Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE)

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 92, 93, 200, 570, 574, 576, 578, 882, 884, 886, 902, 965, 982, 983, and 985.

[Docket No. FR-6086-F-03]

RIN 2577-AD05

Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE)

AGENCY:

Office of the Assistant Secretary for Housing—Federal Housing Commissioner, Office of the Assistant Secretary for Community Planning and Development, Office of the Assistant Secretary for Public and Indian Housing, U.S. Department of Housing and Urban Development (HUD).

ACTION:

Final rule.

SUMMARY:

This final rule establishes a new approach to defining and assessing housing quality: The National Standards for the Physical Inspection of Real Estate (NSPIRE). This rule is part of a broad revision of the way HUD-assisted housing is inspected and evaluated. The purpose of NSPIRE is to strengthen HUD's physical condition standards and improve HUD oversight through the alignment and consolidation of the inspection regulations used to evaluate HUD housing across multiple programs. This final rule also incorporates provisions of the Economic Growth and Recovery, Regulatory Relief and Consumer Protection Act that will reduce administrative burden on small rural public housing authorities (PHAs).

DATES:

This final rule is effective July 1, 2023, except amendments to the following parts, which are effective October 1, 2023: 24 CFR part 92 (instructions 4 through 7); 24 CFR part 93 (instructions 9 and 10); 24 CFR part 200 (instructions 12 and 13); 24 CFR part 570 (instruction 15); 24 CFR part 574 (instruction 17); 24 CFR part 576 (instruction 19); 24 CFR part 578 (instruction 21); 24 CFR part 882 (instructions 23 and 24); 24 CFR part 884 (instruction 26); 24 CFR part 886 (instructions 29 through 31); 24 CFR part 982 (instructions 45 through 55); 24 CFR part 983 (instructions 57 through 61); and 24 CFR part 985 (instructions 62 through 65). For more information,

see

SUPPLEMENTARY INFORMATION

.

FOR FURTHER INFORMATION CONTACT:

Tara J. Radosevich, 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 202-708-1112 (this is not a toll-free number),

NSPIRERegulations@hud.gov.

HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit:

https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

Effective Dates

This rule has two effective dates:

1. Amendments to 24 CFR parts 5, 902, and 965 are effective on July 1, 2023. These amendments implement the NSPIRE regulations at 24 CFR part 5, subpart G and affect the Public Housing regulations.

2. Amendments to 24 CFR parts 92, 93, 200, 570, 574, 576, 578, 882, 884, 886, 982, 983 and 985 are effective on October 1, 2023. These amendments affect the Multifamily Housing regulations, the Housing Choice Voucher regulations, the Project-Based Voucher regulations, Section 8 Moderate Rehabilitation regulations and the Community Planning and Development (CPD) programs such as HOME Investment Partnerships Program (HOME), the Housing Trust Fund (HTF), Housing Opportunities for Persons with AIDS (HOPWA), Emergency Solution Grants (ESG) and Continuum of Care (COC) regulations. Participants and owners subject to these regulations are subject to the Code of Federal Regulations as it exists on the publication date of this rule, and are not subject to the regulatory changes being made by this rule on July 1, 2023, until October 1, 2023.

I. Background

On January 13, 2021, HUD published the “Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE)” proposed rule (“proposed rule”) in the

Federal Register

.

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In the NSPIRE proposed rule, HUD proposed to align and consolidate its inspection standards and procedures and incorporate provisions of the Economic Growth and Recovery, Regulatory Relief and Consumer Protection Act (Pub. L. 115-174) for all of HUD's programs. Specifically, HUD proposed to revise 24 CFR part 5 to become the focal point of consolidated standards, and proposed changes to other regulations to cross-reference to the new streamlined part 5 standards.

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86 FR 2582.

The proposed rule also sought to consolidate, update, and improve the Housing Quality Standards (HQS) and the Uniform Physical Condition Standards (UPCS) to prevent standards and procedures from becoming out of date. In addition, the rule proposed to implement the Economic Growth and Recovery, Regulatory Relief and Consumer Protection Act (“Economic Growth Act”) to implement an alternate performance indicator and rating system for the Public Housing Assessment System (PHAS) and Section 8 Management Assessment Program (SEMAP).

HUD's proposed rule and this final rule were informed by HUD's NSPIRE Demonstration. On August 21, 2019, HUD established through notice

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the implementation of the NSPIRE demonstration to develop a new inspection model for HUD programs. Through the demonstration, HUD built updated standards, procedures, and scoring methodologies. The NSPIRE Standards and procedures for the demonstration were first published on HUD's website in August 2019 and were subject to and improved through stakeholder feedback and test inspections. The Demonstration will continue for enrolled properties until implementation of this rule for the relevant program, or as otherwise announced by notice.

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“Notice of Demonstration To Assess the National Standards for the Physical Inspection of Real Estate and Associated Protocols,” 84 FR 43536.

For additional background, please see the proposed rule.

II. NSPIRE Final Rule and NSPIRE Notices

Consistent with the proposed rule, this final rule will create a unified inspection protocol for three different overarching programs: programs for housing assisted under the U.S. Housing Act of 1937 other than section 8 of the Act (“public housing”), programs previously under the Housing Quality Standards regulations at 24 CFR 982.401 (HQS regulations), and programs previously covered under 24 CFR part 5, subpart G (“Multifamily housing”). CPD programs and regulations are included because these programs pointed to the HQS program regulations. This final rule maintains a regulatory framework that streamlines, consolidates, and aligns inspection standards over 14 sections of regulations for HUD's programs. This new framework for inspection focuses on inside the building, outside the building and

within the units of HUD housing and ensures that they are “functionally adequate, operable, and free of health and safety hazards.” Because of the scope of changes to the inspection process, HUD is setting a different implementation date for HUD's programs to create as smooth a transition as possible.

A. Implementation Timeline

This rule will be implemented in two phases. On July 1, 2023, Public Housing will transition to NSPIRE. On October 1, 2023, the Multifamily Housing programs, Housing Choice Voucher (“HCV”) and Project Based Voucher (“PBV”) programs, and the CPD programs included in this rulemaking will transition to NSPIRE.

Public Housing regulations will be amended on July 1, 2023, and Public Housing program participants will be required to comply with this final rule and use the NSPIRE standards starting July 1, 2023. HUD will prioritize PHAs with a fiscal year end of June 30, 2023, to receive their next inspection under the updated regulations. Because the universe of Public Housing properties is smaller than those participating in Multifamily Housing programs, HUD is better able to prioritize and complete inspections of these properties first under NSPIRE, and then launch inspections in Multifamily Housing programs in October.

The Housing Choice Voucher (HCV), Project Based Voucher (PBV), Section 8 Moderate Rehabilitation Program, HOME, HTF, HOPWA, ESG and CoC regulations will be amended on October 1, 2023, and program participants will be required to comply with this final rule and begin using the NSPIRE standards on October 1, 2023. These programs are unique because inspections are done by PHAs, program participants, and participating jurisdictions (PJs) and not by HUD. These entities will need additional time to update forms and implement technological solutions. Therefore, programs that follow HQS will continue to follow HQS and will not need to comply with these regulations until October 1, 2023.

The Multifamily Housing programs will also begin to use the NSPIRE standards starting on October 1, 2023. After Uniform Physical Condition Standards (UPCS) inspections were delayed due to the COVID-19 pandemic, HUD has committed to providing Multifamily Housing program participants one more UPCS inspection before the transition to NSPIRE. HUD intends to meet this goal by the end of the 2023 Federal fiscal year. Therefore, HUD will transition Multifamily Housing programs to NSPIRE on October 1, 2023. Part 5, subpart G, as it existed before this rule, provided at § 5.703 for the physical condition standards for Multifamily Housing and authorized HUD at § 5.705 to establish UPCS through notice. On July 1, 2023, when Public Housing transitions to NSPIRE, these regulations will be overwritten by the new part 5, subpart G. To enable Multifamily to continue using UPCS, HUD will delay the effective date for Multifamily Housing such that Multifamily Housing program participants are not subject to the new part 5, subpart G until October 1, 2023. Part 5, subpart G as it exists on the publication date of this rule, prior to the changes which will be made on July 1, 2023, will apply to Multifamily Housing until September 30, 2023.

Further transition information will be provided in three core “Subordinate Notices” which will follow this final rule. These core Subordinate Notices are the NSPIRE Standards notice, the NSPIRE Scoring notice, and the NSPIRE Administrative notice. HUD will also issue additional notices on the NSPIRE Standards for the HOME, HTF, ESG, HOPWA, and CoC programs. PIH will issue additional Departmental notices to implement the Small Rural Assessment requirements under part 902, subpart H and part 985. The function of each of these notices is provided in more detail below. All updated Standards and Scoring methodologies will be published—as required by this rule—through a

Federal Register

notice at least once every 3 years with the opportunity for public comment prior to implementation.

B. NSPIRE Standards Subordinate Notice

This rulemaking establishes at 24 CFR 5.705(a) that HUD will establish Standards through a subordinate

Federal Register

notice. HUD proposed standards through notice in the

Federal Register

with request for comments on June 17, 2022 (“Proposed NSPIRE Standards notice”).

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These proposed standards were developed in consideration of the NSPIRE Demonstration and feedback received in response to that demonstration. The notice sought comments on the proposed NSPIRE Standards and included thirteen specific questions for public input, including questions related to mold, safe drinking water, requirements for a permanent heating source, minimum temperature, electrical outlets, deficiency correction time frames, and pest infestation. The individual NSPIRE Standards, posted on HUD's website,

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provided detailed descriptions of housing components and hazards for inspection with descriptions of potential deficiencies and correction timeframes. The notice also proposed an update to the list of life-threatening conditions covered by the Housing Opportunity Through Modernization Act of 2016 (“HOTMA”). The comment period for the Proposed NSPIRE Standards notice closed on August 1, 2022. HUD will publish the final NSPIRE Standards notice before the effective date of this rule, which will consider feedback received in the NSPIRE proposed rule, the NSPIRE Demonstration, and the proposed NSPIRE Standards.

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“Request for Comments: National Standards for the Physical Inspection of Real Estate and Associated Protocols,” 87 FR 36426.

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Available at:

www.hud.gov/sites/dfiles/PIH/documents/6092-N-02nspire_propose_standards.pdf.

C. NSPIRE Scoring and Administrative Subordinate Notices

This rulemaking establishes at 24 CFR 5.705(b) that HUD will establish scoring methods through a

Federal Register

notice. The proposed NSPIRE Scoring notice was published in the

Federal Register

on March 28, 2023.

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It will be final and effective before HUD begins inspections under NSPIRE. The NSPIRE Scoring notice will outline the methodology for weighting the deficiencies found during inspections using the NSPIRE Standards notice and scoring those deficiencies for each program . It will discuss the gradations and severity levels of the new scoring system, including thresholds for potential enforcement action.

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88 FR 18268.

The NSPIRE Administrative notice will be published as a final notice shortly following this final rule. This notice will replace all UPCS guidance that HUD's Real Estate Assessment Center (REAC) previously issued including the Compilation Bulletin for RAPID 4.0, Version 3, Inspector Notices, and other web-based guidance on requesting appeals, exigent health and safety reporting, and other inspection process topics. This subordinate notice will outline the updated NSPIRE process for inspections, submitting evidence of deficiency correction, technical reviews, administrative referrals and other administrative requirements changing with the final NSPIRE rule. It will also include the process HUD will use to gather resident feedback on property conditions. In an additional notice, HUD will provide

guidance for PHAs on the new small rural assessment processes.

D. NSPIRE Implementation and PHAS Score Transition for Public Housing Authorities

With the implementation of the NSPIRE rule, REAC will begin performing physical inspections using the NSPIRE Standards after the effective date of the rule for each program. Recognizing that there may be operational or system transition issues in the initial year of NSPIRE implementation, HUD is specifying in the regulation at § 5.705(c)(1) that an inspection “shall be conducted no earlier than 6 months before and no later than 6 months after the date marking the anniversary of the previous inspection” for a period of one year after the effective date of this rule. After this transition period, the time frame will return to “no earlier than 3 months before and no later than 3 months after the date marking the anniversary of the previous inspection” or at a time period approved by HUD upon a PHA's or owner's good cause request.

For PHAS scores issued after this rule is effective, REAC will use scores calculated as described in the subordinate NSPIRE Scoring notice and aggregate these scores on a unit-weighted basis as described in § 902.25 to create the Physical Assessment Sub-system (PASS) indicator score. Additional information about NSPIRE and PHAS Score transition, including PHAs rated as Troubled, will be provided in the subordinate NSPIRE Administrative notice.

E. Other NSPIRE Notices

HUD's Office of Community Planning and Development will issue separate notices before October 1, 2023, (“CPD NSPIRE notices”) to implement the rule for the individual programs, which generally do not adopt the methods in the three “core” Subordinate Notices discussed above, and provide guidance for how the NSPIRE Standards cover differing CPD program situations, such as homebuyer acquisition or where assistance is tied to a bedroom in shared housing. These notices will be published before the effective date of the rule. Also with this rule, HUD will issue a Departmental notice to provide guidance for the Small Rural PHAS and SEMAP scoring processes. At a later date, HUD will publish a third additional notice to implement a process for collecting and utilizing resident feedback as part of the inspection process.

III. Changes Made at the Final Rule Stage

In response to public comments, and in further consideration of issues addressed at the proposed rule stage, HUD is publishing this final rule with the following changes from the proposed rule.

Section 5.703 National Standards for the Condition of HUD Housing

Affirmative Requirements at § 5.703

In the proposed rule, HUD requested comment on the addition of affirmative requirements for ground-fault circuit interrupter (GFCI) outlets, an arc-fault circuit interrupter (AFCI); heating, ventilation, and air conditioning (HVAC) related to a permanent heating source; guardrails; and interior lighting. The final rule includes requirements for GFCI outlets near a water source, a permanent heating source for certain climate zones, guardrails, and permanent lighting in some living areas. In some cases, these requirements only apply to habitable rooms of the unit. HUD defines a habitable room as it is typically defined in model codes: a room in a building for living, sleeping, eating, or cooking, but excluding bathrooms, toilet rooms, closets, hallways, storage or utility spaces, and similar areas. Additional detail on the affirmative requirements will be provided in the NSPIRE Standards and Administrative notices. HUD makes the following changes from the proposed rule to the NSPIRE affirmative requirements:

Application of Affirmative Requirements to Inside and Outside at § 5.703(b) and (c)

In this final rule, HUD is clarifying that some of the affirmative requirements not only apply to “Units” but also apply to Inside and Outside requirements. This final rule applies the requirements for smoke detectors, carbon monoxide detectors, GFCI outlets, guardrails, and lighting to Inside, and applies the requirements for GFCI outlets and guardrails to Outside. HUD also added pipes to the non-exhaustive list of components that provide domestic water in § 5.703(b).

Smoke Detector Requirement at § 5.703(b)(1) and (d)(3)

In the proposed rule, HUD proposed to require that properties follow the National Fire Protection Association Standard (NFPA) 72 or successor standards, consistent with existing statutory obligations. This final rule removes the reference to NFPA 72 and instead lists requirements consistent with NFPA 72. HUD also provides that following these requirements satisfies the specifications of NFPA 72. HUD also adds that properties must follow these standards and additional standards established by HUD through

Federal Register

notification. This clarifies that HUD may adjust its Standards to include additional requirements in the future, such as future added statutory requirements.

