I would try a quilt of shade loving groundcovers. The aforementioned sedges (Carex), some vinca (Vinca minor), ivy, Siberian cypress (Microbiota decussata), spreading yews (Taxus). MIx it up a bit so it looks interesting all year and also to see what will do best in your site. You will have to water in the first year to get things established, but after that everything should take care of itself. In order to keep the soil in place while the plants are growing in you might want to invest in erosion matting like the highway departments use. You can find it at http://www.forestry-suppliers.com.
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Welcome! I’m Margaret Roach, a leading garden writer for 25 years—at ‘Martha Stewart Living,’ ‘Newsday,’ and in three books. I host a public-radio podcast; I also lecture, plus hold tours at my 2.3-acre Hudson Valley (NY) Zone 5B garden, and always say no to chemicals and yes to great plants.