Oak Creek Hospitality challenges City of Sedona over short-term rental restrictions

Oak Creek Hospitality, LLC has emerged victorious in a legal battle against the City of Sedona over the use of mobile homes as short-term rentals. The Arizona Court of Appeals ruled in favor of Oak Creek, reversing a previous dismissal by the Superior Court and remanding the case for further proceedings. The complaint was initially filed by Oak Creek Hospitality, LLC on November 26, 2025, in the Arizona Court of Appeals against the City of Sedona and its officials.

The dispute began when Oak Creek purchased a 59-space mobile home park named Oak Creek Mobilodge in Sedona with plans to rent out these mobile homes as short-term rentals. However, when they sought a license from the city for this purpose, they were informed that “any homes in a mobile home park are not permitted to be used as [short-term rentals].” This prompted Oak Creek to file a lawsuit seeking declaratory and injunctive relief, arguing that the city’s stance contradicted Arizona’s Short-Term Rental Statute (A.R.S. § 9-500.39), which prohibits local governments from restricting short-term rentals.

The City of Sedona countered by filing a motion to dismiss, claiming that their ordinance did not conflict with state law and that mobile home parks were not covered under the statutory definition of “short-term rental.” Despite this defense, Oak Creek moved for summary judgment on purely legal grounds. The Superior Court initially sided with the city, dismissing Oak Creek’s complaint and denying their motion for summary judgment.

Upon appeal, Presiding Judge Jennifer M. Perkins delivered an opinion joined by Vice Chief Judge David D. Weinzweig and Judge Cynthia J. Bailey. They concluded that individual mobile home units fall within the definition of “vacation rental or short-term rental” under Arizona law. Therefore, they found that Sedona’s policy prohibiting such uses was preempted by state statute.

The court ordered several forms of relief: it declared that Section 9-500.39 preempts Sedona from banning or restricting mobile homes in parks as short-term rentals; it prohibited Sedona from denying Oak Creek’s use of its property for this purpose based solely on its classification as a mobile home park; and it enjoined the city from enforcing its prohibition against Oak Creek.

However, since Oak Creek had not applied for a short-term rental license per city requirements—a step authorized by state law—the court did not grant all requested reliefs but left room for compliance with licensing procedures.

Oak Creek also sought attorney fees under Section 12-341 and invoked the private attorney general doctrine due to societal importance and benefit derived from enforcing statutory rights affecting many people. Given their success in showing statutory violation by Sedona’s interpretation, fee awards were deemed appropriate pending compliance with procedural rules.

Representing Oak Creek were Jonathan Riches from Sharf-Norton Center for Constitutional Litigation and John Thorpe from Frazier Law PLLC; Kristin M. Mackin represented the defendants from Sims Mackin LTD., Phoenix. The case was presided over by Honorable Linda Wallace at Yavapai County Superior Court before reaching appellate review under Case ID No. 1 CA-CV 25-0135.