Hello
Like many before stated check the ordinances for your locale.
I have a somewhat similiar arrangement but definitely not as tight or restricted.
This is how I'd handle the situation if allowable.I'd build a bunker to use as a target. My bunker is 21 years old and the only expense after initial setup was to add a roof(which I took off a year or two later since it made the dirt always damp).
My bunker is basically a treated 3/4" sheet of plywood supported by two treated wood poles. So the target back is four feet high and eight feet wide. The sides are another 3/3" sheet cut in half (each 4x4) coming forward from the back, forming like an open stall. These are held also by wood fence poles. Then this box was filled with black dirt. I made a sifter out of some screen to sift the dirt to make sure no rocks came into the target. I've never added dirt since and I shoot target points or broadheads. I have a little wire brush hanging there to brush the dirt off the arrows when the dirt is damp after a rain.
That said, in your situation maybe you could buy treated plywood and attach it to the corner of your existing fence to form the back of the bunker.Hopefully the fence belongs to you and not your neighbor. Get enough to make the target larger than needed to stop any stray arrows. I would have the plywood as high as the existing fence. Once attached to the fence, hand paint it so from a distance it appears to look just like the fence. Figure how high the dirt will be stacked in the corner and tar the lower portion of the plywood to help the plywood withstand years of moisture. Fill the corner in with dirt, to much dirt is better than to little. Pack down the dirt and now you have a bunker which you'll shoot at towards its base. This target gets better with age.
To dress up the target, plant some flowers at the base corners using some creativity.


Good luck
Dan