Notice of Demonstration To Assess the National Standards for the Physical Inspection of Real Estate and Associated Protocols

Federal Register, Volume 84 Issue 162 (Wednesday, August 21, 2019)
[Federal Register Volume 84, Number 162 (Wednesday, August 21, 2019)]
[Proposed Rules]
[Pages 43536-43542]
From the Federal Register Online via the Government Publishing Office []
[FR Doc No: 2019-17910]
24 CFR Parts 5 and 200
[Docket No. FR-6160-N-01]
Notice of Demonstration To Assess the National Standards for the
Physical Inspection of Real Estate and Associated Protocols
AGENCY: Office of the Assistant Secretary for Housing; Office of the
Assistant Secretary for Public and Indian Housing, U.S. Department of
Housing and Urban Development.
ACTION: Notice.
SUMMARY: The shift to the National Standards for the Physical
Inspection of Real Estate (NSPIRE) will further one of HUD's highest
priority strategic outcomes--resident health and safety. HUD is looking
at the implementation of NSPIRE as an opportunity to reduce regulatory
burden through alignment and consolidation compared to either
maintaining or increasing the number of standards and protocols to
evaluate HUD-assisted housing across multiple programs. During this
demonstration, HUD will solicit volunteers to test the NSPIRE standards
and protocols as the means for assessing the physical conditions of
HUD-assisted and -insured housing. The demonstration, which will
include approximately 4,500 properties, will be implemented on a
rolling, nationwide basis and will assess all aspects of the physical
inspection line of business of the Real Estate Assessment Center--the
collection, processing, and evaluation of physical inspection data and
information, including a new scoring model. As the first step in the
implementation of NSPIRE, HUD is soliciting comment on this proposed,
voluntary demonstration. HUD will consider the comments and incorporate
them into the demonstration. Subjecting the NSPIRE model to a
multistage demonstration will serve as an opportunity to refine
processes and ensure all mechanisms are in place to facilitate the
transition to a nationwide implementation. This demonstration will also
serve as the precursor to any required rulemaking.
[[Page 43537]]
DATES: Comment Due Date: October 21, 2019.
ADDRESSES: HUD invites interested persons to submit comments to the
Office of the General Counsel, Regulations Division, Department of
Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500. Communications should refer to the above
docket number and title and should contain the information specified in
the ``Request for Comments'' section. There are two methods for
submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500. Due to security measures at all Federal
agencies, however, submission of comments by mail often results in
delayed delivery. To ensure timely receipt, HUD recommends that
comments be mailed at least 2 weeks in advance of the public comment
    2. Electronic Submission of Comments. Comments may also be
submitted electronically through the Federal eRulemaking Portal at HUD strongly encourages commenters to
submit comments electronically. Electronic submission of comments
allows the commenter maximum time to prepare and submit a comment,
ensures timely receipt by HUD, and enables HUD to make comments
immediately available to the public. Comments submitted electronically
through the website can be viewed by other commenters and interested
members of the public. Commenters should follow instructions provided
on that site to submit comments electronically.
    Note: To receive consideration as public comments, comments must be
submitted using one of the two methods specified above. Again, all
submissions must refer to the docket number and title of the notice.
    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Comments. All comments and communications
submitted to HUD will be available for public inspection and copying
between 8 a.m. and 5 p.m., weekdays, at the above address. Due to
security measures at HUD Headquarters, an advance appointment to review
the public comments must be scheduled by calling the Regulations
Division at 202-708-3055. This is not a toll-free number. Copies of all
comments submitted are available for inspection and downloading at
Assessment Center, Office of Public and Indian Housing, Department of
Housing and Urban Development, 550 12th Street SW, Suite 100,
Washington, DC 20410-4000, telephone number 202-475-8873 (this is not a
toll-free number). Persons with hearing or speech impairments may
contact the numbers above via TTY by calling the Federal Relay Service
at 800-877-8339 (this is a toll-free number).
