Where's The Funding? Episode 11: Navigating Tribal Matching Funds

Gary Bolton: Well, good morning everyone, and welcome to Where's The Funding? Hosted by the Fiber Broadband Association and sponsored by Broadband.money. I'm Gary Bolton, the president and CEO of the Fiber Broadband Association, and this is our 11th episode of 2023. This is a 12 part series designed to help you understand, navigate, and obtain matching funds for broadband grants. The NTIA BEAD program requires broadband grant applicants to come to the table with a minimum of a 25% matching funds and a letter of credit upfront with the application. For many smaller non-traditional providers and communities, this might sound daunting, but it doesn't have to be. This 12 part series is designed to help you understand and why meeting these requirements can be straightforward. Last month, we had a great session where we discussed how matching capital unlocks major broadband grants with Jack Lawrence, the CFO and founding member of Amperage Infrastructure Corporation.

Gary: If you missed it, you can go to the FBernie website under events or go to broadband.money.io and watch the replay. Today on Where's the Funding? We're gonna be discussing navigating tribal matching funds and grants with Joe Valandra, the CEO and Chairman of Tribal Ready, and Jennifer Weddle, the co-chair of Greenberg Traurig American Indian Law Practice. Before leading Tribal Ready, Joe served as the executive director of the Native American Contractors Association, NACA, he's also served as a managing director of VAdvisors, an LLC that specializes in... Advisory firm in DC. And as the chief of staff for the National Indian Gaming Commission, a federal regulatory agency with Indian Gaming Oversight Responsibilities, Joe has served in senior executive roles in private and public sector, including as a board member of numerous companies in multiple industries. Using his collective expert experiences in government, business and gaming, Joe has launched ventures uniquely focused on technology developments, marketing and development of products and services designed to benefit native nations.

Gary: Jennifer Weddle is the co-chair of the Greenberg Traurig American Indian Law Practice, and has wide range experience in complex regulatory and jurisdictional issues with a focus in Indian law, handling a variety of matters for tribal and non-tribal clients. She has a dynamic and interdisciplinary practice that centers on providing strategies for resolving complex jurisdictional problems. Much of her practice is focused in the area of tribal economic development and natural resource development. Jennifer has a wide range of projects citing experience, including the application that NEPA and NHPA and other environmental laws on tribal and public lands, including with respect to larger linear, multi-state energy and infrastructure projects. Well, welcome Joe and Jennifer, and for our audience, please put any questions in the chat as we go, and we'll work them into our discussion. So Joe and Jennifer, before we jump into the tribal broadband match, let's start with a little bit about you and your organizations. Can you share a little bit about what you guys do and why you're so passionate about getting Broadband to every tribal community? 

Joe Valandra: Yeah, sure. Jennifer, why don't you start? 

Jennifer Weddle: Sure. So as Gary said, I co-chair the American Indian Law Practice at Greenberg Traurig, and I'm based in Denver, Colorado. And one of my clients is the Coalition of Large Tribes, which is an intertribal organization that represents the more than 50 tribes that have reservations of a 100,000 acres or more which is roughly 95% of Indian country in the United States. And that's more than a million citizens amongst those member tribes. And those large land-based tribes have significant challenges in getting broadband just like other rural communities. And it became very acute in the pandemic when kids were trying to go to school and there was no broadband. So literally parents would drive and all sit outside the parking lot at the tribal office trying to get Wi-Fi. And Gary also mentioned I do a lot of economic development work. The internet is really a great equalizer for rural communities that don't have access to the population base. So having broadband access is a really, really critical essential service for tribes that a lot don't have or have very expensively.

Joe: All right. Well, I guess it's my turn. Hi, I'm Joe Valandra. I'm a proud citizen of the Rosebud Sioux Tribe from South Dakota. I now live and work in Washington, DC and have for some time. I'm very proud to be the chairman and CEO of Tribal Ready. We're a native owned, native governed, native managed company. But we have a focus... Our focus given our name is in Indian country tribal nations to help bridge that gap. Actually, it's not bridging the gap, it's filling the gap. One of the... I have a couple of things that maybe give you a sense of why I am so passionate about all of this. When I left the National Indian Gaming Commission back in the end of 2008, that was the time President Obama had just been elected, but the economy was in a very bad state, and Congress passed a funding bill to try to jumpstart the economy.

