I wouldnt think you needed permits or any other "permissions" to replace in kind any electric panel. If you intend to upgrade to more amps then yes as example replacing a 100 amp panel with 200 amp even if you only use 100 amps of the capacity. The box would be capable of adding circuits to fill up the 200 amp capacity which is why they want a new service line. 10K for a service line inside a city seems a bit much even by California standards. You couldnt be running that far in a city. Rural areas I could see when you might have to run 1/4 mile or more.
Welcome to California! The run is about 25 feet.