Eagan Special Council Meeting: Rental Licensing and 2027 Budget – August 10, 2026

The Eagan City Council held a special meeting on August 10, 2026, at the Eagan Municipal Center to discuss proposed amendments to the city's rental licensing ordinance and the 2027 General Fund budget. Staff presented both items, and the council provided direction to advance the ordinance amendments and expressed general support for the budget proposal.

Discussion Items

Rental Licensing Ordinance Amendments

• Director Hootmacher reviewed the rental licensing program, which began implementation in July 2023. As of the meeting, approximately 9,400 units are licensed, including about 8,000 multifamily units and nearly 1,400 single-unit rentals. In 2025, the city inspected almost 3,000 units, aligning with the internal policy of inspecting units every three years (about 33% per year).
• Proposed amendments included:
  • Clarifying definitions of multiple rental dwelling versus single rental dwelling, with a councilmember suggesting wording to improve readability.
  • Removing the owner background check requirement. In three years, only two denials were issued due to background checks, and both were later resolved after significant staff time and legal costs. In 2025, Eagan PD completed 388 background checks. Only two comparable metro cities require such checks.
  • Updating designated manager requirements: owners living outside the Twin Cities metropolitan area must designate a manager within 50 miles, and legal entities (e.g., LLCs) must designate a manager.
  • Removing obsolete implementation language, adding a late renewal fee, eliminating a phase-one training reference, and requiring a satisfactory inspection before renewal.
  • Strengthening short-term rental enforcement: making a rental term under 30 days a violation and holding licensees responsible for tenant conduct, including subleases to short-term operators.
• Council questions addressed tenant protections during non-compliance, the city's authority to make repairs, and the impact of the cadet program on police staffing. Councilmembers expressed support for the amendments.

2027 General Fund Budget

• City Administrator Miller noted this is year two of a two-year budget cycle. At council direction, staff worked to reduce the tax levy increase below 5%, presenting a proposed 4.9% tax levy increase (down from 6.8%) and a 4.7% general fund increase (down from 5.2%).
• No new positions are budgeted for 2027. The budget uses $525,000 in public safety aid (third year), first-year use of OPEB trust fund dollars, and opioid settlement funds. Revenue estimates were slightly refined.
• Expenditure reductions include: medical insurance RFP savings of about $189,000 (still a 6.2% increase); reducing police cadets from 6 to 4 (saving $160,000) as police staffing nears full strength (75 of 79 officers, with four cadets in academy); moving the business survey from a two-year to a four-year cycle; reducing Access Eagan fiber relocation funding and commercial contract inspectors; and miscellaneous line-item cuts.
• Expenditure increases include a community risk assessment and standards of cover study, IT software licensing support (up about $470,000), and property/liability insurance (6% premium increase).
• Finance Director Feldman reported an undesignated fund balance about $10.4 million above the target range, but $14 million has been assigned to capital projects (Civic Arena and Cascade Bay), leaving it unavailable. A $6 million gap in capital equipment funding will require further evaluation in October.
• The average home value increased by $343, and residential apartment valuations were flat or slightly decreased, potentially shifting some tax burden. Other metro cities are proposing levy increases between 5% and 9%.
• Councilmembers appreciated achieving a sub-5% levy without significant service cuts, especially with public safety staffing improving. No objections or requests for additional information were raised.

Key Outcomes

• Council directed staff to place the rental licensing ordinance amendments on an upcoming regular City Council agenda for formal consideration and approval.
• Council expressed general support for the proposed 2027 General Fund budget and tax levy.
• The preliminary 2027 property tax levy will be presented for certification on September 1, 2026; after certification, the levy can only go down, not up.