Joe: Within that bill, there was a fair amount of money set aside for broadband. I helped put together a coalition of five different tribes in five regions of the country to try to do what we're still trying to do today. And that is bring a high speed broadband to Indian country. Unfortunately, that project in Indian country got left behind, which sort of is the theme of Indian country for many of these large infrastructure projects. But now we have an opportunity with the amount of money, with the focus on Indian nations through BEAD, through the Tribal Broadband Connectivity Program the Capital Projects Fund and others. There's capital available, I won't say there's enough. I won't say there's sufficient, there's still a long way to go, but there's enough to really build out high-speed broadband networks in Indian country, and that's what we're focused on.

Joe: My motivation is this, for ever, it feels like forever on the Rosebud Indian Reservation, the Indian Health Service Hospital has been underfunded, understaffed, doesn't provide the services that I know they would like to. So this is not necessarily a criticism of the hospital or its staff, but it's a fact about the community. For a long, long time, decades, the hospital wasn't able to accommodate births. So babies were not being born in our community. They were being born in the largest communities around Rosebud in Nebraska, Pierre, South Dakota, Sioux Falls, Rapid City, other places where there were hospitals to give a safe birth. There were also, of course, midwives and things. So there were births taking place, but not at the hospital. For me, and when I look at how you build a community, what communities are part of, what communities are made of, having those children, those babies born at home, as we like to say, is important.

Joe: On the other end of that spectrum the elders, when they got sick... Got very sick or had a chronic condition, very often again, the hospital couldn't treat them or had a difficult time treating 'em. So they would have to either get in a car or an ambulance, or sometimes an airplane or helicopter and be taken to a regional hospital in Rapid City or Sioux Falls or some place like that. And for many, it got to be to the point where they chose not to do that. They chose to stay home and have a peaceful existence or end of time. The point of all that is that broadband, as Jennifer pointed out, gets you connected. It helps you connect. One of the benefits of broadband is better medical care diagnostics through the internet with true high-speed broadband.

Joe: So you can actually share medical records, X-rays, those kinds of things. Just that, bringing that to a community helps give it more confidence, more resilience, gives people options in their lives. And that's what this is about. It's about giving people options for both their healthcare, which my story was about, but also for economic development, for law enforcement, for entertainment, to grow other businesses. Because as we all know, businesses grow very rapidly on the internet these days, if they're the right business. So, Gary, I'll stop, but my motivation is very personal and we're not gonna stop this time until we get it right.

Gary: Joe and Jennifer, I had naively thought that tribal communities, that the broadband gap and issues in tribal areas were the same as any rural area. And so I'd come in and said try to pretend like it's just like a rural opportunity. And I was so mistaken as they say, if you met one tribe, you met one tribe, and how different tribal broadband is and how important it is that we need to understand that. So at Fiber Broadband Association this past year, we created a tribal broadband working group so that we can better understand the issues that, you know, the Indian country really faces. And so make sure that we can be more prepared to provide better solutions. Can you talk a little bit about... You mentioned a little bit about the Tribal Broadband Connectivity Program, and there's a number of other funding programs including BEAD. Can you just speak to what some of the money available is and what those programs are? 

Joe: Well sure. Under the Tribal Broadband Connectivity Program, there are two phases of it. Phase one has basically been been wrapped up. That encompassed a little under $2 billion to be distributed to Indian country. And most of those grants have been awarded. But those run the gamut from from adoption that is helping people learn how to use the internet to actually building projects. And there were a lot of build projects in that first round. We're now in the midst of round two for the Tribal Broadband Connectivity Program. I'm gonna say it out loud because if I start using acronyms, it can be confusing. So many of them sound the same. The applications for round two were due on January 23rd, I believe. There's about a billion dollars there that is specifically earmarked for tribal communities and tribal organizations to again, build projects, partner on projects for digital equity, that is to help people learn how to use the network, use broadband for workforce development and all those kinds of things.

