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Home My WebLink AboutCVEP - CV IHUB-Accelerator Network Prjct CITY OF PALM DESERT STAFF REPORT REQUEST: APPROVE A FUNDING COMMITMENT IN THE AMOUNT OF $40,000 TO THE COACHELLA VALLEY ECONOMIC PARTNERSHIP IN SUPPORT OF THE COACHELLA VALLEY IHUB/ACCELERATOR NETWORK PROJECT. SUBMITTED BY: Ruth Ann Moore, Economic Development Manager DATE: December 12, 2013 ATTACHMENT: CVEP Funding Request Recommendation: By Minute Motion: 1. Approve a funding commitment of $40,000 to the Coachella Valley Economic Partnership in support of the Coachella Valley iHub accelerator network project; and 2. Appropriate $40,000 from unobligated general funds to Account No. 110-4430- 422-3630 (Economic Development Dues). Executive Summarv: The Coachella Valley Economic Partnership (CVEP) and the University of Redlands were awarded a $200,000 federal planning grant to support the development of a Coachella Valley advanced manufacturing innovation center or "hub" ("iHub"). These grant funds will assist CVEP in creating economic development strategies that recognize the Coachella Valley's advantages as a place to do business utilizing technology and supporting the creation of a manufacturing accelerator program in the eastern Coachella Valley. In order to utilize the grant funds, the granting agency requires CVEP to receive $200,000 in local matching funds from regional stakeholders. CVEP is authorized by the State of California to manage the Innovation Hub program in the Coachella Valley. They have approached the County of Riverside, Coachella Valley Enterprise Zone, and the cities of Coachella, Indio, La Quinta and Palm Desert for partnership in this project. As of November 25, 2013, CVEP has received the following commitments: • The Coachella Valley Enterprise Zone - $75,000 (These were participatory funds by Indio, Coachella and the County into the Enterprise Zone (EZ) and will be G:1rda\Ruth Ann Moore\word data\STAFF REPORTS\I-Hub funding request.doc Staff Report iHub funding request Page 2 of 4 December 12, 2013 forwarded into the CVEP iHub/Accelerator program now that EZ is being eliminated.) • La Quinta - $40,000 contribution has been approved by the La Quinta City Council. • Indio - $15,000 remaining portion of the $40,000 request will be considered at the 12/4/13 Indio City Council meeting. • Coachella - $15,000 remaining portion of the $40,000 request will be considered at the 12/11/13 Coachella City Council meeting. • Riverside County - $15,000 remaining portion of the $40,000 request will be considered at the 12/16/13 Riverside County meeting. Backqround: The Innovation Hub (iHub) program is a State of California program initiated in 2009 to rebuild the job base of the State. An application was submitted on behalf of the Coachella Valley by the cities of Palm Springs, Desert Hot Springs and Cathedral City; in 2010, the Coachella Valley was designated as one of the first six iHubs established Statewide with CVEP serving as the program manager. In 2011, with the opening of the Rabobank Regional Business Center, the program became operational in the Coachella Valley. There was no state or federal funding available in 2010 for the California lnnovation Hub program; it was all funded locally. The cities of Palm Springs, Desert Hot Springs and Cathedral City funded the program at $175K per year for each of the first two years. In addition, a 14,000 square foot incubation facility was provided by Palm Springs at no cost except tenant improvements provided by the private sector. The program added an Accelerator Campus component for those companies successfully completing the iHub program, when Palm Springs provided a 43,000 square foot facility at the Palm Springs Airport plus $1 M over three years for tenant improvements and operations. Desert Health Care District and Wells Fargo provided another $600K for the Accelerator Campus and a $1 M construction grant is now pending with the federal Economic Development Administration (EDA). In the 2013 legislative session, the California Innovation Hub program was codified meaning it is now eligible for state funding. There are now 16 iHubs statewide with more pending and the Coachella Valley iHub is the recognized "best practice" by the state because it now has 18 technology-based companies in the program and its expansion into an Accelerator Campus. In late 2013, CVEP applied for and received a federal EDA planning grant for $200K under the "Investing in Manufacturing Communities Partnership (IMCP)" to be matched locally to expand the CV iHub/Accelerator Campus program to other areas of the Coachella Valley focused on advanced manufacturing. The expansion of the CV iHub/Accelerator Campus program to the east valley for "Advanced Manufacturing" has $200K in federal "seed" money requiring a local match. G:\rda\Ruth Ann Moore\word data\STAFF REPORTS\I-Hub funding request.doc Staff Report iHub