Article | An NSPIREd Change? | Part 2 | Three NSPIRE "3s"

Series Outline

In our last article HERE, we discussed the fact that the new HUD physical standard NSPIRE is replacing UPCS and will apply to LIHTC properties. We also provided an overview of NSPIRE. In this article, we will dig further into the details.

NSPIRE is designed around three components. HUD intends that these components will increase the focus on residents’ home units, make inspections less complex, and improve confidence in HUD’s ability to identify properties that do not adhere to compliance standards.

These components are:

          1. Three types of inspections 

          2. Three inspectable areas

          3. Three categories of deficiencies 

 1. Three Types of Inspections

HUD states that the new NSPIRE model prioritizes health, safety, and functional defects over appearance and implements inspections that better reflect the true physical condition of properties. The NSPIRE model also is designed to support the adoption by owners/managers of sound, year-round maintenance practices. To do this, NSPIRE has a strong self-inspection element.

1.  Self-Inspection. Under NSPIRE, every year each owner/manager will inspect all units and submit their inspection results electronically to HUD. While not scored by HUD, self-inspections provide additional data to REAC between inspections to ensure that inspectors are visiting every unit at least annually, identifying maintenance and modernization needs, and generating work orders on a regular basis. Obviously, self-inspections are a key component of ensuring properties are maintained year-round and encourage regular, preventative maintenance. This will help to prevent “just-in-time” repairs ahead of REAC inspections. LIHTC Note: It is likely that this provision will not apply to properties not subject to REAC.
2.  NSPIRE inspections. These are usually conducted by contracted inspectors and public housing agencies. They are conducted every one to five years, depending on a property’s last inspection score. NSPIRE inspections focus on deficiencies deemed to have the greatest impact on housing quality. NSPIRE inspections may use a high sample rate and are intended to provide a high level of confidence in the inspection results to HUD.
3.  NSPIRE Plus. HUD Federal inspectors may conduct additional inspections triggered by poor property conditions. Other HUD offices may also request NSPIRE Plus inspections. These additional inspections may use the highest sampling rate and provide HUD the highest level of confidence in a property’s condition. Scoring results provide evidence-based data to justify and support enforcement actions against deficient properties and owners.

2. Three Inspectable Areas

Under UPCS, there were five inspectable areas. NSPIRE consolidates these into three easily identifiable locations relating to buildings: Outside, Inside, and Units. “Outside” generally includes elements in the old UPCS “Site” and “Building Exterior” inspectable areas. “Inside” covers the old “Building Systems” and “Common Areas.” According to HUD, this increases the usability of the standards and streamlines the inspection process. To ensure that all residents live in safe, habitable homes, the items and components located outside a building, inside a building, and inside units must be functionally adequate, operable, and free of health and safety hazards. This streamlined approach allows inspectors to cite deficiencies based on where they are standing and works toward eliminating subjectivity or ambiguity about a deficiency’s location.

1.  UNIT:A “Unit” of housing refers to the interior components of an individual dwelling, where the resident lives. This generally includes what UPCS also referred to as “Unit” issues.
2.  INSIDE:“Inside” refers to the common areas and building systems within the building interior and are not inside a unit. This could include interior laundry facilities, workout rooms, and so on. This generally includes what UPCS referred to as “Building Systems” and “Common Area” issues.
3.  OUTSIDE:“Outside” refers to the building site, building exterior components, and any building systems located outside of the building or unit. This includes things like playgrounds, sidewalks, and air-conditioning units. This generally includes what UPCS referred to as “Site” and “Building Exterior” issues.

 3. Three Categories of Deficiencies

A deficiency is a defect or condition cited in a HUD physical inspection when an inspectable item is missing, flawed, or not functioning as designed. Deficiencies differ by classification and severity, and deficiency definitions built into NSPIRE specify what must be recorded for a given deficiency. NSPIRE deficiencies have the greatest impact on residents’ health and safety and the livability of their homes.

Health and safety make up most of the NSPIRE deficiencies because they are believed to be focused on the most critical elements that impact resident safety and habitability. The other two categories of function and operability and condition and appearance deficiencies will make up a much smaller portion of NSPIRE deficiencies. These new categories allow HUD to focus on the most important defects and conditions to support healthy and safe homes.

The correction timeframes for repair or abating deficiencies vary by the type of deficiency or HUD program. NSPIRE has abandoned the UPCS level of deficiency (1-3, from least to most severe) in favor of a model where there either is a specific deficiency or not. The severity is indicated by the overall category of deficiency. Almost all deficiencies are now considered Health and Safety deficiencies, with just a few considered Non-Health and Safety. Health and Safety deficiencies also come with tight mandated correction periods of 24 hours (for Severe issues) or 30 days (for Standard). LIHTC Note: Treas. Reg. 1.42-5 already has built-in correction periods within state HFA discretion. It is likely that most HFAs will only apply the HUD standard to Severe Health and Safety deficiencies (24 hours reported within 72 hours) and use the discretion built into 1.52-5 for other deficiencies.

1. Health and Safety. A health and safety deficiency is a condition that could affect the resident’s mental, physical, or psychological state. A resident could become injured because of this condition. Health and safety deficiencies are those that are most critical to the quality of the residential dwelling unit. If you are not sure why an item is considered Health and Safety, the deficiencies are supported by rationales presented in each inspection standard.

There are two main categories of health and safety deficiencies: standard and severe. The severe category is broken down into life-threatening and non-life-threatening. These represent the most critical elements affecting the health and safety of the resident.

2. Function and Operability. Function and operability deficiencies are those where the resident is unable to use certain fixtures, features, or appliances. Function deficiencies eliminate or critically reduces an object’s usability, but the deficiency alone is not likely to directly harm a resident. This category of deficiency may be evaluated in the context of basic expectations of fixtures and other components in a dwelling, which, while not health and safety issues, are fundamental expectations of habitability. These are items which are reasonably assumed to be part of resident rent. This type of deficiency may be citable when a resident would incur additional costs because of this condition. An example may be a sink that is constantly running, which may increase the resident’s water utility bill significantly if not corrected. These deficiencies require repair based on the property’s routine maintenance plan.
3. Condition and Appearance. Condition and appearance deficiencies are those where components of the property do not meet reasonable expectations of condition and appearance or are damaged. This category includes deficiencies where HUD or the property could suffer reputational harm, or where a resident could incur additional costs because of this condition. is not likely to harm a resident, nor does it critically reduce or eliminate an object’s usability. Note that other, less significant “appearance” deficiencies, such as peeling non-lead-based paint inside a unit, may not be included. This category of deficiency requires repair based on the property’s routine maintenance plan.

 Timelines to repair deficiencies

• Severe Health and Safety deficiencies. For REAC inspections an owner/agent has 24 hours to  correct and 72 hours to report to HUD as corrected.
• Standard Health and Safety deficiencies. For REAC inspections an owner/agent has 30 days to correct and 35 days to report to HUD as corrected.
• Non-Health& Safety. No specified time to correct.

The three "3s" can be a powerful memory aid for understanding an outline of the NSPIRE Model. Now we can look at a system of understanding the specific Standards included in NSPIRE.  

Up next month: Understanding NSPIRE Standard Details

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