A Merced Superior Court judge denied a request earlier this month to halt the Planada flood recovery program due to resident complaints about subpar repairs – just months after Merced County ended its contract with Habitat for Humanity for repair work.
The legal dispute between Merced County residents and several government agencies centers on the $20 million Planada flood recovery program launched by the county to repair homes after the historic 2023 floods ravaged parts of the region.
While the county reports that more than 100 damaged properties have been repaired under the program, residents’ complaints and the termination of Habitat’s contract have raised concerns about construction quality and oversight.
Documents obtained by The Merced FOCUS through public records requests, along with testimony from residents, detail allegations of incomplete or faulty work by Habitat, workers drinking on the job and misplaced belongings.
Those issues, identified as part of that legal fight, provide an inside view of what many residents say they’ve dealt with in the aftermath of the floods. Attorneys representing over 400 flood survivors in Planada are seeking to limit how the county and its contractors inspect and repair homes while lawsuits move forward.
The original lawsuit filed by Los Angeles-based law firm Kabateck LLP in December 2024 names Merced County, City of Merced, the California Department of Fish and Wildlife, and other government agencies as defendants.
The suit alleges the faulty nature of the levees and flood infrastructure of Bear and Miles creeks, combined with the failure of the governmental entities to address those deficiencies, caused extensive damage to the residents of Planada.
Now, attorneys from Kabateck are also seeking to halt parts of the Planada relief program temporarily.
“We want our clients to get the necessary help that they need, but it has to be done correctly,” said Stephanie Charlin, a partner at the firm. “The last thing we want to do is delay them from getting the help and repairs they need. So now we have to get involved.”
Legal issues and a temporary restraining order
Attorneys from Kabateck in a March 2 filing asked a judge to temporarily halt property inspections, communications with residents, and repair work under the county’s Planada20M program.
The filing alleges that county officials and contractors entered properties, conducted inspections, took photos and videos, and asked residents questions about flood damage without notifying their attorneys.
Kabateck attorneys argued that the program’s actions could interfere with their ongoing case by altering or damaging key evidence, since the condition of the homes is central to determining liability and damages.
“One of the problems is they’re also going in and telling our clients when their alleged work has been done, that they need to sign this document saying that the work’s been completed,” Charlin said.
They also alleged that, in some cases, repairs potentially caused additional damage to properties.
“The reality is the work oftentimes isn’t complete … but the rest of the house is still in disarray, still damaged. So it’s a little misleading,” said Charlin.
Merced County filed its opposition just one day later, on March 3, arguing there was no immediate emergency that justified halting the program.
In its filing, the county noted the $20 million program has been operating for about two years and has already repaired more than 100 homes, with dozens of projects still in progress. The county warned that stopping the work could delay repairs for residents still waiting for assistance.
From the county’s point of view, the dispute should be handled through standard legal discovery procedures rather than an emergency court order.
A judge ultimately denied the request for a temporary restraining order.
“The Court ruled in the county’s favor, and denied in its entirety Kabateck’s application for a temporary restraining order,” said Jan Greben, the attorney representing Merced County. “The county has been in communication with Kabateck since the beginning of the Planada recovery program and will continue to keep Kabateck and its clients informed without slowing down the progress of the program.”
Charlin said her firm plans to challenge the decision.
“We’re gonna be filing something soon to get this back in front of the court,” Charlin said. “What’s happening needs to stop until we can come up with a framework and a policy and procedure in which we can be there when our clients’ homes are being inspected.”
The concerns raised in court filings echo complaints from residents who say the work on their homes was poorly done.
Planada resident Lisa Espinoza, who is a plaintiff in the suit, says she knows firsthand about those issues because of the construction work at her home.
One day in September, while reviewing footage from her home security system, she said she saw workers carrying a black bag but was unsure of its contents. Additional footage allegedly showed a Habitat construction worker walking around with a 24-ounce can resembling a Michelob Ultra beer.
“We can see that he had a beer in his hand,” said Espinoza, whose home sustained mold damage from the flood. “I contacted Habitat for Humanity, Merced County, and they ended up coming back and telling me, ‘Oh, it was, uh, a zero beer.’