funding request Page3of4 December 12, 2013 Five potential partners have been asked to provide $40,000 each for this match for the IMCP Phase 1 planning grant. IMCP Phase 2 is a federal implementation grant of $25M each to be awarded to five or six regions in the US. The State of California recently announced its intention to "land" one of the implementation grants; since there were only three Phase 1 planning grants awarded in California, the Coachella Valley is in good position for an implementation grant award. During this first phase of funding, CVEP, in partnership with the University of Redlands, will develop an inventory of suitable sites for future business incubators and accelerators through the region using Geographic Information Systems ("GIS)" technology, perForm a market analysis to show where sites are most likely to succeed based on data, and utilize the information to develop a future economic growth trends model for the manufacturing and technology sectors in the Coachella Valley. The University of Redlands will conduct workshops with the various stakeholders to discuss the specific challenges of economic development in the region and identify the resulting necessities to adapt business models. Key Deliverables: • Develop a GIS tool operated by CVEP and accessed without charge by the City and other CVEP investors; • Conduct an assessment of industry cluster opportunities in advanced manufacturing; • Identify potential iHub and Accelerator Campus facilities offered by project partners in the eastern Coachella Valley; • Recommend career technical training programs to support advanced manufacturing and technology startups; • Develop an international trade and export plan; and • Prepare a business operations plan for the iHub. A strategic plan will be developed inclusive of elements listed above and it will be submitted on or before September 30, 2014 to the IMCP for the second phase IMCP implementation grant. Fiscal Impact: CVEP's focus is on diversifying the economic base by marketing the Coachella Valley region. Economic development on a regional scale is not simply about attracting businesses, but determining long-term regional goals and developing strategies to attain them. By working together through CVEP on regional economic development, it fosters a strong sense among the valley communities that they are part of a larger economic and demographic whole. G:1rda\Ruth Ann Moore\word data\STAFF REPORTS\I-Hub funding request.doc Staff Report iHub funding request Page4of4 December 12, 2013 Palm Desert has been committed to a regional approach for economic development as it pertains to job generation outside of retail and tourism. This type of job recruitment is vital to the year-round residents in the City and can generate future living-wage jobs that expand the economy throughout the Coachella Valley. Funding for the contribution is not included in the '13-'14 General Fund budget therefore, the $40,000 will need to be appropriated from the unobligated funds. By participating in assisting to bring higher paying jobs, Palm Desert residents may have a greater quality of life and increased sales which bring revenue to the General Fund. Staff recommends the motion. Submitted by: CITYCOUNCILAC�bN ""� APPROVED '� DFNTED �. � RECEIVED OTHER v"'� � R th n Moo MEETING DA — — 013 Economic Development Manager AYES: " � ml r NOES: ABSENT: �- Department Head: ABSTAIN: VERIFIED BY: Original on File with City erk's Office artin Alvarez Director of Economic Development Rev' d by: ul S. Gibson Director of Finance Approval: hn Wohlmuth ity Manager G:\rda\Ruth Ann Moore\word data\STAFF REPORTS\I-Hub funding request.doc December 2, 2013 Mr. John Wohlmuth City Manager City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 RE: Budget Request for Advanced Manufacturing Innovation Hub DearJohn: Following up our presentation to the City Council on November 14, 2013 regarding the above- referenced project, please consider this letter a formal request for funding the City of Palm Desert's share to participate as a partner in the project. This request is for$40,000 to participate as a full partner in the project. BACKGROUND As you know, the Innovation Hub program is a State of California program initiated in 2009 to rebuild the job base of the State. An application was submitted on behalf of the Coachella Valley by the cities of Palm Springs, Desert Hot Springs and Cathedral City; in 2010,the Coachella Valley was designated as one of the first six i-Hubs established Statewide with the Coachella Valley Economic Partnership (CVEP) serving as the program manager. In 2011, with the opening of the Rabobank Regional Business Center, the program became operationa) in the Coachella Valley. There are now 16 i-Hubs Statewide with more pending and the Coachella Valley i-Hub is the recognized "best practice" because it has 18 technology-based companies in the program and its expansion