HomeMy WebLinkAbout6/6/2018 - STAFF REPORTS - 5.E. ppALM S
� A��Z
� a
u n
' °•«°'`4 ; CITY COUNCIL STAFF REPORT
°gtiFORN�P
DATE: June 6, 2018 NEW BUSINESS
SUBJECT: APPROVE AMENDMENT NO.1 TO THE CONSULTING SERVICES
AGREEMENT FOR ADMINISTRATIVE AND MANAGEMENT SERVICES
OF THE PALM SPRINGS INNOVATION HUB AND ACCELERATOR
CAMPUS BETWEEN THE CITY OF PALM SPRINGS AND THE
COACHELLA VALLEY ECONOMIC PARTNERSHIP; APPROVE
AMENDMENT NO.2 TO THE LEASE AGREEMENT AT 2901 E. ALEJO
ROAD, BETWEEN THE CITY OF PALM SPRINGS AND THE
COACHELLA VALLEY ECONOMIC PARTNERSHIP; AND APPROVE
$125,000 GENERAL MEMBERSHIP FUNDING FOR THE COACHELLA
VALLEY ECONOMIC PARTNERSHIP FOR A FIVE YEAR PERIOD.
FROM: David H. Ready, City Manager
BY: Community & Economic Development
SUMMARY
In March 2018, the Coachella Valley Economic Partnership (CVEP) submitted a
proposal to the City to make various amendments to the Palm Springs Innovation Hub
(PSiHub) Management Agreement, iHub Accelerator Campus Lease, and general
membership fees (ATTACHMENT 1, Proposal). For the past five years, CVEP has
incurred operating losses now totaling $579,000 before depreciation, and $831,687
including depreciation. To provide relief, and to have CVEP continue to operate the
iHub for the City, CVEP is requesting the City Council amend the Consulting Services
Agreement (ATTACHMENT 2, Consulting Services Agreement Amendment) for
continued management of the PSiHub and Palm Springs Accelerator Campus
("Program"); amend the Lease Agreement at 2901 E. Alejo Road, as amended
(ATTACHMENT 3, Proposed Lease Amendment 2), for the PSiHub/Accelerator
Campus to provide CVEP with credit for tenant improvements made to the City owned
facility using non-City resources; and approve annual funding for the Coachella Valley
Economic Partnership general membership services in the amount of $125,000 for a
five-year period. The $125,000 includes the sponsorship of the annual Economic
Summit ($3,000) and business services ($10,000) which were previously paid
separately.
On May 18, 2018, the PSiHub / CVEP Standing Subcommittee (Mayor Moon and
Councilmember Middleton) recommended the proposal be considered by the City
Council for approval.
ITEM NO.
City Council Staff Report
June 6, 2018-- Page 2
CVEP Consulting Services Agreement and Lease
RECOMMENDATION:
1. Approve Amendment No 1 to the Consulting Services Agreement with the Coachella
Valley Economic Partnership.
2. Approve Amendment No 2 to the Lease Agreement at 2901 E. Alejo Road, with the
Coachella Valley Economic Partnership.
3. Approve funding in the amount of $125,000 annual for five years beginning in the
2018/2019 fiscal year.
4. Authorize the City Manager to execute all necessary documents.
STAFF ANALYSIS:
CVEP and the PSiHub Accelerator Campus play an important and unique role in the
City of Palm Springs and Coachella Valley in fostering entrepreneurship and attracting
firms to enhance and diversify the local economy. Diversification of the local economy
helps protect against economic events, such as obsolescence, technological advances,
environmental regulations, and federal government cutbacks that may negatively impact
Palm Springs' key industry sectors.
Key industries bring new money and investment into the City. They drive wealth
creation and generally have a higher value added than the sectors that serve local
markets. They help strengthen an economy by providing a foundation for medium-sized
businesses, such as grocery stores and clothing retailers. In turn, the medium sized
businesses provide support for smaller businesses such as specialty food stores, gas
stations, florists, housecleaning services, etc. Jobs are created at all levels and enable
a certain quality of life for the individuals working in those jobs.
One of the primary benefits of diversification is that more industry sectors contribute to
the support businesses. For example, most every business consumes office supplies,
their employees eat at nearby restaurants, and companies and their employees may
utilize automobile repair shops or take some form of transit to get to and from work.
Should one sector of a diversified economy experience a decline, the impacts on the
office supply stores, restaurants, and automobile repair shops would not be as severe
as in a community where there was only one major industry experiencing a decline
assuming the other industries are still consuming supplies, eating lunches, and utilizing
transportation.
Diversified economies make it easier to create a sustainable cycle of economic activity
where businesses feed off of one another and grow larger as the economy grows. As
more and more businesses open their doors, this synergy leads to the growth of
supporting industries. This also gives companies more opportunities to innovate and
diversify their products and services. With more business-to-business sales the City will
also benefit from increased sales tax revenues.
City Council Staff Report
June 6, 2018-- Page 3
CVEP Consulting Services Agreement and Lease
One quarter of all the jobs in Palm Springs is tied to the Leisure/Hospitality industry
sector (24.5%), and another quarter (23.5%) is tied to the Education/Health industry
sector. Nearly 50% of all jobs are base in two industries. A negative economic event
affecting 10% of the jobs in the Leisure Hospitality sector could result in the loss of 749
jobs, and a similar impact in the Education/Health sector could result in the loss of 707
jobs. This data is based on total employment of 30,095 for Calendar Year 2015.
STEM Related Business Opportunities
Dr. John Husing is a renowned research economist who has specialized in the study of
Southern California's growing economy since 1964. In March of 2014, Dr. Husing
prepared an analysis on the long term economic impact of the PSiHub Strategy on the
Coachella Valley (ATTACHMENT 4). In this report, Dr. Husing identified a number of
opportunities for STEM based industry growth in the region as discussed below.
• The natural environment provides opportunities to develop and manufacture
technologically advanced products utilizing naturally occurring energy such as
wind, solar, geothermal, lithium, and agriculture.
• The healthcare sector is expected to need far more trained workers as well as
systems and technologies to increase the efficiency of its delivery processes to
meet the needs of the Coachella Valley's residences which is estimated to
surpass 500,000 by the year 2020.
• In regards to logistics and goods distribution, the Coachella Valley is strategically
located along the 1-10 corridor along which goods enter and leave Southern
California to and from the east. The Coachella Valley is also connected to the
movement of goods to and from Mexico along SR-86 freeway to the south.
Union Pacific Railroad also crosses the valley, moving east to the rest of the U.S.
and south to the Mexican border. This sector is rapidly changing from labor
intensive to capital intensive methods of handling goods. It offers a clear
opportunity for creative entrepreneurs to help design the tools to foster this
technical change.
• Energy Storage is another opportunity with great potential. California's effort to
have 33% of its power grid come from renewable sources requires systems and
tools to handle major fluctuations in energy availability. Given the fact that
Coachella Valley's environment has placed major wind and solar operations in or
near the valley, the development of energy storage technology is a natural focus
for the PSiHub's entrepreneurial strategy.
• The golf cart manufacturing sector has expanded into solar cart development. A
group of engineers at the PSiHub has already tapped into this opportunity by
City Council Staff Report
June 6, 2018 -- Page 4
CVEP Consulting Services Agreement and Lease
developing solid-state electricity storage devices and integrated them into golf
carts outfitted with a solar cell array allowing all-day, no plug-in riding.
• Another natural focus for the PSiHub are techniques for lowering water
evaporation, reducing manual labor, recycling water and increasing crop yields
have frequently come from the valley. One PSiHub entrepreneur has created a
computer-controlled portable hydroponic growing system whereby an acre's
worth of vegetables can be grown in a small modular unit.
Attracting and establishing new businesses also requires an organization that can
provide guidance to entrepreneurs and businesses as they grow and expand. CVEP
and the PSiHub Accelerator Campus has the knowledge, technical expertise, and
resources to help businesses develop their concepts, attract investors and funding, and
to position the business for success.
In comparison to the Los Angeles Cleantech Incubator (LACI), PSiHub manages to
operate at a significantly lower cost. However, PSiHub has managed to serve more
startup companies than LACI. LACI has served a total of 42 companies, with 32 still
active. PSiHub has served a total of 56 companies with 34 still active. PSiHub's annual
budget is $350,000, LACI's is $3.6 million. PSiHub's facilities cost $1.8 million, LACI's
cost $67 million. LACI has 42 dedicated staff, PSiHub has 2.5. Additional comparisons
are provided in ATTACHMENT 5.
Unfortunately, for the past five years, CVEP has incurred operating losses now totaling
$579,000 before depreciation, and $831,687 including depreciation. Therefore they
have requested amendments to their lease agreement, consulting services agreement,
and the City's general membership services.
Amendment No 2 of the Lease Agreement at 2901 E. Aleio Road (Palm Springs
Accelerator Campus)
In 2012 the PSiHub Program expanded to include the Palm Springs Accelerator
Campus — specifically for advanced PSiHub clients who are ready to conduct research
and development, prototype, manufacture and/or commercialize of their products or
services.
The 3.5 acre site for the Accelerator Campus was formerly occupied by the Palm
Springs Unified School District on a long term lease until they vacated in 2010. The
vacant site is owned by the City (airport) and contains approximately 41,707 square feet
of permanent and semi-portable structures. It has seven buildings and is within a
Foreign Trade Zone next to Palm Springs International Airport.
CVEP took on the responsibility of expanded management services to the Accelerator
Campus and entered into a master lease agreement with the City in 2013
(ATTACHMENT 6). The Lease Agreement is for a 10 year term, expiring in 2023, with
City Council Staff Report
June 6, 2018— Page 5
CVEP Consulting Services Agreement and Lease
two five year options. The rental rate was based on spaces occupied for the first year,
and rent due on all spaces occupied or not after October 1, 2014. Under the Lease,
CVEP is also responsible for maintenance and repairs of the site.
In 2015, CVEP requested an Amendment to the Lease, which allowed rent to be
deferred for spaces that were not occupied due to the lack of funding to conduct
extensive repairs that would permit occupancy. Amendment No 1 to the Lease
Agreement was approved and allowed CVEP to defer rent on unoccupied spaces at the
campus until May 30, 2018. To date, CVEP has a deferred rent balance of
approximately $100,000 that accrued as a result of a modification to the original lease
on the Accelerator Campus.
However, despite the favorable lease terms provided by the City, CVEP is unable to
generate sufficient revenue (rental income) to pay rent to the City for its obligations
under the Lease, perform property maintenance, and construct tenant improvements.
As the Campus' largest buildings (12,000 square feet and 9,600 square feet) were in
need of repairs (HVAC system, and roof repairs) CVEP was unable to put them into use
and collect rental payments.
The Lease requires that CVEP begin paying the full rent payments on all spaces, and
the deferred rent payments starting June 1, 2018. If no relief is provided through the
proposed amendment CVEP will be required to pay an additional $1,825 monthly
($21,900 annually), in addition to their non-deferred base rent of $5,203 ($62,436
annually), for a total monthly rental payment of $7,028 ($84,336 annually). Without
additional capital to invest in the repairs to the buildings, they will not be able to lease
out those portions of the PSiHub campus in need of repairs.
Therefore, CVEP is asking the City to amend the Lease Agreement to allow a rent credit
of a minimum up to $253,370 to offset the deferred rent and reduce future rent
payments. CVEP is also asking the City to assist with future tenant improvements to
the site (such as HVAC and roof repairs) so that all spaces at the Accelerator Campus
may be rented.
CVEP has successfully raised $900,000 from outside sources, some of which has been
expended for capital improvements at the Accelerator Campus. The source of these
funds was $500,000 from the Desert Healthcare District and $400,000 from Wells Fargo
Bank. CVEP has shown that a minimum of $253,370 of the $900,000 program specific
funding was spent on capital improvements at the Accelerator Campus and propose
that CVEP be granted rent credits for all funds expended on capital improvements.
Department of Airports Staff has reviewed these expenditures and agrees the $253,370
are qualified capital expenditures.
City Council Staff Report
June 6, 2018-- Page 6
CVEP Consulting Services Agreement and Lease
Staff proposes the following use of the proposed $253,370 rental credits:
i. On July 1, 2018, a portion of the available Rental Credits shall be utilized to,
satisfy the Rental Payments that were deferred during the period beginning
February 1, 2015, through June 1, 2018, in the amount of$106,959.62.
ii. Commencing on July 1, 2018 to June 30, 2020, a portion of the available
Rental Credits in the amount of $62,400 ($5,200 monthly) shall be used to
satisfy the monthly rental payments for Fiscal Years 2019 and 2020.
iii. Commencing on July 1, 2020 to June 30, 2021, a portion of the available
Rental Credits in the amount of $21,600 ($1,800) shall be used to satisfy a
portion of the rental payments for Fiscal Year 2021. Lessee shall be
responsible for paying $40,800 ($3,400 monthly) of the rental payment for 12
months.
It should be noted, CVEP proposed to repay the deferred Rental Payments (rents
deferred from February 1, 2015, to June 1, 2018) in the amount of $106,959.62, over a
ten year period beginning in 2023 and ending 2033. This proposal assumed the two
five year options to extend the Agreement would be approved. As shown above, Staff
is recommending the Rental Credits be used to satisfy the deferred Rental Payments
upon execution of the proposed Amendment No 2 to the Lease Agreement at 2901 E.
Alejo Road.
CVEP also proposed and requests that the City of Palm Springs work together with
CVEP to establish a funding mechanism through Measure J or other funding
mechanism to shift the burden of repairs and improvements away from CVEP and to the
City which owns the Accelerator Campus property. Such a funding mechanism would
be utilized to address the broken HVAC systems, energy efficiency upgrades, and other
repairs. CVEP estimates that the Accelerator Campus is in need of $40,000 - $50,000
to repair a leaking roof and to replace a HVAC system in the Health and Medical
Innovation Center. It could also be used to provide future upgrades to bandwidth as it
becomes available from the local internet service providers.
Consulting Services Agreement for Administrative and Management Services of
the Palm Springs iHub and Accelerator Campus Programs
The City of Palm Springs is the State designated coordinator of the iHub Initiative, and
the Coachella Valley Economic Partnership is the non-profit host managing the PSiHub
Program. The City's Innovation Hub designation requires that the PSiHub Program be
managed under a non-profit (501(c) (3) status.
On October 4, 2013 AB 250 was approved, officially codifying the California Innovation
Hub (iHub) Program within the Governor's Office of Business and Economic
Development (GO-Biz). The City executed the Memorandum of Understanding (MOU)
City Council Staff Report
June 6, 2018-- Page 7
CVEP Consulting Services Agreement and Lease
that outlines requirements that the designated iHubs agree to follow the requirements of
the State, which includes:
1. Coordinate and participate in five (5) keynote speaker series seminars annually
with national and regional partners focused on supporting start-up and emerging
technology entrepreneurs that provide advice on starting a business including
financing, marketing and planning. Such participation will be in the form of
attendance, financial or in-kind sponsorship, participation as a panelist or
moderator during the event;
2. Coordinate and support through direct or indirect funding an annual innovation
event in partnership with GO-Biz that demonstrates research and partnerships
that have evolved out of local universities or research laboratories through the
Innovation Hub;
3. Through partner networks provide workshops, seminars, and conferences that
assist 20 startup and emerging companies annually;
4. Provide up to five (5) letters of support and commitments to partner network that
support further grant applications for programs focused on iHub activities
annually; and,
5. Provide in person and or electronic introductions to local municipalities for start-
up and emerging technology companies to receive business assistance in the
form of streamlining permitting process, access to innovation hub partner
networks, and business assistance where appropriate.
CVEP provides quarterly reports on the status of these requirements. Highlights of their
accomplishments include:
• 64 new companies admitted to the PSiHub
• 22 patents awarded to PSiHub businesses
• 176 jobs created
• $22 million of equity capital invested in PSiHub companies
• Two clients received silver and bronze awards from the World's Best
Technologies conference
• One client received the Emerging Entrepreneur award from the Inland Empire
Spirit of the Entrepreneur
• Joe Wallace, representing PSiHub, received the Supporter of Entrepreneurship
Award from the Inland Empire Spirit of the Entrepreneur, and the Model
Community Achievement Award from South Coast Air Quality Management
District.
City Council Staff Report
June 6, 2018— Page 8
CVEP Consulting Services Agreement and Lease
The Consulting Services Agreement for Administrative and Management Services
(ATTACHMENT 7) expires June 30, 2018. The CVEP is asking the City to Amend the
Agreement to extend the term for five (5) years and increase the annual fee to
$200,000. The current annual fee for services is $196,500, paid quarterly. CVEP is
also asking that a CPI increase apply during years two thru five.
The Coachella Valley Economic Partnership - General Membership
The Coachella Valley Economic Partnership, a membership based organization, was
first established is the early 1990's to foster industrial development throughout the
desert region. When the recession hit in 2007/08 the Board of the CVEP formed a
coalition of business leaders throughout the valley to create the Coachella Valley
Economic Blueprint which established the following goals:
• Regionalism
• Economic Diversification
• Workforce Excellence
• Quality of Place
In advancing the goals of the Blueprint, CVEP first leased the 3111 E. Tahquitz Canyon
building from the city to establish their headquarters. They also lobbied the nine cities
and the county to support an increased membership fee of $100,000 annually for five
years. The City of Palm Springs supported the request in the 2010/11 budget and has
continued funding the membership fee at the same level.
CVEP is asking the City to increase the annual membership investment to $125,000,
which includes the annual Economic Summit (held at the Convention Center) and
Business Consulting Services that do not fall under the iHub/Accelerator Program. The
two programs were paid separately, $3,000 and $10,000 respectively, and would now
be included in one annual payment.
CVEP is arguably the only organization in the Coachella Valley whose primary objective
is implementation of the original Blueprint Goals.
Having already established the infrastructure for attracting, growing and expanding
businesses, CVEP has done a great deal towards improving the health of the economy
and creating new business opportunities. By providing CVEP with the relief they are
requesting, and the increase in financial support, the City will enable CVEP to continue
working towards these goals.
BUSINESS PRINCIPAL DISCLOSURE:
According to the California Secretary of State website, Coachella Valley Economic
Partnership is an active Domestic Non-profit California Corporation.
City Council Staff Report
June 6, 2018 -- Page 9
CVEP Consulting Services Agreement and Lease
According to information provided on the Coachella Valley Economic Partnership's
website, its Board of Directors includes: Tom Davis Agua Caliente Band of Cahuilla
Indians; Mark Messenger Bank of America; Jill Tremblay Best, Best & Krieger; Patrick
Sinclair California Alliance for Renewable Energy Solutions; Sandra Cuellar Charter
Communications; Shelley Kaplan City of Cathedral City; Yvonne Parks City of Desert
Hot Springs; Richard Balocco City of Indian Wells; Troy Strange City of Indio; Robert
Radi City of La Quinta; Robert Moon City of Palm Springs; Richard Kite City of Rancho
Mirage; Amy Grubb Cloud Consulting Partners; Richard Ramhoff Desert Regional
Medical Center; Bob Wright East Valley Coalition; Ken Wheat Eisenhower Medical
Center; Crosby Smith Frontier Communications; Jason Schneider Greater Coachella
Valley Chamber of Commerce; Scott White Greater Palm Springs CVB; Mike Stutz Gulf-
California Broadcast Company/KESQ; Rosa Maria Gonzales Imperial Irrigation District;
Richard Oliphant Oliphant Enterprises; Lee Osborne Osborne Rincon; Erin Klink Pacific
Western Bank; Julie Rogers Palm Springs Life; Bruce Gillen Rabobank; Joaquin Tijerina
Riverside County EDA; Deborah McGarrey Southern California Gas Company; Mark
Winkler The Desert Sun; Wes Ahlgren The Hemingway Group; Tamara Hedges
University of California, Riverside; Randy Florence US Bank; David Jager Wells Fargo
Bank; Coachella Valley Unified School District; Brian Murray (Honorary) Palm Springs
Unified School District; Sharon Brown-Welty (Honorary) CSUSB Palm Desert Campus;
Joel Kinnamon (Honorary) College of the Desert; Scott Bailey (Honorary) Desert Sands
Unified School District; James Spee (Honorary) University of Redlands; and, Kenneth
Young (Honorary) Riverside County Office of Education.
FISCAL IMPACT:
Consulting Services Agreement for Administrative and Management Services of
the Palm Springs iHub and Accelerator Campus Programs.
The budget increase difference is $3,500 and is part of the Economic Development
Program's General Fund budget request for the 2018/2019 fiscal year. The subsequent
year's funding will be requested during that year's budget cycle. If the City Council does
not approve the subsequent year funding, the Agreement will be terminated in
accordance with Section 4.5 of the Agreement.
Amendment No 2 of the Lease Agreement at 2901 E. Alejo Road (Palm Springs
Accelerator Campus)
The Airport Staff has reviewed the proposal to utilize rent credits. They have also
reviewed the past capital expenditures at the Accelerator Campus which total $253,370
and agree these expenditures would qualify as capital improvements. As Revenue
generated from the Accelerator Campus goes to the Airport Fund, the Airport Director
indicated that based on PSP past lease management and airport industry practices, the
proposed credit plan is consistent with FAA airport market value lease arrangements.
This conclusion is based upon CVEP providing expenditures for long-term facility
improvements, which generate added tangible value to the airport facility.
City Council Staff Report
June 6, 2018— Page 10
CVEP Consulting Services Agreement and Lease
The Coachella Valley Economic Partnership - General Membership
The membership fee increase includes the Economic Summit and Business Consulting
Services, which represents an overall increase of $12,000, and is part of the Economic
Development Program General Fund budget for the 2018/2019 fiscal year.
SUBMITTED:
Jay ira , Director David H. Ready,
Comt�nu ity & Economic Development City Manager
Attachments:
1. CVEP / PSiHub Proposal
2. Proposed Consulting Services Agreement Amendment 1
3. Proposed Lease Amendment 2 - 2901 E. Alejo Road
4. Dr. Husing report - Long Term Economic Impact of the PSiHub Strategy on the
Coachella Valley
5. Comparison of Los Angeles Cleantech Incubator Compared with Palm Springs
Innovation Hub
6. 2901 E. Alejo Road Lease and Amendment 1
7. Consulting Services Agreement - CVEP
ATTACHMENT 1
CVEP / PSiHub Proposal
Proposal for a Sustainable Palm Springs iHub Program
1. Executive Summary
In 2011,the Palm Springs Nub (PSiHub)was founded to foster entrepreneurship and attract
firms to enhance and diversify the economy of the 440,000 person Coachella Valley.Today (May
2018)there have been 62 entrepreneurs accepted into the program and 36 are still being
mentored. The 43,000 square foot Accelerator Campus in the Foreign Trade Zone on the
grounds of the Palm Springs International Airport is home to eleven (11)companies,six have
offices at the Rabobank Business Center and 19 participate in the virtual program.
The PSiHub program was originated and is currently owned by the City of Palm Springs and
managed by the Coachella Valley Economic Partnership(CVEP) under contract to the City.The
original concept for the PSiHub did not include an Accelerator Campus. The Accelerator Campus
has however proved invaluable in attracting businesses to Palm Springs from other locations and
mitigating the risk of losing our best companies to other regions by providing a place for them to
establish a workforce and their supply chains locally.
The growth of the PSiHub program came at a time when CVEP has experienced financial stresses
but the incubation process has been able to be continued through maintaining an exemplary
combination of professional staff and consultants who are ideal for the PSiHub program.
The purpose of this proposal is for CVEP to formally submit a request that will make the program
sustainable by extending the management agreement for a five year period that coincides with
the renewal term of the lease on the Accelerator Campus and to modify the lease agreement
while shifting the burden of any improvements or repairs at the Accelerator Campus away from
CVEP and onto the owners of the campus.
2. Proposal for Sustainable Support
a. Annual Recurring Support for CVEP
CVEP has been supported for general operating expenses by the City of Palm Springs by
an annual grant of$100,000 for the last seven years. Additionally the City has provided
CVEP with $10,000 for business support outside of the PSiHub and a$3,000 sponsorship
of the annual Economic Summit that is held at the Palm Springs Convention Center.
CVEP formally proposes that the annual support agreement be increased from a total of
$113,000 to$125,000 beginning July 1, 2018 with annual increases that reflect the cost
of living increase calculated by the CPI-U percentage increase from the previous year.
CVEP furthermore proposes that the City of Palm Springs agrees to provide this support
for a period of 5 years.
Proposal to the City of Palm Springs
Page 1
b. Five(5) Year Management Agreement for Palm Springs iHub
CVEP respectfully requests that the City of Palm Springs renew the management
agreement for the Palm Springs Nub with CVEP at an annual support rate of$200,000
(previously$196,500)to be paid quarterly within 15 days of receipt of the quarterly
reports submitted to the City of Palm Springs. This agreement would begin on July 1,
2018 and end on June 30,2023 with the annual rate increased by the CPI-U percentage
increase from the previous year.
c. Credit for Completed Capital Improvements
CVEP has successfully raised$900,000 from outside sources that has been expended for
both capital improvements at the Accelerator Campus and for general operations of the
PS Nub. The source of these funds was$500,000 from the Desert Healthcare District
and $400,000from Wells Fargo Bank.
CVEP has shown that a minimum of$277,623 (report and receipts in appendix) of the
$900,000 program specific funding was spent on capital improvements at the
Accelerator Campus and propose that CVEP be granted rent credits for all funds
expended on capital improvements. CVEP continues to examine old records for
substantiation of any additional dollars that have been spent on capital improvements
at the Accelerator Campus and will report them to the City of Palm Springs as they are
discovered.
d. Use of Credits and Satisfaction of Deferred Rent
CVEP has a deferred rent balance of approximately$100,000 that accrued as a result of
a modification to the original lease on the Accelerator Campus. For purposes of this
proposed application of and credits that are approved by the Common Council of the
City of Palm Springs it is assumed that the credit granted is $277,623 and the deferred
rent is$100,000. It is recognized that either number may be adjusted by later discovery
or agreement between CVEP and the City of Palm Springs to modify these values.
