Fiber Optic Internet Provider - CDL?

Posted By: wblewis935

Fiber Optic Internet Provider - CDL? - 09/21/16 01:01 PM

We originated a commercial loan to a Fiber Optic ISP who provides high speed internet in various areas in our AA. None of the census tracts are distressed middle-income tracts, but there are a few LMI tracts. The primary beneficiary/objective is to serve the area hospitals with high speed fiber optic internet. I feel like this is a CDL, but I'm not sure how to qualify it and what the questions are that I need to ask the loan officer. Do I need to find out what hospitals are receiving the high speed internet and out of those how many are in LMI tracts? Fiber Optic isn't an option in the area currently, so do I go that route and say that this is a new service to the areas? I understand its a combination of many questions, but I'm not sure quite where to focus. And maybe this isn't a CDL at all....

Any help would be greatly appreciated! Thanks!
Posted By: Pale Rider

Re: Fiber Optic Internet Provider - CDL? - 09/21/16 07:38 PM

Very difficult --- what is the CD purpose? Targeted services to LMI or revitalize/stabilize an LMI geography? I don't know how you argue either possible purpose. You say there are a "few" LMI tracts. That doesn't seem "targeted". Same for revitalize.....

Just my opinion.....
Posted By: Princess Romeo

Re: Fiber Optic Internet Provider - CDL? - 09/21/16 07:52 PM

The latest Q&A does address this but only in regards to underserved nonmetropolitan middle income tracts. I attended a CRA Roundtable hosted by the Fed where they addressed this item, and the intent here is to recognize that there are rural areas where high speed internet does not exist which is a detriment to the low- and moderate income individuals who live there since they cannot go to a local library, or even the free wi-fi at a coffee shop to access high speed internet to do on-line banking, accessing health insurance, applying for a job, etc. To the extent that low and moderate income tracts are located in metropolitan areas, most of those are already proximate to high-speed internet access.

.12(g)(4)(i)–1 and §ll.12(h)–5. §ll.12(g)(4)(iii)—4: What activities are considered to ‘‘revitalize or stabilize’’ an underserved nonmetropolitan middle-income geography, and how are those activities evaluated?

A4. The regulation provides that activities revitalize or stabilize an underserved nonmetropolitan middleincome geography if they help to meet essential community needs, including needs of low- or moderate-income individuals. Activities, such as financing for the construction, expansion, improvement, maintenance, or operation of essential infrastructure or facilities for health services,
education, public safety, public services, industrial parks, affordable housing, or communication services, will be evaluated under these criteria to determine if they qualify for revitalization or stabilization consideration.

Examples of the types of projects that qualify as meeting essential community needs, including needs of low- or moderate-income individuals, would be

• a new or rehabilitated communications infrastructure, such as broadband internet service, that serves the community, including low- and moderate-income residents;
Posted By: Inspector

Re: Fiber Optic Internet Provider - CDL? - 09/24/16 04:55 AM

You could use the hospitals to try to get the loan counted but you will need more than the census tract to qualify a hospital from my experience. If the majority of the patients are on Medicaid you could use that angle. However, you would likely be challenged to demonstrate the primary purpose as CD as the area you described sounds like LMI would only receive an ancillary benefit. Maybe if you can map where the ISP is adding lines and see if they are LMI tracts?

It's a tough one but if you feel you have an angle present it to the examiner with your support. Worst they can say is no.
Posted By: wblewis935

Re: Fiber Optic Internet Provider - CDL? - 09/26/16 01:05 PM

Thank you, everyone, for your input! I thought this one might be difficult to prove. I may leave this one alone. Since the loan is already closed, I may have some difficulty finding that information now.

Thanks again!
Posted By: wblewis935

Re: Fiber Optic Internet Provider - CDL? - 01/31/17 02:55 PM

I'd like to revive this thread and provide an update on what I have found about the loan. The hospital is being reimbursed its payment to the ISP of up to 65% of the costs by the FCC under its "Healthcare Connect" program that subsidizes connectivity costs for hospitals in rural markets. The line Is ran through 22 tracts, 9 of which are LMI.

The hospital is the direct beneficiary, so the best way, I believe, would be to find out how many of its patients are on Medicaid. Is this information public, or do I need to contact the hospital directly?

I'm wondering since the connectivity costs are subsidized by the FCC if that makes my case for CD purpose stronger.

Also, the new Q&As provide an interesting proposition....

§ ___.12(g) – 4: Can examples of community development activities discussed in a particular Q&A also apply to other types of community development activities not specifically discussed in that Q&A if they have a similar community development purpose?

The response is yes, and you could look at the specifics in the Q&As. I wonder if this Q&A may help the CD argument for this loan since broadband internet is specifically mentioned in § ___.12(g)(4)(iii) – 4.

Kind of a lengthy response, I understand, but I am starting to believe that I should submit this loan for consideration and wanted to provide an update for feedback.