Spending Bill Puts Rural Infrastructure in Focus

US government allocates $1 billion for rural infrastructure.

  • Spending bill allocates $1 billion in funding for surface transportation infrastructure including highways, bridges, rail and ports
  • No fewer than 30% of available funding will be allocated for projects located in rural areas
  • A project’s ability to generate revenue will not be a criterion for grant funding

Rural infrastructure projects, long a priority of the Trump administration, are receiving renewed attention following the President’s signature of the FY 2019-2020 spending bill.

The legislation, which was on Friday signed into law, allocates $1 billion in funding surface transportation infrastructure including highways, bridges, rail and ports.

The funding will be made available to state and local governments, transit agencies, port authorities or a combination of procurement bodies through competitive grants. No fewer than 30% of available funding will be allocated for projects located in rural areas. Those will be eligible for a minimum grant amount of $1,000,000. Moreover, the Secretary of Transportation may also increase the federal share of costs to more than 80%.

Notably, however, the project’s ability to generate revenue will not be a criterion for grant funding. The White House’s 2016 infrastructure plan provided $100 billion in incentives for project sponsors who demonstrated innovative funding strategies. Another $50 billion had been earmarked for rural infrastructure needs.

USDA broadband pilot

The funding comes as the USDA prepares to launch a $600 million pilot program that will promote private investment in rural broadband infrastructure. The Rural e-Connectivity Pilot Program will empower states and municipalities to seek out new means of financing infrastructure, as well as leverage roughly 7,000 federal telecommunications assets for private sector development, and streamline the permitting process for new broadband projects.

Projects funded through the pilot program are expected to be awarded in the summer. USDA is currently developing guidelines for it.

Data from the FCC notes that roughly 70% of Americans living in rural areas during 2018 had access to 4G LTE services, compared to more than 90% of those in urban areas. The connectivity gap was even more stark for those living in tribal lands, as fewer than 64% had access to 4G.

This gap, according to the American Broadband Initiative, is due to a lower density of homes in rural areas. The more land that must be crossed to erect broadband infrastructure, the greater the requirements for acquisition, development, and permitting. As a result, broadband becomes less affordable for rural customers than for those in more dense areas.

Though private capital generally provides the lion’s share of broadband investment in the US, federal programs such as the FCC-administered Universal Service Fund and nonprofit organizations such as Universal Service Administrative Company (USAC) have been instrumental in providing carriers with a case for investing in rural broadband projects.

USAC in 2017 distributed almost $9 billion for broadband projects. The funding, according to the FCC, included roughly $4.7 billion for carriers serving rural areas of the country, as well as $2.6 billion in subsidies for schools and libraries.

Notably, a prior program known as USDA Rural Development in FY 2017 provided $506 million in federal funding for broadband projects, and successfully leveraged an additional $254 million in private-sector investment. The cost of providing all Americans living in rural communities with broadband internet service is estimated at $40 billion, according to the FCC.

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