A water availability letter is almost always a requirement of for every construction or building permit you may be applying for.
Make sure you speak with the water purveyor that will be providing water to your property.
It is quite common that there is not adequate fire flow on the existing water system to allow any new construction. You may need to make adjustments in your construction budget to allow for this shortcoming. Just because there are water lines out in the street, does not necessarily mean you can connect to them.
Speak with your water supplier as part of the pre-planning for your new project.