Suggestions for my North Side yard?

Saint Paul, MN(Zone 4a)

We're part way into making changes to the deck and yard on the north side of my house. Here are the major issues:

1) My neighbor's deck is close. We can sit out on nice evenings and see what each other is having for dinner.

2) My dogs run around the deck and up and down the fence, so there are large worn areas in the grass, and a perennial bed on the dog side of the fence is pretty much completely trampled.

3) We have a new air conditioner unit I'd like to hide a little from the street.

Here's a before picture, taken from the front sidewalk. My yard's on the right:

Thumbnail by StPaulPeg
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