Scottsdale's Museum of the West Management Agreement

Item 17 CITY COUNCIl REPORT Meeting Date: February 26, 2013 General Plan Element: Economic Vitality General Plan Goal: Sustain Scottsdale as a tourist destination

ACTION Museum Management Agreement for the Scottsdale's Museum of the West. Adopt Resolution 9307 authorizing Museum Management Agreement 2013-025-COS with Scottsdale Museum ofthe West, Inc.; and. Adopt Ordinance 4071, which waives certain financial policies and governing guidance related to municipal financing of Scottsdale's Museum ofthe West.

BACKGROUND On May 25, 2012 staff Issued a Request for Qualifications (RFQ) seeking experienced and qualified persons to present proposals for a downtown cultural park that would include a western themed museum and an additional cultural venue that complements the museum. The RFQ approach was to look at the development of the entire Loloma site in establishing synergy with various arts and cultural uses. The RFQ closed on July 24, 2012 with a single submission by the Scottsdale Museum ofthe West, Inc. At the October 2, 2012 City Council Work Study Session staff presented to the City Council results from the May 25, 2012 RFQ process. As a result of the Work Study session. Council directed staff to: • Develop financial plan scenarios for capital and tenant improvement cost estimates; • Extend the ten-percent (10%) allocation ofthe city's portion ofthe Tourism Development Program funds as long-term debt support for a western museum project until July 31, 2013; • Begin development of a city design/build solicitation for construction of a western museum, contingent on City Council financial plan approval; • Initiate the development of an operating agreement with Scottsdale Museum of the West, Inc. (SMoW) for the operation of a western museum, contingent on City Council financial plan approval. Subsequent to the Council direction of October 2, 2012, SMoW representatives submitted a more detailed definition of their vision forthe downtown cultural park, suggesting it will include, in addition to the western themed museum, a venue that complements the museum and enhances the overall cultural experience on City-owned real property identified as the "Loloma Parcel."

Action Taken City Council Report | Museum Management Agreement

To this end, the existing Loloma Transit Station building is planned as a vital cultural facility including a sculpture garden and a terraced seating amphitheater to accommodate up to two hundred guests for outdoor events such as storytelling, speaker forums, campfire circles, live reenactments, cross- cultural programming and musical performances.

An update and request for a recommendation to the City Council will be presented to the Tourism Development Commission on February 19, 2013 and the Economic Development Subcommittee on February 21, 2013.

The concept of a Scottsdale western museum dates back to the 1980s when community leaders created a vision of preserving and promoting Scottsdale's western heritage. Over the years the western museum vision has evolved into a variety of efforts and actions.

ANALYSIS & ASSESSMENT Recent Staff Action

Third Partv Independent Evaluation

Staff contracted with ConsultEcon, Inc., an independent consulting company that provides economic, feasibility, management and planning services to non-profit organizations, public agencies and private agencies to evaluate SMoW's statement of qualifications. The purpose of the study was to review proposed operating plans and market conditions and to provide an independent evaluation of SMoW's market potential. ConsultEcon conducted their study based on information contained in SMoW's statement of qualifications, the 2006 AMS Feasibility Study, and additional research, interviews and analysis.

Key items noted in the report include:

• Market Context - SMoW is expected to attract visitors from both resident and tourist markets. The overall resident market area is defined as the Phoenix Metropolitan Area, which is projected to increase 5.8 percent, from approximately 4.25 million in 2011 to 4.5 million in 2016. • Visitation Potential - Depending on the final size and program ofthe facility, preliminary attendance potential is estimated at 87,000 to 118,000, with a mid-range estimate rounded to 103,000 in a stabilized year of operation. • Stabilized attendance levels are expected to be achieved in the fifth year after project opening. During the first few years after opening the project is expected to build up to its stabilized attendance level based on word of mouth advertising, staff and volunteer competency growth and reputation. • Operations - A multi-year organizational ramp up from initial opening until a stable year of operations in year 5 is assumed based on SMoW's proposed organization development approach. • Operating Potential - Total current dollar revenue in a stabilized year (Year 5) is estimated at $2.8 million, including operational revenues and non-operational revenues.

Page 2 of 6 City Council Report | Museum Management Agreement

• Operating Expenses and Staffing-Total estimated operating expenses in current dollars would grow from $2.2 million in year one to $2.8 million in stable year 5. • Benchmarking Analysis ~ Benchmarking SMoW operations against comparable museums contributed to the development ofthe operating plan. The benchmark museums indicate that there is a good opportunity for operating success for SMoW based characteristics and the experience of comparable museums.

Museum Management Agreement

The Management Agreement serves as the contract between the City of Scottsdale and the Manager of the Museum. The city will maintain ownership of the facility and SMoW will provide management services for the museum. Key responsibilities of each party are further defined as follows:

SMoW (Manager) responsibilities

1. Participate in museum design and construction 2. Contract and manage exhibit and graphic consultants to develop western themes 3. Art Collection: Ownership ofthe Manager's collection to be conveyed to city if SMoW ceases to operate. 4. Naming Rights: Initial name ofthe museum shall be "Scottsdale's Museum ofthe West". City has sole and absolute discretion as to name, payments for naming rights, payment of all or a portion of naming rights payment to the City. 5. Management 8i Operation - Open for 300 days a year minimum Open during downtown events like Art Walk Establish business operations and gift shop retails outlet - Comply with federal, state and local tax requirements - Board Membership- City has right to appoint and replace not less than 15% ofthe voting members on Manager's governing board 6. Term of Agreement: 10 years with three (3) additional ten (10) year extension options. 7. Financial Commitments Engage in Fundraising to provide new shows - Develop program for five year city matching donation program Pay all museum staff salaries contractual service and utility bills - Letter of Credit- establish $500,000 within first five years

City of Scottsdale responsibilities

1. Selection and contract contract award to Design Build Manager 2. Design and construction ofthe building shell, tenant improvements and Specialty Work 3. Submittal and approval of necessary city planning and Plan Review 4. Resolve ownership of Loloma Transit Center 5. Provide payments up to $400,000 annually to match funds donated to the museum.

Page 3 of 6 City Councii Report | Museum Management Agreement

RESOURCE IMPACTS Capital Funding Support: On September 20, 2011 the Tourism Development Commission unanimously approved the recommendation that a ten-percent 10% allocation ofthe city's portion of Tourism Development Program funds to be reserved as long-term debt support for a western art and history museum project.

On October 18, 2011 the City Council directed staff to work toward a lease to be brought back to City Council for approval and directed staff to reserve a ten-percent (10%) allocation ofthe city's portion ofthe Tourism Development Program funds as long-term debt support for a western art and history museum project and on October 2, 2012 extended the allocation until July 31, 2013 pending negotiation ofthe Management Agreement.

Staff recommends that Scottsdale Municipal Property Corporation (MPC) bonds be issued in FY 2013/2014 to fund:

(a) the estimated $13.6 million in museum and cultural plaza development costs (capital and tenant improvements),

(b) $1 million as a debt service reserve required by financial policy #37 (requiring a reserve of one times annual debt service), and

Annual debt service on the bonds is estimated at $1 million per year for 20 years.

Financial Policy No. 29 requires dedicated, non-general fund financial support for payment of MPC bond debt service and Financial Policy No. 21A limits tourism capital project commitments to $600,000 per year per project. Because the two projects (the museum and the garden/amphitheater) are complementary and supportive of one another, staffs advice is that council may consider allocating $1,000,000 in annual bed tax debt support for this combination project.

A second option would be for Council to waive financial policy #37 which otherwise requires a reserve for debt service purposes—doing so would reduce the annual debt service and bed tax support requirement to an estimated $900,000 per year for 20 years.

Should Council wish to move forward on the Scottsdale Museum ofthe West project, as expressed in the related Resolution, then Council will need to waive Financial Policy No. 21A and may choose to also waive Financial Policy No. 37. Ordinance 4071 will achieve these purposes. Operating Support:

Page 4 of 6 City Council Report | Museum Management Agreement

Staff has reviewed the SMoW financial projections and compared them to the financial projections provided by ConsultEcon. It is proposed by the SMoW representatives that any operating shortfall (operating expenses in excess of revenues) will be provided by the fund-raising efforts of SMoW from its public sponsors and supporters.

Even though SMoW representatives have committed to raise funds from the public equal to the operating shortfall, the project's long-term success would enjoy a significantly higher assurance if the city provided some supplemental operating support during the first five years. Such support might be in the form of matching grants equal to the public funds raised for the operation, up to $400,000 per year. In such case. Council may direct such funding for such City grants to be provided from the City's not-otherwise-committed non-capital Bed Tax receipts.

OPTIONS & STAFF RECOMMENDATION Recommended Approach: Adopt Resolution 9307 authorizing Museum Management Agreement 2013-025-COS with Scottsdale Museum ofthe West, Inc.; and.

Adopt Ordinance No. 4071 which will waive two financial policies as related to the Scottsdale Museum ofthe West project: Financial Policy No. 21A that limits tourism capital project commitments to $600,000 per project and Financial Policy No. 37 that requires a debt service reserve. Waiver of the latter Financial Policy will result in $900,000/year debt service payments.

Provide direction to staff regarding use of not-otherwise-committed non-capital bed taxes to fund supplemental operating support up to $400,000 per year for the first five years. Option B: Alternatively, Council could choose to waive Financial Policy 21A only, in which case it would adopt Ordinance 4071 without Section 2 (resulting in $l,OOO,O0O/year in debt service payments).

Provide direction to staff to proceed with an MPC bond issuance as outlined above.

Provide direction to staff regarding use of not-otherwise-committed non-capital bed taxes to fund supplemental operating support up to $400,000 per year for the first five years. Proposed Next Steps At the annual MPC board meeting held in January 2013, the MPC board was apprised ofthe possibility of a potential request to issue MPC bonds to fund the construction of this project. If this is Council's direction, staff will again meet with the MPC board to seek their approval to issue the bonds. Prior to the bond issuance. Staff will come back before Council with draft bond documents for Council approval.

RESPONSIBLE DEPARTMENT(S)

Economic Development

Capital Projects Management

Page 5 of 6 City Council Report | Museum Management Agreement

Capital Projects Management

STAFF CONTACTS (S)

Rob Millar, Strategic Programs Manager, [email protected]

Bill Peifer, Senior Project Manager, bpeifer@)scottsdaleaz.gov

APPROVED BY

Derek Earle Date Acting Public Works Director (480) 312-2776, [email protected]

^-15-/3 David N. Smith Date City Treasurer (480) 312-2364, [email protected]

PaulT. Katsenes Date Community and Economic Development Executive Director (480) 312-2890, [email protected]

ATTACHMENTS

1. Resolution 9307

2. Ordinance 4071

3. SMoW Statement of Qualifications

4. ConsultEcon Evaluation

5. Museum Management Agreement

Page 6 of 6 Attachment 1

RESOLUTION NO. 9307

A RESOLUTION OF THE COUNCIL OF THE CITY OF SCOTTSDALE, MARICOPA COUNTY, ARIZONA, APPROVING A MUSEUM MANAGEMENT AGREEMENT WITH SCOTTSDALE MUSEUM OF THE WEST, INC. FOR THE PROPOSED DOWNTOWN WESTERN MUSEUM PROJECT TO BE DEVELOPED ON PROPERTY AT THE NORTHWEST CORNER OF MARSHALL WAY AND SECOND STREET

(downtown westem museum)

WHEREAS:

A. The Crty of Scottsdale ("City") values its rich westem heritage, its vibrant downtown, and its strong tourism and arts communities as important community assets providing significant family, economic, tourism, recreation, social and cultural and lifestyle amenities for Scottsdale's citizens, businesses and visitors.

B. City is committed to maintaining and enhancing these amenities to provide these important community benefits.

C. The art and culture of the Westem United States during the years from approximately 1820 through 1920 are an important part of the City of Scottsdale's and the State of Arizona's past, present and future.

D. A first class museum presenting such art and culture increases the attractiveness of downtown to tourists and otherwise advances the prosperity of downtown and the broader community.

E. Such a project will help downtovm Scottsdale maintain and enhance its place as a first-class downtown business, residential, recreational, cultural and tourism area.

F. Including the project as part of dovmtown Scottsdale provkJes the potential for visitors to the City to better experience Scottsdale and its amenities and heritage.

G. The project's location, accessibility for visitors, and integration with downtown wiil support future improvements to downtown.

H. The city council has considered the City expenditure authorized by this Agreement and the direct consideration that Crty will receive and finds that there is a clearly identified public purpose for City's expenditure and that Crty will receive direct consideration substantially equal to its expenditure.

10641221V2 Page lof 2 Resolution 9307 NOW, THEREFORE. BE IT RESOLVED THAT: 1. The Mayor is hereby authorized to execute on behalf of the City the Museum Management Agreement No. 2013-025-COS in the form approved by the city council in its meeting at which this resolution is adopted.

PASSED AND ADOPTED by the Council of the City of Scottsdale this day of , 2013.

CITY OF SCOTTSDALE, an Arizona municipal Corporation

W. J. "Jim" Lane, Mayor

ATTEST:

By: _ Carolyn Jagger, City Clerk

APPROVED AS TO FORM:

OFFICE OFTHE CIWAffORNlE By: /l^/^h^y^ -for Bruc^ W^J)bOm, City Attomey

10641221v2 Page 2 of 2 Resolution 9307 Attachment 2

ORDINANCE NO. 4071

AN ORDINANCE OF THE COUNCIL OF THE CITY OF SCOTTSDALE, ARIZONA RELATED TO MUNICIPAL FINANCING OF THE SCOTTSDALE MUSEUM OF THE WEST; WAIVING CERTAIN FINANCIAL POLICIES AND GOVERNING GUIDANCE

WHEREAS, establishing financial policies and principles contributes to sound financial management, continuity in handling financial affairs and preserving the City's fiscal integrity; and

WHEREAS, publicly adopted policy statements contribute greatly to the credibility of and public and financial community confidence in the governmental organization; and,

WHEREAS, financial policies establish the framework for overall fiscal planning and management; and,

WHEREAS, financial policies set forth guidelines against which current performance can be measured and proposals for future programs can be evaluated; and,

WHEREAS, special circumstances may warrant a determination to waive the applicability of financial guidelines and governing guidance; and

WHEREAS, the City Council desires to waive certain financial policies based on demonstrated special circumstances, now, therefore,

BE IT ORDAINED by the City Council of the City of Scottsdale, Arizona, as follows:

Section 1. The Council hereby determines that it is in the best interests of the citizens of Scottsdale to waive any self-imposed limitations on bed tax funding available to a single project in order to allow the construction of the Scottsdale Museum of the West project to proceed. Financial Policy 21 A, adopted through Ordinance No. 4019, is waived for this limited purpose.

Section 2. The Council hereby determines that it is in the best interests of the citizens of Scottsdale to waive the self-imposed limitations contained in Financial Policy No. 37 in order to allow the construction of the Scottsdale Museum of the West project to proceed. Financial Policy No. 37, adopted through Resolution No. 8698, is waived for this limited purpose.

10637191V1 PASSED AND ADOPTED by the Council of the City of Scottsdale, Maricopa County, Arizona this 26*^ day of February, 2013.

CITY OF SCOTTSDALE, an Arizona Municipal Corporation

By: W. J. "Jim" Lane Mayor

ATTEST:

Carolyn Jagger, City Clerk

APPROVED AS TO FORM:

Br&e Washburn, City Attomey By: John C. Shafer, III Assistant City Attorney

Ordinance 4071 Page 2 of 2

10637191v1 Attachment 3

1 EXECUTIVE SUMMARY 17 LGE COST PROPOSALS

2 SOQ SUMMARY (8.1) 18 OPERATING PLAN (4)

3 VENDOR INTRODUCTION (8.2) 19 PROGRAMMATIC PRINCIPLES

20 DVD's: SAMPLING OF QUALITY OF 4 SOQ DETAIL (8.3.2) COLLECTIONS. EXHIBITS, MEDIA, GRAPHICS

5 EXHIBIT "B'lFlRM/STAFF QUALIFICATIONS (1.1) 21 NARRATIVE: RANGE AND QUALITY OF COLLECTIONS

6 SMoW BOARD OF DIRECTORS 22 DESIGN SAMPLES

7 FOX VITAE 23 MARKETING PLAN (4.4.1. 4.4.2)

8 LGE/CAWLEY DESIGN BUILD RESUME 24 MARKETING PLAN

9 NICHOLS TOURISM GROUP RESUME 26 GIFT SHOP PLAN

10 CORTINA PRODUCTIONS RESUME 26 GIFT SHOP RANGE OF MERCHANDISE

11 GANYMEDE DESIGN GROUP RESUME 27 MEMBERSHIP AND FUND RAISING PLAN

12 FINANCIAL CAPABILITY (2) 28 ECONOMIC PLAN (5)

13 PROFORMA 29. ORGANIZATIONAL STRUCTURE

14 FACILITY DESIGN. CONSTRUCTION AND CAPITAL CONTRIBUTION PLAN (3) 30. CONCLUSION

15 ARCHITECTS'RENDERINGS

16 SPACE REQUIREMENTS EXECUTIVE SUMMARY

The Scottsdale Museum ofthe West (SMoW), LGE Design Build/Cawley Architects, an intended new Limited Liability Company (LLC) to be registered in the state of Arizona^ is pleased to submit this response to the city of Scottsdale's RFQ published on May 25,2012, for a Cultural Park to include a Western-themed museum on city property located immediatety north and west of the Loloma Transit Center in downtown Scottsdale.

The SMoW, LGE Design Build/Cawley Architects LLC will joint venture as the design builder for the proposed new cultural development in the city's historic downtown, and the Scottsdale Museum ofthe West, Inc., a 501-C-3 not-for profit organization, will be the sole Venue Operator ofthe new facility upon its opening. The City's goal of providing high quality, environmentally sensitive, new cultural venues in downtown Scottsdale will be professionally, creatively, and responsibly achieved through a public/private partnership involving the aforementioned qualified entities along with additional talented and experienced resources which they will bring to the proposed project/s. Included on the team are one of our nation's leading media and interactive producers, Cortina Productions, McLean, Virginia (TAB 10), international award-winning exhibition design firm, Ganymede Exhibit Design, Arizona (TAB 11), and the Nichols Tourism Group, Tempe (TAB 28), a company that for nearly two decades has helped Scottsdale and scores of other communities and organizations around the country maximize their destination attractions.

The above-referenced Limited Liability Company proposes the following three options in response to the RFQ for the "Cultural Parcel" and the "Expansion Parcel," the "Loloma Parcel/' and the "Central Parcel," with either Options "A" or "B" to be designed and built by the LLC and Option "C" to be only conceptualized by the LLC. It is believed that either Option "A" or "B" will meet what Nichols Tourism Group presents in TAB 28 as its finding that the development of the proposed Scottsdale Museum of the West will be a key asset in re-energizing a historic theme that Scottsdale has long been known for, its Western Heritage. Additionally, it will serve as a foundation to integrate other powerful, synergistic themes, such as regional galleries and native experiences.

Also, beyond the expenditures at the museum, the Nichols Tourism Group which has performed a number of past studies on the subjects of Scottsdale's economy and its tourism industry, concludes that by introducing a compelling new attraction to the Scottsdale landscape, a mix of new visitors could be attracted. Using conservative assumptions, approximately $45 million of new visitor spending would be stimulated by SMoW to Scottsdale hotels, restaurants and retail businesses. Important to the City, these new expenditures would generate approximately $1.1 million in new taxes for the City, as well. In essence, at whatever level the City invests in this proposed project, the financial return is greater than its initial capital investment and either Option "A" or "B" additionally enriches a neighborhood of the community that desperately needs it while enriching the City's Western heritage reputation.

OPTION A

An approximate 33,000sf, two-story Western-themed museum, to be operated by the Scottsdale Museum ofthe West, Inc, a 501-C-3 organization, will be designed and built in accordance with city building codes and regulations and Gold Leed certification level, on the "Cultural Parcel" and the "Expansion Parcel." A Phase 2 project would include the renovation and utilization of the existing "Transit Station" building to be funded by the SMoW.

OPTION B

An approximate 40,000sf, two-story, Western-themed museum, a sculpture garden, a community garden and amphitheater to be operated by the Scottsdale Museum of the West, Inc., a 501-C-3 organization, will be designed and built in accordance with city building codes and regulations and Gold Leed certification level, on the "Cultural Parcel," the "Expansion Parcel," and the "Loloma Final Plat," and to include the renovation and utilization ofthe existing "Transit Station" building.

OPTION C

Either the city of Scottsdale and/or another private sector entity design and build a community park with an outdoor performing arts venue on the "Central Parcel" to be a complementary cultural venue to either of the proposed Western-themed museum venues to serve as the western anchor to the downtown historic arts district.

If resulting from the RFQ process there are additional creative proposals for a downtown cultural park, it would be the intention of both the SMoW, LGE Design Build/Cawley Architects LLC and the Scottsdale Museum of the West, Inc, a 501-C-3 organization, to work closely with possibly one additional city-preferred Vendor for either/both the "Loloma Final Plat" and the "Cultural Parcel" to coordinate the design and programmatic dimensions conceptualized in order to ensure seamless parcels' transition and aesthetic and programmatic harmony with the herein proposed museum of Western art and history.

As it is the city's goal of increasing the cultural opportunities for various types of cultural events in downtown Scottsdale that will positive impact the surrounding merchants/galleries, energizing the area and creating economic development and incremental revenues for downtown merchants, so, too, is it the Scottsdale Museum of the West's goal by becoming a "must see" public attraction destination In the historic arts district. The city has long been recognized as a center for art, civic heritage, community celebrations and a focal point for cultural tourism in Arizona. At our proposed new museum, the history of the West and its ongoing transformation will be presented using stories of the region's diverse peoples, as seen through their eyes, the work of their hands, the sound of their voices, the products of their creativity and the spirit of generations of visual, literary, and performing artists who found their inspiration here in the region.

As our media producer, Cortina Productions, represents, "through the fusion of artistry, content, and technology, the museum will render the word to the story, the story to the medium, and the medium to the space.''

The proposed new two-story facility and other attractive pedestrian amenities will feature a dynamic mix of innovative, immersive, and interactive "edutainment" visitor experiences; changing exhibits of outstanding regional art and cultural material; exciting public and educational programming, and unique special events. It will offer a special sense of place that celebrates the past, the present and the future... a place where the Old West meets the New West. SUMMARY (8.1) In 400 words or less, summarize your proposal for the particular type of cultural venue you are proposing for the western themed museum and the Center Parcel, describing their creative features, their marketability, and their compatibility with and benefits to Downtown Scottsdale. List at least three strengths and three weaknesses for your proposal for both cultural venues.

The Scottsdale Museum ofthe West is to be a destination attraction in historic downtown that captures the essence of Scottsdale and the West: "Where the Old West meets the New West." The history of the West and its ongoing transformations will be presented using the stories of the 19 Western states' diverse peoples, as seen through their eyes, the work of their hands, the sound of their voices, the products of their creativity and the spirit of generations of visual, literary, and performing artists who found there inspiration here.

The museum will feature a dynamic mix of innovative, immersive, and interactive "edutainment" Visitor Experiences; changing exhibits of outstanding Western regional art, historical/cultural material; exciting educational programming and special events. It will be a special sense of place that celebrates the past, present and the future and educates, inspires and engages museum guests through images, narrative, and multimedia in its orientation theater, exhibitions, sculpture garden, and indoor/outdoor gathering areas.

The museum will be a lively, entertaining learning center for children, families, seniors, tourists and new Westerners. It will complement, support and create excitement and exposure among local, regional, national and international audiences. As an anchor to the historic arts district, the museum will make a significant contribution to the vitality of the downtown by generating increased pedestrian activity to the benefit of Scottsdale's art galleries and related businesses, and being reason for visitors' extended stays in local hotels and resorts.

There is no other museum in/about the West that embraces the opportunity the SMoW will to: 1) introduce and energize guests with the great themes of Western culture: Integrity, optimism, perseverance, courage and creativity; 2) promote discovery of and identification with the variety of stories that have emerged from the challenges of Western life, and the imaginative solutions achieved; 3) invite guests to contemplate the romance and realty that weaves though art, culture and history; 4) kindle guests' appreciation ofthe unique environment and peoples and help to create new generations of great stories by their own contributions to the region.

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Three strengths the museum possesses: 1) knowledgeable, passionate, dedicated leaders and donors; 2) committed lenders of major art/artifacts; 3) mission to help art-related and tourism businesses to again flourish. Three weaknesses: 1) limited facility size to achieve full potential; 2) current underdeveloped neighborhood; 3) volatility of the economy. VENDOR INTRODUCTION (8.2) In 200 words or less. Introduce the Vendor, Including a description of his knowledge of the particular culture venuefs) being proposed and his experience In managing that venue. List at least three strengths and three weaknesses of the Vendor.

The Scottsdale Museum ofthe West, a 501-C-3 organization, is co-venturing with LGE/Cawley Architects to achieve the ambitious and creative goals ofthe project. Each entity brings a wealth of experience in community/institutional planning/ development while engaging specialized museum/public attraction resources to meet full potential. The team includes a four-decade cultural developer who has directed more museum development than any other industry peer; a number of art collectors/lenders. Western historians, contemjDorary artists and cultural partners; a design/builder who has developed numerous buildings in Scottsdale; an award-winning exhibition and interpretive design group; and the leading nationally prominent public attraction media design and production company.

The governance consists of individuals who have been successful and respected business and community leaders for decades in Scottsdale and Arizona and are with knowledge of their fiduciary responsibilities at making and managing policy for the institution.

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STRENGTHS

1) Budget and Construction Management 2) Fundraising Success

3) Rekindling local confidence and "can do" attitude in depressed economic times

WEAKNESSES 1) Inability to hold together all resources if Project timeline is delayed 2) No existing structural relationship with city 3) No single private financing source SOQ DETAIL (8.3.2) In 200 words or less, summarize the contractual arrangements with the City that you believe are necessary to complete the Project

The Scottsdale Museum ofthe West wishes to negotiate in good faith the contractual terms necessary to develop a cultural facility of quality, environmental sensitivity and potential to enhance the aesthetic and business environment of Scottsdale's arts district. Taking into account the significant role the non-profit organization (SMoW) commits to ensure the sustainability of the project, the following are some of the critical considerations which the SMoW would expect to be respected in the final contract:

The City provides the proposed LLC authority to bid out and construct building per City/State codes;

The City accepts responsibility to fund the design and development, improvements, fixtures, etc., to the City-owned facility;

The City accepts responsibility for on-going capital equipment maintenance and replacement beyond the value at any given time ofthe proposed Capital Reserve Fund which the non-profit organization (SMoW) will establish to help defray any City capital repair obligations as owner ofthe museum building;

• The City delegates the responsibility for the daily management of the facility with the non-profit organization (SMoW);

• The City assigns the non-profit organization (SMoW) responsibility to assume general operating costs of facility with scheduled reporting to City. 1.1. Firm and Staff Qualifications

1.1.1 Organization Name, main office address, local address t), office phone, fax, email address and organization web page address. / SCQITSDALE MUSEUM ofthe WEST, 3220 S. HolguinWay Cliandler,"AZ 85248 480-686-9539 (home/office) 480-334-3121 (ce [email protected]

LGE DESIGN BUILD' 740 N 52 nd St#^0 Phoenix, AZ 85008, 480-966-4001 480-225-2788 (fax) wwwJgedesignbuild.com

Cawley Architects 730 N. 52"^ St #203 Phoenix, AZ 85008 602-393-5060 602-393-5061 (fax) www.ca wieva rchitects.com

Cortina Productions 6623-A Old Dominion Dr. McLean, Virginia 22101 703-556-8481 703-847-9694 (fax) cortinaproductions.com Ganymede Design Group Phoenix, Az 602-795-3911 kwintersgpganvmededesign.com

Nichols Tourism Group 531 E. Secretariat Drive Tempe, AZ 85284 602-369-8526 602-257-8837 (fax) www.nicholstourismgrD.com

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1.1.2. A brief description of the organization's primary business and any other associated business related activity involving the proposed cultural and/or museum Industry. Include years of operation and the associated professional accreditations associated with your organization.

The Scottsdale Museum of the West, Inc., a 501-C-3, not-for-profit organization, incorporated in the State of Arizona in 2007, was specifically created to serve the public as an education and cultural institution with a mission to "immerse its guests in the unique story of the American West, illuminating the past to shape our future." It is governed by a Board of Directors representative of the business, artistic, cultural and social communities of predominantly Scottsdale and its Director/CEO is a seasoned museum professional with extensive leadership positions in Arizona, including but not limited to, past director of the Heard Museum, Phoenix, the Museum of Northern Arizona, Flagstaff, interim director of the Arboretum at Flagstaff, and assistant Director of the Phoenix Art Museum.

1.1.3. Describe previous experience performing work similar to that Identified In this RFQ; Include background and outcomes.

In 2010, the Scottsdale Museum ofthe West, Inc., undertook the conceptualization, design, development, and operations management of new Western Discovery Museum at the entrance to the Grand Canyon National Park in Tusayan, Arizona. As an affiliate of SMoW, its 16,000sf new, privately owned public attraction featured the Romance, Imagination and Reality ofthe American West and the Colorado Plateau in dramatic exhibitions featuring major fine arts and artifacts loaned collections. Western film and multi-media, live reenactments, tours, public programs, and a specialty shop highlighting Western wear, gifts, jewelry, books, souvenirs and collectibles. There was a full-time and part-time staff of approximately 40 individuals whom were hired, trained and managed by the SMoW. The museum with an admission rate ranging from $8 (adults) to $5 (children) was open daily with extended hours during the summer season.

This new museum development, as an affiliate to the SMoW and with a goal to help market Scottsdale and its visitor attractions to the millions of annual visitors to the national park, served as a modified precursor to what the non-profit museum organization has planned for a number of years to creatively and successfully achieve in the community of Scottsdale, Arizona. This experience, coupled with the fact that the SMoW's Director/CEO (see Tab 7) has been responsible for the development of more both new and expanded museums than any other peer museum professional in North America in the past 40 years, bodes well for the SMoW and its partners to meet the city of Scottsdale's goals with its proposed Western themed museum and other amenities ofthe adjacent cultural park site.

1.1.4. Reference List - Vendor's submittal should demonstrate previous experience performing work similar to the size and scope Identified In this RFQ, Including references of participation In other projects with similar scope and size to the proposed venue. Provide Information on any other similar venues with which you have a working relationship.

REFERENCE LIST FOR MUSEUM PROJECTS CONCEPTUALIZED, DEVELOPED AND MANAGED UNDER THE LEADERSHIP OF MICHAEL J. FOX, DIRECTOR/CEO, SCOTTSDALE MUSEUM OF THE WEST, INC.

The Heard Museum of Native Cultures and Arts Donald Puddy (retired CEM executive with Kitchell Inc.) 602-799-0554 Donald Puddy [[email protected]] 1982-84 Museum Expansion: Doubling in size of facility, new exhibitions, library, auditorium, staff and volunteer offices, collections storage, retail, catering kitchen, amphitheater, parking Institutional goals achieved

University of California at Berkeley Museums at Blackhawk, Danville, CA Dan Dunn, Director 925.736.2277 [email protected] 1990-1993 Museum of Art, Science and Culture Blackhawk Classic Automobile Museum New Museum Development: approx 80,000sf of exhibitions, indoor/outdoor public programming and special event facilities, catering amenities, staff and volunteer offices, retail, collection storage, library Project goals met and operations flourish Museum of Northern Arizona, Flagstaff, AZ David Chase 607 Cerrillos Road Suite D-2 Santa Fe, New Mexico 87501-3707 505-988-9100 fax 505-988-1958 1993-2000 Museum Campus (400 acres) Expansion and Historic Buildings' Restoration; construction ofthe Branigar/Chase Discovery Center; development of Charter Public High School, The Peaks Senior Living Residential Center, Coyote Springs Residential Neighborhood, the restoration ofthe historic Colton House and its outbuildings, the renovation of numerous additional historic buildings; campus-wide infrastructural improvements Vision of "Intergenerational Museum Campus" unlike any museum anywhere realized and facilities and operations supporting mission ofthe organization

Muhammad Ali International Center, Louisville, KY Barry Alberts, Managing Partner, City Visions balberts(S)cityvisionsassociates.com 502-561-7885 Cell 502-386-4150 2000-2007 Design, development and operations of 92,000sf facility with state-of-the-art Visitor Experiences, indoor/outdoor public gathering facilities, catering kitchen, staff and volunteer offices, library. Project goals met and institution is internationally respected and visited

1.2 Organizational Structure Approach. Vendor's SOQ should provide copies of the resumes of all key project personnel attached at the end of the Vendor's submittal. All resumes shall include a brief summary of past accomplishments, academic credentials. Professional Certifications, Professional Association Memberships, etc.). If any.

The Scottsdale Museum ofthe West, LGE Design Build/Cawley Architects LLC is the corporate entity to be established to professionally, responsibly, and creatively accomplish the various objectives and goals ofthe project as herein described in response to this RFQ. The impressive resumes of all the key project personnel, including the LLC media producers, exhibit designers, and facility management consultants, are included within this document. (Tabs 7,8,9,10,11)

1.3 Industry Knowledge-Additional Information. In narrative form, demonstrate your organization's knowledge of the museum Industry and the Center Parcel cultural venue Industry you are proposing and your philosophy regarding addressing Issues related to the specific Project Industries you are proposing. The organization the Scottsdale Museum of the West has established for the planned Western museum of history and art and the different dimensions of the cultural Center Parcel is reflective of its commitment to meet the goals and museum industry standards (AAM) of the project through an unmatched group of talented, experienced, responsible and accountable professional team members. Over 500 vears of accumulated service in the museum field is represented in the active and successful careers of many of the principals to be engaged in this community development initiative. (Please see Tabs 6,7,8,9,10,11]

The Director/CEO of the SMoW has had nearly 40 years experience and reputation as one of the most prolific and creative "cultural developers" in the museum industry, both nationally and internationally. He has been responsible for seven major new or expanded institutional developments and has consulted on numerous others in North America. In Arizona, he has directed three major museums and two other state-wide non-profit organizations and has helped their board leadership and thousands of volunteers far surpass what they thought their own potential was in contributing to the institutions' many achievements. He has been a leader in the museum industry woridwide and has been past multi-term president of the 19 Western states' American Association of Museums' (AAM) professional association, the Western Museums Association, and has served on the national board of AAM during the era when as the founding leader ofthe US Congress-sponsored National Dialogue on Repatriation he was responsible for the most revolutionary advances of the 20*^ Century in the museum industry's relationships and practices involving the museum, scientific and Native American communities ofthe United States.

Every institution which he has led has been recognized for their aesthetic, functional and community-centered goals met by the experienced and talented teams of professionals he helped assemble and lead as either consultants or members of the organizations' staff and, volunteer corps. Here in the West, in particular, he has extensive knowledge about and the experience Involving the region's history, art, and culture that will help support the goals of the planned Western theme museum in Scottsdale. He has professional relationships and past partnering affiliations with most every major museum and institution of higher education dedicated to the region's history, art and culture which will help to foster interrelationships amongst Western museums and other organizations of distinctive and distinguished missions.

As past vice chairman of the Arizona Tourism Alliance, the Director/CEO of the SMoW has a clear understanding of and hands-on experience in identifying the many ways museums and similar indoor and outdoor public attractions can successfully cultivate tourists to actively participate in and enjoy the cultural attractions of the communities ofthe Valley of the Sun and elsewhere in the region. The SMoW expects itself to be a public attraction that becomes a "must see" destination in historic downtown Scottsdale. It is seen to be a place where the visitors to the region will be excited and engaged by the bold, colorful and transformational experiences as will be demonstrated through what the SMoW represents always as the authentic and very best of Western historical stories, art and artifacts. Visitors, both residents and guests from around the worid, will gain an appreciation for the unique environment and peoples of the West, and they will be inspired to use their own talents to help create a new generation of great stories here in the region.

Museums today are expected to be institutions which offer a dynamic mix of innovative, immersive and interactive visitor experiences appealing to all age groups. They are to be places of stories and ideas as well as places of objects. With all the SMoW and its partners bring to the vision and mission of the proposed new museum, this philosophy of having the Scottsdale Museum ofthe West be an "edutainment" and life-long learning center of history, arts and culture will be embraced as seen in its V/s/torfxper/'ences/exhibits, public and educational programming, and special community events.

1.4. Local Knowledge-Additional Information. Demonstrate the Vendor's familiarity with the City of Scottsdale local environment, economy, and other local issues pertinent to this Project which enhances your qualifications to succes^ully facilitate the RFQ. In narrative form, demonstrate your organization's local knowledge and your philosophy regarding addressing issues related to this specific project.

Representatives ofthe SMoW have an unsurpassed multiple decades' accumulation of knowledge, leadership and experience in association with Scottsdale and the West. Ofthe 16 members of its board of directors, four trustees are former city council members and two of them have been past elected officials of either the State legislature or the Maricopa County Board of Supervisors. One ofthe trustees, an over 80 year old Scottsdale resident and businessman, is recognized as the community's most knowledgeable and published historian of the city of Scottsdale, while nearly all of the other board members have been longtime successful businesswomen and men in Scottsdale. Two ofthe trustees have had distinguished careers in directing major cultural institutions in the West, with one professional having been an admired past President/CEO of the Scottsdale Cultural Council for nearly two decades. Two ofthe trustees are recognized as premiere scholars in the field of art history of Arizona and the region.

These incredibly passionate and dedicated volunteers who have been integral to the conceptualization of a unique museum to tell the story of the West, coupled with the professional partners identified, all have an understanding and appreciation of both the need and potential ofthe proposed new institution and its many community amenities. They also have a respect for the city which has been long recognized as a center for art, civic heritage, community celebrations and a focal point for cultural tourism. They also know of the compelling need at this time for the museum. They recognize there has never been a more critical period in the Scottsdale Arts Community for a museum to complement, support and create excitement and exposure among local, regional, national and international audiences. The current local environment includes Scottsdale's art galleries and related businesses attempting to deal with the worst depression in their history here. Moreover, collections of art, artifacts, documents, photographs, etc., are still available for exhibition in the Scottsdale Museum of the West but many will not be staying in our community if the museum is not built and operating in the near future. Additionally, LGE Design Build is a full service design build construction and development company located in Phoenix, Arizona. Since 1994 LGE has constructed over 750 projects totaling over 17 million square feet. LGE currently has 6 active prelects being designed or built in Scottsdale and has design /built 67 facilities in Scottsdale. Cawley Architects, Inc. is a firm organized to provide excellence in design. From concept to occupancy, they work with a seasoned team dedicated to accurate, timely, and cost-efficient services. Their services are performance oriented and driven by a highly evolved process dedicated to anticipation, efficiency, and cost effectiveness — creating the highest level of services available in today's market. Included in the collaborative team for Scottsdale's Museum ofthe West is David Brant from IDEA. Mr. Brant is responsible for alt aspects of IDEA'S projects, utilizing his award winning experience in project themeing, landscape architecture, urban design, architecture, public art, and graphic design. Several of our team members do have extensive cultural venue experience and this team has collectively designed and built over 1,550 projects totaling over 33 million square feet of space. LGE and Cawley also have partnered on over 400 projects, including retail, office, manufacturing, medical and biotech, totaling over 10 million square feet.

Our team believes it has a pulse on the arts and cultural communities of Scottsdale and its surrounds unlike others, and it contends that the community has one last opportunity to keep in or bring to Scottsdale the very best of Western art and historic artifacts, but only if the planned facilities are constructed and opened soonl Scottsdale Museum of the West Board of Trustees Board Professional Listings

Jim Bruner (Chairman) EVP & Director Community Banking Christine Mollring & Trust, Mutual of Omaha Bank Western Gallery Owner, Scottsdale and Wyoming Alex Corona General Manager Tom Morrow, Emeritus Corona Ranch & Rodeo Grounds Chairman and CEO of Celebration of Laveen, AZ Fine Art, an international fine art marketing company Myron Deibel Retired Banker and Western Art and Ned O'Hearn (Vice Chairman) Artifact Collector Principal, Boulders Realty Advisors Commercial real estate advisory and Jamie Drinkwater, Emeritus investment services Registered Pharmacist, Mountain View Pharmacy Paul Piazza Licensed Real Estate Agent, J. Retired Museum and Gallery Drinkwater Realty, P.C. Director Community Volunteer Past President, Scottsdale Gallery Association Betsy Fahlman Professor of Art History, & William (Bill) G. Ridenour Associate Director, School of Art Attomey & Managing Partner Arizona State University Ridenour, Hienton, PLLC Major Westem Art and Artifact Abe Hays Collector Chairman, Arizona West Galleries Major Westem Art and Artifact Dick Saba, CEO CoUector Saba Western Stores Scottsdale and East Valley Frank Jacobson Past President/CEO, Scottsdale John Tmmp Cultural Council International Marketing Specialist Founding SMoW CEO Graduate of Thunderbird Graduate School Bob Karatz Retired Developer and Hotel Owner/ Ex-Officio Member Operator Rachel Sacco President & CEO, Scottsdale Orme Lewis (Secretary) Convention and Visitors Bureau Managing Director, Select Investments Michael J. Fox, Director/CEO Career Museum Professional Paul Messinger (Treasurer) Director/CEO at Numerous Chairman of the Board Institutions Messinger Mortuaries Scottsdale's Historian

September 14,2012 2. Financial Capability

2.1.

The Operating Vendor, the Scottsdale Museum of the West, a 501-C-3 organization, is a start-up entity that has been dedicating its activities toward the eventual development of its planned new Western themed institution. In the process of performing its business of beginning to cultivate private sector support in the proposed museum development it has realized to date the following direct and indirect financial "investments" through donations, in-kind services and partnerships:

• Private sector donations and pledges: $1,200,000.00 • Trustees' personally paid for museum visits around the country: $40,000.00 • Trustees' personally paid for travel to work sessions with museum design consultants: $5,000.00 • Personally paid for by Trustees various meetings' expenses: $3,000.00 • Partially paid for costs of special consultancies: $350,000.00 • Planning and administrative expenses: $1,200,000.00 • Planning and development expenses for branch facility: $2,800,000.00 • In-kind professional services: $1,000,000.00 • The value of commitment from collectors to provide long-term loan of collections: $20,000,000.00

The Scottsdale Museum of the West, Inc. has engaged for the past four years the professional accounting services of the following Scottsdale entity to conduct the organization's financial compilations in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Upon request to SMoW, this firm shall provide copies ofthe SMoW's financial reports which would consist of Statements of Financial Positions and Statements of Activities for the period requested.

Paul A. Donis, CPA, PC 5839 E. Wilshire Drive Scottsdale, AZ 85257 (480) 947-5482 FAX (480) 947-5019

The confidential Financial Statements and/or Annual Reports representing the other corporate entities ofthe aforementioned Limited Liability Company (LLC) will be presented in person if the LLC is selected to be interviewed by representatives ofthe city of Scottsdale. 2.2.

Pro Forma and Business Plan Approach.

Business Plan Assumptions Assumptions used in this Business Plan as represented throughout this RFQ Proposal were made utilizing information contained in the Scottsdale Museum ofthe West Feasibility Report issued March 2006, by AMS Planning & Research 915 D Street Petaluma, CA 94952. In addition, information was derived from discussions with and the direction ofthe Scottsdale Museum of the West Trustees, other public attraction and tourism professionals, and design builders active in development in Scottsdale, Arizona.

Operations Plan

AMS Planning & Research provided two options in its analysis ofthe organizational structure: 1) an operating division ofthe Scottsdale Cultural Council similar to the Scottsdale Museum of Contemporary Art and the Scottsdale Center for the Performing Arts; and 2) a stand alone, 501(c) (3) nonprofit corporation with a board of trustees. Based on discussion and the actions taken by the Museum ofthe West leadership a decision was made to incorporate in 2007 as an Arizona nonprofit corporation with its own board of trustees.

Day to day management and operations are to be staffed with both full time and part time employees supplemented by volunteers and contracted services where needed.

Construction Costs and Financing

The estimated costs, in 2009 dollars, to construct and design a 45,000sf, four story facility was $51 million prepared by a building systems estimator, CCMC Construction Cost Management Consultancy. The current plan consists of two Options, with the first 30,000+sf building to be maximum two stories on the originally designated two museum parcels owned by the City of Scottsdale. The revised capital budget, including Tenant Improvements, is not to exceed $8.5 Million.

The second option is to construct up to a 40,000sf, two-story facility on the two museum parcels as well as the Loloma parcel, and to renovate and utilize the Transit building and its grounds which will be aesthetically and functionally renovated. The capital budget, including Tenant Improvements, is not to exceed $10 Million.

The SMoW would depend upon the City of Scottsdale to invest minimally $7.5 million in the costs of design and construction of its new museum building. It is understood that these funds would be allocated from the Bed Tax and 20-year bonds would be issued with value estimated from $8 - $10 million with the City assuming responsibility to pay the annual debt service. The city would also be requested to fund up to $2.5 million for the costs of Interior Improvements to the city-owned building.

The revised development plan assumes that the project is designed over the course of no more than six months beginning fall 2012 to follow by construction beginning in early 2013 and with a soft opening planned for the end of 2013.

Opening and Operating Costs

Pre-opening start-up costs include initial staffing, fund raising costs, temporary offices until the museum is open, exhibition expenses getting ready for the opening, and a significant start-up marketing campaign for the year prior to opening and the opening year itself. Total start-up costs are estimated at $500,000, which would be the responsibility of the SMoW.

Staffing includes 11 full time staff and 6 part time and contracted personnel resulting in salaries and benefits for the first year of operations of $700,000. To account for benefits, a level was set at 22% for full time positions and 14% for part time workers.

The operating budget for the first three years of operations is estimated at average $1.6 million annually. Based on a conservative annual attendance of 120,000 the Museum of the West would require on average $1.4 million in earned revenue and approximately $100,000 - $300,000 in contributed revenue annually.

Market Study and Analysis

Arizona has been one of the fastest growing States in the country, and much of that growth has taken place in the Phoenix metropolitan area. Between 1990 and 2000, the metropolitan Phoenix area grew by 45%, as did the 30-mile radius surrounding Scottsdale. Both of these rates are ahead ofthe State's change during this time. Scottsdale alone mushroomed from 130,069 in 1990 to 202,705 in 2000, a 56% increase. Although growth in the region may have slowed somewhat, it is still well above the national average: projections for metro-Phoenix suggest growth to continue to be greater annually than most other states in the country.

The age distribution ofthe Scottsdale market area in comparison with the state is relatively parallel across all age groups. Scottsdale's 20-mile radius and Maricopa County 30-mile radius market area have a slightly higher percentage of younger residents, both children and young adults. This is also reflected in the lower median age of Scottsdale area residents: 32.3 in comparison with the State's 34.2.

Education

Educational attainment in the Scottsdale market area is higher than that of the state. Scottsdale

10 residents are more likely to have a college degree or higher (27%) than the rest of the state (24%). As educational attainment is an important predictor of participation in the arts, the fact that Scottsdale has a higher educational level overall suggests a strong basis of involvement and support for a museum.

Income

Income level is also an important indicator of arts participation. The Scottsdale market area has a higher median level of household income in both the 20-mile and 30-mile radii when compared with Arizona overall. In addition, Scottsdale market residents are more likely earn $100,000/year or more (18%) than the general Arizona population (15%). The greater wealth within the Scottsdale market does not guarantee financial support for the Museum, but does signify a large target base for a fundraising campaign.

Household Composition

Population growth is predominately families in households with children under age 18. The percentage of families with younger children is more concentrated in the Scottsdale market area (37%) than throughout the rest of the state (35%). This is important to note in planning the museum because its goal to serve the community as an educational institution has great potential due to the number of families in the area.

Summary ~ Maricet Area Demographics

According to the AMS Planning and Research study conducted in 2006, demographic measures such as education, household income, and age are most typically associated with arts participation (i.e., over three quarters ofthe typical art gallery audience have college degrees and household incomes greater than $75,000.) The data suggest that the majority of Scottsdale residents, and of the larger 30-mile radius, are characteristic of a typically active arts audience. The high income levels and educational attainment point to a potentially strong local visitor and support base. The greater concentrations of households with children under 18 also suggest a strong interest, support for, and participation in educational programming. Research by the Scottsdale Convention and Visitors Bureau also document visitor demographics as highly educated, higher levels of income and they indicate a higher than average support for arts and cultural organizations in their home communities.

