Alleging that manufactured homes units built for Almeda Fire survivors had numerous defects, Oregon Housing and Community Services has filed an $11.7-million lawsuit against Nashua Homes of Idaho Inc. and Pacific Housing Partners.

Most of the 140 units were to have been used in the Royal Oaks Mobile Manor just north of Phoenix, which had burned in the 2020 Almeda Fire. Housing Authority of Jackson County purchased and rebuilt the site to accommodate 118 units.

Originally targeted for move-in during fall 2023, no defective units were ever occupied, and OHCS is now working with a Klamath Falls company to produce homes for occupancy next year.

Nashua Homes built the units. Pacific Housing had served as a broker, arranged for Nashua to build the homes and was supposed to manage construction and design, ensuring quality of the products according to a state contract.

Work by Nashua and Pacific Housing was performed with serious and substantial defects, the suit asserts. That led to extensive damage to both exterior and interior components of the homes. The construction was not in conformance with building codes, industry standards and other guidelines, the suit says. The suit lists a total of 55 failures to make proper instillations, missing items or damaged items.

Many of the listed items related to mistakes that allowed moisture to enter the homes, resulting in damage. There were also problems with HVAC installations, electrical wiring, doors and windows, and more, according to the suit.

Pacific Housing also failed to obtain proper insurance and failed to name OHCS as an additional insured party as called for under terms of the contract, the suit alleges. A $5-million umbrella insurance policy had been called for.

The suit was filed in Marion County Circuit Court on Nov. 20. OHCS does not comment on pending litigation, agency spokesperson Delia Hernandez told the Rogue Valley Times.

“Because there is a pending lawsuit, counsel has us declining any opportunities to talk about it. It’s just an unfortunate situation,” said a Nashua official, who declined to identify himself.

OHCS provided the defendants with written notices of defects and requested repairs. But the defendants failed to meaningfully respond or agree to fully remediate or repair the defects and damages, the suit states.

The complaint alleges negligence, negligence Per Se, breach of contract and breach of express warranty. Negligence Per Se is a legal doctrine that says negligence can be assumed based on a defendant violating a law or regulation aimed at protecting the victim from a harm. The agency has asked for a jury trial.

The suit seeks monetary damages in five different categories. They include $7,770,000 to repair the homes, including costs to clean after repairs; $1,960,00 for loss of use damages due to the issues: $770,000 for decrease of the unit’s value; $715,197.91 for storage fees; and $616,000 for the cost of third-party consultants to investigate, design and oversee repairs.

In the filing, OHCS reserved the right to add additional claims, seeks an interest rate of 9% on the amounts sought and reimbursement for costs.

OHCS provided funds for Housing Authority of Jackson County to purchase the Royal Oaks site. Almost all of the site work, except for landscaping, had been completed by August 2023.

A total of 66 units had been placed at the site by June of 2023, but health and safety problems were noted with the units. They were later moved off site and stored in south Medford near Charlotte Ann Road.

OHCS considered rebuilding the homes but changed course this spring and decided to replace the units. The agency provided $17 million to the housing authority, which has contracted with InteliFab of Klamath Falls to build new units. Occupancy may occur in the first half of 2025.

Former Royal Oaks residents who lost homes in the Almeda Fire will be given priority for the housing. Other fire survivors will be next in line. The homes will come at little or no cost, but resident will pay space rent and electrical charges.

OHCS’s contract for construction and transportation of the original units totaled $24 million. Cost per unit was $181,000, the agency said.

To help recover some of the agency’s outlay, OHCS put 68 of the homes up for auction in October and November through the state’s Department of Administrative Services. All the units were sold. More of the units are scheduled for sale this coming spring.

All together, the auction brought in $2,680,750. A total of 25 homes were sold as individual units. Another 43 units were sold in batches of varying size from four to eight units.

Individual unit sale prices ranged from a low of $31,270 to a high of $47,700. The batch of eight units sold for $262,880, while the batch of four went for $126,670. The homes all had two bedrooms and one bath and were either 64 or 70 feet long.