🔒Maine’s modular housing industry in limbo after Legislature fails to support regulatory fix

Maine’s growing modular construction industry hit a regulatory roadblock this month, which is expected to derail hundreds of planned housing units. The issue — which only recently came to light — is that some factory construction practices for larger modular buildings do not meet the requirements of the Maine Uniform Building and Energy Code. Specifically, the code requires plumbing and electrical systems to be installed by Maine-licensed tradespeople; the widespread practice has been for them to be inspected but not installed by license holders. Factories, both in-state and beyond, have been constructing modular units for Maine. They had unwittingly been building to standards that may be common in other states, but in Maine apply only to single- and two-family modular buildings, not larger modular projects. Construction of smaller units is regulated by the Maine Manufactured Housing Board, which does not require installers to be Maine-licensed but instead allows companies to be licensed and to be regularly inspected.

A bill to fix the issue was unsuccessful

State Sen. Chip Curry, D-Belfast, sponsored LD 2229 to address the issue, but the bill caught some in the construction industry unprepared. “I wish I’d known about it earlier so I could have understood the ramifications. I didn’t find out about it until the bill failed," said Chris Marshall, a partner at GreenMars Development, which has projects that will be affected.

“There was no ill will behind this,” he added. “It was an unfortunate series of events and miscommunication.” Representatives from the Associated General Contractors of Maine did weigh in, with concerns that more time was needed to fully explore the issue. Ultimately, the committee agreed and declined to move the bill on to the full Legislature for consideration this year.

What now?

As a result, close to 300 housing units already in development, countless more on the drawing board, are in limbo because hiring the necessary number of Maine-licensed electricians and plumbers to handle factory installations here in Maine — and at out-of-state facilities — would be costly, if even possible. Realizing the effect the bill’s defeat will have on modular construction, the Legislature added close to $900,000 in funding to MaineHousing’s $37.5 million FY 2026-27 budget in hopes of covering the cost of hiring enough Maine-licensed tradespeople to complete at least the five multifamily modular projects that are currently under development. “MaineHousing will be developing a process in the coming weeks/months,” to facilitate the pending projects moving forward, Scott Thistle, spokesman for the agency, said.

Capacity will be challenged

As for other modular projects in the pipeline, developers Mainebiz spoke with said projects will be delayed and more expensive. A key issue is that just one factory in Maine builds modular, KBS Builders in South Paris. KBS President Thatcher Butcher told Mainebiz his factory produces about 400 units per year, with close to one-third of them ending up in Maine, and he already hires Maine-licensed electricians and plumbers as subcontractors. "If LD 2229 does not pass [next year], we would need to continue to do so. That poses numerous logistical challenges and adds cost,” Butcher notes. “We could certainly expand our capacity if the underlying statutory issues were resolved.”

Developers who augment KBS’ production by working with out-of-state factories, question the feasibility of adding Maine-licensed tradespeople to work on modulars coming to Maine. Chris Lee, CEO of Brunswick-based Backyard ADUs, which provides modular housing for projects in Maine, New Hampshire and Massachusetts, told Mainebiz, “You can't just replace a trained modular electrician with a Maine-licensed electrician who hasn't worked in a manufacturing facility. "And, you can't just get the skilled manufacturing electrician a Maine-issued master or journeyman license overnight.” Lee references a factory he works with in Pennsylvania. “Picture a 100,000-square-foot modular manufacturing facility that produces seven modular boxes per day. The electricians and plumbers are highly trained in the processes that allow this level of efficiency and output. “Losing the Pennsylvania modular capacity would be devastating,” he said. "Out-of-state manufacturers shipped on average 900 modules to Maine last year.” Marshall concurs, noting, “We already have a shortage of licensed tradespeople here in the state."

Back to ‘stick built’?

Marshall predicts developers will either move all of their work to KBS’s one factory, which will slow deliveries and delay projects, or retool projects to use traditional framing, the "stick-built" approach. GreenMars has under construction 130 modular housing units at Stroudwater Commons in Portland — which Marshall anticipates will now be slowed by close to three months. “The reason we chose modular for Stroudwater was so that we could build rapidly,” Marshall said. “Modular isn’t always cheaper than stick-built. The reason we do it is 100% because of the speed. If you take away that advantage, there’s no reason to build modular.” Marshall emphasized that GreenMars will complete the Stroudwater project with modulars and without cost increases to buyers. “We have a mission to bring these affordable units to market.” Kara Wilbur, who owns Dooryard, a Rumford-based housing catalog company offering both modular and traditionally-built homes, said she’s already retooled upcoming multifamily projects in Yarmouth and Madison to be built ground up.

Going forward

Greg Payne, senior advisor on housing policy for the Governor’s Office for Policy Innovation

and the Future, told Mainebiz that he expects the bill to be considered in the Legislative session in 2027. If the bill passes, it would most likely not go into effect until the fall, Payne said, unless it were to pass as emergency legislation, making it law immediately. Marshall said, “An LD 2229 fix might happen next year, but I can’t plan my projects based on maybe next year.” “Our company doesn't give up easily,” he added. “We're going to continue to find ways to build housing.”