The first thing you have to do if you are replacing your lawn is to kill your existing lawn.

Links:
Kill Lawn
Gardening with Limited Water | University of California Div. of Agriculture and Natural Resources
Water-Wise Lawn Alternatives - UC Master Gardener Program of Sonoma County
Low-Water and Drought-Resistant Plants - Cal Water

12 Great Drought-Tolerant Plants - Sunset
Roseville WaterSmart Plant List - City of Roseville
Low water lawn now available that is made of 4 native grasses and can be mowed 3 times a year and only needs water every three weeks.
Habiturf®: The Ecological Lawn - Lady Bird Johnson Wildflower Center

Efficient Outdoor Water Use | Las Virgenes Water District
  A California-Friendly Guide to Native and Drought Tolerant Gardens
 

In Drought-Ridden California, the Classic Lawn Loses Ground - The New York Times
Examples of drought tolerant gardens in Davis

BeWaterSmart | Regional Water Authority in Sacramento, Placer and El Dorado counties
  BeWaterSmart | Top Ways to Save
Be Water Smart Ð purifyivch
Water Conservation - Niagara Conservation