Arizona Pauses Home Development in some Parts of Phoenix Area

Article originally posted on HERE on June 5, 2023

Arizona will tap the brakes on new development in some parts of Greater Phoenix, Gov. Katie Hobbs announced on Thursday. 

The move won’t halt new construction in the state’s largest metro area, but it will certainly slow some forms of growth and could push developers to change the way they do business as usual, especially in some of the booming suburbs far from Phoenix’s urban center. 

“This is a down payment on my commitment to building a sustainable water future,” Hobbs said at a news conference Thursday morning. 

The announcement came after a water use model run by the Arizona Department of Water Resources found that, over the next 100 years, groundwater use is expected to outstrip supply by 4% in the Phoenix Active Management Area, one of six Active Management Areas throughout the state where use of subsurface water supplies is restricted by state law. 

“The results of this study show that we need to take action once again… we have to close this gap and find efficiencies for our water use, manage our aquifers wisely and increase our utilization of renewable supplies,” Hobbs said.  

“It’s almost like you can see the yellow light flashing in the offing,” said Sarah Porter, director of the Kyl Center for Water Policy at Arizona State University. “It’s some kind of signal – and it doesn’t mean the development will stop, but it does throw out impediments to development.” 

Following the findings of the study, ADWR will stop issuing new Certificates of Assured Water Supply to developers seeking to build new houses that would use groundwater as a water source. Those certificates, known as CAWS, are required for putting up new residential buildings in areas that aren’t served by a city or utility that’s a designated water provider. 

“This latest version of the Phoenix AMA model is now the gold standard for making assured water supply determinations in the Phoenix Active Management Area,” said Tom Buschatzke, director of ADWR. 

The move won’t affect developments in the Phoenix AMA that have already obtained a CAWS certificate – Hobbs said there are about 80,000 lots already permitted through the system. It also won’t directly impact industrial development, which isn’t covered by the CAWS program, or residential development in cities that are designated as assured water suppliers through ADWR. 

And most of the major municipalities in the Phoenix area have that designation: Phoenix, Mesa, Glendale, Tempe, Avondale and others.  

But, critically, outlying suburbs including Buckeye, to the west, and Queen Creek, to the east, are not designated water suppliers. Those two cities, according to Porter and Spencer Kamps, director of legislative affairs for the lobbying group Homebuilders Association of Central Arizona, are the major sites impacted by the latest announcement.  

The two cities have grown faster than the Phoenix metro area as a whole in recent years, and also have lower prices for new homes than cities closer to the downtown core – something Kamps pointed out. 

“They’re some of the fastest growing areas,” Kamps said, adding: “Those are, by and large, the most affordable markets for new home sales. So there’s an impact as it relates to affordability.” 

Part of Buckeye had already seen a pause on CAWS certificates earlier this year when an ADWR study found a long-term shortfall in the Hassayampa Subbasin, which is part of the Phoenix AMA. But Kamps said that subbasin mainly corresponds to the northern part of Buckeye, so the southern part of the area is newly impacted by this week’s announcement. 

In 2021, ADWR issued its first finding of a long-term groundwater shortfall, in the Pinal AMA, stopping the approval of new CAWS certificates there. That’s been followed by the Hassayampa Subbasin announcement earlier this year and, this week, the shortfall finding for the wider Phoenix AMA. 

Porter said that, as ADWR carries out studies throughout the state’s other Active Management Areas, they’re likely to find shortages in those regions as well. The other four AMAs are Prescott, Tucson, Santa Cruz and Douglas. 

The CAWS system is part of Arizona’s landmark 1980 Groundwater Management Act and was mainly intended to protect homebuyers from the possibility of buying a house that could effectively run out of water – something that’s happened in areas not covered by the GMA like the Rio Verde community north of Scottsdale. 

“The program provides the level of water supply certainty to homeowners that is unmatched anywhere in the United States,” Buschatzke said on Thursday. 

But Kamps argued that acting to stop home development misses the mark from a conservation perspective. Residential development, he noted, uses less water than farmland and many industrial developments – but those two uses won’t be impeded by halting new CAWS permits. 

“We have articulated concerns that allowing the mining of groundwater in these basins to continue based on various land uses [i.e. industrial and agriculture], does not in fact help groundwater tables when a sustainable practice, such as for-sale housing, is discontinued,” he said. 

Porter said that one upshot of the announcement could be to incentivize higher-density development. Apartment buildings, after all, use less water per person than single-family homes, and more urbanized municipalities like the city of Phoenix have more room for growth due to their status as designated water providers. 

“My take is that this new model potentially could be a factor in moving the Phoenix area to denser growth. Not necessarily slower, but denser,” she said. 

But there’s also the option for developers to go out and find water sources aside from groundwater to feed new homes. The town of Queen Creek, Kamps noted, has already made deals with neighboring communities to purchase Colorado River water rights that could serve as a water source for new developments that can no longer get a CAWS permit through ADWR.