HB2445 - 561R - Senate Fact Sheet

ARIZONA STATE SENATE

Fifty-Sixth Legislature, First Regular Session

AMENDED

FACT SHEET FOR H.B. 2445

~~groundwater permits; technical correction~~

(NOW: subdivided lands; exemption; leases; emergency)

Purpose

An emergency measure that prohibits the legislative body of a municipality or a county board of supervisors (county BOS) from approving a building permit for one or more detached residential dwelling units located in a residential lease community within an initial active management area (AMA) unless the dwelling units have obtained a written commitment of water service from a city, town or private water company. Outlines requirements relating to water service from a standpipe through a treat and transport agreement between a city or town and one or more third parties.

Background

A subdivision or subdivided land is improved or unimproved land divided or proposed to be divided for the purpose of sale or lease, whether immediate or future, into six or more lots, parcels or fractional interests, including: 1) a stock cooperative; 2) lands divided or proposed to be divided as part of a common promotion plan; and 3) residential condominiums. Leasehold offerings of one year or more are exempt from the classification of subdivision or subdivided lands (A.R.S. § 32-2101).

In 2022, the U.S. Bureau of Reclamation declared a Tier 1 shortage on the Colorado River. This shortage resulted in a substantial cut to Arizona's share of Colorado River water allocations (CAP). In 2023, the Lower Colorado River Basin entered into a Tier 2A shortage, requiring further cuts to water allocations throughout the Colorado River Basin states (CAP).

According to the City of Scottsdale's Drought Management Plan (Scottsdale DMP), if a Tier 1 or Tier 2A shortage has been triggered, any water hauling operations must cease unless the water hauling customer, whether residential or commercial, can prove indisputably that the hauled water is being supplied directly to a City of Scottsdale resident or business (Scottsdale DMP).

A municipal water provider is a city, town, domestic water improvement district, private water company or irrigation district that supplies water for non-irrigation use (A.R.S. § 48-5901). A service area with respect to a city or town, is the area of land actually being served water, for non-irrigation use, by the city or town (A.R.S. § 45-402).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

Municipal and County Approval of Building Permits

1. Prohibits the legislative body of a municipality or a county BOS from approving a building permit for one or more detached residential dwelling units located in a residential lease community within an AMA unless:

a) the dwelling units have obtained a written commitment of water service from a city, town or private water company designated as having an assured water supply or the dwelling units are located on a parcel of land that has qualified as member land; and

b) the applicant has paid all applicable fees and accompanied the building permit application with proof that the applicable fees have been paid.

2. Requires the legislative body of the municipality or a county BOS to note on the face of the building permit that the applicant has met or is exempt from the outlined requirements.

3. Requires a person that seeks a building permit for one or more detached residential dwelling units located in a residential lease community within an initial AMA, before presenting a permit application for approval to the city, town or county, to:

a) apply for and obtain a written commitment of water service from a city, town or private water company designated as having an assured water supply; and

b) pay all applicable fees and accompany the building permit application with proof the applicable fees have been paid unless outlined conditions apply.

4. Exempts a residential lease community or planned residential lease community that applied for or received zoning entitlements by September 30, 2023, from the outlined building permit requirements.

5. Defines residential lease community as six or more detached residential dwelling units on one or more lots, parcels or fractional interests, without regard to the zoning classification of the lots, parcels or fractional interests, that are intended to be offered for the purpose of lease, whether immediate or future, without regard to the lease term, under a common promotional plan.

6. Excludes, from the definition of residential lease community, the construction, provision or leasing of residential structures that are located on agricultural property, that are exempt from county building codes and that are offered for the purpose of housing agricultural workers.

Standpipe Service

7. Requires a city or town that provides water service in a county with a population of more than 1,500,000 persons to execute a treat and transport agreement with one or more third parties for a period of at least three years, treat and transport water to a standpipe and allow use of the standpipe for water to be hauled to residences that are outside the city's or town's water service area if:

a) the number of residences to be served is not more than 750, and the residences are in an area that is an unincorporated community within the county and adjacent to the city or town;

b) the city or town previously provided standpipe service to water haulers that deliver water to the residences and the city or town ceased providing that service pursuant to a Drought Management Plan adopted by the city or town;

c) before ceasing standpipe service, the city or town had an opportunity to execute a treat and transport agreement with one or more third parties that would have allowed the city or town to continue providing standpipe service to the water haulers at no cost tot the city or town but the city or town did not execute the agreement before the effective date;

d) there is no other source of water for those persons within 10 miles of their residences;

e) the city or town is reimbursed for the full reasonable cost of treating and transporting the water and allowing the water to be hauled from the standpipe; and

f) treating and transporting the water to and allowing the water to be hauled from the standpipe does not, without the city's or town's consent, reduce the amount of water available to residences and businesses within the city's or town's water service area or to residences and businesses outside of the city's or town's water service area with whom the city or town has directly contracted to provide water through means other than water hauling.

