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Federal grantmakers for broadband projects will meet in St. Paul today, but Minnesota cities hoping for a chunk of the $7.2 billion in broadband stimulus money fear that the rules are written to shut them out.

The U.S. departments of commerce and agriculture, which have the authority to grant or lend $7.2 billion in federal stimulus money between now and September 2010, are holding a broadband workshop at the Crowne Plaza hotel in St. Paul. It's one of more than a half-dozen meetings around the country and is likely to focus on the details of how to apply for the federal stimulus money.

But some applicants say the deck is stacked against them already because of rules governing the stimulus money. Northfield has given up on its application for now, Cook County is worried and Monticello, which found alternative funding because of a court decision, believes it could never have gotten stimulus money.

The problem, as city and county broadband planners see it, has less to do with technology than with the sheer legwork required to create an acceptable proposal.

Applicants must prove that all the areas they propose to serve would meet a narrow federal definition of being underserved -- that 50 percent or more households in the area lack broadband access, or that fewer than 40 percent of the households already subscribe to broadband. That puts the burden on cities and counties to undertake expensive and time-consuming door-to-door surveys, because telephone and cable companies don't reveal which areas they serve.

"The federal rules poked holes in a lot of people's broadband projects," said Danna MacKenzie, the Cook County information systems director in Grand Marais, who is involved in a roughly $30 million proposal for a county-wide broadband network for homes and businesses that would be funded by federal stimulus money.

"Everybody understands that, as a whole, our communities are underserved. But there are small areas where telephone company DSL is available, and that makes us unable to apply to serve the whole community," MacKenzie said. "So we're trying to dice up the community to fit the federal grant parameters. But that means we must go door-to-door and see which census blocks have DSL and which don't. We'll try to reconfigure our proposal by the Aug. 14 application deadline."

In addition, the rules allow existing telephone and broadband companies to challenge the applications of cities and counties that would compete with them for customers.

Cable and phone companies "will have an opportunity to show that an applicant's certification of areas that are unserved or underserved is incorrect," said Tom Power, chief of staff of the National Telecommunications and Information Administration, a part of the Department of Commerce in Washington.

"That absolutely worries everyone doing one of these broadband projects," MacKenzie said. "It doesn't make sense that the cable and phone companies have veto power."

Melissa Reeder, Northfield's information technology director, agreed.

"The application requirements are so challenging that we simply cannot qualify for the first round of funding," Reeder said, noting that the city can't afford to knock on every door in town to find out exactly which blocks of the city meet the federal definition of being underserved.

"Even if we could get that level of detail, the incumbent broadband providers have the opportunity to appeal our applications -- and they have the information about who is served," Reeder said.

Qwest spokeswoman Johnna Hoff said, "Qwest is still reviewing the rules on broadband stimulus to determine whether we'll participate. However, we support the use of federal stimulus money to bring broadband to rural communities."

Comcast representatives didn't respond to a phone call.

"It's hard to say how many projects will be funded in any one state; it will depend on the quality of the applications," Power said. "But we must do at least one broadband project in each state, if practical."

Applications will be judged on a point system, he said. Broadband proposals win more points for reaching the most users with the greatest speed and affordability. Points also are given for public service, such as providing broadband to a hospital. The rules also favor projects that are "shovel ready," because all projects must be substantially finished within two years of receiving federal money.

Jeff O'Neill, city administrator of Monticello, is glad to abandon his city's application. A last-minute appeals court decision allowed the city to use revenue bonds over the objections of local telephone company TDS. He said the way stimulus-funds rules are written, Monticello wouldn't have qualified.

Steve Alexander • 612-673-4553