BANGOR, Maine — Despite owing the city nearly $120,000, the American Folk Festival has signed a new contract with Bangor, allowing the annual weekend-long event to keep returning to the waterfront.

The annual late-summer festival has drawn musicians from around the world and pumped millions of dollars into Bangor’s economy. Each year, under the new contract, the festival will receive $50,000 worth of city services each year while continuing to pay $15,000 toward its debt, which totaled $300,000 in 2010.

“What I’ve seen from the organization since 2009 is a dedication to commit themselves to be better,” City Councilor Cary Weston said before the council approved the new agreement Monday. “The organization has shown a real sincere interest in securing the fiscal health if you will and making sure the festival is available for years to come.”

During the meeting, American Folk Festival Board Chair Richard Fournier said he wanted the event to be in Bangor “for a long time to come.”

The American Folk Festival last month announced five bands booked for this year’s festival, which will be Aug. 25 and 26. The festival started in Bangor in 2002 as the National Folk Festival banner. In 2005 it was turned over to a group of local community members who struggled with its finances.

By 2010 the festival was deeply in debt and city officials severed the their previously undisclosed financial ties to the festival.

The festival began repaying the city—first $30,000 a year, then $15,000. That arrangement will continue for the next five years as the Folk Festival continues chipping away at its $119,993 debt.

Like the previous five-year contract between the city and the folk festival, which expired following last summer’s festival, the city will provide up to $50,000 worth of police, medical, trash removal and electrical services.

Bangor has still not signed a new contract with Waterfront Concerts, the Old Town-based concert promotion company headed by Alex Gray, who was arrested on a domestic violence charge in March after allegedly attacking his girlfriend following an argument at his Portland condominium.

The city council last discussed the Waterfront Concerts contract negotiations, which have included the volume of the music and the length of a new agreement, during a closed-door meeting on Monday.