Arizona crackdown on groundwater use could crimp suburban growth

If a new state decision slamming the brakes on new homes in sprawling Buckeye is duplicated elsewhere, it could flip traditional growth patterns across a wide swath of Arizona.

It would probably push new homebuilding away from farther-flung suburban areas — potentially such as SaddleBrooke on Tucson’s northwest side and areas of southeast-side Pima County that, like Buckeye west of Phoenix, rely exclusively on groundwater.

The growth would instead be forced into existing cities and closer-in suburbs that have more robust water supplies.

Such a change would have upsides — moving growth closer to more available water supplies — and downsides — pushing growth to areas more expensive to build in, forcing up home prices.

Made public last week, the Arizona Department of Water Resources’ decision effectively limited housing growth in what had been considered prime West Valley real estate in the Phoenix metro area, in Buckeye north of Interstate 10.

Using a computer model, the department concluded the area’s underlying aquifer lacks enough water to meet requirements of Arizona’s 1980 Groundwater Management Act. That law requires that new subdivisions built in the state’s three most populous counties — Maricopa, Pima and Pinal — prove they have enough water to last for 100 years.

More important in the long run, ADWR Director Thomas Buschatzke said last week that he believes similar decisions could be forthcoming in the next few years crimping homebuilding in other urban areas, including suburban Pima County outside Tucson, due to inadequate groundwater supplies.

The department had already issued a similar finding in 2019 for rapidly growing Pinal County, affecting mainly areas lying outside cities such as Casa Grande and Maricopa.

Shifting growth to ‘where the water is’

If Buschatzke’s forecast pans out, that would put more new growth into Tucson, Phoenix, Scottsdale and smaller incorporated communities, experts say. They have a wider range of water supplies than places like Buckeye, lying 37 miles west of Phoenix and about 150 miles northwest of Tucson.

Tucson and Phoenix both have large Central Arizona Project supplies of Colorado River water that Buckeye lacks, for instance, although those supplies aren’t now seen as reliable as before due to the river’s declining flows. The major cities also have a far greater ability and infrastructure capacity, still unrealized, to treat wastewater for drinking.

Such a shift in where growth happens would please many water planners, academics and activists who have long said that development needs to happen “where the water is.”

Cities like Phoenix, Tucson, Oro Valley, Chandler and Mesa — unlike Buckeye — are already designated by ADWR as having an assured, 100-year water supply. That means new subdivisions can be built inside them without getting separate approvals from ADWR, as long as they meet other local and state development requirements.

From an environmental standpoint, moving growth inward would also be positive by putting curbs on urban sprawl, with its accompanying pressure on raw desert land and increased commuting distances from suburban homes to workplaces in or near cities.

In short, those who are happy with the state’s decision say it will help make development more sustainable.

“What is going to have to happen is if they want to grow, they have to find alternative water supplies, which will be far more expensive,” said Kathleen Ferris, a former ADWR director and chief counsel who has crusaded for state policies to limit growth in areas dependent on the state’s rapidly diminishing groundwater supplies. “These will be choices for developers and municipal water providers to make. They’re going to depend on what homeowners and businesses are willing to spend.

“People would like their own lot. They’d like to be away from everything; I just don’t think that’s how growth will occur when you have limited water supplies and you can’t grow on groundwater,” Ferris said.

Whatever change happens will occur slowly, said retired Arizona State University history professor Paul Hirt, who has studied Arizona water management and environmental history in general.

“When the state begins vigorously enforcing the Groundwater Management Act as they should have been doing for the last two decades but haven’t done, it is going to affect where and how we will grow and how fast we will grow. But I think the changes will be more or less incremental, as most change is,” he said.

First and foremost, the new state decision “is evidence that the 1980 Groundwater Management Act and the various policies and procedures that were implemented by ADWR” are working, said Dave White, vice president, director and professor at ASU’s Global Institute of Sustainability & Innovation. “This is exactly the goal of the groundwater act, to insure there is a legal and physically available supply of groundwater to support planned development in the actively managed areas in the state.”

Driving up home costs, rents

But to others, the problem with such a change is that building in urban cores is typically much more expensive than urban fringe development, not least because land in inner cities typically costs a lot more than land in the exurbs.

That will only aggravate an already severe problem of increasingly unaffordable housing in the Tucson and Phoenix areas, say homebuilders and some economists.

“In the short run, if homebuilding was restricted, it would likely drive up home prices and rents. That would pretty quickly translate into less migration into the area,” said George Hammond, director and research professor for the University of Arizona’s Eller School of Management. “As soon as it became well known there were water issues, migration would likely slow.”

At the same time, “people would likely look for alternatives, whatever they can, to keep development going,” Hammond said. “Arizona is viewed as a really attractive place to live, partly due to our climate and partly due to our attractive regulatory climate. We draw a lot of Californians because of our lower cost of living.”

But if water-based restrictions on homebuilding become a reality, it’s possible Arizona could at least somewhat follow the footsteps of California, where many people feel they can no longer live because homes and apartments are so pricey, he said.

“I can’t speculate on the odds of that happening. If water is not available or becomes significantly more expensive, that factors into location decisions of ordinary people and businesses. It’s the same for housing costs,” Hammond said.

Not only is it more cost-effective for many people to live farther from cities, “many people want to live out there, and why shouldn’t they?” said Spencer Kamps, vice president and lobbyist for the Phoenix-based Home Builders of Central Arizona.

“Homebuilding is good economic development. We cannot solve our housing affordability problem just building homes in areas pf designated providers,” meaning cities with assured water supply status, he said.

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“Just to give you an example. Chandler is 95% built out. Land costs are higher and costs for services are higher in most of those older communities. Why are more permits pulled in Queen Creek and Buckeye than in Phoenix? It’s the markets people want — it’s cost effective to build in those communities.”

