NSPIRE Proposed Rule

2582

Proposed Rules

Federal Register
Vol. 86, No. 8
Wednesday, January 13, 2021

This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Parts 5, 92, 93, 200, 574, 576,
578, 880, 882, 884, 886, 902, 982, 983
and 985
[Docket No. FR–6086–P–01]
RIN 2577–AD05

Economic Growth Regulatory Relief
and Consumer Protection Act:
Implementation of National Standards
for the Physical Inspection of Real
Estate (NSPIRE)
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, HUD.
ACTION: Proposed rule.
AGENCY:

This rule proposes a new
approach to defining and assessing
housing quality: The National Standards
for the Physical Inspection of Real
Estate (NSPIRE). This proposed rule is
part of a broader effort across HUD to
revise the way HUD-assisted housing is
inspected and evaluated. The purpose of
NSPIRE is to reduce regulatory burden
and improve HUD oversight through the
alignment and consolidation of the
inspection regulations used to evaluate
HUD housing across multiple programs,
which are currently evaluating housing
quality through differing standards,
protocols, and frequencies. The goal of
this alignment and consolidation is to
create a unified assessment of housing
quality. In advancement of HUD’s
mission to create quality affordable
housing and strong, sustainable, and
inclusive communities, this rule would
establish the method HUD will use for
the implementation of specific NSPIRE
standards, scoring, and processes
through Federal Register notices.
Additionally, the proposed rule seeks to
apply a ‘‘safe, habitable dwellings’’
standard; reduce the categories of
current inspectable areas for physical

SUMMARY:

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condition standards for covered housing
programs from five to three; implement
a new annual self-inspection and
reporting requirement for certain HUD
housing; establish an administrative
process for the treatment of health and
safety deficiencies; and incorporate
provisions of the Economic Growth and
Recovery, Regulatory Relief and
Consumer Protection Act that will
reduce administrative burden on small
rural PHAs.
DATES: Comment Due Date: March 15,
2021.
ADDRESSES: Interested persons are
invited to submit comments to the
Office of the General Counsel, Rules
Docket Clerk, Department of Housing
and Urban Development, 451 Seventh
Street SW, Room 10276, Washington,
DC 20410–0001. Communications
should refer to the above docket number
and title and should contain the
information specified in the ‘‘Request
for Comments’’ section. There are two
methods for submitting public
comments.
1. Submission of Comments by Mail.
Comments may be submitted by mail to
the Regulations Division, Office of
General Counsel, Department of
Housing and Urban Development, 451
7th Street SW, Room 10276,
Washington, DC 20410–0500. Due to
security measures at all federal agencies,
however, submission of comments by
mail often results in delayed delivery.
To ensure timely receipt of comments,
HUD recommends that comments
submitted by mail be submitted at least
two weeks in advance of the public
comment deadline.
2. Electronic Submission of
Comments. Interested persons may
submit comments electronically through
the Federal eRulemaking Portal at
http://www.regulations.gov. HUD
strongly encourages commenters to
submit comments electronically.
Electronic submission of comments
allows the commenter maximum time to
prepare and submit a comment, ensures
timely receipt by HUD, and enables
HUD to make comments immediately
available to the public. Comments
submitted electronically through the
http://www.regulations.gov website can
be viewed by other commenters and
interested members of the public.
Commenters should follow instructions
provided on that site to submit
comments electronically.

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Note: To receive consideration as
public comments, comments must be
submitted through one of the two
methods specified above. Again, all
submissions must refer to the docket
number and title of the notice.
No Facsimile Comments. Facsimile
(fax) comments are not acceptable.
Public Inspection of Comments. All
comments and communications
submitted to HUD will be available for
public inspection and copying between
8 a.m. and 5 p.m. weekdays at the above
address. Due to security measures at the
HUD Headquarters building, an advance
appointment to review the public
comments must be scheduled by calling
the Regulations Division at (202) 708–
3055 (this is not a toll-free number).
Copies of all comments submitted are
available for inspection and
downloading at http://
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Timothy Weese and Samuel Franco,
Real Estate Assessment Center, Office of
Public and Indian Housing, Department
of Housing and Urban Development,
550 12th St SW, Suite 100, Washington,
DC 20410–4000, telephone number 202–
708–1112 (this is not a toll-free
number). Individuals with hearing or
speech impediments may access this
number via TTY by calling the Federal
Relay during working hours at 800–877–
8339 (this is a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
There are currently two inspection
models used across the majority of HUD
housing programs: The Housing Quality
Standards (HQS) developed in the
1970s, which are currently found at 24
CFR 982.401, and the Uniform Physical
Condition Standards (UPCS) developed
in the 1990s, which are currently found
at 24 CFR 5.703. Both remain largely
unchanged since their inception. The
housing portfolio that was once
dominated by government-owned
properties has changed in the past two
decades to become largely increasingly
owned by private entities. This shift has
caused Congress and HUD’s evolving
list of stakeholders to demand revisions
to the physical inspection products and
services that will both provide reliable
evaluations of housing conditions and
protect residents.
HUD analyzed the way inspections
are conducted under both models to

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better understand how housing quality
regulations needed to evolve. HUD
found that both inspection models can
sometimes provide inaccurate and
inconsistent results and can prevent
HUD from effectively evaluating
housing across programs. HUD
determined that while the models are
well-intentioned in design, neither
model currently aligns with HUD’s
priorities, the state of the housing
industry and improvements in
technology. This is partly because
neither model includes mechanisms for
continual update. This analysis also
identified a disproportionate emphasis
around the appearance of items that are
otherwise safe and functional and paid
inadequate attention to the health and
safety conditions within the built
environment. HUD has concluded that
existing housing standards need to focus
on habitability and the residential use of
the structures, and most importantly,
the health and safety of residents.
To this end, HUD announced the
implementation of NSPIRE through the
publication of an August 21, 2019,
notice,1 which described the
development of a new inspection model
for HUD programs. HUD began building
the updated standards, procedures, and
scoring methodologies, which will to be
refined through a multistage NSPIRE
demonstration. The demonstration will
test and HUD will further refine the
future state of HUD’s physical
inspection model to best serve residents.
NSPIRE programmatic provisions will
be published in the Federal Register
and will provide an opportunity for
public comment.2 The improvements
being refined through the NSPIRE
demonstration are intended to occur in
parallel to support and reinforce the
changes being proposed by this rule.
Regulatory Consolidation and
Alignment
As noted above, the proposed rule
would consolidate and align housing
quality requirements and associated
inspection standards across programs
wherever possible. To achieve this,
housing quality regulations across HUD
programs would be consolidated into
one location at 24 CFR part 5. HUD
understands, however, that regulations
must be flexible enough to
accommodate each program’s unique
circumstances. Where differing statutory
requirements or public policy
considerations prevent alignment to 24
CFR part 5, those program-specific
requirements would be maintained in
their respective program regulations and
1 84

FR 162.

3 24

2 https://www.federalregister.gov/.

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would supersede or supplement 24 CFR
part 5.
Current program regulations
governing housing quality and
inspections have a large regulatory
footprint. Rather than being in a single
location, they are located under 24 CFR
part 5 and part 200 for programs
governed by Uniform Physical
Condition Standards (UPCS); 24 CFR
982.401 for programs governed by HQS;
and within each program’s individual
regulations in 24 CFR parts 92, 93, 200,
574, 576, 578, 880, 882, 884, 886, 902,
982, 983, and 985. This means that
finding and understanding the
requirements across programs—even
those governed by the same standard—
is often cumbersome. Instead, this rule
would consolidate 14 dispersed sections
which are spread across 24 CFR, into 7
consecutive sections.
Further, there are often minor,
unnecessary discrepancies in language
across regulations. The use of ‘‘decent,
safe, and sanitary’’ is a good example.
The physical condition standards
applicable to Public Housing and HUD’s
Multifamily Housing program outlines
that housing must be ‘‘decent, safe,
sanitary, and in good repair.’’ 3 The
Housing Choice Voucher (HCV) and
Project-Based Voucher (PBV) program
regulations state housing must be
‘‘decent, safe, and sanitary rental
housing of a modest (non-luxury) nature
with suitable amenities.’’ 4 Meanwhile,
regulations for the Home Investment
Partnerships (HOME) program state
housing be ‘‘decent, safe, sanitary and
affordable.’’ HUD believes that all
standards governing HUD housing are
equivalent in that they mandate safe,
habitable housing for residents. An
alignment of these standards would
create a single expectation of housing
quality across these programs and
remove these unnecessary
discrepancies.
Finally, programmatic alignment and
consolidation is increasingly important
as HUD’s inspection portfolio has
shifted to include greater numbers of
mixed finance properties which are
subject to multiple inspection standards
by the nature of their financing. A
similar challenge is faced by PHAs and
owners whose portfolio includes
multiple HUD program types or that
convert from one funding stream to
another, such as through the Rental
Assistance Demonstration (RAD)
program. HUD acknowledges that the
challenges a PHA faces are not always
the same challenges that owners face,
but in both cases, the lack of aligned

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CFR 5.703.
CFR 982.1(a)(1).

