Decades-Old Legislation Can Play Supplement to Federal Broadband Infrastructure Money

CLEVELAND, June 27, 2022 – A decades-old piece of legislation can play an important and supplemental role to federal grants for broadband infrastructure, said panelists at the Pew Charitable Trust Broadband Access Summit Wednesday.

The Community Reinvestment Act was passed in 1977 to address redlining – the practice of denying financial services to individuals or groups based on where they are located, often along racial or soci-economic lines. The law encourages banks to make community development loans and investments in low- and moderate-income communities, rural, and tribal communities.

The legislation expanded to include investments in broadband infrastructure in 2016, after broadband was deemed an essential community service, said Jordana Barton-Garcia, principal of the social enterprise at Barton-Garcia Advisors. That means that it could play a key role in filling some of the broadband gaps, she said, as the federal government moves to distribute billions to the states under the Infrastructure Investment and Jobs Act.

In response to the pandemic, banks can now qualify to receive CRA credit for broadband deployment activities, said Barton-Garcia. Activities include loans, investments, and services that support digital inclusion or affordability programs.

Banks receive CRA credit for investing in community development projects and are reviewed on their CRA performance every three years. Their scores are open to the general public. If the bank receives a negative rating, it may prevent the bank from opening new branches and the bank will be expected to correct the rating.

Currently, the Federal Reserve is seeking comments on a joint agency proposal to strengthen and modernize CRA regulations.

A report published by the Federal Reserve Bank of Dallas in 2016 laid the groundwork for broadband to be included under the CRA. “Under the CRA, infrastructure investment includes facilitating the construction, expansion, improvement, maintenance or operation of essential infrastructure…  broadband is now a basic infrastructure needed in all communities.”

The CRA also includes workforce development investments, digital literacy projects, and technical assistance for small businesses.