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Bad Techniques for Monitoring REAC Inspectors

  Videotaping REAC Inspectors and Other Bad Ideas We have received a number of questions lately about the recommendations of other REAC Consulting firms to "follow REAC Inspectors with a video camera". This is apparently recommended in the desire to have a better result during an inspection, but in our opinion, managers could do nothing worse than following an inspector with a video camera. The act of videotaping an inspector is an aggressive act, and the moment the video camera is revealed, the manager is essentially saying "You are my enemy and I don't trust you." The inspector won't trust you either, and you will have created an atmosphere of animosity and aggression that will not provide you with any positive effect. If you want to improve you score, work with your inspector; offer to provide assistance getting into bedrooms and other rooms, and help the inspector as much as possible. We advise our clients to make the inspector as comfortable as possible; engage in positive conversation, assist with getting through the inspection, ensure tenants don't place inspectors in uncomfortable situations and have keys ready for every door. We are not advocating being entirely submissive to inspectors, especially if they are rude or aggressive, but you could do many, many better actions than following inspectors with video camera...
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Updated HOME Rules on UPCS

§92.251 Property Standards The changes to §92.251 reorganize the presentation of the property standards requirements and clarify and update the standards. The reorganization is intended to minimize confusion about the applicability of the codes and standards across different housing activities. It creates separate requirements for projects involving: New construction [§92.251(a)] Rehabilitation [§92.251(b)] Acquisition of standard housing [§92.251(c)] Housing occupied by tenants receiving HOME tenant-based rental assistance [§92.251(d)] Manufactured housing [§92.251(e)] Ongoing property standards for rental projects [§92.251(f)] Inspection procedures [§92.251(g)] Revisions to the property standards also address the codes cited in the pre-2013 HOME Rule that has been superseded and/or updated. The 2013 Rule provides additional specificity to the rehabilitation standards requirements in order to ensure that adequate improvements are made to support the long-term viability of HOME-funded rehabilitation projects. For new construction and rehabilitation, the 2013 Rule requires a higher degree of oversight by the PJ. It imposes requirements for the PJ to review and approve construction-related documents prior to construction, and to monitor construction progress. New Construction Projects §92.251(a)(1) requires new construction projec...
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PHA Requirement for 100% Unit Inspections Eliminated

PHAS Changes Eliminate Requirement for 100% Unit Inspections Section 6(f)(3) of the United States Housing Act of 1937 requires that PHAs inspect each public housing project annually to ensure that the project's units are maintained in accordance with the housing quality standards in 24 CFR part 5. HUD implemented this language by requiring that each PHA conducts annual inspections of all public housing dwelling units when it made those inspections part of the Public Housing Assessment System (PHAS) management operations score. With the publication of the revised PHAS on February 23, 2011 (76 FR 10136), a PHA's physical inspection of public housing units is no longer a component of the PHAS score; however, the annual physical inspection of public housing projects remains a statutory requirement. PHAs should continue using the Uniform Physical Condition Standards (UPCS) in 24 CFR 5, Subpart G, Physical Condition Standards and Inspection Requirements, to conduct annual project inspections. These standards address both the inspection of the site area, building systems and components, and dwelling units. PHAs are obligated by statute to inspect each project annually. However, because there is no longer an annual unit inspection requirement, PHA's now have the latitude to schedule unit inspections in a manner that can satisfy the stat...
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Excess Income Reporting Updates

Updated Requirements on Excess Income Reporting for 236 Projects Notice H 2012-2 was issued February 10, 2012 to the attention of MF Directors, CA and the like. The notice details the aggressive pursuit of delinquent Excess Income receivables. Owners and Management Agents need to sit up and take notice. Owners/Management Agents are required to prepare and submit form HUD-93104, Monthly Report of Excess Income to HUD monthly, regardless of whether or not excess income was collected. As you know, excess income is the rent collected in excess of the Basic rent for Section 236 projects. Some properties have obtained written authorization to retain these funds and unless your property has done so, the required payments need to be submitted. Per the notice: On September 1, 2008, it became mandatory for Owners/Management Agents to use the www.pay.gov system, through which remittance of the required payment must be made. If your property had receivables that were converted to an HUD-approved Repayment Agreement and they are current, you are exempt from this notice. Keep in mind that any transfer of ownership of these properties has no effect on the responsibility of the project to pay the amounts due. You can access the notice in its entirety by clicking here. Guidelines can be found in HUD Handbook 4350.1 Section 7-28. If you are unsur...
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REAC Rules on Ponding