CVEP proposes the following application of the$277,623 rent credits:
i. In Fiscal Years 2018-2019, 2019-2020,and 2020-2021 CVEP proposes to
use approximately$62,400 each year to satisfy the full rent and pay
zero dollars to the City of Palm Springs. This would leave credits in the
amount of$90,423.
ii. In Fiscal Year 2021-2022 and 2022-2023 CVEP proposes to pay the City
of Palm Springs $1,432 per month ($34,377)and use$90,423 of the
credits. This would leave no credits unless other credits are earned.
Proposal to the City of Palm Springs
Page 2
iii. For all fiscal years from 2023 to 2033 (10 years)CVEP will pay the City of
Palm Springs the lease rate plus$833 per month. The$833 per month
over a period of 10 years will satisfy the$100,000 deferred rent that is
currently owed.
e. Assumption of Repairs and Improvements
CVEP proposes and requests that the City of Palm Springs work together with CVEP to
establish a funding mechanism through Measure J or other funding mechanism to shift
the burden of repairs and improvements away from CVEP and to the owners of the
Accelerator Campus. This would not include expenses for utilities,garbage removal,
landscape maintenance,or other routine operating costs.
This would include repairs that are needed to keep the Accelerator Campus usable such
as broken HVAC systems, energy efficiency upgrades, repair of damages due to
inclimate weather such as flooding,wind damage, or earthquakes.These kinds of
repairs have been a serious financial burden on CVEP and there are some$40,000-
$50,000 in current needs ranging from a leaking roof to a non-repairable HVAC system
in the Health and Medical Innovation Center.
This would also include any future upgrades to bandwidth as it becomes available from
the local ISP (internet service providers).
CVEP would be pleased to provide advisory and management services in the execution
of any repairs or improvements needed to keep the Accelerator Campus in good repair.
f. Discovery Period for Capital Expenditures
CVEP requests a period of one year from the time a new agreement is signed to submit
past capital expenditures for rent credits. We have a small staff and the effort of pulling
this together quickly may have missed some expenditures.
Proposal to the City of Palm Springs
Page 3
3. Performance to Date
a. Start-up Businesses:The beginning metric that was set for the Palm Springs iHub back in
2011 was to attract 10 businesses per year for the first 5 years. That goal was achieved
and today there have been a total of 64 new companies admitted to the Palm Springs
iHub.Thirty eight of these businesses are still in the program with 20 of those actively
engaging CVEP on at least a weekly basis for business advice. The remainder are virtual
or pursuing their business ideas with less engagement with CVEP.
b. Patents,Palm Springs iHub companies have been issued 22 patents to date. The
particular group of entrepreneurs who are in the Palm Springs iHub have been issued
more than 50 patents during their careers.
c. Outside Capital:The amount of equity capital that has been attracted by Palm Spring
iHub companies now exceeds $22 million. Excluding investments by the entrepreneurs
themselves less than$1 million of that total has been raised locally.
d. Jobs:Businesses that have been admitted to the Palm Springs iHub have created 176
jobs as of March 31, 2018.This data is taken by talking with them.
4. Economic Impact: Please see appendix for study by Dr.John Husing.
S. Partnerships
a. College of the Desert
b. CSUSB-Palm Desert Campus
c. National Renewable Energy Lab(NREL)
d. Wells Fargo Bank IN2 Renewable Energy Incubation Program
6. CVEP Offerings
a. Palm Springs iHub/Accelerator Campus
The Palm Springs iHub offers incubation to businesses admitted on an individual basis.
CVEP assesses the potential for success of each applicant and accepts businesses based
on the strength of the idea,the feasibility for commercialization, and the potential for
each applicant to have a positive impact on greater Palm Springs by growing a company
that creates wealth and employment opportunities while diversifying the local economy
into business sectors that are not seasonal and pay living wages.
b. Business Support
CVEP operates at business support services group that offers seminars and classes on
subjects that enhance early stage businesses potential for success. Seminar topics
include financial literacy, digital literacy,survival in a cyclical economy,and operating a
Proposal to the City of Palm Springs
Page 4
sustainable business model. This division also offers one on one counseling sessions
with local business owners who are experiencing growing pains or acknowledge a need
for change.
CVEP Business Support works with micro-lenders such as Accion that has an office in the
CVEP headquarters, mid-level lenders like Lendistry, and sometimes commercial banks
to help early stage entrepreneurs access capital for the betterment of their businesses.
c. Geographic Information Systems
i. ONGOING
a. Provide Demographic reports for Economic Development Page
on website- http://www.ci.palm-
springs.ca.us/home/showdocument?id=57949
b. Provide data for rental cost and median home value history
c. Create custom maps for reports and council meeting
ii. Create custom maps for meetings, reports, etc.
iii. Create Story Maps for city initiatives, e.g., Current and future
development projects, Example:
http://missioncity.maps.arcgis.com/apps/MapTour/index.html?appid=5
afd bed 13fad458cb6288c46a0bad060#
iv. Create interactive maps for city initiatives, e.g. current maintenance
projects. Example: http://www.apexnc.org/1206/Street-Maintenance-
Map
V. Create and maintain a city map portal with custom content maps for the
city. Example:
http://city.milwaukee.gov/mapmilwaukee#.WvNtXYgvvUk
vi. Create interactive public input maps where citizens can note areas that
need repair, etc. Example: http://www.wpbmobility.com/map/#/
vii. Create interactive maps to be used real-time to look at development
alternatives and model their impacts
viii. Create a geo-data portal for the public, Example:
https://www.esri.com/arcgis/products/arcgis-hub
ix. Support planning staff with custom maps and analysis, combining layers
of data such as land-use, zoning, permitting, parks, etc.
Proposal to the City of Palm Springs
Page 5
d. Visioning and Connecting the Dots
For the first time at the 2017 Economic Summit,CVEP made a presentation on the
announced Amazon Headquarters and profiled the prospects that greater Palm Springs
had for consideration as a site. Among many other things greater Palm Springs was
lacking in sufficient bandwidth,transportation corridors,flight service,STEM degrees at
a local university, and continuous cellular service. CVEP furthermore produced a video
titled "Coachella Valley 2050"showing things that could be if the challenges of today are
met with actions that mitigate these shortcomings. This year we are planning an
enhanced video with other possibilities.
During 2018, CVEP through an Nub company secured the MachineQ platform for
machine to machine communication in Desert Hot Springs. There was no local
investment required. This platform will be rolled out across greater Palm Springs
making development of products that address Smart City initiatives and the Internet of
Things (IOT) possible where they were not before.
Our next push will be into the space known as 5G which is the mobile communications
device platform of the future. Like bandwidth,attracting competitive 5G providers will
be critical to the viability of greater Palm Springs as a burgeoning technology hub.
e. Business Attraction
Greater Palm Springs is well poised to launch a business and personal attraction effort
that targets companies and entrepreneurs from the high cost coastal regions to move
here to start or grow their businesses. We have partnerships with the greater Palm
Springs Convention and Visitors Bureau and Palm Springs Life Magazine that will
mitigate the high cost of running a traditional business attraction program. It is not
unusual for a business attraction program to spend close to a million dollars a year in
pursuit of relocating businesses. CVEP's entrepreneurial partnerships will enable us to
make these efforts with a fraction of that.
f. Annual Economic Summit
CVEP produces the annual Economic Summit that brings a recognized economist to
greater Palm Springs to provide a snapshot of the local, regional, and national
economies. The Summit also profiles efforts in education, infrastructure, and the path
to a brighter future. During the last 3 years the CVEP Economic Summit spent
approximately$100,000 per year and brought 700 attendees to the event held at the
Palm Springs Convention Center.
Proposal to the City of Palm Springs
Page 6
7. Appendices
a. Palm Springs iHub Roster(End of Q12018)
Energy(Renewables/Management/Conservation)
• Desert GeoExchange: Parent company Geothermal Resource Group provides drilling services.
Desert GeoExchange is evaluating its entrance into geothermal heating/cooling systems.
• EV Enterprises: Producer of lithium-ion battery components, microelectronics and other related
products for electric vehicle applications and more.
*Located at Palm Springs Accelerator Campus
• Heppolt., Heppolt has created a new wind turbine. The design allows for installation &
maintenance to be carried out at ground level as opposed to current vertical turbines. HWE is
receiving support from Los Alamos National Lab.
• Indy Power Systems: Offers a patented energy blending technology to enable customers to
minimize their load charges by storing energy during periods of low demand for use during peak
demand times.
• Sactec Solar: A designer and manufacturer of all-in-one alternative energy solution systems.
These units can be deployed in regions or situations where power is not easily accessible.
*Located at Palm Springs Accelerator Campus
• SECOSYS:Their platform seamlessly integrates into existing water meters to manage, control &
conserve water in real-time for water districts, property managers and consumers.
*Located at Palm Springs Accelerator Campus
• Solaris Power Cells:Producer of super capacitor, solid-state cells that have the potential to store
energy with rapid charging rates.
*Located at Palm Springs Accelerator Campus
• SolAqua: China-based manufacturer of solar/solar thermal components looking to establish a
U.S.-based manufacturing hub. *Located at Palm Springs Accelerator Campus
• Swiss Hytech:Swiss-based business engaged in hybrid LeMans racing.Their technology uses a
flywheel to store energy as opposed to other storage systems such as battery systems.
• Vestoxx: German-based startup developing insulating glass units for applications in intelligent
and dynamic windows and glass building facades. Their propriety glass coating technology
increases thermal insulation efficiency.
Proposal to the City of Palm Springs
Page 7
Healthcare/Medical Innovation
• ButterFLi Inc.:ButterFLi has created a local infrastructure for on-demand assisted transportation
for seniors and those with disabilities, such as those who are wheelchair-bound. ButterFLi is like
UBER but for non-emergency medical transportation for seniors and those with disabilities.
• The Connected Grip: The Connected Grip executive team includes a former member of RIM's
(Research In Motion) Blackberry team. They are developing new products in the exercise
machine category that incorporate new technologies such as predictive modelling and
customized Uls.
• Double Lock Systems:Elizabeth Wong is a local CRNA who was recently granted a U.S. patent for
a new sterile IV port and syringe system. She is currently working on prototype variations of this
system.
• GattaCo: Developing products that replace the need for centrifuges and allows for extraction of
plasma from whole blood in half the time of current means.
*Located at Health& Medical Innovation Center
• Incontinence Technologies: The Fanny Wrapper is an adult diaper system with an integrated
sensor unit used to aid caretakers of incontinent adults.
• Pacific Coast Innovations: Designer of a proprietary data compression algorithm that has many
different industry applications. Their first application will be in the manufacturing of medical
devices.
• Pet Projx LLC. Pet Projx is introducing a new hand sanitizer/disinfectant that will focus on the
social acceptance, appeal and form factor that currently hinders this category. Pet Projx also has
ancillary products to introduce down the road that would expand into the beauty and cosmetics
category.
• Priatas: A medical device company focused on intelligent design of medical and lab ware
disposables throughout the entire life cycle of the product. By using less material and
modulating instruments,they hope to decrease medical waste.
• PureOzone 360: Currently researching a new type of disinfectant that would use proprietary
technology for end-consumer sales.
• Restroom Aid.A proprietary system designed to give independence to handicapped individuals
who otherwise need assistance using the restroom.
• Shannon Stevens:Shannon Stevens is a local nurse who has developed a medical-product to be
used in operating room environments for the irrigation of limbs or other body parts subjected to
trauma that need to be cleaned and treated.
• TransMedimaging: Operates in the electronic health record industry. Their propriety service
eliminates waste in medical imaging by facilitation of cloud based data, and hi-res medical
images storage.
Proposal to the City of Palm Springs
Page 8
• CA/A (Care Always in All-Ways): A universal patient portal that gives patients the ability to
control and engage with their and their family's healthcare across the entire care continuum by
connecting he portal to all existing EHR (Electronic Medical Record) systems using block chain
technology as a ledger.
Software—Primary(Education, Lifestyle, Marketing,Social Media)
• Pocial:A new, creative social network designed to connect like-minded individuals based
around polling in an effort to foster and encourage debate, create a collective voice and
quantify opinions.
• PS Talent:Developer of virtual entertainment products on the Sony PlayStation platform
• SportoApp: Propriety mobile application platform for connecting artists with art collectors
worldwide.
• Spectrum Media:Spectrum is a cutting-edge, multi-media company leading the way in the
production,distribution and marketing of audio and video content, across platforms.
*Located at the Palm Springs Accelerator Campus
• Wise Education:Delivers online English as a second language education worldwide using a
unique video conferencing platform.
• Kamran Choudary:Developing a smart phone app to facilitate the presentation and use of retail
coupons using customer designations and recommendations to friends and family for delivery.
Hardware—Primary(Security,Service,Social Media)
• Heightened Security:HS is a local manufacturer of security solutions for residential and
commercial clients.Their product can seamlessly integrate into existing security systems.
• Paul Roide:Paul Roide is a local tradesman. He has developed and patented a new paint gun
sprayer that aims to dramatically increase the efficiency of currently available models.
*Located at the Palm Springs Accelerator Campus
• Post Modern:A developer of integrated hardware/software systems for consumer marketing.
Their system allows marketers to integrate social media into marketing events and tradeshows
using interactive kiosks.
*Located at Palm Springs Accelerator Campus
• Seismic Warning Systems:Developing a regionally-based earthquake warning system with
proprietary detection and customized-alert technology.
Textile&Wearables
• Eco Culture Manufacturing:Textile manufacturing focused on recyclable materials and
integration of sensor technologies for smart devices.
Proposal to the City of Palm Springs
Page 9
• Hip5-sister: Manufacturer of the fashionable,functional and flattering alternative to the fanny
pack that integrates a shield for electromagnetic fields caused by cell phones.
*Located at Palm Springs Accelerator Campus
• Platinum Sun: Designer of rash guards, leggings and neoprene jackets. Currently based in Miami
with intentions of relocating operations to California.
• Advanced American Supply: Garment designer and manufacturer from Canada is moving into
the Palm Springs Accelerator Campus along with sister company Maverick to utilize foreign
trade zone (FTZ)for manufacturing for expo. *Located at Palm Springs Accelerator Campus
b. Coachella Valley Workforce Statistics
The graphic below was developed by CVEP's GIS coordinator to show the average salaries for
each significant employer sector that is operating in the Coachella Valley. Our largest private
sector, Leisure and Hospitality is ironically the lowest paying sector at$26,747 per year. Our
highest paying sector is government that pays an annual wage of$55,814. This highlights the
need for diversification into business sectors that pay higher wages.
Gowmmetrt
Finandal A&MU.s
Education and Health Services
Wholesale Trade
Information
Construction
Manufacturing
Aofasslonal and Business Services
Transportation and Utilities
Retail Trade
Other Services •.-
Natural Re•eurcas and Mining
telsure and Hospitality
S- $10,000 S20,000 $30,000 $40.000 SSO.OW S601000
The following graphic places the five highest paying engineering degrees at the entry level and
as mid-career professionals on the Coachella Valley to illustrate the importance of diversifying
Proposal to the City of Palm Springs
P Y
Page 10
into STEM based business sectors.
GpNmmpnt
Fln.ncl.1 ACUNH • Av..5818r1.f/Intluftry
Eduu[len Antl•Npl[F SpMcp• In th.CV
Whpl.•.N Trptl. St.rtiry S.I.Hi
In•ermKbn • Mltl-C.ro.r S.I.rl.f
Can•tructbn
M.rw/ turine
VrOt.{ilOn.l.ntl 6ualn•••Srvic.a ��
Ch.m1u1 En[In..rinE
Compa.t.r E..el..�.r1�e
E l.cerlc.l F..BI...rin8
Sehw.r.En•In..rine
M�ch.nlyl Eniln..rint
Tr.n•pe %.dn.nd U[llitl—
R.t.11 Tr.tl.
Oth.r B r-f—
N.tur.l R.wurc.•..a Mlnb,
IAIFur..-4 NO•plY.11fy
5- 5)O.O<vl 540.000 560.000 580.000 51OO,[ 5120.0OO
c. Long Term Economic Impact Study
Long Term Economic Impact of the
iHub strategy on the Coachella Valley
Dr.John Husing, PhD Economics
In 2011,the Coachella Valley Hub (CViHub)was founded to foster entrepreneurship and attract firms to
enhance and diversify the economy of the 440,000 person Coachella Valley. By 2013,there were 18
entrepreneurs in the program. These included three service companies at its business center,five in the
completed portion of its 43,000 square foot Accelerator Campus in the Foreign Trade Zone next to Palm
Springs International Airport and 10 virtual firms. Four companies have graduated from the program
and are now competing in the marketplace. The intent is to open a second Hub accelerator campus in
the eastern portion of the Coachella Valley,given the large share of the valley's labor force living there.
The CViHub program is managed by the Coachella Valley Economic Partnership(CVEP).
Given the importance of exposing entrepreneurs to a wide variety of influences, the CViHub's program
has been developed looking at several aspects of the program and the Coachella Valley:
• Economy. For the valley's economy to succeed jobs must be provided for the 48.9% of adults
with high school or less educations and 27.8% with incomes under $25,000. A growth
manufacturing sector can do so. The economy's bifurcated nature is seen in that 24.0% of
adults having BA or high degrees and 18.9% earn over $100,000 providing the area with its
needed professionals and a strong investor class that can help entrepreneurs.
• Natural Environment. California wants 33% of its energy to come from renewables by 2020.
The valley's unique wind, solar and geothermal resources thus opens numerous chances for
Proposal to the City of Palm Springs
Page 11
entrepreneurs to develop and manufacture advanced energy products. This could be enhanced
with lithium now being extracted from nearby Salton Sea geothermal facilities at prices
competitive with imports. It gives local businesses a chance to solve the missing link in
renewable strategies: massive energy storage capabilities.
Meanwhile,the valley's wide swaths of fertile land makes agribusiness a key sector. But,water,
pest and immigrant labor issues have created the need for scientists at the local University of
California testing stations plus local entrepreneurs to address them.
• Entrepreneurs. CViHub already has entrepreneurs at its facilities designing and making
products to deal with wind, solar, geothermal, energy storage and water issues. Solar powered
neighborhood electric vehicles are a target due to the valley's sunny days and huge number of
golfers. Health care efficiency is a focus with the looming increase in local demand since 23%of
residents had no insurance in 2012. So is logistics, as the valley is in the Riverside Metro Area
which dominates the port-related growth of U.S. supply chain activity. The valley also sits
midway on truck routes from L.A. to Mexico.
• CViHub Accelerator Program. The CViHub already provides entrepreneurs with a location for
their companies plus training in setting-up and operating businesses, technical assistance in
product development and supply-chain management and an understanding of pricing and
financing. Altogether, they receive training, counseling, mentoring and monitoring plus
introductions to potential lenders and investors.
Proposal to the City of Palm Springs
Page 12
A second iHub campus is planned in the valley's eastern area where much of its working age
population lives. A$200,000 EDA planning grant for this facility was awarded in 2013 and
nearby local governments will have matched that once one small city makes its pending
decision. This effort includes a partnership with the University of Redlands which will use
Geographic Information Systems tools to identify the most suitable sites. Their effort will
include a GIS-based market analysis to show how future manufacturing and technology growth
trends are likely to affect the valley's various sectors. That data will be shared with local
entrepreneurs and small businesses.
• Financial Support. The CViHub and its new companies must have access to capital and are
fortunate to have it within the Coachella Valley. Every city surrounding the two iHub
accelerator campuses is invested in the effort as is the county plus the Desert Healthcare
District and firms like Rabobank and Wells Fargo.
Entrepreneurs in the CViHub program have access to some of America's wealthiest families.
Already, private agreements in the$250,000 range have already been arranged with wealthy
investors using equity and/or debt instruments. In addition, CViHub is affiliated with the local
Coachella Valley Angel Network and the broader Tech Coast Angels, plus Cannon Bridge Capital
of Vancouver which has funded one graduate and is looking at another. Since many smaller
savers do not meet the stringent qualifications to be legally accredited investors, CViHub has
increased access to local capital via a royalty agreement that can be entered into between the
program's entrepreneurs and individuals for investments in the$7,000 to$35,000 range.
More conventionally, CViHub has created a Small Business Lending Center focused on helping
innovators,entrepreneurs and small business owners gain access to capital. This is run in
tandem with the Coachella Valley Small Business Development Center that is co-located with
the CVEP and CViHub staffs.
• Technical Advice, Mentorinx& Counseling. For entrepreneurs to succeed, they need access to
broad levels of technical help. At the advanced level this is coming, due to the priority given to
the commercializing alternative energy products. CViHub clientele is thus being advised
through its association with the scientists and technicians developing advanced battery
technologies at the Argonne National Labs and Crane Naval Weapons Center. At a more
standard level, the CViHub, SBDC and SCORE programs have been co-located at one location.
There, start-ups are given access to counseling and mentoring on business planning, mastering
financials, creating legal structures, understanding business systems; learning about sales,
marketing and e-commerce, accessing federal contacting and accessing international trade. Cal
State San Bernardino and UC Riverside's nearby Center for Entrepreneurial Management assist
in these efforts. The SCORE program is particularly strong due to the valley's large number of
retired entrepreneurs and executives.
• Export Assistance. As stated, the Coachella Valley is in the Riverside Metro Area that
dominates the port-related growth of U.S. international supply chain activity. In 2013, the
Riverside Metro Area plus the Port of Los Angeles formed the Inland SoCal Link iHub, to
maximize the economic opportunities from stimulating advanced manufacturing innovation as
Proposal to the City of Palm Springs
Page 13
well as the efficiency of movement of goods in the area to maximize the state's exports. As the
CViHub is the most mature iHub in the area, it will play an integral role in these efforts. In
addition, since the valley sits midway on trucking routes carrying goods between L.A.to Mexico,
start-ups wishing to engage in NAFTA trade are well located for doing so.
In addition,the CViHub Accelerator Campus is located in the foreign trade zone including Palm
Springs International Airport which allows its firms to take advantage of all the economic
incentives that entails. Many of the SBDC staff members and SCORE executives working with
the CViHub are well aware of how companies can participate in international trade as well as
benefit from foreign trade zone benefits. The Coachella Valley's start-ups and small businesses
are thus able to benefit from their knowledge.
• Educational initiative. Entrepreneurs in the CViHub program can eventually tap into the young
workers being produced by CVEP's Career Pathways pipeline that starts at the middle school
level. By the time students finish high school,this nationally acclaimed program allows them to
select a career field and enter high school academies providing them with job shadowing,
internships and skills development for their chosen careers. All the local high schools plus
College of Desert are in this program. Scholarships are available for those needing higher
degrees. The obligation of students is to return and counsel those still in the program.
Conversations are underway to expand the program to include the sectors in which CViHub's
clientele are working.
Given the tools and support being made available to the firms chosen to participate in the CViHub effort,
the potential long term impact of the program (20-year)on the Coachella Valley's economy was
estimated using modest assumptions about the program's success:
• 4 companies would annually graduate from the existing Accelerator Campus and 3 companies
from the proposed new eastern campus.
• 15 workers are employed at each firm upon graduating from the program, with a 50% survival
rate after the second year.
• Job growth would be 10% per year for graduating companies while they are still operating, with
expansion stopping after nine years when they reach 35 jobs, with two exceptions: 4 firms
(every 5'one) are moderately more successful and continue growing beyond the 35 job level;4
firms (every 10`n)are more successful and grow 20% per year.
• Jobs pay is$48,900 a year,the 2013 median per Inland Empire manufacturing worker.
• Revenue per employee averages $200,000, the profit-to-revenue ratio is 20% and the price-to-
earnings ratio for valuation is 15 to 1
These assumptions lead to the following results over the total of the twenty year time frame:
0 27,497 person-years of work created
o $1,344,591,935 in total payroll has been injected into the economy
0 81 surviving firms created
o $5,499,353,516 in revenue generated ($5.5 billion) along with $1,099,870,703 in profit
Proposal to the City of Palm Springs
Page 14
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 39,405 total person-years of work created
• $1,933,000,734 total payroll generated
■ $3,372,040,654 in value added increasing the size of the economy
■ $7,132,466,943 in sales activity added by all firms in the Coachella Valley
In year twenty,there would be:
o 81 firms in the Coachella Valley that came from the program
o 3,544 jobs
o $173,791,166 in direct payroll
o $2,158,897 average payroll per firm
o $710,802,436 total revenue
o $8,929,844 in average revenue per firm
o $142,160,487 in total profit
o $2,132,407,308 in company valuation
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 5,112 total person-years of work created
■ $250,801,929 total payroll generated
■ $437,513,698 in value added increasing the size of the economy
■ $925,419,444 in sales activity added by all firms in the Coachella Valley
On average,during each year of the twenty year forecasting period,there would be:
0 47 new companies operating
0 1,375 new jobs
o $67,229,597 in payroll
o $274,967,676 in revenue
o $54,993,535 in profit
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 1,715 total person-years of work created
■ $84,480,426 total payroll generated
■ $147,372,645 in value added increasing the size of the economy
■ $311,719,408 in sales activity added by all firms in the Coachella Valley
The assumptions leading to these results reflect the current graduation rate from the CViHub program
plus employment and payroll levels in the Riverside Metropolitan Area's economy. The 50%success
rate is used since these companies have been given significant advantages before they begin competing.
Proposal to the City of Palm Springs
Page 15
d. Operating Losses CVEP Incurred from PSiHub Operations
CVEP has operated the Palm Springs iHub and Accelerator Campus for nearly 5 years. During
that time period CVEP has incurred an operating loss excluding depreciation that totals
$579,878. When depreciation is included the loss is $831,687.
It is encouraging that CVEP has been able to diminish the losses over time with FY 2017-18
looking substantially better than any previous year. These economies were achieved largely
by recognizing that repairs are not affordable with our current budget. This has caused over
33% of the total square footage of the campus to be in disrepair to the point that it is not
usable. The figures below are from the audited financial records of CVEP through June 30,
2017 and from Osborne-Rincon CPAs for the fiscal year to date.
