Evaluating Lot Value And Redevelopment Options In Hillsborough

Looking at a Hillsborough property and wondering whether the dirt is worth more than the house? You are not alone. With large lots and strict design review, the value often sits in what you can build and how quickly you can deliver it. This guide walks you through the local rules, site factors, and a simple feasibility framework so you can make a confident call on remodel versus rebuild. Let’s dive in.

What drives lot value in Hillsborough

Hillsborough’s rules set hard limits on size and placement. The Town’s minimum new subdivision size is one half acre, or 21,780 square feet. Existing legal lots under that minimum can still support a single home. Review the Town’s lot and subdivision handout for context on minimums and how net lot area is measured in local calculations. See the Town’s Lot Size and House Size resource for details.

Floor area is capped by a formula. The Development Standards use a floor area ratio, or FAR, of 25 percent of net lot area for the first acre, plus 15 percent of net area over one acre. Basements, garages, and most enclosed spaces count per the Town’s definitions. Use the FAR to approximate a maximum enclosed square footage, then refine with the other tests. Refer to the Town’s Development Standards for FAR definitions and calculations.

Setbacks, height, and the building envelope also shape value. Interior side and rear setbacks are commonly 20 feet. Street setbacks depend on right of way width, for example a 50 foot right of way can trigger a 25 foot street setback. Height is tested inside a building envelope that rises from 22 feet at setbacks and slopes inward at 45 degrees to a 32 foot cap. Large houses can require added setbacks. See the Development Standards for these rules.

Design review is discretionary and focuses on compatibility. Most exterior changes, teardowns, and new houses go to the Architecture and Design Review Board. The ADRB enforces the Residential Design Guidelines and can reduce massing below the technical FAR if the design does not fit neighborhood context. Start with an ADRB preliminary review to de-risk planning. Review the Residential Design Guidelines to understand expectations.

Trees are protected and can drive both layout and cost. A protected tree threshold and updated rules require an arborist report, a tree protection plan, and often replacement planting when removal is approved. Plan for mitigation and timeline impacts if significant trees are on site. Read the Tree Protection and Tree Removal Guidelines for current procedures.

Hillside, creek, and wildfire overlays matter. Hillside design guidance can affect massing and grading. Creeks and riparian zones can bring outside agency review. Parcels in the Wildland Urban Interface or High Fire Hazard Zones trigger fire resistant construction and defensible space requirements. Review the Town’s Planning Handouts to check environmental overlays and related submittals.

Parking and access are part of the puzzle. Parking minimums scale with bedroom count and larger homes need more on site spaces and backup room. Driveway and curb work in the public right of way requires encroachment permits. See the Development Standards before committing to a footprint that depends on complex access changes.

Run the numbers: a simple framework

Define the finished product target

Start with the value of a completed, code compliant home that fits the lot and neighborhood. Use recent sales on similar lot sizes and quality levels to estimate a per square foot value range. Local, like kind comps matter more than town wide medians.

Calculate buildable area

Use the Town’s FAR to determine a theoretical maximum floor area, then check setbacks, lot coverage, and height envelope to see what really fits. On a 23,856 square foot lot, 25 percent FAR allows about 5,964 square feet of enclosed floor area before any ADRB reductions. The Town counts most basements and garage space, so confirm how your design treats lower levels and mechanical areas. See the Development Standards and the Lot Size and House Size guide for formulas and definitions.

Estimate costs with a conservative range

• Hard construction costs. Custom single family work on the Peninsula commonly runs several hundred dollars per square foot. A general San Mateo guide places baseline new build costs in the low hundreds per square foot, and high end custom work can exceed those baselines. Use multiple builder bids and a quality level that matches your market target. Refer to this San Mateo build cost overview for baseline context.
• Soft costs and fees. Add design, engineering, survey, geotechnical, permit and impact fees, utility work, financing carry, and a contingency. For complex custom homes, soft costs can add roughly 20 to 40 percent or more to hard costs.
• Site and demo. Include demolition, hazardous materials abatement, tree mitigation or replacement, retaining walls, drainage, and any driveway or right of way work. Tree protection plans and an arborist certification are typically required before demolition or grading permits.

When you have target value and all in costs, test a residual. If the finished value minus total cost meets your required return, a teardown can make sense. If not, consider a remodel or addition with selective site improvements.

Remodel, expand, or rebuild?

A full teardown maximizes design freedom but adds entitlement and cost risk. A major remodel may preserve nonconforming elements or reduce discretionary review, but it must still meet current standards for many aspects. Trees, slopes, and the ADRB’s view on compatibility often push the decision.