into an Accelerator Campus in Palm Springs. In late 2013, CVEP applied for and received a federal EDA planning grant for$200K under the "Investing in Manufacturing Communities Partnership (IMCP)" to be matched locally to expand the CV i-Hub Accelerator program to other areas of the Coachella Valley focused on Advanced Manufacturing. CVEP is currently working with Indio, Coachella, La Quinta, Palm Desert and Riverside County as potential partners in this initiative. There was no State or federal funding available in 2010 for the California lnnovation Hub program; it was all funded locally. The cities of Palm Springs, Desert Hot Springs and Cathedral City funded the program at $175K per year for each of the first two years. In addition, a 14,000 square foot incubation facility was provided by Palm Springs at no cost except tenant improvements provided by the private sector. When the program added an Accelerator component for companies successfully completing the i-Hub program, Palm Springs provided a 43K square foot facility at the PS Airport plus $1M over 3 years for tenant improvements and operations. Desert Health Care District and Wells Fargo provided another $600K for the Accelerator and a $1M construction grant is now pending with the federal EDA. No other CVEP funding has been used to bring the CV i-Hub Accelerator Campus program to this point;the program has and will continue to operate on a "pay to participate" business model basis. In the 2013 legislative session, the California lnnovation Hub program was codified meaning it is now eligible for State funding. The expansion of the CV i-Hub Accelerator program to the East Valley for "Advanced Manufacturing" has $200K in federal "seed" money requiring a local match. Five potential partners have been asked to provide $40K each for this match for the IMCP Phase 1 planning grant. IMCP Phase 2 is a federal implementation grant of$25M each to be awarded to 5-6 regions in the US. The State of California recently announced its intention to "land" one of the implementation grants; since there were only three Phase 1 planning grants awarded in California, the Coachella Valley is in good position for an implementation grant award. DELIVERABLES The deliverables for Phase 1 of the Advanced Manufacturing Innovation Hub are: 1. A GIS-based economic development tool customized for the Coachella Valley by a Project Partner-the University of Redlands—whose partnership with ESRI, a global GIS leader, is critical. Redlands will develop the GIS model specifically for the Coachella Valley along with a GIS-Coordinator hired for this project. This Coachella Valley GIS model and the GIS Coordinator position will continue beyond the planning grant stage and become an on-going tool available to all CV i-Hub partners. 2. A Strategic (implementation-ready) Plan will be developed using the Coachella Valley GIS model to do the following: - evaluate identified industry cluster opportunities in agribusiness; renewable and environmental technologies; medical and healthcare devices; specialty automotive; logistics; defense and security; and, other emerging clusters in the Valley. - assess potential incubation and accelerator facilities for these industry clusters offered by Project Partners; - provide recommendations for career technical education programs to support Advanced Manufacturing in targeted industry clusters: - develop an international trade and export plan for Advanced Manufacturing products; - identify needed public infrastructure to support an Advanced Manufacturing Center; - develop strategies for private sector investment in an Advanced Manufacturing Center and its companies; - develop strategies to provide for local match for IMCP Phase 2 implementation grant and an oversight structure; - provide a business operations plan for the Coachella Valley Innovation Hub Accelerator Network; -The Coachella Valley Strategic Advanced Manufacturing Plan will be submitted by September 30, 2014 for IMCP Phase 2 implementation grant funding. PROJECT COST BREAKDOWN As requested,the cost breakdown for the project is as follows: EDA Fundin� • Development of CV GIS Model— University of Redlands $90K • GIS Coordinator—Year 1 $70K • Office Space/Overhead $40K Total $200K Local Match • CVEP Staff Resources $110K • GIS Coordinator—Year 2 $ 70K • Consulting $ 20K ✓ Trade and Export Plan ✓ Phase 2 Match and Oversight Structure Tota I $200 K CONCLUSION The Innovation Hub program is a major new economic and jobs growth model for the State of California as evidenced by its growth from six to sixteen locations in the last two years. Now, we have the opportunity to expand it to the East Coachella Valley with a federal grant accompanied by a local match. Five jurisdictions are considering becoming Partners in this endeavor—we hope that the City of Palm Desert will be one of them! Sincerely, Thomas Flavin President & CEO cc: CVEP Executive Committee