The population of Arizona is expanding one way or another. But you can see houses with lawns less than a mile from Culdesac, so development like this would bring the per capita water usage down.
The amount of electricity people need to run AC is enormous. Which might at times be a matter of life or death. When I was there I believe a law was passed that it was illegal to shut off electricity if the temperature was above a certain threshold since some people were not able to handle the heat.
Arizona is insanely hot.
Then you argue that places are really cold that need to be heated which may be expensive.
How about you chose a more hospital area that is not really cold and not really hot.
You know where people live without big bills for heating or cooling.
Expansion does not need to stop.
Controlling expansion is key in most cities. The city planning office must approve construction. (or some part of the government has to approve it)
With that it would be natural for the party wishing to construct to detail how they will ensure the water they need.
Many cities are restrictive as to how much construction they will allow.
There are already recently constructed houses in near PHeonix that presently does not have water. They have been cut off by the city.
This is due to a disagreement on taxes, city zones and a few other things. That community must now pay to have tank trucks come by, and a tank truck can haul a lot of water, but when you must supply it to a whole community a tankers worth does not last that long.