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HomeMy WebLinkAbout2013-01-29; City Council; 21119; Lease Agreement Bio Tech and Beyond 2351 FaradayCITY OF CARLSBAD - AGENDA BILL 18 AB# MTG. DEPT. 21.119 1/29/13 CED APPROVAL OF THE LEASE AGREEMENT BETWEEN THE CITY OF CARLSBAD AND BIO, TECH, AND BEYOND FOR AN INCUBATOR AT 2351 FARADAY AVENUE DEPT. DIRECTOR ^^^x^^ CITY ATTY. CITY MGR. RECOMMENDED ACTION: Adopt Resolution No. 2013-029 approving tiie five year lease agreement between the City of Carlsbad and Bio, Tech, and Beyond, LLC for lease ofthe city owned building, located at 2351 Faraday Ave., for the purposes of establishing a life sciences incubator, community laboratory and science education center. ITEM EXPLANATION: As part of their annual planning in 2008, City Council set a goal that the building at 2351 Faraday Ave. be used as an incubator to promote entrepreneurship and business growth in Carlsbad. In 2009 and 2011, requests for proposal were issued for an incubator, but neither effort was successful. However, in August of 2012, the City of Carlsbad received an unsolicited proposal to locate a combination incubator, community laboratory and science education center in the building, which will enable broad collaboration and support innovation in the life sciences industry, one of Carlsbad's most important industry clusters. The goal of the Community Laboratory and Life Sciences Incubator is to create new life sciences companies and new jobs in Carlsbad, help Carlsbad become a national leader in the citizen science movement which will strengthen our life sciences cluster, add to Carlsbad's core technology base resulting in new development and new invention patents, and serve as a key base for regional science education outreach efforts. The building located at 2351 Faraday Ave., also known as the Farmers' Auto Claims building, was purchased by the city in 2001 and has remained vacant. The building is 6,000 square feet in size. This lease only concerns 2351 Faraday Ave., not the larger Farmer's building at 5815 El Camino Real. The space will be leased to Bio, Tech, and Beyond LLC for one dollar ($1) per year. The term of the lease is five years. For the first year, the city also agrees to pay for electric and gas utilities in an amount not to exceed $2,500 per month or $30,000 total. The city currently pays for the utilities related to the property and the additional expense will be the difference between current expenses and any increase due to use by the incubator. Utility usage is likely to be DEPARTMENT CONTACT: Kathy Dodson, 760-602-2744, kathv.dodson(S)carlsbadca.qov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED DENIED WITHDRAWN AMENDED • • • CONTINUED TO DATE SPECIFIC • CONTINUED TO DATE UNKNOWN • RETURNED TO STAFF • COUNCIL RECEIVED THE • REPORT/PRESENTATION OTHER-SEE MINUTES • Page 2 lowest during the first year in operation as the incubator will still be in the start-up phase. After the first year, the incubator will be responsible for all gas and electric payments. The city agrees to continue maintaining the landscaping of the building at city expense for the term of the lease. The city will also continue to pay for trash collection, not to exceed $100 per month for the term of the lease. City responsibility for trash collection excludes any hazardous waste removal. The City will lease the facility with no deferred maintenance. It is expected that some repairs to the building are needed, especially regarding the HVAC system. The total expected cost of this maintenance is $25,000. While these costs are requested to ensure the successful start-up and establishment of the incubator, a successful incubator program can generate significant economic benefits to the city. Pursuant to their business plan, within its first two years of operations the incubator operator will sign up 50 paying members, incubate eight companies, offer at least four science courses per year, hire at least one full time staff member and create a functional cell and molecular biology lab. The lessee is responsible for paying for all tenant improvements, salaries and equipment, among other costs associated with operating the incubator and community laboratory. FISCAL IMPACT: The maximum cost to the city is expected to be: Deferred Maintenance HVAC Repair $25,000 Year One Expense Gas & Electricity $30,000 Trash Removal $1,200 Maximum City Expense (5 years) $56,200 It is recommended that the deferred maintenance be funded through the Infrastructure Replacement Fund and the remaining costs be funded using City Council contingency. Budget for years two to five expenses will be appropriated in the annual Property & Environmental Management budget. Year one expenses for gas and electricity and trash removal will be appropriated from council contingency. ENVIRONMENTAL IMPACT: Pursuant to Public Resources Code section 21065, this action does not constitute a "project" within the meaning of CEQA in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and therefore does not require environmental review. EXHIBITS: 1. City Council Resolution No. 2013-029 2. Lease Agreement between City of Carlsbad and Carlsbad Community Laboratory 3. Incubator proposal by Carlsbad Community Laboratory including letters of support EXHIBIT 1 1 RESOLUTION NO. 2013-029 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING EXECUTION ^ OF A LEASE AGREEMENT BETWEEN BIO, TECH, AND BEYOND LLC AND THE CITY OF CARLSBAD FOR CITY OWNED PROPERTY LOCATED AT 2351 FARADAY 5 AVENUE FOR THE PURPOSES OF OPERATING A LIFE SCIENCES INCUBATOR AND COMMUNITY SCIENCE 6 SPACE 4 7 8 9 10 WHEREAS, the City has determined it is desirable and in the best interest of the community to enter into a five year least agreement with Bio, Tech, and Beyond LLC to lease the small Farmers' Insurance claim building located at 2351 Faraday Avenue, for 11 the purposes of establishing and maintaining a life sciences incubator, community 12 laboratory and science education center; and 13 WHEREAS, there is an economic development need to support the burgeoning life sciences industry that stems from the strong presence of major life sciences companies in Carlsbad and more specifically in the Carlsbad Research Center in which the subject property is located; and WHEREAS, regional educational institutions support the presence of a biotechnology indicator to serve and expand educational resources and life sciences 14 15 16 17 18 19 2Q businesses in the Carlsbad community; and 21 WHEREAS, the City has determined that it is necessary and appropriate to enter 22 into the subject lease and extend the use of the building for life sciences incubation and 23 community science purposes in order to further support the life sciences industry and the biotechnology and science education programs; and WHEREAS, the City and Bio, Tech, and Beyond, LLC have agreed to all terms of 26 the lease; 27 " 28 3 1 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of 2 Carlsbad, California, as follows that: 1. The above recitations are true and correct. 2. That upon approval as to form, by the City Attorney, the Mayor is authorized to execute the lease agreement attached hereto between the City of Carlsbad and Bio, Tech, and Beyond LLC. 3. Authorize the Finance Director to appropriate $25,000 from the 9 Infrastructure Replacement Fund for HVAC repairs. 