I. Structure of the Notice
    The following five sections discuss the background through the
solicitation of comments. Section II provides background information on
HUD inspections and their applicability to HUD's oversight
responsibility related to ensuring safe, habitable conditions within
HUD housing. For the purposes of this notice, ``HUD housing'' is
defined as housing assisted under the HUD programs listed in 24 CFR
200.853(a); housing with mortgages insured or held by HUD, or housing
that is receiving assistance from HUD, under the programs listed in 24
CFR 200.853(b); and Public Housing (housing receiving assistance under
the U.S. Housing Act of 1937, other than under section 8 of the Act).
This does not apply to units assisted under the Housing Choice Voucher
(HCV) program, including the Project-Based Voucher Program under the
purview of the Office of Public and Indian Housing.\1\ Once the NSPIRE
standards have been validated through this demonstration, they will be
tested with HCV properties under the existing demonstration authority
for that program (See FR-5928-N-02, ``Notice of Continuation of
Demonstration to Test Proposed New Method of Assessing the Physical
Conditions of Voucher-Assisted Housing,'' 84 FR 24416). In section III,
HUD explains the elements that will be assessed during the voluntary
demonstration, which are: (1) The improved inspection model and
demonstration protocols; (2) data standardization and information
exchange of inspections and related information; (3) reduced costs of
administrative activities; and (4) oversight and performance
improvement. Also, in section III, HUD discusses which properties will
be subject to inspections as part of the demonstration. In section IV,
HUD describes the process it will use to assess the results of the
demonstration. In section V, HUD outlines the policy deviations
required for the demonstration. Finally, in section VI, HUD solicits
public comment generally and on several questions of specific interest.
    \1\ Once deficiency criteria that make up NSPIRE are completed,
such criteria will be included in the UPCS-Voucher demonstration.
II. Background
    HUD currently uses an inspection model established in 1998, relying
on Uniform Physical Condition Standards (UPCS) \2\ and managed under
the Department's Real Estate Assessment Center (REAC). Since then, the
housing portfolios HUD inspects have undergone major transformations. A
housing portfolio once dominated by Government-owned properties has
become largely populated by private entities. HUD, Congress, the
public, and HUD's growing list of customers demand products and
services that provide accurate and reliable evaluations of housing
conditions, while reducing regulatory burden. HUD has found that some
property owners have become more interested in meeting minimal
compliance thresholds than incorporating best practices that relate to
property maintenance. To address these developments, HUD proactively
initiated a wholesale reexamination of its physical inspection process
and began to lay the foundation of the NSPIRE model that supports two
of three goals in the Department's overarching strategic plan.\3\ The
NSPIRE model will support HUD's objectives to:
    \2\ 24 CFR part 5, subpart G.
    \3\ U.S. Department of Housing and Urban Development Strategic
Plan 2018-2022.
     ``Rethink American Communities: . . . Protect the health
of residents by addressing lead-based paint and other health and safety
hazards in housing.''
     ``Reimagine the Way HUD Works: . . . Rethink how we
deliver services directly to our customers to increase consistency and
    To help achieve these goals, the NSPIRE model will:
     For the first time, incorporate comprehensive, annual
self-inspections by property management staff, the methods and results
of which will be integral parts of HUD's real estate inspection
process. By making regular, comprehensive self-inspections a part of
HUD's physical assessment regimen, property managers will be more
engaged in the process and more vested in the outcomes.
[[Page 43538]]
     Enhance accuracy through:
    [cir] Better identification of substandard properties.
    [cir] Increased objectivity and defensibility of inspections.
    [cir] Reduced complexity of inspections and increased time in
     Place greater weight on health and safety (H&S)
deficiencies than on function and appearance.
     Implement inspections that better reflect the true
physical conditions of properties.
     Ensure owners adopt sound, year-round maintenance
    To achieve these outcomes, NSPIRE will aspire to align all
inspection standards, while adopting flexible protocols to accommodate
the unique circumstances of each program and housing type.