Projections for the next ten years suggest a less than robust continuation of these trends. However, with still more people moving into the area and tourism returning to its robust position before the recent major recession, the market base will expand and the revenue and funding potential for the museum will increase over time.

11 2.2.1.1-2.2.2.10

See Tab 13

2.2.3 If proposing to design and construct the capital Improvements, explain whether or not an operating shortfall Is forecasted. If so, explain how It will be covered.

The Scottsdale Museum ofthe West is a 501-C-3 organization, governed by a volunteer board of directors and administered by a paid museum professional with proven qualifications to manage the day-to-day operations ofthe institution. In accordance with the American Association of Museums (AAM), "the museum depends upon its financial base for which the trustees have a primary responsibility." The governance of the SMoW understands and accepts the traditional role of fund raising and shall approve in concept and organization all development programs and fundraising ventures intended to support the operating annual operating budget of the institution while the actual administration of the budget is the province ofthe museum staff.

No differently than with any other non-profit organization, the SMoW intends to operate within its support base means, and whenever its projected earned income doesn't meet the anticipated expenses, it is the responsibility of the governance and staff to identify sources of funding to meet any anticipated shortfalls. Such funds traditionally would be cultivated from private donors, businesses, corporations, foundations, private and public grants and special events.

2.2.4 Explain In detail the contingent protections that the Contract will provide to the City should the Project not be completed or the Vendor's management of the Venue ends before the expiration of the Contract, Including the disposition of any art collections, exhibitions, artifacts, or other personal property specific to each cultural venue. Provide a full capital, operational and maintenance funding analysis. Explain your potential for fund raising support.

The Scottsdale Museum of the West, Inc., a 501-C-3 organization, was formally designated by the US Treasury in 2007 as a bona fide public charity and educational institution deserving of Federal tax exemption status. (See Tab 5) The SMoW was committed from its beginning to be in compliance at all times with the standards, policies and practices ofthe American Association of Museums (AAM). It was clearly understood then as it is today that a museum is only established if it is to be a permanent institution so that the objects in its care may be ensured responsible stewardship, whether owned by or loaned to the institution.

The Trustees of the SMoW assume a fiduciary responsibility no differently than do Trustees for any other non-profit organization. The board of the SMoW provides for the management and

12 augmentation of finances, including budgeting, fund raising and auditing, in addition to establishing the goals and purpose of the start-up organization, planning for its future, ensuring continued tax-exempt status and compliance with regulatory laws, and formulating polices for the operations of the museum.

The SMoW has had five years of conducting its business of assisting the city of Scottsdale in conceptualizing the development of the proposed Western themed museum of history and art. It has had over twelve Trustees devote endless hours and contribute their personal wealth and other resources to help the community realize its longstanding dream while meeting many well described goals articulated throughout this document. Their devotion, dedication, conviction and vision have been generously shared with SMoW in order to ensure that the organization achieves successes and sustainability.

While it is strongly believed the museum will become an integral new and sustaining visitor attraction within what is becoming a changing downtown pedestrian landscape, if for whatever unforeseen reason/s the not-for-profit organization were to either not complete building the planned new facility or continue its Vendor role of operating the museum, the following would be enacted:

A. The city would require a building performance bond that would provide the opportunity for the completion of the construction of the edifice. B. The management of the new museum could be assigned to another qualified Scottsdale-based organization/institution, e.g., the Scottsdale Cultural Council, or another non-profit entity from elsewhere in the Valley. C. If the SMoW were to terminate its contract as Vendor before its term expires, it would be contractually agreed that all the exhibition fumiture components, museum exhibits' and way finding graphics, media, and other specialized visitor experiences' properties would become permanent ownership by the city of Scottsdale. D. Art that has been permanently gifted to the Scottsdale Museum ofthe West would be transferred to a bona fide, 501-C-3 museum, preferably affiliated with Scottsdale. E. Art and artifacts that have been on loan to the SMoW would require that the city of Scottsdale to negotiate with their owners an extension of their loans following the city's appointment of a qualified museum Vendor.

The subjects of capital, operating and maintenance funding analysis and fund raising are believed to be thoughtfully and thoroughly addressed in other sections of this document.

2.2.5 State your projected general admission revenue total for years 1 through 5. Provide the method.

Admission revenue projections are based on the annual visitation experiences of like-museum venues in the region. As a start-up organization, the projections take into account what traditionally is a leveling of attendance after the first few years of its opening.

13 2.2.6 Explain whether or not your organization anticipates admissions/tickets, events, gift shop and other revenues will cover operating and/or maintenance expenses.

If in any given year the annual operating budget includes expenses which are greater than the projected earned income, the governance and Its museum staff will assume the responsibility and accountability to balance the operating budget through additional sources of funding from individuals, businesses, corporations, foundations, private and public grants and special events.

2.2.7 Describe any opportunities regarding accommodating city requests for use of space as requested for events like State of the City, etc. and minimum number of hours of non-public events as related to your organization's revenue and fundraising projections.

The planned SMoW-operated facility will have a variety of indoor and outdoor gathering areas which may readily accommodate city/state requests for special use when the museum is closed to the public. The SMoW's administration would be considerate of each request for special use ofthe museum and would professionally facilitate the approved events in question in a similar manner that it would its own programs and events.

2.3.1 Explain how many and what level of staff will be devoted to sponsorship and fundraising for each facility.

The SMoW assigns its sponsorship and fundraising activities ultimately to its director who in turn has professional staff and consultants as needed to assist him/her in meeting the goals of the institution. The director of development and marketing, his/her support staff, and, as well, members of the board of director's development committee are actively involved in this critical' dimension ofthe museum's operations.

2.3.2 Explain how/what you would do to differentiate your proposed cultural venues from other similar venues for the purposes of fundraising and sponsorships; from other organizations.

The SMoW is intended to be a unique institution as seen and respected in all the 19 Western states and as such it will create an appropriate and effective marketing plan to reflect a mission worthy of distinction and support. The fact that it will be the only museum In Scottsdate and surrounds solely devoted to the history and art of the West and its many transformations to the present and anticipation of its future, it is believed it will have its only "niche" that is projected to distinguish itself from other venues and be a public attraction worthy of local, regional and national financial support, visitation and participation by volunteers.

14 3. Facility Design, Construction and Capital Contribution Plan

3.1 Proposed Design, Construction Plan and Capital Contributions. If the Vendor elects to design and construct a Venue(s}, the Vendor's SOQ should identify his concepts for each proposed cultural venue's physical structures and any requirements to meet the needs ofthe Vendor's business plan and demonstrate his ability to fund Capital costs required that exceed the City's maximum contribution. The proposal should also Include a marketing study specific to that proposal and presentation of Information concerning outreach to the community and the neighborhood. As to the museum. If the Vendor's facility concept differs from the 2006 Feasibility Study's concept, explain how the City's goals will be achieved. Any such alternative proposal should Include a marketing study specific to that proposal and presentation of Information concerning outreach to the community and the neighborhood.

3.2 Spoce Allocations. Identify total square footage necessary for both the proposed western museum and the Center Parcel cultural venue and provide a breakdown of space allocation for the property for each on the Loloma ParceL

See Tab 16

3.3. Provide plan for funding capital Improvements for each cultural venue that will be required beyond any contribution by the City, If any. Demonstrate ability to contribute to capital costs required over and above the City's maximum contribution. The plan must Incorporate the city's public art requirement equal to 1% of the building valuation.

It remains the goal of the co-venturing team to design and construct either of the proposed new museum facilities within the constraints of the city's capital budget of minimally $7.5 million and an additional $2.5 million for Tenant Improvements. In Tab 17 is the project budget that reflects that the 33,000sf museum can indeed be built within the original budget, with the SMoW assuming responsibility for the design and implementation ofthe Visitor Experiences/ exhibitions, media, etc. If the development ofthe museum surpasses the city's capacity to assume all its capital costs of development, the SMoW will make every effort to raise additional private funds to support the approved design and building costs ofthe preferred project. As a "start up" non-profit organization, we've raised considerable sums already in support of concept development, planning, drawings, etc., and we're positioned to revisit our interested donors and collectors as soon as we have a definitive site. The SMoW is confident that its private funders will assume responsibility for any shortfall in the capital development initiative, particularly if it is Option "B'" which is designed in response to comments made by city staff ~ that the city wants to increase the attractiveness of the venue and the value of the building to ensure its opening success and long-term sustainability.

15 3.4 Schedule and Timing Plan and Approach. If the Vendor proposes to design and construct the venue(s) capital Improvements, provide the proposed timeline for the design and construction of each venue. Including a list of key milestones and time line for major required events from point of council award to grand opening of the proposed cultural venues.

See Tab 17

16 4. Operating Plan

4.1 Center Parcel Cultural Venue Plan. Describe your operating plan for this cultural venue In sufficient detail to give the City a good understanding of what you are proposing for this venue. Including the Information required In Section I, Overview of Project.

Operations Plan

AMS Planning 8i Research provided two options in its analysis ofthe organizational structure: 1) an operating division of the Scottsdale Cultural Council similar to the Scottsdale Museum of Contemporary Art and the Scottsdale Center for the Performing Arts; and 2) a stand alone, 501(c) (3) nonprofit corporation with a board of trustees. Based on discussion and the actions taken by the Museum of the West leadership a decision was made to incorporate in 2007 as an Arizona nonprofit corporation with its own board of trustees (See Tab 6).

Day to day management and operations are to be staffed with both full time and part time employees supplemented by volunteers, contracted services where needed, and collaborative service agreements with other entities. The event catering would be provided by contractual agreements with outside vendors.

Staffing includes 11 full time staff and 6 part-time employees and contracted personnel resulting in salaries and benefits for the first year of operations of $700,000. To account for benefits, a level was set at 22% for full time positions and 14% for part time workers.

The operating budget for the first three years of operations is estimated at average $1.6 million annualty. Based on a conservative annual attendance of 120,000 the Museum of the West would require on average $1.4 million in earned revenue and approximately $100,000 - $300,000 in contributed revenue annually.

The mission ofthe planned Scottsdale Museum ofthe West is as follows:

T7ie Scottsdale Museum ofthe West boldly immerses our guests in the unique story ofthe American Southwest, illuminating the past to shape our future.

17 The concept for the Museum captures the essence of Scottsdale and the West: "Where the Old West meets the New West" This vision for the Museum serves as the foundation for an interactive and experience-based museum that will utilize methods pioneered at institutions such as the National Holocaust Museum, Abraham Lincoln Presidential Library and Museum and the Worid War One Museum, Muhammad Ali Center and others to tell the stories that define the West.

The Scottsdale Museum of the West will recount the history of the West and the dynamic interaction between these various personas—the New West and the Old West—through the eyes ofthe artists, the artifacts ofthe cultures, and the stories of its peoples.

The goals ofthe museum are:

• Showcase the West and why it matters: Inform, educate, inspire and excite museum guests by offering high-quality exhibitions, arts education, community outreach on the history and dynamic interaction between —the New West and the Old West—through the eyes ofthe artists, the artifacts ofthe cultures, and the stories of its diverse peoples. • Draw from theater, entertainment, new technologies, storytelling, and media presentations in communicating the stories of Arizona and the other 18 states of the region. • Collaborate with individual museums and museum consortia, private and corporate collectors and galleries. The premise of this collaborative model is to secure loans of important works and book high quality traveling exhibitions. Through carefully crafted working relationships with the specialized network of museums and public and private collectors, as well as with independent scholars and cur9tors, the Scottsdale Mu3eum of the West will expect to draw upon the "Best of the West" for its exhibitions and programs. • The Museum plans to establish the Western Region Institute which will formally position the institution to become a primary communication center about the 19-state Western region, encouraging other private and public institutions devoted to the study ofthe past, present and future of the West to share their studies, findings and recommendations with a broader regional, national and international audience through the resources ofthe SMoW's institute. • Present exciting encounters with the authentic West through the telling ofthe untold stories ofthe West; unmask the myths and realities ofthe West; explore the frontiers of the Old West and the New West. The "Western Experience Theater" will be a signature experience for visitors to the museum, immersing them in dramatic story-driven multimedia programs, where visitors will explore what the West has been over time, and how these individuals, their cultures, their stories, and their art—and artifacts- have served to appropriate and lay claim to the region.

18 • Create an integrated education program where a hands-on, interactive Learning and Education Center will be developed and will present in-reach and out-reach education programming to meet the needs of diverse audiences. • Create an extensive collaboration with teachers and administrators throughout the state of Arizona to provide education programs that meet the K-12 education Standards of the Arizona Department of Education. • Present learners with an array of experience-based opportunities. • Create a welcoming, hospitable place for guests.

The objectives ofthe museum are:

• The Museum ofthe West will achieve an attendance level of approximately 120,000 during its first year of operation, and a common minimal reduction in year two and year three. Adult guests will make up 60% of this admission; seniors will be 25% and children will be 15% of these objectives. • Average admission revenue is $9.00 based on $10 adult admission; $8 senior admission; $5 children admission. • School group attendance wilt be at least 5,000 per year. (No charge will be extended to school group tours.) • The Museum ofthe West will achieve contributed average annual income in the first three years of $216,000 Membership (revenue and units) is projected to increase each year by a substantial amount. • Membership in the first year will be 2,000 member units at an average membership fee of $100 per unit. • Gross store sales in year one will be $200,000 in the first year. • Net food concession revenue will be $50,000 in the first year based on a percentage of food and beverage sales from caterers doing business in the museum. • The Museum of the West will be open to the public Tuesday through Sunday each week for a total of 42 public hours per week and closed Memorial Day, Independence Day, Thanksgiving Day, Christmas and New Year's Day. • In Year One: the museum will offer over 40 lectures and gallery talks to an average 50 people per program; six larger public events to an average of 50 people per event; and minimally one special event for 500 people. • The program in the Western Experience Theater, Drawn to the West, will run continuously throughout the day. • Story Circle events will be offered frequently. • Three 1-2 day workshops with an average enrollment of 30 will be scheduled. • Adults will be offered up to 20 classes with an average enrollment of 15; children will be offered up to 25 classes with an average enrollment of 20.

19 A total in excess of 50 rental events utilizing the facility will be scheduled in Year One for a net rental goal of $50,000.

4.2.1.1 Provide Information regarding the significance of the art collection as described by AAM standards.

The identified loaned collections of "the very best" of art, artifacts, documents, photographs, etc., are available only to the planned Scottsdale Museum ofthe West. Some ofthe most important and respected deceased and living artists whose iconic works would be loaned by private collectors and institutions for exhibit in recognition and celebration of their emphasis and production of Western subject matter - scenic wonders. Native Peoples, Historical Figures, Cowboys, Lawmen and Outlaws, Pioneer and Business Women and Military Heroes are represented in the enclosed DVDs in Tab 20. Some of the artists are: Thomas Moran, Frederic Remington, Maynard Dixon, William R. Leigh, Cari Oscar Borg and Gunnar M. Widforss. There are many other museum-quality artists who spent time in the region creating great works of art which will be identified, articulated and exhibited by the new museum, among them are: H.B. Mollhausen,, F. W. von Egloffstein, William Henry Holmes, Julian Scott, F. S. Dellenbaugh, Louis Akin, KateT. Cory, Lon Megargee, Lillian Wilhelm Smith, Edgar Payne, Gerald Delano, George Elbert Burr, Gustave Baumann and many others, including the Taos Society of Artists and the founding members ofthe Cowboy Artists of America, George Phippen, Chariie Dye, Joe Beeler, John Hampton and more recent members of distinction, including John Coleman, Gary Niblett, Fred Fellows, Bill Owen, Bill Nebeker and Tim Cox.

The museum will have available to it at any time for exhibition the multi-million dollar valued private collections of paintings, sculpture and other media representative of many of the most respected and notable contemporary Western artists. For instance, the museum will be afforded the opportunity at all times to feature artist John Coleman's # 1 edition of any of his sculptures which in itself will distinguish the institution. Additionally, a private collection of Western American and Native American Art, with more than 3,000 paintings, many of them the award-winners of past Cowboy Artists of America sale exhibitions, sculptures, hand-woven baskets and other artifacts will be available to showcase. (See Tab 21) Additionally, the SMoW is cultivating private donors to acquire forthe institution a multi-million dollar valued very rare collection featuring the American West that would give the museum instant world-wide distinction and added credibility.

20 4.2.1.2 Describe quantity of art collection.

The quantity of art and artifacts to be displayed at any given time within the museum's planned six galleries and sculpture garden will be dependent upon the themes developed and duration of each ofthe rotational exhibitions which will be always presented in creative ways and supplemented by engaging narrative, attractive graphics, media and interactive exhibitry components. With all the exhibitions and other presentations and programs ofthe museum, it remains the primary goal for the guests to gain a new understanding and appreciation of Western history and culture and to identify with core Western values including courage, resilience, optimism, creativity and integrity. (See Tabs 20,21)

4.2.1.3 Provide estimated value of art collection, number of pieces (artifacts, visual Images, etc.), hours of video- appraised and documentation sent with submittal Provide information and photos of collection.

The estimated value of art, artifacts, photographs and media available to the public at any given time would range from $10 million to $100 million. Please view the enclosed DVDs (Tab 10,11, 20) to gain greater appreciation ofthe breath, depth, beauty and historical and cultural importance of some ofthe collections planned to be in the dynamic changing exhibits in the museum.

4.2.1.4 Provide plan for rotation of art collection; Include frequency of rotation and percentage of collection rotated by quantity and by value.

This must be seen as a non-traditional museum wherein the art and artifacts will be used in extraordinarily creative ways to complement the media, graphics, etc., but all being integrated to help tell the story of the 19 Western states. It is envisioned that approximately one-half of the art and artifacts on display wiil rotate minimally annually, thus providing good reason for repeat visitation in order for guests to always see something new and different when visiting the museum. It is the goal of the museum to present the very best authentic art and artifacts of the region, and, therefore, it is expected that the value ofthe works on exhibition at any given time will have an accumulated value ranged from $10 million to $100 million. However, more important to the fulfillment ofthe museum's mission is to have loaned collections with their intrinsic values to help meet the goals and objectives ofthe start-up organization.

4.2.1.5 Provide minimum value of art collection to be kept In museum at all times.

Since the planned 33,000sf museum has limited collection storage facilities, the SMoW intends to partner with other AAM-accredited institutions within the region to provide curatorial care

21 for any loaned collections which the museum would be unable to temporarily house on site. The anticipated value of the collections which will be on the premise at any given time is expected to range from $10 million to $100 million in value.

4.2.1.6 If the Vendor terminates Its management contract before the end ofthe Contract term. Include a plan for the disposition of any art collections, exhibitions, artifacts, or other personal property specific to each cultural venue.

If the SMoW were to terminate its management contract with the city-owned new museum before the end of the Contract term, all the interior improvements, including exhibit cases, graphics, text panels, media equipment and productions, and interactivity components would become the permanent property of the city of Scottsdale at no cost to the municipality. Since the collections will be on loan to the SMoW from collectors, institutions and other lenders, it would require new negotiations with these collectors if the city were to implement a plan to continue to have professionally managed the operations ofthe institution and with a mission in harmony with the original one instituted by the Scottsdale Museum of the West and enthusiastically and generously supported by its many lenders of collections.

Programming Plan

4.3.1 Describe space allocation In terms of square footage devoted to the exhibition of collections and other types of programming. This excludes the amount of square footage dedicated to non-programming uses such as offices, storage areas, prep areas, conference rooms, rest rooms, gift shop, vendlng/cafi areas. Describe programming design philosophy.

See Tab 19

4.3.2 Describe offerings for classes, conferences and symposia, lectures, live performances.

The museum is intended to establish itself as an educational resource for the youth and adults ofthe region and visitors to it. There will be a range of lectures, workshops, hands-on educational experiences and other programs and cross-cultural public events that will support the many thematic exhibitions presented to help meet the institution's unique mission. The museum will aspire in any of its programming to eliminate social, cultural, political and generational barriers for visitors, helping them to discover personal meaning in art and artifacts, share experiences with others, and perhaps find connection with fellow students and/or guests. The museum will offer participatory programming that will inform visitors about the many qualities that make the West unique as well as offer guidance to places where they can pursue their personal interests in greater depth.

22 The museum will be a community gathering place, a learning center for children, families, seniors, tourists and new Westerners. Schoolchildren will discover that history is anything but dull when events and places are presented in a modern, engaging manner in the museum educational programs and activities. Their teachers will value the experience, too, when their students participate in meaningful activities within the context of their encounter or have the opportunity to engage in thoughtful discussion with the classmates and trained staff educators and volunteer docents. All the guests who participate in the programs and events ofthe museum will enjoy the beauty of how artistic expression is integral to human experience, not to mention the important contribution it adds to shared memory and future perspectives.

4.3.3 Describe programs In terms of types and frequencies.

Programs, educational activities, and special events are seen as integral to the museum experience and as such will be both scheduled occurrences and spontaneous ones to the benefit of the museum's varied constituencies. For nearly every one of the school group tours there will be offered specialized programming that will foster an extensive collaboration with teachers and administrators throughout the state of Arizona to provide education programs that meet the K-12 education Standards of the Arizona Department of Education. With adult tourist groups there will often be specially planned Western orientation presentations and other programs to help them understand the history and ongoing transformation of the West. It will present exciting encounters with the authentic West through the telling of the untold stories of the West; unmask the myths and realities of the West; explore the frontiers of the Old West and the New West. The "Western Experience Theater" will be a signature experience for visitors to the museum, immersing them in dramatic story-driven multimedia programs, where visitors will explore what the West has been over time, and how these individuals, their cultures, their stories, and their art—and artifacts—have served to appropriate and lay claim to the region. The museum will draw from theater, entertainment, new technologies, storytelling, and media presentations in communicating through its programming the stories of Arizona and the other 18 states of the region. The Museum plans to establish the Western Region Institute which will formally position the institution to become a primary communication center about the region, encouraging other private and public institutions devoted to the study of the past, present and future of the West to share their studies, findings and recommendations with a broader regional, national and international audience through the resources ofthe SMoW's institute. It will create an Integrated education program where a hands-on, interactive Learning and Education Center will be developed and will present in-reach and out-reach education programming to meet the needs of diverse audiences. It is the goal to present learners with an array of experience-based opportunities.

23 4.3.4 Provide examples ofthe types of art and exhibits, how they will be displayed, provide samples and use sketches, photos, video, audio or other appropriate mediums to allow the Selection Panel to "experience" your organization's vision as much as possible. To the best of your ability present this Information In way that the selection panel can "feel" your Innovation: models, renderings, samples, video and audio.

See Tabs 10,11, 20,21, 22

4.3.5 Describe how you would link this site to other tourism sites (cultural and noncultural).

Importantly, the museum is intended to complement - not compete with - the exceptional cultural institutions and other tourist attractions that already exist and thrive in the Valley and elsewhere in the 19-state Western region. It will fill a niche, appealing to visitors who want to experience the broad scope of western art, tradition, people and experiences throughout the West's colorful history. The museum will collaborate with the appropriate other cultural institutions and tourism sites and co-market its venues and identifies other ways our organizations can mutually benefit from each others' resources. The SMoW sees itself as but one entity of many that serve to educate, inspire, and entertain both residents and visitors to the Western region. Partnering to help strengthen each other is a goal of the museum and may well lead to lending and care of collections, sharing of professional staffs, training of volunteers, purchasing cooperatively in order to receive more reasonable prices, etc.

Center Parcel Cultural Parcel

4.3.6 Describe your Programming Plan as relates specifically to the cultural venue you are proposing. Including but not limited to, types of programming, days and hours of operation, public offerings, and public use of the venue. If any. If the SMoW were to assume responsibility for the Loloma Parcel, it would possibly accommodate its planned building on much of that site which could include up to 40,000sf of edifice, along with an outdoor landscaped performing arts amphitheater and cookout area. The current Loloma Transit building would remain but would be aesthetically enhanced exterioriy and interioriy and it would be re-fitted to accommodate a catering kitchen and related amenities to serve the patrons to the amphitheater and community park.

24 Marketing Plan

4.4.1 Explain how many and what level of staff will be devoted to development and marketing of the Center Parcel cultural venue and the museum.

The marketing plan will be implemented by the development/marketing director and supported by alt other ofthe museum staff whom is seen as marketers for the organization no matter one's job tile and duties. The museum director is integral to the implementation of the plan, as well.

4.4.2 Explain what Is Innovative about your concept. Explain how/what you would do to differentiate the Center Parcel cultural venue and the museum from other similar venues. Differentiate the proposed cultural venues from other attractions.

The marketing plan for SMoW is as much a plan to help the city of Scottsdale move forward by building upon the community's strategic priorities. We are to be marketed as more than "just another art museum," but a place where guests will be excited and engaged by the bold, colorful and transformational experiences as demonstrated through Western history and art. The Western Heritage theme which Scottsdale has been known for a number of decades and recently has lost much of its luster will be returned to prominence and enjoyment once again with the development of the SMoW. The marketing plan represents that uniquely to Scottsdale theme and respects its powerful draw. The plan becomes a catalyst to re-energize the Western Heritage themes which in turn will stimulate new visitation while reinforcing Scottsdale's legacy among its residents. Additionally, the marketing plan will serve as a catalyst in the arts district revitalization.

4.4.3

Provide a marketing plan including budget projections for each venue.

See Tab 24

Membership Plan 4.5.1 Describe types of memberships available for both facilities and the number of memberships expected. If any.

See Tab 27

4.5.2 Describe the cost for each membership type.

25 See Tab 27

4.5.3 Provide a projection ofthe annual Income to be raised from memberships.

See Tab 27

Gift Shop Plan

4.6.1 Provide a plan for gift shop operations/offerings that will not to compete with local theatres, galleries and storefronts but rather enhance the surrounding community.

The SMoW intends never to compete with the local businesses but with its presence in the arts district it hopes to be a tremendous enhancement to the businesses as well as the pedestrian experiences in downtown Scottsdale. It is the goal ofthe museum to establish a local business community advisory committee that would work in tandem with the museum in ways that will be mutually beneficial, including exhibition development and promotion, special events hosting, live performing arts programming, annual collaborative major community event, etc. The SMoW will become a vitally needed and welcomed anchor to the arts district and hopefully never seen as unwelcomed competition amongst the related thematic businesses.

4.6.2

Provide an estimate oftheannual Income to be generated from sales.

See Tab 25,26

26 5. Economic Plan

5.1.1 // the Vendor Is making an alternative proposal to that provided In the 2006 Feasibility Study for the western museum, such alternative proposal should Include a marketing study specific to that proposal and presentation of Information concerning outreach to the community and the neighborhood. Provide a market analysis and demand model for the Center Parcel cultural venue. Include methodology.

The SMoW is not making an alternate proposal to that provided in the 2006 Feasibility Study for the Western museum. However, it did seek the professional resources of Nichols Tourism Group, a business that has done extensive work on behalf of the city of Scottsdate and its CVB.

See Tab 28

5.1.2

Provide estimations for economic Impact, include methodology.

See Tab 28

5.1.2.1 Total on-site spending at the museum and the Center Parcel cultural venue, separated by venue. See Tab 28

5.1.2.2 Total off-site spending, an example of off-site spending Includes: lodging, shopping (clothing. Jewelry, art, other), dining and entertainment.

See Tab 28

5.1.3 Describe plan for attracting repeat visitors. Provide estimates for number of visitors and the frequency of visits.

The SMoW's plan to attract repeat visitors is several fold: • It will aggressively and timely market the frequency of changes to the museum's exhibition galleries; • It will present a variety of public programs, media presentations, special events and other educational and entertaining activities to encourage repeat visitation; • It will offer members' only events; • It will schedule reduced admission fee days; • It will repeatedly host specially planned activities for children and young adults; • It will have "Point of Pride" days for Scottsdale residents • It will provide discounted admission fees for past visitors

27 CAWLEY architects

www.caivli3Viirciiilecl.s.corii Over the past 15 years, Cawley Architects has developed a successful design build method for designing and delivering com mercial projects. This achievement is fundamentally due to the collaborative efforts of our clients and the design build team. We are grateful for the relationships we have formed

"... Design Build and appreciate the trust created in this process.

Design Build is a proven approach for solving development, excellence in design, and construction challenges during the initial stage of a project. From concept to occupancy, we work with a seasoned team dedicated to accurate, timely, and cost ... quality efficient services. Collaboration with an experienced leadership contractor and concentration on total project delivery creates the highest level of sen/ices available in today's market.

.. cost conscious approach to With unique award winning designs, innovative control building design procedures, and responsive professional architectural services, Cawley Architects designs the largest number of high quality medium sized lightindustrialand office build to suit ... performance oriented projects in the Phoenix metropolitan area.

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730 N. 52u(.[ St.icel

Phoeni.x, AZ 85008 60-^-393-5060 [•;ix 602-393-506 I Services

We are committed to providing innovative architectural design services, capitalizing CAWLEY on the Design Build approach to deliver projects on time and on budget. Each project is designed within a group of seasoned team members that set the foundation for the architects Design Build process. We believethatthehighest level of design services is achieved www.cawleyarchTtect5.com by concentrating on total project delivery by associating with an experience developer/contractorthroughoutthe process. We have successfully accomplished this with a number ofthe Valley's leading developer/contractors. We can do the same for you.

Design & Marketing • Digital Design and Renderings • Programming

Green Building and Sustainable Design • LEED • Green Globe • Existing Facility Upgrades

Architectural • Space Planning & Tenant Improvements • Preliminary Design or Pricing Packages • Design Development Drawings • Construction Documents • Bidding and Negotiation • Construction Contract Administration

Planning • Land Yield Studies & Entitlements • Site and Master Planning

Evaluation • Facility Evaluation & Enhancement • Property Evaluation Reports

We strive to create signature designs that reflect our client's values and goals. Our performance oriented Architectural services are driven by a highly evolved process dedicated to efficiency and cost effectiveness. Total Team Approach

Total Team Approach With a single point of responsibility, the Total Team Approach provides continuity and CAWLEY maximum control ofthe project schedule. Through the collaboration of designer and architects builder, the designs are innovative and affordable, and costs are within budget- reducing the probability of design and construction changes. From design conception www.cawLeyarchTtects.com to occupancy, everyone involved is dedicated and focused to achieving the client's objectives.

Performance Oriented Cawley Architects, Inc. has brought together the most experienced Design Build professionals in the Valley dedicated to providing quality services through a Total Team Approach. ThisTotalTeam Approach extends to the consultants and contractors hired to provide their unique brand of services to a project. By working with a cohesive team, using the standards developed by Mr. Cawley and his team, a client can be assured that the quality ofthe project will exceed expectations and will be a project all involved can be proud of.

Quality Leadership As Principalof Cawley Architects, Sherman Cawley leads the group with 30 years of direct, real world involvement in light industrial buildings for manufacturers, distributors, and small businesses. In ourfirm's 15 years, he has contributed to the design and construction of more than 400 projects around the Valley. Mr. Cawley excels in project leadership with initial concept and design, beginning with skillful and thorough intenHews. He has a creative knack for bringing the essence of a client's business out through the visual elements of architecture - making their visiona reality.

Excellence In Design Design Director Paul Devers has 34 years of experience in all phases of commercial architecture. Mr. Devers has practiced as an Architect since 1977 and has lived in Phoenix since 1990. His experience in projects includes office, retail, industrial, banking, corporate, hospitality, medical, and high technologies ranging from renovations to multimillion dollar facilities. As the Principal in charge of design, he is actively involved with the management and development ofthe creative process and signature ofthe firm.

Dedication and Accountability Rounding out Cawley's team are staff members who bring many years of experience in design build architectural production and administration. With the combined knowledge and dedication of our team, Cawley's Total Team Approach provides a service that focuses on client sendee, concise and accurate construction drawings, and communication with our clients—producing a financiallysuccessfu l and rewarding project. Digital Design Studio

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Wireframe Model • Conceptual Design Analysis • Material Studies • Color Studies • 3D Animation

Rendered Image • Marketing • Sales • Presentation Sales and Marketing Exhibits

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www.cawleyarchitects.com project. We consider many options at the beginning, keeping the goal of efficiency in mind. This enables the client to make the choices that ultimately T h e affect the economic viability of their project. We invite our clients to partner Design Build with us in a dedicated effort to be responsible stewards ofthe environment. Architect LEED and the United States Green Building Council (USGBC) As a member firm in the USGBC, Cawley Architects offers Leadership in Energy and Environmental Design services. This is accomplished through one of Cawley's LEED-AP's (accredited professionals) to guide the project team and client through the three (3) stage process: • Design and Engineer to achievable "Green" standards; • Registration to recognize the design effort; and • Certification by USGBC to validate the constructed results.

Green Globes and The Green Buildings Initiative As an alternative, Cawley Architects offers this service as a means to design and build Green Buildings. Although similar in objectives, there are differences between LEED and Green Globes in terms of format and procedures. We will help determine which method works best for you and your building project.

Existing Facility Improvements Existing facilities can be improved to provide a beneficial result in terms of energy conservation and reduction of environmental impacts. Cawley Architects will assist building owners by educating them and providing them a program of environ mental saving improvements in such areas as: Optimize energy performance Improved operational procedures Tax credits Utility rebates LEED for Existing Buildings Cost value analysis Awards

CAWLEY architects

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Legacy Window 2008 Best of NAIOP - Industrial Built to Suit of the Year

University Park 2007 Tempe Beautification Awards - Award of Recognition

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...^ • J

YC's Mongolian Grill 2004 Tempe Beautification Awards - Award of Recognition Design Build architecture The competitive edge

CAWLEY architects

•jli Design Build A Competitive Advantage in a Precarious Market

Toda/s Development Market In t^Hliy'K dtv^iopment xnd real e»ta^» markfrt, thatf am feviref piojeds ti> ^KKUt. creatin;) »YiOft( /.Anip»rjl>3>i and increasing effort to close "thf deal " V/hen the real estate market is robust, devetooers and owners 9*9 more al ease in putiuifl de«b logethtr However, in to^/v economic climate ¥irttH a vastty different lendif^ environment, unstable construction rosts and stringent devflopment standanls, a fail-safe strategy Is eisenttal to stay ahead of the pact(. The need for QuicV. concise, cost-effective 6tiiqt\ and construction sennces has never teen more important

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Design Build and Total Project Delivery DESIGN BUILD TRADITIONAL The design build methodology, as %rttntum CV^M developed over the years, solves many ^i*^4 -".^JM ol the Inherent difficulties that are CONTlAnOR common in the UadUionat Inatf of

owf>er, archtiecU anij contractor. t*iaujDt To avoid these ristcs it ii assenttal hi 11 or. S:'Mtw«J io focus on problem solving and concentrate on total project deiivtry. By working hand In hand wKh an expenenced and dedicated design build team, possessing ttrong leadership sVills and * eosT-coiniinu^ >initud». th« highesr oi^iHty of rtes^in and constructkin services are possible Design Build A Competitive Advantage in a Precarious Market

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DESIGN 8UILD nWE SAVINGS APPROACH with i DESIGN BUILD "The Design-Build Institute of America reported that design- build represents about 40% of the U.S. design and construction industry and, by the year 2015, it could represent up to 507o."

KEY CONSIDERATIONS 6 OF DESIGN BUILD

O single Point of Responsibility O Innovative Design Tf.e deiign ind construction process rft<(uirei llie fhe balance Oetween "design" 4ind *'bulld" creatos tilenti of rriaoy Individuili m€ H itn W confui the opposite ii tiî. It Is possioie 10 produce a highly the most effective communicatlor.t poillb e thto;H}h rraetlvf end coii*efflcient lolitiion when there is 1 the team leadet, either the contractor ot irchited, coope?#Mve effort between th» client, contioctof and wliO '4 revpcmilWe foi tfKhlno the me)n» miifiionei. d*t»lon teem Hy inlying nn lh« fomblned expedience ficibtjtlog team communication&, end ensuring proiect ofthe team a*id trusting iti intuilinn, en mnoêivt accounCab^Ky In the end. client heneflti from rieiign can tie arhit«^d lhat 11 dynamic, attractive, the coordinated efforts of a group ol profe»iionjli and wttMn Iwdget fKpeHerced in their mdivitiual difcipilnri. wofiiing toward a common of providing accuTete. tin»ely 0 Reduced Conflicts and cost-efflcient servicfi. In IK Industry whrie many thailengci affect lilt successful delivefy of a project, there can be O Established Construction Costs cormderaMe ittesi The tenilom shot emerge from Prior to Detailed Design the pressun to piiform at a high level ere minimlred by worifing wKb 1 group of profistionils whoi« "Now much does it cost?" fdenclfying the cor.itruc:ion leUtlonshipi an founoed on ttust through efftctivi costs e^rly In the design pioêiS is e huge edvenijgc communic4iinn^. thedeiign build tenm b confident that eitdbllihef immediate cvfdlbnity and conhdext and prnnîant An evperienced taatn MOiKMiQ tooelhei fo* the developer and the project A qualified design antKipetes the compleidtlts o( each piotect to solve build tf am relying on tneir combined evperit nee lisiiei hefore they oeconit ptoMemi. and current Knowledge are tbU to provide accurate preliminary g leMt«r minimel change ordefs and rooslmction dnteyt ««>ith eipeitive in mjiâglng schedules Just iodwlng the ins aiMj oats of the entitlement pickcess aiU tt«f abMily to iftognlia dt««U>omefit conflicts ren poy off tn • tig wey. The fomight *J9 m&nege tN pmcirfement of materiab and cooKSin»te the constA/ctioe ifqueiices CM speed up tompletloA. Oeilge hiiM ulldiifS mAny Usis so overUp - thoretry compfi>ssi*tQ tiit schedule laving valitabte time end timney According to the Design-Build Institute of America... "The fundamental advantage of design-build is the integration ofthe entire team from the very earliest possible time."

Summary Tips for Selecting Your Tight credit mariets. restrictive lending undenvriting. end the erosion of veal estate valuei have placed increasing demands on Design Build Team the development community A paradigm shifi n in full swing that win revamp the development practices of the past Willi a - Find companies that focus pnmarily renewed demand for accountability And affrMdabiiity. the design In the design build arena build model provides a competitive edge in ovenroming these dat^nting challenQei • SeeV design build firrm with experience in your building type A total team approach with a single pomt of responslbuity provides continuity' and maximiim control of the pco|ea schedule - look foi eKper'flnced teams lead by Through tbe collaboration of desujner and builder, the designs design ouild architects or contractors are innovative and affonlable- By carefully monitoring the drawings, c^sts are within budgeC reducing the piofaabil'ity - Research hn*** many omjects they have of design and constnKtion changes Through a dedicated and compteted together coordinated effort, drawings are prepared in a concise and efffcient manner chat minlmfses change orders and construction success rates of completed delays. Woricing ai a team, instead of ai individuals, and focusing projects by interviewing the user and on client service conflicts am reduced whSch ultimately pmduces the deiigii bulUJ team a bnancially successful and rewarding project. Discuss ttie design build process and the As the martlet rebounds, those who arv poised and ready to key steps involved frnm stan to finish poffnrm will reap the benelits If you feel that you need an evtia edge, design oultd could be the diffemnce in making your next Ask fnr a demnn^rration and examples deal a success. of project management systems

Review how the sdiedute is compiled and what techniques are used to monitor progress

Discuss the communication toOiS used to insure project accountability

Initui^ about the amount of control thi ctient can expect and how flexible the design bui^d team K in dedsion making

Ask if ti'^ chent is allowed to recommend team members with whom they have an estib«>shed business relationship About the Contributors Cawley Architects Inc. is an architectural design build firm based in Phoenix, Arizona specializing in commercial building design. Founded by Sherman Cawley in 1994. the firm has successfully completed over 400 projects in Che industrial, commercial and office markets. Paul Devers joined the firm in 1999 as a principal and contributed to this paper.

For more information on design build, please contact Sherm Cawley or Paul Devers at: Cawley Architects, Inc., 730 N. 52nd Street, Suite 203 Phoenix, AZ 85008 602-393-5060, or email us at ipfQ^^cMey^rchitectSrCom. Shernun Cawley ^nd Paul Devers

CAWLEY architects 730 N. 5Znd St. Suite 203 Phoenix, AZ PH. 602.393.5060 FAX: 602.393.5061

cawleyarchitects.com

Acknowledgements - Artkl* publKhfd from The Cornerstone Fall 2007 iisue, •Nfwilttt«r of CJw AlA Public Archiunt Knowledge Commumty. Written by Da\nd Frommer, AIA - Deifgri-SuHd Jeom Building from on Arthittct's Fenpectivt, an artid* ^written by Milch Moefer with Hoefer WysocW. - Detifn Build Inttitut« of Amtricft, www.dbla.org - A)A/CC Handbook on Project Delivety LGE DESIGN BUILD BUILT FOR YOUR SUCCFSS PROVIDING - ARCHITECTURE ] ENGINEERING i FINANCING ASSISTANCE I CONSTRUCTION & SUPERVISION

OVER 700 BUILDINGS & 12 MILLION SQUARE FEET BUILT SiiicG 199^]. LGE lias consisienily provided excepiional design-build services ior indusirial, oifice. retail and roGdical iacilliies !hroLighoul the Valley. LGE has conipleied over 700 buildings ioLaling more than ] 2 million square i'eGt, lirnily establisliing LGE as a leader in commercial real esiate ^ development snd construciion.

"We are exiremelv pleasofl with ttie LGE experience. From arcliitectiiral iliroiipji conslniclion. Ilie process v/ns very efficient and ptofessional. We coiilil not be tiappicr ivitli our commercial real estate investment.

BoVaPa Partners, LLC From conception through to completion, LGE is there each step of the way.

Our business owners and top management collaborate with you ttiroughout the entire process - from land analysis, design and planning to permit acquisition, financial assistance and construction - building your future the way you envision it.

Arlkin Colour Inc, / BoVaPa Partnen, LLC ALL WITH LGE'S ON-TIME DELIVERY & GUARANTEED PRDJECT PRICING Pride of ownership has always been the key component of LGE*s philosophy, whatever the project's parameters. From the 7,800-square-foot office for Smile Dental in Peoria to the 395,000-square-foot Emerald Design Centers in Tempe, LGE delivers the ultimate in impressive and well-designed space.

"It was a pleasure Romp. fhrough Ihe process "I can t tell you how much this new facility It has been a year since we moved into our of designing our new facility with you and has enhanced our business, not to mention beautifully built building. I would like to take your staff. You gave us great msigfit and the morale boost we ve all enjoyed as a this opportunity to congratulate you on a job recommendations tfiat were invaluable to us." result of our new surroundings." well done and let you know how pleased we are lhat we chose ICE for this project. " Jonaition Blasdeti Randall E. Davidson ftcculron. Inc President Dennis W. Alessandro Imaging Systems of Arizona President Action f^otorsports, Inc. "We are thrilled with our new building and grateful for the services of LGE Design build in the process. I consistently receive compliments on the building design and the final product."

Kurt Kuhl, It IS lare to finil a contractor that delivers It IS a rare ttiing m busmess wtien ttie only thing you can This sii biiilding protect v-as the thud otiice condommmm Vice President on! me anil on b.BBcl - e»en more tare to say about a partner is superlatives. Whenever I Ihinli about proiect that IC{ has built for RRS i Company, lor a total of 18 ditcoi^er a turn that can lake a project rur relationship wih IG[, I have to smile Voui approach buildings. We like the IGE design process and are especialty Kuhl's Electric. Inc. IromAloZ." .md eiecution ofthe one-stop shop larrhiteclure finance pleased with the design and functionality ol the buililmgs and and co-istructKini tor burliline and development has made the sue improvements for this proiect. Construction went this prorni truly enjoyalite." smoothly ard market acceptance was evidencerl by IDO% sell out immediately upon completion."

Pamted iv-th Oil lohn Forstcr. RRS L Company Every single desii^n and construction phase is handled directly by LGE, ensuring the ease and reliability of working with a single source

This centralization facilitates communication, allowing us to control costs, manage change orcJers, guarantee on-time delivery and maintain our tradition of excellence.

1907 ^ i • it

LGE's design-build process couldn't be simpler. Our ream or experts will assisi you in all aspects of design, conslruction, engineering and job costing. Let. LGE transiorm your vision into reality. Call LGE lo [ind out how effortless your next building project will be. We personally guarantee it. "l^. NJF 'n '-':\': S'^Ri - • LGETEAMORGAMZATIONALCHART DESIGN BUILDER-LGE DESIGN BUILD David E. Sellers PRESIDENT Project responsibilities, initial concept design coordifiation, proposal package coordination, client negotiations, contract negotiations, project kick off coordination, assist in Citv approvals, revieuu draujings, revieuu and selection of final bids, revieuj of construction schedule and process and ongoing client assistance.

Frank Pettit

Project responsibilities: project kick off coordination, citv permit coordination, construction drauuing coordina tion, construction scheduling, qualitv control / qualitv assurance, schedule updates, overall project management

Fred Moil

Project responsibilities: assemble preliminan/ bid package and specifications, ongoing pricing assistance, hard bidding, subcontractor qualifving, subcontractor sign off.

Vance Chapman

Project responsibilities: revieuj of construction draiuings prior to permit, all dav to dav site activities, all subcontractor coordination. DESIGN BUILDBM ARCHITECT-CAUULEY ARCHITECTS Sherman Cauuiev PRESIDENT/CfO Project Responsibilities: preliminarv design coordination, project scheduling, citv revieoi submittal, construc tion drauuing revieuu, permit tracking, course of construction onsite revieujs

Paul Devers ['•-{11 IfPi ?JiMih' i P Project Responsibilities: construction draoiing revieuj and coordination, consultant coordination, citv revieuu submittal, construction draujing revieuu, permit tracking, course of construction site revieujs.

STRUCTURAL ENGINEER - CARUSO TURLEV SCOH Richard Turlev

Project Responsibilities revieuu of preliminarv drauuings, recommendation of most cost efficient structural design, structural engineering, coordination uuith other consultants, special inspection during construction. ESIGNBUItDTEAM MECHANICAL ENGINEER - MECHANICAL DESIGNS. INC. Justin Grimmett PROJECT DIRECTOR Project Responsibilities mechanical pre-lavout uiith Oainer, mechanical design and coordination.

ELECTRICAL ENGINEER - TOI\IV UJOO ENGINEERING Greg Hampton

Project Responsibilities: electrical pre-lavout uuith Ouuner, electrical design and coordination, fixture selection

LANDSCAPE DESIGN-TJIVICOUEEN Tim McQueen

Project Responsibilities, landscape design, plant selection, coordination of landscape approvals. NICHOLS TOURISM GROUP Advisory services for an ewlving tourism industry

Scottsdale Museum of the West Recognizing the Facility's Broad Strategic Implications

The purpose of this market positioning summary is to consider likely impacts and implications of the development and operation of the Scottsdale Museum of the West (SMoW.) These summary points are reinforced with the attached set of slides.

Since the mid-1990s, Nichols Tourism Group (NTG) has been an advisor to the state of Arizona, cities throughout the state, as well as to the city of Scottsdale. The visitor industry advisory work has ranged from broad strategic planning efforts, to more specific product development analysis and recommendations. The following points utilize this deep market understanding, as well as the detailed market feasibility study conducted for the facility in 2006 by AMS Planning and Research.

> Many of the findings and recommendations related to the 2006 feasibility study are relevant and reasonable in today's visitor market, as the metropolitan region has regained much ofthe visitor spending declines experienced during recent recessionary times and is achieving spending volumes similar to those experienced in 2006/07. The SMoW concept, building scale, and experiential components are similar to that envisioned in the 2006 study, further reinforfcing the relevancy of feasibility fmdings. Updated construction and operational costs are noted in other portions ofthe proposal response.

> While the operation and performance ofthe SMoW is clearly a key consideration, it should be recognized that the successful launch of a westem themed experience has implications beyond project visitation levels alone. In previous strategic studies, including Morrison Institute's ''Which Wco'Scottsdale'' and NTG's 2006 Strategic Plan for Scottsdale's visitor industry, the loss of unique Scottsdale identities and reduced differentiated destination assets were placing Scottsdale in an "At Risk" position. While possessing a strong mix of destination resorts, golf and spas, many other competitors have added these man-made attractions. True differentiated destination themes are becoming increasingly critical for successful fiiture competitive performance.

