Broadband Infrastructure Grants Announced, Kicking Off $400M of Projects Throughout Pa.

May 10, 2024
Publications

The Pennsylvania Broadband Development Authority recently announced the award of $204 million for 52 broadband development projects throughout Pennsylvania. The grants are funded through the U.S. Treasury under the American Rescue Plan Act of 2021 (ARPA), which authorized the use of funds for broadband infrastructure projects targeted at unserved or underserved households and businesses. Combined with private matching funds, the awards will result in over $400 million of broadband projects throughout Pennsylvania.

The authority awarded these grants pursuant to its broadband infrastructure program (BIP), which is funded under the capital projects fund (CPF), a $279 million program funded by Treasury under ARPA. The authority awarded BIP grants throughout Pennsylvania—in sum, 42 of the commonwealth’s 67 counties received at least one grant. Each county receiving the funds has partnered with an internet service provider (ISP) for the completion of the project (with the ISP putting up the matching funds). Not surprisingly, the bulk of the grants went to two of the largest broadband providers in Pennsylvania—Comcast and Verizon.

Successful grant applicants had to demonstrate their digital equity efforts to ensure long-term, sustainable service and affordable access for lower-income households. Eligible projects include line extension and last mile services as well as large-scale regional infrastructure projects so long as those large-scale projects achieve last mile connections. Successful applicants also had to demonstrate that their project would include a long-term plan that would demonstrate sustainability beyond the initial investment to maintain, repair and upgrade the network to ensure continued operation in the future in the absence of federal funding.

Grants ranged from less than $500,000 to almost $10 million—with the largest grant going to Windstream Pennsylvania LLC, in Clarion County, in the amount of $9,792,155. Taking into account matching funds, Windstream’s project will inject over $20 million of broadband infrastructure development into Clarion County. While matching funds in the aggregate amounted to just under 50% of total project cost, individual projects’ matching funds varied, with many as low as 25%, to a high of 70% of project cost.

Approved projects are contingent on the successful execution of subgrantee agreements and any other necessary contractual arrangements between parties that will be involved in deploying the broadband infrastructure. Grantees must complete the projects by the end of 2026, consistent with federal guidance. It is anticipated that some projects will be completed by the end of 2024.

Grantees must maintain robust records, as the authority retains the right to audit and request information about a particular project at any time during the project period. In issuing guidance for BIP, the authority emphasized the importance of deploying high-quality infrastructure, avoiding costly delays, and promoting efficiency. Grantees also must certify that project expenses were incurred pursuant to the approved scope of work approved by the authority. Grantees must submit quarterly and annual progress reports to the authority. Grantees should expect the authority to maintain frequent contact with them to ensure that projects are moving forward in a timely and cost-effective manner. The authority will withhold the final 10% of grant funds until the final project report has been submitted to and reviewed by the authority to its satisfaction.

The robust program reporting requirements are necessary to provide the authority with the information needed to meet its own accountability requirements. The authority is required to prepare annually a report detailing the funded projects. Additionally, the accounts and books of the authority are subject to examination and audit by the auditor general.

The authority is a special purpose state entity, established pursuant to Act 96 of 2021, and is governed by an 11-member board, including six agency heads (or their designees), the executive director of the Center for Rural Pennsylvania (or a designee), two members of the Senate, and two members of the House of Representatives. The governor selects the chair from the authority’s board members. Board members are not compensated and serve in a fiduciary relationship with the commonwealth and the authority regarding the authority’s use of money and investments.

The authority has a limited lifespan; it is required to dissolve in December 2031, or when all available federal funds have been exhausted, whichever comes first. Funding available under CPF program appears to have been exhausted, as the authority recently announced that its $45 million multipurpose community facilities program was set to close on April 20, and was oversubscribed at the time of the April 18 meeting. The authority has also announced plans to award $20 million from CPF to address the need for devices such as laptops at schools and libraries and other nonprofit organizations. Details of this program will be made available by the authority soon.

The authority also has federal funds available to it under the broadband equity, access, and deployment (BEAD) program established by the Infrastructure Investment and Jobs Act of 2021 (IIJA). The BEAD program authorized over $40 billion in federal funding to expand high-speed internet access through planning, infrastructure deployment and adoption programs. Pennsylvania’s share of this funding amounted to $1.16 billion.

The authority also stands to receive millions of dollars in federal funding under the Digital Equity Act (DEA), which also enacted as part of the IIJA. DEA was enacted to fund programs to promote the meaningful adoption and use of broadband services to low-income households, aging populations, incarcerated individuals, veterans, individuals with disabilities, individuals with a language barrier, racial and ethnic minorities, and rural residents.

With the significant amount of federal funding still available to the authority, it has been increasing its staff in recent months to manage these programs. The authority previously adopted in August 2023 a five-year plan, “Internet for All,” to outline its goals and vision for the expenditure of these funds. We expect that additional grant opportunities will be announced in the near term as the authority ramps up its plan for the expenditure of these funds.

Timothy J. Horstmann is a public finance attorney with McNees Wallace & Nurick, practicing from the firm’s Harrisburg office. He advises public and private sector clients on the financing of capital projects, including broadband infrastructure, throughout Pennsylvania. He can be reached at thorstmann@mcneeslaw.com or 717-237-5462.

Kenneth Stark is an energy/regulatory attorney with the firm, practicing from the Harrisburg office. He advises public and private sector clients on the deployment of broadband services to unserved and underserved areas. He can be reached at kstark@mcneeslaw.com or 717-237-5378.