4. Authorize the Finance Director to appropriate council contingency funds of 11 $31,200 for year one expenses in the Property & Environmental Management 12 10 13 14 15 16 17 18 // 21 22 23 24 25 26 27 28 // // // 19 // 20 // // // // // // // budget. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 29* day of January 2013, by the following vote to wit: AYES: NOES: Council Members Hall, Packard, Wood, Blackburn, Douglas. None. ABSENT: None. MATT HALL, Mayor ATTEST: CITY OF CARLSBAD LEASE AGREEMENT PREMISES: 2351 Faraday Avenue Carlsbad, CA 92008 Lessee: Bio, Tech, and Beyond LLC TERM: Five (5) Years CITY OF CARLSBAD LEASE AGREEMENT INDEX 1. DEFINITION OF TERMS 1 2. TERM 1 3. TERMINATION OF LEASE 2 4. OPTIONS TO RENEW 2 5. VACATION OF PREMISES 3 6. RENT 3 7. COST OF LIVING ADJUSTMENT 3 8. SECURITY DEPOSIT 3 9. UTILITIES PAYMENTS 3 10. TAXES, ASSESSMENTS, AND FEES 4 11. ACCEPTANCE AND MAINTENANCE 4 12. ALTERATIONS 5 13. USE 5 14. OCCUPANCY, ASSIGNMENT AND SUBLETTING 6^ 15. LESSEE'S GOALS 6 16. BENCHMARKING AND REPORTING 6 17. CONDUCT 7 18. PETS 7 19. NOTICES 7 20. RIGHT OF INSPECTION 87 21. AUDIT.... 8 22. RIGHT TO SHOW PREMISES 8 23. INSURANCE 8 24. INDEMNIFICATION 10^ 25. NONDISCRIMINATION 10 26. HAZARDOUS AND/OR CONTAMINATED SOIL AND MATERIAL 10 27. LAW TO GOVERN; VENUE 10 28. SPECIAL PROVISIONS Vm 29. AMERICANS WITH DISABILITIES ACT (ADA) im LEASE AGREEMENT This Agreement is made this 29 day of January, 2013. Between: City of Carlsbad a chartered municipal corporation 1200 Carlsbad Village Drive Carlsbad, Califomia 92008 ("City") And: Bio, Tech, and Beyond LLC a limited liability company 2351 4647 Park Drive Carlsbad, CA 92008 ("Lessee") WHEREAS, City desires to rent to Lessee and Lessee desires to rent from City certain public property located at 2351 Faraday Avenue in the City of Carlsbad, for the purpose of operating a community laboratory to serve as both a life science start-up company incubator and as a science education center. The Premises is defined below and fully described in Exhibit "A," which is incorporated by this reference. NOW THEREFORE, it is mutually agreed by and between City and Lessee as follows: 1. DEFINITION OF TERMS. The following words in this Lease Agreement shall have the significance attached to them in this clause unless otherwise apparent from their context. a. "Lease" means this Lease Agreement. b. "Premises" means 2351 Faraday Avenue, Carlsbad, Califomia, which includes a 6,000 square foot building and parking as more fully described in Exhibit "A." c. "Lessee" means the Bio, Tech, and Beyond LLC and does not include its heirs, assigns, or successors-in-interest. d. "Invitees" means any individual or organization who enters the Premises at the express or implied invitation of Lessee. 2. TERM. The term of this Lease shall be five (5) years, commencing on Febmary 1, 2013. 1 3. TERMINATION OF LEASE. 3.1 Each party shall have the right to terminate this Lease without cause for any reason by giving ninety (90) days prior written notice to the other party. 3.2 City shall have the right to terminate this Lease by giving seven (7) business days prior written notice to Lessee for any of the following events: 3.2.1 Lessee's failure to comply with the following clauses in this Lease: Acceptance and Maintenance, Paragraph 11 Alterations, Paragraph 12 Use, Paragraph 13 Occupancy, Assignment and Subletting, Paragraph 14 Conduct, Paragraph 17 Insurance, Paragraph 23 Americans with Disabilities Act (ADA), Paragraph 29 3.2.2 Ifthe City discovers at any time during the lease term that the Lessee or any other party has used, is using, or will use the Premises in an unlawful manner or for an unlawful purpose, or in any manner that is inconsistent with any provision of this Lease. 3.2.3 The Municipal Property Manager is authorized to terminate this Lease for the City upon City Council direction. 4. OPTIONS TO RENEW. Lessee shall have two (2) one (1) year options to renew this Lease upon City's written consent. If Lessee desires to renew this Lease, Lessee shall provide written notice to City of Lessee's intent to renew not less than sixty (60) days prior to the expiration of the initial Lease term or first renewal year. City shall respond to Lessee's renewal request in writing within thirty (30) days of receiving such notice. City reserves the right to modify the rent rate for each renewal year at the City Council's discretion. 5. VACATION OF PREMISES. 5.1 Upon termination of this Lease for any reason. Lessee shall peaceably vacate, and shall cause its Invitees to peaceably vacate, and deliver the Premises to City in the same condition as Lessee found them upon its acceptance of the Premises hereunder, excepting ordinary wear and tear, conditions caused by acts of God and improvements made in accordance with Section 12 herein. 5.2 Upon such termination, Lessee shall immediately: 5.2.1 Arrange and pay for the disconnection of all utilities and services ordered by Lessee; 5.2.2 Provide a written statement to the Municipal Property Manager of Lessee's new address for purpose of refunding monies , if any due Lessee under this Lease, and forwarding mail; and 5.2.3 Deliver any keys for the Premises to the Municipal Property Manager or send said keys by certified mail to the address stated in Paragraph 19 below. 6. RENT. In consideration of the possession and use of the Premises, Lessee shall deliver and pay rent to City during the term of this Lease in the amount of One Dollar ($1.00) per year. 7. COST OF LIVING ADJUSTMENT. Not applicable to this lease. 8. SECURITY DEPOSIT. Lessee shall deposit with City the sum of one thousand dollars ($1,000) receipt of which is hereby acknowledged by City, as security for any damage caused to the Premises during the term of this Lease. Such deposit shall be retumed to Lessee, without interest, and less any set off for damages to the Premises upon the termination of this Lease. 9. UTILITIES PAYMENTS. For the first year of this Lease, City agrees to pay for electricity, gas, landscaping and trash charges (not to include hazardous materials). The City's payment shall be capped at two thousand five hundred dollars ($2,500) per month and thirty thousand dollars ($30,000) total. Effective on the first aimiversary of the Lease, City will terminate assistance with the payment of electric and gas bills and Lessee will be solely responsible to pay for these utilities and services necessary for the occupancy of the Premises. The City agrees to pay for landscaping and trash charges for the term of the lease. Trash charges will be capped at $100 per month, and will not include the disposal of hazardous materials. 10. TAXES, ASSESSMENTS. AND FEES. 10.1 The terms of this Lease may result in the creation of a possessory interest. If such a possessory interest is vested in Lessee, Lessee may be subjected to the payment of personal property taxes levied on such interest. Lessee shall be responsible for the payment of, and shall pay before delinquent, all taxes, assessments, and fees assessed or levied upon Lessee, on said Premises or any interest therein, on any buildings, structures, machines, appliances, or other improvements of any nature whatsoever, or on any interest therein. 