At the end of March 2019, the Government Accountability Office (GAO) issued a report titled, "REAL ESTATE ASSESSMENT CENTER - HUD Should Improve Physical Inspection Process and Oversight of Inspectors."
The 2017 Consolidated Appropriations Act, Joint Explanatory Statement, included a requirement that the GAO conduct a review of REAC’s policies and processes; this study has been issued in response to that requirement.
The report discusses, among other things, (1) REAC’s process for identifying physical deficiencies and (2) REAC’s selection, training, and monitoring of contract inspectors and its own qualify assurance inspectors.
GAO has made 14 recommendations to HUD to improve REAC’s physical inspection process and its selection, training, and monitoring of contract and quality assurance inspectors, among other things.
What GAO Found
The primary overall finding is that the REAC standardized procedures to identify physical deficiencies at HUD multifamily and public housing properties has a number of weaknesses. For example, REAC has not conducted a comprehensive review of its inspection processes since 2001. Also, REAC does not track its progress toward meeting its inspection schedule for certain properties.
REAC uses contractors to inspect properties; these contract inspectors are trained and supervised by quality assurance inspectors hired directly by REAC. However, REAC’s processes to select, train, and monitor both contract inspectors and quality assurance inspectors have weaknesses.
Background
HUD created REAC in 1997 to obtain consistent information on, among other things, the physical condition of its public and multifamily properties. REAC generally inspects properties every one to three years, using a risk-based schedule. REAC developed a standardized protocol to inspect properties, referred to as the Uniform Physical Condition Standards (UPCS). REAC’s data system automatically generates an overall inspection score for the property from 0 to 100 based on the information an inspector records.
REAC primarily uses contractors - who are trained and certified in REAC’s UPCS protocol - to conduct inspections of multifamily and public housing properties.
To procure inspections of HUD-assisted properties, REAC primarily uses an auction process to award contracts either to eligible contract inspectors or to companies that employ contract inspectors.
REAC Roles & Responsibilities
REAC is situated within the Public & Indian Housing (PIH) branch of HUD. Several departments within REAC are involved in facilitating the physical inspection process:
The 91-page report identified a number of REAC weaknesses.
Conclusions
The GAO study found areas for improvement in the REAC inspection process and made the following 14 recommendations to HUD:
As with most GAO reports, actual implementation of the recommendations may take some time. However, as with the recent REAC change to a 14-day inspection notification, owners and managers of HUD multifamily properties should be proactive in managing properties in a way that will not create a negative outcome when (not if) these recommendations ultimately go into effect.
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