This article was written by Regan Price, Economic Development Research Intern, Center for Regional Economic Competitiveness and Smart Incentives.
To ensure equitable access to broadband internet and spur economic development in underserved communities, many states offer incentive programs to for-profit businesses, local governments, and/or non-profit organizations to expand broadband internet access throughout the state.
The incentives can take a variety of forms. Some states offer specific tax credits relating to broadband infrastructure development, like the Mississippi Broadband Technology Tax Credit. In many states, infrastructure and investment programs that are not explicitly advertised as “broadband expansion programs” can be used to expand internet access and promote prosperity in all communities. States can also leverage federal programs, such as the Community Development Block Grant and New Markets Tax Credit, to assist underserved populations and ensure equitable internet access.
Users of the C2ER State Business Incentives Database can find state programs offering tax credits to fund broadband infrastructure expansion, such as as rural economic development tax credits, opportunity zone investment tax credits, and other tax credits for job creation, broadband technology purchases, brownfield cleanup activities, and infrastructure development.
Beyond tax credits, many states offer grant programs that can be used to spur broadband internet expansion, such as grants for enterprise zone property investment, infrastructure development, job investment activities, economic development, site development, and industrial development. Loan and loan guarantee programs are also utilized, including state programs offering industrial revenue bonds, capital revolving loan options, and/or enterprise bonds for broadband expansion.
One innovative state approach includes the use of Community Development Block Grants (CDBG) to drive internet expansion in underserved communities. For example, in 2014, Nelson County, Virginia was awarded $200,000 in CDBG funds with a $100,000 Local Match Fund requirement. With the CDBG grant funding, Nelson County was able to construct approximately 8.1 miles of fiber optic cable in underserved areas of the locality. The beneficiaries of the fiber optic cable expansion included 88 businesses, 80 residential structures, and 20 newly created jobs resulting from the project.
Another inventive state incentive program is the use of New Market Tax Credits (NMTC) to spur broadband internet expansion. Congress authorized the NMTC in 2000 to mitigate the cost of capital expansion in low-income communities. The program’s flexibility provides options to finance projects to expand broadband, according to the New Markets Tax Credit Coalition. For example, in Conneaut, Ohio, the Ohio Community Development Finance Fund partnered with the Development Fund of the Western Reserve and US Bancorp Community Development Corporation to provide NMTC financing in the town for broadband internet expansion. Conneaut, Ohio has been categorized by the Appalachian Regional Commission as a “severely distressed” and underserved community. But through the collaborative effort made possible by NMTC financing, the private business GreatWage Communications—a company providing high-quality telecommunications services in rural areas—was able to expand into Conneaut, Ohio, leading to 54 new jobs and expanded broadband internet access to an additional 50 businesses and 600 residential customers.
There are many avenues for non-profit organizations, for-profit companies, and/or local governments to strategically use state incentive programs toward broadband internet expansion in their respective communities. The Council for Community and Economic Research (C2ER) maintains the State Business Incentives Database, where users can search and compare state incentive programs from all U.S. states and territories.