> In past visitor survey initiatives, the region's westem heritage was one of the most powerful differentiated themes and had one of the strongest areas of interest in visitorsto the region. While powerful, the range of ways a visitor (or resident) can experience these westem themes has continued to decline, with very few venues providing a 365 day experience opportunity.

531 E Secretariat Drive* Tempe, Arizona 85284 (602)369-8526 * Fax (602) 257-8837 website www.nicholstourismgrp.com > By introducing a compelling westem heritage experience, the SMoW provides the following market attributes to Scottsdale:

o // can significantly leverage Public Sector dollar, o // can be a catalyst to re-energize Westem Heritage themes, o // can stimulate new visitation to Scottsdale, o // can reinforce Scottsdale's legacy among its residents, and o // can be a catalyst in the Arts District revitalization.

> Leveraging Public Sector Dollars - through the attraction of world class collections and direct construction cost funding, the SMoW will potentially leverage the city's contribution by an approximate 3 to 1 ratio.

> Re-Energizing Western Heritage Themes - the facility itself will be a key asset in re energizing a historic theme that Scottsdale has long been known for, its Westem Heritage. Additionally, it will serve as a foundation to integrate other powerful, synergistic themes, such as regional art galleries (many of which possess westem themes) and native experiences. While these other assets currently exist, they have been losing power and the SMoW would serve as an integrator, re-energizing these assets as well.

The facility also has the potential to play a role as a Westem Region Institute, where creative thinking that impacts westem states could be housed. This integrator role would thus clearly serve to re-energize a western heritage theme, but could also play a much broader catalyst role in leveraging other powerful opportunities.

Art/Galleries

531 E Secretariat Drive* Tempe, Arizona 85284 (602)369-8526 * Fax (602) 257-8837 website www.nicholstourismgrp.com > Stimulating New Visitation - as previously noted, the region's westem heritage is a powerful theme that has the potential to drive new interest and visitation. In reviewing recent attendance trends in similar regional facilities, including newly opened experiences like the Musical Instrument Museum, attendance at the SMoW is believed to conservatively reach 120,000 patrons annually. Beyond the expenditures at the museum itself, by introducing a compelling new attraction to the Scottsdale landscape, a mix of new visitors could be attracted. Using conservative assumptions (detailed in the attached slides) approximately $45 million of new visitor spending would be stimulated by SMoW to Scottsdale hotels, restaurants and retail businesses. Also important to the City, these new visitor expenditures would generate approximately $1.1 million in new taxes forthe city.

> Reinforcing Scottsdale's Legacy - like cities across the country, the ability to pass on a community's history and heritage to its citizens is of critical importance. The SMoW would not only be a key new asset appealing to visitors to Scottsdale, it would also be an important resource for Scottsdale residents to understand the city's legacy and heritage.

> Arts District Catalyst - the Arts District has been an important node in Scottsdale's downtown and has helped expand the city's cultural offerings. While important, the District is facing difficult times and the ability to stimulate new foot traffic and attention to the region is an important goal for the city. The SMoW will deliver this renewed sense of interest in the area and act as a new "anchor attraction" for the region. Through cooperative events, exhibitions and activities, new life can be brought to this critical region of the city.

In conclusion, the SMoW will be an important addition to the Scottsdale landscape and will introduce a compelling new way to "serve up" a westem heritage experience to visitors and residents alike. While the attraction itself is an important addition, it is important that the broader strategic roles the facility will play is also fully recognized and appreciated.

531 E Secretariat Drive* Tempe, Arizona 85284 (602)369-8526 * Fax (602) 257-8837 website www.nichoIstourlsmgrp.com 2.1.

The Operating Vendor, the Scottsdale Museum of the West, a 501-C-3 organization. Is a start-up entity that has been dedicating Its activities toward the eventual development of its planned new Western themed Institution. In the process of performing Its business of beginning to cultivate private sector support In the proposed museum development It has realized to date the following direct and Indirect financial "investments" through donations. In-kind services and partnerships:

• Private sector donations and pledges: $1,200,000.00 • Trustees' personally paid for museum visits around the country: $40,000.(X) • Trustees' personally paid for travel to work sessions with museum design consultants: $5,000.00 • Personally paid for by Trustees various meetings' expenses: $3,0CX).(X) • Partially paid for costs of special consultancies: $350,CXX).(X) • Planning and administrative expenses: $1,2(X),000.00 • Planning and development expenses for branch facility: $2,800.(XX).00 • In-kind professional services: $1,000,0(X).00 • The value of commitment from collectors to provide long-term loan of collections: $20,000,000.00

The Scottsdale Museum ofthe West, Inc. has engaged for a number of years the professional accounting services of the following Scottsdale entity to conduct the organization's financial compilations in accordance with Statements on Standards for Accounting and Review Services Issued by the American Institute of Certified Public Accountants. Upon request, this firm would provide copies of the SMoW's financial reports which would consist of Statements of Financial Positions and Statements of Activities for the period requested.

Paul A. DonIs, CPA, PC 5839 E. Wilshire Drive Scottsdale, AZ 85257 (480)947-5482 FAX (480) 947-5019

The confidential Financial Statements and/or Annual Reports representing the other corporate entities ofthe aforementioned Limited Liability Company (LLC) will be presented in person if the LLC Is selected to be Interviewed by representatives of the city of Scottsdale. FINANCIAL ASSUMPTIONS

OPERATING BUDGET

The operating budget includes pre-opening costs of $500,000 and projections for the first five years of operations.

Year One Year Two Year Three Year Four Year Five

EARNED INCOME Admissions 1,080,000 $900,000 $850,000 $875,000 $900,000

Programs 50,000 60,000 75,000 75,000 75,000 Facility Private Use 50,000 100,000 125,000 125,000 125,000 Gift Shop 200,000 225,000 275,000 280,000 290,000 Memberships 85,000 160,000 175,000 180,000 185,000 Gifts/Grants/SoonsorshiDS 100.000 250.000 300.000 375.000 447.000 Total Contributed Income 1,565.000 $1,695,000 $ 1,800,000 $1,910,000 $2,022,000

EXPENSE Personnel $700,000 $750,000 $850,000 $900,000 $950,000 Admin-Supplies/Equip 20,000 25,000 30,000 30,000 30,000 Program-Supplies/Equip 20,000 35,000 40,000 45,000 55,000 Exhibition Development 100,000 100,000 150,000 150,000 150,000 Development/Membership 35,000 50,000 55,000 55,000 55,000 Marketing/Public Relations 200,000 225,000 150,000 165,000 175,000 Gift Shop 150,000 200,000 200,000 210,000 220,000 Maintenance/Utilities 150,000 160,000 175,000 190,000 210,000 Contract Services* 190.000 150.000 150.000 165.000 175.000 Total Operating Expense $1,565,000 $1,695,000 $1,800,000 $1,910,000 $2,022,000

•Includes Insurance and Security Scottsdale's Museum of the West • Optkm B 79n cf If ickj • III ir mm^twi Scottsdale's Museum of the West- Opthm B idj CAWLtY Scottsdale's Museum of tlie West • Option B ideS CAWLtY % ' • •

Scottsdale's Museum of the West • Option B ihiinfHiiVi nJuwiy h >c wv'.coKio owy cyy.

- - - - 4 ;

EASTELEVAnON

SOUTH ELEVAnON

EXTERIOR ELEVATIONS

t % tt M

Scottsdale's Museum of the West • Option B 7017 or »ft rr

NORTH ElEVAHON

EXTiRJOR ELEVAHONS vir»i-r • 1 » m

Scottsdale's Museum of the West • Option B (deg CAWlEY 1 SJf t PlAH

SiullMlile't Muiiumiftin IWeil Cwtai fiml r*iii^1fciiii It. I Scottsdale Museum of the West Entry/Lobby Optiori 'A* Sq Ft Option 'B' Sq. Ft Loioma Transit Center Lobby 1107 1327 N/A Ticketing 117 283 N/A Office 199 163 N/A Retail 863 884 N/A Subtotal 2286 2657 N/A Exhibition Spaces Option'A' Sq Ft Option 'B' Sq. Ft Loioma Transit Center Great Hall 3915 6275 N/A Collectors Gallery 3090 2777 N/A Orientation Theater 2250 1944 N/A Icons of the West Gallery 4281 4153 N/A Scottsdale Galley 1826 1917 N/A Abe Hays Gallery 3858 4381 N/A X' Gallery 3290 7551 N/A Gathering Center 1100 1417 N/A Subtotal 23610 30415 N/A Support Facilities Option 'A' Sq Ft Option 'B'Sq. Ft Loioma Transit Ceiritei^ Loading/Receiving 638 486 N/A Secure Storage 1557 834 N/A Temporary Storage 1139 N/A 1000 Security Office 228 214 N/A Catering 100 172 N/A Equipment Storage 343 494 N/A Volunteer Room 250 219 N/A Subtotal 4255 2419 1000 Administratioh Optibh 'A' Sq Ft Option'B'Sq. Ft Loloma Transit Ceriter Operations Office 170 N/A 400 Staff Offices 223 N/A 1200 Break Room 122 N/A 200 Conference Room 153 N/A 500 Subtotal 668 N/A 2300 Public Facilities Option 'A' Sq Ft Option 'B* Sq. Ft Loioma Transit Center Restroom - Women 415 464 N/A Restroom - Men 482 423 N/A Janitor 100 124 N/A Gift Shop 1100 884 N/A Subtotal 2097 1895 N/A Circuiation Space Option 'A* Sq Ft Option 'B' Sq. Ft Loloma Transit Center Stairs 733 1054 N/A Elevator 95 111 N/A Hallways 716 1459 N/A Subtotal 1544 2624 N/A Totai Area: DESIGN BUILD PROJECT: SCOTTSDALE IWUSEUM OF THE WEST - OPTION SQ FOOTAGE BUDGET ARCH CAWLEY 1ST FLOOR 15,926 SF PLANS DATED 09/15/2011 2ND FLOOR 17,500 SF LOCATION SCOTTSDALE

GROSS SF 33,426 SF

BUDGET 07/17/2012 1050 1 STAKING $5,000 2140 2 DEMO $15,000 2175 3 DUST CONTROL (SWAPP) $5,000 2200 4 GRADE & PAVING $40,000 2250 5 TERMITE TREATMB^ $2,438 2525 6 EXTRUDED CURBS/ STRIPING $12,500 2550 7 SITE UTIUTIES $20,000 2670 8 TRUNCATED DOME PAVERS $4,000 2900 9 LANDSCAPES IRRIGATION $25,000 3300 10 CONCRETE AND DEMO $450,000 3375 11 SITE CONCRETE $55,000 4200 12 MASONRY $11,500 4400 13 POUSHED CONCRETE $105,000 5500 14 STRUCTURAL & MISC. STEEL $701,946 5525 15 ARCHITECTURAL RAIUNG $55,000 5580 16 METAL WALL PANELS $45,436 6100 17 WOOD STRUCTURE N/A 6170 18 STEEL / WOOD TRUSSES N/A 6200 19 FINISH CARPENTRY $0 6400 20 MILLWORK $0 7200 21 INSULATION $40,000 7500 22 METAL ROOFING $100,718 7500 23 TPO ROOF WALK PADS $50,860 7700 24 ROOF HATCH $750 6600 25 SKYUGKTS N/A 7900 26 CAULKING $38,000 7900 27 EXPANSION JTS $10,000 8100 28 DOORS & HARDWARE $8,000 8200 29 DOOR U\BOR INCLUDED 8300 30 OVERHEAD DOORS KOOO 8800 31 GLAZING $57,000 S200 32 KAL WALL $186,000 9250 33 DRYWALL $93,240 9300 34 CERAMIC TILE $45,000 9500 35 DROPCEIUNG $4,000 9600 36 CARPET / V.C.T7 SHEET VINYL $4,000 9600 37 RUSTING OF METAL $25,000 9900 38 PAINTING/SEALING $35,000 9960 39 MARUTE/F.R.P. $900 10240 40 DOCK EQUIPMENT $0 10250 41 FIRE EXT./SIGNS/KNOX $10,000 10600 42 TOILET PARTITIONS $7,150 14200 43 ELEVATORS $65,000 15400 44 PLUMBING $43,290 15550 45 FIRE SPRINKLERS $36,485 15555 46 AIR UNES $0 15650 47 HVAC / GEN. SHEET METAL $1,400,000 16000 48 ELECTRICAL $501,390 16050 49 DRY UTIUTIES $25,000 16075 50 FIRE ALARM $20,000

SUB COSTS 4,365,623

SOFT COSTS 697,285 CONTINGENCIES 2.5% 126,673 GENERAL coNDfTiONS Factor 3.0% 155.664 pROnT & OVERHEAD Factor 5.0% 267,268 SALES TAX Factor 5.82% 326,503 TOTAL $6,938,626 DESIGN BUILD PROJECT: SCOTTSDALE MUSEUIVI OF THE WEST - OPTION '*A' SQ FOOTAGE BUDGET ARCH CAWLEY 1ST FLOOR 15,926 S.F. PLANS DATED 09/15/2011 2ND FLOOR 17,500 S.F. LOCATION SCOTTSDALE

GROSS SF 33,426 S.F.

NOTES BUDGET 1 ARCHITECTURAL 246,575 2 STRUCTURAL 26,000 3 ARCH / MISCELL. INCLUDED 4 LANDSCAPE 3,000 p 5 PLUMBING INCLUDED D e MECHANICAL 40,000 A 7 ELECTRICAL 16,500 a FIRE SPRINKLER DESIGN INCLUDED 9 LEED PROJECT MANAGEMENT 45,152 10 GBCI FEES 3,400 11 ENERGY MODEUNG 9,600 12 COMMISSIONING 30,000 13 G&D PLAN 7,500 14 SURVEY 2,900 15 PRE G&D 3,200 16 REPLAT DESIGN FEE 0 17 SOILS REPORT 3.000 IS HAZARD REPORT 0 19 DESIGN REVIEW 4,500 20 VARIANCES 0 21 UTIUTY POWER FEE 48.160 22 IMPACT FEE 0 23 CIVIL REVIEW FEE 4.830 24 LANDSCAPE REVIEW FEE 2,070 25 REPLAT PERMIT 690 P 26 FIRE UNE REVIEW 690 E 27 PLAN CHECK FEE 11.138 R 2S OFFSITE CONCRETE 2.500 M 29 OFFSITE LANDSCAPE 0 1 30 SEWER TAP PERMIT 0 T 31 G&D PERMIT 2,760 S 32 BUILDING PERMIT 20.588 33 WATER METER INCLUDED 34 OFFSITE BOND 1.500 35 LANDSCAPE METER . INCLUDED 38 SEWER DEV. FEE COMPLETE 1.5" 58,833 37 WATER DEV. FEE INCLUDED 38 WATER USE FEE INCLUDED Ivl 39 CONST. STAKING EE HARD COSTS 1 40 AS-BUILTS •EE HARD COSTS s 41 SRP STAKING 3,500 c 42 BLUE PRINTING 2.000 E 43 CONCRETE TESTING 8,000 L 44 COMPACTION TESTING 3.000 L 45 SPECIAL INSPECTION 13.000 A 46 DUST PERMIT 1.200 N 47 SECURITY 10.500 E 46 MAI. APPRAISAL 0 0 49 C OF C + UABIUTY INS. 56.500 U 50 LEGAUCONTINGENCY 2.500 s 51 CC & R FEES 0 TOTAL" 697.285 PROJECT: SCOTTSDALE MUSEUIVi OF THE WEST OPTION "B' SQ FOOTAGES ARCH CAWLEY 1ST FLOOR 21,529 SF PLANS DATED 07/03/2012 2ND FLOOR 18,574 SF LOCATION SCOTTSDALE

GROSS SF 40,103 SF

BUDGET 07/17/2012 1050 1 STAKING $14,000 2140 2 DEMOUTION $35,000 2175 3 DUST CONTROL (SWAPP) $25,000 2200 4 GRADE & PAVING $40,000 2250 5 TERMITE TREATMENT $2,400 2525 6 EXTRUDED CURBS / STRIPING $7,500 2550 7 SITE UTIUTIES $20,000 2670 8 TRUNCATED DOME PAVERS N/A 2900 9 LANDSCAPE & IRRIGATION $80,000 2950 10 RELOCATE TREES $45,000 3300 11 CONCRETE $403,600 3375 12 POUSHED CONCRETE $140,361 4200 13 SEALED CONCRETE $2,500 4400 14 MASONRY/STONE $108,800 5500 15 STRUCTURAL & MISC. STEEL $725,000 5525 16 MISC. STEEL CANOPIES $72,000 5580 17 PARKING CANOPIES N/A 6100 18 WOOD STRUCTURE N/A 6170 19 STEEL INCLUDED 6200 20 FINISH CARPENTRY $0 6400 21 MILLWORK N/A 7200 22 INSULATION $65,000 7500 23 METAL WALLS AND ROOFING $187,340 7700 24 ROOF HATCH $750 8600 25 FOAM ROOF WITH WALK PAD! $25,000 7900 28 CAULKING $35,000 7950 27 EXPANSION JT $15,000 6100 28 DOORS & HARDWARE $24,700 8200 29 DOOR LABOR INCLUDED 8300 30 OVERHEAD DOORS $2,500 8800 31 GLAZING $29,500 6650 32 KAL WALL $165,000 9200 33 STUCCO N/A 9250 34 DRYWALL $112,481 9300 35 CERAMICS STONE $45,000 9500 36 DROPCEIUNG $5,000 9600 37 CARPET / V.C.TJ SHEET VINYL $5,000 9900 38 PAINTING $43,585 9960 39 MARUTE/F.R.P. $900 10240 40 DOCK EQUIPMENT $0 10250 41 FIRE EXT./SIGNS/KNOX $10,500 10600 42 TOILET PARTITIONS $7,120 14200 43 ELEVATORS $65,000 15400 44 PLUMBING $86,200 15550 45 FIRE SPRINKLEF^S $52,200 15555 46 AIR UNES N/A 15650 47 HVAC / GEN. SHEET METAL $1,700,000 16000 48 ELECTRICAL $603,945 16075 49 EXISTING BUILDING Tl $300,000 SUB COSTS 6,307.882

SOFT COSTS 802,225 CONTINGENCIES 2.5% 162,763 GENERAL CONDITIONS Factor 5.0% 313,143 PROFIT & OVERHEAD Factor 5.0% 328,600 BOND Factor 1.5% 103,672 SALES TAX Factor 5.82% 401.687 TOTAL PROJECT: SCOTTSDALE MUSEUIVi OF THE WEST - OPTION "B' SQ FOOTAGES ARCH CAWLEY 1ST FLOOR 21.529 S.F. PLANS DATED07/03/2012 2ND FLOOR 18,574 S.F. LOCATION SCOTTSDALE

GROSS SF 40,103 S.F.

NOTES Budqet 1 ARCHITECTURAL 313.735 2 STRUCTURAL 30.100 3 ARTIST INCLUDED 4 LANDSCAPE 5,500 P 6 PLUMBING 40,000 0 6 MECHANICAL INCLUDED A 7 ELECTRICAL 35,000 6 FIRE SPRINKLER DESIGN 0 9 PREG&D PLAN 4,500 10 SURVEY 7.500 11 G&D PLAN 14,000 12 REPLAT DESIGN FEE 3.000 13 SaLS REPORT 3,000 14 LEED SERVICES 88.152 15 DESIGN REVIEW 7.500 16 VARIANCES 0 17 UTIUTY POWER FEE 48,160 18 IMPACT FEE 0 19 CIVIL REVIEW FEE 4.830 20 LANDSCAPE REVIEW FEE 2.070 21 REPLAT PERMIT 690 P 22 FIRE UNE REVIEW 890 E 23 PLAN CHECK FEE 12.500 R 24 OFFSITE CONCRETE 2.500 M 25 OFFSITE LANDSCAPE 650 1 26 SEWER TAP PERMIT 0 T 27 G&D PERMIT 2.7B0 S 28 BUILDING PERMIT 22.000 29 WATER METER 1.500 30 OFFSITE BOND 0 31 LANDSCAPE METER 1" 7.413 32 SEWER DEV. FEE 1.5- 44.755 33 WATER DEV. FEE 0 34 WATER USE FEE 0 M. 35 CONST. STAKING HARD COST 1 36 AS-BUILTS HARD COST S 37 SRP STAKING 3.500 C 38 BLUE PRirmNG 2.000 E 39 CONCRETE TESTING 8.000 L 40 COMPACTION TESTING 3.000 L 41 SPECIAL INSPECTION 13.000 A 42 DUST PERMIT 1,200 N 43 MAI. APPRAISAL 0 E 44 SECURITY 10.500 0 45 C OF C +UABIUTY INS. 56,000 U 46 LEGAL«;ONTlNGENCY 2.500 S 47 CC & R FEES 0 TOTAL- 602,225 PROGRAMATIC PRINCIPLES Experience Approach

How will the Museum's message become a permanent part of our guest's life? The experience approach ofthe Scottsdale Museum ofthe West is:

GUEST FOCUSED - The theme statement says it all - "Find yourself in the West." This is a direct invitation to the guest. The inherent promise involves discovery and positive personal transformation. This experience is about the guest. It's relevant to his/her life and is in tune with his/her needs, concerns and interests — no matter what age, gender, or background. EXPERIENTIAL, TACTILE & IMMERSIVE - This Museum will put our guests in the middle of an experience that is bold, dramatic, tactile, and immediate. The experiences one can have here are not something one can do at home. It is not observation, it is participation. The Museum invites exploration and discovery in a way that supports the authenticity of the narratives. MANY KINDS OF EXPERIENCES - "Surprise gets our attention. Interest keeps our attention." This Museum will combine the best of traditional exhibition design methods with the latest immersive and experiential techniques. The great stories ofthe Western region will be told in unexpected, innovative and educational ways. These include immersive theatrical presentations and experiences that invite guests to explore the working environments ofthe West's most iconic artists. Both these will illuminate the gallery experience and heighten the impact ofthe cultural narratives presented therein. ENTHUSIASTIC - The stakeholders in this Museum are passionate about their region. They love it, and want to share this zeal with their fellow VVesterners. This Museum won't just reveal the region- it will celebrate it. The celebration will begin as early as possible - with a visit to the Museum website, for example. It will go on as long as possible - for a visit, augmented with a visit to the gift shop. It will inspire visits to Scottsdale galleries, and to other local and regional historic and cultural sites. Most important, it will bring back to Scottsdale its past reputation of being the place to connect with Western Heritage!

The Creative Plan: A Three Part Experience

While it is not essential for guests to experience the plan in a rigid sequence, the experience is designed to unfold in three parts. Each part supports the others as a cohesive total experience. PART ONE - Guests arrive in the dramatic lobby and are oriented in a welcoming environment. From the lobby guests can enter the Museum's special effects theater where we present the signature show "Drawn to the West." In the lobby, one can also visit The Gateway, an area with information on other places nearby to complement the Western experience. PART TWO -Proceeding to "Creating the West", guests are invited to explore the lives and processes of legendary Westerners and to discover the transformational quality of the region's land and people. There, one can also see demonstrations of a variety of art mediums and even try a hand at them. PART THREE -Venturing throughout the museum, into various Visitor Experience "Zones," guests experience the authentic and "best of the West" art and artifacts in an aesthetically pleasing and welcoming environment. By design, the Scottsdale Museum ofthe West celebrates art and history in new and exciting ways. The stories, art and artifacts are presented as an integral and accessible expression of life in the West. The Museum will put the visitor at the center of the adventure.

THE GUEST EXPERIENCE

Lobby - The Welcome

The lobby is an engaging space that welcomes and invites guests to come inside. The first impression will be one of a hip and contemporary place where the Old West meets the New West ORIENTATION - Guests get a friendly welcome as they buy tickets. Information about exhibits and special programs is clearly presented, and way finding is simple and intuitive. ART & ARTIFACTS - Select works, both historic and contemporary, might be presented here to preview what is being shown throughout the Museum. Site-specific art installations will be commissioned to change out and refresh the space. PHOTO OP - One way the museum will convey that it is a friendly, welcoming place is by providing guests with a "photo op" in the lobby. This can be anything from a dimensional opportunity to "step into" a famous Western painting (colorful cowboys in front of a diorama of Monument Valley) to a chance for parents to photograph their children on a horse as a dimensional "Sheriff" looks on. A good way to think about this opportunity is to ask, "What image do we want guests to e-mail their friends, and tape to the refrigerator?" GATEWAY TO THE WEST - When a group of guests say, "I love this place! Where can I go to see more?" the museum can direct them to the "Gateway." Here a volunteer will be trained to provide every possible opportunity to turn the Museum experience into a lifetime of regional art and history adventures. The volunteer will provide information on Scottsdale galleries and area museums, as well as, other art, nature and history attractions in the Western region. The Museum will collaborate with other state and regional organizations to develop self-guided tours that guests can use to extend their experience.

"Drawn to the West - Through the Eyes of an Artist" The museum's first floor theater features a signature multi-media production. The subject of "Drawn to the West" is the Museum's theme - "Find Yourself in the West." Here guests meet a series of artists whose lives were impacted by the splendor, mystery and drama of the great American West. Their transformative moments are dramatized in emotional terms as we see the inspired art they produced. When guests proceed to "Creating the West" they will discover an opportunity to learn more about some ofthe artists presented in "Drawn to the West."

CREATING THE WEST GALLERIES:

Taking a cue from the museum's mission statement, a good way to engage our guests is to create a space that has these qualities:

IMMERSIVE-You explore period themed environments filled with unexpected and surprising show elements that entertain and educate. UNIQUE STORIES-These are stories that play with the expectations of guests, and surprise them with new twists and turns. ILLUMINATE THE PAST TO SHAPE THE FUTURE - Here we reveal the vision and process of artists and other Westerners whom have made contributions to the region's maturation, to inspire the visitors of today and tomorrow.

|THE STORY CIRCLE

The West has long been famous for its storytellers. A central feature of "Creating the West" is a special area dedicated to the art of storytelling. The Story Circle is an intimate gathering place that can accommodate 25 to 30 guests. Whether it's an actor,a volunteer enacting famous stories of the region, an actual cowboy retelling his real adventures in the West or though the incorporation of media technology, you will be mesmerized by this unique opportunity to hear tales of the West such as:

Famous lawmen and outlaws ofthe Southwest such as Buckey O'Neill, Cap Mossman, Johnny Ringo, Doc Holiday, and Virgil, Wyatt and Morgan Earp

Tales ofthe infamous Indian Wars and the fierce Apache warriors such as Magnus Coloradas, Cochise, Victorio and Geronimo How women of the West, such as Nellie Cashman, Sharlot Hall, Fanny Nampeyo, and Sandra Day O'Connor helped to shape the frontier and blaze new trails

THE EDUCATION CENTER & ART STUDIO

Once you have delved into "Creating the West," you may have a chance to participate in the making of art yourself Education Center's Art Studio. In the Art Studio, museum staff, volunteers and visiting artists will demonstrate and invite guests to participate in a variety of artistic mediums and techniques. School and tour groups can book this space from special activities and educational programming.

• You can pick up a paintbrush and experiment with watercolors and oil paint, comparing the two side by side by copying portions of a Thomas Moran painting.

• You might sit at a traditional Navajo loom and learn how to weave a rug with rich colors and traditional patterns.

• At a potter's wheel you can try to "throw" a pot in a traditional Hopi shape.

• Carving tools will be available, along with wooden "plates" used for wood engravings. You can carve a scene on a plate and then use a printing press to make your own limited edition similar to the illustrations that were printed in period magazine such as Harper's Weekly.

• Modeling clay will be available for those who are inspired by Charles Remington and want to try their hand at sculpting a figure.

Changing Exhibitions featuring the Hays Gallery

This is the climactic payoff for your visit to the Scottsdale Museum of the West. Here you get a pure experience of the very best artifacts and artwork from the West, showcased in a setting designed to convey the narrative power of these works. The Great Hall and the Hays Gallery will be filled with soft, natural light. It will be designed to show all kinds of art - paintings, sculpture, artifacts and installations. Like the rest ofthe museum, it will be a warm and inviting place - elegant, but seasoned with a bit of rustic charm. In short, this is where the Old West and the New West come together.

In the Collector's Gallery art collections borrowed from private individuals and other museums will be rotated on a regular basis. Here museum curators will be able to further explore the themes that are introduced in the other experiences in the building. With such a rich palette of stories to choose from, this area will be a constant draw to visitors.

Some subjects that could be covered throughout the museum in exhibitions and state-of-the- art media technology include:

Great Westerners (Mo Udall, Sandra Day O'Connor, Edward Abbey, Andy Devine, Rex Allen, Kit Carson, Geronimo, Barry Goldwater, Carl Hayden, etc.) "The Five C's" (Copper, Cattle, Cotton, Climate, Citrus) Route 66 and Roadside America Flora and Fauna Water! (Dams, Canals, Irrigation and Agriculture) Ranchers and Farmers Railroads and Western Expansion Visions of Monument Valley Native Americans Railroad Posters as Art Sunsets and Landscapes Myths and Legends Movies and Television Cultural Preservation Taming ofthe West Settlement and Strife Manifest Destiny Discovery

Some of the most important and respected deceased artists whose iconic works would be loaned by private collectors and institutions for exhibit in recognition and celebration of their emphasis and production of the region's subject matter- scenic wonders. Native Peoples, Historical Figures, Cowboys, Lawmen and Outlaws, Pioneer and Business Women and Military Heroes, are: Thomas Moran, Frederic Renriington, Maynard Dixon, William R. Leigh, Carl Oscar Borg and Gunnar M. Widforss. There are many other museum-quality artists who spent time in the region creating great works of art which will be identified, articulated and exhibited by the new museum, among them are: H. B. Mollhausen, F. W. von Egloffstein, William Henry Holmes, Julian Scott, F. S. Dellenbaugh, Louis Akin, Kate T. Cory, Lon Megargee, Lillian Wilhelm Smith, Edgar Payne, Gerald Delano, George Elbert Burr, Gustave Baumann and many others, including the Taos Society of Artists and the founding members of the Cowboy Artists of America, George Phippen, Charlie Dye, Joe Beeler, John Hampton and more recent members of distinction, including John Coleman, Gary Niblett, Fred Fellows, Bill Owen, Bill Nebeker and Tim Cox. ORGANIZATIONAL STRUCTURE AND GOVERNANCE

BOARD OF TRUSTEES

The Scottsdale Museum ofthe West incorporated as an Arizona nonprofit corporation on March 30, 2007. The activities and affairs ofthe corporation will be conducted and all corporate powers will be exercised by or under the direction of the Board of Trustees. The Board of Trustees is vested with the direction of the affairs of the corporation, and will function as the organization's governing board for all purposes.

The Board includes not fewer than 5 or more than 25 elected Trustees. The bylaws define designated trustees as the Museum Director and a representative chosen by the museum docents. Additionally, there is permitted designated Trustees who are appointed by the Board of Trustees. Designated Trustees are non-voting members ofthe Board and serve the Board in an advisory capacity. The Trustees may serve up to two full three-year terms. The bylaws provide for the election of new trustees by current members of the board of trustees. The board also elects a chairman, vice-chairman, secretary and treasurer.

Staffi ng

The Board of Trustees has the authority and responsibility to appoint, evaluate and terminate the museum director and determines the compensation of the museum director. The museum director will be the chief executive officer of the corporation and will supervise the daily operations and affairs of the corporation assuring the vision and mission of the museum are supported and carried through to implementation.

Four management functions will report directly to the director: Curatorial/Programs, Business/Facility Management, Marketing and Public Relations, and Development.

Senior Curator - Responsible for ensuring all exhibitions, programs and activities are effectively presented and delivered to guests. These areas include adult and special programs, family programs, school programs and exhibitions. Additional responsibilities include oversight ofthe Registration/Collections Management, Contract Exhibit Designer and Technicians, as well as the Chief Educator and Assistant, docents and other program volunteers.

Manager of Marketing and Public Relations - Responsible for working with the Director to ensure the successful marketing of the museum in order to meet attendance, special events and facility rental expectations. Oversight responsibilities include management ofthe ticketing and admissions, front desk volunteers, the newsletter/e-newsletter and maintenance of the web site, and membership. Membership/Special Events Coordinator: Reports to the Manager of Marketing and Public Relations. In conjunction with the Manager, oversees the membership program, develops marketing strategies including publications, printed materials and advertising. Coordinates special events.

Visitor Services (Part-time): Responsibilities include management and implementation of admissions, promoting and selling memberships to guests, organizing and communicating new and updated information; providing positive contact with all guests and ensuring their questions and concerns are addressed. Development - Funds are included in the budget for either a staff development director or a contracted senior fund raising professional to assist the museum director during the capital fund raising period. Development Assistant: Maintains and updates donor records; researches prospects; drafts grant requests and funding proposals as required. Operations Manager - Responsible for administration, finances, budget and accounting, central point of contact for the contract administration of outside vendors. Oversees information technology, museum store, and catering operations, security and maintenance and building operations.

Custodial and Maintenance Woricers (Contract): Responsible for the cleanliness, upkeep and maintenance of the facility. Works under the direction of the Operations Manager.

Securitv Staff (Part-time): Monitors and ensures the protection, security, and safe environment ofthe building, art, artifacts, collections, staff, and guests by conducting routine and in some cases, emergency calls for service. Works under direction of the Operations Manager.

Store Manager: Oversees ali activities associated with the gift shop and cafe, including merchandising, overseeing inventory, and any retail activity on the website. Supervises part time store assistants and volunteers.

Assistant to Director: Reports to the Director. Provides centralized administrative services supporting the daily and ongoing activities including answering the main phone line, collecting weekly payroll/timekeeping records and ordering of supplies and servicing administrative needs ofthe director and board of trustees.

PERSONNEL PLAN Proposed staffing for the Scottsdale Museum of the West includes 11 full time employees and 6 part time staff positions. Total annual personnel costs for the first full year of operations are estimated at $700,000. This includes benefits factored at 22% for full-time and 14% for part- time staff. GRAND CANYON GRANDEUR and the COLORADO PLATEAU 1853-1950 Paintings and Prints from the A. P. Hays Collection of Arizona Art

To Native Americans, Spanish Explorers and Arizonans there is one seminal landscape towering over all other scenic and historical landmarks in the state.

It seemed necessary and vital to provide a collection of Grand Canyon artworks by the group of early artists in America and from overseas, who first painted its many vistas. The Hays Collection numbers 100 paintings and prints by 24 artists, who worked in a period from 1853 to 1950.

Artists represented include many ofthe most important in American and Western Art; Moran, Holmes, Remington, Aiken, Borg, Baumann, Bun', Burgdorff, Byxbe, Cook, Couse, Groll, Leigh, Mollhausen, Von Egloffstein, Parsons, Payne, Scott, Symons, Widforss. Williams, Yoshida as well as several unknown artists and photographers.

From 2007 to 2011 the Collection was on tour at four museums in Arizona and one in Utah. It is accompanied by three catalog editions, two hardcover and one softcover. Essays on each ofthe artists are provided along with fifty illustrations, mostly in color. The collection continues to expand and in 2010 a two- page Addendum was added to the catalogs. Extensive graphic displays and text panels provide historical and artistic context for the viewer.

People in the Arts have recognized that the Hays Collection is the largest and the most comprehensive ofthe Grand Canyon and Colorado Plateau ever publicly exhibited in this State. CARL OSCAR BORG (Born Sweden 1879 - Died Santa Barbara 1947) Major Southwest Artist of Hopi 8i Navajo Peoples, Cultures, Rituals 8t Sites

The Province of Tusayan, as Spanish explorers called the land ofthe Hopi and the Navajo, offered splendid solitude, limitless horizons and a wilderness of forms and colors. So wrote Carl Oscar Borg in the exhibition catalog of fifty paintings completed during a first visit among them in 1916.

'The inhabitants... are marked by an Arcadian simplicity, by a dignity and reserve that I am sure," he noted, "would be hard to find among any other living peoples." The primitive lives ofthe two Indian societies appealed to Berg's artistic and philosophical nature. Borg had established a European reputation at Paris by 1913 and had earned seven medals for his American art by 1916.

Thereafter Borg spent large portions of sixteen consecutive years living with the two Indian Tribes, studying and recording their customs and rituals in his art and poetry. No other artist matches his record. As a result. Berg's volume of work in drypoint etchings and in woodblocks is unequaled. The Smithsonian Institution at Washington exhibited fifty Borg prints at a major solo exhibition in 1934. The Hays Collection, by many times the largest in existence, contains about 75 percent of his Western prints: 38 drypoints and 12 woodblocks. The collection contains 25 paintings of watercolor, gouache, tempera and oil and a number of ephemeral objects.

Borg, while a self-taught, plein air painter, was mentored by the dean ofthe California School of Impression, William Wendt. He and Borg are among the small group of five painters credited as the founders of California Impressionism at Los Angeles in the early 1900s, He was "discovered" in 1909 by the greatest patroness in American art history, Phoebe Apperson Hearst. She helped establish his European reputation and arranged sponsorshipof his first visit to the Southwest in 1916 by the University of California, Berkeley and the U.S. Bureau of Ethnology, Washington. His mission: help assure the preservation of Native Cultures.

The categories of light, color and form demanded by Impression served him well in the harsh environment of the Southwest Desert. Borg is recognized for landscapes, portraits and genre scenes ofthe Indians. Ethnologists and critics felt his knowledge and understanding of their cultures was supreme.

The Exhibition which includes a book with a major essay and 80 illustrations is titled: Carl Oscar Borg/Art ofthe Great Southwest in the Land ofthe Hopi and the Navajo/Paintings and Prints from the Hays Collection. Essays of his life and career are provided. Hopi and Navajo artworks and text are divided into several categories: In The Pueblos, Spirituality and Ceremonialism, Portraits, Land ofthe Navajo, Under Western Skies, etc.

Celebrated Artist Thomas Moran in 1916 considered Borg "preeminently the highest grade of any artist in America today." LON MEGARGEE/LEGENDARY PRINTS OF THE SOUTHWEST/THE HAYS COLLECTION

Legendary Prints ofthe Southvi/est is a traveling exhibition highlighting the graphic artwork of Lon Megargee (1883-1960), Arizona's original cowboy artist. The collection, which is the most comprehensive ever provided of the artist's graphic works, has been shown at museums in California, Utah and Arizona (Tucson, Mesa, Yuma, Prescott and Surprise venues). On special request, a small number of major Megargee oil paintings are also provided to museums who Qualify. The collection has more than fifty prints, many related ephemeral objects and is the largest known.

At age 13, Megargee came to Phoenix by himself after the death of his father in Philadelphia. He worked on relatives' farms and decided at age 16 to make his living as a cowboy. After a major drought ended his cowman dreams, he enrolled twice at the Pennsylvania Academy in Philadelphia and later at the Los Angeles School of Art and Design. His efforts to become an illustrator and painter succeeded when the Santa Fe Railway in 1911 purchased several paintings. In 1913, he won the major commission for 15 murals at the Arizona State Capitol building: large, historic, iconic depictions of the state's many bounties. Then the SFR became a client for 42 years.

The artist had several stints as an art director for Hollywood film studios, including Paramount, And in the 1920s became a major illustrator for Western magazine covers. His 24 oils ranked him at the top of this competitive field and won him major commissions from the Stetson Hat Co., railroads and other national firms. He also begari making black and white woodblock prints and published a limited edition book of 28 titled The Cowboy Builds a Loop. He later published a lithographic portfolio of 16 Southwest subjects.

Lon Megargee's archetypal images ofthe Southwest secure his place in Western art history, particularly in his graphic work. There simply is nothing in quality, variety or quantity that matches his prints, and his finest paintings are their equal, as well. He competed and compared favorably in New Mexico with Taos and Santa Fe school artists in annual museum group and one-man shows from 1924 to 1948. In California, he competed in museum exhibitions at Los Angeles and San Diego and was represented by the three most prominent L.A. galleries. New York's renowned Grand Central Art Galleries gave him a one-man show in 1956. WILL JAMES (Canadian-American 1892-1942) IMPORTANT ARTIST & AUTHOR OF THE WEST

Will James/The Hays Collection is an historic and encompassing assembly of art, literature , artifacts and memorabilia of the renowned Western artist and author during his professional career: 1920 to 1942. Bom in Quebec Province, James went west at age 15 to become a cowboy. His early days involved capturing and "breaking" wild mustangs, becoming a " top hand" for cow outfits, rodeo competitions, 17 months in Nevada prisons for cattle rustling, a six-month stint in Hollywood as a film stuntman and bit player in Westerns, and as a cavalry scout on the Mexican Border in WWl. During his roving range years he spent time at ranches in the Prescott and Kingman areas of Arizona.

In 1919, the cowboy was nearly killed by a bronc in a preliminary rodeo mishap. He turned to illustration, an art form for which James had shown promise as a youth. Will had scattered his sketches in cow camps from Canada to Mexico during his cowboy years. At San Francisco, artists Maynard Dixon and Harold Von Schmidt helped him catch on with Sunset Magazine in 1920. After a few years of hard times, James sent a short story with action drawings to Scribner's Monthly magazine. Despite its cowboy vernacular and over objections of several editors, they paid him $200 and published his illustrated short story in March 1923. He soon followed with illustrated cowboy stories for Scribner's and other National magazines.

His first book was published by Scribner's in 1924 to rave reviews. Its great editor, Maxwell Perkins, quickly suggested James write a novel. His 1926 Smoky The Cowhorse won the Newbery Medal for Children's Literature, became a best-seller, had tiiree movie adaptations and has never been out of print. After Smoky, Will James' meteoric rise to National fame assured him the top rung as the cowboy expert of the American West. His 1930 book Lone Cowboy was a Bopk-of-the-Month Selection, a best-seller and a film in 1934.1n ali, he wrote and illustrated 27 books, had five movie adaptations, was published in six foreign languages and during his lifetime was better known than Remington and Russell.

The Hays Collection is currently on a ten-month loan to the National Cowboy and Westem Heritage Museum in Oklahoma City and has been exhibited, as well, in Canadian, Califomia (twice), Texas and Montana museums. That part of the collection now on tour comprises 265 objects. It is the largest and finest in private hands with 100 original works of art, all 27 of his books and those illustrated for other authors, letters, photographs, posters, prints and several dozen artifacts including his Winchester Ml894 carbine, pen knife and WWI dog tag,

A. P. Hays is the recognized expert for Will James, providing authentications and appraisals for James' art and literature for auction houses, museums, galleries and collectors. For many years he has provided the Westem art world with curated exhibitions and written documentation for artists: Dixon, Remington, Borg, Payne, Widforss, Leigh, Megargee and others. MARKETING PLAN

TARGETED CUSTOMERS

Museums are civic gathering places where people can share experiences that dissolve barriers and promote tolerance, education and understanding. The Scottsdale Museum of the West will aspire to transcend social, political, and generational barriers, so that visitors can form personal connections with works of art and social ties with their fellow guests. They will come away with a new sense of themselves and a deeper understanding of how the iconic images ofthe West were shaped over time. Based on conclusions ofthe AMS Planning & Research Feasibility Study and other professional assumptions, in addition to anticipated 70% tourists, the market area for the Museum is the area directly surrounding downtown Scottsdale within 20- mile and 30-mile radii. A secondary market that would participate at a lower rate or for special programming comprises the larger CBSA^ of Phoenix. In addition to the population data, this section also contains an overview of competitive venues in the primary and secondary market areas. This summary provides supporting information that will assist the Scottsdale Museum of the West to distinguish itself from these venues in order to provide a unique and quality experience that attracts and benefits the citizens of Scottsdale and its surrounding region. Demographic measures such as education, household income, and age are most typically associated with arts participation (i.e., over three quarters of the typical art gallery audience have college degrees and household incomes greater than $75,000.) The data suggest that the majority of Scottsdale residents, and of the larger 30-mile radius, are characteristic of a typically active arts audience. The high income levels and educational attainment point to a potentially strong local visitor and support base. The greater concentrations of households with children under 18 also suggest a strong interest, support for, and participation in educational programming. Projections for the next ten years suggest a continuing of these trends. With more people moving into the area, the market base will expand and the revenue and funding potential for the Museum will increase.

Art Potential Index Figure 1 provides a measure ofthe overall quality ofthe arts market in the area. The number in each cell is an index that compares arts attendance propensities for a range of arts activities for the Scottsdale market area to the national average. An index number of 100 is average. As an example, the index of 120 for "Belong to Arts Association" for Scottsdale 20-mile radius indicates that household members are twenty percent more likely to belong to an arts

^ Core Based Statistical Area (CBSA) is defined by the US Census Bureau as a geographical area consisting of a count>' or counties with a high le\ el of integration as measured by commuting patterns. association than the national average. Overall, the Scottsdale market area shows a strong propensity towards participation in a wide range of arts activities.

Figure 1: Market Potential

Scottsdale Scottsdale Phoenix 20 Mile 30 Mile CBSA

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BplnnP to an Art<; A<;<;nriatinn i?n 118 11R

Go tn Music/Dancp 114 117 111

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Some of the larger groups to be attracted to the Museum include: • STUDENTS AND TEACHERS - We are living in a time when most schools have made arts education a low priority. A primary mission ofthe Scottsdale Museum ofthe West is to involve young people and educators by connecting them to the great art and stories of their region. We will engage them with modern storytelling techniques and support their experiences with pre and post visit educational materials. It will enlist them in a great mission - to seize their heritage of courage and creativity, and achieve even greater things. We will present the Southwest story as ever evolving - not complete or finished. The next generations - these young guests - will face the greatest challenges and enjoy the greatest opportunities in history. • WESTERNERS - Residents of the region can discover how this area has created unique images and stories. They will feel welcomed and at home. The themes are universal and designed to appeal to a broad general audience from the auto mechanic in Yuma, to the gallery owner from Scottsdale, to the 9-year-old girl from Prescott. The larger than life heroes ofthe Southwest have qualities - courage, audacity, and integrity - that everyone admires and wants to emulate. Every gallery, exhibit, show and presentation will say to Southwesterners, "This is your place. You are somebody with a rich legacy, and a great destiny." • FAMILIES - By design, this place will welcome families and make sure there is something to engage every member of the family. The exhibits and shows will be designed to foster intergenerational dialog. Children, parents, and grandparents will be encouraged to discuss the art and stories they encounter. This is not a place where parents have to drag their children - everyone will find something to enjoy. • TOURISTS-The Museum will increase cultural tourism in Scottsdale and throughout the entire state. It will attract international media attention with its great themes, innovative galleries and immersive shows. It will serve as an active gateway to other museums, historical sites, cultural attractions and natural wonders, encouraging tourism throughout Arizona and the West. (See "Helping Scottsdale Move Forward" attachment) • BABY BOOMERS - Boomers will soon be retiring, looking for places to spend their leisure time. More important, they are looking for meaningful ways to connect with powerful, inspiring ideas and values. The Scottsdale Museum ofthe West will offer them the chance to do all of these things. Boomers with children will discover a place that communicates great history and art in an entertaining, memorable way. • SNOWBIRDS-This group of seasonal residents is looking for a place they can return to, year after year, to revisit classic stories and be stimulated by new and changing exhibits and programs. They will come to know the Museum as the first place to visit upon their return each winter. • NEW ARRIVALS - The Southwest is a place where people have come to re-imagine their future and create their destiny. This Museum presents the Southwestern identity as an inspiring group of core values derived from history and art - where the old west meets the new west, the unique struggle to survive in a harsh environment, the passion for creativity, the ability to ride waves of change, and the willingness to ignore convention and be guided by dreams. The Museum invites new arrivals to embrace these values and become part of this grand adventure.

