Are You Thinking About ReConnect Round Three Yet? You Should Be.

Heather Mills, Team Lead, Funding Strategies

Ziggy Rivkin-Fish, Principal Grant Strategist

October 29, 2020

All signs are pointing to a third round of the U.S. Department of Agriculture’s ReConnect funding program opening in spring 2021. It’s not too early to begin developing an application strategy to position yourself competitively for that opportunity.

We expect the program might open at the end of the first quarter of 2021 with a grant deadline 60 to 90 days later. As is always the case, competition will be robust for these funds, but developing your grant strategy and strategic partnerships now will prepare you to submit a stronger application.

The ReConnect program represents the most significant congressional appropriation of broadband funding since the Recovery Act in 2009. Previous rounds of ReConnect offered total funding of $500 million to $600 million, distributed as grants, loans, and 50/50 grant/loan combination awards. While the budget for this funding round has yet to be announced, we are anticipating a similar funding level to past rounds.

To be eligible for ReConnect, service areas must be rural and 90 percent unserved by 10/1 Mbps fixed, terrestrial service. Awards can be given to both public and private entities, but USDA will look for strong state and local support in all applications.

Through our work with clients who have successfully pursued broadband funding through the ReConnect program, CTC has developed best-practice strategies for preparing a competitive application. We believe the following are critical steps in mapping out your application planning process over the next several months:

1) Develop a grant strategy. Your goal is to maximize your application’s scoring given USDA’s stated criteria.[1] Every element of your application should speak to those criteria. Start by developing a comprehensive strategy that aligns your approach (with respect to technology, partnerships, business plan, and service levels) with what USDA is seeking to fund.

2) Consider applying for state funds, if available, to complement your grant strategy. Several states have announced grant programs that are meant to complement the needs of potential ReConnect applicants. If your state has such a program, you could potentially leverage that funding as the match for a ReConnect-funded project (e.g., a 25 percent match is required for a 100 percent grant ReConnect application). For this scenario to work, the state grant program must allow its funds to be leveraged as part of the cash match for ReConnect.

3) Gather the many types of information and support materials required. You’ll need a range of data and numbers—such as population statistics and market research—to establish eligibility under the program rules and to provide content for the grant narrative. You’ll also need supporting materials, ranging from letters from your governor to documents that demonstrate the support of the local government, prospective customers, and the business community. Our recommendation here is to go over and above; additional letters (such as from your congressional delegation, the Chamber of Commerce, and so on) can only help to demonstrate the community’s breadth of support for your initiative.

4) Define and refine your proposed funded service area (PFSA). Define the PFSA with a count of the number of rural premises to be connected, including homes, farms, schools, libraries, healthcare facilities, and businesses (which are important because they confer additional points in the application). Then, document the engineering methodology used to demonstrate that the PFSA lacks service and is therefore eligible for funding.

You’ll also need to verify that no Connect America Fund II awarded census blocks are included in the PFSA and that your project area is not located in what is known as a Protected Broadband Borrower Service Area (i.e., the service area of a borrower that has an RUS broadband loan). Also note that if your PFSA includes even a part of an Opportunity Zone, your overall score will benefit. (The IRS offers a primer on Opportunity Zones here.) If you include an Opportunity Zone, discuss how economic development fits into the overall goals of your proposed project as part of the scoring criterion review/narrative.

5) Develop and review your project’s engineering plans and cost estimates. The critical engineering task after you have defined the PFSA is to develop a conceptual design for your network—including project plan, buildout timeline, design, and diagram—and cost estimates for materials and construction. The cost estimates will become a critical input to your business plan and pro forma financials. Both the design and the cost estimate will need to be certified by a licensed Professional Engineer under the ReConnect application rules.

6) Develop a financial pro forma and business plan. The pro forma should be prepared in the format provided by USDA (which is available only on the application portal) and should include subscriber projections and descriptions of planned services and pricing. To support the pro forma revenue projections, you’ll need very compelling data, ideally in the form of statistically valid market research, as well as empirical data about your or your partner’s historical success in achieving comparable market share. Projections should contain five years’ forecasted financial data. This is possibly the most critical item in the application, given USDA’s interest in funding projects it considers sustainable and low-risk.

7) Develop a market narrative, including discussion and data regarding service in the region. You’ll need to demonstrate that your services will be better and no more expensive than other services offered nearby—and present a narrative discussion of why the proposed services will be both marketable and affordable.

8) Collect the appropriate forms from businesses to demonstrate market interest and maximize points for that application item.[2] This is something that can be done through one-on-one conversations or by mailing the forms (with a cover letter and a stamped return envelope) to all the businesses in the PFSA.

9) Set up accounts and then navigate Sam.gov and the USDA portal site, to be ready to enter the grant application into the online grants system. (You may already have accounts in place, but we recommend you check to be sure the accounts are current and that someone on your team is comfortable navigating the portals.) The USDA application portal requires additional effort and may require some users to go to a USDA office in person for verification. Don’t wait until the last minute to set up your online access to the application portal.

10) Commission the required legal opinion and reviews.

11) Write compelling grant and budget narratives. The application doesn’t require a large amount of narrative writing; however, this means the narrative elements of the application are all the more important to make your case for funding.

12) Get in touch with your USDA regional representative.

ReConnect Success Stories

CTC was pleased to support our friends in John Day, Oregon, and at Easton Utilities in Easton, Maryland, with their successful ReConnect applications. The City of John Day partnered with the Oregon Telephone Corporation, which was awarded $6 million to build 89 miles of fiber through rural parts of Wheeler and Grant counties. Easton Utilities was awarded $13.1 million to build broadband throughout a 122-square-mile region in rural Maryland, encompassing nearly 3,500 households and 144 farms. Congratulations to both of these communities for their impactful awards and projects!

Please don’t hesitate to contact us if you have questions. CTC’s funding strategies and grant-writing team are ready to assist you with your ReConnect application planning.

[1] “Evaluation Criteria,” ReConnect Loan and Grant Program, USDA, https://www.usda.gov/reconnect/evaluation-criteria

[2] “ReConnect Program: Pre-subscription Form for Other Businesses,” ReConnect Loan and Grant Program, USDA, https://www.usda.gov/sites/default/files/documents/reconnect-business-pre-subscription-form.pdf

Published: Friday, October 30, 2020 by CTC Technology & Energy