For the Period Ending March 31, 2019

**Unaudited – For Management Use Only**

_______________________________________________________

INDEX

Page 1 – Dashboard

Page 2 – Comparative Balance Sheet

Page 3 – Balance Sheet Ratios

Page 4 – Year-to-date Comparative Statement of Activities

Page 5 – Statement of Cash Flows

Page 6

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VKC

Financial Dashboard

For the period ending March 31, 2019

Significant Underperformance

Slight Underperformance

Good Performance

Color Code Cash & Current Liabilities

87%

13%.0…

Public Revenue - 77% of Total Revenue YTD

CT Tax

Arena

State

6%

29%

13%18%

22%

8%4%

Private Revenue - 23% of Total Revenue

Advertising

Event Hosting

Hotel Lead Share

Memberships

Media Partnerships

Convention Housing

Other

43%

40%

2%

1% 8%

6%

Total Expenses YTD

Marketing &Promotional

Personnel

Rent

Professional Fees

TIF Reimbursement

Other Operating

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Mar Apr May Jun Jul Aug Sept Nov Dec Jan Mar

Cash

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Mar Apr May Jun Jul Aug Sept Nov Dec Jan Mar

Current Liabilities

$285,504 20%

$505,469 36%

$622,648 44%

Marketing Spend

Local Audience Convention/Meetings Audience Tourism/Destination Audience

Dashboard 2019.xlsx 4/15/20192:24 PM13

VISIT KC

COMPARATIVE BALANCE SHEET

FOR THE PERIOD ENDING MARCH 31, 2019

2019 2018 Variance Variance

Inc/(Dec) Inc/(Dec)

$ $ $ %

ASSETSCURRENT ASSETS

Cash

Operating Account 395,960 274,644 121,316 44.2%

Payroll 50,539 72,721 (22,182) -30.5%

Petty Cash 417 381 37 9.6%

Savings-Reserve 502,390 350,568 151,822 43.3%

KCRW-Reserve 138,585 93,908 44,677 47.6%

Money Market -Private 1,702,895 1,260,485 442,411 35.1%

Total Cash 2,790,786 2,052,706 738,080 36.0%

Account Receivable - City of KCMO 1,009,323 950,881 58,441 6.1%

Account Receivable-Other 473,113 521,938 (48,825) -9.4%

TOTAL CURRENT ASSETS 4,273,221 3,525,525 747,696 21.2%

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Furniture, Fixtures & Equipment 1,358,680 1,293,104 65,576 5.1%

Leasehold Improvements 193,399 174,051 19,348 11.1%

Less: Accumulated Depreciation (1,157,621) (1,021,618) (136,003) 13.3%

TOTAL FIXED ASSETS 394,458 445,537 (51,079) -11.5%

OTHER ASSETS

Prepaid Expenses 486,048 300,868 185,180 61.5%

Due from/(to) Foundation 50,081 49,658 423 0.9%

Due from/(to) Spark 127,445 88,430 39,015 44.1%

Deferred Compensation Asset - 432,375 (432,375) -100.0%

TOTAL OTHER ASSETS 663,574 871,331 (207,756) -23.8%

TOTAL ASSETS 5,331,253$ 4,842,392$ 488,861$ 10.1%

LIABILITIESCURRENT LIABILITIES

Trade Accounts Payable 607,547 266,742 340,805 127.8%

Payroll & Benefits Accrual 286,722 112,834 173,888 154.1%

Accrued Vacation and PTO 286,877 223,655 63,222 28.3%

TIF Payable 251,103 465,000 (213,897) -46.0%

Assessment Liability 15,784 - - 0.0%

Other General Liabilities - - - 0.0%

TOTAL CURRENT LIABILITIES 1,448,034 1,068,232 379,802 35.6%

DEFERRED REVENUE

Passkey Fees - 6,190 (6,190) 0.0%

Annual Meeting - - 0.0%

Membership 92,061 74,899 17,162 22.9%

Restaurant Week - - - 0.0%

Other Deferred Revenue 456,710 402,519 54,191 13.5%

TOTAL DEFERRED REVENUE 548,771 483,608 65,163 13.5%

LONG TERM LIABILITIES

Deferred Compensation Liability - 432,375 (432,375) -100.0%

TOTAL LONG TERM LIABILITIES - 432,375 (432,375) -100.0%

TOTAL LIABILITIES 1,996,805$ 1,984,215$ 12,590$ 0.6%

NET ASSETSUnrestricted Net Assets 2,857,501 2,488,213 369,288 14.8%

Current Year Net Assets 476,947 369,966 106,981 28.9%

TOTAL NET ASSETS 3,334,448$ 2,858,179$ 476,269$ 16.7%

TOTAL LIABILITIES & 5,331,253$ 4,842,392$ 488,861$ 10.1%

NET ASSETS

VKC March 2019 financial stmts.xlsx 4/15/20191:43 PM14

VISIT KC

BALANCE SHEET RATIOS

THROUGH MARCH 31, 2019

March June September December March June September December January March

2017 2017 2017 2017 2018 2018 2018 2018 2019 2019

Current Ratio 1

2.07 2.03 2.04 1.90 3.30 2.08 2.65 2.24 2.53 2.95

Defensive Interval 2

104.13 94.06 110.27 112.06 99.48 121.45 111.68 117.05 111.98 114.35

Leverage 3

0.21 0.26 0.22 0.24 0.15 0.00 0.00 0.00 0.00 0.00

1 Current Ratio = Current Assets/Current Liabilities. Measures a company's ability to repay

short term debts with short term assets. A ratio between 1 and 2 is ideal, with a high number indicating

greater ability to repay short term debt.

