(2) One thousand1,000 square feet of interior livable space for an ADUunit with two or more bedrooms.
b. An attached ADU that is created on a lot with an existing primary dwelling is further limited to fifty50 percent of the floor area of the existing primary dwelling. c. Application of other development standards in this subsection E,F., such as FAR or lot coverage, might further limit the size of the ADU, but no application of the percent-based size limit in subsection EF.1.b. above or of an FAR, front setback, lot coverage, and limit, or open-space requirement may require the ADU to behave less than eight hundred800 square feet of interior livable space.
2. Setbacks.
a. Side and Rear. ADUs that are subject to this subsection F. must conform to 4-foot side and rear setbacks.
b. Front. ADUs that are subject to this subsection Floor Area Ratio (FAR). For eachF. must conform to 25-foot front setbacks, notwithstandingsubject to subsection F.1.c. above. c. No setback is required for an ADU that is subject to this subsection F. if the ADU is constructed in the same location and to the same dimensions as an existing structure.
3. Lot Coverage. E,Notwithstanding subsection F.1.c. above, no ADU subject to this subsection F. may cause the total covered floor arealot coverage of all dwellings and structures on the lot may notto exceed twenty-five50 percent of the net lot area for the first acre, plus fifteen, or to exceed 40 percent of the net lot area over one acre, subject to subsection E.1.c. above. This percentage is known as the floor-area ratio (FAR) and in any setback area adjacent to a street line. Lot coverage is calculated by dividing the total covered floor area (in square feet) by as the net lot area (also in square feet).
3. sumLot Coverage. Subject to subsection E.1.c. above, ADUs are subject to lot coverage limits. For purposes of this chapter, there are two types of residential lot coverage limits to which ADUs are subject together with the other dwellingall hardscape coverage and structures on the lot. These types are: structural coverage of a lot. Structural coverage and hardscape coverage. are defined and calculated as follows:
a. Structural Coverage.
(1) Structural coverage consists of areas of the lot covered by a dwelling, a garage, a carport, and any other accessory Areas of a lot located beneath a structure having a roof and more than one wall.two or more walls, for example a dwelling, a pool house, or a garage. Structural coverage calculations and maximums are outlined
(2) The maximum structural coverage of a lot is as follows:
Table 17.52.020-1
Lot size
(net lot area)
Maximum area of lot
permitted to be coveredStructural Coverage Calculation
Up to 17,500 sq. ft. 22 sq. ft. for each 100 sq. ft. or portion thereof of net lot area 17,500 up to 21,780 sq. ft. 3,850 sq. ft. plus 15 sq. ft. for each 100 sq. ft. or portion thereof of net lot area in excess of 17,500 sq. ft.
21,780 up to 32,670 sq. ft. 4,495 sq. ft. plus 10 sq. ft. for each 100 sq. ft. or portion thereof of net lot area in excess of 21,780 sq. ft.
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32,670 through 43,560 sq. ft. 5,585 sq. ft. plus 6 sq. ft. for each 100 sq. ft. or portion thereof of net lot area in excess of 32,670 sq. ft.
Over 43,560
sq. ft.
6,239 sq. ft. plus 5 sq. ft. for each 100 sq. ft. or portion thereof of net lot area in excess of 43,560 sq. ft.
b. Hardscape.
(1) Hardscape coverage consists. Areas of areas of thea lot located beneath a roof or covered by manufactured, non-plant, pervious or impervious materials but does not include anything included in structural coverage.
(2) Examples include, but are not limited to:material or located beneath a structure with a roof with no more than one wall, for example decking, a concrete slab or walkway, a gazebo with no walls (just a roof). .
c. Subject to the provisions of subsection E.3.a. above, the combined total of structural plus hardscape coverage shall not exceed fifty percent of the net lot area; provided, however, that in any setback area adjacent to the street line, the combined total of structural plus hardscape coverage may not exceed forty percent of such area.
4. Minimum Open Space. NoNotwithstanding subsection F.1.c. above, no ADU subject to this subsection EF. may cause the total percentage of open space of the lot to fall below fifty50 percent, subject to subsection E.1.c. above.
5. Notice of Limited Remaining Development Capacity. When five hundred or fewer square feet remain in the allowable floor area, a notice (prepared by the town) shall be recorded by the property owner to notify future owners that the square footage remaining for additional development of the property is minimal and that the building department should therefore be consulted as to whether any additional development is possible on the property.
5. Passageway. No passageway, as defined by subsection H. above, is required for an ADU.
96. Parking.
a. Generally. One off-street parking space is required for each ADU. or bedroom, whichever is less.
The parking space may be provided in setback areas or as tandem parking, as defined by subsection K. above. The town may restrict tandem parking or parking in setback areas in certain areas or throughout the town if the town finds that such parking configurations are not feasible based upon specific site or regional topographic or fire and life safety conditions.above.. b. Exceptions. No parking under subsection E.9F.6.a. is required in the following situations:
(1) The ADU is located within one-half mile walking distance of public transit, as defined in subsection J. above.
(2) The ADU is located within an architecturally and historically significant historic district. -163-
(3) The ADU is part of the proposed or existing primary residence or an accessory structure under subsection CD.1.a. above.
(4) When on-street parking permits are required but not offered to the occupant of the ADU. (5) When there is an established car share vehicle stop located within one block of the ADU. (6) When the permit application to create an ADU is submitted with an application to create a new single-family or new multifamily dwelling on the same lot, provided that the ADU or the lot satisfies any other criteria listed in subsections E.9F.6.b..(1.) through (5.) above. c. No Replacement. When a garage, carport, or covered parking structure, or uncovered parking space is demolished in conjunction with the construction of an ADU or converted to an ADU, those off-street parking spaces are not required to be replaced. 107. Architectural Requirements.
a. The materials and colors of the exterior walls, roof, windows, and doors ofmust be the ADU must match the materials and colors of the exterior walls, roof, windows, and doorssame as those of the primary dwelling.
b. The exterior lighting must be limited to down-lights or as otherwise required by the building or fire code.
c. The ADU or JADU must have an independent exterior entrance, apart from that of the primary dwelling.
d. All second-story windows and doors in an ADU that are less than thirty30 feet from a property line that is not a street linepublic right-of-way shall either be (for windows) clerestory with the bottom of the glass at least six feet above the finished floor, or (for windows and for doors) utilize frosted or obscure glass.
e. An ADU to be constructed on a lot that has an identified historical resource is subject to the ADU exception process.
f. Outdoor showers are not permitted within setback areas and shall not be visible from adjacent properties or the public right-of-way.
g. No roof decks shall be permitted.
h. The interior horizontal dimensions of an ADU must be at least 10 feet wide in every direction, with a minimum interior wall height of seven feet.
i. Allowed stories. No ADU subject to this subsection F. may have more than one story, except that an ADU that is attached to the primary dwelling may have more than one story, but shall not exceed 25 feet in height, or the maximum height permitted for the primary dwelling in the applicable zoning district, whichever is lower.
j. No window or door of the ADU may have a direct line of sight to an adjoining residential property. Each window and door must either be located where there is no direct line of sight or screened using fencing, landscaping, or privacy glass to recent a direct line of sight. k. The ADU and primary dwelling shall use the same driveway to access the street, unless otherwise required for notwithstanding fire apparatus access standards, as determinedregulated by CCFD.
