HUD NSPIRE’s Impact on HOME, Housing Trust Fund, CPD, and LIHTC Programs

On October 1, 2023, the NSPIRE (National Standard for Physical Inspection of Real Estate) Inspection Protocol is scheduled to replace UPCS and HQS as the inspection protocols used on Multifamily and Public Housing HUD Inspections. Ending these decades-old inspection protocols and combining them into a single standard for both risk-based and results-based inspections will have a tremendous effect on programs throughout the industry.

At the same time, most HUD Community Planning and Development (CPD) Programs and Housing Credit (LIHTC) programs will change to the new NSPIRE Standards. This does not mean that these properties will be inspected by REAC but that they are subject to the same standards as all HUD programs. Part of the objective of NSPIRE is to align all inspection protocols to one universal standard for all assisted housing programs.

How Will NSPIRE Impact HUD CPD Programs?

HUD’s CPD Programs serve a wide array of interests, from Veteran programs to housing for the homeless, housing for persons with AIDS, and Title V (McKinney-Vento) programs. Several agencies monitor these programs, including HOME Participating Jurisdictions (PJs), State Housing Finance Authorities, municipalities, and HUD field offices. As of October 2023, these agencies will need to use NSPIRE as the inspection protocol to conduct their inspections. For many, this will mean training staff, modifying software, creating forms and policies, or starting procurement to find reliable vendors familiar with both NSPIRE and CPD programs.

Most of the changes in NSPIRE have been made with Public Housing, Project-Based Rental Assistance (PBRA) Programs, and Multifamily Federal Housing Administration (FHA) properties in mind. However, many of the programs through HUD’s Community Planning and Development (CPD) division are grant based, which can include homeless shelters, temporary, and transitional housing, Emergency Shelter Grants, as well as permanent supportive housing through Housing Opportunities for Persons with AIDS (HOPWA); Shelter Plus Care (S+C), Supportive Housing Program (SHP), and Continuum of Care.

The impact of NSPIRE on CPD program participants is hard to calculate due to the variety of building types and programmatic missions. Many participants in these programs rely upon razor-thin budgets and financing to fund their projects. As such, one of the most direct and substantial effects of NSPIRE will be the new design requirements in the standards. HUD REAC refers to these changes as “affirmative changes,” as they now require owners to meet standards that may be more strict than local requirements. These design requirements include changes to electrical, fire safety, and accessibility standards which may result in additional investment from owners to meet the new standards.nnFor CPD Monitoring Agencies, it will mean notifying their housing partners and preparing their staff or vendors for the coming changes. These changes will be significant for PJs and other agencies, and unfortunately, the timeline for the update is relatively short.

Are Tax Credit (LIHTC) Properties Changing to NSPIRE?

Unlike Multifamily, Public Housing, and HUD CPD Programs, there has not been an official notice regarding a change for LIHTC monitoring. However, the existing Treas. Reg 1.42-5 (Monitoring Reg) Click here to view regualtion directly references 24 CFR 5.703, which currently defines the UPCS Inspection Protocol. Once the final notice is published, the NSPIRE standards will be posted at 24 CFR 5.703, which will sunset UPCS and replace it with NSPIRE. As such, unless the IRS explicitly states otherwise, as of October 1, the inspection standards for monitoring will become NSPIRE.

So, in short – Yes. LIHTC monitoring inspections will change to NSPIRE at the same time as the HUD-funded and financed programs in October of 2023.

What’s Next in Preparing for NSPIRE?

As the timeline for this change is short, monitoring agencies should begin preparing for the transition as soon as possible. NSPIRE, unlike UPCS, is more than just a checklist of deficiencies. The inspection standards include repair timelines, severe life-threatening designations, and Pass or Fail decisions.nnThe essential questions for monitoring agencies are:

• Have policies and procedures been properly updated?
• Are compliance staff trained on the new requirements?
• Is any software used for inspections updated to follow NSPIRE standards?
• Are sponsors, stakeholders, and owners adequately informed of the new expectations?
• Are third-party vendors (if applicable) prepared to use the new inspection protocol?

If monitoring agencies require assistance with training, policies, or outsourcing of inspections, US Housing Consultants can provide professional assistance.

What Programs are Transitioning to NSPIRE?

In January 2021, HUD released an administrative notice (click here to view) which indicated which programs were changing to NSPIRE after the demonstration program had ended. Below is a chart of HUD Housing programs in Community Planning and Development, Multifamily Housing, and Public and Indian Housing. Except for the programs using local building codes as the enforcement standard, all other programs will transition to NPSIRE in October 2023.

*** Not Transitioning to NSPIRE