When I lived in Florida, there were folks who had rock-lawns. Actually a very nice idea. Maybe this couple in Cali should try that. Rock lawns are growing in popularity & plenty of folks from coast to coast are doing it.
A lot of folks, sick of lawn-maintenance or worrying about drought just figure "screw it" and do the rock-lawn thing. It's quite lovely, almost Japanese rock-garden-like. In fact, the first photo is from California from an article about the drought.
And I agree that the schlubs running the place are being jerkasses. It's like they know about the no-watering ban & have just found an easy way to extort money!
It's a big $500.00 Catch 22.
I hope something can be done. Maybe someone can send this nice couple a check for $500.00 so they don't have to pay themselves, then everyone wins!