Holey Water

Welcome back to the Water Agenda, folks.

Today we’ll get you up to date on the Colorado River wars and what this year’s “snow drought” means for municipal water providers.

We’ll also conclude our deep dive into the water-vs-housing crisis by explaining how a groundwater policy loophole would upend lawmakers’ proposed solutions for the housing crisis and take us further into a future of subscription housing.

Arizona requires new housing subdivisions in Active Management Areas, like the Phoenix AMA, to have certificates of "assured water" for 100 years — but development investors exploit a technical loophole to avoid these certificate requirements by keeping all their homes on a single lot and renting them instead of selling them — a trend called “build-to-rent” (BTR).

Very clever.

This sidesteps protections lawmakers intended 40 years ago, when BTR was rare. Whether bought or rented, new homes increase groundwater demand and undermine existing groundwater assurances.

Arizona cities with the biggest BTR inventory increases:

After the Arizona Department of Water Resources (ADWR) halted assured water certificates in Pinal AMA, developers pivoted to BTR. The same story happened in Phoenix in 2023, making it the nation’s top market for investor-funded rentals.

This drives up home prices and allows unregulated groundwater use.

The Starter Homes Act returns in 2025 after Gov. Katie Hobbs’ veto last year following protest from local governments.

The League of Arizona Cities and Towns is boosting an alternative proposal, bills SB1698 and HB2834, sponsored by Sen. Vince Leach (R) and a team of House Democrats:

The Starter Homes Act’s twin bills also have bipartisan sponsorship this year:

Both bills prohibit cities from rejecting high-density housing projects, but the Starter Homes Act nearly triples the density.

Local governments argue that SB1698/HB2834 at least mandates 10% of homes be low-income "starter homes”.

But they don’t explain how their bills allow cities to choose between two definitions of "starter home":

Neither side in this fight is actually guaranteeing affordable for-sale homes.

And thanks to the BTR groundwater loophole, both proposals would encourage high-density rental development — leading to higher home prices and greater water insecurity.

In 2023, Sen. Justine Wadsack’s Senate Bill 1432 would have closed the BTR groundwater loophole, but she considered it dead on arrival in the House and gave her blessing to Rep. Alex Kolodin to repurpose the bill for a different water issue.

Kolodin, however, agrees BTR is a problem.

This year, Sen. Priya Sundareshan introduced SB1599 to close the groundwater loophole for BTR homes, apartments, and commercial/industrial users. Rep. Selina Bliss proposed HB2697, closing the loophole only for BTR homes in the five original AMAs.

Neither bill got a hearing this legislative session.

And neither did Arizona Cities and Towns’ SB1698/HB2834.

The Starter Homes Act bills did pass committee but a floor vote is being held pending negotiations and possible amendments.1

Gov. Hobbs said she’ll join stakeholder negotiations later this year, seeking compromise on Starter Homes policies.

Hobbs also wants to see the BTR problem addressed — it was one of the issues she tasked to her Water Policy Council.

The Starter Homes negotiations would seem a prime opportunity to fix that pesky loophole in our groundwater regulations, for the benefit of our groundwater supplies and our home prices.

The seven Colorado River basin states are reaching for their water pistols in anticipation of a major showdown. Arizona’s House Bill 2103, now on its way to the Senate, will equip the Department of Water Resources with $1 million for potential litigation with other states over cutbacks to River water allotments. Rep. Chris Mathis wanted to add another $2 million to the budget but his amendment didn’t pass the vote.

Colorado says they have a “long-standing litigation fund” ready for any disputes, and the River’s Native American tribes have signaled they’d jump into the fray as well.

U.S. Rep. Greg Stanton is trying to educate his fellow Congress members about the urgency of the Colorado River shortages and calling for the Upper Basin states to agree to cutbacks.

Shannon Mullane from the Colorado Sun tells her state’s side of the story.

But all the states agree that litigation should be avoided, as a lawsuit would go to the U.S. Supreme Court and possibly lead to a federal office having a say in negotiations — which could be worse for everyone.

Meanwhile, in Utah, officials are considering a sneak attack — a proposed pipeline would divert water from the Green River, a Colorado River tributary which supplies 40% of Lake Powell’s inflows.

ASU water expert Sarah Porter chats with Arizona PBS about Trump’s replacement of the U.S. Commissioner to the Upper Colorado River Commission and Trump’s misguided decision to “help” the Los Angeles wildfires by opening two reservoirs to release water “that would never reach L.A. and help it.”

And if you’re doing graduate or undergrad research on Colorado River issues, submit your work to the Central Arizona Project’s Award for Water Research for a chance to win $3,500. Deadline, June 1.

Last month, a team of lab coats published findings that our drought in the Southwest is part of a trend of increasingly frequent “megadroughts”.

And this La Niña winter has been exceptionally dry — on track to break records and qualifying half of Arizona for “extreme drought” conditions.

The result? They’re calling it a “snow drought”. And less snow melt means less water flowing to the Salt River Project’s reservoirs.

SRP says not to worry. The previous years’ heavy rains have the reservoirs at 70% capacity — above average. But they’re still working to improve operational efficiency with new hydro tech.

The utility also just got preliminary approval to build a new lake that would produce more energy than any of their existing turbine systems.

Speaking of lakes — have you ever marveled at the deep blue color of Sahuarita Lake? The city adds blue dye a few times a year, which helps control algae growth.

Up in Tucson, officials are worried that Trump will cut $283.9 million in unspent federal awards, including the money for their much-needed wastewater purifying system.

And our neighbors down in Sonora just announced a 30-year $800 million investment plan to improve their water systems as surface water and groundwater levels decline.

Science communicator Peter Gleik wrote the 2023 book “The Three Ages of Water” about water’s “prehistoric past, imperiled present, and hope for the future.” UofA’s Water Resources Research Center has invited Gleik to give a webinar presentation on March 4. You can register to attend here.