Run a quick massing study with your architect to test FAR, lot coverage, and parking, then ask Planning for a preliminary read on ADRB issues. If you can meet your space goals within the existing envelope and reduce tree impacts, a remodel or addition can be the faster route. If the existing home is small relative to what the lot can support and the site is straightforward, a rebuild may deliver better long term value.

Process and timeline in Hillsborough

Start with Planning and ADRB prelim review

Meet with the Planning Division early to confirm zone constraints, likely review level, and any overlays like WUI or creek setbacks. New houses, teardowns, and major remodels typically require an ADRB preliminary review before a full submittal. The Residential Design Guidelines explain how the Board evaluates context, massing, and materials. Begin there to align expectations.

• Planning Division contact and process overview
• Residential Design Guidelines for design direction

Expect a multidisciplinary team

Most projects need a licensed surveyor, civil and geotechnical engineers, an architect and structural engineer, a landscape architect, a licensed arborist, and a general contractor. The Town requires arborist reports and a tree protection plan when significant trees are present. See the Tree Protection and Tree Removal Guidelines for submittal requirements.

Permits, fees, and tracking

Use the Town’s handouts and fee schedules to forecast Planning and Building fees. Submittals and payments are managed through the Town’s online system. From early design through building permit, expect several months for reviews, then 9 to 18 months or more to build depending on complexity. Check the Planning Division and Building Permits pages for current procedures and links to the online portal.

Common red flags to check early

• Protected trees. Large diameter trees often require permits to remove, replacement planting, and neighbor noticing. These rules can shape the footprint and add time and cost.
• Steep slopes. Hillside guidance can limit massing, increase grading costs, and require geotechnical work and retaining walls.
• Creeks or wetlands. Riparian buffers can trigger added agency review and design constraints.
• Wildfire zones. WUI or High Fire Hazard areas need fire resistant assemblies and defensible space plans.
• Access and parking. Driveway grades, backup space, and curb work in the right of way can add off site scope and encroachment permits.
• Neighborhood compatibility. Even if your math fits the technical FAR, the ADRB may require massing reductions or higher design quality to align with the block context.

Action plan: your first five steps

1. Confirm the lot. Pull deed and assessor data, then plan for a current ALTA survey that shows net lot area and topography. Start with the Town’s Lot Size and House Size guide.
2. Book Planning. Schedule a pre application meeting with the Planning Division to review constraints, overlays, and the likely ADRB path.
3. Order critical reports. Engage an arborist for a tree memo and a geotechnical engineer for a scoping letter. These influence layout and budget, and they are often required before demolition or grading.
4. Test a concept. Have your architect produce a quick massing study that runs FAR, lot coverage, setbacks, and parking. Use the Development Standards and prepare for an ADRB preliminary review.
5. Get real bids. Obtain at least two demolition quotes and two to three general contractor bids that include sitework, tree mitigation, and possible right of way work. Build an all in pro forma with hard, soft, site, and carry costs.

Bottom line

In Hillsborough, lot value is the product of what you can build, what it will cost, and how smoothly you can navigate design review. The Town’s FAR, setbacks, tree rules, and ADRB process make early due diligence essential. With the right team and a realistic budget, you can decide if a remodel, expansion, or full rebuild best fits your goals.

If you want a grounded opinion on value, feasibility, and go to market strategy for your specific property, connect with Breakwater Properties. We pair founder level attention with technical land use insight so you can move forward with clarity.

FAQs

What is FAR in Hillsborough and how is it calculated?

• The Town’s formula allows 25 percent of net lot area for the first acre, plus 15 percent of net lot area over one acre, with most enclosed spaces counted per the Development Standards.

How do tree rules affect a teardown in Hillsborough?

• Protected trees require permits, an arborist report, and a tree protection plan, and removal often triggers replacement planting and neighbor notice, which add time and cost.

How long does it take to permit and build a new home in Hillsborough?

• Preconstruction reviews can take several months, and build time often runs 9 to 18 months or more depending on complexity and review timelines.

What construction cost range should I use for feasibility?

• Use multiple contractor bids and a conservative range of several hundred dollars per square foot for custom work, plus 20 to 40 percent or more for soft costs and contingency.

Can I split a Hillsborough lot under one half acre?

• New subdivisions cannot create lots smaller than one half acre. Existing legal lots under the minimum can still be developed with one home.

Do hillside lots face extra requirements in Hillsborough?

• Yes. Hillside design guidance can affect massing and grading, and steep sites often require geotechnical work, retaining walls, and additional review steps.