2 Defensive Interval = Liquid Assets/Daily Expenses. Indicates how many days a company can

survive without number of days that a company can operate without needing to access noncurrent assets,

long-term or additional outside financial resources

3 Leverage Ratio = Long Term Liabilities/Net Assets. Measures a company's reliance on debt to

finance operations. A low ratio notes low dependence on debt.


VISIT KC

YEAR TO DATE COMPARATIVE STATEMENT OF ACTIVITIES

THROUGH MARCH 31, 2019

$ % $ % $ % $ % $ %

REVENUES, GAINS & OTHER SUPPORT:

Public Revenue

Hotel/Motel Occupancy Tax 2,507,489 66.7% 2,429,001 71.2% 78,488 3.2% 2,297,644 66.1% 209,845 9.1%

Arena License Fees 384,532 10.2% 235,000 6.9% 149,532 63.6% 307,443 8.8% 77,089 25.1%

State Funding - 0.0% - 0.0% - 0.0% 130,198 3.7% (130,198) -100.0%

Sub-Total Public Revenue 2,892,021 76.9% 2,664,001 78.1% 228,020 8.6% 2,735,285 78.7% 156,736 5.7%

Private Revenue

Advertising 54,495 1.4% 24,250 0.7% 30,245 124.7% 21,148 0.6% 33,346 157.7%

Event Hosting 250,675 6.7% 269,000 7.9% (18,325) -6.8% 258,013 7.4% (7,338) -2.8%

Film Office - 0.0% - 0.0% - 0.0% - 0.0% - 0.0%

Hotel Lead Share 110,072 2.9% 78,924 2.3% 31,148 39.5% 42,758 1.2% 67,314 157.4%

Memberships 156,296 4.2% 81,504 2.4% 74,792 91.8% 110,676 3.2% 45,620 41.2%

Media Partnerships 191,159 5.1% 221,623 6.5% (30,464) -13.7% 230,774 6.6% (39,615) -17.2%

Convention Housing Service 71,382 1.9% 15,501 0.5% 55,881 360.5% 13,161 0.4% 58,221 442.4%

Retail Sales Revenue - 0.0% - 0.0% - 0.0% 5,208 0.1% (5,208) -100.0%

Interest I 3,420 0.1% 7,500 0.2% (4,080) -54.4% 1,518 0.0% 1,902 125.3%

In Kind - 0.0% 30,000 0.9% (30,000) -100.0% - 0.0% - 0.0%

Unrealized Gains - 0.0% - 0.0% - 0.0% - 0.0% - 0.0%

Other 30,026 0.8% 18,750 0.5% 11,276 60.1% 59,126 1.7% (29,100) -49.2%

Sub-Total Private Revenue 867,526 23.1% 747,052 21.9% 120,474 16.1% 742,381 21.3% 125,144 16.9%

TOTAL REVENUE 3,759,547 100.0% 3,411,053 100.0% 348,494 10.2% 3,477,668 100.0% 281,879 8.1%

Marketing/Promotional Expenses

Local Audience 285,504 7.6% 360,951 10.6% (75,447) -20.9% 190,355 5.5% 95,149 50.0%

Convention/Meetings Audience 505,469 13.4% 557,162 16.3% (51,693) -9.3% 524,639 15.1% (19,170) -3.7%

Tourism/Destination Audience 622,648 16.6% 669,996 19.6% (47,348) -7.1% 451,198 13.0% 171,450 38.0%

Total Marketing/Promotional Expenses 1,413,621 37.6% 1,588,109 46.6% (174,488) -11.0% 1,166,193 33.5% 247,429 21.2%

Operating Expenses

Wages and Salaries 1,082,927 28.8% 1,037,139 30.4% 45,788 4.4% 846,181 24.3% 236,746 28.0%

Payroll Taxes 88,333 2.3% 80,955 2.4% 7,378 9.1% 79,054 2.3% 9,278 11.7%

Employee Benefits 131,826 3.5% 157,380 4.6% (25,554) -16.2% 168,044 4.8% (36,219) -21.6%

Staff Recruitment 271 0.0% 1,251 0.0% (980) -78.3% 1,193 0.0% (922) -77.3%

Auto 5,913 0.2% 4,875 0.1% 1,038 21.3% 6,496 0.2% (583) -9.0%

Professional Development 550 0.0% - 0.0% 550 100.0% 12,523 0.4% (11,973) -95.6%

Rent 64,818 1.7% 68,700 2.0% (3,882) -5.7% 61,128 1.8% 3,690 6.0%

Hardware Maintenance 36,067 1.0% 45,246 1.3% (9,179) -20.3% 47,310 1.4% (11,243) -23.8%

Equipment Rental/Maintenance 29,719 0.8% 27,501 0.8% 2,218 8.1% 39,815 1.1% (10,096) -25.4%

Depreciation and Amortization 32,970 0.9% 41,747 1.2% (8,777) -21.0% 46,979 1.4% (14,009) -29.8%

Dues and Subscriptions 36,385 1.0% 17,499 0.5% 18,886 107.9% 21,479 0.6% 14,906 69.4%