Safe Water Requirement at § 5.703(d)(1)

HUD is removing the requirement that water be “potable” from the proposed rule and instead requiring that water must be “safe.” After consideration of comments and further deliberation, HUD believes that these two words are, for the purposes of this rule, duplicative and it is not necessary to use both. HUD is also clarifying that this “safe” requirement applies to drinking water in the kitchen and bathroom and clarifies that the requirement that the unit have “hot and cold” running water applies in both the bathroom and the kitchen.

Sanitary Facility and Kitchen Area Requirements at § 5.703(d)(2) & (d)(4)

In the proposed rule, HUD requested comment on whether to define a “sanitary facility” and “kitchen area.” After considering comments, HUD has included additional language in the regulations for both terms at the final rule stage; this new language serves the same function as the definition suggested in the proposed rule for comment. HUD is requiring that sanitary facilities (or bathrooms) include a sink, a bathtub or shower, and an interior flushable toilet. HUD is removing the requirement that the sanitary facility be “adequate for personal hygiene and the disposal of human waste” because listing these elements adequately covers this same requirement. HUD is also requiring that kitchens must include a sink, cooking appliance, refrigerator, food preparation area, and food storage area.

Removal of the Occupancy Requirement Related to Children of the Opposite Sex From § 5.703(d)(5)

In this final rule, HUD is removing the requirement at § 5.703(d)(5) for units assisted under HCV or PBV that children of opposite sex may not be required to occupy the same bedroom or living/sleeping room. HUD views the restriction based on gender to be unnecessary and unrelated to physical conditions, and wanted to provide more flexibility to families and PHAs to determine the number of bedrooms needed as part of determining the payment standard. Removal of the term

“opposite sex” is also consistent with the January 20, 2021, Executive Order on “Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation.” This language also avoids the implication that PHAs must inquire about gender identity to determine occupancy.

Addition of Carbon Monoxide Detection Requirement at § 5.703(d)(6)

Section 101, “Carbon Monoxide Alarms or Detectors in Federally Assisted Housing” of Title I of Division Q, Financial Services Provisions and Intellectual Property, of the Consolidated Appropriations Act, 2021, Public Law 116-260, 134 Stat. 2162 (2020) (“2021 Consolidated Appropriations Act”) included amendments to sections 3(a) and 8 of the United States Housing of 1937 (42 U.S.C. 1437a(a) and 42 U.S.C. 1437f) (1937 Act), section 202(j) of the Housing Act of 1959 (12 U.S.C. 1701q(j)), and Section 811(j) and 856 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013(j) and 42 U.S.C. 12905). These amendments, which took effect on December 27, 2022, concern the installation of Carbon Monoxide alarms or detectors in public housing owned or operated by a PHA, dwelling units occupied by individuals with Housing Choice Vouchers, dwelling units assisted with project-based vouchers or project based rental assistance, dwelling units assisted under the 202 and 811 programs, and dwelling units assisted under the HOPWA program. In the proposed rule, HUD stated its intent to publish a separate proposed rule concerning the implementation of requirements to install carbon monoxide detectors in HUD-assisted and -insured Housing. HUD is still considering a proposed rule which would implement carbon monoxide detectors beyond what is now required by statute. In this rule, however, HUD has determined to make conforming changes so that the regulations of the programs covered by NSPIRE include the new statutory carbon monoxide detector requirement for each program. Because these conforming rule changes merely codify the new statutory requirements, HUD has determined that additional notice and public comment procedure is unnecessary.

Additionally, HUD notes that the 2021 Consolidated Appropriations Act only adds carbon monoxide-related requirements to the HUD programs listed above and the USDA programs authorized by sections 514 and 515 of the Housing Act of 1949. HUD programs such as HUD-insured housing not subject to an assistance contract and the ESG, CoC, HOME, and HTF programs are not subject to statutory requirements concerning carbon monoxide detection. HUD has made corresponding changes at the final rule stage in §§ 92.251(b)(1)(viii), 93.301(b)(1)(viii), 576.403(c), 578.75(b) to clarify that these units will not be subject to the new carbon monoxide requirements. HUD urges grantees, owners, developers, and project sponsors in these programs to take action for the safety of residents and reminds them that there may be additional property standard requirements under applicable State and local laws regarding carbon monoxide detection.

Finally, HUD notes that this final rule only implements the statutory carbon monoxide detector requirement for programs covered under NSPIRE. However, programs not covered by NSPIRE are still subject to the statutory requirement where applicable. Specifically, the statutory requirement covers all of HOPWA, but NSPIRE only applies where HOPWA funds are used under § 574.300(b)(3), (4), (5), and (8). HUD intends to modify the HOPWA regulations to reflect the existing statutory requirement in a future rulemaking related to HOPWA.

Other Changes to § 5.703

Addition of Example Unit Components at § 5.703(d)

HUD is including balconies, carbon monoxide devices, and enclosed patio to the non-exhaustive list of components which may be included in a unit.

Addition of “Structural Soundness” and “Extreme Temperature” Health and Safety Concern Examples at § 5.703(e)(1)

HUD has added structural soundness to the non-exhaustive list of health and safety concerns at § 5.703(e)(1) previously required under § 576.403(c)(1).

HUD has also added “extreme temperature” to the non-exhaustive list of health and safety concerns at § 5.703(e)(1). HUD considers the failure to provide an adequate heat source to prevent extreme cold a deficiency as described in the NSPIRE Standards notice. By adding this language to the regulation and NSPIRE Standards, HUD further implements HOTMA Section 111, which required HUD to publish model guidelines for minimum heating requirements for public housing. As part of the consolidation under NSPIRE, HUD is removing § 982.401(e) regarding the thermal environment and making this addition here. HUD has added language from § 982.401(e) prohibiting the indoor use of unvented fuel-burning space heaters in § 5.703(b) and (d).

Addition of “Carbon Monoxide” as a State and Local Requirement at § 5.703(f)(1)

At this final rule stage, HUD is adding “carbon monoxide” as an example in its non-exhaustive list of examples of State or local requirements that are not superseded by these regulations. This change has no substantive effect.

Section 5.705 Inspection Requirements

Inspection Standards Notice Clarification at § 5.705(a)(1)

In the final rule, HUD clarifies that in addition to the standards and procedures for identifying safe, habitable housing being set out by the Secretary and published in the

Federal Register

, HUD will also provide the scoring and ranking for HUD housing by publication in the

Federal Register

. HUD has also added language identifying the different levels of deficiency which will be used in the NSPIRE Standards notice.

Correction of Typographical Error at § 5.705(b)(2)

In the final rule, HUD corrects a citation in the proposed § 5.705(b)(2) which cited to “§ 982.352(b)(iv)” but should have cited to “§ 982.352(b)(1)(iv).” HUD instead cites to parts 982 and 983 generally.

Timing of Inspections at § 5.705(c)(1) and (c)(2)

HUD has added language to § 5.705(c)(1) clarifying that HUD may approve extension requests for good cause as determined by HUD. In HUD's experience, inspections occasionally need to be rescheduled due to events outside the owner's or PHA's control or for other reasons which would cause the extension request to be justified. HUD has also added language making clear that HUD may extend inspection deadlines without the PHA or owner's request, to account for situations in which HUD decides to grant a general extension, such as in an emergency situation.

HUD is also removing from paragraph (c)(1) the restriction that inspections must be done in the calendar year in which they are due. HUD does not find that this restriction is necessary or important to ensuring timely inspections, nor does it serve another administrative purpose.

In paragraph (c)(2), HUD proposed a default annual inspection for Multifamily and project-based housing,

with the potential for alternative timelines for inspection, such that a property or project may be inspected on a timeline between two and five years. After considering comments and reviewing inspections, HUD believes that such an extended timeline as four or five years would, in most cases, be too long to adequately review HUD-assisted housing. HUD believes that the current “3-2-1” approach utilized in Multifamily and Public Housing properly allocates HUD inspection resources to ensure the regular inspection of all properties while prioritizing those properties which require additional oversight. Properties of PHAs that meet the definition of Small Rural under § 902.101 will be inspected every three years, as described in § 902.103(b).

Addition of Citation Regarding Small PHAs at § 5.705(c)

In § 5.705(c)(4), HUD is adding a citation to § 902.13(a) to clarify that small PHAs shall continue to be inspected in accordance with the relevant regulation, and in paragraph (c)(8), HUD is adding a citation to § 882.516 to clarify that Section 8 Moderate Rehabilitation housing shall continue to be inspected under its own regulation.

Tenant Involvement in Inspections at § 5.705(f)

This final rule adds § 5.705(f) stating that HUD will allow, through notice, for tenant involvement in the inspection process of Public Housing and Multifamily housing programs by making recommendations regarding particular units to be inspected. Any units inspected in addition to the standard unit sample will not be part of the property's score, but the owner or PHA will be required to repair any identified deficiencies. HUD has made this addition after consideration of public comments regarding tenant involvement and the aim to balance the need for tenant input with the procedural integrity of the inspection process.

Section 5.707 Uniform Self-Inspection Requirement and Report

HUD is revising § 5.707 to remove the electronic reporting requirement of self-inspections, and is instead requiring that the owner or PHA maintain records related to the self-inspection for three years. HUD agrees with commenters who suggested a universal reporting requirement for self-inspection results would pose an additional administrative burden. Additionally, HUD has removed language from § 5.707 that offered an additional announcement and opportunity for public comment in the

Federal Register

. This language was removed because HUD will not use the results of self-inspections as proposed to determine risk or the frequency of REAC inspections. The results of self-inspections will also not affect a property's score. Because the final version of the self-inspection requirement largely reflects current requirements for Public Housing and Multifamily programs and properties that score under 60, there is no need for additional comment. The process to perform self-inspections will be in the NSPIRE Administrative notice, which will be published without comment. For properties scoring below 60, HUD believes that this information would be uniquely useful as a tool to ensure all deficiencies are identified and corrected. HUD is also adding language to allow properties the option to perform the self-inspection in conjunction with the follow up inspection at § 5.711(c)(2). HUD has added additional language to § 5.711(c)(2) to clarify the post-inspection survey process and the self-inspection requirement related to the inspection score.

Section 5.709 Administrative Process for Defining and Revising Inspection Criteria

HUD is amending § 5.709 at the final rule stage to make two clarifying changes. First, HUD is distinguishing between the Standards notice and the Scoring notice. In the proposed rule, both were discussed as though they would be one notice. However, Standards and Scoring represent two distinct elements of the assessment of HUD housing, and HUD is publishing separate notices. Both notices are subject to the same procedures.

Second, HUD is clarifying, consistent with the proposed rule's discussion of the matter, that HUD will publish its Standards and Scoring notices “at least” once every three years, to make clear that HUD may publish its notices before it has been three years, at HUD's discretion.

Section 5.711 Scoring, Addressing, and Appealing Findings

Change to the Name of § 5.711

HUD is renaming § 5.711 to more accurately reflect the purpose of this section.

Changes to Deficiency Terminology at § 5.711(c)

HUD is revising the different levels of deficiency to Life-Threatening (LT), Severe, Moderate, and Low. This change is reflected in the proposed NSPIRE Standards notice and HUD is also amending § 5.709(a)(2)(i) for consistency with this change. As discussed further in the NSPIRE Standards and Scoring notices, Low deficiencies are deficiencies which are critical to habitability but do not present a substantive health or safety risk to a resident. HUD is requiring that Low deficiencies be repaired within sixty days unless specified otherwise in the NSPIRE Standards.

Meaning of Correction at § 5.711(c)(1)

HUD also amends § 5.711(c)(1) to require that LT and Severe items must be “corrected” instead of mitigated. In the context of § 5.711, “corrected” means the owner or PHA has resolved or sufficiently addressed the deficiency in a manner that it no longer poses a severe health or safety risk to residents. A correction could include controlling or blocking access to the hazard by performing a temporary relocation of the resident while repairs are made.

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HUD recognizes that to permanently repair some deficiencies, the PHA or owner may need additional time for a licensed professional, or supplies that may not be available in a 24-hour timeframe. In some cases, for lead hazard control work, exterior paint stabilization can be delayed due to season conditions, or the resident family may need to be relocated temporarily while the work is completed, and HUD can approve extensions based on good cause.

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Additional information will be provided in the subordinate NSPIRE Standards and Administrative notices. For LT and Severe defects, HUD expects that permanent repairs will be completed expeditiously, and that evidence of the repair will be provided to HUD as described in § 5.711(c)(2). HUD has also removed the word “contiguous” from paragraph (c)(1) as unnecessary. In practice, PHAs, owners and HUD all understand that the 24-hour timeframe commences immediately upon notification and does not pause for non-working hours, including the weekend.

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HUD notes that correction of a LT deficiency has a specific meaning under HOTMA. § 5.711 does not apply to HCV or PBV, and therefore this definition of “corrected” does not apply to HCV or PBV.

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Relocation for lead hazard control work may be required under 24 CFR 35.1345 and is subject to the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.

Timeline for Correction at § 5.711(c)(1)

HUD also amends § 5.711(c)(1) to clarify the timeline for the correction of health or safety deficiencies. The

timeline for correcting LT and Severe health or safety deficiencies remains 24 hours after the inspection. The timeline for repairing Moderate and Low deficiencies has been revised from “expeditiously” to “within 30 days,” consistent with HUD's intent as stated in the preamble of the Proposed Rule. HUD can authorize permanent repair timelines that exceed 30 days if the deficiency cannot be permanently repaired in 30 days.

The NSPIRE Standards provide HUD's expectations regarding the timeline for repair of each type of deficiency. HUD will not change the requirement that LT health and safety deficiencies must be corrected within 24 hours. Under the NSPIRE Standards, for the Public Housing and Multifamily housing programs, Severe will also require correction in 24 hours.

Post-Report Inspection at § 5.711(c)(2)

HUD is removing the requirement that owners or PHAs provide electronic evidence of correction of Moderate deficiencies as HUD believes, after considering comments, the burden both of reporting and processing this evidence would outweigh the benefit. Paragraph (c)(1) continues to require evidence that Severe deficiencies have been corrected be provided to HUD within established timeframes. HUD is also adding a requirement that properties which score below a 60 must complete a full self-inspection, and not the limited self-inspection described in this regulation for identified deficiencies in units and areas of the property not inspected by REAC. This addition is necessary to ensure that owners and PHAs survey 100 percent of their properties when they have poor physical performance (

i.e.,

scores below 60) in order to identify additional health and safety defects in the units that were not part of the inspection sample. PHAs and owners that conduct a full inspection after the HUD inspection can consider this inspection to satisfy the requirements of § 5.707 for that year.

Start of the 45-Day Deadline To File a Request for Technical Review at § 5.711(d)(1)

In response to a public comment, HUD is revising § 5.711(d)(1) to clarify that the 45-day deadline to file a request for a technical review begins on the day the inspection report is provided to the owner or PHA.

Basis for Technical Review at § 5.711(d)(4)

Based on comments received, HUD revised § 5.711(d)(4) for clarity and renumbered the three types of material errors appropriately.

