On August 13, the Sedona City Council unanimously approved a rezoning of six lots adjacent to Oak Creek and the Sedona Arts Center. Instead of the planned development, a combination of commercial, multi-family and single-family homes will now be used. The property, which is being purchased from Axys Capital by the Stevenson family, owners of the Ambiente Hotel, is to be developed as the Ambiente Creekside Hotel with 50 residential units.
The Stevensons’ zoning reversal request required that the Town Council either revoke the PD zoning that applied to the properties when they were to be developed as an Oak Creek Conservation Area, which would allow the construction of a 36-unit hotel under commercial zoning and a lodging exemption, or that the Town enter into a development agreement with them allowing the construction of a 50-unit hotel combined with a public park on the site.
The zoning reversal proposal was complicated by the city’s 2018 revision of the Land Development Code, which eliminated the previous C-1 commercial zoning category and replaced it with the CO commercial zone, as well as the elimination of fewer than seven lodging units per parcel as a commercial zoning use in 2023.
Lawyer Nick Wood, representing the Stevensons, pointed out that the parcels in question had never been properly rezoned as a public conservation area at the time of the previous planning application.
Wood is an adjunct professor of law at Arizona State University’s Sandra Day O’Connor College of Law and is also representing RD Olson Development in its lawsuit against the City Council over last month’s 4-3 vote to overturn the Planning and Zoning Commission’s unanimous approval of the Oak Creek Heritage Lodge on the left bank of Oak Creek.
“‘If, at the expiration of such period, the property has not been prepared for the use for which it was conditionally approved, the legislative body shall…’ — it must, not the permissive ‘may,'” Wood quoted from Arizona Revised Statute §9-462.01 — “‘schedule a public hearing to take administrative action to extend, rescind, or determine compliance with the schedule…or take legislative action to restore the property to its previous zoning.'”
Wood noted that the PD zoning for the parcels, originally approved in 1998, was amended in 2006 with more stringent requirements: “‘A valid building permit must be issued for the project and the first phase of the project must begin construction within two years of the City Council’s decision on the PD amendment… otherwise the Commission and Council approval will be void.'”
“It’s no longer a fallback,” Wood said. “The PD conditional zoning approval is legally void; therefore, it cannot be revived. It’s gone.”
In addition, Wood added, the city’s zoning map was incorrectly updated to designate the parcels as PD zones.
“The zoning plan is a regulatory document. That plan represents what people can do,” Wood said. “In each of the resolutions that were, of course, part of the ordinances that were to be approved, each one said the same thing: the zoning plan shall be amended to reflect the zoning change upon satisfaction of all the zoning conditions set forth in the schedule. It says the same thing in 2005…2006, which directs the zoning plan to be amended upon satisfaction of all the conditions set forth here. That means there should be no PD on that plan…The direction from the council was not to change the plan from C-1 (now CO) to PD until all the conditions are met, and we know for a fact that that is not the case.”
As for the PD development plans themselves, Wood continued, the permit conditions for the project at the time “required substantial compliance with things like the site plan. If you change the site plan, you can’t proceed with the project. You lose your permits.”
“In 2019, the city determined it needed rights of way,” Wood said. As a result of negotiations between the city and the then landowner, some of the developer’s zoning land on the west side of State Route 89A was subdivided or acquired by the city to allow for the construction of Owenby Way, which now runs through part of the zoning for the former conservation area. “The conditional PD zoning permit is subject to the condition that a specific zoning plan must be met and cannot be implemented due to road occupancy,” Wood said.
“This amendment affects the property owner,” Wood said of the city’s even later removal of lodging as a commercial use right in 2023. “You have the option to allocate less than seven units per parcel to this site if you so choose… The CO zoning declaration for the property was amended in 2023 to remove lodging with less than seven units, which is a violation of ARS §12-1134, and a waiver of the 2022 amendment is required to avoid an expropriation claim.”
“There is nothing to undo,” Wood concluded. “Do not take administrative action to extend the deadline for the PD zone conditional approval because, first, it is invalid so there is nothing to extend and, second, it is impossible to meet anyway.”
Instead, Wood asked the council to pass a resolution directing staff to recognize the invalidity of the conditional PD districting and correct the zoning plan.
“Sedona City Attorney Kurt Christianson and I disagree,” Wood added. “Mr. Christianson is absolutely certain that even though there was a clause in 2006 saying there is no repossession and it is void, you still have the ability to do the repossession.”
“What matters here is state law,” Christianson said. “ARS §9-462.01(E) is clear, the legislature has already anticipated what will happen in such a scenario… In this case, the council has the option to extend the expired PD or reverse the zoning. We can argue about which type it will be, but the end result would be the same. They could build housing, either the C-1 in 1998 or the CO 2024 with a Prop 207 exemption. In either case, the property would be cleared for the housing the developer wants… They also both read the same law and it clearly states that the council can extend the expired PD.”
Attorney Steven Polk, who also represents the Stevensons, said the LDC’s regulations as they stood when the PD district was last approved in 2010 did not allow for a second conditional extension of the rezoning.
“The council is governed by the laws of 2024 and cannot act on the basis of the laws of 2010,” Christianson said. “My advice has not changed: the council has the authority granted to it by the state in this ARS section and that is what applies here. In the event of a conflict, state law prevails because the city is a subdivision of the state.”
Wood and Mike Stevenson explained that if council approves a zoning rollback, the Ambiance Creekside project would have to go through the usual development review process with the city, as well as a subdivision process to convert the existing six parcels into nine, allowing for 50 hotel rooms with six rooms per parcel. The subdivision process would include negotiations with the city for a public park with creekside access.
“We could even propose an additional trailhead instead of a park,” Stevenson said, which could be used as access to the Huckaby Trail.
Local residents Lew Hoyt, Joetta Winter, Patrick Schweiss and Mike Wise, as well as four current Ambiente employees, spoke in favor of the proposed rezoning. No one spoke against it.
“I think it’s admirable that they want to bring that spirit back,” Schweiss said of the Stevensons’ family connection to the property where John Stevenson opened the Dutchman’s Cove Restaurant in the 1960s. “We all long for the Sedona of old.”
After a half-hour closed session with Christianson, the council returned and unanimously passed an ordinance to revoke the zoning.
“There are rights associated with privately owned land,” said Councilman Brian Fultz, adding that he believes the Ambiente project would be a “lighter burden” than other potential projects. Councilwoman Kathy Kinsella expressed her hope that the project review process would put “public pressure” on the project developers to protect the land.
“I actually think it’s a good place for a resort … it makes sense to have one there,” said outgoing City Councilwoman Jessica Williamson. “I don’t think any of the other hotels are owned by private individuals. They’re owned by businesses. I think that’s a good thing.”
