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LOS ANGELES-Gov. Gray Davis has signed into law the most expansive statewide slow-growth program in California’s history, casting aside concerns from some developers and economists who say the measure will worsen the housing shortage and force some large employers out of state.

The plan was approved by the state Legislature last month, as the 2001 session came to a frenzied close that found lawmakers voting on hundreds of issues—some of which they had barely studied. The bill, now signed into law by Davis, requires builders whose projects would include more than 500 homes to first show that there will be enough water for their development’s residents for at least 20 years.

Yet, the plan goes far beyond residential real estate. Large hotel projects are now subject to the new water-related requirements, as are new businesses that want to erect a headquarters complex or industrial facility that would employ more than 1,000 workers.

The measure was authored by Sheila Kuehl (D-Santa Monica), a rising star in the slow-growth movement. It was backed by the California Farm Bureau, as well as many environmental groups.

Some large developers and building associations fought the bill as it wended its way through the Legislature, and then made an unsuccessful last-ditch attempt to get the governor to veto it. Builders say the measure could stifle new housing development and thereby worsen the state’s housing-affordability crisis.

Some economists also opposed the plan. They claim that extending the new water guidelines to commercial projects with 1,000 or more employees will discourage California-based companies from expanding here, and also prompt Fortune 500 companies looking to establish a larger West Coast presence to instead build their projects in neighboring states without such water concerns.

After signing the bill, Gov. Davis said he hopes it will lead to better regional planning and also help to avoid creating a water shortage as bad as the energy shortage that currently grips the state.

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