Palm Springs iHub
Financials
Operating Budget FY 13-14 FY 14-15 FY-15-16 FY 16-17 FYTD 17-18 Totals for Period
City of Palm Springs Contract $ 162,500 $ 196,500 $ 196,500 $ 196,500 $ 196,500 $ 948,500
Rents Collected $ - $ 68,074 $ 55,618 $ 30,611 $ 89,211 $ 243,514
Operating Expenses $ 162,500 $ 484,754 $ 363,493 $ 451,135 $ 310,010 $ 1,771,892
Net from Operations $ - $ (220,180) $ (111,375) $ (224,024) $ (24,299) $ (579,878)
Depreciation $ - $ 34,181 $ 54,343 $ 104,785 $ 58,500 $ 251,809
Operating Revenue less Expenses $ - $ (254,361) $ (165,718) $ (328,809) $ (82,799) $ (831,687)
Capital Improvements
Measure J(City of Palm Springs) $ 500,000 $ 250,000 $ 250,000 $ 1,000,000
Desert Health Care District $ 250,000 $ 125,000 $ 75,000 $ 25,000 $ 25,000 $ 500,000
Wells Fargo Bank $ 100,000 $ 100,000 $ 200,000 $ 400,000
Total Received from Outside $ 350,000 $ 225,000 $ 275,000 $ 25,000 $ 25,000 $ 900,000
e. CVEP Funding Sources for Lost 2 fiscal years
L Public Funding: CVEP receives funding from 8 of the 9 cities in the Coachella
Valley and the Riverside County EDA. During FY 2016-17 public funding
amounted to a total of$491,514 or 42.9%of CVEP's budget. For the first 10
0
months of FY 2017-18 public funds made up$464,000 or 43.9/of CVEP s total
budget. These figures include$196,500 from the City of Palm Springs to
manage the Palm Springs Nub.
Proposal to the City of Palm Springs
Page 16
ii. Private Funding: CVEP receives annual funding for general operations from
private businesses that are interested in stabilizing and diversifying the local
economy. During FY 2016-17 private businesses provided $405,289 or 35.4%of
CVEP's budget. During the first 10 months of FY 2017-18 private businesses
provided$340,000 to CVEP that constitutes 32.1%of the budget.
iii. Self-Generated Revenue:CVEP collects rents and partial reimbursements from
tenants of the Palm Springs Accelerator Campus, provides consulting services,
generates speaking fees,and produces an annual Economic Summit. All of
these activities generate revenue. During FY 2016-17self-generated revenue
was$246,290 or 21.5%of the budget. During the first 10 months of FY 2017-18
self-generated revenue amounts to$246,718 or 23.3%of the budget.
f. Tabulation of Capital Improvements paid for by non-City of Palm Springs support
Proposal to the City of Palm Springs
Page 17
ATTACHMENT 2
Proposed Administrative Services Agreement Amendment 1
Amendment No. 1 to an
Administrative Services Agreement No.
July 1, 2016 to June 30, 2018
This Amendment No. 1 to an Administrative Service Agreement ("Agreement") is made
this day of , 2018 between City of Palm Springs ("City") and the
Coachella Valley Economic Partnership, a California non-profit corporation
("Consultant').
The City and Consultant, hereafter referred to as the "Parties", recognize the following:
RECITALS
WHEREAS, the Consultant maintains a 501(c)(3) designation and is the
managing authority for the Regional Economic Blueprint;
WHEREAS, a principal strategy of the Coachella Valley Economic Partnership
Regional Economic Blueprint calls for creation of a small business support programs,
services and incubator;
WHEREAS, Palm Springs received designation by the State of California as an
Innovation Hub (iHub), known as the Palm Springs Innovation Hub (PSiHub), and under
the iHub guidelines, the State requires that the iHub be managed by, and eventually
turned over to, a 501(c)(3) non-profit organization;
WHEREAS, beginning in July, 2011 and through June 30, 2018, Consultant
assumed operations and management of the PSiHub on behalf of the City of Palm
Springs through an Administrative Service Agreement;
WHEREAS, the PSiHub incubator is co-located with Consultant in a facility
designated as the "Rabobank Regional Business Center" at 3111 East Tahquitz Canyon
Way, Palm Springs; and
WHEREAS, the Parties added the Accelerator Campus at 2901 E. Alejo Road
and Consultant assumed management of the facility for additional incubator services to
accommodate clients in the early manufacturing, prototyping and assembly stages.
NOW THEREFORE, the Parties hereby agree Consultant will continue the
management and administrative services of the PSiHub and Accelerator Campus,
under the auspices of the PSiHub, and desire to amend the Administrative Agreement
as set forth under the following terms and conditions:
1
I. Section 3.1 Compensation of Consultant, shall be amended as follows:
3.1 Compensation of Consultant. Consultant shall be compensated and
reimbursed for services rendered under this Agreement in accordance with the
schedule of fees set forth in Exhibit W. The total amount of Compensation shall not
exceed $200,000.
II. Section 4.4 Term, shall be amended as follows:
4.4 Term Unless earlier terminated in accordance with Section 4.5 of the
Agreement, this Agreement shall continue in full force and effect for a period of seven
(7) years, commencing on July 1, 2016, and ending on June 30, 2023, unless extended
by mutual written agreement of the parties.
III. Attachment "2", Palm Springs Accelerator Campus & Hub Advisory Board, shall
be amended as follows:
Palm Springs Accelerator Campus & Hub Advisory Board The Advisory Board
shall be comprised of the City of Palm Springs two-member Council Subcommittee, City
Manager, and assigned staff and outside industry experts in entrepreneurships and
business management as deemed appropriate.
IV. Attachment "T', Graduation Policies, shall be amended as follows:
Graduation Policies
1. Time Limits — Clients shall not be limited with respect to a term in the incubator.
Each company shall be treated as an individual and continued occupancy will be
based on progress and need of services.
2. Clients who have progressed beyond benefit of services may graduate early.
2
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 to An
Administrative Service Agreement as of the dates stated below.
"CITY"
City of Palm Springs
Date: By:
David H. Ready, Esq., Ph.D.
City Manager
APPROVED AS TO FORM: ATTEST:
By: By:
Edward Kotkin Anthony Mejia
City Attorney City Clerk
"CVEP"
Coachella Valley Economic Partnership
Date: By:
Joe Wallace, CEO
3
Exhibit "A"
SCHEDULE OF COMPENSATION
City shall pay CVEP $200,000 annually, to be billed on a quarterly basis in alignment with the
submission of the Quarterly Report metrics described in Attachment"I".
Compensation shall be paid in advance of the quarter upon receipt of an invoice pursuant to
Section 3 of the Agreement, as follows:
July 1 to September 30 Paid in July
October 1 to December 31 Paid in October
January 1 to March 31 Paid in January
April 1 to June 30 Paid in April
4
ATTACHMENT 3
Proposed Lease Amendment 2
2901 E. Alejo Road
LEASE AGREEMENT NO. 6398
AMENDMENT NO. 2
COACHELLA VALLEY ECONOMIC PARTNERSHIP AT PALM SPRINGS AIRPORT
OPERATING AND LEASE AGREEMENT
AT PALM SPRINGS INTERNATIONAL AIRPORT
This SECOND AMENDMENT to Agreement No. 6398 for certain premises and
improvements located 2901 East Alejo Road at the Palm Springs International Airport
("Agreement") made and entered into on the day of 2018, by and
between the CITY OF PALM SPRINGS ("City"), and the Coachella Valley Economic
Partnership a non-profit corporation ("Lessee").
RECITALS
WHEREAS, the City and Lessee entered into that certain Operating and Lease
Agreement No. 6398 for certain premises and improvements located at 2901 East Alejo
Road at the Palm Springs International Airport ("Property"), as may be duly amended
from time to time;
WHEREAS, Lessee has made capital improvements to the Property in the
amount of in the amount of$253,370.70;
WHEREAS, City agrees to provide Lessee with credit towards rent (Rental
Credits) in an amount equal to the capital improvements made to the Property;
WHEREAS, the parties wish to amend the Agreement pursuant to the terms of
Amendment No. 2:
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, City and Lessee agree to amend the Agreement as
follows:
SECTION 1. The Lease between the Lessor and Lessee, executed on
October 1, 2013, and amended on September 2, 2015, as amended on December 17,
2015, shall be amended as follows:
1.5 Rental Rate.
e. Commencing on July 1, 2018, Lessee shall be responsible for the Rental
Rate for the entire space subject to Lease, occupied or unoccupied based on
original lease rate.
f. Lessee shall be granted Rental Credits in the amount of$253,370.70.
1
g. On July 1, 2018, a portion of the available Rental Credits shall be utilized
to satisfy the Rental Payments that were deferred during the period beginning
February 1, 2015, through June 1, 2018, in the amount of$106,959.62.
g. Commencing on July 1, 2018 to June 30, 2020, a portion of the available
Rental Credits in the amount of $62,400 ($5,200 monthly) shall be used to satisfy
the monthly rental payments for Fiscal Years 2019 and 2020.
h. Commencing on July 1, 2020 to June 30, 2021, a portion of the available
Rental Credits in the amount of $21,600 ($1,800) shall be used to satisfy a
portion of the rental payments for Fiscal Year 2021. Lessee shall be responsible
for paying $40,800 ($3,400 monthly) of the rental payment for 12 months.
i. Commencing on July 1, 2021, Lessee shall be responsible for the full
Rental Rate in the amount of $62,400 ($5,200 monthly) for all the space subject
to the Agreement, occupied or unoccupied.
Section 3.2 Cost of Living Adjustment. This section shall be waived for the
remaining lease term and any option years exercised.
All other terms and conditions contained in the Lease Agreement dated
October 1, 2013 remain unchanged and in full force and effect.
2
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
stated below.
"CITY"
City of Palm Springs
Date: By:
David H. Ready, Esq., Ph.D.
City Manager
APPROVED AS TO FORM: ATTEST
By: By:
Edward Kotkin, Anthony Mejia,
City Attorney City Clerk
APPROVED BY CITY COUNCIL:
Date: Agreement No.
Corporations require two notarized signatures. One signature must be from Chairman of Board,
President, or any Vice President. The second signature must be from the Secretary, Assistant Secretary,
Treasurer, Assistant Treasurer,or Chief Financial Officer.
COMPANY NAME:
Check one Individual Partnership Corporation
Address
By By —
Signature(Notarized) Signature(Notarized)
3
Id ❑❑
iwa.6
wa�
❑❑❑❑❑
loll
�,
ATTACHMENT 4
Dr. Husing Report - Long Term Economic Impact
of the PSiHub Strategy on the Coachella Valley
Long Term Economic Impact of the
iHub Strategy
on the Coachella Valley
h'
�• t R'�:
Final
March 10, 2014
John E. Husing, Ph.D.
Economics & Politics, Inc.
961 Creek View Lane
Redlands, CA 92373
(909)307-9444 Phone
(909)748-0620 FAX
john@johnhusing.com
www.johnhusing.com
Long Term Economic Impact of the
iHub Strategy
on the Coachella Valley
Executive Summary
In 2011, the Coachella Valley iHub (CViHub) was founded to foster entrepreneurship and attract
firms to enhance and diversify the economy of the 440,000 person Coachella Valley. By 2013,
there were 18 entrepreneurs in the program. These included three service companies at its
business center, five in the completed portion of its 43,000 square foot Accelerator Campus in
the Foreign Trade Zone next to Palm Springs International Airport and 10 virtual firms. Four
companies have graduated from the program and are now competing in the marketplace. The
intent is to open a second iHub accelerator campus in the eastern portion of the Coachella
Valley, given the large share of the valley's labor force living there. The CViHub program is
managed by the Coachella Valley Economic Partnership (CVEP).
This report outlines the business strategy for the CViHub program by looking at the economic
environment of the Coachella Valley and the types of businesses likely to succeed within it.
With that background, the details of the existing CViHub Accelerator program and that proposed
for the valley's east area are discussed. Given the extraordinary importance of a multifaceted
approach that must be brought together to ensure the success of this entrepreneurial effort, a
review is taken of the financial support, business mentoring/counseling arrangements,
technological back-up, export assistance and educational initiates being made available to the
firms chosen to participate in the CViHub effort.
To estimate the potential long term (20 year) impact of the CViHub program on the Coachella
Valley's economy, modest assumptions were made about the program's success:
• 4 companies would annually graduate from the existing Accelerator Campus and 3
companies from the proposed new eastern campus.
• 15 workers are employed at each firm upon graduating from the program, with a 50%
survival rate after the second year.
• Job growth would be 10% per year for graduating companies while they are still
operating, with expansion stopping after nine years when they reach 35 jobs, with two
exceptions: 4 firms (every 5`h one) are moderately more successful and continue growing
beyond the 35 job level; 4 firms (every I0`h) are more successful and grow 20%per year.
• Jobs pay is $48,900 a year, the 2013 median per Inland Empire manufacturing worker.
• Revenue per employee averages $200,000, the profit-to-revenue ratio is 20% and the
price-to-earnings ratio for valuation is 15 to 1
These assumptions lead to the following results over the total of the twenty year time frame:
0 27,497 person-years of work created
o $1,344,591,935 in total payroll has been injected into the economy
0 81 surviving firms created
o $5,499,353,516 in revenue generated ($5.5 billion)
Coachella Valley iHub Page i
o $1,099,870,703 in profit has been generated
o Including direct and secondary impacts of new money reaching the valley's economy:
39,405 total person-years of work created
■ $1,933,000,734 total payroll generated
■ $3,372,040,654 in value added increasing the size of the economy
■ $7,132,466,943 in sales activity added by all firms in the Coachella Valley
In year twenty, there would be:
o 81 firms in the Coachella Valley that came from the program
o 3,544 jobs
o $173,791,166 in direct payroll
o $2,158,897 average payroll per firm
o $710,802,436 total revenue
o $8,929,844 in average revenue per firm
o $142,160,487 in total profit
o $2,132,407,308 in company valuation
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 5,112 total person-years of work created
■ $250,801,929 total payroll generated
■ $437,513,698 in value added increasing the size of the economy
■ $925,419,444 in sales activity added by all finns in the Coachella Valley
On average, during each year of the twenty year forecasting period, there would be:
0 47 new companies operating
0 1,375 new jobs
o $67,229,597 in payroll
o $274,967,676 in revenue
o $54,993,535 in profit
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 1,715 total person-years of work created
■ $84,480,426 total payroll generated
■ $147,372,645 in value added increasing the size of the economy
■ $311,719,408 in sales activity added by all firms in the Coachella Valley
The assumptions leading to these results reflect the current graduation rate from the CViHub
program plus employment and payroll levels in the Riverside Metropolitan Area's economy.
The 50% success rate is used since these companies have been given significant advantages
before they begin competing.
Coachella Valley Hub Page H
Economics & Politics, Inc.
961 Creek View Lane
Redlands,CA 92373
(909)307-94"Phone
(909)748-0620 FAX
john@johnhusing.com
www.johnhusing.com
Long Term Economic Impact of the iHub Strategy
on the Coachella Valley
John E. Husing, Ph.D.
In 2011, the Coachella Valley iHub (CViHub) was founded. Its intent is to foster
entrepreneurship and attract firms to enhance and diversify the economy of the 440,000 person
Coachella Valley. By 2013, there were 18 firms in the program including three service
companies at its business center, five in the completed portion of its 43,000 square foot
manufacturing campus and 10 virtual firms. The CViHub Accelerator Campus will ultimately
have the capacity for 10-30 post revenue producers. Today, the program primarily serves the
western portion of the 40-mile long Coachella Valley. Given that a large share of the valley's
labor force lives in its eastern areas, the intent is to open a second iHub campus there. The
CViHub program is being managed by the Coachella Valley Economic Partnership (CVEP)
which is authorized to run an Innovation Hub by the State of California.
To understand the potential long term economic impact of the CViHub program, the discussion
below is organized to:
• Determine the demographic, economic and environmental conditions in Coachella Valley
to show how the CViHub can enhance local prosperity and job growth by expanding the
valley's manufacturing and job base.
• Based on these conditions, recommend the types of CViHub activities that would most
likely succeed in the Coachella Valley and the rationale behind them.
• Give details of the existing CViHub Accelerator Campus and the proposed east Coachella
Valley site that will give infrastructure support needed by manufacturing firms starting in
the valley or migrating to it.
• Discuss the status of financial support for creating or expanding firms in the Coachella
Valley, including the potential for angel investment in projects.
• List the relationships developed by the CViHub that can supply technological research
capabilities to assist firms starting in or relocating to the valley.
• Outline the institutional arrangements in the Coachella Valley that would assist local
manufacturers in exporting products from the area to the world.
• Explain the K-16 and adult technical educational initiatives under way in the Coachella
Valley that would support and be supported by the recommended manufacturing strategy.
Based upon these factors, an analysis has been undertaken of the potential long term economic
impact of the CVi-Hub under realistic assumptions about the growth of companies.
Coachella Valley Nub Page 1
Demos:raphic, Economic & Environmental Conditions
The success of the CViHub rests upon the demographic, economic and environmental forces
impacting the Coachella Valley where it is located
Marginally Educated. First is the nature of much of the Coachella Valley's labor force. In
2012, 48.9% of its adult population aged 25-64 had a high school or less education (Exhibit 1).
There is thus a great need for jobs that can lead to middle class incomes that have minimal
education barriers to entry for this working aged population. Since the median income of the
Riverside Metropolitan Area's manufacturing workers is $48,923 and 67.2% of jobs in this
sector require a high school or less schooling, the Coachella Valley needs it to expand
manufacturing to serve this segment of the population.
SchoolPeople 25-64. Coachella Valley, by
,let
i 4a.uY
42.2% 44.I%
Coar2iella valley Dena$oda pahn Sp my Total
Souroe Americm Corrmrnunity Survey 2ot2
Existing Manufacturing. Currently, the Coachella Valley's manufacturing sector has tended
toward firms working with fabricated metals and industrial machinery. They include 29.3% of
the sector's jobs and work in product areas ranging from tank ammunition to specialty tools and
dies. Food manufacturing represents 17.3% and miscellaneous durable goods 15.5% (Exhibit 2).
Coachella Valley,Exhibit 2.-Shares of Manufacturing Sector 12
Fabricated metals&Industrial Machinery 21,.32YI
Food 17 3%
Misc.Mamltacturing-Durable 15.5%
Lumber and wood products 1 a.5%
Stone,clay and glass e.5%
Printing&publishing 4.2%
Chemicals&Aedproduds 4.0%
Under I% 3.1%
Rubber&nescelaneousplastics 2.1%
Instruments and related 15%
Soave: CA F]W loynke=De Ioymud DepuW=t
MENNEN
Coachella Valley Hub Page 2
Well-Educated Workers. A second education factor of importance is the share of the
Coachella Valley's population with bachelor or higher degrees. They are the likely source of
local technical advisers to companies and the group most likely to engage in entrepreneurship
involving new technologies. They also may have incomes that make them potential investors.
In the 25-64 working age group, this represents 20.4% of the population. However, the roles this
group can play are not as limited to working age people since even those 65 and over can invest
or advise companies. Including them, the share is 24.0% of the valley's adults (Exhibit 3).
Exhibit 3.-Share of Adults Bachelor or Higher Degrees
SchoolCoachella Valley. by 1
■Pen m a o ❑Pexsmv 2s-64
27.2% 26.6%
U-U
24.0%
20.4%
9 4% 7.SY
Coachella Valley Desert Sands Pan*hw Total
Sources American Community Survey,2012
Another important aspect of the Coachella Valley is the bifurcated nature of its income
distribution (Exhibit 4). This is seen in that the two largest groups of households were the
441613 (27.8°%a) that earned under $25,000 in 2012 and 30,289 (24.0%) that earned $100,000 or
more. There is thus the need for jobs to lift families out of poverty and there are people able to
help fund new or expanding businesses. That is especially true of the 13,110 households in the
top group who earned $150,000 or more.
r r
d4 613
r Asa
13 1GE
1 i,1
TU $25,onr $25POO V.4g94 $7 $:IOr1rrm1Aff-
$mT:o Mwmr{n CnxN'v9 III'/SSJYi
Coachella Valley Hub Page 3
The potential investor group is found in cities with particularly high average family incomes
(Exhibit 5): Indian Wells ($207,742). Rancho Mirage ($157,151), La Quinta ($104,254) and
Palm Desert($97,727).
Exhibit 5.-Average Family Income.2012
Coachella Valley's Cities
*207 7.2
Z167 761
$lot f87,727
$7E,000 $65,833
7illillillit $48,238
$43,624
ko m welk Rmdw Mr%o La Ou Pala Desert Pa L 4 mg M10 Catlwdsal City Covkulh Desert Mn Spnw
Smace: Amc Caamnmty 9twy
Natural Environment. There are several unique aspects of the Coachella Valley's natural
environment that provide entrepreneurs with opportunities to develop and manufacture
technologically advanced products involving renewable energy. These are related to California's
commitment to have 33% of the state's energy load coming from renewable sources by 2020.
Here, the CViHub is well located to assist entrepreneurs wishing to work on products and
technologies related to the state's goal:
• Wind. The San Gorgonio Pass area into the
Coachella Valley is currently home to over
4,000 windmills and has proven to be a long
term source of clean, renewable energy. These
facilities provide the valley's entrepreneurs with
the chance to work on methods of increasing the
efficiency and productivity of these facilities.
Given the increasing importance of wind energy
across the U.S. and around the world, the potential market for domestic and export sales
of their products would be immense.
• Solar. The Coachella Valley averages 350
days of sunlight per year. Also, its desert
location makes it the hub with access to the
areas with the maximum solar energy
potential in the U.S. all of which are in the
adjacent deserts (map). Already, solar plants
plus commercial and residential installations
are quite advanced. Entrepreneurs at the
CViHub can tap into this trend.
Coachella Valley Nub Page 4
• Geothermal. Much of California's
geothermal capacity is located directly
south of the Coachella Valley along the
San Andreas Fault which runs east of
n
the valley and south past the Salton Sea
in Imperial County. Ten geothermal
plants are already located in the area pill
with more anticipated. There is
substantial research underway to
improve access and use of this renewal
resource. The CViHub is well situated
to provide entrepreneurs the ability to
commercialize this work.
• Salton Sea Lithium. A great difficulty for California's renewable strategy is the
electrical grid's difficulty with major fluctuations in energy availability. A solution will
require major breakthroughs in energy storage technology. This has been a focus of
CViHub entrepreneurs. Groundbreaking work may now further their efforts as a local
source of the lithium needed for batteries, most of which is currently imported, may soon
be available. A major firm is testing a method of efficiently extracting lithium from the
brine resulting from Salton Sea geothermal operations. If successful, this nearby source
would allow local firms to take advantage of the CViHub's association with the Federal
Lab Consortium and the Department of the Navy to commercialize advanced battery
technologies from the Argonne National Labs and the Crane Naval Weapons Center.
• Asriculture. At the southeastern end of the Coachella Valley, fertile land has made the
area a prime agriculture producer. In 2012, the $543.7 million in farm sales was the
highest in the valley's history (Exhibit 6). Here again, there is the potential for the
valley's entrepreneurs as three significant issues face the agriculture community:
Exhibit 6--Total Agricultural Production (mile
Coachella Valley, 1997-?nl 2
$533.8 $526.3 $543.7
$505.5 $503.8
$d83.2 $486.9 $484.8
$450 7
$d26.6 $425 6 $416.4
$358.2 $405.6
$3317 7 $326.7
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2000 2009 2010 2011 2012
Sm e: F�ide Comkty Agicul=U r issi= 's Ofice
Coachella Valley Hub Page 5
o Headlines about drought in California and the Southwestern U.S. underscore the
need to continually develop methods of conserving and recycling water.
o Until the U.S. immigration policy is straighten out, the agricultural community
faces a lack of labor to harvest crops at the end of the growing season.
o Over time, agricultural crops are threatened with often unexpected pests that
reduce production.
These are issues for which researchers, entrepreneurs and agriculture executives are
continually trying to find solutions. To the extent they lead to the need to produce new
processes, tools or equipment, the Coachella Valley is a logical place for this to occur.
The CViHub benefits from a relationship with the University of California Riverside
(UCR), one of the top research institutions in the nation working on agricultural issues.
Health Care. Another demographic fact of importance to the Coachella Valley's future is that
98,990 local residents or 22.7% had no health insurance in 2012. As the kinks in Obamacare are
eliminated, this represents a significant potential increase in demand for health care services.
Meanwhile, the sector has already needed to grow (Exhibit 7). In part, this is because the
valley's health care system must expand to treat an aging popultion with 19.9% are already 65 or
older(Southern California average: 11.6%). In addition, the wider Riverside Metropolitan Area,
of which the valley is a part, must continue closing the employment gap that finds it has 30%
more P er health care worker than California's average.
people g
Together, these facts mean that the Coachella Valley's health care sector is poised to need far
more trained workers as well as systems and technologies to increase the efficiency of its
delivery processes. Fortunately, the CVEP group that hosts the CViHub has numerous health
care firms on its board and has developed a significant level of cooperation on these issues.
There are thus possibilities for local firms and enterpreneurs to profit by developing systems,
products and training to enhance the sector.
Coachella Valley Exhibit 7.-Health Care Employment
13031
12,120
10,303 10,793
11.028 11,134 11,501
9,746 9,000 9,769
7,939 8,462
8,779 8,620 9,128
8,395
6,823 8 893 7936 7,069 0,588 6.834
1991 1992 1993 1994 1995 1996 1997 1990 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source:CA Dvooymmt Development Dva(m
Coachella Valley Hub Page 6
Logistics. The Coachella Valley sits along the I-10 corridor along which goods enter and leave
Southern California to and from the east. The valley is also connected to the flow of goods to
and from Mexico along the SR-86 freeway to the south. In addition to the trucks using these
routes, Union Pacific Railroad crosses the valley, moving east to the rest of the U.S. and south to
the Mexican border. The Riverside Metropolitan Area which includes the Coachella Valley is
the hub for most of Southern California's new logistics activity, much of which ultimately flows
along these trading routes. Even with the dip from the Great Recession, the metropolitan area
has seen an average of 20.1 million square feet a year of net absorption of industrial space by
companies since 2000 (Exhibit 8). This fast growing sector is rapidly changing from labor
intensive to capital intensive methods of handling goods. It offers an clear opportunity for
creative entrepreneurs to help design the tools to foster this technical change.
