Earmark Hands Annandale $2 Million In Rural Broadband Money

ST. PAUL, Minn. (AP) — The central Minnesota city of Annandale would get one-fifth of the new money available statewide for broadband Internet build-outs in an earmark that passed the Legislature this week with no time to spare — and vaulted the city past a competitive bidding process that other rural towns must go through.

Annandale was passed over for a grant in 2014, but a clause inserted in a budget bill Monday night sets aside $2 million this time. The earmark by House Republican negotiators would answer what one city official called the "helplessness of not having options" to offer quality Internet to businesses and residents.

But others worry about awarding money outside a rigorous vetting process by the state Office of Broadband Development, which makes grants to cities that partner with private companies based on cost, significance to the community and evidence that an area is underserved by Internet providers.

Gov. Mark Dayton will decide the bill's fate by Saturday night. He can line-item veto measures with money attached.

The clause doesn't specifically name Annandale, a city of around 3,000 just south of St. Cloud, but the criteria are so specific that no one involved expects another city could qualify.

"It was designed for Annandale. That was not a closely guarded secret," said Dan Dorman, executive director of the Greater Minnesota Partnership and a lobbyist for Annandale. "Earmarking in funds is not new or revolutionary."

Mike Martin, executive director of the Minnesota Cable Communications Association that represents 15 cable companies, said there's no question Annandale doesn't have good connectivity now. But he said the city has discouraged private expansion by insisting that any network is fiber cable run directly to subscriber homes and businesses instead of using more cost-effective options. He said the city was holding out "for a Cadillac" system, and worried that if they succeed, other cities will seek the same earmark.

"They really aren't going to the head of the line," Martin said. "They're going around the line."

This is the second year of Minnesota's broadband grant program, which has a goal of high-speed Internet from border-to-border. About $20 million was awarded in the first year, but none of those projects are near completion. There would be $8 million left in next year's pot.

Madeline Koch, spokeswoman at the Department of Employment and Economic Development, said the agency would rather see awards made only after potential projects are reviewed.

"DEED uses this scoring process to ensure the best projects are awarded these grants," she said.

Rep. Pat Garofalo, R-Farmington, was the lead House negotiator of the budget bill and helped craft the final language. He said Annandale had a unique situation and deserved the help.

"On its merits this is a slam-dunk of a project because this is a city of thousands of people," Garofalo said. "There are signs posted that people can't use the credit card machines because there is no Internet. They've lost businesses already because of it."

While it wasn't certain until the last day if the earmark would prevail, the city's request had been formally before lawmakers since March and was part of a House-passed bill in April.

City Administrator Kelly Hinnenkamp wrote lawmakers after a House hearing in early April to dispute suggestions that its standards were too high for private firms to enter the market on their own. She said one company demanded a waiver of franchise and permit fees but wouldn't commit to the best possible network in return.

She framed the Capitol campaign as part of an urgent search for a solution, writing the city was dealing with a sense of helplessness.

"This helplessness exists whether it's a flood or broadband or a failing treatment plant — they are all critical needs in small communities and we need support from the state to find a resolution," she said.

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