Magazine recommendations to consider for advertising and feature stories to build museum excitement during year before opening including and inserts to provide residents with status updates on museum construction and projected opening day: • 101 Magazine: has articles and features that communicate and represent the Scottsdale area, with a circulation of 73,000 mailed directly to businesses and residents in North Scottsdale • Scottsdale Magazine: a resource for affluent Southwest Living with a readership 245,000 an issue • Western Art Collector: promotes historic and new work coming up for sale at gallery shows nationwide • The Arizona Collector's Guide: an art gallery guide for the entire state • Trends Magazine: circulation 40,000, high society lifestyle magazine with focus on fashion trends, restaurants and Valley events • Phoenix Home & Garden: with over 461,400 readers, the magazine describes itself as the ultimate guide to the affluent Southwest lifestyle As a part of the plan for opening, a series of stories and features should be developed for the Arizona/Scottsdale Republic and the Scottsdale Tribune. Staff and volunteers should host pre- opening tours for media and local constituents allowing them to have a "preview of the museum experience." Funds should also be planned for advertising the grand opening four to six weeks out in the Sunday editions as well as Thursday's Republic's "Calendar" and Tribune "Get Out" sections. Staff should also negotiate special opening weekend feature sections (an opening week commemoration publication) to highlight all aspects ofthe museum: architecture; programs; exhibitions, trustees, donors and fund raising success, volunteers and staff. Staff should also negotiate with television and radio stations to cover all aspects of the planned special events.

ANNUAL MARKETING PLANS

To meet and exceed the attendance projections, (especially with a limited expense budget) the Marketing Department will develop comprehensive marketing, community relations, media relations, public relations and internet plan. Foremost to be developed is an institutional brand/identity that will distinguish the Scottsdale Museum of the West from the other museums in the greater Phoenix market. Co-op Marketing Agreement with SCVB: Like the pre-opening plan, the Museum of the West needs to have a cooperative marketing agreement with the Scottsdale Convention and Visitors Bureau to spread the word to the tourism community. It is projected that out-of-state tourists will make up as much 70% of the museum attendance. In addition to the direct marketing budget allocations, exhibit program budgets include funds for marketing and promoting events. Build Mailing List: Key to driving and sustaining attendance will be an aggressive program to build a prospect and inquiry list. This list will be important to maintain and cultivate a relationship with guests and prospective donors. The museum should promote its website on all printed materials and invite as well encourage people to join its mailing list. Whether inquiries or request come by mail, email, in person or by phone, the museum should solicit a caller's programmatic preferences (programs for young people and families, festival activity, museum rentals, programs for singles, teens etc.). E-Mail and Website: Marketing efforts should be heavily weighted in the use of email as the primary marketing vehicle for the museum. This is the least expensive and most targeted method of promoting events and exhibitions. The website should feature a calendar of events and preview the 'story tellers' and artists in residence, classes, workshops and lectures. Links should be established with the SCVB, area resorts, azcentral.com; arizonahighways.com; scottsdaleaz.gov; downtownscottsdale.com; and experiencescottsdale.com. The museum should also plan to distribute a semi-monthly e-mail newsletter with news of upcoming events. Education Community Communications: education brochures and emails need to be developed and sent to teachers and educators from pre-schools through university to communicate the wide ranging programs and exhibitions available. Local Advertising and Public Relations: press releases and feature story placement should also be a regular part ofthe marketing plan. A local advertising plan should be developed to build awareness ofthe museum's existence and location, along with the types of experiences available utilizing online and print vehicles to educate and entice locals to patronize the museum. > Print—Local • Newspapers and Magazines: Arizona/Scottsdale Republic, Tribune Newspapers, Scottsdale Airpark News, Arizona Foothills Magazine, 85255 Magazine, Scottsdale Magazine, in-room magazines at Scottsdale hotels; 101 Magazine; Scottsdale Magazine; Western Art Collector; The Arizona Collector's Guide; Trends Magazine; and. Phoenix Home & Garden. • Rack Brochures: 50,000 rack brochures should be printed and a contract negotiated with a local distribution company to insure distribution in high trafficked areas for tourists and local residents. > Public Relations—Local • Send regular updates to local media about museum programs and activities • Develop the web site that can be linked from the City of Scottsdale's and SCVB web site; include the web site on all correspondence and publications • Utilize City of Scottsdale and Scottsdale CVB web sites, publications, collateral, and other communication vehicles to educate locals about offerings • Allow for photo-op postcards to be sent from visitors at the Museum of the West with a web-cam snap shot of themselves. As described in an earlier section of the plan, this can be anything from a dimensional opportunity to "step into" a famous Western painting (colorful cowboys in front of a diorama of Monument Valley) to a chance for parents to photograph their children on a horse as a dimensional "Sheriff looks on. Collect e-mail addresses of both sender and recipient. • Create a 30-minute promotional program and air it regularly on CityCable 11 • Educate area hotel/resort concierges on an ongoing basis as to the Museum of the West's existence and offerings. Develop cablevision programming to include a schedule of events which will run continually along the bottom of the guests TV screen • SCVB can include visits to the museum—when appropriate—into site visits and familiarization tours for media, meeting planners, tour operators and travel agents > Relationship Marketing: • Ongoing communication with guests regarding exhibits, programs and special events strengthen customers' affinity for the museum and provide reasons to return regularly to the museum. • Museum hosted special events for members and collaborative partners

COMPARABLE INSTITUTIONS

The proposed museum will "compete" with a range of museums and arts institutions in the Phoenix area. AMS researched the major museums and compiled data on their operations. programs, markets and finances. Following is a summary of the data illustrating points of comparison to the proposed Museum ofthe West.

THE HEARD MUSEUM

The Heard Museum is a nationally recognized, well-respected and important institution in the Phoenix metropolitan area. It is dedicated "to educate the public about the heritage and the living cultures and arts of Native peoples, with an emphasis on the peoples of the Southwest." Their collection of art and objects from native people of the Americas, Asia, Africa and Oceana is housed and exhibited in a 140,000 sq. ft. building. Their permanent exhibition showcases objects from the collection in an innovative and engaging way. A program of temporary exhibits focuses on ethnography, anthropology, and art related to their mission. The Heard is home to two very successful annual events, the Heard Museum Guild Indian Fair & Market and the World Championship Hoop Dance Contest. Their annual attendance 2008 was 180,000.

PHOENIX ART MUSEUM

The Phoenix Art Museum is located approximately Yi mile from the Heard Museum. Their current building comprises 203,000 square feet, having opened a new 30,000 square foot addition in 2006 to house its modern, contemporary, and Latin American art collections. The collection of over 17,000 objects is focused on art - paintings, sculpture, drawing, photographs - ranging from European and Asian to American and contemporary Latin and Southwest. Facilities include a 300 seat auditorium and programs include Sunday Family Days and Second Saturday Family Days as well as gallery lectures, concerts, and films. For forty years the Museum has hosted the Cowboy Artists of America annual sale and exhibition Attendance, a very successful event that draws visitors and collectors from throughout the world. (Sales in 2006 topped $2.3 million.) Overall the museum attendance for 2008 was 200,000.

ARIZONA MUSEUM OF NATURAL HISTORY

The Arizona Museum of Natural History (formerly the Mesa Southwest Museum) focuses on the natural and cultural history of the American Southwest. From prehistoric cultures to Spanish missions to 1950's domestic life, its mission is "to collect, preserve, research and interpret the natural history of the Southwest with emphasis on Arizona and Sonora and within this broad region, the cultural history ofthe Phoenix Basin and adjacent uplands." The facility itself has about 80,000 square feet of exhibition space and includes a 150-seat auditorium. The organization also owns and operates the Sirrine House, a fully restored Victorian house and museum in Mesa, and maintains the Mesa Grande ruins, an historic Hohokam structure. Attendance in 2008 was 150,000. ARIZONA HISTORICAL SOCIETY - CENTRAL ARIZONA DIVISION

The Arizona Historical Society aims "to collect, preserve, interpret and disseminate the history of Arizona, the West, and Northern Mexico as it pertains to Arizona." It has multiple facilities throughout the State (Tempe, Tucson, Yuma, and Flagstaff). Their facility at Papago Park has a particular focus on the 20th century. A manuscript and photographic archive concentrating on the history and life of central Arizona is located here, including the objects, documents and oral histories obtained through the Phoenix History Project from the 1960s. Attendance from 2008 was 25,000.

I DESERT CABALLEROS WESTERN MUSEUM

The Desert Caballeros Western Museum is located in Wickenburg, approximately an hour outside of Phoenix. Its small collection (400 works) focuses on Western art and life and its permanent exhibits include period rooms and dioramas. At the heart of this museum, named "2007-2008 Western Museum ofthe Year" is its prized collection which tells the vast story of the West through the eyes of America's great western artists. In its galleries, visitors are treated to the early explorer artists such as Catlin; the monumental landscape artists such as Bierstadt and Moran; the classic cowboy artists such as Remington and Russell; Taos society artists such as Sharp, Dunton, Berninghaus and Ufer; and contemporary artists such as Mell. Visitors are also treated to the A. P. Hays' Spirit ofthe Cowboy Collection with its array of authentic cowboy gear and memorabilia dating back to the Mexican vaquero tradition. There is a Hall of History where thousands of years of desert frontier history are captured in time. An early Wickenburg Street Scene with a general store, hotel, saloon and the fully outfitted rooms of a turn-of-the century home. A Mineral Room and Native American Room, and an exhibit especially for children called Out on the Ranch, add to the experience. Attendance in 2008 exceeded 75,000.

ATTENDANCE AND ADMISSION

Attendance in the first year of most cultural institutions is higher than the succeeding year. A conservative estimate for the initial year's attendance is estimated at 120,000. Year two is estimated at 75,000 and year three at 80,000. Attendance is positioned below the Phoenix Art Museum and the Heard Museum and just above Taliesin West at 113,000. It recognizes the strong geographic location of the facility in the heart of Scottsdale's gallery district, the strong allure of the western experience, and the strong marketing and public relations support the facility can expect to receive from the visitor industry. Pricing for the Museum ofthe West is set at a level competitive to the other major museums at $10 for adults, $8 for seniors, and $5 for children. The admission fee includes access to the Western Experience Theater and the Story Circle programs as well as the exhibitions on the third floor. School groups will not be charged for museum exhibition tours. Group rates will be made available to organizations and elder hostels which make arrangements in advance. Additional fees will be associated with special event programs.

Attendance and Fee Schedule^

Youth/

Institution Annual Senior Student Children

Name Attendance Adult 65+ 12-17 6-11

Phoenix Zoo 1,340,000 $14 $9 $6 $6

AZ Sonoran Desert Museum 475,000 $14.50 $12 $9-$12 $2-$4

Arizona Science Center 345,256 $14 $12 $11 $7

Desert Botanical Gardens 640,000 $15 $13.50 $5 $4

Heard Museum 180,000 $15 $13.50 $6-9 $6-9

Phoenix Art Museum 179,000 $10 $8 $4 $4

Taliesin West 113,000 $27-$60 $23-$36 $10-$30 $10

Pueblo Grande Museum 61,348 $2 $1.50 $1 $1

FUND RAISING

MEMBERSHIP AND MAJOR GIFTS A key component ofthe initial and ongoing marketing plan includes a SMoW membership drive. Annually the SMoW will host a minimum of three special events; a major gala and two smaller events targeting individual/family and business/corporate memberships within the community. Individual and family memberships will range from $55 - $200 annually, business and cooperate membership will range from $500 - $2,000. The SMoW is expected to have a couple thousand members during the first year of operation, resulting in membership fees of $85,000. Major gifts will be targeted from the general public. Individual donors, estimated at up to 100 by the end of the first year, are expected to contribute up to $100,000, including family and business sponsorships

2 20o6 according to Phoenix Business Journal, Book of Lists All memberships include unlimited annual visits to the SMoW, advance notice of special events and programs and seasonal discounts at the gift shop.

Scottsdale Museum ofthe West

Membership Benefits

Level * 1 2 3 4 5 6

Benefit $55 $100 $200 $500 $1,000 $2,000

Unlimited admission for 1 adult X

Unlimited admission for 2 adults X

Unlimited admission for 2 adults; XXX X children/grandchildren free

Guest passes 4 10 14 unlimited

Members' only hours XXXXX X

Member discounts: 15% off classes/workshops and 10% off gift X X X X X X store

Quarterly electronic newsletter XXXXX X

Advance ticket offer (special events) XXXXX X

Special events discount, 10% XX X

Annual Special Tour(s) XX X

Donor Wall Recognition X X

Annual donor party 2 4 8

Free (level 2) gift membership 12 4

Private Reception 2

* Levels 1-3 are individual and family memberships; levels 4-6 are business and corporate memberships. A donation plaque will be prominently displayed at the Museum to acknowledge donations received of $1,000 or more. Additionally, the SMoW's web's site will include a special section identifying current volunteers and members, if desired by the individual or organization. The site will include a link to make a gift or donation. On an ongoing basis, a registration book will be available for visitors to leave their e-mail address to receive a quarterly electronic newsletter outlining current activities, future events and program schedules ofthe Museum. The e-mail will include the Museum's web address and outline the benefits of membership.

ANCILLARY INCOME ACTIVITIES

FACILITY RENTAL Special areas of the Museum will be made available for private use for groups from 25-1000. The varied usage fees include admission to the Museum. All rentals are for a maximum of five hours; all events must end by 11:00 P.M.

GIFT SHOP

The Gift Shop will be managed by the Museum staff. The average expenditure will be $3.25 per visitor. It will be opened daily during normal business hours and at other times when the Museum is being used for special events. The gift shop, open daily during normal business hours, will provide the visitor with a wide price range of Western art and history books, gifts and souvenirs to help commemorate the guest's experience. The Museum will net 25% of gross sales based on industry standards provided in the Nichols Report.

FACILITY RENTAL AND CATERING SERVICES

Whether the guest is planning a meeting, special event or an elegant reception, the Scottsdale Museum of the West will be an ideal location for many occasions. Except during the hours the museum is open to the public, the full museum is available for rental to groups and individuals for all types of special events. All outdoor events must end by 11:00 P.M. The user has private use of the designated facilities only. Renters of facilities may not bring in any food or beverages at any time. The Museum of the West will designate up to five preferred caterers who will be able to bid the catering for private events. Caterers will offer a complete selection of food at a variety of prices from "budget" to high-end. The Museum of the West will carry its own alcoholic license and will provide beverages for all catered events. ofthe Ivest

Helpfng Scottsc/^le m Build/na on Scottsc/^le's Stt^tegic Moti'tfes

SMolVc^n 9€/cfress key city tjtiotities

Residents Say Scottsdale is... Losing its unique identity Which Way Building its unique identity How Can Scottsdale 25% BIH^^^^^H Retain and Enhance Source; Wright Consulting Services. 2002. inIts Great Quality of Place? fie a hub ofconnecteis dncfseive asp/aces Redefining ofg/obd/ connections ancf cuftuta/ eânge. Tfiey nây a/so excef in toun'sm, ivhich is, in Greatness large part about making connections How Can Scottsdale Shape its Niche peopie to p/aces in tfie case ofi^cationets in a New Era? anc/iDeopie to peopie in tiie case of con\/entions and eûtiê retreats. Sne^kina to ^006 Touristtj Stt^tegic Pl^n €J^^ 'Vttiguely Scottsf/9le

Tourism Development and Marketing Strategic Product Differentiation Plan Potential Climate Moderate r Scottsdale Natural Environment Strong Resorts Moderate Golf Moderate •nc>«f> ^ Tmmm Spas Moderate Old West/Nathre Cultures Strong Galleries Moderate Shopping Moderate •(5)r Southwest Lifestyle Strong Goal 1 - Effectively differentiate the Scottsdale Hotels Low Food & Beverage Moderate destination by directing the next stage of its Tennis Low ^y^^i ''tourism lifecycle'' in ways that reinforce and Nightlife Moderate rejuvenate existing qualities and characteristics Source: Tourism Development and Marketing Strategic Plan, 2006 '(/' t ''Uniquely Scottsdale. > CollectCollectivi e themes of art/museum/western & Native cultures are dominant themes Activities P9tficip9te(f ttj for Scottsdale visitors - far above spas, golf, sporting events Participating 7 y J or kids activities 90

Art galleries and museums 50 > These themes need to be Western culture and attractions 50 [ative American arts and culture 49^ reinvigorated and interpreted in Outc 41 new and different ways for Special Events 36 today's audiences Nightlife 35 Overnight trips 29 Golf 29 > A centralized destination/facility Spa/rejuvenation 27 Sporting Events 24 can be powerful, but its ability to Kids Activities 10 cross-sell other symbiotic assets ^J^n be even more important Source: City of Scottsdale Leisure Visitor Inquiry Sun^ey, 2010 SMo /Possesses a Af/V of

4 X It C9ii sigijiffcantfy /evetsge Pubfic Sectot tt can be 9 C9t9fyst to teênetgi^ l/i^tetn Heiitase tbeoies tt can stinjufate /leiv i^sftation to Stoftsc/d/e it can ê//|/b/t:e Stoftsoâ/e^ feaacy an^ns its tesic^nts tt can be a catafyst in the Aits Oisttfct teuitafiâtion /Hiblic Oo//<9/s

iblic Resources ale Commitment - Physical Building Development $10,000,000

Private Resources Additional Interior Costs $3,000,000 Collections Value $25,000,000

City has no responsibility for ongoing operating costs of facility!

/ewe/a^eof by aiJ^fXikiihaMy 3 to 2 SAfoiV ^e-^/ie^/>©s Sto^fso^/e's

Scottsdale Museum of the West serves Scottsdale's Western as the anchor for the expansion of a Heritage Pyramid Western Heritage theme.

Western heritage - a powerful and differentiated brand element

Western SMoW plays an ''integrator'' role, Region helping support other differentiated Institute elements

Museum of Western Region Institute - "'hub of the West A connectors'' critical planning initiatives for the western U.S. would be undertaken. Native Offerings Art/Galleries tnstfttittonal Ttj/nk/ng

Autry Collaborative Efforts CM. RUSSELL MUSEUM CM. RUSSELL MUSEUM, MONTANA Loaned collections GENE AUTRY NATIONAL CENTER, CALIFORNIA GILCREASE MUSEUM, OKLAHOMA PALM SPRINGS DESERT MUSEUM, CALIFORNIA Reciprocal programs STANFORD UNIVERSITY, CALIFORNIA UNIVERSITY OF WASHINGTON UNIVERSHY OF WYOMING Enhanced public programming EITEUORG MUSEUM, INDIANA THE BOOTH WESTERN ART MUSEUM, GEORGIA THE HEARD MUSEUM, ARIZONA Annual event - collaborative THE DESERT CABELLEROS MUSEUM, ARIZONA power of institutions THE PHOENIX ART MUSEUM, ARIZONA THE MUSEUM OF NORTHERN ARIZONA, ARIZONA WESTERN GOVERNORS' ASSOCIATION, COLORADO 7^ ?! Collection storage cnv> Im Heard Museum ^ Scottsdale takes on increased recognition as a center of Institute at the Sl^oW creative thinlcing - prospective catalyst to other economic A development initiatives Center of tfw Center tor the Study American West of Art of the Amencan West

> Truly using the visitor industry

in broader strategic ways Global Institute ot Sustainability Momson Institute

' w -tv /"^ s^|ol/|/stfniulates t^i/u \/isitatfon

> New visitation will be generated from prospective visitors looking Patron Impacts for this unique western offering Number of Patrons* 120,000 % Visitors* 70% % SMOW Acts As Significant Driver* 50% > If even just one-half of the Number of Patrons Stimulated* 42,000 facility's visitor patrons come Average Length of Stay** 5.8 primarily to experience this Average Spending Per Person/Day** $209 Percent Spent in Scottsdale** 87% unique theme, the City could SMOW Stimulated Spending $44,293,788 expect to experience over a City of Scottsdale Direct Spend to Tax Ratio** 2.62% 190% return on its $600,000 Stimulated Tax Proceeds* $1,160,497 annual expenditure. ROI Factor* 193%

Source: *SMoW and NTG ** City of Scottsdale Tourism Study - Visitor Statistics November 2010 SA4oiA/Â CtiticBi &eni&nt ih iêsic/etjts Une/îst^nc/ifiQ

The development of a deep understanding and appreciation of a community's heritage is often a key goal of city leaders.

The SMoW would be a critical asset in ensuring Scottsdale's western heritage is understood, Jif not only by its older residents, but also by new generations of citizens 1*^ /^eutWf^fng the Afts OisfHct 7* Major new anchor to bring renewed interest to area Stimulates new foot traffic to galleries Wide range of prospective cooperative arts related initiatives -hi. 7f)ere has ne\/er been a fwre irnportantpenocf in the Stoffso&Ze X X Qonmunity for a niuseuni to conTp/inient support ancf create V * iP*^*^^^ e^ysure aniong local, regionaC f}ational, and /nternatiorial aix/iences. Scottscfale artpalleties are atterrptfnc) to

c/ea/ ivf/? tfie ivofst depress/on in tfie/r history here. Tlie Scottsdale Scottsdale Fashion Square seunj ofthe l/]/esthas one last opportunity to keep in or bring to Entertainment Distria Scottsdale Waterfront r conynun/ty the best of l/i/estern art and artifacts - but only if 5th Avenue Shops & Boutiques Brown & stetson Business Wes are a\/aifable and opened soon/"" Scottsdale Arts District Abe Hays Old Town Scottsdale 35 Year Businessman in Historic Downtown Scottsdale Scottsdale Health Care Founding Board Member of the Scottsdale Museum of the West ORGANIZATIONAL STRUCTURE AND GOVERNANCE

BOARD OF TRUSTEES

The Scottsdale Museum ofthe West incorporated as an Arizona nonprofit corporation on March 30, 2007. The activities and affairs ofthe corporation will be conducted and all corporate powers will be exercised by or under the direction of the Board of Trustees. The Board of Trustees is vested with the direction ofthe affairs ofthe corporation, and will function as the organization's governing board for all purposes.

The Board includes not fewer than 5 or more than 25 elected Trustees. The bylaws define designated trustees as the Museum Director and a representative chosen by the museum docents. Additionally, there Is permitted designated Trustees who are appointed by the Board of Trustees. Designated Trustees are non-voting members ofthe Board and serve the Board in an advisory capacity. The Trustees may serve up to two full three-year terms. The bylaws provide for the election of new trustees by current members of the board of trustees. The board also elects a chairman, vice-chairman, secretary and treasurer.

Staffi ng

The Board of Trustees has the authority and responsibility to appoint, evaluate and terminate the museum director and determines the compensation ofthe museum director. The museum director will be the chief executive officer of the corporation and will supervise the daily operations and affairs of the corporation assuring the vision and mission of the museum are supported and carried through to implementation.

Four management functions will report directly to the director: Curatorial/Programs, Business/Facility Management, Marketing and Public Relations, and Development.

Manager of Marketing and Public Relations - Responsible for working with the Director to ensure the successful marketing ofthe museum in order to meet attendance, special events and facility rental expectations. Oversight responsibilities include management of the ticketing and admissions, front desk volunteers, the newsletter/e-newsletter and maintenance of the web site, and membership. Membership/Special Events Coordinator: Reports to the Manager of Marketing and Public Relations. In conjunction with the Manager, oversees the membership program, develops marketing strategies including publications, printed materials and advertising. Coordinates special events.

Visitor Services (Part-time): Responsibilities include management and implementation of admissions, promoting and selling memberships to guests, organizing and communicating new and updated information; providing positive contact with all guests and ensuring their questions and concerns are addressed. Development - Funds are Included in the budget for either a staff development director or a contracted senior fund raising professional to assist the museum director during the capital fund raising period. Development Assistant: Maintains and updates donor records; researches prospects; drafts grant requests and funding proposals as required. Operations Manager - Responsible for administration, finances, budget and accounting, central point of contact for the contract administration of outside vendors. Oversees information technology, museum store, and catering operations, security and maintenance and building operations.

Custodial and Maintenance Workers (Contract): Responsible for the cleanliness, upkeep and maintenance of the facility. Works under the direction of the Operations Manager.

Store Manager: Oversees all activities associated with the gift shop and cafe, including merchandising, overseeing inventory, and any retail activity on the website. Supervises part time store assistants and volunteers.

The Scottsdale Museum of the West/LGE Design Build/Cawley Architects Limited Liability Corporation (LLC) is proud to provide this enclosed response to the city of Scottsdale's RFQ for a cultural park with Western-themed museum in downtown Scottsdale. We believe our team of experienced and qualified professionals from various disciplines will help the city not only reach its goals in this project's development, but surpass them in ways that will create even greater community pride, engagement and enlightenment with both present and future generations of residents and visitors to Scottsdale and the West.

While there are many wonderful museums of Western American art, culture and history in the 19 states of the region, the Scottsdale Museum of the West will be unique by its aspiration to engage its visitors unlike other institutions in the ever-evolving narrative ofthe region, inviting them to discover in themselves the qualities that shaped this special region of the country - courage, audacity, creativity, resilience and integrity. Great artists and their art are always intertwined with the history of the time in which they lived. The museum will weave those stories together for its guests from the region and around the world.

Scottsdale is the community in the Western region where art always meets history. This is where cowboys, ranchers, families, and business entrepreneurs mingle with gallery owners and art lovers worldwide. "The West's Most Western Town" will be the home of "The West's Most Western Museum" ~ the Scottsdale Museum ofthe West. Attachment 4

ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Scottsdale Museum of the West Review of Existing Market and Operating Plans

Prepared by: ConsultEcon, Inc.

Prepared for: City of Scottsdale

December 2012 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

TABLE OF CONTENTS

Section Page EXECUTIVE SUMMARY 1

I INTRODUCTION AND ASSUMPTIONS I-l

II PROJECT DESCRIPTION & SITE REVIEW Il-l

III MARKET REVIEW III-l

IV ATTENDANCE AND OPERATING POTENTIAL IV-1

V BENCHMARK MUSEUMS AND COMPARISONS TO OPERATING PLANS FOR SCOTTSDALE MUSEUM OF THE WEST V-1

Scottsdale Museum of the West I-l ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

LIST OF TABLES

Table Page III-l Population Trend in the Resident Market Areas, 2010,2011 and 2016 Scottsdale Museum of the West III-3

III-2 Median Age and Age Distribution in the Resident Market Area, 2011 Scottsdale Museum of the West 111-3

ni-3 Trend in School Age Children in the Resident Market Area, 2011 and 2016 Scottsdale Museum ofthe West III-4

III-4 Household Characteristics in the Resident Market Area, 2011 Scottsdale Museum of the West III-5

in-5 Estimated 2011 Income Group Comparison (by Percentage of Households) Scottsdale Museum of the West III-6

II1-6 Hotels and Rooms in the Scottsdale / Paradise Valley Tourism Market Area III-8

in-7 Hotel and Day Visitors to the Scottsdale / Paradise Valley Tourism Market Area III-9

III- 8 Selected Scottsdale Attractions (Ranked by Attendance if Available) III-l 1

rV-l Preliminary Attendance Potential Scottsdale Museum of the West IV-4

IV- 2 Eight-Year Attendance Potential Pattern Scottsdale Museum of the West rV-6

IV-3 Seasonality of Attendance Scottsdale Museum of the West IV-7

IV-4 Facility Sizing Parameters Scottsdale Museum of the West rV-8

IV-5 Admissions Analysis in Current Dollars Scottsdale Museum of the West rV-9

IV-6 Attendance Distribution and Ticket Price Assumptions Scottsdale Museum ofthe West IV-10 IV-7 Operations Analysis Assumptions in Current Dollars, Except Where Noted Scottsdale Museum ofthe West IV-11

IV-8 Multi-Year Operational Revenue Potential and Non-Operational Revenue Scottsdale Museum of the West IV-12

IV-9 Illustrative Personnel Positions and Salaries over Scottsdale Museum of the West IV-13

Scottsdale Museum ofthe West 1-2 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

LIST OF TABLES (cont.)

Table Page IV-10 Illustrative Annual Operating Expenses of the Full Operation in a Stable Year Scottsdale Museum of the West rV-14

rV-l 1 Multi-Year Estimated Operating Expenses Scottsdale Museum of the West IV-15

rV-12 Net Operating Income Summary Scottsdale Museum of the West FV-16

V-1 Benchmark Museums Market and Facility Characteristics V-2

V-2 Benchmark Museums Attendance Analysis V-3

V-3 Benchmark Museums Revenue Analysis V-4

V-4 Benchmark Museum Personnel Analysis V-5

V-5 Benchmark Museums Operations Data V-6

V-6 Benchmark Museums Operations Analysis V-7

V-7 Operating Experience of Selected Phoenix Area Not-for-Profit and Public Visitor Attractions V-8

List of Figures Figure Page II-l Map of the Location for the Proposed Scottsdale Museum of the West.... II-l

II-2 Map of the Location for the Proposed Scottsdale Museum of the West.... 11-2

II-3 Site Plan (Option B) for the Proposed Scottsdale Museum ofthe West.... II-4

II- 4 Architectural Rendering (Option B) for the Proposed Scottsdale Museum ofthe West III- l Resident Market Areas for the Scottsdale Museum of the West III-2

Scottsdale Museum of the West 1-3 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Executive Summary SCOTTSDALE MUSEUM OF THE WEST REVIEW OF EXISTING MARKET AND OPERATING PLANS

The purpose of this study is to review existing market and operating plans for the proposed Scottsdale Museum of the West (SMoW) and to provide an independent evaluation of its market potential and to create a preliminary business plan scenario for the project. The study has been prepared based on information in the July 24,2012 Statement of Qualifications provided by the Scottsdale Museum of the West Inc., the 2006 AMS feasibility study, and additional research, interviews and analysis.

Site Review The proposed site for the Scottsdale Museum of the West is located at the intersection of 1st Street and Marshall Way in Scottsdale. The proposed SMoW location is within an easy day trip driving distance of a large portion of the Phoenix region. The site is located in Scottsdale's downtown, near major shopping destinations, the Scottsdale Civic Center Mall, and Scottsdale Stadium. This location is in "Old Town" Scottsdale, and as planned would be an anchor for the district and another visitor draw based on important themes related to Scottsdale including the "West," the arts, and the history ofthe West.

Project Description A 40,000 square foot museum is planned, with a building capital cost of $13.5 million; $2.5 million for Tenant improvements, $500,000 for organization ramp-up to opening and a plan for $5.0 million in financial reserves.' The interpretive plan, program of spaces and architectural scheme reflected in this study are from the July 24,2012 Statement of Qualifications provided by the Scottsdale Museum of the West, Inc. The interpretive focus is the history and art of the 19 westem states; and the West's many transformations to the present and anticipation of its future. The Scottsdale Museum of the West, Inc. believes that this is a niche that will distinguish it from other venues, and position it as "a public attraction worthy of local, regional and national financial support, visitation and participation by volunteers." This study assumes that the facility will have its Grand Opening at the beginning of January 2015.

Market Context The SMoW is expected to attract visitors from both resident and tourist markets. The following summarizes these markets.

' For the purposes of this report, the financialreserve s serve also as an endowment as their earnings after inflation are included as a non-earned revenue source like endowment proceeds.

Scottsdale Museum of the West ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Resident Market The overall Resident Maricet Area for the proposed SMoW is defined as the Phoenbc Metropolitan Area. Total Resident Market Area population is projected to increase 5.8 percent, fix)m approximately 4.25 million in 2011 to 4.5 million in 2016. This growth trend will increase the size of the markets available for visitation to SMoW. The demographic characteristics of the Resident Market Area include moderately high household income levels, a slightly younger age profile than that of the United States as a whole, and an increasing population of school-age children. The median household income in the overall Resident Market Area is slightly higher than those of the State of Arizona and the U.S. as a whole. In addition, the total Resident Market Area has a greater proportion of households with incomes over $50,000 than the State of Arizona and the U.S. as a whole. Overall, these population and income level data are good indicators for resident market visitation to the Scottsdale Museum of the West.

Tourist Market Scottsdale is an important tourism destination in Central Arizona, known for its spas, resorts, golf course, art galleries and shopping destinations. In 2010, the Scottsdale / Paradise Valley Tourism Market Area hosted an estimated 8.6 million visitors, comprised of 7.5 million (86.8%) day visitors and 1.1 million (13.2%) hotel visitors. Between 2009 and 2010, total visitors increased 14.7 percent; hotel visitors increased 10.6 percent. These data indicate that Scottsdale's tourist market is rebounding from declines in visitor volume that had occurred during the economic recession.

Scottsdale attracts a relatively affluent visitor that is well traveled and participates in cultural activities. The typical Scottsdale visitor is 56 years old and has a median annual income of $103,000. Scottsdale visitors stayed a median of 5.8 nights, and the median travel party size is 2.7 persons. Dining and shopping are the most popular activities of visitors during their visit. Other important activities included Art Galleries and Museums and Westem Culture and Attractions, with a reported 50 percent of visitors participating in these activities. Overall, these visitor data are supportive of tourist visits to the SMoW because of their demographic characteristics and trip activities.

An important segment of tourists are those visiting friends and relatives (VFRs). As an attraction that enjoys a broad base of support among the resident population, residents will take their guests to SMoW as a part of showcasing the city's important cultural destinations. For the purposes of this analysis, there are an estimated 230,000 VFRs to Scottsdale each year.

Local Attractions Scottsdale has a number of event-driven attracfions, such as WestWorid of Scottsdale and the Scottsdale Center for Performing Arts (SCPA), and museums and cultural attractions. WestWorid and SCPA are the most popular destinations in Scottsdale among those profiled, with an estimated 600,000 and 225,000 in annual attendance, respectively. Other Scottsdale museums and cultural attractions, including Taliesin West, Scottsdale Museum of Contemporary Art, the Scottsdale Historical Museums and the Heard Museum North have more moderate attendance levels, ranging from 25,000 to 88,000 visitors for those with reported attendance. While the Scottsdale Center for the Performing Arts and Taliesin West can charge high admission fees due to the experiences

Scottsdale Museum of the West 2 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 offered, the museums in Scottsdale charge a much more moderate admission charge. The Scottsdale Historical Museum is fi^e,an d the Heard Museum North and the Museum of Contemporary Art charge $5.00 and $7.00, respectively.

Visitation Potential The attendance potential analysis for SMoW is based on the characteristics of the available resident and tourist markets, the proposed program as currently described, the merits ofthe site and the performance of comparable attractions as well as the experience of local attractions. Depending on the final size and program of the facility, preliminary attendance potential is estimated at 87,000 to 118,000, with a mid-range estimate rounded to 103,000 in a stabilized year of operation. The preliminary attendance potential for SMoW assumes that an estimated 55 percent of its visitors will come from within the Resident Market Area and 45 percent of visitors will be from the Tourist Market. The evaluation of attendance potential represents a range of market response, but it also reflects the preliminary project program and design and the operating plan included herein. The experience of the comparable facilities indicates that the proposed facility with its proposed program and location, along with the size of available markets, has the potential to realize a high degree of market acceptance.

The seasonality of visitation at SMoW will be determined primarily by the composition of its audience, the timing of special programs and events, and regional weather pattems. January through April would be the peak season. Based on peak season and high day factors, the facility would have an estimated 170 to 210 visitors in-house during peak periods. The high day parking requirement would be 68 to 84 spaces. The proposed scale of SMoW could accommodate the attendance potential for the facility as presented in this analysis.

Early Year Visitation In this model, stabilized attendance levels are achieved in the fifth year after project opening. During the first few years after opening, the project is expected to build up to its stabilized attendance level, based on the current management plan for operations. During this period, word- of-mouth advertising would occur, the competency of the staff and volunteers would grow and its reputation would be developed. In addition, an early year surge in attendance is assumed based on the typical experience of new museums and attractions. Year I is assumed to be at 95 percent of the attendance potential in a stabilized year, declining to 85 percent by Year 3 and then increasing to 100 percent by Year 5 as the organization moves to fiill operation.

Operations during Early Years A multi-year organization ramp up from initial opening until a stable year of operations in year 5 is also assumed in this plan based on SMoW's proposed organization development approach. In inifial years the newness of the museum and its initial exhibits would carry the museum forward and attract both resident and visitor markets. Over time however SMoW plans to create and offer an increasing array of new exhibits, programs and events so that a successfiji stable operating profile would be created. During that time the initial year major exhibits will be refreshed, major new shows mounted and the capacity of the organization, the Board of Directors and museum volunteers will grow such that SMoW projects that a sustainable organization will be been created. It would

Scottsdale Museum of the West 3 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 according to the SMoW plan utilize well the initial investments made in the facility and its organization.

Operating Potential Based on the mid-range attendance estimates, eariy year visitation and operations plan, and other operating factors and assumptions, a multi-year operating plan was prepared for the proposed SMoW.

Revenue Potential Total current dollar revenue in a stabilized year (Year 5) is estimated at $2.8 million, including Operational Revenues and Non-Operational Revenues.

Operational Revenues are derived fromeame d sources, such as ticket sales, memberships, retail, facility rentals and other revenue. Total Operational Revenues are estimated at $1.5 million in current dollars in a stabilized year.

An important factor in this plan is the increasing need for Other Non-Operational Revenues as the scale and scope of the museum operation increases during the period up to Stable Year 5. In current dollar value, the need for Other Non-Operational Revenues would grow from about $750,000 in year I to $1.2 million in year 5. Non-Operational Revenues would be partially frindedb y interest from the operating reserve ftind proposed by SMoW. In a stable year current dollars. Operating Reserves Interest is estimated at $92,000. Other required Non-Operational Revenues would come from grants, gifts, corporate sponsorships, fiindraising events, and other relevant sources.

As is shown in the comparisons to other museums in Section V of this report, annual fiindraising of this magnitude or greater is typical for museums of this type and indeed is necessary for long-term institutional sustainability. Estimates of Non-Operational Revenues have been limited to the extent required to fiandoperatin g costs. In reality, higher amounts would be sought to expand mission fijlfillment, develop organization capacity, and to fiind fiiture investment in the museum.

Operating Expenses and Staffing Total estimated operating expenses in current dollars would grow from $2.2 million in year one to $2.8 million in stable year 5. Like most museums, the largest operating expense is personnel, which represents approximately 55 percent of the total.

As already noted, the staff required to operate SMoW would "ramp up" during the organization's early years, from the Year 1 opening year to the Year 5 stable year. Most staff is necessary at the outset. However, there may be ways to combine responsibilities and use volunteers initially to accommodate the level of attendance. Over time however in order to sustain the museum, a baseline staff of the scale and attributes included in the preliminary staffing plan will be required. Thus this plan ramps up to recommended staffing levels. In a stabilized year, SMoW would have 21 fiill-time and 17 part-time employees for a total of 29.5 ftill-time equivalent employees (PTE's). Initially, a staff of 22 PTE's is estimated.

Scottsdale Museum ofthe West ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Benchmarking Analysis Benchmaricing SMoW operations against comparable museum contributed to the development of the operating plan. Market and operating characteristics of eight westem history and art museums were utilized in the benchmarking analysis. While none of the profiled museums are p>erfectly comparable to the proposed SMoW, they nonetheless provide usefiil benchmarks against which the operating plan can be tested.

The benchmark museums indicate that there is a good opportunity for operating success for SMoW based on its benchmark characteristics and the experience of comparable museums. However, balance will be required in ensuring sufficient quality of visitor experience and in-place museum organization and marketing at its outset to ensure that SMoW establishes a strong reputation and has the resources to sustain a strong level of facility and exhibit quality and maintenance while also providing the exhibits and programs and events to attract new audiences and repeat visitors. The operating plan as described would provide SMoW to achieve such an operating profile.

Scottsdale Museum of the West ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Section I INTRODUCTION AND ASSUMPTIONS

The purpose of this study is to review existing market and operating plans for the proposed Scottsdale Museum of the West (SMoW) and to provide an independent evaluation of its market potential and to create a preliminary business plan scenario for the project. The study has been prepared based on information in the July 24, 2012 Statement of Qualifications provided by the Scottsdale Museum of the West Inc., the 2006 AMS feasibility study, and additional research, interviews and analysis.

Assumptions In preparing this memorandum report, the following assumptions were made. This study is qualified in its entirety by these assumptions. 1. The size and design of the new facility and its exhibits will be appropriate to its market potenfial; and will serve to create a high quality, stimulating history based educational attraction with broad-based audience appeal and a distinctive image. The proposed SMoW will be a unique attraction in the region. On and off-site signage will be highly visible and of best quality. 2. The operating scenarios presented herein assume that the facility will be competently and effecfively managed. An aggressive promotional campaign will be developed and implemented. This program will be targeted to prime resident and visitor markets. The ticket prices and fees for paid elements ofthe visitor experience will be consistent with the cultural and educational value offered. 3. There will be no physical constraints to impede visitors to the facility, such as major construction activity. Changes in economic and social conditions due to events including, but not limited to, major recessions, major environmental problems or disasters that would negatively affect operations and visitation may impact on the results of the findings in this study, including visitor projections. 4. Every reasonable effort has been made in order that the data contained in this study reflect the most accurate and timely information possible, and it is believed to be reliable. This study is based on estimates, assumptions and other information developed by ConsultEcon, Inc. from its independent research efforts, general knowledge of the industry, and consultations with the client group. No responsibility is assumed for inaccuracies in reporting by the client, its agents and representatives, or any other data source used in the preparation of this study. No warranty or representation is made that any of the projected values or results contained in this study will actually be achieved. There will usually be differences between forecasted or projected results and actual results because events and

Scottsdale Museum ofthe West I-l ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

circumstances usually do not occur as expected. Other factors not considered in the study may influence actual results. 5. This report may not be used for any purpose other than that for which it was prepared. Possession of this report does not carry with it the right of publication. This report will be presented to third parties in its entirety. 6. Outputs of computer models used in this report are rounded. These outputs may therefore slightiy affect totals and summaries. 7. The research and analysis of this report was prepared November, 2012. It represents data available at that time.

Scottsdale Museum of the West 1-2 ConsultEcon, Inc Economic Research and Management Consultants December 19,2012

Section n PROJECT DESCRIPTION & SITE REVIEW

The proposed site for the Scottsdale Museiun of the West is located at the intersection of 1^ Street and Marshall Way in Scottsdale. Figure II-l shows the location of this site on a street map, showing the primary highways in the region. The site is located in Scottsdale's downtown, near major shopping destinations, the Scottsdale Civic Center Mall, and Scottsdale Stadium. This location is in "Old Town" Scottsdale, and as planned would be an anchor for the district and another visitor draw based on important themes related to Scottsdale including the "West," the arts, and the history of the West.

Figure II-l Map ofthe Location for the Proposed Scottsdale Museum ofthe West

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^ !i it L« L s ^ - Source: ESRI Business Analyst Onlme

Scottsdale Museum ofthe West II-l ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Figure II-2 is a map showing the extent of 15-minute, 30-minute and 45-minute drive time areas from the proposed SMoW location. The proposed SMoW location is within an easy day trip driving distance of a large portion of the Phoenix region.

Figure 11-2 Map of the Location for the Proposed Scottsdale Museum of the West

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Source: ESRI Busmess Analyst Online

Scottsdale Museum ofthe West II-2 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Project Description and Development A 40,000 square foot museum is planned, with a building capital cost of $13.5 million; $2.5 million for Tenant improvements, $500,000 for organization ramp-up to opening and a plan for $5 million in financialreserves. ^ The interpretive plan, program of spaces and architectural scheme reflected in this study are from the July 24,2012 Statement of Qualifications provided by the Scottsdale Museum of the West Inc. The interpretive focus is the history and art of the 19 westem states; and the West's many transformations to the present and anticipation of its future. The Scottsdale Museum of the West Inc. believes that this is a niche that will distinguish it from other venues, and position it as "a public attraction worthy of local, regional and national financialsupport , visitation and participation by volunteers." This study assumes that the facility will have its Grand Opening at the beginning of January 2015.

Figure II-3 shows a site plan for the proposed SMoW. Figure II-4 is an architectural rendering of the museum. The architectural plan will be refined in subsequent design phases.

Operations During Early Years A multi-year ramp up from initial opening until a stable year of operations in year 5 is assumed. In initial years the newness of the museum and its initial exhibits will carry the museum forward and attract both resident and visitor markets. Over time however, an increasingly rich array of new exhibits, programs and events will be developed so that a successfiil stable operating profile is created. During that time the initial year major exhibits will be refi^shed, major new shows mounted and the capacity of the organization, the Board of Directors and museum volunteers will grow such that a sustainable organization has been created that will utilize well the initial investments made in the facility and its organization.

^ For the purposes of this report, the financialreserve s serve also as an endowment as their earnings after inflation are included as a non-earned revenue source like endowment proceeds.

Scottsdale Museum of the West II-3 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Figure II-3 Site Plan (Option B) for the Proposed Scottsdale Museum of the West

Scottsdai«'sMuMiuioftheWMt-0»tiMB kltj Source: idea, Crowley, LGE and Scottsdale Museum of the West Inc.

Figure II-4 Architectural Rendering (Option B) for the Proposed Scottsdale Museum of the West

Source: idea, Crowley, LGE and Scottsdale Museum of the West Inc.

Scottsdale Museum ofthe West II-4 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Section m MARKET REVIEW

The Scottsdale Museum of the West (SMoW) is expected to attract visitors fi*ombot h resident and tourist markets. This section of the report reviews the resident and tourist markets for the project, including a review of selected attractions in Scottsdale .

RESIDENT MARKET Although the SMoW will draw a variety of market segments, the project's resident market will be a significant source of visitors. Ultimately, the geographic reach and available markets for a project depend on the size and quality of the facility and its exhibits and programs, its accessibility and location, the presence of nearby attractions, regional transportation networks, and marketing efforts.

The resident market for a destination such as the SMoW is defined as the area whose residents would visit as part of a day-trip. Persons in the resident market often have repeat visitation pattems, or become members of the institution. Visiting the project would be a primary purpose or important part of a day-trip. Resident markets are analyzed within a "gravity model" context; the closer residents live to the conservation and education destination, the more likely they are to visit. Depending on the individual market's circumstances, resident markets can extend up to 100 or more miles, or be as narrow as 25 miles. On its periphery, the resident market changes over to the visitor (or tourist) market. The visitor market will be reviewed following this resident market review.

For the purposes of consistency with and comparability to the Scottsdale Museum of the West Feasibility Study, March 2006 by AMS Planning and Research, the overall Resident Market Area for the proposed SMoW is defmed as the Phoenbc Metropolitan Area. Within this overall Resident Market Area, Primary, Secondary and Tertiary Market Area segments are defined as follows: • Primary Market Area: Area within 0 to 20 miles fi*om SMoW. • Secondary Market Area: Area within 20 to 30 miles fi-om SMoW. • Tertiary Market Area: Phoenix Metropolitan Area (Maricopa and Pinal Counties), not including the Primary and Secondary Resident Market Areas.

Scottsdale Museum of the West III-l ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Figure III-l shows a map of the Resident Market Areas for the SMoW.

Figure m-1 Resident Market Areas for the Scottsdale Museum ofthe West

Source: ESRI Business Systems and ConsultEcon, Inc.

Resident Market Area Demographic Characteristics Following is a review of the demographic characteristics of the Primary, Secondary and Tertiary Market Areas.

Resident Market Area Population Data in Table III-l detail the population trends within the Resident Market Area and its segments. The Total Resident Market Area population is projected to increase by 5.8 percent, fi*om approximately 4.25 million in 2011 to 4.5 million in 2016. The growth rate in the Total Resident Market Area, at 5.8 percent, is slightly higher than the projected growth rate of the population of the State of Arizona over the same period (5.3 %), and more significantiy higher than the projected growth rate of the population of the U.S. as a whole over that period (3.2 %). These market data represent a growth trend that will increase the size of the resident markets available for the project.

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Table HI-l Population Trend in the Resident Market Areas, 2010,2011 and 2016 Scottsdale Museum of the West

Percent Change, 2010 2011 2016 2011 to 2016

Primary Market Area 2,951,200 2,982,900 3,093,600 3.7% Secondary Market Area 840,900 858,400 931,600 8.5% Tertiary Market Area 400,800 407,300 469,600 15.3% Total Resident Market Area 4,192.900 4,248,600 4,494,800 5.8%

State of Anzona 6,392,000 6,465,700 6,807,600 5.3% United States 308,745,500 310,704,300 321,315,300 3.4% Source: U.S. Census Bureau, Census 2010 Data; Esri forecasts for 2011 and 2016; and ConsultEcon, Inc. Note: Population numbers are rounded to nearest hundred.

