Two organizations representing rural broadband service providers have asked the USDA to relax certain rules for the ReConnect rural broadband funding program. In a letter to the administrator of USDA’s Rural Utilities Service unit, NTCA – The Rural Broadband Association and the National Rural Electric Cooperative Association (NRECA) argue that the changes would make the ReConnect program more effective amid the COVID-19 pandemic. The associations recommend “immediate” implementation of the measures.
The ReConnect program covers some of the costs of deploying broadband to unserved rural areas where build-out costs are high. The changes would apply to Round 2 of the program, which has a total budget of $550 million.
USDA ReConnect Rules
The recommended USDA ReConnect rule changes would involve two of three types of awards offered, including those made in the form of grants and those made as grant/loan combinations. (The third category of awards, made as 100% loans, would not be affected.)
ReConnect 100% grant awards require matching funds, and currently, recipients must spend all matching funds before they can begin using grant funding. The associations ask the RUS to modify that requirement, arguing that it is “unnecessarily onerous – especially at a time when providers are compelled to monitor cash flows as customers increasingly struggle to pay bills.” Instead, the letter recommends that service providers should only be required to match 25% of the amount drawn from grant funds within each fiscal year.
The letter also recommends that those entities awarded 100% grant funding should no longer be required to have the full amount of matching funds in cash-on-hand prior to award. Noting that in many cases, recipients may plan to use state or other federal programs or use loans to cover at least a portion of the matching funds, the associations recommend that grant recipients should only be required to show that they have matching funds for the first two years and to demonstrate that the remainder will be available through another state or federal program or through an approved loan.
Regarding awards made in the form of 50% loan/ 50% grant, the associations recommend that providers be permitted to draw down loan and grant funds proportionately. This would be a departure from the current rule that requires providers to spend all loan funding before receiving any grant funding.
The modification would continue to ensure that providers have “skin in the game” while also providing greater flexibility to operators “at a time when this could be most useful,” the letter about the USDA ReConnect rules argues.
