Oregon’s housing agency failed to follow basic public contracting requirements on multiple no-bid deals worth nearly $32.3 million that were supposed to help rebuild communities devastated by the 2020 Labor Day wildfires, a state review found.
The contract that “raised the most concern” was with the modular housing brokerage that was supposed to deliver 140 homes for wildfire survivors in two hard-hit areas, a top official wrote. Inspections later revealed many of those units had serious defects and wildfire survivors were never allowed to move in. The state is now suing the broker and the manufacturer of the homes while auctioning off the structures, recouping dimes on the dollar.
The contracting problems identified by Oregon’s Chief Procurement Officer, Stephen Nelson, raise questions about whether the state could have avoided delays or safeguarded money in the modular housing mess if officials had followed the state’s own procurement rules. While the state has blamed broker Pacific Housing Partners and the manufacturer of the modular structures for the defects, Nelson found the state skipped contracting steps aimed at ensuring companies deliver quality products.
An Oregonian/OregonLive investigation highlighted problems with the housing agency’s wildfire recovery work in 2023, when the state had yet to produce a single permanent home for survivors three years after the fires. When the newsroom requested bidding records for the defective modular housing, Oregon Housing and Community Services only provided the contract — not any records showing how the state decided to pick Pacific Housing Partners for the work.
After The Oregonian/OregonLive inquired last fall as to why the state did not provide any other procurement records, a housing agency spokesperson responded that the modular housing contract bypassed the normal bidding process due to the wildfire emergency. Meanwhile, the Department of Administrative Services started its own review of the housing agency’s wildfire recovery contracting in September, at the direction of Gov. Tina Kotek’s office.
Nelson, the chief procurement officer, found a slew of problems in the seven-page report dated March 10. Officials turned over the report to the newsroom in early April, after multiple requests. Nelson declined an interview request.
Oregon public procurement rules allow governments to skip competitive bidding in certain circumstances, such as the emergency declared by the governor as a result of the 2020 wildfires. But governments are still required to document that process including their decision making and how they selected the contractors. Nelson noted it is especially important to document emergency procurement processes.
But the scope of Nelson’s review was limited by the housing agency’s failure to provide him with accounting records and inability to locate basic public contracting records, the chief procurement officer noted.
When Nelson’s office asked state housing officials for complete documentation, those officials “indicated they could only provide the documents that they could find,” Nelson wrote. “Ideally, all documents should have been stored in a centralized procurement file but locating them was challenging.”
Nelson’s report noted that the state’s contract with Pacific Housing Partners required Oregon to pay 50% of the $22.4 million contract price to the company “before any work started” and incorrectly sent additional payments to the company that were supposed to be withheld to ensure Pacific Housing Partners delivered on its contract. Due to contract amendments, the housing agency paid the company a total of $23.9 million, officials have said.
Nelson also wrote generally that some of the no-bid wildfire recovery contracts lacked documented approvals and he listed “common issues identified in most of these agreements.”
The issues included a failure to identify contract administrators, “indicating there was no one at (Oregon Housing and Community Services) assigned to oversee the work,” statements of work “that were either poorly defined or lacked deliverables” and multiple renewals and “overlapping contracts” issued to the same entities “with limited justification.” Nelson wrote that housing officials issued payments “without assurance that deliverables were accepted” and the agency “did not fully use the services offered in the contracts.”
Additionally, the housing agency did not obtain adequate insurance coverage and warrantees in some of the contracts, Nelson wrote.
The governor’s office did not respond to a request for comment.
In a statement, a spokesperson for Oregon Housing and Community Services said the agency “has no higher obligation than promoting financial integrity and operational efficiency in our pursuit of advancing housing progress.”
“Our operational efficiency, fiscal controls, and business practices now have higher standards to minimize delays and lack of flexibility that can stand in the way of housing recovery while working faster to implement programs,” public information officer Delia Hernández wrote in an email.
Mindy Rex, president and CEO of Pacific Housing Partners, did not respond to a request for comment.
