The Competitive Nature of ReConnect 5 Funding, With James Wilson and Tyler Hayes

Episode Description

The fifth round of ReConnect opened up in spring 2024. A total of 148 applications were submitted, amounting to $1.97 billion in funding requests. However, only $700 million is available for awards. At the time of recording, only 10-11 awards had been determined, but more are expected to be announced in the coming months.

James Wilson and Tyler Hayes, RUS representatives for Kentucky and Tennessee respectively, join the podcast to tell us what they are seeing across the landscape and what they are expecting to occur in the future.

Transcript

Transcripts have been lightly edited for clarity and readability.

Intro: The following program is brought to you by the Tennessee Broadband Association. Lead Tennessee Radio, conversations with the leaders moving our state forward. We look at the issues shaping Tennessee’s future: rural development, public policy, broadband, healthcare, and other topics impacting our communities.

Trevor Bonnstetter: Hello, I’m Trevor Bonnstetter, government affairs director for the Tennessee Broadband Association. My guest for this episode of Lead Tennessee Radio is James Wilson and Tyler Hayes. RUS USDA representatives for Kentucky and Tennessee. Welcome to the show.

James Wilson: Thank you. Trevor. Thank you for having us.

Tyler Hayes: Thank you.

Trevor Bonnstetter: So, James, tell us a little bit about what you do with RUS, and what you do when you’re not working with RUS and the members in Kentucky.

James Wilson: So as you just said, Tyler and I are general field representatives for Kentucky and Tennessee, respectively. We basically are representatives of the USDA Rural Utilities Service in our respective states. And we just work closely with the clients that we have throughout the state and the various programs and sort of oversee what’s going on, help the clients through the process of getting loans and grants to do telecommunications and infrastructure work in the states, and then also work with them after receiving the grant, just trying to get them to go, you know, through the process of getting construction activities built, dealing with, you know, reports that we need from a federal level and just trying to help make sure everything runs smoothly.

Trevor Bonnstetter: Great. Tyler?

Tyler Hayes: Yeah. You know, I like to call ourselves kind of a liaison between the telco or the borrower and DC. So, you know, we’ve got a national office staff in DC. It’s really important for us to kind of be that face of the agency, to be able to work directly with our customers so that they know that there is somebody that, you know, they can kind of rely on. If they have a question, they know they’re going to respond to. From a construction standpoint, we kind of, I don’t want to say we’re project managers, but we kind of manage the projects from a construction standpoint, to follow the regulations that RUS has.

Trevor Bonnstetter: Well, great, great. Tyler, tell us a little bit about what you do when you’re not working with the representatives in Kentucky.

Tyler Hayes: Sure. You know, I’ve worked for Rural Development as an agency for 18 years, so I’ve got a long career in government. But outside of that, I’ve got a family. I’ve got a wife, a ten year old son, an eight year old daughter that are both involved in sports. So with practices and games, that keeps you very busy. But as far as hobbies, for myself, I really enjoy hunting and fishing.

Trevor Bonnstetter: Okay. James?

James Wilson: So as you can tell, I’ve got a few more revolutions around the sun than Tyler does. So I have a wife and daughter as well. My daughter, now she is graduated from college. So she actually lives in London, England, and my wife works in consultanting. Outside of RUS, I’ve recently got into ham radio and so working on doing some construction around the house. Maybe my wife likes it, maybe she doesn’t. But putting antennas up, stuff like that.

Trevor Bonnstetter: Well, that’s great. So let’s talk a little bit about ReConnect. We’re going onto ReConnect 5 that’s going to be showing up here. Tell me a little bit about, talk about the previous, James. Tell me about some of your experiences with ReConnect in the state of Kentucky and maybe some of the work that you’ve done outside. I know that you actually have worked maybe not directly with a borrower, but you’ve actually worked on looking in on ReConnect applications in other states. And tell us a little bit about how that process works, and then talk a little bit about the different levels and how it’s got more, more regimented in regards to how the practice goes with ReConnect.

James Wilson: So ReConnect started out in, I believe it was around 2019 and with Congress funding a couple of pilot programs. And so under a pilot program, they pretty much come out with what we call a NOFA or NOSA – notice of funding availability, notice of solicitation applications. And so that sort of established the ground rules for applying under the ReConnect program. And those first few rounds were pretty open on what information was required and everything. As thing works in the federal government, you can do a pilot program for a couple of iterations. Then you have to codify and go in and have formal regulations brought out. So we went in through that process, got the formal regulations set up. And so we now have a little more streamlined approach. So you still have the requirements of the regulations, but then each funding cycle also has that same NOSA or NOFA aspect as well. It sort of establishes the parameters we’re looking at for this particular round of funding: broadband speeds, broadband lending speeds, something like that. So working with the people around the state and some outside of the state, really, we just go in and talk about, you know, here’s the funding levels we’ve got. We’ve got grants, combination loan grants and 100% loan. And so we just work with the applicant, try to get an idea of what they’re looking at as far as build out and, you know, maybe work with them and try to make some recommendations. As you might want to look at this funding flavors, you know, of loan grant or 100% loan. Each one of those funding levels have little different nuances. And under 100% loan scenario, Tyler and I can work a little more closely since it’s not a competitive process. When we start bringing in grant dollars, then it starts bringing in competitiveness. And so we have to be a little more careful on what we’re allowed to offer as assistance. Loans, we can pretty much, you know, talk about anything or make some recommendations.

