Neighbor Wants to Raise/Flatten Back Yard

My back neighbor, who we generally get along with, would like to flatten their back yard. They've got a pile of kids and want a flatter play space for them, along with astroturf. 

We share an old 6' fence that needs replaced. Unfortunately, the fence adds no privacy for either of us, it's too low. 

Basically, my yard is like a canyon between the two rims of our homes, and the fence sits in the middle. 

He wants to bring his side UP about 3' at the highest point. This would make the fence level across our shared property line, but only add privacy when we're at ground level. Our deck, our dining area, our living area, our bedroom would all easily overlook the fence. 

Option 1: If he only brought up his yard, we'd be left with a retaining wall running down our property line. We'd then essentially get a "sunken garden" effect, with a 9' fence or more. One perk to this is that we could then use his retaining wall as backing to our planters. I imagine we'd also need some sort of deed modification or contract to assert that the retaining wall is his to maintain. We also get a new fence at a reduced cost because the poles to support it would need replaced. We'd probably only pay/split for the wood structure replacement of the fence. 

Option 2: He keeps the retaining wall on his property, creating a sort of floating island of raised yard. He'd then easily be able to see over the fence into our yard, and would get no privacy on his side. The old fence is untouched, and thus, we have no say in the matter. 

Option 3:  We join in on the fun, and raise our yard as well. This would require a retaining wall in the middle of our yard (which my wife doesn't want because we already removed one),  we'd be on the hook for equal split of the cost of a new fence, AND I'd need to build a retaining wall around my under-deck storage in order to maintain it's height. It might also mess with my recently installed deck stairs and pad. 

If we did option 3, I'd ask him to pay for the retaining wall until it hit my deck, the fill and grading, and we'd split the cost of the fence. Cost to me would be the section of retaining all preserving my under-deck storage, and half the fence. My yard would be divided into thirds. 
 

Crude Sketch:

0' is the lowest point in both yards. My house sits 7' above that lowest grade. Both our yards are sloped down from a side street, the highest point in our back yards is 7' above the lowest point. The side of my house is level with the ground on that side of the house. His entire house is lower than mine by about 2'. Standing in our kitchen, we look down on his entire yard. 

I've got a retaining wall that makes some of my back yard level with the street, but it needs replaced. That space is about 5' wide currently. I actually wanted to expand this area when I redid the retaining wall because the space is just wide enough to park a car, put a shed, etc. It'd be about 10' after. 

Instead of a retaining wall, his yard just slopes steeply towards the street level. 

His deck on one side is nearly ground level, and about 4' off the ground on the "tall side". 

Light Blue is Option 1

Dark Blue is Option 2

Red is Option 3

Our Backyard (we have sinced removed smaller retaining wall and added a much larger deck).

You are always going to see into his yard from your house unless you install something like a 12' fence.  I say if it isn't broke, don't fix it.  Let him do what he wants inside his property lines.

YMMV

I have little input to your situation but I'll share mine if that might help... 

Two summers ago we squared off the side property of our house and put up a fence.  Some of the few pictures I have:

The whole side yard sloped downward.  Enough slope so that it was generally awkward to walk around to the back of the house via this side. 

Most notable, the fence posts are in the wall.  The white is just 3 ft tall panels but then about another foot of wall from inside the yard.  When standing outside the fence its 3ft white plus as much as 4 ft of wall, so rather tall.   But "ground level" gates at both front and back.    

I got nothing.  

No, really... my neighbors are no less than 1000ft from my house in any direction.  And I have the high ground. 

Following to see outcome 

In reply to QuasiMofo (John Brown) :

Purple Frog (Forum Supporter) said:

You are always going to see into his yard from your house unless you install something like a 12' fence.  I say if it isn't broke, don't fix it.  Let him do what he wants inside his property lines.

YMMV

Then I would be telling him he can't touch the fence line. 
 

I will always see into his yard, but I wouldn't complain about a new, higher fence.

If you did option 2 he would probably have to install his own fence otherwise his kids could ride their bikes over the wall and fall into your yard. 

I think someone may be in for a shock when he finds out what this will cost. As in, he may find himself house-hunting for a better yard for his kids.

