The Department of Housing & Urban Development (HUD) has published a notice that effective April 1, 2023, HUD-assisted sites enrolled in HUD’s NSPIRE demonstration program will change from receiving “advisory” housing safety inspections to receiving “inspections or record.” NSPIRE stands for “National Standards for the Physical Inspection of Real Estate.” This will replace HUD’s current REAC protocol for inspecting HUD affiliated housing projects.
The NSPIRE process is designed to create a new simplified inspection system that more accurately reflects the physical conditions of housing units and places greater emphasis on issues like lead-based paint hazards and mold.
The NSPIRE demonstration program will end for Public Housing participants on June 30, 2023, the day before HUD intends to begin inspections under NSPIRE for Public Housing. The demonstration will end for Multifamily Housing participants on September 30, 2023, and the NSPIRE final rule is anticipated to take effect for those projects on October 1, 2023.
Impact on LIHTC Projects
The jury is still out on the impact changing from the UPCS protocol to NSPIRE will have on LIHTC properties. Treasury Regulation 1.42-5 requires a physical inspection of LIHTC properties. Some Housing Finance Agencies may rely on REAC inspections for purposes of the HFA required inspection of tax credit properties. Since NSPIRE will replace the current UPCS standard, this will change the manner in which these properties are inspected. The impact on Agency inspections that are not done as part of the REAC protocol is unclear. HFAs will be examining their procedures relative to the upcoming change in CFR §5.703, which governs the HUD inspection process. Since this requirement will not go into effect until October 1, 2023, Agencies and owners have time to determine how this change will impact specific inspections.