Trevor Bonnstetter: Yeah. Tyler, tell us a little bit about your experience with Reconnect 5, and where it’s at right now, where do you see the state lining up throughout the United States, and its funding on ReConnect 5?

Tyler Hayes: Yeah, sure. So, ReConnect 5 is obviously it’s the fifth round of ReConnect, and it opened up in the spring of 2024. We’ve been reviewing applications for quite some time now, but we have made some awards just last week. Most of those were loan awards. There were 10 or 11 awards made total. I believe two of those were grant awards. The rest were loan awards. So that, at this point, that’s all that we’ve awarded. But we’re expecting to award a whole lot more in the future. So we had $700 million available whenever we opened the window. I think it’s important to note how competitive this program has been. We received 148 applications for a total of 1.97 billion, with a “B,” dollars. So we had 700 million available, but requested $1.97 billion. So obviously the demand is there. Obviously there’s going to be several applications that are not funded and not awarded. And that’s tough. Of that $700 million available, we had $200 million available in loans, $100 million available in 50% loan / 50% grant, $150 million available in 100% grant, and then $150 million available to socially vulnerable communities. So we break down the allocation to try to award a little bit in each bucket, which is helpful. But as you can imagine, with only 150 million available in the 100% grant for special considerations, we actually received applications for $960 million.

James Wilson: And I think it speaks highly. I mean, as Tyler said, you know, that was for round 5 funding. And you see the oversubscription that we’ve experienced there. And so, you know, given that it’s the fifth round and funding cycles, and that was not our our largest round of funding cycles, that it clearly shows the need throughout rural America for getting broadband out into the rural areas. And, you know, I know Congress has also implemented the BEAD program and, you know, looking forward to how that’s going to impact everything and further the deployment of broadband across across the US. But I think Tyler and I can both speak to I mean, we routinely will get calls from citizens who are just desperately trying to find a way to get broadband service into their areas, to help their children, to help them with businesses and everything. So I think, you know, clearly you see the demand.

Trevor Bonnstetter: Yeah. Well, you’re talking about ReConnect 5 and the organization that you work with has been the foundation for all the members of the Tennessee Broadband Association and the Kentucky Association. As the foundation previously, it was just strictly loan. It was the way that they bought a switch to perform switching duties, which was a huge computer to process phone calls and to put copper lines into the network, and then advancing towards fiber. And so the organization that you guys work with in that government agency has been the foundation. And ReConnect, I think you’ve seen a very active group working within the state of Kentucky and the state of Tennessee continue to participate. There’s always been a large amount of money coming out of your group going to the two states, and I appreciate that’s because of your active engagement with each one of our members and making sure they understand what the opportunities would be. So I thank you very much for both of what the work you’ve had. Going forward, question in regards to, you mentioned that you’re oversubscribed and ReConnect 5 and with that being the case, historically we’ve had some grants that have been given back to RUS, and then we have, I don’t know another name for it, but there’s ReCoonnect 5B that comes back around, and people look so. With such an oversubscription, because I don’t know that you’ve ever been oversubscribed to this level that I can remember historically, do you see that there’s some that’ll probably come back, and there’ll be another Round, or will it be handled in a different way? Historically, it’s been kind of here’s all the announcements. And then there’s some people kind of held back a little bit. Maybe if there’s some funding there’s going to be. Or do you see it really that that money will get pushed. Is there a fiscal year issue here, or is it more? Tell me a little bit, James. What do you think?

James Wilson: I don’t think it’ll be so much as a fiscal year issue. I mean, historically we’ve always seen a few, for whatever reason, sort of get turned down. The offer get turned down. Depending on when that occurs in the time cycle of awards, maybe that will bring somebody in that had scored just a little bit lower and bring them into an award. Or it may just be held for a future funding cycle. So, that’s historically, that’s sort of what we’ve seen. I think we’re just, you know, try to get with the applications we’ve got in. We’ve got that oversubscription level, you mentioned, try to get those processed and through and, you know, get those out and started constructing

Trevor Bonnstetter: You both mentioned, Tyler, maybe you can talk a little bit about, we talk about grants so much. And then I’ve just talked a little bit about the kind of the foundation of that funding that’s historically been there. Talk a little bit about your loan program that’s still there, still available for people to get low interest loans to go out and build their infrastructure within their networks. Talk a little bit about that.

