WATER, WATER EVERYWHERE

DEL WEBB'S 5,600-ACRE NEW RIVER DEVELOPMENT HAS SPAWNED CONTROVERSY. BUT NEWS COVERAGE HAS IGNORED THE WATER WHEELING AND DEALING THAT COULD CARPET ARIZONA'S VIRGIN DESERT WITH SUBURBAN SPRAWL.

If the project were to develop, Del Webb needed a reliable water supply from an off-site source. But if Del Webb lacked water, the company was hardly short of cash or credit. In fact, the firm was becoming something of a darling in the financial community. Its stock was rising on the New York exchange; business publications were touting Del Webb as a model for the American development industry.

The water-rich Ak-Chin and cash-laden Del Webb made an all-American deal. The Ak-Chin agreed to lease between 6,000 and 10,000 acre-feet of water annually to Del Webb for the next 100 years; the developer was free to use the water at any of its communities in Maricopa County, including the Villages at Desert Hills in New River.

The agreement, endorsed by the federal government, has broad implications for future development in central Arizona. For the first time, an Arizona Indian tribe has leased water directly to a private developer rather than to a municipality or other government. "With the Del Webb deal, you now will have other businesses and corporations looking at Indian tribes for water leases," Antone says.

And Arizona tribes have rights to huge amounts of CAP water.
Central Arizona Project officials estimate that as many as 300,000 acre-feet of water now belonging to state Indian tribes will be available for lease in the near future. That's enough water to meet the needs of 1.5 million people per year.

Richard W. Garnett III, a water attorney who reviewed the Ak-Chin lease agreement for Maricopa County, says Indian water leases will play an important role in meeting municipal demands.

Garnett points to the City of Scottsdale's ongoing attempts to reach a similar lease arrangement with the San Carlos Apaches. Scottsdale already has a lease agreement with the Salt River Pima-Maricopa Indian Community. Tucson is negotiating with the Tohono O'odham tribe in southern Arizona.

"Anybody that needs a certified assured water supply is going to think about the Indians as a possibility," Garnett says.

The value of Indian water is abundantly clear in Del Webb's Villages project. The water lease served as a linchpin in the development deal; the deal is projected to generate more than $2 billion in revenue for Del Webb over the next 20 years. The agreement also is a financial windfall for the Ak-Chin.

The lease requires Del Webb to pay $12 million initially for rights to the water, plus delivery charges starting at more than $500,000 per year and steadily increasing for the next 100 years. By the 15th year of the lease, the Ak-Chin will have received a total of $10 million in delivery charges on top of the initial $12 million lease payment--with 85 years to go.

The Ak-Chin have turned surplus water into gold. Now that gold will earn compound interest for the rest of time.

"We want to put the money in a 20-year trust fund and not even touch it," says Antone.

The Ak-Chin/Del Webb agreement, however, does more than benefit those two parties. It also opens the way for other private developers to play the water-lease game.

If a developer can afford to install supporting infrastructure up-front--for the Villages, an outlay of $110 million--and if a demand for housing exists, no area within reasonable distance of the CAP canal in Maricopa, Pinal and Pima counties will be off-limits for construction.

"I certainly don't think there is any particular constraint," Garnett says. Maricopa County's relatively quick approval of the Villages project earlier this month underscores the regional planning problems that Indian water leased to private developers will only exacerbate. No one at the county level cared much about the implications of Del Webb's water lease. Essentially, county officials cared to know that there was water available.

Cities have traditionally used water delivery as a planning tool; a decision on providing water to an outlying area often determined when and how that area would develop.

But growth experts say the availability of Indian water could allow developers to bypass the troublesome municipal planning process. Even more than in the past, development could leapfrog into areas far from urban cores. Areas perhaps even more remote than New River.

And for the unincorporated areas of Arizona's largest urban county, there is no regional planning or zoning entity in place that has the will, the power and the expertise to control such patchwork growth.

"We are really at just the beginning stages of becoming aware of regional growth issues," says Leslie Dornfeld of the Maricopa Association of Governments. "We are just infants."

Del Webb's New River project can be seen in at least two different lights. It could be judged a huge, complicated development that proceeded because of huge and complicated, but perfectly legitimate, market incentives.

Or, if you think like Gary Giordano, the project could be considered the end result of a huge, complicated conspiracy, a manipulation of the government process to benefit private business.

If Del Webb's New River project were the result of a decadelong conspiracy, there would be little reason to believe it could chart a course for Valley growth that numerous other developers are likely to follow.

So it is worthwhile to determine whether Giordano's theory of the Villages at Desert Hills is correct. By Giordano's description, the deal went down like this:

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