HUD is also adding in paragraph (d)(4) the three qualifiers for requesting a database adjustment previously at 24 CFR 902.24. Commenters noted this was inadvertently removed, especially the exclusion of adjustments for modernization work in progress. At this final rule, HUD is combining these three qualifiers for adjustment with the three bases for technical review. These three qualifiers will have the same appeal and review process as the technical review process for errors. Given these revisions, HUD is removing paragraph (c)(3) and removing part of paragraph (e) which HUD believes is repetitive with revised paragraphs (d) and (d)(4).

HUD also removed the term “year built” as an item not scored under § 5.711(d)(4)(i), since a visual lead-based paint evaluation is now part of the NSPIRE inspection, and the results of this evaluation will be scored.

Posting on the Availability of Materials at § 5.711(h)(3)

HUD has revised this section to clarify that the owner or PHA must post a notice to residents on the date of submission to the owner of the inspection score for the property in which the residents reside. The notice must advise the residents of the availability of the inspection materials described in 24 CFR 5.711. HUD is also specifying that the notice must be translated into other languages if necessary to provide meaningful access for limited English proficient (LEP) individuals, consistent with HUD's LEP guidance and Title VI.

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For more information on HUD LEP and Title VI guidance, see “Final Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons”, 72 FR 2731 (Jan. 22, 2007).

Departmental Enforcement Center (DEC) Evaluation at § 5.711(i)

HUD is revising the introductory text of § 5.711(i) to add that HUD will also take administrative review action against properties with two successive scores under 60. HUD also clarifies that while a score of 30 points or less automatically leads to DEC referral, referral is not automatic for the two successive scores under 60. Regarding the two successive scores under 60, HUD recognizes that there may be mitigating circumstances and HUD will take other review actions before HUD decides whether DEC referral is necessary. As proposed, this regulation covered both public and Multifamily housing programs, and HUD has retained this in the final rule and clarified applicability. For public housing properties, HUD recognizes that there are situations where the responsible PHA's PHAS score may have already triggered other forms of administrative review, rendering DEC review repetitive. HUD has also made other minor, technical changes to this paragraph.

No Limitation on Existing Enforcement Authority at § 5.711(j)

HUD has added the term “grant agreement” as an example of a potential authorizing authority.

Sections § 92.251 and 93.301 Property Standards

HUD has removed the clause, “pursuant to 24 CFR 5.705,” from §§ 92.251(b)(1)(viii), 92.251(c)(3), 92.251(f)(1)(i), 93.301(b)(1)(viii), 93.301(c)(3), and 93.301(e)(1)(i) because the requirements in 24 CFR 5.705 through 5.713 do not apply to HOME participating jurisdictions (PJs) under 24 CFR part 92 or HTF grantees under 24 CFR part 93. HUD included the clause in the proposed rule in these sections of 24 CFR part 92 and 24 CFR part 93 only to refer to the part in § 5.705 describing inspection standards and procedures that would be published in the

Federal Register

. However, to avoid further confusion, HUD is removing the clause. HUD will publish the specific deficiencies that must be addressed by HOME PJs and HTF grantees and explain how the requirements in 24 CFR 5.703 apply to PJs and HTF grantees in a standards document published in the

Federal Register

. This standards document for HOME and HTF will be separate from, although similar to, the NSPIRE Standards notice and apply only to HOME and HTF.

HUD is also making changes to these sections to clarify that “decent, safe, sanitary, and in good repair” means compliance with § 5.703 and deleting “as referenced in § 5.703” because § 5.703 does not use this term.

HUD is also making clarifying changes that the affirmative requirements at § 5.703 apply to single-room occupancy (“SRO”) housing where the housing contains the room or facility referenced in the affirmative requirements. This is necessary, for instance, where the SRO does not contain its own restroom and therefore does not need to meet affirmative requirements related to restrooms.

HUD is also revising §§ 92.251(f)(1) and 93.301(e)(1) to clarify that any property standards established by a participating jurisdiction must “require” instead of “ensure” that the

owners maintain the housing as decent, safe, sanitary, and in good repair. HUD believes that these two words, in this context, have the same meaning, but has made the change to make the requirement clear.

Sections 92.504 and 93.404 Regarding Inspectable Areas

HUD has revised the language in § 92.504(d)(1)(ii)(D) and § 93.404(d)(2)(v) to describe “inspectable areas for each building housing HOME-assisted units.” The regulation previously required that for HOME projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect “100 percent of the HOME-assisted units” and 100 percent of the “inspectable items (site, building exterior, building systems, and common areas) for each building housing HOME-assisted units.” However, the parenthetical described the inspectable areas (

e.g.,

site, building exterior, building systems, and common areas) within a HOME project and not “inspectable items.” In this final rule, HUD is correcting the language to require that when projects of one-to-four units are being inspected by the participating jurisdiction or HTF grantee, all of the units and 100 percent of the inspectable areas for each building must be inspected by the PJ or HTF grantee.

Section 570.208 Criteria for National Objectives

This final rule also updates an outdated citation in § 570.208(b)(1)(iv) to create a standard for determining whether Community Development Block Grant (CDBG) funds were used to rehabilitate a substandard residential building. Section 570.208(b)(1)(iv) describes whether an assisted activity is considered to have met the public benefit standard for an activity to address slum or blight on an area basis. One of the criteria for determining whether a CDBG-assisted activity qualifies as an area benefit standard is that the assisted activity must eliminate substandard housing, which is housing that would also fail to meet the housing quality standards for the Section 8 Housing Assistance Payments Program—Existing Housing (24 CFR 882.109).

On April 30, 1998, the final rule entitled “Section 8 Certificate and Voucher Programs Conforming Rule” removed and reserved 24 CFR 882.109 as part of comprehensive rulemaking where HUD revised 24 CFR part 882 to move requirements applying to the Section 8 voucher and certificate programs into 24 CFR part 982 and 983.

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Therefore, this citation is out of date. This final rule updates the citation in § 570.208(b)(1)(iv) from 24 CFR 882.109 to 24 CFR 5.703. This change is technical in nature, and HUD believes that this is an appropriate technical correction to incorporate into this final rule.

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63 FR 23826 at 23854.

Section 574.310 General Standards for Eligible Housing Activities

At the final rule stage, HUD is removing certain housing covered under HOPWA from applicability from NSPIRE. Specifically, HUD is removing from § 574.310(b) NSPIRE's applicability to housing for which HOPWA funds are used under permanent housing placement to pay an eligible person's security deposit, utility hookup and processing costs, or move in costs, except rental application and credit check fees (§ 574.300(b)(7)). HUD has decided to no longer include stand-alone permanent housing placement (§ 574.300(b)(7)) due to the administrative burden it would place on HOPWA housing assistance providers for these one-time costs. Many HOPWA grantees utilize permanent housing placement in combination with the other permanent housing activities that will be subject to the HUD housing standards under the NSPIRE rule.

Section 576.403 Shelter and Housing Standards

For clarity and consistency, HUD is revising the organizational structure of the proposed § 576.403 consistent with the format of § 574.310(b)(2). HUD is also clarifying in § 576.403(c)(2) that the exemption from requiring self-inspection prior to move in for the first thirty days does not exempt the requirement under part 35 to inspect for lead-based paint.

Part 880—Section 8 Housing Assistance Payments Program for New Construction

In the proposed rule, HUD proposed to amend § 880.612 to require that contract administrators inspect projects to determine compliance with part 5, subpart G. Since the proposed rule was published, § 880.612 was modified by HUD's “Streamlining Management and Occupancy Reviews for Section 8 Housing Assistance Programs” rule.

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Because of this change, HUD is now choosing not to amend § 880.612. Part 880 is already made subject to part 5, subpart G through § 880.104(d), which states that “the provisions of 24 CFR part 5 apply to all projects [under this part.]” Therefore, no substantive change is made by the decision not to amend § 880.612.

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87 FR 37990 (June 27, 2022).

Section 884.217, 886.123, 886.323 Maintenance, Operation, and Inspections

HUD is making a technical edit to §§ 884.217(b), 886.123(b), and 886.323(c). The previous regulation required the owner and family to certify before move-in that the unit had been inspected by both parties and the unit was decent, safe, and sanitary. The proposed rule, consistent with other changes, proposed changing “decent, safe, and sanitary” to read “compliant with part 5, subpart G.” HUD does not intend to require that a family is familiar with HUD's housing requirements to certify compliance. Therefore, for clarity, HUD has revised the regulation to require that only the owner must certify compliance with part 5, subpart G. Both parties must still certify that they have each inspected the unit. Families are still entitled and encouraged to identify any deficiencies they believe may exist and, where an owner fails to make repairs, report those deficiencies to HUD.

Section 902.3 Definitions

At the final rule stage, HUD is removing the definition of “Subarea” from § 902.3. As discussed further in HUD's proposed Scoring notice, HUD is not using “Subareas” in NSPIRE. HUD is also making a technical revision to the definition of “Inspectable item” to remove the reference to the “Item Weights and Criticality Levels document”, which no longer exists (as discussed in the proposed rule) under NSPIRE.

Section 902.13 Frequency of PHAS Assessments

The proposed rule removed from § 902.13(b)(2) language relating to inspection frequency under PHAS and replaced it with a citation to § 5.705(c). Incidentally, this change removed language clarifying that, for properties with a physical inspection score at or above 80—

i.e.,

properties scored less than annually—the most recent physical inspection would be used in calculating the overall PHAS physical condition indicator score for a given fiscal year.

At this final rule stage, HUD has revised § 902.13(b)(2) to clarify that HUD will use the most recent physical inspection score for all properties, regardless of inspection frequency, in calculating the PHAS physical condition indicator score. Section 5.705(c), which provides the requirements for the timing of

inspections, does not tie inspections to a particular fiscal year. Therefore, this revision makes clear that an inspection does not have to occur during the PHA's assessed fiscal year to be included in that fiscal year's PHAS score Troubled PHAs will continue to be assessed annually as previously required by § 902.13(b)(3).

Additionally, this final rule adds language to § 902.13(b)(2) regarding the transition from UPCS-based physical condition indicator scores to NSPIRE-based scores. For simplicity, and to prevent technical issues related to calculating scores using both the old UPCS system and the new NSPIRE system, HUD will not provide a PHAS physical condition indicator score that uses both UPCS scores and NSPIRE scores in its calculation. Instead, starting July 1, 2023, PHAs will keep their most recent physical condition indicator score until every public housing property associated with the PHA has been inspected under NSPIRE. After every property under a PHA has received an NSPIRE inspection, the PHA will receive a new physical condition indicator score which will exclusively use NSPIRE inspections in its calculation. After this transition period, scores will be calculated using the normal method laid out in § 902.13(b)(2). This exception does not apply to small PHAs under § 902.13(a) or to small rural PHAs under part 902, subpart H. These PHAs have a relatively small number of buildings compared to PHAs covered by § 902.13(b)(2) and inspections of these buildings are usually more coordinated in a specific period of time. Therefore, while this exception does not apply to these PHAs, HUD intends to ensure that all properties under small and small rural PHAs receive an NSPIRE inspection before calculating a PHA's new physical condition indicator score.

Section 902.103 Public Housing Assessment of Small Rural PHAs

HUD is revising § 902.103(a) to add one additional point for physical condition and neighborhood environment to better align the small rural PHAS regulation with the ordinary PHAS assessment. This additional consideration ensures consistency with 42 U.S.C. 1437d(j)(1), which acknowledges the differences in the difficulty of managing individual projects that result from their physical condition and their neighborhood environment. HUD is also revising the parenthetical examples in paragraphs (c)(1) and (2) to only provide one example to avoid implying that the list of examples is exhaustive.

Section 902.107 Withholding, Denying, and Rescinding Troubled Designation

The final rule includes Conciliation Agreements as a type of special agreement with HUD in § 902.107(a)(1) because a Voluntary Compliance Agreement refers to agreements under Section 504, Title VI, and the ADA, whereas Conciliation Agreement refers to agreements under the Fair Housing Act.

Section 983.101 Housing Quality Standards

In the proposed rule, HUD proposed to replace all of § 983.101 with a citation to § 5.703. After further consideration, HUD has decided, for clarity, to keep the entirety of § 983.101 in place, and to revise paragraph (a) to cite to § 5.703. HUD also makes minor conforming edits to paragraphs (b) and (c).

Section 985.205 Determination of Assessment Rating

HUD has revised the proposed § 985.205(a)(1)(i) at the final rule stage to add that a small rural PHA will be judged based on the last two years of HCV budget authority data. HUD has made this change because, for some PHAs, the sample size would be too small to rely on one year only as an accurate picture of the PHA's performance. The increased review period will improve a PHA's ability to achieve 98 percent in related indicators.

Conforming Changes

HUD makes the following conforming changes which do not impose or change substantive requirements.

Terminology in Part 5

In the proposed rule, in certain places HUD inadvertently used the term “owner” when the correct term should have been “owner or PHA.” There are also instances in the proposed rule where HUD used the term “public housing” when the correct term should have been “HUD housing”, which includes all the programs listed in § 5.701(a). HUD has corrected the terminology, where appropriate, in this final rule.

Sections 884.217 and 886.123

HUD is also making minor changes to the proposed §§ 884.217(c) and 886.123(c). HUD is removing language regarding the sample of units to be inspected and removing language regarding the frequency of inspections to ensure that these paragraphs are consistent with each other, and consistent in applying part 5, subpart G.

Part 965, Subpart I—Fire Safety

This final rule removes part 965, subpart I regarding fire safety. This subpart applied fire safety regulations to public housing. The NSPIRE rule applies these same requirements to public housing, rendering this subpart redundant.

Sections 982.402 and 982.618

This final rule updates part 982 to remove citations to paragraphs in § 982.401 to reflect the update to § 982.401.

Part 982, Subpart M—Special Housing Types

This final rule amends 24 CFR part 982, subpart M, which lays out alternative and additional requirements to the Housing Quality Standards. This final rule makes no substantive changes to subpart M, but only updates and removes citations and references to the Housing Quality Standards consistent with the changes proposed and now made. This is consistent with § 5.703(h) of both the proposed and final rule, which states that special housing types under part 982, subpart M are subject to different and additional requirements.

Part 983—Project-Based Voucher (PBV) Program

This final rule amends § 983.2(c)(4) to remove the citation to “§ 982.401(j),” which was removed in both the proposed and final rule. This does not change the lead-based paint obligations which apply to the part 983, as discussed at § 983.4.

IV. Public Comments

General Support Comments

Several commenters expressed general support for the changes in the proposed rule. A commenter stated that the rule would advance affordable housing. Another commenter anticipated a responsive real-life process to effect improvement in housing standards. Another commenter stated that the proposed rule would be an avenue for managing the workload and incentivizing properties that perform well, and also as a way for HUD to manage its own backlog of inspections. A commenter stated that there are many communities that do not enforce code regulations but having all agencies on the same platform would help local officials understand what is needed. One commenter supported the decreased subjectivity and increased accuracy of the proposed rule to achieve positive outcomes. Commenters also supported HUD's NSPIRE demonstration.

HUD Response:

HUD appreciates this input and support for the changes in the rule. HUD agrees that having focused, objective, accurate and up to date regulations, processes, and standards can help achieve positive outcomes for millions of families while at the same time improving the way HUD operates. In this final rule, HUD has largely maintained the same framework as in the proposed rule.

