Lea Márquez Peterson

FUNDS AVAILABLE: $40 Million for Rural AZ Water Projects

PHOENIX - Apply now. The Arizona Legislature has made available up to $40 million in additional Water Supply Development funds for rural water providers to make improvements to water infrastructure and projects located in rural communities. (SB1823) (News Release)

 Arizona Corporation Commission Chairwoman Lea Márquez Peterson encourages owners and operators of small water utilities regulated by the Commission to take advantage of the funds to improve their water systems and benefit customers. 

 Background: The Legislature established the Water Supply Development Fund in 2007 to provide financial assistance to water providers, “particularly in rural areas,” that lack access to sufficient water supplies and need financial assistance to construct projects necessary to obtain additional water supplies.(HB2692)

 Who Can Apply: The additional $40 million in Water Supply Development funds is available for regulated water utilities that meet the following criteria:

  • Serve at least 15 customers or at least 25 people for at least 60 days/year (ARS 49-352).
  • Meet the requirements of Arizona Revised Statutes 49-1273 (ARS 49-1273).
  • Meet the necessary technical, financial, and managerial requirements (ARS 49-1274).
  • Located outside of an active management area (SB1823).
  • Located in a county with a population of less than 1.5 million people (HB2388).  
  • Any other criteria that may apply under applicable Arizona law. 

 What the Funds may be Used For: Regulated water utilities that meet the criteria above may receive loans up to $1 million (SB1823) and grants up to $100,000 (ARS 49-1273) for the following purposes:

  • Acquiring water or water rights (ARS 49-1201).
  • Planning, designing, building, or developing water supply development projects:
  • Purchasing or refinancing debt related to water supply development projects (ARS 49-1273).
  • Projects that meet the merit requirements of Arizona Revised Statutes 49-1274 (ARS 49-1274).
  • Any other purpose or limitation that may apply under applicable Arizona law. 

How to Apply: Applications can be made with the Arizona Water Finance Authority pursuant to Arizona Revised Statutes 49-1274 (ARS 49-1274). Consider contacting your utility’s attorney for assistance with preparing and filing the application. Costs and attorneys fees associated with preparing and filing a timely application may be recoverable by application to the Arizona Corporation Commission. 

 Additional Benefits: Floor amendments passed by the Arizona Legislature this legislative session also modified the Arizona tax code to allow regulated water utilities to deduct contributions in aid of construction from their Arizona gross annual income for annual income tax purposes. (SB1828) (HB2900)

 Key Quotes from Chairwoman Márquez Peterson:

 “I applaud the passage of Representative Gail Griffin’s bill and the additional $40 million in Water Supply Development funds that the Legislature has authorized for struggling water utilities operating in rural Arizona. I encourage every regulated water utility that qualifies for these funds to take advantage of them as expediently as possible for the benefit of their customers.

 “I believe that when water utility owners work hard, reinvest in their infrastructure, and demonstrate a genuine concern for their customers, that deserves a just and reasonable return. Some of the best ways that I believe that a water utility owner can demonstrate such concern is by taking advantage of these kinds of programs (Water Supply Development funds, WIFA loans, and USDA grants) and seeking gradualism in their rate cases before the Commission (such as phased-in rates with waivers for lost revenue and interest).

 “I want to thank Representative Gail Griffin, a consistent advocate for Southern Arizona, for introducing the additional funds, which were originally proposed at $50 million, and expanding the eligibility criteria so more water service providers could apply.

 “I want to thank Senator Karen Fann and Representative Regina Cobb for their amendments to the Arizona tax code, which will reduce the income tax expense for Arizona’s ratepayers and encourage more development in our growing regions of the state. 

There are many small water utilities in southern, central, and northern Arizona that are serving rural communities and struggle to keep up with routine maintenance and make the necessary improvements to maintain long-term water supplies. These actions by the Legislature give our rural utilities a fighting chance and allow them to continue providing safe and reliable service at affordable rates to their customers.

Arizona Corporation Commission

1200 W. Washington Street

Phoenix, AZ 85007


Corporations Division

1300 W. Washington Street

Phoenix, AZ 85007


Tucson Office (Walk-ins only)

400 W. Congress Street

Tucson, AZ 85701