Resident Market Area Age Profile Important audiences for art and cultural attractions such as SMoW are older adults that have time and disposable income for cultural activities of this type. Data in Table 111-2 profile the Resident Market Area and its segments by age categories.

Table in-2 Median Age and Age Distribution in the Resident Market Area, 2011 Scottsdale Museum of the West

Median Age Oto 17 18 to 24 25 to 34 35 to 54 55 + Primary Market Area 33.9 26.2% 10.6% 14.8% 27.1% 21.3% Secondary Market Area 37.5 26.4% 7.5% 12.6% 25.2% 28.4% Tertiary Market Area 35.7 26.1% 8.2% 14.6% 25.9% 25.2% Total Resident Market Area 34.8 26.2% 9.7% 14.3% 26.6% 23.1%

State of Arizona 36.0 27.5% 10.6% 14.6% 19.6% 27.6% United States 37.2 24.0% 9.9% 13.4% 27.7% 25.2% Source: ESRI and ConsultEcon, Inc.

The Total Resident Market Area population has a median age that is slightly younger than in the State of Arizona and the U.S. as a whole. Nonetheless, a significant proportion of the Resident

Scottsdale Museum of the West III-3 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Market Area population falls into the key age groups of 35 to 54 years old (26.6%) and 55 and over (23.1%).

Resident Market Area School Age Population Students are an important component of the potential market for several reasons. First, families with children are fi^quentvisitor s to this type of facility, as parents seek educational, as well as entertaining family outings. Second, school groups are an important component of visitation, particularly during off-peak periods and on weekdays when general visitation numbers are lower. In addition, visits to a destination such as SMoW by children in school groups can result in word-of- mouth advertising to finendsan d family. This in tum leads to repeat visitation and new visitation. Data in Table III-3 show the estimated number of children ages 5 through 18 in the Resident Market Area in 2011, as well as the projected number of school age children in 2016.

Table in-3 Trend in School Age Children in the Resident Market Area, 2011 and 2016 Scottsdale Museum of the West

2011 2016 Estimated Estimated Percent School-Age School-Age Change, Children Children 2011-2016 Primary Market Area 519,200 528,500 1.8% Secondary Market Area 152,200 163,200 7.2% Tertiary Market Area 70,900 79,900 12.7% Total Resident Market Area 742,300 771,600 3.9%

State of Anzona 1,095,300 1,130,500 3.2% United States 49,985,100 50,868,300 1,8% Source: ESRI and ConsultEcon, Inc. Note: Population numbers are rounded to nearest hundred.

In all, there were an estimated 742,300 school age children in the Resident Market Area in 2011. This number is projected to increase 3.9 percent to approximately 771,600 by 2016. This growth rate is higher than that of the State and of the U.S. as a whole. While the greatest increase in school-

Scottsdale Museum of the West III-4 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 age children is expected in the Tertiary Market Area, the largest number of school-age children will reside in the Primary Market Area.

Resident Market Area Household Characteristics Data in Table III-4 show the characteristics of households in the Resident Market Area, compared to the State of Arizona and the U.S. as a whole. In 2011, there were an estimated 1.56 million households in the Resident Market Area, of which 66.7 percent were classified as families. The overall average household size in the Resident Market Area was 2.68 persons. Overall, the average household size in the Resident Market Area is slightiy larger than those of the State and the U.S. as a whole.

Table m-4 Household Characteristics in the Resident Market Area, 2011 Scottsdale Museum ofthe West

Estimated Percent of Estimated Number of Families to Average Number of Family Total Household Households Households Households Size Primary Market Area 1,108,700 709,900 64.0% 2.66 Secondary Market Area 317,600 229,600 72.3% 2.68 Tertiary Market Area 131,600 99,600 75.7% 2.85 Total Resident Market Area 1,557,900 1,039,100 66.7% 2.68 State of Arizona 2,408,865 1,595,806 66.2% 2.63 United States 117,457,661 78,084,849 66.5% 2.58 Source: ESRI and ConsultEcon, Inc. Note: Population numbers are rounded to nearest hundred.

Resident Market Area Income Characteristics Higher incomes are associated with visitation to art and cultural attractions such as the SMoW, both in terms of the ability to visit (disposable income, transportation and leisure time) and the desire to visit, as higher incomes fi^quently refiect higher educational attainment. Data in Table HI-S show the median household incomes and household income groups in the Resident Market Area compared to the State of Arizona and the U.S. as a whole.

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At $53,100, the median household income in the total Resident Market Area is higher than those of the State of Arizona ($48,400) and the U.S. ($50,200) as a whole. In addition, the total Resident Market Area has a greater proportion of households with incomes over $50,000 than the State of Arizona and the U.S. as a whole. The median household income in the overall Resident Market Area is slightly higher than those of the State of Arizona and the U.S. as a whole. Approximately 53.5 percent of households in the Resident Market Area have incomes over $50,000, compared to 48.8 percent of households in the State of Arizona, and 50.3 percent in the U.S. as whole. These household income data indicate that a significant percentage of Resident Market Area households have the economic means to attend a destination such as the SMoW. However, care should be taken in planning ticket prices to be affordable to all economic levels in the Resident Market Areas.

Table HI-S Estimated 2011 Income Group Comparison (by Percentage of Households) Scottsdale Museum ofthe West

Median Household Less than $25,000- $50,000- $75,000- Income $25,000 $49,999 $74,999 $99,999 $100,000^ Primary Market Area $53,011 21.5% 25.2% 19.2% 13.0% 21.1% Secondary Market Area $56,697 17.7% 24.3% 22.0% 14.9% 21.1% Tertiary Market Area $44,800 26.9% 28.8% 19.5% 11.6% 13.2% Total Resident Market Area $53,069 21.2% 25.3% 19.8% 13.2% 20.5%

State of Arizona $48,434 24.6% 26.6% 19.1% 12.1% 17.6% United States $50,227 24.7% 25.1% 18.4% 12.0% 19.9% Source: ESRI and ConsultEcon, Inc.

Resident Market Summary The total Resident Market Area population is projected to increase 5.8 percent, ft'om approximately 4.25 million in 2011 to 4.5 million in 2016. This growth trend will increase the size of the markets available for visitation to SMoW. The demogr^hic characteristics of the Resident Market Area include moderately high household income levels, a slightly younger age profile than that ofthe United States as a whole, and an increasing population of school-age children. The median household income in the overall Resident Market Area is slightiy higher than those of the State of Arizona and the U.S. as a whole. In addition, the total Resident Market Area has a greater proportion of households with incomes over $50,000 than the State of Arizona and the U.S. as a

Scottsdale Museum ofthe West III-6 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 whole. While this indicates a significant number of households that can afford to visit a destination such as SMoW, care should be taken in planning ticket price ranges to be affordable to all economic levels in the Resident Market Area. Overall, these population and income level data are good indicators for resident market visitation to the Scottsdale Museum of the West.

TOURIST MARKET This section reviews the tourist markets available to the proposed Scottsdale Museum of the West (SMoW). This includes a summary of tourism trends in Scottsdale and key tourism statistics as an input into the attendance and operations analyses. It also reviews selected Scottsdale visitor attractions.

For the purposes of this study, tourist^ markets are defined as follows: • Overnight Visitors to the Scottsdale / Paradise Valley Tourism Market Area, with the following segments by overnight accommodations: • Hotel/Motel Visitors to Scottsdale • Hotel/Motel Visitors to Paradise Valley and Other Areas (portions of East Phoenix, North Tempe, Carefree, Cave Creek, Fountain Hills, and the Salt River Pima Maricopa Indian Community) • Visitors staying with friends and relatives that live in Scottsdale • Day Visitors to Scottsdale, defined £is domestic overnight tourists staying in accommodations outside of the Scottsdale / Paradise Valley Tourism Market Area

The data utilized in this section represent the latest data available for Scottsdale. The sources reviewed to inform this analysis include: • The Scottsdale/Paradise Valley Tourism Study - Part I: Lodging Statistics and Part II: Visitor Statistics, City of Scottsdale. Office of Economic Vitality, December 2011 and March 2012; and,

• City of Scottsdale Visitor Inquiry Study. Behavior Research Center, August 2010.

Scottsdale Tourism Trends and Statistics Scottsdale is an important tourism destination in Central Arizona, known for its spas, resorts, golf course, art galleries and shopping destinations. As a new destination, the proposed SMoW

^ The terms "visitor," **tourisf' and "traveler" are used interchangeably.

Scottsdale Museum of the West II1-7 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 has the potential to draw visitation from tourists staying in Scottsdale, as well as day visitors staying in other locations in Central Arizona.

Lodging Statistics As shown by data in Table III-6, there are a large number of hotels in the Scottsdale / Paradise Valley Tourism Market Area. There are a total of 83 hotels with 16,600 rooms. Most (56%) of these rooms are located in Scottsdale. In the City of Scottsdale, resorts accounted for 41 percent of the rooms in the city, with fiill service hotels and limited service hotels accounting for 22 percent and 37 percent, respectively.

Table ni-6 Hotels and Rooms in the Scottsdale / Paradise Valley Tourism Market Area

Percent to Area Hotels Rooms Total Rooms Scottsdale 51 9,354 56.4% Paradise Valley & Other Areas 32 7,237 43.6% Total 83 16,591 100.0% 1/ Other Areas include portions of East Phoenix, North Tempe, Carefree, Cave Creek, Fountain Hills, and the Salt River Pima Maricopa Indian Community. Source: The Scottsdale/Paradise Valley Tourism Study - Part I: Lodging Statistics, City of Scottsdale. Office of Economic Vitality, December 2011; and ConsultEcon, Inc.

In 2010, the average occupancy rate in Scottsdale / Paradise Valley Tourism Market Area hotels was 60.3 percent, an increase from 56.0 percent in 2009. The average daily room rate in 2010 was $136.99, a slight decline fi-om$139.2 8 in 2009. Despite the decline in room rates, the increased occupancy rates have resulted in higher room revenues for hotels. These data reflect improving conditions at hotels that had been challenged due to the economic recession.

Hotel and Day Visitor Volumes Data in Table ni-7 show estimates of hotel and day visitors to the Scottsdale / Paradise Valley Tourism Market Area in 2009 and 2010. In 2010, the Scottsdale / Paradise Valley Tourism Market Area hosted an estimated 8.6 million visitors, comprised of 7.5 million (86.8%) day visitors and 1.1 million (13.2%) hotel visitors. Between 2009 and 2010, total visitors increased

Scottsdale Museum of the West III-8 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

14.7 percent; hotel visitors increased 10.6 percent. These data indicate that Scottsdale's tourist market is rebounding ft'om declines in visitor volume that had occurred during the economic recession.

Table m-7 Hotel and Day Visitors to the Scottsdale / Paradise Valley Tourism Market Area

2009 2010 Percent Percent to Percent Change, Segment 2009 Total 2010 to Total 2009-2010 Hotel Visitors 1,024,467 13.6% 1.133,254 13.2% 10.6% Day Visitors 6,487,767 86.4% 7,483,407 86.8% 15.3% Total Visitors 7312,234 100.0% 8,616,661 100.0% 14.7%

2010 Hotel Visitors by Segment Scottsdale 638,928 56.4% Paradise Valley i:i. Othe r Areas 1/ 494,326 43.6% Total 2010 Hotel Visitors 1,133,254 100.0%

1/ Other Areas include portions of East Phoenix, North Ten^, Carefree, Cave Creek, Fountain Hills, and the Sah River Pima Maricopa Indian Community. Source: The Scottsdale/Paradise Valley Tourism Study - Part II: Visitor Statistics, City of Scottsdale. Office of Economic Vitality, March 2012; and ConsultEcon, Inc.

Hotel visitors spent an average of $205.69 per person per day and day visitors spent an average of $41.14 per person per day. The total direct spending of day and hotel visitors in Scottsdale was an estimated $1.15 billion in 2010. Including indirect expenditures, the total economic impact of this visitor spending was an estimated $2.87 billion.

Profile of Scottsdale Visitors Scottsdale attracts a relatively affluent visitor. According to the 2010 Visitor Inquiry Study, the typical Scottsdale visitor is 56 years old and has a median annual income of $103,000. Scottsdale visitors stayed a median of 5.8 nights, which is somewhat higher than in past studies. Travel party size has remained relatively stable in recent years, at 2.7 persons. Dining and shopping are the most popular activities of visitors during their visit, with 96 percent and 90 percent of those surveyed participating. Other important activities included Art Galleries and Museums and Westem Culture and Attractions, with a reported 50 percent of visitors

Scottsdale Museum of the West III-9 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 participating in these activities. Overall, these visitor data are supportive of tourist visits to the SMoW because of their demographic characteristics and trip activities.

Visiting Friends and Relatives An important segment of tourists are those visiting fiiends and relatives (VFRs). As an attraction that enjoys a broad base of support among the resident population, residents will take their guests to SMoW as a part of showcasing the city's important cultural destinations. While the ratio of VFRs to resident population varies in different community, a reasonable estimate of one VFR per resident staying in resident homes is assumed for the purposes of this analysis. Therefore, there are an estimated 230,000 VFRs to Scottsdale each year, based on the 2010 population estimate fi-om the City of Scottsdale's Demographic Trends Analysis, October 2010.

Scottsdale Attractions Data in Table III-8 show a list of selected Scottsdale attractions. These profiled attractions include event driven attractions, such as WestWorid of Scottsdale and the Scottsdale Center for Performing Arts. These two facilities are the most popular destinations in Scottsdale among those profiled, with an estimated 600,000 and 225,000 in annual attendance, respectively. Scottsdale museums and cultural attractions, including Taliesin West, Scottsdale Museum of Contemporary Art, the Scottsdale Historical Museums and the Heard Museum North have more moderate attendance levels, ranging ftx)m 25,000 to 88,000 visitors for those with reported attendance. While the Scottsdale Center for the Performing Arts and Taliesin West can charge high admission fees due to the experiences offered, the museums in Scottsdale charge a much more moderate admission charge. The Scottsdale Historical Museum is free, and the Heard Museum North and the Museum of Contemporary Art charge $5.00 and $7.00, respectively.

Scottsdale Museum ofthe West III-10 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Table HI-S Selected Scottsdale Attractions (Ranked by Attendance if Available)

Name Annual Admission Pricing Description Attendance WestWorid of 600.000 Many events are free, but WestWorid is an equestrian center and special Scottsdale (2009) admission varies depending on events facility owned and operated by the City of event Scottsdale. Events include horse shows, rodeos, dog showrs, and club/riding competitions. The ^ility features equestrian arenas, fields, and stables available for events and individual use. Scottsdale 225,000 Varies based on performance Operated by the Scottsdale Cultural Council, the Center for the (2010- and seat location, rangmg Scottsdale Center for the Perfomiing Arts, with an Performing 2011) fiom $9.00 to $109.00. Free 853-seat theater, presents performances of dance. Arts community events in the Civic ja2z, classical and world music, theater and satire Center Park. as well as arts education programs and festivals. Taliesin West 88.000 Pricing dependent upon tour Offering a variety of guided tours ranging in (2008) selected duration fiom one to three hours. Taliesin West was architect Frank Lloyd Wright's winter home $24.00 - $60.00 adult and school in the desert. Today, this National $10.00-$17.00 child (4-12) Historic Landmark is home to the Frank Lloyd Wright Foundation and an architecture school. Children not allowed on some Facility includes a bookstore, and is available for tours. Discounts available for rentals. seniors, military, students and youth. Admission discounted on Tuesdays and Wednesdays for all visitors. Scottsdale 36,000 $7.00 adult Operated by the Scottsdale Cultural Council, the Museum of (2009) Museum features collections of modem & $5.00 student Contemporaiy contemporaiy paintings, sculpture, prints, Art Free - child 15 & under drawings, photos, architecture and design, outdoor sculpture garden, and a gift shop. SMOCA Free admission on these days Lounge is a multi-media community event space Thursdays: noon to 9:00 pm that hosts changing exhibitions, installations, poetiy, films, music and comedy. Fridays and Saturdays:5:00 pm to 9:00 pm Scottsdale 25,000 No Charge The mission of the Scottsdale Historical Museum Historical (estimate) is to present, preserve, and interpret through Museiun research, exhibits, and educational programming, tbe prehistory, history and cultural heritage of Scottsdale and the Southwest. Heard Museum NA $5.00 adult A community location of the Heard Museum, North. featuring two exhibit galleries of American Indian $4.00 senior Scottsdale artwork, and educational programs and special $2.00 student and child 6-12 events like the aimual Navajo Folk Festival Note: Attendance is rounded. Source: Facilities listed; Scottsdale Cultural Council 2010-2011 Annual Report', Top Private Attractions 2009, fiom the Arizona Office of Tourism; Official Museum Directory online; and Consul^con, Inc.

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Tourist Market Summary Scottsdale is an important tourism destination in Central Arizona, known for its spas, resorts, golf course, art galleries and shopping destinations. In 2010, the Scottsdale / Paradise Valley Tourism Market Area hosted an estimated 8.6 million visitors, comprised of 7.5 million (86.8%) day visitors and 1.1 million (13.2%) hotel visitors. Between 2009 and 2010, total visitors increased 14.7 percent; hotel visitors increased 10.6 percent. These data indicate that Scottsdale's tourist market is rebounding fi"om declines in visitor volume that had occurred during the economic recession.

Scottsdale has a number of event-driven attractions, such as WestWorid of Scottsdale and the Scottsdale Center for Performing Arts (SCPA), and museums and cultural attractions. WestWorid and SCPA are the most popular destinations in Scottsdale among those profiled, with an estimated 600,000 and 225,000 in annual attendance, respectively. Scottsdale museums and cultural attractions, including Taliesin West, Scottsdale Museum of Contemporary Art, the Scottsdale Historical Museums and the Heard Museum North have more moderate attendance levels, ranging from 25,000 to 88,000 visitors for those with reported attendance. While the Scottsdale Center for the Performing Arts and Taliesin West can charge high admission fees due to the experiences offered, the museums in Scottsdale charge a much more moderate admission charge. The

Scottsdale Museu m of the West III-12 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Scottsdale Historical Museum is free, and the Heard Museum North and the Museum of Contemporary Art charge $5.00 and $7.00, respectively.

Scottsdale Museum of the West III-13 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Section IV ATTENDANCE AND OPERATING POTENTIAL

This section provides a preliminary analysis of attendance and operating potential for the proposed Scottsdale Museum of the West (SMoW) based on the plan proposed to date, and the operating profile and operating budgets included in this overall report. The benchmark museum data fi-om national comparable museums and the operating results of selected Phoenix area educational attractions and museums are an important input to this analysis. These are presented in Section V in comparison to the results of this analyses and the earlier operating planning for SMoW.

VISITATION POTENTIAL Attraction Success Factors Planning, creating and operating an area serving attraction, such as SMoW, is a substantial challenge. Audiences today are exposed on a daily basis to extremely high-tech, high-quality media at home, work and school. Due to high audience standards, those in the museum and cultural attraction industry have adopted the same high quality techniques to attract visitors. As the expectations by audiences of leisure time products and educational experiences are very high, a successful attraction must meet audience expectations of value, provided both in terms of money and time spent. To achieve its goals for interpretive and economic success, an attraction such as the proposed SMoW should fulfill the following criteria.

• Good Location - The accessibility and visibility of the location is critical to its market success. A successful museum must be highly accessible both locally and regionally. The proposed SMoW location in Scottsdale's downtown is both accessible and visible to Scottsdale residents and tourists. • Exhibit Quality and Content - The interpretive elements should have a high degree of interest and/or relevance to the audience. There must be sufficient attraction content to appeal to a diverse audience with a degree of subject interests, ages and educational levels. There must be a variety and quantity of experiences for die visitor to feel they have visited a special place. The attraction must have sufficient quality and quantity of content to warrant a special trip, and to possibly forego altemative activities. Typically, this implies that more than one hour is spent experiencing the attraction, with a target length of stay of perhaps one and a half to two hours. When combined with a meal or snack (perhaps in the nearby shopping district or a picnic in the park), shopping for souvenirs, taking a walk and/or relaxing in a greenspace, the experience must be the focal point of a half-day or full day recreational experience. Most importantly, it must be an

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entertaining experience. SMoW as proposed at 40,000± square feet would be of sufficient size and scope to become an area-wide serving museum based on the proposed interpretive content and based on the operating plan herein. • Repeatability - For most museums, a repeat visitation pattern is necessary for success. To bring an audience back, the attraction must have exhibits, programs, events and site qualities that justify repeatable experiences. Changing and interactive exhibitry, consistently new and innovative programming and special/annual events are successful ways for projects of this type to encourage repeat visitation. Project proponents have described SMoW as having these qualities, and this study assumes interpretation, education, events, changing exhibits and other qualities to make SMoW a highly repeatable experience. • Serves Resident and Visitor Markets - While the resident market is the focus for a museum of this type and location, it should appeal to visitor markets as well. The estimated 2016 population of the Resident Market Area is 4.5 million. In addition, SMoW would draw on area visitors including tourists staying in Scottsdale, Paradise Valley and other nearby areas, visiting friends and relatives, and day tourists. Planning for and marketing to residents and tourists ensures both maximum and year-round visitation. Further, successful local marketing is an essential approach to attracting the tourist market. Working in partnership with local hotels and resorts will be an important to reaching those staying in commercial accommodations. In addition, many tourists are visiting friends and relatives, and many locals advise out-of-towners on the best local attractions. • Marketing and Programs - The design and operating plan for SMoW assumes an ongoing marketing effort aimed at prime audiences, which include the defined resident market area, as well as area tourists. With the tourism audiences, there are marketing channels that can be used to build awareness of SMoW. These include hotel and information centers; cooperative marketing with the City of Scottsdale and the Scottsdale CVB; presence at Scottsdale festivals and events; local newspapers and radio spots and other marketing channels. Because the marketing budget will be limited, skillful use of the marketing budget and an emphasis on non-cash expense marketing efforts will be necessary for success in the marketing effort. Ongoing programming is important in attracting first time visitors and repeat visitors.

• Facility Pricing - The attraction's ticket prices are assumed to be in keeping with breadth and quality of the visitor experience, and the time a visitor would spend at SMoW. The ticket price should be competitive with other comparable attractions in the region, and should take into account income levels of the resident population. Current dollar value admission fees of $ 11.00 for adults, $9.50 for seniors, and $7.00 for children are assumed. Special programs are assumed to result in higher admission fees, at $15.00 per attendee. School groups and members are assumed to be admitted without a charge for admission. An allowance for coupons and discounts has also been included at 2 percent of ticket prices. These prices are competitive in the marketplace and should help to strike a balance between maximizing attendance and eamed revenues. • Serves as an Event Venue - Museums and visitor attractions are increasingly being used as "unique" event venues. In order to serve this market segment, the building program must

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support catering, and the museum staff and operation must successfially market and administer the events. An active facility rental program is included in the operating plan. • Days Open - It is recommended that SMoW operate year-round Tuesday through Sunday. Closing days for major holidays would depend on the local market and 0F>erating experience. • Sound Financial Basis - An appropriate project scale for the potential audience is important so that revenues can support both operations and the physical infrastructure of the facility. Entrance fees must be set to maximize revenues while maintaining optimum visitation levels given the markets to be served. Operations and marketing must sustain the audience size and the physical infi-astmcture and provide a quality visitor experience. Operations must be scaled to the particular attributes of the facility, including staffing, seasonality and other factors. Substantial fiindraising capacity and sufficient contributed revenues to balance supplement eamed revenues are a critical component of all successful museums. Meeting these requirements will help to create a sound financial base. A multi-year ramp-up to a sound financial basis is included in this plan.

Preliminary Attendance Potential The attendance potential analysis for SMoW is based on the characteristics of the available resident and tourist markets, the proposed program as currently described, the merits of the site and the performance of comparable attractions as well as the experience of local attractions. This attendance potential estimate also represents a range of market response, bearing in mind that the project is in its early planning stages. The experience of the comparable facilities indicates that the proposed facility with its proposed program and location, along with the size of available markets, has the potential to realize a high degree of market acceptance.

Data in Table IV-1 provide the range of total stabilized attendance potential at SMoW based on 2016 data for the resident market and 2010 data for the tourist market, the latest data available. In this model, stabilized attendance levels are achieved in the fifth year after project opening.

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Table IV-1 Preliminary Attendance Potential Scottsdale Museum of the West

Market P«ielration Rates

Low Range Mid Range High Range Percent Available Markets Low High Attendance Attendance Attendance to Total Resident Market 2016 Population

Primaiy Market Area 3.093.584 1.25% 1.75% 38,670 46,404 54.138 45.2% Secondary Market Area 931,610 0.75% 1.00% 6.987 8,152 9.316 7.9% Tertiary Maricet Area 469.649 0.25% 0.35% 1,174 1,409 1,644 1.4%

Total Resident Marliet 4,494.843 1.04% 1.45% 46,831 55,964 65,098 54.6%

Estimated 2010 Low Range Mid Range Higb Range Visitor (Tourist) Market Tourist Market Low High Attendance Attendance Attendance Scottsdale Overnight Vlsiiors Domestic & Intematioiial Ovemight Hotel Visitors to Scottsdale"*' 639.000 1.75% 2.25% 11.183 12.780 14.378 12.5% Visitors to Paradise Vatley & Other Areas ^ 4/ 494,000 1.25% 1.50% 6,175 6,793 7.410 6.6%

Visiting Friends & Relatives (VFRs) ^' 230.000 1.75% 2.25% 4,025 4,600 5,175 4.5%

Scottsdale Day-Trip yjsUors uomesTic uvemigni uay-1 nppers lo Scottsdale* 7,483.000 0.25% 0.35% 18,708 22,449 26,191 21.9% Total Visitor (Tourist) Market 8,846,000 40,090 46,622 53.153 45.4%

Total Stabilized Attendance Potential Range 86,921 102,586 118,251 100.0% Mid Range Attendance ^ 87,000 103«000 118,000

1/Source: The Scottsdale/Paradise Valley Toiinsm Study—Part D: Visitor Slatistica March 2012. This is the most recent available data.

2/ Includes Paradise Valley and poitions of East Phoenix, North Tempe, Carefree^ Cave Creek, Fountain Hills, and the Salt River Pima Maricopa Indian Conununity. 3/ Estimated at one visiting friend or rebtive per resident of Scottsdale, a typical rationnationally . 4/TheCity of Scottsdale deflnes this segment as day visitors in its 2012 Scottsdale/Paradise Valley tourism study. Day visitors are domestic ovemight tourists staying in accommodations outside ofthe Scottsdale/Paradise Valley area. S/ Rounded to nearest 1,000. Source. ConsultEcon, Inc

Depending on the final size and program of the facility, preliminary attendance potential is estimated at 87,000 to 118,000, with a mid-range estimate rounded to 103,000 in a stabilized year of operation, as shown in Table IV-1. The evaluation of attendance potential represents a range of market response, but it also reflects the preliminary project program and design and the operating plan included herein. The preliminary attendance potential for SMoW assumes that an estimated 55

Scottsdale Museum of the West lV-4 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 percent of its visitors will come from within the Resident Market Area^ and 45 percent of visitors will be tourists from beyond that area.

The preliminary operating plan for SMoW should be refined as the project moves forward. This analysis is limited by the early planning stage of the physical plan, the plan of programs and visitor experiences. As planning moves forward and more definitive plans for architecture, exhibit design, visitor programs, and operations are created; additional refinement ofthe attendance potential may be warranted. It is assumed in the analyses that the following conditions will be met. 1. The size and design of the new facility and its exhibits will be appropriate to its market potential, and will serve to create a high-quality, stimulating attraction with broad-based audience appeal and a distinctive image. SMoW will be regarded as a unique attraction in the region. This distinction will give it further visibility as a "must-see" attraction. 2. An aggressive promotional campaign will be developed and implemented. This program will be targeted to prime visitor markets. The facility will be competently and effectively managed, and the institution will develop the proper staff and board infrastructure to develop and operate such a project. The most important marketing components are to publications reaching general visitors to Scottsdale; to individuals, organizations and groups interested in the westem art and history; and, to school administrators and teachers in the resident market area. 3. The ticket price for the facility will be consistent with the recreational and educational value offered, and with current attraction admissions prices at other comparable attractions, both locally and regionally. The attendance projection that follows assumes a benchmark ticket price of $ 11.00, with lower prices for seniors and children. The facility will also offer memberships and fi^e admission to school groups. 4. There will be no physical constraints to impede visitors to the facility, such as major construction activity. Changes in economic conditions such as a major recession or major environmental problems that would negatively affect operations and visitation will not occur in the forecast period. In addition, sufficient parking must be available on-site or adjacent to the SMoW site. 5. The range in the estimate of attendance is based on four factors. The first is simply the variation in market acceptance of the project. The second factor is the amount and quality of marketing employed. The third is how well SMoW is operated and the quality of its exhibitions. The fourth is how well the conceptual site, building and exhibit program is translated in the future design and construction phases of the project.

^ Resident Market Area is The Phoenix Metro Area of Maricopa and Pinal Counties.

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Early Year Attendance During the first few years af^er opening, the project is expected to build up to its stabilized attendance level, based on the current management plan for operations. During this period, word-of-mouth advertising would occur, the competency of the staff and volunteers would grow and its reputation would be developed. In addition, an early year surge in attendance is assumed based on the typical experience of new museums and attractions. Year 1 is assumed to be at 95 percent ofthe attendance potential in a stabilized year, declining to 85 percent by Year 3 and then increasing to 100 percent by Year 5 as the organization moves to full operation. Data in Table IV-2 show an estimated eight-year attendance projection with future years (after stabilized Year 5) at an assumed 0.5 percent growth rate due to the projected growth in the resident and tourist markets.

Table IV-2 Eight-Year Attendance Potential Pattern Scottsdale Museum ofthe West

STABLE YEAR! YEAR 2 YEAR 3 YEAR 4 YEARS YEAR6 YEAR 7 YEARS Percentage of Stabilized Attendance 95% 90% 85% 92% 100.0% 100.5% 101.0% 101.5%

Mid Range Attendance Level 97,850 92,700 87,550 94,760 103,000 103,515 104,030 104,545

NOTE: SMoW is expected to open in 20IS. Therefore. Year I represents 2015. 1/ Stabilized attendance expected to occur in Year S. This analysis assumes that the full facility will be open for Year I of operations, with a ramp up of operations to Year 5 at full operations. Source: ConsultEcon, Inc.

Seasonality of Visitation The seasonality of visitation at SMoW will be determined primarily by the composition of its audience, the timing of special programs and events, and regional weather pattems. The experience of visitor attractions indicates that those facilities with a larger percentage of visitors from tourist markets have the most highly peaked attendance pattems, while those which draw more from resident markets have a more even attendance pattern. Based on these factors, SMoW could expect a surge in the winter months due to regional tourism pattems. Data in

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Table rV-3 show the estimated monthly distribution of attendance at the facility for the mid- range attendance potential.

Table IV-3 Seasonality of Attendance Scottsdale Museum of the West

Mid-Range Attendance Total Seasonality Attendance

January 11% 11,330 February 11% 11,330 March 12% 12,360 April 10% 10,300 May 9% 9,270 June 8% 8,240 July 5% 5,150 August 5% 5,150 September 4% 4.120 October 7% 7,210 November 9% 9,270 December 9% 9,270 Total 100% 103,000

1/ Rounded to nearest 1.000. Source: ConsultEcon, Inc.

Facility In-House Population The information provided by data in Table IV-4 uses the estimated stabilized attendance to prepare estimates of peak attendance days and the related demand for parking at SMoW. Given this context, a facility in-house population analysis has been prepared that uses the estimate of the attendance during the peak month of March, a high week during that period and a strong day in that week (18 percent of weekly attendance, most likely a Saturday) to arrive at an appropriate "design day" attendance level for SMoW. A factor of peak in-facility population of 25 to 30 percent of that

Scottsdale Museum of the West IV-7 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012 day's total attendance is used, based on an assumed length of stay of 1.5 to 2.0 hours. These factors provide an estimate of the "in-house" population that is useful for facility sizing and throughput analysis. The facility would have an estimated 170 to 210 visitors in-house during peak periods. The high day parking requirement would be 68 to 84 spaces. The proposed scale of SMoW could accommodate the attendance potential forthe facility as presented in this analysis.

Table IV-4 Facility Sizing Parameters Scottsdale Museum ofthe West

Stable Year

Mid Range Attendance 103,000

Average Periods During Facility Peak Periods Peak Months Rentals

Peak Month Attendance 12,360

Average Month Attendance 8,583

High Week at 28% of Peak Month 3,461 2,403 Hign uay Anenoance ai i6Vo oi nign Week 623 433

(1.5 hr. stay - (2.0 hr. stay- (l.Shr.sUy- (2.0hr. sUy- Length of Stay 25%) 30%) 25%) 30%)

Peak In-house Population 156 187 108 130

Rounded In-house Population 160 190 110 130

High Day Parking Requirement ^ 64 76 44 52

Potential for Event Parking Demand 130

1/ Stable year attendance achieved after five yean. 2/ Based on 95 percent auto usage during peak daytime periods (bus usage is higher during the shoulder seasons from school groups and tour groups). 2.S persons per vehicle. Plus 5% turnover requirement. Does not include employee, volunteer and other administrative visitor parking. 3/ Estimated at one car per two attendees at events of 200 people per event, plus 30 cars for caterers and servers, security, SMoW staff, volunteers, etc. 4/ Most major facility rentals will be during evenings or at the end of the day, so they would seldom overlap with the peak in-house times of day which tend to be 10 am to 2 pm. Source: ConsultEcon, Inc.

Scottsdale Museum of the West IV-8 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

OPERATING POTENTIAL

The following section presents an evaluation of the operating potential of die proposed SMoW.

Admissions by Type Data in Table IV-5 present an analysis of attendance by admissions category and ticket prices for a stable year of attendance in order to derive estimated per capita admission revenue. It also includes an analysis of memberships by type of membership. Table IV-5 Admissions Analysis in Current Dollars Scottsdale Museum of the West

Per Capita Ticket Revenue Percent Contributio Contribution % to ToUi Attendance n to Ticket to Ticket Per Attendance By Type Ticket Price Per Capita Capita Adult 36.0% 37,080 $11.00 $3.96 56.8% Senior 16.0% 16.480 $9.50 $1.52 21.8% Youth (3-12) 17.0% 17,510 $7.00 $1.19 17.1% Student Group 5.0% 5.150 $0.00 $0.00 0.0% Members 12.0% 12.360 $0.00 $0.00 0.0% Programs 3.0% 3,090 $15.00 $0.45 6.4% Facility Rentals 8.0% 8,240 $0.00 $0.00 0.0% Free/Complimentaiy " 3.0% 3.090 $0.00 $0.00 0.0% Less Discounts & Coupons (2^ 2% ($0.14) -2.0% Total 100.0% 103,000 S6.98 100.0%

Memberships Estimates Estimated Membership Percent to Number of Avg. Price Types Totai Memberships By Type No. of Member Attendances 12,360 Individual 30.0% 618 $35 Average Annual Attendances Per Membership 6 Family 64.0% 1,318 $85 Est. Total Memberships 2,060 Donor 3.5% 72 $250 Average Membership Fee $91.00 Sponsor 1.5% 31 $500 Membership Revenue $187,460 Patron 1.0% 21 $1,000 100.0% 2,060 $9134 Rounded: S9I.00

1 / Includes children aged 3 and under. complinwntBiy tickets, VIPs, special events etc. Source: ConsultEcon. Inc.

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Data in Table rV-6 present the attendance distribution and ticket price assumptions over an eight- year period. The Student Group, Members, Facility rentals and Program audiences ramp up over time in this model as the organization's capacity increases and these audiences are cultivated. Conversely, Ticketed attendance is strong initially as early year excitement about the museum attracts many locals and frequent visitors to Scottsdale.

Table IV-6 Attendance Distribution and Ticket Price Assumptions Scottsdale Museum of the West

STABLE % to Total Attendance YEARl YEAR 2 YEAR 3 YEAR 4 YEARS YEAR 6 YEAR 7 YEARS Adult 38.2% 37.6% 36.3% 36.0% 36.0% 36.0% 36.0% 36.0% Senior 17.0% 16.7% 16.1% 16.0% 16.0% 16.0% 16.0% 16.0% Youth (3-12) 18.0% 17.7% 17.1% 17.0% 17.0% 17.0% 17.0% 17.0% Student Group 3.80% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Members 10.5% 11.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% Programs 2.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Facility Rentals 7.0% 6.5% 7.5% 8.0% 8.0% 8.0% 8.0% 8.0% Free/Compltmentary " 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Attendance By Type Adult 37,379 34,855 31.781 34.114 37,080 37.265 37.451 37,636 Senior 16,635 15.481 14.096 15,162 16.480 16,562 16,645 16,727 Youth (3-12) 17.613 16,408 14,971 16.109 17.510 17,598 17,685 17.773 Student Group 3.718 4.172 4.378 4.738 5.150 5,176 5.202 5.227 Members 10.274 10,197 10,506 11,371 12,360 12,422 12,484 12.545 Programs 2,446 2.781 2.627 2,843 3,090 3.105 3.121 3,136 Facility Rentals 6,850 6.026 6.566 7.581 8,240 8.281 8.322 8.364 Free/Complimentary " 2,936 2.781 2.627 2,843 3,090 3.105 3.121 3,136 Total 97,850 92,700 87,550 94,760 103,000 103,515 104,030 104345 Estimated Future Ticket Prices ^ Adult $11.70 $11.70 $12.30 $12.30 $12.90 $12.90 $13.50 $13.50 Senior $10.10 $10.10 $10.60 $10.60 $11.10 $11.10 $11.70 $11.70 Youth (3-12) $7.40 $7.40 $7.80 $7.80 $8.20 $8.20 $8.60 $8.60 Student Group $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Members $0.00 SO.OO $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Programs $15.90 $16.22 $16.54 $16.87 $17.21 $17.55 $17.91 $18.26 Facility Rentals $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Free/Complimentary " $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Less Coupons & Discounts ($0.13) ($0.13) ($0.13) ($0.13) ($0.14) ($0.14) ($0.15) ($0.15)

Per Capita Average Revenue $7J9 $7.27 $7J7 $7J2 S7.68 S7.68 $8.05 $8.05

1/ Includes children aged 3 and under, conq>lunentary nckets, VIPs, special events etc. 2/ Year 1 ticket prices reflect compounded inflatioa rate of 2% per year from 2012 (o 2015 dollar value. Achial pricing in 2015 dollars will depend on actual inflatioD and other factors and would be rounded accordingly, Source: ConsultEcon, Inc.

Scottsdale Museum of the West IV-10 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Operating Assumptions Data in Table IV-7 summarize key assumptions that underlie the operations analysis.

Table IV-7 Operations Analysis Assumptions in Current Dollars, Except Where Noted Scottsdale Museum of the West

Generat Amounts " Comments Year Assumed to Open to Public 2015 January 1 Total Indoor Gross Square Footage 40.000 Stable Year Anendance 103.000 Annual Inflation Rate 2.0% Personnel & Benefits Annual Inflation Rate 2.0% Annual Attendance Growth after Year S 0.5% Admission Fees and Revenue Adult Ticket Price $11.00 Yearl Per Capita Ticket Revenue $6.98 Year! Coupons & Discounts as a % of Per Capita Ticket Rev. 2.0% Ticket Price Increase % Every Other Year 5.0% Retail Retail Area Gross Square Footage 800 Per Capita Retail Sales $3.50 Sales 15% Cost of Goods Sold as a % of Retail Sales 50% Family & Individual Memberships Memberships 2.060 Stable Year Average Membership Fee $91.00 Annual Attendances Per Membership 6 Facility Rentals and Receptions Major Rentals Per Year 26 Stable Year Target Attendance in Stable Year 5,200 Avg. 200 per event Average Net Revenue per Rental $4,000 Medium Rentals Per Year 26 Stable Year Target Attendance in Stable Year 2,600 Avg. too per event Average Net Revenue per Rental $2,000 Minor Rentals Per Year 26 Stable Year Target Attendance in Stable Year 650 Avg. 25 per event Average Net Revenue per Rental $750 Percent to Stable Year Facility Rentals Year I 80% Year 2 70% Years 80% Year 4 90% Other Revenue As a % of Eamed Revenue 1%^ operating Reserves ^' Operating Reserve Assumption at Opening $2,000,000 Operating Reserve Additions Years 2 through 4 $1,000,000 Annual Growth Rate above Inflation Rate 2% Annual Interest 2% 1/ I^ollar values ve in cuirent value of the doHar. Other revenues indude revenue from special events, fees of museum images and objects, on-site V adveitising, interest on accounts and other sources. Operating reserves amounts and the use and timing of receipts peScottsdalr e Museum ofthe West, Inc. Rates of 3/ return assumptions provided by CEI. Source: ConsultEcon, Inc.

Scottsdale Museum of the West IV-11 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Revenue Data in Table IV-8 present a stable year and multi-year analysis of operational and non-operational revenues. Operational revenues are derived fromeame d sources, such as ticket sales, memberships, retail, facility rentals and other revenue. Non-operational revenues are also evaluated and include interest from an operating reserve fund and other non-operational revenues that are required to achieve breakeven museum operations. Other non-operational revenues would come fromgrants , gifts, corporate sponsorships, fiindraisingevents , and other relevant sources.

Table IV-8 Multi-Year Operational Revenue Potential and Non-Operational Revenue Scottsdale Museum of the West

STABLE Stable Year In Percent YEAR 1 VEAR2 YEAR3 YEAR 4 YEARS YEARti YEAR 7 YEARS Current Dollars to Total TOTAL ATTENDANCE 97,850 92,700 87,550 94,760 103,000 103,515 104,030 104.545 103.000 Per Capita Ticket Revenue $7.39 $7.27 $7.37 $7.32 $7.68 $7.68 $8.05 $8.05 $6.98 REVENITE Operational Revenue Ticket Revenue S722,821 $673,493 $645,414 $693,416 $790,544 $794,496 $837,277 $841,422 $718,693 25.9% Membership Revenue 165,870 164,900 178,500 193,800 220,420 231,840 245,440 259,160 187,460 6.8% Gross Retail 417.953 403.874 389,066 429,528 476,216 488,169 500,410 512,945 414.575 15.0% Facility Rental 150,426 131.516 156,503 174,837 201,594 205,626 209,739 213,934 175,300 6.3% Other Revenue 14,571 13,738 13,695 14,916 16.888 17.201 17,929 18,275 14,962 0.5% Total Operational Revenue $1,471,640 $1,387,521 $1,383,178 $1,506,497 $1,705,662 $1,737,333 $1310.795 $1345,735 $1,511,190 54J%

Non-Operational Revenue Operating Reserves Interest $40,000 $60,784 $81,975 £103,581 $105,610 $107,679 $109,789 $111,940 $91,940 3.3% 1' 791.542 962,508 1.146.136 1.375,977 1.373.875 1.406.863 1.399.414 1,431,869 1,169,733 42.2% TOTAL REVENUE $2^03,183 $2,410,813 $2,611,288 $2,986,054 $3,185,147 $3,251,875 $3,319,997 $3,389,544 $2,772,863 100.0%

Operating Reserves $2,000,000 $3,039,184 $4,098,728 $5,179,030 $5,280,498 $5,383,953 $5,489,435 $5,596,984 $4,596,991

NOTE: SMoWiseKpcctedtOopcnui2DI5. Thocforc, Year 1 mpresenlslhc inflated 201 jdollfli value. 1/ Represents potential revaluetix m grants, gifts, cwporaie sponsorships, fundraising evenls. and ahe relevant sotnces. Source: ConsullEcon, Inc.

Staffing Data in Table rV-9 are illustrative of how the SMoW organization would "ramp up" during the organization's early years, fix)m the Year 1 opening year to the Year 5 stable year. Most staff is necessary at the outset. However, there may be ways to combine responsibilities and use volunteers initially to accommodate the level of attendance. Over time however in order to sustain the museum, a baseline staff of the scale and attributes included in the preliminaiy staffing plan will be required. Thus this plan ramps up to recommended staffing levels.

Scottsdale Museum of the West IV-12 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Table IV-9 Illustrative Personnel Positions and Salaries over Scottsdale Museum of the West

VEARJ VEAR3 YEAH^ STABLeVEAH3 Nuitte d Full Ninrter d Full NiDita or tfFull NuirtMrcf Tim MTIiTO TIma PartTtma Tim Port Tim Tim Pari Tim Tim tat Tim

QiecUlvsDIrKtcr BudneBsMmagv/CFO fleix|dariGt/A(Mfildr4lv«Asd. M arkOSna. Dnriqarant, MoiiMrMp end FadDty MskdlngMoi^

Dwdopmrt Mavger M antwntt p Coonf ndor EvoteCovdndor GnH4) Sd SB / Ressvdiarl d / M oitntfd p SdcB VUtor Servlonand Eduction Prorams Edu:dlonarinjUlcnc(ranMaBDer Educdore

Visitor Atidato SetuttyGuadi

M iBOxn Sbm M noEr / Buyer CadilGra- AtMsdons'nddl

AradoriCutfor Chax^rg BrHtit Gdloy Coonindar IT/MiMtlmaiaTecMda)/Wd>ate

FadlltyMni^/Eni^nar

TeU IS 14 IS 18 17 17 21 18 21 17 ToM FuQ TImEquhBlsa Pfldtl(m(FTFS| 2200 2&n 39i00 2a£0 EUarlasand FringaCoda Amanl Tobri Total Total Total Tom Satariaa aetvy ariary Salary Uary Sdary (FTE)lii Budgd. Budgd- Budgd- BiHtyt- Budgd- Currvil CurrsM Currwd Currod Cwrsd Currad Valua Odto- Ddlar Ddtar Ddlar Ddiv

Ex«cutivsDirador $12^000 V S120.00D si20.oao S120.000 $i2aooo $i2aooo BudmMflnager 52.000 1/ 52.000 szooo 5Z000 52000 52,000 Raocftlafild/AiMnidrdlva Aed. 3ZO0O 4/ 32.000 3Z00O 32,000 32,000 32.000 H arlutfna Owdqnnri, M viteddp Bid Fadlfty RoMa MatdlnoManagBr 56.000 V 58,000 58JX» 5B.O0O 50.000 58,000 AdnirldrdlvaAad. SZOOO 4/ 0 0 0 32,000 32.000 DsMlapmert Manqger 95,000 1/ 95,000 95.000 05,000 85.000 06.000 M oTtBtH p COOTI nd V 34,000 2/ 17.000 17.000 17,000 17.000 17.000 EvvtaCixiiJrAv 50,000 2/ 25,000 25.000 saooo saooD saooo GnKpM«ft-m>dlortd/Mqit«WpMa 25,000 12,500 12.500 1ZS0O 25.000 25.000 Vldttr Swtassnd EducaUon ftivvni EclucdionaKlRMicFYofpanMngff 47.000 2/ 47,000 47,000 47SXD 47.000 47.000 38.000 2/ 38.000 38,000 38.000 57,000 57.000 Victor SovloeaMams SKl Tidns 38.000 2t 38,000 38,000 38AD 38,000 38,000 VidtorAoldirts 2Z000 2Z00O 00,000 88,000 88,000 88,000 SscuttyGumb 2Z000 88,000 88,000 88,000 88,000 88,000 D^*n A n ifiiJirfiBiB Mioun 3ora Maimer / Buyer 43:000 y 42.000 42000 42,000 42,000 42000 C^cn- Attdsdtranddl 20,000 40,000 40,000 40i000 50.000 oom> Exhibits ardor 73^ V 73.000 73,000 73.000 73,000 73.000 Aed dart Cutter 53,000 3/ 53.000 53,000 S3.000 53,000 53,000 Chan^rD ExMUt Odlcry Coonf ndcr 3S.000 2/ 0 1S.000 loxno 3&000 38,000 IT/Mtitlmedaledvidai/Wcbata 30.000 41 38.000 19M) 10^ 39,000 38,000 Plant Oparrtim 51.000 21 51.000 51.000 51.000 51.000 51.000 CutodoB 20.000 laooo 10.000 10,000 laooo 10,000 TeW Wariaain Currori Mlm «9B2S0O »1,0«3^ $1,188,000 S1.16S^ FrEnga&BmrfitaQAwnircl 2a%orTold Sdalo $208,700 1278.880 S2B2.O40 $323,400 $326,200 Total aateteaA BmM*Bu6gt $1,219^ $1^74,800 $1,»8^ $1,478^ 81^,200 Total Currcrt Ddlar Valua Total Futura OdlBT Vatua Total aalarlasin Futura Ddlara $ijno,m $1^078,102 $1,in,6«B $1,300,718 $1,338,219 FrtngtA BmdttalnFuturaDdlara S2S3,0U $301,880 $322,438 $364,201 $374,701 Total aedariasft BrntfttaBudyl tt,2n,82B $1J79.«71 $1,473,n2 $1,684,»1» $1,712,830

NOTES nHVmUitl'>fmmCdaUMamkFTt.mm»mm»>mt*a%FTe. V ;0«rar« BTKpnaMnunMVIda U etfnM • TWi F%c««taaMy rem poMoi hvn xn2 Nfl u Airatai Ajllnict Uiawim Mlln c( MiMurm X G«nM • nfi U>V Iw M (sAlcn rram 3D13IW ttty Mnrim Ajimaol yiaim « UiTiMd • Udn 7Bh nrortV* HBT Iw n ^Mn hon 3011 BDWW OonaJIEeon. Ins.