Additional General Support Comments

Commenters expressed support for HUD's dedication to seeking stakeholder feedback. One commenter supported HUD engaging with the public to address the industry's difficulties with existing inflexibility on technical, mechanical, and engineering issues that have limited impact on the safety and habitability of existing structures but absorb a disproportionate amount of time and difficulty on sites. Another commenter stated that HUD has made clear that equity and transparency are key goals for this rule. One commenter noted that, while it is important that HUD lays out an expansive framework at the Federal level, it will be important that HUD works frequently with public authorities as they facilitate this transition to promote efficiency while limiting administrative burden when possible. A commenter urged HUD to expand outreach to include residents, State and local code enforcement agencies, legal service attorneys, housing advocates, public health advocates, and environmental justice advocates, to make enforcement effective and efficient.

HUD Response:

HUD thanks commenters for their input on this topic. HUD continues to improve outreach efforts and obtain feedback from stakeholders and the general public. HUD agrees that equity and transparency are key considerations in this rule. HUD has retained the requirement at § 5.709(a)(1) to regularly revisit the requirements through public comment, allowing all stakeholders an opportunity to be heard. HUD also believes outreach efforts should include residents, State and local code enforcement agencies, and other housing stakeholders and advocates and continues to seek their feedback through this rulemaking process. The proposed NSPIRE Standards notice was posted for comment on June 17, 2022, for 45 days for public comment. HUD considers these comments important in finalizing the Standards notice. To promote feedback and encourage transparency, HUD also published information on the NSPIRE demonstration effort on its website and sought feedback from participants through the demonstration.

Residents of HUD-assisted housing were encouraged to comment as members of public, but also through other available opportunities for participation. In public housing, residents can participate in resident advisory councils and attend regular meetings held by their Board of Commissioners. Board members are typically appointed by elected officials and include at least one resident member. All members of the public, including legal service attorneys and housing and public health advocates, can report housing standard violations or other concerns to HUD offices. A list of contacts for HUD's local offices can be found at

https://www.hud.gov/local.

Economic Growth and Recovery Act

Question for Comment #1: Standards for Small Rural Section 8 Projects and PHA Public Housing Projects

Commenters recommended that HUD follow Congress's intent to provide less burdensome regulations for small PHA properties. One commenter supported HUD's proposal to align standards for small rural PHAs. Another commenter supported taking an expansive view and defining “standards . . . for the acceptable condition of public housing projects” to mean the entire NSPIRE model. A commenter also recommended HUD provide more technical assistance options for small rural PHAs. One commenter suggested the same standards should apply to all projects to ensure fair and equitable living conditions across PHAs.

A commenter stated that Housing Quality Standards (HQS) inspections for Section 8 properties were more consistent and objective than the Uniform Performance Condition Standards (UPCS) inspection protocol used for their public housing properties, and therefore small rural agencies should be allowed to use the HQS protocol to comply with inspection requirements. This commenter recommended that if HUD determines that maintaining HQS inspection protocols for small rural agencies is infeasible, then HUD should allow public housing units at small rural agencies to be inspected similar to Section 8 properties.

HUD Response:

Through this rule, HUD is adopting the statutory requirement for specific relief for small rural PHAs but requires that properties of these PHAs will be assessed using the NSPIRE standards for physical conditions in both the Public Housing and HCV programs. The changes will apply to PHAs as described in 24 CFR part 902, subpart H and 24 CFR part 985, subpart D. HUD declines to implement the recommendation to utilize Housing Quality Standards (HQS) for small rural PHAs. One of HUD's objectives is to align standards across numerous housing portfolios, and with this rule the HQS regulations incorporate the NSPIRE standards and refer to § 5.703. HUD believes that the NSPIRE standards provide more consistent and objective criteria with which to evaluate the safety and habitability of HUD-assisted housing. Residents that live in units managed by small rural PHAs should be provided the same level of safety and habitability as residents of other 572 public or HUD-assisted housing.

As proposed and now made final, HUD will make the initial determination of PHAs that qualify as small rural as defined in § 902.101 of this title no later than 120 days after the effective date of the final rule for Public Housing, or July 30, 2023. Additional deregulation efforts for other small PHAs are outside the purview of this rule but could occur through future rulemaking including updates to the Public Housing Assessment System (PHAS). Relief under this rule is provided in 24 CFR part 985, subpart D and a new subpart H under the current 24 CFR part 902. Section 902.103(b) includes a three-year cycle for overall scoring based on physical conditions for non-Troubled small rural PHAs.

HUD agrees with the need to align standards for small rural PHAs for Public Housing and Section 8 properties with other PHAs, and this rule provides the framework for this alignment to the NSPIRE standards. The NSPIRE standards were proposed for comment on June 17, 2022, and final standards will be published before this rule's effective date. Additional implementing information for the new standard, including the process for PHAS rule and SEMAP assessments, will be provided through a Departmental notice. HUD plans to provide more technical assistance for small rural PHAs with the administrative notice.

Section 5.701 Applicability

Commenters stated that the proposed rule should be broad in scope. Two commenters suggested expanding applicability to include tax credit communities and Section 232 properties. Another commenter welcomed HUD's efforts to codify uniform standards across HUD-assisted housing, noting that establishing uniformity will help empower residents to navigate different HUD assisted

housing systems over time and also improve the interface with local code inspection agencies, who otherwise may have to navigate conflicting standards and expectations across HUD programs.

A commenter expressed concern that the proposed rule does not take into account the differences between insured housing and affordable housing, pointing out that some types of HUD-insured housing,

e.g.,

assisted living and nursing homes, are subject to various State-imposed requirements and regulations. One commenter suggested that HUD should clearly state which specific program regulations are superseded or supplemented elsewhere, noting that part 5 may become the first stop a PHA, owner, or owner/agent (“POA”), member of the public, or other interested party makes to find housing quality regulations, and it may be their last stop if they are not directed to other applicable regulations. The commenter stated that absent this direction, individuals will have to cross-check program regulations manually which could lead to unnecessary confusion.

HUD Response:

HUD agrees with the comments about the scope of the rule and believes that the rule improves the consistency and uniformity of housing standards for HUD-assisted programs given its broad applicability to all HUD-assisted residential properties and units. In order to ensure regulated parties know which standards apply to them, this rule revises specific program regulations to reference the new NSPIRE standards. The framework for evaluating physical condition addresses safety and habitability regardless of the type of HUD-assisted housing.

This rule applies to all types of HUD housing including health care facilities insured under Section 232 of the National Housing Act and Low-Income Housing Credit (LIHTC) properties receiving some form of HUD assistance and other properties under a HUD-assisted housing contract (

e.g.,

annual contributions contract). HUD does not have authority to create rules that apply to the Department of Treasury's Internal Revenue Service LIHTC and therefore cannot apply this rule to the LIHTC generally, but can apply this rule whenever the LIHTC property also receives some form of HUD-assistance. HUD will engage other Federal agencies with potentially overlapping subsidies to further evaluate the applicability of the NSPIRE rule to these other Federal housing subsidy types.

With respect to conflicting standards and expectations, HUD physical condition requirements have always overlapped with State and local physical condition standards and sometimes exceed these standards. In other cases, State and local standards exceed HUD standards. This rule does not change the proposed § 5.703(f) which states that for all covered programs, the NSPIRE Standards for the condition of HUD-assisted housing do not supersede State and local Housing codes. This rule establishes nationwide Federal minimum requirements for HUD-assisted housing and does not attempt to unify or preempt State and local housing standards. Because all HUD-assisted housing must meet the NSPIRE rule requirements, residents and other HUD-assisted housing stakeholders should have a nationwide expectation for the safety and habitability of housing; however, it will continue to be necessary to review all other applicable requirements including Federal accessibility requirements and State and Local requirements.

Section 5.703 Inspection Standards

Comments Regarding Alignment and Streamlining of Standards

Commenters expressed support for the alignment of standards and inspection processes, stating that this would have a positive impact on properties with mixed financing or subsidy layering, eliminate the need to subject residents to multiple, separate oversight mechanisms, and reduce administrative and cost burden to owners and agents. Commenters supported the proposed rule's streamlining of the number of inspection categories and focus on the condition of individual units and stated that this approach is more aligned with municipal laws governing health and safety in rental housing. A commenter supported moving away from “curb appeal” deficiencies toward “substantial safety deficiencies,” while another commenter supported the linguistic change from “exigent health and safety” to “severe health and safety” deficiency, as reducing bias and variability in the inspections process.

One commenter noted that federally assisted rental properties are in varying states of disrepair with multiple deficiencies, and suggested that irrespective of the housing program HUD might require the same standards to be applied across the board, and according to the housing program requirements, require different levels of risk management measures or approaches to address the health and safety risks posed by the identified hazards.

One commenter stated that the proposed rule lacks coherence between HUD standards and other groups' standards. The commenter further stated that given how housing has been contracted out and privatized, it can be more difficult to assess program-assisted housing.

HUD Response:

HUD agrees with commenters that the regulatory consolidation, use of consistent standards across housing program, and program alignment within this rule will allow HUD and regulated entities to realize administrative benefits.

HUD agrees with commenters that the rule will reduce the administrative and cost burden to owners while improving the habitability and safety of HUD-assisted properties and units, which are not mutually exclusive objectives. HUD evaluated many other third-party organization standards and believes its standards are consistent with industry best practices for residential real estate. This rule provides a consistent means of assessing all types of HUD-assisted housing.

This rule will align all listed HUD-assisted programs under the NSPIRE Standards that were proposed on June 17, 2022 and will be final before the effective date of this rule. Resolution of identified deficiencies will be mostly consistent with resolution of deficiencies under the UPCS and HQS standards but scoring and pass/fail decisions will be driven by the NSPIRE program requirements and applicable statutes. With this consolidation, HUD will better focus on habitability and the health and safety of residents.

Minimum Habitability Requirements

A commenter agreed with the idea of reinforcing the importance of minimum habitability requirements and adding the word “safe” to the existing rule and suggested that “safe” take on issues regarding lead exposure and mean “protected from the amount of exposure that will cause harm or damage after exposure.”

HUD Response:

The term “safe” has been, and will continue to be, an important term for HUD inspection standards. This rule will reinforce the priority of maintaining a safe and habitable dwelling. HUD declines to adopt additional language around lead exposure in this regulation, as it is covered by 24 CFR part 35.

Environmental Factors

A commenter noted that “standard public health and safety metrics related to morbidity and mortality” are largely foreign to housing providers, and whether they align well with the unique environment of housing maintenance and management is unknown. This commenter agreed that the built

environment's effect on the health and safety of residents is more important than any building damage that is strictly cosmetic in nature but cautioned that HUD must ensure that protocols reflect that PHAs are constrained by funding and other funding priorities.

A commenter suggested HUD require inspection of roofs, foundations, storm water runoffs, trash receptacles, ERV systems, heat pumps, and air ducts. This commenter further suggested HUD require screens to prevent bugs, and humidity and environmental control to avoid unnecessary power bills. Another commenter stated that HUD must specifically consider hazards created by the outside environment and their effects on subsidized properties and on the low-income tenants who reside in these developments or are eligible to live there, and that the comment period should either be extended, or a new comment period opened, to specifically consider these important factors. This commenter suggested specifically that HUD should include 24 CFR 982.401(l) in the regulations, as well as 24 CFR 982.401(h), and other environmental hazards considerations (

e.g.,

the proximity of the property to large polluters and transportation infrastructure, toxins in the soil and water, and the area's air quality).

A commenter proposed several additions to address general health and safety concerns. The commenter suggested that HUD address toxic mold and indoor air, largely caused by water leaks and poor ventilation in aging housing stock, by equipping REAC inspectors with moisture meters to detect moisture behind walls that may signal plumbing or roof leaks that cause mold. The commenter also suggested adding and/or revising requirements around a number of health and safety issues, including clogged ventilation; presence of asbestos/radon; presence of lead-based paint; presence of mice, rats, bedbugs and roaches. Finally, the commenter recommended that HUD re-adjust or remove the Point Loss Caps to allow for accurate deductions for deficiencies. The commenter opined that the practice artificially inflates REAC scores, negates the point of a “random sample,” and is inherently biased against the health and safety of residents.

Commenters also focused on the issue of water-borne lead poisoning and provided several lead-related suggestions, including that HUD update its lead inspection requirements, by, for example, no longer allowing visual inspections to suffice as a valid way to assess lead risks, and by using a portable x-ray fluorescence tool, or XRF gun to assess lead hazards. A commenter expressed concern that HUD's proposal to make no substantive changes to the lead-based paint requirements of its current regulations misses a critical opportunity to make long-overdue updates to outdated lead standards.

HUD Response:

HUD appreciates acknowledgement of the built environment's effect on health and safety of residents; as such this rule focuses on the built environment supported by HUD subsidies and/or assistance, as described in § 5.703 for outside, inside and units and in the NSPIRE Standards notice. HUD acknowledges that capital funding across both its Public Housing and Multifamily programs has been limited in recent years, and this may have resulted in deferred maintenance and modernization. However, this cannot result in units that are unsafe for residents, and so the NSPIRE program has made life-threatening conditions a priority for standards development and scoring.

Comments concerning the scope of inspectable items will be addressed through the subordinate

Federal Register

notice on the NSPIRE physical condition standards, which was proposed for public comment on June 17, 2022.

In the final NSPIRE Standards notice, a screen will be considered a component of the window, and will be cited if damaged, missing or not functionally adequate. HUD acknowledges that some HUD-assisted housing may be located in areas with industrial contamination, and takes very seriously the comment concerning the risks posed to residents by the external environment. Contamination can be addressed as a health and safety concern under § 5.703(e) of this rule. HUD will provide additional information about the applicability of this section in the NSPIRE Administrative notice. Lead-based paint evaluation and hazard control is covered under 24 CFR part 35 and is outside the scope of this rulemaking.

With respect to the dangers posed by water-borne lead, HUD continues to work with the Office of Lead Hazard Control and Healthy Homes and the Environmental Protection Agency (EPA) where there are active, environmental hazards to residents, including lead in water. More information on the review of site contamination is available at:

https://www.hudexchange.info/programs/environmental-review/site-contamination/.

With respect to other health and safety issues such as mold, moisture and pest intrusion, this rule and the associated standards cover these housing-related hazards. The NSPIRE Standards were proposed on June 17, 2022, for public comment and will be finalized before this rule takes effect. NSPIRE will continue to include visual assessments only, but HUD will continue to consider other, specialized inspections for environmental health issues. The use of a moisture meter to assess moisture intrusion is one of several tools HUD has considered and, because this pertains to inspection standards, HUD will discuss this further in the final NSPIRE Standards notice.

HUD will elaborate more on its scoring methodology in its Scoring notice. HUD will take these comments and all additional comments into consideration before scoring under NSPIRE commences, including whether the point-loss cap will be retained.

Affirmative Requirements

A commenter cautioned that several of HUD's proposed affirmative safety requirements would exceed local building codes and create significant costs for housing stakeholders and create unnecessary confusion and urged HUD to base standards on existing International Building Code or fire Life Safety Codes wherever possible. The commenter suggested that if HUD proceeds with these affirmative safety requirements, the agency should be mindful of these impacts and help owners defray costs, while allowing transition times or the possibility to “earn” extra points, rather than lose points, for new affirmative safety requirements. The commenter further suggested that HUD make efforts to mitigate inconsistencies between inspectors to the extent possible.

