BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 745


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          SENATE THIRD READING


          SB  
          745 (Hueso)


          As Amended  August 19, 2016


          Majority vote


          SENATE VOTE:  36-1


           -------------------------------------------------------------------- 
          |Committee       |Votes|Ayes                   |Noes                 |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Utilities       |10-4 |Gatto, Burke, Eggman,  |Patterson, Chávez,   |
          |                |     |                       |Dahle, Obernolte     |
          |                |     |                       |                     |
          |                |     |Cristina Garcia,       |                     |
          |                |     |Eduardo Garcia, Roger  |                     |
          |                |     |Hernández, Quirk,      |                     |
          |                |     |Santiago, Ting,        |                     |
          |                |     |Williams               |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Appropriations  |11-4 |Gonzalez, Bloom,       |Bigelow, Chang,      |
          |                |     |Bonilla, Bonta,        |Jones, Obernolte     |
          |                |     |Eggman, Eduardo        |                     |
          |                |     |Garcia, Quirk,         |                     |
          |                |     |Santiago, Weber, Wood, |                     |
          |                |     |McCarty                |                     |
          |                |     |                       |                     |








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          SUMMARY:  Makes various changes to the California Advanced  
          Services Fund (CASF). Specifically, this bill:  


          1)Requires the California Public Utilities Commission (CPUC), in  
            its review of applications for funds from the CASF Broadband  
            Public Housing Account (Public Housing Account), to award  
            grants only to unserved housing developments.


          2)Limits the eligibility to apply for CASF funds from the Public  
            Housing Account to unserved publically supported communities.


          3)Specifies that a housing development is unserved when at least  
            one housing unit within the housing development is not offered  
            broadband internet service.


          4)Extends the date remaining funds from the Public Housing  
            Account are transferred back to other CASF Accounts from  
            December 31, 2016, to December 31, 2020.


          5)Extends the due date on the CPUC annual report to the  
            Legislature from January 1 of each year to April 1 of each  
            year.


          6)Requires the CPUC to provide additional information in its  
            annual report, including county information and specified  
            details on the status of each CASF funded project.


          7)Authorizes representatives of workforce organizations and air  








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            pollution control or air quality management districts to be  
            included as an eligible consortium for funds in the CASF Rural  
            and Urban Regional Broadband Consortia Grant Account  
            (Consortia Account). 


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, the CPUC anticipates increased costs of approximately  
          $260,000 to present county-by county-data on project progress  
          and provide detailed information of efforts to leverage non-CASF  
          funds in annual reports.  Staff would also be required to  
          process the additional applications and conduct administrative  
          tasks related to grant oversight and reimbursement for  
          applications from workforce organizations and air quality  
          districts.


          COMMENTS:


          1)Author's Statement:  According to the author, "Improving the  
            information available to policymakers about the efforts and  
            activities of the CASF program will help to further our  
            efforts to improve access for more Californians.  More  
            detailed information at the county-level and information about  
            efforts to leverage non-CASF resources will be beneficial to  
            inform policymakers as to the existing challenges and  
            opportunities.  The funds in the Public Housing program are  
            beneficial to low-income residents who would otherwise be  
            without broadband service - and therefore, opportunities for  
            employment, economic development, health improvements,  
            services, etc."


          2)Background:  The CASF was statutorily established by the  
            Legislature through SB 1193 (Padilla), Chapter 393, Statutes  
            of 2008, to help promote the deployment of broadband  
            infrastructure in unserved and underserved areas of the state.  
             The goal of the program was to reach areas of the state that  








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            had dial-up internet connectivity.  The CASF is funded through  
            a surcharge collected on all telecommunications end-users.  As  
            of June 2016, the CASF surcharge rate is at 0.464%.


          3)CASF Accounts:  CASF funding is allocated into four accounts,  
            the Broadband Infrastructure Grant Account (Infrastructure  
            Account), the Consortia Account, the Broadband Infrastructure  
            Revolving Loan Account (Revolving Loan Account), and the  
            Public Housing Account.  The Infrastructure Account funds the  
            capital costs of broadband infrastructure projects in unserved  
            and underserved areas in California.  The Consortia Account  
            provides funding for the cost of broadband deployment  
            activities, other than the capital cost of facilities.  The  
            Revolving Loan Account supplements financing for projects also  
            receiving CASF grant funding.  The Public Housing Account  
            supports projects to deploy local area networks and to  
            increase adoption rates in publicly supported housing  
            communities.  Currently, the CPUC is authorized to collect  
            $315 million for the CASF through 2020, but not to exceed $25  
            million per year, unless the CPUC 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.  


          4)CASF Broadband Public Housing Account:  In 2013, the  
            Legislature passed AB 1299 (Bradford), Chapter 507, Statutes  
            of 2013, which established the Public Housing Account within  
            the CASF.  As of December 2015, there remains approximately  
            $22 million remaining in the Public Housing Account.  Any  
            remaining funds in the Public Housing Account that haven't  
            been awarded by December 31, 2016, is to be transferred back  
            to Infrastructure Account and Revolving Loan Account.


            This bill extends the date remaining funds from the Public  
            Housing Account are transferred back to other CASF Accounts  
            from December 31, 2016, to December 31, 2020.








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          5)Resolution T-17515:  In 2015, the Housing Authority of the  
            County of San Bernardino (HACSB), Community Housing Works  
            (CHW), and Eden Housing, Inc. (Eden), submitted applications  
            for CASF funding.  The projects were challenged by two  
            Internet Service Providers (ISP) on the grounds that an ISP  
            was already providing service to those publically supported  
            communities.  The subsequent review of the challenge concluded  
            that nearly all of the public housing application locations  
            were wired.  HACSB, CHW, and Eden responded to the challengers  
            by asserting that "although the units may have wiring to  
            support broadband Internet service, residents do not subscribe  
            to that service because they cannot afford the service."  In  
            June 2016, the CPUC approved $239,793 for the HACSB, CHW, and  
            Eden projects.


            This bill limits the eligibility to apply for CASF funds from  
            the Public Housing Account to unserved publically supported  
            communities and requires the CPUC to award grants only to  
            unserved housing developments for funds from the Public  
            Housing Account. 


          6)CASF Annual Report:  Under current law, the CPUC is required  
            to provide an annual report to the Legislature on January 1 of  
            each year on the status of the CASF.  This bill extends the  
            due date on the CPUC annual report to the Legislature from  
            January 1 of each year to April 1 of each year.  In addition,  
            this bill requires the CPUC to include more specified  
            information in its annual report.


          7)Regional Consortia:  Under current law, moneys from the  
            Consortia Account are available only to eligible consortia's  
            to fund the cost of broadband deployment activities other than  
            the capital cost of facilities.  This bill would add  
            representatives of workforce organizations and air pollution  








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            control or air quality management districts as eligible  
            consortia that may apply for Consortia Account funds.  




          Analysis Prepared by:                                             
                          Edmond Cheung / U. & C. / (916) 319-2083  FN:  
          0004723