Fire survivors who hope to get housing from a state program at the Royal Oaks Mobile Manor just north of Phoenix will be delayed again after Oregon Housing and Community Services announced it will not rehabilitate defective modular homes they purchased.

The agency and the Housing Authority of Jackson County are negotiating how the local organization might proceed with the project, with the state providing funds to construct new units.

“We are currently trying to work that out. It comes down to dollars and cents,” said Jason Elzy, executive director of the housing authority. “We are clearly disappointed that this project has not come to fruition yet. It’s unfortunate that we received those living units in that condition.”

As part of the negotiations, the housing authority is going through a public procurement process to work out what the costs for new units will look like, he said.

“When we last updated the community, we were developing plans to rebuild/rehabilitate the units. The planned approach was based on advice from OHCS’ consultants and informed by industry-standard best practices,” OHCS said in a statement.

“After reviewing with local partners, they felt this approach would not fully reassure community members or set up the project for long-term success,” the statement continued.

Delia Hernandez, a public information officer with the department, said, “We know the community has a good pulse on what is needed locally. After talking with the community, we decided this was the best route.”

Besides housing authority involvement, ACCESS, the county’s community action agency, will select applicants to live in the homes.

“This is the preferred path for the housing authority,” Elzy said, adding that the agency was not involved in the OHCS decision process.

The housing authority had rehabilitated the site, devastated by the Almeda Fire on Sept. 8, 2020, to house 118 modulars. The exact number under a new arrangement is unknown, Elzy said.

The housing authority used a $6 million award from OHCS to purchase the 21-acre property in early 2022. The authority estimated it would spend another $5 million or more to redevelop the site, including replacing most of the infrastructure. The park is 90% complete with only some landscaping and fencing to be installed after homes are moved in. Foundation pads and utility infrastructure are in place.

The housing authority has built a number of multifamily residences, but this would be the first time it undertakes a project with separate modular homes.

Neither agency would put a timeline on when survivors might be able to move in.

At an August meeting in Medford with potential residents, OHCS announced a plan to rebuild the units that had been declared uninhabitable by using local contractors. Occupancy of the units had been originally scheduled to begin last fall.

“I know when we went there last year, they definitely wanted homes that were safe to move into. That was one of the main concerns,” Hernandez said.

Local agencies and OHCS have been in communication with potential residents, Hernandez said. That was a request heard at the August session.

ACCESS stopped processing applications for the housing when the problems surfaced in June. At that time, they were screening applications from 44 former Royal Oaks residents, who were given preference. Another 100 fire survivors had been selected for review in a lottery.

In an email, ACCESS Housing Director Joe Vollmar wrote that the application process is on hold until OHCS has a timeline for homes and gives the go-ahead.

In 2021, following the Almeda and South Obenchain fires in Southern Oregon and other conflagrations in the state, OHCS contracted with Nashua Homes of Idaho, Inc. to build 140 modular units to assist survivors of the 2020 Labor Day fires.

Units began to be delivered locally in 2022. By June, 66 had arrived at Royal Oaks.

After units were delivered to the Medford area, they were found to be deficient, with water leaks, mold and building code violations. Many units are now sitting at the Royal Oaks site. OHCS will remove the modulars if an agreement is reached, Elzy said.

The state is exploring its options with respect to the manufacturer, Hernandez said. She could not elaborate on the possibility of litigation, she said. The cost per unit under the $24-million contract, including transportation, has come to $181,000.

Boards of directors for both agencies will have to approve an agreement. OHCS expects this to happen within the next 45 to 60 days.

“This (collaboration) is really based on their success in creating their project on time and on budget,” Hernandez said. “They are local. They know the community. We are happy to be partners with them on this.”