HUD Response:

HUD considered the costs and benefits of this rule and considered model codes in its development, where appropriate. The affirmative requirements in the final rule at § 5.703 align with the International Property Maintenance Code (IPMC) which is currently adopted for use in 40 States & 1000 plus local jurisdictions as their housing maintenance codes. Affirmative requirements are the basic requirements for an assisted unit and property that must be met for participation. These standards are what HUD considers the minimum requirements for habitability, and generally will not be scored for their presence or absence but will be designated as pass/fail. If they are not met, they will be cited, and must be corrected if the unit is approved for participation or continued occupancy. HUD has evaluated the costs of the new

rule in its Regulatory Impact Assessment. The NSPIRE Standards notice was published for comment on June 17, 2022; additional information regarding affirmative requirements will also be included in the forthcoming Scoring notice.

HUD agrees that inconsistencies between inspections and inspectors is an important issue that should be mitigated and has revised the requirements for eligibility and ongoing training as described in the subordinate NSPIRE Administrative notice which will be issued soon after this rule. This notice, and the contract used to procure REAC inspectors will include requirements for quality assurance and control to ensure consistency between inspectors and inspections.

The NSPIRE scoring methodology will be published in the Scoring notice. This Scoring notice will be published for effect but will seek public comments, including regarding scoring changes that reward certain properties for adoption of affirmative requirements, but HUD does not plan to award bonus points for standards that must be met and are not optional.

Alternative Standards

A commenter noted that Federal agencies are required to use voluntary consensus standards wherever possible in their procurement and regulatory activities in lieu of expending public resources developing government unique standards and encouraged HUD to leverage private sector codes by, at minimum, accepting the IPMC across HUD's programs as an optional, alternative compliance mechanism. The commenter opined that allowing adherence to the IPMC to satisfy HUD's maintenance requirements would harmonize these requirements and standardize practices, and that inspectors would be more efficient and effective at implementing a single maintenance standard than they would at three or more variations. The commenter noted the IPMC exceeds HUD's standards because HUD's standards have not been substantively updated for decades., while the IPMC is updated every three years.

HUD Response:

HUD considered the IPMC as a model but believes the NSPIRE Standards are more appropriate for HUD programs. To apply the IPMC, the current inspector workforce would need to learn a new set of standards in addition to the statutory requirements that HUD must oversee that exceed IPMC. The IPMC also does not publish standards in areas that are safety concerns for HUD and is often a prescriptive standard that does not consider current conditions.

Accessibility Compliance

Several commenters recommended that HUD require that common areas, indoor mailboxes, parking lots, waste disposal areas, walkways, and other areas should be ADA compliant for persons with disabilities.

HUD Response:

Compliance with the requirements of the Americans with Disabilities Act (ADA) is already required for services, programs, and activities of State or local governments, as described in 28 CFR part 35. HUD-assisted properties must also comply with Section 504, as described in 24 CFR part 8. The Office of Fair Housing and Equal Opportunity (FHEO) is responsible for inspection and administrative enforcement related to compliance with accessibility standards under both the ADA and Section 504, as well as the Fair Housing Act. Those regulations are not proposed for modification through this rulemaking. The NSPIRE Standards will include elements of accessibility within the standards, but these elements are not the same as the Federal accessibility standards as they relate to housing. Compliance with these NSPIRE Standards does not mean the participant has complied with the Federal accessibility standards. HUD also notes that the NSPIRE standards include common areas under § 5.703(b), Inside, and the areas outside the property such as waste disposal areas, walkways in § 5.703(c), Outside.

Area Names and Definitions

A commenter suggested clarifying in paragraph (a) that “outside the building” includes the building site. This commenter also suggested that paragraph (b) be renamed as “Inside common areas,” that both mechanical rooms and utilities rooms be stricken, and that the definition be qualified as applying only to areas that are accessible to residents. With respect to paragraph (c), the commenter suggested renaming it to “Outside areas” and that the definition be qualified as applying only to areas that are accessible to residents.

One commenter stated that HUD must define “functionally adequate” and also questioned the basis of the universal habitability requirements and design specifications.

HUD Response:

HUD streamlined the number of inspection categories (or areas as previously defined) from five to three to simplify the inspection program and improve transparency for all stakeholders. HUD believes that properties should be free from health and safety hazards, including all of the areas as described in (b) Outside, (c) Inside, and (d) Units. Section 5.703(c) includes the building site, building exterior components, and any building systems located outside of the building or unit. Examples of “outside” components on the site may include fencing, retaining walls, grounds, lighting, mailboxes, project signs, parking lots, detached garage or carport, driveways, play areas and equipment, refuse disposal, roads, storm drainage, non-dwelling buildings, and walkways. Regarding “inside common areas,” mechanical rooms and utilities are included as areas to inspect, regardless of access because they could present a safety hazard that could impact units. For example, combustible materials near a water heater or furnace in a utility room could cause a fire that impacts the entire building. Regarding the definition of the term “functionally adequate,” each standard in the NSPIRE Standards notice will define what “functionally adequate” means for that particular standard.

Living Rooms as Bedrooms

Commenters suggested that § 5.703(d)(5) should not count living rooms as a bedroom and should be modified to include Public Housing and Multifamily housing. A commenter stated that families with a member who experiences a disability should not be forced to use the living areas as a bedroom in lieu of granting the family's reasonable accommodation request for a larger voucher.

HUD Response:

Proposed § 5.703(d)(5) included requirements that for units assisted under the HCV or PBV program, the unit must have at least one bedroom or living/sleeping room for each two persons. While HUD appreciates comments on bedroom sizes, the regulation has been retained with a modification to exclude gender qualifiers but retained language around age regarding what PHAs could require for families. The commentor's concerns, however, touch also on subsidy standards in § 982.402, which are not proposed for revision. The requirements for family size and composition are not applied to the Public Housing and Multifamily housing programs because those programs did not previously have strict occupancy requirements linked to the unit size. Families that include a person with a disability may request a waiver of the occupancy requirements to accommodate their needs as a reasonable accommodation. The Fair Housing Act and Section 504 of the Rehabilitation Act of 1973 each prohibit

discrimination against persons with disabilities, and PHAs and owners are obligated to grant requests for reasonable accommodation when it may be necessary to afford a person with a disability with equal opportunity to use and enjoy housing. For more information or to file a complaint, see

www.hud.gov/fairhousing.

Superseding State and Local Code

A commenter suggested that § 5.703(f)(1) should be amended to state that HUD standards supersede local or State codes when HUD standards exceed local or State codes.

HUD Response:

HUD declines to state that HUD's standards supersede local or State code. The NSPIRE rule establishes a standard for housing quality across covered HUD programs, while allowing applicability of State/local building codes that are more protective or necessary for local conditions. Superseding State or local code only where HUD standards exceed that code, and only for HUD housing, would be administratively difficult and unnecessary. HUD Housing is required to follow both Federal standards and State and local law.

Application to HCV and PBV Units

Commenters suggested that § 5.703(f)(2) should be amended to require HCV and PBV units (not just Public Housing and Multifamily housing) to meet State and local standards that are greater than those established by HUD in order to comply with the subpart. A commenter asserted that the inapplicability of State and local housing code to HCV and PBV units is in opposition of the statute and HUD's historical practices and stated that HCV and PBV units should not pass inspection if they do not comply with Federal, State, and local codes, asserting that voucher families should be able to benefit from using State and local laws to improve their housing conditions without the risk of their losing their subsidies, and that to the extent HUD is concerned that State and local codes are being used to target and exclude voucher holders, HUD could clarify that local and State code violations cannot result in the termination of the subsidy or used in a manner to penalize the tenant household. A commenter stated that HUD must ensure that inspection standards applicable to the HCV program do not impose requirements that exceed typical rental market standards and unintentionally limit housing choice or discourage landlords from participating. The commenter stated specifically that the standard for units to have “a living room and a kitchen area” should reflect the existing definitions used in the HCV program and that the phrase “other than very young children” must be defined, or it must be clear that the housing provider has the discretion to define the age.

HUD Response:

HUD believes that the language under § 5.705(a)(3) is sufficient to address these concerns. State and local codes still apply to HUD assisted housing, but the requirements would not be incorporated in the NSPIRE inspection. For the HCV and PBV programs, PHAs have the ability to consider variations in local laws and practices and provide appropriate flexibility to facilitate the efficient provision of assistance. Multifamily owners, managers and PHAs are encouraged to include State and local requirements in their annual self-inspections. HUD agrees that the HCV and PBV program should have certain flexibilities to ensure that the program does not unintentionally limit housing choice or discourage landlords from participating, while still requiring that units be healthy and safe for residents.

With respect to definitions of “living rooms” and “kitchens,” HUD has not created new definitions for these spaces in regulatory text, and State/local standards will continue to apply. In the Administrative notice, HUD will include definitions that align with the American Housing Survey. HUD appreciates the comment on defining “very young children.” As discussed elsewhere, HUD removed the regulation requiring separate bedrooms for children of the opposite sex, and therefore the term “very young children” is no longer used.

Comments Regarding Smoke/Carbon Monoxide Detectors and Fire Extinguishers

Commenters had concerns about the burden associated with providing the various items. One commenter suggested that requirements for CO/Smoke detectors in every sleeping room be grandfathered to requirements at the time of construction. The commenter noted that current regulations and code require them on each living level but, unless a minimum threshold is crossed in rehab/modification in any unit, they are not required in each bedroom. The commenter also opined that the likelihood for tampering and/or removal will increase by a level times the number required to be provided.

Another commenter opined that the proposed change of requiring fire extinguishers in every unit is a costly and bad idea to implement, and that it will be highly difficult to regulate extinguishers owned by residents, and costly in dollars and points to the project. Another commenter urged HUD to reconsider the draft standard that would require a fire extinguisher in every unit, and to replace it with a requirement to install extinguishers regularly at a certain measure throughout the hallways of properties. The commenter stated that having a fire extinguisher in the unit will increase the likelihood that a resident will remain in the unit in the case of the fire and try to extinguish it, instead of exiting the unit as quickly as possible.

A commenter stated that requiring a fire extinguisher inside each rental unit would exceed local requirements and create administrative burden. Some commenters supported requiring carbon monoxide detectors. One commenter stated that HUD must move quickly to require the installation of carbon monoxide detectors in HUD-assisted and HUD-insured housing, and that, given that most local codes require the presence of carbon monoxide detectors, there is no need for delay. A commenter noted that HUD did not require carbon monoxide detectors to be installed consistent with the 2018 edition of the International Fire Code but noted that the IPMC has required carbon monoxide detectors in each of the last two editions. A commenter asked if fire stops could be used in place of fire extinguisher and noted success in installing fire stops, which deploy automatically, above stoves to prevent kitchen fires, which they found to be safer than using a fire extinguisher.

HUD Response:

Regarding carbon monoxide detectors, the requirements in the 2021 Consolidated Appropriations Act took effect on December 27, 2022. The Act requires that PHAs adopt the provisions of the 2018 edition of the International Fire Code (IFC) Standards, sections 915 and 1103 (or subsequent versions if amended) for the covered programs. The NSPIRE Standards proposed to incorporate this requirement, but the statute is prescriptive for public housing owned or operated by a PHA, dwelling units occupied by individuals with Housing Choice Vouchers, dwelling units assisted with project-based vouchers or project-based rental assistance, dwelling units assisted under the 202 and 811 programs, and dwelling units assisted under the HOPWA program and required that units in these covered programs have carbon monoxide detection devices installed, effective December 27, 2022. No action from HUD was necessary to cause this requirement to take effect, and HUD is making these conforming changes at the final rule stage without notice and

comment because they only incorporate these statutory requirements.

Regarding fire extinguishers and other fire safety requirements, the proposed NSPIRE Standards notice published on June 17, 2022, included a fire extinguisher requirement and HUD will discuss this requirement, including comments received on this requirement, more in the final Standards notice. With respect to the comment about “fire stops,” HUD interprets the comment as actually relating to a “StoveTop Firestop system.” HUD does not intend to include such a system as an alternative manner of compliance because these systems do not have national standards and must be acceptable to the local authority having jurisdiction.

Other Suggestions

A commenter supported requiring pictures of failed items and recommended requiring pictures of items that are not fails but should nonetheless be documented. Another commenter supported current HUD asbestos abatement standards. Another commenter urged HUD to provide a single document with clear and objective scorable defects and weight of defects and required condition.

Two commenters suggested that HUD, in the final rule, refine the characteristics of some of the identified unit components, such as adequate heat (and cooling where appropriate) directly or indirectly in each room, well-functioning windows and doors with functioning locks, and an adequate number of electrical outlets and built-in lighting fixtures.

HUD Response:

HUD appreciates the comments about the need for a clear and objective scoring methodology. NSPIRE will require documentation of deficiencies which inspectors will upload into a new streamlined system. Further guidance regarding documentation of deficiencies will be published in the final Standards notice, Scoring notice, and Administrative notice which will be published before the effective date of this rule.

The proposed rule did not propose new standards for asbestos in federally assisted housing and HUD is choosing not to do so now. Property owners, managers and PHAs are advised to continue to monitor any known or suspected asbestos containing materials (ACM) and ensure that they are not damaged or friable. If ACM will be disturbed during renovation activities, follow all applicable OSHA and EPA laws.

Comments Regarding Water Safety (Questions for Comment #1 and #2)

HUD asked several questions about water safety. HUD received comments on all of these questions, which are combined and discussed below. The first group of questions was directed at definitional issues, i.e., how should “safe and potable water” be defined and whether “safe” should mean that a public water system is in compliance with the Safe Drinking Water Act?

A number of commenters pointed out that PHAs are not in a position to monitor water safety, which is the responsibility of local water suppliers and local government agencies. Commenters also noted that there is an important distinction, unaddressed in the proposed rule, between properties served by public water systems and those served by well water systems. Some commenters stated that HUD had no business attempting to define “safe and potable water,” with a few recommending specifically that “safe” be removed. These commenters stated that this determination is the province of other State and Federal entities, most notably the EPA, and that HUD lacks the requisite expertise with respect to determinations of water safety.

Many commenters did suggest definitions for “safe and potable water.” Some commenters suggested keeping the definitions very basic: “Running water with temperatures of hot and cold running thru the pipes”; “water that is safe to drink and for food preparation”; potable water is water that is “safe to drink.” One commenter suggested that HUD should define safe water as having “reasonable certainty that no harm will result,” and that “there is a reasonable certainty in the minds of competent scientists that the substance is not harmful under the conditions of its intended use.” This commenter, with respect to “potable water,” suggested that potable means more than just safe, and that water can be used for drinking, cooking, bathing, and other household needs, and therefore must meet the required (chemical, biological and physical) quality standards at the point of supply to the users, and be of an acceptable color, odor and taste for each personal and domestic use. One commenter stated that “if water is coming from a public source, it is safe to assume the water is fit to drink.” A commenter believed that HUD should establish a national definition, not driven by local standards or politics. Many commenters stated that it is appropriate for HUD to rely on EPA determinations under the Safe Drinking Water Act (“SDWA”). At least two commenters, however, while supporting a general reliance on EPA's SDWA determinations, pointed out that those determinations are not acceptable in the presence of lead service lines.

HUD also asked several questions related to detection and enforcement of safe water standards, including how should HUD monitor whether water is safe; what elements should be reviewed during a physical inspection to determine water safety; and whether inspectors should verify that a municipal water supply authority is in compliance with EPA's Safe Drinking Water Act?

