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Keeping the lights on, saving on costs

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The City of Perham is thinking of new ways to keep the lights on.

During a time when many city governments are dealing with Local Government Aid (LGA) cuts from their budgets, Perham is taking a proactive approach to determine where cuts - and revenue generators - can be made.

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City council members unanimously approved a motion Feb. 13 that will allow the city to impose an electric franchise fee on Otter Tail Power for its electrical services within the city -- to the tune of $60,000.

"That will replace what we pay for the cost of city lights," said City Manager Kelcey Klemm.

Each year, the city spends roughly $60,000 a year on lights around the city. Now, that cost will be reimbursed through the franchise fee.

While the city has always had the right to impose the fee, it was recently brought to the attention of city leaders.

In a notice to Otter Tail Power, the company agreed to the fee, but said they would like any changes to the agreement in a written notice 120 days in advance.

The city will begin collecting the fee during the July 2012 billing month. Otter Tail Power has the option of paying the city monthly, but is at least obligated to do so quarterly.

The agreement states that Otter Tail Power agrees to make customer billing records within the city available for inspection. It also states that the determined fee could be subject to change if the company has to make up for bills not collected or customer refunds.

Refinancing

The City of Perham had more encouraging news in the way of finances Monday evening.

The city was able to refinance its bonds with a 1.5 percent rate -- the lowest it has seen in quite some time.

The refinancing bid was awarded to a bank out of Kansas. Several Minnesota banks ranked in the top five for bids.

The refinancing with the rate will save the city $300,000 over the course of the bond life.

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