[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 [www.gpo.gov]
[FR Doc No: 2019-17910]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

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.

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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 
deadline.
    2. Electronic Submission of Comments. Comments may also be 
submitted electronically through the Federal eRulemaking Portal at 
https://www.regulations.gov/. 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 
https://www.regulations.gov/.

FOR FURTHER INFORMATION CONTACT: Daniel R. Williams, Real Estate 
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).

SUPPLEMENTARY INFORMATION:

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.
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    \1\ Once deficiency criteria that make up NSPIRE are completed, 
such criteria will be included in the UPCS-Voucher demonstration.
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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:
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    \2\ 24 CFR part 5, subpart G.
    \3\ U.S. Department of Housing and Urban Development Strategic 
Plan 2018-2022.
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     ``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 
accountability.''
    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 
units.
     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 
practices.
    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 https://www.hud.gov/program_offices/public_indian_housing/reac/products/prodpass.
    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:
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    \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.
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     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 
inspected;
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    \6\ 24 CFR 902.3.
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     Deliberately grouping deficiencies into one of three 
categories;
     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 
information;
    [ssquf] Process and provide analysis of data provided through self-
inspections; and
    [ssquf] Update inspection profiles based on POA provided data and 
information.
     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\
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    \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.
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    [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.
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    \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.
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    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: https://www.hud.gov/program_offices/public_indian_housing/reac/nspire.
    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 
annually.
    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.
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    \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.
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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.
 Consistency
    [cir] Did interrater reliability among inspectors improve?
    [cir] Were standards applied uniformly to the same inspectable item 
at multiple locations?
 Accuracy
    [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 
results?
    [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?
 Objectivity
    [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.
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    \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.
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     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: https://www.hud.gov/program_offices/public_indian_housing/reac/nspire.

    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]
BILLING CODE 4210-67-P