Exhibit . -1 Space Not Absorption
Riverside Metro Area. 2000-2013 (million sq.ft-)
46.1 _----
i
88.7
28.5
2i.d 23.6
20.1 20.9 21.7 20.1
19.2
14.6 14.8
7.1 8.7
-4.7
2V00 1uOl 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Ava'ar
Sm e: enibb @ Mlu tc 2011,CH Rilwd ELbs 2012.2013
CViHub Technology & Manufacturing Strategy
Given the demographic, economic and environmental context in which the CViHub is located,
the following business opportunities are open to firms affiliated with the organization:
• Energy Storage. As indicated, California's bid to have 33%of its power grid come from
renewable sources is running into the difficulty because the electrical grid has trouble
handling major fluctuations in energy availability. This is an issue both for the overall
system as well as for homes and businesses that are using renewable sources. Given the
fact that Coachella Valley's environment has placed major wind, solar and geothermal
operations in or near the valley, the development of breakthroughs in energy storage
technology is a natural focus for the CViHub's entrepreneurial strategy. One tenant has
already created a related system to minimize peak electrical load costs by storing energy
during periods of low energy demand for use during periods of peals demand.
• Lithium. The efforts being undertaken to purify lithium from the brine that is a
byproduct of Salton Sea geothermal production re-enforces the priority CViHub's has
Coachella Valley iHub Page 7
given to energy storage technology since lithium is the essential ingredient in efficient
batteries. It means that success in developing better energy storage technologies could
lead to manufacturing being cost effectively located in the Coachella Valley. Beyond
new technologies, a local source of lithium could also mean that the manufacture of
batteries using this element and existing technologies could become an important
Coachella Valley strategy.
• Solar Power. While large arrays have garnered the attention in the solar field, micro
level innovation opens numerous possibilities for innovators located in the sun-drenched
Coachella Valley. Among potential new applications are solar-thin film that could be
made part of building materials, windows with see-through microscopic solar cells that
might be integrated into residential development and micro-inverters that dramatically
reduce the cost of transforming DC solar power to AC residential power. Today, a
CViHub entrepreneur is already manufacturing "sun-tracking" trailers and ISO-
containerized energy power systems that allow solar power deployment to random sites.
• Personal Electric Vehicles. Given its large base of country clubs, golf cart
manufacturing has emerged in the Coachella Valley. This is now morphing into solar
cart development. Thus, a group of engineers at the CViHub has developed solid-state
storage devices and integrated them into golf carts outfitted with a solar cell array
allowing all-day, no plug-in riding. With people already using golf carts along special
lanes in the Coachella Valley, developments like these are seen locally as ultimately
encouraging the production and use of Neighborhood Electric Vehicles.
• Wind. Wind energy costs are severely impacted by the wear and tear on equipment.
Entrepreneurs and engineers have thus been creating systems that produce less friction
between parts and allow for easier maintenance. These have included altering blade
designs that reduce the load on the structures holding them while capturing more energy
with one CViHub affiliated firm doing just that. Another is building wind turbines that
can operate at high or low wind speeds at ground level for easier maintenance. Given the
Coachella Valley's large wind fields and California's commitment to alternative energy,
wind power will continue to be a potential target for local engineers and entrepreneurs.
• Geothermal. Geothermal production has largely been limited to site-specific, capital
intensive investments. However, a spinoff of efforts to increase the efficiency of such
plants has been acceleration in heat pump design. These are systems that reduce energy
costs by using solar power to heat fluids that are stored under the ground and later
circulating through homes or buildings to reduce winter heating costs. In summer, these
systems reverse the process and use the same principals as refrigerators to air condition
facilities. One CViHub affiliate already involved in geothermal production is now
migrating to geothermal heating and cooling systems.
Coachella Valley NO Page 8
• Water. Whether it is water for farming or domestic use, conservation has become a
California watchword. A desert community like the Coachella Valley naturally has
drawn firms wanting to design and test processes for doing so. Thus, one CViHub firm
has created a platform that seamlessly integrates into existing water meters to manage,
control and conserve water in real-time in homes, buildings and fields.
• Agribusiness. Given the long history of farming in the Coachella Valley, it is natural for
innovation in agriculture to be developed in the area. Techniques for lowering water
evaporation, reducing manual labor, recycling water and increasing crop yields have
frequently come from the valley. Most recently, a CViHub entrepreneur has moved
beyond the needs of the valley to create a computer-controlled portable hydroponic
growing system whereby an acre's worth of vegetables can be grown in a small modular
unit that can be deployed into disaster sites or remote locations.
• Agricultural Research. In the Coachella Valley, the UCR maintains a 540-acre
agricultural research station. It provides a field setting for research into new and
improved plant varieties for agricultural and urban landscapes as well as new, more
sustainable agricultural practices to enhance crop productivity. The commercialization of
this research provides increases in agricultural production and adds to both the export of
goods from the valley as well as increased economic output within it. CViHub maintains
a close working relationship with UCR through its Center for Entrepreneurial
Management in Palm Desert. It can therefore provide outlets for firms wishing to take
advantage of this research.
• Health Care Systems. As discussed, the Coachella Valley's health care system
recognizes that its systems must become increasingly efficient if it is to respond to the
growing demand for services in the valley. Two CViHub firms are already working to
design products for this purpose. One is using its proprietary data compression algorithm
to begin creating the next generation of mobile medical monitoring products. Another
has developed a cloud-based high-resolution system for use with medical imaging (e.g.,
MRIs) that provides on-line access to patients and health care professionals.
• Logistics. No part of Southern California's economy is changing faster than the
movement, storage and handling of cargo. The region's logistics group handles 40% of
U.S. containerized imports and 27% of exports that flow through the ports of Los
Angeles and Long Beach. It has also seen a surge in activity as huge e-commerce based
fulfillment centers (e.g., Amazon.com) have begun providing 24-hour delivery service to
customers. As much of this activity is centered in the Riverside Metropolitan Area, it is
the natural area for developing technologies to lower the cost and increase the efficiency
of warehousing systems. The CViHub has affiliated itself with the development of a
joint iHub proposed by the surrounding counties of Riverside and San Bernardino plus
the Port of Los Angeles. It aims to work with industry to provide this capability
including the likelihood of significant local manufacturing opportunities.
Coachella Valley Hub Page 9
• Defense. One advantage for the Coachella Valley is the ability to locate difficult
production operations in remote areas. This is the case with Armtec Defense Products
Co. which produces artillery and tank rounds for the defense department in the Coachella
Valley. That plant's growing business indicates that there is an opportunity for the valley
to specialize in defense functions of this kind. The valley is also close to the country's
two most important desert warfare bases: the U.S. Marine Corps Air Ground Combat
Center at Twentynine Palms and the U.S. Army National Training Center at Fort Irwin.
CViHub Accelerator Campuses
Today, the existing Coachella Valley iHub Accelerator Campus is a cluster of seven buildings on
3.5 acres within a Foreign Trade Zone next to Palm Springs International Airport. The program
is led by Joe Wallace CVEP's Managing Director of the CViHub program. Mr. Wallace was
chosen to lead the program as he has personally started and taken several firms from concept
through to initial public offering and is thus well aware of the characteristics entrepreneurs need
to succeed. Those being invited into the program need sound business ideas and a practical plan
for turning them into products. Importantly, they must also show that their backgrounds are
strong enough to eventually attract the talent needed to assist them as their ideas mature, plus the
ability to ultimately convince angels, venture capitalists or banks to fund them.
For CVEP, the CViHub program is one element of several it is undertaking to help diversify the
Coachella Valley's economy. In this case, the aim is to assist start-ups or small firms wishing to
launch local businesses that can bring innovative products to the valley's market, generate
revenues and create local jobs. In particular, the program is looking to assist entrepreneurs
whose ideas fit with the valley's array of economic advantages. The intent is to give them
training in setting up and operating businesses, provide them with technical assistance in product
development and supply-chain management, and ensure they gain an understanding of pricing
and financing. Introductions to potential funders are part of the program. When successful
companies exit the CViHub program they should have mastered these skills and become ready to
succeed in the commercial world. The normal period for doing so is three years.
As stated in the introduction, the CViHub program plans to open a second campus specializing in
advanced manufacturing in the eastern portion of the Coachella Valley where a large portion of
the valley's working aged population resides. A $200,000 Federal Economic Development
Administration planning grant for this facility was awarded in late 2013. The required matching
funds have been made substantially available from the Coachella Valley Enterprise Zone,
Riverside County and the cities of Indio, Coachella, La Quinta and Palm Desert. The city of
Coachella is considering investing in the project and a decision is imminent.
CVEP in partnership with the University of Redlands will use Geographic Information Systems
(GIS) tools and this funding to identify the most suitable sites for the Coachella Valley's future
incubators and accelerators. The effort will also include a GIS-based market analysis to
determine how future manufacturing and technology growth trends are likely to affect the
valley's various sectors. Stakeholder workshops will be used to discuss the challenges facing the
Coachella Valley Hub Page 10
valley's economic development. This work will help inform local firms about how their
business models should be adapting to these factors.
Financial Support
A great difficulty facing programs like the CViHub and the new companies that they foster is
access to capital. From the standpoint of the program itself, the CViHub has powerful support
within the Coachella Valley. CVEP provides offices and the staffing for the program as part of
its economic development strategy. The cities and county surrounding the first CViHub campus
each invested in the program. In particular, Palm Springs's investment has been worth over $1
million. More recently the cities in the eastern Coachella Valley, where the second CViHub
campus is proposed, have each put money into that effort. In addition, the Desert Healthcare
District has granted $500,000 to the effort for programming, operations and tenant improvements
related to the recruitment and advancement of the health and medical center businesses.
Rabobank has supported the effort by donating the original iHub office building, and Wells
Fargo Bank awarded a $100,000 clean technology grant to the effort.
For the entrepreneurs in the CViHub program, the Coachella Valley provides a unique
opportunity. As one of America's major retirement centers, the valley is the permanent home to
over 5,000 households with incomes in excess of$200,000. There are far more when the very
large number of high income seasonal residents is included. To some extent, this shows up in
census data which found that 21% of the families in Indian Wells and Rancho Mirage were in
this group. CVEP has facilitated private agreements between several CViHub firms and wealthy
people with both equity and debt instruments. The typical deal has been in the $250,000 range.
Some of these people are part of the CV Angel Network through which local entrepreneurs can
present business opportunities to investors predisposed to invest in new companies. This group's
stated interest is in providing early-stage funding to start-up companies primarily based in the
Coachella Valley. Their preference is for early-stage investment in firms seeking capital in the
$100,000 to $500,000 range. CViHub is also affiliated with the large Tech Coast Angels
organization that looks at potential deals throughout Southern California.
Beyond these arrangements, CViHub has a direct connection with Cannon Bridge Capital (CBC)
of Vancouver, Canada. This venture capital firm specializes in early stage technology
companies and takes them public on the pink sheets in reverse mergers into existing public
shells. In October 2013, they took Solaris (SPCL), a CViHub company, public at $0.30 per
share. In March 2014, the stock is at $0.70 with a market cap of$42.1 million. CBC is currently
in discussions with another CViHub company.
In addition, CVEP has created a Small Business Lending Center focused on helping innovators,
entrepreneurs and small business owners gain access to capital. The lending center works in
tandem with the Coachella Valley Small Business Development Center (SBDC) that is co-
located with the CVEP and CViHub staffs. It works with local entrepreneurs, the Small
Business Administration and a network of Coachella Valley, Los Angeles, Orange and San
Diego lenders willing to underwrite and place small business loans for local firms. The fact that
Coachella Valley Hub Page 11
both RaboBank and Wells Fargo have invested in the CViHub's operations creates a natural tie
to those institutions. The most recent financing event held for small firms by the CVEP network
included Citibank, First Bank, Pacific Western Bank, Palm Desert National Bank, RaboBank,
Wells Fargo, Altura Credit Union and Point Loma Credit Union. In 2013, the Coachella Valley
SBDC assisted Coachella Valley companies in securing over $7 million in loans. Beyond this,
the SBDC and the CViHub collaborated with a local business to negotiate a substantially reduced
settlement for a loan that had been secured by capital equipment and inventory. The terms are
confidential but today a company employing roughly 50 people in manufacturing is on a path to
profitability in the East Valley as a result of this settlement.
One issue for potential equity investors is the requirement that they must have an income of
$200,000 or $1 million in net worth exclusive of their residence to become legally accredited
investors. This bars many potential savers from making smaller equity investments to start-up
firms. To overcome this difficulty and increase local access to capital, the CViHub has
developed a royalty agreement that can be entered into between our companies and individuals.
Three such agreements have been executed ranging from between $7,000 and $35,000 with
funds being used for the development of proof of concept models.
Importantly, CViHub's work in helping local entrepreneurs find access to financing was seen
when the 2012 WBT Innovation Marketplace picked three of its companies to be among the 100
presented at its national investor forum. The companies were selected by a national panel of
seed investors, venture capitalists and corporate licensing executives. The competition for
inclusion was fierce as the companies that were selected represented vetted and mentored start-
up companies as well as pure technologies coming from top universities, laboratories, research
institutions, incubators and innovation centers.
Technical Advice
For the CViHub's firms to be successful, they need access to broad levels of technical assistance.
At the most advanced level, this is coming about due to the organization's priority in assisting
local entrepreneurs to commercialize alternative energy products. As discussed the major
eP gY p � Jor
obstacle facing California's desire to increase the use of wind, solar and geothermal energy is the
need to see the commercializing of advanced battery technologies. For this reason, CViHub has
developed associations with the Federal Lab Consortium and the Department of the Navy. The
purpose has been to give local entrepreneurs access to the scientists and technicians developing
advanced battery technologies at the Argonne National Labs and Crane Naval Weapons Center.
At a more basic level, CVEP has the staff of the CViHub and the full operation of the federally
supported Coachella Valley SBDC located at their headquarters building. This has created a
single location where the valley's local small business as well as the CViHubs clientele can
access counseling on such matters as business planning, mastering the financials, creating legal
structures, understanding business systems; learning about sales, marketing and e-commerce,
accessing federal contacting and working in international trade. To assist in this work, the
CViHub and the SBDC are able to draw on the staff members and advanced students at the
Coachella Valley Hub Page 12
desert campuses of California State University San Bernardino, UCR's Center for
Entrepreneurial Management and College of the Desert.
Importantly, with so many retired senior managers now living in the Coachella Valley, the area's
chapter of the Senior Corps of Retired Executives (SCORE) is particularly active. Like the
CViHub and SBDC programs, the operation is run from CVEP's office complex. It has 40
former executives and small business volunteer counselor. Paralleling some of the work of the
SBDC, they offer business monitoring, counseling and low cost workshops on such subjects as
digital marketing, customer acquisition and management, social media, intellectual property,
patents and trademarks, starting a business and financing a business.
Export
An important consideration for companies located in the Coachella Valley is the fact that
Riverside-San Bernardino Metropolitan, where the Coachella Valley is located, is the fastest
growing part of the international logistics supply chain that begins with the POLA and POLB
and runs through the inland counties along Southern California's major transportation arteries.
In 2013, Riverside and San Bernardino counties together with POLA have formed the Inland
SoCal Link iHub, one of the newest iHubs recognized by the State of California. Its goal is to
maximize the economic development opportunities along this transportation corridor by
stimulating advanced manufacturing innovation and opportunities to increasing the efficiency of
movement of goods in the area and maximizing the state's exports. As the CViHub is the most
mature iHub in the area, it will play an integral role in these efforts.
Meanwhile, as discussed, the CViHub Accelerator Campus is already located in the foreign trade
zone including Palm Springs International Airport. This allows firms located at the facility to
take advantage of all the economic incentives that such a designation entails. Many of the SBDC
staff members and SCORE executives working with the CViHub are well aware of how
companies can participate in international trade as well as how firms in a foreign trade zone can
benefit from the incentives it offers. The Coachella Valley's start-ups and small businesses are
thus able to benefit from their knowledge.
Another key advantage for companies located in the Coachella Valley is the fact that the land
route from Mexico through to Riverside, San Bernardino and Los Angeles counties is State
Route 86. It runs from Mexicali across the border to Calexico and from there through Imperial
County and a total of 76 miles to the Coachella Valley. This puts the valley half way between
Los Angeles and the border. The international movement of truck traffic between Southern
California and most of Mexico flows along this route as it is the closest California crossing point
to and from the bulk of that country. Firms at the CViHub wishing to participate in international
trade with Mexico thus have a competitive geographic advantage both in terms of their central
location between the border and Los Angeles as well as their nearness to Mexicali.
Education
Entrepreneurs in the CViHub program can eventually tap into the young workers being produced
by CVEP's Career Pathways pipeline. This program has become one of the most sophisticated
Coachella Valley iHub Page 13
and acknowledged student training efforts in California. It begins at the middle school level with
students participating in tours of various types of businesses. The purpose is to give them a
feeling for what actually takes place on jobs in different growth sectors of the local economy.
Once students enter high school, they are given the opportunity to shadow workers in various
types of jobs in expanding sectors. This is possible due to the high level of cooperation that has
been developed between the three local unified school districts, CVEP and some 250 local
companies. In high school, students can choose to affiliate with one of the three career
academies set up in health care, advanced technology and the arts, media and entertainment
fields. As they go through school, the class work for academy students reflects the reality of
working in these fields. These students are also given the opportunity to work as interns within
these sectors. Meanwhile, secondary school instructors can be awarded paid externships that
allow them to work in these sectors during their breaks from teaching. This allows them to adapt
their classroom teaching to reflect an actual understanding of how their subjects are used in the
working world.
Once students graduate from high school, CVEP's program has succeeded in putting together
scholarship funding that allows many of them to begin studying in their chosen fields at the
community college or university levels. A key obligation for them is to return to the local high
schools to both mentor students and discuss their college experiences.
Importantly, over 1,000 students are participating in the Career Pathways program with the
majority coming from the Coachella Valley's rapidly growing Hispanic community.
Though CViHub's Accelerator Campus is relatively new, it has already seen dialogue between
its client companies and the CVEP workforce development program. This has resulted in the
hiring of both employees and interns. It is the intent of the CViHub program to ultimately bring
the Career Pathways program into the sectors represented by its client companies.
Economic Impact
Given the background discussed above and looking long term, the question arises as to what
impact the CViHub program can potentially have on the economy of the Coachella Valley.
Modest assumptions for making such a forecast are as follows for the existing Palm Springs
CViHub Accelerator campus:
• 4 companies emerge from the each year
• 15 workers are employed at each firm upon leaving
• 50% is the survival rate of exiting firms after the second year
• Job growth is 10%per year for firms while they are in operation
• Job growth stops at 35 employees (28=Inland Empire average in 2013), except:
o Every fifth company continues growing through year 20.
o Every tenth company grows at 20%per year.
Coachella Valley Hub Page 14
• $48,900 is the Inland Empire's 2013 median pay per manufacturing worker
• Revenue per employee averages $200,000
• Profit to Revenue ratio is 20%
• Price to Earnings ratio: 15 to I
The same assumptions are used for the proposed east Coachella Valley Accelerator Campus
except that only 3 companies are assumed to emerge each year.
Using these assumptions for the combination of the two campuses and looking at three time
periods, the CViHub program is forecasted to have the economic impacts on the Coachella
Valley's economy shown below (see year by year forecast in Appendix):
• Over the 20 year period
o 27,497 person-years of direct work has been created
o $1,344,591,935 in total payroll has been injected into the economy
o 81 surviving firms created
o $5,499,353,516 in revenue generated ($5.5 billion)
o $1,099,870,703 in profit has been generated
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 39,405 total person-years of work created
■ $1,933,000,734 total payroll generated
■ $3,372,040,654 in value added increasing the size of the economy
■ $7,132,466,943 in sales activity increased by all affected firms in the
Coachella Valley
• In the 20tn year
o 81 firms in the Coachella Valley coming from the program
o 3,544 direct jobs exist
o $173,791,166 in direct payroll is leaving those firms
o $2,158,897 average payroll per firm
o $710,802,436 total revenue
o $8,929,844 in average revenue per firm
o $142,160,487 in total profit
o $21132,407,308 in company valuation
o Including direct and secondary impacts of new money reaching the valley's economy:
Coachella Valley Hub Page 15
■ 5,112 total person-years of work created
■ $250,801,929 total payroll generated
■ $437,513,698 in value added increasing the size of the economy
■ $925,419,444 in sales activity increased by all affected firms in the Coachella
Valley
• Averages over the 20 Year Period
0 47 new companies
0 1,375 new jobs
o $67,229,597 in payroll
o $274,967,676 in revenue
o $54,993,535 in profit
o Including direct and secondary impacts of new money reaching the valley's economy:
■ 1,715 total person-years of work created
■ $84,480,426 total payroll generated
■ $147,372,645 in value added increasing the size of the economy
■ $311,719,408 in sales increased by all affected firms in the Coachella Valley
It should be noted that the direct impacts mentioned above are those from the revenues,jobs and
payrolls of the new companies added into the Coachella Valley's economy because of the
CViHub program. Since manufacturing firms largely sell throughout the state, the nation or the
world, any money flowing through them and into the valley's economy is regarded as fresh new
dollars to the marketplace. In a sense, this is like the money flowing to gold miners in an Old
Western town. Just as the miners would re-spend their dollars at the local general store and
saloon thus creating a secondary tier of economic impact in those businesses, it also does that in
the modern economy. Thus, much of the money flowing into the Coachella Valley's economy
through the CViHub's successful companies ends up being spent again locally on the goods and
supplies needed to run those firms. Also, when the employees and owners of the new companies
spend the incomes made in them on local goods and services to support their families, it further
adds to this secondary expansion of the valley's economy. To estimate these secondary effects
and generate the total impacts shown here, professional economists use the IMPLAN model. It
can estimate these effects given the structure of each local economy in the U.S. The model was
used here for the zip codes that constitute the Coachella Valley.
Coachella Valley Hub Page 16
Appendix
Year by Year Forecast Results
Direct Activity Direct&Indirect Activity
Year Firms Revenue Jobs Payroll Jobs Payroll Value Added Sales
1 2017 7 $21,000,000 105 $5,134,500 151 $7,409,711 $12,925,937 $27,340,661
2 2018 14 $44,625,000 223 $10.910,813 321 $15,745,636 $27,467,617 $58,098,905
3 2019 21 $58,012,500 290 $14,184,056 417 $20,469,326 $35,707,901 $75,528,575
4 2020 25 $72,864,750 364 $17,815,431 524 $25,709,844 $44,849,770 $94,865,258
5 2021 28 $89,353,425 447 $21,846,912 643 $31,527,763 $54,998,893 $116,332,461
6 2022 32 $107,672,408 538 $26,325,904 774 $37,991,496 $66,274,609 $140,182,610
7 2023 35 $128,566,016 643 $31,434,391 925 $45,363,667 $79,135,060 $167,384,754
8 2024 39 $151,915,259 760 $37,143,281 1,093 $53,602,293 $93,507,005 $197,783,980
9 2025 42 $178,038,955 890 $43,530,525 1,280 $62,819,866 $109,586,685 $231,795,367
10 2026 46 $207,302,455 1,037 $50,685,450 1,492 $73,145,297 $127,598,977 $269,894,578
11 2027 49 $240,125,225 1,201 $58,710,617 1,727 $84,726,594 $147,802,075 $312,627,731
12 2028 53 $275,038,932 1,375 $67,247,019 1,978 $97,045,664 $169,292,189 $358,083,151
13 2029 56 $313,222,493 1,566 $76,582,900 2,253 $110,518,482 $192,794,967 $407,795,714
14 2030 60 $353,968.252 1,770 $86,545,238 2,546 $124,895,352 $217,874,829 $460,844,093
15 2031 63 $397,776,367 1,989 $97,256,322 2,861 $140,352,755 $244,839,636 $517,879,464
16 2032 67 $447,721,643 2,239 $109,467,942 3,221 $157,975,615 $275,581,994 $582,905,031
17 2033 70 $502,818,220 2,514 $122,939,055 3,616 $177,416,077 $309,495,084 $654,637,259
18 2034 74 $564,820,676 2,824 $138,098,655 4,062 $199,293,232 $347,658,886 $735,360,504
19 2035 77 $633,708,504 3,169 $154,941,729 4,558 $223,599,846 $390,060,779 $825,048,064
20 2036 81 $710,802,436 3,554 $173,791,196 5,112 $250,801,929 1 $437,513,698 $925,419,444
Totals $5,499,353,516 27,497 $1,344,591,935 39,4051$1,933,000,734 $3,372,040,654 $7,132,466,943
Averages 47 $274,967,678 1 1,3751 $67,229,597 1,7151 $84,480,426 1 $147,372,545 1 $311,719,408
Note: year one begins with the first round of CViHub Accelerator Campus graduates.
Coachella Valley Hub Page 17
ATTACHMENT 5
Comparison of Los Angeles Cleantech Incubator
With Palm Springs Innovation Hub
Comparison of Palm Springs iHub and LACl/La Kretz Center
(Both Programs are part of the California !Hub Initiative and were started in late 2011)
LACI La Kretz Palm Springs iHub
Facilities 60,000 square feet 50,000 square feet
3.2 Acres 3.4 Acres
Cost of Facilities $67 Million $1.8 Million
Annual Budget $3.6 Million $350,000
Dedicated Staff 42 2.5
Companies 42 total 56 total
32 active 34 active
Funding Sources City of Los Angeles City of Palm Springs
LA Dept. of Water and Power Desert Healthcare District
Wells Fargo Bank
Equity Raised for $134 Million $21 Million
Companies
ATTACHMENT 6
2901 E. Alejo Road Lease and Amendment 1
of
LEASE AGREEMENT NO. 6398
AMENDMENT NO. 1
COACHELLA VALLEY ECONOMIC PARTNERSHIP AT PALM SPRINGS AIRPORT
OPERATING AND LEASE AGREEMENT
AT PALM SPRINGS INTERNATIONAL AIRPORT
This FIRST AMENDMENT to Agreement No. 6398 for certain premises and
improvements located 2901 East Alejo Road at the Palm Springs International Airport
(Herein "Agreement") made and entered into on the Second day of September 2015, by
and between the CITY OF PALM SPRINGS (herein *City"), and the Coachella Valley
Economic Partnership a non-profit corporation ("Lessee").
RECITALS
WHEREAS, the City and Lessee entered into that certain Operating and Lease
Agreement No. 6398 for certain premises and improvements located at 2901 East Alejo
Road at the Palm Springs International Airport ("Agreement"), as maybe duly amended
from time to time; and
WHEREAS, the parties wish to amend the Agreement pursuant to the terms of
Amendment No. 1:
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, City and Lessee agree to amend the Agreement as
follows:
SECTION 1. The Lease between the Lessor and Lessee, executed on
October 1, 2013, shall be amended as follows:
1.5 Rental Rate.
a. Rental payment shall be twelve cents ($0.12) per square foot per month
for the building space exclusively used by the Lessee for the term of the lease.
