New Federal Legislation Eases Access to Financing for Broadband Projects with Qualified Private Activity Bonds

Congress has passed the Infrastructure Investment and Jobs Act of 2021, which President Biden signed on November 15, 2021. The Act includes approximately $65 billion in funding opportunities for the deployment of broadband services in rural areas. In addition to the creation of a broadband grant program, the new legislation modifies Section 142(a) of the Internal Revenue Code to add broadband as an allowable use for qualified private activity bonds. With the new legislation, state and local governments can issue qualified private activity bonds beginning in 2022 to finance qualified broadband projects for rural areas. A qualified broadband project is any project designed to provide broadband service to underserved geographic areas where a majority of households do not currently receive certain minimum broadband speeds (an “Eligible Area”) and that results in such areas receiving certain minimum broadband speeds after the project is complete (the “Required Results”). Broadband projects in underserved areas now have access to more financing options with the addition of the use of qualified private activity bonds and the federal broadband grant program under the new legislation. However, because of the specific requirements for the Eligible Areas and the Required Results of a qualified broadband project, the number of broadband projects that are eligible to be financed with qualified private activity bonds may be limited.