Tag: "grants"

Posted February 6, 2020 by Katie Kienbaum

At the end of 2019, Congress passed the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act, fixing a tax law change that threatened to raise rates and delay the expansion of broadband for rural cooperative members across the country.

Passage of the RURAL Act ensures that cooperatives can accept federal funds for broadband deployment, disaster relief, and other efforts without risking their nonprofit tax exempt status. A change in the 2017 tax law would have labeled these funds as revenue for the first time, potentially causing co-ops to exceed the allowable percentage of non-member income they must maintain to remain tax exempt.

After Senators Tina Smith (D-Minn.) and Rob Portman(R-Ohio) and Representatives Adrian Smith (R-) and Terri Sewell (D-Ala.) introduced the bipartisan bill in April, it attracted 55 additional cosponsors in the Senate and more than 300 in the House. It was eventually incorporated into the consolidated appropriations act and signed into law in December.

“Obstacles From the Federal Government”

We described the possible impact of the 2017 tax law change on rural cooperatives over a year ago, when Senator Smith first brought the issue to our attention.

Failure to remedy it would have forced some co-ops to choose between continuing with desperately needed broadband and disaster recovery projects and increasing their members’ rates. Northwestern Electric Cooperative CEO Tyson Littau described the difficulty of that decision to the National Rural Electric Cooperative Association (NRECA):

Do we rebuild and try to strengthen our distribution system and pay the taxes, or do we delay the mitigation project that would improve 1,200 miles of line throughout our territory? I think we have a responsibility to the membership to improve the system for the future.

Gulf Coast Electric Cooperative was another co-op faced with the prospect of raising electric rates to...

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Posted February 27, 2019 by lgonzalez

Earlier this month, we learned about a Senate bill in the Arkansas State Legislature that, in it’s original form, would have rescinded state restrictions preventing many municipalities from improving local connectivity. After amendments, SB 150 lost most of its effectiveness, but the bill that became law this week is still a small step in the right direction for a state where the rate of broadband connectivity is some of the lowest in the country.

Beginning Promise

For years, Arkansas has been one of the states that doesn’t allow government entities from providing broadband services to the public. The ban specifically disallowed “directly or indirectly, basic local exchange, voice, data, broadband, video, or wireless telecommunication service.” There has always been an exception to the ban for communities that have their own electric or cable utilities and want to offer telecommunications services. No municipality may offer basic exchange service, interpreted as telephone service.

Only a few communities have taken advantage of the legal exception, such as Paragould, Clarksville, and Conway. In recent years, electric cooperatives are deploying in rural areas, but many of the state’s rural residents rely on DSL, fixed wireless, and satellite. In the few more populous communities, there may also be scattered cable connections available. 

seal-arkansas.png Even though large incumbent ISPs have collected federal grant funding in the past, deployment in Arkansas has been inadequate to connect all Arkansans. According to the FCC, connectivity to households is near the bottom of the list.

SB 150 is one of several bills introduced by the Republican Woman’s Legislative Caucus as part of their “Dream Big” initiative. Other bills in the initiative...

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Posted November 9, 2018 by Katie Kienbaum

For many rural Americans, the local electric or telephone cooperative is their best hope for finally obtaining modern-day connectivity. With the support of government funding, rural cooperatives have brought electricity, telephone service, and more recently broadband access to some of the most rugged and sparsely populated places in the country.

However, recent tax code changes might prevent co-ops from connecting more rural communities. Cooperatives could potentially lose their tax exempt status if they accept government grants for broadband expansion and disaster recovery — an unintended yet foreseeable consequence of the Republican “Tax Cuts and Jobs Act” passed late last year. In a press release, Senator Tina Smith called attention to the oversight, noting, “This uncertainty has caused cooperatives significant concern and frozen some of their grant applications.”

Who’s Ready for Some Tax Policy?

As nonprofit membership corporations, rural electric and telephone cooperatives are exempted from paying taxes under section 501(c)(12) of the Internal Revenue Code (IRC). To maintain this tax exempt status, cooperatives must derive at least 85 percent of their income from members (e.g., from selling electricity). This is sometimes referred to as the the member income test or the income source test.