8. Prohibits the city or town from charging residences, water haulers and other third parties for water-related costs, expenses and acre-feet of water that do not provide a direct benefit to the residences.

9. Requires a city or town that treats and transports water or that allows water to be hauled from a standpipe, either directly or by way of contract with one or more third parties, to:

a) treat and transport water to the standpipe;

b) allow the water to be received at the standpipe and delivered through water haulers that have established a water hauling account with the city or town or its contractors;

c) bill and collect from the water haulers the reasonable cost of treating and transporting the water to and allowing the water to be hauled from the standpipe, not exceeding $20 per each 1,000 gallons; and

d) provide annually at least 150 acre-feet of water at the standpipe.

10. States that self-hauling of water is allowed.

11. Requires a city, town or third party that secures, procures or provides water for treatment, transportation and water hauling to disclose to the public the source and quantity of the water provided.

12. Exempts a city or town that treats and transports water and that allows water to be hauled from a standpipe from liability for any actions taken or omissions after water is received by a water hauler at the standpipe.

13. Prohibits a city, town or third party that secures, procures or provides water for treatment, transportation and water hauling from reducing or suspending the amount of water provided for any reason except if the city, town or third party has disclosed the source and quantity of the water and that source has been reduced or suspended by a proportionate amount outside the city's, town's or third party's control.

14. Precludes a city or town drought management plan from prohibiting the city or town from entering into contracts with private entities, including private water companies, to ensure the integration of stable and secure water supplies.

15. Exempts a city or town, if a city or town has fulfilled its obligations, from liability to any person or entity for providing or failing to provide water.

16. States that the area outside of a city's or town's utility service area where a water hauler may deliver water does not constitute a part of the city's or town's service area.

17. States that a city or town is not obligated to provide standpipe service outside of its service area unless required by law or contract.

18. Excludes standpipe service from being considered a utility service.

19. Stipulates that the requirement for a city or town to provide water service outside a city or town does not:

a) preclude the execution or implementation of a voluntary agreement before the effective date; or

b) apply if a voluntary treat and transport agreement or other agreement that results in adequate water being supplied to the residences that would otherwise be served. Repeals the requirement for a city or town to provide water service outside a city or town on January 1, 2026.

Joint Legislative Study Committee on Land Divisions of Five or Fewer Lots, Parcels or Fractional Interests (Study Committee)

20. Establishes the Study Committee consisting of:

a) three members of the House of Representatives (House) who are appointed by the Speaker of the House representing both political parties with one member to serve as Cochairperson; and

b) three members of the Senate who are appointed by the President of the Senate representing both political parties with one member to serve as Cochairperson.

21. Requires the Study Committee to:

a) meet as often as the chairpersons deem necessary;

b) gather information related to land divisions of five or fewer lots, parcels or fractional interests;

c) conduct fact-finding on issues related to lot splits and land divisions of five or fewer lots, parcels or fractional interests; and

d) submit a report by December 31, 2023, regarding the Study Committee's findings and recommendations to the Governor, the President of the Senate, the Speaker of the House and the Secretary of State.

22. Requires the Legislature to provide administrative assistance and staffing for the Study Committee as required.

23. Requires any agency or political subdivision of Arizona, on request of the Study Committee, to provide the Study Committee with services, equipment, documents, personnel and facilities without cost.

24. Repeals the Study Committee on February 1, 2024.

Miscellaneous

25. Excludes, from the definition of subdivision or subdivided lands, the construction, provision or leasing of residential structures that are located on agricultural property that are exempt from county building codes and are offered for the purpose of housing agricultural workers.

26. Exempts, from the definition of improved lot or parcel, a condominium within four years after the date on which the sale is entered into.

27. Declares that qualifying as member land and subjecting the real property to the parcel replenishment obligation and the replenishment assessment directly benefits the real property by increasing the potential of the property to qualify for a building permit as a residential lease community.

