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States and Localities Have Updated Guidance for Treasury’s Coronavirus Capital Projects Funds

By Heather Mills, V.P. for Grant & Funding Strategies

The Treasury Department released new guidance on its long-awaited, $10 billion Coronavirus Capital Projects Fund program—an extremely flexible opportunity that will deliver funds to each eligible state, territory, and tribal entity. State governments will now work with Treasury to receive their allocations—so now is also the time for local governments to advocate at the state level for their key broadband projects.

What can these funds be used for?

As we noted back in May, this program will deliver guaranteed funding to the states for the purpose of ensuring “access to the high-quality modern infrastructure, including broadband, needed to access critical services.” (See Treasury’s Allocation Information for a list of allocations by state, territory, and tribal area.)

The updated guidance issued gives us a clear picture of the kinds of projects Treasury has in mind—and that state governments will thus be considering as they decide how to allocate their funds:

“The COVID-19 public health emergency highlighted that access to high-quality internet can enable work, education, and health access, and that individuals and communities that lack affordable access to such high-quality internet are at a marked disadvantage. Investing in broadband for communities sensitive to or that have historically experienced these inequities will be critical for improving digital equity and opportunity, especially in the case of communities that currently lack access to the affordable, reliable, high-quality broadband internet that is necessary for full participation in school, healthcare, employment, social services, government programs, and civic life.”

The program will allow funds to be used for costs that fit in one of three main categories:

  1. Broadband Infrastructure Projects: “[C]onstruction and deployment of broadband infrastructure designed to deliver service that reliably meets or exceeds symmetrical speeds of 100 Mbps so that communities have future-proof infrastructure to serve their long-term needs.”
  2. Digital Connectivity Technology Projects: “[P]urchase or installation of devices and equipment, such as laptops, tablets, desktop personal computers, and public Wi-Fi equipment, to facilitate broadband internet access for communities where affordability is a barrier to broadband adoption and use.” You read that right: Affordability matters. Those who can’t afford to pay for services, even if available, are considered unserved.
  3. Multi-Purpose Community Facility Projects: “[C]onstruction or improvement of buildings designed to jointly and directly enable work, education, and health monitoring located in communities with critical need for the project.”

Proposals for all projects need to address the ability to do work, education, and health monitoring remotely. While fulfilling these requirements may feel intuitive for category 1 (Broadband Infrastructure Projects) and category 2 (Digital Connectivity Technology Projects), category 3 requires expansion of our concept of libraries, community centers, and health centers—as well as a retooling of the scope of services these institutions can offer.

Devices funded by the program can’t be locked with filters and they can’t have usage caps that would hinder household needs.

Multi-purpose Community Facility Projects will require legwork by agencies involved in the design to institute appropriate privacy and confidentiality controls. This process would include both virtual and physical considerations and should ultimately make it easier for patrons to access healthcare, education, and work.

Affordability and Speed as a focal point

Unique to this program is the focus on determining where affordability is a barrier to broadband adoption and use and an emphasis on the importance of providing 100 Mbps symmetrical speeds. If you haven’t done so already, make sure you incorporate affordability in your planning. It will be essential to your project justification and documentation of community need, as well as the way you track the project’s progress in addressing those needs. Additionally, an eligible area is defined simply as one that cannot receive affordable, reliable, fixed wireline service of at least 100/20 Mbps. Further, RDOF-awarded areas are eligible if the service being provided is not affordable or at or above 100/20.

For infrastructure projects, the unit of analysis is not individual households, but communities. This means low-income and other communities not being well served by the private sector can be targeted without worrying about exact boundaries of served and unserved. Treasury suggests providing a list of federal sources (such as census data) to document the need, but if you have local data on social and health indicators, that would be even better. Your mapping should utilize a community focus to aid in analysis of priority areas.

How can your locality benefit from this program? And what should you be doing now?

Keep in mind that this is not a competitive grant program at the source (Treasury). Rather, the prioritization and distribution of allocated funds will occur at the state, territory, or tribal government level. For localities with candidate projects, a lot will depend on the states, territories, and tribal governments, and their decisions to apply for the funding.

Also, while it feels like a done deal that every eligible entity will apply, there may be exceptions. And while there is time for localities to get their ideas to their state governments to be considered a “subrecipient” of funding, the states are not required to reach out for ideas from localities. Make sure you get in front of your state broadband office or equivalent lead agency; get your needs in front of them and get a sense of their initial thoughts on the process.

Funds are block-grant type, so they are “guaranteed” allocations for your state or other governing body. Your state has enormous freedom in structuring the process for which projects to fund. This could mean that it either intentionally or unintentionally restricts the funding by applying outdated procedures and rules.

