San Tan Valley, AZ – Water restrictions are reshaping where homes can be built across central Arizona. Spencer Kamps, Vice President of Legislative Affairs at the Home Builders Association of Central Arizona (HBACA), delivered that message to the newly incorporated San Tan Valley council on December 17, 2025. He explained how state groundwater restrictions have halted residential development outside designated water providers—and why that could increase development pressure in communities like San Tan Valley that have secured water supplies.
Key Points
- Groundwater models for the Pinal AMA (2019) and Phoenix AMA (2023) found insufficient 100-year supply, effectively ending new Certificate of Assured Water Supply approvals
- New for-sale housing outside designated providers has been largely halted
- Limiting where homes can be built has increased land prices and housing costs, Kamps said
- Outside designated providers, for-sale subdivisions must demonstrate 100-year water supply and replenish groundwater; rentals, commercial, and industrial uses do not
- The Ag-to-Urban program allows conversion of farmland to housing but limits density to roughly four units per acre
- According to Kamps’ presentation, median new home prices exceed $500,000, requiring about $120,000 annual income to qualify
The presentation was informational only. Council took no action.
Who Represents the Builders
HBACA lobbies state, county, and local governments on behalf of residential builders. The trade association represents over 100 builder members and nearly 600 total members across Maricopa, Pinal, and Yavapai counties.
The organization represents for-sale housing. Kamps said they have “a little bit of BTR”—build-to-rent—among their members, but described HBACA as a “for-sale housing advocacy group” with no commercial or industrial members. This distinction matters for water policy because different land uses face different regulatory requirements under Arizona law.
Three of the association’s six staff members are registered lobbyists. According to its website, HBACA works to “eliminate overly restrictive and costly building laws and regulations that drive up the cost of housing.”
Kamps acknowledged his role clearly. “We are the voice of the home building industry,” he said.
EPCOR as a Designated Provider
EPCOR operates in the San Tan Valley service area as a designated provider. Kamps explained that a designated provider is “a town or a city or private utility that has secured 100 years worth of water, sends that to the Department of Water Resources, they deem it so, and you are now a designated provider.” According to EPCOR’s December 3 presentation to council, its San Tan system holds designations through 2028 in the Phoenix AMA and through 2038 in the Pinal AMA.
For more details on water providers serving San Tan Valley, EPCOR and Queen Creek presented to council on December 3.
The Connection Between Water and Housing
Arizona requires new residential subdivisions within Active Management Areas to prove they have 100 years of water before lots can be sold. This requirement comes from the 1980 Groundwater Management Act.
Kamps outlined three water supplies available for growth: groundwater, surface water, and effluent.
Groundwater is a shared public resource regulated by the state. Surface water operates under “prior appropriation,” where earlier users have priority rights. Effluent is treated wastewater that can be recharged into aquifers.
Kamps said “housing specifically uses predominantly groundwater and effluent to grow. We don’t use a lot of surface water. We do use some, but it’s a rarity more than the norm.”
Effluent as a Water Source
Kamps urged council members to pay attention to effluent as a water resource.
“That’s the big one. That is created. It’s a new water resource,” he said. “The biggest one is effluent can be recharged into the ground to create what we call a long-term storage credit that can go out on the market. Somebody can buy that and use it.”
Cities, towns, and private water companies own effluent from treatment plants they operate. Most gets recharged for long-term storage credits, according to Kamps’ presentation.
EPCOR already recycles 95.9% of treated effluent, according to its December 3 council presentation.
The Groundwater Model That Changed Everything
San Tan Valley spans both the Phoenix and Pinal AMAs. ADWR released groundwater models for both—the Pinal AMA model in 2019 and the Phoenix AMA model in June 2023. Both found the regions lack enough groundwater to meet projected 100-year demand.
“In Pinal they came out with a groundwater model in 2019 that says we don’t have 100 years worth of water,” Kamps said. “In Phoenix, that groundwater model was released on June 1st of 2023, and it includes the San Tan area, because you’re in the Phoenix AMA. And that said we don’t have 100 years worth of groundwater.”
The consequences hit builders hard. “Essentially, that certificate program, the CAWS program, is over,” Kamps said. The program still exists, but ADWR cannot approve new certificates based on groundwater because the models don’t demonstrate 100-year physical availability. “We can only grow and develop housing specifically in designated providers,” he added.
Different Rules for Different Land Uses
Kamps emphasized an important distinction. The Assured Water Supply requirement applies to subdivided lands. According to his presentation, it “does not apply to rental properties, industrial, commercial, manufacturing, or data centers, unless part of a larger subdivision.”
Outside designated providers, builders must secure a Certificate of Assured Water Supply, or CAWS. “We look at a well, we apply to the department for a CAWS to say, ‘Will this well pump for 100 years?'” Kamps explained. “And if they deem it so, we can move forward with that project as long as we meet the second step… which is, we have to replace that water as well.”
Builders replace that groundwater through the Central Arizona Groundwater Replenishment District (CAGRD). “My industry created the Central Arizona Groundwater Replenishment District in 1990. It’s been operational since 1995,” Kamps said. “Every home built in your community, in your town, built since 1995, is replacing the groundwater that residents are using.”
“Outside designated providers, housing is the only land use that meets the 100-year requirement and the replenishment obligation,” he said. “Commercial, industrial and rentals do not meet that requirement.”
Commercial and industrial users can still access groundwater outside designated providers. “They can access groundwater, they don’t replenish,” Kamps said.
Why Apartments and Rentals Face Different Requirements
During public comments, Karen Mooney, a San Tan Valley resident and Pinal County Planning and Zoning Commissioner, raised concerns about this disparity.
“The Assured Water Certificate really concerns me because apartments don’t require them,” she said.