Telephone 22,317 0.6% 9,246 0.3% 13,071 141.4% 8,433 0.2% 13,884 164.6%

Insurance 15,871 0.4% 9,750 0.3% 6,121 62.8% 8,618 0.2% 7,254 84.2%

Office Expense 3,822 0.1% 7,875 0.2% (4,053) -51.5% 19,988 0.6% (16,167) -80.9%

Postage 12,552 0.3% 11,550 0.3% 1,002 8.7% 6,585 0.2% 5,967 90.6%

Professional Fees 41,714 1.1% 65,751 1.9% (24,037) -36.6% 81,712 2.3% (39,997) -48.9%

TIF Reimbursement 251,103 6.7% 251,103 7.4% 0 0.0% 465,000 13.4% (213,897) -46.0%

Miscellaneous 3,647 0.1% 3,750 0.1% (103) -2.7% 2,221 0.1% 1,426 64.2%

Tradeouts 8,175 0.2% 7,500 0.2% 675 9.0% 18,750 0.5% (10,575) -56.4%

Bad Debt - 0.0% 1,251 0.0% (1,251) -100.0% - 0.0% - 0.0%

Interest E - 0.0% - 0.0% - 0.0% - 0.0% - 0.0%

Total Operating Expenses 1,868,979 49.7% 1,850,069 54.2% 18,910 1.0% 1,941,509 55.8% (72,530) -3.7%

TOTAL PROGRAM EXPENSES 3,282,599 87.3% 3,438,178 100.8% (155,578) -4.5% 3,107,702 89.4% 174,899 5.6%

CHANGE IN NET ASSETS 476,947$ 12.7% (27,125)$ -0.8% 504,072$ -1858.3% 369,966$ 10.6% 106,981$ 28.9%

MARCH 2019 MARCH 2019 MARCH 2018 MAR '19 TO MAR '18VARIANCE

YTD - ACTUALS YTD - BUDGET YTD - ACTUALS ACTUALS VARIANCEACTUAL TO BUDGET

VKC March 2019 financial stmts.xlsx 4/15/2019 - 1:58 PM16

VKC

Statement of Cash Flows

For the periods of

December 31, 2018 to March 31, 2019

Cash flows from operating activities: YTD Change

Change in net assets 476,947$

Increase/(Decrease) Accumulated Depreciation 33,296

(Gain)/Loss from disposal of assets -

(Gain)/Loss from investments -

(Increase)/Decrease in accounts receivable (297,165)

(Increase)/Decrease in prepaids (44,904)

(Increase)/Decrease in deposits -

Increase/(Decrease) in accounts payable 125,651

Increase/(Decrease) in salary and vacation payable (112,727)

Increase/(Decrease) in Deferred Revenue 63,017

Increase/(Decrease) in Accrued expenses (420,262)

Net cash used in operating activities (176,147)

Cash flows from investing activities

Purchase of Fixed Assets 3,747

Allowance for Leasehold Improvements

Leasehold Improvements -

Net cash used in investing activities 3,747

Cash flows from financing activities

Draw on Line of Credit -

Net cash provided by (used in) financing -

Net increase/(decrease) in cash (172,400)

Cash and cash equivalents at beginning of period 2,963,186

Cash and cash equivalents at end of period 2,790,786$


Convention and Visitors Bureau of Greater Kansas City d/b/a Visit KC and Subsidiaries

Independent Auditor’s Report and Consolidated Financial Statements

December 31, 2018

DRAFT

18

CONTENTS

Page

Independent Auditor’s Report 1

Consolidated Statements of Financial Position 2

Consolidated Statements of Activities and Changes in Net Assets 3

Consolidated Statement of Functional Expenses 4

Consolidated Statements of Cash Flows 5

Notes to Consolidated Financial Statements 6-11

Independent Auditor’s Report on Supplementary Information 12

Supplemental Schedule of Consolidating Statement of Financial Position 13

Supplemental Schedule of Consolidating Statement of Activities and Changes in Net Assets 14

DRAFT

19

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Convention and Visitors Bureau of Greater Kansas City

We have audited the accompanying consolidated financial statements of the Convention and Visitors Bureau of Greater Kansas City d/b/a Visit KC and Subsidiaries (the Association) (a nonprofit organization), which comprise the consolidated statements of financial position as of December 31, 2018 and December 31, 2017, and the related consolidated statements of activities and changes in net assets, ,and consolidated statements of cash flows for the years then ended, and the consolidated statement of functional expenses for the year ended December 31, 2018, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Convention and Visitors Bureau of Greater Kansas City d/b/a Visit KC and Subsidiaries as of December 31, 2018 and December 31, 2017, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Kansas City, Missouri April XX, 2019

