Commercial Real Estate in Philo: Wineries, Highway 128 and Anderson Valley Zoning

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

Philo is the Anderson Valley town on Highway 128 between Boonville and Navarro, and it is where the valley’s tasting rooms are most concentrated. Commercial property here means winery and vineyard parcels, tasting rooms, farm stands, small inns and a few roadside commercial and industrial sites. Philo is unincorporated, has no public water or sewer system, and is governed by Mendocino County, so any business plan has to fit both the County zoning and what a well and septic system can support.

Who controls the parcel

Mendocino County Planning and Building Services applies the Inland Zoning Code, Division I of Title 20, updated in full on September 10, 2024 per the state notice of determination. Valley-wide policy is the Anderson Valley section of General Plan Chapter 6, coded CP-AV.

The only local service district is the Anderson Valley Community Services District (AVCSD). Mendocino LAFCo’s 2014 service review says the district formed in 1970 from County Service Area No. 1, covers about 160 square miles, and provides fire protection, street lighting, the Boonville airport and recreation. It does not provide water or wastewater service. Most developed parcels use individual wells or private community water systems and septic systems, and earlier studies of a public water system did not move forward for lack of community support.

LAFCo’s 2015 sphere update for AVCSD, adopted December 7, 2015 by Resolution 15-16-08, adds Philo detail: two satellite fire stations in Philo, with the Old Philo station owned by Philo Mill, and an out-of-district fire contract area along Lone Tree Ridge Road east of Philo. If a parcel sits in a contract area rather than inside the district, confirm how fire service is provided before you insure it.

Philo zoning for commercial, industrial and mixed use

The General Plan describes Philo as a mix of residential, commercial, agricultural and industrial uses, the only Anderson Valley town it lists with industrial use. These inland districts are the ones that carry business uses. Parcel zoning was not verified; get a County Letter of Zoning.

District	Intended uses	Notes for Philo
A-G Agricultural (Ch. 20.052)	Crops, animals and processing of products raised on site	40-acre minimum; winery packing and processing permitted; agricultural sales and general cottage industry by administrative permit; limited lodging by use permit
R-L Rangeland and F-L/TPZ forest districts	Grazing and timber on the valley slopes	Resource use first
R-C Rural Community (Ch. 20.084)	Mixed homes, shops and limited industry in a town	Without water or sewer district service, 40,000 sq ft minimum
C-1 / C-2 Commercial (Ch. 20.088, 20.092)	Local retail and full-service commerce; C-2 permits lodging	Commercial lots outside any water or sewer district need 40,000 sq ft
I-1 Limited Industrial (Ch. 20.096)	Light industry and processing	Consistent with Philo’s industrial history

The A-G chapter is central for winery buyers. Its purpose is to preserve land for crops and animals while allowing processing of products raised on the premises and some related commerce. Packing and processing for wineries is permitted outright, general packing and processing needs an administrative permit, and setbacks are 50 feet. The chapter does not list tasting rooms by name, so confirm how the County classifies a tasting room or event use before buying for it. In R-C, C-1 and C-2, the no-minimum lot rule for commercial use needs both water and sewer districts, which Philo lacks.

Wine country commerce along Highway 128

LAFCo’s 2015 report counts 20 wineries in Philo, compared with eight in Boonville. The General Plan’s direction for that economy:

Keep development in town. CP-AV-1 concentrates new development in Yorkville, Boonville, Philo and Navarro and their immediate vicinities and discourages new retail outside the four towns. A tasting room or shop on open highway frontage between towns faces that policy.
Wine and agritourism. CP-AV-7 promotes agribusiness and wine production and sales. CP-AV-9 supports coordinating agriculture and tourism, and CP-AV-10 supports commercial uses serving residents and visitors.
Keep farmland zoned for farming. CP-AV-19 retains agricultural and resource zoning throughout the valley, so rezoning a vineyard to commercial is unlikely.
A two-lane highway. CP-AV-2 asks the State to keep Highway 128 a two-lane rural road, and the plan notes it carries log trucks to mills. Actions CP-AV-2.1 through 2.3 seek turnouts, careful left-turn lanes and traffic calming. Event venues should plan parking and turning movements early.
Optional town plans. CP-AV-6 offers County help with a valley-wide plan or plans for each of the four towns if the community wants them.

Water, septic, soils and the Navarro River

The General Plan names several constraints for Anderson Valley: it is tectonically active, has some of the most easily eroded soils anywhere, and has limited fire, police and water and wastewater services. Action CP-AV-11.1 commits the County to help Philo and the other towns pursue small, decentralized water and wastewater systems, and CP-AV-12 encourages AVCSD to provide or manage them. Nothing has been built, so today every winery, tasting room or inn relies on its own water and septic.

Philo drains to the Navarro River, and CP-AV-18 protects the Navarro River watershed, with Action CP-AV-18.1 supporting the Navarro River Restoration Plan. CP-AV-21 limits hillside development that causes excessive grading or vegetation removal. Expect scrutiny of grading, ponds and water diversions on winery projects.

Transfer tax, business tax and property tax

Philo has no city government, so only the county transfer tax applies. Fidelity National Financial’s transfer tax guide (rev. January 2026) lists $1.10 per $1,000, customarily paid by the seller. The County Recorder collects it without posting a rate. Inns and vacation rentals remit transient occupancy tax and a Business Improvement District assessment through the Treasurer-Tax Collector. A change of ownership generally triggers Proposition 13 reassessment; land under a Williamson Act contract is valued under different rules.

Due diligence that matters in Philo

Confirm the zoning and how the County treats any tasting room, events or lodging on the site.
Test well yield and quality, and confirm water rights for any pond or creek diversion.
Size the septic system for visitors and winery process water.
Check whether the parcel is inside AVCSD or in a fire contract area.
Review grading and hillside history, given erodible soils.
Work through our commercial due diligence checklist.

Questions people ask

Who zones property in Philo?

Mendocino County, under the Inland Zoning Code. Philo is unincorporated.

Can I process wine on agricultural land in Philo?

Yes. A-G permits winery packing and processing outright.

Is a tasting room allowed on a vineyard?

The A-G chapter does not name tasting rooms. Ask Planning how the use is classified and what permit it needs.

Does Philo have public water or sewer?

No. AVCSD does not provide either service, and properties rely on wells and septic.

Can I open a shop on Highway 128 between towns?

CP-AV-1 discourages new retail outside the four Anderson Valley towns.

Who provides fire protection?

The Anderson Valley Community Services District, which has two satellite stations in Philo.

Does Diamond handle commercial property in Philo?

Contact Matthew Martinez to discuss buying, selling or leasing commercial property in Philo.

Sources & notes

Parcel zoning and tasting room permit rules were not verified. This page is general information, not legal or tax advice. Last reviewed October 2026 by Matthew Martinez.

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