HB2753 - 571R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 45-576, Arizona Revised Statutes, is amended to read:

START_STATUTE45-576. Certificate of assured water supply; designated cities, towns and private water companies; exemptions; definition

A. Except as provided in subsections G and J of this section, a person who proposes to offer subdivided lands, as defined in section 32-2101, for sale or lease in an active management area shall apply for and obtain a certificate of assured water supply from the director before presenting the plat for approval to the city, town or county in which the land is located, where such is required, and before filing with the state real estate commissioner a notice of intention to offer such lands for sale or lease, pursuant to section 32-2181, unless the subdivider has obtained a written commitment of water service for the subdivision from a city, town or private water company designated as having an assured water supply pursuant to this section.

B. Except as provided in subsections G and J of this section, a city, town or county may approve a subdivision plat only if the subdivider has obtained a certificate of assured water supply from the director or the subdivider has obtained a written commitment of water service for the subdivision from a city, town or private water company designated as having an assured water supply pursuant to this section. The city, town or county shall note on the face of the approved plat that a certificate of assured water supply has been submitted with the plat or that the subdivider has obtained a written commitment of water service for the proposed subdivision from a city, town or private water company designated as having an assured water supply pursuant to this section.

C. Except as provided in subsections G and J of this section, the state real estate commissioner may issue a public report authorizing the sale or lease of subdivided lands only on compliance with either of the following:

1. The subdivider, owner or agent has paid any activation fee required under section 48-3772, subsection A, paragraph 7 and any replenishment reserve fee required under section 48-3774.01, subsection A, paragraph 2 and has obtained a certificate of assured water supply from the director.

2. The subdivider has obtained a written commitment of water service for the lands from a city, town or private water company designated as having an assured water supply pursuant to this section and the subdivider, owner or agent has paid any activation fee required under section 48-3772, subsection A, paragraph 7.

D. The director shall designate private water companies in active management areas that have an assured water supply. If a city or town acquires a private water company that has contracted for central Arizona project water, the city or town shall assume the private water company's contract for central Arizona project water.

E. The director shall designate cities and towns in active management areas where an assured water supply exists. If a city or town has entered into a contract for central Arizona project water, the city or town is deemed to continue to have an assured water supply until December 31, 1997. Commencing on January 1, 1998, the determination that the city or town has an assured water supply is subject to review by the director and the director may determine that a city or town does not have an assured water supply.

F. The director shall notify the mayors of all cities and towns in active management areas and the chairmen of the boards of supervisors of counties in which active management areas are located of the cities, towns and private water companies designated as having an assured water supply and any modification of that designation within thirty days of AFTER the designation or modification. If the service area of the city, town or private water company has qualified as a member service area pursuant to title 48, chapter 22, article 4, the director shall also notify the conservation district of the designation or modification and shall report the projected average annual replenishment obligation for the member service area based on the projected and committed average annual demand for water within the service area during the effective term of the designation or modification subject to any limitation in an agreement between the conservation district and the city, town or private water company. For each city, town or private water company that qualified as a member service area under title 48, chapter 22 and THAT was designated as having an assured water supply before January 1, 2004, the director shall report to the conservation district on or before January 1, 2005 the projected average annual replenishment obligation based on the projected and committed average annual demand for water within the service area during the effective term of the designation subject to any limitation in an agreement between the conservation district and the city, town or private water company. Persons proposing to offer subdivided lands served by those designated cities, towns and private water companies for sale or lease are exempt from applying for and obtaining a certificate of assured water supply.

G. This section does not apply in the case of the sale of lands for developments that are subject to a mineral extraction and METALLURGICAL processing permit or an industrial use permit pursuant to sections 45-514 and 45-515.

H. The director shall adopt rules to carry out the purposes of this section. On or before January 1, 2008, The rules shall provide for a reduction in water demand for an application for a designation of assured water supply or a certificate of assured water supply if a gray water reuse system will be installed that meets the requirements of the rules adopted by the department of environmental quality for gray water systems and if the application is for a certificate of assured water supply, the land for which the certificate is sought must qualify as a member land in a conservation district pursuant to title 48, chapter 22, article 4. For the purposes of this subsection, "gray water" has the same meaning prescribed in section 49-201.

I. If the director designates a municipal provider as having an assured water supply under this section and the designation lapses or otherwise terminates while the municipal provider's service area is a member service area of a conservation district, the municipal provider or its successor shall continue to comply with the consistency with management goal requirements in the rules adopted by the director under subsection H of this section as if the designation was still in effect with respect to the municipal provider's designation uses. When determining compliance by the municipal provider or its successor with the consistency with management goal requirements in the rules, the director shall consider only water delivered by the municipal provider or its successor to the municipal provider's designation uses. A person is the successor of a municipal provider if the person commences water service to uses that were previously designation uses of the municipal provider. Any groundwater delivered by the municipal provider or its successor to the municipal provider's designation uses in excess of the amount allowed under the consistency with management goal requirements in the rules shall be considered excess groundwater for purposes of title 48, chapter 22. For the purposes of this subsection, "designation uses" means all water uses served by a municipal provider on the date the municipal provider's designation of assured water supply lapses or otherwise terminates and all recorded lots within the municipal provider's service area that were not being served by the municipal provider on that date but that received final plat approval from a city, town or county on or before that date. Designation uses do not include industrial uses served by an irrigation district under section 45-497.

