BILL ANALYSIS 1 1 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 2 1 7 2 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