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requirements unduly increases the
complexity and uncertainty associated
with participating in HUD’s programs
and may deter some owners from future
involvement.
Programmatic and Statutory Limits on
Alignment
Part of this alignment will consolidate
and align the regulations governing the
physical condition of HUD housing to
create a shared expectation of housing
quality across a wide array of distinct
programs. The remainder of the
alignment centers around program
administration: Inspection protocols,
processes, and procedures.
Regarding these inspection protocols,
processes, and procedures, the majority
of the alignment that HUD is proposing
involves the program regulations for the
public housing and multifamily
programs. However, given the unique
nature of some HUD programs and the
limits posed by existing statutory
requirements, it is not possible for HUD
to align all program administration
regulations across all programs under
this proposed rule.
Within this proposed rule, the
Housing Choice Voucher (HCV)
program, comprised of the Project Based
Voucher (PBV) and Tenant Based
Voucher (TBV) programs, has been
aligned with other HUD programs to the
maximum extent possible, while also
acknowledging that varying types of
rental housing and unique geographic
features conditions nationwide
necessitate separate requirements in
certain areas. HUD’s approach for
aligning these programs accounts for
the:
• Unique statutory requirements
related to the standards of individual
units rather than the project as a
whole; 5
• Nature of the entity responsible for
conducting inspections 6 (the PHA
rather than HUD);
• Relationship of housing quality
standards to State and local codes; 7
• Pass/fail nature of inspections; and
• Frequency of inspections.8
All of these differ greatly from other
HUD programs, particularly projectbased assistance programs.9
5 U.S.C.

1437f(o)(8)(C).
1437f(o)(8)(C).
7 U.S.C. 1437f(o)(8)(G).
8 U.S.C. 1437f(o)(8)(D)(i).
9 Important to note that PBVs are part of the HCV
program and PBV units under section 8(o)(13) are
subject to the requirements under section 8(o)(8),
thus, using the Housing Quality Standards similar
to tenant-based voucher units. Thus, key elements
of physical standard requirements for the PBVs
align with the HCV program and by virtue of
section 8(o)(8) will be distinct and separate from
PBRA and public housing.
6 U.S.C.

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Similarly, while the proposed rule
aligns the Office of Community
Planning and Development (CPD)
programs whenever possible, CPD
programs pose unique challenges to
alignment, both across HUD and within
CPD. CPD programs provide housing
assistance, one-time or time-limited
assistance (such as mediation with a
property owner or a one-time payment
of rental arrears to help a family avoid
eviction from their existing housing, or
payment of rental application fees to
help a person in shelter get back into
housing), and special housing needs
programs. CPD programs also fund
various services, such as legal assistance
and mediation to prevent eviction and
housing search and placement, for
special needs populations. The variety
of housing assistance and services
offered through CPD programs required
HUD to adopt, as proposed here, unique
inspection frequencies and protocols
that account for the needs of these
different programs and assistance types.
Furthermore, this alignment accounts
for the fact that CPD programs are
administered differently. For example,
CPD’s formula grant-based programs are
provided to States, eligible units of local
government, the District of Columbia,
U.S. Territories and Tribal governments,
which often follow local code
requirements.
Through the rulemaking process,
HUD invites recommendations on
opportunities to further consolidate
similar regulatory provisions.
With regard to consolidation, HUD is
requesting public comments on the
following questions:
Question for Comment #1: The
Economic Growth and Recovery Act
mandates that for small public housing
agencies, the same standards apply to
small public housing agencies for the
acceptable condition of public housing
projects also apply to projects assisted
under Section 8. Is there a preferable
approach to implementing the statutory
provision that requires the same
standards for small rural Section 8
projects and PHA public housing
projects? If so, how should the
standards for and small rural PHA
Section 8 projects and public housing
projects differ from the standards
employed for all other public housing
and HCV units while ensuring that all
HUD housing must be free of health and
safety hazards?
Why HUD Is Implementing NSPIRE
Through Rulemaking
As previously noted, the current
regulatory footprint of all housing
standards is sprawling. HUD believes
that consolidating these standards—a

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total of 16 regulations containing many
administrative and procedural
differences—is required to reduce
administrative burden and increase
resident safety.
While some of the programmatic
modifications made by this proposed
rule could have been implemented
without formal rulemaking, proceeding
with this proposed rule provides a
framework for continued stakeholder
engagement and ensures transparency
throughout the process.
During the NSPIRE implementation
and in parallel to formal rulemaking,
HUD plans to draft Federal Register
notices that would outline the specific
standards, scoring, and protocols under
NSPIRE. All updated standards and
scoring methodologies would be
published—as required by this proposed
rule—through a Federal Register Notice
at least once every 3 years with the
opportunity for public comment prior to
implementation. This would provide
opportunity for both industry
stakeholders and the general public to
examine the proposed changes, provide
pertinent comments, and suggest the
inclusion of any relevant industry best
practices. This would also allow HUD to
be more responsive to the changing
portfolio and evolving needs in the field
and would allow HUD to further ensure
resident safety remains at the forefront.
II. The Proposed Rule
There are three sections under this
heading representing the four types of
changes this rule is making: Section A
covers amendments and additions to 24
CFR part 5, which make up the bulk of
the changes proposed;’’ Section B covers
HUD’s implementation of its statutory
mandate regarding Small rural PHAs;’’
and Section C discusses other changes
which the proposed rule would make to
regulations for programs which are
being integrated under NSPIRE.
A: Amendments and Additions to 24
CFR Part 5
Amending 24 CFR part 5 would allow
HUD to consolidate multiple physical
condition requirements into a single
regulation. This would align
overarching policies related to the
frequency of inspections, the method of
appealing results, and the actors
responsible for conducting inspections.
It would also make several technical
modifications to other regulations.
These changes would ensure
transparency, consolidate regulatory
sprawl, and reduce overall burden for
PHAs and owner/agents.
HUD’s consolidation and alignment of
the inspections regulations under this
part broadly fall into two categories.

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First, amended and aligned § 5.703
would generally apply across all HUD
programs covered under the proposed
rule. These regulations are meant to
convey clear expectations of housing
quality and maintenance requirements
across HUD programs, ensuring
residents have a shared expectation of
safe, habitable housing regardless of
program type. Second, changes and
alignment in § 5.705 through § 5.713 are
generally only applicable to the public
housing and multifamily programs as
they deal with administrative
procedures and scoring for HUDconducted inspections. To clarify, by
nature of their differing statutory
requirements and programmatic
considerations, § 5.705 through § 5.713
in part 5 generally do not apply to
Section 8(o) programs (HCV and PBV),
Moderate Rehabilitation, or certain CPD
programs (i.e., HOME and Housing
Trust Fund (HTF)).
HUD proposes the following
amendments and additions to 24 CFR
part 5:
a. Section 5.701 Applicability
The current regulations at § 5.701
state that the physical condition
standards in 24 CFR part 5 apply to
Public Housing and certain programs
administered under HUD’s Office of
Multifamily Housing, including all
project-based Section 8 programs and
any housing with mortgages insured or
held by HUD or receiving insurance
from HUD.
Amended § 5.701 would extend this
subpart to the HCV (part 982) and PBV
programs (part 983). CPD programs
would adopt these standards by
reference in the applicable CPD
regulations to include: The HOME
Program (part 92); HTF) (part 93);
Housing Opportunities for Persons with
Aids (HOPWA) (part 574); Emergency
Solutions Grants (ESG) Program (part
576); and Continuum of Care (CoC) (part
578).
b. Section 5.703 National Standards
for the Condition of HUD Housing
HUD’s housing condition standards
are located in two areas in the
regulations today: Existing § 5.703
applies to public housing, multifamily,
and some CPD programs while existing
§ 982.401 applies to HCV and PBV, and
to some other CPD programs via crossreference. CPD programs do not apply
any scoring, weighting, ranking or
enforcement from Part 5. This is
outlined in the CPD program rules (e.g.,
HOME rule at 24 CFR 92.251(f)(1)(i).)).
CPD programs are fundamentally
different than many of the programs
subject to REAC inspections as they are

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programs administered by local
governments subject to local decision
making. CPD programs have their own
means of enforcement specified in each
program regulation. These functions are
instead performed by HUD CPD staff,
and can include requiring the
participating jurisdiction or grantee
repaying the full amount of subsidy
provided to the project. Amended
§ 5.703(a) through (e) consolidates and
replaces both § 5.703 and § 982.401.
These provisions parallel the specific
directives at 42 U.S.C. 1437(f)(2) and 42
U.S.C. 1437(o)(8)(B) that require the
Secretary to establish quality standards
that ensure housing is safe and
habitable. In these provisions, HUD
proposes to define ‘‘safe, habitable
dwellings’’ as those for which ‘‘the
items and components located inside
the building, outside the building, and
within the units of HUD housing . . .
[are] functionally adequate, operable,
and free of health and safety hazards.’’
HUD believes the requirement of
‘‘functionally adequate, operable, and
free of health and safety hazards’’ is
generally equivalent to ‘‘decent, safe,
and sanitary.’’ The intentional shift in
language would serve as a uniting
phrase across programs. Additionally,
the shift would help the public
differentiate between the old and the
new regulatory frameworks. It would
further allow HUD to establish clear,
objective, and aligned property
inspection standards (described later in
this rule at § 5.705(a) and § 5.709) by
creating identifiable limits that are
comparable across housing programs.
For example, the terms ‘‘functionally
adequate’’ and ‘‘operable’’ may be
defined based on universal habitability
requirements and design specifications
for an item or component. In contrast,
‘‘decent,’’ is a highly subjective term.
Perceptions of decency vary from
person to person and location to
location. The terms ‘‘health’’ and
‘‘safety’’ can also be measured
universally and quantitatively by using
standard public health and safety
metrics related to morbidity and
mortality. ‘‘Health’’ as used here would
be inclusive of ‘‘sanitary;’’ HUD believes
that term ‘‘health’’ would be more
useful for assessment of a broader range
of impacts. HUD intends this new
description to make clear 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. The new definition
would also simplify the way in which
this rule names the inspectable areas of
a property by reducing the number of
areas from five to three. This change is

