4.2. ERMUSR 08-11-2015 - Laserfiche WebLink

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This financial structure has led to tensions between ERMU and the city. For example, in 1987, a property tax levy limit left the city anticipating a budget deficit. ERMU had earned a profit from increased demand for services as the city grew. The city approached ERMU and asked that ERMU's $12,000 annual payment be increased to 5 percent of its retail sales, a sum of$163,000 that year. Since ERMU had begun purchasing electricity, it was concerned with maintaining competitive rates and General Manager Bill Birrenkott feared that such a large payment to the city would force a significant rate increase. The city responded that, much like a municipal liquor store, ERMU was an enterprise to fund the city government and its responsibilities were to the city as well as its customers. The two sides reached a compromise, with ERMU increasing its payment to $72,000. The city coffers were still short,but by much less than they would have been otherwise. Tensions like this have arisen from time to time,but in general, ERMU and the City of Elk River maintain a productive working relationship.85 During 1991, ERMU continued to expand its service area. General Manager Birrenkott spearheaded an initiative to extend its reach through a contract with Anoka Electric Cooperative for"the orderly transfer of service territory between the utilities,"meaning that ERMU would be able to expand its service area to include more customers in and around Elk River.86 Negotiated just before a large housing boom, ERMU was able to purchase rural service areas that have since been developed, adding greatly to ERMU's customer base. ERMU installed an additional substation in November 1991 to provide electricity more effectively. To further increase demand, ERMU loaned the city$55,000 to purchase lots in Industrial Park to attract new businesses.87 In April 1991,the Elk River City Council denied _ TT//y} a permit application by ERMU to expand its k 114 � ,� industrial building on the ,. �� ;