The Sedona City Council voted unanimously on Aug. 13 to approve a zoning reversion for six parcels of land adjacent to Oak Creek and the Sedona Arts Center from planned development to a combination of commercial, multifamily and single-family residential. The property, which is being purchased from Axys Capital by the Stevenson family, owners of Ambiente Hotel, is planned to be developed as the 50-unit Ambiente Creekside hotel.

The Stevensons’ request for a zoning reversion proposed that the council either revert the PD zoning applied to the parcels when they were planned for development as the Preserve at Oak Creek, which would allow a 36-unit hotel under commercial zoning and a lodging waiver, or that the city enter into a development agreement with them to allow a 50-unit hotel on the site in combination with a public park.

The zoning reversion proposal was complicated by the city’s revision of the Land Development Code in 2018, which eliminated the previous C-1 commercial zoning category, replacing it with CO commercial zoning, and by the city’s 2023 removal of fewer than seven lodging units per parcel as a use in commercial zones.

Attorney Nick Wood, representing the Stevensons, pointed out that the parcels in question had never been correctly rezoned to PD at the time of the previous development application.

Wood is an adjunct professor of law at the Sandra Day O’Connor College of Law at Arizona State University who is also representing RD Olson Development in its lawsuit against the council for the 4-3 vote last month that overturned 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 this period, the property has not been improved for the use for which it was conditionally approved, the legislative body … shall’—shall, not the permissive ‘may,’” Wood quoted from Arizona Revised Statute §9-462.01, “‘schedule a public hearing to take administrative action to extend, remove or determine compliance with the schedule … or take legislative action to cause the property to revert to its former zoning classification.’”

Wood noted that the original PD zoning approved in 1998 for the parcels had subsequently been amended in 2006 with stricter conditions: “‘A valid building permit for the project shall be issued and the first phase of the project shall be under construction within two years of the city council on the PD amendment … or commission’s and council’s approval will become void.’”

“It’s not a reversion anymore,” Wood said. “The conditional PD zoning approval is void as a matter of law; therefore, it can’t be resurrected. It’s gone.”

Furthermore, Wood added, the city’s zoning map had been incorrectly updated to show the parcels as being zoned PD.

“The zoning map is a regulatory document. That map represents what people can do,” Wood said. “In each one of the resolutions, which of course were part of the ordinances for approval, each one of them said the same thing: The zoning map shall be amended to reflect the zone change upon completion of all zoning conditions as set forth in the exhibit. It says the same thing in 2005 … 2006, directing the amendment of the zoning map upon completion of all the conditions set forth herein. What this means is, this map should not show PD on it … The council’s direction was that you don’t change the map from C-1 at the time, or now CO, to PD until all the conditions have been fulfilled, and we know for a fact they haven’t been.”

As for the PD zoning itself, Wood continued, the conditions of approval for the project at the time required “substantial conformance with things like the site plan. If you change the site plan you can’t go forward with the project. You lose your approvals.”

“In 2019, the city determined that it needed rights-of-way,” Wood said. As a result of the negotiations that ensued between the city and the then-landowner, some of the developer’s parcels on the west side of State Route 89A that were included in the site plan were split or acquired by the city to enable the construction of Owenby Way, which now runs through part of the site plan for the former Preserve. “The conditional PD zoning approval is subject to a condition requiring compliance with a specific site plan and cannot be implemented due to the roadway taking,” Wood said.

“That change does affect the property owner,” Wood said of the city’s still later 2023 removal of lodging as a by-right use in commercial zoning districts. “You do have the ability to grant this site the less than seven units per parcel if you choose to do so … The property CO zoning was amended in 2023 to remove lodging, fewer than seven units, in violation of ARS §12-1134 and a waiver of the 2022 amendment is necessary to avoid a takings claim.”

“There’s nothing to revert,” Wood concluded. “Take no administrative action to extend the time period of conditional PD zoning approval because, one, it’s void, so there’s nothing to extend, and B, it’s impossible to comply anyway.”

Instead, Wood asked that council direct staff via resolution to acknowledge that the conditional PD zoning was void and to correct the zoning map.

Sedona City Attorney Kurt Christianson “and I disagree on this,” Wood added. “Mr. Christianson is very comfortable that even though you had language in 2006 that says no reversion, it’s void, that you still have the ability to do the reversion.”

“What controls here is state law,” Christianson said. “ARS §9-462.01(E) is clear, the legislature already envisioned what will happen in this type of scenario … In that case, council has the option to extend the expired PD or revert the zoning. We may argue about which type it would be, but the end result would be the same. They would be able to build lodging, either the C-1 in ’98 or the 2024 CO with a Prop 207 waiver. Either way, the property would be cleared for the lodging units the developer desires … Both of them also read the same law and it says clearly that council can extend the expired PD.”

Attorney Steven Polk, also representing the Stevensons, said that the provisions of the LDC as they existed at the last time the PD zoning was approved in 2010 did not permit a second conditional extension for rezoning.

“Council is subject to 2024 laws and can’t take action based on 2010 laws,” Christianson said. “My advice hasn’t changed: Council has the authority given it by the state in that ARS section and that’s what controls here. If there’s any conflict, state law would prevail since the city is a subdivision of the state.”

Wood and Mike Stevenson explained that if the council agreed to revert the zoning, the Ambiente Creekside project would then be required to go through the usual development review process with the city as well as a subdivision process to turn the existing six parcels into nine in order to allow 50 hotel rooms at six rooms per parcel. The subdivision process would include a negotiation with the city for a public park offering creekside access.

“We might even propose an additional trailhead as opposed to a park,” Stevenson said, which could be used to access Huckaby Trail.

Residents Lew Hoyt, Joetta Winter, Patrick Schweiss and Mike Wise, along with four current Ambiente employees, spoke in support of the proposed rezoning. No one spoke against it.

“I think it’s admirable they want to bring that spirit back,” Schweiss said of the Stevensons’ family connection to the property, where John Stevenson had started the Dutchman’s Cove Restaurant in the 1960s. “We all long for the Sedona of yesteryear.”

After spending half an hour in executive session with Christianson, council returned and unanimously approved an ordinance to revert the zoning.

“Land that is privately owned has rights associated with it,” Councilman Brian Fultz said, adding that he thought the Ambiente development would be a “lighter load” than other potential projects. Councilwoman Kathy Kinsella stated that she hoped the development review process would bring “public pressure” on the developers to protect the land.

“I actually think it’s a good place for a resort … it makes sense to have one there,” outgoing Councilwoman Jessica Williamson said. “None of the other hotels, I think, are owned by people. They’re owned by corporations. My sense is that it’s a good thing.”