Narrowing the Digital Divide Through Installation of Broadband Infrastructure

in HUD-Funded New Construction and Substantial Rehabilitation of Multifamily

Rental Housing

October 12th, 2017

Background Why me? Why HUD? Why Broadband?

Rule Purpose Definitions

Broadband Infrastructure Substantial Rehabilitation Speed

HUD Programs Included Exclusions

Financing broadband infrastructure

Agenda

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Why Me? Mercy Loan Fund- Community Development

Financial Institution (CDFI)

To create stable, vibrant, and healthy communities by developing, financing and operating program-enriched housing for families, seniors and people with special needs who lack the economic resources to access quality, safe housing opportunities.

Tony asked me to be a part of this panel because of Mercy Loan Fund’s commitment to the promotion of broadband technology.

Background- Why me?

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Why HUD?

Background-Why HUD?

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March 23rd, 2015 Obama Administration Presidential memorandum

“Expanding Broadband Deployment and Adoption by Addressing Regulatory Barriers and Encouraging Investment and Training.” 

‘Access to high-speed broadband is no longer a luxury, but it is a necessity for American families, businesses, and consumers.’

Background-Why HUD?

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March 23rd, 2015 Presidential memorandum President Obama further noted that the Federal

Government has an important role to play in developing coordinated policies to promote broadband deployment and adoption, including promoting best practices, breaking down regulatory barriers and encouraging further investment.

Part of the memorandum called for a Broadband opportunity council of which HUD was a member.

May 18th, 2016 HUD published a proposed rule seeking to require the installation of broadband infrastructure on all new construction or substantial rehabilitation in multifamily projects supported by HUD.

Background-Why HUD?

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March 23rd, 2015 Presidential memorandum

May 18th, 2016 HUD Proposed rule

July 18th, 2016 Comment Period Closed

December 20th, 2016 HUD final rule effective January 19th, 2017

Just under the wire…

Background-Why HUD?

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ASSumption

Background-Why Broadband?

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President Obama’s memorandum points out that it is not only access to the internet that is needed, but access at a certain speed

The memorandum references a report produced by Ericsson ‘Socioeconomic Effects of Broadband Speed’. Link to report

This report looked at both Macroeconomic and Microeconomic factors in relation to broadband speed. R2

Background-Why Broadband?

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Macroeconomic effects

Doubling broadband speeds for an economy can add 0.3 percent to GDP growth

Economic effects, including increased innovation and productivity in business

Social effects, including better access to services and improved healthcare

Environmental effects, including more efficient energy consumption

Background-Why Broadband?

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Microeconomic effects

In OECD countries, gaining 4 Mbps of broadband increases household income by USD 2,100 per year

In BIC countries, introducing a 0.5 Mbps broadband connection increases household income by USD 800 per year

In OECD countries, upgrading from 0.5 Mbps to 4 Mbps increases income by around USD 322 per month

In BIC countries, upgrading from 0.5 to 4 Mbps increases income by USD 46 per month

Background-Why Broadband?

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To narrow the digital divide in low income communities served by HUD

To provide a platform for individuals and families to participate in the digital economy and increase their access to economic opportunities.

Rule- Purpose

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Final Rule

HUD requires installation of broadband infrastructure at the time of new construction or substantial rehabilitation of multifamily rental housing that is funded or supported by HUD

Limited exceptions

Rule

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Broadband Infrastructure

Cables, fiber optics, wiring, or other permanent (integral to the structure) infrastructure—including wireless infrastructure—as long as the installation results in broadband infrastructure in each dwelling unit meeting the Federal Communications Commission's (FCC's) definition in effect at the time the pre-construction estimates are generated.

Rule - Definitions

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Substantial Rehabilitation

For programs that do not already have a definition of substantial rehabilitation Work on the electrical system with estimated costs equal to

or greater than 75 percent of the cost of replacing the entire electrical system, or when the estimated cost of the rehabilitation is equal to or greater than 75 percent of the total estimated cost of replacing the multifamily rental housing after the rehabilitation is complete.

Calculation done on pre rehabilitation estimates for the work.

Rule - Definitions

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Definitions- Speed

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FCC defines broadband speeds as 25 Megabits per second download, 3 Megabits upload

Current HUD speed requirements

25 Megabits per second download

3 Megabits per second upload

Federal Communications Commission Definition at the time pre-construction estimates are generated.

Definitions- Speed

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The following Nationwide and Colorado maps show where fixed residential broadband services of at least 25 Mbps download and 3 Mbps upload is deployed and where it is not deployed.

https://www.fcc.gov/maps

Definitions- Speed

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Definitions- Speed

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Financing broadband infrastructure- Property Level HUD will approve broadband infrastructure as part of the

new or rehab construction budget.

HOME Funds

Housing Trust Fund

CDBG

LIHTC

Banks (Community Reinvestment Act (CRA))

Partnerships Cities/ Libraries

Educational institutions

Banks/ Federal Reserves

CDFI’s

Financing broadband infrastructure

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Financing broadband infrastructure- Community Level

USDA RD guarantee loan program and grants

Cities

Utility Cooperatives

Privately- owned (Comcast-Google Fiber)

Banks (CRA) Infrastructure Opportunity

Financing broadband infrastructure

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Financing broadband infrastructure- Community Level

Dallas Fed Publication on CRA Primary Purpose definition- serve LMI individuals and

communities

Community Development definition- revitalize and stabilize LMI areas

Service Test- proof that alternate delivery systems are being used

CRA Q & A published in 2016

Financing broadband infrastructure

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