UPCS Inspection Code Changes - Ponding On August 9, 2012, a new scoring notice was released by HUD REAC; these changes are technically effective as of September 17, 2012, for Public Housing. As of 2013, the new inspection code will be in effect for both Public Housing and Multifamily HUD. This article is the first in a series of several newsletters that will focus on the new changes: New Series of UPCS Violations and Changes Ponding (Grounds): This does not include detention/retention basins or ponding on paved areas, such as parking lots: - Detention/retention basins are covered in "Storm Drainage (Site)" - Ponding on paved areas is covered in "Parking Lots/Driveways/Roads (Site)". If there has been measurable precipitation (1/10 inch or more) during the previous 48 hours, consider the impact on the extent of the ponding. Determine that ponding has occurred only when there is clear evidence of a persistent or long-standing problem. Level 1: N/A Level 2: An accumulation of water (3 to 5 inches deep) affects the use of at least 100square feet of the grounds, but the grounds are generally usable. Level 3: There is an accumulation of more than 5 inches deep over 100 square feet. -OR- Accumulation has made a large section of the grounds, more than 20%, unusable for its intended purpose. For example, ponding has made a recreational f...
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Inspections That Create Fair Housing Issues

The Fine Line Between Protecting Your Property and Being Judgmental One of our inspectors recently asked for advice about a situation they encountered during an interchange between a resident and management. During our inspection, the manager told the tenant "Your housekeeping is unacceptable," which we of course hear frequently, but they continued, "and you should be ashamed of yourself." There is a fine line between tracking housekeeping to protect health and safety and your assets, and being judgmental. You should be careful to avoid the latter. This incident brought up a discussion around our office about when we should intervene and provide advice. We spent some time doing research on the internet and reviewing fair housing lawsuits from the last twenty years. We found countless stories about managers sending residents personal notes and letters, using exclamation points, ALL CAPS, and other writing that provides a pejorative and judgmental tone. Most leases have provisions regarding housekeeping standards, and it is the right of the owner/manager to perform inspections to enforce these standards. However, this "housekeeping" should be confined to the following: Is the condition of the tenant's housekeeping affecting the unit's components (i.e. are items damaged or being damaged) Is the resident infringing on other's right ...
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REAC Inspection Photo Requirement

  New REAC Inspection Photo Requirement Near the end of last year, an update to HUD REAC's software, RAPID, was released that provided the ability to capture photographs as part of your REAC Inspection. REAC Inspectors will be performing inspections this year using this new capability, specifically recording only "Level 3" severe deficiencies with a photograph. More minor issues resulting in "Level 1" or "Level 2" deficiencies will not have the requirement to include photographs (for the time being). Common questions regarding new REAC Inspection photo requirements Now that they can see all of our issues in photos, am I going to fail? No. If your property is well prepared and you are doing what you should be doing, you will not fail because of this requirement. In fact Inspectors should not be any more or less vigilant as the result of having to use a camera. So, if your property is well maintained and there are no items on your property that are damaged or malfunctioning, then you still have the potential to do exceptionally well. The most immediate impact will be that inspections may take longer to perform. Will REAC Appeals be affected by the integration of photos? If your appeal is prepared properly, photographs taken by the inspector should not impact the effectiveness of your appeal and in many cases the photos would ...
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Complaints About REAC Inspectors

Knowing When to File A Complaint About A REAC Inspector At nearly everyone one of our training sessions, speaking engagements, or just day to day requests for advice: the most common question we have been receiving over the last several years revolves around "unprofessional REAC Inspector". Something like "We had this one inspector who was just awful and he/she did...." The question is: when should this result in a formal complaint about the REAC Inspector? Here are the most common forms of the questions: They wrote up stuff that the last inspectors never did. In one form or another, this is the most common complaint we hear. This inspector got down on her/his hands and knees; checked vents, turned on broilers, showers, checked every window, turned on every light fixture, etc; this is how inspections are supposed to be done . The response to this typically results in a realization that the real issue is with the previous REAC inspectors who performed substandard inspections and setup false sense of standards. If this scenario has occurred to you, you should seek out training on REAC Inspection requirements and schedule a Pre-REAC Inspection with a qualified consultant before your next REAC Inspection. The REAC Inspector made strange and unusual requests : Some REAC Inspectors may just rub people the wrong way; they can be peculi...
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REAC Clarification on Fire Safety Systems

