Arizona water supply and what commercial lenders ask on a ground-up deal

Arizona commercial construction lenders ask about water before they ask about a coupon. Inside an active management area, subdivided land offered for sale or lease has long been tied to a 100-year assured water supply under the Groundwater Management Act of 1980. A certificate of assured water supply, or a designation held by a water provider, is how that showing is made for the subdivisions the statute covers. Capital Market Funds does not issue certificates, does not interpret a statute for your parcel, and does not treat this note as legal advice. Counsel and the water provider say what a specific site can still do. We arrange the loan. We need to know whether water is a certificate, a designated provider, a will-serve letter, or an open item.

The statewide construction comparison, which is where a bank facility, HUD 221(d)(4), a debt fund, or a life-company forward is sorted, is Arizona construction financing. The index of city and asset pages is construction financing. Draw paperwork, which is a different statute, stays on the construction checklist.

What ADWR said in 2023 about the Phoenix AMA

ADWR's Phoenix AMA groundwater page describes a basin-scale model and a projection of about 4.86 million acre-feet of unmet groundwater demand over 100 years. Unmet demand, in the department's wording, is groundwater use the model simulates as unfulfilled because wells run dry. In keeping with that finding, the department said the state would not approve new determinations of assured water supply within the Phoenix AMA based on groundwater. Developments that already had a certificate or a designation could continue. New determinations would need an alternative water source. That is the department's published position. It is not a Capital Market Funds underwriting overlay, and the acre-foot figure is not a loan amount.

The practical effect sponsors described was a stall on new for-sale plats that had counted on groundwater, especially on the edges of the metro area. Commercial buildings are not automatically in that same certificate box. A lender still asks, because a retail pad, an apartment, or a warehouse can depend on the same provider, the same plat, or the same political uncertainty. Horizontal rental communities were sometimes financed on a different theory: a single rental lot is not the subdivided land the certificate statute was written for. That distinction is discussed on Phoenix build-to-rent. It is not a promise that every rental site clears.

What the 2026 ruling did, and what it did not do

The Arizona Capitol Times reported on April 22, 2026 that Maricopa County Superior Court Judge Scott Blaney ruled ADWR had acted illegally when it changed how it evaluated groundwater for metro Phoenix housing in 2023. The suit was brought for the Home Builders Association of Central Arizona. The judge's point, as the Capitol Times described it, was that the department adopted a new formula without the formal rulemaking process. A spokesman told the paper the agency intends to appeal. Holland & Hart's note on the April 21 order describes the court invalidating AMA-wide unmet-demand and depth-to-water rules on those procedural grounds and enjoining the department from relying on them while an appeal or a proper rulemaking is outstanding.

A later public account, including the June 2026 reporting already cited on the Arizona construction page, discussed a further ruling on how much extra water the department could demand above the 100-year showing. Read the two as a live dispute, not as a single sentence that says building is open. Neither ruling is a permit for your site. Neither one is a reason to tell a lender the water question is closed. If the appeal succeeds, or if the department completes a formal rule, the question changes again.

What to put in the first construction email

Name the city, say whether the plan is a for-sale subdivision, a rental community on one lot, or a commercial building, and attach whatever water paper you actually have. Buckeye requests that sit next to large master plans, including Teravalis, should assume the lender will price infrastructure timing. That city page is Buckeye construction. Do not send a finished, leased building to this note. Permanent debt on a standing asset does not reopen the subdivision certificate.

We will not quote a construction rate, a loan-to-cost, or a ranking of which West Valley city is safest. Craig Hoebing arranges the facility from Scottsdale under Arizona commercial mortgage banker license CMB-1047342, NMLS 1445066. Sending a water letter to this office does not approve it.