Silicon Valley South

A $1.5-million federal grant that one Orange County community college district rejected is about to be scooped up by another district in the county to encourage the development of new businesses.

The grant from the U.S. Commerce Department will help the Rancho Santiago Community College District build a business incubator for digital-imaging companies. It probably will be built at Santiago Canyon College in Orange, which, with Santa Ana College, make up the district’s two main campuses.

Paul Garza, Rancho’s director of economic development, said he hopes the incubator can bring high-tech businesses to a portion of the county that has had trouble attracting them. “You don’t see them in Santa Ana or Orange or Anaheim,” Garza said.

The grant was headed for the South Orange County Community College District as part of an ambitious high-tech project. Then the district did the unthinkable: It said it didn’t want the funds.

“I’ve never had a client give back money,” said Jill Dominguez of the WRJ Group in Fountain Valley, which has been the consultant on the incubator for both districts. “I think it’s the strangest thing that’s ever happened.”

Under South Orange County, the incubator would have operated with a digital learning center planned for a helicopter hangar at the former Tustin Marine base.

But in the last few months, district trustees scrapped both projects and turned down $2.5 million in grants.

First, the trustees voted to stop pursuing money for the incubator, which they were all but guaranteed of getting. Then, they told the state to keep the second half of a $2-million grant to develop the digital learning center.

South Orange County said it couldn’t take the remainder of the grant because the district didn’t know when the Tustin land would become available. The division of land at the base has been tied up by lawsuits and the Legislature.

At the February board meeting during which the board backed off the incubator, Trustee Thomas A. Fuentes, who is also chairman of the Orange County Republican Party, said he opposed mixing government and business, according to those who were there.

District board President Nancy M. Padberg said she opposes such business incubators: “You’re helping someone start up a new business. What is [the] role of government there? The person doing that has no responsibility. The government is giving them a free ride.”

“Rancho really wanted to do this project,” said consultant Dominguez. “They have economic development in their philosophy. They totally got it.”

An incubator is to provide a place where nascent businesses have space to grow until they can move out on their own.

In this case, the community college district must match the $1.5-million grant with its own funds. But that is easily met by the value of the campus land and buildings devoted to the project and salaries of those involved.