Rural Communities Stand To Gain From Water Project Funding Options

Arizona Water Company in Sedona

By Terri Jo Neff

Tucked here and there among the $12.8 billion budget package signed into law last week by Gov. Doug Ducey are numerous water-related funding opportunities for rural counties across Arizona.

Among the budget items in SB1823, the general appropriations bill, are allocations of $3 million for water project assistance grants to cities and towns that provide water in Navajo and Apache counties. Another $2 million of water project assistance grants are available to irrigation districts in Cochise and Graham counties.

Those funds are in addition to $160 million moved from the state’s general fund on June 30 to the Drought Mitigation Revolving Fund. Of that, up to $10 million may be used for grants which facilitate the forbearance of water deliveries by June 30, 2025, while another $10 million may be used for Arizona State Land Department grants related to water use.

Ducey also signed into law changes to Arizona’s tax code which allow water utilities regulated by the Arizona Corporation Commission (ACC) to deduct contributions toward construction from their Arizona gross annual income. This can be particularly beneficial for companies which serve smaller communities where it can be difficult to spread out the cost of construction projects.

In addition, the Legislature passed a bill sponsored by Rep. Gail Griffin (R-LD14) to provide $40 million for the Water Supply Development Fund for assistance to water providers for improvements to water infrastructure and projects located in rural communities.

The ACC is encouraging owners and operators of small water utility companies which are regulated by the Commission to take advantage of the funding, which can go as high as $1 million per project, to improve their water systems and benefit customers. There is also an option of a $100,000 grant which does not require repayment.

Eligible water utility companies must serve at least 15 customers or at least 25 people for at least 60 days of the year, be located outside of an active management area, and be within a county with a population of less than 1.5 million people. The funding can be used for myriad purposes, including acquiring water or water rights; purchasing or refinancing debt related to water supply development projects; conveying, storing, or recovering water; reclaiming or reusing water; capturing or controlling stormwater; and replenishing groundwater.

Utilities can apply for the WSD Fund loans or grants to the Arizona Water Finance Authority.

“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,” ACC chair Lea Marquez Peterson said last week.

House Speaker Rusty Bowers (R-LD25) acknowledged the importance of the water funding allocations in a post-budget signing statement, calling the funding for infrastructure projects a “key to securing Arizona’s future, and one of our highest priorities.”