News | HUD has published Proposed NSPIRE scoring standards (and does this apply to the LIHTC?)

HUD has published the proposed scoring system for NSPIRE. The Notice is HERE.

Introduction | The NSPIRE Standards were published for public comment on June 17, 2022. With a new Notice, HUD now seeks public review and comment on the proposed NSPIRE physical inspection scoring and ranking methodology to implement HUD's final NSPIRE rule for Public Housing and Multifamily Housing programs. This includes the Section 8 Project-Based Rental Assistance (PBRA) and other Multifamily assisted housing, Section 202/811 programs, and HUD-insured Multifamily as described in the NSPIRE proposed rule. Comments will be taken for 30 days after the publication of the Notice in the Federal Register. These can be submitted preferably online at https://www.regulations.gov/ or by mail. 

HUD will consider comments received in response to this request before publishing a final NSPIRE Scoring notice in the Federal Register.

Purpose of NSPIRE Scoring | The scoring methodology converts observed defects into a numerical score and sets a threshold for HUD to perform additional administrative oversight by establishing a level for when a property fails an inspection (less than 60 points) and when an enforcement referral is automatic or required (less than or equal to 30 points). It also seeks to remove some of the distorting effects that the UPCS scoring standard was observed to have that resulted in scores that did not reflect the state of the property, especially units.

Next Steps in 2023 | HUD expects to publish the NSPIRE final rule early this year. The final NSPIRE Scoring Notice will be published after the NSPIRE final rule. HUD’s Real Estate Assessment Center (REAC) will then commence inspections for official scoring of record for Multifamily programs, and the scores to be included in a Public Housing Assessment System (PHAS) score for public housing.

HUD will also publish an NSPIRE Administrative Notice after the final rule that provides implementation guidance. This will include, among other requirements, 1) instructions for submitting requests for technical reviews, 2) how to notify residents of inspection results and scores, and 3) how to submit evidence that health and safety deficiencies identified in the NSPIRE inspection have been corrected.

Future Updates | HUD stated its intent to publish updates to the NSPIRE standards and scoring methodology through future Federal Register notices at least once every three years with an opportunity for public comment.  

Does this Notice Apply to Tax Credit Properties? | Based on past IRS interpretations of the applicability of HUD inspection standards to LIHTC properties, it is likely that the overall scoring will not apply to the LIHTC, and the threshold for further monitoring is a procedural issue that applies only to HUD properties. However, any severity ranking of individual findings applies and will likely continue to be reported to the IRS by the applicable state LIHTC Agency. Under UPCS, this was 1-3 (with 3 being the most severe). Replacing that is likely the NSPIRE Defect Severity Categories assigned to each deficiency. These are 1) life and safety, 2) severe, 3) moderate, and 4) low. 

Our article series "An NSPIRED Change" will provide more analysis of the scoring calculations. Look for the next installment of that series on April 5. Click on the NSPIRE image for all of our NSPIRE-related blog posts so far. 

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