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20

tel:816-531-2822

2018 2017

CURRENT ASSETS

Cash 3,431,888$ 2,924,754$

Accounts receivable, net 1,193,887 1,489,186

Prepaid expenses 437,943 348,043

Total Current Assets 5,063,718 4,761,983

PROPERTY AND EQUIPMENT

Property and equipment 1,548,331 1,458,166

Less accumulated depreciation 1,124,651 974,640

Total Property and Equipment 423,680 483,526

NONCURRENT ASSETS

Investments, deferred compensation - 599,542

Total Noncurrent Assets - 599,542

TOTAL ASSETS 5,487,398$ 5,845,051$

CURRENT LIABILITIES

Accounts payable 477,384$ 385,888$

Accrued expenses 771,127 760,909

Deferred revenue 457,837 347,656

Tax increment financing 588,706 961,313

Total Current Liabilities 2,295,054 2,455,766

NONCURRENT LIABILITIES

Deferred compensation - 599,542

Total Noncurrent Liabilities - 599,542

TOTAL LIABILITIES 2,295,054 3,055,308

NET ASSETS

Without donor restrictions 3,192,344 2,789,743

With donor restrictions - -

Total Net Assets 3,192,344 2,789,743

TOTAL LIABILITIES AND NET ASSETS 5,487,398$ 5,845,051$

LIABILITIES AND NET ASSETS

CONVENTION AND VISITORS BUREAU OF GREATER KANSAS CITY

d/b/a VISIT KC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

DECEMBER 31,

ASSETS

See Notes to Financial Statements

DRAFT

21

NET ASSETS WITHOUT DONOR RESTRICTIONS

SUPPORT AND REVENUE 2018 2017

Contributions 1,387,189$ 1,183,395$

Government contracts 11,233,394 11,008,019

Membership dues 401,870 325,219

Advertising income 123,168 144,207

Program services fees 1,175,668 1,151,514

Other 129,328 30,277

In-kind revenue - -

Net assets released from restrictions 78,750 141,900

TOTAL SUPPORT AND REVENUE 14,529,367 13,984,531

EXPENSES

Program Services 10,163,423 10,860,177

Administrative 3,969,801 2,738,304

TOTAL EXPENSES 14,133,224 13,598,481

CHANGE IN NET ASSETS WITHOUT DONOR RESTRICTIONS 396,143 386,050

NET ASSETS WITH DONOR RESTRICTIONS

Contributions 78,750 141,900

Net assets released from restrictions (78,750) (141,900)

CHANGE IN WITH DONOR RESTRICTED NET ASSETS - -

OTHER CHANGES IN NETS ASSETS

Unrealized gain on investments, deferred compensation - 117,982

Interest income 8,696 4,678

Interest expense (2,238) -

CHANGE IN NET ASSETS 402,601 508,710

NET ASSETS, BEGINNING OF YEAR 2,789,743 2,281,033

NET ASSETS, END OF YEAR 3,192,344$ 2,789,743$

FOR THE YEAR ENDED DECEMBER 31,

CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS




DRAFT

22

Program Services Administrative Total Expenses

Transportation 296,551$ 8,506$ 305,057$

Lodging 140,365 3,524 143,889

Meals 27,537 7,338 34,875

Entertainment 424,511 19,602 444,113

Gifts 89,301 4,225 93,526

Other convention and event expenses 1,065,557 8,076 1,073,633

Restaurant week and downtown dazzle 428,020 - 428,020

Tradeshows 198,421 4,300 202,721

Marketing and advertising 3,511,120 - 3,511,120

Salaries and wages 2,244,437 1,126,596 3,371,033

Payroll taxes 202,277 61,110 263,387

Incentives and commissions 482,371 129,219 611,590

Employee benefits 468,166 185,778 653,944

Rent 203,564 53,635 257,199

Mail and postage 21,587 12,075 33,662

Stationary and supplies 27,552 5,048 32,600

Telephone 28,332 6,767 35,099

Maintenance 110,594 42,423 153,017

Dues and subscriptions 54,710 35,613 90,323

Professional services - 494,705 494,705

Insurance - 35,083 35,083

Information technology 79,147 89,976 169,123

Automobile expenses 13,027 9,617 22,644

Office equipment 708 - 708

Staff recruitment - 4,576 4,576

Education and training 14,965 46,238 61,203

Depreciation - 150,011 150,011

Interest - 2,238 2,238

Miscellaneous 30,603 16,792 47,395

Bad debt - 2,467 2,467

TIF reimbursement - 1,406,501 1,406,501

10,163,423$ 3,972,039$ 14,135,462$



CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2018


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23

2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets 402,601$ 508,710$

Adjustments to reconcile change in net assets

to net cash provided by operating activities:

Depreciation 150,011 241,303

Changes in:

Accounts receivable 295,299 276,355

Prepaid expenses (89,900) (109,269)

Accounts payable 91,496 184,475

Accrued expenses 10,218 31,138

Deferred revenue 110,181 (13,936)

Tax increment financing (372,607) 47,666

Net cash provided by operating activities 597,299 1,166,442

CASH FLOWS FROM INVESTING ACTIVITIES

Net disposal and purchases of property and equipment (90,165) (121,760)

Net cash used by investing activities (90,165) (121,760)

INCREASE IN CASH AND CASH EQUIVALENTS 507,134 1,044,682

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 2,924,754 1,880,072

CASH AND CASH EQUIVALENTS, END OF YEAR 3,431,888$ 2,924,754$

NON-CASH TRANSACTIONS:

Distribution of deferred compensation 599,542$


FOR THE YEAR ENDED DECEMBER 31,


CONSOLIDATED STATEMENTS OF CASH FLOWS


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24

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Convention and Visitors Bureau of Greater Kansas City d/b/a Visit KC (the Association), a not-for profit organization, is engaged by the city of Kansas City, Missouri (the City), to encourage and promote tourism and convention business in the area under a contract expiring April 2020. As compensation for providing these services, the City remits to the Association a percentage of fees collected from the hotel occupation tax and arena license fees.