Included in the May 1, 2011, Compilation Bulletin # 2 were a few clarifications on fire safety systems, and these clarifications provide some needed detail on areas that can be the difference between passing and failing an inspection. The compilation bulletin can be downloaded in our Document Store. We recommend that you download this document and have it available if you encounter a REAC inspector who is not familiar with the updates. Here are a few updates to the Fire Safety section (Page 24) and our comments on these updates: If paint or any other obstruction is observed on the sprinkler head a deficiency will be recorded. Paint on an escutcheon plate should not be recorded as a deficiency. If the escutcheon plate or other components are missing or damaged, it will be recorded as a deficiency. This clarification provides some direction on ensuring that paint that is strictly on escutcheon plates should not be recorded as a deficiency, but we are advising our clients to continue to monitor paint on the escutcheon plates to avoid any issues on the day of the inspection. Fire Extinguishers - "All fire extinguishers observed must be inspected, resident owner and property owned" This issue is one that makes up a large portion of negative scores that we have seen in the last year; where the difference between a passing and failing ...
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REAC Implementing Use of New "RAPID" Software

REAC Implementing Use of New "RAPID" Software How Will This Affect Owners and Managers? Over the last six months, a series of changes have been working their way through the UPCS and REAC Inspection Processes, and a large percentage of the changes relate to the implementation of the new "RAPID" software that REAC Inspectors are supposed to use. There has been a lot of outreach by REAC and HUD to Owners and Mangers to make them aware of the new software. The following are the questions that are presented to us by our clients and industry representatives about RAPID and how it changes the REAC process for Owners and Mangers. Do I have to Use the RAPID Software Myself? No, there is no requirement to use the RAPID software by owners and managers, and most who have used it find the product to be incongruent with "what managers do". In short, it appears to be an improved platform for REAC Inspectors as compared to the aging software they were using for years, but it is designed to make the REAC inspection process more accurate and not necessarily to allow owners and managers to conduct UPCS inspections easily. The public version of the software can be cumbersome to install; often requiring an initial call to REAC to allow for access to the HUD's systems. The RAPID software uploads and maintains all data collected during any inspection...
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REAC Appeals: Using Weather Condition to Adjust Your Score

  REAC Appeals: Using Weather Condition to Adjust Your Score A client of ours in the Southwest recently came to us with a score of 34c on their REAC Inspection. They were understandably upset, as they had just spent over $40,000 on repairs and still received a failing score. We reviewed their report and discovered that at the same time that this inspection had occurred, there had also been a rather significant tropical storm. We informed the client that with this information, they were eligible to use a database adjustment appeal citing "Conditions Outside of Management Control". They received an adjusted score of 76. This is how we assisted our client in getting this adjustment (Reference Citation: 24 CFR Part 200.857)... We used the following materials: Letter from Insurance Adjuster Research Data on Storm Impact Statement from General Contractor Cover Letter from US Housing Consultants We assisted the client with preparing a simple yet thorough cover letter that referenced the specific regulatory requirements, providing clear, concise reference material that showed (a) that there was a weather issue, (b) how it impacted the inspection, and (c) how it impacted the property. If you receive a score on your REAC Inspection that is less than desirable (not just failing), maybe you could appeal and may not even know it. We pre...
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Call For Aide Cord Rule Update

  New Regulations Clarified on Requirements for Call for Aide Systems On October 31, 2014, HUD Published a Memorandum regarding "Office of Multifamily Programs Policy on Emergency Call Systems in Elderly Properties." In this memorandum, HUD clarifies that "There is no requirement that a property use a particular type of call systems (such as older pull cord systems), as long as the system in place meets the functional requirements described in HUD Handbook 4910.1, Section 100-2.20" This Handbook (4910.1 Minimum Property Standards for Housing, 1994 Edition) specifies the requirements to provide and maintain the emergency call system," and that it is "unacceptable to have a separate add-on rental fee, but the cost for such a system is part of the project's expense and is expected to be covered within the monthly rental charge." The clarification of the requirement states that "An emergency response system, including mobile response devices, in elderly Multifamily properties shall be deemed acceptable if: The system registers an alarm call at a central supervised location; OR The system provides an intercommunication system that connects to a continuously monitored switchboard (24 hours a day); OR The system sounds an alarm in the immediate corridor and actuates a visual signal at the living unit entrance; AND The system is av...
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Handbook of Rules Regarding REAC Inspections Updated (8/22/2014)

  Handbook of Rules Regarding REAC Inspections Updated (8/22/2014) On August 12, 2014, HUD REAC notified active REAC Inspectors of a change to the HUD REAC Compilation Bulletin, the document that outlines the rules and methods for conducting REAC inspections, such as when certain areas of the property are and are-not inspected and other details about the "nuts and bolts" of conducting inspections. The majority of the document puts in writing those practices that have been part of the accepted day to day for several years, such as how inspectors should handle commercial spaces in buildings without a HUD insured mortgage. There are new sections dealing with mobile home parks and group homes, and dealing with model units and other areas previously unaddressed. These additions seem to be because of the increased number of properties participating in HUD mortgage programs that are outside the traditional HUD subsidized programs. The following is a short list of the areas that we think would be most interesting: Commercial Spaces – There are two rules here: one is that spaces that are "commercial" on properties without a HUD insured mortgage will not be inspected. This refers to areas such as rented office spaces, storefronts, and other commercial areas. The second rule here relates to when equipment for those commercial spaces i...
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Opinion vs. Deficiency on REAC Inspections

