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DATE: February 4, 2015 NEW BUSINESS
SUBJECT: APPROVE ADDITIONAL FUNDING FOR OPERATIONAL SERVICES OF
THE COACHELLA VALLEY INNOVATION HUB AND THE PALM
SPRINGS ACCELERATOR CAMPUS
FROM: David H. Ready, City Manager
BY: Community & Economic Development
SUMMARY
The City Council will consider approving additional funding for the operation of the
Coachella Valley Innovation Hub (CViHub) and Palm Springs Accelerator Campus
('Program").
The CViHub/Accelerator Program is managed by the Coachella Valley Economic
Partnership ("CVEP"), which provides administrative and client services to meet the
goals of the Program, including providing education, support, training, business
assistance, and networking programs for the clients in the Program. CVEP also
manages the physical facilities reserved for CViHub clients housed at the Rabobank
Regional Business Center and at the Accelerator Campus.
The CViHub has been repeatedly recognized in the State of California as a `Best
Practice" model to develop start up incubator programs. Palm Springs has the only
Accelerator Campus combined with an innovation hub not only in the State, but in the
nation. The significant success of both programs and facilities has led to new business
development, job creation, and investment.
RECOMMENDATION:
1. Approve additional funding for the operational services of the Coachella Valley
Innovation Hub and Palm Springs Accelerator Campus in the amount of $131 ,320.
2. Adopt Resolution No "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR THE 2014-15 FISCAL
YEAR TO PROVIDE AN ADDITIONAL $71,500 FOR THE COACHELLA VALLEY
INNOVATION HUB PROGRAM."
3. Authorize the City Manager to execute all necessary documents.
ITEM NO. ��
City Council Staff Report
(February 4, 2015) — Page 2
(iHub-Accelerator Funding)
STAFF ANALYSIS:
The City of Palm Springs is the State-recognized manager of the iHub Initiative, and the
CVEP is the non-profit host selected by the City to manage the CViHub Program. The
City's Innovation Hub approval requires that the CViHub Program be managed by a
non-profit (501(c)(3) organization. CVEP has developed the Program in the last two
years to a "Best Practice" model as recognized by the State.
The CViHub Program is focused on growing and mentoring start-up companies,
primarily but not exclusively in the renewable energy and clean/green technology
industries, including health, wellness and medical technology innovations. In 2012 the
CViHub Program was expanded to include the Palm Springs Accelerator Campus —
specifically for advanced CViHub clients who were ready to conduct research and
development, as well as prototype, manufacture and commercialize their products or
services.
The CViHub operates as the small business incubator with the capacity to mentor six
clients in-house at the Rabobank Regional Business Center and 12 clients at the
Accelerator Campus. Non-resident (virtual) clients also receive mentoring services.
There are currently 22 companies in the Program. The 2014 4`d Quarter Report
(attached) describes the Program's community relations and accolades, partnership
activities, and client descriptions and highlights.
In addition to client services, other operational and management responsibilities include
pursuing public/private funding in order to evolve to a sustainable program, prepare
Quarterly Reports to the City as well as the State's annual report, develop and keep
current the website, calendar and social network accounts, and oversee an iHub
Advisory Board and client selection criteria.
The original State Innovation Hub program was created under the Schwarzenegger
administration; since that time, Governor Brown approved AB 250, officially creating the
California Innovation Hub (iHub) Program within the GoBiz office. The City is not
required to reapply for iHub Designation, but the State has created a new Memorandum
of Understanding which will come to Council for approval at a future meeting.
Palm Springs has been recognized as an economic development leader for its
commitment to the CViHub and Accelerator Program. On October 3, 2014 the CViHub
received a Model Community Achievement Award from South Coast Air Quality
Management District at their 26th Annual Clean Air Awards Ceremony. At the
November 13th 2014 "Spirit of the Entrepreneur' Ceremony the CViHub received the
Supporter of Entrepreneurship Award. A promotional video found on the CViHub web
page, recently shown at the annual Coachella Valley Economic Summit, demonstrates
the impact and importance of the program.
02
City Council Staff Report
(February 4, 2015) -- Page 3
(iHub-Accelerator Funding)
FISCAL IMPACT:
The Coachella Valley Innovation Hub Program (CViHub) was one of the original six iHubs
designated by the State in 2010 and began as a regional partnership between the cities
of Palm Springs, Desert Hot Springs and Cathedral City. The startup funding commitment
from the two partner cities was $25,000 each, with the City of Palm Springs committing to
a higher level funding at $125,000. Since 2010, Palm Springs has been consistent with
its funding but the other cities have not.
