Where's the limit of paving on the north side? What is it about the house that requires this orientation? Pave the entire front?... have you checked with regulations? I doubt you can do it and if you can it would look hot and unfriendly. It would BE hot. To technically avoid lying to you, co-workers are answering a different question than you're asking. South side curve of drive/walk looks fine. The issues you pose seem like you're trying to pound a square peg into a round hole. The problem is the house, the lot, or the orientation. If you have a difficult lot, why not build a house that suits the lot instead of building in inefficiencies or drawbacks? Future buyers WILL recognize them and your efforts will not fully rewarded.

The 40' setback doesn't look too unusual, especially if what is shown as the neighbouring houses is correct. Here, there is a minimum of 30' setback required and our front porch is actually 50+' back from the road - but our lot is deeper than yours.

I'm confused by the garage - if it's the L-shaped room, it doesn't look deep enough across the front to accomodate cars - unless those car images are not properly scaled....? Is the long arm of the L for 2 cars in tandem ?

Can you rotate the house a bit to the north? That would better align the north front corner with the neighbouring house to the north, and make backing out easier by making a straighter run to the road. (I don't think having to turn a bit to back out is a big deal though... Backing out here involves taking a curved track - it's not a problem because the driveway is wide enough to make maneuvering easy.) It would also give you more usable space in the backyard I think. Have you started to think about what you need/want in the backyard for things like patio space and how it would all be arranged?

I think it would be a good idea to have space for at least a few plantings on the north side of the driveway - unless there is grass or other plantings on the neighbour's property along there that would help make that side look balanced.

Woody, I think that the plan is showing the understory part of the garage that extends beyond the second floor living area. I do agree with you about "straightening" out the orientation for overall balance. As shown, there's an awful lot of unusable real estate in the back of the RV side yard, something that may very well turn off future buyers. The OP can afford to lose a little of their desired southern exposure in order to address the currently overwhelming paved areas and offset approach. After all, this is a home, not a parking lot :)

Our lot is marked for general use and doesn't have any restrictions other than minor easements which we have already met (value of the house and setbacks). Therefore the current plan is to have pavement all the way to the north side of the lot. (The neighbor has a 12 foot patch of grass behind it.)
We live in Fairbanks, AK where in the winter we can have as little as 3 hours and 45 minutes of light during the day and thus southern exposure is highly desirable. In addition we are building a really well insulated house (walls will be R-41 or R-37 after considering thermal bridging) with the idea to capture as much heat gain from the sun as much as possible.
As far as RV (or a boat), if I ever buy one, I would park it at the back of the lot, right along the north side of the lot.
We haven�t done much planning on the layout of the backyard as all of our free time and effort was spent on choosing a house plan and finding an affordable lot in town. (Our budget will also be fully exhausted after building the house, paving the driveway, and small patio in the back.) The entire process started in the middle of May this year so this process is extremely rushed.
I appreciate everyone�s honesty and agree with trying to "pound a square peg into a round hole" �. but I�m sure something like this is do able. For example have the square small enough to fit into the hole or the other way around. ;) What I am looking for is a way to use this orientation to our "advantage", if possible. In other words is it possible to turn this weakness into strength? If it�s not possible, then we will rotate the house slightly to the north.
PS � We are rushing with the construction of our house b/c right now we are paying $2,000 for renting a 1,300 sq. ft. duplex built in 1980s. With the current rates, for the same amount of money I can afford to own a 2,300 sq. ft. house if I build it myself. Thus, for the same monthly payment I can own my own place.
With 14,000 heating degree days in my area whenever the fuel cost go up my rent follows. Owners of 1980�s construction often pay 5-6K (sometimes more) for heating their homes. While, really well insulated homes are around $2,000 to heat for the entire year.

Here's the bird's eye view of my lot.

I applaud what you're doing - and envy you because I'd LOVE to build a high-efficency home from scratch! When you renovate and do an addition, like we did here, there are just too many compromises because you're constrained by existing things.

I doubt the small amount of rotation to bring the house into better line with the house to the north and improve the usable space in the yard would significantly reduce your light. I think the advantages (which you may not fully appreciate until you get to the stage of planning the use of the outdoor space in the backyard) will outweigh any minor change in light. If the neighbour has greenspace/plantings at the side of your driveway, that would help a lot but, if it was me, I'd want planting space there so I could control what goes there and affects the look of your property. We have a large amount of paved area in the front and it is very hot and barren-looking in its unadorned state! We have beds on both sides, with one side constrained to a narrow bed as it is limited by being on the side against the neighbour's driveway. To give a more expansive feel on that side, we also have large pots on the driveway on that side. You could use pots on your driveway too on that side (put them on wheels so they could be moved out of the way when the RV or boat needs to be moved in or out...)

Thanks for the suggestions woodyoak. I really like the idea of using large pots on the driveway with wheels!

As I was changing the angel of the house I remembered that when you rotate the house to be in line with the north side of the lost most of direct line of sight from the formal dining room will be block with our fence (line of sight from dining room is represented with a highlighted square in yellow). =( So either the driveway is slight blocked by the fence or the dining room window is facing the fence. Out of the two I have a difficult time determining which is the lesser of two evils. So frustrating! I wish the lot was wider but it isn't. We already purchased the lot and are set on the current house plan (invested significant of time into it already).

What if you mirrored the house plan, still squaring it to the northern plot line?

I must be missing something... because I can't see the difficulty with the driveway if the house is rotated as I visualize it. I also don't see what the problem is re line-of-sight from the dining room - just plant something interesting in front of the fence so that would be what the people see when they look out the windows. Our dining room faces basically down the driveway but I considered the view from each place at the table that has a view out, and planted so that there is a pleasant view for all positions at the table.

You are stuck inside the box with your thought process. You are not really getting south exposure with your design; it's southwest and southeast. If that's what you want, fine. If you want direct south exposure, try to follow my explanation.

Take a square or rectangular piece of paper, let that represent your garage. Lay it on the plant of the lot the way you want the garage orientation. Now take a separate square or rectangle, representing the rest of your house, and lay it so that one full side faces south. Design your house with overlapping planes at angles and you have a far more interesting house as well as a solution to your orientation problem. There is no law that a house must have all right angles. Get more creative with the house.

Question: I see many beautiful, mature trees on your lot. All of them are casting long shadows. I see the neighbors who have clear-cut their lots have backyards in shadow. Is the south orientation really going to give you the sun exposure you desire?

A rule of thumb that you should keep in mind is that function is more important than looks. If getting in and out of the garage is a pain, it will be eternal. Later, if choosing between needing to solve appearance issues vs. functional issues, the former would be the better problem to have.

If the other houses on the street and the computer 3-D view are an indication of the type of house construction/style, I think you're going to be disappointed that a small shift in the orientation will make an appreciable or meaningful difference in terms of solar gain. These don't look like solar houses with south-facing walls of insulated glass.

My thoughts on the house synch with catkim's... why not just modify the garage and garage door orientation and place the rest of the house as you desire? We can't see the roof design, but modifying the first floor garage cannot be that difficult or expensive and it seems as if it would solve your dilemma.