Getting Ready for Reconnect

Background

In 2019, Congress passed the Consolidated Appropriations Act, 2019 which provided Federal funds for the ReConnect Program. Originally authorized in 2018, this program is used, through loans and grants, to build infrastructure for essential internet e-Connectivity services to rural areas without sufficient access to broadband, defined by the law as 10 Mbps (megabits per second) downstream and 1 Mbps upstream. The latest round of Reconnect required 100 Mbps symmetrical speeds to be eligible for funding.

The USDA has awarded over $3 billion in third rounds of funding. Applications for Round 4 were due on November 2, 2022.

About

The ReConnect Program offers loans, grants, and loan-grant combinations to facilitate broadband deployment in areas of rural America that currently do not have sufficient access to broadband. In facilitating the expansion of broadband services and infrastructure, the program will fuel long-term rural economic development and opportunities in rural America.

Who May Apply

The entities considered eligible to apply for assistance under the ReConnect Program include:

1. Corporations
2. Limited Liability Companies and Limited Liability Partnerships
3. Cooperatives or mutual organizations
4. States or local governments, including any agency, subdivision, instrumentality of political subdivision thereof
5. A territory or possession of the United States
6. An Indian Tribe, as defined in Section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. §450b)

Co-Applicants are not eligible entities. If two entities would like to partner with each other in delivering broadband to areas without sufficient access, then one entity must take the lead on submitting an application.

Eligible Funding Purposes

Award funds may be used to pay for the following costs:

1. **To fund the construction or improvement of facilities required to provide fixed terrestrial broadband service.**Eligible facilities include buildings, land, and fixed wireless service. If other services will be provided over these facilities, then award funds may also be used to acquire the additional equipment. For example, awards funds may be used to purchase equipment that is required to comply with the Communications Assistance for Law Enforcement Act, 47 U.S.C §1001 et seq (CALEA).
2. **To fund reasonable pre-application expenses.**Funding for pre-application expenses may not exceed five percent of the award. Pre-application expenses must be included in the first request for advance of award funds and will be funded with either grant or loan funds. If the funding category applied for has a grant component, then grant funds will be used for this purpose. If pre-application expenses are not included in the first request for advance of award funds, they will become an ineligible purpose. Costs associated with satisfying the environmental review requirements are eligible for reimbursement under this category. Up to 3% of the total award can be used to cover costs associated with satisfying the environmental review requirements. The environmental review costs count as part of the overall 5% allowable for pre-application expenses.
3. **To fund the acquisition of an existing system that does not currently provide sufficient access to broadband (eligible for 100 percent loan requests only).**The cost of the existing system acquisition is limited to 40 percent of the award amount requested. After improvements are made, the upgraded system must meet the minimum requirements of the most recent FOA.

Funding Limits

Award amounts under the FOA will be limited as follows:

1. 100 Percent GrantUp to $150,000,000 is available for grants. The maximum amount of grant funds that can be requested in an application is $25,000,000. However, to encourage broadband deployment in remote areas, if an applicant provides supporting information that demonstrates that the PFSA(s) is comprised 100 percent of areas classified by the USDA Economic Research Service as Frontier and Remote Area (FAR) Level 4, the applicant may request up to $35,000,000. A GIS layer of FAR Level 4 areas can be found on the ReConnect Program Service Area Map.
2. 100 Percent Grant for Alaska Native Corporations, Tribal Governments, Colonias, Persistent Poverty Areas and Socially Vulnerable CommunitiesUp to $350,000,000 is available for grants. The maximum amount of grant funds that can be requested in an application is $25,000,000. However, to encourage broadband deployment in remote areas, if an applicant provides supporting information that demonstrates that the PFSA(s) is comprised 100 percent of locations within areas classified by the USDA Economic Research Service as FAR Level 4, the applicant may request up to $35,000,000. A GIS layer of FAR Level 4 areas can be found on the ReConnect Program Service Area Map.
3. 50 Percent Loan / 50 Percent Grant CombinationUp to $150,000,000 is available for loans and up to $150,000,000 is available for grants. The maximum amount that can be requested in an application is $25,000,000 for the loan and $25,000,000 for the grant. Loan and grant amounts will always be equal.
4. 100 Percent LoanUp to $150,000,000 is available for loans. The maximum amount that can be requested in an application is $50,000,000.
5. Projects serving areas where 90% of households lack sufficient access to broadband

Up to $200,000,000 is available for grants. The maximum amount that can be requested in an application is $25,000,000. USDA reserves the right to offer funding to eligible Round 3 applicants once all awards from the current round have been made.