Spark, a Destination Management Company, LLC (Spark) is 100% owned by the Association and was formed to provide planning of social entertainment activities and events for other organizations. Spark also provides customized recreational travel services such as planning social entertainment events for corporate meeting planners, conventions, corporations, and VIP experiences.

The Kansas City Regional Destination Development Foundation (the Foundation) was formed for the following purposes:

To create awareness and appreciation within the local, education, business communities, and residents about the positive impact of tourism to our region as an economic development tool. To engage in research, to better understand trends and inform our community and its leaders in tourism product development decisions.

To develop and sustain two hospitality education initiatives: (a) hospitality career awareness program aimed at developing and directing City residents into hospitality careers, and (b) hospitality ambassador training and certification program designed to provide continuing education and advancement opportunities to frontline hospitality employees.

To create new opportunities in hospitality and tourism product development, by serving as an incubator for the development of local events and festivals serving the population of the Kansas City region.

Principles of Consolidation

The consolidated financial statements include the accounts of the Association, its wholly owned subsidiary, Spark LLC, and the Kansas City Regional Destination Development Foundation, which it exercises control over and in which it has an economic interest. All significant intercompany accounts and transactions have been eliminated upon consolidation.

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Revenues, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets are classified and reported as follows:

Net assets without donor restrictions - Net assets that are not subject to any donor-imposed restrictions. The governing board has designated, from net assets without donor restrictions, net assets of $501,712 and $350,339 for 2018 and 2017, respectively (see Note 5).

Net assets with donor restrictions - Net assets subject to donor-imposed restrictions. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the Association or by the passage of time. Other donor restrictions are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. The Association has no donor restricted net assets at December 31, 2018 and 2017 , respectively.

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25

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of Presentation (Continued)

Donor restricted contributions are reported as increases in net assets with donor restrictions. When a restriction expires, net assets are reclassified from net assets with donor restrictions to net assets without donor restrictions in the statement of activities.

Income Taxes

No provision is made for federal or state income taxes due to the Association’s tax-exempt status. The Association is required to file Form 990, Return of Organization Exempt from Income Tax, yearly. The information in this return is used by the Internal Revenue Service to substantiate the Association’s continuing tax-exempt status. The last three years of these returns are open to IRS examination.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements. Estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from management’s estimates.

Accounts Receivable

Accounts receivable are primarily derived from fees from the City taxes collected and fees to area hotels, members, and visiting associations. There was no allowance as of December 31, 2018 and 2017.

Property and Equipment

Property, plant and equipment are stated at cost and are capitalized when costs exceed $1,000. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from three to ten years.

Concentration of Credit Risk

At various times during the year, cash balances held at banks may exceed the federally insured limit of $250,000 per bank. The Association has not experienced any losses due to these credit risks.

The fees collected from the City comprise approximately 76% and 75% of total revenues for the years ended December 31, 2018 and 2017, respectively.

Revenue Recognition

Contributions are recorded as revenue at the earlier of the receipt of an unconditional promise to give or the receipt of cash or other assets.

Contracts with governmental entities, program service fees, advertising income, and membership dues are generally recorded as revenue when the related costs are incurred or when the Association has performed the service and is allowed to bill under the terms of the agreement.

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26

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Donated Services

The Association records various types of in-kind support at fair market value. Contributed in-kind support

is recognized if professional services are received that (a) create or enhance long-lived assets or (b)

require specialized skills, are provided by individuals possessing those skills, and would typically need to

be purchased if not provided by donation, or (c) goods donated that can be used for the Association’s

purpose. During the year, the Association received donations of hotel rooms, tickets, and membership

benefits.

Functional Allocation of Expenses

The costs of supporting the various programs and other activities have been summarized on a functional basis in the statement of activities. Costs that can be directly attributed to a specific program or supporting service are charged to that program or supporting function. Expenses that relate to more than one program or supporting service require allocation on a reasonable basis that is consistently applied. The expenses that are allocated include transportation, lodging, meals, entertainment, gifts, convention and event expenses, tradeshows, salaries and wages, payroll taxes, employee benefits, automobile expenses, education and training, and miscellaneous, which are allocated on the basis of estimates of department time and effort, as well as occupancy, office expenses, and information technology, which are allocated between departments based on employee count.

Change in Accounting Principle

On August 18, 2016, FASB issued Accounting Standards Update (ASU) 2016-14, Not-for Profit Entities (Topic 958) – Presentation of Financial Statements of Not-for-Profit Entities. The update addresses the complexity and understandability of net assets classification, deficiencies in information about liquidity and availability of resources, and the lack of consistency in the type of information provided about expenses and investment return. The Association has adjusted the presentation of these statements accordingly.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Subsequent Events

Subsequent events have been evaluated through April XX, 2019, which is the date the financial statements were available to be issued.

NOTE 2: AVAILABILITY AND LIQUIDITY

The Association strives to maintain liquid financial assets sufficient to cover operating expenditures. The following table reflects the Association’s financial assets as of December 31, 2018, reduced by amounts that are not available to meet general expenditures because of contractual restrictions or internal board designations. In the event the need arises to utilize the board-designated funds for liquidity purposes, the reserves could be drawn upon through a board resolution.

