[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Rules and Regulations]
[Pages 92626-92639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30708]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 92, 93, 570, 574, 578, 880, 881, 883, 884, 886, 
891, 905, 983

[Docket No. FR 5890-F-02]
RIN 2501-AD75


Narrowing the Digital Divide Through Installation of Broadband 
Infrastructure in HUD-Funded New Construction and Substantial 
Rehabilitation of Multifamily Rental Housing

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: Through this rule, HUD continues its efforts to narrow the 
digital divide in low-income communities served by HUD by providing, 
where feasible and with HUD funding, broadband infrastructure to 
communities in need of such infrastructure. In this final rule, HUD 
requires installation of broadband infrastructure at the time of new 
construction or substantial rehabilitation of multifamily rental 
housing that is funded or supported by HUD, the point at which such 
installation is generally easier and less costly than when undertaken 
as a stand-alone effort. The rule, however, recognizes that 
installation of broadband infrastructure may not be feasible for all 
new construction or substantial rehabilitation, and, therefore, it 
allows limited exceptions to the installation requirements. Installing 
unit-based broadband infrastructure in multifamily rental housing that 
is newly constructed or substantially rehabilitated with or supported 
by HUD funding will provide a platform for individuals and families 
residing in such housing to participate in the digital economy and 
increase their access to economic opportunities.

DATES: Effective date: January 19, 2017.

FOR FURTHER INFORMATION CONTACT: If you have any questions, please 
contact the following people (the telephone numbers are not toll-free):
    Office of Community Planning and Development programs: Clifford 
Taffet,

[[Page 92627]]

General Deputy Assistant Secretary for Community Planning and 
Development, Room 7100, 202-708-2690.
    Office of Multifamily Housing programs: Katie Buckner, Office of 
Recapitalization, Office of Housing, Room 6226, 202-402-7140.
    Office of Public and Indian Housing programs: Dominique Blom, 
Deputy Assistant Secretary for Public Housing Investments, Office of 
Public and Indian Housing, Room 4130, 202-402-4181.
    The address for all individuals is Department of Housing and Urban 
Development; 451 7th Street SW.; Washington, DC 20410-0500. Persons 
with hearing or speech impairments may access these numbers through TTY 
by calling the Federal Relay Service at 800-877-8339 (this is a toll-
free telephone number).

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

A. Purpose of this Rule

    The purpose of this rule is to require installation of broadband 
infrastructure at the time of new construction or substantial 
rehabilitation of multifamily rental housing that is funded or 
supported by HUD. This rule does not require a funding recipient to 
undertake new construction or substantial rehabilitation, but when a 
funding recipient does choose to pursue such activity for multifamily 
rental housing with HUD funding, this rule requires installation of 
broadband infrastructure. While the rule only requires affected funding 
recipients to install one form of broadband infrastructure, HUD 
suggests that funding recipients consider whether installing more than 
one form of broadband infrastructure would be beneficial to encourage 
competition among service providers on quality and price. Installing 
unit-based broadband infrastructure in multifamily rental housing that 
is newly constructed or substantially rehabilitated with or supported 
by HUD funding will provide a platform for individuals and families 
residing in such housing to participate in the digital economy, and 
increase their access to economic opportunities.

B. Summary of Major Provisions of this Rule

    This rule requires installation of broadband infrastructure at the 
time of new construction or substantial rehabilitation of multifamily 
rental units funded by the following programs:
    1. Choice Neighborhoods Implementation Grant program;
    2. Community Development Block Grant (CDBG) program, including the 
CDBG Disaster Recovery program;
    3. Continuum of Care program;
    4. HOME Investment Partnerships program;
    5. Housing Opportunities for Persons With AIDS program;
    6. Housing Trust Fund program;
    7. Project-Based Voucher program;
    8. Public Housing Capital Fund program;
    9. Section 8 project-based housing assistance payments programs, 
including, but not limited to, the Section 8 New Construction, 
Substantial Rehabilitation, Loan Management Set-Aside, and Property 
Disposition programs; \1\ and
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    \1\ This rule applies to all projects with project-based Section 
8 housing assistance payment (HAP) contracts (other than Mod Rehab 
or Mod Rehab Single Room Occupancy (SRO) projects), regardless of 
whether the properties receive specific funding to pay directly for 
substantial rehabilitation or new construction, as defined in this 
rule.
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    10. Section 202 and Section 811 Supportive Housing for the Elderly 
and Persons with Disabilities programs.
    The requirements of the rule do not apply to multifamily rental 
housing that only has a mortgage insured by HUD's Federal Housing 
Administration or with a loan guaranteed under a HUD loan guarantee 
program.
    HUD defines broadband infrastructure as cables, fiber optics, 
wiring, or other permanent (integral to the structure) infrastructure--
including wireless infrastructure--as long as the installation results 
in broadband infrastructure in each dwelling unit meeting the Federal 
Communications Commission's (FCC's) definition in effect at the time 
the pre-construction estimates are generated. Currently, the FCC 
defines broadband speeds as 25 Megabits per second (Mbps) download, 3 
Mbps upload.\2\ In addition, for programs that do not already have a 
definition of substantial rehabilitation, HUD defines substantial 
rehabilitation as work on the electrical system with estimated costs 
equal to or greater than 75 percent of the cost of replacing the entire 
electrical system, or when the estimated cost of the rehabilitation is 
equal to or greater than 75 percent of the total estimated cost of 
replacing the multifamily rental housing after the rehabilitation is 
complete. The definition of substantial rehabilitation for purpose of 
the installation of broadband infrastructure does not affect 
definitions of rehabilitation already in place for other purposes.
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    \2\ Federal Communications Commission, 2015 Broadband Progress 
Report and Notice of Inquiry on Immediate Action to Accelerate 
Deployment, GN Docket No. 14-126, Rel. Feb. 4, 2015, at para. 45 
(available at https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-10A1.pdf).
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C. Costs and Benefits of This Rule

    The costs and benefits of this rule are difficult to quantify, but 
they can be described qualitatively. This rule only requires that the 
broadband infrastructure provided be able to receive high-speed 
Internet that is ``accessible'' in each unit. It does not require those 
recipients of funding undertaking new construction or substantial 
rehabilitation to provide broadband service to current or future 
residents even if residents pay for such service. Furthermore, the 
definition of broadband infrastructure in the rule includes coaxial 
cable television (TV) wiring that supports cable modem access or even 
permanent infrastructure that would provide broadband speeds to 
dwelling units wirelessly. The rule also provides for exceptions to the 
installation requirements where the installation is too costly to 
provide due to location or building characteristics.
    A recent survey by the National Association of Homebuilders found 
that 4 percent of the surveyed multifamily housing developers never 
installed landline wires and jacks in multifamily units completed in 
the past 12 months.\3\ In recent years, HUD's competitive grants for 
new construction under the Choice Neighborhoods program have sought the 
provision of broadband access. Therefore, this rule would simply codify 
what is considered common practice in the private market today when new 
construction or substantial rehabilitation is undertaken.
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    \3\ NAHB, Multifamily Market Survey 3rd Quarter 2015. November 
2015. There were 90 responses, and of the responses, 18 percent 
indicated it was not applicable, presumably because they had not 
completed any projects in the past 12 months. The survey covers all 
multifamily construction including lower quality Class B and Class 
C. It does not provide details on the developers or projects that 
did not install landlines.
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    Given the wide range of technologies that may be employed to meet 
the requirements of this rule, it is not possible to specify the cost 
of the technology and how much additional burden this may be for owners 
or developers building or providing substantial rehabilitation to HUD-
assisted rental housing. If the broadband infrastructure consists of 
wiring connected to proximate telephone or cable company networks, the 
cost is not expected to be significant, as all electrical work in a 
multifamily project is estimated to be only about 10 percent of the 
construction cost; \4\ thus, running an additional cable through 
existing electrical conduits would be a minimal

