Don’t Neglect Community Development Block Grants for Broadband, Says HUD

The program can function as a gap filler for other federal funding.

Don’t Neglect Community Development Block Grants for Broadband, Says HUD
Photo of Erik Pechuekonis of HUD, Chad Lawson of Murray Electric System, Justin Soileau of Cox Communications and Dwight Wininger of ALLO Fiber (left to right)

ORLANDO, August 24, 2023 – A representative for the U.S. Department of Housing and Urban Development told attendees at Fiber Connect Tuesday that providers should not overlook the department’s Community Development Block Grant for broadband deployment assistance.

The program provides annual grants to states and local governments to be used for economic and community development, primarily for low and moderate-income individuals. The Section 108 program, called the loan guarantee program provides CDBG recipients with the ability to leverage their annual grant allocation to access low-cost, flexible financing for economic development and infrastructure projects.

According to Erik Pechuekonis, community planning and development specialist at HUD, the program provides loan guarantees of an amount five times the amount in annual grants from CDBG. States, Cities and counties are eligible for the program as well as subrecipients like nonprofits and economic development corporations.

Loans are non-competitive and are provided at low rates for up to 20 years, said Pechuekonis. Additionally, the department provides one-on-one technical assistance. Loans may be used for acquisition construction, rehabilitation of public facilities and public improvements, which includes broadband builds, he said.

Each project under the loan program must benefit low and moderate-income persons, improve housing or address urgent needs for community health and safety. Pechuekonis said that broadband projects qualify as reaching these minimum requirements. He specified that funds are available for broadband deployment and not as a subsidy for service. Additionally, grantees will be required to produce a source of collateral.

The program “can also function as a gap filler so if you don’t get quite enough funding, we can step in and fill that role as well,” added Pechuekonis, referring to the $42.5 billion Broadband Equity Access and Deployment Program. “We generally work well with other federal state programs.”

“This is something new in terms of applying these funds to broadband,” added Amy Maclean, editorial director at CableFax magazine.

Pechuekonis said that HUD is trying to mesh out the priorities between grantee’s competing interests with housing, infrastructure and economic development. We are seeing a lot of interest in this program, he said.

This comes months after the National Telecommunications and Information Administration released allocation amounts for states through the BEAD program. Many communities are turning to alternative sources of funding, fearing that they will not receive BEAD funds.

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