June 19, 2019
HUD UPDATE: REAC Physical Inspection, NSPIRE, Carbon Monoxide Detectors and More
On June 18, 2019 by Bobbie Guidry
LeadingAge has provided an overview of recent developments in Housing & Urban Development policies that affect providers of affordable housing. This update features the latest news on the voluntary NSPIRE initiative, HUD instructions on enforcement actions if a property refuses to be inspected, instructions to inspectors to collect information only on carbon monoxide detectors, 14-day scheduling of inspections, and the four reasons HUD Multifamily field offices can delay inspections.
NSPIRE: Inspection Demonstration Becomes Voluntary and Nationwide
The REAC inspection demo that is scheduled to begin during the third quarter of fiscal year 2019 will now be voluntary, and national providers may be able to volunteer to be part of the demonstration. The two-year demonstration, known as the National Standards for the Physical Inspection of Real Estate (NSPIRE), will test new standards for inspecting and collecting information about, the condition of most properties. Bookmark and visit the new landing webpage where further details will be provided as things move forward.
LeadingAge hosted a member call-in in May on this topic and answers to questions asked during the call can be found here. As LeadingAge reviews this new demonstration project information, we are raising concerns with HUD on behalf of members. LeadingAge filed comments on HUD’s emergency information collection notice concerning NSPIRE. According to the data collection notice, HUD will be asking owners participating in the demonstration to submit annual self-inspection reports and other property-specific data and certifications. LeadingAge urged HUD to keep the abilities and resources of smaller properties in mind in considering processes for submitting data and to allow properties to use software they already have for reporting, rather than requiring the installation of any new computer systems.
Once the demonstration implementation notice is issued this month, a portal will be enabled on the REAC NSPIRE webpage. Questions and comments may continue to be shared with LeadingAge, and/or submitted directly to HUD at NSPIRE@HUD.gov.
Inspector Guidance on Scheduling and Notifications
In March, HUD issued new terms and conditions to inspectors about how they are to handle the requisite 14-day notification process and any owner refusal to comply. The new scheduling rules detail:
Scheduling Methodology: REAC Inspectors are instructed to “create a schedule of properties and the dates that the inspectors have assigned the properties prior to notifying any of the owner/agents. One of those dates will be 14 days from the initial notification date and the second date will be a final date within seven days of the first inspection date if the first inspection is unsuccessful.”
Notification Procedure: REAC Inspectors are told that they “must call owner/agent exactly 14 calendar days prior to the inspection to notify the owner/agent of the inspection date and then send an email confirmation as well.” HUD specifically says that “A confirmation by the owner/agent is not required to proceed with the scheduled date.” LeadingAge has queried whether there is wiggle-room, within the initial 14-day notification period, to enable owners to minimally shift the date without exceeding the 14 days, to accommodate special events or other conflicts at the site. The general response suggests this is possible, but wholly subject to inspector willingness and availability. If an initial inspection date within 14 days is not accepted, however, a provisional score of zero WILL be recorded.
Non-Compliance with Scheduling: If, prior to the first inspection date, the owner/agent informs the contractor that they will not allow the inspection to go forward, the contractor will record the rejection and then provide the second inspection date which was recorded in the schedule sent to REAC. If the owner/agent agrees to the date, the contractor should then send a new confirmation. If both inspections are refused or unsuccessful as the result of the owner/agent, the inspector is to report this to HUD, and zero score will be the final score of record.
Exceptions for Extraordinary Circumstances: If the owner/agent refuses the inspection dates because they are undergoing substantial rehabilitation, the REAC Inspector has been instructed to inform the owner/agent that unless they have received an approved waiver/postponement from HUD prior to the scheduled inspection date that the inspection must go forward as scheduled. In such cases as these, retroactive database adjustments should be pursued, as detailed here.
Regional Offices May Provide HUD-Approved Delays
HUD has delegated authority to the 12 field offices to consider and approve an owner/agent’s request to delay an inspection outside of the new 14-day protocol (as detailed in Notice H 2019-04). Requests to extend or reschedule an inspection outside of the notification window, for any circumstances which may significantly impact the execution of an inspection or inspection results (e.g., major renovations, significant rehabilitation, fire, etc.), must be “submitted by the POA and approved by HUD prior to the proposed date of inspection.”
The memorandum “Approving the Delay of a Physical Inspection Beyond the New Real Estate Assessment Center (REAC) Inspection Notification Timelines” is being distributed by regional offices to owner/agents in their area, and indicates that the Asset Management Director may approve a delay in an inspection for the following four circumstances: major rehabilitation (defined as being tied to a major recapitalization transaction with a total cost of rehabilitation at $15,000 or more per unit); Presidential Disaster Declaration, other emergency; or HUD approved repair plan.
The memorandum also explains what an Account Executive or Resolution Specialist should do once a delay is approved/denied.
In cases of repairs or rehabilitation that do not meet these threshold criteria, a Database Adjustment may be submitted prior to the inspection taking place or within 45 days of the release of an inspection report. View this HUD YouTube video on how to submit a Database Adjustment appeal for more information.
Multifamily Enforcement for REAC Zero Scores
Read the May 1, 2019 memorandum that provides guidance on what steps a field office must take when a project receives a score of zero because an owner and/or management agent defaulted on the contractual obligation to allow HUD to perform a physical inspection based on the new 14-day notification period.
Carbon Monoxide Detectors
On April 18, HUD issued a notice H2019-05: Carbon Monoxide Detectors in HUD Assisted Housing to remind owners, managers, and agents of certain HUD-assisted housing to have operational carbon monoxide (CO) detectors, where specified, as required by the state or local law, code, or other regulation, and to strongly encourage owners, managers, and agents of housing covered by the HUD assistance programs above, located in areas where state or local law, code or other regulations do not require CO detectors, to have operational CO detectors (1) in units that have fuel-fired/burning appliance(s) and/or an attached garage, and (2) in bedrooms that contain a fireplace or a fuel-fired or burning appliance. On May 20, HUD announced that $5 million will be made available for the purchase and installation of carbon monoxide (CO) detectors in public housing units where they are necessary. Provided through HUD’s Emergency Safety and Security Program, these funds represent the first time HUD is targeting grants specifically for the purchase and installation of carbon monoxide detectors. It is unclear at this time whether these or other funds will also be made available to the multifamily assisted housing portfolio or not.