NSPIRE Final Notice Delivered: Changes Abound
HUD has heard your comments on NSPIRE and has produced over 200 pages of text titled “Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE).”
This Final Notice addresses the public comments before the final rule is enacted on October 1. Or, for Public Housing agencies, July 1, 2023. Let’s highlight a few of the most significant changes made because of industry feedback.
First: Repair Reporting Requirements
Most impactful is the change to how severity will be rated on NSPIRE. There is a semantic change of Severe Non-Life Threatening to “Severe” and Advisory to “Low.” However, the most significant change is that moderate and low deficiencies will not require proof of repair to be provided to HUD after an inspection. Additionally, “Low” rated issues previously did not require any repair to be completed. Under this final notice, this has been changed to require that repairs be done within 60 days of the inspection.
HUD is removing the requirement that owners or PHAs provide electronic evidence of correction of Moderate deficiencies as HUD believes, after considering comments, the burden of both reporting and processing this evidence would outweigh the benefit.
Second: Carbon Monoxide Detection Exception
The requirement to have carbon monoxide (CO) detection in units was rooted in legislation based in 2021. In this notice, HUD clarifies that the NSPIRE standards for CO detection are limited to the programs listed in the legislation.
HUD notes that the 2021 Consolidated Appropriations Act only adds carbon monoxide-related requirements to the HUD programs listed above and the USDA programs authorized by sections 514 and 515 of the Housing Act of 1949. HUD programs such as HUD-insured housing are not subject to an assistance contract, and the ESG, CoC, HOME, and HTF programs are not subject to statutory requirements concerning carbon monoxide detection.
Third: Inspection Timing
Recognizing that there may be operational or system transition issues in the initial year of NSPIRE implementation for Public Housing agencies, HUD has decided that an NSPIRE inspection “shall be conducted no earlier than six months before and no later than six months after the date marking the anniversary of the previous inspection” for a period of one year after the rule goes into effect.
Post transition, the time frame for public housing agencies returns to “no earlier than three months before and no later than three months after the date marking the anniversary of the previous inspection.”
Also noteworthy is the change from using the previous PHAS score and the fiscal year-end for the portfolio. Now it is based on the last REAC inspection.
With the exception of small PHAs as described in § 902.13(a), public housing properties will no longer be scored based on the fiscal year-end for the portfolio and previous PHAS score, and properties will be assessed based on the anniversary and score of the previous inspection.
Fourth: Community Planning and Development
Community and Development programs (CPD) will have their own subordinate notice, which will be published soon. HUD states:
“HUD’s Office of Community Planning and Development (CPD) will issue separate notices before October 1, 2023, (“CPD NSPIRE notices”) to implement the rule for the individual programs, which generally do not adopt the methods in the three “core” Subordinate Notices discussed above, and provide guidance for how the NSPIRE Standards cover differing CPD program situations, such as homebuyer acquisition or where assistance is tied to a bedroom in shared housing.”
Essentially many CPD programs — home buyer assistance, down payment assistance, etc. — wouldn’t be adequately served by adhering to the NSPIRE standards. Based on the language in this notice, HUD is likely to carve out an exception.
Fifth: Water Testing
HUD is removing the requirement that water be “potable” from the proposed rule and instead requiring that water must be “safe.”
HUD has decided that these two words are essentially synonymous. HUD also clarifies that the “safe” only applies to drinking water in the kitchen and bathroom, further elucidating that “hot and cold” running water must be available in the bathroom and the kitchen.
Sixth: Voucher Program Occupancy Standards with Gender
HUD is removing the requirement under HCV and PBV that children of the opposite sex may not be required to occupy the same bedroom or living/sleeping room.
The rationale is that this change is consistent with the January 20, 2021, Executive Order on “Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation.”
Seventh: Unit Self-Inspections
For many years, it has been required that a tenant and ownership/management state that the unit is in “decent, safe, and sanitary” condition on the move-in and move-out inspection forms. As part of this final rule, HUD clarifies that the owner/agent must certify that the property is “compliant with part 5, subpart G”.
HUD has revised the regulation [§§ 884.217(b), 886.123(b), and 886.323(c)] to require that only the owner must certify compliance with part 5, subpart G. Both parties must still certify that they have each inspected the unit.
Additionally, this notice clarifies that annual self-inspections will be required for multifamily housing (whereas it was already required for Public Housing). However, the annual self-inspections will not be subject to electronic submission, as previously proposed.
HUD is revising 24 CFR § 5.707 to remove the electronic reporting requirement of self- inspections, and is instead requiring that the owner or PHA maintain records related to the self-inspection for three years.
Many more alterations are contained in the 222-page document, which we hope to further clarify with you soon.
We have also updated our NSPIRE manual and reference website. You can access it by clicking here.