Central County Fire Department.
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8. Landscape Requirements. Except as required in subsection F.8.e. below, evergreen landscape screening must be planted and maintained between thean ADU and adjacent parcels and between any public right-of-way and an ADU wall that faces the right-of-way. Screening shall be installed as follows:
a. At least one fifteen15-gallon size plant shallmust be provided for every five linear feet of exterior ADU wall. Alternatively, at least one twenty-four-inch24” box size plant shallmust be provided for every ten linear feet of exterior wall. This paragraph dictates the minimum number of required plantings, not the particular placement of those plantingsADU wall. b. For a ground-level ADU, plant specimens must be at least six feet tall when installed. As an alternative, for a ground-level ADU, a solid fence of at least six feet in height may be installed.
c. For a second-story ADU, plant specimens must be at least twelve feet tall when installed. d. All landscaping must be drought tolerant.
e. Notwithstanding any other provision in this code, all landscaping must comply with applicable standards in Title 24 of the California Code of Regulations, including the California Fire Code and California Wildland Urban Interface Code, and any related Central County Fire Department (CCFD) and Town of Hillsborough regulations. If Title 24 or CCFD regulations prevent landscape screening, the screening required by subsection F.8.a. and F.8.b. and F.8.c. above must be achieved using non-combustible fencing that is consistent with fire-related regulations
9. Historical Protections. An ADU that is on or within 600 feet of real property that is listed in the California Register of Historic Resources must be located so as to not be visible from any public rightof-way.
G. Impact Fees. The following requirements apply to all Class 1 ADUs and JADUs and Class 2 ADUs.
1. School Fees. A JADU or ADU with less than 500 square feet of interior livable space does not increase assessable space by 500 square feet for the purposes of Education Code section 17620(a)(1)(c) and is therefore not subject to school fees under Education Code section 17620.
2. Other Development Impact Fees.
a. No impact fee is required for a JADU or for an ADU that is less than seven hundred fifty750 square feet in sizeof interior livable space. For purposes of this subsection F.1G.2., "impact fee" means a "fee" under the Mitigation Fee Act (Government Code Section 66000(b)) and a fee under the Quimby Act (Government Code Section 66477). "Impact fee" here does not include any connection fee or capacity charge for water or sewer service.
2. Any impact fee that is required for an ADU that is seven hundred fifty square feet or larger in size must be charged proportionately in relation to the square footage of the primary dwelling unit (e.g. the floor area of the primary dwelling, divided by the floor area of the ADU, times the typical fee amount charged for a new dwelling). "Impact fee" here does not include any connection fee or capacity charge for water or sewer service.
G. b. Any impact fee that is required for an ADU that is 750 square feet or more of interior livable space must be charged proportionately in relation to the square footage of the primary dwelling unit (e.g. the floor area of the ADU, divided by the floor area of the primary dwelling, times the typical fee amount charged for a new dwelling). Process and Timing.
1. Building permit only and ADU planning permit applications are considered and approved ministerially, without discretionary review or a hearing.
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2. The town shall approve or deny the application to create an ADU or JADU within sixty days from the date that the town deems an application complete. If the town does not act upon the completed application within sixty days, the application is deemed approved unless either:
a. The applicant requests a delay, in which case the sixty-day time period is tolled for the period of the requested delay; or
b. When an application to create an ADU or JADU is submitted with a permit application to create a new single-family or multifamily dwelling on the lot, the town may delay acting on the permit application for the ADU or JADU until the town acts on the permit application to create the new single-family or multifamily dwelling, but the application to create the ADU or JADU will still be considered ministerially without discretionary review or a hearing.
3. If the town denies an application to create an ADU or JADU, the city must provide the applicant with comments that include, among other things, a list of all the defective or deficient items and a description of how the application may be remedied by the applicant. Notice of the denial and corresponding comments must be provided to the applicant within the sixty-day time period established by subsection G.2. above.
4. A demolition permit for a detached garage that is to be replaced with an ADU is reviewed with the application for the ADU and issued at the same time.
H. Nonconforming Zoning Code Conditions, Building Code Violations, and Unpermitted Structures.
1. Generally. The citytown will not deny an ADU or JADU application due to a nonconforming zoning condition, building code violation, or unpermitted structure on the lot that does not present a threat to the public health and safety and that is not affected by the construction of the ADU or JADU.
2. Unpermitted ADUs and JADUs constructed before 20182020. a. Permit to Legalize. As required by state law, the citytown may not deny a permit to legalize an existing but unpermitted ADU or JADU that was constructed before January 1, 2018, if2020, unless denial is based on either of the following grounds:
(1) The ADU or JADU violates applicable building standards, or (2) The ADU or JADU does not comply with the state ADU or JADU law (Government Code Section 65852.2) or this ADU ordinance (Chapter 17.52). b. Exceptions:
(1) Notwithstanding subsection H.2.a. above, the citytown may deny a permit to legalize an existing but unpermitted ADU or JADU that was constructed before January 1, 20182020, if the citytown makes a finding that correcting a violation is necessary to protectcomply with the healthstandards specified in California Health and safety of the public or of occupants of the structureSafety Code section 17920.3.
(2) Subsection H.2.a. above does not apply to a building that is deemed to be substandard in accordance with California Health and Safety Code Section 17920.3.
3. Encouragement of ADU Establishment in Existing Residential Livable Spaces and Domestic Units.
Recognizing that there may be a considerable existing stock of potential ADUs in the town representing a valuable housing resource for the community, including guest suites, guest quarters, pool houses, carriage houses, domestic quarters, and similar spaces, the town encourages property owners to apply to establish an ADU or JADU within existing space in accordance with this chapter. a. No Penalty for Seeking Legalization. Upon receipt of an application to legalize an unpermitted ADU or JADU described in subsection H, the town shall not penalize the applicant solely for having established the unpermitted or nonconforming unit. b. Existing Detached Domestic Units – Legal Nonconforming Status. -166-
(1) A detached domestic unit that was lawfully established and existing as of January 10,1983, is deemed a legal nonconforming accessory structure.
(2) Detached domestic unit means living quarters designed, capable of being used, or intended to be used to house household help, such quarters being not structurally attached to the single-family dwelling served by the household help.
(3) Except as provided in subsection H.3.c. below, alterations to a legal nonconforming detached domestic unit that is not being permitted as an ADU shall be confined to the interior of the structure; exterior improvements shall be limited to normal upkeep and repair and to improvements that do not enlarge or alter the existing exterior dimensions of the structure.
c. Establishing an ADU Within Existing Residential Livable Space or an Existing Accessory Structure. (1) An applicant may apply to permit and legalize an ADU or JADU within existing space of a primary dwelling or withing an existing accessory structure, including an existing detached domestic unit.