DRAFT

27

NOTE 2: AVAILABILITY AND LIQUIDITY (Continued)

Financial assets at year end: 2018

Cash and cash equivalents $ 3,431,888 Accounts receivable 1,193,887

Total financial assets 4,625,775

Less amounts not available to be used within one year: Board designated net assets (see Note 5) 501,712

Financial assets available to meet general expenditures over the next twelve months $ 4,124,063

NOTE 3: PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31:

2018 2017

Computer equipment and software $ 935,895 $ 912,250 Furniture, fixtures, and office equipment 387,548 340,376 Automobiles 31,489 31,489 Leasehold improvements 193,399 174,051

1,548,331 1,458,166 Less: accumulated depreciation (1,124,651) (974,640)

$ 423,680 $ 483,526

Depreciation expense was $150,011 and $241,303 for 2018 and 2017, respectively.

NOTE 4: LINE OF CREDIT

The Association maintains a line of credit with a financial institution with a maximum borrowing limit of

$325,000. The line bears interest at 5%. The Association had no advances drawn against the line as of

December 31, 2018 and 2017. The line is collateralized by substantially all of the Association’s assets

and assignment of the contract with the City. The line provides for $300,000 of cash draws with $25,000

reserved for letters of credit.

NOTE 5: NET ASSETS

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors for the years ended December 31:

2018 2017

Downtown dazzle $ 78,750 $ 141,900

Board designated net assets were as follows at December 31:

2018 2017

General reserve fund $ 501,712 $ 350,339

DRAFT

28

NOTE 6: LEASES

The Association leases office facilities, equipment, and other services under operating leases expiring through 2025.

Rent expense was $263,472 and $258,992 for the years ended December 31, 2018 and 2017,

respectively.

The following is a schedule by years of future minimum rental payments required under these leases.

Year Ending December 31,

2019 $ 255,592 2020 240,000 2021 245,000 2022 255,000 2023 255,000 Thereafter 425,000

$ 1,675,592

NOTE 7: EMPLOYEE BENEFITS

Profit Sharing Plan

The Association has a 401(k) savings plan, which covers substantially all full time employees. Contributions made by the Association are at the discretion of the board of directors and determined annually. Association contributions for 2018 and 2017 were $376,957 and $304,302, respectively.

Deferred Compensation

The Association’s deferred compensation plans were closed during 2018 and assets distributed to those participants. Through 2017, the Association had deferred compensation plans under Section 457(b) and Section 457(f) of the Internal Revenue Code. Under the provisions of the Plan, certain employees can elect to have a portion of their pre-tax salary withheld and contributed to the Plan. The assets in the Plan are held by the Association, which are subject to the claims of its creditors. Accordingly, the assets and the related liability are reflected in the Association’s statement of financial position as of December 31, 2017.

NOTE 8: TAX INCREMENT FINANCING (TIF)

The Association has entered into several agreements with the City, the Tax Increment Financing Commission of Kansas City (TIF Commission), and developers to participate in the funding of hotel projects in the City. The payment terms vary between agreements, are dependent upon the amounts of hotel and convention taxes collected, with expiration dates through 2036. The Association’s expense under these agreements was $1,406,501 and $1,938,803 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, $588,706 and $961,313 respectively, remained outstanding.

DRAFT

29

NOTE 9: LITIGATION

During 2017, a former employee filed a lawsuit against the Association and the Chief Executive Officer (CEO) alleging her firing was a retaliatory act. The Association and the former employee reached a settlement in December of 2017 for $250,000. The settlement payment was made in 2018 and was covered by the Association’s insurance provider.

In January of 2018, the Association and the CEO came to an agreement to separate in relation to the litigation discussed in Note 10. The agreement calls for a severance package with payments to the former CEO through December 2018.

NOTE 10: RELATED PARTY TRANSACTIONS

The Association has a board member in a management position within the marketing firm used by the Association. The Association received revenue from the entity through program service activities and incurred expenses for media buying, agency fees, production, website, and media consulting. The approximate revenue recognized from the related party was $9,000 for the year ended December 31, 2018. There was no revenue recognized for the year ended December 31, 2017. The accounts receivable balance from the related party was $5,000 as of December 31, 2018. There was no accounts receivable balance from the related party as of December 31, 2017. The approximate expense incurred for the related party was $2,725,356 and $1,865,219 for the years ended December 31, 2018 and December 31, 2017, respectively. The accounts payable balances due to the related party were $112,788 and $67,741 as of December 31, 2018 and December 31, 2017, respectively.

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30

INDEPENDENT AUDITOR’S REPORT ON SUPPLEMENTAL INFORMATION

To the Board of Directors of the Convention and Visitors Bureau of Greater Kansas City

We have audited the consolidated financial statements of the Convention and Visitors Bureau of Greater Kansas City d/b/a Visit KC and Subsidiaries as of and for the years ended December 31, 2018 and December 31, 2017, and have issued our report thereon dated April XX, 2019, which contained an unmodified opinion on those consolidated financial statements. Our audit was performed for the purpose of forming an opinion on the consolidated financial statements as a whole. The schedule of consolidating statement of financial position as of December 31, 2018 and schedule of consolidating statement of activities and changes in net assets for the year ended December 31, 2018 is presented for the purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Kansas City, Missouri April XX, 2019

