HUD published a final physical inspection Scoring notice in the Federal Register on July 7, one of three documents supplementing the final rule implementing the new National Standards for Physical Inspection of Real Estate (NSPIRE). NSPIRE scoring is focused on the health and safety of the housing units where residents live, as well as on the functional defects of buildings, and deemphasizes scoring based on the appearance of building exteriors. NLIHC submitted a comment letter in response to a proposed Scoring notice published in the Federal Register on March 28 (see Memo 4/3). The Scoring notice does not apply to the Housing Choice Voucher (HCV) or Project-Based Voucher (PBV) programs; NSPIRE retains a pass/fail indictor for the HCV and PBV programs. The final Scoring notice only makes one major change and clarifies three other provisions.
NSPIRE will replace HUD’s former physical inspections standards, the Uniform Physical Conditions Standards (UPCS) and the Housing Quality Standards (HQS). HUD published final overall NSPIRE regulations on May 11 (see Memo, 5/15) and NLIHC prepared a summary of the key provisions of the final rule (see Memo, 5/22). Of the three supplemental notices, HUD also published the final physical Standards notice, along with a link to 295 pages of detailed “inspectable items,” on June 22 (see Memo, 6/26). HUD posted Notice PIH 2023-16/H 2023-07, the Administrative Procedures Notice, on June 30 (see Memo, 7/10). The intent of issuing the three notices instead of incorporating their content in regulations is to enable HUD to more readily provide updates as appropriate. HUD intends to update the NSPIRE Standards and Scoring notices every three years.
The Major Change in the Final Scoring Notice
The major change in the final Scoring notice removes the proposal to use letter grades in conjunction with inspection scores. Table 8 in the proposed Scoring notice had seven letters along with a property score and an explanation of the joint letter/property score. For example, the table entry for a property with an NSPIRE score greater than 70 but less than 80 with a C letter grade was explained as “a property with an acceptable physical condition with a greater number of concerning defects. The property should be closely monitored to see if these issues are correctable or present larger concerns about resident health and safety and overall asset condition.” The proposed Scoring notice stated the intent of the table was to make inspection scores easy for PHAs, private owners of HUD-assisted Multifamily housing, HUD staff, and residents to better understand a property’s condition and to guide risk management and enforcement. The letter grading is removed from the final Scoring notice because several public comments expressed concern that letter grading could lead to misinterpreting inspection outcomes and even stigmatize affordable housing.
The NSPIRE final rule and proposed Scoring notice identified three inspectable areas: the dwelling unit (e.g., bathrooms, kitchens, electrical systems, walls, windows, carbon monoxide devices, smoke detectors, etc.); inside a building containing a unit selected by random sample for inspection (e.g., common areas, utility rooms, mechanical rooms, community rooms, etc.); and outside areas of a building (e.g., fencing, mailboxes, play areas, storm drainage, etc.). In-unit deficiencies are weighted more heavily.
The NSPIRE scoring methodology converts observed defects into a numerical score. NSPIRE retains the 0-100 point score for properties inspected by HUD’s Real Estate Assessment Center (REAC), which considered a failing score to be less than 60 points. Properties with an overall score of 30 or less will automatically be referred to HUD’s Departmental Enforcement Center (DEC).
For scoring, HUD proposed “Fail Thresholds,” two situations in which a property will be considered to have failed inspection:
- The final Scoring notice retains the proposed notice provision to continue using the UCPS practice of failing a property that has a score less than 60. This is called the “Property Threshold.”
- The final Scoring notice adds a new “Unit Threshold” that fails a property even if it had an overall score of more than 60, if 30 or more points at the property are deducted due to in-unit deficiencies. This reflects HUD’s goal of maximizing the health and safety of residential units.
In the Background section of the final Scoring notice, HUD indicates that several public comments misinterpreted the Unit Threshold to suggest that the deduction of 30 points or more in a single inspected unit could fail an entire property, which was not HUD’s intent. Therefore, the final Scoring notice clarifies that the Unit Threshold applies to all the inspected units in a property collectively. In addition, HUD will only lower the score to 59 if it was previously 60 or more. HUD will not further adjust scores that were already less than 60.
