Amended in Assembly June 20, 2016

Amended in Senate January 4, 2016

Senate BillNo. 745


Introduced by Senator Hueso

February 27, 2015


An act to amend Sections 281 and 914.7 of the Public Utilities Code, relating tobegin delete telecommunications.end deletebegin insert telecommunications, and making an appropriation therefor.end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 745, as amended, Hueso. Telecommunications: universal service: 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, referred to as the CASF, in the State Treasury. 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.begin delete Existingend delete

begin insertExistingend insert law establishes the Rural and Urban Regional Broadband Consortia Grant Account within the CASF. Existing law provides that moneys in the Rural and Urban Regional Broadband Consortia Grant Account are 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, and provides that an eligible consortium may include representatives of organizations, including 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.

This bill would specifically include representatives of workforce organizations and air pollution control or air quality management districts amongst the persons that can be included in an eligible consortium.

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Existing law establishes the Broadband Public Housing Account within the CASF. Existing law provides that moneys in that account are available for, among other things, grants and loans to publicly supported communities to finance projects to connect to broadband networks.

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This bill would require the commission, in its review of applications for grants and loans for this purpose, to prioritize unwired housing developments and provide that a wired housing development would be an eligible applicant only if the commission determines that the project would provide broadband Internet service at no greater cost for comparable speed and quality than is commercially available before the project.

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Existing law transferred moneys from other accounts within the CASF to the Broadband Public Housing Account for various specified purposes and provided those transferred moneys not awarded by December 31, 2016, would be returned to the accounts from which they were transferred.

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This bill would extend that date until December 31, 2020. By authorizing the granting of moneys remaining in the Broadband Public Housing Account until that date, this bill would make an appropriation.

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Existing law requires the commission to annually report to the Legislature on the expenditures of CASF funds, as specified, including the geographic regions of the state affected by those expenditures in the prior year.

This bill would require the commission’s report to the Legislature to include that information by county andbegin delete to includeend delete details on efforts to leverage non-CASFbegin delete funds.end deletebegin insert funds, the status of each project funded through the CASF, whether the project has been completed, and, if applicable, the expected completion date of the project.end insert

Vote: majority. Appropriation: begin deleteno end deletebegin insertyesend insert. Fiscal committee: yes. State-mandated local program: no.

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

P3    1

SECTION 1.  

Section 281 of the Public Utilities Code is
2amended to read:

3

281.  

(a) The commission shall develop, implement, and
4administer the California Advanced Services Fund program to
5encourage deployment of high-quality advanced communications
6services to all Californians that will promote economic growth,
7job creation, and the substantial social benefits of advanced
8information and communications technologies, consistent with
9this section.

10(b) (1) The goal of the program is, no later than December 31,
112015, to approve funding for infrastructure projects that will
12provide broadband access to no less than 98 percent of California
13households.

14(2) In approving infrastructure projects, the commission shall
15give priority to projects that provide last-mile broadband access
16to households that are unserved by an existing facilities-based
17broadband provider. The commission shall provide each applicant,
18and any party challenging an application, the opportunity to
P4    1demonstrate actual levels of broadband service in the project area,
2which the commission shall consider in reviewing the application.

3(c) The commission shall establish the following accounts within
4the fund:

5(1) The Broadband Infrastructure Grant Account.

6(2) The Rural and Urban Regional Broadband Consortia Grant
7Account.

8(3) The Broadband Infrastructure Revolving Loan Account.

9(4) The Broadband Public Housing Account.

10(d) (1) All moneys collected by the surcharge authorized by
11the commission pursuant to Decision 07-12-054 shall be
12transmitted to the commission pursuant to a schedule established
13by the commission. The commission shall transfer the moneys
14received to the Controller for deposit in the California Advanced
15Services Fund. Moneys collected on and after January 1, 2011,
16shall be deposited in the following amounts in the following
17accounts:

18(A) One hundred ninety million dollars ($190,000,000) into the
19Broadband Infrastructure Grant Account.

20(B) Fifteen million dollars ($15,000,000) into the Rural and
21Urban Regional Broadband Consortia Grant Account.

22(C) Ten million dollars ($10,000,000) into the Broadband
23Infrastructure Revolving Loan Account.

24(2) All interest earned on moneys in the fund shall be deposited
25in the fund.

26(3) The commission shall not collect moneys, by imposing the
27surcharge described in paragraph (1) for deposit in the fund, in an
28amount that exceeds one hundred million dollars ($100,000,000)
29before January 1, 2011. On and after January 1, 2011, the
30commission may collect an additional sum not to exceed two
31hundred fifteen million dollars ($215,000,000), for a sum total of
32moneys collected by imposing the surcharge described in paragraph
33(1) not to exceed three hundred fifteen million dollars
34($315,000,000). The commission may collect the additional sum
35beginning with the calendar year starting on January 1, 2011, and
36continuing through the 2020 calendar year, in an amount not to
37exceed twenty-five million dollars ($25,000,000) per year, unless
38the commission determines that collecting a higher amount in any
39 year will not result in an increase in the total amount of all
40surcharges collected from telephone customers that year.