A number of commenters expressed an opinion that HUD should not be involved in “monitoring” water safety; rather, HUD should defer to the agencies that currently monitor the water supply under State and Federal law. One commenter noted that should HUD choose to enter this area, participation should be limited to confirmation that the property is served by a municipal water system through a water bill or that any private well system is monitored and tested regularly. Another commenter stated that adding a new safe water monitoring layer to something that is already regulated and monitored on a State and Federal level seems a bit redundant and unnecessary. Another commenter offered that if HUD is concerned about water quality, then HUD, either internally or through the EPA, should be able to perform regular, routine inquiries about public water systems around the country to ensure that those systems are in compliance with the Safe Drinking Water Act.

Similar to monitoring, a number of commenters expressed an opinion that HUD should not be involved in conducting inspections related to water safety; or, in the alternative, that HUD conduct only the most cursory inspection with respect to water safety. One commenter opined that no elements should be reviewed during the physical inspection to determine water safety; that a PHA has met its responsibility if there is hot and cold running water. Another commenter suggested that HUD's inspection be limited to a visual observation of water for contamination or discoloration. Other commenters suggested that no elements should be included by HUD in requirements for physical inspections other than a visual inspection for poorly maintained pipes and valves and confirmation that water flow is present and can maintain at least 120 degrees.

One commenter suggested that as one element of inspection, HUD should seek to determine that owners are not delinquent in their water and sewer

accounts for individual properties, in order to ensure that properties are not at risk for service disconnection. Several commenters suggested that HUD could review local Water Quality Reports that are compliant with the U.S. EPA's National Primary Drinking Water Regulation for Consumer Confidence Reports, and/or other reports provided by municipalities/water supply authorities.

Two commenters opined that inspectors trained in water sampling techniques could take the water samples directly and send them to a certify laboratory for analysis. One commenter stated that HUD should monitor drinking water safety by testing housing facility infrastructure for contamination, not just public water systems. Another commenter stated that HUD, either internally or through the EPA, should be able to perform regular, routine inquiries about public water systems around the country to ensure that those systems are in compliance with the Safe Drinking Water Act. If not, the Federal Government should work with the local jurisdiction managing the public water system to ensure those systems are upgraded and safe. The commenter noted that HUD can also inform PHAs in those areas that there may be water contamination so that they may inform their residents and provide those residents options for safe drinking water if the local or State government has yet to do so.

One commenter recommended that HUD must conduct its own monitoring of water safety in order to ensure that housing it supports provides safe and potable water to its residents. The commenter suggested periodic monitoring of every unit for lead; PFAS and other unregulated yet harmful contaminants; Legionella; and, objectionable smell, taste, color, or clarity, and that monitoring and sampling should be done in accordance with the best science to achieve accurate results. The commenter also stated that HUD must immediately notify residents of unsafe or unpotable water, what is being done to rectify the condition, and when the condition has been resolved.

With respect to whether HUD inspectors should verify that a municipal water supply authority is in compliance with EPA's Safe Drinking Water Act, the majority of commenters replied in the negative with several noting that building owners have zero recourse if the water provider is not in compliance with the Safe Drinking Water Act. One commenter expressed that if HUD seeks to verify the availability of safe and potable water for residents, the Department should communicate with local water system administrators rather than with property owners and agents. One commenter stated that SDWA is designed to measure a water system's compliance with Federal standards, which the commenter finds lacking in several respects. This commenter stated that Federal lead standards, EPA enforceable limits, and maximum SDWA contaminant levels are out of date and do not reflect latest scientific evidence, with the result that some dangerous contaminants can be present in water within homes even though the water provided by the water system is free of the bacteria.

Some commenters supported the notion that HUD should verify SDWA compliance; one commenter strongly supported this idea. This commenter stated that HUD should create a uniform standard of water safety monitoring at HUD facilities nationwide. Another commenter opined that water safety should be determined using the guidelines of the EPA's Safe Drinking Water Act and that an inspector needs to ensure that the local municipal water supply authority is in compliance.

Those commenters who did suggest physical inspection criteria offered a number of recommendations. Multiple commenters suggested primary reliance on official reports from other governmental entities; one of these suggested that where there is no public water supply HUD's inspection should rely on appearance, odor and/or taste. Another commenter suggested that a basic turbidity test from randomly selected units at the property might give some immediate feedback for an inspection report about whether a plumbing issue might be impacting the potable drinking water, and that an inspector could also take a quick pH test at the same source. This same commenter suggested that privately sourced water could be sent to a laboratory for testing.

A commenter suggested that any Point of Use or Point of Entry treatment device should be identified and inspected to ensure it is properly installed and maintained, and that hot water tanks be inspected and drained, as appropriate. This commenter recommended inspection criteria for well water systems, including well inspection; proximity to and quality of any onsite or neighboring septic system; total coliform/microbial testing; lead and copper testing, and chemical testing for all known potential chemical contaminants in the aquifer.

HUD Response:

HUD appreciates comments on how water is monitored, and the shared responsibility for ensuring drinking water safety. HUD notes that drinking water requirements are not new to HUD standards. Requirements already exist within the HQS and UPCS regulations, with additional details in the HQS inspection guidance; the NSPIRE regulations consolidate and clarify the requirement. At this final rule stage, HUD is including a requirement that the unit provide safe drinking water, regardless of the source (well vs. municipal water supply). Additional information about this requirement is provided in the NSPIRE Standards notice proposed for comment on June 17, 2022.

When there is public health risk related to drinking water from a public source, the public water system is required under US Environmental Protection Agency (EPA) regulations

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to notify its customers. Notice typically includes local media alerts, postings on public water system websites and alerts in water bills. Given this, HUD expects that PHAs, residents and landlords participating in the Section 8 programs will have a minimal burden to monitor public water safety. If a local public water system notifies a landlord or PHA that the public water is contaminated and recommends action, landlords participating in the Section 8 program are already expected to ensure that the action is taken. This same expectation applies to PHAs operating public housing. This rule standardizes both regulations to a single requirement and adopts the existing approved acceptability criteria for drinking water for all applicable programs.

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40 CFR part 141, subpart I.

HUD adopted the term “safe” to align its regulations with the term used under the Safe Drinking Water Act, as well as to support the broad HUD-wide goal to provide safe, habitable housing for residents. Water for drinking, bathing and other activities must be available to residents. After consideration of public comments, HUD has decided to continue to defer to EPA's determinations for allowable levels of drinking water contaminants, and what is considered safe. HUD expects that landlords, PHAs, and residents will be advised by a public water system, State or local health departments, or the EPA when the public water is unsafe and can rely on this determination without further testing. These alerts will be distributed through local media alerts, the public water system website or within water bills. PHAs and owners should be aware of local water safety alerts and take action to either implement recommendations or provided an alternate source of safe

water, such as bottled water. Often, the impacted jurisdiction will provide bottled water for free. For more information about requirements for public notification, see

https://www.epa.gov/dwreginfo/lead-and-copper-rule.

Regarding the suggestion of a visual inspection for contamination or discoloration, this observation would not indicate if the water had high levels of lead. Additional details about the water inspection process will be provided in the NSPIRE Standards notice.

The NSPIRE rule, and the REAC physical inspection, does not require detailed reviews of documentation, and there is no current HUD regulatory requirement that PHAs and property owners maintain documentation of water and sewer payments or local water quality reports. This would be a substantial new administrative burden not contemplated in the proposed rule. Additionally, since this information is not federally standardized, it would add a significant time burden to the inspection. HUD has consulted with the EPA on whether it could monitor reporting in the Safe Drinking Water Information System (SDWIS), but the information reported is delayed, and may not indicate whether there is a current exposure risk. For example, when lead is identified through routine system monitoring, the public water supply can take actions to alter water chemistry to reduce leaching. In HUD's administrative notice, HUD intends only to include a requirement that PHAs and landlords be aware of local drinking water alerts that are already required under EPA regulations and to take action to implement an acceptability criteria variation (

e.g.,

point of use water filtration) when necessary. These alerts are issued when actions taken by the public water system are not sufficient and there may be a risk of exposure. HUD also continues to evaluate means of using publicly available data to keep residents safe.

HUD declines to include a requirement under NSPIRE for inspection of water treatment devices, point of use filters, well systems, or water testing. Section 5.703(d)(1) requires that the unit include an adequate source of safe water and does not specify or establish different contaminant standards for whether the source is municipal or well. As discussed above in the preamble, HUD has removed the term “potable” and has clarified that safe drinking water must be provided in the kitchen.

Question for Comment #3: Site and Neighborhood Standards

HUD asked whether the site and neighborhood standards as found in 24 CFR 982.401(l), should be included in the regulation or only in the inspection standards. HUD also asked whether all of the explicit standards should be included or if there are certain site and neighborhood standards that HUD should consider changing. HUD received the following comments in response.

Site & Neighborhood Standards Generally

Several commenters stated that PHAs should be held responsible for environmental conditions within their control and that the standards remain relevant because it may sometimes be necessary to invoke site and neighborhood standards when conditions are genuinely unsafe, especially for children. A commenter stated that site and neighborhood standards have historically been important to ensure a balanced distribution of public housing projects within a locality.

A commenter suggested that a regulation for a site & neighborhood inspection is unnecessary because most of the facilities already follow the HUD and Tax Credit guidelines to not build in areas of industry, railroad tracks or traffic congestion; another noted that it would not make sense to include these standards in the regulation when the vast majority of inspection standards will not be in the regulation. Another commenter pointed to the difficulty inspectors would have enforcing local site and neighborhood standards.

Commenters cautioned that these standards could be prejudicial against older housing and transit-oriented properties and suggested that historical buildings should be exempted from the testing standard to preserve the rarity and quality of materials and finishes in these buildings.

Commenters expressed concerns that site and neighborhood standards can be subjective and very hard to judge, unless an area clearly represents a serious health hazard or safety concern. Thus, commenters urged HUD to provide explicit standards and to clarify how it determines whether there is a danger because it is important for HUD to provide specific and measurable guidance so that PHAs are able to incorporate any changes into existing processes. A commenter urged HUD to write the regulations to specify that properties must be “reasonably free” of “serious adverse environmental conditions”; another suggested HUD add “landslide” and “hill slide” to the term “mudslide” and cited to examples of HUD-assisted properties being vacated due to hill slide events in both public housing and project-based housing.

With respect to the Section 8 program, where there is no scoring system similar to the PHAS system, a commenter suggested HUD clarify whether these items require failure of an HQS inspection.

One commenter opined that the site and neighborhood standards should be included in the inspection standards and the regulation, because there are no qualifications for inspectors and leaving enforcement to individuals who can only rely on instructions provided by their locality would defeat the implementation of establishing a uniform standard. This commenter also opposed giving these inspectors discretion, which the commenter said would effectively render them legislators.

HUD Response:

HUD appreciates the comments related to the importance of site and neighborhood standards to the NSPIRE rule. HUD believes that expanding the existing HQS site and neighborhood standards from § 982.401(l) to apply to additional programs would negatively impact existing properties for circumstances beyond their control and threaten already scarce affordable housing resources. With this final rule, the original text of § 982.401 is removed and the regulation refers to § 5.703. Site is included as the example “building site” at § 5.703(c). Neighborhood conditions are not directly included in § 5.703(c). The listed elements of the outside must be functionally adequate, operable, and free of health and safety hazards. The final subordinate NSPIRE Standards notice, to be published before this rule is effective, will provide more details on areas and components inspected. HUD will continue to update and publish guidance on other environmental hazards that are not fully addressed by NSPIRE, such as radon, lead-based paint, carbon monoxide, and other environmental health hazards. The NSPIRE inspection is not intended to serve as the only way HUD assesses compliance with all environmental health laws and related requirements. Compliance is verified through other oversight processes performed by different HUD staff. For example, radon is considered as part of certain environmental reviews conducted under 24 CFR parts 50 and 58. Because the revised § 982.401 will refer to the new § 5.703, the term “mudslide” is no

longer in regulation, and there is no need to add “landslide” or “hill slide” as examples in regulatory text. Finally, NSPIRE inspections will include the elements identified as “outside,” including the site as provided in the NSPIRE Standards notice. But the NSPIRE inspection will not include environmental sampling. The focus of NSPIRE is more toward residents' units, where residents spend the most time.

Inspectors using the NSPIRE standards will be trained in the standards and have experience in performing housing inspections. The final NSPIRE Standards notice will provide guidance on what to evaluate, and the NSPIRE Scoring notice will provide factors for scoring. A software tool will be available to inspectors and PHAs to help ensure assessments are consistent and accurate. Property owners and managers will continue to have a process to appeal physical inspection scores to HUD, and REAC will continue to have a quality assurance team to monitor inspection scoring and trends. The process for appeals is provided in this final rule at § 5.711(c), (d) and (e) and the Administrative Procedures notice.

Environmental Conditions

Many commenters stated that the property or PHA should not be held accountable for adverse environmental conditions outside of its control, such as flooding, poor drainage, sewage hazards, mudslides, air pollution, smoke or dust, excessive noise of vehicular traffic, and issues with adjacent lots or buildings. A commenter noted that property owners' ability to address these issues may be restricted by local laws. Another noted that fire hazards, garbage and infestations can be the result of tenant behaviors within their units, common areas or the site grounds.

Commenters pointed out that if properties are penalized for these issues, the voucher program may have fewer units available for families as landlords are increasingly frustrated with the inspection process. One commenter stated the neighborhood standards may also preclude provision of assistance to existing homeowners in substandard housing conditions that reside in rural communities where drainage, streets, sidewalks and other neighborhood improvements are not found or also require improvement.

Commenters suggested that the site and neighborhood standards should be considered for properties only at the time of development, prior to final endorsement, or prior to entering into a rental subsidy contract.

HUD Response:

HUD appreciates the comments regarding site and neighborhood standards and environmental conditions that may be outside the control of the property owner or PHA. In addition to HUD's responses above, NPSIRE inspections and scoring are more focused on the units, versus other inside and outside areas. This is because the unit is where residents spend most of their time, and the safety and habitability of the unit is critical. Additional details on inspectable areas and deficiencies were proposed for comment in the subordinate NSPIRE Standards notice and will be finalized before the rule is effective.

Questions for Comment #4-11 on HOME and HTF

HUD asked a number of related questions pertaining to minimum housing condition standards, minimum deficiencies, and other appropriate standards across HOME and HTF, including HOME Tenant-based rental assistance (TBRA) properties, in a variety of contexts (e.g., rehabilitation, rental, home ownership and affordability period) to solicit feedback on appropriate standards to ensure that HOME-assisted and HTF-assisted housing remains decent, safe, sanitary and in good repair.

Comments Regarding HOME and HTF Standards Generally

Across the different scenarios presented, several commenters expressed a need for a uniform, consistent set of standards, not only for HOME and HTF, but across all federally assisted housing programs. One commenter stated that minimum standards should not be asymmetrical depending on program or resident type, but broad sweeping to fit all sorts of housing units. The same commenter recommended that inspectors for HOME and HTF programs be provided clear definitions to limit firsthand interpretations of the guidance as well as appropriate supplemental training on future guidance.