If a broadband office, for example, decides to award funds through its existing grant program it could end up reintroducing a funding match requirement—or an old definition of “unserved” (e.g., limiting unserved areas to those that can only receive less than 25/3 by any technology; ignoring reliability, affordability, and technology (wireline)  components; or, conversely, allowing funding of projects with fixed wireless design and not taking affordability into account).

These would end up locking out the very communities that the Treasury program is aiming to serve. Make sure you talk with your state office to ensure your community’s needs are considered; that the funding process is adopted fairly; and that the process reflects the funding source’s flexibility and intentions.

So, what happens now?

Eligible entities must apply to Treasury for the funding by December 27, 2021. Once they have done so, Treasury will issue a grant agreement (remember, if the eligible state, territory, or tribal entity wants the money, they have a right to it per the ARPA law). Once the grant agreement is signed, most eligible entities will have 365 days to file a grant plan for approval by Treasury on how the funds will be used. The exception is for Tribal governments; their grant applications will serve as their grant plans. The grant plan can be revised during the 365-day period, if needed.

All funds must be expended by no later than December 31, 2026.

CTC’s Grant and Funding Strategies team continues to analyze the latest developments in infrastructure funding. Please contact us if you have questions or would like to discuss how CTC can assist you.

Published: Thursday, October 21, 2021 by CTC Technology & Energy



Developing a Grant Strategy in an Evolving Funding Landscape

By Ziggy Rivkin-Fish, CGEIT, VP for Broadband Strategy

Are you trying to get more secure footing in a shifting broadband landscape? You’re not alone. Between existing and potential funding programs, it’s very challenging to plan in the current moment.

For example, as we discussed in a previous paper, the results of the Rural Digital Opportunity Fund (RDOF) reverse auction and the pending rules for a range of new federal broadband funding programs have created some uncertainty about whether RDOF-awarded areas will be eligible for other streams of federal broadband funding.

This uncertainty leaves many communities’ grant planning efforts in flux at a time when Congress has allocated historic amounts of new funding for broadband infrastructure. Based on what we know now, we offer the following preliminary guidance to communities about preparing for new federal funding opportunities.

The moving pieces

Two unknowns will determine how RDOF awards will affect communities’ eligibility for other federal funding programs:

  • Whether the FCC will ultimately certify RDOF awardees. While the FCC technically has awarded geographic areas to auction bidders, it is still going through the process of reviewing bidders’ detailed technical and financial information. The possibility remains that the FCC could retract awards if it is not confident that a bidder will meet its commitments. In particular, fixed wireless and satellite providers’ (e.g., SpaceX’s Starlink) network designs are likely to face scrutiny.
  • What the new funding programs’ rules will look like. Several new broadband funding streams have been created in the past few months, including multiple programs enacted by the Consolidated Appropriations Act of 2021 and robust funding allocations included in the American Rescue Plan Act of 2021 (ARPA).

These programs are so new that their rules are still being developed by the agencies that will administer them—so we do not yet know how they will consider areas that have already received federal funds (such as RDOF awards). Some existing broadband funding programs have chosen to disregard RDOF in their latest funding rounds. For example, the Appalachian Regional Commission is not considering RDOF awards at all in the current application cycle for its Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) program.

Funding streams to consider

The legislation that enabled NTIA’s new broadband funding programs explicitly stated that NTIA should coordinate with other federal agencies to ensure that the same project area is not funded by more than one agency. While there is precedent for satellite-awarded RDOF areas to be exempt from such a rule, most areas that were awarded to RDOF winners likely will be excluded from receiving funds from NTIA’s new programs.

The various broadband-relevant allocations of ARPA stimulus funding could be more attractive opportunities. The legislation itself places few restrictions on the use of the funds, simply mentioning broadband infrastructure as an eligible expense.

The $220 billion State Fiscal Recovery Fund and the $130 billion Local Fiscal Recovery Fund leave spending guidelines entirely up to state and local authorities, respectively. For the $10 billion Capital Projects Fund, guidance from the Department of the Treasury is anticipated in the near future, and will provide further information regarding restrictions and parameters.

States and localities can certainly develop their own criteria for evaluating projects and distributing ARPA funding, though, and broadband projects will have to compete against other capital infrastructure proposals and priorities. Additionally, it is highly likely that the telecom industry will lobby to prevent funding of broadband projects that would compete in their existing service areas.