10.2 Lessee further agrees not to allow such taxes, assessments, or fees to become a lien against said premises or any improvement thereon. Nothing herein contained shall be deemed to prevent or prohibit Lessee from contesting the validity of amount of any such tax, assessment, or fee in any manner authorized by law. IL ACCEPTANCE AND MAINTENANCE. 11.1 Lessee hereby acknowledges that Lessee has inspected the Premises, that Lessee accepts said Premises "as is" and "where is," that the Premises are in a good and sanitary order, condition, and repair. Lessee hereby accepts the Premises as such, except for maintenance to the building to be performed by the City within sixty (60) days of the commencement of this Lease. 11.2 Lessee agrees to take good care of the Premises and all improvements, alterations, fixtures, and appurtenances thereon. Lessee agrees to provide for maintenance and upkeep of the Premises, as necessary to preserve the Premises in good order and condition, except that City shall provide for maintenance and repair of all landscaping, grounds, roof, electrical and HVAC. Said repairs and maintenance shall be made in a good and professional manner, and at least equal to the condition and quality of the repaired items at the inception of this Lease. Lessee agrees to be solely responsible for all costs of maintenance and repair except as noted above. 11.3 In the event Lessee fails to properly maintain the premises as required by City, then City may notify Lessee in writing of said failure. In the event Lessee fails to perform said maintenance within thirty (30) days after such notice by City, City may immediately terminate this Lease, pursuant to Paragraph 3.2 above. 12. ALTERATIONS. 12.1 Lessee shall make the alterations and improvements to the Premises, at Lessee's sole cost and expense, that Lessee reasonably believes are necessary to operate said community laboratory. Any and all alterations and improvements made to the Premises must first be approved in writing by the Municipal Property Manager. 12.2 Any improvements made with the consent of the Municipal Property Manager shall become a fixture to the realty and shall remain on and be surrendered with the Premises upon termination of this Lease. 12.3 Noncompliance by Lessee or its Invitees with any provision of this clause shall be cause to terminate this Lease for the City pursuant to Paragraph 3.2 above. 12.4 Before making any improvement that require a City and/or other jurisdictional permit(s), the Lessee is responsible for obtaining all such jurisdictional permit(s) from the City or other agency with jurisdictional authority at their sole cost and expense and that the written approval by the Municipal Property Manager as described in Section 12.1 above does not negate the need to obtain such required City or other jurisdictional agency permit(s). 13. USE. Lessee agrees to use the Premises as follows: 13.1 To create a center that will serve as a life science start-up company incubator, a lab space where lay and professional scientist members can conduct research and business activities and where science education groups can teach classes and host science events. 13.2 Lessee shall not use, nor permit the use of, the Premises other than as described in Paragraph 13.1 above. In any case where Lessee is, or should reasonably be, in doubt as to the propriety of any particular use. Lessee may request, and will not be in breach or default if Lessee abides by, the written determination of the Municipal Property Manager that such use is or is not permitted. 13.3 Noncompliance by Lessee or its Invitees with any provision of this clause shall be cause to terminate this Lease for the City pursuant to Paragraph 3.2 above. 13.4 All uses shall be in compliance with the City codes, the underlying Specific Plan for the Carlsbad Research Center and the Covenants, Conditions and Restrictions for the Premises. 14. OCCUPANCY. ASSIGNMENT AND SUBLETTING. The Premises shall only be occupied by Lessee and Lessee's Invitees. Lessee agrees to require its Invitees to utilize the premises in accordance with the Lease Agreement. Lessee shall not assign this Lease or any interest therein without the prior written consent of the Municipal Property Manager. Any such assignment without the City's consent shall be void and shall, at the option of City, terminate this Lease. Noncompliance by Lessee or its Invitees wdth any provision of this clause shall be cause to terminate this Lease for the City pursuant to Paragraph 3.2 above 15. LESSEE'S GOALS. In consideration for the letting of the Premises and amenities provided by the City, Lessee agrees to use its best efforts to accomplish the following objectives in order to provide a public benefit: 15.1 Create community space where like-minded lay and professional scientists can go to share ideas, get help and access the tools they need to innovate. Sign up 50 paying members in the first 2 years. 15.2 Develop a vibrant start-up company incubator. Be instmmental in launching at least 8 start-up companies within the incubator in the first 2 years, wdth the start-up companies to be licensed in the City of Carlsbad 15.3 Become a leading local center for science education and outreach. Offer at least 4 science courses a year at the facility in partnership with San Diego science groups. 15.4 Build a lean, low cost organization, staffed primarily by volunteers and managed by scienfist-members. Hire at least one full time staff member by middle of year 2. 15.5 Create a functional cell and molecular biology lab within 6 months of inception. 15.6 Develop revenue streams from membership fees, corporate sponsors, crowdfunding, direct donations, event fees, course fees and grants. 16. BENCHMARKING AND REPORTING. During the duration of this Lease term, Lessee agrees to provide the Municipal Property Manager with semi-annual reports on December 31^^ and June 30* of each year for the incubated companies to include the following: • Number of jobs created by the Lessee and by any incubated companies; Amount of any salaries paid; Total gross and net revenues earned; Amount of any investment in the company and a list of investors; A list of local suppliers used by the company; A list of local support services used by the company; and Total amount of gross sales outside of the City of Carlsbad. 17. CONDUCT. 17.1 Lessee, Invitees and their guests shall at all times conduct themselves in a quiet and dignified manner so as to cause no annoyance or inconvenience to neighbors of Lessee. 17.2 Lessee and Invitees shall not violate, or permit the violation of, any City or County ordinance, or state or federal law, in or about the Premises. 17.3 Noncompliance by Lessee or its Invitees with any provision of this clause shall be cause to terminate this Lease for the City pursuant to Paragraph 3.2 above. 18. PETS. No pets or livestock of any kind may be kept on the Premises without the prior written consent of the Municipal Property Manager. 