(2) When an existing detached domestic unit or other existing space is proposed to be established as an ADU, the town shall not require correction of unrelated nonconforming zoning conditions, building code violations, or unpermitted structures found elsewhere on the lot that are not impacted by the ADU and do not pose a threat to public health and safety.
(3) Improvements to an existing structure in connection with establishing an ADU may include those alterations necessary to comply with applicable building standards and this chapter.
Any expansion beyond the existing structure shall be regulated by Chapter 17.52 and applicable state law
d. Disaster Reconstruction. If a natural disaster (such as a fire, earthquake, flood, landslide, etc.) damages or destroys an existing detached domestic unit or other existing accessory structure that is proposed to be established as an ADU, the structure may be reconstructed in the same location and to the same or smaller exterior dimensions as the damaged or destroyed structure, consistent with this chapter and applicable state law.
17.52.030 Nonconforming domestic units.
A. All detached domestic units existing as of January 10, 1983, are nonconforming structures. (The term "detached domestic units" means living quarters designed, capable of being used, or intended to be used to house household help, such quarters being not structurally attached to the single-family dwelling served by the household help.) All alterations to or remodeling of nonconforming detached domestic units shall be confined to the interior of such structures; exterior improvements shall be limited to normal upkeep and repair and to such improvements as do not enlarge or alter the existing outside dimensions of the structure.
B. Notwithstanding the foregoing, in the event that a natural disaster (such as fire, earthquake, flood, landslide, etc.) damages or destroys a nonconforming detached domestic unit, the same may be reconstructed to the same or smaller outside dimensions as those of the damaged or destroyed structure.
C. Notwithstanding the foregoing, an existing detached domestic unit that is converted to an ADU may be enlarged to a maximum floor area of one thousand four hundred square feet subject to the requirements of Section 17.52.020.
.
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17.52.040 Conversion of existing residential space.
Recognizing that there may be a considerable existing stock of potential ADUs in the town and that this stock represents a valuable housing resource for the community, the town wishes to encourage property owners to take advantage of this ADU ordinance. Accordingly, any property owner may apply to the town without penalty or fee for the purpose of converting existing residential space (such as guest suites, guest quarters, pool houses, carriage houses, domestic quarters, etc.) into an ADU in accordance with the provisions and requirements of this chapter. (Ord. No. 763, § 3(Exh. A), 1-13-2020; Ord. No. 768, § 3(Exh. A), 3-8-2021; Ord. No. 777, § 3(Exh. A), 12-13-2021; Ord. No. 787, 12-12-2022; Ord. No. 796, § 4(Exh. A), 12-9-2024)
17.52.050030 ADU exception review.
A. AnAny proposed ADU or JADU that would otherwise be allowed under this chapter but does not comply with every applicable standard in Section 17.52.020 may nevertheless be permittedconform to the objective design to development standards set forth In this chapter may be allowed by the director of building and planning, or the director's designee, at the director's or designee's discretion if the ADU or JADU undergoes thetown following design review process set forth inas prescribed by Chapter 2.12 of this code (ADU exemption)..
B. Discretionary design review. An ADU or JADU that does not comply with all the standards in Sectionapplication submitted under this section 17.52.020 is030 will be considered, reviewed, and noticed as a "type B project" under Section 2.12.070.A.
BC. Findings Required. The following findings shall be made in in advance of any approval of an ADU or JADU Exception:
1. The project is consistent with the town general plan.
2. The project is consistent with this code, including the town zoning ordinance.
3. The project is consistent with the town residential design guidelines.
4. The project is consistent with all other town land use policies and plans.
5. The project has undergone the design review process outlined in Chapter 2.12 of this code.
6. The project has been publicly noticed as a "type B" project” under Section 2.12.070.A of this code.
7. The project does not constitute a risk to the welfare of the town and its residents;
8. The project does not constitute a risk to the health and safety of the town and its residents.
An ADU that complies with all the standards in Section 17.52.020 is approved ministerially in accordance with that section, as indicated by subsection 2.12.070(A)(2)(c)(ix). -168-
TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
13 NEW BUSINESS
CITY COUNCIL MEETING
MARCH 9, 2026
AGENDA STAFF REPORT
ITEM SUBJECT: Acceptance of the 2025 General Plan Annual Progress Report (APR) SUMMARY: Government Code §65400 requires local jurisdictions to prepare and submit an Annual Progress Report (APR) on the status of the General Plan and implementation of the Housing Element to the Governor’s Office of Land Use and Climate Innovation (LCI) and the California Department of Housing and Community Development (HCD).
The Town of Hillsborough’s Calendar Year (CY) 2025 APR is included as Attachment 1. This Staff Report provides additional context to the APR and is organized into the following sections:
• Background
• Progress Toward Meeting the Town’s Regional Housing Needs Allocation (RHNA) • Status of Housing Element Actions and Programs
• Additional Annual Reporting Requirements (General Plan and Surplus Land) The reporting period covers January 1 through December 31, 2025. This represents the third year of implementation under the Town’s 2023–2031 Housing Element.
Background
Since 1969, California law has required cities and counties to plan for the housing needs of all economic segments of the community through the Housing Element of the General Plan. The Housing Element serves as the jurisdiction’s strategy for accommodating projected housing growth and addressing constraints to housing production.
A General Plan functions as a jurisdiction’s long-term policy framework for physical development.
All land use decisions must be consistent with the adopted General Plan. Hillsborough’s General Plan consists of six elements: Housing, Land Use, Circulation, Open Space & Conservation, Public Safety, and Noise.
State law requires the Housing Element to be updated every eight years. The Town adopted its 2023–2031 Housing Element, which was certified by the California Department of Housing and Community Development (HCD) on March 28, 2024.
The 2023–2031 Housing Element outlines the Town’s strategy to:
• Accommodate its assigned Regional Housing Needs Allocation (RHNA) • Remove regulatory and procedural constraints to housing production • Promote affordability and housing opportunity
• Maintain compliance with evolving State housing law
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Agenda Staff Report – Hillsborough City Council
March 9, 2026
The Annual Progress Report provides a transparent accounting of housing production, program implementation, and compliance activities undertaken during CY 2025.
Annual Progress Report Overview
Government Code §§ 65400 and 65700 require all jurisdictions to submit an Annual Progress Report (APR) on the status of the General Plan and implementation efforts to the Governor’s Office of Land Use and Climate Innovation (LCI) and HCD each year. The APR must also be presented to the City Council for acceptance.
The APR serves as the Town’s annual accountability document. It demonstrates the Town’s ongoing implementation of General Plan policies and Housing Element programs, including measurable progress toward housing production targets. In addition, amendments to the Surplus Land Act (Government Code § 54220 et seq.) require local agencies to report surplus land actions as part of the APR.
Housing Element APR
The Housing Element portion of the APR fulfills the State’s housing-related reporting requirements, including documentation of the Town’s progress toward meeting its assigned Regional Housing Needs Allocation (RHNA).
