The water heater tank is a pretty good idea, but you need a way to seal it off in case of a boil water order. Maybe put in a bypass and only run water through the tank one day a week to reduce exposure. The big problems with rain collection and desalinsation is there isn't anywhere near enough rain and there's no electricity to spare here. The only viable solution is water rationing for residential, businesses, and agriculture. customers

The costs are going to be significant. It's going to drive out most of the desert agriculture, and pretty much going to kill whats left of the lawns after the last time. I have no idea what xeriscaping costs for a house, but the alternative for a typical single family home to put in artificial grass is around $8k.