HUD Response:

HUD appreciates and agrees with the comment with respect to consistency and has aligned standards with only minor exceptions. The NSPIRE rule aligns HOME and HTF standards with other HUD-assisted housing programs subject to NSPIRE. There will be some differences by project type in certain cases (

e.g.,

rental project, homebuyer acquisition, or units occupied by tenants receiving HOME TBRA). While the NSPIRE rule aligns standards for HUD-assisted housing programs where these programs share common attributes (

e.g.,

within the dwelling unit), HUD agrees with comments pointing out that the minimum deficiencies that must be corrected in a HOME- or HTF-assisted project should vary in certain cases. This is because NSPIRE includes standards for areas or components of a Multifamily building that do not exist in a single unit assisted with HOME TBRA or HOME or HTF-assisted single-family housing of one to four units. In addition, HOME and HTF may be used to assist a homebuyer to acquire housing, which is a fundamentally different type of housing project compared to the HUD rental programs for which NSPIRE is designed. HUD is concerned that unduly onerous property standards may severely limit the choice of unit for an individual or family receiving assistance for homebuyer acquisition. It is HUD's intent to impose property standards that ensure both HOME- or HTF-assisted homebuyer acquisition projects are decent, safe, sanitary and in good repair but also sustainable so that the homebuyers are not subject to the financial burden of a system replacement or major repairs soon after acquisition.

Consequently, HUD has determined that it is necessary to impose HOME and HTF minimum property standards consistent with NSPIRE's focus on safety and habitability, but which vary based on project type to balance the need for both quality and availability of housing. As requested by commenters, HUD will provide additional guidance and training to ensure that all PJs and HTF grantees understand the property standards requirements. HUD's Office of Community Planning and Development (“CPD Office”) will issue an NSPIRE notice describing the applicability of the NSPIRE Standards for HOME and HTF.

Comments Regarding Minimum Housing Condition Standards for HOME and HTF Housing

Some commenters discussed the suitability of the current HQS as an appropriate standard to ensure that the housing remains decent, safe, sanitary and in good repair. One commenter believed that HQS in and of itself could apply across the programs covered by the proposed rule. Another commenter stated that HQS, in combination with the current HomeFirst inspection form, would establish a robust minimum housing condition standard.

One commenter recommended adoption of International Residential Code (IRC) for single family new construction projects and rehabilitation projects. With respect to rehabilitation, the commenter further recommended

inclusion of minimum health and safety standards in addition to IRC, as not all health and safety concerns are addressed by IRC rehabilitation requirements.

With respect to HOME TBRA specifically, the commenter urged HUD to consider that many participants elect to reside in single-family housing that may not meet the requirements set forth for HOME rental properties and expressed an opinion that existing Housing Quality Standards are well suited to both homebuyer, acquisition only, and HOME TBRA projects.

A commenter recommended that HUD include § 982.401(l) and (h) and other environmental hazard considerations.

HUD Response:

HUD understands that some commenters prefer HQS as a standard for ensuring that HOME- and HTF-assisted housing is decent, safe, sanitary and in good repair upon completion and throughout the period of affordability for rental housing. HUD believes that the transition to NSPIRE will retain what commenters appreciate about HQS while accomplishing NSPIRE's goal of aligning standards across HUD programs.

For the HOME and HTF programs, CPD will issue a notice to implement the NSPIRE Standards and identify deficiencies related to the NSPIRE Standards for these specific programs. In CPD's experience with HQS as a minimum property and inspection standard for HOME TBRA units and certain HOME and HTF rental projects, HOME- and HTF-assisted housing have different statutory requirements than other NSPIRE programs and therefore, other factors that must be considered in implementing revised property standards. This rule revises the HQS regulations at § 982.401 to point to § 5.703. Due to this, HUD will implement requirements for HOME- and HTF-assisted projects that limit the applicability of the NSPIRE Standards to accommodate program-specific requirements.

HOME and HTF programs are formula block grants that allow for local decision-making by the State and local governments that administer these programs. Therefore, HOME and HTF cannot impose property standard requirements that ignore State and local codes. This requirement for compliance with State and local codes is also statutory under the HOME program. Consequently, it is not possible for the NSPIRE Standards to replace State and local codes in HOME and HTF-assisted projects. In the absence of applicable State or local codes, HOME and HTF program regulations apply the IRC or International Building Code (IBC) of the International Code Council to new construction projects, as applicable to the type of housing, and the International Existing Building Code (IEBC) of the International Code Council to rehabilitation projects, as applicable.

References in HOME to § 982.401(l) and (h) and other environmental hazard considerations are now covered by § 5.703(c) and have been updated. HUD agrees that elements of § 982.401(l) and (h) and other environmental hazards are important and will be addressed in the supplemental CPD NSPIRE notice that will apply to HOME and HTF.

Comments Comparing NSPIRE Standards to HOME and HTF Housing and Minimum Deficiencies

One commenter, in comparing the NSPIRE Standards to minimum deficiencies that must be corrected in HOME- and HTF-assisted rehabilitation projects at §§ 92.251(b) and 93.301(b) or which must be corrected prior to HOME- and HTF-assisted homebuyer acquisition of standard housing, opined that the HomeFirst inspection form meets or exceeds the NSPIRE standards for minimum deficiencies that must be corrected since it incorporates State and local standards of housing safety and maintenance. Another commenter stated that there should not be a minimum or maximum of deficiencies that must be corrected during an onsite inspection; rather, there should be a system in place by which as many hazards are identified in a home, evaluated, and prioritized based on their severity for potential health and safety outcomes affecting the occupants. Once there is a prioritized list, the owner would address those hazards in the order of outcome severity. The same commenter specifically noted that addressing lead hazards should be part of that high standard for housing assisted with HOME or HTF, and that lead hazards assessed should include lead-based paint, lead in the drinking water with point of use testing, and soil contamination.

With respect to whether HUD should establish different minimum deficiencies that must be corrected in HOME- or HTF-assisted rental housing and homebuyer or owner-occupied housing rehabilitation projects at §§ 92.251(b) and 93.301(b), a commenter stated that instead of having minimum deficiencies that must be corrected, the property owner/manager should address the hazards based on the severity (

i.e.,

extreme, severe, serious, or moderate) of potential health and safety outcomes affecting the occupants.

HUD Response:

Under the HOME and HTF regulations, an owner of a rental property must immediately correct health and safety deficiencies. In addition, the lead-based paint requirements at 24 CFR part 35 continue to apply to HOME and HTF-assisted rehabilitation projects and during the period of affordability for rental projects; these regulations are not proposed for revision and this final rule includes cross-references to the applicable sections of part 35, including subparts B, J, K, M, and R. HUD disagrees that the programs should not set minimum deficiencies that must be corrected following an onsite inspection of rental housing during the period of affordability. If HOME or HTF funds are invested in a rental development project, HUD must ensure that the project remains decent, safe, sanitary and in good repair throughout the period of affordability. This is a statutory requirement for HOME. Furthermore, the HOME and HTF programs require that PJs and HTF grantees underwrite a rehabilitation or new construction rental project to ensure that funding is available to make necessary repairs throughout the period of affordability. Therefore, it is reasonable to expect HOME and HTF projects to support necessary repairs to maintain the housing at a standard that meets HOME and HTF minimum requirements and the PJ or HTF grantee's ongoing property standards.

HUD does not agree that the HQS, in combination with the current HomeFirst inspection form, would meet the new standards established with the NSPIRE final rule.

Comments Regarding Minimum Deficiencies for Small HOME and HTF Rehabilitation Projects

With respect to whether HUD should establish different minimum deficiencies that must be corrected in large and small HOME- or HTF-assisted rehabilitation projects at § 92.251(b) and § 93.301(b), commenters replied in the negative, and generally repeated the feeling that standards should be uniform across programs and occupancy categories. With respect to how HUD should define a large housing project, one commenter suggested that the appropriate threshold is 40 or more units.

HUD Response:

HUD agrees with commenters and will not establish different minimum deficiencies for large and small HOME- and HTF-assisted rehabilitation projects in this final rule.

Comments Regarding Minimum Deficiencies That Must Be Corrected for HOME or HTF Housing

With respect to whether HUD should establish different minimum deficiencies that must be corrected for HOME or HTF-assisted rehabilitation and homebuyer or owner-occupied acquisition of standard housing projects at § 92.251(c)(3) and § 93.301(c)(3), one commenter opined that no updates to the minimum deficiency standards are recommended at this time.

Another commenter responded in the affirmative, noting that the current requirement for single-family housing to meet the requirements of UPCS includes inspecting for non-applicable items, and exceeds the standard for other federally assisted or insured mortgage programs. The commenter recommended that units for acquisition be subject only to homebuyer inspections as required by FHA financing, and not subject to a separate standard.

HUD Response:

Updates to the required minimum deficiencies that must be corrected in a HOME- or HTF-assisted rehabilitation or homebuyer acquisition project are necessary because the current regulation references UPCS, which will no longer exist when this rule becomes effective. HUD agrees with the commenter that minimum deficiencies to be corrected should vary based on project type in certain cases because not all the standards of NSPIRE, which was developed for ongoing inspections of Multifamily rental developments, will apply to single-family housing.

Comments Regarding Minimum HOME TBRA Written Property Standards

With respect to whether HUD should establish minimum written property standards requirements for housing occupied by tenants receiving HOME TBRA at § 92.251(f) that exceed or are different than minimum requirements for the ongoing condition of HOME-assisted rental housing, one commenter noted that tenants of HOME TBRA often reside in single-family housing rather than in multifamily rental developments and that the use of a standard that is heavily focused on large rental developments, such as UPCS, would include items that are not present in single-family housing, and may neglect to fully inspect for hazards that are generally only present in single-family housing.

With respect to whether HUD, in the alternative, should apply the NSPIRE standards (not to include the inspection procedures, administrative processes for scoring and ranking, or the enforcement requirements of NSPIRE) to housing occupied by tenants assisted with HOME TBRA at §  92.251(f), one commenter stated that this was a reasonable approach. The commenter stated that HUD can apply NSPIRE standards but allow local jurisdictions to establish stronger local standards which would apply in that jurisdiction. The NSPIRE standard should be a minimum, but if there are higher quality standards that local jurisdictions establish, those should be allowable as well. Another commenter replied in the negative, stating that HUD should treat this situation consistent with the proposed rule for HCV and PBV, and not another standard.

In response to whether another national housing quality or condition standard exists that HUD should apply to housing occupied by tenants assisted with HOME TBRA, one commenter recommended the use of the same standard for HOME TBRA as for the Section 8 HCV program, even if this standard is different than the standard for HOME rental projects. The commenter reasoned that HOME TBRA closely mirrors the Section 8 HCV program, and both programs are often administered by the same agencies, allowing them to utilize one common standard that is most applicable to the project type.

HUD Response:

HUD agrees with commenters who requested consistency. The NSPIRE rule establishes standards that will cover all listed programs, with exceptions only where there are differing statutory or programmatic requirements. For example, the regulation at § 92.251(b)(1)(viii) continues to exclude HOME-assisted projects and units from using the scoring, item weights, criticality, and other requirements contained in §§ 5.705-5.713. Additionally, HOME PJs must create their own ongoing property standards for HOME rental housing or housing occupied by tenants receiving HOME TBRA, which must comply with State and local code requirements and ordinances. Where there are no applicable State or local code requirements and ordinances, the HOME PJ will be required to inspect the property so that the property does not contain the specific deficiencies prescribed by HUD based on the applicable standards in 5.703 and published in the

Federal Register

. By doing this, HUD is establishing c HOME PJs require owners maintain the housing as decent, safe, and sanitary housing in good repair.

Question for Comment #12: Special Housing

HUD asked whether the application of unique standards to certain specific special types of housing (i.e., single room occupancy housing; congregate housing; shared housing; and manufactured homes) in the HCV, PBV, and Moderate Rehabilitation Programs should be expanded to apply to CoC, ESG, and HOPWA programs as well.

Two commenters expressed general agreement with the expansion of the unique standards; however, one of these commenters limited endorsement of the application of the unique standards to CoC PBRA. One commenter stated that the unique standards should be expanded to apply to CoC, ESG, and HOPWA programs. The commenter opined that if a recipient of CoC, ESG, or HOPWA funding determines that using a special type of housing is the best course of action for a specific household, then they should be able to use that type of housing and not be penalized through poor inspection scores based off of standards that do not make sense for the unit. The commenter also noted that applying the unique standards to CoC, ESG, and HOPWA will help standardize inspection protocols across HUD programs.

One commenter stated that the unique standards should apply to CoC, ESG, and HOPWA programs in order to fulfill HUD's intent to align inspection requirements for all housing assistance programs to decrease the complexity and uncertainty associated with participating in HUD's programs that may deter some owners from future involvement, as well as to decrease regulatory burden. The commenter further suggested that HUD consider other housing types recently implemented by municipalities to address their housing crises such as the approval of Accessory Dwelling Units.

One commenter stated that the NSPIRE protocol should consider universally accepted norms associated with healthcare, assisted living and memory care occupancies, and that these should include specific allowances for egress issues associated with normal elopement risk reduction inherent to these facilities. The commenter further stated that the health care facility concept of “RACE” (Rescue, Alarm, Contain and Extinguish) should be accepted by NSPIRE as a standard method of fire and life safety within healthcare and senior facilities, greatly reducing the necessity of window egress exits.

One commenter stated that the unique housing standards in part 982 should

not be applied to ESG since the minimum standards for permanent housing in § 576.403 provide more flexibility for the program participant and consistency for the administrator. The commenter also recommended that the proposed addition of § 576.403(d) should be revised to state, “for the first 30 days in which a program participant receives homelessness prevention assistance, the recipient or subrecipient may provide services under § 576.105(b) and § 576.106 to help the program participant remain in their unit without inspecting the unit or determining whether it meets the requirement in this section.” The commenter reasoned that the payment of rental arrears or rental assistance under § 576.106 are often necessary to prevent eviction, and that requiring the habitability inspection within 30 days of assistance while also providing rental arrears or assistance would decrease the disruptive process of eviction. The commenter recommend further that HUD provide guidance about what resolution is required of a grantee if the unit that was assisted in the 30-day period does not meet the standard but should not require repayment of assistance provided during that term.

HUD Response:

HUD appreciates the comments related to special housing types and the needs of participants in tenant-based rental assistance, as well as the feedback about consistent standards across housing programs, including expanding unique standards to certain types of housing within CoC, ESG and HOPWA programs. The NSPIRE Standards will apply to these programs, with some limitations that will be described in the CPD NSPIRE notices. For the HCV and PBV programs, Section 982.605 continues to allow for alternate requirements for sanitary facilities, food preparation, and space and security if there is no applicable local code standard for SRO housing. Housing that meets the affirmative habitability standards in § 5.703(d) can be eligible for HUD assistance, including Accessory Dwelling Units. With alignment of housing standards, the Department will better focus on habitability and the health and safety of residents.

With respect to universally accepted norms associated with health care, HUD evaluated many of these norms including RACE. Facilities that need to keep doors or windows locked for resident safety (

e.g.,

memory care facilities) or to comply with other legal requirements, such as Federal civil rights laws, will be allowed to request a technical correction and score adjustment after the inspection. More information will be in the Administrative Procedures notice. In addition, § 5.703(d) of this rule requires smoke detectors consistent with the requirements in NFPA 72, and more information will be provided in the NSPIRE Standards notice.