28. Makes technical and conforming changes.

29. Becomes effective on signature of the Governor, if the emergency clause is enacted.

Amendments Adopted by Committee

1. Outlines requirements for a person, that seeks a building permit for six or more detached
single-family residences within an AMA in which any portion of the CAP aqueduct is located before presenting a permit application without regard to any proposed lease term for those detached single-family residences.

2. Allows a city, town or county, except for applications submitted before September 30, 2023, to approve a building permit application that includes six or more detached single-family residences within an AMA in which any portion of the CAP aqueduct is located, without regard to any proposed lease term, only if the detached single family residences included in the building permit have obtained a certificate of assured water supply from the Director of ADWR or a written commitment of water service.

3. Makes technical changes.

Amendments Adopted by Committee of the Whole

b) the applicant has paid all applicable fees and accompanied the building permit application with proof that the applicable fees have been paid.

2. Requires the legislative body of the municipality or a county BOS to note on the face of the building permit that the applicant has met or is exempt from the outlined requirements.

3. Outlines requirements for a person that seeks a building permit for one or more detached residential dwelling units located in a residential lease community within an initial AMA, before presenting a permit application for approval to the city, town or county.

4. Exempts a residential lease community or planned residential lease community that applied for or received zoning entitlements by September 30, 2023, from the outlined building permit requirements.

5. Defines residential lease community.

6. Requires a city or town that provides water service in a county with a population of more than 1,500,000 persons to execute a treat and transport agreement with one or more third parties for a period of at least three years, treat and transport water to a standpipe and allow use of the standpipe for water to be hauled to residences that are outside the city's or town's water service area if outlined conditions are met.

7. Prohibits the city or town from charging residences, water haulers and other third parties for water-related costs, expenses and acre-feet of water that do not provide a direct benefit to the residences.

8. Outlines requirements of a city or town that treats and transports water and that allows water to be hauled from a standpipe, either directly or by way of contract with one or more third party.

9. States that self-hauling of water is allowed.

10. Requires a city, town or third party that secures, procures or provides water for treatment, transportation and water hauling to disclose to the public the source and quantity of the water provided.

11. Exempts a city or town that treats and transports water and that allows water to be hauled from a standpipe from liability for any actions taken or omissions after water is received by a water hauler at the standpipe.

12. Prohibits a city, town or third party that secures, procures or provides water for treatment, transportation and water hauling from reducing or suspending the amount of water provided for any reason except if the city, town or third party has disclosed the source and quantity of the water and that the source has been reduced or suspended by a proportionate amount outside the city's, town's or third party's control.

13. Precludes a city or town drought management plan from prohibiting the city or town from entering into contracts with private entities, including private water companies, to ensure the integration of stable and secure water supplies.

14. Exempts a city or town, if a city or town has fulfilled its obligations, from liability to any person or entity for providing or failing to provide water.

15. States that the area outside of a city's or town's utility service area where a water hauler may deliver water does not constitute a part of the city's or town's service area.

16. States that a city or town is not obligated to provide standpipe service outside of its service area unless required by law or contract.

17. Excludes standpipe service from being considered a utility service.

18. Stipulates that the requirement for a city or town to provide water service outside a city or town does not:

a) preclude the execution or implementation of a voluntary agreement before the effective date; or

19. Establishes the Study Committee.

20. Outlines Study Committee membership and requirements.

21. Defines residential lease community within municipalities and counties.

22. Removes the addition to the definition of subdivision or subdivided lands for the purposes of assured water supply only six or more detached single-family residences that are constructed for the purpose of sale or lease, whether immediate or future, on one or more lots, parcels of fractional interests without regard to the zoning classification of the lots, parcels or fractional interests, not including the sale of subdivided lands.

23. Reinserts, in the definition of subdivision or subdivided lands, leasehold offerings of one year or less.

24. Excludes, from the definition of improved lot or parcel, a condominium within four years after the date on which the contract for sale is entered into.

25. Declares that qualifying as member land and subjecting the real property to the parcel replenishment obligation and the replenishment assessment directly benefits the real property by increasing the potential of the property to qualify for a building permit as a residential lease community.

26. Adds an emergency clause.

House Action Senate Action

NREW 2/14/23 DPA 6-3-0-1 NREW 3/30/23 DPA 6-0-1

3^rd Read 3/2/23 31-28-1

Prepared by Senate Research

June 12, 2023

RA/slp