Government Lien on BEAD Assets

The headline isn’t entirely accurate because of the use of the word lien. However, the government maintains what it calls a property trust relationship in assets constructed with federal grant dollars, which is similar to, but not the same as a bank lien. In the case of the Broadband Equity, Access, and Deployment (BEAD) program, the government interest in grant assets would be held and managed by each State Broadband Office, under the auspices of the National Telecommunications and Information Administration (NTIA). The trust will last through the useful life of the asset, as determined by the government. The useful lives of assets for BEAD are not the same as the depreciation lives of the assets. NTIA has set the longest life for BEAD at 10 years. This is not a new rule and has been applied to other federal grant programs. One of the biggest consequences of these rules is that some lenders are uncomfortable with the government’s interest in the assets, and some lenders will balk at lending to an internet service provider when they find out about this.