HUD will issue additional guidance on § 576.403(f) as pertains to payment of rental arrears or rental assistance and preventing evictions.

Question for Comment #13: Affirmative Requirements

HUD asked for input with respect to the inclusion of certain affirmative requirements at the final rule stage by adding deficiencies for the lack of a presence of certain specific features in HUD-assisted units. Specifically, HUD asked for input related to electrical outlets and switches; GFCIs and AFCIs; HVAC (permanently installed heating source); guardrails; and lighting.

General Comments

Two commenters noted their general agreement with all of HUD's suggestions, without providing any specific comments. Many commenters sounded a common theme that HUD should weigh very carefully any attempt to introduce affirmative requirements across the entire portfolio of HUD-assisted housing, in light of all of the relevant considerations to the differences in such housing. One common theme was centered on the difference between older and newer housing. For example, one commenter noted that most new construction units have more than enough electrical outlets in each bedroom and living room. However, older cities, such as New York City, have aging housing stock which might not support multiple new outlets without upgrading to a new wiring system. Another commenter opined that properties built in the 1940s should not be held to the same standards as those more recently built, and that even those that may have undergone some modernization since initially built were modernized to the codes and standards of the time during which they were modernized. The commenter pointed out that to hold older properties to the same standards of recent buildings would be a financial burden and that the PHA has neither the funds nor the staff to stay in compliance and would discourage private property owners from participating in HUD programs.

Another common theme related to suggestions for HUD restraint centered around the existence of various housing codes, which commenters argued obviated the need for HUD to impose additional requirements. For example, one commenter pointed out that HUD's proposed requirements would not be in alignment with local code and would set higher expectations than local code, which could have far-reaching implications on the development and maintenance of properties and lead to much higher costs. Another commenter opined that in some cases the proposed changes represent very significant upgrades or overhauls and urged HUD to either defer to local building codes, or to slowly phase in the affirmative safety requirements, as well as to consider approving additional project or capital funds to cover the costs of these upgrades. Two commenters noted that to the extent that existing properties are subject to new standards, HUD must refrain from penalizing (unintentionally or otherwise) PHAs, owners, and operators that may not have funds for upgrades, particularly when those properties are in compliance with local/State codes which reflect local needs and conditions. Commenters suggested that the electrical requirements should match the code at the time the building was built, and that requiring electrical upgrades to existing building would be a financial hardship on building owners unless the building is being renovated. A commenter expressed that HUD should align the proposed requirements to the UCC and PHA's local codes.

With respect to the proposed addition of new standards, generally, one commenter noted that some owners with older properties may decide not to participate if HUD requires significant upgrades to their units that they are not required to perform if they rent to someone in the private market. Another commenter noted that funding to maintain and improve properties is in limited supply, and that properties that are compliant under current standards should be considered compliant under the new standards, and that any new standards should apply only to new construction and properties that undergo renovation. One commenter agreed that all potential deficiencies that HUD is considering appear to be reasonable for safety considerations, but noted that to the extent that existing properties are subject to new standards, PHAs, owners and operators should have an ample notice period to bring their units into compliance. Another commenter opined that the proposed requirements could create new costs for PHAs and limit the supply of housing available to voucher holders. As such, HUD should assess the total cost to PHAs to comply. One commenter, while agreeing that the proposed features may be necessary, cautioned that the cost to produce the features must be heavily

weighed in view of additional affordable units lost versus created or preserved, and that dollars invested in these features will ultimately reduce the available subsidies for those applicants waiting to be housed, further straining American's scarce affordable housing stock.

HUD Response:

HUD appreciates the comments about differences in housing stock related to age and location and reaffirms that the NSPIRE Standards will balance the need for housing with the mission to ensure that the housing is decent, safe, sanitary and in good repair, as well as the challenge of having consistent housing standards across programs with very different levels of Federal investment and assistance. HUD recognizes, and agrees with the commenters, that if inspection standards and process for tenant-based programs are onerous and delay lease up, private landlords may decline to accept a voucher and lease to other renters.

HUD also recognizes the challenge of meeting State or local housing codes for properties that will be covered by the NSPIRE Standards. Most importantly, the forthcoming NSPIRE Standards will apply nationally and provide standards for areas where there are no codes or safety requirements. In other areas, the State or local requirements may be more or less stringent. Often, State or local requirements account for special conditions in that jurisdiction such as local climate variation. Where a State or local requirement is more stringent that NSPIRE, the property must meet that requirement as well as the NSPIRE Standards.

With respect to comments regarding timelines to correct identified deficiencies, and the ability of property owners or PHAs to fund required renovations, the available time frame for response will vary depending on the deficiency, the program, and the process. In this final rule, HUD has revised “severe health and safety” to LT. HUD also developed a secondary category for other severe, but not LT deficiencies. Where a LT deficiency as described in § 5.711(c) is identified, the owner or PHA must correct it in 24 hours. For the HCV program, response times for LT deficiencies must be corrected in accordance with the HOTMA statute. HUD will discuss this matter further in the final NSPIRE standards. Other deficiencies can be resolved as described in existing program regulations. Those regulations are not included in this rulemaking for revision. HUD recognizes that standards should include reasonable expectations for repair, and the need for work to be completed quickly and affordably. These expectations will be described in the Administrative Procedures notice which will be published before this final rule takes effect.

Comments Regarding the Electrical Outlet and Switch Requirement

Two commenters referred expressly to the presence of extension cords. One of them, in agreeing with the proposed requirement, explained that inadequate number of outlets within all habitable rooms leads the occupant to rely on the usage of power-strips and extension cords, and that these power strips and extension cords are often overloaded with plugs from multiple appliances, a condition that could lead to overheating and potential electrical fires. The commenter further noted that the presence of such cords is also the cause of trips and falls hazards which significantly affect elderly occupants. The other stated that the proposed requirement should not be addressed as an issue unless there are extension cords that could cause a trip hazard.

Several commenters raised the issues of the age of the property in question. One commenter stated that meeting this requirement may be challenging in older units that do not have either two electrical units or an electrical unit and a permanent light in all habitable rooms, as older buildings may have to undergo substantial electrical work on the unit, adding significant cost and burden to meeting the standard. Another commenter stated that many older units include bedrooms where there is only one outlet and no overhead lighting. One commenter specifically noted that the age of the building should be considered when determining the distance of the outlet to the sink. One commenter felt that establishing minimum standards to be maintained by properties that have already been constructed and under contract as affordable housing for decades exceeds the reach of an inspection which is supposed to ensure the property is being adequately maintained as safe, decent, and sanitary, and crosses into the realm of specifying how that property should have been constructed instead of confirming the adequacy of its maintenance.

Two commenters specifically expressed concerns with respect to historic properties. One noted that, because insured buildings are so diverse in age and design, to add this requirement would be a hardship on owners especially in older historic occupancies; the other opined that historic buildings should be exempted from this proposed requirement in order to preserve the high quality of fixtures and materials.

One commenter expressed that the rationale in the rule (safety, usability, and illumination) demonstrates why a one-size-fits-all approach is inappropriate and opined that HUD should attempt to create standards around safety, usability, and illumination or demonstrate, with data, why the proposed requirements are necessary before adding the proposed deficiency. One commenter, while expressing general support for the proposed requirement, noted that wiring a second outlet can represent a significant undertaking, and therefore urged HUD to incorporate a mechanism for providing relief for housing under existing rental assistance contracts which may not have been built/renovated to this standard, providing a grace period until improvements can be made.

HUD Response:

HUD appreciates feedback about the question of adding a deficiency for an inadequate number of outlets. HUD took these comments into consideration in drafting the proposed Standards notice and will address this matter more fully in the final NSPIRE Standards notice.

Comments Regarding the GFCI & AFCI Requirement

As with “electrical outlet and switch,” many of the comments on GFCI and AFCI centered on issues of existing codes and/or implementation with respect to older properties. One commenter noted that while new and rehabilitated properties are in compliance with this standard, older properties that have not been upgraded may not be able to comply. Specifically, a commenter noted that bathrooms in older properties tend to be smaller and built before the era of ground fault indicators, but it is likely that GFCIs were installed at a later date during an electrical modernization, and that to now require that an outlet be located more than 6 feet from a shower or sink or be upgraded with a GFCI is not only unreasonable but unfeasible as well.

Another commenter repeated its position that imposition of this proposed requirement crosses into the realm of specifying how that property should have been constructed instead of confirming the adequacy of its maintenance. Commenters stated that GFCI outlet requirement should be grandfathered,

i.e.,

required where minimum rehabilitation thresholds for modification have been surpassed and that, if required in older Section 8 HCV units, owner participation may be discouraged due to prohibitive costs to

modify. One commenter stated that it does not believe that owners of older construction (pre-1975) housing units with proper operating outlets need to be forced to upgrade to GFCI and AFCI outlets in order for the unit to pass inspection and that, if HUD decides to move forward with this requirement, additional capital resources should be made available to convert to this protection. The commenter further urged that all NSPIRE inspectors should be equipped with the proper equipment to test the GFCI and AFCI outlets and not be reliant on a visual inspection.

With respect to AFCI in particular, two commenters noted that AFCI protection is a newer concept and would be burdensome and costly to install in older buildings. Another commenter, while supporting the GFCI proposal, distinguished AFCI as a higher standard that represents a significant undertaking because it requires the removal and replacement of circuit breakers. The commenter encouraged HUD to defer to local building code requirements rather than imposing a blanket AFCI requirement, and that, if the AFCI requirement is imposed, HUD should incorporate a mechanism for providing relief for housing under existing rental assistance contracts which may not have been built/renovated to this standard, providing a grace period until improvements can be made.

Several commenters provided comments with respect to the GFCI location standard (

i.e.,

within 6 feet of sinks, tubs, showers; or exterior, garage, or unfinished basement areas). Two commenters stated that while it is reasonable to expect GFCI protection when an outlet is within 6 feet of water or on the exterior of the building, it does not believe it is necessary to require GFCI protection in garages and unfinished basement areas.

With respect to refrigerators, a commenter questioned the need for GFCI protection as they are often located within 6 feet of a sink but are on their own dedicated circuit which does not have a GFCI installed. The commenter felt that such a requirement would be confusing.

HUD Response:

HUD agrees that ARC Fault Circuit Interrupter (AFCI) should not be required in existing buildings. The ARC Fault Circuit Interrupter (AFCI) standard under consideration does not require the installation of AFCI breakers where they are not present. The standard requires the test button, when present, to function properly when pressed.

With respect to the physical placement of Ground Fault Circuit Interrupter (GFCI) protected outlets or breakers, HUD continues to believe that Ground Fault Circuit Interrupter (GFCI) protected outlets or breakers should be a requirement near water sources as specified in the current Electrical—Outlet and Switch standard

12

HUD agrees that major appliances do not need to be plugged into a GFCI outlet. HUD will address this matter further in the final NSPIRE Standards notice. The requirement for GFCI outlets was added to the affirmative requirements in § 5.703(b), (c) and (d).

12

Electrical Safety Foundation International (ESFI), “Ground Fault Circuit Interrupters: Preventing Electrocution Since 1973”

https://www.esfi.org/ground-fault-circuit-interrupters-preventing-electrocution-since-1971/

(Last accessed May 2, 2022).

Comments Regarding HVAC (Permanently Installed Heating Source)

Several commenters expressed general approval of including a requirement for a permanently installed heating source and suggested there should be a deficiency for lack of proper heating. One commenter opined that because not having heat could be a life-threatening situation, not having a working and reliable heating system should be a deficiency; another pointed out that use of a portable heater (with HUD approval) is generally approved only in rural areas with warm climates, and that HUD should include a requirement for a permanently installed heat source. Another agreed that all units should have a heating source but suggested that HUD define this to include a properly installed and vented wood stove as a permanent heating source. One commenter urged consideration for existing properties which do not meet this standard and are not going through a substantial rehabilitation and suggested that it might be appropriate to exclude existing developments from the proposed requirement.

Other commenters differed. Two commenters stated that the requirement would greatly burden older and historic homes that do not have permanent heat sources installed, and that it would be more reasonable to require heating to be UL rated for use as a heating device so long as it is in safe, operable condition. One commenter pointed out that many areas do not require the use of HVAC systems to maintain a living space at a safe temperature, and that forcing tropical properties to install heating equipment and polar communities to install air conditioning is wasteful and unnecessarily complicates property maintenance. The commenter suggested that establishing that a target temperature range be attainable would be a more cost-effective manner of protecting stakeholder interests.

One commenter stated that the heating source requirement is addressed under flammable materials and that the proposed requirement would be redundant and should be eliminated.

HUD Response:

HUD agrees with the comments regarding the importance of properly functioning heating systems. Adequate heat is essential for the health and comfort of residents. The NSPIRE HVAC standard will include a deficiency for a minimum temperature requirement during the winter to prevent the potential negative health and safety effects of cold temperatures, including hypothermia, which can be fatal. HUD has replaced language originally in § 982.401(e) regarding the “thermal environment” with a requirement in § 5.703(e)(1) that the unit not be subject to “extreme temperatures” and will finalize provisions to meet the requirement in the NSPIRE standards.

HUD appreciates feedback particularly regarding tropical climates and will take it into consideration for future standards iterations. Additional consideration may be given to areas with extreme cold weather that falls within the 3rd standard deviation of winter temperatures. This will be revisited in subordinate Standards notices. HUD agrees that presence of air conditioning units should not currently be a requirement. The proposed NSPIRE HVAC standard does not include a requirement for air conditioning, just that installed AC units provide cool air, which is specified as lower than room temperature. NSPIRE does not have a deficiency for a maximum temperature requirement during the summer that is analogous to the minimum temperature winter requirement for heat. Where State or local jurisdictions have such requirements, covered programs must follow the more stringent requirement.

HUD does not agree with commenters that suggested that portable space heaters or fireplaces should be allowable as sources of heat. Portable space heaters, electric and fuel burning, have been associated with property fires and carbon monoxide poisoning. Fires and carbon monoxide poisoning resulting from space heater usage have caused serious injuries and deaths. Space heaters have also caused substantial property damage to properties throughout the United States sometimes leading to the complete loss of housing. Residents without adequate heating have occasionally used gas and electric ovens to provide heat, which have resulted in property fires and

carbon monoxide poisonings as well. Requiring a properly functioning permanent heating source as an affirmative requirement in § 5.703(c) removes the health and safety risks associated with portable space heaters.

HUD also does not agree that a fireplace should be considered as a permanent heating source. Permanent heating sources are typically specified as being self-fueled. They are permanently affixed within the unit or building, safely connected to the unit or building electrical system, thermostatically controlled by the unit or building and appropriate for the size of the unit. The energy source for a permanent heating system can be electric, gas or oil. A fireplace does not meet the self-fueled criteria. Fireplaces also do not evenly distribute heated air throughout a property as effectively as permanently installed heating sources and are one of the leading causes of heating system caused fires in properties.

HUD notes that there have been instances of properties experiencing a heating emergency if a boiler or furnaces fail. In these situations, a temporary, back up heating source may be necessary.

Comments Regarding the Guardrail Requirement

While some commenters supported the proposed requirement, several noted the need for additional details. Two commenters stated that the requirement needs to have a minimum horizontal distance associated with it within which the 30-inch vertical drop exists; one recommended that HUD better explain the proposed requirement depe

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