RHNA allocations are determined by the State and distributed locally by the Association of Bay Area Governments (ABAG) on an eight-year cycle. The Bay Area is currently in the sixth RHNA cycle (2023–2031).
The reporting period for this APR covers January 1, 2025 through December 31, 2025.
For the 2023–2031 planning period, the Town of Hillsborough has been assigned a RHNA allocation of 554 net new housing units, distributed across four income categories. The allocation by income level is summarized below:
Income Level RHNA 6 Allocation
Very Low Income (0-50% AMI) 155
Low Income (51-79% AMI) 89
Moderate Income (80-119% AMI) 87
Above Moderate Income (120% AMI+) 223
Total 554
Per the Town’s RHNA 6 allocation, 331 of the 554 units are assigned to lower-income categories (very low, low, and moderate income households), defined as households earning up to 120 percent of Area Median Income (AMI), as established annually by HCD. The remaining 223 units are assigned to the above-moderate income category (greater than 120 percent AMI).
Town Progress Towards RHNA 6
During the reporting period (January 1, 2025 through December 31, 2025), the Town continued to make measurable progress toward its RHNA 6 allocation. As is typical in predominantly built-out residential communities, the majority of net new housing production occurred through the development of Accessory Dwelling Units (ADUs).
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Agenda Staff Report – Hillsborough City Council
March 9, 2026
Pursuant to State reporting standards, replacement dwellings (i.e., homes rebuilt following demolition) do not count toward RHNA production totals. 2025 Housing Activity Summary
• Approved 54 ADUs through Planning Division review
• Issued building permits for 56 ADUs and 2 net new single-family dwellings • Issued certificates of occupancy for 41 ADUs
For RHNA reporting purposes, building permits issued during the reporting year are counted toward annual production totals.
Income Category Breakdown
Using HCD-certified methodology (described below), the Town’s 2025 building permit activity is distributed across income categories as follows:
• Lower-Income Units (Very Low, Low, and Moderate Income):
41 units (ADUs)
• Above-Moderate Income Units:
15 ADUs
2 net new single-family dwelling
The Town anticipates continued ADU production in future years as a result of ongoing education and outreach efforts, as well as streamlined ministerial review procedures consistent with State law.
Methodology for Determining Housing Affordability
Due to the high cost of land and construction in Hillsborough, and consistent with State guidance, HCD certified the Town’s Housing Element with an approved income distribution methodology for ADUs. Under this methodology:
• 30% of ADUs are projected to serve very low-income households • 20% are projected to serve low-income households
• 20% are projected to serve moderate-income households • 30% are projected to serve above-moderate income households This methodology reflects statewide ADU affordability research and was reviewed and accepted by HCD as part of Housing Element certification.
To supplement this projection-based methodology, the Town conducts an annual voluntary survey of property owners who completed ADUs in the prior calendar year to gather information regarding rental rates and occupancy. However, due to limited response rates, the survey data does not provide a statistically reliable sample. Accordingly, the Town continues to rely on the HCD-certified methodology for annual reporting purposes.
Beginning in 2026, rental reporting questions have been incorporated into the building permit process to improve response rates and data completeness. The Town anticipates that this revised approach will generate more reliable data to inform future APR reporting and policy evaluation. -171-
Agenda Staff Report – Hillsborough City Council
March 9, 2026
Status of Housing Element Actions and Programs
RHNA 6 ADU Production & Implementation Efforts
Consistent with the Housing Element strategy adopted for the 2023–2031 planning period, the Town continues to rely heavily on Accessory Dwelling Units (ADUs) to meet its RHNA allocation.
The Housing Element projects an average of approximately 50 ADUs annually, totaling 400 ADUs by 2031. Based on production during the first three years of RHNA 6, ADU activity remains consistent with this long-term projection.
The Town continues to implement numerous Housing Element programs designed to support ADU development and reduce barriers to housing production.
Streamlined Approval & Regulatory Framework
In 2025, the Town maintained and enhanced its streamlined ADU approval processes, including:
• Ministerial approval for ADUs meeting objective standards, consistent with State law • Assignment of an ADU Specialist to provide focused project review and applicant guidance • Continued implementation of an ADU Exception process to allow flexibility for zoning standards (e.g., FAR and lot coverage), where appropriate • Maintenance of a gallery of pre-approved ADU plans to reduce design and permitting time https://hillsborough.aduaccelerator.org/gallery
These efforts support predictable timelines and reduce uncertainty for homeowners pursuing ADU development.
Regional & Technical Partnerships
The Town remains an active participant in the San Mateo County ADU Resource Center, which provides:
• Technical design assistance
• Budgeting and financing resources
• Educational materials and homeowner workshops
• One-on-one consultations
https://smcadu.org/
The Town also continues its partnership with HIP Housing to facilitate the Hillsborough ADU Match Program, connecting ADU owners with prospective tenants. https://hiphousing.org/
Education & Outreach
In 2025, the Town continued proactive outreach efforts, including:
• Maintaining a user-friendly ADU webpage with clear procedural guidance • Providing early consultation opportunities for prospective applicants • Responding to increased homeowner interest in ADU development Community interest in ADUs remains strong and continues to be a primary driver of housing production in Hillsborough.
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Agenda Staff Report – Hillsborough City Council
March 9, 2026
Additional Annual Reporting Requirements
General Plan APR
Each element of the Town’s General Plan identifies implementation measures designed to advance adopted goals and policies. These measures are assigned to responsible departments for implementation.
Departments track progress throughout the year and report implementation status to the Building & Planning Department for inclusion in the Annual Progress Report.
Attachment 2 provides a summary of key General Plan implementation activities completed during Calendar Year 2025.
Surplus Land APR
Pursuant to the Surplus Land Act (Government Code § 54220 et seq.), the Town maintains an inventory of surplus land owned or controlled by the Town and makes this inventory available upon request. The inventory is submitted annually to HCD as part of the APR.
At its December 14, 2020 meeting, the City Council adopted a resolution declaring two buffer strips and two landscaped islands as non-exempt surplus properties. These parcels remain listed in the Town’s surplus land inventory. No additional properties were added to the surplus land inventory during the 2025 reporting year.
FISCAL IMPACT: There is no fiscal impact associated with the preparation and consideration of the 2025 General Plan Annual Progress Report.
ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review under California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.
ATTACHMENT(S):
1. 2025 General Plan & Housing Element Annual Progress Report (APRs)
2. General Plan Implementation Summary
3. Surplus Land Inventory List
PREPARED BY: Liz Ruess, Assistant Director of Building & Planning RECOMMENDATION: Accept the 2025 General Plan Annual Progress Report. -168-
ATTACHMENT 1
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Policy No./ Action No. Policy/Action Responsible Dept. Status/Implementation Land Use Element
Action LU 1.1
The ADRB will apply the
Hillsborough Residential Design
Guidelines when reviewing new
construction and significant
remodeling.
ADRB, Building and
Planning Department Ongoing
Action LU 1.2
The Town will enforce its Residential
Landscaping requirements to
maintain the attractive visual
character of Hillsborough, as well as
to promote water conservation.
