The REAC Impossible Newsletter
Volume 2, Number 4, June/July 2021
Head-Scratcher of the Month
HUD REAC Inspections do not identity bad properties

Good properties can score the same as bad properties in a REAC inspection under the flawed scoring rules. So how does HUD separate the wheat from the chaff? Back in late 2018 HUD announced, in a memo, HUD had been conducting an internal review of its 20-year old UPCS inspection program. The memo says that HUD will be changing the UPCS inspection scoring to better reflect the physical condition of its subsidized housing. 

In early 2021, HUD offered its new inspection system called the National Standards for the Physical Inspection of Real Estate (NSPIRE), and published it in the Federal Register.    

The goal of NSPIRE is to emphasize areas directly affecting residents. NSPIRE does that, in part, by reducing 5 inspectable areas (units, building systems, common areas, building exterior, and site) to 3 inspectable areas (units, inside, and outside).

Consequently, units will now count for 50% of the score, up from 35%. This is not a drastic change because if there were few common areas and site items to inspect, it was not unusual for units to be worth up to 45% of an inspection score.

So, essentially, unit defects will count, on average, 15% more than under UPCS. Properties can fail an inspection by losing too many unit points under NSPIRE. However, HUD has not divulged what constitutes a failing unit score.  
Nor has HUD published points assigned to NSPIRE defects, even though a demonstration project has been underway for over 2.5 years. I have a FOIA requesting info about scoring, and based on past responses, I do not expect an answer soon, if at all.

Per HUD NSPIRE is needed, despite a 96% pass rate and failed inspections declining in 2017. With those numbers Congress must be wondering why all the NSPIRE kerfuffle. 

Nonetheless, HUD is well on its way to employing NSPIRE. Once a federal government agency gets a foothold, no amount of dissenting empirical data will stop the freight train. The ostensible reason HUD is adopting a “new and better” inspection program is, by HUD’s own admission, the 20-year old UPCS inspection program is grossly flawed. HUD purports that UPCS does not consistently identify bad properties. NSPIRE will not identify bad properties any better than UPCS. 

Bad properties will not be identified until HUD fixes the scoring rules, AND hires competent inspectors, managers, and directors. HUD just installed a new REAC Director, Ashley (Ash) Sheriff, with zero experience in building inspections. REAC is about to embark on a whole new direction, without expert leadership. I would love to see Ash’s face when an inspector tries to explain a GFI. Imagine airlines led by a non-pilots, Army platoons led by a civilian social workers, or Spanish only speaking teachers teaching English only speaking classes.

So why do the current scoring rules not identify bad properties? Explained best by way of illustration. Good Property and Bad Property are inspected by REAC inspector R. Johnson. There are 50 defects on Bad Property, and only 10 defects on Good Property. However, both properties score a 90. How could this happen? Is not one property worse since it had five items as many defects. Yes it is, but because of flawed scoring rules both score the same. Let us quickly look at why that happens by way of 3 examples. I could list 500 plus examples.

Sprinkler heads
Say Good and Bad Property each have about 200 sprinkler heads. Dozens of sprinkler heads are compromised because of paint on Bad Property. However, Good Property has only one painted sprinkler head. Yet, both properties only lose 10 points. Mr. Johnson is required to only list up to three heads with paint, so the report for the Bad Property would show only 3 defective sprinkler heads even though dozens were defective, and both properties still only lose 10 points. Good Property has one defective head, but losses the same number of points as Bad Property with dozens of bad heads. Fix them all or fix none, one same as dozens, points wise!

Rodent infestation
Bad Property has a long standing rat infestation, and because Good Property has effective rodent extermination controls it has no rats. Mr. Johnson sees scurrying rats in several common area rooms and units in Bad Property, but records a defect for rat infestation in only one location. He sees no hurrying vermin but only droppings in one common area room at Good Property and records a defect for infestation. Both properties lose 3 points for infestation. Mr. Johnson was required to list at least 3 locations for infestation, but Mr. Johnson is too hurried to list more than one instance of rodent infestation, as he is not paid hourly.  So, the REAC inspection report indicates that both properties have rodent infestation even though Bad property had severe infestation and Good Property had fixed its vermin issue. Good Property has no infestation, but because the droppings had never been swept up, a defect for infestation was booked. The real and long standing rodent problem at Bad Property goes undetected other than a lowered score by 3 points, the same 3 points deducted for Good Property with no rodent infestation. 

Trip hazards
Inspector Johnson records one of several trip hazards on Bad Property. He would have recorded more, and was required to list up to three, but it is a lot of extra work to take a photo, haul out a measuring device, measure the offset/gap, and describe the location in the inspection software. At Good Property, and after an exhaustive search Mr. Johnson finds an out of the way trip hazard which he duly records. Both properties lose 5 points for a trip hazard, regardless of the number present or recorded. But the dedicated public servants sitting in HUD offices across the country looking at the REAC inspection reports would not know that Bad Property was tripping up residents every other day while no tripping was reported Good Property. Five points outside, zero inside! Fix them all or fix none, one same as dozens, points wise!

As an aside, zero points are deducted for a trip hazard inside a unit or common area. 
Identify and score all defects

Zero points are also not deducted for defective/missing smoke detectors. However, REAC requires SD defects be mitigated, immediately! Why not just require properties to mitigate defects, rather than using a defective/flawed scoring system to identify bad properties.  If the point of the inspection program is to motivate owners to keep their assets in good repair, just require them to make repairs like with smoke detectors. Or just record and score all defects. 

All defects at the collapsed Champlain South Towers in Miami, FL, were recorded, but ignored. REAC does not even go so far as to record all defects. At least record all of the defects. Now that would be a start in separating the wheat from the chaff. 

Home inspectors record ALL defects, not just a few here and there or ‘up to 3’. If a home inspector does not record a defect they are at risk of paying for the fix, putting lives and property in danger, and increased insurance costs. The risk to HUD is its charges’ safety. 

The real reason HUD is again changing its flawed inspection procedure: “this time it will work, I promise!”, says the unqualified REAC Director to the HUD Secretary, Congress, et al. Ash gets more budget money. NACHI should be charged with inspecting the nation’s subsidized housing, or the States where it was before HUD took over, not the Federal government.
Next newsletter: REAC inspections do not identify serious building structural defects leading owners to think their buildings are structurally sound, and not on the verge of collapse.
Hank Vanderbeek, MPA
Certified Master Inspector
REAC Property Consultant
Former Federal Office of Inspector General Forensic Auditor
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