When leaders in the city of Holbrook, Arizona, changed the zoning on a local motel mid-purchase so they could control “who’s coming in,” they ended up derailing the sale and slashing the property’s value. But the Goldwater Institute fought back, and in a victory for private property rights secured compensation for the owner, Anil Patel.
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.
Anil’s Howard Johnson motel on the edge of Holbrook was classified as a commercial zone when he found a willing buyer in 2022 who wanted to convert it into temporary short-term housing for low-income individuals. Initially, the city’s planning and zoning administrator confirmed this use was permitted so the sale proceeded.
Yet, just as the sale neared closing, the Holbrook City Council passed a targeted zoning change, stripping away a principal property right and reclassifying it as a less protected, conditional use. According to Holbrook Mayor Kathleen Smith, the decision to pass the ordinance during the pendency of the transaction would provide “a little more control of who’s coming in.” Essentially, the zoning change would allow council members to deny any use they didn’t want in their city.
The ordinance quickly passed, and the subsequent denial of a conditional use permit stopped the motel sale and reduced the value of the property.
But because of Prop 207, Anil had a right to redress.
Prop 207 is by far the strongest protection for property rights in the nation. Under Prop 207, if a property owner’s right to use their land is restricted by a land-use law and that reduces the fair market value of the property, owners are entitled to just compensation. The government can choose to repeal their action, grant a waiver to the property owner, or pay the requested compensation.
Rather than repeal their action or grant a waiver, the city of Holbrook reached a settlement with Anil to compensate him for the lost value to his property. While the city denies all liability, Anil was able to get the compensation he deserved for the government interference with his property rights.
Holbrook’s attempt to control “who’s coming in” couldn’t outdo private property right protections—and the Goldwater Institute’s victory ensures that fair treatment prevails.
Stacy Skankey is the American Freedom Network Litigation Director at the Goldwater Institute.
