HUD Finalizes Rule Requiring Broadband Installation: U.S. Department of Housing and Urban Development (HUD) published its final rule requiring the installation of broadband infrastructure in certain HUD-financed multifamily rental housing projects.

HUD Finalizes Rule Requiring Broadband Installation: U.S. Department of Housing and Urban Development (HUD) published its final rule requiring the installation of broadband infrastructure in certain HUD-financed multifamily rental housing projects.

HUD’s Goal in Implementing the New Rule is to Help Close the “Digital Divide” in Low-Income Communities.

  • Posted on: 6 January 2017
  • By: HRASHID

On December 20, 2016, the U.S. Department of Housing and Urban Development (HUD) published its final rule requiring the installation of broadband infrastructure in certain HUD-financed multifamily rental housing projects. The rule only applies to HUD-financed multifamily rental housing projects that are either newly constructed or undergoing substantial rehabilitation. HUD’s goal in implementing the new rule is to help close the “digital divide” in low-income communities. Nevertheless, the rule does not mandate that they provide internet access. It merely requires that project owners and developers provide broadband infrastructure in certain circumstances.

The applicable HUD programs include all Section 8 project-based housing assistance payment programs, as well as HOME, CDBG, the Project-Based Voucher program and a few others. But the rule does not apply to a project whose sole financial support from HUD is either a mortgage insured by the Federal Housing Administration or a loan guaranteed under a HUD program.

To satisfy the rule, the installation must result in broadband infrastructure that meets the Federal Communications Commission’s (FCC’s) requisite broadband speeds. Beyond that, however, the infrastructure can take most any form—cables, fiber optics, wiring or wireless—as long as its installation is permanent. Right now, broadband speeds must be 25 megabits per second (mbps) download and three mbps upload to meet the FCC’s broadband requirements. But the FCC may adjust these requirements in the future, and thus project developers must be mindful of the FCC’s requisite broadband speeds when it generates pre-rehabilitation estimated costs.

Under the new rule, whether rehabilitation is substantial depends on whether it meets an applicable HUD program’s specific definition of “substantial rehabilitation,” or, if an applicable program has no set definition, on the rehabilitation’s costs. If the rehabilitation consists of work on the electrical system, then it is substantial if its estimated costs are or exceed 75 percent of the cost of replacing the whole electrical system. Rehabilitation is also substantial if its estimated costs are or exceed 75 percent of the cost of replacing the multifamily rental housing after the completion of rehabilitation. In those two instances, a HUD-financed multifamily rental housing project owner would have to install new broadband infrastructure.

The final rule does not significantly depart from what HUD originally proposed. But HUD clarified that it was setting the cost threshold for substantial rehabilitation on pre-rehabilitation estimates. In doing so, HUD recognized that program participants who unintentionally exceed the 75 percent cost threshold during the project’s rehabilitation are already facing greater costs than expected. HUD deemed this an “undue burden” on project developers.

HUD’s final rule requiring broadband installation for new construction and substantial rehabilitation was published in 81 Fed. Reg. 92628. It goes into effect on January 19, 2017. Nixon Peabody previously addressed the proposed rule on this blog on May 18, 2016, at http://web20.nixonpeabody.com/ahrc/Lists/Posts/Post.aspx?ID=787&Title=Br....

https://www.federalregister.gov/documents/2016/11/29/2016-27985/elementa...
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Yours In Peace,
Mr. Hasson J. Rashid
Cambridge, MA