19. NOTICES. Any notice or other documentation required or permitted to be given by this Lease must either be personally served on the other party or served by certified mail, retum receipt requested, to the addressee below. Notices served by mail shall be sent to the address listed below and shall be deemed delivered as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was retumed as undeliverable. A change of either party's address must also be immediately served in the marmer described above. For Citv: Joe Gamba, Municipal Property Manager City of Carlsbad Property and Environmental Management 405 Oak Avenue Carlsbad, CA 92008 For Lessee: Joseph P. Jackson III 4647 Park Drive Carlsbad, CA 92008 (760) 434-2893 joseph.jackson@gmail.com joe.gamba@carlsbadca.gov 20. RIGHT OF INSPECTION. City reserves the right for its agents or employees to enter upon and inspect the Premises at any reasonable time to ascertain if Lessee is complying with the provisions of this Lease. 21. AUDIT. City reserves the right for its agents or employees to conduct financial audits, not more than once yearly, of Lessee's financial records that are in any way associated with the Premises. City shall provide at least three (3) business days advance notice to Lessee of City's intent to inspect such records. 22. RIGHT TO SHOW PREMISES. City reserves the right, during the last sixty (60) days of this Lease, or any extension thereof, to conduct an "open house" of the Premises in order to facilitate re-renting or selling the Premises. Said "open house" shall not exceed four hours total duration (maximum of two separate days), and when possible, be scheduled from 3:00 p.m. to 5:00 p.m., Monday through Friday. 23. INSURANCE. Lessee will obtain and maintain for the duration of this Lease and any and all amendments, insurance against claims for injuries to persons or damage to property which may arise out of or in connection with the occupancy or use of the Premises by Lessee or its Invitees, visitors, agents, representatives, employees or subcontractors. The insurance will be obtained from an insurance carrier admitted and authorized to do business in the State of Califomia. The insurance carrier is required to have a current Best's Key Rating of not less than "A-:Vn" OR with a surplus line insurer on the State of Califomia's List of Eligible Surplus Line Insurers (LESLI) with a rating in the latest Best's Key Rating Guide of at least "A:X". 23.1 Coverages and Limits. Lessee will maintain the types of coverages and minimum limits indicated below, unless the City Risk Manager approves a lower amount. These minimum amounts of coverage will not constitute any limitations or cap on Lessee's indemnification obligations under this Lease. City, its officers, agents and employees make no representation that the limits of the insurance specified to be carried by Lessee pursuant to this Lease are adequate to protect Lessee. If Lessee believes that any required insurance coverage is inadequate, Lessee will obtain 8 such additional insurance coverage, as Lessee deems adequate, at Lessee's sole expense. 23.2 Commercial General Liabilitv Insurance. $ 1,000,000 combined single-limit per occurrence for bodily injury, personal injury and property damage. If the submitted policies contain aggregate limits, general aggregate limits will apply separately to the work under this Lease or the general aggregate will be twice the required per occurrence limit. 23.3 Workers' Compensation and Emplover's Liabilitv. Workers' Compensation limits as required by the Califomia Labor Code. Workers' Compensation will not be required if Lessee has no employees and provides, to City's satisfaction, a declaration stating this. 23.4 Additional Provisions. Lessee will ensure that the policies of insurance required under this Lease contain, or are endorsed to contain, the following provisions: 23.4.1 The City will be named as an additional insured on Commercial General Liability which shall provide primary coverage to the City. 23.4.2 Contractor will obtain occurrence coverage. 23.4.3 This insurance will be in force during the life of the Agreement and any extensions of it and will not be canceled without thirty (30) days prior written notice to City sent by certified mail pursuant to the Notice provisions of this Lease. 23.5 Providing Certificates of Insurance and Endorsements. Prior to City's execution of this Lease, Lessee will fumish certificates of insurance and endorsements to City. 23.6 Failure to Maintain Coverage. If Lessee fails to maintain any of these insurance coverages, then City will have the option to declare Lessee in breach, or may purchase replacement insurance or pay the premiums that are due on existing policies in order to maintain the required coverages. Lessee is responsible for any payments made by City to obtain or maintain insurance and City may collect these payments from Lessee. 23.7 Noncompliance by Lessee or its Invitees with any provision of this clause shall be cause to terminate this Lease for the City pursuant to Paragraph 3.2 above. 24. INDEMNIFICATION. Lessee shall defend, indemnify, and hold harmless City, its officers, agents, volunteers and employees fi'om and against any and all claims, demands, and liabilities for loss of any kind or nature which City, its officers, agents, volunteers or employees may sustain or incur or which may be imposed upon them or any of them for injury to or death of persons or damage to property as a result of, arising out of, or in any manner coimected wdth this Lease or with the occupancy and use of the Premises by Lessee, its Invitees, visitors, or any other persons whatsoever. Lessee further agrees to pay any and all costs and expenses, including, but not limited to, court costs and reasonable attomey's fees incurred by City on account of any such claims, demands, or liabilities. However, the provisions of this Lease shall not be constmed to indemnify City for claims or acts arising from City's sole negligence. 25. NONDISCRIMINATION. Lessee herein covenants that this Lease is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of physical or mental disabilities, race, color, creed, religion, sex, marital status, national origin or ancestry in the use, occupancy, tenure or enjoyment of the leased premises. Lessee shall not establish or permit any such practice of discrimination or segregation with reference to the selection, location, number, or use of occupancy by customers, tenants, invitees or vendees in the leased Premises. 26. HAZARDOUS AND/OR CONTAMINATED SOIL AND MATERIAL. Lessee will not place or permit to be placed materials and/or contaminated soils on the Premises which under federal, state, or local law, statute, ordinance, or regulations require special handling in collection, storage, treatment, and/or disposal. Lessee also hereby covenants and agrees that, if at any time it is determined there are materials and/or contaminated soils located on the Premises which under any environmental requirement require special handling in collection, storage, treatment, or disposal. Lessee shall notify City. Within thirty (30) days after written notice to City or from City, Lessee shall commence to take and thereafter diligently complete, at Lessee's sole expense, such actions as may be necessary to comply with environmental requirements. 27. LAW TO GOVERN; VENUE. This Lease Agreement shall be interpreted, constmed and govemed according to the laws of the State of Califomia. In the event of litigation between the parties, venue in state trial courts shall lie exclusively in the County of San Diego, North County Branch. In the event of litigation in a U.S. District Court, venue shall lie exclusively in the Southem District of Califomia, in San Diego. 