Joe: The Capital Project Fund is administered by the Treasury Department. It allocated, I forget the amount of money. It was a large amount of money, and there was a portion set aside for tribes so that tribes can utilize that money to build out or to plan for broadband projects. It was also given to states, states have created programs to do sub-grants for, again, broadband and other economic development kinds of capital intensive kind of projects. There's that. The USDA, there's something called ReConnect. I think they're getting dangerously close to announcing ReConnect 5. I've been traveling, so they may have done that. I didn't see it. But that's a...

Gary: They have to pass budget first.

Joe: Yeah, that's right. [laughter] Yeah, you have to have the money before you could actually announce it, I guess. But that provides for broadband development in rural America, which includes most all of Indian country. So that's another pool of money that we hope will be available shortly. And then there's the big money, what I call the big money, BEAD. And there's approximately $42.5 Billion available in that pot of money, about 42 billion after the administrative expenses that's been allocated to the states. And I can't from the top of my mind tell you how much each state got, but they got... Most states got significant amounts of money. And the intention there is that those monies will then be sub-granted to projects within each state. And tribes are eligible for BEAD.

Joe: In fact it's my understanding and my... From discussions I've had over the last couple of years, that BEAD was in part envisioned to fill the gap that the Tribal Broadband Connectivity Program didn't fill with only $3 billion available to tribes. And some of us had argued that there should have been six to $10 billion in the TBCP, but there wasn't, but there's 42 billion in BEAD. The states are going through the process of having their plans approved. And we should begin to see the NOFO, it's a notice of funding opportunity from the states come out sometime in the middle of this coming year 2024. I could talk all day. Gary, I'll just stop for a second.

Gary: Yeah, so I mean, the good news about like the Tribal Broadband Connectivity Program and the US ReConnect is that they don't have a match requirement, but BEAD unfortunately has a 25% match and a letter of credit requirement, which my understanding is a non-starter for tribes. So Jennifer, can you talk about what's going on with the tribes and their ability to come up with a match and how they're scared of debt and things like that. Can you get just kind of a little bit of nuts and bolts on matching funds and how that impacts tribes? 

Jennifer: Yeah, so tribes are very fearful of debt especially for large infrastructure investments that have very high dollar figures. And they're always concerned about how do we repay those monies, what's the income stream that will fund that infrastructure into the future? Because tribes have experienced a great deal of disappointment in the past with projects that didn't get finished and cost overruns. That happens a lot in Indian country. The BEAD requirement for a letter of credit, I think is really intended to protect against exactly that sort of thing. A letter of credit is a one-time transaction where a bank says, we guarantee that this amount of money will be available to pay, and if the tribe were unable to pay that money, the bank would pay that amount of money. And that's something you typically like to see when you have a very significant investment.

Jennifer: And really I think Congress wanted to make sure that these dollars are being used and used appropriately. So we don't have a bunch of three-quarters of the way built infrastructure out there. You want it to be complete. For tribes, it can be daunting to work with financial institutions that don't work with Indian country necessarily. A lot of tribes have more relationships, not with big national banks, but smaller local banks that really don't have the capital to issue larger letters of credit. The interest rates on letters of credit are often much higher than other types of credit. And there's usually a one-time fee associated with the issuance of the letter of credit as well. So those are all hard things for tribes. And it's also a cost item in terms of the lawyering to get there.

Jennifer: The banks wanna know that they have an enforceable agreement, and that requires a waiver of sovereign immunity to make the legal instruments enforceable. And those are all hard things that tribes generally don't like to do. And again, for the clients that I represent, a lot of them don't have great access to credit and capital generally. So their capacity to get credit is often impeded. Which is why, and I think Joe will also speak to this, Congress included the ability to waive that matching requirement in the BEAD money specifically for tribes. And tribes need to be very assertive about requesting those waivers. The other thing I would just say about alternative sources is tribes could still use their American Rescue Plan Act state and local fiscal recovery fund monies to the extent they still have them. That was a $20 billion pot of money that went specifically to Indian country. Those funds do not have to be, excuse me, obligated until December 31, 2024, and they don't have to be spent until December 31, 2026.