Common area spaces such as landscaping and parking areas are included in the
lease amount.
b. Prior to October 1, 2014, and ending January 31, 2015, Lessee shall be
responsible for the rental payment covering only the space occupied by Lessee,
excepting any space unoccupied or under construction or renovation.
C. Lessee shall be responsible for the Rental Rate for all of the space subject
to Lease, occupied or unoccupied. Commencing on February 1, 2015, Lessee
shall pay monthly the rental payment covering the space occupied by Lessee.
Any space unoccupied or under construction or renovation, collectively the
"unoccupied space", shall be subject to deferral as provided below.
l DUPLICATE
ORIGINAL
r
d. Rent due and payable for unoccupied space for the period between
February 1, 2015 and May 30, 2018 shall be deferred ("Deferred Rental
Payment") until June 1, 2018.
e. Commencing on June 1, 2018, Lessee shall be responsible for the full
Rental Rate for all of the space subject to the Lease, occupied or unoccupied.
f. Commencing on June 1, 2018, each month Lessee shall pay a portion of
the Deferred Rental Payments. The monthly deferred rental payment due shall
be calculated as follows: the total amount of Deferred Rental Payments divided
by the number of months remaining on the lease(60 months).
Section 2.7, Termination by Lessee, is hereby appended with the following
paragraph:
Should the Lessee terminate this Lease prior to the term or any extension
thereof, the amount of Deferred Rental Payments in Subsections (c) and (d) of Section
1.5 shall be immediately due and payable to the City.
All other terms and conditions contained in the Lease Agreement dated
October 1, 2013 remain unchanged and in full force and effect.
SECTION 2. As of January 31, 2015 the rent due each month is calculated at
$2,502.42, for the occupancy as outlined in Exhibit "A". City and Lessee agree that as
of November 1, 2015, Lessee is current on rental payments offset by Deferred Rental
Payments detailed as follows:
CVEP-lease Agreement No.6398-Amendment#1
October 2014 5 004.84 2,5021.42 500484 -2 502.42 -
November 5 004.84 2,502.42 5,004.84 -2,502.42 -
December 5 004.84 2.502.42 5,004.84 -2 502.42
Janua 2015 5,004.84 2,502.42 5.004.84 -2.502.42
February(2015) 5,004.84 2,502.42 0.00 2,502.42 2,502.42
March 5 004.84 2,502.42 0.00 2,502.42 2,502.42
nl 5 004.84 2,502.42 0.00 2,502.42 2,502.42
My 5.004.84 2,502.42 0.00 29502.42 2,502,42
June 5,004.84 2,502.42 2,502.42 0.00 2,502.42
Jul y 5,004.84 2,502.42 2,502.42 0.00 2,502.42
A Ust 5,004.84 2,502.42 2.502.42 0.00 2,502.42
September 5,004.84 2,502.42 2,502.42 0.00 2,502.42
October 5,004.84 2,502.42 2,502.42 0.00 2,502.42
ovember 5 004. 4 2.502.42 2 502.42 0.00 24502.
Total 70 067.76 35,033.88 35,033.88 0.00 25,024.20
2
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
stated below.
"CITY"
City of Palm Serings
Date: is A-6 By+.�_-�s-�' .�'••
David H. Ready
City Manager
APPROVED AS TO FORM: ATTEST
By: a By
Doug C.Holland, times Thompson,
City Attorney City Clerk
APPROVED B�nY CITY COUNCIL:
Date: Agreement No.
Corporations require two notarized signatures. One signature must be from Chairman of Board,
President,or any Vice President.
The second signature must be from the Secretary,Assistant Secretary,Treasurer,Assistant Treasurer,
or Chief Financial Officer.
COM2A�7NY NAME:
C✓�r' Check one—Individual_Partnership Y` Corporation
3111 A-,'Ja&� ,,f�`r��`1
Address
��l>Vt -K C'R g2zGZ.
BY By n\CA
Si r otarized) Signature(Notarized)
3
F
CuIFOIN A ALL-PUEtt OSK Clog_CnoE g t IW
�'.{.1.�� .t�'t� hq.%ei.6Ke Zed J.X l.f•.f.i n ++./a�Y�YLY Wf.etr
A n"T FAft or ads adiwr car p ft WOM G*tfw UN&Y Of are idhi"afro yRed dW
dennwtb-.wid diaae>ieaeattawedad andnonhsavlde6eeaacv+aryCarvsidtyafdatdaaarrt
Sbft at Caifonie }
countyat 91i"Jarsjap- } n V�1 E NO 1 [� t
&it
onDPLsnbr 42, 0�10ir?b�enn®.-5 f1jY �YO mrU �" c
Dab - Hare knot Aimra and Tifte of Im Ora w'
pa=m ft Wpemed JOeZCAek4wAace-
NwmN
of ObnwN
who proved io nw en the bmte of anfickdooy eadence to he the paaai(e) adww name(a}akaff
admmt od to the wMii kmbumerd and edam dedeed In ma that bWaWM wmaded the tans to
hm*mdVi ►adhairmdcapacifypait<wdthafbybm&wdREiradgrwlnmftahfhekahWawdthepwaaw
art wentily upon bluff d witch the peso "acbd.moculed tho inUWneaL
I MVy Wider PENALTY OF PWUURY urdsVm Iowa
d the ffiai d Ca unf a the the foregah pwegmph
iatnw and oaaeaf.
CARRIE ROVNEY lay'. dI °
Cof uld"Im*2W2407
= Nowy PoWIc•California i
FUwMdfr County
Comm Juh 23 201 e~
Fbw Mfty SadAbow
OPTIMAL
7bmgpf fsaeseiran b aptiaraK complaft the M a nOmn ran deft alw fba d a4e dmmiwrf or
6aaxtufod rea9siuna+t od this forte ban d dxsanar
OeeagMwn of Atbdod Dowmad
TAs s Type of Ooownw* Oafs
Manbw of Pages Other A6over
Capealyfoo Cfeihed by Mghenla)
awmes Mona: Sgma Menas
❑0mParab 06ew—TdIOW ❑Calwmte Ofawr—Tdbo*
(Q Parbw— ❑U nled ❑ ElPartner— O Unand ❑Oeneraf
O kaivkb O in Fad ❑+ndeidnal ❑Af money in Fed
OTUmba ❑ orOormwvafor ❑Thmel" ❑OmwdanorCarnemdor
❑Othw: ❑Od>er.
tttgnerN > In fbp�mlkw
. l+�y Aaaoeif8an•wwiwlJdtorNlolwy.ag-1.800U9 N6TARy[!-BOQ8�27) !am�7
4
EXHIBIT "A"
Palm Springs iHub Accelerator Campus 2901 E.Alejo Road,Palm Springs,CA 92262
Occupancy
Bulidinga Facility Type S/F Description Status S/FUccupled
Concrete tilt-up built in 1961;clear height of 14'w/roll•up delivery
-i Warehouse 9,600 ,door. Occupied 2513.5
2 Small office 640 Administrative office
3 Shop-Warehouse 6,000 Woodshop and maintenance building Occup°ed 6000
4 Lunch Room 640 Employee lounge-break roam M&W restroom-nonconforming
Vehicle maintenance facility;3 sets of drive-thru rallup doors with one
5 Mechanic's Facility 3,500 at 14'high x 12'wide Occupied 3500
6 Storage building 2,100 Storage building(removed)
8 Small Warehouse 1,800 Small warehouse storage building Occupied 1800
9. Welding Shop 960 Weldingshop Occupied 960
Concrete tilt-up built in 1999 w/freezer&cooler ZS'clear ceilings and
10 Cold Storage Facility 12,487 30`coiumn spacing Truck well,small office.
12 Small Office 1,920 Office building-divided into 2 bays-open space occupied 1920
13 Small Office 1,920 Office building-divided into offices and conference room,restroom Occupied 1920
28 Prir1t-Graphics Shop 2,240 print shop facility,open space with some divided office space Oct ed 2240
Total 20,853.5
Total Available Sg1l;.. 43,807 Nate:Building 6 removed total square footage=41,707 s/f x.12
Rent based an
occupancy last
Bldg 6 Remove building -2,100 update 11y17-15 $2,502.42
Actual Available Sq.Ft. 41,707
z$012 $Sr004{#4„Lftnthly Rent due on entire site starting October 1,2014 R F "
*� ;Monthly Rent adjusted to occupied space only,starting February 1,
,�l
2015,until May 30,201B
g ,
5
LEASE AGREEMENT
THIS LEASE ("Lease") is made and entered into this �.� day
of C>cr , 2013, by and between the CITY OF PALM SPRINGS, a California
charter city and municipal corporation ("Lessor"), and the Coachella Valley Economic
Partnership, a California non-profit corporation ("Lessee").
RECITALS:
A. Lessor is the owner of certain premises and improvements located at the
Palm Springs International Airport in the City of Palm Springs, County of
Riverside, State of California, located at the 2901 East Alejo Road ("Property");
and
B. Lessee is a regional public-private economic development organization, of
which Lessor is a member, and is charged with implementing a regional blueprint
to make the Coachella Valley competitive in a number of key industries;
C. Lessee is the operator of the Coachella Valley Innovation Hub (CViHub)
under that certain Administrative Agreement with the Lessor, which provides for
the mentoring and support of start-up businesses in identified industries in the
Western Coachella Valley; and
D. Lessee desires to lease said Property to operate the Palm Springs
Accelerator Campus to expand the services and facilities offered under the
CViHub Program to include space for fabrication, manufacturing, prototyping,
testing and other production activities of the CViHub businesses.
AGREEMENT:
1.0 LEASE SUMMARY. Certain fundamental lease provisions are presented in this
Section and represent the agreement of the parties hereto, subject to further definition
and elaboration in the respective referenced Sections and elsewhere in this Lease. In
the event of any conflict between any fundamental lease provision and the balance of
this Lease, the latter shall control. References to specific Sections are for convenience
only and designate some of the Sections where references to the particular fundamental
lease provisions may appear.
1.1 Property. The "Property" shall refer to that certain real property located in
the County of Riverside, State of California, as more particularly described in Exhibit
"A". attached hereto an incorporated herein by reference together with the
improvements located thereon as depicted on the Plot Plan attached as Exhibit "B',
attached hereto and incorporated herein by reference.
1
es2-awe 1
1.2 The Premises, The Premises shall consist of that certain portion of the
building, as defined, herein, including all improvements therein or to be provided by
Lessor under the terms of this Lease, and commonly known as 2901 East Alejo Road,
located in the City of Palm Springs, County of Riverside, State of'California, also
identified as a portion of Assessor Parcel Number 502-100-029 and generally described
as Multi-Tenant buildings (office, industrial & warehouse use in portable and permanent
structures, asphalt paving, chain link fencing, and miscellaneous landscaping all as
shown on the plot plan attached as Exhibit "B".
1.3 Lease Term. The Lease term shall be ten (10) years commencing
October 1, 2013, ("Commencement Date") and terminating September 30, 2023.
1.4 Extension Options. Two (2) five (5) year extension options may be
exercised by mutual written agreement of the parties.
1.5 Rental Rate. Rental payment shall be twelve cents ($0.12) per square
foot per month for the space exclusively used by Lessee, Common area spaces such as
landscape, and parking areas, for the term of the lease. Prior to October 1, 2014,
Lessee shall be responsible for the rental payment covering only the space occupied by
Lessee, excepting any space unoccupied or under construction or
renovation. Commencing on October 1, 2014, Lessee shall be responsible for the
Rental Rate for all of the space subject to the Lease, occupied or unoccupied.
1.6 Security Deposit. N/A
1.7 Use of Premises. Lessee shall use and occupy the Premises for the
purpose of establishing and operating the Palm Springs Accelerator Campus to provide
mentoring and support services to start-up businesses in identified industries in the
Western Coachella Valley as part of the implementation of the Innovation Hub (iHub)
Program established by the State of California and received by the Western Coachella
Valley cities at the Property, under an Administrative Services Agreement with the City
of Palm Springs, as amended, more particularly described in Exhibit E. The occasional
serving of alcoholic beverages shall only be at special events, mixers, open houses and
other activities sponsored by Lessee and shall be subject to the State's alcoholic
beverages control laws.
1.8 Address for Notices.
Lessee: Coachella Valley Economic Partnership
Attn: Chief Operating Officer
3111 East Tahquitz Canyon Way
Palm Springs, California 92262
Lessor: City of Palm Springs
Attn: City Manager
3200 East Tahquitz Canyon Way
Palm Springs, CA 92262
2
95200 1
2.0 TERM
2.1 Term. The term of this Lease shall commence on the date specified in
Section 1.3 ("Commencement Date") and shall continue for the period specified therein
unless earlier terminated as provided herein.
2.2 Reserved.
2.3 Time. Time is of the essence of this Lease.
2.4 Force Majeure. If either party hereto shall be delayed or prevented from
the performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, restrictive governmental laws or
regulations or other cause without fault and beyond the control of the party obligated
(financial inability excepted), performance of such act shall be excused for the period of
the delay and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay, provided such party provides the other
party written notice of such event within ten (10) days of the commencement of the
event.
2.5 Termination by Lessor. Lessor shall have the right to terminate this Lease
effective on any anniversary of the Commencement Date, with or without cause, by
providing Lessee with at least one hundred twenty (120) days advance written
notice. With the exception of any unamortized balance of Leasehold Improvement
Costs not paid for by Lessor through the CViHub Administrative Agreement, if Lessor
terminates this Lease as provided in this Section, Lessee hereby waives any right to
receive any other compensation from Lessor, including, but not limited to, the value of
Lessee's leasehold interest, loss of goodwill and relocation benefits, inverse
condemnation or the taking of property and Lessor shall have no obligation to pay
Lessee therefor.
2.6 Holding Over. Any holding over after the expiration of the term of this
Lease, with the consent of Lessor, express or implied, shall be construed to be a
tenancy from month to month, cancelable upon thirty (30) days' written notice, and at a
monthly rental equal to one hundred and fifty percent (150%) of the monthly rental in
effect at the expiration of the term and upon terms and conditions as existed during the
last year of the term hereof.
2.7 Termination by Lessee. Lessee shall have the right to terminate this
Lease by providing Lessor with at least sixty (60) days advance written notice that
Lessee has experienced a reduction in funding in an amount that would require a
reduction in space greater than 60% of the current Premises, through staff reduction
and reduced programming. if Lessee terminates this Lease as provided in this Section,
Lessee hereby waives any right to receive any other compensation from Lessor,
including, but not limited to, the unamortized value of Lessee's leasehold improvements,
Lessee's leasehold interest loss
os of goodwill and relocation benefits,9 t , inverse
condemnation or the taking of property and Lessor shall have no obligation to pay
Lessee therefor.
3
952009,
3.0 RENTAL
3.1 Monthly Rental. Lessee shall pay to Lessor, during the term of this Lease
from and after the Commencement Date as monthly rental ("Monthly Rental") for the
Premises the sum specified in Section 1.5 hereof, which sum shall be paid in advance
on the first day of each calendar month. In the event the Commencement Date does
not occur on the first day of a calendar month, the Lessee shall pay the rental for the
fractional month on the Commencement Date on a per diem basis (calculated on a
thirty-day month). All rental to be paid by Lessee to Lessor shall be in lawful money of
the United States of America and shall be paid without deduction or offset, prior notice
or demand at the address designated in Section 1.8 hereof.
3.2 Cost of Livinq Adjustment. The monthly rental shall be adjusted at the
end of the first three (3) years of the within term and adjusted upward at the end of each
three (3) year period thereafter by the same percentage as the cost of living index has
changed during the said three (3) year period, provided that in no event shall the
adjusted minimum rental be less than the original lease amount provided for
herein. The cost of living index to be used is that reflected by the Revised Consumer
Price index for Urban Wage Earners and Clerical Workers, all items, Los Angeles -
Anaheim - Riverside, California (1982-84 = 100) published by the Bureau of Labor
Statistics of the U.S. Department of Labor. It is agreed for the purposes of this Lease,
that the base index shall be the month of October 2013.
3.3 Additional Rental. For the purposes of this Lease, all monetary obligations
of Lessee under this Lease, including but not limited to, insurance premiums, property
taxes, maintenance expenses, and utility costs shall be the direct obligation of the
Lessee and shall not be collected by Lessor and shall not be deemed to be additional
rental. Any late charges accrued by Lessee shall be deemed additional rental.
3.4 Real Property Taxes. Unless Lessee qualifies for an exemption from
property taxes or possessory interest taxes due to its non-profit status, in addition to all
rentals herein reserved, Lessee shall pay, at the election of Lessor, either directly to the
taxing authority or to Lessor, annual real estate taxes and assessments levied upon the
Premises (including any possessory interest taxes), as well as taxes of every kind and
nature levied and assessed in lieu of, in substitution for, or in addition to, existing real
property taxes. Such amount shall be paid on the date that is twenty (20) days prior to
the delinquent date or, if Lessor receives the tax bill, ten (10) days after receipt of a
copy of the tax bill from Lessor, whichever is later. Even though the term of this Lease
has expired and Lessee has vacated the Premises, when the final determination is
made of Lessee's share of such taxes and assessments, Lessee shall immediately pay
to Lessor the amount of any additional sum owed.
3.5 Personal Property Taxes. Unless Lessee qualifies for an exemption from
property taxes or possessory interest taxes due to its non-profit status, during the term
hereof Lessee shall pay prior to delinquency all taxes assessed against and levied upon
fixtures, furnishings, equipment and all other personal property of Lessee contained in
the Premises, and when possible Lessee shall cause said fixtures, furnishings,
equipment and other personal property to be assessed and billed separately from the
real property of Lessor.
4
esioa9 i
3.6 Utilities. Lessee shall pay all charges for water, gas, neat, electricity, and
sewer, and all other services used in, upon, or about the Premises by Lessee or any of
its sublessees, licensees, or concessionaires during the term of this Lease. Lessee
shall pay all telephone, internet, cable television, satellite, broadband and other
telecommunications services, as well as trash removal.
3.7 Late Payment. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rental or other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which is extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges. Accordingly, any payment of any sum to be paid by Lessee not paid within ten
(10) days of its due date shall be subject to a five percent (5%) late charge. Lessor and
Lessee agree that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Lessor for its loss suffered by such late payment
by Lessee. Sixty (60) days before the anniversary date each year the City shall notify
the Lessee of any outstanding delinquency, which must be cured prior to the
anniversary date or the City may exercise its right of termination under section 2.5 and
terminate the lease.
3.8 Interest. Any sum to be paid pursuant to the terms of this Lease not paid
when due shall bear interest from and after the due date until paid at a rate equal to
three percent (3%) over the prime rate being charged by Bank of America, N.A. from
time to time during such period so long as the rate does not exceed the maximum non-
usurious rate permitted by law in which case interest shall be at the maximum non-
usurious rate allowed by law at the time the sum became due.
3.9 Security Deposit. N/A
4.0 USE OF THE PREMISES
4.1 Permitted Use. The Lessor hereby leases to Lessee and Lessee leases
from Lessor the Premises with appurtenances as defined herein, for the purpose of
conducting thereon only the use specified in Section 1.7 of this Lease and for no other
use. Lessor has determined that, based on the fair market rental of the space, per the
appraisal, uses at the Property are not limited to aviation-related uses by the Federal
Aviation Administration.
4.2 Prohibited Uses. Lessee shall not sell or permit to be kept, used,
displayed or sold in or about the Premises (a) pornographic or sexually explicit books,
magazines, literature, films or other printed material, sexual paraphernalia, or other
material which would be considered lewd, obscene or licentious, (b) any article which
may be prohibited by standard forms of fire insurance policies, or (c) any alcoholic
beverages unless expressly permitted by Section 1.7 hereof.
4.3 Compliance with Laws. Lessee shall, at his own cost and expense,
comply with all of the requirements of all municipal, state and federal authorities now in
force or which may hereafter be in force pertaining to the use of the Premises, and shall
faithfully observe in said use all municipal ordinances, including, but not limited to, the
General Plan and zoning ordinances, state and federal statutes, or other governmental
regulations now in force or which shall hereinafter be in force. Lessee's violation of law
5
952009 1
shall constitute an incurable default under this Lease. The judgment of any court of
competent jurisdiction, or the admission of Lessee in any action or proceeding against
Lessee, whether Lessor is a party thereto or not, that Lessee has violated any such
order or statute in said use, shall be conclusive of that fact as between the Lessor and
Lessee.
Lessee shall not engage in any activity on or about the Premises that violates any
Environmental Law, and shall promptly, at Lessees sole cost and expense, take all
investigatory and/or remedial action required or ordered by any governmental agency or
Environmental Law for clean-up and removal of any contamination involving any
Hazardous Material created or caused directly or indirectly by Lessee. The term
"Environmental Law" shall mean any federal, state or local law, statute, ordinance or
regulation pertaining to health, industrial hygiene or the environmental conditions on,
under or about the Demised Premises, including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 et seq.; (iii) California Health
and Safety Code Sections 25100 et seq.; (iv) the Safe Drinking Water and Toxic
Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et seq.;
(v) California Health and Safety Code Section 25359.7; (A) California Health and Safety
Code Section 25915; (vii) the Federal Water Pollution Control Act, 33 U.S.C. Sections
1317 et seq.; (viii) California Water Code Section 1300 et seq.; and (ix) California Civil
Code Section 3479 et seq., as such laws are amended and the regulations and
administrative codes applicable thereto. The term "Hazardous Material" includes,
without limitation, any material or substance which is (i) defined or listed as a
"hazardous waste", "extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution or nuisance under
the Environmental Laws; (ii) petroleum or a petroleum product or fraction thereof; (iii)
asbestos; and/or (iv) substances known by the State of California to cause cancer
and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms
"Hazardous Materials" and "Environmental Laws" in their broadest sense. Lessee shall
provide all notices required pursuant to the Safe Drinking Water and Toxic Enforcement
Act of 1986, California Health and Safety Code Section 25249.5 et seq. Lessee shall
provide prompt written notice to Lessor of the existence of Hazardous Substances on
the premises and all notices of violation of the Environmental Laws received by Lessee.
4.4 Signs. Lessee shall not place or permit to be placed any sign that is not in
compliance with the sign ordinance of the Lessor upon the exterior or in the windows of
the Premises. Any sign not constructed in accordance therewith shall be immediately
removed by Lessee and, if said sign is not removed by Lessee within ten (10) days of
written notice from Lessor to Lessee, then Lessor may remove and destroy said sign
without Lessee's approval and without any liability to Lessee.
4.5 Parkina and Common Areas. During the term of this Lease and any
extension thereof, Lessor gives to Lessee for the use and benefit of Lessee, its agents,
employees, customers, licensees and sublessees a nonexclusive license in common
with Lessor and other present and future owners and Lessees of the Property and their
6
952009.1
agents, employees, customers, licensees and sublessees, and others authorized by
Lessor to use the automobile parking areas, roadways, walkways, landscaped areas,
service areas, of the Property for ingress, egress and automobile parking, provided that
the condemnation or other taking by any public authority, or sale in lieu of
condemnation, of any or all of such parking and common areas shall not constitute a
violation of this covenant. Nothing herein contained shall be deemed to prevent Lessor
from using or authorizing others to use said parking and common areas.
4.6 Maintenance and Landscaping. During the entire term hereof, Lessee
shall keep or cause to be kept the parking and landscaped areas in a good, neat, clean
and orderly condition, properly lighted and landscaped, and shall repair any damage to
the facilities thereof as well as the exterior walls and roof of the Premises as provided in
Article 11.
4.7 Hours of Business. Subject to the provisions of Section 7.0 hereof,
Lessee shall continuously during the entire term hereof conduct and carry on Lessee's
business in the Premises and shall keep the Premises open for business and cause
Lessee's business to be conducted therein during the Lessee's usual business hours of
each and every business day.
4.8 Rules and Regulations. Lessee shall faithfully observe and comply with
the rules and regulations that Lessor shall from time to time promulgate and/or modify.
The rules and regulations, if any, are attached hereto as Exhibit "D" ("Rules and
Regulations"). Any amendment or modification of the Rules and Regulations shall be
binding upon the Lessee upon delivery of a copy of such amendment or modification to
Lessee. Lessor shall not be responsible to Lessee for the nonperformance of any said
rules and regulations by any other Lessees or occupants. The Rules and Regulations
shall apply and be enforced as to all Lessees in the Premises on a uniform basis.
5.0 ALTERATIONS AND REPAIRS.
5.1 Alterations and Fixtures. Lessee shall make any alterations to the
Premises, or any part thereof, as described in Exhibit "F" Leasehold Improvement
Agreement. Any alterations to the Premises, except movable furniture and trade
fixtures, shall become at once a part of the realty and shall at the expiration or earlier
termination of this Lease belong to Lessor. Any such alterations shall be first submitted
to the Executive Director of Airports and shall be in conformance with the requirements
of all municipal, state, federal, and other governmental authorities, including
requirements pertaining to the health, welfare or safety of employees or the public and
in conformance with reasonable rules and regulations of Lessor Any and all fixtures and
appurtenances installed by Lessee shall conform with the requirements of all municipal,
state, federal, and govemmental authorities, including requirements pertaining to the
health, welfare, or safety of employees or the public. Upon completion of construction of
the alterations, Lessee shall submit to Lessor evidence satisfactory to Lessor of the cost
of said alterations ("Improvement Costs").
5.2 Maintenance and Re air. Lessee shall, at all times during the term hereof,
and at Lessee's sole cost and expense, keep, maintain and repair the Premises, and
other improvements within the Premises in good and sanitary order, condition, and
repair„ including, without limitation, the maintenance and repair of any store front,
7
95_7009,t
doors, window casements, walls, glazing, heating and air conditioning system,
plumbing, pipes, roofs, electrical wiring and conduits. Lessee shall also at its sole cost
and expense be responsible for any alterations or improvements to the Premises
necessitated as a result of the requirement of any municipal, state or federal authority.