When Statements During an Inspection Are Actually Just Opinion Our inspection consultants have been telling us lately that many clients are telling them of experiences where the previous REAC Inspector "dinged them" for any number of issues that they'd "never heard of before." Our clients wanted to know if HUD had added new deficiencies recently, or if their last REAC inspector was wrong. At each of these occasions, the first step we took was to look at the actual inspection report try and isolate the exact wording of the issue. One scenario involved an inspector who told the property that they needed "better grass" on their property. The inspector went onto describe in great detail the different types of grass that would perform better. There was no deficiency listed on the report that mentioned anything to do with grass – nothing close. The conclusion was: the inspector was "just talking". We hear dozens of these stories each month; inspectors attempting to make small talk or (occasionally) just be helpful and provide advice, and the property manager or maintenance personnel interprets this small talk as issues that are being cited and need to be addressed. One client told us that the last inspector said, "You should really use steel doors," instead of the wood doors they currently had installed throughout their building. The ...
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HUD and ADA Design Standards

Changes to the Section 504 Design Requirements Late last month, HUD announced changes to the accessibility design standards. This notice states that owners of multifamily properties under HUD Assistance (Section 8, HOME, etc) can now meet their accessible design obligations under Section 504 by complying with the Justice Department's 2010 ADA Design Standards. For quite some time, UFAS (Uniform Federal Accessibility Standards) has been the widely accepted protocol that covered physical design rules for HUD Section 504 as well as public accommodations. In many ways, the 2010 ADA standards for accessible design are more "modern" and easier to follow than the often cumbersome UFAS standards. HUD Adopts 2010 ADA Design Standards HUD's notice does not completely accept the 2010 standards, however. HUD has chosen to preserve certain areas of UFAS where the new standards are not as strict as the existing UFAS standards. The HUD notice specifies a range of exceptions where owners will have to continue to comply to UFAS standards and cannot switch to the 2010 ADA standards. For example, in the 2010 ADA standards, the concept of "structural practicality" was introduced, where certain sites are defined as not-practical to adapt to barrier-free design. HUD has rejected the flexibility of structural flexibility introduced in the 2010 ADA sta...
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How Weather Events Affect Inspections

  How Weather Events Affect Your Inspection & How They Don't In the last few months, we have received many phone calls, emails, and questions at speaking events from clients about how they can deal with damage from "bad weather". Here is a few examples of the questions we received and the responses that we provided: Our parking lot has been badly damaged by the harsh winter, will the inspector take that into account? No, REAC inspectors are not allowed to take such an explanation into account. Your best course of action is to ensure that the parking is free from hazardous condition, even if you are not able to repair all of the small cracks and loose gravel. There are a number of large holes in our foundation but it was too cold in the winter to fix it, can we appeal it on the basis that it was so cold. No, this isn't a basis for an appeal. If it was truly a condition outside of your control, you could possibly have an appeal, but there are a number of products that could have been used to temporarily patch (i.e. repair) the damaged area that are not affected by temperature (plywood cover, insulating foam, etc). So, when does weather play a role? For Appeals – if you have a natural disaster within a reasonable timeframe prior to the inspection that would make addressing the damage from the storm impossible, then it can ...
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LIHTC Physical Issue Correction Periods

Clarification on rules regarding LIHTC recapture and penalties Last week in the IRS's LIHTC Newsletter, there was a reminder about non-compliance correction periods, and as a result, we received a number of questions about how this could impact our clients. The newsletter ( LIHTC Newsletter # 55 ) clarified that while many Housing Finance Authorities provide a period of time for repairs to be completed after a physical inspection, that this period is not exempt from recapture or other tax consequences. When your low income housing tax credit property receives it's tri-annual physical inspection, the HFA is required to submit an 8823 for all noted physical non-compliance (as well as rent and issues with the low income certifications) observed during the inspection. Before the submission of the 8823, the property is provided with an opportunity to complete the repairs; the correction period cannot exceed 90 days from the date of the notice provided to the property. In certain circumstances, an agency may extend the correction period to a total of six months, if warranted. However, it is important to remember that any correction period is not a "grace-period" that allows the property to escape recapture or other consequences. It is also important to remember that unlike REAC Inspections, LIHTC inspections using the UPCS Inspection ...
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REAC Appeals and Health & Safety

