Amended in Senate September 4, 2013

Amended in Senate July 10, 2013

Amended in Assembly April 25, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1299

Introduced by Assembly Member Bradford

February 22, 2013

An act to amend Section 281 of the Public Utilities Code, relating to telecommunications.

LEGISLATIVE COUNSEL’S DIGEST

AB 1299, as amended, Bradford. Telecommunications: universal service programs: California Advanced Services Fund.

Existing law, the federal Telecommunications Act of 1996, establishes a program of cooperative federalism for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. The universal service principles include the principle that consumers in all regions of the nation, including low-income consumers and those in rural, insular, and high-cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. The act authorizes each state to adopt regulations to provide for additional definitions and standards to preserve and advance universal service within the state, only to the extent that they adopt additional specific, predictable, and sufficient mechanisms that do not rely on or burden federal universal service support mechanisms.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations, as defined. Existing law establishes the California Advanced Services Fund (CASF) in the State Treasury and requires that moneys in those funds are the proceeds of rates and are held in trust for the benefit of ratepayers and to compensate telephone corporations for their costs of providing universal service and may be expended only to accomplish specified telecommunications universal service programs, upon appropriation in the annual Budget Act or upon supplemental appropriation. Existing law requires the commission to develop, implement, and administer the CASF to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and substantial social benefits of advanced information and communications technologies, as provided in specified decisions of the commission and in the CASF statute. Existing law establishes 3 accounts, the Broadband Infrastructure Grant Account, the Rural and Urban Regional Broadband Consortia Grant Account, and the Broadband Infrastructure Revolving Loan Account within the CASF.

Existing law prohibits the commission from collecting, before January 1, 2011, more than $100,000,000, for deposit into the CASF through the surcharge authorized by the commission. Existing law authorizes the commission to collect an additional sum not to exceed $125,000,000, after January 1, 2011, for a sum total of moneys collected through the surcharge not to exceed $225,000,000. Existing law authorizes the commission to collect the additional sum through the 2015 calendar year. Existing law requires that of the moneys collected after January 1, 2011, $100,000,000 is to be deposited into the Broadband Infrastructure Grant Account, $10,000,000 is to be deposited into the Rural and Urban Regional Broadband Consortia Grant Account and used for specified purposes, and $15,000,000 is to be deposited into the Broadband Infrastructure Revolving Loan Account and used for specified purposes.

This bill would establish the Broadband Public Housing Account within the CASF and would authorize the commission to transfer $20,000,000 from the Broadband Infrastructure Grant Account and $5,000,000 from the Broadband Revolving Loan Account to the Broadband Public Housing Account if the commission is otherwise authorized to collect funds for purposes of the CASF in excess of the $225,000,000 the commission is authorized to collect through December 31, 2015, under existing law. The bill would authorize not more than $20,000,000 from the Broadband Public Housing Account be available for grants and loans to a publicly supported begin delete housing end delete community, as defined, to finance a project to connect a broadband network to that publicly supported begin delete housing end delete community. The bill would authorize not more than $5,000,000 from the Broadband Public Housing Account be available for grants and loans to a publicly supported begin delete housing end delete community to support programs designed to increase adoption rates for broadband services for residents of that publicly supported begin delete housing end delete community. The bill would require the commission, in reviewing a project application to consider the availability of other funding sources for that project, any financial contribution from the broadband service provider to the project, the availability of any other public or private broadband adoption or deployment program, including tax credits and other incentives, and whether the applicant has sought funding from, or participated in, any reasonably available program. The bill would authorize the commission to require an applicant to provide match funding, and prohibit the commission from denying funding for a project solely because the applicant is receiving funding from another source.

begin insert

The provisions of the bill would become operative only if this bill and SB 740 of the 2013-14 Regular Session are both enacted and become effective on or before January 1, 2014.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 281 of the Public Utilities Code is
amended to read:

281.  

(a) The commission shall develop, implement, and
administer the California Advanced Services Fund to encourage
deployment of high-quality advanced communications services to
all Californians that will promote economic growth, job creation,
and the substantial social benefits of advanced information and
communications technologies, as provided in Decision 07-12-054
and Decision 09-07-020 and this section. The commission shall
establish the following accounts within the fund:

(1) The Broadband Infrastructure Grant Account.

(2) The Rural and Urban Regional Broadband Consortia Grant
Account.

(3) The Broadband Infrastructure Revolving Loan Account.

(4) The Broadband Public Housing Account.