By entering into the Premises, Lessee shall be deemed to have accepted the Premises
as being in good and sanitary order, condition and repair, and Lessee agrees on the last
day of said term or sooner termination of this Lease to surrender the Premises with
appurtenances, in the same condition as when received and in a good, clean and
sanitary condition, reasonable use and wear thereof and damage by fire, act of God or
by the elements excepted. Lessee shall periodically sweep and clean the sidewalks
adjacent to the Premises, as needed. Upon Lessee's possession of the Premises,
Lessee shall be deemed to have accepted the Premises as being in good condition and
repair.
5.3 Free from Liens. Lessee shall keep the Premises free from any liens
arising out of any work performed, material furnished, or obligation incurred by Lessee
or alleged to have been incurred by Lessee, with the exception of a Federal First Priority
Unsupported Lien Filing associated with the EDA grant funding tied specifically to
leasehold improvements made by Lessee.
6.0 INSURANCE AND INDEMNIFICATION.
6.1 insurance Provided by Lessor. Lessor shall maintain fire and extended
coverage insurance throughout the term of this Lease in an amount equal to at least
ninety percent (90%) of the replacement value of the building containing the Premises,
together with such other insurance, coverages and endorsements as may be required
by Lessor. Lessee hereby waives any right of recovery from Lessor, its officers and
employees, and Lessor hereby waives any right of loss or damage (including
consequential loss) resulting from any of the perils insured against as a result of said
insurance.
6.2 Insurance Provided by Lessee.
(a) Lessee to Provide Personal Pro)erty Insurance. Lessee, at its
expense, shall maintain fire and extended coverage insurance written on a per
occurrence basis on its trade fixtures, equipment, personal property and inventory within
the Premises from loss or damage to the extent of their full replacement value and shall
provide plate glass coverage.
(b) Lessee to Provide Liability Insurance. During the entire term of this
Lease, the Lessee shall, at the Lessee's sole cost and expense, but for the mutual
benefit of Lessor and Lessee, maintain comprehensive general liability insurance
insuring against claims for bodily injury, death or property damage occurring in, upon or
about the Premises and on any sidewalks directly adjacent to the Premises written on a
per occurrence basis in a combined single limit of ONE MILLION DOLLARS
($1,000,000.00) for bodily injury, death, and property damage or provided, however, if
s
95?069.l
Lessor so elects Lessor may provide such insurance and, in such event, Lessee agrees
to pay its pro rata share of the cost of said insurance on the same basis as provided in
Section 6.1 above.
(c) Lessee to Provide Workers' Compensation Insurance. Lessee, and
any sublessees, shall, at the Lessee's sole cost and expense, maintain a policy of
workers' compensation insurance in an amount as will fully comply with the laws of the
State of California and which shall indemnify, insure and provide legal defense for both
the Lessee and the Lessor against any loss, claim or damage arising from any injuries
or occupational diseases occurring to any worker employed by or any persons retained
by the Lessee in the course of conducting Lessee's business in the Premises.
(d) General Provisions Applicable to Lessee's Insurance. All of the
policies of insurance required to be procured by Lessee pursuant to this Section 6.2
shall be primary insurance and shall name the Lessor, its officers, employees and
agents as additional insureds. The insurers shall waive all rights of subrogation and
contribution they may have against the Lessor, its officers, employees and agents and
their respective insurers. All of said policies of insurance shall provide that said
insurance may not be amended or cancelled without providing thirty (30) days' prior
written notice by registered mail to the Lessor. Prior to the Commencement Date or
such earlier date as Lessee takes possession of the Premises for any purpose; and at
least thirty (30) days prior to the expiration of any insurance policy, Lessee shall provide
Lessor with endorsements evidencing the above insurance coverages written by
insurance companies acceptable to Lessor, licensed to do business in the state where
the Premises are located and rated A:VII or better by Best's Insurance Guide. In the
event the Risk Manager of Lessor ("Risk Manager") determines that (i) the Lessee's
activities in the Premises creates an increased or decreased risk of loss to the Lessor,
(ii) greater insurance coverage is required due to the passage of time, or(iii) changes in
the industry require different coverages be obtained, Lessee agrees that the minimum
limits of any insurance policy required to be obtained by Lessee may be changed
accordingly upon receipt of written notice from the Risk Manager, provided that Lessee
shall have the right to appeal a determination of increased coverage by the Risk
Manager to the City Council of Lessor within ten (10) days of receipt of notice from the
Risk Manager. Lessor and Lessee hereby waive any rights each may have against the
other on account of any loss or damage occasioned by property damage to the
Premises, its contents, or Lessee's trade fixtures, equipment, personal property or
inventory arising from any risk generally covered by insurance against the perils of fire,
extended coverage, vandalism, malicious mischief, theft, sprinkler damage or leakage,
and earthquake. Each of the parties, on behalf of their respective insurance companies
insuring such property of either Lessor or Lessee against such loss, waives any right of
subrogation that it may have against the other. The foregoing waivers of subrogation
shall be operative only so long as lawful in California and provided further that no policy
is invalidated thereby.
6.3 Indemnification of Lessor. Lessee, as a material part of the consideration to be
rendered to Lessor under this Lease, hereby waives all claims against Lessor for
damage to equipment or other personal property, trade fixtures, leasehold
9
952009.1
improvements, goods, wares, inventory and merchandise, in, upon or about the
Premises and for injuries to persons in or about the Premises, from any cause arising at
any time. Lessee agrees to indemnify the Lessor, its officers, agents and employees
against, and will hold and save them and each of them harmless from, any and all
actions, suits, claims, damages to persons or property, losses, costs, penalties,
obligations, errors, omissions or liabilities, (herein "claims or liabilities") that may be
asserted or claimed by any person, firm or entity arising out of or in connection with the
negligent performance of the work, operations or activities of Lessee, its agents,
employees, subcontractors, or invitees, provided for herein, or arising from the use of
the Premises or the parking and common areas by Lessee or its employees and
customers, or arising from the failure of Lessee to keep the Premises in good condition
and repair, as herein provided, or arising from the negligent acts or omissions of Lessee
hereunder, or arising from Lessee's negligent performance of or failure to perform any
term, provision, covenant or condition of this Lease, whether or not there is concurrent
passive or active negligence on the part of the Lessor, its officers, agents or employees
but excluding such claims or liabilities arising from the sole negligence or willful
misconduct of the Lessor, its officers, agents or employees, who are directly responsible
to the Lessor, and in connection therewith:
(a) Lessee will defend any action or actions filed in connection with any
of said claims or liabilities and will pay all costs and expenses, including legal costs and
attomeys' fees incurred in connection therewith;
(b) Lessee will promptly pay any judgment rendered against the
Lessor, its officers, agents or employees for any such claims or liabilities arising out of
or in connection with the negligent performance of or failure to perform such work,
operations or activities of Lessee hereunder, and Lessee agrees to save and hold the
Lessor, its officers, agents, and employees harmless therefrom;
(c) In the event the Lessor, its officers, agents or employees is made a
party to any action or proceeding filed or prosecuted against Lessee for such damages
or other claims arising out of, or in connection with, the negligent performance of or
failure to perform the work, operation or activities of Lessee hereunder, Lessee agrees
to pay to the Lessor, its officers, agents or employees, any and all costs and expenses
incurred by the Lessor, its officers, agents or employees in such action or proceeding,
including, but not limited to, legal costs and attorneys' fees.
7.0 ABANDONMENT AND SURRENDER.
7.1 Abandonment. Lessee shall not vacate or abandon the Premises at any
time during the term of this Lease; and if Lessee shall abandon, vacate or surrender the
Premises or be dispossessed by process of law, or otherwise, any personal property
belonging to Lessee and left on the Premises shall be deemed to be abandoned, at the
option of Lessor, except such property as may be mortgaged to Lessor.
7.2 Surrender of Lease. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the
option of Lessor, terminate all or any existing subleases or sub-tenancies, or may, at the
10
952W9,1
option of Lessor, operate as an assignment to it of any or all of such subleases or sub-
tenancies.
8.0 DAMAGE AND DESTRUCTION OF PREMISES. In the event of (a) partial or
total destruction of the Premises during the term of this Lease which requires repairs to
the Premises, or (b) the Premises being declared unsafe or unfit for occupancy by any
authorized public authority for any reason other than Lessee's act, use or occupation,
which declaration requires repairs to the Premises, Lessor shall forthwith make said
repairs provided Lessee gives to Lessor thirty (30) days' written notice of the necessity
therefor. No such partial destruction (including any destruction necessary in order to
make repairs required by any declaration made by any public authority) shall in any way
annul or void this Lease except that Lessee shall be entitled to a proportionate reduction
of Monthly Rental while such repairs are being made, such proportionate reduction to
be based upon the extent to which the making of such repairs shall interfere with the
business carried on by Lessee in the Premises. However, if during the last two (2) years
of the term of this Lease the Premises are damaged as a result of fire or any other
insured casualty to an extent in excess of twenty-five percent (25%) of the then
replacement cost (excluding foundations), Lessor may within thirty (30) days following
the date such damage occurs terminate this Lease by written notice to Lessee. If
Lessor, however, elects to make said repairs, and provided Lessor uses due diligence
in making said repairs, this Lease shall continue in full force and effect, and the Monthly
Rental shall be proportionately reduced while such repairs are being made as
hereinabove provided. Nothing in the foregoing to the contrary withstanding, if the
Premises or said building is damaged or destroyed at any time during the term hereof to
an extent of more than twenty-five percent (25%) of the then replacement cost
(excluding foundations) as a result of a casualty not insured against, Lessor may within
thirty (30) days following the date of such destruction terminate this Lease upon written
notice to Lessee. If Lessor does not elect to terminate because of said uninsured
casualty, Lessor shall promptly rebuild and repair the Premises and/or the building and
the Monthly Rental shall be proportionately reduced while such repairs are being made
as hereinabove provided. If Lessor elects to terminate this Lease, all rentals shall be
prorated between Lessor and Lessee as of the date of such destruction. In respect to
any partial or total destruction (including any destruction necessary in order to make
repairs required by any such declaration of any authorized public authority) which
Lessor is obligated to repair or may elect to repair under the terms of this Section,
Lessee waives any statutory right it may have to cancel this Lease as a result of such
destruction.
9.0 SUBLETTING. The purpose of this Lease is for the Lessee to sublet all or a
portion of the Premises for the purposes of the CViHub. For purposes of this Lease, a
sublease shall be deemed to include any person or group of persons occupying all or
portion of the space for any period of time. Only Qualified Subleasees may occupy any
of the space without the prior consent of the Lessor. For the purposes of this Lease, a
Qualified Sublessee shall meet both of the following criteria: (1) the Qualified Sublessee
shall be an active participant in the CViHub program, with an approval of admission to
the CViHub by the CViHub Advisory Board; (2) and, the Qualified Sublessee shall have
received a recommendation by the Managing Director of the CViHub that the use of the
11
952oa9.t
Property would further the development of the business and the goals of the
CViHub. Any such sublease shall be subject to all of the terms and conditions of this
Lease. The proposed sublessee shall execute a written sublease agreement in a form
approved by Lessor. The proposed sublessee shall simultaneously provide to Lessor an
estoppel certificate in the form described in Section 12.3 hereafter. Consent by Lessor
to the subletting, occupation or use by any person shall not be considered to be an
assignment of the Lease by Lessee to any other party. Neither this Lease nor any
interest therein shall be assignable as to the interest of Lessee by operation of law.
10.0 DEFAULT AND REMEDIES.
10.1 Default by Lessee. In addition to the defaults described in Section 9.0
hereinabove, the occurrence of any one or more of the following events shall constitute
a default and breach of this Lease by Lessee: (a) the failure to pay any rental or other
payment required hereunder to or on behalf of Lessor more than three (3) days after
written notice from Lessor to Lessee that Lessee has failed to pay rent when due; (b)
the failure to perform any of Lessee's agreements or obligations hereunder(exclusive of
a default in the payment of money) where such default shall continue for a period of
thirty (30) days after written notice thereof from Lessor to Lessee which notice shall be
deemed to be the statutory notice so long as such notice complies with statutory
requirements; (c) the vacation or abandonment of the Premises by Lessee; (d) the
making by Lessee of a general assignment for the benefit of creditors; (e) the filing by
Lessee of a voluntary petition in bankruptcy or the adjudication of Lessee as a bankrupt;
(f) the appointment of a receiver to take possession of all or substantially all the assets
of Lessee located at the Premises or of Lessee's leasehold interest in the Premises; (g)
the filing by any creditor of Lessee of an involuntary petition in bankruptcy which is not
dismissed within sixty (60) days after filing; or (h) the attachment, execution or other
judicial seizure of all or substantially all of the assets of Lessee or Lessee's leasehold
where such an attachment, execution or seizure is not discharged within sixty(60) days.
Any repetitive failure by Lessee to perform its agreements and obligations hereunder,
though intermittently cured, shall be deemed an incurable default. Two (2) breaches of
the same covenant within a sixty (60) day period, a notice having been given pursuant
to (a) or (b) above for the first breach, or three (3) of the same or different breaches at
any time during the term of this Lease for which notices pursuant to (a) or (b) above
were given for the first two (2) breaches shall conclusively be deemed to be an
incurable repetitive failure by Lessee to perform its obligations hereunder.
In the event of any such default or breach by Lessee, Lessor may at any time thereafter,
without further notice or demand, rectify or cure such default, and any sums expended
by Lessor for such purposes shall be paid by Lessee to Lessor upon demand and as
additional rental hereunder. In the event of any such default or breach by Lessee,
Lessor shall have the right (i) to continue the lease in full force and effect and enforce all
of its rights and remedies under this Lease, including the right to recover the rental as it
becomes due under this Lease, or (ii) Lessor shall have the right at any time thereafter
to elect to terminate the Lease and Lessee's right to possession thereunder. Upon such
termination, Lessor shall have the right to recover from Lessee:
12
952009A
(i) The worth at the time of award of the unpaid rental which
had been earned at the time of termination;
(ii) The worth at the time of award of the amount by which the
unpaid rental which would have been earned after termination until the time of award
exceeds the amount of such rental loss that the Lessee proves could have been
reasonably avoided;
(III) The worth at the time of award of the amount by which the
unpaid rental for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and
(iv) Any other amount necessary to compensate the Lessor for
all the detriment proximately caused by Lessee's failure to perform its obligations under
the lease or which in the ordinary course of things would be likely to result therefrom.
The "worth at the time of award" of the amounts referred to in subparagraphs (i) and (ii)
above shall be computed by allowing interest at three percent (3%) over the prime rate
than being charged by Bank of America, N.A. but in no event greater than the maximum
rate permitted by law. The worth at the time of award of the amount referred to in
subparagraph (III) above shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent(1%), but in no event greater than ten percent (10%).
As used herein "rental" shall include the Monthly Rental, other sums payable hereunder
which are designated "rental" or "additional rental" and any other sums payable
hereunder on a regular basis such as reimbursement for real estate taxes.
Such efforts as Lessor may make to mitigate the damages caused by Lessee's breach
of this Lease shall not constitute a waiver of Lessor's right to recover damages against
Lessee hereunder, not shall anything herein contained affect Lessor's right to
indemnification against Lessee for any liability arising prior to the termination of this
Lease for personal injuries or property damage, and Lessee hereby agrees to indemnify
and hold Lessor harmless from any such injuries and damages, including all attorneys'
fees and costs incurred by Lessor In defending any action brought against Lessor for
any recovery thereof, and in enforcing the terms and provisions of this indemnification
against Lessee.
Notwithstanding any of the foregoing, the breach of this Lease by Lessee, or an
abandonment of the Premises by Lessee, shall not constitute a termination of this
Lease, or of Lessee's right of possession hereunder, unless and until Lessor elects to
do so, and until such time Lessor shall have the right to enforce all of its rights and
remedies under this Lease, including the right to recover rent, and all other payments to
be made by Lessee hereunder, as they become due. Failure of Lessor to terminate this
Lease shall not prevent Lessor from later terminating this Lease or constitute a waiver
of Lessor's right to do so.
13
95'_009
10.2 No Waiver. Acceptance of rental hereunder shall not be deemed a waiver
of any default or a waiver of any of Lessor's remedies.
10.3 Lessor's Default. Lessor shall not be in default unless Lessor fails to
perform obligations required of Lessor within a reasonable time, but in no event later
than thirty (30) days after written notice by Lessee to Lessor and to the holder of any
first mortgage or deed of trust covering the Premises whose name and address shall
have theretofore been furnished to Lessee in writing, specifying wherein Lessor has
failed to perform such obligation; provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days are required for performance then
Lessor shall not be deemed in default if Lessor commences performance within a (30)
day period and thereafter diligently prosecutes the same to completion. In no event shall
Lessee have the right to terminate this Lease as a result of Lessor's default and
Lessee's remedies shall be limited to damages and/or an injunction.
11.0 CONDEMNATION. In the event a condemnation or a transfer in lieu thereof
results in a taking of any portion of the Premises, Lessor may, or in the event a
condemnation or a transfer in lieu thereof results in a taking of twenty-five percent
(25%) or more of the Premises, Lessee may, upon written notice given within thirty (30)
days after such taking or transfer in lieu thereof, terminate this Lease. Lessee shall not
be entitled to share in any portion of the award and Lessee hereby expressly waives
any right or claim to any part thereof. Lessee shall, however, have the right to claim and
recover, only from the condemning authority (but not from Lessor), any amounts
necessary to reimburse Lessee for the cost of removing stock and fixtures. If this Lease
is not terminated as above provided, Lessor shall use a portion of the condemnation
award to restore the Premises.
12.0 MISCELLANEOUS.
12.1 Reservation of Right to Modify Property. Lessor hereby reserves the right
(but not the obligation) to renovate, modernize, rehabilitate, expand, reduce,
reconfigure, enclose and/or otherwise alter all or any portion of the Premises
(collectively "Modifications"), in such manner and at such time or times, throughout the
term of this Lease, as Lessor may, in its sole and absolute discretion, deem to be in the
best interests of the Property. Such Modifications may include, without limitation, the
right to construct new buildings on the Property for additional uses, to remove, renovate,
repair, add to, modernize or otherwise alter the building in which the Premises are
situated as well as other buildings, facilities, structures, malls, walkways, landscaping,
parking and common areas or other areas within the Property. In connection with any
and all such Modifications, Lessor may enter the Premises to the extent reasonably
required by Lessor to pursue and complete such Modifications. In addition, Lessor may
temporarily close portions of the parking and common areas and cause temporary
obstructions in connection with any Modifications. Lessee agrees that under no
circumstances shall the Modifications as to any portion of the Property or the
construction activity that takes place in the course of making the Modifications, or any
aspect thereof, including Lessor's entry into the Premises, constitute an eviction or
partial eviction of Lessee or a breach of Lessee's right to quiet enjoyment or of any
other provision of this Lease, nor entitle Lessee to damages, injunctive relief or other
14
952009.1
equitable relief, nor entitle Lessee to any abatement or reduction in the Monthly Rental,
additional rental or other charges or sums due under this Lease; provided Lessor uses
reasonable efforts to mitigate any adverse effects on Lessee caused by the
Modifications.
12.2 Entry and Inspection. Lessee shall permit Lessor and his agents to enter
into and upon the Premises at all reasonable times for the purpose of inspecting the
same or for the purpose of posting notices of non-liability for alterations, additions or
repairs, or for the purpose of placing upon the property in which the Premises are
located any usual or ordinary "For Sale" signs or any signs for public safety as
determined by Lessor. Lessor shall be permitted to do any of the above without any
rebate of rent and without any liability to Lessee for any loss of occupation or quiet
enjoyment of the Premises thereby occasioned. Lessee shall permit Lessor, at any time
within six (6) months prior to the expiration of this Lease, to place upon the Premises
any usual or ordinary "For Lease" signs, and during such (6) month period Lessor or his
agents may, during normal business hours, enter upon said Premises and exhibit same
to prospective Lessees.
12.3 Estoppel Certificate. If, as a result of a proposed sale, assignment, or
hypothecation of the Premises or the land thereunder by Lessor, or at any other time,
an estoppel certificate shall be requested of Lessee, Lessee agrees, within ten (10)
days thereafter, to deliver such estoppel certificate in the form attached hereto as
Exhibit "C" addressed to any existing or proposed mortgagee or proposed purchaser,
and to the Lessor. Lessee shall be liable for any loss or liability resulting from any
incorrect information certified, and such mortgagee and purchaser shall have the right to
rely on such estoppel certificate and financial statement
12.4 Jurisdiction and Venue. The parties hereto agree that the State of
California is the proper jurisdiction for litigation of any matters relating to this Lease, and
service mailed to the address of Lessees set forth herein shall be adequate service for
such litigation. The parties further agree that Riverside County, California is the proper
place for venue as to any such litigation and Lessee agrees to submit to the personal
jurisdiction of such court in the event of such litigation.
12.5 Partial Invalidity. If any term, covenant, condition or provision of this Lease
is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the provisions hereof shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereof.
12.6 Successors in Interest. The covenants herein contained shall, subject to
the provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all the parties hereto; and all of the parties hereto shall be
jointly and severally liable hereunder.
12.7 No Oral Agreements. This (i) Lease covers in full each and every
agreement of every kind or nature whatsoever between the parties hereto concerning
this Lease, (ii) supersedes any and all previous obligations, agreements and
understandings, if any, between the parties, oral or written, and (iii) merges all
preliminary negotiations and agreements of whatsoever kind or nature herein. Lessee
is
9520091
acknowledges that no representations or warranties of any kind or nature not
specifically set forth herein have been made by Lessor or its agents or representatives.
12.8 Authority. In the event that Lessee is a corporation or a partnership, each
individual executing this Lease on behalf of said corporation or said partnership, as the
case may be, represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of said corporation or partnership, in accordance with a duly
adopted resolution of the Board of Directors, if a corporation, or in accordance with the
Partnership Agreement, if a partnership, and that this Lease is binding upon said
corporation or partnership in accordance with its terms. Lessee represents and warrants
to Lessor that the entering into this Lease does not violate any provisions of any other
agreement to which Lessee is bound.
12.9 Relationship of Parties. The relationship of the parties hereto is that of
Lessor and Lessee, and it is expressly understood and agreed that Lessor does not in
any way or for any purpose become a partner of Lessee in the conduct of Lessee's
business or otherwise, or a joint-venture with Lessee, and that the provisions of this
Lease and the agreements relating to rent payable hereunder are included solely for the
purpose of providing a method whereby rental payments are to be measured and
ascertained.
12.10 Nondiscrimination. Lessee herein covenants by and for itself, its heirs,
executors, administrators and assigns and all persons claiming under or through it, and
this Lease is made and accepted upon and subject to the following conditions: That
there shall be no discrimination against or segregation of any person or group of
persons on account of race, sex, marital status, color, creed, national origin or ancestry,
in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the
Premises herein leased, nor shall the Lessee itself, or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy of
Lessees, Lessees, sub-Lessees, sublessees or vendees in the Premises.
12.11 Notices. Wherever in this Lease it shall be required or permitted that
notice and demand be given or served by either party to this Lease to or on the other,
such notice or demand shall be given or served in writing and shall not be deemed to
have been duly given or served unless in writing, and personally served or forwarded by
certified mail, postage prepaid, addressed, if to Lessor, as specified in Section 1.9.
Either party may change the address set forth herein by written notice by certified mail
to the other. Any notice or demand given by certified mail shall be effective one (1) day
subsequent to mailing.
12.12 Waiver. No delay or omission in the exercise of any right or remedy by a
non-defaulting party shall impair such right or remedy or be construed as a waiver. A
party's consent to or approval of any act by the other party requiring the party's consent
or approval shall not be deemed to waive or render unnecessary the other party's
consent to or approval of any subsequent act. Any waiver by either party of any default
must be in writing and shall not be a waiver of any other default concerning the same or
any other provision of this Lease.
16
9520091
12.13 Federal Government Required Provisions. Lessee shall perform and fully
comply with Federal Aviation Administration and Transportation Security Administration
requirements imposed on "Tenant"as described in Exhibit"G" to this Lease.
12.14 Exhibits and Addenda. The Exhibits and Addenda attached to this Lease
are made a part of this Lease as if fully set forth in this Lease.
17
952009.1
IN WITNESS WHEREOF, the parties have duly executed this Lease together with the
herein referred to Exhibits which are attached hereto, on the day and year first above
written in Palm Springs, California.
"City"
ATTEST: CITY OF PALM SPRINGS, a
municipal
_ Corporation
B mes Thompson, City Clerk J
Its:
APPROVED S TO FORM: APPROVED BY CITY COUNCIL
Douglas H (land, City Attorney
"Lessee"
Coachella Valley Economic
Partnershi
B :
Its:
By:
Its:
18
952W9A
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
Location and Address:
2901 East Alejo Road, Palm Springs, California, 92262, located on property of the Palm
Springs International Airport.
Assessor's Parcel Number:
Portion of 502-100-029
Legal Description:
A portion of 3.25 acres M/L in POR LOTS 1,2 & 3 MB 0141652 SD PALM VALLEY
COLONY LANDS
OwnershipNesting:
City of Palm Springs
19
�i
EXHIBIT "B"
PLOT PLAN OF DEMISED PREMISES
Palm Springs iHub Accelerator Campus
2901 E.Alejo Road, Palm Springs,CA 92262
2
10
1 3 13 12
4
8
28 5
9
(Note: For locatlonal purposes only-not to scale)
1 Warehouse building 9,600 s/f ,
2 Administrative building 640 s/f
3 Shops building 6,000 s/f Leased Nov 2012
4 Employee Lounge 640 s/f
5 service Garage 3,500 s/f Leased July 2013
8 Warehouse building 1,800 s/f
9 Weld shop building 960 s/f
10 Food service warehouse 12,487 s/f
12 Maintenance offices(modular building) /90 31-Z99s/f I Leased Nov 2012
13 Maintenance offices (modular building) 1,920 s/f Leased Nov 2012
28 Print graphics office(modular building) 2,240 s/f
Total buildings square footage 41,707 5/F
20
9s2009 l
ATTACHMENT 7
Consulting Services Agreement— CVEP
CONSULTING SERVICES AGREEMENT
(Administrative and Management Services:lgreentent
Coachella Vallev Economic Partnership)
THIS AGREEMENT FOR CONSULTING SERVICES ("Agreement") is made and
entered into on July 1,2016, by and between the City of Palm Springs, a California charter city
and municipal corporation ("City"), and the .Coachella Valley Economic Partnership, a
California non-profit corporation, ("Consultant"). City and Consultant are individually referred
to as"Party"and are collectively referred to as the"Parties".