ADRB, Building and
Planning Department
Ongoing - The Town updated
the Water Efficient Landscape
Ordinance (WELO) in 2021 to
comply with SB1383.
Action LU 1.3
The Town will enforce its Nuisance
Ordinance, which allows for the
clean-up of overgrown properties
that pose a safety hazard or create a
visual nuisance inconsistent with
the character of Hillsborough.
Code Enforcement
Ongoing. The Town completed
recruitment of a Code Compliance
Coordinator to expand capacity for
consistent enforcement and
improve responsiveness to
complaints.
Action LU 2.1
The Town will enforce the
Construction Management
Ordinance to ensure the timely
completion of construction projects.
Building and Planning
Department
Ongoing - Building Division continues
to conduct Bi-monthly monitoring.
Action LU 2.2
The Town will explore methods to
clarify for the public the Town’s
various development review and
construction processes.
Planning & Building
Department
Staff improved transparency in
review and construction processes,
and reviewed internal workflows to
better clarify requirements,
timelines, and approval authority for
the public.
Action LU 3.1
The Town will provide for public
review and involvement prior to
approval of any proposed change to
the conditions of a private school
permit.
Building and Planning
Department
Ongoing - As per HMC 17.16.030 any
amendments to a permit to operate
shall be referred to the city council.
Amendments requiring design
review shall first be reviewed by the
ADRB, then referred to the City
Council.
Action LU 3.2
The Town will provide notice to the
HCSD when a private school
proposes new development or a
change to operations so that the
District may comment on the
proposal.
Building and Planning
Department Ongoing
Action LU 4.1
The Town will continue to utilize its
budget planning process to ensure
that Town-provided services are
maintained at a level that meets the
community’s needs.
Building and Planning
Department
Ongoing. The Town adopted a
balanced budget and continued to
evaluate service levels, workload
demands, and cost recovery to
ensure Building and Planning
services remain adequately funded
and responsive to community needs.
CY 2024 General Plan Annual Implementation Progress Report ATTACHMENT 2
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Action LU 4.3
The Town will support the HCSD in
the preparation and
implementation of its Facilities
Master Plan.
Building and Planning
Department Completed.
Action LU 4.4
The Public Works Department will
continue to monitor water and
sewer distribution and collection
lines to determine those needing
repair and provide needed repair, as
feasible.
City Council, Public
Works/Engineering
Department
Ongoing - Implementing sewer
system management plan (2019)
Action LU 4.5
The Town will continue to
implement the Recycling of
Construction and Demolition
Ordinance to minimize the amount
of construction debris disposed of in
the landfill.
Public Works
Director/Building &
Planning Department
Ongoing -
Updated in 2021 to comply with
requirements set forth by SB 1383.
Action LU 4.6
The Town will continue to contract
for the collection of household
recycling from each home on a
regular basis. When renewing or
amending the contract,
consideration will be given to the
need to meet the State’s 50%
diversion requirements for solid
waste, the ease of pick-up, hours of
collection, visual design of recycling
containers, location where
containers are collected for pick-up
and overall cost for recycling
collection.
Public Works Director The Town has achieved a
diversion rate of 73.04%
for calendar year 2025
Action LU 4.7
For Town contracted services, the
Town will utilize the contract
negotiation process to ensure that
the specific needs of the community
for various services, such as
telecommunications, library and
refuse collection, will be met by the
selected service provided.
Department Heads Ongoing
Circulation Element
Action C 1.1
The Public Works Department will
continue to utilize the Pavement
Management System to plan for the
on-going maintenance of the Town’s
roadways.
Public
Works/Engineering
As of November 2025,
Town has PCI of 83
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Action C 1.2
The Police Department will monitor
accident reports and complaints to
identify locations that are at high
risk for accidents. They will work
with the Public Works Department
to identify and implement
appropriate improvements to
reduce the incident of accidents.
Police, Public
Works/Engineering
Ongoing. The PD monitors collision
data and complaints to identify
high-risk areas, has added a
motorcycle officer to enhance
focused traffic enforcement, and
coordinates with Public Works to
advance appropriate safety
improvements.
Action C 2.1
The Town will work with SM County,
the SFPUC and Caltrans to
implement feasible improvements
at the intersection of Black
Mountain Road/Hayne Road/Skyline
Blvd. to improve traffic flow or limit
the amount of regional cut-through
traffic traveling into the Town. Such
improvements might include adding
a separate eastbound left-turn land
and a separate shared through/rightturn lane. The Town may consider adoption of traffic impact fees to
fund the Town’s share of
improvements.
Police, Public
Works/Engineering
Improvements at the intersection of
BlackMountain Road/Hayne
Road/Skyline Blvd. to improve traffic
flow or limit the amount of regional
cut-through traffic traveling into the
Town are complete.
Action C 2.2
The Town will work with HCSD
through the District’s Facility Master
Plan process to identify roadway
improvements for site access and onsite circulation at the schools, as well as explore and implement
traffic control programs to reduce
congestion in the area around the
public schools. The Town will also
work with the District to identify
and implement short-term
measures, such as providing
additional police presence, to
address traffic congestion until longterm improvements are made.
Police, Public
Works/Engineering Ongoing - Town provides annual
funding to support crossing guard
program.
Action C 2.3
The Town will work with the School
District and local private schools to
develop a network for parents to
facilitate organizing carpools as well
as encouraging safe walking and
biking.
Police
Ongoing, including alignment with
the Town’s Bike/Ped Master Plan, to
support safe routes to school and
strategies that encourage walking,
biking, and organized carpooling.
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Action C 2.4
The Town will identify minimum
Levels of Service for intersections
and roadways shared with adjacent
communities and pursue
agreements with adjacent
communities to maintain those
intersections at the agreed upon
Level of Service.
Police, Public
Works/Engineering Ongoing
Action C 2.5
While accepting a lower Level of
Service where appropriate, the
Town will monitor every 5 years via
traffic counts roadway segments or
intersections that are operating at
LOS D or lower. The Town will
explore feasible mitigation
measures to reduce congestion at
these locations.
Public
Works/Engineering Ongoing
Action C 3.1
The Town will review all
construction plans for conformance
with Municipal Code parking
requirements.
Building & Planning
Department
Ongoing. The Building and Planning
Department continues to review all
construction plans for compliance.
Action C 3.2 The Town will update the parking
strip requirement.
Public
Works/Engineering Completed in 2010
Action C 4.1
The Town will coordinate with the
School District and other entities to
develop “Suggested Routes to
School Plans” for all public and
private schools in the Town. Plans
shall identify all pedestrian and
bicycle facilities, and traffic control
devices for residents to determine
the most appropriate travel routes.
The plans shall also identify existing
easements for potential use for offstreet pedestrian pathways.
Police
Ongoing. In Progress. Following
completion of the Eucalyptus
Pathway, the Police Department
continued coordination with the
School District and integrated
Suggested Routes to School
planning into ongoing Bicycle and
Pedestrian Master Plan efforts to
further evaluate pedestrian and
bicycle facilities, traffic control
devices, and potential off-street
pathway connections.