    Recognizing the impact of these changes, HUD began to analyze the
way inspections are conducted and to better understand areas in which
its standards and processes needed to evolve. This analysis showed that
HUD's current process for inspecting and assessing housing assets has
not fundamentally changed since it was developed in 1998. Aspects of
the UPCS model, such as problems in units carrying a low scoring
weight, having standards with intentionally broad language, relying on
resource-intensive manual processes to determine the quality of the
results, and assuming that the individual inspector would not be a
determining factor in inspection outcomes, are misaligned with HUD's
priorities and the state of the housing inspection industry. Detailed
documentation about how inspections are performed today can be found on
the REAC website at
    More specifically, as HUD has developed the concept of NSPIRE, the
review of the existing program has shown that standards for the
assessment of existing housing need to be well-aligned to the
livability and the residential use of the structures and that having
too many indicators results in a highly complex task, which increases
the chance for error. Similarly, processes that were designed for a
different generation of technology capabilities can benefit from
current advances in that field, such as machine learning, process
automation, and automated data exchanges that bring consistency and
transparency to processes and results. Additionally, a review of the
items and deficiencies within the UPCS standards has shown that some
rely too heavily on individual judgment, especially those oriented
around the appearance of items that are otherwise functional.
    From this analysis, HUD has started to develop, document, and
propose standards and protocols for a new inspection model called
NSPIRE. This demonstration seeks to target a diverse, representative
group of stakeholders, including REAC, other HUD offices, public
housing agencies (PHAs), and owners and agents (OAs), the last two of
which are referred to, collectively, as POAs. After the public comment
period has expired and HUD has considered the comments, HUD will
subject the NSPIRE model to a multistage demonstration for the purpose
of ensuring that all mechanisms are in place to support the transition
to the NSPIRE model after all required rulemaking.
    Demonstration participation is limited to volunteers; no POAs will
be required to participate. This demonstration does not include
properties under the HCV program as HUD has a separate demonstration
program underway that covers that program. As NSPIRE is intended to be
a single inspection standard for all of HUD, however, once the NSPIRE
standards have been validated during the demonstration that is the
subject of this notice, they will be migrated to the Uniform Physical
Condition Standards for Vouchers (UPCS-V) demonstration for further
testing with HCV properties. Feedback and lessons learned will be
shared across the demonstrations to inform any subsequent rulemaking.
III. The NSPIRE Demonstration
A. Overview
    Start here In executing the authorities \4\ and in fulfillment of
the oversight responsibilities provided to the Secretary, HUD is
developing improved standards, protocols, and processes as part of
NSPIRE. HUD will make drafts of the standards incrementally available
on the department's website, as well as the final set of standards
applicable to the demonstration. The NSPIRE Model is designed to better
identify those POAs who are not adhering to minimum compliance
standards \5\ by:
    \4\ Including but not limited to those contained in 42 U.S.C.
3535(r) and 1437d(f)(3).
    \5\ Codified at 24 CFR 5.703.
     Establishing more objective, better-defined deficiency
definitions which will be validated by a third-party contractor;
     Requiring properties to complete and submit their annual
self-inspection results electronically;
     Incorporating less complex inspection protocols using
indicators aligned to quality;
     Reducing the number of inspectable areas at properties to
simplify the process and reduce administrative errors related to
deficiency misclassification by regrouping the inspectable items into
three categories from five \6\--note that this only changes the
grouping of inspectable items, it does not change which items are being
    \6\ 24 CFR 902.3.
     Deliberately grouping deficiencies into one of three
     Better identifying all H&S deficiencies; and
     Adopting a new scoring model that places the most emphasis
on the areas considered the most important--the residents' homes.
    The demonstration will use objective condition standards that
include a list of H&S items which must be addressed, revised
Information Technology (IT) processes, and new oversight approaches.
The specific H&S deficiency criteria are still in development and will
be released on HUD's website as they become available. Demonstration
participants will be notified by email and Listserv in advance when HUD
plans to change criteria and again by the same method of notification
after any changes are posted to the website. Moreover, this
demonstration is the first step in implementing an NSPIRE Model that
seeks to better identify H&S hazards in housing, more accurately assess
the physical condition of HUD housing, improve inspection service
delivery, encourage more active engagement by POAs in the physical
assessment process, and enhance HUD's overall oversight and risk
management capabilities.