RECITALS
A. City requires the services of a consultant, to operate the Palm Springs Innovation
Hub and Palm Springs Accelerator Campus, ("Project").
B. Consultant has submitted to City a proposal to provide administrative and
management services to City under the terms of this Agreement.
C. Based on its experience, education, training, and reputation, Consultant is
qualified and desires to provide the necessary services to City for the Project.
D. City desires to retain the services of Consultant for the Project.
In consideration of these promises and mutual agreements,City agrees as follows:
AGREEMENT
1. CONSULTANT SERVICES
1.1 Scope of Services. in compliance with all terms and conditions of this
Agreement, Consultant shall provide administrative and management services to City as
described in the Scope of Services and Schedule of Compensation attached to this Agreement as
Exhibit "A"and incorporated by reference (the "services' or "work"). Consultant warrants that
all services and work shall be performed in a competent, professional, and satisfactory manner
consistent with prevailing industry standards, In the event of any inconsistency between the
terms contained in the Scope of Services Work and the terms set forth in this Agreement, the
terms set forth in this Agreement shall govern..
1.2 Compliance with Law. Consultant services rendered under this Agreement shall
comply with all applicable federal, state, and local laws, statutes and ordinances and all lawful
orders, rules,and regulations.
1.3 Licenses and Permits. Consultant shall obtain at its sole cost and expense such
licenses, permits, and approvals as may be required by law for the performance of the services
required by this Agreement.
r ' D U P L I CAT E Revised 575118
r)RIGINAL
1.4 Familiarity with Work. By executing this Agreement, Consultant warrants that
it has carefully considered how the work should be performed and fully understands the
facilities,difficulties, and restrictions attending performance of the work under this Agreement.
2. TIME FOR COMPLETION
The time for completion of the services to be performed by Consultant is an essential
condition of this Agreement. Consultant shall prosecute regularly and diligently the work of this
Agreement according to Exhibit "A." Consultant shall not be accountable for delays in the
progress of its work caused by any condition beyond its control and without the fault or
negligence of Consultant. Delays shall not entitle Consultant to any additional compensation
regardless of the party responsible for the delay.
3. COMPENSATION OF CQ,NSULTANT
3.1 Compensation of Consultant. Consultant shall be compensated and reimbursed
for the services rendered under this Agreement in accordance with the schedule of fees set forth
in Exhibit"A". The total amount of Compensation shall not exceed S 196,500.
3.2 Method of Payment. In any month in which Consultant wishes to receive
payment, Consultant shall submit to City an invoice for services rendered prior to the date of the
invoice, no later than the first working day of such month, in the form approved by City's
finance director. Payments shall be based on the hourly rates set forth in Exhibit "A" for
authorized services performed. City shall pay Consultant for all expenses stated in the invoice
that are approved by City and consistent with this Agreement, within thirty (30) days of receipt
of Consultant's invoice.
3.3 Changes. In the event any change or changes in the Scope of Services/Work is
requested by City, Parties shall execute a written amendment to this Agreement, specifying all
proposed amendments,including,but not limited to, any additional fees. An amendment may be
entered into:
A. To provide for revisions or modifications to documents, work product, or
work,when required by the enactment or revision of any subsequent law; or
B. To provide for additional services not included in this Agreement or not
customarily furnished in accordance with generally accepted practice in Consultant's profession.
3.4 Appropriations. This Agreement is subject to, and contingent upon, funds being
appropriated by the City Council of City for each fiscal year. If such appropriations are not
made, this Agreement shall automatically terminate without penalty to City,
4. PERFORMANCE SCHEDULE
4.1 Time of Essence. Time is of the essence in the performance of this Agreement.
Revised S/SM
4.2 Schedule of Performance. All services rendered under this Agreement shall be
performed as set forth in Exhibit "A." Any time period extension must be approved in writing
by the Contract Officer.
43 Force Maieure. The time for performance of services to be rendered under this
Agreement may be extended because of any delays due to unforeseeable causes beyond the
control and without the fault or negligence of Consultant, if Consultant notifies the Contract
Officer within ten (10) days of the commencement of such condition. Unforeseeable causes
include, but are not limited to, acts of God or of a public enemy, acts of the government, fires,
earthquakes, floods, epidemic, quarantine restrictions, riots, strikes, freight embargoes, and
unusually severe weather. After Consultant notification, the Contract Officer shall investigate
the facts and the extent of any necessary delay, and extend the time for performing the services
for the period of the enforced delay when and if, in the Contract Officer's judgment, such delay
is justified. The Contract Officer's determination shall be final and conclusive upon the parties
to this Agreement.
4.4 Term. Unless earlier terminated in accordance with Section 4.5 of this
Agreement, this Agreement shall continue in full force and effect for a period of twenty four(24)
months, commencing on July 1, 2016, and ending on June 30, 2018, unless extended by mutual
written agreement of the parties.
4.5 Termination Prior to Expiration of Term. City may terminate this Agreement
at any time, with or without cause, upon thirty (30) days written notice to Consultant. Where
termination is due to the fault of Consultant and constitutes an immediate danger to health,
safety, and general welfare, the period of notice shall be such shorter time as may be determined
by the City. Upon receipt of the notice of termination. Consultant shall immediately cease all
services except such as may be specifically approted by the Contract Officer. Consultant shall
be entitled to compensation for all services rendered prior to receipt of the notice of termination
and for any services authorized by the Contract Officer after such notice. Consultant may
terminate this Agreement, with or without cause, upon thirty(30)days written notice to City.
5. COORDINATION OF WORK
5.1 Representative of Consultant. The following principal of Consultant is
designated as being the principal and representative of Consultant authorized to act and make all
decisions in its behalf with respect to the specified services and work: Joe Wallace, Acting
President'C£O. It is expressly understood that the experience, knowledge, education, capability,
and reputation of the foregoing principal is a substantial inducement for City to enter into this
Agreement. Therefore, the foregoing principal shall be responsible during the term of this
Agreement for directing all activities of Consultant and devoting sufficient time to personally
supervise the services under this Agreement. The foregoing principal may not be changed by
Consultant without prior written approval of the Contract Officer.
5.2 Contract Officer. The Contract Officer shall be the City Manager or his/her
designee ("Contract Officer"), Consultant shall be responsible for keeping the Contract Officer
fully informed of the progress of the performance of the services. Consultant shall refer any
¢ Revised.5151 i6
decisions that must be made by City to the Contract Officer. Unless otherwise specified, any
approval of City shall mean the approval of the Contract Officer.
5.3 Prohibition Against Subcontracting or Assignment. The experience,
knowledge, education, capability, and reputation of Consultant, its principals and employees,
were a substantial inducement for City to enter into this Agreement. Therefore,Consultant shall
not contract with any other individual or entity to perform any services required under this
Agreement without the City's express written approval. In addition, neither this Agreement nor
any interest may be assigned or transferred, voluntarily or by operation of law, without the prior
written approval of City.
5.4 Independent Contractor. Neither City nor any of its employees shall have any
control over the manner, mode, or means by which Consultant, its agents or employees, perform
the services required, except as otherwise specified. Consultant shall perform all required
services as an independent contractor of City and shall not be an employee of City and shall
remain at all times as to City a wholly independent contractor with only such obligations as are
consistent with that role; however, City shall have the right to review Consultant's work product,
result, and advice. Consultant shall not at any time or in any manner represent that it or any of
its agents or employees are agents or employees of City.
5.5 Personnel. Consultant agrees to assign the following individuals to perform the
services in this Agreement. Consultant shall not alter the assignment of the following personnel
without the prior written approval of the Contract Officer. Acting through the City Manager, the
City shall have the unrestricted right to order the removal of any personnel assigned by
Consultant by providing written notice to Consultant.
Name: Title:
Joe Wallace ClIfef I1rr702'atiOJt 4jl'icer and ,Wanaging Director of the
Pahn Springs Wab and Accelerator-Campus
hVle Wagner Assistant Director. Innovation and Business Serl,ices
6. INSURANCE
Consultant shall procure and maintain, at its sole cost and expense, policies of insurance
as set forth in the attached Exhibit "B", incorporated herein by reference.
7. INDEMNIFICATION.
7.1 Indemnification. To the fullest extent permitted by law, Consultant shall
defend (at Consultant's sole cost and expense), indemnify, protect, and hold harmless City, its
elected officials, officers, employees, agents, and volunteers (collectively the "Indemnified
Parties"), from and against any and all liabilities, actions, suits, claims, demands, losses, costs,
judgments, arbitration awards, settlements, damages, demands, orders, penalties, and expenses
a Rem$ed 5,SoM
r ;
including legal costs and attorney fees (collectively "Claims"), including but not limited to
Claims arising from injuries to or death of persons (Consultant's employees included), for
damage to property, including property owned by City, from any violation of any federal, state,
or focal law or ordinance, and from errors and omissions committed by Consultant, its officers,
employees, representatives, and agents, that arise out of or relate to Consultant's performance
under this Agreement. This indemnification clause excludes Claims arising from the sole
negligence or willful misconduct of the City, its elected officials, officers, employees, agents,
and volunteers. Under no circumstances shall the insurance requirements and limits set forth in
this Agreement be construed to limit Consultant's indemnification obligation or other liability
under this Agreement. Consultant's indemnification obligation shall survive the expiration or
earlier termination of this Agreement until all actions against the Indemnified Parties for such
matters indemnified are fully and finally barred by the applicable statute of limitations or, if an
action is timely filed, until such action is final. This provision is intended for the benefit of third
party Indemnified Parties not otherwise a party to this Agreement.
7.2 Desien Professional Services Indemnification and Reimbursement. If the
Agreement is determined to be a "design professional services agireement" and Consultant is a
"design professional" under California Civil Code Section 2782.8, then:
A. To the fullest extent permitted by law, Consultant shall indemnify, defend
(a( Consultant's sole cost and expense), protect and hold harmless City and its elected officials,
officers, employees, agents and volunteers and all other public agencies whose approval of the
project is required, (individually"Indemnified Party'; collectively"Indcmnified Parties") against
any and all liabilities, claims,judgments, arbitration awards, settlements, costs, demands, orders
and penalties(collectively"Claims"), including but not limited to Claims arising from injuries or
death of persons(Consultant's employees included) and damage to property, which Claims arise
out of, pertain to, or are related to the negligence, recklessness or willful misconduct of
Consultant, its agents, employees, or subcontractors, or arise from Consultant's negligent,
reckless or willful performance of or failure to perform any term, provision, covenant or
condition of this Agreement ("Indemnified Claims"), but Consultant's liability for indemnified
Claims shall be reduced to the extent such Claims arise from the negligence, recklessness or
willful misconduct of the City and its elected officials, officers, employees, agents and
volunteers.
B. The Consultant shall require all non-design-professional sub-contractors,
used or sub-contracted by Consultant to perform the Services or Work required under this
Agreement, to execute an Indemnification Agreement adopting the indemnity provisions in sub-
section 7.1 in favor of the Indemnified Parties. In addition, Consultant shall require all non-
design-professional sub-contractors, used or sub-contracted by Consultant to perform the
Services or Work required under this Agreement, to obtain insurance that is consistent with the
Insurance provisions as set forth in this Agreement, as well as any other insurance that may be
required by Contract Officer.
Revised.SM15
,,rs:;, r
a
8. RECORDS AND REPORTS
8.1 R. eports. Consultant shall periodically prepare and submit to the Contract Officer
reports concerning the performance of the services required by this Agreement, or as the
Contract Officer shall require.
8.2 Records. Consultant shall keep complete, accurate, and detailed accounts of all
time, costs, expenses, and expenditures pertaining in any way to this A,gccmcnt. Consultant
shall keep such books and records as shall be necessary to properly perform the services required
by this Agreement and enable the Contract Officer to evaluate the performance of such services.
The Contract Officer shall have full and free access to such books and records at all reasonable
times, including the right to inspect, copy, audit, and make records and transcripts from such
records.
8.3 Ownership of Documents. All drawings, specifications, reports, records,
documents, and other materials prepared by Consultant in the performance of this Agreement
shall be the property of City. Consultant shall deliver all above-referenced documents to City
upon request of the Contract Officer or upon the termination of this Agreement. Consultant shall
have no claim for further employment or additional compensation as a result of the exercise by
City of its full rights or ownership of the documents and materials. Consultant may retain copies
of such documents for Consultant's own use. Consultant shall have an unrestricted right to use
the concepts embodied in such documents.
8.4 Release of Documents. All drawings, specifications, reports, records,
documents, and other materials prepared by Consultant in the performance of services under this
Agreement shall not be released publicly without the prior written approval of the Contract
Officer,
8.5 Cost Records. Consultant shall maintain all books, documents, papers, employee
time sheets, accounting records, and other e%idence pertaining to costs incurred while performing
under this Agreement. Consultant shall make such materials available at its offices at all
reasonable times during the term of this Agreement and for three (3) years from the date of final
payment for inspection by City and copies shall be promptly furnished to City upon request.
9. ENFORCEMENT OF AGREEMENT
9.1 California Law. This Agreement shall be construed and interpreted both as to
validity and to performance of the parties in accordance with the laws of the State of California.
Legal actions concerning any dispute, claim, or matter arising out of or in relation to this
Agreement shall be instituted in the Superior Court of the County of Riverside, State of
California, or any other appropriate court in such county, and Consultant covenants and agrees to
submit to the personal jurisdiction of such court in the event of such action.
9.2 Interpretation. This Agreement shall be construed as a whole according to its
fair language and common meaning to achieve the objectifies and purposes of the Parties. The
terns of this Agreement are contractual and the result of negotiation between the Parties.
Accordingly, any rule of construction of contracts(including, without limitation,California Civil
Code Section 1654) that ambiguities are to be construed against the drafting party, shall not be
employed in the interpretation of this Agreement, The caption headings of the various sections
and paragraphs of this Agreement are for convenience and identification purposes only and shall
not be deemed to limit, expand, or define the contents of the respective sections or paragraphs.
9.3 Waiver. No delay or omission in the exercise of any right or remedy of a non-
defaulting party on any default shall impair such right or remedy or be construed as a waiver.
No consent or approval of City shall be deemed to waive or render unnecessary City's consent to
or approval of any subsequent act of Consultant. Any waiver by either party of any default must
be in writing. No such waiver shall be a waiver of any other default concerning the same or any
other provision of this Agreement.
9.4 Rights and Remedies are Cumulative. Except with respect to rights and
remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the
parties are cumulative. The exercise by either party of one or more of such rights or remedies
shall not preclude the exercise by it, at the same or different times, of any other rights or
remedies for the same default or any other default by the other party.
9.5 Legal Action. In addition to any other fights or remedies, either party may take
legal action, in Iaw or in equity, to cure, correct, or remedy any default, to recover damages for
any default, to compel specific performance of this Agreement, to obtain injunctive relief, a
declaratory judgment, or any other remedy consistent with the purposes of this Agreement.
10. CITY OFFICERS AND EMPLOYEES: NON-DISCRIMINATION
10.1 Non-Liability of Oita, Officers and Employees. No officer or employee of City
shall be personally liable to the Consultant, or any successor-in-interest, in the event of any
default or breach by City or for any amount which may become due to the Consultant or its
successor, or for breach of any obligation of the terms of this Agreement.
10.2 Connict of Interest. Contractor acknowledges that no officer or employee of the
City has or shall have any direct or indirect financial interest in this Agreement nor shall
Contractor enter into any agreement of any kind with any such officer or employee during the
term of this Agreement and for one year thereafter. Contractor warrants that Contractor has not
paid or given, and will not pay or give, any third party any money or other consideration in
exchange for obtaining this Agreement.
10.3 Covenant Against Discrimination. Consultant covenants that, by and for itself,
its heirs, executors, assigns, and all persons claiming under or through them, that there shall be
no discrimination or segregation in the performance of or in connection with this Agreement
regarding any person or group of persons on account of race, color, creed, religion, sex, marital
status, disability, sexual orientation, gender identity, gender expression, national origin, physical
or mental disability,medical condition,or ancestry.
11. MISCELLANEOUS PROVISIONS
11.1 Notice. Any notice, demand, request, consent, approval, or communication that
either party desires, or is required to give to the other party or any other person shall be in
7 Re.sed U5116
writing and either served personally or sent by pre-paid, first-class mail to the address set forth
below. Notice shall be deemed communicated seventy-two (72) hours from the time of mailing
if mailed as provided in this Section. Either party may change its address by notifying the other
party of the change of address in writing.
To City: City of Palm Springs
Attention: City Manager City Clerk
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
To Consultant: Attention: President/CEO
Coachella Valley Economic Partnership
3111 E. Tahquitz Canyon Way
Palm Springs, California 92262
11.2 Integrated Agreement. This Agreement contains all of the agreements of the
parties and supersedes all other written agreements.
11.3 Amendment. No amendments or other modifications of this Agreement shall be
binding unless through written agreement by all Parties.
11A Severabilitv. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law. In the event that
any one or more of the phrases, sentences, clauses, paragraphs, or sections contained in this
Agreement shall be declared invalid or unenforceable by valid judgment or decree of a court of
competent jurisdiction, such invalidity or unenforceability shall not affect any of the remaining
phrases, sentences, clauses, paragraphs, or sections of this Agreement, which shall be interpreted
to carry out the intent of the parties.
11.5 Successors in Interest. This Agreement shall be binding upon and inure to the
benefit of the Parties' successors and assicnees.
11.6 Third Partv Beneficiary. Except as may be expressly provided for in this
Agreement, nothing contained in this Agreement is intended to confer, nor shall this Agreement
be construed as conferring, any rights, including, without limitation, any rights as a third-party
beneficiary or otherwise,upon any entity or person not a party to this Agreement.
11.7 Recitals. The above-referenced Recitals are hereby incorporated into the
Agreement as though fully set forth in this Agreement and each Party acknowledges and agrees
that such Party is bound, for purposes of this Agreement, by the same.
11.8 Authority. The persons executing this Agreement on behalf of the Parties
warrant that they arc duly authorized to execute this Agreement on behalf of Parties and that by
so executing this Agreement the Parties are formally bound to the provisions of this Agreement.
Revised $15116
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
stated below.
"C 1TY"
City of Palm Springs
Date: 1 1���t1 13y,,t3s^
David H. Ready, sq+ .FF
City Manager APPROVED BY CITY COUNCIL
APPROVED AS TO FORM: ATTEST
Doug] s . Holland ames Thompson
City homey City Clerk
"CONSULTANT"
(Coachella Yallev Econonac Partttersltip)
Date: �' ( ! BY
Joe Vallacc
Are ident/C o
Date:
(frame)
7 Revised V506
I
CAUFORNIA ALL4MIRPOSE ACKWMILE csaExr CtvbL CODE 5 1180
A ndmy phrc or otw d5w caTo np de csilikaw vairre my d»4wmty of dva nx%,ucl v the ap+d tle
document fa whop fna C dr --a is=wNd rd not 4a traatf,enasa,axon}a vai or dda daa�
Stara at Car:famia ) � )
County of k y ell(-5 r1d•L.. )
01 ik f�UtLP beforernne. L&WLeiL 9 0?w&4-A;,Nj2 ztm
onto I here rrnnent Aknrno and rent o dv CfTieer
Pe�N appeared l� W/Z L+ Pi
NaaWN of sr�+abl
who proved to mo an the bum or eatiafacfory sw4wee to be tll��ar�aQ� wtwae oars W6-* f
to tt a witfidn inatvnnerd arrd m ore r4(j�e tyy asa«ead&a coma rn
LWK
cc the wifiH upon boFfoX of wf ich twe pwbm iq�� W,�m,erthety a aanart uw perooryd).
1 Mtty fmder PE?4ALTY OF PMURY wrier the bete
of the State of CaRom n that the fwwang pareprom
* ` is true and cco ecL
CYNTHIA A.BE=of WITNEW M hvid mud official to^'
Commission#2p55635 L
Koury Public•California i
Riverside County
My Comm.E res Febieb i B,2018 r Siryr t"of ME YPubdc
PbW Notary Sall Above
OPTIONAL
Thatgh dia aectbn cb vptb+var.oom b&V Vik inufomviion can deter aRwafion of the doamma+t or
G=drrwri ntadadvncnt of Mfc form to an urmrtrnncfod dom"ant
Deecriphas of Attached Dodzmnen
Tree at Type of DadanentC6yt9tinhfVidi<i I "
Numbw of Papw. " S grwrio)6thw Than Named Above:
CapdciWgal Cta M*d by SigneKU
Signer a fine= agw,a Marne-
❑Garpornbe Off w—Rie4s): 0 Cmporde Officer—Td
❑Partner- p LimMad Q Gerrard ❑Partner— rt>I p Gowrnt
13 IrWivkimt Ci Mowery in Fact `�„�.JneSp'�ial O Attomey in Fsd
13 Trudge O Guardian or 0 TnARM C3 Guwdan or Conoaevdor
9i9rw Io Signer Is Repreaening:
B:Titi Natant iJatay Anaocioliar•wvw.NabonoAJa+ay orp•18t.Y}l15 NOTARY(n-ii008I66&'rry Mode e500T
f 43 Revized�515116
EXHIBIT "A"
SCOPE OF SERVICES and
SCHEDULE OF COMPENSATION
CVEP Obligations and Responsibilities:
On an annual basis during the term of this Agreement the Coachella Valley Economic
Partnership (CVEP) shall provide to the City the following administrative and management
services for the operation of the Coachella Valley Innovation Hub (CViHub) and the Palm
Springs Accelerator Campus(Accelerator):
• Continue responsibility for further development and operations of CViHub and
Accelerator program and services;
• Maintain a dedicated, full-time manager to direct and oversee CViHub and Accelerator
operations, and provide direct services to clients;
• Pursue other public and private funding sources, i.e., grants and sponsorships in order to
generate a sustainable program;
• Oversee:maintain the CViHub and Accelerator website, calendar, blog, and social
networking accounts:
• Prepare and submit quarterly reports against performance metrics set forth by the City of
Palm Springs (Attachment "I") as follows: July 1 to September 30 due in October,
January 1 to Match 31 due in April„ October I to December 31 due in January, April I to
June 30 due in July;
• Prepare and submit annual reports in accordance with sections S and 9 of the State of
California Innovation Hub Memorandum of Understanding (Exhibit "C"); and submit a
copy of all reports to the City Contract Administrator and perform all other duties of the
State of California Innovation Hub MOU;
• Prepare and submit quarterly financial reports within 30 days of quarter ending.
Financial reports should include revenue and expenditures for the reporting period.
• Coordinate Advisory Board meetings and all records as needed (Attachment"2");
• Oversee selection criteria, application process, incubator and accelerator campus
lenses'occupants(Attachment"3");
• Deliver CViHub and Accelerator program and client services, including but not limited
to:
1 r Revised.515116
A. Facility Based Services for Clients of the CViHub and Accelerator Campus
Administration
1. Space
a. Telephone-- (unlimited local and national calls)
b. Local Area Network (LAN)
c. High Speed Internet Access
d. Space for individual servers
e. Shared Conference Room
f Physical and mailing Address
g. Restrooms
h. Janitorial services
3. Rent—determined by Advisory Board
a. Free
b. Below market rate
3. Shared Office Systems
a. Copies (at cost)
b. Fax(incoming and outgoing)
c. Postage meter(at cost)
d. Receptionist/switchboard
e. Usage%user charge for other office systems to be determined by
CViHub & Accelerator Manager or Advisory Board.
B. Client Services
I. Seminars & Workshops to be hosted by the CViHub'Accelerator
a. Business plans
b. Financial management and accounting support
c. Financing assistance
d. HR support
e. Hot Topics- Special Interest
f. Commercialization/Technology Licensing
I One-on-One Meetings Support
3. Mentoring Program
C. Access to Professional Services Providers
I. Accounting& Financial Professionals
I Regulatory Compliance
3. E-commerce
4. Government procurement
5. Manufacturing Assistance
t? Revised 5606
6. Legal Services
7. International Trade
D. Networking Opportunities
1. Events
2. Introductions
3. Virtual
E. Access to Other Educational Seminar and Training Providers
I. SBDC(Small Business Development Center)
2. SBA(Small Business Association)
3. SCORE (Counselors to America's Small Businesses)
4. CVWDC (Coachella Valley Women's Business Center)
5. CIEDEC(CA Inland Empire District Export Council)
F. Administer all other Agreements between the City and CVEP in a timely and
appropriate manner.
t i 3 '�=aed�515ri8
SCHEDULE OF CONDENSATION
City shall pay CVEP 5196,500 annually, to be billed on a quarterly basis in alignment with Elie
submission of the Quarterly Report metrics described in Attachment"I".
Compensation shall be paid in advance of the quarter upon receipt of an invoice pursuant to
Section 3 of the Agreement, as follorvs:
July I to September 30 Paid in July
October I to December 31 Paid in October
January 1 to March 31 Paid in January
April l to June 30 Paid in April
14 Revlse9,V 5116
Attachment "1"
Quarterly Reporting Metrics
CVEP shall provide a quarterly report to the City of Palm Springs that shall contain, but not be
limited to,the following information:
• Companies (contact information) providing outreach services
• Companies (contact information)receiving outreach services
• Number of companies in residence
• Number of graduating companies
• Number of employees hired by CViHub and Accelerator companies (jobs created --
monthly and cumulative)
• Number of employees hired by CViHub and Accelerator graduate companies (jobs
created —monthly and cumulative)
• Revenues.sales from CViHub and Accelerator start-up companies
• Number of interns/students trained
Number of sponsors,corporate partners, members or contracts signed
• Number of patent disclosures,applications by CViHub and Accelerator companies
• Funding sources and amounts leveraged or invested in CViHub and Accelerator
companies
7it3<,,p i 13 Revi3ed•5151 t&
Attachment "2„
Palm Springs Accelerator Campus& iHub Advisory Board
The Advisory Board shall be comprised of the City of Palm Springs two-member Council
Subcommittee, City Manager,and assigned staff.
Advisory Board Duties
The Advisory Board shall establish policy guidelines for the CViHub Incubator program and
Palm Springs Accelerator Campus. The Board will be instrumental in promoting the CViHub
and Accelerator Initiative and generating awareness and understanding of the programs as an
important economic development tool for Palm Springs.
