Replace lush garden with more sustainable desert garden?

One idea that I strongly recommend is holding a "plant sale".  Of course the lawn may have to expire on natural terms this summer, but to the extent you have more water intensive plants that are in good shape, many people would be more than happy to come and buy them from you and/or dig them up for free.  If you go this route you can ask your local nursery if they have any old containers they plan to trash so that there are pots for people to use.  

Lots of benefits to this approach - the plants go to good homes/aren't wasted, you get a head start on clearing the space for your succulent garden, and you don't have to live with dying plants (which can quickly become fire hazards).  Spring is the perfect time for this as plants usually look their best.

Congratulations on your decision, it’s an extremely wise move!  There are many, many resources for reading and learning about California native plants; Berkeley (and the larger East Bay) have quite a few nurseries that specialize in CA natives.  There are a lot of books and websites to consult also.  Using plants that are perfectly adapted to our climate makes sense not just for your water bill, but for the larger ecology as well.  You will have a lot of fun learning about native plants!   Two things I would say: we do not live in a desert, so I wouldn’t necessarily be thinking of a “desert garden” since we (in good years!) get a fair amount of winter rains.  That being said, many cacti & succulents do fine here.  Secondly, after a little research maybe, I’d hire a landscaper who specializes in CA natives to either consult and draw you a plan, or (depending on how much you can do yourselves) install the garden.  It will require some regular watering at first, but as the plants take hold, the vast majority of our natives require little or no summer water (since we get little or no summer rain here...).  Great idea; enjoy!

The SF Bay Area sometimes has lots of rain in the winter. Many desert plants would suffer with all that water. So I can't recommend a desert garden. You say that your garden requires a lot of water. Are you sure? Many deep rooted bushes and trees need little if any irrigation. Rhododendron, ceanothus, yarrow, daffodils, roses and many more lush-looking plants thrive in our summer-dry climate. You may be surprised by what lives if you turn off the irrigation. Or, if you may be able to keep it all even if you reduce the irrigation. A lawn or a veggie garden will need some summer water. You may want to hire a landscape designer or a garden coach to help you figure out your options. Or, talk to neighbors. Reduction in water usage has been a California theme for years now, and many gardeners have knowledge in this area. 

It is definitely smart, and common around here (just take a walk and see!) to switch from water-hogging landscaping to drought-tolerant.

Depending on your budget, you can hire landscapers who specialize in drought tolerant and/or natives, or take a more DIY approach. You can get lots of ideas (and learn of landscape design companies with expertise) by participating in the "Bringing Back the Natives" Garden tour on May 3.  Sign up. ishttps://www.bringingbackthenatives.net/

Another good resource is EBMUD's  book https://www.ebmud.com/water/conservation-and-rebates/watersmart-gardener/plants-and-landscapes-summer-dry-climates/

Before you stop watering, you might want to look into EBMUD's rebate for switching to low-water plants.  your HIGH WATER plants (maybe just lawns??) have to still be there to start the process (we hadn't realized that and missed out). It might have to be an actual grass lawn, though - see the details here: https://www.ebmud.com/water/conservation-and-rebates/rebates/lawn-conversion-rebate/

Consider a thoughtful compromise between maintaining your lush yard as-is and replacing it all with a dry landscape.  For example, if you have a border of shrubs around a lawn, simply replacing the lawn with pavers will save a lot of water.  You may have some low-water plants mixed in with the thirsty ones (if you're not sure, take clippings to a good nursery like Berkeley Horticultural for identification).  A drip-irrigation system, regular, generous additions of organic matter, and a thick layer of mulch can help conserve water.  (For drip system information and equipment, try the Urban Farmer in Richmond -- this is an easy DIY project.)  For ornamentals and fruit trees, you can install a gray-water system.  (For gray-water system info, try oasisdesign.net.)

                Simply switching off the irrigation and letting it all die may mean you will lose plants that need a little water to get by, while making it easier for drought-tolerant weeds to take hold.  Desirable drought-tolerant plants can help control weeds via competition.  The best time to plant them is in late fall to early winter.