(b) (1) All moneys collected by the surcharge authorized by
the commission pursuant to Decision 07-12-054, whether collected
before or after January 1, 2009, shall be transmitted to the
commission pursuant to a schedule established by the commission.
The commission shall transfer the moneys received to the
Controller for deposit in the California Advanced Services Fund.
Moneys collected on and after January 1, 2011, shall be deposited
in the following amounts in the following accounts:

(A) One hundred million dollars ($100,000,000) into the
Broadband Infrastructure Grant Account.

(B) Ten million dollars ($10,000,000) into the Rural and Urban
Regional Broadband Consortia Grant Account.

(C) Fifteen million dollars ($15,000,000) into the Broadband
Infrastructure Revolving Loan Account.

(2) All interest earned on moneys in the fund shall be deposited
in the fund.

(3) The commission shall not collect moneys, by imposing the
surcharge described in paragraph (1) for deposit in the fund, in an
amount that exceeds one hundred million dollars ($100,000,000)
before January 1, 2011. On and after January 1, 2011, the
commission may collect an additional sum not to exceed one
hundred twenty-five million dollars ($125,000,000), for a sum
total of moneys collected by imposing the surcharge described in
paragraph (1) not to exceed two hundred twenty-five million dollars
($225,000,000). The commission may collect the additional sum
beginning with the calendar year starting on January 1, 2011, and
continuing through the 2015 calendar year, in an amount not to
exceed twenty-five million dollars ($25,000,000) per year, unless
the commission determines that collecting a higher amount in any
year will not result in an increase in the total amount of all
surcharges collected from telephone customers that year.

(c) (1) All moneys in the California Advanced Services Fund
shall be available, upon appropriation by the Legislature, to the
commission for the program administered by the commission
pursuant to this section, including the costs incurred by the
commission in developing, implementing, and administering the
program and the fund.

(2) Notwithstanding any other law and for the sole purpose of
providing matching funds pursuant to the federal American
Recovery and Reinvestment Act of 2009 (Public Law 111-5), any
entity eligible for funding pursuant to that act shall be eligible to
apply to participate in the program administered by the commission
pursuant to this section, if that entity otherwise satisfies the
eligibility requirements under that program. Nothing in this section
shall impede the ability of an incumbent local exchange carrier,
as defined by subsection (h) of Section 251 of Title 47 of the
United States Code, that is regulated under a rate of return
regulatory structure, to recover, in rate base, California
infrastructure investment not provided through federal or state
grant funds for facilities that provide broadband service and
California intrastate voice service.

(d) Moneys in the Rural and Urban Regional Broadband
Consortia Grant Account shall be available for grants to eligible
consortia to fund the cost of broadband deployment activities other
than the capital cost of facilities, as specified by the commission.
An eligible consortium may include, as specified by the
commission, representatives of organizations, including, but not
limited to, local and regional government, public safety, elementary
and secondary education, health care, libraries, postsecondary
education, community-based organizations, tourism, parks and
recreation, agricultural, and business, and is not required to have
as its lead fiscal agent an entity with a certificate of public
convenience and necessity.

(e) Moneys in the Broadband Infrastructure Revolving Loan
Account shall be available to finance capital costs of broadband
facilities not funded by a grant from the Broadband Infrastructure
Grant Account. The commission shall periodically set interest rates
on the loans based on surveys of existing financial markets.

(f) (1) For purposes of this subdivision, begin delete “publicly end delete begin insert the following
terms have the following meanings: end insert

begin insert

(A) “Publicly subsidized” means either that the housing
development receives financial assistance from the United States
Department of Housing and Urban Development pursuant to an
annual contribution contract or is financed with low-income
housing tax credits, tax-exempt mortgage revenue bonds, general
obligation bonds, or local, state, or federal loans or grants and
the rents of the occupants, who are lower income households, do
not exceed those prescribed by deed restrictions or regulatory
agreements pursuant to the terms of the financing or financial
assistance.

end insert

begin insert (B) end insert begin insert   end insert begin insert “ end insert begin insert Publicly end insert supported begin delete housing end delete community” means a publicly
subsidized begin delete housing multitenant attached dwelling unit end delete begin insert multifamily
housing development end insert that is wholly owned by either of the
following:

begin delete

(A)

end delete

begin insert (i) end insert  A public housing agency that has been chartered by the state,
or by any city or county in the state, and has been determined an
eligible public housing agency by the United States Department
of Housing and Urban Development.

begin delete

(B)

end delete

begin insert (ii) end insert  An incorporated nonprofit organization as described in
Section 501 (c)(3) of the Internal Revenue Code (26 U.S.C. Sec.
501(c)(3)) that is exempt from taxation under Section 501 (a) of
that code (16 U.S.C. Sec. 501(a)), and that has received public
funding to subsidize the construction or maintenance of housing
occupied by residents whose annual income qualifies as “low-” or
“very low” income according to federal poverty guidelines.