[[Page 92628]]

incremental cost. If the broadband infrastructure is wireless, the cost 
will be for the equipment, which varies greatly by the design and size 
of the project, as does the cost per unit. Given that the costs of 
installation of broadband infrastructure are only a portion of the 10 
percent of construction costs, the requirement imposed by this rule is 
not expected to measurably reduce the size of the housing or the number 
of units to be constructed. At most, installation of broadband 
infrastructure may reduce the provision of other amenities or 
nonessential finishes, but HUD considers even these reductions 
unlikely. Additionally, the rule only applies to new construction or 
substantial rehabilitation that is supported with HUD-provided 
resources, not to existing buildings where substantial rehabilitation 
is not contemplated.
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    \4\ 2015 National Building Cost Manual. Ed. Ben Moselle. 
Carlsbad, CA: Craftsman Book Company. https://www.craftsman-book.com/media/static/previews/2015_NBC_book_preview.pdf,, pg. 19.
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    Materials on the benefits of narrowing the digital divide are 
voluminous. Having broadband Internet in the home increases household 
income \5\ and yields higher education achievement for students.\6\ On 
July 2015, the Council of Economic Advisers issued the report ``Mapping 
the Digital Divide,'' which examines progress in the United States in 
narrowing the digital divide and the work that still needs to be done, 
especially in the Nation's poorest neighborhoods and most rural 
communities.\7\ However, this rule's limited scope in only requiring 
the installation of infrastructure instead of providing Internet access 
also limits the benefits of the rule. The benefit of the rule is that 
where broadband Internet service can be made available, the tenant, 
residing in housing with broadband infrastructure, will be assured of 
the ability to access broadband Internet service, whether they choose 
and are able to afford Internet service or not. This puts broadband 
Internet service within reach, especially where other charitable and 
public social programs, including HUD's ConnectHome program, provide 
free or reduced-cost service.
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    \5\ Ericsson, Arthur D. Little, and Chalmers University of 
Technology. Socioeconomic Effects of Broadband Speed. September 
2013. http://www.ericsson.com/res/thecompany/docs/corporate-responsibility/2013/ericsson-broadband-final-071013.pdf.
    \6\ Davidson, Charles M. and Michael J. Santorelli. ``The Impact 
of Broadband on Education.'' December 2010. https://www.uschamber.com/sites/default/files/legacy/about/US_Chamber_Paper_on_Broadband_and_Education.pdf, pg. 24.
    \7\ See Council of Economic Advisers. ``Mapping the Digital 
Divide.'' Issue Brief. July 2015. https://www.whitehouse.gov/sites/default/files/wh_digital_divide_issue_brief.pdf.
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II. Background

    On March 23, 2015, President Obama issued a Presidential memorandum 
on ``Expanding Broadband Deployment and Adoption by Addressing 
Regulatory Barriers and Encouraging Investment and Training.'' \8\ In 
this memorandum, the President noted that access to high-speed 
broadband is no longer a luxury, but it is a necessity for American 
families, businesses, and consumers. The President further noted that 
the Federal Government has an important role to play in developing 
coordinated policies to promote broadband deployment and adoption, 
including promoting best practices, breaking down regulatory barriers, 
and encouraging further investment.
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    \8\ See Barack Obama. ``Presidential Memorandum--Expanding 
Broadband Deployment and Adoption by Addressing Regulatory Barriers 
and Encouraging Investment and Training.'' March 23, 2015. https://www.whitehouse.gov/the-press-office/2015/03/23/presidential-memorandum-expanding-broadband-deployment-and-adoption-addr.
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    On May 18, 2016, at 81 FR 31181, HUD published a proposed rule 
seeking to require the installation of broadband infrastructure on all 
new construction or substantial rehabilitation in multifamily projects 
supported by HUD. This proposed rule was an outgrowth of the 
President's memorandum and HUD's own Digital Opportunity Demonstration, 
known as ``ConnectHome.'' The comment period on the proposed rule 
closed on July 18, 2016. HUD received 25 comments on the proposed rule 
from a variety of commenters, including State or local government 
economic development offices, the National Association of Home 
Builders, Internet service providers, housing authorities, and 
nonprofit organizations.

III. Changes From the Proposed Rule

    HUD is not changing any of the substantive requirements that were 
in the proposed rule. Rather, in response to questions raised by public 
comments, HUD is offering two clarifications in the regulatory text.
    First, in the definition in 24 CFR 5.100, HUD is basing the 
threshold for substantial rehabilitation on the pre-rehabilitation 
estimates for the work. HUD recognizes that, in the course of 
rehabilitation, certain cost or work changes may result in the project 
exceeding the threshold to be defined (for the purposes of installing 
broadband infrastructure) as substantial rehabilitation. However, in 
these instances, the funding recipients are already facing higher costs 
than expected, and to add additional, unplanned-for requirements would 
be an undue burden.
    Second, HUD has clarified the point in the planning process for new 
construction or substantial rehabilitation at which a project must be, 
as of the effective date of this rule, to not be subject to the rule's 
requirements. Due to the different nature of each program covered by 
this rule, a tailored approach was necessary, instead of a single 
declaration for all of the programs.
    In addition to these two regulatory changes, HUD will offer some 
future clarifying guidance on how funding recipients are to determine 
whether installing broadband infrastructure would be infeasible for a 
given project. This is to be a case-by-case determination, and is very 
fact-specific. The ultimate decision, however, will be up to the 
funding recipient, who will also have to maintain adequate 
documentation of the determination.

IV. Public Comments and HUD Responses

Adoption of the Internet Franchise Policy Framework

    A commenter urged HUD to adopt the policy framework of the Internet 
Franchise (found at https://webpass.net/franchise), which the commenter 
stated directly addresses the issues in HUD's rule and would eliminate 
the need for rulemaking in this area. The commenter stated that 
creating a new set of rules for a small subset of properties--those 
supported by HUD--is not helpful. HUD should adopt broadly applicable 
Internet access rules that can be a model for the whole country.
    HUD Response: HUD appreciates the suggestion but believes the 
approach provided in HUD's rule is the appropriate approach for HUD 
programs. In addition, HUD is not able to regulate Internet access for 
housing not assisted by HUD.

Capacity or Speed

    Commenters asked that HUD encourage the installation of 
infrastructure that is ``future-proofed'' against higher Internet 
speeds than what meets the current broadband definition, perhaps by 
encouraging fiber optic connections to accomplish that goal or by 
requiring that the infrastructure have capacity of 150 percent of the 
current standards. Commenters also suggested that, rather than just 
considering bandwidth capacity, HUD should require that the technology 
allow for the use of common Internet applications (including voice-
over-Internet protocols, or VOIP, and other streaming services).

[[Page 92629]]

Commenters suggested that HUD find ways to provide incentives to 
provide the highest level of broadband capacity.
    Commenters also asked how HUD intended to communicate and implement 
new speed standards from the FCC.
    HUD Response: HUD is not mandating that funding recipients install 
a specific type of infrastructure. Rather, HUD has specifically written 
the definition of broadband infrastructure to allow funding recipients 
to choose the form of infrastructure that is most appropriate for their 
circumstances, including future technologies that we cannot imagine 
today.
    HUD believes that, rather than requiring installation of 
infrastructure meeting a standard higher than the FCC's then-current 
definition of ``advanced telecommunications capability,'' it is enough 
to install infrastructure that meets that definition, especially as in 
some areas that speed is more than what may be currently available. 
Further, HUD believes that by requiring that each unit has access to 
infrastructure that allows broadband speeds, every family will be able 
to use Internet applications, such as VOIP, as desired. However, this 
is established as the minimum. Nothing prevents funding recipients from 
aiming higher, and nothing prevents other local authorities from 
establishing higher standards as a local requirement for funding or 
from using HUD funding to pay for the cost differential of getting to 
that higher level.
    In addition, by tying the infrastructure requirements to the FCC's 
definition, future changes by the FCC will automatically be 
incorporated into HUD's requirements. When the definition is revised in 
the future, HUD will evaluate the most appropriate way to notify its 
funding recipients covered by this rule of the change.

