CNN and The New York Times Publish Misleading Story on Phoenix’s Water Situation and Real Estate Development Prospects
Recently, CNN, The New York Times and other media published a misleading story about Phoenix’s and Arizona’s water situation and real estate landscape, painting a dire picture to their readers. Of course, this article created negative publicity, and we’ve had many out-of-state investors concerned about it.
CNN Statement
- Arizona is facing a water shortage and struggles to meet water needs.
- Arizona’s water usage is high and unsustainable.
- Arizona has limited water storage.
- Arizona is heavily reliant on the Colorado River for water.
- Arizona lacks resilience during drought due to water infrastructure.
- Arizona lags in water reuse compared to other states.
- Certifications for new developments within the Phoenix area are temporarily halted.
The Greater Phoenix Economic Council (GPEC) released a statement of the actual facts of Phoenix’s / Arizona’s water and real estate prospects. The full content of their document can be read below:
True Statement
- Arizona has a 100-year assured water supply and rigorous conservation efforts.
- Arizona is currently below 1957 water usage levels due to increased conservation methods and decreased agricultural water usage.
- Arizona has five times more water stored than it uses, with 13.2 million acre-feet of water stored in reservoirs and underground.
- Only 36% of Arizona’s water supply is from the Colorado River, while other states have higher dependencies.
- Arizona’s infrastructure allows for access to water from vast aquifers during times of drought, providing resilience to water shortages.
- Arizona is a national leader in water reuse, with California sending more water back to the ocean than Phoenix uses.
- Existing approved and in-development houses are unaffected by the pause, which is around 80k houses in development.
Arizona Water Position Update 06.02.23
On June 1, Governor Hobbs and the Arizona Department of Water Resources unveiled the
Phoenix Active Management Area (AMA) Groundwater Model and the Arizona Department of
Water Resources’ latest study of groundwater conditions across the Phoenix metropolitan area.,
resulting in widespread uncertainty across the country.
Situation
- Water is a precious resource in Arizona and has been a priority for its residents since
before it became a state. - The Active Management Area (AMA) report revealed that after 100 years of current and
planned groundwater pumping, there are areas where not all demands will be met. - According to the Model, there will be 4.86 million acre-feet (MAF) of unmet groundwater
demands over the 100-year period, which represents only 4% of the total groundwater
demand during that time. - In compliance with the 100-year Assured Water Supply law, Arizona will temporarily halt
the approval of new Certificates of Assured Water Supply reliant on groundwater.
However, growth on existing Certificates, within designated areas, and developments
utilizing non-groundwater sources will not be affected.
Impact
- Existing homeowners and home-building certificates will not face any impacts and will continue to receive water deliveries as planned.
- Cities with a Designation of assured water supply (DAWS), including large cities in Greater
Phoenix will continue to grow within its approved water portfolios. - Urban growth in other areas will need to rely on water supplies other than nonreplenishable groundwater, aligning with the State’s policy since the signing of 1980
Groundwater Management Act.
• Groundwater is just one component of Greater Phoenix’s comprehensive water
portfolio, which includes Colorado River water, surface water, and recycled water
supplies. - Development on non-subdivided land is not subject to the Assured Water Supply
Program and will not be affected by the modeling results.
Current State
- Transparency is a crucial step in securing our water future.
- The temporary halt does not indicate a water crisis in Arizona but rather demonstrates the
effectiveness of existing regulations and measures implemented to alert the state and
ensure its water security. - Alongside significant investments at the State and Federal levels, totaling more than $5
billion in funding, Arizona is actively advancing its planning efforts for conservation,
distribution, and augmentation to address future water needs. - Arizona’s water future is secure, and families and businesses considering a move to
Arizona can trust that water security is a serious concern for both public and private
leaders in the region.
Housing
- All existing housing certificates can proceed as planned. There is a substantial number of
already approved housing certificates. - Greater Phoenix currently has 1,890,294 residential units, including both multifamily and
single-family residences, either under construction, proposed, or approved. - Cities with assured water supplies can continue their growth as those supplies allow.
- In certain areas, growth will need to rely on existing and planned water sources other than
groundwater.
Water Facts
- Arizona’s population and economy have experienced consistent growth while maintaining
steady water usage for decades. - Increased conservation methods and reduced water demand in agriculture have enabled
Greater Phoenix to remain below its 1957 water usage levels. - Arizona has 1.75 times more water stored than it uses, with 12 million acre-feet (MAF) of
water stored in reservoirs and underground, including 7.1 MAF in Greater Phoenix. - Arizona is a national leader in water reuse, with more than 89% of the water entering the
Greater Phoenix waste stream being reclaimed and treated for potable use. - While there have been reductions in Arizona’s Colorado River allocation, it represents only
about 40% of the state’s entitlement. The Central Arizona Project (CAP) has supported the
groundwater supply to compensate for historical groundwater dependency in the Valley,
preserving groundwater for times of need. - Implemented programs and reduction strategies have created a resilient system,
transitioning away from Colorado River water while maintaining economic growth.
Water Future
- Careful planning and investment have resulted in a reliable and well-managed water
supply, but further investment is required to support future growth. Arizona is making
aggressive investments in a multi-faceted portfolio of water supplies and advanced
programs for managing groundwater. - Funding of $4 billion has been approved through the Inflation Reduction Bill to
compensate farmers who voluntarily reduce their water deliveries under short-term or
multi-year agreements. - The legislature has approved $1.2 billion as part of a water package that can be utilized
over three years to enhance long-term water supplies and conservation efforts. - Arizona has allocated an additional $40 million to the Water Policy Council, dedicated to
water conservation, infrastructure, and sustainable groundwater management initiatives.
If you would like to speak to someone about this topic, contact us at [email protected] or call (480) 295-7600 to schedule a call with our Wealth Development Team member.
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