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intended to increase readability,
streamline the inspection process, and
emphasize to stakeholders the
importance of resident units.
Section 5.703(a) would limit the ways
in which the quality requirements apply
to units occupied by HCV and PBV
participants, as well as common areas
and exterior areas which either service
or are associated with such units. This
limitation is generally derived from the
unique statutory requirements for these
programs related to the application of
housing quality standards to units (as
opposed to projects). Other factors that
make this limitation appropriate is the
entity responsible for conducting the
inspections (the PHA), the relationship
of the housing quality standards to local
codes, and the frequency of those
inspections.
HUD also proposes to consolidate into
§ 5.703(d) several provisions currently
found in one section of the regulations
but implied in others. For example, the
proposed rule would make it clear that
certain unit features, like having a
kitchen area, are minimum habitability
requirements across programs. Most
renters would expect to have the ability
to store and prepare food in their home.
While not new requirements, they
reinforce the importance that this rule
places on residents’ units and the
primarily residential nature of HUD
housing. Similarly, amended § 5.703(d)
would add the word ‘‘safe’’ to the
current requirement that units have an
adequate source of potable water. ‘‘Safe’’
in this context would be defined by
HUD through future rulemaking after
receiving public comments.
This portion of the rule would also
incorporate requirements currently
described more clearly by the HCV
regulations for smoke detectors,
including those for hearing impaired
persons and the requirement for hot and
cold running water, and would replace
current paragraph (f) concerning health
and safety concerns. So that all the
habitability provisions are in one place,
paragraph (e)(2) would maintain
language found in the current regulation
at § 5.703(f) regarding lead-based paint
but would add information on
applicability.
The remaining provisions in (f)
through (h) discuss the relationship of
local codes to HUD housing and identify
when alternatives to § 5.703 would
apply.
New paragraph (g) would clarify that
§ 5.703 may be replaced or
supplemented by a state or local
standard under the HCV and PBV
program in line with the statutory
exception for those programs found at
42 U.S.C. 1437f(o)(8)(B). Additionally,

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for special housing types, such as Single
Room Occupancies or congregate
housing, that may have incompatible
design requirements, like shared
bathroom or kitchen facilities,
paragraph (h) would clarify that the
provisions in § 5.703 may be modified
by program specific requirements which
would continue to be found in the same
program-specific sections of the
regulations as they are today.
With regard to standards, HUD is
requesting public comments on the
following questions:
Question for Comment #2: HUD has
the following questions regarding water
safety:
(a) How can HUD best define what is
meant by safe or potable water?
(b) Should ‘‘safe’’ mean water
provided by a public water system that
is in compliance with the Safe Drinking
Water Act (42 U.S.C. 300f et seq.) as
implemented by the EPA?
(c) How should HUD monitor whether
water is safe?
(d) What elements should be reviewed
during the physical inspection to
determine water safety?
(e) Should inspectors verify that a
municipal water supply authority is in
compliance with EPA’s Safe Drinking
Water Act? How would they best do
this?
Question for Comment #3: HUD is
specifically seeking comment on
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 seeks comments on whether all of
the explicit standards should be
included or if there are certain site and
neighborhood standards that HUD
should consider changing?
Question for Comment #4: The
proposed rule would establish a subset
of minimum NSPIRE standards to apply
to rehabilitation of rental and owneroccupied or homebuyer housing and
homebuyer acquisition of standard
housing (i.e., down payment assistance)
assisted with HOME or HTF at
§§ 92.251(b) and (c)(3) and §§ 93.301(b)
and (c)(3), and to HOME- and HTFassisted rental projects throughout the
affordability period at § 92.251(f) and
§ 93.301(e), and for units occupied by
tenants receiving HOME Tenant-based
rental assistance (TBRA) in accordance
with § 92.251(f)What minimum housing
condition standards should HUD apply
to HOME- and HTF-assisted
rehabilitation activities for rental or
owner-occupied housing and what
minimum condition standard should
apply to HOME-assisted homebuyer
acquisition activities at completion to
ensure that the housing is decent, safe,

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sanitary and in good repair? In addition,
what minimum housing condition
standards should HUD apply
throughout the affordability period to
HOME- and HTF-assisted rental projects
and units occupied by tenants receiving
HOME TBRA to ensure that the housing
remains decent, safe, sanitary and in
good repair?
Question for Comment #5: How do
the NSPIRE standards in this proposed
rule compare 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 (i.e., down payment
assistance) to ensure that upon
completion the housing is decent, safe,
sanitary and in good repair?
Question for Comment #6: Should
HUD 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)? If so, what
should HUD consider when establishing
minimum standards for the
rehabilitation of rental housing,
homebuyer housing, or owner-occupied
housing?
Question for Comment #7: Should
HUD 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)? If so, what should HUD
consider when establishing minimum
standards and what should HUD define
as a large housing project?
Question for Comment #8: Should
HUD establish different minimum
deficiencies that must be corrected for
HOME or HTF-assisted rehabilitation
and homebuyer or owner-occupied
acquisition of standard housing (i.e.,
down payment assistance) projects at
§ 92.251(c)(3) and § 93.301(c)(3)? If so,
what should HUD consider when
establishing minimum standards for
rehabilitation projects and homebuyer
acquisition projects?
Question for Comment #9: Should
HUD 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?
Should HUD establish a list of
minimum deficiencies that must be
corrected if found during an onsite
physical inspection of HTF-assisted
rental housing? If so, what elements
should be required in the written
property standards?

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Question for Comment #10:
Alternatively, should HUD apply the
NSPIRE standards established in
accordance with this proposed rule (not
to include the inspection procedures,
administrative processes for scoring and
ranking, or the enforcement
requirements of NPSIRE) to housing
occupied by tenants assisted receiving
HOME TBRA at § 92.251(f)? HUD could
require inspection of the assisted unit;
the items and components within the
primary and secondary means of egress
from the unit’s entry door(s) to the
public way; the common features
related to the residential use of the
building (e.g., the laundry room,
community room, mail room); and, the
systems equipment that directly services
the unit similar to the exceptions that
are included in the proposed rule for
HCV and PBV. Is there another national
housing quality or condition standard
that HUD should apply to housing
occupied by tenants assisted with
HOME TBRA?
Question for Comment #11: Should
HUD establish a list of minimum
deficiencies that must be corrected if
found during an onsite physical
inspection of HOME- or HTF-assisted
rental housing or housing occupied by
a tenant receiving HOME TBRA at
§ 92.251(f)? If so, should HUD establish
separate lists for HOME and HTFassisted rental housing and housing
occupied by a tenant receiving HOME
TBRA? What should HUD consider in
the development of such lists of
deficiencies?
Question for Comment #12: Section
5.703(h) of the proposed rule identifies
unique standards to special types of
housing—single room occupancy (SRO)
housing; congregate housing; group
home; shared housing; manufactured
home; cooperative housing; and
homeownership—but applies this
section only to the HCV, PBV, and
Moderate Rehabilitation Programs.
Should any of these unique standards—
specifically SRO, congregate housing,
shared housing, and manufactured
homes—apply to the CoC, ESG, and
HOPWA programs?
Question for Comment #13: HUD is
considering adding certain affirmative
requirements at the final rule stage.
Currently under consideration are
related to ground-fault circuit
interrupter (GFCI), an arc-fault circuit
interrupter (AFCI); Heating, ventilation,
and air conditioning (HVAC); Guardrail;
and Lighting-Interior. In alignment with
HUD’s prioritization of resident safety,
HUD welcomes public comment on all
issues, but is specifically seeking
feedback regarding implementing the
following:

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a. Electrical Outlet and Switch—HUD
is considering adding a deficiency
under the Electrical Outlet and Switch
Standard regarding an inadequate
number of outlets (i.e., either 2 working
outlets or 1 working outlet and a
permanent light) within all habitable
rooms due to potential safety hazards,
usability barriers, and inadequate
illumination.
b. GFCI & AFCI—HUD is considering
adding a deficiency under the GFCI &
AFCI Standard regarding the lack of
GFCI protection where required (e.g.,
within 6 feet of sinks, tubs, showers; or
exterior, garage, or unfinished basement
areas) due to potential safety hazards,
such as shock or electrocution.
c. HVAC—HUD is considering adding
a deficiency under the HVAC Standard
regarding the lack of a permanently
installed heating source due to potential
health safety hazards, such as fire or
carbon monoxide exposure.
d. Guardrail—HUD is considering
adding a deficiency under the Guardrail
Standard to require a guardrail when
there is an elevated walking surface
with a drop off of 30 inches or greater
measured vertically.
e. Lighting—Interior—HUD is
considering adding a deficiency under
the Lighting—Interior Standard
regarding the absence of a permanently
mounted light fixture in the kitchen or
bathroom due to potential safety
hazards and inadequate illumination.
c. Section 5.705
Requirements

Inspection

The current § 5.705 states that entities
must inspect covered HUD housing
programs annually in accordance with
HUD-prescribed physical condition
standards unless program regulations or
HUD provide otherwise. Amended and
expanded § 5.705 would align
inspection standards (including
provisions pertaining to frequency),
would identify entities responsible for
conducting inspections, would outline
timing of inspections and reinspection
fees, and would mandate access to
properties. Centralizing these standards
would provide greater clarity and ease
of access for stakeholders and oversight
authorities.
Section 5.705(a)(1) continues to
require that any entity responsible for
conducting an inspection of HUD
housing determine compliance with this
subpart. However, (a)(1) would require
that entities must inspect such HUD
housing in accordance with the
standards and procedures set out by the
Secretary and published in the Federal
Register as described in § 5.711, and
would allow HUD to establish aligned