Costs

    Commenters responded to HUD's estimates on the cost of installing 
broadband infrastructure. Many commented that the estimates of the 
costs of labor and material were too low, particularly when a project 
is undergoing rehabilitation. Commenters stated that the costs would 
vary widely across the country, depending on the construction type, the 
number of units involved, and the regional labor costs. Commenters also 
stated that HUD should account for operation and maintenance costs for 
the infrastructure, which may be significant. Commenters stated that 
the study by the National Association of Home Builders did not 
specifically address broadband access, and, therefore, it should not be 
used as evidence that installing broadband is already current practice.
    Commenters also suggested that HUD has not justified the costs of 
compliance with the rule with enough benefits. Some commenters stated 
that in rural areas, limited access to broadband equipment installers 
can inflate installation and service costs.
    HUD Response: The benefits of narrowing the digital divide through 
expansion of Internet service are well documented. The Council of 
Economic Advisers Brief, issued in March 2016, and entitled ``The 
Digital Divide and Economic Benefits of Broadband Access,'' 
demonstrates such benefits. (See https://www.whitehouse.gov/sites/default/files/page/files/20160308_broadband_cea_issue_brief.pdf.) HUD 
understands that the costs of installing broadband infrastructure will 
vary given the geographic area in which the construction or substantial 
rehabilitation is to take place and that, given such variations, the 
costs of labor and materials will not be uniform across the Nation. 
Some costs may be lower because the jurisdiction in which the 
installation is occurring may already have a strong broadband 
infrastructure in place that would reduce the cost of a HUD funding 
recipient to provide such infrastructure. However, given the comments 
received, HUD has revised its costs analyses found in Section V of this 
preamble.
    Whatever the cost of the installation of a broadband 
infrastructure, that cost is borne by HUD in the funds awarded to the 
funding recipient, or the HUD funds are taken into account when 
leveraging them for rehabilitation funding. There is no mandate in any 
of the HUD programs covered by this rule to undertake new construction 
or substantial rehabilitation.
    While HUD funds will cover the cost of installation of the 
broadband infrastructure, HUD understands that, in tight budgetary 
times, installing broadband infrastructure may be too expensive for the 
construction budget to incorporate, given other construction or 
rehabilitation requirements such as energy efficiency features or 
improvements or accessible housing features needed by the elderly or 
persons with disabilities. In such cases, the final rule provides that 
a funding recipient may be exempted from compliance if the cost of 
installing broadband infrastructure would result in a fundamental 
alteration in the nature of its program or activity or in an undue 
financial burden.
    HUD will continue to explore the possibilities of reducing the cost 
of broadband infrastructure, including allowing HUD funds to be used 
for operation or maintenance costs or facilitating group purchases to 
reduce the costs of the infrastructure itself.

Exceptions

    Many commenters weighed in on the exceptions to the broadband 
infrastructure requirements. Several requested examples of projects 
that would fall under the listed exceptions or more detailed 
definitions of the provided exceptions. Commenters suggested that, in 
addition to the exemptions currently included, HUD provide an exception 
for scattered-site properties with 1 to 4 units.
    Some commenters stated that having a building in a rural location 
should not exempt the housing provider from providing broadband 
infrastructure as, while the connection to the building may be more 
expensive, a rural location does not increase the price of installing 
infrastructure in the building itself. Other commenters stated that 
requiring the installation of infrastructure where broadband is not 
currently available could result in the buildings having obsolete 
infrastructure when broadband access is provided.
    Regarding the feasibility determination, some commenters believed 
that the owner should be the proper entity to determine whether 
installing broadband infrastructure is feasible, while others stated 
that HUD should make that determination, moving as quickly as possible 
to avoid delays in projects. Commenters also requested additional 
information on the infeasibility exception, particularly what 
documentation developers should maintain about any determination of 
feasibility, and any specific formula or source of pre-rehabilitation 
estimates that HUD will require. Commenters asked at what point a 
project would be considered infeasible; some stated that the threshold 
of feasibility should be set such that costs of broadband installation 
that are over 5 percent of the construction budget should be considered 
infeasible.
    Commenters suggested that HUD should consider the costs of 
maintaining and operating the infrastructure in determining 
feasibility. Commenters reminded HUD that, in the future, increased 
speed requirements could impact the feasibility of installing broadband 
infrastructure. Commenters also suggested that HUD encourage 
installation of broadband infrastructure in common areas if it is too 
expensive to install in every unit.
    HUD Response: This rule only applies to buildings with more than 4 
rental

[[Page 92630]]

units, so HUD does not believe an exemption for scattered-site 
properties is needed.
    For the existing exemptions from the rule's requirements, this rule 
places the burden of determining whether or not an exemption applies 
and documenting the basis for the determination on the funding 
recipient. HUD will provide additional guidance with examples and 
possible ways to make such determinations. HUD also appreciates and 
supports the suggestion that if a funding recipient determines that 
providing broadband infrastructure to every unit is too expensive, the 
funding recipient should consider providing broadband infrastructure to 
common areas at the property.
    HUD notes that a building's location in a rural area not currently 
served by broadband does not necessarily mean that broadband will not 
be available in the foreseeable future. In addition, the current 
unavailability of broadband service to a property does not 
automatically mean that installing the broadband infrastructure is cost 
prohibitive. However, HUD acknowledges that, in some situations, the 
fact that broadband will not be available to a property for an extended 
time period could be a legitimate justification for meeting the 
``location'' exemption, particularly if the window before broadband 
service is available is long enough to potentially render any 
infrastructure installed now obsolete by the time such service is 
available.
    In some programs, maintenance and operating costs are considered 
eligible expenses of the funding program, and, therefore, there is no 
need to consider those costs when determining the cost feasibility of 
installing the broadband infrastructure in the first place. At this 
time, it is beyond the scope of this rulemaking to amend other program 
regulations (which are sometimes based on statutory limitations) to 
allow such costs when it is not currently allowable. However, HUD will 
continue to look for situations in which program regulations can be 
revised to allow Internet operation and maintenance costs to be 
eligible uses of program funds.

Effectiveness Timeline

    Commenters also asked for additional detail on the timing of when 
the requirements of the new rule would apply. Some stated that for 
substantial rehabilitation, HUD should state that any project beyond 
the earliest stage of project budget development should be exempted 
from the rule. Commenters also suggested that the rule should not apply 
if a request for proposals (RFP) has been issued for a given project.
    HUD Response: HUD fully recognizes that imposing additional 
requirements on projects that have already established budgets would 
have negative impacts on those new construction or substantial 
rehabilitation plans. HUD has, therefore, put specific applicability 
language into each program's regulations specifying the date or point 
in the development process after which projects will be subject to 
these new requirements. HUD intends in particular to issue additional 
guidance for the Project-Based Voucher (PBV) program and any 
substantial rehabilitation that may occur after a Housing Assistance 
Payments (HAP) contract has been signed.
    However, HUD encourages funding recipients who are currently 
developing projects for new construction or substantial rehabilitation 
that would not be covered by this rule to seriously consider whether 
they can include broadband infrastructure in those construction or 
rehabilitation plans.

