A homebuilders’ group in the Phoenix area says the state has overstepped its authority by limiting how much water can be withdrawn for new housing development.
The Department of Water Resources’ rules have caused construction to come to “a complete stop” in areas that had been primed for growth at the western and eastern ends of the state capital region, according to attorneys for the Home Builders Association of Central Arizona that sued the state agency last month in Maricopa County Superior Court.
The builders say that until recently, they could get a certificate allowing them to start construction if they showed they could draw enough water from a well, surface water or some other source to supply their development for the next 100 years. But now the state says restrictions on new construction are justified if there’s a water shortage anywhere in the Phoenix area, even an hour’s drive away from where new homes are proposed.
“Gov. [Katie] Hobbs’ deeply inaccurate and flawed claim that Arizona is running out of groundwater is having devastating effects on housing affordability in the state,” Jackson Moll, the homebuilding group’s chief executive officer, said in a statement.
The governor’s office said in an email that the builders are “trying to get a short-term profit by pumping the water out from under Arizona families and farmers.”
The city of Phoenix has set a goal to build 50,000 new homes by 2030, according to its website. A 2024 Arizona State University report found that the state as a whole has a 270,000-unit housing shortage. Besides water, the report said builders also deal with local opposition to new development and restrictions on anything besides single-family homes.
One out of every seven new homes in greater Phoenix is expected to be built by 2030 in the Buckeye area at the western edge of the region, the homebuilders group said in a 2024 study. But with the change in water policy, the group said the houses won’t be built.
The study said while builders have obtained certificates allowing them to build 80,000 homes across the Phoenix region, many of these developments may not go forward due to lack of infrastructure or financing. In some cases, as in the master-planned developments of Tartesso and Verrado in Buckeye, the locations that have approved water supplies are too far away from existing subdivisions to justify construction at this time, according to the study.
The builders’ lawsuit claims the state water agency should have solicited public input before it implemented the new policy.
In an interview, Department of Water Resources Chief Hydrologist Ryan Mitchell said the state revised how it determines groundwater availability in June 2023. Prior to that time, water supplies in the Salt River Valley that includes central Phoenix and areas to the east were evaluated separately from those in the less developed Hassayampa Valley to the west. Buckeye, the area with the most growth potential, is in the Hassayampa Valley. The state now considers the two valleys as part of a single water supply area, leading to the recent change in policy.
“They aren’t separate, it’s all one contiguous groundwater basin,” Mitchell said. “A molecule of water can travel all the way [from east to west] and never [see] daylight. There were some people who were unhappy with this model, but … experts said it was the most comprehensive, robust model ever to come out of the department.”
The homebuilders’ lawsuit also alleges the state’s water policy is arbitrary because it only applies to land subdivided for residential development. Farms, large industries and apartment complexes aren’t subject to the same restrictions, according to the suit.