Scottsdale Museum ofthe West IV-13 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Operating Expenses Data in Table FV-IO are illustrative annual operating expenses in a stable year (Year 5) after the SMoW organization reaches full operations after the early year ramp up period.

Table IV-10 Illustrative Annual Operating Expenses of the Full Operation in a Stable Year Scottsdale Museum ofthe West

Project Parameters Indoor Square Footage 40,000 Percent Annual Attendance in a Stable Year 103,000 to Employees (PTEs) at Full Operation 29.50 See Personnel Schedule Total

Detailed Budgetary Analysis Annual Amount Expense Factors Salaries (FTE, PTE) $1,165,000 See Personnel Schedule 40.0% Fringe / Benefits (@ 28% of Sal.) 326,200 See Personnel Schedule 11.2% Allowance for Interns & Seasonal Budgeted at $15/hour for Personnel 37,500 2,500 hours 1.3% Uniforms 2,950 @ $100 Per FTE 0.1% Professional/Contract Services 91,450 @ $3,100 Per FTE 3.1% Voice/Data/Web Presence 30,975 @ $1,050 Per FTE 1.1% Postage & Shipping 10,325 @ $350 Per FTE 0.4% Equipment Rental/ Lease 11,800 @ $400 Per FTE 0.4% Travel, Meeting and Entertainment 14,750 @ $500 Per FTE 0.5% Dues and Subscriptions 7,375 @ $250 Per FTE 0.3% Retail Cost of Goods Sold (COGS) 207,288 @ 50% Of Gross Retail Sales 7.1% Advertising 206,000 @ $2.00 Per Attendee 7.1% Printing/Copying & Publications 51,500 @ $0.50 Per Attendee 1.8% Events & Programs 75,000 Budgeted 2.6% Changing Exhibits 125,000 Budgeted 4.3% Exhibit Reinvestment 51,500 @ $0.50 Per Attendee 1.8% Exhibit Supplies 15,000 Budgeted 0.5% Exhibit Replacement 10,000 Budgeted 0.3% Supplies & Materials 59,000 @ $2,000 Per FTE 2.0% Utilities 120.000 @ $3.00 Per Interior SF 4.1% Insurance 50,000 @ $1.25 Per Interior SF 1.7% Repairs & Maintenance 60,000 @ $1.50 Per hiterior SF 2.1% Other Operating Expenses / Contingency 44,250 $1,500 Per FTE 1.5% Total Operating Expenses $2,772,863 95.2% Operating Analysis Operating Expense Per SF $69.32 Operating Expense Per Visitor $26.92 Attendees Per FTE 3,492 Operating Expense Per FTE $93,995 Square Feet Per FTE 1,356

1/ Factors are based on industry standards, the specific attributes of the project and local conditions. 21 Note that capital reserves for major maintenance and replacement to the building and its systems nor major changes and new exhibits are not included in the operating expense budget These would be paid for through capital SMoW accounts. Source: ConsultEcon, Inc.

Scottsdale Museum ofthe West IV-14 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Data in Table IV-11 show estimated operating expenses over an eight-year period. These reflect a ramping up of the organization and also the increased attendance, programs, facility rentals, education groups and other staff-intensive activities.

Table rv-ll Multi-Year Estimated Operating Expenses Scottsdale Museum of the West

STABLE Facton Year 1 Assuinnl to be 3015 VEARl YEAR 2 YEARS YEAR4 VEARS VEAB& VEAR7 VEARS AltendBDCc 97,850 92.700 87.350 94.760 103,000 103,515 104.030 104.543 FTE'g 22.00 24.00 23.50 29.00 29.30 29.30 29.50 29.50 OperallnB EipenK Riinp-Up Anumptioii s Salaries (FTE, FHT) Schedule Frinse / BcnefiU (i§ Z8% or Sal.) Schedule Allowance for Inlenu & Seasonal Peisonne l Budded 0% 0% 0% 50% 100% 100% 100% 100% Unifoinu Per FTE 100% 73% 73% 85% 100% 100% 100% 100% Pcornsional/Coniraa Snvicei Per FTE 100% 100% 100% 100% 100% 100% 100% 100% VDiceTDalB/Web Picscnce Per FTE 130% 140% 130% 110% 100% 100% 100% lOOK Postage & Shipping Per FTE 100% 100% 100% 100% 100% 100% 100% 100% Equipmeoi Retdal/ Lease Per FTE 100% 100% 100% 100% 100% 100% 100% 100% Entettmnmeni Per FTE 90% 90% 93% 100% 100% 100% 100% 100% Duo and Sid»crtptions Per FTE 100% too% 100% 100% 100% 100% 100% 100% (COGS) Of Gross Retail Sales 100% 100% 100% 100% 100% 100% 100% 100% Advertising Per Attendee 100% 95% 93% 93% 100% 100% 100% 100% Printiiig/Copyiiig & PublicatioiB Per Attendee 100% 100% 100% 100% 100% 100% 100% 100% Events A Progranis Budgeud 60% 60% 63% 83% 100% 100% 100% 100% Changing Exhibits Budgeted 23% 25% 75% 90% 100% 100% 100% 100% Exhibit Reinvestment Per Attendee 10% 20% 30% 90% 100% 100% 100% 100% Exhibit Supplies Budgeted 40% 30% 75% 90% 100% 100% 100% 100% Exhibit Replacement Budgeted 23% 50% 75% 90% 100% 100% 100% 100% Supplies A Materials Per FTI 100% 100% 100% 100% 100% 100% 100% 100% Utilities Per biieiior SF 100% 100% 100% 100% 100% 100% 100% 100% bisurancc Perbterior SF 100% 1009'; 100% 100% 100% 100% 100% 100% Rcpsiis & Mninicirocc Per Interior SF 60% 73% BOS 90% 100% 100% 100% 100% UtnerUperDiing txpa\tea/ Ctmmtgatcy Per FTE 100% 100% 100% 100% 100% 100% 100% 100%

STABLE (Incumnt Ftrccntt o OperatlnK Eipensct VEARl VEAR2 YEAR 3 YEAR4 YEARS YEAR6 YEAR7 YEAR 8 dallon) Total Salerics CfTE. PTE) Schedule $1,010,801 $1,078,102 $1,151,356 $1,300,718 $U38,2I9 $1^64,983 $1,392,283 $1,420,128 $1,163,000 410% Fringe / Benefits l@ 28K oTSol.) Schedule 283.024 301.869 322,436 364,201 374,701 382.195 389,839 397,636 326,200 118% AlUiwance for tmem* ft Seasonal Budgeted at SlMiour Personnel for 2,300 hours 0 0 0 21,116 43.076 43.937 44.816 45,712 37,500 1.4% UniTonns SlOO Per FTE 2,335 1.948 2,112 2,776 3389 3.456 3,326 3,396 2.950 0.1% Proresstooal/ConinKt Services J3.100 Per FTI 72J74 80.333 B7.278 101,242 103.047 107.148 109,291 111.477 91,450 3.3% Voiee/DaiaWeb Presence J 1.0 JO Per FTE 36,771 38, IBS 38.430 37,721 33.381 36.292 37,018 37.758 30.975 1.1% Postage & Shipping J3S0 Per FTE 8.171 9.092 9.834 11,431 11.860 12,097 12.339 12.386 10.325 0.4% Equipment Rental/ Lease $400 PerFTE 9,339 10.391 11762 13.063 13.534 13.826 14.102 14J84 11.800 0.4% TraveL Meeting and Entcrtainmen $S00 PerFTE 10.306 11,690 13J73 16.329 16.943 17,282 17,628 17.980 14,750 0.3% Dues and Subscriptions S250 PerFTE 5,837 6,493 7.039 8.165 8.472 8.641 8,814 8.990 7,375 0J% Retail Cost oT Goods Sold (COGS) 50K Of Gross Retail Soles 208,976 201.937 194J33 214,764 238.108 244,083 250.205 256.473 207,288 7.3% Advertising S2.00 Per Attendee 207.678 190.649 183,638 202,759 236.629 242J69 248.631 254.880 206,000 7.4% Piinting/Ctqiying ft Publicstions S0.3D Pa Attendee 51,920 50.171 48,331 53,358 59.157 60.642 62,163 63.720 31.300 1.9% Events ft PiDgrants Budgeted 47,754 48.709 53.824 71,793 86^151 87.874 89,632 91.425 73,000 2.7% Changing Exhibits / Curatorial Budgeted 33,163 33.826 103 JOS 126,693 143,586 146,457 149 J87 132,374 123,000 4.3% Exhibit ReinvesBnent S0.30 Per Attendee 3,192 10.034 24.166 48.022 39,137 60,642 62.163 63.720 31,500 1.9% Exhibit Supplies But^eted 6J67 8,118 12,421 13,203 17,230 17,373 17.926 18,283 13,000 0.3% Exhibit Replacement Budgeted 2.633 3,412 8,281 10,133 11,487 11,717 11,931 12,190 10.000 0.4% Supplies ft Materials $2,000 PerFTE 46,693 31,937 36,308 65.317 67,772 69,128 70,510 71.921 39.000 2.1% Utilities $3.00 PerbteriorSF 127,345 129,892 132,490 133,139 137,842 140,399 143.411 146.279 120.000 4J% Insurance $1.23 Per Interior SF 53,060 34,122 53,204 56^ 57,434 38,583 59,733 60,930 30,000 1.8% Repaire ft Maintenance $1.30 Per Interior SF 38,203 48.709 52,996 60.813 68,921 70,300 71.706 73.140 60.000 2.2% Other Operating Expenses / Contingeocy $1,300 PerFTE 35,020 38.968 42.231 48.988 50.829 31,846 32.883 53.941 44,250 1.6%

Total Operating expenses " $2^10^813 $1^11,288 $2^^ $3,I8SJ47 S3J51,875 $3,319^ S3^J44 $1,772,863 100.0%

I'NoullMtcapilil rcMTva lor BufDf (00 B nd ill fyriEiiii Da-oqnr cbMgB tai im (DthibiU (ra BM iochido ID tbaopnitiag•pcrabudgct L T •M voaU bs pud fca thmigh opi •1 SMoW naDU. Sounc: CDawliEBai. Ins.

Scottsdale Museum of the West IV-15 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Operating Summary Data in Table IV-12 present an eight-year summary of new operating income, based on the revenue potential and estimated operating expenses in this operations analysis.

Table IV-12 Net Operating Income Summary Scottsdale Museum ofthe West

Stable Year In Current STABLE Dollars YEARl YEAR 2 YEAR 3 YEAR 4 YEARS YEAR 6 YEAR? YEARS Revenues Operational Revenues $).sn,i90 $1,471,640 $1,387,521 $1,383,178 $1,506,497 $1,705,662 $1,737,333 $1,810,795 $1,845,735 Non-Operatfonal Revenues Operating Reserves Interest $91,940 $40,000 $60,784 $81,975 $103,581 $105,610 $107,679 $109,789 $111,940 Other Non-Operational Revenues " $1,169,733 $791,542 $962,508 $1,146,136 $1,375,977 $1,373,875 $1,406,863 $1,399,414 $1,431,869 Total Revenue $2,772,863 $2,303,183 $2,410,813 $2,611,288 $2,986,054 $3,185,147 $3,251,875 $3,319,997 $3,389,544 Expenses

Operating Costs ^ $2,772,863 $2,303,183 $2,410,813 $2,611,288 $2,986,054 $3,185,147 $3,251,875 $3,319,997 $3,389,544

Net Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0

1/ Estimates of Non-Opetatiomt Revenue Potential have been limited to the extent required. Higher amotum would be sought lo expand mission fulfUbiMni and developmeni of organizational capacity. 2/ Note lhat capnal reserves for major TOtntenance and reptactment to the building and its systems nor major changes and new exhibits are not iiKluded in the operaibg expense budget. These would be paid for through capital SMoW accounts. Source: ConsultEcon, Inc.

An important factor in this plan is the increasing need for Other Non-Operational Revenues as the scale and scope of the museum operation increases during the period up to Stable Year 5. This analysis includes an estimated $792,000 requirement in Year 1 (assumed to be 2015) and increasing to $1,374,000 in Stable Year 5. These amounts are in future dollars, and not in current value of the dollar. In current dollar value, the amounts would grow from about $750,000 to $1,200,000. These amounts are above the assumed retum on investment of the Operating Reserves which are planned to be fully in place by the Stable Year. As is shown in the comparisons to other museums in Section V of this report, annual fundraising of this magnitude or greater is typical for museums of this type and indeed is necessary for long-term institutional sustainability.

Scottsdale Museum ofthe West IV-16 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

It is anticipated that the capacity of Scottsdale Museum of the West to effectively build its case for support and its intemal fundraising capacity over time. In addition, by Stable Year 5, SMoW plans to have its capital fundraising complete which should further enhance its capacity to succeed in its annual fundraising.

Scottsdale Museum ofthe West IV-17 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Section V BENCHMARK MUSEUMS AND COMPARISONS TO OPERATING PLANS FOR SCOTTSDALE MUSEUM OF THE WEST

The following section benchmarks the economic characteristics of the various operating plans for the Scottsdale Museum of the West (SMoW) with those of comparable museums focused on westem art and culture. This section also includes comparisons of the three operating plans to selected local attractions. The three SMoW operating plans are based on information and data included in the following documents: • Management and Operating Estimates fromth e Scottsdale Museum of the West Feasibility Study, Final Report, March 2006, AMS Planning and Research • Statement of Qualifications: Cultural Park in Historic Downtown Scottsdale featuring a Western Art and History Museum, July 24,2012, Scottsdale Museum of the West, Inc., LGE Design Build, Cawley Architects, LLC.

• Attendance and Operating Potential from Section IV of this report

Benchmark Museums SMoW is benchmarked against the following museums: • Amon Carter Museum of American Art, Fort Worth, TX • Autry National Center Of The American West, Los Angeles, CA • Buffalo Bill Historical Center, Cody, WY • Eiteljorg Museum of American Indians and Westem Art, hidianapolis, IN • Gilcrease Museum, Tulsa, OK • Heard Museum, Phoenix, OK • National Cowboy and Westem Heritage Museum, Oklahoma City, OK • National Cowgirl Museum And Hall of Fame, Fort Worth, TX • Rockwell Museum of Westem Art, Coming, NY • National Museum of Wildlife Art, Jackson, WY

Scottsdale Museum of the West V-1 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Market and Facility Characteristics Data in Table V-1 present selected market and facility characteristics of the benchmark museums and SMoW operating plans.

Table V-1 Benchmark Museums Market and Facility Characteristics

Facilitv Data Esttnt Mmdun MSA; bInaHlih FadUiia County Pop Votmne Tourist Estimated Eitlnuted (2010 Dcstinatioii Total Outdoor Aonud Adult Child Family SUtc Census) Locition Square Fed AciuKe Attendance Admission Admission FTE'i Membcnhip Amon Carter Museum of American An Fort Worth TX 6^71.773 " Low 109,000 - 119.934 SO.OO SO.OO 88.5 $65.00 Autty National Center Of The American West Los Angeles CA 12.828,837 " Mid 148.000 - 162,000 $10.00 $4.00 150.0 S6S.00 BufTalo Bill Historical Center Cody WY 28,205 ^ Mid 190.000 - 200.000 $18.00 SIO.OO 112.5 S6S00 Eiteljorg Museum of Amencan Indians and Western Art Indianapolis IN 1,756.241 * Mid 178.000 - 113,447 $10.00 $6.00 60.5 S6S.00 Gilcrease Museum Tulsa OK 937.478 *' Low NA 460 85.700 $8.00 S0.00 62.0 $63.00

Heard Museum Phoenix AZ 4.192.887" Mid 139,000 - 200.000 $18.00 $7.50 90.0 $75.00 National Cowboy and Westem Heritage Museum Oklahoma City OK 1.252.987" Mid 200,000 18 203.529 $12.50 $5.75 116.S $75.00 National Cowgirl Museum And Hall of Fame Fort Worth TX 6.371,773" Low 33.000 - 85.543 $5.00 S5.00 12.0 $95.00 Rockwell Museum of Westem Art Coming NY 98,990" Mid 40,000 31,000 S8.00 $0.00 14.5 SIOO.OO ixauonai Museum ot wiioiite Art Jackson WY 31,464 Mid 51.000 - 47.564 $1200 S6.00 34.0 S90.00

Median 139,000 116,691 $10.00 $5.38 75.3 $70.00

Average 120,889 124.872 S10.15 $4.43 74.1 $76.00

Results from Alternative Opcraring Plans for Scottsdale Museum otth e Wat Scottsdale Museum ofthe West (AMS) Scottsdale AZ 4,192.887 " High 49.000 0 80,000 $10.00 S3.00 20.3 $100.00 Scottsdale Museum ofthe West (SMoW, Inc.)(yr3) Scottsdale AZ 4.192,888*' High 40,000 0 112,000 SI 0.00 $5.00 14.0 SIOO.OO

Scottsdale Museum ofthe West (Business Plan) Scottsdale AZ 4,192.889*' High 40.000 0 103,000 SI 1.00 $7.00 30.3 $85.00

Note: Average Attendance it weighted, bsKd on oiaikci populations. 1/ Da]las-FLWoith-Arlinglon,TXMSA 2J 1,01 Angeles-Lang Beach-SoDU Ana. CA MSA V PukCouOy, WY 4/ Inllanapolts-Canncl [N MSA 3/ Tulsa, OK MSA 6/ Ptnenix. AZ MSA 7/ Oklabonta City. OK MSA V Coniln8.NYMicropotitanSialisticalAiea 9/ Dallai-FLWortli-AillnK(on.TXMSA 10/ Jackson. WY-ID Mbciopollian Siatiolcal Area Source: FacilUlet listed. ESRI / US Census Bureau, Guidcstar USA Inc.. The OflldalMummDirectaiy 2012, Afsociatien of Childien*! Museums, Scotudale Musnunof Ihe West Inc., AMS and ConsuliEoon, Inc.

Scottsdale Museum of the West V-2 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Data in Table V-2 present an analysis of attendance at the benchmark museums and SMoW operating plans. The capture rates for attendance vary widely and are based not only on the scale and type of museum offerings, but also on market size. Larger markets tend to have higher attendance, but lower capture rates. In this analysis SMoW would have capture rates within the experience of its peer museums, and would utilize available space very efficiently.

Table V-2 Benchmark Museums Attendance Analysis

Facilitv Data Benchmark Analvses

Exteot MnseDm is Meriiet Attendees per MSA/CouDty in a High Volume Estimated Capture Rate Attendees SI 00,000 Pop (2010 Tourist Destination Annual (Attendance / per Attendees Operating Census) Location Attendance Population) FaciUty SF per FTE Expense Amon Carter Museum of American Art 6,371.773 Low 119,934 1.9% 1.10 1,355 1.036 Autiy National Center Of The American West 12,828,837 Mid 162,000 1.3% 1.09 1,080 950

Buffalo Bill Historical Center 28,205 Mid 200.000 709.1% 1.05 1.778 1,948 Eiteljorg Museum of American Indians and Westem Art 1,756.24] Mid 113,447 6.5% 0.64 1,875 1,271

Gilcrease Museum 937,478 Low 85,700 9.1% NA 1,382 1,329 Heard Museum 4,192,887 Mid 200,000 4.8% 1.44 2,222 2,249 National Cowboy and Westem Heritage Museum 1,252,987 Mid 203,529 16.2% 1.02 1,747 2,087 National Cowgirl Museum And Hall of Fame 6,371,773 Low 85,543 1.3% 2.59 7,129 3,055 Kocicweii Museum oi westem Art 98,990 Mid 31,000 31.3% 0.78 2,138 1,136 iNaiionai Museum ot wiidiite 31,464 Mid 47,564 151.2% 0.93 1,399 1,115 Art

Median 1,504,614 116,691 7.8% 1.05 1,762 1,300

Average 3,387,064 124,872 93.3% 1.18 2,211 1,617

Weighted Average 3.7% 1.07 1,686 1,510 Results from Altemative Operating Plans for Scottsdale Museum of the West Scottsdale Museum ofthe West (AMS) 4,192.887 High 80,000 1.9% 1.6 3,951 2,455 Scottsdale Museum of the West (SMoW, Inc.) (yr 3) 4,192,888 High 112,000 2.7% 2.8 8,000 6,222

Scottsdale Museum of the West (Business Plan) 4,192.889 High 103,000 2.5% 2.6 3,405 3,714

Source: Facilities listed, ESRI / US Census Bureau, GuidestarUSA Inc., The Official Museum Oirectoiy 2012, Associanon ofGiildren's Museums, Scottsdale Museum of the West, Inc., AMS and ConsultEcon, Inc. ** Note: Tbis is a calculated 'weighted* average based on market population size.

Scottsdale Museum ofthe West V-3 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Data in Table V-3 present revenue data and analysis of the benchmark museums and SMoW operating plans. In this plan, SMoW has a relatively low percentage of non-eamed revenues (fundraising). Over time there will be continual need for institutional renewal and SMoW should continually target increasing its outside support so that it can provide a higher level of benefit to its attendees and the community; and so that it strengthens its economic sustainability. These data also indicate that SMoW has a good opportunity to operate very efficiently within its facility size. Thus the SMoW plan includes sufficient facility size to become an area-side serving cultural institution and attraction, while not having undue facility size and staff requirements.

Table V-3 Benchmark Museums Revenue Analysis

Fidlitv Data BenchmarltAoalTia HuTatal HtoTalal EuDcd/ Euned/ Euned/ Earned/ GIftiA Earned/ GlfbA MetnlienU p / M cmberililp/ Membcrthtp / Mcmbcnlilp / Cruti, McmbenUp %toTetal GrmH, Ortwr Other Other Total Rev other InlcrtM A FnndraUni /Other Inlcicit A jnam per 1 Icvooeper tevenoe per P«r TetalRcv TvtaIRe* Rcvcnoc " DMdeodi Evmti Total Rcvcooc •brven" Ohidendi Evtnii Attendee SF FTE AUCsdce pcrSF per FTC AmoD Outer Mnseam of Amencan Art S440,692 $136,921 $12,336,216 $13,133,829 3.4% 1.2% 93 3% S3.67 $4.04 $4,980 $110 $121 $148,631 Aimy Notional Center OTTbe AmcncsD West 12,302,113 $224,876 $10,163,612 $12,690,703 18.1% 1 8% 80 1% $14.21 $13.36 $13,348 S78 $86 $84,603

Buffalo Bill Historical Center S4,2S 1,423 $867,624 $6,311,338 $11,430^83 37.2% 7.6% 33.2% $21.26 $11.38 $37,790 $37 $60 $101,603 Eiteljoig Miueum oPAniaican Inditna and Wcslcm Art $1,021,037 $1,144,249 $3,693,674 $7,861,960 13.0% 14.6% 72 4% S9.0I $3.74 $16,893 $69 $44 $129,930

Gilcrease Mascom S3.096,36B $243,807 $2,239,283 $3,601,638 33.3% 4.4% 40.3% S36.I3 NA $49,943 $63 NA $90,349 Heonl Miueum $3,101,322 $212,364 $1,787,808 $7,102,894 71.8% 3.0% 23.2% $23.31 $36.71 $36,693 $36 $31 $78,911 Notion B1 Cowbo>' ond Weslrni Henuge Miueum SI ,279.449 $1,130,393 $4,673,030 $7,102,894 IB.OK 16.2% 63.8% $6.29 $6.40 $10,982 $33 $36 $60,969 Notional Cowgirl MuKum And Hall of Fame S620.240 $11,016 $736,784 $1,368,040 43.3% 0.8% 33.9% $7.23 SIS 80 $31,687 $16 $41 $114,003 KocKw-eii Muieum ot wen cm Alt $162,212 $86,970 $2,372,974 $2,822,136 3.7% 3.1% 91.2% S3.23 $4.06 $11,187 $91 $71 $194,631 NODonu Museum ot wiidiue Alt $1,167,462 $206,912 $8,631,737 $10,006,131 11.7% 2.1% 86.3% $24.33 $22.89 S34337 $110 $196 $294,298

Median $1,223,436 $218,720 $3,184,362 $7,482,427 18.1% 3.0% 69.1% $11.61 $13.36 $23,613 $67 $60 $107,803

Average $1,944,482 $430,733 $3,338,830 $7,914,063 28.0*/. 3.3% 66.6% $13.31 $13.1? $28,984 $77 $78 $129.7%

Wdehted Avcr^ 24.6% 3.4% 700% $13.37 $13.03 $26,239 $63 $68 $106,873

Rcanlti from Altcniattve Opcraliag Plans for Scottsdale Museum of ihc Wot Scottsdale Musenm of the West (AMS) $1,981,000 $0 $U77,000 $3,238,000 60.8% 0.0% 39.2% $23 $40 $97,817 $41 $66 $160,189 Scottsdale Museum oTlhc Wen (SMoW. Inc.)(yr3) SI ,300,000 $0 $300,000 $1,800,000 83.3% 0.0% 16.7% $13 $38 $107,143 $16 $43 $128,37]

Scottsdale Muieum idihe West (Business Plan) $1,311,000 S9I.940 $1,169,733 $2,773,000 34.3% 3 3% 41.2% $13 $38 $49,930 $27 $69 $91,669

II Rdul Btafvnkin II nel oTcoM oTola Tor Boutn FKtlioaliiM.eslUrUSCaiHBnB.

Scottsdale Museum of the West V-4 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Data in Table V-4 present personnel data and analysis of the benchmark museums and SMoW operating plans. The proposed staffing plan fits well within the benchmark experience of the peer museums.

Table V-4 Benchmark Museum Personnel Analysis

Facilitv Data Benchmark AnalvxcA PacDitics Salary asa Eillmated Estimated Salary and Percent of Salaries Salary Total Annual Fringe Non-Salary Total ind Fringe Eipenscs SF per FTE Attendees Square Feet Attenttance PTE's Eipcnaes Eipenscs Total EipeoMS Eipenscs per FTE Per SF Pcfsonnd per FTE Amon Carter Museum of American Art 109.000 119,934 88.5 $6,234.091 $5,342,910 $11,577,001 53.8% $70,442 $57.19 1.232 1.355 Autry National Center Of The American West 148,000 162,000 ISO.O $7,921,065 $9,137,212 $17,058,277 46.4% $52,807 $53.52 987 1.080

Buffalo Bill Historical Center 190,000 200,000 112.5 $5,406,263 $4,862,874 $10,269,137 52.6% $48,036 $28.43 1.689 1,778 Eiteljorg Museum of American Indians and Westem Art 178,000 113,447 60.5 $3,195,352 $5,729,121 $8,924,473 33.8% $52,816 $17.93 2.942 1,875

Gilcrease Museum NA 85,700 62.0 $3,969,091 $2,480,809 $6,449,900 61.5% $64,018 NA NA 1.382 Heard Museum 139,000 200,000 90.0 $3,969,467 $4,923,767 $8,893,234 44.6% $44,105 $28.56 1,544 2,222 National Cowboy and Western Heritage Museum 200,000 203,529 116.5 $4,727,614 $5,025,700 $9.753.314 48.5% $40,580 $23.64 1,717 1.747 National Cowgirl Museum And Hall of Faroe 33,000 85,543 12.0 $720,171 $2,079,607 $2,799,778 25.7% $60,014 $21.82 2,750 7.129 Kocmveil Museum oi westem Art 40,000 31,000 14.5 $827,720 $1,901,804 $2,729,324 30.3% $37,084 $20.69 2,759 2,138 Naaonai Museum ot wiiaiite 51,000 47,564 34.0 $2,000,072 $2,267,609 $4,267,681 46.9% $58,826 $39.22 1.500 1.399 Art

Median 139,000 116,691 75.3 $3,969,279 $4,893,321 $8,908,854 46.7% $34,930 $28.45 1,689 1.762

Avenge 120,889 124.872 74.1 $3,897,091 $4,373,141 $8,272,232 44.6% $54,875 $32.34 1.902 2.211

Weighted Average 47.1% $52,628 $32.17 1,604 1,686

Results from Alternative Operating Plans for Scottsdale Museum of the West Scottsdale Museum ofthe West (AMS) 49,000 80,000 20.3 $1,221,000 $2,037,000 $3^58,000 37.5% $60,296 $24.92 2,420 3,951 Scottsdale Museum of the West (SMoW, lnc.){yr3) 40,000 112,000 14.0 $850,000 $950,000 $1,800,000 47.2% $60,714 $21.23 2.857 8,000

Scottsdale Museum ofthe West (Business Plan) 40,000 103,000 30.3 $1,529,000 $1,244,000 $2,773,000 55.1% $50,345 $38.23 1.322 3.405

Note: Some Total Expense rigura for the inuseunu include deprccidion • a non-cash expense thai is not included in any or the SMoW Opcradng Plans. Souicc: Ffdiilics tisud, ESRI/IJSCeosus Bureau. Oiddcdir USA liK. Tbe OfTicU] MusumDun^^ Awtttttion of CMdfen'»Mu«eum\5oonadtleMu»euroof the Weg. Inc., AMS and CoiuullEcm. Inc.

Scottsdale Museum of the West V-5 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Data in Table V-5 show selected operations data of the benchmark museums and SMoW operating plans.

Table V-5 Benchmark Museums Operations Data

Fadlitv Data FacUltiei Earned / Clfti& Efdmated EltlOMtCd Memi>enlilp Granlit Salary and Total Annual /Odwr Interest A Fund railing Total Fringe Non-Salary Total Square Feet kttendance FTE'i Revenue " Divlileodi Event) Revenue Eapcnsa Eipcnics Eipenscs Ncl Revenue Amon Carter Museum of Amencan Art 109,000 119,934 88.5 $440,692 $156,921 $12,556,216 $13,153,829 $6,234,091 $5,342,910 $11,577,001 $1,576,828 Autry National Center Of The Amencan West 148,000 162,000 ISO.O $2,302,215 $224,876 $10,163,612 $12,690,703 $7,921,065 $9,137,212 $17,058,277 -$4,367,574

Buffalo Bill Historical Center 190.000 200,000 112.5 K2S 1,423 $867,624 S6.311.338 $11,430,385 S5.406.263 K862.874 $10,269,137 $1,161,248 Eiteljorg Museum of American Indians and Western Art 178.000 113.447 60.5 $1,022,037 $1,144,249 $5,693,674 $7,861,960 $3,195,352 $5,729,121 $8,924,473 -$1,062,513

Gilcrease Museum NA 85.700 62.0 $3,096,568 $245,807 $2,259,283 $5,601,658 $3,969,091 $2,480,809 $6,449,900 -$848,242

Heard Museum 139,000 200.000 90.0 $5,102,522 $212,564 $1,787,808 $7,102,894 $3,969,467 $4,923,767 $8,893,234 -$1,790,340 National Cowboy and Westem Heritage Museum 200.000 203.529 116.5 $1,279,449 $1,150,395 K673.050 $7,102,894 $4,727,614 $5,025,700 $9,753,314 -$2,650,420 National Cowgirl Museum And Hall of Fame 33.000 85.543 12.0 $620,240 $11,016 $736,784 $1,368,040 $720,171 $2,079,607 $2,799,778 -$1,431,738 Kodcwelt Museum ot Westem Art 40,000 31,000 14.3 $162,212 $86,970 $2,572,974 $2,822,156 $827,720 $1,901,804 $2,729,524 $92,632 iNauonal Museum ot Wildiite An 51.000 47.564 34.0 $1,167,462 $206,912 $8,631,757 $10,006,131 $2,000,072 $2,267,609 $4,267,681 S5.738.450

Median 139.000 116,691 75.3 $1,223,456 $218,720 SS. 184.362 $7,482,427 $3,969,279 $4,893,321 $8,908,854 -$1,426,427

Average 120.889 124.872 74.1 $1,944,482 $430,733 $5,538,850 $7,914,065 $3,897,091 K375.14t $8,272,232 -S3S8.167

Results from Altemative Operating Flani for Scottsdale Museum of Ihe West Scottsdale Museum ofthe West (AMS) 49.000 80.000 20.3 $1,981,000 $0 $1,277,000 S3.258.000 $1,221,000 $2,037,000 $3,258,000 $0 Scottsdale Museum of the West (SMoW. Inc.)(yr 3) 40,000 112.000 14.0 $1,500,000 $0 $300,000 SI.800.000 $850,000 S950.000 $1,800,000 $0 Scottsdale Museum of the West (Business Plan) 40,000 103,000 30.3 $1,511,000 $91,940 $1,169,733 $2,773,000 $1,529,000 $1,244,000 $2,773,000 SO

1/ Retail talcs portion ia net t^cou of sales for benchmark institutioni. Source: FacilitiGs tided. ESRI / US Cans Binedu. Cudeflar USA ITK . Hw OITKial I IDuBdoir2011, AnociauonafCliildni^iMu 1 orifu WM. Inc., AM3 snd CaiaallEcan. Inc

Scottsdale Museum ofthe West V-6 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Data in Table V-6 present an analysis of operations data of the benchmark museums and SMoW operating plans. This analysis indicates that the proposed operating plan for SMoW would operate efficiently but within the benchmark experience of the peer group of museums.

Table V-6 Benchmark Museums Operations Analysis

Fadlitv Data Benchmark Analvses FacQitla Salary and Operaling Eatfanated Eitimatcd Salary and Fringe Ex. Salary and Operating Operating Expenses Total Annual Fringe Non>$alary Total as a H of Fringe Per Expenses Expenses per SqaarrPcct Attcadance fTE'i Eapcniet Eipcnica Expensci Total PTE perSF per PTE Anendce Amon Carter Museum of American Art 109.000 119.934 88.5 $6,234,091 $5,342,910 $11,377,001 53.8% $70,442 $106.21 $130,814 $96 53 Autiy National Center Of The American West 148,000 162.000 150.0 $7,921,063 $9,137,212 $17,038,277 46.4% $52,807 $115.26 $113,722 $105.30

Buffalo Bill Historical Center 190.000 200.000 112.5 $5,406,263 $4,862,874 $10,269,137 52.6% $48,056 $34.03 S91.281 $31.33 Eiteljorg Museum of American Indians and Westem An 178.000 113.447 60.5 $3,195,352 $5,729,121 $8,924,473 35.8% $52,816 $50.14 $147,512 $78.67

Gilcivase Museum NA 85.700 62.0 $3,969,091 $2,480,809 $6,449,900 61.5% $64,018 NA $104,031 $73.26 Heard Museum 139,000 200.000 90.0 $3,969,467 $4,923,767 $8,893,234 44.6% $44,105 $63.98 $98,814 $44.47 National Cowboy and Western Heritage Museum 200,000 203.529 116.5 $4,727,614 $5,025,700 $9,753,314 48.5% $40,580 $48.77 $83,719 $47.92 National Cowgirl Museum And Hall of Fame 33.000 85.543 12.0 $720,171 $2,079,607 $2,799,778 23.7% $60,014 $84.84 $233,315 $32.73 KocKweii Museum ot westem Art 40.000 31.000 14.5 $827,720 $1,901,804 $2,729,524 30.3% $57,084 $68 24 $188,243 $88.05 ^attonal Museum ot wuaitte An 51.000 47.564 34.0 $2,000,072 $2,267,609 $4,267,681 46.9% $58,826 $83.68 $125,520 $89.73

Median 139.000 116,691 75.3 $3,969,279 $4,893,321 $8,908,834 46.7% $54,950 $68.24 $119,621 $76.96

Average 120.889 124.872 74.1 $3,897,091 $4,375,141 $8,272,232 44.6% $54,875 $75.02 $131,697 $71.00

Weighted Average 47.1% $32,628 $70.10 $111,711 $66 25

Results from Alternative Operating Plana for Scottsdale Mnseam of the West Scottsdale Museum ofthe West (AMS) 49.000 80.000 20.3 $1.221.000 12.037,000 $3,258,000 37.5% $60,296 $66.49 $160,889 $40.73 Scottsdale Museum ofthe West (SMoW. Inc.)(yr3) 40.000 112.000 14.0 $850,000 $950,000 $1,800,000 47.2% $60,714 $45.00 $128,571 $16.07

Scottsdale Museum of the West (Business Plan) 40,000 103.000 30.3 $1,529,000 $1,244,000 $2,773,000 55.1% $50,545 $69.33 $91,669 £26.92

Soma: Facihtiealiitcd,ESIU/tJSCeiwuButtau.OukleiurUSAIIK,TheOfncialMuaet^ AtBxdatimerChildira'aMwuitB.S«oaidabMujeuinofiheWes.Inc.AMStndC

Scottsdale Museum of the West V-7 ConsultEcon, Inc. Economic Research and Management Consultants December 19,2012

Comparisons to Local Museums and Visitor Attractions Data in Table V-7 present the operating experience of selected Phoenix area non-for-profit and public visitor attractions, with a comparison to SMoW operating plans.

Table V-7 Operating Experience of Selected Phoenix Area Not-for-Profit and Public Visitor Attractions

Facilitv Data Adult Child Ticket Ticket Topical Total Total City Operator Price Price Attendance FTE's Revenue Expenses Arizona Museum of Natural History Mesa City of Mesa $10.00 $6.00 138,000 16 N/A N/A Arizona Science Center Phoenix Private not-for-profit $14.00 $11.00 300,000 63 $7,204,217 $8,020,486 Dcsen Botanical Garden Phoenix Private not-for-profit $18.00 $8.00 367,000 137 $9,968,030 $11,123,010 Desert Caballeros Westem Museum Wickenburg Private not-for-profit $7.50 $0.00 35,000 6 $2,028,001 $785.631 Hall of Flame Museum of Firefighting Phoenix Private not-for-profit $6.00 $3.00 35.000 7 $883,369 $510,900 Heard Museum Phoenix Private not-for'^ofit $18.00 $7.50 200,000 90 $7,102,894 $13,698,388 Musical Instrument Museum Phoenix Private not-for-profit $18.00 $10.00 200,000 83 N/A N/A Phoenix Art Museum Phoenix Private not-for-profit $13.00 $6.00 210,000 123 $9,337,443 $8,979,685 Phoenix Zoo Phoenix Private not-for-profit $20.00 SIO.OO 1,450,400 330 $21,709,131 $20,381,983 Pioneer Arizona Living History Museum Phoenix Private not-for-profit $7.00 SS.OO 65.000 8 $186,351 $210,406 Pueblo Grande and Archeological Park Phoenix City of Phoenix $6.00 $3.00 40.200 7 N/A N/A Scottsdale Historical Museum Scottsdale Private not-for-profit $0.00 $0.00 25,000 0 $209,884 $87,881 Scottsdale Museum of Contemporary Art Scottsdale Scottsdale Cultural Council $7.00 $0.00 36.000 18 N/A N/A Taliesen West Scottsdale Private not-for-profit $32.00 $17.00 over 100,000 NA $8,996,096 $6,371,612

Results from Altemative Operating Plans for Scottsdale Museum of Ihe West Scottsdale Museum of the West (AMS) $10.00 $3.00 80,000 20.25 $3,258,000 $3,258,000 Scottsdale Museum of die West (SMoW, Inc.) (yr 3) $10.00 $3.00 112,000 14.00 $1,800,000 $1,800,000

Scottsdale Museum of the West (Business Plan) $11.00 $7.00 103.000 30.25 $2,773,000 $2,773,000

Note: Some Total Expense 6gures for the museums include depreciation - a non-cash expense that is not included in any of tfie SMoW Operating Plans. Source: Th« Ofiicial Museum Directory 2012 for attendance and FTE data, pan time Morlcers counted as 1/2 FTE; ticket prices from Museum \wd)5ite5; financial infonnation from the latest ntS 990 forms availoble from Guidestar.org; and ConsultEcon. Inc.

Summary The benchmark museums indicate that there is a good opportunity for operating success for SMoW based on its benchmark characteristics and the experience of comparable museums. However, balance will be required in ensuring sufficient quality of visitor experience and in-place museum organization and marketing at its outset to ensure that SMoW establishes a strong reputation and has the resources to sustain a strong level of facility and exhibit quality and maintenance while also providing the exhibits and programs and events to attract new audiences and repeat visitors. The operating plan as described would provide SMoW to achieve such an operating profile.

Scottsdale Museum ofthe West V-8 ATTACHMENT 5

City of Scottsdale Contract No. 2013-025-COS (downtown western museum) res. no. 9307

MUSEUM MANAGEMENT AGREEMENT

THIS MUSEUM MANAGEMENT AGREEMENT (the "Agreement") is made this day of 20 , by and between the City of Scottsdale, an Arizona municipal corporation ("City"), and Scottsdale Museum of the West Inc.,. an Arizona non-profit corporation ("Manager").

RECITALS

A. The art and culture of the Westem United States during the years from approximately 1820 through 1920 ("Wesitem Heritage") are an important part of the City of Scottsdale's and the State of Arizona's past, present and ftjture.

B. City and Manager desire that a museum (the "Facility") be constructed to celebrate Westem Heritage.

C. City owns property (the "Property") that is a suitable location for the Facility. The Property comprises approximately 2.62 acres located at the northwest comer of Marshall Way and Second Street, which is the existing Loloma Transit Center and a vacant parcel to the north.

D. The Facility wiil consist of two museum buildings (collectively the "Buildings") together with an adjacent sculpture garden, patio or simiiar outdoor feature (the "Plaza"). A portion of the south Buikiing (the "Old Transit Structure") already exists. The Old Transit Stmcture was originally constructed as the Loloma Transit Center.

E. The woric to construct the Facility comprises the foltowing parts:

1) The work (the "Shell Wori<") to adapt the Old Transit Structure for museum use, to construct and enclose the north Building structure, to constnjct the Plaza, and to build out the interior of both Buildings.

2) The woric (the "Specialty Wori<") to prepare the north Building for use as a museum and for installation of decoration and exhibits.

3) Ail remaining woric (the "Display Woric") to complete the Facility, install artworic, artifacts, equipment fumiture and supplies, and othenfl/ise outfit the Facility to be operated as a museum.

F. City and Manager desire that the Facility be completed and open to the public no later than January 1,2015 (the "Opening Deadline").

G. Manager desires to thereafter manage the Facility as a museum of Westem Heritage (the "Pennitted Uses").

10277486v18 Page 1 of 37 Contract No. 2013-025-COS NOW, THEREFORE, for and in consideration of the foregoing and the covenants and agreements contained herein to be kept and performed by Manager, and other good and valuable consideration. City and Manager agree as follows:

I. FACILITY TO BE MANAGED

1 Facilitv to Be Managed. Manager shall manage the Facility as follows:

1.1 Management Scope. Manager shall manage the interior of the Buildings and the exterior Plaza for the Permitted Uses as set out in this Agreement Manager shall not manage any other area, property improvements or facilities.

1.2 Reservation. City specifically reserves to itself the right to enter and to use the entire Facility for the exercise of all of City's rights under this Agreement.

1.3 Facilitv Modification. After ninety (90) days notice to Manager, City shall have the unilateral right to modify the Facility from time to time during the term of this Agreement.

1.4 Other Agreements. Manager shall comply with any recorded or unrecorded agreements or other matters affecting the Facility. City does not wan-ant title to the Facility.

1.5 Citv's Fixtures and Personalty. City is not obligated to provide any fixtures or personal property. Any and all of City's property as may come into the possession of Manager or be used by Manager shall be retumed to City by Manager upon the eariier of City's request or at tennination of this Agreement and shall be maintained in good woricing condition by Manager from time to time at Manager^s expense and replaced by Manager at Manager's expense when worn out and shall be owned at all times by City with Manager being solely responsible for the condition thereof. All such personal property is provided "as is" and Manager accepts all responsibility for Its condition and shall thoroughly inspect tiie same before use.

1.6 No Real Estate Interest. This Agreement is not a lease. Manager has no real estate interest or ownership of the Buildings, tiie Plaza or any other aspect of the Property or tiie Facility.

II. TERM OF AGREEMENT

2 Term of Agreement. City hereby hires Manager to manage tiie Facility subject to and conditioned upon Manager's full, timely, complete and faithful performance of all performances and things to be performed or done hereunder by Manager, and Manager hereby accepts this Agreement.

2.1 Temn. The term of this Agreement shall be for a period of ten (10) years unless sooner terminated as set forth in tiiis Agreement,

2.2 Bdension. If Manager continuously, fully, completely and timely performs tills Agreement throughout the initial term set forth above and any extension (disregarding nonperformance cured witiiin any cure period specified by tiiis Agreement), tiiis Agreement may be extended at Manager's option for three (3) additional ten (10) year periods. In order to exercise its

10277486V18 Page 2 of 37

Contract No. 2013-025-COS option to extend. Manager must give to City written notice of Manager's intent to extend no eariier than twelve (12) months and no later than six (6) months prior to expiration of the initial temn or extension.

2.3 Holding Over. In any circumstance whereby Manager would manage or occupy the Facility after the expiration of this Agreement such holding over shall not be deemed to operate as a renewal or extension of this Agreement but shall only create a limrted extension from month to month that may be temninated at any time by City upon thirty (30) days notice to Manager, or by Manager upon sbcty (60) days notice to City.

2.4 Termination Rk]ht Notwithstanding anything contained herein to the confa^ary, City shall have the unconditional right with or without cause, to unilaterally terminate this Agreement at any time upon three hundred and sixty-five (365) days written notice.

111. FINANCIAL COMMlTMEm'S

3. Financial (Commitments. The parties make financial commitments to each other as follows:

3.1 Pavment for Services and Use of Facilities. City is obligated to perfonn its obligations as set out in tiiis Agreement, but is not obligated to othen/vise compensate Manager for Manager's management of the Facility or Manager's other performances. Manager is obligated to perform its obligations as set out in this Agreement but is not obligated to otherwise compensate City for use of the Facility or Cit/s other perfonnances.

3.2 Donations Matching Program. City shall pay to Manager annual amounts (the "Match Payments") as follows:

3.2.1 City shall pay a Match Payment no later than June 30 of each year of this Agreement (the "Match Payment Date") from 2014 tiirough 2018. City has no obligation under any circumstances to pay any Match Payment before tiie Match Payment due in June 2014 or after the Match Payment due in June 2018.

3.2.2 The amount of each Match Payment shall be determined as follows:

3.2.2.1 The amount of each Match Payment shall be the lesser of Four Hundred Thousand Dollars ($400,000.00) or the amount of certain third party donatrans to Manager (the "Match Donations") during a certain period (tiie "Match Period").

3.2.2.2 The Match Period is an annual period ending on the May 31 occum'ng immediately before tiie Match Payment Date and beginning on the same date of the prior year. For example, tiie Match Period for tiie 2014 Match Payment shall be May 31, 2013, through May 31, 2014.

3.2.2.3 The Match Donations include only such ctonations to Manager as satisfy all of tiie following requirements:

3.2.2.3.1 The donation was not made in payment or exchange for (or in anticipation of) any membership, admission, use ofthe Facility, instiuction, goods, services or

10277486v18 Page 3 of 37

Contract No. 2013-025-COS [ any other cxjnsideratlon or t^enefiL Beneficial tax treatment (such as income tax deductions for I charitable donations of art) and public or private acknowledgment of a donation (such as publicity i atxDUl the donation) do not count as consideration or benefit under the preceding sentence. i

3.2.2.3.2 The donation was at least Five Thousand Dollars ($5,000) but not more ttian Fifty Thousand Dollars ($50,000)..

3.2.2.3.3 The donation was actijally delivered to and owned by Manager before the end of tiie Match Period.

3.2.2.3.4 The donation was a donation of money by a family or individual.

3.2.2.3.5 The use of the donation is restricted to normal operating expenses of the Facility during the following Match Period.