    The NSPIRE demonstration will test, and refine as necessary,
processes comprised of the standards, regulations, business processes,
risk models, IT systems, and support services necessary to meet the
goals and objectives described above. Specifically, the NSPIRE Model is
designed to improve objectivity, defensibility, and accuracy in order
to achieve a more reliable assessment of housing conditions for those
living in HUD housing. The scope of the inspection, the procedural
guidelines, and the individual deficiencies have been modified to
remove subjectivity and ambiguity and to emphasize those areas that
present the highest risk of harm to those living in HUD housing. The
fact that NSPIRE has three inspectable areas does not
[[Page 43539]]
imply a reduction in what items may be cited or the physical locations
to be inspected, but is intended to simplify the field protocols used
by the inspector to achieve an increase in consistency. Accordingly, as
a different way to aggregate inspection data, this does not imply a
reduction in the quality of the inspection.
B. The NSPIRE Model and Demonstration Protocols
    Under this voluntary demonstration, HUD will inspect, for up to two
years, approximately 4,500 properties from a pool of volunteers who are
willing to adopt the NSPIRE Model to assess the physical condition of
HUD housing. To that end, HUD's NSPIRE Model has three major
components: (1) Three Types of Inspections, (2) Three Categories of
Deficiencies, and (3) Three Inspectable Areas. The Three Types of
Inspections include POA self-inspections; those conducted by
contractors and/or federal inspectors; and those conducted solely by
federal inspectors. The Three Categories of Deficiencies are Health and
Safety; Function and Operability; and Condition and Appearance, with
each category ideally resulting in emergency work orders, routine work
orders, and other maintenance respectively. The Three Inspectable Areas
will be Inside, Outside, and Unit. ``Inside'' refers to all common
areas and building systems (e.g., HVAC) located inside a building.
``Outside'' refers to the building site, the building envelope, and any
building systems located outside of the building or unit. ``Unit''
refers to the interior of an individual residential unit. The
transition to these three major components will decrease inspection
complexity, simplify the scoring model, and increase consistency in the
way the standards are interpreted, and protocols are applied, during an
inspection. Elements of each of the three components will be deployed
simultaneously to refine the mechanics of administration during this
demonstration; however, each type of inspection (POAs, Contract
Inspectors, Federal Inspectors) will begin the demonstration in an
incremental fashion.
    As part of the NSPIRE implementation process, HUD intends to issue
a proposed rule in late 2019 that will amend and align overarching
policies related to the frequency of inspections, the method of
appealing results, and the actors responsible for conducting the
inspection. After having been validated through the demonstration and
considering any public comments from the proposed rule, HUD will also
publish separate notices in the Federal Register open for public
comment which contain the detailed elements of the NSPIRE inspection
itself to include the standards, sampling and scoring protocols.
    For the demonstration, the following phases apply:
     Phase I--HUD will begin an iterative approach to receiving
and processing participating POA annual inspection results and other
data (e.g., certificates, property profiles, work orders, and local
code violations which occurred during the annual reporting period) to
develop a reasonable assurance of property conditions at the time of
the POAs' self-inspections. Capabilities within Phase I will include:
    [cir] A system (POA-owned or HUD-provided) that POAs can use
successfully to:
    [ssquf] Inspect their properties, record the results, create work
orders, and submit results to HUD; and
    [ssquf] Stream property profiles, certificates, and work orders
directly to HUD.
    [cir] A HUD system that can successfully:
    [ssquf] Receive and store POA self-inspections and related
    [ssquf] Process and provide analysis of data provided through self-
inspections; and
    [ssquf] Update inspection profiles based on POA provided data and
     Phase II--HUD will begin iteratively deploying
functionality to reach Phase II objectives; this will be achieved when
HUD can better and more accurately determine when an owner is not
providing acceptable housing. For the purpose of this demonstration
only, contract and federal inspectors will assess properties using the
Critical to Quality (CTQ) standards (further explained below) and
protocols developed as part of the NSPIRE Model during Phase II, which
will be incrementally posted on the NSPIRE website as they are
developed. Each deficiency will be posted online in a manner that
allows for targeted stakeholder feedback for that specific deficiency
instead of requiring a comprehensive review of all the standards.
