Republican Effort to Lift Water Restrictions for Developers Crumbles in Arizona House

A proposal by Arizona Republicans aimed at providing relief to housing developers has failed due to ongoing concerns about water supply. The legislation, which sought to exempt certain housing projects in Queen Creek and Buckeye from a building moratorium, was rejected by the Arizona House of Representatives for the second time, with a final vote tally of 29-26.

Republican Rep. Alexander Kolodin of Scottsdale, along with House Democrats, opposed the bill. This second defeat effectively ends the legislative attempt to revive the proposal. Supporters, led by Rep. Gail Griffin, chair of the House Natural Resources, Energy and Water Committee, argued that the bill was essential for developers caught off guard by a moratorium instituted by Democratic Governor Katie Hobbs in June 2023. The moratorium directly impacted projects in critical water-scarce areas, prompting Republicans to seek a solution to restart construction.

The moratorium affects regions within the Phoenix Active Management Area (AMA) that depend solely on groundwater, following revelations from the Arizona Department of Water Resources (ADWR) that the current supply fell 4% short of a required 100-year assured water supply. The Phoenix AMA, one among several established under the 1980 Groundwater Management Act, includes most of the Phoenix metropolitan area. Developers in this region must secure a certificate of assured water supply to proceed with their projects.

House Bill 2299 would have allowed developers who applied for this certificate between early 2021 and May 31, 2023, to request a reevaluation of their applications based on outdated groundwater models from 2006-2009. Barry Aarons, a lobbyist for the Arizona Municipal Water Users Association, warned that utilizing these outdated models could lead to excessive groundwater extraction, highlighting the inaccuracy of not adopting the updated 2024 groundwater model for planning.

Supporters of the bill, like Republican Rep. Khyl Powell, noted the increasing urgency of Arizona’s housing shortage and rising costs. However, Kolodin expressed concerns about the timing of introducing new developments, especially with impending negotiations over Colorado River water usage set for 2026. Arizona relies heavily on the Colorado River, which supplies about 35% of the state’s water.

The requisite groundwater replenishment for housing developments, primarily sourced from the Colorado River, poses additional challenges considering potential cuts to the river’s allocation. Communities within the Phoenix AMA, including major cities like Phoenix and Scottsdale, have officially opposed Griffin’s bill, raising alarms over sustainability and long-term water availability.

Kolodin suggested that groundwater regulations in Arizona need a comprehensive overhaul rather than ad hoc exceptions for specific projects. He emphasized the necessity of legislating a new model for water management to address structural issues instead of offering selective permissions. Meanwhile, Aarons noted the importance of equitable treatment for all water users, citing disparities in existing regulations.

In response to the ongoing regulatory issues, Republican leaders and the Home Builders Association of Central Arizona have initiated legal action against some of ADWR’s rules regarding assured water supply designations. This lawsuit, filed on March 10 in Maricopa County Superior Court, contests the department’s new Alternative Path to Designation of Assured Water Supply, which would potentially allow construction in moratorium areas under certain renewable water conditions. Critics, including House Speaker Steve Montenegro, labeled this initiative as a tax on water usage.