3.2.2.3.6 The donor is not a member of Manager's board of directors or other governing or advisory body. The preceding sentence does not apply to donations made by such a memt)er prior to the first annual anniversary of the memt>er first becoming a member.

3.2.2.3.7 The donation is made through public fundraising where tiie goal and progress are publicized,

3.2.2.3.8 The following infonmation about the donation is induded on an annual list of Match Donations delivered to City within ten (10) days after the end of the Match Period:

3.2.2.3.8.1 The cbnor's name and principal place of residence.

3.2.2.3.8.2 The donation date and amount

3.2.2.3.8.3 The relationship, if any. between the donor and Manager.

3.3 Citv's Cost Limitations. Notwithstanding anything in this Agreement to the contrary:

3.3.1 The maximum total amount City is obligated to pay anyone for Shell Wori^, Specialty Work, Display Work and any and all design or construction of any and all improvements related to this Agreement shall not exceed Eleven Million One Hundred Thousand and No/100 Dollars ($11,100,00.00), plus a limited amount for Display Work as hereafter provided.

3.3.2 The only other resources. City is required to provide toward design, construction, operation or management of the Facility or othen/vise under this Agreement or otherwise are the Match Payments.

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Contract No. 2013-025-COS 3.4 Manager Resources. If City determines at any time that Manager lacks the financial or other capacity to perform Its duties with respect to design, construction and operation of the Facility as required by this Agreement City may terminate this Agreement by notice to Manager.

3.5 Letter of Credit. Manager shall deliver to City a letter of credit as follows:

3.5.1 The amount of the letter of credit shall be as follows:

3.5.1.1 Until the eariier of completion of the Display Work or the date the Display Work Is required to be completed, the letter of credtt is not required.

3.5.1.2 For the following twelve (12) months, the amount of the letter of credit shall be One Hundred Sixty Six Thousand Six Hundred Sixty Six and 66/100 Dollars ($166,666.66)

3.5.1.3 For the following twelve (12) months, the amount of the letter of credit shall be Three Hundred Thirty Three Thousand Three Hundred Thirty Three and 33/100 Dollars ($333,333.33).

3.5.1.4 Thereafter, the amount of the letter of credit shall be Five Hundred Thousand and no/100 Dollars ($500,000.00).

3.5.2 The letter of credit shall be available to City as an additional security deposit for Manager's performance of all of its obligations under tiiis Agreement.

3.5.3 The letter of credit shall meet the requirements listed on Exhibit "A" attached hereto.

3.5.4 Manager shall provide and maintain the letter of credit during the entire temn of this Agreement as follows:

3.5.4.1 No later than thirty (30) days before a letter of credit is required, Manager shall give City notice containing a reference to this Agreement and this paragraph and a copy of the proposed form of letter of credit, along with a copy to City's city treasurer.

3.5.4.2 Manager shall cause the original letter of credit to be delivered to City's financial services general manager.

3.5.4.3 Manager shall pay all fees and other costs associated with the letter of credit, regardless of the reason or manner such costs are required.

3.5.4.4 Within ten (10) days after City gives Manager notice that City has drawn on the letter of credit, Manager shall cause the letter of credit to be replenished (or its amount to be increased) to the required amount.

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Contract No. 2013-025-COS 3.5.5 City may draw on the letter of credit upon any breach by Manager of this Agreement, and in the following circumstances whether or not they are a breach by Manager of this Agreement:

3.5.5.1 Manager fails to cause the letter of credit to be renewed, extended, increased in amount or otherwise maintained as required by this Agreement.

3.5.5.2 Manager fails to make monetary payments required under this Agreement

3.5.5.3 The issuer of the letter of credit fails to immediately honor a request for payment under the letter of credit or othen/vise repudiates or fails to honor the letter of credit.

3.5.6 City shall also have such additional rights regarding the letter of credit as may be provided elsewhere in this Agreement.

3.6 Securitv Deposit Upon execution of this Agreement Manager shall provide to City, and maintain with City at all times during the term of this Agreement, a cash security deposit in the amount equal to Zero Dollars ($0) to guarantee the faithful performance of this Agreement Any funds or property of Manager held by or available to City or any issuer of a letter of credit receiver, escrow agent or other third party under or related to this Agreement shall also stand as a secxjrity deposit guaranteeing. Manager's faithful performance of tiiis Agreement Any portion of any security deposit to which Manager may then be entitled, net of any setoff or other obligation of Manager, shall be paid to Manager without interest by the owner of the fee titiet o the Facility within sixty (60) days after the later of termination of this Agreement and completion of all of Manager's obligations related to this Agreement

3.7 /appropriations and Approvals. This subparagraph shall conbx)! notwithstanding any provision of this Agreement or any exhibit or other agreement or document related hereto. City's provision of funds under this Agreement is in all respects subject to appropriation by City Council. Cit/s entire obligation under this Agreement shall be limited to the amount appropriated. If fijnds necessary to fulfill Cit/s obligations under this Agreement are not appropriated or are otherwise made not available by Cit/s city council, then City may temninate tiiis /Agreement by notice to Manager. Temiination in accordance with this-provision shall not constitute a breach of tiiis Agreement by City. No person shall be entitied to any compensation, damages or other remedy from City if this Agreement is terminated pursuant to tiie terms of tiiis paragraph or otiier temns of tiiis Agreement. In lieu of temiinating this Agreement, City may elect to reduce the amount of funds and other resources City provides.

3.8 Political Activities. Manager shall use no City funds or resources for polib'cal activities, for lobbying Cit/s city council or any legislative or administrative body as defined in State law, or for the purpose of influencing the outcome of any election.

IV. MANAGEMENT DUTIES

4. Management Duties. Manager's management of tiie Facility shall in ail respects confonn to all and each of the following cumulative provisions: 10277486v18 Page 6 of 37

Contract No. 2013-025-COS 4.1 Permitted Uses. Manager shall use the Facility solely for the Permitted Uses. No other activity shall be conducted at or from the Facility.

4.2 Related Uses Permitted. As an adjunct to its operation of tiie Permitted Uses, Manager shall have tiie right to:

4.2.1 Operate a ticket office or counter selling primarily tickets to the Facility.

4.2.2 Operate food and beverage concessions selling items for on-site consumption by persons attending the Facility.

4.2.3 Operate an adminisfa^tive office for activities conducted at the Facility.

4.2.4 Conduct education in Western Heritage.

4.2.5 Conduct sales of programs and souvenirs relating to Western Heritage.

4.2.6 Occasional and infrequent rental of the Facility on an houriy basis to third parties for convention, social meeting and similar group presentation uses. Except as City may approve from time to time:

4.2.6.1 Such uses during any month shall not exceed five (5) events.

4.2.6.2 Each event shall be limited to a single day.

4.2.6.3 Such events must not overiap nomial museum operating hours more than five (5) hours during any montii.

4.2.7 Museum gift shop selling newspapers, periodicals, greeting cards, post cards, gifts, books, jewelry, toys, photography supplies, and similar items. The gift shop must not occupy more than Fifteen Hundred (1500) square feet

4.2.8 Sales of artworic at tiie Facility shall be limited in order to maintain an open and participatory working relationship with tiie gallery owners and related businesses in the area. Manager shall form an advisory group representative of local businesses to implement such a relationship. This paragraph applies lo intemet, mail order, and similar sales, whetiier or not occumng at the Facility.

4.3 Additional Restiictions. The Permitted Uses are further restiicted as follows:

4.3.1 Sales of chewing gum, tobacco, alcohol, pornography, condoms, or other adult materials, weapons, postcards, and hats or other clothing is prohibited. This paragraph does not prohibit Manager txanded postcards, hats and clothing and does not prohibit alcohol at private events.

4.3.2 Smoking or other use of tobacco or similar substances is not pennitted indoors.

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Contract No. 2013-025-COS 4.3.3 A\\ equipment and other personalty shall be stored in a manner that it is not visible from outside tiie Facility.

4.3.4 Food shall not be cooked at the Facility. The preceding sentence does not apply to seo/ing of catered food cooked offsite, heating of snack bar food, or incidental cooking such as a lunchroom microwave oven, cnDck-pot or coffee pot

4.3.5 No gambling activiti"es of any sort whatsoever are permitted at the Facility. The preceding sentence shall not apply to infi-equent "casino night" events conducted by charitable or other non-profit local entities for their own fundraising purposes. No more than six (6) such one- day events shall ocx^r at the Facility in any twelve (12) month period.

4.3.6 Sales, merchandise, signs, and merchandise storage and display are confined to the interior of tiie Facility witiiin the Buildings.

4.3.7 Notwithstanding anything in this Agreement to the contrary, the Pennitted Uses are hereby further restricted from time to prohibit any activity that would cause or result in (or in City's reasonable discretion creates a material risk of causing or resulting in) any of the following:

4.3.7.1 Violation of any bond or other documents (collectively the "Financing Documents") related to acquisition or construction of the Property or the Facility or refinancing any debt or other obligations related to the Property or the Facility.

4.3.7.2 Unfavorable tax treatment of any rights or obligations relating to the Financing Documents.

4.4 /Vnimals. No animals are allowed other than seeing eye dogs and similar animals providing healtii assistance to disabled persons.

4.5 Manager Owned M. M\ art, artifacts, exhibits, media or other displays or ath'actions owned by Manager (the "Manager Collection") shall be subject to the following:

4.5.1 Manager shall convey ownership of the Manager Collection to City upon Manager's ceasing to operate the Facility for any reason; vyhether through expiration of this Agreement or otherwise. Manager shall not otherwise cease ownership of an item in the Manager Collection without notice to City and specific authorization of its board of directors to dispose of the item.

4.5.2 The Manager Collection excludes normal gift shop inventory.

4.6 Short-Term Borrowed Art. All art, artifacts, exhibits, media or other displays or attractions owned by others but available to Manager for a period of one year or less (the "Short-Temn Borrowed Collection") shall be subject to the following:

4.6.1 Manager shall cause all contracts for items in the Short-Term Borrowed Collection to provide as follows if Manager ceases to operate tiie Facility:

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Contract No. 2013-025-COS 4.6.1.1 City shall have the right to continue to use and display the item during the remaining time of the agreement.

4.6.1.2 City shall not be responsible for damage to the item prior to City receiving the item or be otherwise responsible for the actions or responsibilities of Manager or others.

4.6.1.3 Cit/s use and display of the item shall be at no expense to City except tiiat during Cit/s use and display of the item City shall safeguard tiie item and shall pay any remaining rental or similar charge for the item according to the contract between the item's owner anci Manager, not to exceed a prorated portion of such charges based on the amount of time City has the item compared to the overall term of the contract.

4.7 Other Borrowed Art. City agrees to Manager that, if Manager ceases to operate the Facility and City comes jnto possession of art artifacts, exhibits, media or other displays or atti"actions owned by others borrowed by Manager that are not part of the Short-Term Borrowed Collection, and if the items' owners are unwilling for the City to continue to hold the items, then City shall retum the items to their owners.

4.8 Annual Plan. Manager shall operate the Facility according to an annual operations plan (the "/Vnnual Plan") as follows:

4.8.1 /^nual Plan Contents, The /Vnnual Plan shall contain historic information, along with future projections and plans for tiie coming calendar year regarding the following matters:

4.8.1.1 Exhibtts, shows and programming.

4.8.1-2 Attendance and memberships.

4.8,1-3 Finances, expenses and revenues.

4.B.1.4 Art, artifacts, in-kind, and other donations.

4.8.1.5 Volunteers and staffing.

4.8.1.6 Operating tasks and expenses.

4.8.1.7 Program quality, education outreach, civic engagement and financial acxxiuntability.

4.8.1.8 Maintenance, repair and other woric to the Facility.

4.8.1.9 Space usage, community involvement publicity.

4.8.1.10 An inventory of tiie Manager Collection and the Short-Term Borrowed Collection, which shall describe each item and include a list of items acquired or disposed of during the prior year and the dates of acx^uisition or disposition.

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Contract No. 2013-025-COS 4.8.1.11 Other matters relevant to this Agreement or the Facility as requested by City.

4.8.1.12 Manager's mission, vision and goals to provide the City with the planning, development, production, operations and managerial services required of it under this Agreement.

4.8.1.13 Preliminary projections and plans regarding all such matters for the subsequent five (5) years.

4.8.2 /Vnnual Plan Process. Manager shall each year prepare a proposed Annual Plan as follows:

4.8.2.1 /Annual Plan Review. No later than October 1 of each year during the term of this Agreement (including the last year) Manager shall deliver to City a proposed Annual Plan for the subsequent year. Cit/s contract administrator shall review the proposed Annual Plan as to whether \t projects financially sound, specific, measurable, realistic, and sustainable perfonnance measures and timely compliance with this Agreement If City's conti'act administrator confirms tiie annual plan prior to the end of such year, then the proposed new /Annual Plan shall be the Annual Plan under this Agreement during the subsequent year. If Cit/s contract administi-ator does not confirm the required plan information is contained within the plan, then Manager shall address the concems of the contract adminisb"ator to meet the requirements of the agreement. If Manager fails to comply witii the terms of tiie agreement witii respect to the annual plan, then the matter will be presented to the City's dty manager who shall make tiie final determination. If the City detennines In its sole and absolute discretion that City desires not to exercise its review of approval rights for the Annual Report during any particular period, then City may elect not to exercise its review or approval rights for the /Uinual Report for that period.

4.8.2.2 No Annual Report Delay. No Annual Report is required for 2013 or 2014.

4.8.2.3 Compliance with Annual Plan. Manager shall manage the Facility in compliance with the Annual Plan.

4.9 Transparencv. Manager shall establish and implement written policies and procedures, including enforcement provisions, regarding ethics, open meetings, disclosure of documents, and records retention. Except to the extent City may approve in writing from time to time, Manager shall conduct its affairs in compliance with the same Arizona public records and open meetings laws that are applicable to City except that Manager need not disclose the identity of donors other than donors of Matching Donations.

4.10 Reguired Operation. During the entire term of this Agreement and any renewals or extensions, Manager shall actively and continuously operate the Facility as a Westem Heritage museum. To that end, unless otherwise approved by City from time to time, Manager shall open tiie Facility to the public as follows:

4.10.1 The museum must be open at least three hundred (300) days each year. 10277486v18 Page 10 of 37

Contract No. 2013-025-COS 4.10.2 The museum must be open until 9:00 p.m. on nights a downtown evening arts related event is cx^cumng.

4.10.3 Manager shall give City at least seven (7) days advance notice of changes in Its operating schedule.

4.10.4 The operation requirements of this paragraph shall be effective commendng on the eariier of the Opening Deadline or fhe date tiie Facility is first opened for business and shall continue through the date tiiis Agreement tenninates or expires for any reason. If the Fadlity are damaged severely enough that the Facility cannot reasonably be operated during repairs, Uie operation requirements of this paragraph shall be suspended during any time spedfied by this Agreement for accomplishing repair of such damage.

4.11 Signs. Manager shall install all signs and martcings required for safe use of the Facility. No other signs are allowed without City consent except tiiose originally installed when the Facility is first completed. The requirements of this paragraph apply to all signs, designs, monuments, decals, graphics, posters, banners and other manner of signage visible from outside the Facility. No marquees or otiier signage shall promote or depict anything other than the Facility and events occurring at the Facility.

4.12 Publicitv. Upon spedal or standing requests made by City ft-om time to time and not in the absence of such requests. Manager shall include in its promotional materials and other information distributed, sent or made available to the public or otiiers a notation that all or any part of Manager's activities at the Facility are accomplished "with the assistance of the City of Scottsdale" or other words or indications of sponsorship or support as City may reasonably select fit)m time to time.

4.13 Names. The names of the museum operations and the Fadlrty and its features shall comply with the following:

4.13.1 The name of the museum operations and the Facility shall be Westem Heritage related.

4.13.2 The name of the museum operations and the Fadlity shall include the wond "Scottsdale".

4.13.3 Names shall not include the name of any other municipality, county or any state (other than Anzona).

4.13.4 Wittiout City consent names of the museum operation, tiie Facility and Facility spaces and otiier features shall not include names of individuals or business entitles. The preceding sentence does not apply to temporary (18 months or less) naming of funding programs, changing exhibit spaces, education dasses and woricshops.

4.13.5 The initial name of the museum operation and the Facility shall be "Scottsdale's Museum of tiie West".

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Contract No. 2013-025-COS 4.13.6 Ail names of tiie museum operation and the Fadlity and its features are j subject to City approval at Cit/s sole and absolute discretion as fo name, payments for naming i rights, payment of all or a portion of naming rights payment to Crty, and otiier matters. The < preceding sentenc^e does not apply to temporary (18 months or less) naming of funding programs, [ changing exhibit spaces, education classes and workshops.

4.13.7 Manager shall not use in connection with the Facility or its operations at tiie Facility any name associated with products or purveyors of any sort of alcohol, tobacco, adult entertainment or gambling related products or services. j

4.13.8 Following temnination of tills Agreement for any reason. City shall have the \ exclusive right to use or allow others to use any name used at the Facility.

4.14 Nonexdusive Uses. Manager understands and agrees tiiat Crty, Cit/s otiier tenants, and otiier persons witiiin and without tiie surrounding vicinity may conduct firom time to time business activities in direct cx)mpetition witii Manager, Manager has no exdusive rights to conduct any activity.

4.15 Communications Operations Resfai'ction. Manager shall not install, operate, or allow the use of equipment, methodology or technology that may or would interfere with the optimum effective use or operation of Cit/s existing or ftjture fire, emergency or other communication equipment methodology or technology (i.e., voice or other data carrying, receiving or transmitting equipment). If such interference should occur. Manager shall immediately discontinue using the equipment metiiodology or technology tiiat causes tiie interference until Manager takes cxDrrective measures. Any such corrective measures shall be made at no cost to City. i 4.16 C(X)rdination Meetings. Manager shall meet with City and users of neariDy property from time to time as requested by City to coordinate and plan constructbn and operation of tiie Fadlity and all matters affected by this Agreement Wrthout limitation, such meetings shall include annual and otiier periodic inspections and meetings relating to the upkeep and maintenance ofthe Fadlity.

4.17 Conduct at Fadlitv. In entering into this Agreement City and Manager have foremost in mind providing the public with a family atinosphere devoid of any act by any person contrary to tiie tiighest standards of community sensitivity, and avoiding any substance or appearance of any noisy, unruly, inebriated, disoiptive, disorderly, lewd, nude, topless, bottomless, adult oriented, unwholesome or sexually oriented behavior, business, entertainm^t, or other activity of any description or to any degree at the Facility. Any such behavior, business or activity at the Facility or while arriving at or leaving the Fadlity by Manager, any customer of Manager or anyone else using any part of the Facility related to Manager or tiiis Agreement while tills Agreement is in effect is stiictiy prohibited. Manager spedfically acknowledges that the requirements of this paragraph are a requirement of this Agreement independent of and in addition to any zoning or other govemmental regulation affecting the Fadlity. Any violation of this paragraph shall be an "Unruly Behavior Occurrence" by Manager under tiiis Agreement. Manager shall immediately cause removal from the Facility any person who commits or who causes, directs or encourages any person to commit, an Unnjly Behavior Occumence. To that end and without limitation, all of tiie following shall apply:

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Contract No. 2013-025-COS 4.17.1 No materials shall be rfisplayed, viewed or produced upon the Facility depicting specified anatomical areas or specified sexual adivities. No person shall exhibit, use, display or offer to sell any devices, objects or paraphernalia that are designed or typically marketed for use in connection witii specified sexual activities. No person shall perform specified sexual activities upon, the Facility. No person shall make visible his or her specified anatomical areas. "Specified anatomical areas" shall mean less tiian completely and opaquely covered human genitals, pubic region, buttock, and female breast below a point immediately above tiie top of the areola; and human male genitals in a discernibly turgid state, even If completely and opaquely covered; or any simulation or portrayal of any of the foregoing. Specified sexual activities shall mean human genitals in a state of sexual stimulation or arousal; acts of masturbation, sexual intercourse or sodomy; fondling or other erotic touching of human genitals, pubic region, buttock or female breast; or any simulation or portrayal of any of tiie foregoing.

4.17.2 Any direct or indirect physical contact involving customers (otiier tiian pati-on dancing during permitted private events, if allowed by law), employees, performers and other persons is prohibited.

4.17.3 Manager shall immediately cause to t>e removed from the Fadlity any person related to Manager or this Agreement (including without limitation Manager's customers) who:

4.17.3.1 Violates any provision of tiiis paragraph,

4.17.3.2 Appears or is believed to be to be intoxicated or illegally under the influence of any narcotic or chemical.

4.17.3.3 Commits an ad of violence.

4.17.3.4 Acts in a loud or unusually boisterous manner.

4.17.3.5 Hamns or threatens harm to any person or tiling,

4.17.3.6 Uses loud or electi^onically amplified profanity that can be heard by users of tiie Facility or the public.

4.17.3.7 Violates laws or regulations applicable to the Faciirty Site.

4.17.4 The address used in any police report of an Unmly Behavior Occunence shall not be conclusive proof of the location of the matters reported for the purposes of this Agreement rather. Unruly Behavior Occunences reported in polic^e reports to have occun-ed at the address of tiie Facility or at other locations shall be chargeable to Manager under tiiis /^reement only to the extent provided by this Agreement

4.17.5 The requirements of this paragraph are for the benefrt of City and for the benefit of all real property located witiiin tiiree hundred feet (300') of the Fadlity. The owners of such real property and their successors and assigns are third party beneficiaries of this paragraph tiiroughout tiie term of tiiis Agreement. Such third party benefidaries' sole remedy is injunctive

10277486V18 Page 13 of 37

Contract No. 2013-025-COS relief against Manager and those claiming under Manager to enforce the requirements of this paragraph.

4.18 Quality Sen/ice. In entering into this /Ngreement City and Manager have foremost in mind providing the public with Westem Heritage museum services of the highest quality. Witiiout limitation, Manager shall do tiie following:

4.18.1 Manager shall operate the Facility in a first-dass manner; shall fumish prompt dean and courteous sen/ice; and shall keep the Facility atfa^ctively maintained, orderiy, clean, sanitary and in an inviting condition at all times,al l to Cit/s reasonable satisfaction.

4.18.2 Manager shall operate the museum and perform its operation and maintenance obligations to standards equal fo or higher than those maintained at similar first class facilities in Maricopa County, all as reasonably determined by City: For purposes of the preceding sentence, Heard Museum, Scottsdale Museum of Contemporary M and Phoenix Art Museum (the "Comparison Facilities") shall be deemed to be similar facilities. City shall have the right by wrrtten notice firom time to time in its reasonable discretion to designate other museums in the westem United States as additional or replacement Comparison Facilities.

4.18.3 Manager shall not employ any person or persons in or about the Facility who shall fail to be dean, courteous, effident and neat in appearance or who shall use improper, profane, obnoxious or rude language or act in a loud or boisterous or othen/vise improper manner,

4.19 Manager's Agent. Manager shall at all times when the Facility is occupied retain on call available to City upon the Facility an active, qualrfied, competent and experienced manager to supervise all activities upon and operation of the Facility and who shall be authorized to represent and act for Manager in matters pertaining to alt emergendes and the day-to-day operation of the Fadlity and otiier matters affecting this /\greement Manager shall also provide notice to City of the name, street address, electi-onic mail address, and regular and after hours telephone and telefax numbers of a person to handle Manager's affairs and emergendes at the Facility.

4.20 Manager Board Member. City shall have the right from time to time to appoint and replace at Cit/s pleasure board members representing not less than frfteen percent (15%) of tiie voting members on Manager's goveming board. Manager shall provide to such persons appointed by City such en-ors and omissions insurance and otiier. protections as. City or such persons may reasonably request, and in any event not less protection than is provided to any other members of Manager's board or any employee of Manager. City is not responsible for the actions or inadion of board memt>ers City may appoint Manager shall obtain bonds covering such persons, ff City determines in its sole and absolute discretion that City desires not to appoint a board member to a position during any particular period, then City may elect not to appoint the board member for that period.

4.21 Non-Profit Stafijs. Manager shall continuously maintain its status as a non profit charitable organization under § 501(c)(3) ofthe Intemal Revenue Code.

4.22 Operation Standards. Manager shall operate the facility in compliance with tiie standards of tiie /American Alliance of Museums.

10277486v18 Page 14 of 37

Contract No. 2013-025-COS 4.23 Manager's Income. All of Manager's income from whatever source shall be used solely to perform Manager's obligations under this Agreement. Any excess Manager income shall be used for tiie Penmitted Uses as set out in this Agreement

4.24 Manager's Personnel. No officer, employee, volunteer or other person employed by or working for or with Manager shall be an employee of dty or have any other relationship to City by virtue of such employment or woric. Manager shall cause that Manager, and not City, shall be responsible for all salaries, wages, bonuses, retirement withholding, worker's compensation, occupational disease compensation, unemployment compensation, employee benefits, taxes and all similar and related responsibilities.

4.25 Manager Contracts with Others. Manager shall not enter into agreements witii third parties to provide museum, art or artifact management or related services to tiiird parties without City consent, which City may grant condition, limit, withhold or retract from time to time in its sole and absolute discretion.

4.26 Facilitv Securitv. Manager shall implement a security program acceptable to City to protect the Facility and its contents.

4.27 Hazardous Materials. Manager's adivities upon or about tiie Fadlity shall be subject to the following provisions regarding any hazardous waste or materials or toxic substance or any substance now or hereafter subjed to regulation under tiie Anzona Hazardous Waste Management Act A.R.S. § 49-901, et seg.. the Resource Consen/ation and Recovery Ad, 42 U.S.C. 6901, et seg.. or the Toxic Substances ContiDi Ad, 15 U.S.C. 2601, et sea., or any other federal, state, county, or local law pertaining to hazardous waste or toxic substances (collectively Toxic Substances"):

4.27.1 Manager shall not produce, dispose, transport ti-eat,us e or store any Toxic Substances upon or about the Facility. The prohibitions of tiie preceding sentence only shall not apply to:

4.27.1.1 Materials necessary for creating exhibits at the Facility, provided such materials are present only in tiie minimum quantities reasonably necessary for such uses.

4.27.1.2 Janitorial supplies ancJ similar, materials in tiie minimum quantities necessary for firstclas s modem museum uses permitted by this Agreement.

4.27.2 Manager shall dispose of any materials as required by law and as reasonably required by City.

4.27-3 Manager shall not use the Facility in a manner inconsistent witii regulations issued by tiie Anzona Department of Health Services.

4.27.4 In addition to any other indemnities or obligations. Manager shall pay, indemnify, defend and hold City harmless against any loss or liability incurred by reason of any Toxic Sutistance on or affecting tiie Fadlity attributable to or caused by Manager or anyone using the Facility or adirig or claiming under Manager or this /Agreement or otiierwise relating to this

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Contract No. 2013-025-COS Agreement Manager shall immediately notify City of any prohibited Toxic Substance at any time discovered or existing upon the Fadlity.

4.27.5 Manager understands the hazards presented to persons, property and tiie environment by dealing with Toxic Substances. Manager acknowledges the possibility that tiie Fadlity may contain actual or presumed asbestos containing materials.

4.28 Use Reserved bv Citv. Cify reserves fhe limited right to use the Facility and all equipment and furnishings therein for its own events and performances and related rehearsals and adivities (collectively "Resen/ed Events") subject to tiie following requirements:

4.28.1 City shall have the right from time to time to request use of all or part of tfie Facility for Reserved Events when such portion of the Fadlity is not otherwise being used by Manager. Manager shall grant such requests it at the time of tiie request the portion of tiie Facility requested has not previously been publicly scheduled for a specific conflicting use. Such requests shall be answered within seventy-two (72) hours. If Manager has previously scheduled a confliding use of tiie requested portion of the Facility, Manager shall offer to City Crt/s choice of the unscheduled times wnthin thirty (30) days before or after the time requested. Manager shall each montii publish and deliver to City updates of its schedule for the Facility.

4.28.2 Manager shall have tiie right to provide woricers at its own expense to operate lighting and sound equipment at Resen/ed Events. Manager shall, from time to time but no more often than once each calendar year, provide ti'aining to not more than two (2) of Cit/s employees regarding use of tiie sound and lighting equipment

4.28^3 Reserved Events shall be limited to all areas that are accessible to visitors or that Manager makes available to other events or users.

4.28.4 Manager shall provide janitorial service and, if requested, operate lighting and sound equipment at Reserved Events.

4.28.5 City has the right to obtain its own exdusive concessions for Reserved Events.

4.28.6 City shall be responsible for any damage to tiie Facility or to Manager's equipment or furnishings caused by use of ttie Fadlity for Reserved Events.

4.28.7 Manager shall, if requested by City, sell ticketst o Resented Events through the box office at tiie Facility or otiier ticket sales points used by Manager. The preceding sentence does not require Manager to open the box office or other sales points at times they would not otherwise be open.

4.28.8 Cit/s use of tiie Faciirty for Reserved Events shall be wrthout compensation of any sort to Manager except that

4.28.8.1 Manager may charge City a reasonable equipment rental for Manager's adual cost of providing equipment C^'ty uses during Reserved Events. City shall use Manager's equipment to the extent available.

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Contract No. 2013-025-COS 4.28.82 Manager may charge City a reasonable fee for Manager's adual cost of janrtorial woric and sound and lighting woric provided by Manager necessitated by a Resented Event.

4.28.8.3 If the Fadlity would othenwise be closed during a Reserved Event Manager may eled to station one of its employees at the Fadlity during a Reserved Event and charge City a reasonable fee to reimburse Manager's actual additional expense of such employee.

4.28.8.4 Manager may charge City Manager's actual costs for additional services City may request for Reserved Events.

4.28.9 City shall not conduct more tiian six (6) Reserved Events during any calendar year.

4.28.10 All uses of the Fadlity under this paragraph shall be without compensation of any sort to Manager and shall be delegable and assignable by City (except that City must be a sponsor or cx>-sponsor of the event). City shall not be pennitted to conduct at the Facility any type of event that ttiis Agreement would prohibit Manager from conducting at the Facility.

4.29 Admissions for City. Upon request Manager shali provide to City at no charge not less tiian thirty (30) admission tickets per month. The tickets must allow access to all areas for which tickets are issued. This paragraph does not detrad from City's other rights to acx;ess the Facility.

4.30 Rxtures and Personal Propertv. Manager shall from time to time commencing on the Opening Deadline provide to the Facility all equipment and other items necessary for the Faciirty to be convenientiy used for ttie Permrtted Uses. Witiiout in any way limiting the foregoing, Manager at its own expense shall provide to tiie Fadlity and maintain in good repair all ofthe items listed on Exhibit "B" attachecl hereto.

4.31 Common Areas. Subjed to cun-ent and future City regulations and policies goveming the use of, and access to such areas, Manager, its officers, employees, agents, customers and invitees, and its suppliers of services and fumishers of materials shall have the right of ingress to and egress from tiie Facility through such portions of the Property and surrounding public areas as are reasonably necessary for Manager to perform this Agreement. Such right is staidly limrted to ingress and egress over areas that Crty opens to the public for that purpose from time to time. There shall be absolutely no activity or storage, however temporary, in tiie parking lots, sidewalks, driveways, porches or other areas sunounding the Fadlity. Manager shali immediately dean up any spills or debris caused by Manager or its suppliers or customers. Service doors of the Fadlity will remain closed at all times except during the adual act of bringing in or taking out supplies or otiier materials through the door. Vehicles making deliveries to the Fadlrty shall parte only in areas spedfically designated by City fi-om time to time as delivery areas.

4.32 Paricing. City at no expense to Manager shall cause paricing to be available for the Facility as necessary to comply with applicable paricing codes. Parking areas are not part of the Fadlity.

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Contract No. 2013-025-COS

5.4 City Construction Woric Cost Notwithstanding anything else in this Agreement if City determines at any time in its sole and absolute discretion that design or construction of the Facility or any part of the Facility will exceed the lesser of City's budget or any cost limit set out in this Agreement, City may tenninate this Agreement by notice to Manager.

5.5 Ottier City Woric. Except for the Shell Woric and the Spedalty Woric. Crty has not promised to and is not obligated in any manner to make any improvements or perfonn any woric to the Facility.

5.6 Reliance. City is entering into this Agreement and is undertaking to design and constinjd the Shell Work and the Specialty Woric in reliance upon Manager's promise to manage and occupy the Faciirty and othenwise perform all of Hs obligations under this Agreement.

VI. MANAGER'S CONSTRUCTION AFTER FACILITY OPENS

6 Manager's Consfaxidion After Facility Opens. Except for the Display Work prior to opening the Faciirty as a museum, this Agreement does not contemplate that IVlanager shall perfonm any construdion, alteration, modification, replacement repair, demolition or ottier cumulatively signrticant construction or similar woric (collectively "Manager's Improvements"). City may refuse to permrt any constiirction work by Manager for any reason or no reason in City's sole and absolute discretion. CITTS ISSUANCE OF BUILDING PERMITS. ZONING CLE/^J^CES OR ANY OTHER GOVERNMENTAL REVIEWS OR ACTIONS SHALL NOT CONSTfTUTE /APPROVAL OF ANY WORK FOR PURPOSES OF THIS AGREEMENT. Crty may Impose upon Manager any requirements, limitations, restrictions or conditions whatsoever that Crty may deem for any reason in Cit/s sole and absolute discretion to be desirable for any reason. Wrthout limitation, City may condition City's approval of any woric Manager may propose on Manager's agreeing to requirements, payments, limitations, conditions and obligations relating to the woric or any other matter.

Vll. MANAGER'S INITIAL CONSTRUCTION

7 Manager's Inrtial Constiudion. Manager shall perform tiie following:

7.1 Display Woric. As of the date of this Agreement the Display Work is only in the preliminary design stage. The Display Work shall indude design and constiuction of tiie items listed on Exhibit "E" attached hereto and any otiier perfonnance necessary to open the Facility for the Permitted Uses. Manager shall pay for ttie Display Woric. Manager shali complete tiie Display Woric no later than the Opening Deadline. Display Woric indudes obtaining and paying for building permits and other regulatory approvals for the Display Woric.

7.2 Display Woric Cost Crty shall pay a portion of the cost of tiie design of tiie Display Woric by paying to Manager not more than five (5) montiily payments of Eighty Thousand and No/100 Dollars ($80,000.00) each. The first such payment shall be due sixty (60) days after the date of tiiis Agreement The total of such payments shall not exceed tiie lesser of Four Hundred Thousand and No/100 IDollars ($400,000.00) or the third party arm's lengtti reasonable cost ofthe design for the Display Work. Manager shall repay any overpayment

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Contract No. 2013-025-COS VIII. MAINTENANCE AND UTILITIES

8 Maintenance and Utilrties. Maintenance and utilities for the Premises shall be provided as follows:

8.1 Maintenance. Maintenance shall be provided fertile Premises as follows:

8.1.1 Maintenance, repairs and replacement Except as spedfically stated otherwise, the duty to maintain any item includes tiie duty to repair and replace ttie item.

8.1.2 Maintenance bv Manager: Manager shall perform certain maintenance work (the "Manager Maintenance Woric") as follows:

8.1.2.1 The Manager Maintenance Woric is limited to the items listed on Exhibit "F" attached hereto together with all otiier maintenance tfiat tiiis Agreement does not specifically require City to perfonn.

8.1.2.2 Manager shall perfonn the Manager Maintenance Woric at Manager's expense.

8.1.3 Maintenance by Citv: City shall perform certain maintenance woric (ttie "City Maintenance Work") as follows:

8.1.3.1 The City Maintenance Woric is limited to tiieitem s listed on Exhibit "G" attached hereto.

8.1.3.2 City shall perfonn tiie City Maintenance Woric at City's expense.

8.2 Utilities. Utilities shall be provided for the Premises as follows:

6.2.1 Utilrties bv Manager: Manager shall provide certain utilities (the "Manager Utilities") as follows:

8.2.1.1 The Manager Utilrties are the rtems listed on Exhibit "H" attached hereto togetiier .with all other utilities ttiat this Agreement does not specifically. require City to provide.

8.2.1.2 Manager shall provide the Manager Utilrties at Manager's expense.

8.2.2 Utilities by Crty: City shall provide certain utilities (the "Crty Utilities") as folfows:

8.2.2.1 The City's Utilrties are limited to tiie items listed on Exhibit "1" attached hereto.

8.2.2.2 City shall provide the City Utilities at Crt/s expense.

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Contract No. 2013-025-COS 8.2.3 Utility Interruptions and Mishaps. City is not responsible for utility interruptions. Crty is not responsible for the acts, breach, en"ors or omissions of any provider or consumer of eledrical service or other utilities to the Premises.

IX. BREACH

9 Breach. Manager shall comply with, perfonn and do each perfonnance and obligation required of Manager herein and shall cause all persons using the Facility or claiming through or under Manager or this Agreement to do the same. Manager's failure to do so shall be a breach by Manager of this Agreement.

9.1 Events of Defauti. This entire Agreement is made upon tiie condition that each and every one ofthe following events shall be deemed an "Event of Default" and a material breach by Manager of Manager's material obligations under this Agreement:

9.1.1 If Manager shall be in anears in the payment of any amount and shall not cure such anearage wrthin ten (10) days after City has notified Manager in writing of such anearage.

9.1.2 If Manager shall fail to operate the facilities as herein required.

9.1.3 ft Manager shall fail to timely pay any taxes or other amounts herein required to be paid by Manager to any tiiird person. Such failure to pay shall not be an event of default ff Manager gives immediate notice to City of Manager's intent to challenge the amount claimed to be due, Manager does in fad promptly challenge said amount, and Manager provides to Crty with said noti'ce bonds or other finandal security adequate in Cit/s discretion to assure Manager's ability to pay tiie disputed amount and to proted Crty and the Fadlrty from adverse consequences of Manager's failure to pay.

9.1.4 If Manager shall fail to or neglect to do or perform or observe any otiier provision contained herein on its part to be kept or performed and such failure or negled to do or perform or observe any of such other provisions shall continue for a period of thirty (30) days after City has notified Manager in writing of Manager's breach.

9.1.5 If Manager shall repeatedty fail to perform any requirement of this Agreement. After City has once given notice of any failure by Manager to comply with any provision of this /Agreement, three (3) or more failures to comply with said provision of this /Agreement during any six (6) montii period shall constitute a repeated failure by Manager to comply with such provision.

9.2 Cit/s Remedies. Upon the occurrence of any Event of Defautt or at any time thereafter, City may, at its option and from time to time, exercise any or ali or any combination of the following remedies in any order and repetitively at Citys option:

9.2.1 Tenninate this Agreement.

9.2.2 Wrthout demand or notice, enter into and upon the Facility or any part thereot and expel Manager and those daiming by, through or under it and remove their effects, if

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Contract No. 2013-025-COS any, forcibly if necessary, without being deemed guilty of trespass and wrthout prejudice to any other remedy.

9.2.3 Enforce a lien hereby established upon Manager's property at the Facility securing all of Manager's obligations hereunder.

9.2.4 Cause a receiver to be appointed for the Facility and for the continuing operation of Manager's business tiiereon.

9.2.5 Pay or perform, for Manager's account and at Manager's expense, any or all payments or perfonnances required hereunder to be paid or performed by Manager.

9.2.6 Abate at Manager's expense any violation of this Agreement.

9.2.7 Refuse without any liability to Manager therefor to perfonm any obligation imposed on City by this Agreement,

9.2.8 Be excused without any liability therefore from further performance under tiiis Agreement,

9.2.9 Insist upon Manager's full and faitfiful perfonmance under this Agreement during the entire remaining term of this Agreement

9.2.10 Assert or exercise any other righto r remedy permitted by law.

9.3 Power of Attorney. For the purpose of exercising any of Crt/s rights or remedies as hereunder, Manager hereby irrevocably appoints City as Manager's tiue and lawfiji attomey in fad, and such power of attomey shall be deemed to be a power coupled with an interest that cannot be revoked for any reason, to pay or perfomi, for Manager's account and at Manager's expense, any or all payments or perfonnances required hereunder to be paid or performed by Manager, to tenninate of record this Agreement, to enter into and upon the Faciirty or any part thereot and to perform any ad upon the Faciirty or othenMse deemed necessary by City to exercise rts rights under this Agreement

9.4 Non-waiver. Manager acknowledges Manager's unconditional obligation to comply with this Agreement. No failure by City to demand any performance required of Manager under this Agreement and no acceptance by City of any imperfed or partial performance under this Agreement shall excuse such performanc^e or impair in any way Cit/s abilrty to insist prospedively and retroactively, upon full compliance witti this Agreement No acceptance by City of payments or other performances hereunder shall be deemed a compromise or settiement of any daim City may have for additional or fijrttier payments or perfomnances. Any waiver by City of any breach of condition or covenant herein contained to be kept and perfomied by Manager shall not be deemed or considered as a continuing waiver and shall not operate to bar or prevent City from dedaring a default for any succeeding or continuing breach erther of tiie same condrtion or covenant or otiienwse. No statement, bill or notice by City conceming payments or otiier performances due hereunder shall excuse Manager from compliance wrth this Agreement nor estop City (or otiierwise impair Cit/s ability) to at any time corred sudi notice and/or insist prospectively and reta-oactively upon full compliance with tills Agreement No waiver of any

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Contract No. 2013-025-COS description (including any waiver of tiiis sentence or paragraph) shall be effective against City ! unless made in writing by a duly authorized representative of City specrtically identifying the | particular provision being waived and specifically stating tiie scope of the waiver. M/M^AGER I EXPRESSLY DISCLJMMS AND SHALL NOT HAVE THE RIGHT TO RELY ON ANY SUPPOSED ! W/MVER OR OTHER CH/\NGE OR MODIFICATION, WHEPHER BY WORD OR CONDUCT OR ! OTHERWISE, NOT CONFORMING TO THIS PARAGRAPH. !

9.5 Reimbursement of Remedies Cit/s Expenses. Manager shall pay fo Crty upon demand any and all reasonable amounts expended or incunred by City in perfomning Manager's obligations.

9.6 Inspection. City shall have access to the Faciirty at all times and upon reasonable notice (except, in the event of an emergency wrthout notice) for the purpose of examining, inspecting, evaluating, planning, repairing, designing, maintaining or showing the Fadlity or exercising Crt/s otiier rights hereunder. Manager shall promptly undertake appropriate action to rectity any deficiency (identrtied by City during such inspedions or othenA/ise) in Manager's compliance with this Agreement

9.7 Default bv Citv. Notwithstanding anytiiing in this Agreement to the contrary, rtCit y at any time is required to pay to Manager any amount or render any perfonnance. such amount or performance is not due until thirty (30) days after notice by Manager to City that the amount has become payable or that tiie performance is due. If a cure cannot be effected during that pericxJ, Crty shall not be in defautt so long as City commences cure during fhe period and diligently prosecutes the cure to completion provided such cure must t>e completed within sixty (60) days after rt is due.

X. TERMINATION

10 Rahts at Tennination. Temnination of this Agreement due to Manager's breach or for any other reason does not terminate Manager's obligations existing or arising prior to or simurtaneous with, or attributable to, the tennination or in any way tenninate any of Manager's liability related to this Agreement.

10.1 Departure. Ai the expiration of the temn hereof or upon any sooner tennination thereof, Manager shall witiiout demand, peaceably and quietiy qurt and exit tiie Facility leaving, it thoroughly deaned, in good repair, and witti all utilities operating, with the Facility maintained and repaired and in as good order and condition, reasonable use and wear excepted, with the Fadlity as tiie same may be upon its completion or in such better condition as the Fadlrty may thereafter be placed. Upon termination. Manager shall deliver to City any amounts for which City deems a claim may be made respeding tiie Fadlrty.

10.2 Confinnation of Tennination. Upon expiration or tennination of tills Agreement for any reason. Manager shall provide to Crty upon demand qurt claim deeds covering the Fadlity executed by Manager and by all persons claiming through tiiis /Vgreement or Manager any interest in or right to use the Fadlrty.

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Contract No. 2013-025-COS 10.3 Tenmination Items. Upon tennination of this /Agreement through expiration, default or otherwise, if tiie same has not occurred eariier, titie to certain rtems (the 'Tenmination Items") shall automatically vest in City as follows;

10.3.1 The Temnination Items shall vest in City wittiout any payment by City or any compensation to Manager and without requirement of any deed, conveyance, or bill of sale. However, if Crty shall request any documents in confinnation thereot Manager shall promptiy execute, acknowledge and deliver the same.

10.3.2 The Termination Items are all personal property owned or used at the Facility under this Agreement Without limrtation, the Termination Items include:

10.3.2.1 Any and alt fixtures and stiudural or pemianent improvements placed upon the Facility together wrth all pipes, fences, conduits, b-aflic bumpers, pumps, valves, sprinklers, meters, hoists, vwring, cables, cabinets, controls, air coriditioners, heaters, water heaters and all otiier mechanical or other systems and their components, monitors, timers, utility lines and all other equipment and personal property of every description attached in any way to the Fadlity or installed at a fixed location upon the Fadlity together wrth every part of the utility systems serving tiie Facility, whether or not located upon tiie Facility.

10.3.22 /Ml fixhJres, fumrture, furnishings, equipment and otiier personal property located at tiie Fadlity.

10.3.2.3 Any otiier property required by tiiis Agreement

10.3.3 Notwithstanding the foregoing, the Tenmination Items do not indude the following:

10.3.3.1 Personal effects owned by Manager's employees and volunteers.

10.3.3.2 Security cameras or other security devices (except cables) that may be leased from a security company.

XL INSURANCE AND INDEMNITY

11. Insurance and Indemnity. During the entire terni of this /Agreement Manager shall insure the Facility and property and adivities at and about the Faciirty and provide Indemnrtrcation as follows:

11.1 Insurance Required. Prior to entering, occupying or using tiie Fadlity in any way, and at all times thereafter Manager shall obtain and cause to be in force and effed the foiiowing insurance:

11.1.1 Commercial General Liability. Commerdal general liabilrty insurance with a limrt of Five Million Dollars ($5,000,000) for each occurence, a limit of Five Million Dollars ($5,000,000) for products and completed operations annual aggregate, and a limrt of Five Million Dollars ($5,(X)0,000) general aggregate limrt per policy year. The policy shall cover liability arising

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Contract No. 2013-025-COS from Facility, operations, independent conti'adons, produds, completed operations, personal injury, bodily injury, advertising injury and liability assumed under an "insured contracf including this Agreement except as to pollution, and Manager's intentional acts.

11.1.2 Liquor Liabilitv. Liquor liabilrty insurance in an amount not less than One Million Dollars ($1,000,000) for each claim and Two Million Ddlars ($2,000,000.00) for all claims in the aggregate. This coverage is required at all times when alcohol is being consumed, sold, or served at the Fadlrty. or when Manager hdds any type of liquor license for the Facility, or when any liquor license otiierwise exists with resped to the Fadlity,

11.1.3 Automobile Liability, Automobile liability insurance with a combined single limit of One Million Dollars ($1,000,000) for each acddent covering any and all owned, hired, and non-owned vehides assigned lo or used in any way in connedion witii Manager's use of the Facility. Without limrtation, such insurance shall cover hazards of motor vehicle use for loading and offloading.

11.1.4 Woricers' Compensation. Such workers' compensation and similar insurance as is required by law and employer's liability insurance with a minimum limit of One Hundred Thousand Dollars ($100,000) for eadi acddent One Hundred Thousand Dollars ($100,000.00) disease for each employee. Five Hundred Thousand Dollars ($500,000.00) policy limit for disease. All conti'adors and subcontradors must provide like insurance.

11.1.5 Diredors and Officers Liability. Diredors and Offlcers Liability Insurance, including Employment Practices Liability, in the amount of One Million Dollars ($1,000,000.00) per claim, and One Million Dollars ($1,000,000.00) annual aggregate, indusive of defense costs.