10 28. SPECIAL PROVISIONS. Lessee hereby acknowledges that Lessee waives all rights to any form of relocation assistance provided for by local, state, or federal law to which Lessee may be entitled by reason of this Lease. 29. AMERICANS WITH DISABILITIES ACT (ADA). It is the duty ofthe Lessee while operating under this Lease to comply with all local, state, and federal laws, including, but not limited to, the Americans with Disabilities Act and to indemnify City from any violation of any such law. Failure by Lessee or its Invitees to comply with a provision of local, state, or federal law is grounds for immediate termination of this Lease by the City pursuant to Paragraph 3.2 above 11 IN WITNESS WHEREOF, the parties below are authorized to act on behalf of their organizations, and have executed this Lease as of the date set forth below. Date: Bio, Tech, and Beyond LLC ]A^0 By: sepOT. Jackal, III, President & CEO Date: Date: APPROVED AS TO FORM Celia Brewer, City Attomey By:. CITY OF CARLSBAD By: By: Jane ^(^aldi. Assistant City Attomey Dated: /^^^^/f 12 EXHIBIT "A" The Lease Premises include the approximate 6,000 square foot building together with the a minimum of 24 parking spaces located on Parcel 2 of Parcel Map No. 14258 filed with the Office of the County Recorder on April 18,1996 in the book of Parcel Maps at page 14258 (APN 212-062-13-00). The premises also include the non-exclusive use ofthe parking lot access driveways located on Parcels 1 and 3 of Parcel Map No. 14258 filed with the Office of the County Recorder on April 18, 1996 in the book of Parcel Maps at page 14258 (APN 212-062-12-00 & APN 212-062-14-00) for the purpose of ingress and egress to the subject Lease Premises property and building described above. The site plan included on page 2 of this exhibit shows the general building floor of the Lease Premises and is included for reference purposes only. 2351 Faroday Avenue EXHIBIT 3 Proposal Creation of a Carlsbad Community Laboratory That Serves As a Start-up Company Incubator and Science Education Center Sponsors: Joseph Jackson Founder, BloCurious Kevin Lustig, PhD CEO, Assay Depot Carlo Quinonez, PhD UCSD Fellow Todd Chamoy Sr Consultant, Booz Allen Hamilton Confidential Carlsbad Bioincubator Proposal August, 2012 SUMMARY This is an unsolicited proposal to create a community laboratory in Carlsbad that will serve as both a life science start-up company incubator and as a science education center. We are proposing that Carlsbad lease us the building known as "The Farmer's Building" for use as a community laboratory. Because of the public benefit we are providing, we are requesting a no- cost lease with a term of 5 years. We request that the building Is leased to us In good working order, with no deferred maintenance, and that Carlsbad continue to be responsible for maintaining landscaping and grounds and for waste disposal. As we will not generate revenue until our second year, we also request that Carlsbad pays the building electricity and heating costs (estimated at $15-20K) for the first year. Our non-profit organization (status and name pending) will cover set-up costs, equipment costs and other overhead costs of building out the community lab. In Its first year, the community lab will be staffed by volunteers working without pay. In subsequent years, permanent staff will be hired to provide member services. The proposed community laboratory will achieve a number of important goals. First, It will help Carlsbad become a national leader In the rapidly growing citizen science movement, strengthening an already strong life science cluster here. Second, It will directly stimulate the Carlsbad economy by creating new life science companies and new jobs based In Carlsbad. Third, It will add to the breadth and depth of Carlsbad's core technology base and lead to the local development and patenting of new Inventions. Fourth, It will help serve as a key San Diego base for science education outreach efforts, particularly to high school and college science teachers. We already have a commitment from the nationally renowned Salk Institute In La Jolla to partner with us In science education outreach efforts (see attached letter of support). Several start-up companies, including Aquinas (see attached letter of support), have been enthusiastic about the prospect of using the bioincubator to help launch their businesses. The online science marketplace Assay Depot has also committed to an annual $5K sponsorship and to sponsoring a $10K Open Science Competition out of a Carlsbad community lab. If it Is established (see attached letter of support). The bottom line Is that we have spent the past 6 months testing the waters for a community lab In Carlsbad and we have found great enthusiasm for the concept. BUSINESS PLAN Our vision Is to create a versatile Inexpensive labspace In Carlsbad where citizen and professional scientists can conduct research and business activities, and where science education groups can teach classes and host science events. The community laboratory will be open to all citizen and professional scientists over 18 years old. Scientists younger than 18 will be allowed access under adult supervision. The laboratory will be constructed from donated lab benches, computers and laboratory equipment. Some of this equipment has already been stockpiled and can be used Immediately. We anticipate that we can create a functional cell and molecular biology lab from donated equipment within 6 months of inception. In Its first year, the lab will be staffed by the founding group and other volunteers. Confidential Carlsbad Bioincubator Proposal August, 2012 The community lab will have five different revenue streams that will enable It to become financially self sufficient by year 2: Projected Revenue Sources 1. Membership Fees - Once the lab Is fully operational, we will charge researchers a membership fee of $100 per month to use the facility. We will charge virtual or small companies an additional monthly fee of $200 if they also want to use a shared office and conference room. 2. Corporate Sponsorships and Science Challenges - We have business contacts at hundreds of life science companies In Carlsbad and San Diego and believe that we can sign up at least a handful of annual corporate sponsors that would receive some marketing benefits In return. Some of the sponsorships will be In the form of Science Challenges and Competitions. Assay Depot has already committed to becoming our first corporate sponsor and to running a $10K science competition for community lab users. 3. Crowdfunding and Direct Donations - We will use online crowdfunding sites such as petrldlsh.com, klckstarter.com and razoo.com as well as our own crowdfunding website to fund specific research projects and to fund ongoing operations. We will also solicit direct donations from wealthy San Diego individuals. 4. Event and Course Fees - We will charge small colleges and similar organizations a small fee (TBD) to use the community facility for science education courses. We will also host our own science courses and entrepreneurship workshops. In partnership with local science groups, such as San Diego's Oxbridge Biotech Roundtable (see attached letter of support) and the San Diego Biotechnology Network (see attached letter of support). 