BROADBAND UPDATE: MATRIX PULLS OUT OF MCA GRANT
Greetings All :
It is with great disappointment that I announce to you that the on Tuesday December 5, 2023 Matrix notified Maine Connectivity Authority (MCA) that they are declining their grant awards in Fayette and Wilton.
- Since Spring 2023, MCA has been working with Matrix to develop contracts for the Wilton and Fayette grant awards. In September, MCA requested final contract information, including budgets for the two contracts. At this time, Matrix identified their lack of awareness and the impending issues caused by the fact that the grant funding through the Connect the Ready program was taxable by the federal government.
- This information has been part of MCA and federal program guidance and has been clearly presented in the IRS code since 2017. All other MCA grant recipients are currently abiding by these rules and have factored the tax liability into their financial models.
- MCA worked diligently with Matrix and the communities to understand the challenges faced by the company and to try to find creative solutions, but ultimately was unable to reach a financially and legally compliant option that worked for Matrix.
MCA provided Matrix with a deadline of Tuesday, December 5, to either provide MCA with the outstanding information needed to finalize the grant contract as it was originally awarded, or to notify both MCA and Fayette that they would be unable to fulfill their contractual obligations and would be declining the grant award.
- On Tuesday December 5, Matrix notified MCA that they are declining their grant awards in Fayette and Wilton. The notice of Matrix’s declination of these two awards was shared with the MCA Board (and the public) at the monthly meeting on Tuesday, December 12.
- MCA is committed to serving the people of Fayette and Wilton and will continue to work with both communities to identify creative solutions to leverage private investment and investigate funding options through MCA programs to bring connectivity to the communities in a timely and efficient manner.
- While this is not necessarily the route we would have chosen to arrive at this point, we are hopeful that this development will help create a more sustainable, resilient broadband solution in the long run.
- In declining their award, Matrix cited their challenges in managing the income tax revenue associated with the grants. All MCA awards funded through the American Rescue Plan’s Capital Projects Funds are subject to income tax for subgrantees. This has been a long documented challenge at a state and national level.
Regardless - ALL MCA awardees have been aware of and subject to the same requirements - and this is not a requirement unique to Matrix. What is unique to Matrix is their lack of awareness around the requirement given how prominent it has been at a state and national level. This issue - combined with Matrix’s lack of marketing to hit required pre-subscription rates and challenges with other awards in Maine cast a degree of uncertainty as to the company’s viability in achieving their growth goals.
The funds forfeited by Matrix will be reallocated by MCA to address connectivity needs throughout the state. However, MCA acknowledges the significant burden and disappointment at this development in Fayette and is committed to continuing to work with Manager Robinson in understanding how best to identify a solution as soon as possible.