BILL ANALYSIS                                                                                                                                                                                                              1
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                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                               DEBRA BOWEN, CHAIRWOMAN
          

          AB 2172 -  Levine                                 Hearing Date:   
          June 22, 2004              A
          As Amended:         June 16, 2004            FISCAL       B

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                                      DESCRIPTION
           
           Current law  allows the Director of the Department of General  
          Services (DGS) to lease DGS-managed property to cellular  
          telephone companies, allowing them to put wireless towers on top  
          of buildings and on state property (except for property owned by  
          Caltrans).  Money from those leases is deposited into the fund  
          which was used to buy the DGS-managed property.

           Current law  authorizes the Legislature to appropriate 15% of the  
          money from those leases described above to the Digital Divide  
          Account, which is a subaccount of the California Teleconnect  
          Fund Administrative Committee Fund (CFFACF).  Monies in the  
          Digital Divide Account are available to finance digital divide  
          projects through the Digital Divide Grant Program, as specified,  
          upon appropriation by the Legislature.

           Current law  requires grant funds to be awarded to  
          community-based nonprofit organizations that are exempt from  
          taxation under Section 501(c)(3) of the Internal Revenue Code.

           This bill  changes the accounting by requiring that 15% of the  
          lease money be deposited directly into the Digital Divide  
          Account, now renamed the Digital Opportunities Account, but  
          doesn't otherwise alter the applicability of the 15% or the  
          requirement for appropriation.  The remaining 85% is deposited  
          into the fund which was used to buy the DGS-managed property, as  
          is required today.

           This bill  allows the California Public Utilities Commission  
          (CPUC) to pay for the administration of the Digital  











          Opportunities Grant Program out of the CTFACF.

           This bill  narrows the field of eligible grant recipients to  
          those who run a nonprofit technology program, which is defined  
          as a community-based nonprofit organization that is exempt from  
          taxation under Section 501(c)(3) of the Internal Revenue Code  
          and engages in diffusing technology into local communities and  
          training local communities that have no access to, or have  
          limited access to, the Internet and other technologies and are  
          located in underserved areas.

           This bill  specifies that programs eligible for the grants  
          include community programs that provide employment training and  
          skills.

           This bill  adds legislative findings, among them that access  
          through the Internet to governmental services and educational  
          programs can provide a cost-effective method of service  
          delivery.

           This bill  also makes numerous non-substantial changes to the  
          Digital Divide Grant Program, now renamed the Digital  
          Opportunities Grant Program.

                                      BACKGROUND
           
          Last year, AB 855 (Firebaugh), Chapter 820, Statutes of 2003,  
          created a program to facilitate the use of non-Caltrans state  
          property by cellular telephone companies.  This program set  
          aside 15% of most new lease revenue for a grant program to pay  
          for digital divide projects.  That program is administered by  
          the CPUC in conjunction with the CPUC's existing California  
          Teleconnect Fund, a program which discounts telecommunications  
          rates to schools, libraries, health care institutions, and  
          qualified community-based organizations.

                                       COMMENTS
           
           1.Making Fewer, Though Perhaps More Needy, Programs Eligible For  
            Grants  .  Under current law, grant funds are awarded on a  
            competitive basis subject to criteria set by the CPUC.  The  
            grants must be distributed widely, including urban and rural  
            areas, and a recipient must be a community-based nonprofit  
            organizations that's exempt from taxation under Section  










            501(c)(3) of the Internal Revenue Code.

            This measure makes fewer entities eligible for grants by  
            stating an eligible recipient must, in addition to being a  
            nonprofit 501(c)(3), also run a nonprofit technology program  
            that diffuses technology into local communities and trains  
            local communities that have no access, or have limited access,  
            to the Internet and other technologies and are located in  
            underserved areas.

           2.Keeping administrative costs at 5%.   This bill permits the  
            administrative cost of the Digital Opportunities Grant Program  
            to come from the California Teleconnect Fund Administrative  
            Committee Fund (CTFACF).  However, in order to be consistent  
            with the current law requirement to keep administrative costs  
            for the program at or below 5%, the bill requires any CTFACF  
            money used to cover administrative costs to be counted toward  
            the 5% cap on administrative costs for the program.

           3.Prior Hearing.   This bill was heard in this committee on June  
            8, 2004, but failed on a 3-2 vote (5 votes were needed for  
            passage).  Reconsideration was granted.  Since that hearing,  
            the bill has been amended to incorporate all of the amendments  
            - both technical and substantive - that were suggested in this  
            committee's analysis of the bill for the June 8 hearing. 

                                      PRIOR VOTES
           
          Senate Energy, Utilities, & Communications Committee            
          (3-2) (failed passage)
          Assembly Floor                          (76-0)
          Assembly Appropriations Committee       (19-0)
          Assembly Utilities and Commerce Committee                       
          (12-0)

                                       POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
          California Community Technology Policy Group











           Oppose:
           
          None on file



          



























          Randy Chinn 
          AB 2172 Analysis
          Hearing Date:  June 22, 2004