DRAFT

31

tel:816-531-2822

Visit KC KCRDDF Spark Eliminations Total

CURRENT ASSETS

Cash 2,962,692$ 461,979$ 7,217$ -$ 3,431,888$

Accounts receivable, net 1,188,469 860 4,558 - 1,193,887

Prepaid expenses 437,943 - - - 437,943

Due from affiliates 127,184 - - (127,184) -

Total Current Assets 4,716,288 462,839 11,775 (127,184) 5,063,718

PROPERTY AND EQUIPMENT

Property and equipment 1,548,331 - - - 1,548,331

Less accumulated depreciation 1,124,651 - - - 1,124,651

Total Property and Equipment 423,680 - - - 423,680

NONCURRENT ASSETS

Investments, deferred compensation - - - - -

Total Noncurrent Assets - - - - -

TOTAL ASSETS 5,139,968$ 462,839$ 11,775$ (127,184)$ 5,487,398$

CURRENT LIABILITIES

Accounts payable 474,934$ 2,450$ -$ -$ 477,384$

Accrued expenses 753,991 - 17,136 - 771,127

Deferred revenue 457,837 - - - 457,837

Tax increment financing 588,706 - - - 588,706

Due to affiliates - 30,108 97,076 (127,184) -

Total Current Liabilities 2,275,468 32,558 114,212 (127,184) 2,295,054

NONCURRENT LIABILITIES

Deferred compensation - - - - -

Total Noncurrent Liabilities - - - - -

TOTAL LIABILITIES 2,275,468 32,558 114,212 (127,184) 2,295,054

NET ASSETS

Without donor restrictions 2,864,500 430,281 (102,437) - 3,192,344

With donor restrictions - - - - -

Total Net Assets 2,864,500 430,281 (102,437) - 3,192,344

TOTAL LIABILITIES AND NET ASSETS 5,139,968$ 462,839$ 11,775$ (127,184)$ 5,487,398$



SUPPLEMENTAL SCHEDULE OF CONSOLIDATING STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2018

ASSETS

LIABILITIES AND NET ASSETS

See Independent Auditor's Report on Supplemental Information

DRAFT

32

NET ASSETS WITHOUT DONOR RESTRICTIONS Visit KC KCRDDF Spark Eliminations Total

SUPPORT AND REVENUE

Contributions 922,338$ 464,851$ -$ -$ 1,387,189$

Government contracts 11,233,394 - - - 11,233,394

Membership dues 401,870 - - - 401,870

Advertising income 123,168 - - - 123,168

Program services fees 931,870 6,482 237,316 - 1,175,668

Other 129,328 - - 129,328

Net assets released from restrictions - 78,750 - - 78,750

TOTAL SUPPORT AND REVENUE 13,741,968 550,083 237,316 - 14,529,367

EXPENSES

Program Services 9,529,117 428,020 206,286 - 10,163,423

Administrative 3,845,261 86,341 38,199 - 3,969,801

TOTAL EXPENSES 13,374,378 514,361 244,485 - 14,133,224

CHANGE IN NET ASSETS WITHOUT DONOR RESTRICTIONS 367,590 35,722 (7,169) - 396,143

NET ASSETS WITH DONOR RESTRICTIONS

Contributions - 78,750 - 78,750

Net assets released from restrictions - (78,750) - (78,750)

CHANGE IN NET ASSETS WITH DONOR RESTRICTIONS - - - - -

OTHER CHANGES IN NETS ASSETS

Interest income 8,696 - - - 8,696

Interest expense - - (2,238) - (2,238)

CHANGE IN NET ASSETS 376,286 35,722 (9,407) - 402,601

NET ASSETS, BEGINNING OF YEAR 2,488,214 394,559 (93,030) - 2,789,743

NET ASSETS, END OF YEAR 2,864,500$ 430,281$ (102,437)$ -$ 3,192,344$



SUPPLEMENTAL SCHEDULE OF CONSOLIDATING STATEMENT OF STATEMENT OF ACTIVITIES

AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2018

See Independent Auditor's Report on Supplemental Information

DRAFT

33

BOARD RESOLUTION

Be it further resolved, the Visit KC Board of Directors gave authorization at the April 23, 2019 meeting to update all American Century Investments’ account documents to reflect Jason Fulvi, President CEO, and Ron Jackson, Chief People Partner, both with Visit KC, as authorized signers of Visit KC and trustees.

IN WITNESS WHEREOF, I have hereunto set my hand this ___ of _______, 2019.

__________________

CiCi Rojas

CHAIRMAN

34

AUDIENCE GROUPS TARGETS ( Jan. - May 2018)

• Young families: A25-45 w HHI $50K-$150K w married wchildren in HH

• Active singles: A21-35 w HHI $35K-$100K w most not married

• Modern matures: A50+ w HHI $65K+ w married wno children in HH

AUDIENCE GROUP TARGETS ** (June - Dec. 2018)

• Growing Families: A35-64 w Average Income $67K wDiscretionary Spend $10K-$25K w Family Union/SuburbanStyle/Family in Motion

• Active Couples: A55-74 w Average Income $107K wDiscretionary Spend $25K w Power Elite/Flourishing Families/Booming with Confidence

• Modern Matures: A55-74 w Average Income $65K wDiscretionary Spend $10K-$25K w Autumn Years/ThrivingBoomers/Blue Sky Boomers

LEISURE CAMPAIGN OVERVIEW - OMNI-CHANNEL APPROACH

2018 LEISURE INTEGRATED MARKETING PROGRAM

Objective: Increase overall and incremental leisure travel (overnight hotel stays) to Kansas City by attracting first-time visitors, increasing length of stay and encouraging repeat visitation.