Financial Feasibility and Sustainability Requirements

Only projects that USDA determines to be financially feasible and sustainable will be eligible for an award under the ReConnect program. An eligible project must demonstrate a positive ending cash balance as reflected in the cash flow statement for each year of the forecast period and demonstrate positive cash flow from operations by the end of the forecast period. Eligible projects must also meet at least two of the following requirements: a minimum Times Interest Earned Ratio (TIER) requirement of 1.2, a minimum Debt Service Coverage Ratio (DSCR) requirement of 1.2, and a minimum Current Ratio of 1.2.

If an application has no existing debt, is not applying for any loans from this program or proposing to borrow funds from any other fund sources during the forecast period and is applying only for grant funds, only the Current Ratio will be applied and not the TIER or DSCR. For this situation, applications must only meet the minimum current ratio required of 1.2. Please contact the USDA General Field Representative in your state if you have further questions.

To be eligible to receive ReConnect Program funds, a proposed project must meet the following criteria:

1. Lack Sufficient Access to Broadband: At least 50% of households in the proposed funded service area (PFSA) must lack sufficient access to broadband service, as defined in the latest Funding Opportunity Announcement (FOA).
   • The FOA published on August 4, 2022 defines sufficient access to broadband as at least 100 megabits per second (Mbps) downstream and 20 Mbps upstream.
2. Serve All Premises in the PFSA: The proposed network must be capable of providing broadband service to every premises located in the PFSA at the time of application submission at the speed defined in the latest FOA.
   • The speed defined in the latest FOA is 100 Mbps symmetrical service to every premise in the proposed funded service area (PFSA). Please note that “capable of delivering 100 Mbps symmetrical service to every premises” means that all premises in the PFSA must be able to receive this service at the same time.
3. Be in a Rural Area: A rural area is any area that is not located in a city, town, or incorporated area that has a population of greater than 20,000 inhabitants or an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants.

Information on Non-Rural areas and additional service area eligibility requirements are available on the Reconnect Program Service Area Map.

The datasets that make up the Service Area Map are also available to download under the Service Area Map Datasets page.

Additional service area eligibility requirements include the following:

• Ineligible Service Areas: If any part of a PFSA is ineligible, the Rural Utilities Service (RUS) may request that an application be modified if the modification is deemed feasible. Otherwise, the application will be rejected.
• Overlapping Service Areas: RUS will not fund more than one project that serves any one given geographic area. However, RUS reserves the right to make funding offers or seek consultations to resolve partially overlapping applications to make as many eligible applications viable for consideration as possible. Therefore, when addressing instances where service areas overlap, the Agency may do the following:
  • Determine that the overlap is so insignificant that no agency action is necessary;
  • Request one or more applications to be revised to eliminate the overlapping territory;
  • Choose one application over another based on the amount of assistance requested, the number of awards already chosen in the area or state, or the need for the project in the specific area due to other factors; or
  • Choose the project that either scores higher, or in the judgement of the agency, is more financially feasible.
• Prior Funded Service Areas:
  • RUS will not fund a project proposing to serve an area that has already received financial assistance. However, pursuant to the Consolidated Appropriations Act, 2021 (Pub. L. 116-260), the service areas of existing RUS borrowers without sufficient access to broadband, as defined in the latest FOA, are eligible for ReConnect funding. Prior funded service areas include:
    • RUS Broadband Loans: Service areas of borrowers that have RUS Broadband loans that are receiving sufficient access to broadband are ineligible. If an RUS borrower is not providing sufficient access to broadband in an area, any entity may apply to serve that area. Additionally, RUS Broadband Borrowers that have built out their service areas consistent with their application and award documents, but were not required to provide, and are currently not providing, sufficient access to broadband are eligible to apply for funding for these service areas; provided that they have not defaulted on, and have materially complied with their prior Broadband loan award requirements. Current RUS Broadband Borrowers that have received funding to provide sufficient access to broadband but have not yet built out their system are ineligible to apply for funding for these service areas.
    • RUS Community Connect Grants: Service areas that received grants under the RUS Community Connect Grant Program are eligible if they do not have sufficient access to broadband, except for those grants still under construction.
    • RUS BIP Grants: Service areas that received a 100% grant under BIP are eligible if they do not have sufficient access to broadband.
    • Service Areas with Other Funding: Applicants are encouraged to work with the Governor’s office for the states, and tribal governments for the tribal areas, where they are proposing to provide broadband service and submit information detailing where state funding has been provided.
    • Additional service areas restricted from funding will be identified in the latest FOA.
• Tribal Lands: A certification from the appropriate tribal official is required if service is being proposed over or on tribal lands. The appropriate certification is a Tribal Government Resolution of Consent. The appropriate tribal official is the Tribal Council of the Tribal Government with jurisdiction over the tribal lands at issue. Any applicant that fails to provide a certification to provide service on the tribal lands identified in the PFSA will not be considered for funding.

