A housing emergency didn't beat a 2016 preemption statute.
On November 26, 2025, the Arizona Court of Appeals (Division One) held in Oak Creek Mobilodge v. Sedona(1 CA-CV 25-0135) that Sedona cannot bar mobile-home-park short-term rentals under its housing-emergency policy — Arizona's 2016 STR preemption statute (A.R.S. § 9-500.39) controls. The League of Arizona Cities is pushing a 2026 statute fix.
Arizona · 2016 → 2026
The preemption statute outlasts the local emergency.
2016
Arizona enacts A.R.S. § 9-500.39 — the STR preemption statute
The Arizona legislature enacts A.R.S. § 9-500.39, preempting municipal regulation of short-term rentals in significant respects. The statute becomes the legal floor for Arizona STR operators and the ceiling on Arizona cities' STR regulatory ambition.
2020 – 2023
Sedona declares housing emergency; adopts restrictive posture
Amid sustained short-term-rental pressure on the Sedona housing market, the city adopts a housing-emergency framing and pursues regulatory tools aimed at STR activity. The mobile-home-park STR question is one contested corner of that broader program.
2024 – Early 2025
Oak Creek Mobilodge challenges Sedona's application to park STRs
Oak Creek Mobilodge, operating a mobile-home park in Sedona, challenges the city's application of its housing-emergency regulatory framework to mobile-home-park short-term rentals. The litigation reaches the Arizona Court of Appeals on appeal.
November 26, 2025
AZ Court of Appeals Div. One files opinion 1 CA-CV 25-0135
The appellate court holds Sedona cannot bar mobile-home-park STRs under its housing-emergency policy because A.R.S. § 9-500.39 preempts. The opinion is the primary source document for this case file. The city signals interest in further appeal.
December 20, 2025
League of Arizona Cities — statute-fix bill proposed for 2026
Per Arizona Capitol Times (December 20, 2025), the League of Arizona Cities is pursuing a 2026 legislative fix that would enable jurisdiction-level STR license caps, loosening the preemption shield. The legislative route is now a live 2026 variable for Arizona STR underwriters.
2026
Two-track risk: further appeal and statutory amendment
For the Sedona market specifically, the Oak Creek Mobilodge opinion is the current controlling law. For Arizona STR underwriting broadly, the 2026 legislative session is the next material inflection point. Both tracks should be modeled explicitly.
Governing Statute
A.R.S. § 9-500.39 (2016)
Arizona's STR preemption statute. The controlling state law in the Oak Creek Mobilodge opinion.
Opinion
1 CA-CV 25-0135
AZ Court of Appeals Division One, filed November 26, 2025. The primary source.
Further Appeal
Signaled by Sedona
Per Capitol Times coverage, Sedona has signaled appetite for further review. No Supreme Court disposition as of the date of this file.
2026 Statutory Risk
League of AZ Cities bill
The League is openly advocating for a 2026 amendment enabling jurisdiction-level STR caps — a potential loosening of the preemption shield.
Parties and Policy Actors
Who's in the opinion, and who moves next.
Oak Creek Mobilodge (plaintiff/appellant)
Mobile-Home-Park STR Operator
Sedona, Arizona
Documented Record
Named plaintiff/appellant in the matter captioned Oak Creek Mobilodge v. Sedona et al., opinion 1 CA-CV 25-0135 (AZ Ct. App. Div. One, filed November 26, 2025).
The operator's material argument — that A.R.S. § 9-500.39 preempts Sedona's housing-emergency application to the park's STR operations — was adopted by the Division One panel. Without examining the full opinion, the operative outcome is that Sedona's enforcement under the challenged framework is no longer available on the record decided.
City of Sedona (defendant/appellee)
Municipal Regulator
Sedona, Arizona
Documented Record
Named defendant/appellee in 1 CA-CV 25-0135. Per Capitol Times coverage (December 20, 2025), Sedona has signaled interest in further appellate review.
Sedona's housing-emergency framework is a broader program; the Mobilodge opinion addresses its application in the specific mobile-home-park STR context. The city retains significant policy and enforcement authority outside the reach of the opinion, and is pursuing a parallel legislative track through the League of Arizona Cities.
