City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: SEPTEMBER 5, 2023
FROM: COMMUNITY & ECONOMIC DEVELOPMENT WARDS: ALL
DEPARTMENT
SUBJECT: CONCEPTUAL FRAMEWORK PROPOSAL TO ATTRACT THE FIRST ALL-
ELECTRIC AUTONOMOUS SHUTTL E ADVANCED MANUFACTURING
FACILITY IN THE UNITED STATES, AL ONG WITH OHMIO’S INTERNATIONAL
HEADQUARTERS, POINT OF SALE AND RESEARCH AND DEVELOPMENT CENTER, AND DEPLOY THREE (3 ) ALL-ELECTRIC AUTONOMOUS
SHUTTLES IN A TWO-YEAR PILOT IN THE CITY OF RIVERSIDE -
SUPPLEMENTAL APPROPRIATION
ISSUE:
Approve the Conceptual Framework Proposal between the City of Riverside and Ohmio, Inc. for the establishment of its international headquarters, advanced manufacturing and point of sale for all-electric, autonomous vehicle shuttles in the City of Riverside and demonstrate the viability and safety of the all-electric autonomous shuttles in a two-year pilot program.
RECOMMENDATIONS:
That the City Council:
1. Approve the Conceptual Framework Proposal; and
2. Authorize the City Manager, or his desi gnee, to prepare an agreement per the parameters of the Conceptual Framework Proposal; and
3. By at least five affirmat ive votes, authorize a supplemental appropriation in an amount not to exceed $2.5 million inclusive of a $1.5 mill ion capital lease or $1.4 million purchase for three (3) all-electric autonomous shuttles, “safety drivers” not to exceed $400,000 and related costs including, but not limited to , maintenance and repair, electricity, and insurance; and
4. Authorize the City Manager, or his designee , to negotiate and execute the agreement per the Proposal with Ohmio, Inc.
BACKGROUND:
May 2023 – City staff conducted a series of meet ings with Ohmio, a New Zealand based, all- electric autonomous shuttle advanced manufacturi ng company, that is inco rporated in the state of Delaware in the United States.
Riverside Autonomous Vehicle Shuttle Pilot Project ● Page 2 June 2023 – Ohmio completed a successful pilot deployment of all-electric, autonomous shuttles at JFK Airport in New York and not ified the City that they were selected by the San Bernardino County Transportation Authority, as a pre-qualified Operating Systems Provider for the Tunnel to Ontario International Airport Project.
June 2023 – The City assisted with site selecti on services, identifying si tes that met Ohmio’s needs to manufacture all-electric autonomous shuttl es. On Ohmio’s second visit to the City of Riverside, City staff toured the available sites with Ohmio repr esentatives. A site of interest was identified, and discussions are underway for a potential multi-year lease of a 30,000-square foot facility in the City of Riverside.
June/July 2023 – Further discussions were held to clarify a conceptual framework that would include Ohmio relocating its international he adquarters, advanced manufacturing, research, and development, and point of sale to the City of Ri verside. Also included in the framework was the notion of the City serving as a testbed through a pilot deployment of all-electric autonomous shuttles in the
City of Riverside.
July 2023 – Ohmio hired a broker and submitted a letter of intent to lease a 30,000- square foot building at 1075 Mount Vernon Avenue in the City of Riverside (see
photo).
July 2023 – City staff met with representatives from the University of California, Riverside (“UCR”), UCR’s
Center for Environmental Research and Technology,
Greater Riverside Chambers of Commerce, Riverside
County Transportation Commission, Riverside Trans it Authority, Riverside County Office of Economic Development, and the State of Cali fornia Office of Business and Economic Development. All have expressed enthusiasm and e xcitement for this innovative project given this framework would be bringing advanced manufacturing, jobs, research and development and an international headquarters to the City of Riverside.
August 2023 – The Economic Development, Plac emaking, and Branding/ Marketing Committee met to consider a recommendation to the City Council to approve the Conceptual Framework Proposal and to direct staff to prepare an agreement based on the terms outlined in the proposal.
The committee made a motion in favor of the recommendation however, requested staff perform additional research on the purchase of the shuttl es instead of the lease option; and for Ohmio to consider extending the building lease term to five (5) years instead of three (3).