  How To Clear Issues When You Plan to Appeal One of the most common questions that we receive about REAC appeals is "My Inspection just finished and I want to appeal something, but I have to fill out the 72-hour form for Contract Administrator saying it's "fixed" - what do I do? Essentially the form that you have to complete wants clarification on when you have resolved the issue cited by the REAC inspector, and you want to say that there is nothing to fix. Hence the conundrum. So here's how you fill out the form (an example to illustrate the point): the inspector has cited your property for an inoperable (empty) fire extinguisher, but it is tenant owned and you plan to appeal on the basis that tenant owned fire extinguishers should be cited as "Other Hazards". Instead of showing that the issue is resolved with a work order or a receipt from a contractor (as you would normally use), you can write a letter to the tenant stating that they need to remove the item, or simply issue a work order for your staff to remove the empty fire extinguisher (after discussing with the tenant, of course). Will this affect your eventual appeal? No. The completion of the EH&S form and the review of technical or database adjustment appeals are reviewed by separate departments and stating that you have "addressed the issue" is not the same ...
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HUD 4350.3 Change 4 and LIHTC

How income Calculations have changed with 4350.3 Chg 4 One of the recent updates in the HUD 4350.3 Chg4 relates to how income is verified and what is considered to be an acceptable form of verification and what isn't. This change has redefined the term "third-party verification" to include verification materials that have been in the possession of the tenant, whereas in the past, third party verification was considered to be materials delivered directly to the O/A by the employer or institution. So, how does this affect the Low Income Housing Tax Credit program? Since the LIHTC program refers owners/agents to the 4350.3 Chapter 5 for rules on calculation of income and assets - anything that HUD does directly affectly affects all LIHTC programs. This week, the IRS released a newsletter that clarified the IRS's position - which said, in short, that the IRS will continue to follow the 4350.3 Chapter 5, including the recent changes regarding acceptable forms of verification. However - it may be not considered appropriate by your state Housing Finance Agency. Your state agency may impose additional requirements on income verification above and beyond what the HUD handbook now states. Many states may opt to continue with their current rules that require third party verification, as hand-carried documentation typically fails to address...
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Why REAC Scores Change Dramatically

Why Did My REAC Score Go Down So Much? Over the last few months, our office has been busy answering phone calls from hundreds of property owners across the country – many of them with a similar question – why did my score go down so much? They say, "I did everything the same as last time, but this time, the score was awful." Some start by blaming (a) the process, (b) the inspector, (c) changes to the inspection code rules, and (occasionally) the White House. Our staff of consultants try to help back these owners and managers off the ledge, and explain that the reason their score dropped is outside any of the standard concepts. We have to tell everyone that there is a good chance that your last inspection (the one that you based your knowledge of the process on) could have been sloppy or unprofessional, and the first step is to drop all preconceived notions and just see what needs to be fixed. So - what is the answer? The answer is pretty simple: people need to receive training on understanding REAC and UPCS Inspection Codes. Obviously we are partial to our training, but you can take one of those other ones too. In any case, when you think about who is going to attend, remember - not just your maintenance staff, but also everyone up and down the line needs training . If an inspection were to go sideways, receive a sub 30 score, f...
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Latest Blogs

24 August 2019
REAC Inspections
On August 21, 2019, HUD published a set of proposed rules in the Federal Register "Notice of Demonstration To Assess the National Standards for the Physical Inspection of Real Estate and Associated Protocols" 24 CFR Parts 5 and 200; [Docket No. FR–6...
21 August 2019
REAC Inspections
On August 20, 2019, HUD released the first of the new NSPIRE protocols which will be expected to become active once the pilot/demonstration program has concluded. This is a first look at what deficiencies will look like under NSPIRE, the inspection ...
16 July 2019
REAC Inspections
July 8, 2019 HUD's Office of Multifamily Housing Asset Management and Oversight released a memorandum reiterating the rules surrounding notice prior to entering resident's units, availability of documentation for residents to review, and clarificati...
09 July 2019
REAC Inspections
The House Financial Services Committee passed a bill - the Safe Housing for Families Act of 2019 (H.R. 1690), and it will likely move forward to a full vote in the near future. The bill provides $300 million over three years to fund the installation...
05 June 2019
REAC Inspections
Enter your text here ...HUD REAC Released a PowerPoint document (Click here) in an email to REAC Inspectors. This presentation is intended to provide clarify to sometimes subjective interpretations of what is considered to be "Non-Industry Standard"...

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