Composition of the Advisory Board may be subject to change during the term of the Agreement.
The Advisory Board and CVEP may recommend changes to its composition. Such a change
shall constitute a minor change to the Agreement. The City Manager of the City of Palm Springs
or his designee is authorized to approve proposed changes to the Advisory Board.
'.?t itmt I t5 Rt+isad:5I5J16
Attachment " '
CVEP shall establish a Selection Committee to review and select qualified candidates for the
CViHub and Accelerator programs. The Selection Committee shall include two (2) business
representatives within the City of Palm Springs, a staff representative from the City of Palm
Springs, a CVEP Executive Board member, and the CViHub Accelerator Manager. The
CViHub Accelerator Manager shall manage the Selection Committee's review process and
prepare all related reports.
CViHub Accelerator Incubator Client Selection
The CViHub Accelerator Selection process is as follows;
I. Intake of completed Client Application
2. Application(s) presented to Selection Committee,
3. Selection Committee accepts or declines application
Evaluation Criteria
I. Meets Targeted industry sectors -- innovative information solutions, clean technology,
renewable energy and new emerging technology
2. Early stage of development (typically within first two years, but small companies
undergoing change in direction or launching new product may also apply)
3. Potential to commercialize or launch within 3 years
4. Ability to pay rent while cash flow is developed
5. Desire to take advantage of and benefit from value added services and guidance
6. Capacity for growth,job creation and economic benefit
7. Not in direct competition with other incubator clients (or no conflict)
Graduation Policies
I. Time Limits -- Clients shall be limited to a term of no more than 3 to 5 years in the
incubator
2. Clients who have progressed beyond benefit of services sooner than the 3-year term may
graduate early
3. Clients who require excessive commitment of resources and do not demonstrate progress
toward graduation may be terminated from the program.
The client selection, evaluation criteria and graduation policies may be subject to change.
Changes to the Selection Criteria are determined by the Advisory Board and CVEP and shall
constitute a minor change to the Agreement. The City Manager of the City of Palm Springs or
his designee is authorized to approve the proposed changes for the Client Selection Committee.
720544 t'' Revised:s ii;
EXHIBIT "B"
INSURANCE PROVISIONS
Including
Verification of Coverage,
Sufficiency of Insurers,
Errors and Omissions Coverage,
Minimum Scope of Insurance,
Deductibles and Self-Insured Retentions, and
Severability of Interests (Separation of Insureds)
1 K Revised 515138
INSURANCE
1. Procurement and Maintenance of Insurance. Consultant shall procure and
maintain public liability and property damage insurance against all claims for injuries against
persons or damages to property resulting from Consultant's performance under this Agreement.
Consultant shall procure and maintain all insurance at its solo cost and expense, in a form and
content satisfactory to the City, and submit concurrently with its execution of this Agreement.
Consultant shall also carry workers' compensation insurance in accordance with California
workers' compensation laws. Such insurance shall be kept in full force and effect during the
term of this Agreement, including any extensions. Such insurance shall not be cancelable
without thirty(30)days advance written noticc to City of any proposed cancellation. Certificates
of insurance evidencing the foregoing and designating"the City, its elected officials, officers,
employees, agents, and volunteers as additional named insureds by original endorsement shall be
delivered to and approved by City prior to commencement of services. The procuring of such
insurance and the delivery of policies, certificates, and endorsements evidencing the same shall
not be construed as a limitation of Consultant's obligation to indemni fy City, its elected officials,
officers,agents,employees, and volunteers.
? Minimum Scone of Insurance. The minimum amount of insurance required
under this Agreement shall be as follows:
I. Comprehensive general liability and personal injury with limits of at least
one million dollars ($I,000,000.00) combined single limit coverage per occurrence and two
million dollars(32,000,000)general aggregate;
2. Automobile liability insurance will' limits of at least one million dollars
(S 1,000,000.00)per occurrence;
3. Professional liability (errors and omissions) insurance with limits of at
least one million dollars ($1,000,000.00) per occurrence and two million dollars ($2,000,000)
annual aggregate is:
4w required
m-X-_... is not required;
4. Workers' Compensation insurance in the statutory amount as required by
the State of California and Employer's Liability Insurance with limits of at least one million
dollars S1 million per occurrence. If Consultant has no employees, Consultant shall complete the
City's Request for Waiver of Workers' Compensation Insurance Requirement form.
3. Primary Insurance. For any claims related to this Agreement, Consultant's
insurance coverage shall be primary with respect to the City and its respective elected officials,
officers, employees, agents, and volunteers. Any insurance or self-insurance maintained by City
and its respective elected officials, officers, employees, agents, and volunteers shall be in excess
of Consultant's insurance and shall not contribute with it. For Workers' Compensation and
Employer's Liability Insurance only, the insurer shall waive all rights of subrogation and
IN)j4J-11 19 Revised 515116
contribution it may have against City, its elected officials, officers, employees, agents, and
volunteers.
4. Errors and Omissions Coverage. If Errors & Omissions insurance is required,
and if Consultant provides claims made professional liability insurance, Consultant shall also
agree in writing either(1) to purchase tail insurance in the amount required by this Agreement to
cover claims made within three years of the completion of Consultant's services under this
Agreement, or (2) to maintain professional liability insurance coverage with the same carrier in
the amount required by this Agreement for at least three years after completion of Consultant's
services under this Agreement. Consultant shall also be required to provide evidence to City of
the purchase of the required tail insurance or continuation of the professional liability policy.
5. Sufficiency of Insurers. Insurance required in this Agreement shall be provided
by authorized insurers in good standing with the State of California. Coverage shall be provided
by insurers admitted in the State of California with an A.M. Best's Key Rating of B++, Class
VII,or better,unless otherwise acceptable to the City.
6. Verification of Coverage. Consultant shall furnish City with both certificates of
insurance and endorsements, including additional insured endorsements, effecting all of the
coverages required by this Agreement. The certificates and endorsements are to be signed by a
person authorized by that insurer to bind coverage on its behalf. All proof of insurance is to be
received and approved by the City before work commences. City reserves the right to require
Consultant's insurers to provide complete, certified copies of all required insurance policies at
any time. Additional insured endorsements are not required for Errors and Omissions and
Workers' Compensation policies.
Verification of Insurance coverage may be provided by: (I) an approved General and.+or
Auto Liability Endorsement Form for the City of Palm Springs or(2) an acceptable Certificate of
Liability Insurance Coverage with an approved Additional insured Endorsement with the
following endorsements stated on the certificate:
1. "The City of Palm Springs, its officials, eniplovees, and agents are manned as all
additional insured... " ("as respects City of Palm Springs Contract No.__ " or 'for any and all
work performed with the Cirv"may be included in this statement).
3. "This insurance is primary and non-contribrawy Oyer anv insurance or self-
insurance the City may!rare..." ("as respects City of Pabn Sprints Conu•act No. " or "for arty
and all ivork performed a irk the City" may be included in this statement).
3. "Should any of the aboi c described policies be canceled before the expiration
date thereof the issrtirng company hill mail 30 days written notice to the Certificate Holder
named" Language such as, "endeavor to" mail and "but failure to mail such notice shall impose
no obligation or liability of any kind upon the company, its agents or representative" is not
acceptable and must be crossed out.
?il Revised:S t6
't.'rJ,j,rir i
4. Both the Workers' Compensation and Employers' Liability policies shall contain
the insurer's waiver of subrogation in favor of City, its elected officials, officers, employees,
agents,and volunteers.
In addition to the endorsements listed above, the City or Palm Springs shall be named the
certificate holder on the policies.
All certificates of insurance and endorsements are to be received and approved by the City
before work commences. All certificates of insurance must be authorized by a person with
authority to bind coverage, whether that is the authorized agentfbroker or insurance underwriter.
Failure to obtain the required documents prior to the commencement of work shall not waive the
Consultant's obligation to provide them.
7. Deductibles and Self-Insured Retentions, Any deductibles or self-insured
retentions must be declared to and approved by the City prior to commencing any work or
services under this Agreement. At the option of the City, either (1) the insurer shall reduce or
eliminate such deductibles or self-insured retentions with respect to the City, its elected officials,
officers, employees, agents, and volunteers; or(2) Consultant shall procure a bond guaranteeing
payment of losses and related investigations, claim administration, and defense expenses,
Certificates of Insurance must include evidence of the amount of any deductible or self-insured
retention under the policy. Consultant guarantees payment of all deductibles and self-insured
retentions.
8. Severability of ]Interests (Separation of Insureds!. This insurance applies
separately to each insured against whom claim is made or suit is brought except with respect to
the limits of the insurer's liability.
1 Reviseo,5150�5
EXHIBIT "C"
CALIFORNIA INNOVATION HUB
MEMORANDUM OF UNDERSTANDING
SEE NEXT PAGE
?? Revmed 515t16
I
j California Innovation Hub Memorandum of Understanding
THE CrTY OF PALM SPRINGS,acting as THE PALM SPRINGS IHUS(sometimes referred to as the
"Designated iHub"),AND THE GOVERNOR'S OFFICE OF BUSINESS AND ECONOMIC DEVELOPMENT("GO-
Biz")enter Into this Memorandum of understanding("MOU")dated It 'Mikapitalized
terms are either defined within the paragraph or in the definition section under Appendix A.
RECITALS
Whereas,as one of the world's largest economies, the State of California leads the nation in sparking
Innovation;and
Whereas,on October 4,2013 Governor Edmund G. "Jerry"Brown Jr.signed Into law Assembly Bill No.
250("AB 250"),creating the California Innovation Hub(iHub)Program within the GO-Biz;
Whereas,GO•Siz may designate an iHub through a competitive application process;
Whereas,the purpose of each iHub will be to stimulate partnerships,economic development,and Job
creation by leveraging assets to provide an Innovation platform for startup businesses,economic
development organizations,business groups,and financial Institutions;
Whereas,AS 250 requires GO-Biz to oversee,coordinate,and provide assistance to each designated
iHub;
Whereas,AS 250 requires that any iHub designated by GO-Biz before January 1,2014,must enter Into a
memorandum of understanding with GO-Blz that meets the requirements set forth in AB 250;
Whereas,the City of Palm Springs submitted an application through the competitive process requesting
designation as an iHub for the Western Coachella Valley located in the County of Riverside;
Whereas,GO-biz evaluated the application and designated the City of Palm Springs in the County of
Riverside as an iHub on May 11,2010,
Whereas,the City of Palm Springs has represented that its focus will be,but not limited to,renewable
energy and clean tech(collectively,"purpose");
Whereas,the City of Palm Springs has entered into a Management Agreement with the Coachella Valley
Economic Partnership,and has obtained letters of support from the Small Business Development
Center,College of the Desert,University of California—Riverside,National Renewable Energy Lab(NREL),
Naval Weapons Center,Cat State University-San Bernardino,Wells Fargo, Palm Springs Chamber of
Commerce,Riverside County Workforce Development Center("pa rtner network")in alignment with
Government Code Section 12099.4 to further its purpose.
1
�
THEREFORE,THE DESIGNATED IHUB AND GO-BIZ(COLLECTIVELY THE'PARTIES"OR INDIVIDUALLYTHE
I
"PARTY") PARTIES AGREE AS FOLLOW;
A. Incorporation.All parties agree that the recitals are true and are hereby incorporated by
reference into this MOU.The term of this MOU shall be four years.
i
B. Requirements of the Designated[Hub.The Designated IHub agrees to do the following:
1. Coordinate and participate in five(5)keynote speaker series seminars annually with
national and regional partners focused on supporting start-up and emerging
technology entrepreneurs that provide advice on starting a business including
financing,marketing and planning.Such participation will be In the form of
attendance,financial or in-kind sponsorship,participation as a panelist or
moderator during the event;
2. Coordinate and support through direct and or in-kind funding an annual innovation
event in partnership with GO-Biz that demonstrates research and partnerships that
have evolved out of local universities or research laboratories through the
Innovation Hub;
3. Through partner network of the Coachella Valley Innovation Hub provide
workshops,seminars,and conferences that assistance 20 startup and emerging
technology companies annually;
A. Provide up to five(5)letters of support and commitments to partner network that
support furthergrant applications for programs focused on Nub activities annually;
5. Provide In person and or electronic introductions to local municipalities for start-up
and emerging technology companies to receive business assistance In the form of
streamlining permitting process,access to Innovation hub partner networks,and
business assistance where appropriate;
6. Promote other Nub programs and events through social media and other
communication paths highlighting the collaborative nature of the Nub program;
7. Include the IHub logo on marketing materials and other communications to brand
events and activities of the IHub,as further described in section E below regarding
license;
8. Provide on an annual basis,no later than March 31"a common data set for the
purpose of reporting activity within the[Hub that will include at a minimum,to the
extent applicable:
a. Report on the status of the requirements In items(1)-(6)of Section B,
a bove;
b. Investment Raised/Secured by Designated iHub and/or iHub partner(s);
c. Companies Funded within iHub partner network,
d. Graduates still In business("Graduates"for purposes of this section mean
graduates of an incubator or accelerator program with Designated!Hub);
and
e. Patent applications applied for and granted within Designated Nub region.
2
The minimum common data set Is subject to modification or change from time to
time only with the prior written approval of GO-Biz and the Designated[Hub.
9. Under AB 250 an[Hub shall annually,no later than July 31" report to GO-Blz
progress in meeting each of the goals set forth in Section B above and describe how
it has satisfied the performance standards as described in the iHub application.
C. Designated IHub.The Designated lHub certifies that:
L It has received a copy of the state's nondiscrimination policy from GO-Biz,has read
the policy and agrees to comply with Its terms;
2. The Designated Nub and its principals are current in payment of all state and local
taxes owned unless they have entered into an agreement that was deemed
satisfactory by the respective taxing authority and are in full compliance with the
agreement.
D. Requirements of Go-aiz.GD-Biz agrees to do the following:
1. Enter into partnerships an behalf of the IHub network with various industry sectors,
nonprofit organizations,and non-governmental organizations to negotiate and
Implement exclusive arrangements for the benefit of the IHub network to obtain
access to products and services,including, but not limited to training,software and
educational opportunities for innovators and entrepreneurs;
2. Explore opportunities for partnerships with appropriate foreign governments,as
determined by GO-Biz, to cooperate in the exchange of innovation technologies and
co-develop Innovation platforms;
3. Develop a model or program for appropriate foreign private entities to join a
California NO as either venture capitalist or member/participant of one or more
iHubs;
d. As appropriate, promote the[Hubs during foreign trade missions,investment
forums and In meetings with foreign entitles including governments.
S. Deploy a web based platform that will facilitate dialogue and referrals between the
iHubs throughout the state of California;
6. Develop regulations to determine the process for distributing any funds received
and deposited in the Innovation Accelerator Account created under Government
trade 12099.7;
7. Fromote the Nub Program through social media and other communication paths
highlighting successful accomplishments amongst all designated iHubs to the extent
the Designated IHub communicates with GO-Biz and provides information about its
accomplishments and activities;
8. License the[Hub logo to Designated IHub as set forth below;
9. Provide letters of support to Designated Nub for the purpose of seeking federal and
state funds to support activities of the Designated IHub;and
3
i
10. O- l G Biz will annually post,no later than September 30u,,the information for each of
the reports submitted by each designated€Hub on GO-8iz's internet website and
will provide notice to the Governor and relevant policy committees of the
Legislature that the information is available on the internet.
E. License.On August 29,2014,GO-Biz submitted a section 1(a)trademark application to the
United States Patent and Trademark Office("USPTO") to federally register the iHub mark as
depicted in Appendix B(the"Mark")and assigned serial number 86381306 by the USPTO.
Although not yet federally registered,GO-Bfz has common law rights to the Mark and any other
rights that it may acquire through federal registration of the Mark and hereby grants to the
Designated iHub a non-exclusive,royalty-free, non-sublicensable and non-assignable right to
the Mark to use It In connection with its Mub designation for but not limited to logo design,
web pages owned and operated by the Designated!Hub and any of its partner organizations,
event branding and any other uses provided that prior use and written approval by GO-Biz is
obtained..When exercising this right,the Designated!Hub must ensure any notice of
trademark,"TM"or other propriety right is not removed from any place where It Is placed on
or embedded.Once the Mark Is federally registered the°notation will be required to be
placed on all uses of the Mark by the Designated IHub. Designated iHub agrees that it will not
alter,crop,manipulate and create derivative works from the Mark,other than a proportional
sizing of the Mark to fit applicable materials. Designated iHub must immediately notify GO-Biz
IF it becomes aware or suspects that any third party has gained access of the Mark and Is
wrongfully using the Mark,in whole or in part,or is violating any of GO-Biz's intellectual
property rights,including,but not limited to,trademarks and copyrights.Nothing in this MOU
is intended orshall be construed to transferor assign any intellectual property rights of GO-Biz
to the Designated]Hub,except as otherwise licensed in this MOU.Designated iHub
acknowledges and agrees that all right,title and interest in and to the Mark remains with GO-
Biz,and nothing contained In this MOU will be construed to convey any rights or propriety
interest in the Mark other than the specific rights specifically granted in this MOU. Designated
iHub acknowledges and agrees that the Mark possess a special,unique and extraordinary
character which makes it difficult to assess monetary damages which GO-Blz might sustain by
an unauthorized use.Designated[Hub agrees that irreparable injury would be caused to GO-B!z
by such unauthorized use,and that Injunctive relief would be appropriate in the event of
breach of this Agreement.GD-Biz makes no representations or warranties with regard to the
Mark,except as otherwise explicitly set forth In this MOU.
F. Public Records. Designated]Hub acknowledges that GO-Biz is subject to the California Public
Records Act(PRA)(Government Code section 6250 et.seq.).This MOU and materials submitted
by Designated iHub to GO-Biz may be subject to a PRA request. In such an event,GO-Biz will
notify the Designated iHub,as soon as practicable that a PRA request for the Designated iHub's
information has been received,to allow Designated iHub,at its discretion,to seek an
Injunction.GD-Biz will work in good faith with the Designated Mub to protect the information
to the extent an exemption is provided bylaw,including but not limited to notes,drafts,
4
i
E
proprietary Information, financial information and trade secret information.GO-Biz will also
apply the"balancing test"as provided for under Government Code section 6255 to the extent
applicable.
G. Assignment This MOU is not assignable to another party unless written consent from the non-
assigning party is obtained.
H. Media Release.Designated iHub agrees to cooperate in good faith with GO-Biz,if requested in
connection with any publicity,outreach or press release related to the lHub designation.
Designated IHub may elect to Issue a press release related to this MOU or any requirements
hereunder, but any release shalt be approved by GO-Biz in writing prior to such release.Such
approval shall not be unreasonably withheld.
I, indemnification/Warranty Disclaimer/Limitation of liability. When created, Designated IHub
shall defend,indemnify and hold GO-Biz,its agents or assigns,harmless from and against all
claims,damages,and liabilities(Including reasonable attorneys'fees)arising from this MOU in
the event Designated IHub acts or engages in willful or negligent misconduct.UNDER NO
CIRCUMSTANCES WILL THE STATE OF CALIFORNIA,GO-BIZ,ITS AGENTS OR EMPLOYEES,OR
ANYONE ELSE INVOLVED IN THIS MOU BE LIABLE TO DESIGNATED IHUB FOR ANY DIRECT,
INDIRECT,INCIDENTAL,SPECIAL OR CONSEQUENTIAL DAMAGES THATARISE FROM THIS MOU,
J. Jurisdiction.The validity of this MOU and the interpretation and performance of all of Its terms
shall be governed by the laws of the State of California.The Designated IHub hereby
Irrevocably agrees to submit to the personal jurisdiction and venue of any state or federal court
located in the Cily of Sacramento,State of California,and expressly waives any claim or
defense that such forum is not convenient or proper for purposes of any action arising under
this Agreement.
K. Waiver.Neither party shall be deemed by mere lapse of time(without giving notice or taking
other action)to have waived any action by the party of any of the provisions of this MOU.
5
i
i
l
1. Notice.Any notices required or permitted to be given under this MOU shall be given In writing
and shall be delivered(a)in person,(b)by certified mail, (c) by facsimile with confirmed receipt
required,electronic communication with confirmed receipt required,or(d)by commercial
overnight courier that guarantees next day deOvery and provides a receipt,and such notices
shall be addressed to:
If to GO-t91z: 1325 J Street,1Bth Floor
Sacramento,California,USA 95814
Attention: Deputy Director, Innovation&
Entrepreneurship
Phone:(916)322-0694
Facsimile: (916)322-0693
Email:lou i s.s tewa rtCi aov.ca.sov
If to Designated iHub:
3200 E Tahquitz Canyon Way
Palm Springs,CA 92262
Attention:David H Ready,City Manager, City of
Palm Springs
Coachella Valley iHub
Phone:760-323-8362
Facsimile:760-322-8325
Email:David.Ready@pa I mspringsca,gov
If to Desginated iHub Managemant CVEP
3111 E.Tahquitz Canyon Way
Palm Springs,CA 92262
Attn:Joe Wallace, iHub Manager
Phone: 760-340-1575
Joe62CVEP.com
M. Modification.This MOU may be amended or modified only by mutual agreement of the parties
in written addendum.
N. Ambiguities.Each party has had the opportunity to seek the advice of counsel or has refused to
seek the advice of counsel.Each party and its counsel,if appropriate,have participated fully in
the review and revision of this MOU.Any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not apply in interpreting this MOU.The language
In this MOU shall be Interpreted as to its fair meaning and not strictly for or against any party.
d. Necessary Acts,Further Assurances.The parties shall at their own cost and expense execute
and deliver any further documents and shall take such other actions as may be reasonably
required or appropriate to carry out the intent and purposes of this MOU.
6
i
P, Sections and Other Headings.The section and other headings contained in this MOU are for
reference purposes only and shall not affect the meaning or interpretation of this MOU.
Q. Representation on Authority of Parties/Signatories. Each person signing this MOU represents
and warrants that he or she is duly authorized and has legal capacity to execute and deliver this
MOU.Each party represents and warrants to the other that the execution and delivery of the
MOU and the performance of such party's obligations hereunder have been duly authorized
and that the MOU is a valid and legal agreement binding on such party and enforceable in
accordance with Its terms.
R. Severability.If any term of this MOU is to any extent invalid,illegal,or incapable of being
enforced, such term shall be excluded to the extent of such invalidity,Illegality,or
unenforceability;all other terms hereof shall remain in full force and effect.
i
S. Execution. This MOU may be executed in parts,by fax,or other similar electronic means.
i
l
t
f
Governor's Office f Business and Economic Development
By: By.
Name: Kish i n Name: Lows Stew
Its. Director Its: Deputy Director,Innovation&Entrepreneurship
City of Palm springs t�
Name;David H.Ready,Esq.,Ph.D.
Its; City Manager �
ZZ FOM
APPROVED SY CTt COUNCILLAa-._........
ATTEST:
�'rcltyv Clerk
P. Sections and Other Headings.The section and other headings contained In this MOU are for
reference purposes only and shall not affect the meaning or interpretation of this MOU.
Q. Representation on Authority of Parties/Signatories.Each person signing this MOU represents
and warrants that he or she is duly authorized and has legal capacity to execute and deliver this
MOU_Each party represents and warrants to the other that the execution and delivery of the
MOU and the performance of such party's obligations hereunder have been duly authorized
and that the MOU is a valid and legal agreement binding on such party and enforceable in
accordance with its terms.
i R. 5everablllty.If any term of this MOu is to any extent invalid,illegal,or incapable of being
enforced,such term shall be excluded to the extent of such invalidity, illegality,or
unenforceability;all other terms hereof shall remain in full force and effect.
S. Execution.This MOU may be executed in parts,by fax,or other similar electronic means.
Governor's Office of Business and Economic Development
By: By:
Name: Kish Rajan Name: Louis Stewart
Its: Director Its: Deputy Director,Innovation&Entrepreneurship
City of Palm Springs
Name:David H.Ready, Esq.,Ph.D.
A AS/TO FCJ M
A;)h 21ts W 1 tFTYATTORNEY
ATTEST.
Gty Clerk
Appendix A
4efimlions
l
Clean tech:This is a field of technology that is economically competitive and productive technology that
j uses less material and/or energy,generates less waste and causes less environmental damage than the
{ alternatives.
Renewable Energy:This Is a field of technology derived from resources that are naturally regenerative
or are practically inexhaustible,such as biomas,heat(geothermal,solar, thermal gradient),moving
water(hydro,tidal,and wave power),and wind energy. Municipal sold waste may also be considered a
source of renewable(thermal)energy,
Emerging Technology:Is afield of technology that broaches new territory in some significant way. New
technological fields may result from the technological convergence of different systems evolving
towards similar goals.Convergence brings previously separate technologies together so that they share
resources and interact with each other,creating new efficiencles,
Graduate: For the purpose of this document the term"graduation"is used to refer to tenants in
incubators and accelerators spaces that leave the physical premise with the promise of further growth
and success.
"Innovative solution"refers to a product,process, service,or information technology that is new or
improves an existing product,process,service,or Information technology and is not currently deployed
in the U.S.marketplace.An Innovative solution is expected to deliver measurable benefits compared to
current practice in the areas of environmental benefits,performance,overall process reliability and
control,or economic or social benefits.Moreover,an innovative solution shall consist of a specific and
Identifiable research component.
Startup:Is generally a newly created company less than three(3)years old that are in the initial phase of
development.
Appendix B
Innovation Hub Program Trademark
9
i
i
(40 rim
TM-Edition
INTERNATIONAL CATALOGUE OF TF
TM-Edition Ltd.
Szechenyi ter 17.
2000 Szentendre Governor's 011b
HU Development
Tax ID: HU14800561 1325 J Street, '
Bank: Erste Bank Hungary Zrt. CALIFQRNiA 9
SWIFT: GIBA HUHB USA
IBAN: HU66 1160 0006 0000 0000 6490 6485
I Date: 18, Feb. 2015
E
E
TRADEIN ARK
OWNER
Governor`s}. Office
Economic evelol
1325 J Street, 1 St
CALIFORNIA 958
a �
USA
' Hub
m
C CLASSES ` F GO
CALIFORNIA AND SER�CES:
INNOVATION HUB 3541
a