The shortage of housing affordable for low- to middle-income Mainers continues to be a critical issue for economic growth.
Recent legislative action will have some positive impact, but housing advocates stress there is more work to be done to reach the state’s goal of creating 84,000 more homes by 2030.
The good news
The 132nd Legislative session passed a number of bills aimed at addressing the state’s housing needs. The $519 million supplemental budget — added to an $11.65 billion two-year appropriation approved in 2025 — allocates funding for a range of programs to boost housing.
“In particular, the budget includes $63.5 million for housing and homeless response programs to build affordable housing, support shelters and warming centers and provide resources to towns to implement land use policy,” Laura Mitchell, executive director of the nonprofit Maine Affordable Housing Coalition, says.
The Maine Affordable Housing Coalition estimates the funding will support the creation of close to 300 housing units.
The measure also includes funds to make improvements to seniors homes to allow them to age in place and provide limited rental support to avoid evictions. This allocation is predicted to provide for the upgrade of 645 senior homes.
“All in all, MAHC’s goals for the session were to provide funding for affordable housing and cut the red tape for housing development,” Mitchell says, “and we made forward progress in both those areas.”
Reduced regulatory restraints
In terms of cutting red tape, Mitchell cites the passage of LD 128, which streamlines the Department of Environmental Protection permitting process.
Championed by the Build Homes Build Communities coalition, LD 128 supports a clearer path for small multifamily developments; projects that include detached residential housing for up to four families, including accessory dwelling units, instead of just single-family housing.
LD 161 will begin the process of updating the 30-year-old subdivision law “that has created duplicate review pathways, along with overly reactive reviews for small developments,” Mitchell says, “which can halt new housing in its tracks, and has been confusing after decades of minor edits.”
LD 2224 seeks to reduce some construction costs by mandating a study of fire codes, including those that call for sprinkler systems in single-family homes.
LD 2225 supports municipal code enforcement efficiency and training to reduce barriers to creating more housing.
A win for rental development
One notable bill signed into law this spring by Gov. Janet Mills extends the Maine Affordable Housing Income tax credit through 2036. LD 2116 is designed to boost affordable rental housing development, by providing up to $10 million annually.
When paired with federal 4% Low Income Housing Tax Credits, the funding will help finance construction and preservation of income-restricted homes.
The program is expected to help address the growing need for more housing for the state’s aging population, with at least 30% of new unit credits targeted for senior housing.
Rural areas of Maine should also benefit under the new law; another 20% is targeted for construction in rural areas and 10% of the credits are set aside for the preservation of USDA rural development projects.
In testimony to the Joint Standing Committee on Taxation in January, Mitchell said since the program was enacted in 2020, $61 million in state tax credits has leveraged $350 million in outside investment for housing development, resulting in 824 new affordable homes built.
“Further,” she adds, “108 older affordable homes have been preserved across the state.”
Funding for MaineHousing projects
MaineHousing, which administers funding for affordable housing development, was allocated $37.5 million in the supplemental budget, an increase of $10 million over funding in the 2023-24 biennial budget.
Additionally, a restructuring of how proceeds from the real estate transfer tax are allocated, which passed in 2024 under LD 1082, is projected to support housing production through MaineHousing to the tune of $17 million annually. That funding will be available for the first time this year.
“This represents a continued commitment from the administration and the Legislature to make meaningful investments in housing. We have never had a more robust production pipeline, and it’s because of investments like this,” says Erik Jorgensen, senior director for government relations and communications at MaineHousing.
In March the Augusta-based organization announced the award of $12 million in grants through Maine’s Home for Good program, which will create 92 affordable apartments in three Maine communities — Bangor, South Portland and Portland — to provide housing for the chronically homeless.
“Government subsidy, while important, is not going to solve Maine’s housing shortage. We really need it, but we also need land use reforms and consistent policies to allow housing to be built at greater scale,” Jorgensen says.
