Bermuda would be a poor choice because it would have a very short growing season. Tall fescue doesn't really use much less water than KBG (at least not in comparison with the grasses I'll be discussing in a bit). If it can't grow deep roots, it can sometimes actually need more water than KBG.

You've got several options.

If your main goal is to plant grass that will stay green with almost no water, the two grasses that would probably use the least are buffalo grass and blue grama. These are often grown together in a lawn setting. They're both native and both will grow in Colorado. The problem is that they'd have a short growing season (especially in Zone 4). If you don't mind a lawn that will be tan from late September or Early October into mid to late May, these will use the least amount of water. Both can be bought as seeds, plugs or sod. Sod is the most expensive, but easiest and fastest to establish. Seed is the least expensive, but hardest and slowest to establish. Buffalo grass grown from seed also has pollen that causes problems for many people with allergies.

If you'd rather have a lawn that is green at about the same times as the KBG lawn, you'll want a cool season grass.

One grass that is getting a lot of use in lawns recently is crested wheatgrass. This is an import and can live with no additional water. In fact, watering it much would kill it. It has very fine leaves, but they're a bit too yellow for my taste. It deals with drought by going in and out of dormancy at the drop of a hat. Most varieties are bunch grasses, but a few newer varieties such as Roadcreast and Ephraim are weakly rhizomatous.

Sheep fescue is native to the intermountan west, but the variety that is most often used in lawns (Covar) is based on a stand found in Turkey. It has extensive very fine roots, that don't go very deep into the soil, but spread laterally. It has very fine leaves and deals with drought with the extensive root system and also by reducing evapotransporation. It's low growing and can be left unmowed if you don't mind a slightly wild look. It's a bunch grass, but mowing will encourage tillering and it will spread somewhat if it is mowed. It will stay green with very little additional water (on a par with the buffalo grass and blue grama).

Streambank and thickspike wheatgrass are native grasses. Some references list streambank as a form of thickspike wheatgrass and not a separate species. They have similar looks and growth types, but streambank wheatgrass is more suited to heavy/clay soil and thickspike wheatgrass does better with sandy soil. It's lighter green than KBG and has very fine leaves. It spreads rhizomatously so it will fill in bare spots. It grows slowly and should be mowed high (around 3.5-4 inches). It may only need to be mowed 2-4 times a year. It will live with no irrigation, but will go dormant during the summer and come out of dormancy once it rains. If you want to keep it green, it would need only slightly more water than the buffalo grass, blue grama or sheep fescue (maybe 1/2 inch every other week). It is pretty easy to get started from seed.

Western wheatgrass is somewhat similar to streambank wheatgrass, but it has much deeper roots, so it goes dormant later. It is also slower to come out of dormancy because most of the roots are deeper (so the rains need to penetrate deeper before it will bounce back). It has wider leaves that are somewhat blue in color. It's harder to establish than streambank wheatgrass and seems to do better when dormant seeded. It has similar water needs to streambank wheatgrass, but would probably benefit from less frequent but deeper water. It grows a little more slowly than streambank wheatgrass. I've seen it described as aggressively rhizomatous.

Very little fertilizer is required for any of these (maybe 1/2 to 1 lb N per 1000 sq ft per year) and the crested wheatgrass and sheep fescue will probably die if they are fertilized the way a traditional lawn is fertilized. Western wheatgrass will do best if fertilized a couple of times a year, but if it's planted in a mixture (with streambank wheatgrass, for example) it will do fine with the lower level.

If you decide to go this route, do as I say, not as I did. Kill the existing lawn first. It's a little scary, but if you try overseeding into the existing lawn, it will take too long and will ultimately cost more. I overseeded my lawn with streambank and western wheatgrass in the front and sheep fescue in the back. I added some blue grama to the heckstrip because it gets so hot in the summer. It has taken several years to get to the point where the majority of the lawn has the native grasses and I've still got a lot of KBG and tall fescue (it will probably die out this year as I plan to water rarely).

There's a sod farm in Salt Lake city that sells sod and seed and one of their products may meet your needs. I haven't bought from them because I prefer making my own mixes, but I may buy some of their sod if I end up with bare spaces at the end of the summer.

I've bought seed from a number of suppliers (usually buying individual varieties and mixing myself).

Round Butte Seed
Mountain Valley Seed used to have good prices on streambank nad western wheatgrass, but I don't see them on the site anymore.
Southwest Seed

I used to have some other links, but I can't think of them at the moment.

My dog loves to lie in the area that is mostly streambank wheatgrass.

Wow, you are such a wealth of information. Thank you so much for taking the time and explain this.
I did contact a see company in Greeley, CO and they recommended the two you did as well, Buffalo Blue Gramma and Streambank Wheatgrass.

The problem is that it's sold as a seed and I would rather have sod installed, as she said it's probably too later to plant the seed.

What are your thoughts on Thermal Blue, which is what a local turf company (sod) has recommended?

Actually, if anything, it's too early to plant buffalo grass and blue grama. As warm season grasses, you need to wait until the daily highs are in the 80s to plant.

I don't know much about thermal blue. It's a hybrid between Texas bluegrass and KBG. I think it's supposed to be very heat tolerant and is supposed to need less water than KBG, but I don't know how much less. You might want to post a new question with thermal blue in the subject so that somebody who knows about thermal blue will see it.

I'll post another message about that then.
I forget what the different between warm season grass and cool season grass. Warm season means it thrives better in the heat, right? So this doesn't get green till closer to the summer? Do you know if it only is available in seeds?

That's right. Buffalo grass and blue grama will both turn tan when you get a frost in the fall and they'll turn green later in the spring as well.

Some of the other grasses I mentioned will be green about as long as a KBG lawn and don't use much more water than buffalo grass and blue grama. I'm using mostly streambank and western wheatgrass in front and they were green all winter (along with the fescue/KBG lawn I'm trying to slowly replace through attrition).

Both buffalo grass and blue grama are available as plugs and sod as well as seed. Here is an article on planting a grama lawn from plugs. They also have articles on planting buffalo grass. They recommend tilling, but I don't think that's a good idea because it can lead to a bumpy lawn after the soil settles. They sell plugs, ass well.

Buffalo grass grown from plugs will probably produce no seeds. This has two advantages. For one thing, buffalo grass seeds are very large and in sort of a burr so they can be uncomfortable to walk in. Also, the male plants produce pollen that can be rough on people with allergies.

If you go with seeds, you'll probably need to sow the two grasses separately. Buffalo grass seeds are about the size of small peas, and blue grama seeds are like dust.

BP,

Great advise as always.

I planted ephraim wheat, which is a great breed of crested for colorado, for the mother in law. Still going 5 years later, she doesn't water much. It requires little water and helps keep the soil rooted for erosion control.

I would like to add www.avseeds.com to your list. I have had the best results with all of their varieties. Last year I planted 30,000 sq feet with their low 2 gro blend. Excellent germination and coverage. I used the earth carpet blue blend for the lawn. Excellent again.

OP, you may want to xeriscape leaving a small section for grass. Having dogs may hinder your back yard no matter what you plant. As for turf type fescue, I'd rather have bluegrass. That fescue needs just as much water as the bluegrass.

Good luck