Council declines developer request to reduce Silos obstruction fees; affirms $40,800 charge

The Mankato City Council on Jan. 27 declined a developer request to reduce right-of-way obstruction fees for the Silos apartment project and voted to maintain a $40,800 obstruction-fee charge.

City staff summarized the developer’s request and staff’s review. The Silos developer asked the council to reduce obstruction fees by $15,950—from $40,800 to $24,850—arguing much of the sidewalk closure occurred simultaneously with separate Riverfront Drive construction, which already limited pedestrian access on the same block. City staff said the fee schedule calls for a $300-per-day charge for right-of-way obstructions in the downtown area, and that staff had already applied an internal reduction (charging $50 per day) rather than the strict fee schedule; following inspection-based accounting of days of obstruction the strict fee schedule could have produced charges near $181,000 before staff’s discretionary reductions.

Interim Public Works Director Carl Kiel and City Manager Arndt explained the fee schedule, the inspection process used to count obstruction days and how fees were estimated in the project’s TIF application. Developer representative (Mr. Brennan) told the council the project was completed ahead of typical timelines (about eight and a half months) and is fully occupied four months after opening; he said the original $20,000 obstruction estimate was a scheduling guess and that the higher final amount reflected sequencing changes and concurrent construction. "The fees and the TIF application, guessing at road closure costs is much more of an art than a science," Brennan said.

Council members discussed whether reducing the fee based on concurrent Riverfront construction would set a precedent that could undermine fee enforcement and project timetables. Some council members said fees help incentivize timely completion; others noted the city had already reduced the fee from what a strict reading of the schedule would have produced. One council member observed that while the Riverfront project visually blocked part of Plum Street, pedestrian access via alleys and other routes remained usable and that the city’s obstruction fee intends to charge for actual loss of sidewalk use and associated inconvenience.

Council member Laevon moved to maintain the $40,800 fee applied to the Silos Apartments project; the motion was seconded and approved by voice vote. The council indicated staff will discuss fee-schedule interpretation and potential changes at a later work session.

Details: Staff said a strict application of the fee schedule might have produced an approximately $181,000 charge for the Silos project; staff applied a reduced daily-charge approach that produced the $40,800 figure developers were billed. The developer requested the council reduce the fee by the days when Riverfront Drive work also restricted access on the same block, arguing the city should not double-charge the same obstruction.

The council also scheduled further discussion of the city’s obstruction-fee policy at an upcoming work session to consider whether the fee schedule and staff practice should be reconciled and clarified.