Woodbury is asking the Minnesota Supreme Court to weigh in after an appellate court ruled it may not charge developers for roads outside of their property.
The petition, filed earlier this week, follows a recent legal victory for Martin Harstad. The New Brighton-based developer sued Woodbury in 2016 after it sought nearly $1.4 million for road improvements as a condition for Harstad's 183-home residential project.
A Washington County District judge ruled last year the fee, which Woodbury calls a "Major Roadway Assessment" was illegal. The state Court of Appeals upheld the lower court's decision last month.
At issue was whether cities have the authority to mandate such fees, a point observers say may echo statewide.
In asking the state's highest court to review the case, attorneys for Woodbury said the latest ruling could raise further challenges on how cities fund projects.
"Rather than providing clarity, the Court of Appeals sowed confusion about cities' authority to assure the construction of streets and other necessary public improvements," attorneys for Woodbury wrote in its petition.
The appellate court's ruling could upend how growing cities across the state help fund public infrastructure.
The Builders Association of the Twin Cities said the fees have had a negative impact on housing affordability. Meanwhile, the League of Minnesota Cities, who represents Woodbury, say the cost of new infrastructure would fall on taxpayers.
For Harstad, the city planned to use the fees for traffic signals, roundabouts and other items to handle any increased traffic off-site from the proposed Bailey Park neighborhood in southern Woodbury.
The Supreme Court typically reviews several hundred petitions annually but only agrees to hear a small handful of cases.
Correction: A previous version of this story misstated the year Martin Harstad filed his initial suit. It was in 2016.