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inspection standards across HUD
programs.
New paragraph (b)(1) would
incorporate existing provisions from
§ 200.855 describing the entity
responsible for inspecting HUD housing.
New paragraph (b)(2) would provide an
exception for the HCV, PBV and Mod
rehab programs in cases where the PHA
is required to conduct the inspection.
New subparagraph § 5.705(c)(1)
would pull elements from existing
regulations which outline that a
property must be inspected before the
property is approved for participation in
any of the HUD housing programs under
this part unless the property is already
a participant in another HUD program
under this part. It would also continue
to require that an entity responsible for
conducting an inspection of HUD
housing must determine compliance
with this subpart and must inspect such
housing annually, unless otherwise
specified below.
Current inspection requirements for
public housing and multifamily
programs are risk-based with
frequencies ranging from annually to
once every three years. The proposed
rule would maintain risk-based annual
inspection requirements. The proposed
rule would expand this time period to
between 2 and 5 years. The criteria
under which a PHA or owner/agent may
qualify for a longer inspection cycle
would be described in a future Federal
Register Notice and will be based on a
risk assessment. This change in
inspection frequency would further
incentivize performance without any
anticipated degradation in housing
quality as it would not obviate the
expectation of continuous compliance
with housing quality requirements.
Further, since proposed § 5.707 would
require properties to conduct an annual
self-inspection and submit results to
HUD, the Agency believes that
submission of self-inspection results
and status of repair would mitigate risk
associated with longer inspection
frequencies. In all cases, HUD housing
would be required to remain in
compliance with all applicable laws and
regulations, including the quality
standards in § 5.703, regardless of the
date of the next inspection.
Due to different statutory and
programmatic requirements,
requirements surrounding inspections
frequencies for some programs would
continue to be governed by current
applicable regulations, including HCV,
PBV, and Moderate Rehabilitation.
Further, small rural PHAs would be
exempted from the annual inspection
requirement and would instead follow
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Recovery Act outlined later in this
notice. Finally, HUD may exempt
assisted-living facilities, board and care
facilities, and intermediate care
facilities, and any other Section 232
facilities if they meet certain criteria as
outlined in the regulation.
New paragraph (d) would incorporate
and align existing language regarding
reinspection costs from the public
housing and multifamily regulations.
The proposed rule would allow, but not
require, the responsible entity (as
identified in proposed § 5.705(a)(1)) to
charge a property owner (including
PHAs) a reasonable reinspection fee
when an owner notifies the responsible
entity that a repair has been made, or
the allotted time for repairs has elapsed,
and a reinspection reveals the
deficiency was not corrected.
New paragraph (a)(3) would outline
variants in inspection standards for the
HCV and PBV programs by
incorporating existing regulations at
§ 982.401(a)(ii). As required by statute,
the proposed rule would continue to
give PHAs the ability to consider
variations in local laws and practices
and provide appropriate flexibility to
facilitate the efficient provision of
assistance.10
With regard to inspection, HUD is
requesting public comments on the
following questions:
Question for Comment #14: HUD is
soliciting comment on the risk-based
annual inspection requirement
expansion from 2 to 5 years. Is a
different range merited? If so, what
should HUD consider in setting and
adjusting the ranges?
Question for Comment #15: HUD is
soliciting comment on how to involve
tenants in helping REAC identify poor
performing properties. For example,
could tenants provide a ‘‘1–5 rating’’ of
their units with ‘‘1’’ being ‘‘poor’’ and
‘‘5’’ being ‘‘excellent?’’ Could tenants
recommend their units for inspection
separate from the statistical sample for
scoring purposes to inform HUD’s risk
analysis of the property?
d. Section 5.707 Uniform SelfInspection Requirement and Report
While 42 U.S.C. 1437(d)(f)(3) requires
that each PHA inspect all public
housing projects annually, current
regulations governing other covered
HUD housing programs, such as those
for Multifamily Housing, do not
explicitly require an annual selfinspection of all units. The proposed
rule would add a new regulation at
§ 5.707 which would explicitly require
annual self-inspections of all units in a
10 42

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2587

project and would add a new electronic
reporting requirement. The results of the
electronic reporting requirement would
be an integral part of HUD’s real estate
inspection process. With advances in
technology, HUD believes it is now
possible and practical to collect this
type of property data electronically. The
procedures for this reporting would be
outlined in a future Federal Register
Notice with an opportunity for public
comment.
By making regular, comprehensive
self-inspections and reporting a part of
each covered property’s physical
assessment regimen, HUD would once
again signal a focus on identifying and
mitigating risks to resident health and
safety. Self-inspections are a key
component of ensuring properties are
maintained year-round and encourage
regular, preventative maintenance rather
than ‘‘just in time’’ repairs ahead of
HUD-conducted inspections.
It should be noted that due to the
unique statutory requirements of the
HCV, PBV, and CPD programs, they
would be exempted from this electronic
reporting requirement. Additionally,
Moderate Rehabilitation would continue
to follow program requirements
described in the current regulations.
With regard to self-inspection, HUD is
requesting public comments on the
following questions:
Question for Comment #16: HUD is
soliciting comment on how the
clarification to self-inspect all HUD
housing units in certain programs to
ensure that units are being maintained
in accordance with HUD housing
quality standards will impact the
operations of PHAs, owners and agents?
What advantages and disadvantages
would arise from extending this selfinspection requirement to the programs
that do not explicitly require an annual
self-inspection of all units (such as
HCV, PBV, Moderate Rehabilitation, and
CPD programs)?
Question for Comment #17: Is there
an alternative to the self-inspection
protocol (§ 5.707 Uniform selfinspection requirement and report) that
would allow HUD to achieve the
objective that families live in safe and
habitable units, and what are the risks
and benefits of that alternative?
e. Section 5.709 Administrative
Process for Defining and Revising
Inspection Criteria
The proposed rule would add § 5.709
which would require HUD to establish
an administrative process for regularly
receiving public comments on scoring
and ranking criteria through Federal
Register notices.

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New paragraph (a)(1) would establish
a timeframe for revisions of standards of
every 3 years, or every 3 years after the
most recent revision, whichever is later.
The inclusion of this regulation would
allow HUD to respond to the changing
needs of an evolving housing portfolio
and technological changes that may
impact the inspections process. This
proposed rule would mandate that the
Agency update the scoring and ranking
criteria regularly and would further
demonstrate HUD’s commitment to
ensure scoring is reasonable, responsive,
and current.
New paragraph (a)(2) would allow
HUD to publish a notice without 30
days of public comment in the case of
an emergency. For § 5.709, an
emergency would be defined as a
significant health hazard, a new safety
concern due to changing construction
technology, or another event as
determined by the Secretary. This
section would further highlight the
Secretary’s commitment to being
responsive to the needs and safety of
residents.
Question for Comment #18: In
alignment with HUD’s desire to increase
clarity and decrease ambiguity, HUD is
considering definitions for kitchens and
sanitary facilities. HUD seeks public
input on the following:
a. Should HUD define what
constitutes a kitchen and its related
components required for functional
adequacy (e.g., cooking appliance,
means of refrigeration, food preparation
and storage)?
b. Should HUD define what
constitutes a sanitary facility and its
related components required for
functional adequacy (e.g., bathtub or
shower, toilet, ventilation, sink)?
f. Section 5.711 Scoring, Ranking
Criteria, and Appeals
The proposed rule would add a new
regulation at § 5.711 which would
incorporate and streamline existing
regulations governing the scoring and
ranking of covered properties, chiefly
multifamily and public housing
properties. Further, it would include the
responsibilities of PHAs and owner/
agents after an inspection and outline
the process for appealing inspection
results. Proposed § 5.711 would also
incorporate and replace the current
scoring and ranking process under
§ 200.857 as well as the prior appeals
process for physical inspections under
the Public Housing Assessment System
(PHAS) at §§ 902.22, 902.24, 902.26, and
902.68. By aligning similar language
across programs, HUD believes the
proposed rule will increase clarity and

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ease of compliance while creating a
standardized set of expectations.
New paragraph (a) would exempt the
HCV and PBV programs which would
continue to be assessed under the
Section Eight Management Assessment
Program (SEMAP) as well as small rural
PHAs which would be assessed under
new subpart D of 985. As part of the
streamlining in the proposed rule, new
paragraph (b) moves the existing
regulation at § 200.857(a)(1) to part 5.
New paragraph (b)(2) would clarify
that Public Housing projects would
continue to be scored and ranked under
the Public Housing Assessment System
(PHAS) outlined in part 902. New
paragraph (c)(1) would introduce the
category of severe health or safety (SHS)
deficiencies which are the most serious
types of conditions that can be cited as
violations of § 5.703 and replaces the
current exigent health and safety (EH&S)
category of deficiencies found in
§ 902.22. Similar to the use of new
language in § 5.703, the change in
terminology would serve as a visual
marker to help a reader differentiate
between the existing and proposed
regulations. It would also help to
minimize confusion across the aligned
programs. The term ‘‘exigent health and
safety’’ has been associated with more
than one definition in the past and has
been confused with the term ‘‘lifethreatening.’’ For example, HUD’s
notice at 76 FR 10055 employed EH&S
and life threatening synonymously
despite the different meanings.11
While generally equivalent in purpose
to the way EH&S is being used today,
the new phrase, ‘‘severe health or
safety’’ would provide a clear
expression of the seriousness of these
types of issues which would also be
reflected in the proposed default
timeframe of repair of 24 hours. HUD
acknowledges that current regulations
are inconsistent in describing how soon
an EH&S deficiency must be corrected,
establishing a singular provision at
§ 5.711(c)(1) for the correction of SHS
deficiencies for most programs would
address these inconsistencies.
Additionally, the Housing
Opportunity Through Modernization
Act of 2016 (HOTMA) limited HUD’s
flexibility in defining the timeframes for
11 ‘‘The UPCS physical inspection emphasizes
health and safety (H&S) deficiencies because of
their crucial impact on the well-being of residents.
A subset of H&S deficiencies is exigent health and
safety (EHS) deficiencies. These are life threatening
(LT) and require immediate action or remedy. EHS
deficiencies can substantially reduce the overall
project score.’’ See, 76 FR 10055 https://
www.federalregister.gov/documents/2011/02/23/
2011-2633/changes-to-the-public-housingassessment-system-phas-physical-conditionscoring-notice.