Evaluation Criteria

For any funding option that includes grant funds, evaluation criteria for scoring the application will be included in the Federal Register notice that opens an application window. Applications submitted for a certain category will be ranked and awarded based only on those applications included in that category. Applications in the same category will be scored and ranked against the following special evaluation criteria.

1. Rurality of PFSA (25 Points). Points will be awarded for serving the least dense rural areas as measured by the population of the PFSA per square mile or if the PFSA is located at least one hundred miles from a city or town that has a population of greater than 50,000 inhabitants. If multiple service areas are proposed, the density calculation will be made on the combined areas as if they were a single area and not the average densities. For population densities of 6 or less or if the PFSA is located one hundred miles from a city or town of 50,000, 25 points will be awarded. A GIS layer identifying areas located at least one hundred miles from a city or town that has a population of greater than 50,000 inhabitants can be found in the ReConnect Program Service Area Map.
2. Level of existing service (25 Points). Projects that are proposing to build in areas where at least 50 percent of the households in each proposed funded service area are not receiving service of at least 25 Mbps downstream and 3 Mbps upstream will receive 25 points. Applicants must provide supporting evidence that 25/3 service does not exist for those households. To the extent possible, applicants must identify all existing providers in the PFSA and indicate what level of service is actually being provided.
3. Economic need of the community (20 Points). Economic need is based on the county poverty percentage of the PFSA in the application. The percentages must be determined by utilizing the United States Census Small Area Income and Poverty Estimates (SAIPE) Program. For applications where 75 percent of the PFSA(s) are proposing to serve communities with a SAIPE score of 20 percent or higher, 20 points will be awarded. Proposed funded service areas located in geographic areas for which no SAIPE data exist will be determined to have an average SAIPE poverty percentage of 30 percent. Such geographic areas may include territories of the United States or other locations eligible for funding through the ReConnect Program. A GIS layer identifying SAIPE areas can be found in the ReConnect Program Service Area Map.
4. Affordability (20 Points). Applications can receive 20 points if in their service offerings, they include at least one low-cost option offered at speeds that are sufficient for a household with multiple users to simultaneously telework and engage in remote learning.
5. Labor Standards (20 points*). It is important that necessary investments in broadband infrastructure be carried out in ways that produce high-quality infrastructure and promote efficiency. We understand the importance of promoting workforce development, and we encourage recipients to ensure their broadband projects use strong labor standards consistent with Tribal laws when projects propose to build infrastructure on Tribal Lands. Using these practices in construction projects promotes effective and efficient delivery of high-quality infrastructure and supports economic recovery through employment opportunities for workers, but may also help to ensure a reliable supply of skilled labor that would minimize disruptions, such as those associated with labor disputes or workplace injuries.Applicants should include in their applications a description of whether, and if so, how the project will incorporate three categories of strong labor standards and protections:a. Strong labor standards: whether workers (including employees of contractors and subcontractors) will be paid wages at or above the prevailing rate; whether the project will be covered by a project labor agreement; and/or whether the project will use a unionized project workforce; andb. Demonstrated compliance with and plans for future compliance with labor and employment laws: whether the applicant has any violations of tribal, state, or federal labor, workplace safety and health, or employment laws within the last five years; and/or whether the applicant, its contractors, or subcontractors will commit to union neutrality; and/or whether the applicant, its contractors, or subcontractors will commit to permitting workers to create health and safety committees that management will meet with upon reasonable request; andc. A plan to recruit and support an appropriately