City staff contacted Ohmio to ga ther additional information on th e sale of the shuttles and to discuss the possibility of extending the lease for the building to a five-year term. The principal for Ohmio indicated a purchase option for the shuttles was available, which would provide a cost savings of approximately $100,000 to the City. However, this option would require an upfront payment of $1.4 million as opposed to lease payments in the amount of $1.5 million being spread throughout the agreement term. Ohmio also expressed a willingness to consider an extension of the initial lease term for the property to five (5) years, helping to ensure a longer initial period for Ohmio to provide economic benefit to the city.
During the Committee meeting, several questions were also posed to staff about the operation of the shuttles i.e., dedicated lane, number of shuttles to deploy, and shuttle speed. Staff offered additional information in response to these questions and highlighted that the shuttles do not need
Riverside Autonomous Vehicle Shuttle Pilot Project ● Page 3 to have a dedicated lane as they will not be on a fixed track system and their program software allows them to operate on existi ng road networks. As for the deploy ment of the shuttles, it was shared that they do not need to travel together, and that the rate of speed will vary based on State licensing requirements.
August 2023 – Staff made a presentation on the Ohmio Conceptual Framework Proposal to the Greater Riverside Chambers of Commerce Economic Development Council. Members expressed excitement for the project and voted unanimous on a motion to support the project.
DISCUSSION:
Ohmio is a leader in the development and deployment of
fully electric autonomous shuttles. Ohmio shuttles operate globally, including in New Zealand, Australia, South
Korea, Luxembourg, and New York, and the company has
recently secured new contra cts in the Netherlands, the UK, and Finland. In addition, Ohmio was recently selected as selected as a pre-qualified Operating Systems Provider for the Tunnel to Ontario International Airport Project.
Why Riverside? From the outset of our discussions, Ohmio principals emphasized that the City of Riverside is their top relocation choice because it is a talent rich environment, home to cutting edge research and development, and a City with a demonstrated desire to innovate. UCR, Cal Baptist University, La Sierra University, and Riverside Community College all offer degrees aligned with the needs of the company. Ohmio was struck with the alignment, synergy, and nature of research and development being performed by UCR and the California Air Resources Board Southern California Headquarters campus.
By building on the current successes that attracted Ohmio to Riverside, the City can realize lasting economic benefits for the ent ire community. Here are a few wa ys this framework can make an impact to the City of Riverside:
Local Advanced Manufacturing Advanced manufacturing plays an important role within the local economy, supporting high wage jobs and small businesses within the expanded global supply chain. The Milken Institute estima tes that for every job created in advanced manufacturing, 2.5 jobs are crea ted in other sectors. Ohmio plans to establish an advanced manufacturing facility in the City of Riverside. The first locally produced vehicles could be available by Spring 2024, stimulating the local economy and ensuring rapid delivery and support for future vehicles.
This facility would be the only autonomous shuttl e advanced manufacturer in the United States.
Ohmio is uniquely positioned to cater to a variety of projects nationwide, given their status as the only US-based shuttle advanced manufacturer. Their ongoing projects overseas provide then the opportunity to export Riverside-made products, expanding market reach and contributing to the local economy.
Jobs Ohmio estimates they will start with 7-10 jobs in the first year and create between 25-30 jobs over a three-year period, with positions spanning from engineers to technicians. These new roles would provide valuable professional development opportunities and the ability to customize solutions to meet client needs.
Riverside Autonomous Vehicle Shuttle Pilot Project ● Page 4 Supply Chain Ohmio intends to incorporate American technologies into its shuttles, contributing to the 'Americanization' of the autonomous vehicle in dustry. This effort is anticipated to attract other autonomous vehicle part suppliers to Riverside offering business to business relationships, gradually transforming the city into a hub fo r autonomous vehicle advanced manufacturing and related activities.
Research and Development The proposed research and development center will open avenues for collaborative research projects wit h UCR and other local universities. This will position local universities at t he forefront of autonomous vehicle technology research, attracting funding opportunities, and enabling the universities to shape the future of this transformative field.
The continued growth of innovativ e industry sectors like autonomous vehicles would rely on the excellence of our local educational institutions and will attract an d retain talent and create high paying jobs and career pathways fo r residents. Ohmio will foster also industry-academic ties by offering unique internship programs at the re search and development center and advanced manufacturing facility. Students, from a range of disciplines, will gain practical, hands-on experience, aiding their prof essional development and enhancin g the quality of academic offerings.