State officials have previously acknowledged to The Oregonian/OregonLive that the Pacific Housing Partners contract was never uploaded to a statewide contracting database, as it should have been. They also told the news organization that they could not locate key required bidding documents for the contract, including any record of leaders at the housing agency approving a sole source contract and a description of how they selected the company ultimately awarded the no-bid contract.
Due to the housing agency’s failure to document the contracting process, it has been unclear how officials selected Pacific Housing Partners for the deal. Idaho corporation records show that Rex formed Pacific Housing Partners one year before Oregon’s housing agency awarded it the $22.4 million contract. Pacific Housing Partners, in turn, contracted with Nashua Homes in Idaho to manufacture homes for wildfire survivors.
Hernández said “previous state leadership and partners made (Oregon Housing and Community Services) aware of Pacific Housing Partners.” She did not identify the state leaders but did said the partners who provided input on the choice included then-Gov. Kate Brown’s Wildfire Recovery Director Matt Garrett and Wildfire Recovery Ombudsman Micheal Morter, former housing agency director and wildfire recovery consultant Marget Van Vliet and development consultants Tom Kemper and Bruce Wood.
Van Vliet said on Tuesday that she brought the idea of contracting with Pacific Housing Partners to the state, after Rex approached her with the pitch. Van Vliet said she knew Rex because Rex worked in affordable housing banking earlier in her career, although she had not been in touch with her for a while. “We got excited about the prospect and thought it could be a huge win,” Van Vliet said of the idea.
Four of the other wildfire housing recovery contracts Nelson reviewed were with entities led by Kemper, a longtime real estate investor and former central Oregon housing authority executive director, and Wood, a developer and former employee at Prosper Portland. Their corporations — KemWood Acquisition Company, KemperCo and Foundation Real Estate Development — collectively received state contracts worth more than $1.1 million, according to Nelson.
Nelson did not say in his report when the housing agency signed the contracts with the companies, but the Department of Administrative Services provided three of the four contracts to The Oregonian/OregonLive upon request Housing officials signed two contracts in May 2021, one with Kemper’s consulting entity, KemperCo, and one with Wood’s consulting entity, Foundation Real Estate Development. Each was worth up to $225,000, terminated after 13 months and called for the consultants to quantify the need for short-term housing for wildfire survivors awaiting permanent homes and potential solutions.
Two months later, housing officials also inked a contract worth $450,000 with Kemper and Wood’s newly formed joint consulting entity, KemWood Acquisition Company, to identify potential sites to rebuild permanent housing and help acquire the properties. Housing officials signed a fourth contract worth $207,000 with Kemper, through KemperCo, to work on “interim housing initiative and permanent housing capacity contract investments,” but the state did not provide a copy of that contract.
Van Vliet said Kemper went to Idaho on behalf of the state to conduct due diligence on Pacific Housing Partners and the modular housing manufacturer. Kemper did not respond to an email and phone call.
In an interview, Wood said that he and Kemper “were approached by OHCS and hired as consultants to help expedite housing in the fire affected counties.” Wood said he and Kemper were tasked with compiling information on the manufactured home parks that were destroyed in southern Oregon.
Wood said he did not recall dealing with any specific people at the housing agency but did meet once with former director Margaret Salazar at a community event and interacted with deputy director Caleb Yant. “But they weren’t the ones who hired us,” Wood said. “I don’t remember who actually hired us.”
Salazar left the state housing agency in early 2022 for an appointment as a regional administrator at a U.S. Housing and Urban Development office. Yant remains at the agency.
“We were consultants, so we just provided consulting advice,” Wood said.
Wood said state housing officials also asked him on one occasion to look at a couple dozen of the modular housing units that Pacific Housing Partnership had delivered to southern Oregon.
“We were not hired to inspect the units, we just went by and looked at them,” Wood said. “We worked hard. We were there, and that’s it.”
— Hillary Borrud is an investigative reporter. Reach her at 503-294 4034 or hborrud@oregonian.com.