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repair of deficiencies in the HCV or PBV
programs. That act requires that life
threatening conditions be addressed in
24 hours and all other deficiencies
within 30 days. In order to
accommodate that statutory constraint,
HUD would identify in the notice
described in § 5.709 which of the SHS
deficiencies are life threatening and
which ones are non-life threatening.
Section 5.711 would also require the
correction of non-SHS health or safety
deficiencies within 30 days, for all
programs.
Further, proposed § 5.711 would
incorporate and condense the
administrative review and enforcement
action provisions found at § 200.857(h)
and § 200.857(i) to align with HUD’s
current procedures and eliminate
inconsistencies with Section 219, Title
II, Division H of the Consolidated
Appropriations Act, 2020, Public Law
116–94, December 20, 2019. As
previously noted, CPD programs do not
apply any scoring, weighting, ranking or
enforcement from Part 5. This is
outlined in the HOME rule at 24 CFR
92.251(f)(1)(i). CPD programs are
fundamentally different than many of
the programs subject to REAC
inspections as they are programs
administered by local governments
subject to local decision making. CPD
programs have their own means of
enforcement specified in each program
regulation. These functions are instead
performed by HUD CPD staff, and can
include requiring the participating
jurisdiction or grantee repaying the full
amount of subsidy provided to the
project. New paragraph (d)(2) would
consolidate current regulations
governing the process for technical
reviews into one section with an aligned
set of procedures applicable to
properties inspected by HUD.
With regard to tenant-induced
damage, HUD is requesting public
comments on the following questions:
Question for Comment #19: HUD is
soliciting comment on how to fairly
approach tenant-induced damage to
units and properties in such a way that
it will have a positive impact on HUDassisted properties. What could be used
as incentives or disincentives to
discourage tenant-induced damage?
Question for Comment #20: HUD
seeks input on the scoring threshold
that should be used to refer a property
to the Departmental Enforcement Center
(DEC): What factors should be
considered by HUD in setting the
threshold, and whether should this be a
stationary threshold or one that is
updated periodically?

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g. Section 5.713 Second- and ThirdParty Rights
The proposed rule would add new
§ 5.713, which would incorporate and
modify existing language at § 982.407 on
enforcement of inspection requirements.
The new regulation would mirror
existing regulations in place for the HCV
and PBV programs—which in no way
create any right to assert any claim
against HUD or the PHA for damages,
injunction, or other relief for alleged
failure to enforce inspection standards,
and would expand it to other programs
under NSPIRE.
B: Addition of Part 902, Subpart H and
Part 985, Subpart D Regarding Small
Rural PHAs
Small rural PHAs generally operate in
a very different financial environment
and rental housing market than larger
PHAs in major metropolitan areas.
These PHAs often have less access to
private capital and their small size
typically means that they operate with
fewer staff and outside consulting
services. Accordingly, regulatory burden
often falls more heavily on small rural
PHAs, reducing their ability to serve
low-income families.
On May 24, 2018, President Trump
signed the Economic Growth and
Recovery, Regulatory Relief and
Consumer Protection Act (‘‘Economic
Growth Act’’) into law. Section 209 of
the Act added section 38 to the United
States Housing Act of 1937 (42 U.S.C.
1437 et seq.) and made several
amendments pertaining to small rural
PHAs. Certain statutory amendments
made by section 209 became effective 60
days after enactment, and HUD
published a notice in the Federal
Register on February 14, 2019,12 which,
read together with the statutory
language, was intended to aid HUD
program participants and the public in
understanding the reasons for deferred
action with respect to specific statutory
provisions. HUD published a notice in
the Federal Register on February 27,
2020,13 explaining how HUD designates
small rural PHAs and described which
209 provisions were being
implemented. The notice also stated
that HUD would undertake future
rulemaking for full implementation of
other provisions, including defining
small rural PHAs in the regulations.
This proposed rule would implement
this definition of small rural PHA as
well as a new assessment system for
their public housing and HCV programs.
HUD believes that the Economic Growth
Act’s focus on inspections and the
12 84
13 85

FR 4097, February 14, 2019.
FR 11381, February 27, 2020.

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directive to follow the same standards
for small, rural public housing as that
for projects assisted under Section 8
make the inclusion of the act’s
provisions in this rule a logical fit.
The proposed rule would create new
Subpart H under the current 902
regulations for the Public Housing
Assessment System (PHAS). Section
209(a)(2) of the Economic Growth Act
defined ‘‘small public housing agency’’
and directed HUD to use the existing
definition of ‘‘rural area’’ contained in
the regulations governing the Consumer
Financial Protection Bureau (CFPB) at
12 CFR 1026.35(b)(2)(iv)(A). In the
February 27, 2020 notice, HUD further
refined this definition by defining PHAs
that ‘‘predominantly operate in a rural
area’’ and clarifying that these PHAs
would be referred to as ‘‘small rural
PHAs’’ to avoid confusion with other
small PHA designations employed by
HUD. The proposed rule would fully
implement these definitions through
§ 902.101. A small rural PHA would be
defined as a PHA that administers 550
or fewer combined public housing and
Section 8 voucher units and either has
a primary administrative building with
a physical address in a rural area or
more than 50 percent of its combined
public housing units and voucher units
in rural areas. The methodology for
identifying a small rural PHA was
identified in the February 27, 2020
notice and § 902.101(b) would require
that HUD make this determination once
every three years. PHAs would have the
ability to appeal this determination in
accordance with § 902.101(c).
The proposed rule would amend the
current regulations for the Public
Housing Assessment System (PHAS) to
exempt small rural PHAs and would
instead implement an alternate
performance indicator and rating
system. Under proposed § 902.103,
small rural PHAs would be assessed
based on the physical condition of their
public housing properties. Proposed
§ 902.103(b) would establish an
assessment frequency of no more than
once every three years, as required
under Section 209(c)(1)(A) of the
Economic Growth Act, except that a
troubled small rural PHA would be
subject to an annual assessment.
A small rural PHA’s public housing
program would be designated as
troubled under § 902.105 if:
• The weighted average score of all
property inspections is below 70
percent of the total available points; or
• If a the PHA has a weighted average
score of between 70 and 80 percent of
the total available points and has at least
one property that receives fewer than 70
percent of the total available points.

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Troubled small rural PHAs would be
referred to their local field office or
other designated HUD office(s) for
remedial action, oversight, and
monitoring. HUD would negotiate and
develop a Corrective Action Agreement
(CAA) as described in § 902.105(c)
within 30 days of the PHA’s notification
of their designation as troubled. Section
902.105(c) through (i) would outline the
requirements and process for the CAA.
Proposed § 902.107 would describe the
situation under which HUD may
withhold, deny, or rescind a troubled
designation. Conditions for appealing
troubled designations are outlined in
proposed § 902.109. Sanctions for small
rural PHAs that remain troubled as well
as incentives for small rural PHAs that
are high performers would remain the
same as those currently described in the
PHAS regulations.
The Economic Growth Act provides
that HUD may designate a small rural
PHA as a troubled PHA with respect to
its HCV program if HUD determines the
agency has failed to comply with HCV
inspection requirements, HUD is
proposing to add a new subpart D to 24
CFR part 985, Section 8 Management
Assessment Program (SEMAP).
Under proposed § 985.201, PHAs that
meet the definition of small rural under
§ 902.101 would no longer be subject to
SEMAP requirements but would instead
be assessed on the basis of the
performance indicators and rating
system under subpart D. In assessing
whether a small rural PHA’s HCV
program is a high performer, standard
performer, or troubled, HUD would take
four indicators into consideration, all of
which are related to the small rural
PHA’s compliance with the inspection
requirements. Each indicator would be
scored on a pass/fail basis. The
inspection indicators described in the
proposed § 985.203 include:
• Inspection standards which would
confirm the PHA is applying the
applicable NSPIRE standards to HCV or
PBV-assisted units or a HUD-approved
variation under § 5.703. The PHA would
pass the indicator if all HCV and PBV
units were inspected using the correct
standards;
• Initial unit inspections which
would validate the PHA is conducting
initial inspections within the
appropriate timeframes. The PHA
would pass the indicator if at least 98
percent of newly leased units passed
inspection prior to the beginning of
assistance;
• Frequency of HQS inspections
which would verify the PHA inspects
tenant-based units under HAP contract
and the required sample of PBV units at
least once during the three-year period

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from the last PHA inspection. The PHA
would pass the indicator if at least 98
percent of the units were inspected; and
• Unit condition enforcement would
confirm the PHA is taking corrective
action as required in cases where the
owner fails to correct an identified unit
deficiency in accordance with HUD
requirements. The PHA would pass the
indicator if 98 percent of inspections
with identified life-threatening or other
deficiencies were corrected within the
required timeframe.
In order for the small rural PHA to be
designated as a high performer,
additional requirements related to
funding would also apply. Proposed
§ 985.205(a) would state that for a PHA
to be designated as a high performer, the
PHA must:
• Either utilize at least 98 percent of
its HCV budget authority for the most
recent calendar year or the percent of
HCV units leased by renters or occupied
by homeowners for the most recent
calendar year must be at least 98
percent;
• Not end the calendar year with
excess HAP reserves; and
• Not end the calendar year in a
funding shortfall or receive shortfall
prevention funding from HUD.
If the small rural PHA passes all four
inspection indicators and meets the
funding criteria listed above, the PHA is
designated as a high performer. If a PHA
passes all four inspection indicators but
does not meet the funding criteria listed
above, the PHA will be designated as a
standard performer. If the small rural
PHA fails any one of the four inspection
indicators, regardless of whether or not
it meets the funding requirements, the
PHA is designated as troubled.
In accordance with statutory
requirements contained in the Economic
Growth Act, proposed § 985.207 would
establish an assessment frequency of no
more than once every three years,
except that a troubled small rural PHA
would be subject to an annual
assessment in accordance with
§ 985.204.
Proposed § 985.209 would cover
requirements that apply to small rural
PHAs designated as troubled, including
the statutorily mandated appeals
process and the required corrective
action agreement.
Proposed § 985.211 would state that
HUD would maintain small rural PHAs’
assessment files, including designations,
appeals, and agreements, for at least 3
years.
With regard to small rural PHAs, HUD
is requesting public comments on the
following questions:
Question for comment #21: HUD is
considering establishing the threshold