P5    1(e) (1) All moneys in the California Advanced Services Fund
2shall be available, upon appropriation by the Legislature, to the
3commission for the program administered by the commission
4pursuant to this section, including the costs incurred by the
5commission in developing, implementing, and administering the
6program and the fund.

7(2) Notwithstanding any other law and for the sole purpose of
8providing matching funds pursuant to the federal American
9Recovery and Reinvestment Act of 2009 (Public Law 111-5), any
10entity eligible for funding pursuant to that act shall be eligible to
11apply to participate in the program administered by the commission
12pursuant to this section, if that entity otherwise satisfies the
13eligibility requirements under that program. Nothing in this section
14shall impede the ability of an incumbent local exchange carrier,
15as defined by subsection (h) of Section 251 of Title 47 of the
16United States Code, that is regulated under a rate of return
17regulatory structure, to recover, in rate base, California
18infrastructure investment not provided through federal or state
19grant funds for facilities that provide broadband service and
20California intrastate voice service.

21(3) Notwithstanding subdivision (b) of Section 270, an entity
22that is not a telephone corporation shall be eligible to apply to
23participate in the program administered by the commission pursuant
24to this section to provide access to broadband to an unserved or
25underserved household, as defined in commission Decision
2612-02-015, if the entity otherwise meets the eligibility requirements
27and complies with program requirements established by the
28commission. These requirements shall include all of the following:

29(A) That projects under this paragraph provide last-mile
30broadband access to households that are unserved by an existing
31facilities-based broadband provider and only receive funding to
32provide broadband access to households that are unserved or
33underserved, as defined in commission Decision 12-02-015.

34(B) That funding for a project providing broadband access to
35an underserved household shall not be approved until after any
36existing facilities-based provider has an opportunity to demonstrate
37to the commission that it will, within a reasonable timeframe,
38upgrade existing service. An existing facilities-based provider
39may, but is not required to, apply for funding under this section to
40make that upgrade.

P6    1(C) That the commission shall provide each applicant, and any
2party challenging an application, the opportunity to demonstrate
3actual levels of broadband service in the project area, which the
4commission shall consider in reviewing the application.

5(D) That a local governmental agency may be eligible for an
6infrastructure grant only if the infrastructure project is for an
7unserved household or business, the commission has conducted
8an open application process, and no other eligible entity applied.

9(E) That the commission shall establish a service list of
10interested parties to be notified of California Advanced Services
11Fund applications.

12(f) Moneys in the Rural and Urban Regional Broadband
13Consortia Grant Account shall be available for grants to eligible
14consortia to fund the cost of broadband deployment activities other
15than the capital cost of facilities, as specified by the commission.
16An eligible consortium may include, as specified by the
17commission, representatives of organizations, including, but not
18limited to, local and regional government, public safety, elementary
19and secondary education, health care, libraries, postsecondary
20education, community-based organizations, tourism, parks and
21recreation, agricultural, business, workforce organizations, and air
22pollution control or air quality management districts, and is not
23required to have as its lead fiscal agent an entity with a certificate
24of public convenience and necessity.

25(g) Moneys in the Broadband Infrastructure Revolving Loan
26Account shall be available to finance capital costs of broadband
27facilities not funded by a grant from the Broadband Infrastructure
28Grant Account. The commission shall periodically set interest rates
29on the loans based on surveys of existing financial markets.

30(h) (1) For purposes of this subdivision, the following terms
31have the following meanings:

32(A) “Publicly subsidized” means either that the housing
33development receives financial assistance from the United States
34Department of Housing and Urban Development pursuant to an
35annual contribution contract or is financed with low-income
36housing tax credits, tax-exempt mortgage revenue bonds, general
37obligation bonds, or local, state, or federal loans or grants and the
38rents of the occupants, who are lower income households, do not
39exceed those prescribed by deed restrictions or regulatory
P7    1agreements pursuant to the terms of the financing or financial
2assistance.

3(B) “Publicly supported community” means a publicly
4subsidized multifamily housing development that is wholly owned
5by either of the following:

6(i) A public housing agency that has been chartered by the state,
7or by any city or county in the state, and has been determined to
8be an eligible public housing agency by the United States
9Department of Housing and Urban Development.

10(ii) An incorporated nonprofit organization as described in
11Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec.
12501(c)(3)) that is exempt from taxation under Section 501(a) of
13that code (26 U.S.C. Sec. 501(a)), and that has received public
14funding to subsidize the construction or maintenance of housing
15occupied by residents whose annual income qualifies as “low” or
16“very low” income according to federal poverty guidelines.

17(2) Notwithstanding subdivision (b) of Section 270, moneys in
18the Broadband Public Housing Account shall be available for the
19commission to award grants and loans pursuant to this subdivision
20to an eligible publicly supported community if that entity otherwise
21meets eligibility requirements and complies with program
22requirements established by the commission.

