He declined in the summer too, this was Arteta in October:
Speaking ahead of Thursday’s Europa League clash with Dundalk, Arteta said: “We ended up with a large squad at the end of the transfer market.
“We had a few plans in mind with Reiss. One of them was as well to send him on loan to get more minutes because of the competition we have upfront.
“The reality is he has been really good in training. He wants to stay here. He wants to fight for his place.”
Asked why Reiss remained in north London, Arteta replied: “It was mixed reasons. Reiss was really convinced that he wanted to fight to stay here.
“When you see that willingness and that passion and that security in a player you feel tempted to keep him even though you know that opportunities are going to be restricted and he is not going to have a lot of continuity in his play.
“But things change very quickly and if he starts playing and playing well and he does what he can do, why not? He could start to play more games.”
To be fair, I understood Nelson wanting to stay in the summer, we had EL and LC games that he could play in to try and prove himself, unfortunately he ended up injured for a lot of those. In Jan he should have just gone though as it was clear he'd dropped down the picking order and with fewer 'small' games coming up he should have taken his chances elsewhere imo.