Commercial Real Estate in Holy City: Hillside Zoning, Rural Business Uses and Mountain Site Rules

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

Holy City is a small unincorporated community in the Santa Cruz Mountains above Los Gatos, reached from Old Santa Cruz Highway near Highway 17. It was once a commercial settlement, but today it is mostly wooded residential land with scattered home businesses and a few rural uses. Business property here is governed by the County’s rural hillside rules and, just as much, by fire access, water and septic constraints, so confirm what a parcel allows with Santa Clara County Planning before relying on this page.

Who controls the parcel

Holy City is outside any city and outside the urban service areas that Santa Clara County policy reserves for urban development, so the County’s zoning ordinance and its Planning, Environmental Health, Roads and Fire Marshal staff control land use. Parcels in this part of the mountains are generally zoned HS Hillside under the County’s rural base districts, Chapter 2.20; confirm the zoning of a specific parcel on the County map. The County’s zoning summary describes Hillside as keeping mountain land largely in open space, with grazing and very low-density housing. Mountain parcels along Old Santa Cruz Highway can fall in the State Responsibility Area, where CAL FIRE standards apply; confirm a parcel’s status on CAL FIRE’s maps. For County rules more broadly, see our Santa Clara County commercial guide, and for the nearest town business districts, our Los Gatos commercial guide.

Hillside zoning: which business uses are possible

Chapter 2.20’s use table, last amended by Ordinance NS-1200.384 in December 2023, lists what HS allows. Uses not listed are prohibited in rural districts.

Use in HS Hillside	Approval	Notes
Small-scale winery	By right	Medium-scale needs a special permit; large-scale a use permit and architecture and site approval
Limited agricultural sales (farm stand)	By right
Wholesale nursery	By right	Retail nursery needs a use permit
Local-serving retail	Use permit	Possible in HS and Agricultural Ranchlands, not in Exclusive Agriculture
Restaurant or bar	Use permit	Public floor area capped at 1,200 sq ft
Camps and retreats	Use permit
Bed and breakfast inn	Use permit	Special permit if tied to an on-site winery or farm, within the main residence
Commercial kennel	Use permit
Farmers’ market, agricultural entertainment	Not allowed in HS	Allowed by permit only in other rural districts

This table is the honest answer to "what commercial is possible in Holy City": small, low-traffic, rural-serving businesses by use permit, and farm-based uses by right.

What a mountain site actually requires

The County’s requirements for a building site in this area show why business use is so constrained. A March 14, 2024 County Planning letter on a proposed home off Old Santa Cruz Highway in the Los Gatos mountains, on HS land, asked for:

Geology. Updated geotechnical reports, because that parcel sits in an Alquist-Priolo earthquake fault zone and a seismic landslide hazard zone, with slope stability review.
Water. Individual water clearance from Environmental Health, with a well completion report, well yield report and water sample results.
Septic. An approved onsite wastewater treatment system shown on the plans.
Fire access. Because the site is in the State Responsibility Area and wildland-urban interface, an 18-foot driveway built for 75,000-pound loads, a fire turnaround, defensible space under Public Resources Code 4290 and hydrant or water tank details.
Roads. A private access road built to County standards or a pro rata road improvement proposal, a right-of-way dedication and proof of legal access from Old Santa Cruz Highway.
Trees and height. Approval to remove protected trees of 12 inches or more and a 35-foot height limit.

A business that brings customers, employees or food service will face these same tests at a larger scale, and a use permit can be conditioned on road, water and fire upgrades.

Scenic roads, design review and home businesses

Scenic roads. The County’s -sr combining district requires design review for structures and signs within 100 feet of a designated scenic road. Check whether a mountain road fronting your parcel carries it.
Design review. The -d combining district triggers hillside visual review.
Home-based businesses. For most Holy City owners, a home occupation is the realistic business use; confirm the County’s current home occupation standards.
Short-term lodging. B&B inns need a use permit. Confirm County transient occupancy tax registration for any paid lodging.

Transfer tax, business tax and property tax

Holy City is unincorporated, so only the County documentary transfer tax applies; there is no city transfer tax. The County Ordinance Code Div. A30, Ch. III sets that tax at $0.55 per $500 of value, excluding liens that remain on the property; check the escrow estimate. A sale generally triggers Proposition 13 reassessment. We did not verify an unincorporated County business license requirement.

Due diligence that matters in Holy City

Start with our commercial due diligence checklist, then add:

Confirm the zoning district and any -sr, -d or lot-size combining designations.
Check whether the business is by right, special permit or use permit in the Chapter 2.20 table, or is legal nonconforming.
Get well yield, water quality and septic records from County Environmental Health.
Measure the access road and driveway against County and CAL FIRE standards.
Order a geotechnical review for landslide and fault hazards.
Confirm insurance availability in the wildland-urban interface before closing.

Questions people ask

Can I open a store or cafe in Holy City?

Local-serving retail and restaurants are possible in HS only with a use permit, and restaurants are limited to 1,200 square feet of public area.

Can I start a winery in the Santa Cruz Mountains near Holy City?

A small-scale winery is allowed by right in HS; larger wineries need a special or use permit.

Is a bed and breakfast allowed?

With a County use permit, or a special permit if it is tied to an on-site winery or farm and inside the main residence.

What fire rules apply?

Where a parcel is in the State Responsibility Area, as the 2024 County letter found for one site off Old Santa Cruz Highway, CAL FIRE access, water supply and defensible space standards apply to new development.

Who issues permits in Holy City?

Santa Clara County Planning and Development, with Environmental Health, Roads and the Fire Marshal.

Is there a city transfer tax?

No. Holy City is unincorporated, so only the County tax applies.

Does Diamond handle commercial property in Holy City?

Contact Matthew Martinez to discuss buying, selling or leasing rural or special-use property in Holy City.

A nearby mountain permit file: what reviewers requested

The County’s March 14, 2024 Harvey Way review letter concerns one proposed house and driveway, not an approved project or a community-wide entitlement. Reviewers requested legal-lot evidence, surveyed slope calculations, culvert capacity analysis, recorded access easements, water clearance, wastewater approval and updated geotechnical work. Fire review addressed road load capacity, turnarounds and defensible space. For a Holy City-area acquisition, ask which equivalent records apply to the actual parcel. Do not transfer that file’s zoning, hazard designation or dimensional requirements to another property.

Sources & notes

Note: The 2024 letter concerns one parcel off Old Santa Cruz Highway, used here to illustrate County requirements in this corridor; it does not name Holy City, and its fault-zone findings are parcel-specific. That Holy City parcels are zoned HS is our expectation, not confirmed on the zoning map. We did not review the County home occupation rules, TOT or business license rules. The community’s history is general background.

This page is general information, not legal or tax advice. Last reviewed October 2026 by Matthew Martinez.

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