For the first time, construction of new housing developments in California will be contingent on water availability, under a bill signed yesterday by Gov. Gray Davis (D). The new law prohibits cities and counties from approving housing projects of 500 or more units unless water agencies verify that there is sufficient water to serve the developments for at least 20 years, even in times of drought. The bill’s author, state Sen. Sheila Kuehl (D), is optimistic that the law can help California reconcile its dwindling water supply with a booming population. (The number of California residents is expected to increase by 70 percent in the next 40 years.) The law will have the greatest impact in arid Southern California and in the Central Valley, including parts of the East Bay.