5. Grants - We will apply for grants from the US government and non-profit foundations. We will also provide consulting support to member companies who want to submit SBIR and STTR grants to the US National Institutes of Health. We beleve that this combination of revenue sources will enable us to raise the approximately $60K we will need by year 2 to fund operations and hire at least one full-time employee. This number does not Include money raised by crowdfunding or other means for specific research projects. Any additional non-project specific revenue will be used to purchase new lab equipment, upgrade office facilities and hire additional staff members. How Do We Measure Success? Goal #1 Create a community space where like-minded citizen and professional scientists can go to share Ideas, get help and access the tools they need to Innovate. Sign up 50 paying members In first 2 years. Goal #2 Develop a vibrant start-up company Incubator. Play a role In launching at least 8 start-up companies within the Incubator In the first 2 years. Goal #3 Become a leading local center for science education and outreach. Offer at least 4 science courses a year at the facility In partnership with San Diego science groups. Goal #4 Build a very lean, low cost organization, staffed primarily by volunteers and run by scientist-members. Hire at least one full time staff member by middle of year 2. Confidential Carlsbad Bioincubator Proposal August, 2012 If we are successful in creating a successful, bioincubator, we will consider acquiring equity In future companies we help create, similar to the way that Y-Combinator has operated. This would entail a more significant Investment of time and a possible equity Investment from venture capitalists, but It would create the possibility of a greater payoff downstream that could then be re-Invested in the community lab. THE TEAM The four founders of our non-profit organization (status and name pending) have significant experience In life science research, science education and the formation of life science start-up companies. They are willing to donate their time and energy to establishing and running the proposed community laboratory. Their most Important attributes are their experience, their passion for science and their desire to help mentor the next generation of scientists and science companies. Three of the four founders reside in San Diego county. The fourth founder will move to San Diego county In November, 2012. Joseph Jackson previously founded and helped run BloCurious, one of the country's first community laboratories. He Is a graduate of Harvard College (2004) and the London School of Economics (2005). As an entrepreneur and angel Investor, Joseph has focused on the convergence of blotechnologyand information technology. He Is a mentor to the Thiol Foundation 20under20 program, and he was a participant at the Unreasonable Institute 2010 inaugural program, a participant In Start Up Chile, and a 2011 Echoing Green Finalist (one of 30 entrepreneurs out of more than 20K applicants to the oldest Social Entrepreneurship program in the world). His mission Is to enable the emergence of a new era of entrepreneurship by democratizing access to technology and distributing It so that small Innovators can leverage it to have large Impacts. As Founder of the Open Science Summit, and co-founder of BioCurlous, the first Silicon Valley biotechnology membership lab, he and his work have been featured or quoted In Popular Mechanics, GQ (France), Nature, the New York Times, Boston Globe, and many other blogs and outlets. As a recognized thought leader In the emerging DIY (do It yourself) biology movement, he consults to a range of early stage biotechnology companies and to different stakeholders in government (FBI, HHS, USPTO), academla, and Industry, as these groups seek to understand the critical issues surrounding Open Innovation in the 21st century knowledge economy. Kevin Lustig, PhD Is founder and CEO of Assay Depot, a San Diego-based company whose cloud-based software products enable scientists to easily access research services and experts. Assay Depot's online platform helps citizen and professional scientists translate their Ideas Into experiments. In 2001, Kevin founded and directed research at Kalypsys Inc., a San Diego- based drug discovery company that raised over $170 million In venture funding and put five drug candidates Into human clinical trials. Although he is now an entrepreneur, Kevin has over 15 years of experience working at the lab bench. He directed lead discovery at Tularik, a biopharmaceutical company purchased by Amgen in 2004 for $2.5 billion, and he carried out postdoctoral work at Harvard Medical School after receiving a PhD degree from the University of California, San Francisco (UCSF) and an A.B. degree, magna cum laude, from Cornell University. His research discoveries have been published In Science, Nature and other leading scientific journals and he has been awarded eight technology patents. Recently named one of the Pharmaceutical Industry's 100 Most Inspiring People by PharmaVolce magazine, Kevin speaks regularly about the profound changes happening today In life science research. Carlo Quinonez, PhD Is an IRACDA Fellow in the Department of Pharmacology at the University of California, San Diego (UCSD), where he Is developing open-source hardware Confidential 4 Carlsbad Bioincubator Proposal August, 2012 Instruments that might help power the rise of the citizen science movement. He uses the open source tools he is developing to study the regulatory network controlling activation of the Immune system. Carlo received an Entrepreneurial Fellowship at Caltech that lead to a seven-year foray Into the business world where he gained expertise In product design, engineering and project management. While working at Equlgene, Carlo helped design an Instrument to collect heart rate, cardiac output, velocity, and position from free-running thoroughbreds on the racetrack. Dr. Quinonez also co-founded VIsopla, where he led the development of a scalable hardware platform for high-power LED lighting. Todd Chamoy is a management consultant with Booz Allen Hamilton, one of the largest consulting and IT service providers In the United States. He has extensive expertise In business and technology, providing services ranging from financial analysis to database programming for government clients. Prior to joining Booz Allen, Todd worked as an Associate at Industrial Economics, Incorporated, (lEc) In Cambridge, Massachusetts, a consultancy specializing In economic analysis of environmental and homeland security Issues, where he earned commendations from Customs 8i Border Protection and from Citizenship & Immigration Services for his work on two key economic reports. Before entering the world of consulting, Todd studied biology at the Massachusetts Institute of Technology (MIT); he has also earned a Masters In Pacific International Affairs from UCSD. Confidential Carlsbad Bioincubator Proposal August, 2012 "•W'EDUCATION OUTREACH SALKINSirrUTE lla$ttl)i-tm SficiHT Etluralion June 13,2012 Kevin Lustig, Ph.D. CEO, Assay Depot lllSORoselieSt San Diego, CA 92121 Dear Kevin, Thank you very much