“I said, ‘That’s not a Michelob Zero (a non-alcoholic beverage).’ I sent pictures of the beer cans on the floor,” Espinoza said. “Still, nothing was done about it.”
Espinoza said the beer incident was one of several issues she experienced during the repair work at her home. She also reported issues with construction work.
Termination of Habitat’s contract
Merced County hired Habitat for Humanity of Merced and Stanislaus County and Self-Help Enterprises in February 2024 to lead housing repairs under a $20 million state-funded flood recovery program in Planada.
The county terminated Habitat’s contract in January this year and announced the change during a community meeting without further explanation.
A termination letter obtained by the Merced FOCUS on Feb. 24 through a public records request shows county officials raised concerns about halted construction and requested an accounting of unspent funds from Habitat.
“We understand that all construction being performed by Habitat was stopped in mid-December,” reads the letter. “Because the contract required all construction to be completed by the end of December 2025 and because Habitat ceased work in mid’ December, the County should have all records associated with such construction in hand.”
Mike North, public information officer with Merced County, said county staff have been in communication with Habitat after the contract ended.
“County staff is carefully reviewing claims, invoices, inventory reports, and other expenses reported by Habitat,” he said. “Environmental reports, appraisals, contracts, permits, and other related construction records are being transferred over by Habitat to the County, with some items still being requested.”
Another issue the termination letter revealed was the possible mishandling of residents’ belongings.
“We have heard rumors through our representatives in the community that certain storage containers used to store residents’ personal belongings will be removed with the residents’ belongings still inside or that such belongings will be removed and placed outdoors,” the letter reads. “The County will pursue all remedies for breach, or other causes of action, if residents or the County are damaged during this transition.”
The letter showed that staff with the Merced County Economic Development Department reached out to the container company and took over those contracts.
Habitat for Humanity representatives did not respond to multiple requests for comment. An automated email reply from CEO Anita Hellam indicated she was out of the office.
A visit to Habitat’s office in Modesto revealed that Hellman was out of the office until the end of March, according to staff there.
Construction work by Habitat for Humanity
County department notes documented complaints about construction work, including concerns about billing and halted projects.
An email from Ana Muniz-Laguna, an office assistant from Merced County administration and budget support, noted Habitat submitted receipts for incorrect items and with incorrect dates and descriptions.
“All the contractors have been pulled off of constructions due to funding, do not have money to pay contractors, or supplies called and stated she is concerned that the tile contractor was packing up his tools and was told to leave the construction site until further noticed,” the email reads.
Repairs to Espinoza’s home were finished right before Thanksgiving, but she said the work done was subpar, with numerous issues popping up as her family moved back in.
“I don’t have any cold water in my shower, and there’s no pressure,” she said, adding that there were other plumbing issues, such as reversed hookups on her washer, or a missing thermostat for her heater. “PG&E won’t even turn it on now. It’s unsafe because of what they did to it.”
The electricity at the home was also affected by what Espinoza described as the faulty replacement of an electric circuit breaker.
“I can’t use my microwave and wash clothes at the same time,” she said.
The list of issues described by Espinoza also included a shoddy foundation fix and missing pillars.
During the four months it took for the work to be completed, the family of six — including two couples and an adult with a disability — was housed in hotels. At first, each couple had their own room, while the older son shared a room with his younger brother to help care for him. Eventually, that arrangement changed.
When only two rooms were available to the family, some tough decisions had to be made. The brothers didn’t want to be separated, nor did Espinoza and her husband want to impose on their other son’s marriage. They decided to stay four to one room.
“We didn’t feel comfortable,” she said. “Me and Steve slept on one bed. My son, who is disabled, slept on the other bed, and my oldest son had to sleep on a small chair-kind of bed.”
Once the sleeping arrangements were dealt with, another issue surfaced. The Marriott in Merced did not have a kitchen, so the family had to start eating out.
“It depleted all of our savings,” Espinoza said.
At first, the family was told each adult would receive $200 weekly for food. But because there were six adults, they ended up only receiving $400, she said.
Espinoza never received any paperwork explaining how much was spent on her house. The only information she received was an initial estimate of about $42,000 for repairs.
