Eagan flags future utility rate hikes to bridge infrastructure funding gap

Eagan flags future utility rate hikes to bridge infrastructure funding gapOperating revenues in the Eagan public utilities fund are currently failing to cover depreciation, prompting city officials to signal upcoming rate increases to support capital improvements.

An auditor's report revealed that Eagan's public utilities fund operating revenues are not covering depreciation expenses.

City staff confirmed utility rate increases will be needed to replace aging assets forecasted in the capital improvement plan.

The City Council adopted the 5-Year Public Works Capital Improvement Plan (2027-2031) and awarded a 2026 manhole lining contract without discussion.

During a June 2, 2026, presentation of the 2025 Annual Comprehensive Financial Report, the City of Eagan, Minnesota, signaled that utility rate increases are on the horizon to address a growing gap in infrastructure funding. Auditor Rebecca Peterson of Redpath and Company informed the City Council that the public utilities fund's operating revenues are currently insufficient to cover depreciation. She stressed the importance of building sufficient reserves and cash flow to accommodate the high cost of aging infrastructure replacement. In response, city staff confirmed they are already taking steps to address the shortfall. Noting a recent workshop presentation alongside Public Works Director Mathis, a staff member stated, "We presented that there's a need to increase utility rates, and this illustrates... one of the reasons why, because of those ongoing infrastructure costs." The city is currently relying on capital improvement plans and asset management forecasting to identify necessary asset replacements, which officials noted will come at a significant cost. During the same meeting, the council unanimously approved its consent agenda, which formally adopted the 5-Year Public Works Capital Improvement Plan for 2027-2031. The consent approvals also authorized the implementation of 2027 and 2028 public works improvements, awarded the 2026 manhole lining contract, and approved a contract with LVC Companies to install access control equipment at the South Treatment Plant.