Strategy: Create a fully-integrated, highly-targeted marketing campaign utilizing television, online banner ads, print magazine ads, direct mail, e-mail, mobile marketing, search engine marketing, social media and media relations.

Visit KC completed the third year of its data-driven marketing approach and continues to employ an always-on digital strategy. At the center of that strategy is an optimized campaign that uses adaptive content customized to travelers’ individual interests to target audiences demographically and psychographically, meaning that the right messages reach the right people at the right time and on the right platform.

LEISURE MARKETING GOALS

Increased incremental sales generated with smaller investment is the recipe for returning better ROI’s.

That is exactly what our campaign delivered. The 2018 campaign generated an ROI of $99,

well above last year’s ($85) and Visit KC’s historical average ($74). More importantly, this is the highest

level of return ever recorded by Visit KC.

Study measured all media investments expended through Sept. 7, 2018, and visits that occurred through early Oct. 2018. Source: H2R Market Research

Total Media Buy: $729,000Seven media markets, spanning six states

TARGET MARKETS • Core: Des Moines, St. Louis, Omaha, Lincoln, Wichita,

Tulsa, Chicago

MEDIA TACTICS *Television & Online Video w Display & High Impact Units w Integrated Print Packages w Summer Getaway Guide w Social Media w Mobile Platforms w Email Marketing w Media Relations

* Additional tactics used in the campaign fell outside the scope of this study

ROI was $99 - a new record

Visit KC’s 2018 Campaign resulted in 81k incremental trips

Incremental room nights totaled 292k

$73 million in incremental travel spending

Plenty to go around—and then some.

KCC100-21597-VisitKC-Leisure-Midwest Living Sept2017 Print-BBQ_2_0_dis.indd 1 7/11/18 3:27 PM

**Audiences were optimized to Active Couples, Modern Matures and Growing Families for June – December media placements based on performance and TERMINAL research indicators.

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REGIONAL MARKETING CAMPAIGN

MEDIA TYPE JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT TOTAL

DIGITAL 1,570,249 3,124,412 3,580,285 6,111,505 16,686,743 34,749,338 20,305,846 7,857,787 4,798,391 98,784,556

MAGAZINE & PRINT - - - - - - - - 3,171,000 3,171,000

TELEVISION - - - - 1,867,653 2,440,078 - 26,800 28,600 4,363,131

TOTAL 1,570,249 3,124,412 3,580,285 6,111,505 18,554,396 37,189,416 20,305,846 7,884,587 7,997,991 106,318,687

CAMPAIGN RESULTS• The campaign reached 1.6 million traveler households.• Travelers found the ads appealing, with 57% rating the ads

positively.• Visit KC’s ads inspired 46% of travelers to search online for

information and 35% to VisitKC.com.• 37% of travelers saw or heard a Visit KC ad of some kind.

• Visit KC ads inspired travelers to visit KC. The campaign createda 7-point lift in intent to visit, with Chicago seeing the strongestlift of +11 points.

• Visit KC maintained marketing efficiency as the average costper aware travelers was $0.45.

• Air travel continues to creep upward and now accounts for21% of Kansas City’s visitors.

ADVERTISING AWARENESS BY MEDIUM30%

25%

20%

15%

10%

5%

0%Television Digital

OnlineVideo

Digital Banners

LeisureE-mail

Print Ads

I I I I

15% 14%

29%

10%

14%

CAMPAIGN PERFORMANCE 2014 2015 2016 2017 2018

Incremental Trips 99,000 95,400 70,900 85,400 81,400

Avg. Party Size 3.1 3.5 3.1 2.4 2.9

Avg. Room Nights 1.3 1.4 2.1 2.9 2.2

Incremental Room Nights 202,000 225,000 164,000 233,000 292,000

Incremental Visitor Spending $71.4M $78.3M $60.6M $71.7M $72.3M

Media Expenditures $0.98M $0.97M $0.65M $0.84M $0.73M

Campaign ROI $73 $81 $93 $85 $99

MEDIA KC AD VISITING PARTY UNIQUE NO. OF EST. MARKET AWARENESS HH SIZE VISITS VISITS TRIPS

Chicago 30% 141,900 2.5 353,000 2.1 727,000

Des Moines 44% 110,500 3.4 372,000 1.7 644,000

Lincoln 53% 72,900 3.6 259,000 1.9 487,000

Tulsa 37% 88,600 3.1 273,000 1.7 453,000

Omaha 48% 139,000 3.2 442,000 2.3 1,000,000

St. Louis 41% 228,800 2.4 543,000 1.8 994,000

Wichita 52% 204,700 2.9 586,000 2.7 1,600,000

Total (AVG.) 37% 986,400 (AVG.) 2.9 2,800,000 (AVG.) 2.1 5,905,000

2018 LEISURE AD IMPRESSIONS

PREPARED BY H2R MARKET RESEARCH

Visit KC • 1321 Baltimore Ave., Kansas City, MO 64105 • 816-691-3800 • VISITKC.COM • #HowWeDoKC

Media Markets

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