23(3) begin insert(A)end insertbegin insertend insertNot more than twenty million dollars ($20,000,000)
24shall be available for grants and loans to a publicly supported
25community to finance a project to connect a broadband network
26to that publicly supported community. A publicly supported
27community may be an eligible applicant only if the publicly
28supported community can verify to the commission that the
29publicly supported community has not denied a right of access to
30any broadband provider that is willing to connect a broadband
31network to the facility for which the grant or loan is sought.

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32
(B) (i) In its review of applications received pursuant to
33subparagraph (A), the commission shall prioritize unwired housing
34developments. A wired housing development shall be an eligible
35applicant only if the commission determines that the project would
36provide broadband Internet service at no greater cost for
37comparable speed and quality than is commercially available
38before the project.

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39
(ii) For purposes of this subparagraph, a housing development
40is wired when it is possible to subscribe to a commercially
P8    1available broadband Internet service, such as Digital Subscriber
2Line (DSL), cable modem, or another protocol, utilizing existing
3wired facilities. A housing development is unwired when at least
4one housing unit within the housing development is not wired.

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5(4) (A) Not more than five million dollars ($5,000,000) shall
6be available for grants and loans to a publicly supported community
7to support programs designed to increase adoption rates for
8broadband services for residents of that publicly supported
9community. A publicly supported community may be eligible for
10funding for a broadband adoption program only if the residential
11units in the facility to be served have access to broadband services
12or will have access to broadband services at the time the funding
13for adoption is implemented.

14(B) A publicly supported community may contract with other
15nonprofit or public agencies to assist in implementation of a
16broadband adoption program.

17(5) To the extent feasible, the commission shall approve projects
18for funding from the Broadband Public Housing Account in a
19manner that reflects the statewide distribution of publicly supported
20communities.

21(6) In reviewing a project application under this subdivision,
22the commission shall consider the availability of other funding
23sources for that project, any financial contribution from the
24broadband service provider to the project, the availability of any
25other public or private broadband adoption or deployment program,
26including tax credits and other incentives, and whether the applicant
27has sought funding from, or participated in, any reasonably
28available program. The commission may require an applicant to
29provide match funding, and shall not deny funding for a project
30solely because the applicant is receiving funding from another
31source.

32(7) (A) To provide funding for the purposes of this subdivision,
33the commission shall transfer to the Broadband Public Housing
34Account twenty million dollars ($20,000,000) from the Broadband
35Infrastructure Grant Account and five million dollars ($5,000,000)
36from the Broadbandbegin insert Infrastructureend insert Revolving Loan Account. Any
37moneys in the Broadband Public Housing Account that have not
38been awarded pursuant to this subdivision by December 31,begin delete 2016,end delete
39begin insert 2020,end insert shall be transferred back to the Broadband Infrastructure
40Grant Account and Broadband Infrastructure Revolving Loan
P9    1Account in proportion to the amount transferred from the respective
2accounts.

3(B) The commission shall transfer funds pursuant to
4subparagraph (A) only if the commission is otherwise authorized
5to collect funds for purposes of this section in excess of the total
6amount authorized pursuant to paragraph (3) of subdivision (d).

7

SEC. 2.  

Section 914.7 of the Public Utilities Code is amended
8to read:

9

914.7.  

(a) Bybegin delete Januaryend deletebegin insert Aprilend insert 1 of each year, the commission
10shall provide a report to the Legislature that includes all of the
11following information:

12(1) The amount of funds expended from the California Advanced
13Services Fund in the prior year.

14(2) The recipients of funds expended from the California
15Advanced Services Fund in the prior year.

16(3) The geographicbegin delete regions, including information by county,end delete
17begin insert regionsend insert of the state affected by funds expended from the California
18Advanced Services Fund in the priorbegin delete year.end deletebegin insert year, including
19information by county.end insert

20(4) The expected benefits to be derived from the funds expended
21from the California Advanced Services Fund in the prior year.

begin insert

22
(5) Details on the status of each project funded through the
23California Advanced Service Fund, whether the project has been
24completed, and, if applicable, the expected completion date of the
25project.

end insert
begin delete

26(5)

end delete

27begin insert(6)end insert Actual broadband adoption levels from the funds expended
28from the California Advanced Services Fund in the prior year.

begin delete

29(6)

end delete

30begin insert(7)end insert The amount of funds expended from the California Advanced
31Services Fund used to match federal funds.

begin delete

32(7)

end delete

33begin insert(8)end insert Additional details on efforts to leverage non-California
34Advanced Services Fund funds.

begin delete

35(8)

end delete

36begin insert(9)end insert An update on the expenditures from the California Advanced
37Services Fund and broadband adoption levels, and an accounting
38of remaining unserved and underserved households and areas of
39the state.

begin delete

40(9)

end delete

P10   1begin insert(10)end insert The status of the California Advanced Services Fund
2balance and the projected amount to be collected in each year
3through 2020 to fund approved projects.

4(b) Pursuant to Section 10231.5 of the Government Code, this
5section is repealed on January 1,begin delete 2021.end deletebegin insert 2022.end insert



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