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HUD Releases Proposed NSPIRE Scoring Notice

On March 24, the Department of Housing and Urban Development (HUD) released a preview of the proposed notice for scoring methodology under the National Standards for the Physical Inspection of Real Estate (NSPIRE). The Department stated that the proposed notice will be published in the Federal Register soon, at which point a 30-day comment period will begin. PHADA intends to submit comments after a detailed analysis of the proposed notice and will solicit feedback from PHADA members and industry inspection experts. Housing authorities (HAs) are highly encouraged to reach out to policy@phada.org with any specific questions or comments on the scoring methodology so that policy staff may incorporate those comments into the Association’s submission. HAs are also highly encouraged to submit comments of their own, detailing specific impacts to their agencies, to: regulations.gov.

The proposed notice requests comment on the proposed NSPIRE physical inspection scoring and ranking methodology to implement the final NSPIRE rule for public housing and Multifamily Housing programs. Below is a general overview of the highlights of this notice, to get as much information to members as possible in a timely manner. A more in-depth analysis of the proposed scoring notice will be made available in the near future.


General Overview of Scoring Methodology

In general, changes to the scoring methodology from UPCS to NSPIRE focus on habitability and the residential use of structures (versus appearance), and most importantly, the health and safety of residents within the built environment. The new scoring methodology, per the Department, intends to prioritize conditions that are most likely to impact residents in the places where they spend the most time – that is, the units – with a focus on both defect severity level and defect location.

Therefore, in-unit deficiencies are weighted more heavily, meaning that properties with such deficiencies would be more likely to fail an inspection. The weight of the deduction for a given deficiency changes depending on both the location and the severity. Since the number of defects observed will likely be greater in properties where HUD inspects a larger number of units, the methodology normalizes the total defect deduction value by dividing it by the total number of units inspected.

Under NSPIRE, there are now two situations in which a property will be considered to have failed an inspection:

  • Scores Below 60 – consistent with existing policy and practice, failure to achieve a score at or above 60 is considered a failing score, and properties that score under 60 are required to perform additional follow-up and may be referred for administrative review under current regulations, as well as future regulations under NSPIRE.
  • Unit Point Deduction 30 or Above – the Department states that consistent with HUD’s goal of maximizing the health and safety of a unit, it has determined that scores, where deductions are disproportionately from unit deficiencies, should be considered failures even if, for example, the rest of the property is in pristine condition. Therefore, regardless of the overall property score, if 30 points or more were deducted due to unit deficiencies, HUD would consider the property to have failed the inspection and would deem the result of the inspection to be a score of 59.


Non-Scored Defects and New Affirmative Requirements

  • Smoke Detectors – under HUD practice for not scoring smoke detector defects under the UPCS scoring methodology, HUD will not score smoke detector defects under NSPIRE, but will continue to denote identified defects. It is critical to note that these defects are classified as life-threatening (LT) defects and must be corrected within 24 hours even though these defects are not scored. HUD will also follow this policy for carbon monoxide devices. While not scored, these items are considered LT and must be remedied within the timelines established by HUD.
  • Affirmative Requirements – defined generally as property attributes or requirements that must be met, the lack of these items (both quantity and location) would constitute a defect and result in a deduction from the property’s inspection score. HUD states that it understands that it may take properties’ ownership and management some time to comply with these new standards and as a result will not score new affirmative requirements, defined as those standards that were expressly not in the UPCS or in any way covered by those standards, in the first 12 months of NSPIRE inspections. The list of new affirmative requirements will be included in the final NSPIRE rule. The Department expects that the list will include:
    • GFCI-protected outlets within 6 feet of a water source.
    • Guardrails for elevated walkways.
    • Permanently installed heating source for current climate zones.
    • Permanently mounted light fixtures in the kitchen and each bathroom.


Scoring Designations

In addition to a numerical score between 0–100 for an NSPIRE inspection, HUD will assign a letter grade to each property inspection score. The Department states that this is intended to assist HUD, owners, management, residents, and the public to better understand the condition of the property and to guide administrative activities such as oversight, risk management, and enforcement. PHADA does have initial concerns with these designations.


Unit Sampling

HUD’s inspection program and scoring methodology under NSPIRE relies on inspecting a statistically significant sample of units to achieve a 90 percent confidence level with a 6 percent margin of error for its inspections. HUD employed the same confidence level and a similar margin of error, but capped the number of units inspected at 27 units under UPCS. Under the NSPIRE scoring and sampling methodology, HUD intends to increase the maximum number of units to 32 units. Further, HUD is eliminating the requirement that every resident building be inspected regardless of whether any unit within that building was subject to inspection. Under the NSPIRE scoring and sampling methodology, building-level sampling will be driven by units. The Department states that this will help achieve consistency in inspection results across all sizes of properties. This change in unit sampling results in an increase in the NSPIRE sample by no more than 5 units (or less in many cases.



For Public Housing properties subject to the Public Housing Assessment System, HUD will use the new NSPIRE scoring methodology and associated property inspection scores to calculate the Physical Condition Indicator component of PHAS once a HA’s entire portfolio has been inspected under NSPIRE. Until all inspections are completed under NSPIRE, a PHA’s physical condition indicator will continue to be based on the most recent UPCS scoring and unit weighted average. PHADA appreciates that the Department has considered the impacts of physical inspection scores to PHAS. This process will provide some agencies with additional time to prepare for the implementation and rollout of NSPIRE, dependent on their portfolios and the timing of their scheduled NSPIRE inspections. However, small and rural agencies with one or few developments may not be afforded these same opportunities, which is concerning and inequitable.


NSPIRE and the Housing Choice Voucher Program

NSPIRE will retain a pass/fail indicator for HCV and PBV programs. While not in the proposed scoring notice, HUD recently stated that for up to one year after October 1, 2023, agencies may continue to use the Housing Quality Standards (HQS) as an alternative inspection method. This seems to be an admission by the Department that HUD is not ready to fully implement NSPIRE. While PHADA is appreciative of and supports this flexibility for the HCV program, the public housing program should also receive similar flexibility. PHADA has requested for years that NSPIRE scores be provisional or advisory for at least one year following implementation of NSPIRE. Assisted housing programs should be treated equitably and held to the same standards.


Further Analysis and Next Steps

As noted above, PHADA will provide a more in-depth analysis in the near future. Housing authorities are encouraged to review the notice in full and reach out to the policy team if they have any questions and/or concerns. The Association will also connect with members directly, along with other industry stakeholders and inspection experts to develop comments and to provide a template as a starting point for members to submit their own agency-specific concerns as well.

After a preliminary review of the notice, PHADA appreciates HUD’s acknowledgment of the need for more time and resources to be prepared to comply with NSPIRE, as well as the Department’s efforts to address disproportionate impacts on some agencies as a result of scoring. However, PHADA continues to have significant concerns with NSPIRE and the notice leaves many questions unanswered. We will continue to provide timely updates and additional resources as they are available.

The proposed notice can be found here.

For more information on NSPIRE, visit the NSPIRE Resources page here.


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