11.1.6 Employee Fidelity/Crime. Crime/Fidelrty coverage, including but not limited to, the perils of employee dishonesty, robbery, ttieft. and disappearance or destruc±on of money and securities in perfomnance of their duties under tiiis Agreement. The coverage limrt shall be not less tiian One Hundred Thousand Dollars ($100,000.00) per loss.

11.1.7 Fine Ait Fine art insurance covering worics of art and collections of all kinds and of every description, and all associated property induding but not limrted to frames, glasses, shadow boxes, crates and otiier display equipment while at the Fadlrty, at Manager's ottier premises, at any otiier location woridwide, or in transit woridwide. Coverage shall be on a "wall to wair basis from the time property is removed from rts normal reposrtory, incidental to shipment until returned or shipped to another point designated by the owner or its agent prior to return shipment. Perils insured against shall all be risks of dired physical loss or damage from any extemal cause, except as exduded. Any applicable deductible or retention shall not be greater tfian One Thousand Dollars ($1,000.00).

11.1.8 Personal Property. Manager shall maintain spedal causes of loss personal property coverage, as defined by Insurance Sen^rces Office, Inc., in an amount per ocx^umence equal to full replacement cost of all personal property used in connection witti the Facility.

11.1.9 Other Insurance. Any otiier insurance Crty may reasonably require for tfie protection of Crty and Crt/s employees, officials, representatives, officers and agents (all of whom, induding City, are colledively "Additional Insureds"), tiie Fadlity, sun-ounding property. Manager, 10277486V18 Page 25 of 37

Contract No. 2013-025-COS or the activities carried on or about the Fadlity. Such insurance shall be limited to insurance a reasonable person owning, leasing, designing, constiucting, occupying or operating similar facilrties could reasonably purchase.

11.2 Policv Limrt Escalation. Not more than once in any tiiirty-six (36) month period. City may elect on not less tiian tiiirty (30) days notice to Manager to increase the amount or type of any insurance to account for inflation, changes in risk, or any other fador tiiat City reasonably determines to affect tiie pmdent amount of insurance to be provided.

11.3 Form of Al\ Insurance. All insurance provided by Manager with resped to the Facility, whetiier required by this Agreement or not, and all insurance provided by third parties under this Agreement, shall meet the following requirements;

11.3.1 "Occurrence" coverage is required except for directors' and officers' liability. "Claims made" insurance is not otherwise permrtted.

11.3.2 If Manager uses any excess insurance tiien such excess insurance shall be "follow fornn" equal to or broader in coverage than the underlying insurance.

11.3.3 Polides must also cover and insure Manager's activities relating to tiie business operations and activities conduded away from the Faciirty.

11.3.4 Manager must dearty show by providing copies of insurance polides, insurance certificates, formal endorsements or otiier docximentation acceptable to City that all insurance coverage required by this Agreement is provided.

11.3.5 Upon Cit/s request. Manager shall provide to Crty copies of actual insurance polides.

11.3.6 Manager's insurance shall be primary insurance as to tiie risks it covers.

11.3.7/^1 policies, except for directors and officer's liability and fidelrty/crime policies, shall waive transfer rights of recovery (subrogation) against City and the other Additional Insureds.

11.3.8 All dedudibles, retentions or "self-insured" amounts shall be subject to the following:

11.3.8-1 Manager shall be solely responsible for all such amounts.

11.3.8.2 No deductible shall be applicable to coverage provided to City. 11.3.8.3 No such amount for any policy during any year may exceed Five Thousand and No/100 Dollars ($5,000.00).

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Contract No. 2013-025-COS 11.3.9 All polides shall contain provisrons tiiat neither Manager's breach of a policy requirement or wananty, nor failure to follow daims reporting procedures, shall affed coverage provided to City.

11.3.10 All liability insurance must name City and the other Additional Insureds as additional insureds. Manager shall cause coverage for Additional Insureds to be incorporated into each insurance policy by endorsement.

11.3.11 All applicable polides must list City as a loss payee as respects proceeds relating to the Facility.

11.3.12 All policies must require ttie insurer to provide City with at least thirty (30) days prior notice of any cancellation, reduction or other change in coverage that would reduce coverage, below the amount required by tiiis /\greement. The insurer's duty to notify City of changes in coverage shall not include phrases such as "endeavor to" or "but failure to mail such notice shall impose no obligation or liabilrty of any kind upon tfie company, rts agents or representatives."

11.3.13/Ml policies shall require that notices be given to City in Oie manner spedfied for notices to City under this Agreement.

11.4 Evidence of Insurance. Manager shall provide evidence of all insurance as follows:

11.4.1 Certificates must be in ACORD fonm or equivalent acceptable to City.

11.4.2 Manager shall provide to City certificates of insurance annually. Manager shall provide certificates at other times at City's request

11.4.3 Certrticates must evidence that the policy described by the certificate is in full force and effect and that the policy satisfies each requirement of this Agreement applicable to the policy. For example, certrticates must evidence that City and the other Additional Insureds are additional insureds.

11.4.4 Each insurance certificate provided to City constitutes a wananty and representation by Manager to City that polides, coverages and other rnatters are actually in effect as described in the certtiicate.

11.4.5 Upon Crt/s request Manager shall provide to City copies of actual insurance policies.

11.5 Acceptable Insurers. At a minimum, all insurers shall be duly licensed (or qualified unlicensed non-admitted insurer) by the State of Anzona Deparhnent of Insurance. At a minimum, all insurers shall have and maintain an A.M. Best, Inc. rating of B++ 6.

11.6 Crt/s Election to Provide Insurance. City is not required to canry any insurance covering or affecting the Facility or use of Citys property related to ttiis Agreement City may eled to acquire ad or any part of the insurance required by this Agreement (witti or without any other real property City may own. or control) and Manager shall pay to City the costs of such insurance as

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Contract No. 2013-025-COS reasonabty determined by City. Manager shall provide all required insurance not so provided by City. Any insurance or sert-insurance maintained by City shall not contiibute to Manager's insurance.

11.7 No Representation of Coverage Adequacy. By requiring insurance. City does not represent that coverage or limits will be adequate to protect Manager. Failure to demand evidence of compliance with the insurance requirements set forth in tiiis Agreement or failure to identify any insurance defidency shall not relieve Manager from Manager's obligation to maintain required insurance.

11.8 Insurance to be Provided bv Others. Manager shad cause rts contradors or other persons occupying, woricing on or about or using tiie Facility pursuant to this /Vgreement to be covered by their own or Manager's commerdal general liability insurance with liability limits of not less tiian One Million Dollars ($1,000,000.00) each occurrence. Two Million Dollars ($2,000,000.00) products' completed operations and a Two Million Dollar ($2,000,000.00) general aggregate limrt per policy year and conforming to the other requirements of tiiis Agreement. Diredors' and officers' liability and employee fidelity/crime coverage shall not be required from such persons.

11.9 Indemnitv. In addition to all other indemnities and otfier obligations hereunder, to tiie fullest extent permrtted by law, throughout the terni of this Agreement and until all obligations and perfonnances under or related to tiiis Agreement are satisfied and all matters described in tiiis paragraph are completely resolved. Manager (and all otiier persons using, acting, woricing or claiming through or for Manager or this Agreement (if they or their subcontractor, employee or other person or entity hired or direded by them partidpated in any way in causing tiie claim in question)) shall jointiy and severally, indemnify, defend and hold harmless City and all otiier Additional Insureds for, from and against any and all claims or hann related to tiie Facility or this Agreement (the "Indemnity"). Wrthout limitation, the Indemnity shall indude and apply to any and all allegations, demands, judgments, assessments, taxes, impositions, expenses, proceedings, liabilities, obligations, surts, actions, daims (including wrthout limitation daims of personal injury, txjdily injury, sickness, disease, deatii, property damage, destruction, loss of use, financial harm, or ottier impairment), damages, losses, expenses, penalti"es, fines or otiier matters (together witii all attomey fees, court costs, and the cost of appellate proceedings and all other costs and expenses of litigatbn or resolving the daim) that may arise in any manner out of any use of the Fadlity or other property related to this Agreement or any actions, acts, errors, mistakes or omissions relating to woric or services in the perfomnance of or related to this Agreement including without limitation any injury or damages or cause of action daimed or caused by any employees, contradors, subcontractors, tenants, subtenants, agents or otiier persons upon or using the Fadlrty or surrounding areas related to this Agreement induding without limitatbn, claims, liability, harm or damages caused in whole or in part by City or any otiier Additional Insured or anyone for whose mistakes, errors, omissions or negligence Manager or City may be liable. As a condrtion to Crt/s executing this Agreement, Manager specrtically agrees that to the extent any provision of this paragraph is not fijily enforceable against Manager for any reason whatsoever, tiiis paragraph shall be deemed automatically refomned to the minimal extent necessary to cause rtt o be enforceable to the fullest extent penmrtted by law. The Indemnrty shall also include and apply to any environmental injury, personal injury or other liability relating to Citys or Manager's acquisition, ownership or use of real property developed, operated, owned, used, controlled or possessed by City or Manager under tiiis Agreement Notwithstanding tiie foregoing, the Indemnity does not apply to: 10277486via Page 28 of 37

Contract No. 2013-025-COS 11.9.1 Claims arising only from the sole gross negligence of City and its employees.

11.9.2 Claims that the law prohibits from being imposed upon tiie indemnitor.

XII. CONDEMNATION

12. Condemnation. The following shall govern any condemnation of any part of or interest in the Facility (the "Part Taken") and any conveyance to a condemnor in avoidance or settlement of condemnation or a threat of condemnation:

12.1 Tennination as to Part Taken. This Agreement shall terminate as to the Part Taken on the date (the "Condemnation Date") that is the earlier of the date title to the Part Taken vests in the condemnor or the date upon which the condemnor is let into possession of the Part Taken. In the event of a partial taking, this Agreement shall continue in full force and effect as to the part of the Facility not taken. A partial taking is a taking that does not substantially affect the Facility or its operation. City shall determine whether condemnation is totai or partial.

12.2 Condemnation Proceeds. Manager hereby assigns and ti-ansfers to City Manager's entire interest in all condemnation damages, interest, severance damages, and any other payments or proceeds of any kind relating to the condemnation (collectively the "Condemnation Proceeds"). Manager shall execute and deliver to City assignments or other instruments requested by City confirming such assignment and transfer. Manager shall Immediately pay to City any Condemnation Proceeds Manager may receive. The Condemnation Proceeds shall not include relocation benefits, if any, awarded spedfically only to Manager to cover expenses of relocating Manager's business located at the Facility at the time of the condemnation. Such relocation benefits shall be owned by and paid directly to Manager only.

Xlll. DAMAGE TO OR DESTRUCTION OF FACILITY

13. Damage to or Destruction of Fadlity. If the Facility is wholly or partially damaged by fire, explosion, the elements, the public enemy, or other casualty, and the cost of restoring the damage would exceed One Hundred Thousand Ddlars ($100,000.00), ttien Crty shall have a ninety (90) day period following such damage to notity Manager that Crty elects to tenninate this Agreenient Otherwise, City shall repair the Facility. Cil/s obligations are limited to tiie Building stmdure. City is not obligated to repair Display Woric, fixtures, or art artifads or other personal property.

XIV. M/VNAGER'S RECORDS

14. Manager's Records. Manager shall provide infonnation to City as follows:

• 14.1 Record Keeping. Manager shall maintain in a secure place at a secure location witiiin Maricopa County, Arizona proper and accurate books, records, ledgers, conrespondence, and other papers and repositories of infomiation, relating to this Agreement and to all of Manager's obligations hereunder. Manager shall fumish, from time to time, such financial and ottier information as City may reasonably request pertaining to Manager's and Citys respedrve rights and obligations with respect to this Agreement as reasonably determined by City.

10277486v18 Page 29 of 37

Contract No. 2013-025-COS 14.2 Audit Report. Within ninety (90) days after the end of each fiscal year. Manager shall prepare and submit to City at Manager's expense an annual audrt report of revenues and expenses related to this Agreement and an opinion thereon prepared by an independent certified public accounting firm. The audit report shall include an annual financial statement prepared in accordance wrth generally accepted accounting prindples (GAAP) and the provisions of the Statement of Financial Accounting Standards No. 117 (Financial Statements of Not-for-profit Organizations). Manager shall make available to City all work papers and records produced by the auditor pertaining fo the audrt, or copies thereot wrthin ten (10) working days after notice by City to do so.

14.3 Annual Performance Report. Before March 1 of each year, Manager shad submrt to City a report of Manager's performance under tiiis Agreement for the prior calendar year. The report shall include an analysis of the effectiveness of Manager's performances under this Agreement including without limitation documentation of performance of tfie Annual Plan. If Crty requests. Manager shall also present these annual reports to City at a public city council meeting. The report shall itemize the then existing fixtures, fijmiture, furnishings, equipment and other personal property used at ttie Fadlrty, showing at least the date of acquisition, the initial purchase cost and the depreciated book cost as of tiie date of the report.

14.4 Performance Audit. City may at any time conduct a performance audit to evaluate Manager's perfonnance under this Agreement. Manager shall make available any information related to this Agreement requested by City for the audit within ten (10) woricing days of the request. The performance audrt nnay consider all information that is relevant to areas of operations of Manager and its responsibilities under this Agreement.

14.5 /Applicable to Others. By daiming under this Agreement, otiiers using tiie Facility shali also be deemed to have agreed to provide to City upon request infonnation relevant to compliance with this Agreement by Manager or others,

XV. COMPLI/VNCE WITH U\W

15, Compliance with Law. Manager shall conduct only lawful operations and activities at and near the Facility in accordance with all federal, state, county and local laws, ordinances, regulations or other rules or policies as are now in effect or as may hereafter be adopted or amended and shall use and occupy tiie Facility in conformance with all of the same. This Agreement does not constitute, and Crty has not promised or offered, any type of waiver ot or agreement to waive (or show any type of forbearance or favoritism to Manager with regard to), any law. ondinance, power, regulation, tax, assessment or other legal requirement now or hereafter imposed by the City of Scottsdale or any other govemmental body upon or affeding Manager, the Facility, or Manager's use of the Facility. Manager acknowledges that all of Manager's obligations hereunder are in addition to, and cumulative upon (and not to any extent in substitution or satisfadion of), all laws and regulations applicable to Manager. Manager ftjrther agrees that tfiis Agreement is not intended to diminish any performances to the City of Scottsdale that would be required of Manager by law if this Agreement had been made between Manager and a private citizen. Crty has not relinquished any right of condemnation or eminent domain over tfie Fadlity. This Agreement does not impair ttie City of Scottsdale power to enad, apply or enforce any laws or regulations, or exerdse any govemmental powers, affecting in any way Manager or the Fadiity, Without limiting in any way the generalrty of tiie foregoing. Manager shall comply witii all and each of tfie fdlowing: 10277486V18 Page 30 of 37

Contract No. 2013-025-COa 15.1 Govemment Propertv Lease Excise Tax. Manager shall be responsible for any and all property taxes and all govemment property tease excise taxes described in A.R.S. § 42-1901 ef seq, or similar laws in force fiT>m time to time tfiat are lawfijlfy assessed against ttie Fadlity or against Crty or Manager with respect to the Fadlity. Pursuant to AR,S. § 42-1931, failure by Manager to pay the taxes after notice and an opportunity to cure is an event of default that could result in divesting Manager of any interest in or right of occupancy of tiie Facility,

15.2 Taxes. Liens and Assessments. In addrtion to all other amounts herein provided. Manager shall pay, when the same become due and payable, all taxes and general and special fees, charges and assessments of every description that during the term of this Agreement may be lawfully levied upon or assessed against Manager, the Fadlrty, the operations conducted therein, any amounts paid or other performances under this /Agreement by erther party, and all possessory interest in the Facility and improvements and other property tiiereon, whettier belonging to City or Manager. The preceding sentence does not apply to obligations of Manager not related to tiie Fadlity. Manager shall have the right to contest, but not the right to refuse to timely pay, any taxes and assessments. Manager shail pay all sales, transaction privilege, and similar taxes that it is legally obligated to pay.

15.3 Procurement Process. Manager shall cause all Manager design and construdion activity at tiie Facility to comply In all respeds with ali applicable bidding and procurement laws and shall pay, indemnify, defend and hold hannless City from any suits or other daims of any description related to such laws. City shall have the right but not the obligation, to determine in Cit/s reasonable.discretion how such laws apply to tiie Fadlity.

XVI. ASSIGN/ABILITY

16. Assiqnabilrtv. This Agreement is not assignable by Manager and any assignment shall be void and create in tiie assignee no rightsexcep t in stiict compliance with the following:

16.1 Special Expertise. In making this Agreement City depends upon tiie particular capacities, expertise, powers, and good offices of Manager, which would not be satisfactorily provided by a third party. No right or obligation of Manager hereunder may in any way whatsoever be assigned or delegated to a tiiird party witiiout Citys prior express wrrtten consent.

16.2 Assignments Prohibited. Every assignment of Manager's interest in this Agreement or any of Manager's rights or interests hereunder is prohibited unless Manager first receives from City notice of City's consent to tfie assignment.

16.3 /Assignment Transadlons Included. References in tills Agreement to assignments by Manager shall be deemed also to apply to all of the following ticinsactions, circumstances and conditions:

16.3.1 Any voluntary or involuntary assignment conveyance or transfer of any rights under tiiis Agreement.

16.3.2 Any voluntary or Involuntary pledge, lien, mortgage, secunty interest, judgment deed of tmst daim or demand, whether arising from any conti^ct any agreement any

10277486V18 Page 31 of 37

Contract No. 2013-025-COS woric of construction, repair, restoration, maintenance or removal, or otherwise (collectively "Liens").

16.3.3 The use, occupation, management control or operation of the Facility or any part thereof by others.

16.3.4 Any transfer of memt)ership interests, corporate stock or any other dired or indirect ti'ansfer of the majority of the ownership, management or control of Manager.

16.3.5 Any assignment by Manager for the benefit of creditors, voluntary or involuntary.

16.3.6 Any bankruptcy or reorganization of Manager not completely resolved in Manager's favor within one hundred twenty (120) days after it is inrtiated.

16.3.7 The occurrence of any of tiie foregoing by operation of law or otherwise.

16.3.8 The occunrence of any of the foregoing with resped to any assignee or, other succ;essor to Manager.

16.4 /Assignment Transactions Excluded. References in this /Agreement to assignments by Manager do not apply to the following transactions:

16.4.1 Agreements to allow an event producer fo hold a one-time event (such as a wedding reception) at the Fadlity.

16.4.2 Manager's hiring and discharging of employees.

16.4.3 Nonnal turnover on Manager's board of directors.

16.5 Effed of /Assignment No adion or inadion by City shall be deemed a waiver of the prohibition on assignments or any otiier provision of tiiis Agreement or the acceptance of the assignee or occupant as Manager, or a release of Manager from the further perfonnance by Manager of tiiis Agreement The consent by City to an assignment shall not relieve Manager from obtaining Crt/s consent to any furttier assignment. No assignment shall release Manager from any liabilrty hereunder.

16.6 Enforceabilrty after /Assignment. This Agreement shall confrol any conflict between this Agreement and tiie terms of any assignment. Upon execution of this Agreement and upon each subsequent assignment, Manager shall provide a complete copy of this Agreement and any amendments to each assignee.

16.7 Grounds for Refijsal. No assignments of tiiis Agreement are contemplated or bargained for. City has the absolute right for any reason or for no reason in its sole discretion to give or withhold consent to any assignment or to impose any condrtions upon any assignment. Manager shall pay to City tiie sum of One Thousand Five Hundred Dollars ($1,500) as a fee for legal and administa*ativ6 expenses related to any assignment or any request for consent to an assignment

10277486v18 Page 32 of 37

Contract No. 2013-025-COS 16.8 Form of /Assignment. /Any permrtted assignment shall be by agreement in fomri and content acceptable to City. Witiiout limitation, any assignment shall spedfy and require each assignee acquiring any interest under this Agreement to assume and be bound by, and be obligated to perform the tenns and condrtions of this Agreement and that in the event of defaurt of Manager under such assignment City at City's sole option may succeed to the position of Manager as to any assignee of Manager without liability for any prior breaches or performances.

XVII. MlSCELLAvNEOUS

17. Miscellaneous. The following additional provisions apply:

17.1 Years. Unless othenwse specrtied, references in tiiis /Agreement to a year refer to a calendar year. A fiscal year begins July 1 and ends June 30.

17.2 Severability. If any provision of this Agreement is dedared void or defective, that declaration shall not affect tiie validity nor any otiier provision of this Agreement

17.3 Amendments. This Agreement may not be amended except by a fonnal writing executed by all of tiie parties.

17.4 Confiicts of Interest No member, official or employee of City shall have any dired or indired interest in tfiis Agreement nor participate in any decision relating to the Agreement tiiat is prohibited by law.

17.5 No Partnership. Manager has no relationship with Crty except as defined by this Agreement. This Agreement and the fransactions and performances contemplated hereby shall not create any sort of partnership, joint venture, assodation or similar relationship between the parties. Manager is a non-profit corporation and is neither a department, nor an operating agency of City.

17.6 Nonliability of City Offidals and Employees. No member, official, representative or employee of City shall be personally liable to any party, or to any successor in interest to any party, in the event of any default or breach by City or for any amount tiiat may become due to any party or successor, or with respect to any obligation of Crty or otiierwise under the terms of this Agreement or related to this Agreement

17.7 Notices. Notices hereunder shall be given in writing personalty served upon the other party or mailed by registered or ceriified mail, retum receipt requested, postage prepaid addressed to:

ff to City: Rob Millar Strategic Programs Manager City of Scottsdale 4021 N 75*^ Sfreet Scottsdale. AZ 85251

Copy to: City of Scottsdale 3939 Drinkwater Blvd. 10277486V18 Page 33 of 37

Contract No. 2013-025-COS Scottsdale, AZ 85251 Attn: City Attomey

If to Manager Museum of the West 8285 E. Via Del Sol Scottsdale /Arizona 85255

Copy to: William Ridenour, Esq. RIDENOUR, HIENTON & LEWIS. P.L.LC 201 North Centi^al Avenue, Surte 3300 Phoenix, /Arizona 85004-1052

By notice from time to- time, a party may designate any other street address within Maricopa County, /Arizona as its address for giving notice hereunder. Notices to Manager may instead be hand delivered to Manager's management office at the Facility. Service of any notice by mail shall be deemed to be complete three (3) days (excluding Saturday, Sunday and legal holidays) after the notice is deposited in the United States mail.

17.8 Time of Essence. Time is of the essence of each and every provision of this Agreement.

17.9 Integration. This Agreement constrtutes tiie entire agreement between the parties with respect to the subject matter hereof and supersedes any prior agreements, understandings, negotiations, proposals, draft agreements, discussion outiines, correspondence and memoranda or representation regarding the Property or tfie Fadlity.

17.10 Construdion. Whenever tiie context of this Agreement requires, the singular shall indude the plural, and the masculine shall indude tiie feminine. This Agreement was entered into on the basis that rt shail be constiued according to its plain meaning and nerther for nor against any party, regardless of their respective rolesi n preparing this Agreement. The tenns of this Agreement were established in light of the plain meaning of this Agreement and tfiis Agreement shall therefore be interpreted according to its plain meaning and witiiout regard to mles of interpretation, if any, that might otherwise favor Manager.

17.11 Manager Payments Cumulative. /All amounts payable by Manager to City hereunder or under any tax, assessment or other existing or future ordinance or other law of City of Scottsdale or the State of /Arizona shall be cumulative and payable in addition to each other payment required hereunder, and such amounts shall not be credited toward, substituted for, or set off against each other by Manager in any manner.

17.12 Paragraph Headings. The paragraph headings contained herein are for convenience In reference and not intended to define or limit tiie scope of any provision of this Agreement

17.13 No Third Partv Beneficiaries. Except for any limited provisions expressly stated to t>e for tiie benefrt of a tiiird party, no person or entity shall be a third party benefidary to this /Agreement or shall have any right or cause of action hereunder. City shall have no liabilrty to third parties for any approval of plans, Manager's constiudion of improvements. Manager's negligence. 10277486V18 Page 34 of 37

Contract No. 2013-025-COS Manager's failure to compty with the provisions of this Agreement (including any absence or inadequacy of insurance required to be carried by Manager), or otherwise as a resurt of tiie existence of tfiis Agreement.

17.14 Exhibits. All attached exhibits tfiat are specificalty referenced in this Agreement are hereby incorporated into and made an integral part of tiiis Agreement for all purposes.

17.16 Attorneys' Fees, ff any action or surt or proceeding is brought by Crty or Manager to vindicate or exercise any of Citys or Manager's rights or remedies hereunder, tiie non-prevailing party shall pay all costs of such action or suit and all expenses of such action or suit together wrth such sum as tiie court may adjudge reasonable as attorneys' fees to be allowed In sakJ surt, action or proceeding.

17.16 Choice of Law. This/Agreement shall be govemed by the internal laws of tiie State of Arizona wrthout regard to choice of taw mles. Exclusive proper venue for any action regarding this Agreement shall tie Maricopa County.

17.17 Approvals and Inspections. /All approvals, reviews and inspections by City under tills Agreement or othenwise are for Cit/s sole benefit and not for the benefit of Manager, rts contractors, engineers or other consultants or agents, or any otiier person.

17.18 Statuton/ Cancellation Right. In addition to its other rights hereunder, City shall have tiie rights specrtied in AR.S. § 38-511.

17.19 E-Verity. The following provisions shall apply to ali work by Manager, its subcontractors or others perfomning woric under this Agreement:

17.19.1 Under the provisions of A.R.S- §41-4401, Manager wan'ants to City that Manager and all its subcontradors will comply with all Federal Immigration laws and regulations that relate to their employees and that Manager and alt its subconti^adors now comply with the E-Verify Program under A.R.S. §23-214(A). A breach of this warranty by Manager or any of its subconfradors will be considered a material breach of this Agreement and may subject Manager or its subconfractors to penalties up to and including termination of this Agreement or any subcontract. City retains the legal right to insped the papers of any employee of Manager, or any subconfrador who worics on this Agreement to ensure that Manager or any subconfractor is complying with the warranty given above. City may condud random verification of the employrnent records of Manager and any of its subcontradors to ensure compliance with this warranty- Manager agrees to indemnity, defend and hold City harmless for, from and against all losses and liabilities arising from any and all violations of these statutes.

17.19.2 City will not consider Manager or any of its subconfractors in material breach of this Agreement ff Manager and its subcontradors establish that tiiey have complied wrth the employment verification provisions prescribed by 8 USCA §1324 (a) and (b) of the Federal Immigration and Nationality Act and the E-Verify requirements prescribed by A.R.S. §23-214(A)- The "E-Verify Program" means the employment verification pilot program as jointiy administered by the United States Departinent of Homeland Security and the Social Security Administration or any of its successor programs.

10277486V18 Page 35 of 37

Contrad No. 2013-025-COS 17.19.3 The provisions of this paragraph must be included in any contract Manager enters into wrth any and all of its subcontractors who provide servic:es under this Agreement or any sufciconfrad. "Services" are defined as furnishing labor, time or effort in the State of Arizona t^y a contractor or subconfractor. Services include constmction or maintenance of any structure, building or fransportation facility or improvement to real property. Manager vwll take appropriate steps to assure that all subconfradors comply with the requirements ofthe E- Verify Program. Manager's failure to assure compliance by alt its subcontradors with the E- Vertfy Program may be considered a material breach of this Agreement by City.

17.20 Sudan and Iran. In accordance with AR.S. §35-39106 and 35-393.06, Manager certifies that it does not have scrutinized business operations in Sudan or Iran, as defined in A.R.S. §35-391(15) and 35-393(12).

17.21 Dates. Sunday, Saturday and Arizona legal holidays are holidays for purposes of this Agreement

17.22 Recording. This Agreement shall not be recorded,

EXECUTED as ofthe date first given above.

MANAGER: SCOTTSDALE MUSEUM OF THE WEST INC., an /Arizona non-profrt corporation,

By: Its:

CITY: CITY OF SCOTTSD/ALE, an /Arizona munidpal corporation

By: W. J. "Jim" Lane, Mayor

ATTEST:

Carolyn Jagger, City Cleric

/APPROVED AS TO FORM:

OFFICE OF THE CITY ATTORNEY

10277486V18 Page 36 of 37

Contrad No. 2013-025-COS Paul Katsenes, Executive Director Community & Economic Development

Derek Eari, Acting Executive Director, Public Works

David Smith, Crty Treasurer

10277486v18 Page 37 of 37

Contract No. 2013-025-COS TABLE OF EXHIBITS

Exhibrt Paragraph Description

A 3.5.3 Letter of credit requirements.

B 4.30 List of equipment and other personal property Manager is required to

provide to the Fadlity.

C 5.1 Scope of woric for Shell Woric.

D 5.2 Scope of woric for Spedarty Work.

E 7.1 Scope of woric for Display Woric.

F 8,1.2.1 List of Manager Maintenance Work.

G 8.1.3.1 List of City Maintenance Work.

H 8.2.1.1 List of Manager Utilrties.

I 8.2.2.1 Ust of Crty Utilrties.

[Note: This page is not part ofthe agreement]

10277486V18 Page 1 Contract No. 2013-025-COS standards for Letters of Credit

In addition to any other requirements imposed upon a letter of credrt (the "Letter of Credrt") issued pursuant to this Agreement, each Letter of Credrt shall meet and be "govemed by the following additional standards and requirements;

1. General Reguirements. The Letter of Credit must

1.1 Be dean, unconditional, and inevocable.

1.2 Be payable to City upon demand.

1.3 Be subjed to the International Standby Practices 1998, International Chamber of Commerce Publication No. 190.

1.4 Be conditioned for payment solely upon presentation of the Letter of Credit and a sight draft,

1.5 Be transferable one or more times by Crty wrthout the consent of Manager or the- Issuer.

2 Letter of Credrt Fees, Manager shall pay upon Crty's demand, as addrtional Rent, any and all costs or fees charged in connedion wrth the Letter of Credrt, induding without limitation, those that arise due to:

2.1 Cit/s sale or transfer of all or a portion of the Fadlity or the Property.

2.2 The addrtion, deletion, or modrtication of any beneficiaries under the Letter of Credrt.

3 Issuing Bank. The Letter of Credrt shall meet all ofthe following requirements:

3.1 The issuer shall be a federally insured financial institution wrth offices in Maricopa County, Arizona.

3.2 The Issuer shall be a member of tiie New Yoric Clearing House Association or a commercial bank or trust company satisfactory to City.

3.3 The issuer shall have banking ofiices at which tiie Letter of Credrt may be drawn upon in Maricopa County, Arizona.

3.4 The issuer shall have a net worth of not less than $1 billion.

4 Expiration of Letter of Credrt. Thie Letter of Credrt shail expire not eariier than 12 months after ttie date it Is delivered to City. The Letter of Credrt shall provide that it shall be automatically renewed for successive 12 month periods, unless wrrtten notice of nonrenewal has been given by the issuing bank to Landlord not less than 60 days prior to the expiration of ttie cunrent period. If the issuing bank does not renew the Letter of Credrt,

10277486v18 Exhibit "A" Page 1 of 2

Contract No. 2013-025-COS and if Manager does not deliver a substitute Letter of Credit at least 30 days prior to the 1 expiration of tiie cunent period, tiien, in addrtion to its other rights under this Agreement, . i City shall have the right to draw on the existing Letter of Credit I

Draws. City may draw upon the Letter of Credrt as follows:

5.1 City may use, apply, or retain the proceeds of tiie Letter of Credit to the same extent that City may use, apply, or retain any other Manager funds or property to whidi City may have access.

5.2 City may draw on the Letter of Credit in whole or in part, from time to time, at Cit/s election.

5.3 Within thirty (30) days after Crty gives Manager notice that City has drawn down the Letter of Credrt, Manager shall restore all amounts drawn by Crty, or substitute cash security instead.

5.4 If the required amount of the Letter of Credrt increases from time to time, Manager shall, from time to time, on or before the date of the increase, deliver to City an addrtional letter of credrt in the amount of such increase, or cause tiie existing Letter of Credrt held by Crty to be amended to increase its amount.

5.5 City may draw upon the Letter of Credrt as othenwise pemiltted by tiiis Agreement.

Cooperation bv Manager. Manager shall promptly execute and deliver to City any and all modifications, amendments, and replacements of the Letter of Credit as City may reasonably request.

I0277486v18 Exhibrt "A" Page 2 of 2

Contrad No. 2013-025-COS Fixtures and Personal Property

Desks Chairs Computers and copiers Computer Monitors IT hardware and software (servers, etc.) File cabinets Phones Ladders Conference room table(s) Kitchen equipment? (refrigerator, stove, microwave, dishwasher) Lamps, desk lights Forklift, scissor lift Toots point of sale equipment (cash registers) event tent silverware, portable tables outdoor speakers and enclosures retail items, display cases or tables curatorial equipment or supplies everyday commodes (toilet paper, paper, pencils pens, etc.)

10277486v18 Exhibit "B" Page 1 of 1

Contrad No. 2013-025-COS SCOPE OF WORK FOR SHELt

1, Construction program for New Building:

a. Approximately 22,000 square feet Exhibit and Gallery

b. Approximately 2000 square feet Theater

c. Approximately 6000 square feet Great Hail

d. Approximately 1300 square feet Lobby

e. Approximately 340 square feet Ticketing f. Approximately 900 square feet Gift Shop

g- Approximately 2400 square feet Support Facilrties h. Approximately 2100 square feet Administration Offices

i. Approximately 900 square feet Public Restrooms

j. Approximately 1900 square feet Circulation (stairs elevator hallway)

Total of approximately 40,000 square feet of new building area

2. Remodeled Area at Loloma Transit Center:

a. Approximately 2000 square feet Offices & Conference Room

b. Approximately 1300 square feet Storage

Total of approximately 3300 square feet Remodeled Area

3. Construction program for Plaza and Sculpture Garden

a. Approximately 12,000 square feet Entry Plaza b. Approximately 16,000 square feet Sculpture Garden

Exhibrt C Contract No. 2013-025-COS Page 1 of 1 SCOPE OF WORK FOR SPECIALTY

The gallery and exhibrt spaces will receive additional attention and detailing beyond the construction of the shell and interior improvements. The following list of Specialty work will be performed by the city:

Custom-buirt exhibrt furniture

Architectural features

Multimedia equipment- projectors, speakers, amplifiers and equipment racks

Exhibit and retail millwork

Special wail treatments

Telescopic seating

Acoustic finishes

Clean power and communication head-ins

Exhibit D - Page 1 of 1 Contract No. 2013-025-COS SCOPE OF WORK FOR DISPLAY

Exhibrt designers will produce a series of theme-vignettes: photos, text, objects scanned for photomurals, banners and labeling. Addrtional components unique to the galleries such as display lighting, publication media, signage, wayfinding, diorama production, is included in the DISPLAY WORK. The installation of these components elements, materials and labor, required to setup the shows, galleries, kiosk, exhibits, and gift shop are the responsibility ofthe MANAGER.

Exhibit E Contract No, 2013-025-COS Page 1 of 1 MANAGER MAINTENANCE RESPONSIBILITY

A. SMoW SHALL:

1. Cleaning Wash, wax, vacuum, dust floors, walls, windows furniture and equipment

2. Supplies Restroom stock, commodities, copy paper, writing utensils, etc.

3. Repairs AN projectors, screens, furnrture, and window coverings, drains, exterior and interior doors, building security system and plumbing fixtures

4. Building interior trash collection

5. Payments

Utility bills and trash collection bills

6. Daily monitor humidity control system

7. Offsite Coordination Direct bus, valet and limousines to acceptable paricing 8. Grounds and Sculpture Garden Mowing, edging and overseeding

9. Replacement of Normal Wear and Tear Painted surfaces, carpeting, wall coverings and plumbing fixtures

10. Exhibits and artworic Maintenance and operation ofthe museum's interior and exterior exhibrt and artwork

11. SMoW Security System Repair, maintenance and replacement ofthe building security system

12. City Notice Contact contract administrator if city maintenance responsibility item needs attention

Exhibit F Contract No, 2013-025-COS Page 1 of 1 Contract No. 2013-025-COS

CITY MAINTENANCE RESPONSIBILITY

THE CITY SHALL:

1. Maintain, repair and replace \f necessary: a. Roof Roofing material, caulking, flashing, beams, slabs and tmsses b. Electrical distribution systems Main panel, breakers, raceways and wiring 12 gauge and lower c. Floors Concrete flatwork d. Fenestration Windows and storefronts e. HVAC Heating, ventilating, air conditioning and humidity systems (not grilles) f. Automated energy management systems g. Plumbing system Water lines, valves, waste pipes and traps and flxture hangers h. Vertical circulation Guardrails, handrails and elevators i. Emergency and safety systems Fire alarms and flre sprinklers j. Building Exterior Paint, caulking and lights attached to building k. Grounds and Sculpture Garden Area light poles, fixtures and ground boxes Irrigation valves and boxes, control wire, heads and emitters I. Landscape vegetation Trees, shrubs and ground cover m. Routine exterior trash collection

Exhibit G Page 1 of 1 LIST OF MANAGER UTILITIES

The MANAGER will be responsible for establishing accounts and paying all utilities that service the building, according to the following list:

Water Sewer Telecommunication (Cox or Ciwest) Internet (Cox or Qwest) Electric (Arizona Public Service) Gas (Southwest Gas)

In the event that a utility provider service area or ownership changes the responsibility to pay the utilities remain the SMoW Manager.

Exhibrt H Contract No. 2013-02S-COS Page 1 of 1 LIST OF CITY UTILITIES

The CITY will be responsible for establishing accounts and paying all utilities that service outside the building, according to the following list:

Water Sewer Telecommunication (Cox or Qwest) Electric (Arizona Public Service)

Exhibit I Contract No. 2013-025-COS Page 1 of 1 Museum Management Agreement

City Council

February 26, 2013 m

CO Requested Action

Adopt Resolution 9307 authorizing Museum IVIanagement Agreement 2013-025-COS with Scottsdale Museum of the West, Inc. and adopt Ordinance NO. 4071, which waives certain financial policies and governing guidance related to municipal financing ofthe Scottsdale Museum of the West. Presentation Overview

1. Western Museunn Background 2. Analysis of Existing Market and Operating Plans 3. Management Agreement 4. Funding Plan October 2, 2012 - City Council Work Study Session staff presented to the City Council results from the May 25, 2012 RFQ process, which included:

• statement of Qualifications from Scottsdale Museum of the West, Inc.

• 40,000 square foot museum, including a sculpture garden and existing Laloma Transit Facility

• Estimated $12 million in development costs (capital and tenant improvements)

• Estimated $1.2 million in annual operating costs Site Aerial Council directed staff to:

1. Develop financial plan scenarios for capital and Tl cost estimates 2. Extend the ten-percent (10%) allocation of the city's portion of the Tourism Development Program funds as long-term debt support for a western museum project until July 31, 2013 3. Begin development of a city design/build solicitation for construction of a western museum, contingent on City Council financial plan approval 4. Initiate the development of an operating agreement with SMoW for the operation of a western museum, contingent on City Council financial plan approval Independent Analysis of Market and Operating Plans

Scottsdale Museum of West Statement of Qualifications

Projected annual attendance Operating costs Earned and received revenue Endowment establishment Staffing levels

ConsultEcon, Inc., independent consulting company that provides economic, feasibility, management and planning services to non profit organizations, public agencies and private agencies, was contracted by the city to evaluate SMoW's statement of qualifications

Review proposed operating plans and market conditions and to provide an independent evaluation of SMoW's market potential Scottsdale City Council Meeting on Scottsdale Museum ofthe West (SMoW)

Presented by: Robert E. Brais, Vice President

ConsultEcon, Inc. lar ConsultEcon and Project Overview

We are economic and management consultants, focused on the cultural facilities, visitor attractions, tourism and community planning. Founded in 1991 and completed over 700 assignments, including many in Arizona and in Scottsdale Retained to review past SMoW market studies and operating plans and to prepare operating scenarios for potential future attendance and operations Reviewed: - Existing data, analyses and plans - Resident and tourist market context - Area cultural attractions and comparable museum experience - Conferred with SMoW leadership and with Scottsdale project managers Prepared: - Attendance scenarios - Operating assumptions - Preliminary project pro formas ConsultEcon, Inc. SMoW Market Overview

SMoW will attract visitors from both resident and tourist markets. Resident market: Phoenix Metropolitan Area - Growing to 4.5 million by 2016 (5.8% increase from 2011) Tourist market: Scottsdale/Paradise Valley - 7.5 million day visitors in 2010 (86.8% of total) - 1.1 million hotel visitors in 2010 (13.2%) - 230,000 visiting friends and relatives estimated to Scottsdale

ConsultEcon, Inc. SMoW Visitation Potential

Preliminary mid-range attendance potential is estimated at 103,000 in a stabilized year of operation - Stable Year is Year 5 Attendance potential range of 87,000 to 118,000 based on quality of operations and market response

SMoW Mid Range Attendance Potential

YEAR lYEAR 2YEAR 3YE/SH:>««LE YE/WAR 6YEAR 7YEAR 8

ConsultEcon, Inc. February 26, 2013 SMoW Visitation Potential

• Seasonal attendance pattern • Mix of resident and tourist visitation

ConsultEcon, Inc. February 26, 2013 SMoW Visitation Potentia

Ticket prices assumed at $11.00 adult and $7.50 youth Estimated 5,000 students receive discounted admission Family memberships priced at $85.00

Estimated 2,060 total memberships Percent to Total SMoW Attendance Estimated 78 facility rentals

Programs 3.0% Students, 5.0%

Free, 3.0%

ConsultEcon, Inc. February 26, 2013 SMoW Operating Expenses and Staffing

Based on the operating plan, total estimated operating expenses in current dollars would grow from $2.30 million to $2.77 million between Year 1 and Year 5 (stable year) Personnel expenses represent Percent to Total Stable Year Expenses largest cost Personnel increase from 22 FTE's in Year 1 to 29.5 FTE's by Year 5 (stable year)

ConsultEcon, Inc. February 26, 2013 SMoW Revenue Potential

A multi-year organization ramp up from initial opening until a stable year of operations in year 5 is assumed based on SMoW's proposed organization development approach. Operational Revenues are strong during the initial attendance surge after opening and stabilize by year 5 In current dollar value, the need for other Non-Operational Revenues would grow from approximately $750,000 in year 1 to $1.26 million in year 5 - other Non-Operational Revenue requirement set at break-even operations

ConsultEcon, Inc. eb ruary 26, 20 SMoW Revenue Potentia $1.51 million in Operational Revenue potential based on the mid-range attendance for a stable year and in current dollar value $1.26 million in other Non-Operational Revenue required for stable year mid-range attendance scenario in current dollar value. Includes City support for several years and ongoing and increasing museum fundraising

SMoW Sources of Revenue

Gross Retail Sales Facility 1^% Operating Rentals Reserves 6% Interest 3% ConsultEcon, Inc. February 26, 2013 SMoW Operating Potentia

During the first few years SMoW is expected to build up to its stabilized attendance level based on word of mouth advertising, staff and volunteer competency growth and reputation. City contribution to non-Operational Revenues is essential to achieve this plan based on project sponsor's estimates of its fund-raising capacity Benchmarking of the market and operating characteristics of eight western history and art museums contributed to the evaluation and to the development ofthe operating plan The overall analysis and experience ofthe benchmark museums indicate that there is a good opportunity for operating success for SMoW Ultimately the quality of the museum, its exhibits, programs, staff, marketing and operations; along with its success in generating community support and contributions will dictate the extent of its success

ConsultEcon, Inc. Museum Management Agreement

The operating agreement serves as the contract between the City of Scottsdale and the operator, Scottsdale Museum ofthe West (SMoW). SMoW (Manager) Responsibilities 1. Participate in museum design and construction. 2. Contract and manage exhibit and graphic consultants to develop western themes. 3. Art Collection: Ownership ofthe Manager's collection to be conveyed to city if SMoW ceases to operate. 4. Naming Rights: Initial name of the museum shall be "Scottsdale's Museum of the West". City has sole and absolute discretion as to name, payments for naming rights, payment of all or a portion of naming rights payment to the City. Museum Management Agreement

5. Management & Operation - Open for 300 days a year minimum - Open during downtown events like Art Walk - Establish business operations and gift shop retails outlet - Comply with federal, state and local tax requirements - Board Membership- City has right to appoint and replace not less than 15% ofthe voting members on Manager's goveming board 6. Term of Agreement: 10 years with three (3) additional ten (10) year extension options. 7. Financial Commitments - Engage in Fundraising to provide new shows - Develop program for five year city matching donation program - Pay all museum staff salaries contractual service and utility bills - Letter of Credit- establish $500,000 within first five years Museum Management Agreement

Annual plan due to City by October 1 each year, to include:

- Exhibits, shows and programming - Attendance and memberships - Finances, expenses and revenues - Art, artifacts, in-kind, and other donations - Volunteers and staffing - Operating tasks and expenses - Program quality, education outreach, civic engagement and financial accountability - Maintenance, repair and other work to the facility - Other matters relevant to this Agreement or the Facility as requested by the City - Manager's mission, vision and goals to provide the City with the Planning, development, production, operations and managerial services required of it under the agreement Museum Management Agreement

Citv of Scottsdale Responsibilities

1. Selection and contract award to Design Build Manager 2. Design and construction ofthe building shell, tenant improvements and Specialty Work 3. Submittal and approval of necessary city planning and Plan Review 4. Resolve ownership of Loloma Transit Center 5. Provide payments up to $400,000 annually to match funds donated to the museum. Funding Plan

Historv of Funding Discussions: Western Museum

• September 20, 2011: - Tourism Development Commission approved the recommendation for a 10% ($600,000/yr) allocation of Tourism Development funds tor long-term debt support.

• October 18, 2011: - Council directed staff to develop a lease for Council approval and - Reserved a ten-percent ($600,000/yr) allocation of the city's portion of the Tourism Development Program funds as long-term debt support

• June 19, 2012: - Tourism Development Commission voted to extend the 10% ($600,000/yr) reserve from July 31, 2012 to December 1, 2012

• On October 2, 2012: - Council extended the 10% ($600,000/yr) reserve until July 31, 2013. Funding Plan

Current Funding Recommendation: Western Museum

Municipal Property Corporation (MPC) bonds issued in FY13/14 to fund estimated $13.6 million museum and cultural plaza development costs, plus $1.0 million as a debt service reserve required by financial policy: - Annual debt service for 20 years estimated at $1.0 million/yr ($900,000 without debt service reserve). - MPC debt service provided by Bed Tax capital funds.

Matching Grant Program to incentivize private donations and insure operating viability: - Up to $400,000 per year for first five years - Dollar match equal to private donations - Funds not required to subsidize operations to be "banked" for future years - Funded by non-capital Bed Tax funds. Funding Plan

Funding Plan Actions: Scottsdale Museum ofthe West

Adopt Ordinance No. 4071 which will waive two financial policies as related to the Scottsdale Museum of the West project: • Waive Financial Policy No. 21A (that limits tourism capital project commitments to $600,000 per project), and • Waive Financial Policy No. 37 (that requires a debt service reserve) • Authorize the commitment of $900,000/yr of Bed Tax capital fund support

Direct staff regarding use of non-capital Bed Tax funds for matching grant support up to $400,000 per year for the first five years. Bed Tax Allocation Budget ($ in millions) Forecast FY 12/13 FY 13/14

Western Museum (Reserve)

TPC Improvements

TNEC Equidome

WestWorid 80 Acres ~ Capital'-'Swmg'' A^iiiinisfralibh'

Tourism Events

General Fund

($13.4 Total Bed Tax) ($14.0 Total Bed Tax) ($1.5 Hotel Lease) ($1.6 Hotel Lease) $6.7 Marketing $7.0 Marketing $8.2 Non-Marketing $8.6 Non-Marketing Tourism Development Commission Economic Development Subcommittee

• On February 19, 2013 the Tourism Development Commission voted in favor ofthe Western Museum and requested capital and matching grant funding.

• Economic Development Subcommittee on February 21, 2013.