Infrastructure Design

    Commenters suggested other changes to HUD's requirements for the 
broadband infrastructure. Several stated that the broadband wiring 
should enter the building at a central point and then flow to each unit 
and common space in the building. Commenters stated that HUD should 
encourage building owners to consider ways to future proof the 
infrastructure, including how to replace broken wires and how to make 
access points easily accessible. Others wrote that HUD should specify 
that buildings using wireless should have sufficient access points to 
ensure that each unit has fast, reliable service.
    Commenters also stated that HUD should require broadband 
infrastructure be provided for common areas and meeting spaces.
    Some commenters objected to HUD allowing broadband over power lines 
(BPL) or very-high-bit-rate digital subscriber lines (VDSL), as the 
commenters felt those technologies needed significant improvements and 
more widespread adoption to become viable ways of receiving broadband.
    HUD Response: This final rule does not require a specific form of 
broadband infrastructure, as long as the infrastructure meets the speed 
requirements and complies with State and local building codes. This 
rule does not supersede any State or local building codes that may 
apply to the installation of broadband infrastructure. HUD expects 
funding recipients to consider the costs of installation, as well as 
operation and maintenance, when deciding which form of broadband 
infrastructure to install. HUD also encourages all funding recipients 
to include broadband infrastructure in a way that conforms to standards 
for resilient construction.
    In addition, HUD is not requiring the installation of broadband 
infrastructure in common areas and meeting spaces, but HUD highly 
encourages funding recipients to do so when possible. In projects where 
installing such infrastructure in individual units is cost prohibitive, 
HUD encourages funding recipients to install broadband infrastructure 
in common areas, unless the recipient determines that is also cost 
prohibitive.

Internet Service Providers (ISPs)

    Several commenters stated that HUD should encourage housing 
providers to install broadband infrastructure that enables multiple 
competitive providers in the same project, or a managed solution to 
allow for subsidized services. Commenters stated that HUD should 
prohibit owners from entering into arrangements with providers that 
limit other providers' access to inside wiring, interfering with the 
right of residents to request or receive broadband service from a 
specific provider, or entering into exclusive marketing arrangements in 
HUD-supported housing.
    Commenters stated that infrastructure running from the street to 
the building should have sufficient conduit capacity to allow for use 
by multiple providers.
    HUD Response: As noted in response to the prior comments, HUD 
leaves the precise nature or manner of installation of broadband 
infrastructure to standards and requirements set by State and local 
codes. HUD does recognize that it is important to provide as much 
choice as possible regarding service providers. However, sometimes, 
exclusive contracts allow for the provision of broadband service at a 
much lower rate than would otherwise be available. HUD therefore 
declines at this time to restrict housing providers' ability to enter 
into limited service contracts, but would like to recommend caution for 
public housing agencies (PHAs) considering exclusivity contracts.

Programs

    Commenters were divided on whether HUD should include additional 
programs beyond those in the proposed rule. Some wrote that HUD should 
not include more programs. Others asked that HUD include all programs 
providing housing assistance for low-income populations, which may make 
the regulation easier to enforce in general. Commenters also stated 
that HUD should include all multifamily

[[Page 92631]]

programs, while reconsidering including Continuum of Care (CoC) 
programs, as they help with shelter needs, not long-term housing 
solutions.
    HUD Response: The number of HUD programs that provide for new 
construction and substantial rehabilitation has not expanded greatly 
over the years. HUD's Choice Neighborhoods program was the successor to 
HUD's HOPE VI program. HUD's Housing Trust Fund program is a new 
program that provides, among other things, for the production of 
affordable housing. If future HUD programs, whether existing or new, 
provide for the new construction or substantial rehabilitation of 
multifamily rental housing, HUD will incorporate these requirements 
into those programs. In addition, CoC funds long-term housing solutions 
as well as temporary housing solutions. Therefore, HUD finds it 
appropriate to include broadband infrastructure in these projects.

Sanctions

    Commenters suggested some sanctions HUD could consider. Some stated 
that HUD should fine owners for inappropriate use of exemptions from 
the requirements, perhaps using the funds for digital literacy 
programs. Commenters stated that HUD could, in egregious cases, 
disqualify recipients from future HUD funding. Other commenters 
suggested that instead of sanctions, HUD could require funding 
recipients to develop ways to bring the Internet to a project's 
residents.
    HUD Response: For every HUD program, there are corrective and 
remedial actions available to HUD for funding recipients who do not 
follow their regulatory requirements. These corrective and remedial 
actions vary among programs, depending on existing statutory and 
regulatory authority. At this time, developing additional program-
specific remedies is outside the scope of this rulemaking. However, in 
the event that a funding recipient does not follow the requirements of 
this rule, HUD will use the options currently available to pursue such 
violations.

Substantial Rehabilitation

    Commenters suggested that HUD reconsider applying the requirements 
to substantial rehabilitation projects. Others suggested that HUD 
expand the definition to include other trigger activities, such as 
updating or replacing coaxial cables, installing fiber optics, or 
installing Ethernet. Commenters stated that the definition of 
substantial rehabilitation should not include the electrical system 
standard, because work on electrical systems does not always translate 
easily into providing broadband infrastructure.
    Commenters addressed HUD's question about how to determine whether 
a rehabilitation project rises to the level of substantial 
rehabilitation. Some stated that HUD should rely on pre-rehabilitation 
cost estimates because, if there are unexpected expenses that take the 
project over the substantial rehabilitation threshold, adding broadband 
requirements on top of those expenses may be too much for the project. 
However, other comments stated that HUD should use actual costs to 
judge the substantial threshold.
    Commenters also asked how the standard applies to scattered sites, 
where only a single unit or a few units are being renovated.
    HUD Response: HUD believes that it is important to include 
substantial rehabilitation in this rule to maximize the number of 
families who can benefit from the rule, while minimizing costs as much 
as possible. In addition, HUD believes that maintaining the electrical 
system standard as one way to determine substantial rehabilitation is 
appropriate, as such work would likely result in exposing a building's 
basic infrastructure in such a way as to allow for the installation of 
broadband infrastructure.
    HUD appreciates the responses to the question about which 
construction costs to use when determining whether or not work rises to 
the level of substantial rehabilitation. HUD has decided that the 
percentage-of-cost threshold for substantial rehabilitation should be 
based on the pre-rehabilitation cost estimates, and this has been 
incorporated into the substantial rehabilitation definition.
    Because this rule only affects structures with more than 4 rental 
units, scattered-site housing with fewer than 4 rental units is not 
covered by the rule.

Additional HUD Support for Broadband

    Commenters stated that HUD should couple the rule with additional 
support for subsidies and digital literacy programs, including treating 
the provision of broadband service as an eligible expenditure in 
affordable rental housing. Others asked for additional funding for the 
infrastructure costs themselves. Commenters further stated that HUD 
could leverage its size and buying power to secure broadband service at 
lower prices. Some suggested that HUD should explore additional 
subsidies to use ``white space'' in the over-air spectrum in rural 
areas for wireless Internet or to subsidize seniors or families with 
children.
    Commenters also suggested that HUD should coordinate with the 
United States Department of Agriculture (USDA) to work with ``last 
mile'' connection issues.
    HUD Response: This rule, and HUD's broadband rule providing for 
assessing Internet service needs in the consolidated planning process, 
are not HUD's final responses to narrowing the digital divide. Through 
HUD's ConnectHome initiative, HUD is striving to narrow the digital 
divide in the housing arena. In addition, HUD has and will continue to 
work with other Federal agencies, such as the USDA and the National 
Telecommunications and Information Administration.
    HUD encourages funding recipients to make their own connections 
with other programs, or to establish local requirements to accomplish 
these goals. HUD will continue to seek out opportunities to foster such 
partnerships at the national and local level. Several HUD programs can 
be used to pay for such complementary services, and HUD encourages 
funding recipients to leverage those resources. HUD will also continue 
to explore ways to expand the eligibility of such complementary 
services and for infrastructure work in HUD programs. However, 
Congress, not HUD, establishes program funding levels, so we are unable 
to provide additional programmatic funds at this time.

