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Committee approves 2026 license fee schedule; rental‑license fees rise 10%
Summary
Finance and departmental staff presented a mostly flat 2026 license schedule with targeted changes: a 10% increase to rental‑license fees to boost cost recovery from ~58% to ~64%, and pollution control (PCAR) adjustments expected to raise roughly $1.2 million. After public comment from landlords and industry groups, the committee approved the schedule.
City budget staff presented the recommended 2026 license fee schedule and explained the administration’s approach to hold most fees flat while implementing a small set of department‑driven adjustments. Staff noted the city contracted a comprehensive fee study to guide larger revisions going forward.
Rental licensing staff proposed a 10% increase across Tier 1–3 rental license fees aimed at improving cost recovery from roughly 58% to an estimated 64% for the rental licensing program. April Bogard, director of inspection services, said the program’s estimated costs are $7.7 million for 2025 and that current collections of about $4.5 million leave the general fund subsidizing approximately $3.2 million. The staff presentation included examples: a tier‑1 single‑family home fee under the proposal would be $98 (building fee) plus $41 per‑unit for a total of $139 annually — a $13 annual increase for that example.
The Health Department and finance staff described changes to the Pollution Control Annual Registration (PCAR) fee structure, including a revised CO2e fee methodology that expands the scope of covered emissions and applies a per‑ton charge with an annual per‑site cap; staff projected roughly $1.2 million in additional PCAR revenue, including about $1,048,000 from CO2e fees.
During the public hearing, multiple rental‑property owners and trade groups — including the Minnesota Multi‑Housing Association and local landlords — opposed the rental fee increase, citing thin margins, rising operating costs and the long interval between physical inspections for many properties. Supporters of stronger PCAR fees said the program must align fees with program costs and that state law requires fees to recoup the city's expenses for pollution reduction programs.
After discussion and questions about the underlying cost calculations, the committee voted to approve the recommended 2026 license fee schedule, including the 10% rental‑license increase and PCAR adjustments. Staff committed to provide additional accounting detail if requested.
Next steps: staff will implement the fee schedule as adopted and continue the comprehensive fee study work to inform future changes.