CVEP continues to pursue additional revenue for the Program and recently obtained a
$100,000 grant from Wells Fargo Bank specifically for the CViHub/Accelerator Program,
and a $500,000 grant from the Desert Healthcare District for the Accelerator Campus.
The Desert Healthcare District funds are partially allocated ($75,000 per year for three
years) for the Accelerator Campus' Health and Medical Innovation Center's administrative
functions. Other funding sources continue to be pursued.
The iHub budget (attached) shows an annual budget of $429,440, of which $232,708 is
funded through lease revenue and the private sector revenue sources noted above,
leaving an annual shortfall of $196,732 to be funded by the program's City sponsors.
This amount, rounded down to $196,500, would be the aggregate annual contribution
from the three cities during the contract period.
The City budgeted $125,000 for the CViHub Program in the current fiscal year. However,
at the adoption of the Fiscal Year 2014-15 budget, the City Council only appropriated
$65,500 in anticipation that the other two Partner Cities would allocate the same amount.
CVEP made a request of the two Partner Cities in July 2014 for 1/3 financial support, in
the amount of $65,500 for the 2014-15 fiscal year. Since neither Partner City has
approved any financial support this year, CVEP is requesting that the City of Palm
Springs fill the financial need for the operation services for the current fiscal year. The
additional commitment to the iHub would be $131,000, but the actual additional impact to
the General Fund would only be $71,500, which is the difference between the CVEP
request and current $125,000 budget allocation.
Within the CVEP organization, the iHub is considered to be an unqualified success, with
the City of Palm Springs' assistance.
In return for the additional funding from Palm Springs, however, which more than
supplants the funding from the other partner cities, the City and CVEP are negotiating
changes in the iHub structure within CVEP, giving the City of Palm Springs more direct
authority over the operation and budget of the iHub and Accelerator Campus, and
removing the other partner cities from the iHub Advisory Board. An amended
Administrative Services Agreement with CVEP with these changes will be presented to
Council within the next month or so.
03
City Council Staff Report
(February 4, 2015)— Page 4
(iHub-Accelerator Funding)
v�
JoO Ray ond, 'rector Cathy Van H rn, Administrator
C mm ity & Economic Development Community Economic Development
David H. Ready, City Ma
Attachments:
Budget Resolution
CViHub &Accelerator Preliminary Budget
CViHub 3'd Quarter Report (2014)
04
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET
FOR THE 2014-15 FISCAL YEAR.
WHEREAS, Resolution No. 23560 approving the budget for the Fiscal Year 2014-15
was adopted on June 4, 2014; and
WHEREAS, the City Manager has recommended, and the City Council desires to
approve, certain amendments to said budget.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS
DOES HEREBY RESOLVE that the Director of Finance is authorized to record inter-fund
cash transfers as required in accordance with this Resolution, and that Resolution No.
23560, adopting the Fiscal Year 2014-15 budget is hereby amended as follows:
SECTION 1. ADDITIONS
Fund Activity Account Amount
001 1400 54095 $71,500
General Fund Com & Economic PS I-Hub
Development
Purpose: Establish funding for
SECTION 2. SOURCE
Fund Activity Account Amount
001 29031 $71,500
General Fund Fund Balance
ADOPTED THIS DAY OF 2015.
David H. Ready, City Manager
ATTEST:
James Thompson, City Clerk 05
Resolution No.
Page 2
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that
Resolution No. is a full, true and correct copy, and was duly adopted at a regular
meeting of the City Council of the City of Palm Springs on by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
James Thompson, City Clerk
City of Palm Springs, California
06
CViHub& Acclerator Park Budget FY 2014-2015
Preliminary Budget 2014
Revenue QS Q2 Q3 Q4 Totals
Lease Collections $ 14,427 $ 14,427 $ 14,427 $ 14,427 $ 57,708
Client Paid Utilities $ - $ _ $ _ $ _ $ _
Wells Fargo $ 100,000 $ $ - $ - $ SD0,000
Desert Healthcare $ 75,000 $ - $ - $ - $ 75,000
City of Palm Springs $ $ _ $ _ $
City of Cathedral City $ - $ $
Desert Hot Springs $ $ _ $ $ _ $
State of CA Support $ - $ $ _ $ $
Total Revenue and Su _-.__
pPort $ 139,a2�$- 14r42-7� 1¢a�� $ 10-a27-$ 2=2,-TDB ---..�.
