Maine's modular housing sector faces a major regulatory setback after the state legislature failed to pass a bill that would have aligned its building code with most neighboring states, leaving nearly 246 planned units across five projects in limbo and raising costs for developers statewide.
Background
The core issue: some factory construction practices for larger modular buildings do not meet the requirements of the Maine Uniform Building and Energy Code, which mandates that plumbing and electrical systems be installed by Maine-licensed tradespeople. The widespread industry practice, by contrast, requires such systems to be inspected-but not necessarily installed-by license holders.
Modular housing in Maine is governed by a patchwork of codes. One- and two-unit residential buildings and townhouses fall under separately adopted International Code Council codes, updatable only through formal rulemaking at the Manufactured Housing Board. Buildings with three or more residential units, as well as commercial structures, have no separate code or inspection system.
Factories both in-state and out-of-state had been constructing modular units for Maine projects, unwittingly building to standards that may be common elsewhere but in Maine apply only to single- and two-family modular buildings-not larger developments. The problem went undetected for years until a high-profile Portland project exposed the discrepancy.
This regulatory uncertainty arrives as Maine faces a shortage of 76,400 to 84,300 homes by 2030, according to a 2023 report by HR&A Advisors for the Maine State Housing Authority. A 2025 housing roadmap by HR&A identified restrictive zoning, slow permitting, and a shortage of construction workers as the primary drivers of underproduction. The Maine Development Foundation's 2025 Measures of Growth report also highlighted worsening affordability, finding that home prices have risen far faster than incomes, leaving 64% of Maine households unable to afford a median-priced home.
Details
State Sen. Chip Curry, D-Belfast, sponsored LD 2229 to address the code discrepancy. The bill would have brought Maine in line with other states by allowing unlicensed workers to install plumbing or electrical systems in a manufactured home, provided the work was supervised or inspected by a master plumber or master electrician. Representatives from the Associated General Contractors of Maine argued that more time was needed to fully explore the issue, and the committee ultimately declined to advance the bill to the full Legislature.
The legislation's failure means higher costs, scheduling disruptions, and in some cases major restructuring for five modular housing projects in the pipeline totaling 246 units across Maine. According to an estimate from Backyard ADUs, which worked on the Dougherty Commons project in Portland, using Maine-licensed tradespeople in the factory adds an estimated $3,000 per module, translating to cost increases per project ranging from $24,000 to $468,000.
A key factor: only one factory in Maine builds modular-KBS Builders in South Paris. KBS President Thatcher Butcher told Mainebiz that his factory produces about 400 units per year, with close to one-third ending up in Maine. He added that the company "could certainly expand our capacity if the underlying statutory issues were resolved." Out-of-state manufacturers shipped an average of 900 modules to Maine in the prior year.
Chris Marshall, co-founder of GreenMars Development, said "Maine had been operating right up until last summer as if [LD] 2229 had passed years ago." He added that "nobody bothered to calculate the impact if this didn't happen." GreenMars had planned a 130-unit modular project on outer Congress Street in Portland that now faces delays and restructuring.
In the interim, the Legislature allocated a roughly $900,000 lifeline for projects already underway. The funding, added to the governor's supplemental budget, will allow MaineHousing to deploy licensed plumbers and electricians to factories so that three MaineHousing-funded projects can reach completion.
Outlook
The Housing and Economic Development Committee has directed the Governor's Office of Policy Innovation and the Future to explore a longer-term solution, though it remains unclear how many additional projects could stall or be abandoned while the state works out a fix. A revised bill is not expected before the 2027 legislative session, and even if passed, would likely not take effect until that fall unless enacted as emergency legislation.
Maine's own Housing Production Innovation Working Group has noted that the state need not enter uncharted territory-it can replicate successful regulatory approaches and training initiatives from states with robust offsite construction industries, a path that could strengthen Maine's position to meet both its own housing needs and those of the broader region.
