Hank + Dani
Another option that might help to keep things in budget {as the rock hill will be tricky} would be to think about extending either a wooden or concrete patio from your back door, over the top of the drainage and out to where the other patch of grass that you don't use is currently. The hill could be seeded with native grasses and wildflowers, and just sort of left to nature. If you created a pathway up to the top, there could still be a lovely viewpoint, maybe just a bit more rugged.
We love the idea of creating a wooded deck that extends over the top of the current drainage ditch. Concrete could also be an option. Using geometric concrete pavers as pathways throughout would really tie it all together. We also love the texture created by planting grasses and low water plants like yarrow, sedum, and other lovely colorful pollinators.
Planting a few varieties of native grasses would look incredible on the hill. Native grasses are Water wise and low maintenance, and would be an incredible contrast to the block walls that surround.
Q