J. Subsections A, B and C of this section do not apply to a person who proposes to offer subdivided land for sale or lease in an active management area if all the following apply:

1. The director issued a certificate of assured water supply for the land to a previous owner of the land and the certificate was classified as a type A certificate under rules adopted by the director pursuant to subsection H of this section.

2. The director has not revoked the certificate of assured water supply described in paragraph 1 of this subsection, and proceedings to revoke the certificate are not pending before the department or a court. The department shall post on its website a list of all certificates of assured water supply that have been revoked or for which proceedings are pending before the department or a court.

3. The plat submitted to the department in the application for the certificate of assured water supply described in paragraph 1 of this subsection has not changed.

4. Water service is currently available to each lot within the subdivided land and the water provider listed on the certificate of assured water supply described in paragraph 1 of this subsection has not changed.

5. The subdivided land qualifies as a member land under title 48, chapter 22 and the subdivider has paid any activation fee required under section 48-3772, subsection A, paragraph 7 and any replenishment reserve fee required under section 48-3774.01, subsection A, paragraph 2.

6. The plat is submitted for approval to a city, town or county that is listed on the department's website as a qualified platting authority.

K. Subsection J of this section does not affect the assignment of a certificate of assured water supply as prescribed by section 45-579.

L. On or before December 31, 2023, the director shall study and submit to the governor, president of the senate and speaker of the house of representatives a report on whether and how a person that seeks a building permit for six or more residences within an active management area, without regard to any proposed lease term for those residences, should apply for and obtain a certificate of assured water supply from the director before presenting the permit application for approval to the county in which the land is located, unless the applicant has obtained a written commitment of water service for the residences from a city, town or private water company designated as having an assured water supply pursuant to this section.

M. The director or a political subdivision of this state may not require owners of subdivided lands to pay for or provide a water source to reduce groundwater demands incurred off the owner's parcel as a condition of receiving a certificate of assured water supply or a written commitment of water service from a city, town or private water company that has obtained a designation of assured water supply.

m. the director or any political SUBDIVISION of this state may not require owners of subdivided lands to pay for or provide a water SOURCE to reduce GROUNDWATER demands incurred off the owner's parcel as a condition of receiving a CERTIFICATE of assured water supply or a written commitment of water SERVICE from a city, town or private water company that has obtained a DESIGNATION of assured water supply.M. n. For the purposes of this section, "assured water supply" means all of the following:

1. Sufficient groundwater, surface water or effluent of adequate quality will be continuously available to satisfy the water needs of the proposed use for at least one hundred years. Beginning January 1 of the calendar year following the year in which a groundwater replenishment district is required to submit its preliminary plan pursuant to section 45-576.02, subsection A, paragraph 1, with respect to an applicant that is a member of the district, "sufficient groundwater" for the purposes of this paragraph means that the proposed groundwater withdrawals that the applicant will cause over a period of one hundred years will be of adequate quality and will not exceed, in combination with other withdrawals from land in the replenishment district, a depth to water of one thousand feet or the depth of the bottom of the aquifer, whichever is less. In determining depth to water for the purposes of this paragraph, the director shall consider the combination of:

(a) The existing rate of decline.

(b) The proposed withdrawals.

(c) The expected water requirements of all recorded lots that are not yet served water and that are located in the service area of a municipal provider.

2. The projected groundwater use is consistent with the management plan and achievement of the management goal for the active management area.

3. The financial capability has been demonstrated to construct the water facilities necessary to make the supply of water available for the proposed use, including a delivery system and any storage facilities or treatment works. The director may accept evidence of the construction assurances required by section 9-463.01, 11-823 11-822 or 32-2181 to satisfy this requirement.END_STATUTE

Sec. 2. Section 48-3771, Arizona Revised Statutes, is amended to read:

START_STATUTE48-3771. District replenishment obligations; replenishment location; source of replenishment; exception

A. For each active management area in which member lands or member service areas are or may be located, the district shall replenish groundwater in an amount equal to the groundwater replenishment obligation for that active management area. Except as provided in section 48-3781, subsection G, the district shall complete the replenishment of the groundwater replenishment obligation of that active management area applicable to a particular year within three full calendar years after the year that the district incurs the groundwater replenishment obligation. Replenishment of the groundwater replenishment obligation of an active management area applicable to a particular year is complete when the amount of water added to aquifers through water storage that has been credited directly to the district's conservation district account pursuant to title 45, chapter 3.1, plus long-term storage credits that have been transferred from the district's long-term storage account to its conservation district account pursuant to title 45, chapter 3.1, less the groundwater replenishment obligation of member lands and member service areas located in the active management area and applicable to previous years, less the contract replenishment obligations relative to municipal providers in the active management area for previous years and the year of the calculation, equals or exceeds the groundwater replenishment obligation of the active management area for that year.