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for troubled PHAs under the small rural
assessment as a PHA that either has a
weighted average of less than 70 percent
of all available points on physical
inspections, or a PHA that has a
weighted average of between 70 and 80
percent of all available points and that
also has at least one property that
received a score of less than 70 percent
of available points. HUD is seeking
comment on how this threshold will
impact PHAs and residents, and what
alternative thresholds HUD should use
to define a troubled PHA?
Question for comment #22: HUD is
specifically seeking comment on the
four indicators proposed to determine if
the PHA is failing to fulfill its
responsibilities for unit inspections
under the HCV program and the method
by which HUD is proposing to
determine if the PHA has passed or
failed the indicator. Are the indicators
proposed to make such determination
appropriate? If not, are there better
alternatives?
Question for comment #23: HUD is
specifically seeking comment on the
criteria it is proposing to determine if
the PHA is a high performer or a
standard performer. Are the conditions
related to funding utilization
appropriate? If not, are there better
alternatives? Should HUD be
considering other criteria besides
utilization to designate a PHA a high
performer as opposed to a standard
performer? If so, what other
performance measures should be taken
into account? How would HUD verify
the PHA’s performance on any
suggested additional or alternative
performance criteria, keeping in mind
HUD’s preference to move away from
reliance on self-certifications wherever
possible and to not require PHAs to
report or submit data for PHA
assessments that is not already collected
as part of normal HCV PHA operations
and HUD oversight?
Question for comment #24: What
specifically should be required in the
corrective action agreement?
C: Other Regulatory Changes
As discussed above, § 5.701 would
expand the scope of part 5, subpart G.
Therefore, this proposed rule would
amend regulations for the HCV (part
982), PBV (part 983), HOME (part 92),
HTF (part 93), HOPWA (part 574), ESG
(part 576), and CoC (part 578).
The proposed rule would align HOME
property standards requirements for
housing with the requirements for
ongoing property condition standards of
rental housing at § 92.251(f).
Participating jurisdictions would be
required to establish written property

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standards for housing occupied by
tenants that meet minimum
requirements at § 92.251(f) including
compliance with State and local codes
and ordinances, health and safety, and
lead-based paint requirements.
While most participating jurisdictions
are subject to State and local building or
rehabilitation codes, many are not
subject to comprehensive property
condition or habitability codes. The
program regulations at § 92.251(f) do not
provide a uniform standard for housing
that is decent, safe, and sanitary and in
good repair where State and local codes
are absent. HUD is proposing a uniform
standard for what must be inspected
during, and corrected as the result of, an
ongoing physical inspection of HOMEassisted rental housing during the
period of affordability or an annual
inspection of housing occupied by a
resident.
Also under the proposed rule, the
Housing Trust Fund (HTF) program
regulations would be revised to make
conforming changes to the HTF property
standards requirements at
§ 93.301(b)(1)(viii), (c)(3), and (e)(i). The
specific deficiencies will be a subset of
the deficiencies defined for NSPIRE and
published in the Federal Register in
accordance with § 5.705.
The proposed rule would also make
conforming changes to apply § 5.703 to
the Housing Opportunities for Persons
with AIDS (HOPWA), Continuum of
Care (CoC), and Emergency Solutions
Grants (ESG) programs. The rule
proposes to amend the HOPWA
regulations at § 574.310; the CoC
regulations at § 578.75; and the ESG
regulations at § 576.403 to cite to
§ 5.703. The CoC regulations at
§ 578.75(b) regarding lead-based paint
requirements would be amended only to
apply § 5.703 where § 982.401 currently
applies; this proposed rule makes no
substantive changes to the lead-based
paint requirements. The ESG regulations
would be amended to include § 5.703 in
the minimum standards for permanent
housing but not emergency shelters.
These amendments are intended to
replace program-specific standards with
references to part 5. Further, § 5.711
would incorporate and condense the
administrative review and enforcement
action provisions at §§ 200.857(h) and
200.857(i) to align with HUD’s current
procedures and to eliminate
inconsistencies with Section 219, Title
II, Division H of the Consolidated
Appropriations Act, 2020, Public Law
116–94, December 20, 2019.
HUD is also proposing technical
changes for HAP contracts at §§ 880.612,
884.217, 886.123 and 886.323 to require

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
annual compliance with the expanded
part 5, subpart G.
Under this proposed rule, the
Moderate Rehabilitation program
regulations at § 882.516(b) would be
revised to clarify that PHAs must
inspect (or cause to be inspected) units
at least annually and at other times as
necessary in accordance with the
NSPIRE standards established under
§ 5.703. HUD would continue to
conduct the inspections in accordance
with the NSPIRE standards for mod
rehab projects that are managed by the
PHA as provided under § 882.516(d). In
addition, the proposed rule would
change the title of § 882.516(c) from
‘‘Units not decent, safe, and sanitary’’ to
‘‘Units with health and safety hazards’’
and add a title to § 882.516(e) for clarity.
D. Other Rulemakings
HUD notes that there is some overlap
in the proposed changes with HUD’s
Housing Opportunity Through
Modernization Act of 2016:
Implementation of Sections 102, 103,
and 104 proposed rule (84 FR 48820).
HUD further notes that HUD intends to
publish a proposed rule concerning the
implementation of requirements to
install carbon monoxide detectors in
HUD-assisted and -Insured Housing,
which would also overlap with this
proposed rule. At the final rule stage,
HUD will make any changes necessary
to address any conflicts between these
rules.
III. NSPIRE Improvements Beyond This
Rule
In addition to the regulatory changes
being proposed by this rule, HUD is
making other improvements to its
physical inspection program. HUD is
committed to extending the same
principles reflected in this rule to other
aspects of the NSPIRE effort. HUD has
continued to move forward with the
‘‘top-to-bottom review’’ of its inspection
process directed by the Secretary to
ensure taxpayer-supported housing is
healthy, safe, and habitable for the
millions of families HUD serves. The
regulation will signal to the public
HUD’s clear intent to change its
business approach. HUD is proactively
aligning Public Housing, HCV, and
other programs, through establishing an
approach to revise and publish
inspection standards, testing and
validating a new inspection scoring
model, and continuously engaging with
the public in HUD’s improvement
efforts.
To ensure stakeholders can provide
input on all aspects of NSPIRE, HUD
launched listening sessions about
making improving HUD’s inspections

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better. That approach of early and often
feedback has continued. For example, in
the development of the physical
inspection standards, HUD published
drafts on the NSPIRE website for public
input.14 For reference, these are the
standards which will apply to all
inspections (see § 5.705(a)) and will be
published formally for public comment
prior to implementation (see § 5.709).
HUD has received hundreds of
suggestions on the draft NSPIRE
standards and has closely reviewed all
the comments. The majority were
successfully incorporated into revisions.
HUD’s analysis, supported by
stakeholder feedback, has identified that
the current Uniform Physical Condition
Standards (UPCS) and Housing Quality
Standards (HQS) specifications do not
always clearly identify or explain the
particular harm or hazard that HUD is
trying to avoid. To address this concern,
HUD applied best practices from risk
analysis frameworks that feature
predominantly in the public health
discipline to help all stakeholders
understand the ‘‘why’’ or the
‘‘rationale’’ for each deficiency. A
‘‘rationale’’ is a plainly written riskbased assessment that describes the
harm or negative result that could occur
if that issue were to be present at a
property. It justifies why that issue is
critical to housing quality. By taking
this approach, HUD can ground each
standard in a clear and defensible
explanation based in sound science.
Given the approach described above—
and because it is important to ensure the
standards remain up to date—HUD is
working to establish an ‘‘infrastructure
of partnerships’’ to provide continuous
technical input and scientific guidance
for standards development. HUD started
this effort by collaborating with partners
across the public and private sectors—
including other Federal agencies—and
academic and non-profit organizations.
HUD anticipates that the continued
expansion of these relationships will
help to provide the input into the threeyear updates to which HUD commits in
this rule.
Along with the efforts already
described, HUD has launched two
demonstrations: (1) The Demonstration
to Assess the National Standards for the
Physical Inspection of Real Estate (84
FR 43536) and (2) the Demonstration to
Test Proposed New Method of Assessing
the Physical Conditions of VoucherAssisted Housing (81 FR 26759). These
14 U.S. Department of Housing and Urban
Development. (2019). National Standards for
Physical Inspection of Real Estate (NSPIRE)
Standards. Retrieved from: https://www.hud.gov/
program_offices/public_indian_housing/reac/
nspire/standards.