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Action C 5.1
The Town will pursue the creation of
an off-street bicycle trail along
Crystal Springs Road, consistent
with the County’s Trail Plan and
Bicycle Route Plan. In this effort, the
Town will work with current
property owners, including the
SFPUC, to incorporate the trail into
future development along the route.
The Town will recommend that the
County of San Mateo research,
identify and compete for available
funding to assist with the
completion of the trail. Hillsborough
will also request that the County
and C/CAG study feasible
alignments that would avoid
negatively impacting sensitive
biological resources located along
San Mateo Creek.
Building and Planning
Department/Public
Works/Engineering
Will occur in conjunction with
development proposals along Crystal
Springs Road.
The Town will develop a community
awareness program to encourage
local use of safer bicycle routes,
including referring residents to the
C/CAG Bicycle and Pedestrian
Advisory Committee’s bicycle route
map. The Town will include bicycle
and pedestrian safety and
enforcement when developing
community awareness programs.
Police/Public Works/
Engineering
Ongoing - Part of the Town's Bike
and Pedestrian Master Plan (BPMP)
Action OSC 1.1
The Town will continue to cooperate
with the HCSD through their Joint
Powers Agreement to maintain the
Hillsborough Recreation
Department.
City Council, City
Manager
Continued support through Council
members serving as Town
commissioners. Continued funding
to support crossing guards for
school operations. Programs
promoted through Town
communications. Town-provided
facilities for programming.
Action OSC 1.2
The Town will adopt an ordinance in
compliance with the Quimby Act to
require new development to
provide land dedication and/or inlieu fees in the amount equal to 3 acres of parkland per 1,000 new
residents.
Building and Planning
Department Adopted in 2006 & Ongoing
Open Space and Conservation Element
Action C 5.2
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Action OSC 3.1
The Town will evaluate the Tree
Removal Ordinance to recognize the
need to allow for a system of
gradual replacement of important
trees as they age to ensure that
there is a mixture of healthy trees in
the community and that there is not
a period during which all of the
trees die of old age at the same
time.
Building and Planning
Department
Revised ordinance related to tree
removal in 2022. Process included
substantial community outreach
and improved clarity of processes
and utilization of a town certified
arborist.
Action OSC 3.2
The Public Works Department will
be responsible for maintaining the
health of trees on public property as
necessary. Trees on private
properties should be maintained by
property owners.
Public Works/Code
Enforcement
Public Works conducts an annual
windshield survey to inspect
roadways of dead and low hanging
trees in the Town over public rightof-way to mitigate risk.
Action OSC 3.3
The Town will continue to direct
residents to the procedures in the
Voluntary Resolution of Disputes
Regarding Trees and Views
Ordinance to allow neighbors to
come to agreement on a balance
between the desire for larger trees
and preservation of views.
City Manager, Code
Enforcement
Continued public education on best
practices regarding working with
neighbors on tree removals. Included
information on what residents
can/should do about trees blocking
their views on the Town website.
Action OSC 3.4
The Town will provide information
to residents on how to reduce the
impact of deer on private property,
such as planting vegetation that
deer generally dislike and fencing.
Residents will be reminded that it is
illegal to feed deer and that it poses
a risk.
Building & Planning
Department
As applicable and through landscape
application plan review.
Action OSC 4.1
The Town will adopt and implement
a Creek Protection Ordinance to
ensure that new development does
not have a negative impact on
creeks and streams.
Public
Works/Engineering
Town complies with CEQA
requirements.
Action OSC 4.2
The Town will continue to
participate in the San Mateo
Stormwater Pollution Prevention
Program
Public
Works/Engineering,
Building and Planning
Department
Ongoing
Action OSC 4.3
The Town will encourage property
owners to incorporate water
conservation techniques into their
landscaping to reduce water usage.
City Council, Public
Works, Building and
Planning Department,
Newsletter
Regular water conservation tips and
reminders (in coordination with
BAWSCA) regularly published in
Town communications
Action OSC 5.1 The Town will continue to enforce
the Historic Preservation Ordinance.
Building and Planning
Department Ongoing
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Action OSC 5.2
The Town will require projects
subject to CEQA to analyze impacts
to cultural resources per state law.
Building and Planning
Department Ongoing
Action OSC 5.3
The Town will require construction
projects to stop if archaeological or
paleontological resources are
uncovered during grading or other
on-site excavation activities.
Building and Planning
Department Ongoing
Public Safety Element
Action PS 1.1
The Central County Fire Department
will review plans for all new
buildings and major additions and
make recommendations for
modifications to reduce fire hazard.
Fire
Ongoing – plans are reviewed for fire
access capabilities, water supply and
fire sprinklers, and landscape
projects within WUI area.
Action PS 1.2
When property owners are not
correctly maintaining their property,
the Town will implement fire control
maintenance measures as needed,
provide necessary fire prevention
improvements on properties that
pose a public safety threat, and pass
the costs on to the owners.
Fire
Ongoing – Adopted ordinances for
code and wildland-urban interface
enforcement outline actions to
ensure safety risk is reduced
Action PS 1.3
The Town will work with the Central
County Fire Department to review
and update, if necessary, the Town’s
and Department’s regulations and
approach regarding fire protection
to ensure adequate fire protection.
Fire
Ongoing – 2019 California codes
were adopted by local municipal
code that includes fire protection
measures
Action PS 1.4
The Town will continue to work with
the Central County Fire Department
to ensure that regional approaches
to fire protection and suppression
are implemented in Hillsborough.
Fire
Ongoing – county-wide dispatching
system provides emergency response
based on closest apparatus location
to incident
Action PS 2.2
The Town will continue to
implement its Hillside Lot Size
Ordinance.
Public
Works/Engineering Ongoing
Action PS 2.2
The Town will continue to require
construction plans for all new
houses to be reviewed by a
registered professional engineer.
Building and Planning
Department Ongoing
Action PS 3.1
The Town will review all new
building plans & substantial
renovations for compliance with the
UBC and any additional state or
federal seismic safety regulations
prior to permit approval.
Building and Planning
Department
Ongoing. The Town currently utilizes
the California Building Standards
Code (CBSC) or International Building
Code (IBC).
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Action PS 3.2
The Town will distribute
information to residents on
emergency procedures in case of an
earthquake.
Fire
CCFD continues to provide
information to Town residents for all
hazards including earthquakes.
Encouraging residents to subscribe to
SMCAlert the county’s mass
notification system to receive real
time public safety information.
Zonehaven and the “Know Your
Zone” campaign is another platform
we encourage residents to familiarize
themselves with that provides real
time public safety information on a
map-based website.
Action PS 4.1
The Town will continue to
participate in the National Flood
Insurance Program
Public Works & Building
and Planning
Departments
Ongoing
Action PS 5.1
The Police Department will continue
to provide information on crime
prevention and community
outreach.
Police
Ongoing - FLOCK or the crime
mapping now available on the
website.
Action PS 5.2
The Town will continue to support
the Bay Area Air Quality
Management District in monitoring
air pollutants.
