Key Points:

• Water proposal lets builders buy water from retiring farmers

• Plan could allow 1 million new homes statewide

• Rural areas feel left out, fear water shortages

Housing developers left stranded and stalled by a lack of an assured water supply are getting a lifeline under a deal cut between Republicans and Democratic Gov. Katie Hobbs. 

The proposal, known as “Ag-to-Urban,” allows homebuilders to buy water rights from farmers who retire their agricultural land if they promise to use only a certain percentage of the water to supply new developments.

The agreement was confirmed on June 18 by Sen. T.J. Shope, R-Coolidge, who said GOP lawmakers and Hobbs “think it’s the most consequential water bill that’s been passed and will get signed since the 1980 Groundwater Act.”  

The deal immediately affects only Maricopa and Pinal counties, but the Pima County Active Management Area may also fall under its guidance if a moratorium on new water certificates is put in place by state water regulators, Shope said.

If all three areas were included, more than 400,000 acres of farmland could be eligible for conversion. Shope said if half the land were converted from farmland, up to a million homes could be built while saving a huge amount of water. 

“The Ag-to-Urban program is a win-win for farmers who are ready to retire but still want to capitalize on their land and for Arizona families looking to obtain their American dream through homeownership,” Shope said in a statement. 

Still, not everyone is happy.

While big developers are celebrating a win, elected officials in rural Arizona are criticizing Hobbs for backing the proposal without tying it to new protections for groundwater in their areas. They have been pushing for a way to protect their water supplies for years, but Republicans who control the Legislature have refused to move their proposals. 

Mohave County Supervisor Travis Lingenfelter, a Republican who chairs the northwestern Arizona county’s board, called it a missed opportunity. 

“We really thought that that was the best leverage opportunity that we’ve seen since the groundwater management code was adopted,” Lingenfelter said. “We were disappointed that they let that go.”

Hobbs spokesman Christian Slater declined to comment on either the Ag-to-Urban deal or the criticism. 

Minority Democrats and Hobbs want additional areas of the state designated as active management areas so that big farms can’t move in and pump all the water out of the basins their cities, towns and small farmers rely upon. 

The Ag-to-Urban proposal was prompted by a moratorium on issuing water certificates for new developments in western and southeastern parts of metro Phoenix — including parts of Buckeye and Queen Creek — adopted by the state in June 2023. 

That moratorium was put in place by the Arizona Department of Water Resources in 2023, with backing from Hobbs, after new data showed there was not enough groundwater in those areas to meet the requirements of the landmark 1980 Groundwater Management Act.

That law requires builders to show they have an assured 100-year supply of water. 

The ban on new certificates drew howls of protests from developers and Republican lawmakers who want more development.

Shope has been working on a fix for the past two years and got Republicans who control the House and Senate to pass a version of Ag-to-Urban last year. 

But Hobbs vetoed the measure, saying that, while she supported the concept, the bill fell short. 

She wrote in her 2024 veto letter that the proposal did not ensure that water would actually be conserved and that homebuyers were not guaranteed that there was enough water for 100 years. Hobbs also said the concept should not be adopted statewide because differing supplies in each of the state’s four initial active groundwater management areas required a more nuanced approach.

Shope introduced a different version early this year but it has been stalled amid negotiations with the governor.

“My hope is that it’s completely bipartisan,” Shope told Capitol Media Services. 

He said the Senate was expected to vote on the proposal on June 19 and send it to the House. If it passes as he hopes, it could be on Hobbs’ desk by the end of the week.

Shope cited data from the Arizona Department of Housing which estimates there is currently a shortage of 270,000 housing units statewide. That, in turn, is driving up housing prices, saying the average median home sale price in Arizona has increased more than 50% in the past five years.

All that, however, still does nothing for the rural residents who are worried that large corporate farms will drain their regions of water.

Willcox Mayor Gary Hancock said he was frustrated by the failure of the governor to push for new protections for rural areas.

“We’ve got a lot of people out here in rural Arizona that need this water too,” Hancock said. “It’s hard to see the focus shift away from us.”

Lingelfelter, the Mohave County supervisor, said a coalition of counties in the northern and western part of the state have teamed up to try to break the logjam on rural groundwater. 

“Collectively, we represent almost 650,000 rural Arizonans that don’t have any water security at all,” he said. “We were really hoping that this was going to be the year that all the leverage was used, and we got something finally passed for our citizens.”