Other Comments

    Commenters asked HUD to expand the scope of the rule beyond new 
construction and substantial rehabilitation to also include existing 
facilities. Commenters also disagreed with HUD's encouragement to 
deploy competing infrastructure or delivery mechanisms.
    HUD Response: As noted in responses above, this rule and its 
companion broadband rule regarding the consolidated planning process 
are not HUD's final responses to narrowing the digital divide. HUD is 
continuing to examine other areas for which HUD has authority and 
oversight to determine whether there are other avenues HUD can take to 
narrow the digital divide. At this time, however, it is outside the 
scope of this rulemaking to require funding recipients to retrofit 
existing buildings with broadband infrastructure unless rehabilitation 
work is being undertaken with HUD program funding.

[[Page 92632]]

V. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and, therefore, subject to review by the Office of Management and 
Budget (OMB) in accordance with the requirements of the order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. This rule was determined to be a ``significant 
regulatory action'' as defined in section 3(f) of Executive Order 12866 
(although not an economically significant regulatory action, as 
provided under section 3(f)(1) of the Executive Order).
    As discussed, this rule furthers HUD's efforts to narrow the 
digital divide in low-income communities served by HUD. Specifically, 
HUD is requiring installation of broadband infrastructure at the time 
of new construction or substantial rehabilitation of multifamily rental 
housing that is funded by HUD. As noted in the Executive Summary, the 
costs and benefits of this rule are difficult to quantify, but they can 
be described qualitatively.

A. Benefits

    The benefits of narrowing the digital divide are well documented. 
In just one example, a study conducted by a former chair of the 
President's Council of Economic Advisers used data on the amount of 
time Internet users spend online to estimate that Internet access 
produces thousands of dollars of consumer surplus per user each 
year.\9\ As noted above, however, the benefits of Internet technology 
have not been evenly distributed and research shows that there remain 
substantial disparities in both Internet use and the quality of access. 
This digital deficit is generally concentrated among older, less 
educated, and less affluent populations,\10\ as well as in persons with 
disabilities.\11\
---------------------------------------------------------------------------

    \9\ Council of Economic Advisers July 2015 report, supra, citing 
Austan Goolsbee and Peter J. Klenow, Valuing Consumer Products by 
the Time Spent Using Them: An Application to the Internet National 
Bureau of Economic Research Working Paper No. 11995 (February 2006) 
available online at: http://www.nber.org/papers/w11995.
    \10\ Ibid.
    \11\ Eve Hill, Department of Justice, Testimony before the 
Senate Committee on Health, Education, Labor, and Pensions (February 
7, 2012), available online at http://www.justice.gov/sites/default/files/testimonies//attachments/02/07/12/02-07-12-crt-hill-testimony.pdf.
---------------------------------------------------------------------------

    Additionally, individuals with vision, learning, and physical 
disabilities affecting manual dexterity rely on assistive technologies 
to interact with computers and the Internet, and such technologies 
function best on broadband Internet. Without access to broadband 
infrastructure, these individuals may have limited access to basic 
services that are now offered online.
    HUD recognizes that the rule's limited scope in only requiring the 
installation of infrastructure, instead of providing Internet access, 
also limits the benefits of the rule. Specifically, the benefit of the 
rule is that where broadband Internet can be made available at a 
limited price, the tenants, residing in housing with broadband 
infrastructure, will be assured of the ability to access broadband 
Internet service, whether they choose and are able to afford Internet 
service or not. This rule, therefore, would put broadband Internet 
service within reach where other charitable and public social programs, 
including HUD's ConnectHome program, provide free or reduced-cost 
service.

B. Costs

    It is not possible to specify the exact costs that recipients and 
owners may incur as a result of the rule, given the variety of 
available technologies that may be used to satisfy the new broadband 
requirements. However, available data indicate that any costs 
associated with this rule will be minimal.
    As is displayed on Table I, broadband Internet access can be 
provided using two general technologies: Wired and wireless, each with 
several specific technologies. Broadband can be delivered over wired 
lines using very-high-bit-rate digital subscriber lines (VDSL), cable 
lines, power lines (BPL), or fiber optic platforms. Using wireless 
technologies, broadband can be provided using satellite, fixed 
wireless, mobile wireless, and Wi-Fi platforms.

                                    Table I--Types of Broadband Technologies
----------------------------------------------------------------------------------------------------------------
                                                                               Access requirement
                                                               -------------------------------------------------
               Platform                    Connection type                                     Not part of
                                                                 Part of infrastructure       infrastructure
----------------------------------------------------------------------------------------------------------------
Wired:
    Digital Subscriber Line (VDSL)...  Copper wire............  Yes....................  Router & Modem.
    Cable Modem......................  Copper wire............  Yes....................  Router & Modem.
    Fiber............................  Fiber Optic wire.......  Yes....................  Router & Modem.
    Broadband over Power Lines (BPL).  Copper wire............  Yes....................  Router & Modem.
Wireless:
    Satellite........................  Over the Air--satellite  None...................  Router & Modem.
    Fixed Wireless...................  Over the Air--Longer     None...................  Router & Modem.
                                        Range Directional
                                        Equipment.
    Mobile Wireless..................  Over the Air--Cellular.  None...................  Router & Modem.
    Wireless Fidelity (Wi-Fi)........  Over the Air--Short-     None...................  Router & Modem.
                                        Range Wireless
                                        Technology.
----------------------------------------------------------------------------------------------------------------

    Whereas wired lines technologies may require some sort of physical 
infrastructure consisting of internal wiring within the dwelling unit, 
wireless technologies do not require any additional physical 
infrastructure

[[Page 92633]]

within the building. With wireless technology, the signal travels 
through the air to the customer, who uses a connection technology, such 
as a modem, to access the services. For wireless technologies, the 
infrastructure cost to the property boundary (connection to the service 
provider) is nil ($0.00). However, the availability of wireless 
broadband service is limited and evolving, so HUD expects many builders 
will install wired broadband infrastructure to ensure that the 
requirements of this rule are met.
    Building costs of installing wired infrastructure are limited to 
in-dwelling wiring, as this is all that is required by the rule. Within 
the unit or the building, the electrical work consists of running cable 
(meeting the requirements of category (Cat) 5e or Cat 6 wire), 
installing jacks and plates, and minor construction work (such as 
drilling and patching walls). Fiber optic cables are rarely run in the 
dwelling unit but are installed by the service provider outside the 
unit; the non-fiber optic wiring then makes broadband accessible within 
the unit. Depending on the market, some of the cost is also borne by 
the service provider.
    The average per-unit cost for wiring for broadband Internet is 
approximately $200 (see Table II). These costs are simply estimates of 
one method of complying with the requirements of the rule. Labor costs 
will also vary based on the region and whether the installation is 
being done as part of substantial rehabilitation or new construction. 
At most, installation of broadband infrastructure may reduce the 
provision of other amenities or nonessential finishes, but even these 
reductions are considered unlikely.
---------------------------------------------------------------------------

    \12\ http://www.homewyse.com/services/cost_to_install_electrical_wiring.html.