“We need housing that is affordable to people at all income levels, not just those households who live in ‘affordable housing’ — the income restricted buildings that MaineHousing finances.”
A ‘corrective’ bill passes
LD 2173 is aimed at “fixing” some of the more unpopular zoning mandates that had previously been signed into law in 2022 under LD 2003, then altered in 2025, under LD 1829.
Municipalities had argued that many of the provisions in the most recent bill, designed to increase housing by boosting density, i.e., more housing units per lot, went too far, pre-empting local ordinances and growth caps, with no fiscal support for added infrastructure costs.
Scarborough, which is one of the fastest growing towns in the state, was particularly vocal in its opposition to LD 1829, which had been due to take effect this coming July, and provided feedback to Legislators.
LD 2173, “An Act to Update the Laws Regarding Housing Developments and Accessory Dwelling Units,” strikes more of a balance between encouraging housing construction and some of the more aggressive mandates under LD 1829.
For homeowners and small-scale developers, some of the changes could help reduce barriers to smaller projects.
The new bill also allows for more time for implementation, moving the deadline out to July 2027.
“The Town Council was unified in believing that, while it was rooted in good intentions, the original state legislation was a blunt instrument that would have undercut many of our thoughtful local regulatory efforts and could have resulted in negative unforeseen consequences,” Scarborough Town Council Chair Cory Fellows tells Mainebiz. “To their credit, state legislators listened and made meaningful revisions.”
Modular construction takes a hit
Of the bills that did not pass, LD 2229 is one of the more impactful. It was designed to address a recently-discovered technicality in alignment with Maine’s building code, regarding inspection practices for larger factory-built modular units.
Specifically, the state building code requires plumbing and electrical systems to be installed by Maine-licensed tradespeople, whereas the widespread practice has been for them to be inspected but not installed by license holders, as is the practice in other states.
State Sen. Chip Curry, D-Belfast, sponsored LD 2229 to clarify the issue, but the bill was reviewed late in the session, and representatives from the modular industry, unaware of the bill, did not provide testimony.
Legislators decided to hold the bill until more input could be considered.
Now close to 300 modular housing units already in development, and many more on the drawing board, are in limbo until the bill can be passed.
In an attempt to rescue a handful of the projects, the Legislature pulled $900,000 from reserve funds to help cover some of the added costs to developers, though it’s not clear how effective that will actually be. The funds will be administered by MaineHousing.
Greg Payne, senior advisor on housing policy for the Governor’s Office for Policy Innovation and the Future, says he expects the bill to be considered in the Legislative session in 2027. If it passes, it would most likely go into effect that fall, Payne says, unless it were to pass as emergency legislation, making it law immediately.
Among other bills that stalled, but are expected to be taken up in the next Legislative session, is LD 2164, which would provide technical and financial assistance to towns seeking to convert vacant school buildings into housing.
The program would be administered by the Augusta-based Maine Redevelopment Land Bank Authority, a quasi-governmental agency created in 2023 to rehabilitate abandoned or underutilized properties.
Much more needs to be done
Patrick Woodcock, president and CEO of the Maine State Chamber of Commerce, says much more work needs to be done to meet Maine’s housing needs.
The Chamber is part of the Build Maine Build Communities advocacy coalition, launched in November 2025 in partnership with the Maine Affordable Housing Coalition, the Maine Real Estate and Development Association and the Portland Regional Chamber of Commerce.
“Maine needs a breakthrough year with our housing production, to lower the costs for residents and attract new workers to our state, to ultimately grow our economy,” Woodcock says.
“Maine and local communities will need to significantly build on these efforts, to lower the cost of building homes, streamline the permitting at the state and local level and provide long-term sustainable funding.”
Mitchell of the Maine Affordable Housing Coalition agrees there is work to be done.
“My biggest take away from this session is there’s so much to do,” Mitchell says. “And all of us at MAHC are just super energized to keep moving housing policy forward in Maine because all Maine people deserve a home.”