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demonstrations are among the first steps
in implementing an aligned inspection
protocol for public housing, multifamily
housing, and voucher programs. More
information about those demonstrations
can be found on the NSPIRE 15 and
ISDV 16 websites.
Strategically, the demonstration
programs give HUD and properties an
opportunity to ‘‘stress test’’ processes in
a real-world setting to ensure they are
stable and ready to scale out to the full
population of Property Owner Agent
(POA). In addition to being reasonable,
HUD wants to ensure that its inspection
standards are performable across a wide
variety of inspectors. The
demonstrations allow HUD the ability to
make sure its administrative processes
that support physical inspections are
efficient and responsive. HUD is also
leveraging technology to eliminate
manual processes and to realize the
benefits of having aligned programs.
The information coming out of both
demonstrations also informs the
development and refinement of property
scoring approaches. HUD has worked
diligently to identify the most
appropriate scoring models to improve
the accuracy, objectivity, and
consistency of assessment across
different property configurations. Along
with modifications to the current model,
HUD is currently exploring alternative
scoring models based instead on datadriven methodologies, including those
based on probabilistic approaches.
Finally, aligning HUD’s oversight to
property risk will benefit both HUD and
the POAs. For example, HUD has
proposed in this rule that a risk model
inform the extension of the frequency of
inspections up to 5 years in some
programs. Taking a risk-based oversight
approach allows high-performing
properties to continue to do those things
that make them successful while
ensuring struggling properties are able
to get the attention needed. While HUD
will maintain a ‘‘pass/fail’’ result for
HCV and PBV inspections as required
by statute, moving to NSPIRE with
consistent inspection standards allows
large volumes of inspection and housing
quality data to be compared across
programs for the first time. HUD
believes that better data will lead to the
15 U.S. Department of Housing and Urban
Development. (2019). The Demonstration to Assess
the National Standards for the Physical Inspection
of Real. Estate Retrieved from: https://
www.hud.gov/program_offices/public_indian_
housing/reac/nspire/demonstration.
16 U.S. Department of Housing and Urban
Development. (2019). The Demonstration to Test
Proposed New Method of Assessing the Physical
Conditions of Voucher-Assisted Housing. Retrieved
from: https://www.hud.gov/sites/dfiles/PIH/
documents/upcsvdemoparticpation.pdf.

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
Regulatory Flexibility Act

development of more refined risk
models and also allow rigorous
assessment of the impacts of
deficiencies, individually and in
combination, on residents.
IV. Findings and Certifications
Regulatory Review—Executive Orders
12866 and 13563
Pursuant to Executive Order 12866
(Regulatory Planning and Review), a
determination must be made whether a
regulatory action is significant and
therefore subject to review by the Office
of Management and Budget (OMB) in
accordance with the requirements of the
order. Executive Order 13563
(Improving Regulations and Regulatory
Review) directs executive agencies to
analyze regulations that are ‘‘outmoded,
ineffective, insufficient, or excessively
burdensome, and to modify, streamline,
expand, or repeal them in accordance
with what has been learned.’’ Executive
Order 13563 also directs that, where
relevant, feasible, and consistent with
regulatory objectives, and to the extent
permitted by law, agencies are to
identify and consider regulatory
approaches that reduce burdens and
maintain flexibility and freedom of
choice for the public.
HUD believes that this proposed rule,
by consolidating physical condition
inspection standards into a streamlined
format and utilizing improved
technology and methods will aid all
parties—PHAs, property owners, agents,
and inspectors—in complying with
HUD’s physical condition standards
creating a smaller burden while
maintaining or increasing the
effectiveness of HUD’s physical
condition requirements. The proposed
rule has been determined to be a
‘‘significant regulatory action,’’ as
defined in section 3(f) of the Order, but
not economically significant under
section 3(f)(1) of the Order. The docket
file is available for public inspection
online at www.regulations.gov.
Executive Order 13771, Regulatory Costs
Executive Order 13771, entitled
‘‘Reducing Regulation and Controlling
Regulatory Costs,’’ was issued on
January 30, 2017. This proposed rule is
expected to be an Executive Order
13771 deregulatory action. The
requirements this proposed rule would
place on the public are comparable to
pre-existing requirements. This rule
would also provide relief to small rural
PHAs and certain qualifying properties
and would provide relief by removing
inconsistencies across HUD’s programs,
reducing compliance costs.

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The Regulatory Flexibility Act (RFA)
(5 U.S.C. 601 et seq.) generally requires
an agency to conduct a regulatory
flexibility analysis of any rule subject to
notice and comment rulemaking
requirements, unless the agency certifies
that the rule will not have a significant
economic impact on a substantial
number of small entities. There are
2,297 small PHAs all of which will be
affected; however, the economic impact
will not be significant.
The economic impact will not be
significant because the proposed rule
would not change the substantive
requirement that HUD program
participants are required to maintain the
physical condition of HUD housing. The
proposed rule would also, in most cases,
maintain the same level of review for
compliance in the form of physical
inspections. Regulatory flexibility
would be increased by allowing HUD to
require less frequent inspections for
high-performing PHAs under PHAS.
Regulatory relief would also be
provided to small rural PHAs, which
would only be subject to triennial
inspections under PHAS. Accordingly,
the undersigned certifies that the
proposed rule will not have a significant
economic impact on a substantial
number of small entities.
Notwithstanding HUD’s determination
that this rule will not have a significant
effect on a substantial number of small
entities, HUD specifically invites
comments regarding any less
burdensome alternatives to this rule that
will meet HUD’s objectives as described
in the preamble to this rule.
Environmental Impact
A Finding of No Significant Impact
with respect to the environment has
been made in accordance with HUD
regulations at 24 CFR part 50, which
implement section 102(2)(C) of the
National Environmental Policy Act of
1969 (42 U.S.C. 4332(2)(C)). The
Finding of No Significant Impact is
available for public inspection between
the hours of 8 a.m. and 5 p.m. weekdays
in the Regulations Division, Office of
General Counsel, Room 10276,
Department of Housing and Urban
Development, 451 Seventh Street SW,
Washington, DC 20410–0500. The
FONSI is also available through the
Federal eRulemaking Portal at http://
www.regulations.gov.
Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits an agency from
publishing any rule that has federalism
implications if the rule either: (i)

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Imposes substantial direct compliance
costs on State and local governments
and is not required by statute, or (ii)
preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the
Executive Order. This proposed rule
would merely revise existing Federal
standards in a way which would not
increase or decrease compliance costs
on State or local governments and
therefore does not have federalism
implications and would not impose
substantial direct compliance costs on
state and local governments or preempt
state law within the meaning of the
Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (2 U.S.C. 1531–
1538) (UMRA) establishes requirements
for federal agencies to assess the effects
of their regulatory actions on State,
local, and tribal governments, and on
the private sector. This proposed rule
would not impose any Federal mandates
on any State, local, or tribal
governments, or on the private sector,
within the meaning of the UMRA.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501–
3520), an agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information,
unless the collection displays a
currently valid Office of Management
and Budget (OMB) control number.
Except for the self-inspection report
requirements, the information collection
requirements contained in this proposed
rule have been approved by OMB under
the Paperwork Reduction Act and
assigned OMB control numbers 2502–
0369 (Uniform Physical Standards and
Physical Inspection Requirements),
2577–0241 (Exigent Health and Safety
Deficiency Correction Certification),
2577–0257 (Public Housing Assessment
System (PHAS) Appeals, Technical
Reviews and Database Adjustments),
2577–0289 (National Standards for the
Physical Inspection of Real Estate
(NSPIRE)), and 2577–0169 (HCV
Program and Tribal HUD–VASH). The
collection requirements will be
amended to reflect the altered burden
contained in this proposed rule. The
current PRA ‘‘HCV Program and Tribal
HUD–VASH’’ (OMB 2577–0169)
authorizes collection of unit inspection
data from PHAs as part of their
participation in the HCV and PBV
programs. This proposed rule will not
require a modification to this approved
collection.

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
The current PRA package ‘‘National
Standards for the Physical Inspection of
Real Estate (NSPIRE)’’ (OMB 2577–
02890) authorizes collection of selfinspection data from properties
participating in HUD’s NSPIRE
Demonstration. As NSPIRE moves from
demonstration to implementation, the
number of responses will increase to
accommodate the full portfolio of
properties required to submit selfinspection results to HUD.
The current PRA package
‘‘Administrative Process for Scoring,
Ranking, and Appeals’’ (OMB 2577–
0257) authorizes the collection of data

The current PRA package ‘‘Other
Reporting Requirements’’ (OMB 2577–
0241) only authorizes the collection of
electronic certifications by PHAs for
corrected/mitigated Exigent Health and
Safety (EH&S) deficiencies. The new
number of responses and burden reflect
the inclusion of all programs, beyond
Public Housing, that will now be
required to submit electronic closeout of
all health and safety deficiencies, not
just EH&S deficiencies.
The burden of the information
collections in this proposed rule is
estimated as follows:

associated with data base adjustments,
technical reviews, and appeals (Public
Housing only) for Multifamily and
Public Housing properties. HUD
anticipates this number to remain
constant upon implementation of
NSPIRE.
The current PRA package ‘‘Uniform
Physical Standards and Physical
Inspection Requirements’’ (OMB 2502–
0369) authorizes the collection of data
associated with inspections of HUDinsured mortgages. HUD expects this
number to increase slightly due to
higher unit sampling as part of the
NSPIRE protocol.
Number of responses

Burden hours per
response

Information collection
Current

New

Current

Total annual cost
Hourly
cost *

Current

New

New

Inspection Reporting (HCV) (OMB 2577–0169) ...................
Self-inspection Reporting (OMB 2577–0289) .......................
Administrative Process for Scoring, Ranking, and Appeals
(OMB 2577–0257 ..............................................................
Uniform Physical Standards and Physical Inspection Requirements (OMB 2502–0369) ..........................................
Other Reporting Requirements (OMB 2577–0241) ..............

3,680,527
4,500

3,680,527
38,000

.44
2.7

.44
2.7

$34
34

$55,060,684.00
413,100.00

$55,060, 684.00
2,335,176.00

1,510

1,510

7.7

7.7

34

51,366.00

51,366.00

12,100
971

12,100
16,000

6.0
.28

8.0
1.0

34
34

2,468,400.00
9,244.00

3,291,200.00
544,000.00

Totals .............................................................................

3,699,608

3,748,137

................

................

................

58,002,794.00

61,282,426.00

* Estimates assume a blended hourly rate that is equivalent to a GS–12, Step 5, Federal Government Employee.

