I hate to say it...

But it seems like they may be going after you for an entire new lawn (and possibly landscaping as well), due to the sprinkler system being down. You have bent over backwards, but it was not good enough. I've no doubt that whatever agreement you come to will never be good enough and that as long as you continue to "make good" that you will prolong your own agony...and (I'd bet) they'll continue to throw more and more demands at you as well.

I would kindly inform them that you will not be continuing with this any more. I would offer up no explanations or appologies...it seems that this will only add fuel for them to come at you with further demands.

I'd also seek legal advice on how to bring this to an end.

good luck,
dan