skilled, trained, and credentialed workforce (including by contractors and subcontractors): whether work will be performed by a directly employed workforce or whether the employer has policies and practices in place to ensure employees of contractors and subcontractors are qualified; how the applicant will ensure use of an appropriately credentialed workforce (I.e., satisfying requirements for appropriate and relevant pre-existing occupational training, certifications, and licensure); and/or whether a locally-based workforce will be used. In addition, the plan should include whether there are any partnerships with training providers, unions, or community colleges to support the recruitment and training of the workforce.Prevailing rate means that all laborers and mechanics employed by contractors and subcontractors are paid wages at rates not less than those prevailing, as determined by the U.S. Secretary of Labor in accordance with the Davis-Bacon Act (information available at this link: go.usa.gov/xexef). Please refer to the Davis-Bacon Act for all questions pertaining to prevailing wages.For applicants that commit to strong labor standards, consistent with Tribal laws when the project proposes to build infrastructure on Tribal Lands, 20 points will be awarded. An applicant requesting these points must incorporate components from each of the three categories above. Projects that propose to build infrastructure on Tribal Lands must follow Tribal Laws such as the Tribal Employment Rights Ordinances to be in compliance with a ReConnect award, regardless of receiving points under this standard. The Agency reserves the right to adjust award amounts for unforeseen circumstances.
6. Tribal Areas (15 points). For applicants that are Tribal Governments and Tribal Government wholly-owned entities and, at least 75 percent of the geographical area of the PFSA(s) is on Tribal Lands, 15 points shall be awarded. For non-tribal governmental entities where at least 50 percent of the geographical area of the PFSA(s) is on Tribal Lands, 10 points shall be awarded. Tribal lands will be analyzed using the GIS layers (Tribal Area (BIA LAR); Tribal Supplemental Area (BIA LAR); and Tribal Statistical Area (BIA)) in the RUS mapping tool. For applicants that are Alaska Native Corporations (ANCs) or Alaska Native Tribal Governments where at least 50 percent of the geographical area of the PFSA(s) is on Census Tribal areas in Alaska, 15 points shall be awarded. For non-ANC or non-Alaska Native Tribal Government entities where at least 50 percent of the geographical area of the PFSA(s) is on Census Tribal areas in Alaska, 10 points shall be awarded. Census Tribal areas in Alaska will be analyzed using the GIS layer (Alaska Census Tribal Areas) layer in the RUS mapping tools located at www.usda.gov/reconnect.
7. Local governments, non-profits and cooperatives (15 points). Applications submitted by local governments, non-profits or cooperatives (including for projects involving public-private partnerships where the local government, non-profit, or cooperative is the applicant) will be awarded 15 points.
8. Socially Vulnerable Communities (15 points). For applications where at least 75 percent of the PFSA(s) are proposing to serve Socially Vulnerable Communities, as defined in this FOA, 15 points will be awarded. A Socially Vulnerable Community is a community or area identified in the Center for Disease Control’s Social Vulnerability Index with a score of 0.75 or higher. A GIS layer identifying the Socially Vulnerable Communities can be found on the ReConnect Program Service Areas Map.
9. Net neutrality (10 points). For applicants that commit to net neutrality, 10 points will be awarded. A board resolution or its equivalent must be submitted in the application committing that the applicant’s networks shall not (1) block lawful content, applications, services, or non-harmful devices, subject to reasonable network management; (2) impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management; and (3) engage in paid prioritization, meaning the management of a broadband provider's network to directly or indirectly favor some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party, or (b) to benefit an affiliated entity.
10. Wholesale broadband services (10 points). Companies that propose to buy market access, bandwidth, functionality and servicing on a wholesale basis with the intent of reselling their purchased “capacity” on the retail market to businesses and consumers. Applicants that commit to offering wholesale broadband services at rates and terms that are reasonable and nondiscriminatory will receive 10 points.