for your time and interest in the Salk Education Outreach Programs. The Salk Institute through its Education Outreach Programs has systematically been reaching out to students in an effort to motivate and inspire the next generation of scientists. We are particularly interested in partnering with you in the development of the new community science lab facility in Carlsbad, as well as helping to reach area high school students and teachers for the Biocurious Science Challenge. We know that you are aware of one of our highest profile outreach program, which is the The Salk Institute's Mobile Science Laboratory (MSL). It is an award-wmning program established m 1996 that provides San Diego County middle school students and teachers the opportunity to leam cutting-edge concepts m the biosciences through use of the same standard laboratory equipment found in modem research laboratories at no cost to the school. And to date it has worked with over 30,000 local students. The Salk Mobile Science Lab (MSL) has served as an initial introduction to biotechnology for many San Diego County middle school teachers. Our program is consistently booked to capacity before the academic year starts. Over the years we have recognized that we are not able to fulfill demand for the MSL. However through our kit-based curriculum and in-service teacher workshops we have been able to extend its reach. We have developed Activity Kits fi-om our Mobile Science Lab curriculum that teachers can check out. These kits provide all the necessaiy equipment and reagents for either DNA extractions or Gel Electrophoresis and are available to teachers at two county locations through our existing partnerships vdth Miramar and Grossmont Community Colleges. However, the teachers who utilize the kits still need to be trauied on the activities tiiemselves. While both Miramar and Grossmont College have served as training sites in the past, decreasing education budgets have meant that those facilities can no longer stay open in the evenings or on weekends for our use. We are excited by the potential of the Carlsbad facility for teacher training workshops for our kit curriculum. The community science lab proposed in Carlsbad would be a wonderful alternative to allow us to continue to foster high-end biotechnology experiences for our teachers and their students. We've long had hopes of expanding our teacher outreach to include some of the amazing new research happening at the Salk Institute, particularly in the neurosciences, and of being able to work with teachers to develop lab based activities hi tiiese topics for their students. The lack of an appropriate training facility of our own and increasingly Ihnited access to the community colleges has plac^ those plans on hold. We look forward to contmuing to explore new ideas for fostering science education with your help. With sincere thanks, ^^^^ Ellen Potter and Dona Mapston Salk Education Outreach 10010 North Torrey Pines Road, U Jolla. CA 92037-1099 PO Box 85800, San Diego, CA 92186-5800 Tel 858.453-4)00 www.8alk.edu AOUINAS SCIENCES Carlo J. Quinonez, Ph.D. Founder, President Lcom cell (626) 644-8323 Aquinas Sciences, LLC Suite F-375 270 N.B Camino Real Encinitas, Califomia 92024 main (760) 66-AQSCI www.aqscience.com July 23, 2012 Kevin Lustig, Ph.D. CEO, Assay Depot 11180 Roselle St San Diego, CA 92121 Dear Kevin, Aquinas Sciences LLC is developing open-source versions of scientific instrumentation used in biology research. Our goals are ensuring equal access to the tools used in science and fostering the large-scale collaborations needed to accelerate the discovery of cures and scientific breakthroughs. The Aquinas technology was originally developed at UCSD. Aquinas Sciences LLC is currently in the process of licensing the intellectual property from the UC Regents. We are excited by the potential of the Carlsbad facility as both a startup incubator and a community biology lab. As you know, Aquinas is developing a hardware platform and we're relying on Other companies to incorporate our technology into their products. So lowering barriers to adoption and making our hardware more accessible is an important part of our future success. Since the Carlsbad facility will be home to multiple startups, its an ideal location for us to move into and setup a "hardware lab," equipped with the specialized equipments and tools necessary for general electronics and product design, for the mutual benefit of Aquinas and the other startups at your facility. We're also eager to help with the community biology lab. Part of the motivation for open-sourcing the technology behind our hardware was to help bridge the resource divide in education, where access to cutting-edge hardware is largely limited to an elite minority of schools. By releasing the hardware as open-source, we hope to catalyze a renaissance of science and shop classes in education again. We imagine a future where schools can build their own science equipment rather than relying on government entitlement programs to provide enough funding to bring public science education into the 21 century. The Carlsbad facility would be a wonderful opportunity to showcase Aquinas hardware as part of a high-end biotechnology educational experience. We look foHA/ard to working together to make biotechnology more open and accessible to everyone. Sincerely, Carlo Quinonez Founder and President OS HHH assay depot August 24 2012 Carlsbad Community Laboratory Re: letter of support To Whom It May Concern, I am writing to express Assay Depot's strong support for the proposal to create a community laboratory in Carlsbad. We believe that the next generation of innovations in the life science area will come from the convergence of citizen and professional science. Community labs like the one proposed for Carlsbad will be a critical part of this new scientific revolution. To show our support for the community lab, Assay Depot is willing to commit to a $5K annual corporate sponsorship and to a $10K open science competition (to fund research within the Carlsbad community lab). You can learn more about similar open science challenges Assay Depot has run with BioCurious, the community lab in the Bay Area, and GenSpace, the community lab in Brooklyn, by following this link: http://challenge.assaydepot.com/ We also plan on being involved in science education efforts out of the Carlsbad lab. We are already planning a science educational workshop on ''how to create a start-up company from your graduate or post-doctoral work,'' and hope to hold the course this Winter in the Carlsbad community lab in partnership with other local science groups. Finally, we will be happy to donate lab benches and some lab equipment to help get the lab equipped. We will also use our large network of partners to solicit additional equipment and supply donations. We're excited to see firsthand the convergence of the Maker Revolution and DIY- Biology. We look forward to helping make the Carlsbad bioincubator a success. Best regards. Chris Petersen Co-Founder and CIO Assay Depot 858 254 0875 August 28 2012 Carlsbad Community Laboratory To Whom It May Concem, Biotech Acumen develops cross-discipline training programs for professionals and scientists in the biotech community. We believe numerous students and young