Home Builders Take Legal Action Over Water Supply Regulations Stalling West Valley Development

A coalition of home builders has initiated legal action against the Arizona Department of Water Resources (ADWR), asserting that new assured water supply regulations are unlawful. These regulations have reportedly halted several residential developments and inflicted financial strain on builders.

The Goldwater Institute filed the lawsuit on January 22 in the Maricopa County Superior Court. Representing the Home Builders Association of Central Arizona, the complaint targets ADWR and its Director, Thomas Buschatzke. It challenges two specific water supply rules believed to have been enacted without adequate public input and in conflict with existing state laws.

Jackson Moll, CEO of the Home Builders Association, criticized Democratic Governor Katie Hobbs, whose administration oversees ADWR. He described Hobbs’ claims of a groundwater shortage as “deeply inaccurate and flawed,” arguing they have had detrimental impacts on housing affordability across Arizona.

Moll declared that the lawsuit aims to uphold the state constitution’s principles while ensuring the responsible management of Arizona’s natural resources and promoting economic growth.

In Arizona’s designated groundwater Active Management Areas (AMAs), builders must secure a certificate of 100-year assured water supply before construction. This includes commitments from water providers, ensuring that the water meets quality and availability standards. The assured water supply rule is rooted in the 1980 Arizona Groundwater Code, which was designed to manage the state’s overdrawn groundwater resources.

In June 2023, Hobbs released a revised hydrological assessment for the Phoenix AMA, projecting a 4% shortfall in its water supply over the next century. This revelation led to the suspension of various home building projects in areas that rely solely on groundwater, despite a significant housing shortage in the region.

Many of these locations lack established water providers, leaving developers reliant on obtaining assured water supply certificates on their own. In November, ADWR reaffirmed its stance, stating no additional certificates would be issued based on updated data.

In the lawsuit, attorney Jonathan Riches from the Goldwater Institute specifically contests two recently implemented regulations concerning AMA-wide “unmet demand” and water depth. Riches argues these rules were improperly enacted, lacking due public consultation, and diverging from established state law.

He emphasized that decisions regarding critical issues like affordable housing and resource management should stem from a democratic process rather than executive declarations. Meanwhile, a spokesperson for Hobbs described the lawsuit as a “shameless and partisan attack,” alleging that it serves the interests of profit-driven developers at the expense of Arizona’s families and farmers.

Riches contends that the new criteria for determining water availability differ significantly from traditional methods, which evaluated site-specific conditions. The lawsuit alleges that the ADWR fabricated the term “unmet demand,” which does not appear in state laws.

Utilizing the new rules, ADWR deemed that the “2024 model update does not support the issuance of Assured Water Supply determinations based on groundwater.” Consequently, applications from subdivision developers represented by the Goldwater Institute are presently at a standstill.

Riches argues that ADWR’s novel assessment method unjustly shifts the criteria for issuing water supply certificates, causing significant delays and hindering new residential projects. Such actions have reportedly inflicted “enormous harm” on developers who have incurred substantial expenses while relying on their legal rights to these certificates. ADWR maintains that its approach to determining assured water supply applications is sound and legally compliant.