Court Finds Arizona Department of Water Resources Illegally Imposed Tax on Home Builders

June 9, 2026 ADI Staff Reporter
construction

A Maricopa County Superior Court judge has found that the Arizona Department of Water Resources illegally imposed a “tax” on home builders.

[READ RULING HERE]

Attorneys with Holtzman Vogel, Emily Gould, former Arizona Supreme Court justice Andrew Gould, Jon Riches, and Erica Leavitt secured a summary judgment in the landmark administrative law case.

The Arizona Department of Water Resources (ADWR) amended a rule requiring developers to secure 25% more water than their projected needs — above and beyond what state statute requires — effectively creating a moratorium on new subdivision development in the Phoenix and Pinal Active Management Areas.

The plaintiffs: the Home Builders Association of Central Arizona (HBACA), Speaker of the Arizona House of Representatives Steve Montenegro, and Arizona Senate President Warren Petersen challenged the rule, claiming ADWR exceeded its statutory authority and directly contradicted the plain language of A.R.S. § 45-576.

The Court agreed on every point.

Maricopa County Superior Court Judge Blaney declared the amended rule void and enjoined ADWR from enforcing it, finding that:

  • The rule was the only path available to developers, not a voluntary alternative as ADWR claimed.
  • The additional 25% water requirement conflicted with the plain language of the governing statute.
  • ADWR could not rely on a general grant of rulemaking authority to impose obligations the Legislature never authorized.

    • Supporters of development say that the ruling doesn’t just open the door to new and affordable housing development across Arizona. It reinforces a foundational principle that agencies must act within the boundaries the Legislature sets.

    About ADI Staff Reporter 14495 Articles
    Under the leadership of Editor-in -Chief Huey Freeman, our team of staff reporters bring accurate,timely, and complete news coverage.

    2 Comments

    1. I’m pleased with this decision. It confirms that legislators, not bureaucrats, write the laws. All across our country bureaucrats think otherwise and overstep the boundaries of their positions. This ruling is a first step for Arizona in reigning in that kind of overreach.

    Comments are closed.