The core question is whether it restricts you.
Well, assuming that the neighbor is in the wrong and has not agreed on a purchase/lease contract with the municipality, it is of course not very proper to simply appropriate a piece of municipal land - but what really happens if it is noticed? Either he dismantles his stairs or he has to buy the plot.
If he buys it (can buy it), does that change anything about your access? You still have 3.25m.
If he has to dismantle it, you gain a meter of space - and a deluxe neighbor. According to your description, the relationship is already strained anyway, so I would only follow up with the building authority if you are clear about the consequences. If you go to the building authority, the situation will either be clarified (because there is an agreement with the municipality) or presumably an employee will come out and take a look on site.
What then happens is pure speculation and also depends on the person in charge.
Best regards
Dirk Grafe