Councilmember Brian Tyler asked why data centers and industrial users avoid CAGRD requirements.
Kamps explained the distinction stems from consumer protection logic. “What consumers are we protecting when it comes to data centers?” he asked. “If the data center runs out of water, technically nobody is gonna be harmed. If somebody’s owning a home and they run out of water, they’ve obviously lost significant value.”
He acknowledged the policy deserves reconsideration. “Should various land uses be held to a higher standard of care for protecting the aquifer? I think that’s a discussion the state needs to have.”
Buckeye: Billions in Limbo
Kamps described what happened in Buckeye when the groundwater model hit. The city had been a key affordability market for builders.
“When the groundwater model hit up in Phoenix, we had plans to put over 150,000 housing lots in the ground. Maybe even close to 200,000,” he said. “Buckeye was a key affordability market for my builders. We could get homes in the ground under $400,000 out there.”
Builders had invested heavily in infrastructure. “Those projects have north of $2 to $3 billion of infrastructure in the ground that they were pre-positioning for those housing units, and then everything was ground to a halt.”
The result was stark. Land prices inside designated providers skyrocketed. “They had water. We didn’t have water outside,” Kamps said.
As Phoenix-area development becomes harder, pressure shifts to communities with designated providers. “The demand for housing is not gonna go down,” Kamps warned. “It’s gonna create pressure I think in your area.”
A Distorted Water Market
The groundwater restrictions have disrupted water markets throughout the region.
“We’ve distorted the water markets,” Kamps said. “The position that the State of Arizona’s taken is you can’t access groundwater, but if you can go find surface water, we’re good. There is no surface water to get.”
He described the competition. “You’ve got people out on the market—we have 30 to 40 corporate builders out in the market that have never been in the market before.”
Previously, builders simply applied for certificates using groundwater wells. Now they compete for scarce renewable supplies. “Buckeye and Queen Creek are both trying to buy Harquahala water,” Kamps noted. Queen Creek spent $244.4 million on Harquahala water rights.
These costs ultimately reach homebuyers.
Colorado River Uncertainty Compounds the Problem
Negotiations over Colorado River allocations create additional challenges. Arizona receives 2.8 million acre-feet annually. Of that, 1.5 million flows through the Central Arizona Project (CAP).
“There’s not one person that uses the Colorado River that’s interested in negotiating a deal right now, because next year they don’t know if they’re gonna have the water,” Kamps said. “It’s creating a massive chilling effect on certainty as it relates to investment.”
The seven basin states have not reached consensus on reducing demand from the river. “The federal government can step in at any time,” Kamps said. “I just highlight that ’cause they could do it tomorrow.”
He explained the Lower Basin Plan is an agreement between Nevada, California, and Arizona on cutting water. “We’re asking the upper basin states to contribute to those cuts. They’re saying no. That’s the rub,” he said.
Kamps estimated the potential impact. “If that Lower Basin Plan were implemented, I think Arizona would have to reduce their demand by 760,000 acre-feet,” he said. “On the CAP supplies it’s about 50%. It’s significant.”
This uncertainty primarily impacts designated providers relying on CAP water. “Those are mostly the older cities up in the Phoenix area,” Kamps said. EPCOR’s December 3 presentation to council showed 13% of its Arizona water portfolio comes from CAP, which delivers Colorado River water to central Arizona.
The Ag-to-Urban Program: Promise and Problems
Governor Hobbs signed legislation last year creating the Ag-to-Urban program. The concept allows builders to convert agricultural land to residential use while retiring farm water rights.
“One of the major reasons we’re saving groundwater is because we transitioned ag land to homes,” Kamps explained. Agriculture uses about 5 acre-feet per acre annually, while residential development uses roughly 1 acre-foot per acre.
However, challenges remain. Farmers believe their land values have jumped dramatically. “Their land, they think their land went from 30 grand an acre to $300,000 an acre,” Kamps said.
Still, he remained optimistic about the program. “Projects will get approved. Houses will happen. Housing will happen, and that’s a positive thing.”
Density Limits Under Ag-to-Urban
The program allocates 1.5 acre-feet of water per acre of land converted from agricultural use. Since each home requires water, the total water available limits how many homes can be built on that acre.
“We are limited to 1.5 acre-foot per acre, and that limits density,” Kamps said. “We calculated during the negotiations of that bill that we’re gonna be capped at a density of roughly four units per acre, and that would make housing prices unattainable, especially for an entry level builder, which has to be in the six, seven, eight units per acre.”
The National Narrative Hurts Arizona
Kamps addressed broader perceptions affecting investment.
“We have this national narrative that Arizona’s out of water, and we gotta change that,” he said. “It hurts investment. It hurts our ability to grow. It hurts our ability to attract businesses and I think that’s a negative.”
The housing affordability crisis compounds these concerns. According to Kamps’ presentation, the average age of first-time homebuyers has reached 40 years old nationally.
“Affordability is a huge issue,” Kamps said. “It’s delaying family formation.”
According to Kamps’ presentation, median new home prices are just above $500,000. Buyers need roughly $120,000 in annual income to qualify. Yet Arizona’s economic development programs attract workers earning about $70,000.
Questions About Existing Entitlements
Mooney raised concerns about development already approved years ago.
“Some of these farmlands have been entitled since 1999,” she said. “If a water assured certificate for an HOA or community was established then, it’s grandfathered.”
She questioned how many such entitlements exist in San Tan Valley. “My entire community is surrounded at this point,” she said.
Mooney said she asked Kamps about grandfathering. He told her that existing certificates are grandfathered, but developers may need to meet current standards if they change their plans.
Mayor Schnepf requested a future agenda item. He asked for a presentation on existing entitlements in San Tan Valley, including how many exist and how long they have been in place.
The council took no action. The agenda scheduled this as an informational presentation only.