    Additionally, HUD will create a demonstration scoring model which
will be used to assess demonstration results. Similar to the
publication of the NSPIRE deficiencies, HUD will publish the proposed
weighting factors as a supplement to the item and deficiency
descriptions on the website. Among other considerations, weighting
factors are based on the importance of the item to the built
environment, its potential impact on a resident if defective, and the
extent to which any damage reflects on the ability of management to
maintain a property. Capabilities within Phase II will include:
    [cir] A system of more objective standards and simpler protocols
that will enable a trained inspector to better detect, identify, and
record deficiencies and submit those results to HUD. These ``objective
standards'' will be in the form of CTQs. CTQs will be a well-defined
subset of the entire set of NSPIRE Standards that have a high
correlation to overall quality and are calibrated to provide strong
assurance that a property is not in compliance with HUD's minimum
property standards. Simply put, when a deficiency is noted against a
CTQ or a number of CTQs, there will be a high correlation to
substandard conditions within a property. This direct correlation to
quality allows for inspections built around CTQs to evaluate fewer
standards but remain highly effective in determining substandard
conditions. This capability should provide a higher level of confidence
in evaluating property conditions than the POAs' self-inspections
described in Phase I. For this phase of the demonstration, HUD may use
contract inspectors, government employees, or both to inspect
properties according to a revised set of deficiency definitions in lieu
of those found in the current Dictionary of Deficiency Definitions (see
24 CFR 902.3).\7\
    \7\ Public Housing Assessment System (PHAS): Physical Condition
Scoring Notice and Revised Dictionary of Deficiency Definitions;
Notice; Federal Register, Volume 77, Number 154, Part II, Department
of Housing and Urban Development, August 9, 2012.
    [cir] A system of protocols and additional indicators, compared to
those used by contract inspectors, that will enable trained federal
employee inspectors to better detect, identify, and record evidence
about the extent of substandard conditions and submit those results to
HUD. These additional factors will be developed later in the
demonstration based on the feedback federal inspectors have provided as
they assist with the development of NSPIRE. Generally, these indicators
are those that require more time, higher skills, or more equipment to
identify such that they would not be practical for a contractor to
perform on every inspection. This capability would provide the highest
level of confidence in evaluating a property's condition compared to
POA or contracted inspections with the results being used
[[Page 43540]]
to support enforcement actions or sanctions.
    [cir] A HUD analytic system capable of processing the inspection
results, including the employment of a new scoring model, to provide a
more accurate and defensible determination of those POAs who are not
providing acceptable housing. For the purposes of the demonstration, a
new scoring model will be used in lieu of the current Physical
Condition Scoring Notice.\8\ Nothing in this demonstration notice
should be construed to mean any rights and obligations under 42 U.S.C.
1437d(j)(1)(K)(I) and 1437d(j)(2) are being waived, suspended, or
superseded. HUD is undertaking this demonstration in accordance with 42
U.S.C. 1437d(j)(1)(K)(I) to ensure agencies are not penalized for
circumstances beyond their control. All rights under 42 U.S.C.
1437d(j)(2) and as provided in 24 CFR 902.64, 902.66, 902.68 and
902.69, which deal with technical reviews and rights to petition and
appeal troubled performer designation continue to apply.
    \8\ Public Housing Assessment System (PHAS): Physical Condition
Scoring Notice and Revised Dictionary of Deficiency Definitions;
Notice; Federal Register, Volume 77, Number 154, Part II, Department
of Housing and Urban Development, August 9, 2012.