                        Table II--Sample Cost to Install Electrical Wiring (1 Wiring) 12
----------------------------------------------------------------------------------------------------------------
                    Item                                Quantity                   Low                High
----------------------------------------------------------------------------------------------------------------
Electrical Wiring Labor (Hours)--Labor       2.1 hours....................            $160.07            $205.10
 estimate to install electrical wiring,
 route, secure, and connect new NMB-B
 wiring run for single receptacle, up to a
 40' run. Includes planning, equipment, and
 material acquisition, area preparation and
 protection, setup, and cleanup.
Electrical Wiring Materials and Supplies--   1 Wiring (unit)..............              20.00              25.00
 Cost of related materials and supplies
 typically required to install electrical
 wiring including connectors, fittings, and
 mounting hardware.
                                            --------------------------------------------------------------------
    Total Costs (1 Wiring).................  .............................             180.07             230.10
----------------------------------------------------------------------------------------------------------------

    HUD also notes that the rule is drafted so as to minimize the costs 
of the new installation requirements. For example, the rule does not 
mandate any rehabilitation or construction, and the decision to 
undertake such activities appropriately remains with recipients and 
owners. Rather, the scope of the regulatory changes is limited to 
requiring the installation of broadband infrastructure if the recipient 
or owner elects to undertake new construction or substantial 
rehabilitation. The rule minimizes the economic impacts on recipients 
and owners by recognizing that the installation of broadband 
infrastructure is generally less burdensome and costly at the time of 
new construction or substantial rehabilitation than when such 
installation is undertaken as a stand-alone effort.
    Moreover, this rule only requires the installation of broadband 
infrastructure that is ``accessible'' in each unit. The rule does not 
require recipients or owners to provide a regular subscription to 
broadband Internet service (even at a cost) to residents. Also 
minimizing the economic costs of the regulatory changes is the fact 
that the definition of broadband infrastructure includes cable 
television, fiber optic cabling, and wireless infrastructure providing 
appropriate broadband connectivity to the individual units. As 
discussed above in this Executive Summary, multifamily HUD or standard-
market new construction typically provides telephone landline and cable 
TV connectivity. Further, HUD's competitive grants for new construction 
under the Choice Neighborhoods program have, in recent years, sought 
the provision of broadband.
    A review of HUD internal databases, summarized on Table III, shows 
that, in 2013, 58,677 units within the targeted programs were newly 
constructed or rehabilitated. However, HUD's data did not contain 
specific information to be able to determine how many of the units that 
underwent rehabilitation met the definition of ``substantial 
rehabilitation'' contained in the rule, so the number of affected units 
would be smaller than is contained in the table. In addition, data on 
affected units newly constructed using CDBG funding are unavailable, as 
grantee reports do not separate multifamily from single-unit new 
construction.

                                         Table III--HUD-Assisted New Construction and Substantial Rehabilitation
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     HOME
                                              Sec. 8 RAD   811 PRAC    202 PRAC   Sec. 8 202    HOPE VI       PIH        CDBG       Rental      Totals
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              New Construction
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012........................................  ..........         506       2,405  ..........         146         703  ..........  ..........  ..........
2013........................................         110         583       2,034  ..........          44         297  ..........      19,424      22,492
2014........................................         100         482       1,592  ..........  ..........  ..........  ..........      11,596  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Rehabilitation
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012........................................  ..........  ..........          25  ..........  ..........          36  ..........  ..........  ..........

[[Page 92634]]

 
2013........................................         199          15  ..........         109  ..........          16      20,918      14,928      36,185
2014........................................  ..........          28          15  ..........  ..........  ..........      15,716       6,965  ..........
                                             -----------------------------------------------------------------------------------------------------------
    FY 2013 Totals..........................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........      58,677
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Further, a review found that multifamily (5-plus units) HUD or 
standard-market new construction typically provides telephone landlines 
and many provide cable TV connectivity.\13\ A recent survey by the 
National Association of Homebuilders found that just 4 percent of the 
surveyed multifamily housing developers did not install landline wires 
and jacks in multifamily units completed in the past 12 
months.14 15 In recent years, HUD's competitive grants for 
new construction under the Choice Neighborhoods program have required 
the provision of broadband.\16\ Therefore, this rule simply codifies 
what is considered common practice in at least one program.
---------------------------------------------------------------------------

    \13\ For example, under ``Class 4 Low Average Quality'' the 
Craftsman 2015 National Building Cost Manual lists cable TV as a 
standard feature. Only ``Class 5'' minimum quality does not list 
cable or a computer network as a standard feature. All electrical 
work is estimated to be 10 percent of project cost. 2015 National 
Building Cost Manual, supra, p. 19.
    \14\ NAHB, Multifamily Market Survey, supra.
    \15\ Note that HUD's definition of accessibility is more 
restrictive than the FCC's because HUD considers only the building 
itself.
    \16\ United States Department of Housing and Urban Development. 
``Choice Neighborhoods Planning Grants Notice of Funding 
Availability,'' supra, p. 32. ``Broadband Access. All FY2014 and 
FY2015 Implementation Grantees will be required, as part of their 
Transformation Plan, to include infrastructure that permits unit-
based access to broadband Internet connectivity in all new units. 
Grantees may use Choice Neighborhoods funds to provide unit-based 
broadband Internet connectivity, which includes the costs of 
installing broadband infrastructure and hardware in units, but not 
the costs of Internet service for residents. Regular and informed 
Internet adoption can increase access to the job market, as well as 
health, education, financial and other services. Further, in-home 
broadband Internet access is an attractive, and in most cases, 
standard amenity that can be used to market the mixed-income 
community created through the Transformation Plan.''
---------------------------------------------------------------------------

    Accordingly, most recipients and owners already meet the standards 
established in the rule, and the new regulatory requirements will 
impose minimal, if any, new economic costs. HUD has addressed those 
rare situations where the new requirements may prove too costly by 
allowing exceptions to the installation requirements where the 
installation is documented to be economically infeasible due to 
location or building characteristics.
    The docket file is available for public inspection online at 
www.regulations.gov under the docket number and title of this rule.

Impact on Small Entities

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities.
    This rule provides that for new construction or substantial 
rehabilitation of multifamily rental housing funded by HUD, as part of 
the new construction or substantial rehabilitation to be undertaken, 
such activity must include installation of broadband infrastructure. 
None of the programs covered by this rule require a funding recipient 
to undertake new construction or substantial rehabilitation. Instead, 
new construction and substantial rehabilitation are eligible activities 
that funding recipients may take using HUD funds. Therefore, small 
entities will not incur any costs they would not otherwise incur by 
voluntarily undertaking new construction or substantial rehabilitation, 
since the costs of these activities, including the installation of 
broadband infrastructure, are funded by HUD. For these reasons, this 
rule will not have a significant economic impact on a substantial 
number of small entities.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This rule will not impose any Federal mandates on 
any State, local, or tribal governments or the private sector within 
the meaning of the UMRA.

Paperwork Reduction Act

    The information collection requirements contained in this rule were 
submitted to OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520) for review and approval and are pending or are covered by 
OMB control numbers 2577-0269, 2577-0191, 2506-0165, 2506-0077, 2506-
0085, 2506-0170, 2506-0199, 2506-0171, 2506-0133, 2577-0169, 2577-0157, 
2502-0587, 2502-0612, 2502-0462, and 2502-0608. In accordance with the 
Paperwork Reduction Act, an agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless the collection displays a currently valid OMB control number.

Environmental Review

    A Finding of No Significant Impact (FONSI) with respect to the 
environment was made at the proposed rule stage in accordance with HUD 
regulations in 24 CFR part 50 that implement section 102(2)(C) of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). That 
FONSI remains applicable to this final rule and is available for public 
inspection online at www.regulations.gov under the docket number and 
title of this rule.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive order. This rule does not have federalism 
implications and does not impose substantial direct compliance costs on 
State and local governments nor preempts State law within the meaning 
of the Executive order.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers applicable to 
the programs that would be affected by this rule are: 14.218, 14.225, 
14.228, 14.239, 14.241, 14.267, 14.850, 14.871, and 14.872.

[[Page 92635]]

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs-housing and community development, 
Individuals with disabilities, Intergovernmental relations, Loan 
programs-housing and community development, Low and moderate income 
housing, Mortgage insurance, Penalties, Pets, Public housing, Rent 
subsidies, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation, Wages.

24 CFR Part 92

    Administrative practice and procedure, Low and moderate income 
housing, Manufactured homes, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 93

    Administrative practice and procedure, Grant programs-housing and 
community development, Low and moderate income housing, Manufactured 
homes, Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs-education, Grant programs-
housing and community development, Guam, Indians, Loan programs-housing 
and community development, Low and moderate income housing, Northern 
Mariana Islands, Pacific Islands Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.

24 CFR Part 574

    Community facilities, Grant programs-housing and community 
development, Grant programs-social programs, HIV/AIDS, Low and moderate 
income housing, Reporting and recordkeeping requirements.