Jennifer: So that's another source that tribes could use, although Indian country is historically very underfunded so that money is for many tribes not just sitting around. They've already spent it on other major needs.

Gary: So, I mean this is just a non-starter, match letter credit for tribes. But as Jennifer you said, BEAD has a opportunity to waive the matching funds and this provides a giant opportunity, Joe, right? To not only tribes but to several providers that wanna partner with tribes. Can you tell us a little bit about that? 

Joe: Sure. I wanna emphasize again that both in the... Well, in the NOFO and in the guidance that the NTIA, the Department of Commerce has put out, it's clear that the secretary has the ability to grant waivers and and specifically for tribes. When you follow that up with the language in Executive Order 13375, I think it is about waivers. I think tribes have a real opportunity across the board for waivers for BEAD funds. I just... So the tribes that are considering BEAD with all of the requirements that it has, one of the things I don't think they have to worry too much about, they just need to be assertive in asking for the waiver. And the state should support that waiver, a request to NTIA.

Joe: So that's a threshold. But I think the opportunity Gary's referring to is this, for BEAD funding, let's be clear this is specifically for BEAD funding, that if a incumbent provider or a new provider wants to enter a market and they want to avail themselves of BEAD funding in order to do that, a potential strategy for for that type of development is to partner with the tribe, have the tribe be the lead sub-grantee and make them a a significant part of both the project, the management and the ownership of the assets going forward. And that waiver would then be available to that overall project because the tribe is playing a significant role, must play a significant role and is the lead grantee or sub-grantee of the BEAD funds. I'm not sure a lot of people have thought of that.

Joe: I know some have. I've heard some incumbents talking about it. I've heard some tribes talking about it as a way to attract additional capital so that the entire project can be built out, because that 25% that might have gone to a match might still be available through a partnership arrangement so that a bigger project can be built. And I think it's in everyone's... In most cases it's in the project's best interest to include as many potential subscribers and users as possible. So I think just as a business strategy, Gary as you were saying, I think that the ability to partner with tribes, see tribes as an equal beneficiary of those projects is a real opportunity here for non-tribal companies that wanna get into the marketplace.

Gary: So just to recap, I mean, if a ISP wants to be able to get away without having to have the match, they could not only take the Indian country opportunities but they could kind of mix in non-Indian countries into the whole overall projects, get the tribes, partner with tribes to kind of be the lead on this and be able to really significantly reduce or eliminate the match. Is that what you're saying? 

Joe: Well, I think I would say significantly reduce 'cause I'm not sure the match waiver would apply off of Indian lands, but that should be the heart of the... From my point of view, that should be the heart of the project anyway. And then for the part of the project assuming that it does encompass non-tribal lands, there may still be a matching requirement for that. But I don't know. I haven't seen a project proposed like that, so I'm not sure exactly how that would work. I'd love to work with one to see and work through the administrative process to see how the Department of Commerce would view that especially as I said with a project that's being led by a tribe to cover both tribal and non-tribal lands. 'Cause as you know, Gary, you've already referred to it, Indian lands in general are not in a vacuum. They're surrounded by non-tribal communities that are actually part of the community. So providing service to those non... To those communities that just are just outside of the boundary of tribal lands is as much of a priority for most tribes as providing broadband for the communities within tribal lands. So I think there's a real synergy here. Just some of the details need to be worked out.

Gary: That's great. So let's talk about letter credit. That's a huge issue. And fortunately NTIA has done a fantastic job of listening and understanding the concerns. And so at the beginning of this month they issued a waiver to the letter of credit requirement. And this waiver makes a lot of modifications to the requirements, making it more flexible to eligible entities and sub-grantees which includes allowing credit unions issue letter credit, use of performance bonds allows eligible entities to reduce the obligations on completion of milestones, and also allows for alternative initial letter of credit or performance bond percentage. Joe and Jennifer, how does this apply to tribes? And does this help? 

