Tag Archives: SLFRF

Extension of Capital Project Fund Grants

There is a glimmer of hope that ISPs that won state grants that were funded from the Capital Project Fund (CPF) can get an extension of six months to complete grant construction.

The Capital Project Fund was created by the 2021 American Rescue Plan Act (ARPA) and provided almost $10 billion to states and territories for making broadband-related grants. The program was administered by the Department of the Treasury, which gave block grants to States. Each State then made awards through State Broadband grant programs to ISPs. I’ve seen estimates that CPF grants have funded projects to bring new broadband infrastructure to roughly 2 million rural passings. The grants could also be used to purchase devices like laptops and computers for qualifying households. The final approved use of the funds was to construct or improve physical community hubs where citizens can remotely access work, education, and telehealth services.

Many State grants awarded under this program have been constructed and up and operating. But as inevitable, some grant winner had delays and don’t expect to finish grant construction by the end of this year when the funding expires.

On May 6, the Department of the Treasury updated the Coronavirus Capital Project Fund FAQs. The update includes a process where some projects can get an extension to complete construction for six months, until June 30, 2027, under the following new rules:

  • States must make requests for an extension by July 31 of this year.
  • Extension requests are not generic and must be related to a specific project.
  • To be eligible for an extension, a project must have already made material progress toward completion. The project must certify that it can’t complete construction by the legislative end of the CPF program of December 31, 2026.
  • The reasons for the extension must be to extenuating circumstances beyond the grantee’s control. The FAQ lists eligible extenuating circumstances to include, but are not limited to, permitting or regulatory delays, supply chain disruptions, labor shortages, or severe weather events.
  • ISPs can’t ask for an extension for reasons like inadequate planning, project management deficiencies, failure to secure financing, or other avoidable causes.
  • Treasury is not obligated to grant the extensions and will review each extension request based on the specific facts and merits.

This is very good news for projects that were delayed by external events. For example, I know there are CPF projects in North Carolina that were significantly delayed due to Hurricane Helene. The State government here has already started the process of identifying projects that might benefit from the extension.

Note that not all state broadband grants were funded through Capital Project Fund dollars. For example, around $350 billion was given directly to state and local governments to meet infrastructure needs through the State and Local Fiscal Recovery Plan (SLFRF). This covered a lot more than broadband and could also be used for a wide range of infrastructure projects like dams, bridges, roads, etc. I’ve seen estimates that over $8 billion of this money made it into State broadband grant programs.

SLFRF is being administered by NTIA, and at this point, there are no announced plans for any extension of this funding, which expires on December 31, 2026.

Broadband Grant Deadlines

The industry and the press have been laser-focused on BEAD grants for the last few years. It’s easy to forget that there are a lot of federal broadband grants that have been issued under other grant programs, many of which are facing completion deadlines. This includes grants from programs like CAF II, RDOF, ReConnect, the Capital Projects Fund, ARPA grants funded through SLFRF, NTIA middle-mile grants, and the NTIA Tribal Grants.

A lot of projects under these grants have a deadline to be completed this year or in 2027. Today’s blog looks at the consequences of not finishing a grant project by the legislative deadline.

The grants that face the most immediate deadlines at the end of 2026 include State grants that were funded by the Capital Projects Fund or through SLFRF. These grants would have been awarded through individual State broadband grant programs, but the underlying money came from federal legislation. ARPA grants might have also come from counties or cities. These grants have a hard completion deadline of December 31 of this year.

I’ve been hearing from State Broadband managers that the Federal government has no appetite for any extensions of this funding. This is not news, and they’ve been saying the same thing for the last year, but lately, they have been reminding states of this.

It’s been routine in the past for ISPs to get extensions for grant construction as long as they had a good story of why they needed the extra time. In today’s environment, there are a lot of reasons why construction might be delayed. It could be due to challenges in getting permits, rights-of-way, or easements. It might mean having problems getting onto poles because of recalcitrant pole owners. It might be due to supply chain problems in receiving needed materials. It might come from labor shortages that slow construction vendors. If the federal agencies behind the grants enforce the legislative deadlines, none of these excuses will matter.

Grant recipients need to do everything in their power to finish construction this year. With no extensions, any work done after the deadline will not be reimbursed. I’ve been hearing rumors that failure to complete a federal grant program on time might also make an ISP ineligible for any future federal broadband funding.

If hard deadlines are enforced, this could also be coupled with a hard deadline for submitting grant paperwork quickly. Most grant programs in the past have allowed grantees some leniency after construction is completed to submit invoices. Hard deadlines might result in rejection of invoices sent after the deadline. Most grants also require some kind of close-out reporting to document that the project construction is completed, and ISPs need to get any such report completed quickly.

Anybody working with a State Broadband Office needs to understand their specific requirements. For example, there might be states that want paperwork submitted and completed by the legislative deadline, meaning construction has to be completed even earlier than the end of the year. ISPs also need to push vendors to invoice for the grant-funded projects quickly to provide proof of the spending.

I am positive that some ISPs will be surprised if they don’t get reimbursed for work they have completed. Grant offices have sent out deadline warnings for years, but have often given routine exceptions for lateness. It sounds like, starting this year, that deadlines are firm with little or no room for exceptions.