A state water advisory council wants Gov. Katie Hobbs to push for new rules that would allow some new growth in the groundwater-pinched Phoenix area with new homes pumping less groundwater than they can now.
The Governor’s Water Policy Council on Friday approved that recommendation and a second one that would put new “build-to-rent” housing developments in urban areas under the same state requirements for having an assured, 100-year water supply that now falls solely on for-sale housing subdivisions.
The first recommendation would require the Arizona Department of Water Resources to adopt new regulations. They would create a new system that would allow private water companies and other, non-municipal water providers to gain formal designations of having an assured water supply.
The system would more easily allow the water companies to introduce renewable surface water and treated wastewater supplies to their customers so they don’t rely only on native, imperiled groundwater. A key provision would require that water providers set aside 30% of whatever new supplies they acquire to reduce their pumping of groundwater by that amount.
That would allow them to serve a series of new developments without each new project to prove separately that it has an assured supply. This proposal is seen as an immediate response to a June order from ADWR to stop approving new subdivisions in the Phoenix area that would use groundwater.
But it won’t provide immediate relief to the numerous large-scale developments in that area because all renewable supplies, except for effluent, are years and, in some cases, many years away from being available for delivery to customers. And ADWR officials told the council on Friday that it will take about six to nine months for them to draft formal rules after holding more meetings with various interest groups.
This new requirement, while sweeping, would currently only affect new growth in the Phoenix area and in Pinal County, not the Tucson area or the other two urban areas of Arizona — Prescott and Santa Cruz counties — that have state-run water management requirements.
That’s because the rapidly growing Phoenix and Pinal areas are the only ones for which ADWR has completed computer model analyses showing that they’ll likely have more water demand than supply over the next century. In both cases, no new development is being allowed that would be served by the regions’ imperiled aquifers.
The second recommendation would require the Legislature to amend the landmark 1980 Groundwater Management Act to require build-to-rent subdivisions to prove an assured supply. This change would affect all five state-run water management areas, including the Tucson area.
Build-to-rent is a fast-growing segment of Arizona’s housing industry. About 11,000 such housing units exist statewide today, with another 15,000 under development, said Stuart Goodman, legislative counsel for the National Rental Home Council. The build-to-rent market is growing because of market demand for more affordable housing and for homes that don’t require long-term commitments such as mortgages, he said.
Both measures gained unanimous support at Friday’s council meeting for moving them forward for further consideration by ADWR and the Legislature.
The proposed rules governing assured supply designations will get a second round of scrutiny over the coming months as ADWR officials meet with various parties with direct interests in the proposal.
That proposal for a new system of assured water supply designations also still faces strong, substantive opposition from the Phoenix-area Home Builders Association of Central Arizona. Partly, that’s because they view some of the requirements in that proposal as too onerous. Partly, it’s because the proposal won’t provide quick enough relief in their eyes from the new state ban on assured water supply approvals for new homes based on groundwater.
The home builders group does support moving this proposal forward so it can get more detailed review by other interest groups and other “stakeholders” who will work with ADWR to iron out details before new rules are approved, said Rob Anderson, an attorney representing the builders.
Some of the major developers with projects at stake should be involved in that process, he said.
Without some relief from ADWR’s new clampdown on pumped groundwater for growth, “Stakeholders who spent millions and in some cases billions on investments will get wiped out,” said Anderson, referring to developers who have built infrastructure such as roads and bridges and bought land for large master-planned developments now on hold.
“With all that said, we appreciate the fact that the department will work with us on these concerns,” Anderson said.
Numerous other water council members, representing a wide range of interests, gave the proposal high praise Friday. They saw it as creative and innovative, providing, in ADWR’s words, a workable, alternative pathway for water providers to get designations.
“There’s a lot of questions that still need to be addressed ... but I believe it is very positive that this group has been working trying to develop a path forward,” said Warren Tenney, director of the Phoenix-based Arizona Municipal Water Users Association.
While he supports continued discussion of this proposal with other interests, Tenney said the state ultimately needs to continue showing it’s protecting groundwater, making sure it develops renewable supplies and “being as proactive as we can.
“There are many many generations after us that want to be able to enjoy Arizona. That’s what we can make certain of by working on this,” he said.
