They're doing that here in the bay area too. My question is, do I have to have grass to count as a lawn? I stopped watering my lawn the day I bought the house, so at this point it is just dirt. Can I still the the $3/sqft to put in turf?
In some cities, not watering your lawn may get you a fine too: http://www.latimes.com/opinion/editorials/la-ed-brown-lawns-...
http://www.bayfriendlycoalition.org/LYL-rebates.shtml
And the program most relevant to your current question:
http://www.valleywater.org/Programs/LandscapeRebateProgram.a...