City Council, City
Manager
Promoted links to BAAQMD website
and “Spare the Air” days in Town
communications.
Action PS 5.3
The Town will continue to promote
energy conservation by the public
and private sectors.
City Council, City
Manager, Building and
Planning, Public Works
Departments; Newsletter
Continued messaging about energy
conservation, rebates, and utilization
of clean energy in Town
communications.
Action PS 5.4
The Town will work with the County
to offer a periodic drop-off program
for household hazardous waste and
distribute information on
alternative non-toxic landscaping
treatments, especially to the
Country Club and schools.
Public Works/Recycling
Specialist
Annual e-waste event sponsored
with SBWMA; battery drop-off
located at Town Hall; Integrated Pest
Management Plan kept up to date
with current practices
Action PS 6.1
The Town will develop a local
emergency preparedness plan that
identifies a city chain of command,
outlines an action checklist and
coordinates with the SM County
Emergency Operations Plan.
Fire
Ongoing - the joint
Hillsborough/Burlingame Emergency
Operations Plan outlines emergency
preparedness and response on a
local level
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Action PS 6.2
The Town will provide community
awareness and education programs
for citizens describing procedures
and evacuation routes to be
followed in the event of a disaster.
Fire/Police
San Mateo County now utilizes a
real time public safety platform
'Genasys’ that provides real time
emergency information on a mapbased website. The “Know Your Zone” public education campaign
was launched in November 2020.
This platform allows first responders
to identify and direct individuals on
procedures and evacuation routes
following an incident. This platform
will be exercised in the periodic local
and county-wide emergency
functional drills.
Action PS 6.3
The Town will conduct periodic drills
using emergency response systems
to test the effectiveness of the
Town’s procedures.
Fire
Annually: Coordinated and
performed jointly with the CCFD and
the City of Burlingame to staff a
FEMA approved single Emergency
Operations Center (EOC). CCFD,
Burlingame and the Town follow the
SEMS/NIMS guidelines for Homeland
Security Exercise and Evaluation
Program (HSEEP) in conducting
annual workshops, seminars, drills,
and exercises within the Town and in
coordination with the county and the
region that include CERTs,
neighborhood network groups and
community members. These drills
include testing of emergency
communications and scenario based
incident response.
Noise Element
Action N 1.1
The Town will continue to advocate
that noise abatement measures are
taken by Caltrans for Caltrans
roadways affecting the Town,
whenever feasible.
Public
Works/Engineering Ongoing
Action N 1.2
The Town will continue to
enforce the Noise Ordinance &
respond to Unruly Gatherings
Ordinance and Toy Ordinance.
Police Ongoing
Action N 1.3
The Police Department will continue
to enforce the California Vehicle
Code pertaining to noise standards
for cars, trucks, and motorcycles.
Police Ongoing
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Action N 2.1
The Town will continue to
participate on the
Airport/Community Roundtable and
coordinate with the SFO Airport
Land Use Commission and SFO’s
Aircraft Noise Abatement Office.
City Council, City
Manager
Continued support through Council
member serving as Town liaison on
roundtable.
Action N 2.2
The Town will cooperate with the
Comprehensive Airport Land Use
Plans’ requirements for review of
proposed land use policy actions
within land influenced by airports.
Building and Planning
Department When applicable
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ATTACHMENT 3
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TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
14 DISCUSSION
CITY COUNCIL MEETING
MARCH 9, 2026
AGENDA STAFF REPORT
ITEM SUBJECT: Preliminary Discussion Regarding Crystal Springs Uplands School Proposed Enrollment Increase
SUMMARY: Crystal Springs Uplands School (“Crystal”) has initiated a request for a General Plan Amendment (GPA) to allow an increase in approved student enrollment at its existing Hillsborough campus.
The purpose of this agenda item is to:
• Inform the City Council and community of the request; • Provide an overview of the required CEQA process; and • Receive Council input regarding issues and areas of concern that should be considered in defining the scope of environmental review.
No action is requested at this time. This is a preliminary, conceptual discussion intended to inform the forthcoming environmental analysis.
BACKGROUND:
Crystal has submitted a request for a General Plan Amendment to increase allowable enrollment at its existing campus. They have indicated that they wish to explore enrollment levels that can be accommodated within the existing building footprint, without physical expansion of facilities. As currently described, the environmental analysis would focus solely on operational changes at the existing site and would not include additions to the campus footprint.
An increase in enrollment constitutes an increase in land use intensity. Even in the absence of new construction, higher enrollment levels may result in potential environmental impacts related to:
• Traffic and circulation
• Parking demand
• Noise
• Utilities and infrastructure capacity
As part of the CEQA process, Crystal will identify the maximum enrollment that can be accommodated within the existing built footprint, including existing classrooms and spaces that could potentially be repurposed for instructional use. This defined enrollment scenario will serve as the project baseline for environmental analysis.
The retained environmental consultant will evaluate enrollment increases within the existing footprint and assess higher operational scenarios, as appropriate, to determine the extent of potential impacts and whether such impacts can be mitigated to a less-than-significant level. -181-
Agenda Staff Report – Hillsborough City Council
March 9, 2026
The appropriate enrollment level, and the level of CEQA review required (e.g., Initial Study/Mitigated Negative Declaration or Environmental Impact Report), will be determined based on the results of the environmental analysis.
The Town has issued a Request for Proposals (RFP) to retain a qualified environmental consultant. All costs associated with CEQA review will be borne by the applicant through the Town’s cost recovery process.
Typical General Plan Amendment Process
1. GPA Request Submitted – Complete
2. Initiation of CEQA Review – In Process
o Consultant selection underway
o Scope to include defined enrollment scenarios at existing campus
3. City Council Conceptual Review (Current Step)
o Discussion item only
o Council may identify issues or areas of concern for inclusion in CEQA scope o Council may not express support or opposition on the merits of the proposal
4. City Council Public Hearing
At a future noticed public hearing, the Council would consider:
o Certification/adoption of the CEQA document
o General Plan Amendment
o Zoning Code Amendment
5. City Council Public Hearing – Amendment to Permit to Operate This must occur after CEQA certification. Depending on the level of CEQA review and findings, this item may occur at the same meeting as the GPA/Zoning actions or at a subsequent meeting.
The precise sequencing and timeline will be better defined once the CEQA consultant is retained and the scope of environmental review is confirmed.
Purpose of Discussion Item
Staff recommended bringing this request to the City Council at an early stage to ensure transparency and alignment prior to formal public hearings.
The purpose of tonight’s discussion is to receive City Council input on:
• Issues or areas of concern that should be analyzed under CEQA; • Operational factors the City Council would like evaluated (e.g., traffic management strategies, shuttle programs, staggered schedules);
• Any other cumulative or contextual considerations that should be incorporated into the environmental scope.
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Agenda Staff Report – Hillsborough City Council
March 9, 2026
This discussion does not constitute approval or denial of the proposed enrollment increase or the General Plan Amendment. The purpose of this item is limited to identifying issues and areas of concern that should be evaluated as part of the CEQA analysis. The City Council should not express opinions on the merits of the request at this time.