Jennifer: I think every little bit helps. And we do see efforts here by NTIA to try to meet grant recipients where they are. These are really daunting processes for all rural communities. And tribes are used to trying to kind of Frankenstein together different sources of funding, which is I think what's gonna happen in the broadband space as well, because these are such massive investments. And even though there's a lot of money, it's still not enough, as Joe was saying. So the more optionality that can be out there, the more broadband will actually get built out.

Joe: Yeah, I do applaud the programmatic waiver that was issued a couple weeks ago by NTIA. I think that it does recognize the reality of where things are in small rural areas or just in rural areas in general. And that would include tribes. The performance bond issue is becoming a much more typical part of procurement for tribes as they subcontract or they use contractors to build various projects in Indian country. A performance bond is a very typical thing to see. So it's something that tribes understand already and why it's important. And as these projects because of the size of the projects, with the tribe being the... In Indian country in particular being the focal point, they can have... They can build into their procurement process if they haven't already, these performance bond issues. And now they have some flexibility there too which again makes it better for tribes to find a wider array of contractors and partners to work with them. So overall, this is a good thing. I'm anxious to see it in practice, Gary, but but it looks like a really great step for everybody including Indian country.

Gary: So I mean, this sounds like a fantastic opportunity for ISPs and for tribes to be able to partner together to really take advantage of some of the special status that tribes have to eliminate the match and to also take advantage of some of the NTIA waivers on letter of credit. How do these ISPs and tribes get together? Should they be both working through the state broadband office or how do tribes raise their hand and say, "Hey, come help me"? And how do ISPs say, "Hey, I really wanna take advantage of this," to not only be able to have a better business case with these advantages that tribes bring, but also to make sure these tribes get served? 

Joe: Well, it's a wonderful question and I think theoretically everybody should be raising their hands and finding a place to sit down and talk, ideally. Unfortunately, history dictates a little bit of this and that and I'm not criticizing every single incumbent ISP, I'm not. I know you have a lot of them as your members, Gary. But historically, much of Indian country has been left out of development by incumbent providers even when they've received federal funds to improve service in rural areas including tribe... Tribes generally haven't seen that improvement, haven't seen that investment at least haven't seen it benefit them. So it's a tough starting point, but we are at a point, and I appreciate you bringing it up where those tough discussions need to take place if they can. Where they can't, Tribal Ready is working to help tribes stand up their own ISP, stand up their own non-traditional type of provider so that they don't get left out this time. There's the traditional fear or the historical fear that they will be left out. We don't want that to be the case. And so I fully endorse the idea of sitting down across the table, having a tough discussion and see if you can find common ground because that's the only way you're gonna find common ground or at least attempt to find common ground. I think Jennifer might have some other perspective on this, too.

Jennifer: Yeah, and a lot of the state broadband offices are staffed with people who don't have a lot of experience in Indian country and they need to really partner with the state officials who do have that experience. A lot of states have cabinet level officials who are responsible for the state's relations with the tribes in the state. Those are great people to engage. Calling Tribal Ready is a great way to engage. Figuring out who is out there looking. There's a lot of networking that Joe's doing all the time to stay on top of where the needs are. And then I would also say incumbents could always go visit with their congressional delegation. The congressional delegations are very attuned to the lack of broadband in Indian country where the needs are and and hear from their tribal constituents all the time. So the federal offices are in my experience more than willing to try to convene people, make connections, and help things actually get built.

Gary: Well, Joe and Jennifer, what you're doing is so incredibly important. Thanks for sharing your insights on navigating tribal matching funds. This is a really tremendous opportunity and hopefully tribes and service providers can get together and take advantage of eliminating the match and be able to take advantage of the waiver on the letter of credit. So really appreciate what you are doing and...

Joe: Yeah, thank you, Gary.

Gary: Yeah, I wanna thank everybody for joining us today, and look forward to getting back together next month for our next episode of Where's the Funding. So thanks everybody for joining. We'll see you guys again in December.

Jennifer: Thank you.

Joe: Bye-bye. Thank you very much.