The Conceptual Framework Proposal (“Proposal”) allows for the testing and validation of safety and efficient transportation ma nagement. Autonomous vehicles , with their precision and consistent performance, have the potential to reduce traffic acci dents caused by human error, enhancing safety for all road users, and contributi ng to a safer Riverside. Autonomous shuttles can contribute to better traffic management and congestion reduction in the city, improving overall transportation efficiency.
International Headquarters Headquarters draw visitors. Stra tegic functions thrive on face- to-face contact, and headquarters are the natural plac e of convening. They host client, board, and team meetings, as well as in ternal and public-facing events. Each aspect attracts business visits, often from overseas. This puts Riverside on the global map as a hub for innovation.
Point of Sale Ohmio’s point of sale worldwide would be the City of Riverside adding economic benefit to the community. The average price of an all-electric autonomous shuttle is $300,000, which translates to $26,250 to the City for each vehi cle sold at the 8.75% sales tax. Selling 10 shuttles would generate $262,500, selling 25 shu ttles generates $656,250 and should they sell 50 shuttles the City would receive $1,312,500. Should this product “take off”, this establishment has the potential to become the one of the City’s largest sales tax generators.
Adaptive Reuse
Nurturing the growth of tech industrie s of the future has environmental and quality of life advantages as well. The transition of industrial and warehousing spaces into clean and green technology corridors has the ability to reduce pollution and local traffic congestion while transforming the City into a job center with high paying, hi-tech job opportunities.
Sustainability Ohmio’s all-electric autonomous shuttles have climate and air quality benefits. The shuttles have zero tail pipe emissions and cleaner transportation means cleaner air and better health. Using all-electric vehicles help to reduce greenhouse gas emissions positively contributing to air quality and support sustainability efforts like reaching carbon neutrality.
City Brand The City of Riverside would grow its brand as a leader in the global shift towards a sustainable, clean, and green economy with Ohmio’s international headquarters, manufacturing facility and research and develop ment center. Ohmio’s all-el ectric autonomous shuttle also showcases a commitment to innovation. The presence of a forward-thinking autonomous vehicle company like Ohmio could draw talent and investment to Riverside, enhancing its attractiveness Riverside Autonomous Vehicle Shuttle Pilot Project ● Page 5 as a place to live, work and explore.
Pilot Project A fully electric autonomous shuttle pilot project (“Pilot Project”) is proposed, one that can serve as an amenity for residents, empl oyees, and visitors. The Pilot Project will be a demonstration utilizing City streets as a test bed. The Pilot Project will not effect core Riverside Transit Agency services. At this time, no routes have been identified but areas of interest include the City’s 6-mile Innovation Corridor along University Avenue between Downtown and UCR given the embedded technology, university campuses, hospital campuses and areas throughout the City not currently being served by transit.
The Proposal provides for the leasing of three (3) shuttles for a two-year period at a cost of up to $1,500,000 for the capital lease or $1,400,000 for the purchase of three (3) shuttles, as well as, other related costs including, but not limited to, safe ty “drivers”, maintenance, electricity, electric chargers, and insurance. Alternative funding sources are being explored that may involve grants – both Federal and State, public-private partnership s, leveraging opportunities with our strategic partners, and charging for tickets for riding the shuttle. The co st centers depicted in the table below are projected estimates that may be refined and updated as a part of the negotiation process with an agreement presented to Committee and Council for review and consideration.