Crystal has initiated their own neighborhood engagement process by mailing postcards to neighboring properties and will be posting a neighbor Q&A on March 11th.
FISCAL IMPACT: All costs associated with CEQA review and processing of the GPA request will be paid for by the applicant through the Town’s cost recovery system.
ENVIRONMENTAL ISSUES: Pursuant to the California Environmental Quality Act (CEQA), an increase in allowable student enrollment constitutes an increase in land use intensity and may result in environmental impacts requiring analysis and, where feasible, mitigation.
ATTACHMENT(S): None
PREPARED BY: Liz Ruess, Assistant Director of Building & Planning RECOMMENDATION: Receive staff presentation and provide input regarding issues and scope considerations for environmental review.
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TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
15 DISCUSSION
CITY COUNCIL MEETING
MARCH 9, 2026
AGENDA STAFF REPORT
ITEM SUBJECT: Discussion of Proposed Changes to Home-Based Business Regulations SUMMARY: The Ad Hoc Subcommittee appointed by the City Council to study updating commercial activity regulations considered the input provided by the Council and community at the November 17, 2025 study session regarding regulations related to home-based businesses and large events. The Subcommittee recommends that the Municipal Code be updated to allow more flexibility for home businesses.1 The goal is to legitimize acceptable commercial uses, not to raise significant revenue. Once final input is received, the Subcommittee will work with the City Attorney and staff to draft amendments to the applicable sections of the Municipal Code.
BACKGROUND
Section 5.06.010 of the Municipal Code requires that all home businesses obtain an annual home business permit. “Home businesses” are defined in Section 17.16.015, including various “profitmaking” activities.
Chapter 5.04 of the Municipal Code sets forth the regulations for the business taxes to be paid by businesses operating within the Town. While these regulations appear to be working effectively for contractors and other service providers, the collection of the business tax from home businesses depends on the businesses obtaining permits under Chapter 5.06 and self-reporting income.
Chapter 5.04 was adopted by the Council in 1985 and Chapter 5.06 in 1999. Neither section has been amended since the initial adoptions.
FINDINGS
While the Town has long prided itself on being a single-family residential community with no commercial activity, times have changed. Advances in technology and the increased acceptance of remote work during the pandemic have led to more acceptance of the concept that a home can be used for some business purposes without losing the essential residential character of the property and without unduly impacting neighbors.
Further, regulations relating to home businesses have been criticized as confusing or unfair, leading to a lack of compliance. The Subcommittee believes that, with clearer regulations, more home businesses will obtain permits and pay the taxes required by the Municipal Code, and enforcement will be enhanced.
A review of records maintained by the Secretary of State shows more than 1,100 businesses registered with Hillsborough addresses as their principal place of business. It is believed that the sole purpose of the majority of these limited liability companies and corporations is to hold title to 1 Recommendations concerning large events will be presented at a future meeting. -184-
Agenda Staff Report – Hillsborough City Council
March 9, 2026
the property (for privacy or limitation of liability). These entities do not impact neighboring properties in any way. In these circumstances, a business license should not be required.
The Town provides a variety of services that create a safe and serene setting for home businesses to operate in a respectful manner. Payment of the business license fee and gross receipts tax are appropriate for home businesses.
Amendments to the business tax classifications or rates would require voter approval. Therefore, no such changes are recommended at this time. Improved compliance with and enforcement under the existing rates should provide appropriate revenue to support Town services and enforcement efforts.
PROPOSED CHANGES
1. General Authorization of Home Businesses. Unless specifically prohibited (parties with paid admissions) or regulated (movie productions), home businesses that obtain permits under Section
5.06.010 and comply with regulations would be permitted. (a) Entities holding title would be exempt. Many limited liability companies and corporations are registered with the Secretary of State using Hillsborough addresses as their principal place of business. Many of these companies are formed simply to hold title to the residence, for liability and/or privacy reasons, and do not conduct any other business activity. These entities would be exempt from the licensing and tax requirements.
(b) Entities located outside of Hillsborough would be exempt. Many residents have businesses with offices located outside of Hillsborough but may occasionally use their residence for limited business activity. “Limited business activity” would include phone calls, emails, virtual meetings, and occasional in-person meetings or dinners.2 In contrast, a resident that has a nominal office outside of Hillsborough but conducts substantial business activity from his/her home would be required to obtain the home business license and pay the gross receipts tax.
2. On-Site Employees and Deliveries. The guiding principle is that the business operations within a residence should not create impacts outside the property that exceed normal residential use. Accordingly, up to two full-time equivalent employees may be allowed to work at the home business, provided that they park on the property itself. The regulation of business employees would be distinguished from other on-site employees (gardeners, nannies, etc.).
Further, residences receive many nonbusiness deliveries of groceries and products on a daily basis, so home businesses should be able to receive such deliveries as well, again subject to the proviso that the deliveries do not exceed what is reasonable for residential properties in Hillsborough. Occasional visits by customers/clients should be allowed to the same extent as those for residents who have businesses located outside Hillsborough.
3. General Application. The regulations would apply to all parts of the residential property, including ADUs and garages. The regulations would apply to tenants and sub-tenants.
4. Enforcement. The home business application will be simplified to focus on the nature of the business, where employees will park, the expected volume of deliveries, and similar information to 2 Larger events with a business purpose would be subject to new regulations for special events. -185-
Agenda Staff Report – Hillsborough City Council
March 9, 2026
assess impacts. Since home businesses will be legitimized and the process streamlined, it is hoped that more residents conducting these activities will comply with the license requirements and pay the business tax.
Enforcement may begin in several ways: through observations by the Code Enforcement Officer, monitoring filings with the Secretary of State showing Hillsborough as the principal place of business, and reports from other residents. The recommended enforcement procedure would be for the Code Enforcement Officer to issue a warning with a 30-day period to comply, and thereafter issue a citation for a hearing before the Administrative Hearing Panel. If the resident does not comply with an Order issued by the Hearing Panel, the Town would file an action for an injunction in the Superior Court, which the judge could enforce through fines or even imprisonment for contempt of court.
Failure to obtain a business license is currently classified as an infraction under Section 5.06.020.
This provision would remain as an alternative enforcement tool.
Once the business is licensed, it will be required to pay the gross receipts tax as set forth in Chapter 5.04. Chapter 5.04 provides several means of enforcing the collection of the gross receipts tax. Collection and enforcement of the gross receipts tax may be out-sourced to a specialist service. The gross receipts tax is not currently being collected from home businesses, but there is no exemption in the Code. If the Council desires to create a threshold amount before imposing the gross receipts tax on home business, voter approval may be required.
FISCAL IMPACT: There is no fiscal impact associated with this agenda item.
ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review under California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.
ATTACHMENT(S): None
PREPARED BY: Mark Hudak, Assistant City Attorney
RECOMMENDATION: Review proposed changes to the Town’s regulations related to homebased businesses and provide input and direction to staff on what to include in amendments to the Town’s Municipal Code.
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