Hill, 43, returned to Spotland in January, agreeing an initial deal until the end of the season after succeeding John Coleman.
And the man who led Dale to a first promotion for 41 years in the 2009/10 season appears to be working his magic once more with an ongoing six-match unbeaten run.
The boss underwent further talks with chairman Chris Dunphy on Monday and a three-year contract is on the table according to reports in the Rochdale Observer, with Hill already planning the club's pre-season programme.
When questioned about the new deal, he said: "I think we're getting closer. I can't see any reason why not.
"We are all pretty chilled out about it and I am doing a lot of the preparation with respect to pre-season friendlies, a pre-season training camp, individual players' programmes.
"On recruitment we are way down the pecking order, so we'll see. I've got a good idea of the players currently at the club I want to keep."