Breakdown of Au nord de la ville, il y a une colline verte.
Questions & Answers about Au nord de la ville, il y a une colline verte.
Both exist, but they don’t mean exactly the same thing.
Au nord de la ville = to the north of the town / north of the town (outside or beyond it).
- Example idea: The hill is located north of the town on the map.
Dans le nord de la ville = in the northern part of the town (inside the town, in its northern area).
- Example idea: A park that is in the northern district of the town.
In your sentence, the hill is outside, in the direction north of the town, so au nord de la ville is correct.