Novin Buys Affordable Housing Project in North Fair Oaks

Novin Development, which targets large mixed-income projects on vacant or underutilized parcels, has acquired the site of an approved, 100 percent affordable residential development in North Fair Oaks that fits the bill — and could eventually house adults with intellectual or developmental disabilities.

Walnut Creek-based Novin paid $3.9 million, or around $165 a square foot, to purchase a half-acre surface parking lot at 3051 Edison Way in North Fair Oaks, an unincorporated part of San Mateo County totaling nearly 800 acres and bounded by Redwood City, Atherton and Menlo Park. A construction company owned by Ronald Grove, who sold the parcel to Novin, leases the property to store construction materials, equipment, related vehicles and employee parking for work at various sites in the area, according to public records.

The lease will continue until Novin breaks ground on the project approved for the site, a six-story, 78-unit building affordable to those making between 20 and 100 percent of the area median income, company President Iman Novin said in an interview. That means the project would be affordable to single-person households making between $23,000 and $116,200 a year, according to California Department of Housing and Community Development data. Up to half of the project’s units would serve workforce residents, Novin said; that could make them a potential draw to employees at Meta’s Menlo Park headquarters less than four miles away.

Through the deal, Novin is essentially taking over the project from Emerald Bay Homes, a Palo Alto-based developer that agreed to purchase the site from Grove in September 2021, according to property records. Emerald filed project plans in March and received approval from San Mateo County three months later. The company invoked SB 35 when submitting its proposal, a state law that streamlines the approval process for 100 percent affordable housing projects in jurisdictions out of compliance with their state-mandated housing production goals, helping to explain the relatively short review period. It would ultimately fall out of contract with Grove; neither responded to requests for comment.

As for Novin, it’s considering a few changes to Emerald’s plans, including the project’s unit mix. As it stands, the project consists of 26 studio apartments, 51 one-bedrooms and one two-bedroom manager’s unit. Yet those with special needs prefer one- and two-bedroom units over studios, Iman Novin said. Emerald’s proposal targeted setting aside a quarter of the project’s 78 units as permanent supportive housing for adults with developmental disabilities, according to San Mateo County’s online permit portal.

Assuming Novin has the same or a similar goal for its project, it’s likely that the company will file revised plans calling for more one- and two-bedroom units and fewer studios than before. The developer expects to know by this time next year whether it will have all of the project’s funding in place. Under a best-case scenario, it would break ground six months after finalizing the development’s capital stack, which translates to mid-2024.

Construction would take about two years using the conventional, stick-built approach, but Iman Novin said using a modular technique could cut the construction timeline almost in half. He and his eponymous company are exploring whether to use the latter approach for the project, a change that would be part of its revisions to Emerald’s approved plans.

In the meantime, the developer is working on assembling the development’s capital stack and bringing on a number of other potential project partners, Iman Novin said. The stack will include tax credits, commitments from state sources and the California Housing and Community Development Department, and operating subsidies, he said. Novin has already received nearly $5.4 million in loans to finance the acquisition of the Edison Way site and pre-development costs, mostly supplied by Century Housing Corporation, with the rest from the Golden State Acquisition Fund. Also, the developer has partnered with affordable housing co-developer Sunflower Hill to provide services to the project’s developmentally disabled residents.

Novin, which said it’s confident it will be able to secure state funding for its North Fair Oaks project, pegged per-unit construction costs at more than $500,000 a unit. It declined to provide a total cost estimate, citing potential future changes to the project’s entitlements.