Id be concerned about the drainage and what the impact will be to your yard. 3' is a lot to raise... you may find you are getting all the runoff from his roof.

Do you have septic systems?

I vaguely remember your thread from regrading and deck addition a bit ago.

I'm sure it's the most expensive option but I'd be looking to fill in that whole section and split the cost with the neighbor. It looks like you're always going to be able to see the neighbor but bringing the yard up seems like it'd make it more likely you spend time there. But that's just me.

Where does the rain water drain to now ?
 

and just an idea , is there a chance he can flatten his side but going down and removing dirt ,  That would be cheaper for him than bringing in dirt and the retaining wall.

His yard kinda naturally slopes into mine. In our block of houses for which is bordered by the uphill street, I'm the highest, he's a little bit below me, and we both have side neighbors who are further down slope where it starts to flatten out. 

I have no worries about water impacting my house, and honestly, I collect so much water from my own property that I'm not worried about anything from his. If he flattens his yard he'll actually hold more water on his property.

Right now, it just runs down to our shared fence and into my planters. Which is good for my plants being in the desert and all. 

In order to get the flatness he desires its far more cost effective to fill than to remove. 

Here's his back yard from the highest point: 

and from the trees/shed area:

See how the yard falls away from the deck as you get further down towards the shed? He wants to build a retaining wall down towards the trees/shed to make the area in front of the deck all flat the whole way out to our shared fence. 

Let you in on a secret: although Flagstaff has a wonderful climate, I suspect neighbor kids aren't going to play out there any more or less if he grades and installs artificial turf.

Unless he's got barking dogs, brighter-than-the-sun flood lights, or is a drug dealer, I'm not here to tell him how to use his property. 

They are great neighbors and I'm evaluating options so we can discuss potential plans so neither of us are caught off guard by the other. 

SV reX said:

I think someone may be in for a shock when he finds out what this will cost.

Like said here.  The cost will kill this project.  Retaining walls are take your breath away expensive.  This is likley a $30k plus project.  If the homeowner is like me, in the sense that he's broke as hell thanks to having a pile of kids, there's no way he's going to have this work done. 

I'd forget he even said anything about this. 

I think as long as you have a good relationship with this neighbor and you get the paperwork straight, option 1 is the way to go. It's the most bang for your buck on your end, you get a bit more privacy (or at least not less privacy) for minimal cost and effort. 

I agree that option 2 seems like it would just spit kids over the fence into your yard.

He's handy, and has connections. 

He just built a luxury campground where the places he rents go for $500/night. 

He also plans to keep any retaining walls under the 4' max as required by our local ordinance for needing a permit or engineering.  

Never underestimate what people will spend money on. What's expensive to you is cheap to someone else. 

In reply to pheller :

That wouldn't make me feel better if I was his neighbor. 
 

It's part of the reason why I don't like the idea of not having the fence raised. They could strike it rich and decide to move elsewhere leaving me with new rear neighbors and a trespassing dog. 

Especially considering it looks like he already has the start of the retaining wall, I'd go with Option 1. Unless the view is distorted, it looks as if that wall could just continue and the fence would run about the same height as the fences at the far ends with gates (on both properties). 

This seems... Odd. 

From my perspective, I don't care what he does as long as the retaining wall is set back 24" from the property line (the limit for my zoning). If that means he needs a new fence, he can do whatever he wants with the fence as long as it keeps the kids out of my yard and is no closer to my house/property line than it is now.

Seems like it would be a hell of a lot easier and cheaper to just move.

"Holding more water on his property" could actually be worse than draining on to yours. If the water does not drain properly, it could end up settling against the new retaining wall, which could lead to failure of the wall at some point. If that were to happen, the wall will be in your yard. 
 

I wouldn't be comfortable with a neighbor building a retaining wall up to my property line with no permit and no engineering. 
 

YMMV

BTW... some cities do not allow retaining walls to be built on property lines, and if it IS on the property line, then you likely share half of the legal responsibility should there be any future failures. 
 

Retaining wall article that may be helpful

Not my yard, but in my unasked for opinion the kids won't care.