Despite these hurdles, the ARPA funding presents a chance to build fiber optic infrastructure that will last for decades in areas where RDOF commitments have a high risk of not materializing, or where existing coverage is spotty or barely meets broadband speeds. In other words, areas that face challenges in qualifying for eligibility within traditional broadband funding frameworks could be viable candidates for ARPA funding.

ARPA funding could also resolve a blind spot in FCC auctions and traditional grant frameworks such as ReConnect: These types of programs typically exclude backhaul and middle-mile infrastructure that could lower barriers of entry for ISPs—which in turn could facilitate not only the extension of service to unserved areas, but also competition in already-served areas. ARPA funding could also potentially be used to pay for broadband strategic planning, including granular mapping and the development of programmatic solutions to facilitate broadband adoption.

Finally, we can consider the second round of RDOF. The FCC may fix and retain the reverse auction format, particularly if there are sufficient non-awarded areas after the first round—areas that either were ultimately rejected in the first round of RDOF or those that the FCC newly deems eligible. The auction format may yet be salvageable—if designed and executed correctly, with full and robust enforcement of bidder obligations. (That said, we hope that reverse auctions will be supplemented by more robust merit-based grantmaking at both federal and state levels, to address the inherent limitations of the reverse auction mechanism.)

The second round of RDOF, in whatever form it may take, will have a longer timeline than other federal funding sources since it will rely on the implementation of the FCC’s new address fabric and mapping data.

Even prior to the auction itself, former FCC Chairman Ajit Pai was criticized for rushing to design and execute the process, and for relying on poor and misleading mapping data to determine eligible areas. Former Chairman Pai argued that it was preferable to work quickly to solve the problem for most areas in need, and tackle the remaining areas later when better mapping data became available. This decision to conduct the auction before more accurate maps were ready has created a patchwork of isolated unserved areas, which are no longer fit for an auction format because only nearby incumbents would have a viable business case to serve them.

What should communities do?

In light of these moving pieces—and the potential funding streams—we recommend communities take the following steps to develop a funding strategy and position themselves competitively for federal dollars:

An RFP or RFI can also be an excellent vehicle for addressing community priorities. For example, it could address affordability concerns by capturing ISPs’ proposed fees and willingness to participate in subsidy programs. These elements could be considered as a scoring element for potential partners.

  • Explore potential partnerships. If you already know the areas of your community that are served and unserved by broadband, reach out to potential partners directly or write a request for proposals (RFP) or a request for information (RFI) to get a better understanding of potential partnerships. It can be a good strategy to target larger geographic areas at the outset and refine the service area later to reflect factors such as partner priorities, community need, and funding eligibility.

    Additionally, any critical anchor institutions such as public housing, community centers, or first responder units that lack adequate connectivity can be included as priorities in the RFP or RFI. Lastly, the RFP/RFI document or the contract agreement with a partner can include performance and auditing requirements as a partnership condition.

    Additionally, any critical anchor institutions such as public housing, community centers, or first responder units that lack adequate connectivity can be included as priorities in the RFP or RFI. Lastly, the RFP/RFI document or the contract agreement with a partner can include performance and auditing requirements as a partnership condition.

    Throughout this process, do not limit yourself to working with incumbent service providers. If there are RDOF areas in or near your community, you can use the FCC auction results portal to see which ISPs bid in various auction rounds. Even if they did not win the auction, these providers may be willing to build in your community if sufficient support is available.
  • Develop a community mapping initiative. If a broadband mapping effort is not already underway in your community, it would be a valuable project to pursue. In some cases, especially if there is a potential partnership on the table, incumbent ISPs will share their actual network maps. The local school district may also have data about which neighborhoods have broadband gaps.

    Creating a robust mapping effort to identify served and unserved areas is not just critical for identifying areas eligible for federal funding, but also for having the capability to challenge provider claims when the new FCC mapping program—which will rely on providers’ data—comes online. The FCC’s draft rules for the process explicitly give local governments the ability to challenge providers’ service claims.
  • Watch for updates from the FCC. It is prudent to keep a close eye on FCC announcements of RDOF bidder certifications or denials, to understand whether any areas will open up for second-round bidding (or other funding) in your community.
  • Build support for a broadband project. Finally, make sure your executive stakeholders are in the loop and supportive of project priorities. At minimum, you may need their approval, and you may need a pool of matching funds available, too, depending on the funding program. It is never too early to start having internal conversations about how to gather community resources behind a potential broadband initiative.

CTC’s Grant and Funding Strategies team continues to analyze the latest funding developments. Please contact us if you have questions or would like to discuss how CTC can assist you.

Published: Wednesday, May 5, 2021 by CTC Technology & Energy