Qtr. Cash Flow $ 82;067 $ (93,433) $ (92,933) $ (93,433) $ (196,732)
Cum.Cash Flow $ 92,067 $ (11,366) $ (103,299) $ (196,732)
Operating Expenses $
Lease Payments $ 7,560 $ 7,560 $ 7,560 $ 7,560 $ 30,240
Salarys&Benefits $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 200,000
Professional Services $ 9,000 $ 12,000 $ 12,000 $ 12,000 $ 45,01M
Marketing $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 12,000
Utilities $ 18,000 $ 15,500 $ 14,000 $ 15,500 $ 63,000
Maintenance $ 1,000 $ 1,000 $ 1,000 $ 11000 $ 4,D00
Repairs $ 11000 $ 1,000 $ 1,000 $ 1,000 $ 4,000
Grant Writing and Mgt. $ 7,800 $ 7,800 $ 7,800 $ 7,800 $ 31,2D0
Admin&Facilities $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 40,000
Quarterly Totals $ 107,360 $ 107,860 $ 106,360 $ 107,860 $ 429,440 '..
Cumulative Expenses $ 107,360 $ 215,220 $ 321,580 $ 429,440
Assumptions:
1.Lease Collections based on current scheduled rents x 70%
2.Lease Payments to City of Palm Springs Budget of$30,240 per year based on 21,000 square feet at$1.44
3.Salarys&Benefits are for Managing Director,50%of Asst Dlr,Admin Assistant starting at opening
4.Utilities estimated based on actuals for 6 months and projecting increase from HMIC
S.Maintenance and Repairs(non-constructlon)estimated at$1000 per quarter each;
6.Admin&Facilities Include bandwidth requirements,lease of hardware,security,and disposal service
7.Grant Writing and Management basis Is$65 per hour for 1 week per month and Includes management of the EDA grant
8.Utilities Payments from Client Companies to begin only when construction is completed and Indlvidual billing in place
Conclusions of Financial Needs for Operations
Financial Needs from Public Sources(3 City investors)for Fiscal Year:$196,732
Timing of Needs Approximately Equal($49,183)per quarter over last 3 quarters to avoid negative cash flow
07
COACHELLA
H�ub
COACHELLA VALLEY
INNOVATION HUB
QUARTERLY REPORT
October 1 —December 31, 2014
Submitted by: Joe Wallace
CViHub Managing Director
January 19, 2015
08
Executive Summary
The Coachella Valley Innovation Hub (CViHub) is a State designated business incubator initially funded by
the Western Coachella Valley cities, Palm Springs, Desert Hot Springs, and Cathedral City. It is managed
by the Coachella Valley Economic Partnership (CVEP) an economic development organization serving the
entire region. As part of the IMCP (Investing in Manufacturing Community Partnership) the cities of Indio,
La Quinta, Palm Desert, and Riverside County have all become investors in the CViHub.
The CViHub's primary focus is on early stage businesses in the renewable energy and associated
technology space. The CViHub facilitates education, support, training, business assistance, and networking
programs to contributing members and overseas operations of a small business incubator.
This report covers the fourth quarter of 2014. The quarter saw the client base in the CViHub maintain
capacity with 5 in-house, 5 in the Accelerator Campus, and 12 virtual clients for a total of 22 clients.
A number of metrics for evaluating CViHub progress were checked that are consistent with the goals of
creating wealth and setting the transformation of the Coachella Valley economy into motion.
CViHub Q4 2014 Report
Introduction
The CViHub is a network that enhances Coachella Valley's competitiveness by stimulating partnerships and collaborations that
accelerate investment and economic development around research clusters. The CViHub is focused on clean technology,with
emphasis on sustainable businesses,renewable energy,and enhancing technologies.
The goals of the CViHub include:
• Transform the local economy through growing renewable energy based enterprise
• Nurture,attract,and grow 50 renewable energy based companies in 5 years
• Create local high paying technology and manufacturing jobs in the Coachella Valley
• Develop programs to enable and encourage the Coachella Valley and California to compete in the global marketplace
• Increase the per capita household income and standard of living regionally
• Attract angel and venture capital investments in client companies
The CViHub operates a small business incubator that has the capacity to mentor up to six clients in-house at the Rabobank Business
Center, 12 at the Accelerator Campus, and twelve virtually. The CViHub offers office space to clients,complete with office
equipment and amenities,access to shared conference rooms,a board room, and a dedicated staff that monitors and assists the
clients. CViHub clients have access to professional services at free or reduced costs,targeted training classes and workshops.
09
CViHub Advisory Board
Our Advisory Board that blends public and private stakeholders exchanged emails to consider a group of applications to the CViHub.