State Sen. Priya Sundareshan of Tucson called this “a really creative proposal,” and said it’s important to recognize that it represents a path to assured water supply designations and growth during an era of unmet groundwater demand.
“I will follow this closely to make sure it doesn’t get significantly weakened,” Sundareshan said. “If I had my druthers, I’d go as high as 50% (reduction of pumped groundwater). But this is a compromise process and it’s important we stay together with a compromise process.”
ADWR Director Tom Buschatzke told the council, “This is one of the strongest by consensus proposals we have before us. We have successfully achieved consensus on this recommendation.”
As ADWR sees it, this proposal carries out several key principles the department says it wants to accomplish in improving assured water supply requirements.
The proposals have been discussed intensively by the council’s Assured Water Supply Committee for about four months, starting shortly after ADWR laid down the gantlet for new developments by forbidding new projects on groundwater in the Phoenix area.
The department said the ban on new groundwater-based growth is needed because its computer model found the area will have a 4% shortfall in groundwater compared to what’s needed to serve new development expected in that area through 2100.
Some of ADWR’s key principles for changing its assured water supply program are:
Proposals should enable future growth without reliance on “mined” groundwater that pumped in excess of what replenishes the aquifer through rainfall and other means.
Proposals may not reduce the 100-year requirement or increase the depth to which groundwater may be pumped. That’s 1,000 feet in the Phoenix and Tucson areas and 1,100 feet in Pinal County.
Proposals must ensure there is water before growth.
The new proposal would ease existing rules that make it very difficult if not impossible for water companies and other providers to introduce renewable supplies such as effluent or surface water into their systems if those supplies would be “co-mingled” with groundwater.
It would also make it easier for new development based on renewable supplies even if the arrival of those supplies is years away. A water provider would have to show financial capability of acquiring the renewable supply and have a plan to bring it in and all permits needed to build it.
The water provider would get a groundwater “allowance” for how much it could use over 100 years.
Once all requirements are met to bring in a new supply, a provider could dip into its groundwater allowance to meet new growth needs until the renewable supply arrives.
Also, the proposed rules would “grandfather” all groundwater pumping that a water provider did in 2021, allowing it to continue.
The exception would be when a provider introduces a renewable supply.
Then, 70% of the renewable supply could support new development. The remaining 30% would have to replace some of the provider’s groundwater use.
As a hypothetical example, ADWR cited what would happen if a water company serves 20,000 acre-feet a year of groundwater but then adds 8,000 acre-feet a year of effluent and surface water. Then, it could use 5,600 acre-feet for new growth but would have to replace 2,400 of groundwater use.
Over 100 years that would save the area’s aquifer about 240,000 acre-feet, ADWR said.
But the benefit to the aquifer would be greater because some of the groundwater that’s still being pumped would have to be replenished by other renewable supplies and recharged into the aquifer, ADWR said. Savings to the aquifer could be boosted further because the new rules would allow water providers to add still more renewable supplies faster than what’s allowed under current rules, department officials said.
Doug Dunham, an official with the private water company Epcor, thanked ADWR for the work that went into this proposal, adding that other members of the Assured Water Supply Committee spent “many, many hours trying to put something together. A whole lot of work went on behind the scenes.”
But he expressed reservations about some specifics, saying, for one, the 30% requirement for renewable supplies to replace groundwater is “way too high. There’s just no way that a private utility is going to be able to justify those kinds of cuts.”
As for “purists” who insist on higher percentage groundwater reductions, “this is a voluntary program. Nobody has to get a designation. If it’s too onerous, nobody will,” he said.
“There’s also pressure from the other side: ‘Let’s make it a 50-year program, allowing the (aquifer to fall) 2,000 feet,’” he said.
After the meeting, water council member and former ADWR Director Kathleen Ferris, a strong supporter of this proposal, agreed with the department that it needs to be formally drafted through a rulemaking process.
“It’s like writing a piece of legislation. It’s not something that you can just talk about in a meting and move on. It needs really thorough vetting and analysis of all the moving parts,” said Ferris, currently a researcher at Arizona State University’s Kyl Center for Water Policy.
“If you make a groundwater allotment too small, people are worried no one will join. If you make it too big, you defeat the purpose of getting people off groundwater. It’s a fine balance.”
