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Modular manufacturers urge state supply‑side incentives, factory investments and demand guarantees
Summary
Manufacturers and startups told the board that scaling modular housing requires targeted public financing, R&D grants and predictable baseline demand to de‑risk factory investments and sustain production through housing cycles.
Manufacturers and technology startups told the State Board of Equalization on July 29 that state policies and public finance can accelerate modular housing at scale — but only if the state helps de‑risk factory investments and supports research and workforce development.
Vamsi Kotla, cofounder and CEO of Remo Homes, told the board that modular firms borrow techniques from aerospace and semiconductor manufacturing to cut cost, waste and timelines. ‘‘We bring precision manufacturing and engineering discipline to prefab housing,’’ Kotla said. Remo described a 1,352‑square‑foot design that the company said can be built to high wildfire‑resilience standards and priced at roughly $220 per square foot in its pilot examples.
Kotla and other witnesses emphasized three finance and policy needs: - Supply‑side incentives to underwrite factory capital. Witnesses said a single modular production line requires substantial upfront capital (witnesses cited roughly $30 million to start a line) but can produce thousands of units over a decade; small per‑unit factory subsidies could leverage large output. - Baseline demand or state backstops. Industry witnesses asked for state‑level purchase commitments, low‑cost loan pools or other mechanisms to smooth demand and keep factories running through housing market cycles so fixed overhead does not force shutdowns. - R&D and manufacturing credits. Modular proponents asked for grants or tax credits to adapt higher‑performance materials (vacuum insulation, noncombustible panels) and preapprove standardized, fire‑resistant designs.
Remo and other technology firms highlighted product innovations: vacuum‑insulated panels, panelized wall systems that compress multiple layers into a single factory panel, and configuration management systems that track each unit’s components for maintenance and insurer comfort. Dr. Partha Dutta, Remo’s chief scientist, described using materials and manufacturing techniques common in aerospace and semiconductors to reduce waste and improve fire resistance.
Developers who build modular multifamily projects said factories close to job sites cut transportation risk and improve lender confidence. Bill O’Neil of Sola Impact/Model Z said finding a converted factory in Watts enabled local production and reduced the transportation and logistics risk that can make lenders wary.
The industry representatives asked the board to consider referrals to the Legislature and to housing agencies for: flexible financing programs, manufacturing tax credits, state‑backed baseline purchase agreements and coordinated workforce training. They said supply‑side support could make modular production lines profitable and make rapid production of affordable units feasible.
No formal action was taken; witnesses requested that the board relay industry proposals to HCD, the California Energy Commission and the Legislature.