    Prior to the demonstration, HUD will publish a minimum,
standardized list of exigent health and safety (EH&S) items to be
included in the CTQ inspection that POAs participating in the
demonstration must correct, remedy, or act to abate within 24 hours of
receipt of notification of such deficiencies from HUD to include
submitting evidence of repair, correction, or abatement (e.g., closed
work order and photo) to HUD through NSPIRE systems. At this time, HUD
expects this list to be similar to the exigent health and safety items
in UPCS and the list of published life-threatening conditions published
as part of the UPCS-V demonstration. If at the time of the inspection,
EH&S and H&S deficiencies are observed, the inspector will provide a
list of such deficiencies to the POA that must be corrected and closed
with HUD within established timeframes. As part of the demonstration,
HUD will work with POAs to establish a process for validating repair of
H&S deficiencies that do not require repair within 24 hours but must be
corrected with evidence of the repair being submitted through NSPIRE
systems. This collaborative effort will include determining reasonable
times for repair for H&S deficiencies. Also, HUD will explore options
to better address the pervasiveness of deficiencies throughout a
property while retaining statistical samples within its protocols.
    As part of the demonstration, HUD will inspect properties that have
been selected through a voluntary application and selection process
with the goal of ensuring the consistency, accuracy, and objectivity of
the new indicators. In addition to general feedback, POAs will be
provided the opportunity to participate in formal focus groups to
review results and provide feedback on the indicators. HUD will inspect
participating properties at least once during the demonstration using
the NSPIRE standards. During the demonstration, HUD will explore
multiple sampling formulas to determine the optimal sampling rates for
both units and buildings. HUD will also explore the feasibility of
implementing the new standards and protocols and identify refinements
that are needed to fully implement the new model nationwide.
    The demonstration will continue for at least two years and may be
extended by subsequent Federal Register notice so HUD has sufficient
information to evaluate the success of the new standards and protocols
and assurance that the NSPIRE Model is achieving consistent results.
C. Data Standardization and Information Exchange of Inspections and
Related Information
    For participating POAs, this part of the demonstration will test
the transition to automated systems/processes through which POAs will
submit inspection results, work orders, certificates, and property
profiles. POAs will be permitted to use their own software to perform
their inspections; however, HUD will provide software to those POAs who
request it. This software will be mobile-based so the POA will need an
Android or iOS device. For POAs with their own IT systems, including
POA-produced inspection software, HUD will work with participating
agencies to establish the JavaScript Object Notation (JSON) or
equivalent data standards for transferring physical inspection
information between the POA and HUD systems. All IT configuration
requirements will be made available for review on HUD's NSPIRE website.
HUD will require POAs participating in this part to document and submit
all inspections electronically to HUD. HUD anticipates that it will
then review, analyze, and where appropriate, transform the inspection
data into value-added information, such as relative risk reports, for
electronic transmission back to the POAs for their use.
    POAs participating in this part of the demonstration who choose to
use their own software will be required to have and maintain the IT
resources and support necessary to interface with HUD's systems using
industry standard file transfer protocols such as Simple Object Access
Protocol (SOAP) and Representational State Transfer (REST) standards
and complying with all security requirements. Some data exchange may be
via transfer of flat files (e.g., spreadsheets), especially during the
early portions of the demonstration.
D. Oversight and Performance Improvement
    In this part of the demonstration, HUD will explore whether and how
POAs are consistently identifying maintenance needs; remedying such
needs appropriately and in a timely manner; and accurately reporting
unit-based inspection outcomes to HUD. As part of the demonstration,
HUD will analyze POAs' abilities to effectively evaluate units as
decent, safe, and sanitary. Further, HUD will test the capability of
NSPIRE to identify PHAs and properties that are at risk of falling into
non-compliance before the next regularly scheduled inspection.
