Local governments urged to use the Broadband Handbook for Federal Funds: Broadband Breakfast

CLEVELAND, June 27, 2022 — Decades-old legislation can play an important and complementary role to federal subsidies for broadband infrastructure, Pew Charitable Trust Broadband Access Summit panelists said Wednesday.

The Community Reinvestment Act was passed in 1977 to combat redlining – the practice of denying financial services to individuals or groups based on their location, often along racial or socioeconomic lines. The law encourages banks to make community development loans and investments in low and middle income, rural and tribal communities.

The legislation was expanded to include investments in broadband infrastructure in 2016, after broadband was deemed an essential community service, said Jordana Barton Garcia, Director of Social Enterprise at Barton-Garcia Advisors. That means it could play a key role in closing some of the broadband gaps, she said, as the federal government prepares to distribute billions to states under the infrastructure investment and employment.

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

Banks receive credit from ARC for investing in community development projects and are reviewed on their performance by ARC 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 have to correct the rating.

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

A report released by the Federal Reserve Bank of Dallas in 2016 laid the groundwork for the inclusion of broadband in the CRA. “Under the ARC, investing in infrastructure includes facilitating the construction, expansion, improvement, maintenance or operation of critical infrastructure…broadband is now a necessary basic infrastructure in all communities.

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

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