The Advisory Board listed below serves a term of one year and is comprised of nine members all of provided input to the CViHub
management regarding the fourth quarters applicants.
• Former Mayor Kathy DeRosa,Cathedral City
• Mayor Steve Pougnet, Palm Springs
• Vacancy to be appointed by Mayor of Desert Hot Springs
• Mark Anderson,The Buzz Factory
• Jim Casey, Integrated Wealth Management
• Andy Jessup,Jr.,Jessup Auto
• Keith Goff, Rabobank
• Larry McLaughlin,College of the Desert
• Franchesca Werden,The Grant Factory
Community Relations/Accolades
The CViHub participated in the following events this quarter:
• CViHub named winner of 2014Inland Empire Spirit of Entrepreneurship Award
• Renewable Energy Roundtable(2)
• Monthly California Innovation Hub Conference Calls(3)
• SBDC Fireside Chats(2)
CViHub Clients on December 31,2014
The CViHub started Q4-2014 with twenty two incubator clients. During the second quarter a total of 5 applications or visits of
interest to the CViHub were reviewed and none were accepted as clients.
Partnership Activity
The partnerships resulted in tangible activity during this quarter:
• Coachella Valley Small Business Development Center:Co Mentoring businesses
• Completed Univ.of Redlands milestone presentation for investor cities in East Valley
• Finalized East Coachella Valley iHub Business Plan
• CViHub(CVEP)granted 50 shares of founders stock in Indy Power Systems in thanks for support
• CVEP named as recipient of future royalty stream by E.Ted Daniels for royalties earned from sales of Incontinence
Technologies patent Jt8,772,568
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Metrics
The CViHub updates their metrics and reports on them quarterly. The metrics include:
III Metric Result
Number of resident companies '... 5
Number of Virtual Companies '... 12 '...
Accelerator Campus Clients 5
Number of graduating companies 0(6 total to date)
Number of jobs created by CViHub companies to date 100(31 this quarter)
Revenue/sales from CViHub companies(estimated for quarter) Greater than$1 Million
Investment Dollars Raised by CViHub Clients Approx:$300,000
Number of sponsors,corporate partners, members or contracts for the Over 200 identified
_CViHub
Number of patent applications and issued patents(total) 2 filed -J
Number of licenses or agreements by CViHub companies
i
Funding sources and amounts leveraged/invested Wells Fargo/NREL multi-
year support agreement in
finalization process,
expectation is$100k per
year for 2 years.
Number of companies receiving outreach services 7(excluding iHub clients)
Number of entities providing outreach services 3
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Client Highlights from Q4-2014
• Indy Power Systems completed the Toyota Renewables installation in Yellowstone and is negotiating to be the energy storage provider
for the new Toyota headquarters in Plano,TX. CEO Steve Tolen has entered into a partnership with Hot Purple Energy for residential
energy storage with a demo unit expected in Spring of 2015 in Palm Springs.
• EV Enterprises now has$5.5 Million in quotes submitted to various potential customers
• SacTec Solar is developing a quote for 63 portable 401kW solar storage units for a customer in Saudi Arabia. Contract will be between$6
Million and$7 Million
• HipsSister was featured on ABC's show called"The List"which features new products.
• SecoSys is now in pilot production and beginning an ad campaign for their smart water meters locally. Hiring in the Coachella Valley may
begin as early as next week. They are featured in the upcoming issue of Thrive Magazine.
• Pocial has gotten their first revenue event and one of the founders quit his day job.
• PS Talent has executed a merger with Atom Nation of Great Britain.The operation will remain in Palm Springs and the merger takes
optimal advantage of the core strengths of both parties.
• Sunup Technologies has now hired 25 people locally
Previously Stated Goals for Q4-2014
• Finalize Architectural Details for Accelerator EDA Grant
• Secure long term commitment from Wells Fargo and NREL partnership
• Work with Marketing to publish THRIVE magazine
• Implement solution to HVAC problems in the HMIC
• Full opening of the Health and Medical Innovation Center(first clients move in)
One of the five goals for Q4 was achieved in full. The Health and Medical Innovation Center energy related upgrades have turned
out to be more complex and expensive than expected.We hope have a handle on the solutions during Q3 of 2015 and to put an
implementation plan in place in Q2 prior to populating the campus with businesses. For this reason the advisory board and the full
opening have been delayed until the improvements have been implemented.