B. With respect to the portion of the groundwater replenishment obligation attributable to a parcel of member land or a member service area, the district shall replenish groundwater in the active management area where the parcel of member land or the member service area is located in an amount equal to the groundwater replenishment obligation applicable to that parcel of member land or that member service area.

C. Except as provided by title 45, chapter 3.1, the district may replenish groundwater with central Arizona project water or water from any other lawfully available source except groundwater withdrawn from within an active management area.

D. Notwithstanding any other provision of this chapter, if a parcel of member land is included in the service area of a municipal provider that is not a member service area but that has been designated as having an assured water supply under section 45-576, the parcel of member land has no parcel replenishment obligation and the district has no groundwater replenishment obligation attributable to that parcel of member land for as long as the designation remains in effect.

E. Notwithstanding any other provision of this chapter and except as provided in subsection F of this section, if a parcel of member land is included in the service area of a municipal provider that is a member service area and that has been designated as having an assured water supply under section 45-576, the parcel of member land has no further parcel replenishment obligation.

F. After September 14, 2024, a municipal provider that submits an application for a new designation of assured water supply pursuant to rules adopted by the department of water resources in the Phoenix and pinal active management area areas that relies on a member service area agreement may elect for all parcels of member land in the municipal service area to retain a replenishment obligation. For parcels of member land that retain a replenishment obligation, the district shall replenish groundwater in an amount equal to the obligation applicable to that parcel of member land.

G. If, pursuant to subsection F of this section, a municipal provider's service area contains member lands and the municipal provider applies to become designated as having an assured water supply, the municipal provider shall notify the district and the director of the department of water resources at the time of application whether it chooses to assume the member lands' replenishment obligation under the municipal provider's designation of assured water supply and member service area agreement. This section does not authorize new member lands to be enrolled within the municipal provider's service area after the service area is designated as having an assured water supply.

H. If a municipal provider chooses to allow parcels of member land within its service area to retain the parcel replenishment obligation pursuant to this section, the designation of assured water supply and member service area agreement for the municipal provider shall provide that the parcels of member land retain the parcel replenishment obligation for the lesser of either of the following:

1. Ten years from the date of commencement of the first term of the designation.

2. The first term of the designation.

I. On the lesser of the conditions prescribed by subsection H of this section, the municipal provider shall begin to assume a percentage of the groundwater delivered to parcels of member land and any associated parcel replenishment obligation and provide the information to the district in the annual reports required by section 48-3775. In the first year of reporting pursuant to this subsection, the municipal provider may assume not less than ten percent of the total reported groundwater delivered to each parcel of member land. In each successive year the municipal provider shall assume at least an additional ten percent so that within ten years, all reported groundwater delivered and parcel replenishment obligation are assumed by the municipal provider and the parcels of member land have no further parcel replenishment obligation.

J. After a municipal provider assumes all groundwater deliveries from all parcels of member land as prescribed by subsection I of this section, the municipal provider shall cease submitting reports to the district for parcels of member land pursuant to section 48-3775 while the municipal provider's designation of assured water supply remains valid.

K. If a municipal provider assumes the parcel replenishment obligation of member lands pursuant to a designation of assured water supply that relies on a member service area agreement, any groundwater allowance or extinguishment credits, as provided in rules adopted by the department of water resources pursuant to section 45-576, associated with the member lands assumed by the municipal provider may be used as follows:

1. If the parcel replenishment obligation and reported groundwater delivered to the member lands are entirely assumed on the initial designation of an assured water supply, the remaining extinguishment credits or groundwater allowance associated with the member lands may be used by the municipal provider as authorized pursuant to a member service area agreement.

2. If the parcel replenishment obligation and reported groundwater delivered to the member lands are assumed in stages as provided in subsection I of this section, the municipal provider may use the groundwater allowance and extinguishment credits for the member lands in the same manner as authorized in the applicable agreement and notice of municipal reporting requirements if the groundwater is being reported as delivered to member lands. Thereafter, any remaining extinguishment credits or groundwater allowance may be used by the municipal provider as authorized under the member service area agreement.

L. For a designation for a municipal provider issued pursuant to subsection f of this section, owners of lands that are subdivided after the date of designation may not be required to provide or pay for a water source to reduce a replenishment obligation the municipal provider incurs for lands other than the owner's subdivided land. [L. For a designation for a municipal provider issued pursuant to subsection f of this section, owners of lands that are subdivided after the date of designation may not be required to provide or pay for a water source to reduce a replenishment obligation the municipal provider incurs for lands other than the owner's subdivided land.]END_STATUTE