* this is a pic of the bottom level... on the top level there is a small garden behind that cherry blossom tree.
The length is about the same as the bottom lawn.
It's a big yard to maintain each fall.
Gorgeous maple tree and one ponderosa pine and two lilac bushes. Each side of the yard has a different type of "fencing". The back border has 1/2 chainlink and the remainder is wooden fencing (two lots long) to enclose my neighbour's swimming pool= our city bylaw is min. 6 ft fencing all around property with pool.
The top level is just "lawn" with border fencing @ the back and right side (shown= chain link fence) but the left side has a messy out- of-control line of fir Christmas trees = a border done by our former neighbour.
These trees are missing alot of branches and there are "holes" that my cat can access!
Climate here is semi-arid with snow in winter.

perhaps a retaining wall to further define the two levels.

Oh I d love ur garden cos mine is so flat I cant help with plants but a retaining wall and levelling area near house would be paved with steps down to lower level with rockery on both sides of steps. i live in Ireland so U ll get planting ideas from other As I said Tiz a lovely interest plot Good luck

It would be nice if you could use your yard as a bit of a retreat! You will have to do some levelling for that, but I could imaging a gazebo on the left.... if you use a Cedar Kit you do not even have to stain it if you don't want that extra work! http://www.outdoorlivingtoday.com/oltss/storefront/product_detail.php?pid=BAYSIDE12

I don't know if you have plans for the 'lawn' - but you should consider EasyTurf (www.easyturf.com). We'll give you a year-round, lush green lawn without the hassle of maintenance/time/money spent.
What part of the country do you live?
Let me know if you have any questions.
Take care - good luck!
George .
http://www.houzz.com/projects/82915/Backyard-Installations

I like rare bird's idea of steps and rockery: simple and beautiful. Am wondering, however, about the fence currently separating the spaces. Is it there of necessity? If so, additional plant material to cover would seem more in order.

The second part of your question addresses reducing lawn area. I think I am seeing the shady bit being outlined by your hose? If so, this is a good area for water features and/or hardscaping. That leaves an opportunity for additional planting beds along the patio perimeter, softening its edges and reducing the lower lawn by half.

There are lovely colourful pebbles available quiet cheap and I use them for area that are shaded here is a pic of my garden shaded by the house

@ George (this property is in a desert-like climate in Canada). We have lawn watering restrictions in summer. The left top side of yard has a barn-like shed my deceased father built back in his day. We will not remove it as we use it often for storage. We also have a squirrel that stores his pinecones in the woodpile beside the shed. Don't really mind the pinecone debris as we blocked out his access into the shed. Lots of wildlife enter this yard. eg:bluejays, squirrels, bears and deer. A young bear actually crushed the soft fencing on the leftside a few yrs ago. He must of jumped the chainlink fence on the right side to gain entry into the yard. Deer ate the top sections of a cedar tree in the front yard too.

@ studio10001.. can you suggest plant material to grow on chain fence? Lilacs bloom during the early summer here. Very hot summers.

@ Rarebird.. we were thinking of pebbles.. but we got alot of rock already..lol. We took out many truck loads from this backyard in 1975! And it was sifted it too.
Everywhere you dig you hit a rock.. we need to add more topsoil.
Last month we used these excess rocks on a pathway-in-progress @ the chimney side of house.
Can one have too much rock in their yard? ... just wonderin;... it gets 30 degrees Celcius here in summer. Rainfall is minimal.

Jill , I recommend you ask your local nursery for available choices that incorporate your zone (6, by the newer canadian standards), and look especially at xeriscaping options to compensate for dessert conditions.

Which reminds me I'm supposed to be cooking right now!! Good luck w you project, Jill, I have bears to feed.....

We don't have the pool it is the new neighbour behind us. The previous owners (1970's built the wooden fence to protect their pool entry area) that covers half of my yard and another neighbour's property. The fence is also decaying.lol.

I'm imagining a curving terrace low wall or maybe two depending on the height of the slope. Terracing will require some earth moving but if you set up two levels it should not be too big a job. There are some concrete blocks that have a lip to form a wall so that no grouting, concrete is necessary, They come in some nice colors. With all your wildlife that visit you would not want to plant anything too delicate, but there are some great vines to cover your fences - also climbing roses will deter too much traffic on the fence. I live in a dry climate - high plains - with hot summers and little rain. The zeriscape idea would be good if water is rationed and can look very attractive with native plants and colored gravel. A yard that is terraced is so much more useful than a sloping lawn. The existing trees are a great start.

@ nancy22032 Terracing is a neat idea... wow, colored gravel.. sort of like dyed mulch bark. Thanks so much for all your creative tips!

Hope u have some of the rock left U could build a small wall lokk closely at the left hand side of my pic I built the wall there to make a raised rockery bed lol :)

could U use the shed to make a seating area like the 1 on the right hand side of my pic Put timber in front of shed and more outwards it would make a cool seating area my kids usually sit in this area with a fire pit in the evenings

@ Rarebird.. your yard is large and very tidy. Do you have miscanthas grasses or plumes in the back and is that a wisteria in the front of pic? I love the cascading wistaria when it blooms but cannot grow it :(
Your stone wall is x2 tall... How do you keep your rocks from moving.
I also like that red bush on left side of yard.

No I dont have miscanthus cos i like smaller shrubs I had one in the front but after 10 years it got so untidy and ugly i moved it only to find a nest of rats had made their home there lol.....yes I cultivated the wisteria from an early around a 6 foot pole and kept all grow clean at the trunk to make it into a tree tiz time consuming cos it keeps sprouting at the bottom and I want a tree. Tis 12 years old and needs support as the wisteria wood is very soft It blooms twice a year and the leaves are lovely all summer it need constant pruning to keep in shape that is a purple heather on the left side. For the wall we put in a cement foundation and the cement in all sizes of rock It starts outside the frame of my pic and curves around to seating area

this is another area

this is a better picture of the wall and seating area this seating would look cool in front of ur dads shed

You might want to consider replacing the decaying fence with an aluminum one - that will fix the problem permanently!

@Jill - watering restrictions? Ha! No need to worry about those with EasyTurf - 'cause there's no watering! We can incorporate as much or as little lawn as you need for your project - if I know what city you're in, I can put you in touch with an authorized dealer - or you can check us out/look one up at www.easyturf.com.
Let me know!
George

@Jill - on an unrelated note, I feel bit homesick now - my Dad has a couple of "pet" squirrels. He slowly moved their food tray from the back fenceline to the back porch - now they eat breakfast right outside his sliding glass door while he reads the paper and drinks coffee.