Commercial Real Estate in Los Altos Hills: Institutional Uses, Home Businesses and the R-A Rules

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

Los Altos Hills is a residential town by design, and its zoning code has no retail, office or industrial district. Property that is "commercial" here is mostly institutional or special-use land: private schools, churches, commercial stables, utility sites and the Foothill College area, plus home-based businesses on residential lots. Every use is decided under the Residential-Agricultural (R-A) rules, so confirm what is allowed on a specific parcel with the Town’s Planning Department before relying on this page.

Who controls the parcel

The Town of Los Altos Hills regulates land inside its limits through Title 10 of its Municipal Code, in which the R-A district is the base zone. The code’s table of contents lists no commercial or office district, and the Town has no downtown; shops and offices serving residents are in neighboring Los Altos and Palo Alto. Two outside agencies matter on many parcels. The County Health Officer acts for the Town on septic systems under the Town’s sewage chapter, and County Environmental Health approves onsite wastewater systems for new SB 9 parcels. Unincorporated County land also lies within and around the town, where County zoning applies; see our Santa Clara County commercial guide and our Los Altos commercial guide for nearby retail districts.

Los Altos Hills zoning for nonresidential use

Article 7 of the zoning chapter lists every use allowed in R-A. The table below groups the nonresidential ones.

What business uses are possible

Schools and churches. Private schools are conditional only where the General Plan land use diagram designates them, so a buyer cannot simply convert a large estate into a school. Churches and convents are conditional, while funeral chapels and mortuaries are excluded. Under the multifamily overlay adopted in 2025, school uses on overlay parcels remain subject to the R-A standards.

Equestrian property. Private stables are accessory to a home, with up to two hoofed animals on the first acre and one more for each additional half acre. Commercial boarding stables need a Planning Commission permit, which makes equestrian facilities the closest thing to a by-application commercial use in the town.

Home occupations. A home business must be entirely subordinate to the residence, with no retail sales, no off-site advertising and no more than one employee from outside the family. That works for professional offices and studios but not for client-heavy or retail operations.

Short-term rentals. Under Article 12, adopted by Ordinance 575 effective May 19, 2018, a property needs a Town short-term rental license, the owner must live there at least 270 days a year, only one short-term rental unit is allowed per property, and events and commercial uses are barred. Exceptions need a conditional permit and a public hearing before the Site Development Committee. There are no hotels or inns in the code’s use lists.

Site rules that limit any project

• Lot size. Article 5 requires at least one net acre per parcel, with a 160-foot building circle.
• Lot unit factor. Floor area and paved area are scaled by the lot unit factor and shrink with slope. Maximum floor area starts at 6,000 square feet per lot unit factor on flat land and falls to 5,000 at slopes of 30% or more.
• Height. Generally 27 feet, with an absolute maximum of 35 feet.
• Setbacks. 40 feet from the street and 30 feet from other property lines, larger for estate-scale buildings.

These limits apply to schools and churches as well as homes, so expansion potential on an institutional site is often set by its development area, not its use permit.

Sewer, septic and utilities

Many parcels in town are on septic. Under the Town’s sewage disposal article, adopted by Ordinance 549 in 2014, buildings must connect to public sewer if a main is within 200 feet of the property line, unless gravity flow is not possible or an existing private system works properly. Elsewhere a private system is required, reviewed and inspected by the County Health Officer. Failures must be reported to the Town within 10 days, and the Health Officer can order repairs. For a church, school or stable, septic capacity can cap occupancy or expansion.

Transfer tax, business tax and property tax

The Town’s real property transfer tax, adopted by Ordinance 132 and operative in December 1967, is 27.5 cents per $500 of consideration, excluding remaining liens, and is administered by the County Recorder under the state’s Documentary Transfer Tax Act. The County Ordinance Code Div. A30, Ch. III sets the County tax at $0.55 per $500 and, in §A30-40, credits a conforming city tax set at half that rate, so the city’s 27.5 cents is shared within the County’s $0.55 rather than added; confirm the total on the escrow estimate. A sale generally triggers Proposition 13 reassessment. Institutional owners should confirm whether their use qualifies for a welfare or religious property tax exemption with the County Assessor.

Due diligence that matters in Los Altos Hills

Start with our commercial due diligence checklist, then add:

• Pull the existing conditional use permit and its conditions for any school, church or stable.
• For a school, confirm the General Plan diagram designates the site.
• Calculate the lot unit factor, maximum development area and floor area before planning expansion.
• Confirm whether the parcel is on sewer or septic, and get County Health records for the system.
• Check whether a multifamily overlay applies, since it changes the parcel’s rules.
• For an equestrian property, confirm the animal count allowed by acreage.

Questions people ask

Sources & notes

1. Los Altos Hills Municipal Code (GoCodebook)
2. Title 10, Article 7, R-A district uses
3. Title 10, Article 5, R-A area, height and setbacks
4. Title 10, Article 12, Short-term rentals
5. Title 10, Article 16, Multi-family development standards
6. Title 6, Chapter 4, Article 1, Sewage disposal
7. Title 3, Chapter 5, Real property transfer taxes
8. Santa Clara County Ordinance Code, Division A30, Chapter III, Real Property Transfer Tax

Note: The absence of a commercial district is based on the code’s table of contents. We did not review Article 10 (conditional use procedures), the General Plan land use diagram, Foothill College’s status or property tax exemptions.

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

Related: Los Altos Hills real estate guide · Multifamily property in Los Altos Hills · Commercial real estate services