Won’t stop other development

The state’s 100-year water supply requirement only covers new homes sold to homebuyers, noted Kamps and David Godlewski, president of the Southern Arizona Home Builders Association.

Rental homes, apartment buildings, and commercial and industrial developments can keep going up even in areas without assured water supplies, meaning that stopping homebuilding in a place like Buckeye won’t stop all development, they said.

“Why aren’t apartments at the same standard? And commercial. We’ve got all these manufacturing companies, and what are their water uses? Are they recycling? Are they replenishing the aquifer? It seems that only homebuilders are being punished,” Godlewski said.

“We need housing of all types and all price points for all kinds of consumers,” he added. “Infill development and building in an urban environment is important. But not everyone wants to live in the same kind of community. People want to live in an urban environment, they want to live in suburban communities. We have to figure out water planning and water management to be able to accommodate both.”

But while rising home costs are clearly a problem, not just here but everywhere in the U.S., what really matters is not whether the construction industry will take a hit in the next decade, Hirt countered.

“People should be worried about housing developments where people are investing their savings, in whether they are going to be sustainable in 30 or 50 or 100 years. In Europe, cities are thousands of years old. We should be asking ourselves what kind of civilization we want for 1,000 years from now. If we don’t get serious about limiting growth based on existing water supplies, we will be creating gross civilizations that will have to be abandoned in future generations.”

Many homes already approved for construction

Whatever happens, Buckeye and Pinal County won’t see homebuilding halt in the near future. Under the state groundwater law, both areas have already racked up state approvals for plenty of new homes, enough to supply demand at its current pace for close to a decade. That’s when the lack of new home lots could become a problem for builders and buyers alike.

Buckeye, for instance, has 35 subdivisions already in various stages of construction and planning, totaling 21,000 homes, that already received state certificates of assured water supplies. In most recent years, Buckeye has issued 2,000 to 2,200 single-family home permits a year. But no certificates of assured supply have been issued for a year and a half in the northern Buckeye area where ADWR’s latest computer model found inadequate groundwater supplies, said the homebuilders’ Kamps.

In Pinal County, close to 100,000 unbuilt home lots lie in areas where the state has deemed there is an assured water supply, with more than 25,000 such lots existing in the Casa Grande area, said Steve Miller, a Pinal County supervisor.

The state stopped issuing assured supply certificates close to seven years ago, “but you can see the building is still going on. It hasn’t really slowed anything down here. It doesn’t have an immediate effect. But if you start looking at five, six, seven years down the road, when developers are trying to entitle more land into sellable lots, there could be an effect” if the water issue isn’t resolved, said Miller, a developer and homebuilder for 40 years himself.

For much of the first half of 2022, until mortgage interest rates climbed sharply, new home permits in Pinal County averaged around 600 a month, records show. That figure was close to home permit levels there back in 2006, at the end of the real estate boom of that time, although well below the peak levels of a few years earlier, Hammond said. The building in Pinal, typically one of Arizona’s fastest-growing counties, was similar last year “to what we’re seeing around the rest of the state.”

But most or virtually all the home building in Pinal is occurring inside cities that have their own designations from ADWR as having assured supplies. Outside the designated areas — in normally highly marketable, unincorporated suburban areas — “we are out of lots in Pinal,” Kamps said.

‘Our own survival is at stake’

Overall, homebuilding in areas outside cities that use groundwater is a sustainable practice, Kamps said, because the developers and later residents of such homes are required to pay a regional water district money to replenish the aquifer with CAP water, to compensate for their subdivisions’ pumping.

Plus, new home development also often replaces farmland, which uses far more water than housing, he said. And home dwellers create lots of sewage effluent, which can be an additional water supply, he said.

“Manufacturing, industrial, commercial, rental properties don’t replenish what they pump,” Kamps said. “To stop a sustainable practice that protects the groundwater tables, while allowing unsustainable land uses to continue, only assures the groundwater will decline over time.”

But many critics of existing water policies have pointed out that the replenishment of aquifers through artificial groundwater recharge basins usually happens miles away from the site of the particular subdivisions’ pumping.

Also, the critics say there’s no guarantee the CAP supplies will always be available to replenish aquifers as Colorado River flows decline due to drought and climate change.

Those were just some of many problems identified with the state’s management of groundwater in a report that water attorney Ferris co-authored in 2021 for ASU’s Kyl Center for Water Policy.

That study took aim precisely at the kind of development that ADWR now appears to be limiting if not stopping — large-scale subdivisions that rely on groundwater.

Titled “The Myth of Safe Yield,” the study concluded “there is no real prospect” of any of the state’s water management areas in Southern and Central Arizona of ever sustaining a long-term balance between groundwater pumping and recharge.

In an early warning for the Buckeye area, the Kyl Center study said its review of ADWR records showed the agency had already allocated almost two-thirds of 18.7 million acre-feet of water stored in the groundwater basin containing Buckeye to master-planned communities, and that the aquifer’s ability to serve them could be uncertain.

Making development on desert land at that scale even more tenuous is the possibility the amount of groundwater in that area could be considerably less than currently estimated by the state, Ferris wrote.

“ADWR’s models project groundwater availability for 100 years, but the agency’s modeling capabilities are constantly changing, and models are imperfect at predicting the future. It is quite likely that not all of the groundwater in storage can be accessed or used due to impermeable layers, poor quality, or ongoing pumping” by other users, the study said.

“If Arizona is to prosper into the next century,” the study said, “our focus needs to turn to what is essential for our future: The preservation of our groundwater and our increasingly fragile aquifers. Our own survival is at stake.”