professionals don't realize that they have far more opportunities to leverage their talents beyond that of traditional professional paths. Our goal is make them aware of these paths and work with them to take action. We believe that community focused centers like the Carlsbad Community Laboratory support this vision. We're excited about the opportunities it will create in leveraging the vast amount of talent we have in the region. To show our support of the community lab, Biotech Acimien is willing to provide: • training programs • consulting and mentorship • idea sharing events The Carlsbad lab integrates seamlessly with our education and mentorship programs. Together we can give teams the ability to take the learnings all the way to execution. We're excited to support this convei^ence of enablers. We look forward to helping make the Carlsbad Community Lab a success. Best regards, Janus Javier Founder Biotech Acumen ^1 •^SDBN # Join e Connect ^ Grow August 24 2012 Re: letter of support for Carlsbad community bioincubator Dear Kevin, I am writing to express the strong support of the San Diego Biotechnology Network (SDBN) for the creation of a shared community laboratory in Carlsbad. As you know our organization has been working since 2008 to address the need for more high quality face to face networking opportunities for scientists in the San Diego area (http://sdbn.org/). The proposed community lab/bioincubator would provide an excellent venue for scientists in our network to join together to turn their ideas into experiments and into start-up companies. Most of our SDBN networking events are currently held in South San Diego, in the Torrey Pines, Mission Valley or Sorrento Valley areas. The location of a community laboratory in Carlsbad would help enable us to expand our reach to North San Diego and Orange County. Considering Carlsbad is already home to over 100 life science companies, having a community science hub there just makes good sense. Additionally, we've had interest in forming a satellite networking group in Carlsbad. As I also run Comprendia, a science marketing firm specializing in start-up companies, I am particularly interested in the bioincubator aspect of the community lab. I believe that the next wave of innovation in life sciences will come from citizen scientists and ex- industry scientists working hand in hand. Community labs will be an important part of this new collaborative way of doing science. SDBN has a broad membership of scientists working in biotechnology, diagnostics, green technology, medical devices or pharmaceutical discovery. I look forward to help getting the word out about the new Carlsbad community lab. Best regards. Mary Canady Founder San Diego Biotechnology Network (SDBN) President Comprendia, LLC Oxbridge Biotech Roundtable SAN DIEGO CHAPTER http://oxbridgebiotech.com August 30 2012 RE: Support letter for Carlsbad Bioincubator Dear Kevin, I am writing to express the support of the Oxbridge Biotech Roundtable (OBR) for the creation of a bioincubator in Carlsbad. Oxbridge Biotechnology Roundtable (OBR) is a student-led, intercampus forum established to foster a conversation between academics and industry professionals in the health care and life sciences field. OBR's mission is to create a global network of academic innovators from across disciplines, connecting them with each other and the industry resources necessary to move ideas fonvard. We are a community that transcends the online space, with numerous opportunities to collaborate and leam through our online publications, our business development workshops, and our speaker series at affiliated institutions, which has included visionary leaders in biotech and pharma and outstanding entrepreneurs. The proposed community bioincubator in Carlsbad would be a great place for San Diego scientists in our network to carry out the critical experiments needed to support a govemment grant application or the founding of a new start- up company. We believe the benefits will be mutual as OBR also offer pro bono consulting services to start-up companies, in addition to our science education and science networking efforts. We hope to work closely with the community scientists to provide contacts and resources for them to implement their ideas. At OBR, we believe that science innovation comes from lowering barriers between experts in different scientific fields. Being able to work together on real experiments in shared community labs, like the one proposed for Carlsbad, removes a significant barrier to innovation. I look forward to working with you to make the lab a huge success! Warm regards, Kelvin Chan President, San Diego Oxford Biotech Roundtable (OBR) Kelvin .chan @ oxbridgebiotech .com 858 336 1633 30 Carlsbad Life Sciences Incubator Community Laboratory and Science Education Center Kathy Dodson January 29, 2013 City Council Desire for Incubator •2008-09 City Council goal resulted in request for proposal (RFP) for an incubator •2011-12 second RFP issued •RFPs included use of city-owned 2351 Faraday for a nominal fee •Three proposals received in 2011, none moved forward to a lease 2351 Faraday Farmer’s Auto Claims Building (6,000 sq. ft.) Scope of Incubator Proposal •Life Sciences Incubator –assisting start up companies •Community Lab – providing space for amateur and professional scientists •Science Education Center – offering a range of classes for varying levels of expertise Goals of Incubator Proposal •Create new life sciences companies and new jobs in Carlsbad •Become a national leader in the citizen science movement •Strengthen our life sciences cluster •Add to new development and new patents •Become key base for regional science education Request for City Investment •Lease 2351 Faraday building for $1.00 per year •Pay gas and electricity for one year •Pay trash removal for 5 years •Continue landscaping maintenance for 5 years •No deferred maintenance in the building New City Expenses Deferred Maintenance HVAC Replacement $20,000 Year One Expense Gas & Electricity $30,000 Trash Removal $1,200 Year 2 -5 Expense Trash Removal $4,800 Maximum City Expense (5 years) $56,000 Cost Responsibilities of Applicant •All tenant improvements •Equipment acquisition and installation (estimated equipment value $250,000) •Salaries (estimated in-kind salary donations of $585,000 and hard salary expenses of $292,500) •Operating, overhead and maintenance expenses (minus limited costs covered by City) Incubator Proposal Strengths •Strong, experienced team •Support from science organizations and interested companies •An ambitious but achievable business plan •Measurable with clear goals Measuring Success •50 paying members in first 2 years. •Launch at least 8 start-up companies in 2 years •Offer 4 science courses per year in partnership with San Diego science organizations •Hire one full time staff member by mid year 2 Support for Carlsbad Incubator •Letters of support were received from: –Salk Institution, Education Outreach –Aquinos Sciences LLC –Assay Depot –Biotech Acumen –San Diego Biotechnology Network –Oxbridge Biotech Roundtable Recommendation Adopt resolution No. 2013-029 approving a five year lease agreement between the City of Carlsbad and Bio, Tech, and Beyond LLC for lease of the city owned building, located at 2351 Faraday Ave.