The proposed Scoring notice would score all deficiencies, even repeated instances of the same deficiency. Public comments raised concerns about some deficiencies that could be observed in multiple rooms or on inspectable items even if they were the same deficiency, such as pest infestation. The final Scoring notice continues citing a deficiency multiple times in all inspectable areas (the unit, inside a building, and outside a building) but will deduct points only once per inspected unit, building, or outside area. Examples of deficiencies that will be cited for each instance but scored only once in the same inspectable area include infestation, damaged doors, damaged walls, blocked egress, and sharp edges.
The final Scoring notice retains the long-standing practice of not scoring smoke detector defects, instead indicating smoke detector defects with an asterisk (*) after a property’s overall score. The proposed Scoring notice indicated that the final Scoring notice would have a similar designation for carbon monoxide devices, which the final notice indicates is a plus sign (+) after an NSPIRE score. Carbon monoxide device defects must be corrected within 24 hours.
NSPIRE seeks to strengthen HUD’s physical condition standards and improve HUD oversight. The NSPIRE standards are meant to align and consolidate the two sets of physical inspection regulations (contained mostly at 24 CFR part 5) used to evaluate HUD housing across multiple programs: the Housing Quality Standards (HQS) and the Uniform Physical Condition Standards (UPCS). NSPIRE physical inspections will focus on three areas: the housing units where HUD-assisted residents live, elements of their buildings’ non-residential interiors, and the exteriors of buildings, ensuring that components of these three areas are “functionally adequate, operable, and free of health and safety hazards.” The new inspection protocol commenced on July 1, 2023, for public housing and will begin on October 1, 2023, for the Housing Choice Voucher (HCV) program, the various programs administered by HUD’s Office of Multifamily Housing Programs, and the housing programs overseen by HUD’s Office of Community Planning and Development (CPD).
As explained in a previous article in Memo, HUD intends to score deficiencies based on two factors: the “severity” of a defect and the “location” of the defect (such as whether it is inside a unit, inside a building (e.g., corridors, community rooms and mechanical rooms), or in an outside area (e.g., fences, parking lots, and sidewalks)). Regarding severity, UPCS provided letter designations (e.g., a, b, c) to indicate the presence of exigent health and safety defects. NSPIRE replaces the letter designations with “Defect Severity Categories”:
- Life-Threatening (LT): there is a high risk of death, severe illness, or injury to a resident.
- There is a high risk of permanent disability or serious injury or illness to a resident.
- There are deficiencies that would seriously compromise the physical security or safety of a resident or their property.
- There is a moderate risk of an adverse medical event requiring a healthcare visit, causing temporary harm, or if left untreated causing or worsening a chronic condition that may have long-lasting adverse health effects.
- There are deficiencies that would compromise the physical security or safety of a resident or their property.
- Low: There are deficiencies critical to habitability but that do not present a substantive health or safety risk.
The Federal Register version of the final NSPIRE Scoring notice is available at: https://tinyurl.com/3fnhfsbp
An easier-to-read version of the final NSPIRE Scoring notice is available at: https://tinyurl.com/bdfz65h8
The final NSPIRE rule is available at: https://bit.ly/3pvM9XM
An easier-to-read version of the final NSPIRE rule is available at: https://bit.ly/3pxumiX
NLIHC’s summary of key provisions of the final rule can be found at: https://bit.ly/3Oweh7H
Read the final Standards notice at: https://tinyurl.com/zyaksbsh
The final Standards (“inspectable areas”) are viewable at: https://tinyurl.com/37mraxj8
The Administrative Procedures Notice is available at: https://tinyurl.com/5c7ce3pp
Explore HUD’s NSPIRE website at: https://bit.ly/2V9qvV3
More information about all HUD programs subject to the new NSPIRE rule is available in NLIHC’s 2023 Advocates’ Guide.