She never heard back from Habitat after she asked for paperwork about the repairs to her home. What Espinoza later received was a certified letter from one of the contractors stating that a lien would be placed on her house for an unpaid balance to Habitat.
The issue was reported to both Habitat and the county, but Espinoza said she never heard back and is unsure if a lien was placed on her property.
A Merced FOCUS reporter’s search for legal documents related to the property did not produce evidence of pending liens.
A representative from Self Help Enterprises, a company that subsequently took over the repair work, visited Espinoza’s home to check on the construction and address any issues.
“The guy was here for like two hours checking everything, and he said, ‘Yeah, they did mess up a lot of stuff,’” she said.
Following the money: Advance payments and administrative fees
Documents show millions of dollars were paid to Habitat before the contract was terminated.
A contract between the two entities gave Habitat a 10% administrative fee in addition to funds for work.
It started with $3 million for construction and a $300,000 administrative fee, but an amendment in September 2025 increased the amount to $7.65 million and capped administrative fees at $765,000.
The language in the contract clarifies that all advance payments are subject to audit and review by county officials and must be matched to the work performed.
Documents show that $4.3 million was paid out for construction work and about $580,000 for admin fees.
A final invoice from Habitat requesting $500,000 from the county was issued on Dec. 23, 2025.
The termination letter asked Habitat to reconcile all work, both completed and incomplete, and all subcontractor payments using funds already paid.
“The County expects to be made aware of any shortfall in such reconciliation to be reported to the County immediately,” reads the letter, while demanding all charges to be actual and reasonable and any unspent funds to be returned by Feb. 27.
The Merced FOCUS requested the reconciliation report for these funds through a public records request, but the request was not fulfilled by the time of publication.
North said the Planada $20 million program was a first-of-its-kind and came with challenges, as well as many positive outcomes.
“By working closely with the community, the County built a program that prioritized people, their properties and infrastructure,” he said in an email interview. “Coordinating across many different departments, we have been focused on addressing community needs and concerns while navigating logistical and regulatory hurdles. While the process has not always been easy, the County remains fully committed to finding solutions and pivoting when necessary to maintain steady progress.”
New contractor announced
During the January community meeting, Mark Mimms, the county’s economic development director, said Self-Help Enterprises would take over some of the construction, with the rest handled by contractors hired directly by the county.
North clarified in an interview that Self Help took over all remaining construction projects and that the county did not hire any contractors directly.
“The homes have been inspected, and Self-Help is writing the scope in order to determine construction status and a construction timeline,” he said.
A review of an amendment to the contract between Self-Help and the county, signed in early January, showed that the organization must complete construction and issue certificates of occupancy by June 30. All closeout documents for the work must be filed by Sept. 30. All contracts and amendments appear to give up to $7 million to Self-Help to complete the work.
The organization is receiving a 10% administrative fee for all funds used. Self-Help also reimburses residents who paid for their repairs.
Melissa Valdez, assistant director of strategic partnerships at Self-Help, said her entity originally had 19 projects in Planada, with three still under construction. The entity, she said, has also completed inspections and is reviewing all cases to ensure that all work meets the program’s requirements.
“In addition, 25 homeowners have received reimbursement for repairs completed with or without permits,” Valdez said. “These numbers may continue to change as case reviews, inspections, and eligibility determinations are finalized.”
For Valdez, it is still too early to determine an exact number of homes that need additional repair or corrective work, or the timeline for completion.
“Each project presents its own circumstances, so timelines can vary depending on permitting, contractor availability, and the scope of repairs identified during inspections,” she said. “Our current goal is to complete the remaining work by the end of the summer, while continuing to move projects forward as efficiently as possible.”
For Self-Help, Valdez said communication with homeowners is a priority during such a complex process, which requires careful evaluation of each home and coordination with multiple partners.
“Self-Help Enterprises remains committed to completing repairs as efficiently as possible while ensuring that all work meets program requirements and safety standards,” she said.
“Our team recognizes the challenges residents have faced throughout the recovery process and remains focused on supporting the community and completing the remaining work. The safety and well-being of families in Planada continues to guide our efforts.”