24 CFR Part 578

    Community development, Community facilities, Grant programs-housing 
and community development, Grant programs-social programs, Homeless, 
Reporting and recordkeeping requirements.

24 CFR Part 880

    Grant programs-housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 881

    Grant programs-housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 883

    Grant programs-housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 884

    Grant programs-housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements, Rural areas.

24 CFR Part 886

    Grant programs-housing and community development, Lead poisoning, 
Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 891

    Aged, Grant programs-housing and community development, Individuals 
with disabilities, Loan programs-housing and community development, 
Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 905

    Grant programs-housing and community development, Public housing, 
Reporting and recordkeeping requirements.

24 CFR Part 983

    Grant programs-housing and community development, Low and moderate 
income housing, Rent subsidies, Reporting and recordkeeping 
requirements.

    Accordingly, for the reasons stated in the preamble, HUD amends 24 
CFR parts 5, 92, 93, 570, 574, 578, 880, 881, 883, 884, 886, 891, 905, 
and 983 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority citation for part 5 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 1437n, 3535(d), Sec. 
327, Pub. L. 109-115, 119 Stat. 2936, Sec. 607, Pub. L. 109-162, 119 
Stat. 3051, E.O. 13279, and E.O. 13559.

0
2. In Sec.  5.100, add the definitions of ``Broadband infrastructure'' 
and ``Substantial rehabilitation'' in alphabetical order, to read as 
follows:


Sec.  5.100   Definitions.

* * * * *
    Broadband infrastructure means cables, fiber optics, wiring, or 
other permanent (integral to the structure) infrastructure, including 
wireless infrastructure, that is capable of providing access to 
Internet connections in individual housing units, and that meets the 
definition of ``advanced telecommunications capability'' determined by 
the Federal Communications Commission under section 706 of the 
Telecommunications Act of 1996 (47 U.S.C. 1302).
* * * * *
    Substantial rehabilitation, for the purposes of determining when 
installation of broadband infrastructure is required as part of 
substantial rehabilitation of multifamily rental housing, unless 
otherwise defined by a program, means work that involves:
    (1) Significant work on the electrical system of the multifamily 
rental housing. ``Significant work'' means complete replacement of the 
electrical system or other work for which the pre-construction cost 
estimate is equal to or greater than 75 percent of the cost of 
replacing the entire electrical system. In the case of multifamily 
rental housing with multiple buildings with more than 4 units, ``entire 
system'' refers to the electrical system of the building undergoing 
rehabilitation; or
    (2) Rehabilitation of the multifamily rental housing in which the 
pre-construction estimated cost of the rehabilitation is equal to or 
greater than 75 percent of the total estimated cost of replacing the 
multifamily rental housing after the rehabilitation is complete. In the 
case of multifamily rental housing with multiple buildings with more 
than 4 units, the replacement cost must be the replacement cost of the 
building undergoing rehabilitation.
* * * * *

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

0
3. The authority citation for part 92 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 12701-12839.

0
4. Amend Sec.  92.251 by revising the introductory text of paragraph 
(a)(2) and adding paragraphs (a)(2)(vi) and (b)(1)(x) to read as 
follows:


Sec.  92.251   Property standards.

    (a) * * *
    (2) HUD requirements. All new construction projects must also meet 
the requirements described in this paragraph:
* * * * *
    (vi) Broadband infrastructure. For new commitments made after 
January 19, 2017 for a new construction housing project of a building 
with more than 4

[[Page 92636]]

rental units, the construction must include installation of broadband 
infrastructure, as this term is defined in 24 CFR 5.100, except where 
the participating jurisdiction determines and, in accordance with Sec.  
92.508(a)(3)(iv), documents the determination that:
    (A) The location of the new construction makes installation of 
broadband infrastructure infeasible; or
    (B) The cost of installing the infrastructure would result in a 
fundamental alteration in the nature of its program or activity or in 
an undue financial burden.
    (b) * * *
    (1) * * *
    (x) Broadband infrastructure. For new commitments made after 
January 19, 2017 for a substantial rehabilitation project of a building 
with more than 4 rental units, any substantial rehabilitation, as 
defined in 24 CFR 5.100, must provide for installation of broadband 
infrastructure, as this term is also defined in 24 CFR 5.100, except 
where the participating jurisdiction determines and, in accordance with 
Sec.  92.508(a)(3)(iv), documents the determination that:
    (A) The location of the substantial rehabilitation makes 
installation of broadband infrastructure infeasible;
    (B) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (C) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.
* * * * *

PART 93--HOUSING TRUST FUND

0
5. The authority citation for part 93 continues to read as follows:

    Authority:  42 U.S.C. 3535(d), 12 U.S.C. 4568.

0
6. Amend Sec.  93.301 by revising the introductory text of paragraph 
(a)(2) and adding paragraphs (a)(2)(vi) and (b)(1)(x) to read as 
follows:


Sec.  93.301   Property standards.

    (a) * * *
    (2) HUD requirements. All new construction projects must also meet 
the requirements described in this paragraph:
* * * * *
    (vi) Broadband infrastructure. For new commitments made after 
January 19, 2017 for a new construction housing project of a building 
with more than 4 rental units, the construction must include 
installation of broadband infrastructure, as this term is defined in 24 
CFR 5.100, except where the grantee determines and, in accordance with 
Sec.  93.407(a)(2)(iv), documents the determination that:
    (A) The location of the new construction makes installation of 
broadband infrastructure infeasible; or
    (B) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden.
    (b) * * *
    (1) * * *
    (x) Broadband infrastructure. For new commitments made after 
January 19, 2017 for a substantial rehabilitation project of a building 
with more than 4 rental units, any substantial rehabilitation, as 
defined in 24 CFR 5.100, must provide for installation of broadband 
infrastructure, as this term is also defined in 24 CFR 5.100, except 
where the grantee determines and, in accordance with Sec.  
93.407(a)(2)(iv), documents the determination that:
    (A) The location of the substantial rehabilitation makes 
installation of broadband infrastructure infeasible;
    (B) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (C) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.
* * * * *

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

0
7. The authority citation for part 570 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 5301-5320.

0
8. In Sec.  570.202, add paragraph (g) to read as follows:


Sec.  570.202   Eligible rehabilitation and preservation activities.

* * * * *
    (g) Broadband infrastructure. Any substantial rehabilitation, as 
substantial rehabilitation is defined by 24 CFR 5.100, of a building 
with more than 4 rental units, for which CDBG funds are first obligated 
by the recipient on or after April 19, 2017, must include installation 
of broadband infrastructure, as this term is also defined in 24 CFR 
5.100, except where the recipient determines and, in accordance with 
Sec.  570.506, documents the determination that:
    (1) The location of the substantial rehabilitation makes 
installation of broadband infrastructure infeasible;
    (2) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (3) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

0
9. In Sec.  570.204 add paragraph (a)(5) to read as follows:


Sec.  570.204   Special activities by Community-Based Development 
Organizations (CBDOs).

    (a) * * *
    (5) Any new construction or substantial rehabilitation, as 
substantial rehabilitation is defined by 24 CFR 5.100, of a building 
with more than 4 rental units, for which CDBG funds are first obligated 
by the recipient on or after April 19, 2017, must include installation 
of broadband infrastructure, as this term is also defined in 24 CFR 
5.100, except where the recipient determines and, in accordance with 
Sec.  570.506, documents the determination that:
    (i) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (ii) The cost of installing broadband infrastructure would result 
in a fundamental alteration in the nature of its program or activity or 
in an undue financial burden; or
    (iii) The structure of the housing to be substantially 
rehabilitated makes installation of broadband infrastructure 
infeasible.
* * * * *

0
10. Add paragraph (c)(5) to Sec.  570.482 to read as follows:


Sec.  570.482   Eligible activities.

