The Department of Housing & Urban Development (HUD) is well underway in the overhaul of its Real Estate Assessment Center (REAC) physical inspection protocol. The REAC inspection process will eventually be replaced with a new physical inspection procedure known as the National Standards for the Physical Inspection of Real Estate (NSPIRE), which will feature new standards, protocols, and procedures that will apply to many HUD programs, including public housing, multifamily housing, and FHA-insured housing.
HUD is well into a two-year demonstration program to test and refine the NSPIRE protocols before finalizing them. Major changes to be tested include:
- Requiring site owners and management agents to perform comprehensive annual self-inspections covering all units;
- Putting greater emphasis on health and safety issues than on function and appearance; and
- A new scoring model that places most emphasis inside resident units as opposed to common areas.
HUD has decided to incorporate two new procedures into the NSPIRE demonstration:
- HUD will test for the best method for including up to five additional dwelling units in the inspections, as identified in advance by resident organizations. If there is no resident organization, HUD will use a risk model to select units above those units selected by sample; and
- HUD is researching the best way to survey residents and include survey results in the NSPIRE demonstration.
Under these new procedures, any safety or health issue will be considered Urgent. Function and operability will fall under the heading of Planned and can be undertaken through routine work orders. A third category, relating to condition and appearance, will be considered Subjective, and there will be a good deal of discretion in this area.
The demonstration phase is voluntary and will include 4,500 participating properties. This phase will go through October 2020.
Two of the main goals of the program are to streamline the inspection process and refocus the standards on areas that directly affect residents. For this reason, NSPIRE reduces the current five inspectable areas (dwelling units/building systems/common areas/building exterior/site) to three inspectable areas (dwelling units/inside/outside). The scoring weight given the dwelling units is increased from 35% to 50% of the overall score, meaning that a property cannot pass if the dwelling unit section fails. The “inside” and “outside” inspectable areas will each be worth 25% of the total score.
Another major change to the procedures has already occurred, and that is the inspection notice timeframe. Prior notifications were sometimes as much as 120 days prior to an inspection with the norm being 60 to 90 days. The new requirement is no more than 14 days and there is a reduced ability to reschedule. HUD implemented this change to encourage year-round maintenance as opposed to “reactive” maintenance once an inspection was scheduled.
Management companies will now have to develop in-house procedures to prepare for these new requirements.
Clearly, the most significant change is the scoring emphasis for the condition of the units, which is the area over which management has the least control. It will be virtually impossible to address all issues in resident units in a 14-day time period, meaning that management will need regular access to units.
HUD is currently seeking properties to participate in the demonstration. These properties can be owned by Public Housing Agencies (PHAs) or private owners.
Owners may register one or more properties for acceptance into the demonstration but there is no requirement to submit all properties within a portfolio. Also, submission of an application does not guarantee acceptance into the program, nor does it obligate the owner in any way. If accepted, an owner may voluntarily withdraw any and all properties at any time.
Owners interested in participating may complete an online application (as noted below).
To encourage participation, HUD has outlined a number of benefits:
- Only one inspection, and scores are advisory;
- Owners will be able to participate in focus groups, listening sessions, conference calls, and training sessions on policies and procedures;
- Owners will have a direct line to HUD for purposes of providing feedback; and
- Owners will receive advance training on how to use the inspection software.
- Annually inspect 100% of units. Self-inspections will be submitted electronically for evaluation but will not be scored;
- Schedule a mutually agreed inspection date with a HUD inspector, so demonstration data can be collected;
- If property conditions warrant, HUD reserves the right to order and execute a UPCS inspection and apply any available remedies, sanctions, or other actions as determined by the results;
- If the project is currently subject to an existing HUD Compliance, Disposition, and Enforcement or Corrective Action Plan, the property is not eligible;
- If the most recent REAC score was 70 or less, and the property is not currently subject to corrective action, the project may be considered for inclusion on a case-by-case basis; and
- Owners must agree to participate in focus groups, listening sessions, conference calls and training sessions.
Any owner interested in joining the demonstration program may complete an online application at hud/gov/program_offices/public_indian_housing/reac/nspire/registration.
The form may then be emailed to nspire@HUD.gov.