Maine is stifling this homemade solution to the housing crisis

SOUTH PARIS, Maine — Home builders around Maine routinely turn clients away or add them to yearslong wait lists. This one is begging for more business.

KBS Builders, a manufactured home company, can churn out up to four homes a week in their hulking western Maine headquarters. Their customizable modular homes are built to the same standard as a stick-built home and leave the factory within months to be shipped — 90 percent finished with utilities already installed — to sites all across New England.

But KBS is only operating at 60 percent of that building’s capacity. Five years ago, the company bought a second factory out of bankruptcy that sits empty. While their business is growing, a web of arcane regulatory barriers unique to Maine is holding it back from doing more here.

The state treats manufactured homes as singular products, so they are taxed once on materials and again on installation. They also cannot be sold directly to consumers, so KBS requires middlemen to put them up. Neither the installers nor contractors working on stick-built homes need licenses, but Maine requires licenses to do modular work.

“I’ve taken all the complexity out of assembling this building, and you’re still requiring someone to have licensure to install this on site. But somebody can go get all the raw parts and build it themselves on site with zero license?” KBS President Thatcher Butcher said. “You tell me where that makes sense.”

New Hampshire and Vermont regulate the industry the same way, although New Hampshire has no sales tax. Licenses are administered by the Maine Manufactured Housing Board, which was established in 1986 to control the quality of mobile homes, which were synonymous with poorly built trailers. Today, a modular home is often more energy efficient than a stick-built home.

Butcher has repeatedly lobbied legislators to provide parity between modular and traditional site-based construction. Lawmakers have been more interested in licensing all contractors like 35 other states do, although a bill on the subject failed last year. Rep. Tiffany Roberts, D-South Berwick, plans to submit a similar measure again this session, she said.

There are only a dozen licensed modular home installers in Maine, Sarah Sturtevant, a research consultant at the Maine Affordable Housing Coalition, found by calling through a list on the Manufactured Housing Board’s website. Those installers are able to charge a premium, edging consumers away from modular construction, Butcher said.

“Our growth in Maine has very much been more limited than in other states, which is unfortunate, because out of all the areas that we service, I think Maine has the most need for housing,” Thatcher said.

KBS’ expansion would also bring more dependable construction jobs to western Maine, a region that was once home to several manufactured housing builders before the 2008 recession. KBS currently employs 120 people, many of whom said they preferred working for a modular builder to doing site-based work.

“The big advantage for these guys is the inside environment. Working inside, they’re not shivering to death when they’re doing their job, and it makes a big difference,” Gary Cossar, a receiver at KBS’ warehouse, said.

Being able to build homes year round is another perk of building modular in Maine. Sam Hight, who runs the Hight family of car dealerships in Skowhegan and is a developer who has built three rural affordable rental projects with KBS, broke ground on an 18-unit project in Madison in November and had it finished by April.

Unlike with stick-built projects he’s done in the past, Hight didn’t have to wait for laborers or subcontractors to become available and travel to his remote site. KBS has a full team including electricians, plumbers and finishers working together in South Paris.

Lawmakers will soon consider promoting modular construction to meet lofty housing goals this upcoming year. Sen. Rick Bennett, R-Oxford, said he is submitting one bill that would remove the double tax and another that will focus on rebuilding the industry in Oxford County with startup capital and incentives. Other lawmakers are interested in focusing on it as well.

“[This] industry presents an opportunity for future growth and innovation in how we get housing built and how we address the underproduction issues that we face, not only here in Maine, but certainly across the country,” House Speaker Ryan Fecteau, D-Biddeford, said.