Arizona Court of Appeals, Division One
Intermediate Appellate Court
State of Arizona
Documented Record
Issued the opinion in 1 CA-CV 25-0135 on November 26, 2025. The opinion is published through the Arizona Courts website portal used by Division One.
Opinions from Division One are controlling authority in Arizona unless reversed or superseded. For STR underwriting in Arizona cities within the division's geography, this opinion is immediately relevant — but the Arizona Supreme Court remains the final state-law authority if further review is granted.
Arizona State Legislature (enacted A.R.S. § 9-500.39)
Source of Preemption
State of Arizona
Documented Record
Enacted the 2016 STR preemption statute codified at A.R.S. § 9-500.39. The statute is the foundation of the Mobilodge opinion's preemption analysis.
The legislature is also the body that could unwind the preemption. The interplay between legislative amendment risk and appellate outcomes is the structural tension in Arizona STR underwriting.
League of Arizona Cities and Towns
Municipal Lobbying Organization
Arizona (statewide)
Documented Record
Per Arizona Capitol Times (December 20, 2025), planning a 2026 legislative package that would enable jurisdiction-level STR license caps.
The League is the coordinating vehicle for a statute fix. Arizona STR underwriting should treat League-supported legislation as an above-base-rate probability during the 2026 session — policy-making through organized municipal lobbying is a recurring pattern in STR-preemption states.
Arizona STR Operators and Aggregators
Industry Market Participants
Arizona (statewide)
Documented Record
Benefit directly from A.R.S. § 9-500.39's preemption framework and from the Mobilodge holding that applies it to housing-emergency-based enforcement.
Industry groups will likely organize opposition to any 2026 statute amendment. The 2026 legislative session is now a genuine two-sided fight — operators have both the appellate win and the political asset of the preemption framework to defend.
The Pre-Acquisition Intelligence
What RealClear reads in Arizona STR portfolios.
Score: 68/100. Preemption is protection — until the 2026 session rewrites it.
Preemption Analysis
Oak Creek Mobilodge
Sedona, Arizona · Yavapai County
Preemption Frame
Ruling
Further Appeal
2026 Legislative Risk
The Preemption Shield
Arizona's 2016 STR preemption statute (A.R.S. § 9-500.39) limits how far municipalities can restrict vacation and short-term rentals. In Oak Creek Mobilodge v. Sedona (1 CA-CV 25-0135, filed November 26, 2025), the Arizona Court of Appeals Division One held Sedona could not apply its housing-emergency policy to bar mobile-home-park short-term rentals because the state statute controls. The city has signaled a further appeal.
Recommendation
For Arizona STR sites: the preemption statute is the asset. For Arizona city counsel: the preemption statute is the obstacle. Both sides should underwrite a 2026 statute-amendment scenario — the League of Arizona Cities is openly advocating for a legislative fix enabling jurisdiction-level STR license caps.
Before Capital is Committed
What should an Arizona STR underwriter know before the 2026 session?
Treated A.R.S. § 9-500.39 as an asset with a finite shelf life
The 2016 preemption statute is the legal asset that drives Arizona STR economics. It is not a constitutional right — it is statutory. Any underwriting that assumes it will persist unchanged through 2026 and beyond is underwriting against a known, organized opposition.
Read the Mobilodge opinion as narrow — not global
The Division One opinion addresses Sedona's housing-emergency application to mobile-home-park STRs. It does not foreclose every Arizona city STR enforcement theory. Apply the holding to comparable facts; do not over-read.
Modeled the 2026 statutory-amendment scenario explicitly
A League-of-Cities-backed 2026 amendment enabling jurisdiction-level caps would materially change the Arizona STR landscape. Portfolio models should include a 2026 outcome variable and a worst-case cap-regime scenario for Sedona, Flagstaff, Scottsdale, and peer cities.
Built flexibility into lease and loan terms tied to preemption status
Sophisticated capital structures price regulatory volatility directly. For Arizona STR transactions closing in 2025-26, consider rent-abatement triggers, loan-term step-downs, or conforming-use protections tied to A.R.S. § 9-500.39 remaining substantively intact.
The statute is the asset. Read it before you price it.
Your next Arizona STR deal deserves a real answer.
RealClear models state preemption, the latest appellate opinions, and credible legislative amendment paths in one brief — so the 2026 Arizona session is a known variable, not a surprise.
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