Tyler Hayes: Sure. You know, ReConnect is kind of at a critical juncture right now in the fact that it’s been previously funded as a pilot program. And that time frame is kind of over. So we really don’t know what the future of ReConnect looks like today. We have our guesses. We’ve got some, you know, some thoughts, and we’ve heard some rumors. With that in mind, the Infrastructure Loan Program that Trevor is referring to has always been there. It continues to be there. One of the differences between the two programs is the ReConnect program usually has an application window with a 30, 45, 60 day application period that closes, and it’s usually just once per year. If you miss that window, you don’t get a chance to apply. The Infrastructure Loan Program has always had a revolving open window, so at any time in the year, if an entity wants to come apply for a loan, they don’t have to wait on an application period to open or close. Historically, we’ve had about $690 million each year in that program. That program is still the bread and butter program for our agency in my opinion. It’s still a cost of money loan program, so the rates are going to be much more advantageous than you can get out on the commercial market today.

Trevor Bonnstetter: So where do we go from here? ReConnect 5s are being announced. Deployment will take place in the following months past that after environmentals are done. Where does RUS go next? Is there ReConnect right behind this that people are lining up for those applications of that billion dollars that was left out? Where do you guys see it going next?

James Wilson: So as I mentioned a little earlier, you know, with BEAD coming out, I’m not for certain what time frame of a potential ReConnect Round 6 may fall under, and that still remains to be seen.

Tyler Hayes: Yeah. And I would I would just add, there’s a strong push from the current administrator, Andy Berke, to build out the projects that have been funded. Right. Reconnect Round 1 through 4 and fixing to be 5. In Tennessee and Kentucky, you know, we’ve been very fortunate that when our projects are awarded, our people are ready to build out. You know, they’re waiting on us to get environmental clearance and some other things in order to start building, to connect their customers that they so desperately want to connect. That’s not the case in other parts of the country. There are hurdles that, you know, or unforeseen circumstances. So there’s lots of dollars out there that hadn’t been used to connect to customers yet. And so there’s a big push from our administration to focus this fiscal year on build out.

Trevor Bonnstetter: So let me say this in regards to BEAD. I know it’s coming from a different agency, but I do want to thank both of you for your participation with all of the companies in Kentucky and Tennessee to facilitate not just your programs, but to facilitate getting broadband built out. It’s maybe in another agency, but you’re a great resource for each one of our companies to come and talk to about how we get to having 100% coverage in Kentucky and Tennessee. And I appreciate all your efforts that you’re doing today, and you’ve done in the past. Anything you’d like to share at the end of this, Tyler?

Tyler Hayes: You know, just along those lines, Trevor, we really appreciate our state broadband offices for reaching out to us and using us as a resource, like you said. I mean, essentially, we’d be competitors in the open market, but we both work for government agencies, so we shouldn’t be. And so we get a lot of questions from them, have a lot of conversations with them being the state broadband offices. And we just really appreciate kind of that partnership and that ability to work together to to get to the end goal that you mentioned.

James Wilson: I agree with Tyler. And, you know, we work. You know, obviously we don’t want to see duplication of funding going in the area. You know there’s a set amount of broadband dollars available for the nation. We wanted to see it, you know, maximize the build out potential, and then not see any overbuild. So I know, you know, our higher ups in Washington have been working very closely with NTIA, with FCC on ensuring that overbuilds don’t happen or minimize that as much as possible. And so, you know, as Tyler said, I’m just real happy to be able to work with the Kentucky State Broadband Office. They’ve been really good. We’ve got a really good liaison back and forth with everything and just really, you know, happy to see all this done. Just know it’s going to be a betterment for both our states and the citizens in it.

Tyler Hayes: Yeah, and I’d be remiss if I didn’t just mention a couple other programs that we offer, and I don’t want to go into details on this show, but we have the Community Connect Grant Program that is very specific to a small area, that’s usually open once a year. We have a Distance Learning and Telemedicine Grant Program that is really kind of an oddity when you compare it to like the ReConnect or the Infrastructure Loan Program, but it does have a really big purpose and play a vital role in both of our states. So if anybody has information that they’d like about distance learning and telemedicine, the grant program, please feel free to reach out to James or I. And then last but not least, we have the Broadband Technical Assistance Program. It’s kind of a new program that’s just come about the last two years to help people who may not have the tools to apply for a BEAD or ReConnect or an infrastructure loan. Try to get from the point of not having the tools to get to the point of an application. So just mention those three other programs that RUS administers. And like I said, if there’s additional questions, people can get in touch with James or I by email, telephone.

Trevor Bonnstetter: Well, James, Tyler, thank you very much for joining me today for this episode of Lead Tennessee Radio.

Tyler Hayes: Thank you so much for having us.

James Wilson: Thank you.