Not all sources of non-member income are included when calculating this percentage. Revenue from utility pole rentals, for instance, is exempted. In the past, rural cooperatives also excluded federal and state grants from the member income test, based on assorted rulings from the Internal Revenue Service (one example is Rev. Rul. 93-16, 1993–1 C.B. 26, which held that a federal grant given to an airport should not be considered income for tax purposes). As long as co-ops treated the government funding as a source of capital, not income, they could accept as much grant money as they wanted without the...

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Posted November 24, 2017 by ChristopherBarich

Ely Area Broadband Coalition (Ely ABC) and the Ely Economic Development Authority (EEDA) are set to complete a broadband feasibility study and release report results by late-November.

The ABCs Of The Ely Feasibility Study

The Ely Area Broadband Coalition (Ely ABC) is a collection of city, township, school district officials, and private citizens working in partnership with the EEDA to improve broadband in Ely and the surrounding area. In mid-2017, Ely ABC and EEDA submitted the Request for Proposals (RFP) to conduct a broadband feasibility study.

The group is keeping an open mind and will consider a variety of models. In addition to publicly owned infrastructure, they're hoping to hear ideas that will include partnership possibilities or recommendations on encouraging the private sector to improve local services.

The City of Ely is in St. Louis County and located in the northeastern corner of Minnesota. The rural community has a population of approximately 3,500 year-round residents and covers 2.74 square miles. The community, known on the edge of the Boundary Waters Canoe Area Wilderness, is known as the location of the North American Bear Center and the International Wolf Center.

In November 2016, Ely was one of six communities to receive a $25,000 Blandin Broadband Communities (BBC) program grant from the Blandin Foundation in partnership with Iron Range Resources and Rehabilitation Board (IRRRB) and Saint Louis County. Ely ABC and EEDA utilized the BBC grant to fund the broadband feasibility study. 

Through the BBC program, the six communities will receive broadband planning, along with technical support and assistance to advance local technology initiatives over the next two years. The BBC program has assisted 18 other rural communities across Minnesota with broadband planning.

Blandin Foundation president and CEO,...

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Posted September 29, 2017 by lgonzalez

California Legislators have turned on their constituents living in rural areas who want to participate in the 21st century online economy. What began as a move in the right direction - allocating substantial resources to funding high-speed Internet infrastructure - has become another opportunity to protect big incumbents. It’s twice as nice for Frontier and AT&T, because they will be paid big bucks to meet a low Internet access bar.

Discretionary Fund

Democrat Eduardo Garcia, the main author on Assembly Bill 1665, represents the Coachella Valley, a rural area in the southern area of the state near Palm Springs. Democrat Jim Wood coauthored with eight others. Wood represents coastal areas in the northern part of the state, which was passed during the eleventh hour of the 2017 legislative session. Wood’s district and region has obtained several grants from the California Advanced Services Fund (CASF) that have helped to improve local connectivity. 

The CASF is much like CAF; both programs are funded through a surcharge on revenue collected by telecommunications carriers from subscribers. Since 2007, when California authorized the CASF, the legislature has amended the rules and requirements several times. Early on, CASF awards went primarily to smaller, local companies because large corporations such as AT&T and Frontier did not pursue the grants. Now that those behemoths have their eyes on CASF grants, they’ve found a way to push out the companies who need the funds and have shown that they want to provide better services to rural Californians.

AB 1665 allocates $300 million to Internet infrastructure investment and an additional $30 million to adoption and related local programs. Policy experts have criticized the legislation on several fronts. Consultant Steve Blum told CVIndependent:

The incumbents (large corporate ISPs) including AT&T, Frontier and the California Cable and Telecommunications Association jumped in and said, ‘We want the bill to be X, Y and Z.’ … Assemblymember Eduardo Garcia took it and started adding language that reflected the desires of these cable and telephone company incumbents.

“The bill went through three revisions, and each time,...

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