Question
Hi, Our back yard is roughly 17 feet from the house exterior to the fence. The length of the property is over 25 feet. So its a small yard that is south facing. The first 8 feet are level and then it slopes downwards with a 3:1 grade to the fence. What options to we have have to landscape this area/slope. We have lost more than 10 feet here. Can retaining walls be built 10 feet from the fence? There is a water draining facility pipe such that water from lots above us in elevation will drain downwards and out towards our neighbours home backyard.
Building a deck is not possible since the city wont issue a permit (structure area has to be less than 45% of foot print). We want to make as much land level as possible and try to plant and make it more use-able living area outside. I live in rainy Seattle.

Answer
Assuming there are no restrictions on walls there is no reason you can not build a wall at the back of your lot and then fill behind it to flatten your yard. This is typically not cheap. You must have access for a small bobcat loader for wall materials and back fill also. There is no reason you could not build a wall right next to a fence unless you have some local rule saying you can not. The only issue will be space needed to build the wall. You probably need at least 3 feet from the fence in order to work.
I can speak to the drainage issue without a better understanding of the concern. Typically though as long as you are not doing anything to increase or "point" the water onto another lot that used to be free flowing you should be fine. Best of Luck

Sean J Murphy, LA,ISA, LEED AP
Please check out my blogs and articles on landscape topics like this on my websites.
http://www.seanjmurphy.com
http://amenityarchitects.com