E. Participants
    HUD plans to select POAs from all regions from within a nationwide
pool of applicants with properties in HUD's Region III receiving
preference as the initial cohort. Properties within other regions will
be added on a regional, rolling basis throughout the demonstration
period. Solicitation and application information will be made available
through HUD's ``NSPIRE'' website at:
    HUD is seeking participation from 4,500 properties across all
regions; however, HUD will seek to increase this number if more data
and/or information are required. Further, HUD may request POAs
participating in any part of the demonstration to participate in focus
groups, conference calls, and training sessions on policies and
procedures. If required, HUD may make training available to
participating POA inspectors, administrators, and quality control staff
on the new inspection protocol, including how to use the inspection
software. POAs will be responsible for scheduling, assigning
inspectors, and conducting their self-inspections. POAs may
incrementally submit their annual inspection results or submit the
results all at once;
[[Page 43541]]
however, POAs must meet the standard of 100 percent unit inspections
    Participating POAs will generally not be subject to both an NSPIRE
and a Uniform Physical Condition Standards (UPCS) inspection. If during
the NSPIRE demonstration, however, HUD believes substandard conditions
exist, the Department, at its discretion, may order and execute a UPCS
inspection to confirm substandard conditions and consequently apply any
available remedies, sanctions, or other actions as determined by the
results. The triggers for a UPCS inspection for a property accepted
into the NSPIRE demonstration may include but are not limited to: The
identification by HUD, through the NSPIRE inspection or other means, of
significant, serious conditions at a property that call into question
its prior UPCS scores or its current ability to provide safe, habitable
housing to residents; a property not timely correcting healthy and
safety issues; or other administrative information available to HUD
that would give the Department reason to believe the property is unsafe
or financially at risk.
    Properties subject to an existing HUD Compliance, Disposition, and
Enforcement or Corrective Action Plan will not be included in the
demonstration. Any property with a current score of 70 or below but not
currently under an enforcement action will be considered on a case-by-
case basis but may be subject to both an NSPIRE and UPCS inspection.
F. Scoring
    During the demonstration, HUD will develop and test a new scoring
model that prioritizes H&S defects over function and appearance to
achieve HUD's objectives of better identification of substandard
properties and protection of residents. The NSPIRE scoring model to be
tested in the demonstration will vary from the current Public Housing
Assessment System scoring model.\9\ Since the scoring model will be
under development, any NSPIRE inspection scores HUD issues during the
demonstration will be advisory and therefore, will only be used to
refine the demonstration. If a POA participating in the demonstration
has an administrative requirement for a UPCS inspection score, HUD may
grant a POA's request for a UPCS inspection. HUD reminds properties
that while NSPIRE scores will remain advisory during the demonstration,
as today, a pattern of serious and substantial conditions that indicate
a wide-spread failure to provide acceptable basic housing could subject
the property to a UPCS inspection and any available remedies,
sanctions, or other actions as determined by the results.
    \9\ Public Housing Assessment System (PHAS): Physical Condition
Scoring Notice and Revised Dictionary of Deficiency Definitions;
Notice; Federal Register, Volume 77, Number 154, Part II, Department
of Housing and Urban Development, August 9, 2012.
IV. Assessing the Demonstration
    The demonstration will provide HUD with data on the NSPIRE Model,
including its ability to improve HUD's oversight and risk management
capabilities through a reliable, repeatable inspection process that
better identifies health and safety risks to residents, before
implementing such a program nationwide. The demonstration is
anticipated to begin 60 days following the date of publication of this
notice, with POAs being added on a rolling basis. Throughout the
demonstration, HUD will assess its success and determine how to best
implement the new model on a permanent basis throughout the country. In
evaluating the demonstration, HUD will assess whether the use of the
NSPIRE inspection protocol produces (1) more consistent and accurate
results, (2) data standardization and a reliable and less-burdensome
method for information exchange, and (3) better indications of
substandard properties. Factors HUD may consider during its assessment
include but are not limited to:
 Definition of Success
    [cir] The new model provides a high probability (reasonable
assurance) of detection of a property that is not meeting minimum
condition standards.
    [cir] Did interrater reliability among inspectors improve?
    [cir] Were standards applied uniformly to the same inspectable item
at multiple locations?
    [cir] Did cited deficiencies align to the inspector's overall
professional judgment of the property/unit? (For example, a quality
scale of 1-5 with ``1'' being worst and ``5'' being best.)
    [cir] How did the NSPIRE result compare to previous inspection
    [cir] Did all citable deficiencies have a rationale and an
authoritative reference to describe potential hazards?
    [cir] Were the rationales valid and did they accurately describe
potential harm?
    [cir] From a linguistic standpoint, have the standards been written
to remove as much subjective language as possible? Do they provide
unequivocal ways to measure or prove the deficiency exists?
    [cir] When presented to a focus group, is there a uniform
understanding of the language among members?
