Water supply in limbo for new luxury community by Lake Pleasant

The Arizona Republic reported that a developer came up with a plan 15 years ago to get enough drinking water to an untouched swath of desert near Lake Pleasant for a massive neighborhood it wanted to build.

Lake Pleasant 5000 was hailed as what would be one of the largest master-planned communities in Arizona but the Great Recession brought those plans, and most development plans in the Phoenix area, to a grinding halt.

Now, as development picks up, and with water across the Valley in short supply, a West Valley city is making a grab for the water that Lake Pleasant 5000 thought it secured long ago.

Surprise is asking Maricopa County Superior Court permission to condemn Circle City, a small water company that agreed to add Lake Pleasant 5000 to its service area and provide water to the community, if the developer built the system needed to get it there. The city says the condemnation is necessary to meet future water needs.

Condemnation is the standard way for governments to acquire water utilities, under state law. Voter approval is required first, and then the city can request a condemnation through the courts.

The parties are now entangled in a court battle that has turned rancorous, and put Lake Pleasant 5000's water supply in limbo.

Concerned about what the condemnation would mean for Lake Pleasant 5000, last year the Arizona Corporation Commission tried to get involved.

Commissioner Andy Tobin said he found out about the potential condemnation at the same time the Corporation Commission was reviewing a request to more than double Circle City's water rates.

Tobin said he felt the potential condemnation was "intentionally kept quiet" as Circle City tried to get the rate hike.

The commission eventually denied that request, saying it was not right to approve a rate hike with the condemnation in progress. The case spurred Tobin to look closer at the condemnation.

Tobin said it concerns him that the development could be left behind. If this becomes a precedent, he said, maybe there is something the commission can do to make sure that contracts are more permanent.

The Arizona Supreme Court ruled earlier this year that the commission had no jurisdiction over the issue, since it doesn't regulate municipal water utilities.

Under state law, municipal water providers have to secure a 100-year water supply before approving new subdivisions, said Simone Kjolsrud, a graduate research assistant at Arizona State University's Kyl Center for Water Policy at ASU's Morrison Institute.

Surprise could purchase "as needed" water supplies from year to year, Kjolsrud said, but it wouldn't be enough to meet the state's long-term requirement. Even if the city doesn't need the water rights now, Kjolsrud said, it can sell the rights temporarily to cover its costs.

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