HUD published a proposed rule in the Federal Register on January 13 that presents a new approach to defining and assessing housing quality among HUD programs, calling the approach the “National Standards for the Physical Inspection of Real Estate” (NSPIRE). The intent of the proposed rule, along with the existing NSPIRE demonstration (see Memo, 8/26/19), is to improve HUD oversight by aligning the physical inspection regulations used to evaluate HUD-assisted housing across multiple HUD programs to create a unified assessment of housing quality. HUD programs currently evaluate housing quality using different inspection standards, protocols, and frequencies. Comments to the proposed rule are due March 15.
The proposed rule would establish a method HUD will use to implement specific NSPIRE standards, scoring, and processes through Federal Register notices. In addition, the proposed rule seeks to:
- Apply a “safe, habitable dwellings” standard
- Reduce the categories of current inspectable areas for physical condition standards from five to three
- Implement a new annual self-inspection and reporting requirement for certain HUD-assisted housing
- Establish an administrative process for the treatment of health and safety deficiencies
- Incorporate provisions of the “Economic Growth and Recovery, Regulatory Relief and Consumer Protection Act” that will reduce administrative burden on small, rural public housing agencies (PHAs)
During the NSPIRE demonstration stage and parallel with formal rulemaking, HUD plans to draft Federal Register notices that outline specific inspection standards, scoring, and protocols. All updated standards and scoring methodologies would be published, as required by the proposed rule, through a Federal Register notice at least once every three years, with the opportunity for public comment prior to implementation.
Need for the Proposed Rule
Two inspection models are currently used across the majority of HUD housing programs:
- Housing Quality Standards (HQS), developed in the 1970s and applying to the Housing Choice Voucher (voucher) and the Project-Based Voucher (PBV)
- Uniform Physical Condition Standards (UPCS), developed in the 1990s and applying to public housing and private housing assisted with the multifamily project-based Section 8 programs.
HUD found that both inspection models can provide inaccurate and inconsistent results. NLIHC notes that advocates have found that some properties in bad condition receive passing physical condition scores (Real Estate Inspection Center, REAC scores), while other properties in good condition receive low scores.
HUD has also identified a disproportionate emphasis in physical inspections around the appearance of items that are otherwise safe and functional, while inadequate attention is paid to health and safety conditions. HUD concluded that existing housing standards should focus on habitability, residential use of structures, and most importantly, the health and safety of residents.
NSPIRE Background
HUD sought PHAs and owners of private HUD-assisted multifamily properties in 2019 to volunteer for its Real Estate Inspection Center (REAC) pilot project named National Standards for the Physical Inspection of Real Estate (NSPIRE). According to a Federal Register notice, on August 21, 2019, over the course of two years HUD sought to inspect 4,500 properties willing to voluntarily adopt NSPIRE model (see Memo, 8/26/19). A list of properties approved to participate in NSPIRE as of October 2, 2020 is at: https://bit.ly/3q9ai1k
The NSPIRE model contains three major components:
- Three types of inspections: 1) self-inspections by PHAs and owners and agents of private, HUD-assisted multifamily housing, 2) inspections conducted by contractors and/or federal inspectors, and 3) inspections conducted solely by federal inspectors. HUD will inspect participating properties at least once during the demonstration using the NSPIRE standards.
- Three categories of physical deficiencies: 1) health and safety, 2) function and operability, and 3) condition and appearance. HUD states that ideally each category could result in emergency work orders, routine work orders, and other maintenance.
- Three inspectable areas: 1) inside (common areas and building systems), 2) outside (building site and building envelope), and 3) units (the interior of an individual home).
REAC posted two new features on the INSPIRE demonstration Resident Engagement webpage. The National Alliance of HUD Tenants (NAHT) had been advocating for these two provisions, among others, for many years. House Financial Services Committee Chair Maxine Waters (D-CA) and Representatives Rashida Tlaib (D-MI) and Ayanna Pressley (D-MA) sent a letter to HUD Secretary Ben Carson on November 18, 2019 urging HUD to better incorporate tenant perspectives in the NSPIRE demonstration (see Memo, 11/25/19). They claimed HUD was not following through on its promise to engage with a diverse group of stakeholders (see Memo, 2/25/19). The letter noted that HUD had spoken only to HUD officials, PHAs, and property owners and agents, leaving tenants out of the discussion altogether.
The preamble to the proposed rule explains that HUD began building updated physical inspection standards, procedures, and scoring methodologies that will be refined through the multistage NSPIRE demonstration. NSPIRE will test and HUD will further refine the physical inspection model to best serve residents. NSPIRE program provisions will be published in the Federal Register and will provide an opportunity for public comment. The improvements being refined through the NSPIRE demonstration are intended to occur in parallel with changes in the proposed rule to support and reinforce the rule.
Highlights of the Proposed Rule
Housing quality regulations across HUD programs would be consolidated into one location at 24 CFR part 5. However, where different statutory requirements or public policy considerations prevent alignment with 24 CFR part 5, those program-specific requirements would be maintained in their respective program regulations and would supersede or supplement 24 CFR part 5. The majority of the alignment of inspection protocols, processes, and procedures that HUD proposes involve the public housing and multifamily programs (including project-based Section 8, Section 202 Supportive Housing for the Elderly, and Section 811 Supportive Housing for Persons with Disabilities).
The proposed rule has aligned the Housing Choice Voucher (HCV) program (including the Project Based Voucher (PBV) and Tenant Based Voucher (TBV) programs) with other HUD programs, particularly those administered by HUD’s Office of Community Planning and Development (CPD) to the maximum extent possible. Those CPD programs include HOME Investment Partnerships (HOME), the national Housing Trust Fund (HTF), Emergency Solutions Grants (ESG), Housing for Persons with AIDS (HOPWA), and Continuum of Care (CoC).
NLIHC has a more detailed summary of specific proposed NSPIRE provisions.
The NSPIRE webpage is at: https://bit.ly/2MQ9Lmr
The NSPIRE Resident Engagement webpage is at: https://bit.ly/3nD70BT
The Federal Register version of the proposed rule is at: https://bit.ly/3nI3dmJ
An easier to read version of the proposed rule is at: https://bit.ly/39pzYQw
More information about public housing is on page 4-30 of NLIHC’s 2020 Advocates’ Guide.
More information about multifamily housing is on page 4-61 of NLIHC’s 2020 Advocates’ Guide.
More information about vouchers is on page 4-1 of NLIHC’s 2020 Advocates’ Guide.
More information about Project-Based Vouchers is on page 4-8 of NLIHC’s 2020 Advocates’ Guide.