Breaking: Arizona Passes Ag-to-Urban Bill: G&B Clients Facilitate Bipartisan Effort to Save Groundwater, Provide Pathway for Development on Farmland

By the Gammage & Burnham Water Group: Alexandra M. Arboleda, Grady Gammage, Jr., Michael J. Pearce, Kyle R. Stenseth, and Sean F. Krieg

Representing the most significant changes to Arizona groundwater law in decades, the Arizona Legislature has passed the “ag-to-urban” bill with bipartisan support. This historic moment, creating a new ag-to-urban program, is a unique opportunity to fulfill Arizona’s need for more housing while saving water and protecting our aquifers. This bipartisan and data-driven legislation creates a win-win-win for the aquifer, farmers, and developers. Ag-to-urban saves groundwater by providing a voluntary pathway for responsible municipal development on farmland. The Senate approved SB 1611 on June 19, 2025, and the House approved it today on June 23, 2025–sending the bill to Governor Hobbs for her signature.

Gammage & Burnham’s Water Group chair, Alexandra Arboleda, spearheaded the bipartisan effort on behalf of firm clients Cowley Companies Inc. and Harvard Investments, Inc. Over two legislative sessions, Alexandra worked closely with our clients, the Governor’s office, legislators, the Arizona Department of Water Resources (ADWR), and other stakeholders. We are proud to have contributed to this historic legislation on behalf of our clients.

Why it Matters

For decades, Arizona’s Assured Water Supply program has encouraged reducing groundwater use and transitioning to alternative water sources. Despite the program’s success, groundwater modeling released in 2019 and 2023 by ADWR projected that available groundwater within parts of the Phoenix metro area and Pinal County had already been allocated to existing and planned uses. The modeling prompted a moratorium on new Assured Water Supply determinations using groundwater.

This moratorium has precluded developing most farmland with irrigation grandfathered rights. While longer-term water management solutions progress, like importing water supplies or more providers obtaining Designations of Assured Water Supply, the moratorium forced farms that might otherwise be developed to continue irrigating with groundwater. Ag-to-urban provides a voluntary pathway for these lands to develop under the Assured Water Supply program, which will save groundwater in the short-term and facilitate the transition to longer-term water management solutions. As required by the Assured Water Supply program, underground aquifers will be replenished with alternative water supplies to replace the groundwater used at subdivisions.

Key Provisions

Landowners and developers should study the ag-to-urban program eligibility criteria. To ensure that the development saves groundwater, only irrigation grandfathered rights with a history of recent irrigation use may be relinquished under the ag-to-urban program. Developers should review the unique details and reporting history of these rights when assessing program eligibility.

In exchange for relinquishing an irrigation grandfathered right, a landowner in the Phoenix Active Management Area may obtain a credit for 1.5 acre-feet per acre of groundwater for one hundred years that can then be pledged to a Certificate or Designation of Assured Water Supply on certain terms. A landowner in the Pinal Active Management Area may obtain a credit for 1.0 acre-foot per acre of groundwater for one hundred years. To utilize this program, a developer must evaluate the water demands of their project and ensure that their water provider can withdraw the water under the program criteria. This will require careful analysis and collaboration with the water provider.

Municipalities, homeowner’s associations, and developers should study the ag-to-urban conservation requirements, which limit the ability to use or require the use of groundwater for turf, lakes, or other amenities on the ag-to-urban land. These requirements are designed to ensure that projects are highly water efficient and can be developed within the groundwater allotment. This could affect how municipalities approach rezoning at ag-to-urban projects.

There are several other key provisions that affect program eligibility and utilization. The complexity of this program reflects the immense compromise and analysis that went into this bipartisan legislation.  Landowners, farmers, developers, associations, and municipalities should consult with an attorney regarding specific questions about the ag-to-urban program.

Next Steps

The ag-to-urban legislation passed without an emergency clause meaning that, upon the Governor’s signature, it will go into effect 90 days after sine die when the legislative session concludes.  In the coming months, ADWR will develop rules and forms for ag-to-urban applications.  In this time, farmers and developers can begin identifying and preparing lands that are eligible to be developed under the ag-to-urban program. Gammage & Burnham is proud to have contributed to this program and is prepared to advise clients on how to utilize it.

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