The City of Holbrook has reached a settlement agreement with Anil Patel, the owner of the Howard Johnson’s hotel located at 2608 Navajo Blvd. Patel who, represented by the Goldwater Institute, had filed the lawsuit against the city in February of 2024, after ChangePoint Integrated Health, a behavioral health organization which had planned to purchase the property were denied a special use permit to turn the hotel into a temporary short-term lodging and backed out of the purchase agreement.
ChangePoint had intended to purchase the hotel as a temporary housing facility for individuals transitioning out of care by the facility. When ChangePoint inquired with the city as to whether or not the zoning code would permit this use, the previous city administration under the direction of Ted Soltis, had informed ChangePoint that this was a permitted use and the sale was expected to go through at the end of February 2023.
However, once the Holbrook Planning and Zoning Commission and the Holbrook City Council learned of the pending transaction by ChangePoint, it was determined that a conditional use permit would be required for the intended use, due to a conflict in city code. The property was zoned C-2, which requires a conditional use permit for residential housing but also included all allowances from C-1 zoning. At the time, C-1 listed residential housing as a principal permitted use. The council addressed the conflict, requiring both C-2 and C-1 to require a conditional use permit for residential housing.
Following that change, ChangePoint was required to go before the Holbrook Planning and Zoning Commission for the permit. Upon review of the development, the Commission recommended denying the permit and several residents spoke out against the permit, with concerns of an increased crime rate and homelessness should residents of the facility no longer be able to live in the housing. After careful review, the decision to deny the permit was upheld by the Holbrook City Council.
In the complaint filed by the Goldwater Institute it states that Holbrook officials were attempting to seize Patel’s property by prohibiting him from using his land as he sees fit by usurping private property rights Arizona Private Property Rights Protection Act (A.R.S. § 12-1131 et seq.). The complaint stated that this was an effort by city officials to “selectively exclude newcomers from entering Holbrook.” Goldwater had quoted Mayor Kathleen Smith as stating that the city’s decision would allow “a little more control of who’s coming in,” claiming the zoning change would allow council members to deny any use they didn’t want in their city.
Smith responded to the Goldwater comments stating, “The Goldwater Institute again misrepresented both my remarks and the City’s position regarding a zoning matter tied to the Holbrook hotel property. The quote attributed to me to have ‘a little more control of who’s coming in.’ did not refer to the prospective buyer or any class of people tied to this ordinance. I was addressing a broader, ongoing issue: several Holbrook motels attempting to convert to single-family residences without meeting health, safety and zoning standards. My remarks were about enforcement and compliance across all such properties—not about this buyer or project.
She noted that the case in question was settled as a cost-saving measure, not as an admission of wrongdoing or liability. “The City acted lawfully and appropriately under its zoning authority and continues to apply the same standards to all properties. The City’s priority in all matters is public safety, code compliance and maintaining community standards—not targeting specific buyers or controlling who moves into the community.”
Smith emphasized that the city welcomes businesses to Holbrook and has a proven track record of working successfully with them. “Any remarks to the contrary risk discouraging potential investment, and the Goldwater Institute’s portrayal misrepresents our community. By spreading disparaging and untrue statements, they are causing real economic harm to the very businesses and opportunities we strive to attract.”
The amount agreed upon for settlement was in the amount of $250,000. The Goldwater Institute statement added, “The favorable resolution is yet another example of the power and importance of Arizona’s Private Property Rights Act, or Prop 207, a law drafted by the Goldwater Institute that was overwhelmingly approved by voters nearly two decades ago. The law protects people like Anil when governments pass laws that reduce the value of their property.”
