backyard low water design (new layout dimensions)

Briefing

Looking for designs for a nice backyard area in our upper lot to replace currently dead lawn area. Note that southern California is in an extreme drought so lawn is not an option. We need drought tolerant, native plants. The tricky thing here is that I have a large dog and 2 small kids and I'd like the area to be appealing to both. The dog needs a place to go to the bathroom and the kids want a place to play. I'd also like some sort of seating area, a small amount of artificial lawn maybe, and a dry creek bed. I'm not looking to change the actual structures that are already in place, ie the walls, the tiki hut, the pool, spa etc are all good as is along with the large palms and I would like to keep many of the existing large plants and all of the current cement walkways etc. I am open to getting rid of the pink and yellow trees but I am happy with the palms. The kids are 2 and 6 and the dog is a golden retriever.

When it rains we currently have issues with dirt flooding down the hill from above and directly into the pool. Whatever landscaping is done needs to resolve this issue. I'm hoping maybe the dry creek bed can help with this as well.

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