Table – Project Proposal Estimated Cost
Topic Unit Total Cost Note
Lease
Shuttles
or
Purchase
Shuttles
3 $1,500,000
or
$1,400,000
City leases 3 shuttles
or
Purchase 3 shuttles
Safety
“Drivers” 3 $390,000 $65,000 per year X 3 shuttles X 2 years = $390,000
Electricity 60 kilowatts
per day $35,610
$5,935 per shuttle annual X 3 shuttles X 2
years = $35,610
(Estimated to be 20,000 kilowatts per day /
per shuttle X 3 = 60,000 kilowatts per day)
Electric
Chargers 3 $60,000
Furnish and install a Level 2 charger at the
Corp Yard would be approximately $5 -
$10,000 per each unit X 3 shuttles X 2
years = $60,000 + Overnight slow charge
with a level 2 charger looking at $5 per
charge cycle per van
Riverside Autonomous Vehicle Shuttle Pilot Project ● Page 6 Maintenance 3 $65,370 $10,895 annual cost X 3 shuttles X 2 years = $65,370
Insurance 3 $199,020 Insurance estimates have not been
collected at time of publication
TOTAL
$2,250,000
$2,150,000
Estimated cost over 2-year lease term
Estimated cost over 2-year purchase
The state-of-the-art electric autonomous shuttl es will provide safe, efficient, and sustainable transportation solutions that will enhance acce ss to transportation, showcasing the City’s commitment to innovation while contributing to our “living lab” reputation.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 3 – Economic Opportunity (Access to Transportation, Choices, Green Fleet and System s and Smart City Ecosystem); Strategic Priority 4 – Environmental Stewardship (Implement proactive policies and measures to ensure all residents breath healthy and clean air, Impl ement the requisite measures to achieve citywide carbon neutrality no later than 2040); and Strategic Priority 6 – Infr astructure, Mobility and Connectivity (Access to Transportation, Choices, Green Fleet and Systems and Smart City Ecosystem).
This item aligns with each of the five Cross-Cutting Threads as follows:
1. Community Trust – The Proposal allows for the te sting and validation of safety and efficient transportation manage ment. Autonomous vehicles , with their precision and consistent performance, have the potential to reduce traffic accidents caused by human error, enhancing safety for all road users and contributing to a safer Riverside.
Autonomous shuttles can contribute to better traffic management and congestion reduction in the city, improving overall transportation efficiency.
2. Equity – Ohmio’s all-electric autonomous shuttl es have climate and air quality benefits.
The shuttles have zero tail pipe emissions and cleaner transportation means cleaner air and better health for all.
3. Fiscal Responsibility – The Proposal includes Ohmi o locating its international headquarters, manufacturing facility, research and development and its point of sale, which includes the City receiving 8.75% (sales tax) of each shuttle sold worldwide. The Proposal helps to showcase the viability of shuttle, allows for real world research and provides a valuable service to patrons utilizing the shuttle. There may be the potential to collect fairs for shuttle rides, apply for grants, receiv e funding for transporta tion and/or lease the shuttles to private partners to help defer the costs.
4. Innovation – The Proposal positions Riverside as a testbed for new and emerging technology. The Ohmio all-electric, auto nomous shuttles provide an inventive and sustainable solution to meet the need for “first-mile/last-mile” connection for transit riders in the community and around the world.
5. Sustainability & Resiliency – The deployment of a zero-emission shuttle adds to the changing transportation needs of the community. With t he addition of autonomous vehicles, Riverside will have the opportunity to rethink urban design and planning, leading to more efficient use of road space and potentially reducing the need for parking Riverside Autonomous Vehicle Shuttle Pilot Project ● Page 7 infrastructure. Using all-electric vehi cles will also help to reduce greenhouse gas emissions positively contributing to air q uality and support sustainability efforts like reaching carbon neutrality.
FISCAL IMPACT:
The total fiscal impact of this action is up to $2, 500,000. Cost refinement is ongoing for various pieces of this project, but the expectation is that the total two-year cost will not exceed $2,500,000.
Ohmio’s point of sale worldwide would be the City of Riverside, adding economic benefit to the community. The average price of an all-electric autonomous shuttle is $300,000, which translates to $26,250 to the City for each vehicle sold at the 8.75% sales tax. There may also be an opportunity for grant funding to further offset costs.
Costs and revenue offsets are predicated on t he outcome of negotiations between the City and the vendor. At this stage, ther e are potential opportunities to o ffset costs, as stated above, and those will be explored through the negotiation proce ss. Further updates a nd firmer numbers for cost estimates will be brought forward to Council after the City has formally engaged with the vendor.
Prepared by: Jennifer A. Lilley, Community and Economic Development Director Certified as to
availability of funds: Kristie Thomas, Financ e Director/Assistant Chief Financial Officer Approved by: Rafael Guzman, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Concurs with;
___________________________
Ronaldo Fierro, Chair
Economic Development, Placemaking, and Branding/Marketing Committee
Attachments:
1. Proposal
2. Presentation