Goals for Q1-2015
• Prepare RFP for EDA Phase of Accelerator Campus Construction
• Secure Funding for Q3&Q4!Hub operations
• Work with SoCal Edison to devise an energy efficiency plan for the Accelerator Campus
• Investigate incentives available for implantation of energy efficiency plan
• Re-examine the membership of the advisory board and make recommendations for changes
Appendices:
• CVIHub Companies circa December 31, 2014
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3111 E.Tahquitz Canyon Way
C OA C H E L LA Palm Springs,CA 92262
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IIALL
p:(760)340- 7
f:(760)548-030370
w: CViHub.com
CViHub Companies Q4 2014
RESIDENT COMPANIES album artwork. Astrella has created a technology platform that
securely pairs physical products to digital content.
Pocialr Pocial is a new, creative, social network designed to
connect like-minded individuals through a combination of Desert GeoExchange: Parent company Geothermal Resource
polling and social media in an effort to foster and encourage Group provides drilling services. Desert GeoExchange is
debate,create a collective voice and quantify opinions. evaluating its entrance into geothermal heating/cooling systems.
Post Modem: Post Modern is a developer of integrated Heightened Security., HS is a local manufacturer of security
hardware/software systems for consumer marketing. Their solutions for residential and commercial clients. Their product
system allows marketers to integrate social media into their can seamlessly integrate into existing security systems.
marketing events,tradeshows,retail outlets,etc.
Heppolt Wind Energy: Heppolt has created a new wind turbine.
Pdatos: Priatas is a medical device company focused on the The design allows for installation & maintenance to be carried
intelligent design of medical and lab ware disposables out at ground level as opposed to current vertical turbines.HWE
throughout the entire life cycle of the product. is receiving support from Los Alamos National Lab.
PSTalent.com: PSTalent has an agreement to develop virtual Incontinence Technologies:The Fanny Wrapper is an integrated
entertainment platforms for Sony PlayStation based games and detection device utilized to aid incontinent adults to get the
nexuses. The programming based hiring and wealth creation assistance they need from their caretakers.
potential in the short term of this business is considerable.
lady Power Systems: Indiana-based IPS offers patented energy '.
SECOSYS: SECOSYS was founded by a process engineer in the blending technology to enable customers to minimize their load
semi-conductor industry. Their platform seamlessly integrates charges by storing energy during periods of low demand for use
into existing water meters to manage,control&conserve water during peak demand times.
in real-time for both property managers and end consumers.
Pacific Coast Innovations: This Seattle based company has a
ACCELERATOR CAMPUS COMPANIES proprietary data compression algorithm that has many different
industry applications. Their first application will be in
EV Enterprises: EV was our first graduate to transition into the manufacturing medical devices.
Accelerator Campus.They manufacture electric vehicle charging
components,microelectronics and other related products. Real Ez-Up: Real Ez-Up founder is a recent Arizona State
graduate of Technological Entrepreneurship & Management.
hips-sister: hips-sister manufacturers a fashionable, functional, They specialize is producing high-end inflatable tents and
and flattering alternative to the fanny pack that integrates a canopies with integrated LED lighting and other technologies.
shield for electromagnetic fields caused by cell phones.
Seismic Warning Systems: SWS is developing the nation's first
Sactec Solar: A designer & manufacturer of alternative energy regionally-based earthquake warning system. By introducing a
solutions,Sactec is focused on "sun-tracking" mobile trailer and regional system, SWS can showcase the Coachella Valley and
ISO-containerized energy power systems for governmental launch itself into a multi-billion dollar emerging market.
(DOD, DHS, FEMA)and non-governmental agencies.
Swiss Hytech: This Swiss based business engages in hybrid
Solaris Power Cells: (Formally NRG Power Cells) Solaris was LeMans racing. Their concept of using a flywheel to store energy
founded by a team of successful entrepreneurs from the data as opposed to batteries has on road potential that will require
storage industry. Their capacitor cells have the potential to high level mechanical skills.
store(renewable)energy with rapid charging rates.
TransMedimaging:TransMedlmaging operates in the electronic
Sunup Energy: Sunup is a commercial solar thermal company health record (HER) industry. Their service eliminates waste in
providing design, manufacturing & installation services for medical imaging by facilitation of cloud based data, hi-res
commercial&industrial applications in Southern California. medical images,storage.
VIRTUAL COMPANIES Vestaor. This German-based startup intends to manufacture
insulating glass units for application in intelligent and dynamic
Astrella: Astrella is a fashion, music and technology lifestyle windows and building glass facades. Vestaxx` proprietary glass
brand.They produce high end luxury garments based on iconic coating technology increases thermal insulation efficiency.
s more efficient than traditional wind turbines.
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