UPDATE: The Rochester City Council has just approved a settlement of nearly $49,000, marking a significant development in ongoing disputes over city development fees. This unanimous decision was made on Wednesday, adding to the list of city payments associated with collected development fees.
While no formal court claims were filed in connection with this settlement with Sioux Falls, S.D.-based Stencil Group, Rochester City Attorney Michael Spindler-Krage revealed that informal claims had emerged following a previous approval of $676,000 in similar settlements in June 2025. These ongoing disputes highlight the challenges faced by property developers in Rochester.
In June, several property owners threatened litigation after a lawsuit by Tap House Real Estate LLC resulted in a $245,000 settlement earlier this year. This lawsuit stemmed from fees tied to a transportation improvement district (TID) policy that required developers to pay for public infrastructure improvements. The controversial policy, implemented in 2004, aimed to address public infrastructure costs amid the city’s growth but has faced criticism for limiting developers’ options.
The Tap House lawsuit was a direct result of these fees, with the company paying $102,500 for public street development linked to its location at 2365 Commerce Drive NW. In response to increasing developer concerns, the city halted the collection of TID fees in 2024.
Wednesday’s settlement agreement pertains to payments made by Stencil Group for the extension of Badger Hills Drive Northwest at 46th Avenue. Stencil Group has been actively developing in the area, including projects like Forte Living and the Pines, adjacent to West Circle Drive.
Spindler-Krage indicated that the settlement aligns with refunds provided to other developers in similar situations. “The percentage of Stencil Group’s two TID payments that would be refunded under the proposed settlement is in line with payments to other claimants who are similarly situated to the Stencil Group,” he noted.
This settlement may not be the last related to the former TID policy. Spindler-Krage confirmed that the city is aware of at least one unresolved claim from another developer within the previous district, indicating that tensions and disputes over development fees are likely to continue.
As the situation unfolds, stakeholders in Rochester’s development community are urged to stay informed on future council meetings and potential settlements that may arise from these ongoing disputes. The implications of these decisions could significantly impact local development practices and the economic landscape of Rochester moving forward.
