Keep fighting! I know it's hard, but keep it up! We started chickens this year (26 of 'em), but we're in a more rural area. Our chickens started wandering in our neighbor's yard, so she told us nicely. We put up a fence (we own 2.5 acres, and all 3 sides around her property) on the section we saw them going in. We hadn't seen them since, thought it was the end of the matter. Then I get a knock on our door a month later, it was the Board of Health--she'd called because they were pooping on her lawn (uh, one or two spots?) and she complained. Luckily, there's no leash law here in town and it's an ag-friendly town, but still, the guy suggestsed that I maybe extend the fence on the one side, so I did. I'm no longer speaking to my neighbor, as we had it out after the BoH was here. She accused me of not doing anything and I said I DID do something and hadn't seen them in her yard. She says they still come and I know it, but duh, I have 3 kids, do you think that maybe I'm not paying close attention and think it's rude to stare into someone's yard? I've been a lovely neighbor to her up until then. Anyway, we want to put up a fence, but to it legally, you have to have it staked for property lines--$2,500 (and that's without a fence!). So I put up a fence along one edge of the property (300 feet) but there are still two other sides that should get done. Ironically, there are trees that have fallen and she's never moved or cut up, AND she's got a huge wood pile of yard debris right on our property line, so it would involve land clearing even to get to a place where I can put up a fence. And by fence, I mean a 1x1 hammered into the ground with chicken wire strung up. When we are able to afford a fence, we're going to put up something TALL AND UGLY facing her, make her feel all boxed in on 3 sides. We've been good neighbors to her, but calling the BoH? That's not someone we're going to ever make happy, cranky old lady. So now I do see our chickens in her yard and I just shrug my shoulders and figure I'll fight that battle if it comes to it. But since she won't clear her part of the crap from our land, I'll use that as an excuse and see where it gets me. Ugh!
Good luck, I wish you the best. It's insanely stupid what your town is doing, the pride of some people (city council and mayor!), idiots! And for the record, I own rabbits too and they're quiet except for the rustling of bedding and little water nips from the bottle. My kids are WAY louder.