PHOENIX — The Arizona Legislature’s Republican leadership and a homebuilders group are suing the state water department over a groundwater rule for developers.
The Department of Water Resources regulation permits developers to build where groundwater is the only water source – areas that are otherwise under a building moratorium instituted by Gov. Katie Hobbs.
“We're really again allowing homebuilding to go forward, which is important, but we're doing it in a responsible way,” Director Tom Buschatzke told ABC15 on Tuesday.
Under the Alternative Path to Designation of Assured Water Supply rules, developers in those areas must provide additional water to offset their groundwater usage.
“Without this program, homebuilders have to go out and get 100% renewable water supplies,” Buschatzke said. “We're only asking them to get 25% renewable water supplies.”
House Speaker Steve Montenegro calls the regulation “a 33.3% groundwater tax,” saying it threatens housing affordability.
“This is government overreach at its worst,” he said in a statement Monday. “The people of Arizona elected us to defend their interests, not allow unelected bureaucrats to impose illegal taxes that make the American Dream of homeownership even more out of reach.”
Buschatzke said the regulation is not a tax, saying it’s “an offset of a groundwater allowance that we're letting the homebuilders use.”
What is Arizona's assured water supply law?
State law requires homebuilders to prove the property has an assured water supply – that is, enough water to last 100 years.
Buschatzke said the Alternative Path to Designation of Assured Water Supply rules give builders the “opportunity to build while still maintaining the consumer protection that is required under the law that's existed for over four decades.”
Arizona in 2023 paused development in areas of metro Phoenix where groundwater is the only water source after a Department of Water Resources study showed groundwater in metro Phoenix will be 4% short of demand over the next 100 years under current conditions.
House Majority Leader Michael Carbone in a statement said that the moratorium is illegal and makes undevelopable hundreds of thousands of acres that could otherwise alleviate Arizona’s housing crisis.
“These illegal actions aren’t about water security; they’re about government control,” he said, saying he welcomed the lawsuit.
Homebuilders group joins lawsuit
Montenegro is suing the state water department in a joint suit with Arizona Senate President Warren Petersen and the Home Builders Association of Central Arizona.
"The legislature and HBACA want to weaken water protections for homeowners and allow corporate developers to suck water out from under them,” Hobbs’ office said in a statement. “Putting short-term corporate profits above reliable water for Arizona working families is unacceptable.”
The Governor’s Office called the lawsuit “a shameless political stunt.”
"The Governor won’t hesitate to defend Arizona homeowners from the chaos of these politically driven attacks on our water security," her office said.
Andrew Gould, an attorney representing the homebuilders group, told ABC15 obtaining that extra water will be expensive for developers – and a cost that will be passed on to buyers.
“People can't afford homes and so now to go out and find this extra water – essentially this water tax – the cost of homes is going to go up even higher,” he said.
The lawsuit also alleges the Department of Water Resources sidestepped the proper rule-making process when creating the regulation.
"You can't just unilaterally issue a rule to get your policy in place. You have to follow the law,” Gould said, adding that you have to go to the Legislature to change the law.
It’s an allegation Buschatzke said is not true.
“We jumped through every hoop that we had to jump through,” he said. “We dotted every I and crossed every T in that process.”
Buschatzke said he's worried about Arizona’s uncertain water future.
“I will continue to protect the homeowners that are here and the homeowners that are going to come here and make sure that they have the same water security that the law and our history has shown in our state,” he said.