* * * * *
    (c) * * *
    (5) Broadband infrastructure in housing. Any new construction or 
substantial rehabilitation, as substantial rehabilitation is defined by 
24 CFR 5.100, of a building with more than 4 rental units, for which 
CDBG funds are first obligated by the State's grant recipient on or 
after July 18, 2017, must include installation of broadband 
infrastructure, as this term is also defined in 24 CFR 5.100, except 
where the State or the State's grant recipient determines and documents 
the determination that:
    (i) The location of the new construction or substantial

[[Page 92637]]

rehabilitation makes installation of broadband infrastructure 
infeasible;
    (ii) The cost of installing broadband infrastructure would result 
in a fundamental alteration in the nature of its program or activity or 
in an undue financial burden; or
    (iii) The structure of the housing to be substantially 
rehabilitated makes installation of broadband infrastructure 
infeasible.
* * * * *

0
11. In Sec.  570.506, redesignate paragraph (c) as paragraph (c)(1) and 
add a new paragraph (c)(2) to read as follows:


Sec.  570.506   Records to be maintained.

* * * * *
    (c) * * *
    (2) Where applicable, records which either demonstrate compliance 
with the requirements of Sec.  570.202(g) or Sec.  570.204(a)(5) or 
document the State's or State's grant recipient's basis for an 
exception to the requirements of those paragraphs.
* * * * *

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

0
12. The authority citation for part 574 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 12901-12912.

0
13. Add Sec.  574.350 to subpart D to read as follows:


Sec.  574.350   Additional standards for broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 574.3, of a building with more than 
4 rental units, for which HOPWA funds are first obligated by the 
grantee or project sponsor on or after January 19, 2017 must include 
installation of broadband infrastructure, as this term is defined in 24 
CFR 5.100, except where the grantee or project sponsor determines and, 
in accordance with Sec.  574.530, documents the determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

PART 578--CONTINUUM OF CARE PROGRAM

0
14. The authority citation for part 578 continues to read as follows:

    Authority:  42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d).

0
15. In Sec.  578.45, add paragraph (d) to read as follows:


Sec.  578.45   Rehabilitation.

* * * * *
    (d) Broadband infrastructure. Any substantial rehabilitation, as 
defined by 24 CFR 5.100, of a building with more than 4 rental units 
and funded by a grant awarded after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the grantee determines and, in accordance 
with Sec.  578.103, documents the determination that:
    (1) The location of the substantial rehabilitation makes 
installation of broadband infrastructure infeasible;
    (2) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (3) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

0
16. In Sec.  578.47, add paragraph (c) to read as follows:


Sec.  578.47   New construction.

* * * * *
    (c) Broadband infrastructure. Any new construction of a building 
with more than 4 rental units and funded by a grant awarded after 
January 19, 2017 must include installation of broadband infrastructure, 
as this term is defined in 24 CFR 5.100, except where the grantee 
determines and, in accordance with Sec.  578.103, documents the 
determination that:
    (1) The location of the new construction makes installation of 
broadband infrastructure infeasible; or
    (2) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden.

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW 
CONSTRUCTION

0
17. The authority citation for part 880 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.

0
18. Add Sec.  880.212 to subpart B to read as follows:


Sec.  880.212   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and that is subject to a Housing Assistance Payments 
contract executed or renewed after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the owner determines and documents the 
determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR 
SUBSTANTIAL REHABILITATION

0
19. The authority citation for part 881 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.

0
20. Add Sec.  881.212 to subpart B to read as follows:


Sec.  881.212   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and that is subject to a Housing Assistance Payments 
contract executed or renewed after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the owner determines and documents the 
determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

[[Page 92638]]

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE 
HOUSING AGENCIES

0
21. The authority citation for part 883 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

0
22. Add Sec.  883.314 to subpart C to read as follows:


Sec.  883.314   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and that is subject to a Housing Assistance Payments 
contract executed or renewed after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the owner determines and documents the 
determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW 
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING 
PROJECTS

0
23. The authority citation for part 884 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

0
24. Add Sec.  884.125 to subpart A to read as follows:


Sec.  884.125   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and that is subject to a Housing Assistance Payments 
contract executed or renewed after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the owner determines and documents the 
determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

PART 886--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL 
ALLOCATIONS

0
25. The authority citation for part 886 continues to read as follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

0
26. Add Sec.  886.140 to subpart A to read as follows:


Sec.  886.140   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and that is subject to a Housing Assistance Payments 
contract executed or renewed after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the owner determines and documents the 
determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

0
27. Add Sec.  886.340 to subpart C to read as follows:


Sec.  886.340   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and that is subject to a Housing Assistance Payments 
contract executed or renewed after January 19, 2017 must include 
installation of broadband infrastructure, as this term is also defined 
in 24 CFR 5.100, except where the owner determines and documents the 
determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

PART 891--SUPPORTIVE HOUSING FOR THE ELDERLY AND PERSONS WITH 
DISABILITIES

0
28. The authority citation for part 891 continues to read as follows:

    Authority:  12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d), and 8013.

0
29. In Sec.  891.120, add paragraph (f) to read as follows:


Sec.  891.120   Project design and cost standards.

* * * * *
    (f) Broadband infrastructure. Any new construction or substantial 
rehabilitation, as substantial rehabilitation is defined by 24 CFR 
5.100, of a building with more than 4 rental units and funded by a 
grant awarded after January 19, 2017 must include installation of 
broadband infrastructure, as this term is also defined in 24 CFR 5.100, 
except where the owner determines and documents the determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

0
30. Add Sec.  891.550 to subpart E to read as follows:


Sec.  891.550   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and funded by a grant awarded after January 19, 2017 
must include installation of broadband infrastructure, as this term is 
also defined in 24 CFR 5.100, except where the owner determines and 
documents the determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of

[[Page 92639]]

its program or activity or in an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

PART 905--THE PUBLIC HOUSING CAPITAL FUND PROGRAM

0
31. The authority citation for part 905 continues to read as follows:

    Authority:  42 U.S.C. 1437g, 42 U.S.C. 1437z-2, 42 U.S.C. 1437z-
7, and 3535(d).

0
32. In Sec.  905.312, add paragraph (e) to read as follows:


Sec.  905.312   Design and construction.

* * * * *
    (e) Broadband infrastructure. Any new construction or substantial 
rehabilitation, as substantial rehabilitation is defined in 24 CFR 
5.100, of a building with more than 4 rental units and funded by a 
grant awarded or Capital Funds allocated after January 19, 2017 must 
include installation of broadband infrastructure, as this term is also 
defined in 24 CFR 5.100, except where the PHA determines and, in 
accordance with Sec.  905.326, documents the determination that:
    (1) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (2) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (3) The structure of the housing to be rehabilitated makes 
installation of broadband infrastructure infeasible.

PART 983--PROJECT-BASED VOUCHER (PBV) PROGRAM

0
33. The authority citation for part 983 continues to read as follows:

    Authority:  42 U.S.C. 1437f and 3535(d).

0
34. Add Sec.  983.157 to subpart D to read as follows:


Sec.  983.157   Broadband infrastructure.

    Any new construction or substantial rehabilitation, as substantial 
rehabilitation is defined by 24 CFR 5.100, of a building with more than 
4 rental units and where the date of the notice of owner proposal 
selection or the start of the rehabilitation while under a HAP contract 
is after January 19, 2017 must include installation of broadband 
infrastructure, as this term is also defined in 24 CFR 5.100, except 
where the owner determines and documents the determination that:
    (a) The location of the new construction or substantial 
rehabilitation makes installation of broadband infrastructure 
infeasible;
    (b) The cost of installing broadband infrastructure would result in 
a fundamental alteration in the nature of its program or activity or in 
an undue financial burden; or
    (c) The structure of the housing to be substantially rehabilitated 
makes installation of broadband infrastructure infeasible.

    Dated: December 15, 2016.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016-30708 Filed 12-19-16; 8:45 am]
 BILLING CODE 4210-67-P