    [cir] In the field, has the need for an inspector to apply personal
judgment, interpretation, or opinion been reduced or, if appropriate,
even eliminated?
 Defensibility (Validity)
    [cir] Do the standards focus on items that have the most impact on
residents (H&S, function--less so for condition)?
    [cir] Is there agreement on the rationales (potential harm) for
most of the deficiencies?
    [cir] Are the standards up-to-date? Do they align to expectations
of housing quality and advances in building science and technology
(e.g., carbon monoxide, mold, lead, Americans with Disabilities Act,
disaster resilience)?
V. Policy Deviations
    For the purpose of the demonstration only, HUD will invoke the
following policy deviations:
     For the purposes of meeting various program requirements,
HUD will extend the inspection periodicity for demonstration properties
based on their most recent inspection score in HUD's Physical
Assessment Subsystem (PASS) for two years rather than on the
periodicity outlined in 24 CFR 200.855, 200.857 and 902.13. All other
statutory and regulatory requirements still apply. In other words, HUD
is generally waiving the regulatory requirement to undergo a UPCS
inspection for the duration of the demonstration for participating
properties. However, as noted elsewhere, the Department, at its
discretion, may order and execute a UPCS inspection (or equivalent) to
confirm substandard conditions and consequently apply any available
remedies, sanctions, or other actions as determined by the results,
particularly in the event of the demonstration extending beyond a two-
year period.
     Inspectable Areas: HUD will use an inspection protocol
with only 3 inspectable areas (unit, outside, inside) rather than the 5
areas contained in 24 CFR 902.3.
     EH&S and H&S Deficiencies Repair: POAs will close out all
EH&S and H&S deficiencies electronically. Further, in addition to EH&S
and H&S deficiencies outlined in the current Dictionary of Deficiency
Definitions,\10\ HUD will
[[Page 43542]]
inspect for the presence and function of carbon monoxide detectors.
This constitutes an affirmative requirement for the installation of
carbon monoxide detectors for properties/units that contain a fuel-
burning appliance, fuel-burning fireplace, or are in buildings with
attached private garages with an opening connected to the dwelling unit
or sleeping unit.
    \10\ Public Housing Assessment System (PHAS): Physical Condition
Scoring Notice and Revised Dictionary of Deficiency Definitions;
Notice; Federal Register, Volume 77, Number 154, Part II, Department
of Housing and Urban Development, August 9, 2012.
     For the purposes of meeting various program requirements,
HUD will carry forward for demonstration properties the most recent
inspection score in HUD's Physical Assessment Subsystem (PASS).
VI. Solicitation of Public Comment
    In accordance with section 470 of the Housing and Urban-Rural
Recovery Act of 1983 (42 U.S.C. 3542), HUD is seeking comment on the
demonstration. Section 470 provides that HUD may not begin a
demonstration program not expressly authorized by statute until a
description of the demonstration program is published in the Federal
Register and a 60-day period expires following the date of publication,
during which time HUD solicits public comment and considers the
comments submitted. HUD has established a public comment period of 60
days. The 60-day public comment period allows HUD the opportunity to
consider those comments and be in a position to commence implementation
of the demonstration following the conclusion of the public comment
period. While HUD solicits comment on all aspects of the demonstration,
HUD specifically solicits comment on the following:
    1. Are there specific H&S deficiencies that should be added to the
current list of EH&S or H&S deficiencies?
    2. Is the new model's focus on health, safety, and function while
limiting the inspection of some condition and appearance deficiencies
appropriate and acceptable?
    3. Are there other property characteristics HUD should consider in
its inspection and scoring protocols?
    4. What inspection incentives should HUD consider providing to
high-performing properties and what criteria should be included to
determine that status?
    5. Are there aspects of the new model that would be a higher
administrative burden than the current model?
    6. Are there are any low-value aspects of the UPCS model that HUD
should not carry forward into NSPIRE?
    HUD requests that POAs interested in participating in the
demonstration follow the application guidance available on HUD's
``NSPIRE'' website:
    Dated: August 13, 2019.
Dominique G. Blom,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 2019-17910 Filed 8-20-19; 8:45 am]