(2) Notwithstanding subdivision (b) of Section 270, moneys in
the Broadband Public Housing Account shall be available for the
commission to award grants and loans pursuant to this subdivision
to an eligible publicly supported begin delete housing end delete community if that entity
otherwise meets eligibility requirements and complies with
program requirements established by the commission.

(3) Not more than twenty million dollars ($20,000,000) shall
be available for grants and loans to a publicly supported begin delete housing end delete
community to finance a project to connect a broadband network
to that publicly supported begin delete housing end delete community. A publicly
supported begin delete housing end delete community may be an eligible applicant only
if the publicly supported begin delete housing end delete community can verify to the
commission that the publicly supported begin delete housing end delete community has
not denied a right of access to any broadband provider that is
willing to connect a broadband network to the facility for which
the grant or loan is sought.

(4) (A) Not more than five million dollars ($5,000,000) shall
be available for grants and loans to a publicly supported begin delete housing end delete
community to support programs designed to increase adoption
rates for broadband services for residents of that publicly supported
begin delete housing end delete community. A publicly supported begin delete housing end delete community
may be eligible for begin delete a grant to fund end delete begin insert funding for end insert a broadband
adoption program only if the residential units in the facility to be
served have access to broadband services or will have access to
broadband services at the time the begin delete grant end delete begin insert funding end insert for adoption is
implemented.

(B) A publicly supported begin delete housing end delete community may contract with
other nonprofit or public agencies to assist in implementation of
a broadband adoption program.

(5) To the extent feasible, the commission shall approve projects
for funding from the Broadband Public Housing Account in a
manner that reflects the statewide distribution of publicly supported
begin delete housing end delete communities.

(6) In reviewing a project application under this subdivision,
the commission shall consider the availability of other funding
sources for that project, any financial contribution from the
broadband service provider to the project, the availability of any
other public or private broadband adoption or deployment program,
including tax credits and other incentives, and whether the applicant
has sought funding from, or participated in, any reasonably
available program. The commission may require an applicant to
provide match funding, and shall not deny funding for a project
solely because the applicant is receiving funding from another
source.

(7) (A) To provide funding for the purposes of this subdivision,
the commission shall transfer to the Broadband Public Housing
Account twenty million dollars ($20,000,000) from the Broadband
Infrastructure Grant Account and five million dollars ($5,000,000)
from the Broadband Revolving Loan Account. Any moneys in the
Broadband Public Housing Account that have not been awarded
pursuant to this subdivision by December 31, 2016, shall be
transferred back to the Broadband Infrastructure Grant Account
and Broadband Infrastructure Revolving Loan Account in
proportion to the amount transferred from the respective accounts.

(B) The commission shall transfer funds pursuant to
subparagraph (A) only if the commission is otherwise authorized
to collect funds for purposes of this section in excess of the total
amount authorized pursuant to paragraph (3) of subdivision (b).

(g) (1)  The commission shall conduct an interim and final
financial audit and an interim and final performance audit of the
implementation and effectiveness of the California Advanced
Services Fund to ensure that funds have been expended in
accordance with the approved terms of the grant awards and loan
agreements and this section. The commission shall report its interim
findings to the Legislature by April 1, 2011. The commission shall
report its final findings to the Legislature by April 1, 2017. The
reports shall also include an update to the maps in the final report
of the California Broadband Task Force and data on the types and
numbers of jobs created as a result of the program administered
by the commission pursuant to this section.

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2018, pursuant to Section
10231.5 of the Government Code.

(B) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

(h) (1)  Beginning on January 1, 2012, and annually thereafter,
the commission shall provide a report to the Legislature that
includes all of the following information:

(A) The amount of funds expended from the California
Advanced Services Fund in the prior year.

(B) The recipients of funds expended from the California
Advanced Services Fund in the prior year.

(C) The geographic regions of the state affected by funds
expended from the California Advanced Services Fund in the prior
year.

(D) The expected benefits to be derived from the funds expended
from the California Advanced Services Fund in the prior year.

(E) Actual broadband adoption levels from the funds expended
from the California Advanced Services Fund in the prior year.

(F) The amount of funds expended from the California
Advanced Services Fund used to match federal funds.

(G) An update on the expenditures from California Advanced
Services Fund and broadband adoption levels, and an accounting
of remaining unserved and underserved areas of the state.

(2) (A) The requirement for submitting a report imposed under
paragraph (1) is inoperative on January 1, 2016, pursuant to Section
10231.5 of the Government Code.

(B) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert This bill shall become operative only if this bill and
Senate Bill 740 are both enacted and become effective on or before
January 1, 2014. end insert