How to Modernize Federal Programs to Expand Program Support for Broadband Investments

On September 21, 2015, the Broadband Opportunity Council (BOC) released a report and recommendations on how to increase broadband deployment, competition and adoption through executive actions within the scope of existing Agency programs, missions and budgets.(1) In total, the report describes 36 immediate actions, with associated milestones, that 25 Federal Agencies have committed to undertake over the next 18 months.

I. Modernize Federal programs to expand program support for broadband investments

We’d like to share with you all of the recommendations this week. In this first post, we look at the actions the Administration is proposing to modernize Federal programs to expand program support for broadband investments. Today, BOC finds, not all Federal programs fully reflect the changing social, economic and technological conditions that define the need for and benefits of broadband. In some cases, programs that can support broadband deployment and adoption lack specific guidelines to promote its use. Other programs have not integrated funding for broadband commensurate with its importance and role in program execution and mission.

The BOC recommends that all relevant Federal programs, especially those supporting economic development, infrastructure and housing programs, use rulemakings or guidance to open financing resources for broadband investments.

To implement this recommendation, BOC members will take the following initial 13 actions. Cumulatively, these actions will open up or clarify the potential uses for $10 billion in Federal grants and loans for broadband-related activities.

United States Department of Agriculture (USDA):

• Update guidance for the Rural Development Community Facility Program: Rural Housing Service - Community Facilities (CF), which represents an estimated $2.3 billion in FY16 funding, will develop and promote new funding guidance making broadband projects eligible.
• Expand broadband eligibility for USDA's Rural Utilities Service (RUS) Telecommunications Program: RUS will revise regulations that currently limit broadband investment in specific areas with inadequate service. This change would open funding opportunities to a different provider even though an incumbent exists and would allow new entrants to access an estimated FY16 funding of $690 million.
• Expand broadband eligibility for Rural Business Loan Guarantee Program: USDA Rural Business will issue guidance to rural communities stating that broadband projects represent an eligible infrastructure expense for the Rural Business Cooperative Services Business and Industry Loan Guarantee Program. Subject to specific requirements, loan funds may be used for real estate, equipment, working capital and debt refinancing. This program represents an estimated $1.2 billion in FY16 funding.
• Expand broadband eligibility for RUS Electric Program: RUS will issue guidance to its legacy electric borrowers and other stakeholders that broadband projects supporting smart grid and communications facilities for energy management are an eligible infrastructure expense. This program represents an estimated $5 billion in electric infrastructure investment. SmartGrid funding will be available based on demand. The Department of Energy (DOE) will highlight this guidance on Smartgrid.gov and will send out an alert to their list serve.

United States Department of Housing and Urban Development (HUD):

• Establish broadband connectivity standards for housing construction: HUD will begin a rulemaking process to require that HUD-funded new residential construction and substantial rehabilitation projects include plans for infrastructure that supports unit-based access to broadband internet connectivity. Exceptions will be made where the local infrastructure, location of the building or building structure makes broadband infeasible as determined by HUD. In addition, the rule will not apply to properties that only participate in HUD-insured or guaranteed mortgage or loan programs. Other Agencies will explore adoption of similar standards for housing construction programs under their purview.
• Amend Consolidated Plan regulations to include broadband: HUD’s Office of Community Planning and Development will begin rulemaking to integrate broadband feasibility and needs assessment into planning efforts. The Consolidated Plan serves as a framework for a community-wide dialogue to identify housing and community development priorities.
• Expand broadband eligibility for community development and housing: HUD Office of Community Planning and Development will issue guidance to over 1,300 communities that are recipients of Community Development Block Grant Program, Housing Trust Fund, HOME Investment Partnerships Program, Housing Opportunities for Persons With AIDS, Emergency Solutions Grant, and Continuum of Care stating that broadband is an eligible infrastructure expense. These programs represented nearly $6.4 billion in FY15 funding.
• Clarify broadband eligibility in the Indian Community Development Block Grant Program: HUD’s Office of Native American Programs (ONAP) will issue guidance to Indian Community Development Block Grant (ICDBG) recipients that broadband is an eligible infrastructure expense. Tribes and certain Tribal organizations are eligible to apply for funds. HUD is making available approximately $58.9 million for this competitive program in FY15.

Department of Commerce:

• Highlight broadband eligibility for Economic Development Assistance: DOC’s Economic Development Administration (EDA) will issue an FY16 Federal Funding Opportunity (FFO) for its Economic Development Assistance Programs (EDAP) that highlights broadband planning and deployment as one of EDA’s national strategic priorities for funding. The President’s FY16 request for EDAP is $227.5 million.

Department of Health and Human Services (HHS):

• $25 million in new grants to advance Health Centers’ use of health IT: HHS will support Health Centers’ efforts to use health information technology to improve healthcare. HHS will award $25 million in grants to help health centers implement electronic health records and other health information technology to improve quality of care and patient access to personal health information. Since patient and health center use of electronic health information relies on having access to those records, training and technical assistance to facilitate access to broadband will be listed as an eligible expense in this grant program.

Department of Justice (DOJ):

• Highlight broadband eligibility for Justice Assistance Grant Program: DOJ will issue guidance clarifying that the Justice Assistance Grant (JAG) program allows funding for broadband deployment and adoption related to criminal justice activities. Approximately 1,100 State, Local and Tribal jurisdictions receive annual JAG formula funding. This program represents an estimated $370 million in FY16 funding.

Department of Labor (DOL):

• Expand broadband eligibility for One-stops and Job Centers: DOL will issue clarification that broadband service within one stops / American Job Centers is an allowable expense within administrative allowances. ETA will address the allowability of funds to improve digital literacy skills for job hunters, promote Wi-Fi in public facilities, and improve capacity of computer centers to deliver services to customers. This clarification can impact up to 2,500 one-stop career centers across the country.

Department of Treasury:

• Clarify broadband eligibility for New Market Tax Credits: Treasury will update Frequently Asked Questions (FAQs) to specify that broadband projects in qualified census tracts are eligible for the New Markets Tax Credit Program (NMTC Program), provided the investment meets the IRS Regulations related to a business qualifying under the NMTC program. The NMTC Program provides a 39 percent tax credit to offset Federal tax liability for investors that make equity investments in specialized financial institutions called Community Development Entities (CDEs) that provide loans and other credit assistance in low-income communities. Over the past 5 years, CDEs have raised $20.644 billion in qualified private equity investment under the NMTC.

II. Following Up on These Recommendations
In order to ensure that these recommendations are implemented in a timely and transparent fashion, Agencies will provide regular updates to the Council Steering Committee which will monitor progress and report periodically to the National Economic Council.

Tomorrow we’ll share the recommendations aimed at empowering communities with tools and resources to attract broadband investment and promote meaningful use.

1. Modernize Federal programs to expand program support for broadband investments.
2. Empower communities with tools and resources to attract broadband investment and promote meaningful use.
3. Promote increased broadband deployment and competition through expanded access to Federal assets.
4. Improve data collection, analysis and research on broadband.

Notes:
1) The BOC, you may recall, was created in March 2015 by a Presidential Memorandum and, back in April, sought public input on how federal agencies can promote broadband deployment, adoption and competition.