In accordance with 5 CFR
1320.8(d)(1), HUD is soliciting
comments from members of the public
and affected agencies concerning the
information collection requirements in
the proposed rule regarding:
(1) Whether the proposed collection
of information is necessary for the
proper performance of the functions of
the agency, including whether the
information will have practical utility;
(2) The accuracy of the agency’s
estimate of the burden of the proposed
collection of information;
(3) Whether the proposed collection
of information enhances the quality,
utility, and clarity of the information to
be collected; and
(4) Whether the proposed information
collection minimizes the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated collection
techniques or other forms of information
technology (e.g., permitting electronic
submission of responses).
Interested persons are invited to
submit comments regarding the
information collection requirements in
this rule. Under the provisions of 5 CFR
part 1320, OMB is required to make a
decision concerning this collection of
information between 30 and 60 days
after the publication date. Therefore, a
comment on the information collection
requirements is best assured of having
its full effect if OMB receives the
comment within 30 days of the

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publication. This time frame does not
affect the deadline for comments to the
agency on the proposed rule, however.
Comments must refer to the proposed
rule by name and docket number (FR–
6123) and must be sent to:
HUD Desk Officer, Office of
Management and Budget, New
Executive Office Building,
Washington, DC 20503, Fax number:
202–395–6947
and
Colette Pollard, HUD Reports Liaison
Officer, Department of Housing and
Urban Development, 451 7th Street
SW, Room 2204, Washington, DC
20410
Interested persons may submit
comments regarding the information
collection requirements electronically
through the Federal eRulemaking Portal
at http://www.regulations.gov. HUD
strongly encourages commenters to
submit comments electronically.
Electronic submission of comments
allows the commenter maximum time to
prepare and submit a comment, ensures
timely receipt by HUD, and enables
HUD to make them immediately
available to the public. Comments
submitted electronically through the
http://www.regulations.gov website can
be viewed by other commenters and
interested members of the public.
Commenters should follow the
instructions provided on that site to
submit comments electronically.

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List of Subjects
24 CFR Part 5
Administrative practice and
procedure, Aged, Claims, Crime,
Government contracts, Grant
programs—housing and community
development, Individuals with
disabilities, Intergovernmental relations,
Loan programs—housing and
community development, Low and
moderate income housing, Mortgage
insurance, Penalties, Pets, Public
housing, Rent subsidies, Reporting and
recordkeeping requirements, Social
security, Unemployment compensation,
and Wages.
24 CFR Part 92
Administrative practice and
procedure, Low and moderate income
housing, Manufactured homes, Rent
subsidies, and Reporting and
recordkeeping requirements.
24 CFR Part 93
Administrative practice and
procedure, Grant programs—housing
and community development, Low and
moderate income housing,
Manufactured homes, Rent subsidies,
and Reporting and recordkeeping
requirements.
24 CFR Part 200
Administrative practice and
procedure, Claims, Equal employment
opportunity, Fair housing, Housing

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules

standards, Lead poisoning, Loan
programs—housing and community
development, Mortgage insurance,
Organization and functions
(Government agencies), Penalties,
Reporting and recordkeeping
requirements, Social security,
Unemployment compensation, and
Wages.

housing, Rent subsidies, and Reporting
and recordkeeping requirements.

24 CFR Part 574

24 CFR Part 985

Community facilities, Grant
programs—housing and community
development, Grant programs—social
programs, HIV/AIDS, Low and moderate
income housing, and Reporting and
recordkeeping requirements.

Grant programs—housing and
community development, Public
housing, Rent subsidies, and Reporting
and recordkeeping requirements.
For the reasons discussed in the
preamble, HUD proposes to amend 24
CFR parts 5, 92, 93, 200, 574, 576, 578,
880, 882, 883, 884, 886, 902, 982, 983
and 985 as follows:

24 CFR Part 983
Grant programs—housing and
community development, Low and
moderate income housing, Rent
subsidies, and Reporting and
recordkeeping requirements.

24 CFR Part 576
Community facilities, Grant
programs—housing and community
development, Grant programs—social
programs, Homeless, and Reporting and
recordkeeping requirements.
Community development,
Community facilities, Grant programs—
housing and community development,
Grant programs—social programs,
Homeless, and Reporting and
recordkeeping requirements.
24 CFR Part 880
Grant programs—housing and
community development, Rent
subsidies, and Reporting and
recordkeeping requirements.

24 CFR Part 884
Grant programs—housing and
community development, Rent
subsidies, Reporting and recordkeeping
requirements, and Rural areas.
Grant programs—housing and
community development, Lead
poisoning, Rent subsidies, and
Reporting and recordkeeping
requirements.
24 CFR Part 902
Administrative practice and
procedure, Public housing, and
Reporting and recordkeeping
requirements.
24 CFR Part 982
Grant programs—housing and
community development, Grant
programs—Indians, Indians, Public

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2. Revise subpart G to read as follows:

Subpart G—Physical Inspection of
Real Estate

Grant programs—housing and
community development, Homeless,
Lead poisoning, Manufactured homes,
Rent subsidies, and Reporting and
recordkeeping requirements.

24 CFR Part 886

Authority: 12 U.S.C. 1701x; 42 U.S.C.
1437a, 1437c, 1437d, 1437f, 1437n, 3535(d);
Sec. 327, Pub. L. 109–115, 119 Stat. 2936;
Sec. 607, Pub. L. 109–162, 119 Stat. 3051 (42
U.S.C. 14043e et seq.); E.O. 13279, 67 FR
77141, 3 CFR, 2002 Comp., p. 258; and E.O.
13559, 75 FR 71319, 3 CFR, 2010 Comp., p.
273.
■

24 CFR Part 882

17:44 Jan 12, 2021

1. The authority for 24 CFR part 5
continues to read as follows:

■

24 CFR Part 578

VerDate Sep<11>2014

PART 5—GENERAL HUD PROGRAM
REQUIREMENTS; WAIVERS

Sec.
5.701 Applicability.
5.703 National Standards for the Condition
of HUD Housing.
5.705 Inspection Requirements.
5.707 Uniform self-inspection requirement
and report.
5.709 Administrative Process for Defining
and Revising Inspection Criteria.
5.711 Scoring, Ranking Criteria, and
Appeals.
5.713 Second- and Third-Party Rights.
§ 5.701

Applicability.

(a) Scope. This subpart applies the
national standards for the physical
inspection of real estate standards to the
following HUD programs:
(1) All Public Housing programs
(programs for housing assisted under
the U.S. Housing Act of 1937 other than
section 8 of the Act);
(2) The Housing Choice Voucher
program under section 8(o) of the U.S.
Housing Act of 1937, part 982 of this
title and the Project-Based Voucher
program under section 8(o)(13) of the
Act and the regulations at part 983 of
this title (referred to in this part as the
HCV and PBV programs, or HCV and
PBV housing);

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(3) All project-based Section 8
programs;
(4) Section 202 Program of Supportive
Housing for the Elderly (Capital
Advances);
(5) Section 811 Program of Supportive
Housing for Persons with Disabilities
(Capital Advances);
(6) Section 202 loan program for
projects for the elderly and handicapped
(including 202/8 projects and 202/162
projects); and
(7) Housing with mortgages insured or
held by HUD, or housing that is
receiving assistance from HUD, under
the following authorities:
(i) Section 207 of the National
Housing Act (NHA) (12 U.S.C. 1701et
seq.) (Rental Housing Insurance);
(ii) Section 213 of the NHA
(Cooperative Housing Insurance);
(iii) Section 220 of the NHA
(Rehabilitation and Neighborhood
Conservation Housing Insurance);
(iv) Section 221(d)(3) of the NHA
(Market Interest Rate (MIR) Program);
(v) Section 221(d)(3) and (5) of the
NHA (Below Market Interest Rate
(BMIR) Program);
(vi) Section 221(d)(4) of the NHA
(Housing for Moderate Income and
Displaced Families);
(vii) Section 231 of the NHA (Housing
for Elderly Persons);
(viii) Section 232 of the NHA
(Mortgage Insurance for Nursing Homes,
Intermediate Care Facilities, Assisted
Living Facilities, Board and Care
Homes);
(ix) Section 234(d) of the NHA
(Rental) (Mortgage Insurance for
Condominiums);
(x) Section 236 of the NHA (Rental
and Cooperative Housing for Lower
Income Families);
(xi) Section 241 of the NHA
(Supplemental Loans for Multifamily
Projects). (Where, however, the primary
mortgage of a Section 241 property is
insured or assisted by HUD under a
program covered in this part, the
coverage by two HUD programs does not
trigger two inspections); and
(xii) Section 542(c) of the Housing
and Community Development Act of
1992 (12 U.S.C. 1707 note) (Housing
Finance Agency Risk Sharing Program).
(b) Conflicts. The regulations in this
subpart may be supplemented by the
specific regulations for the HUDassisted programs listed in paragraph
(a). The program-specific regulations
may address the frequency of
inspections, who performs the
inspections and whether alternative
inspections are available given the
statutory and regulatory framework for
the program. When there is conflict
between the regulations of this subpart

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
and the program-specific regulations,
the program-specific regulations govern.
(c) HUD housing. For purposes of this
subpart, the term ‘‘HUD housing’’ means
the types of housing listed in paragraph
(a) of this section.
§ 5.703 National Standards for the
Condition of HUD housing.

(a) General. To ensure that all
residents live in safe, habitable
dwellings, the items and components
located inside the building, outside the
building, and within the units of HUD
housing must be functionally adequate,
operable, and free of health and safety
hazards. The standards under this
section apply to all HUD housing. HUD
housing under the HCV and PBV
programs shall be subject to these
standards only for:
(1) The subsidized unit itself; and
(2) Items and components within the
primary and secondary means of egress
from a unit’s entry door(s) to the public
way, those common features related to
the residential use of the building (e.g.,
the laundry room, community room,
mail room), and the systems equipment
that directly services the voucher unit.
(b) Inside. Inside of HUD housing
refers to the common areas and building
systems that can be generally found
within the building interior and are not
inside a unit. Examples of ‘‘inside’’
common areas may include, basements,
interior or attached garages, enclosed
carports, restrooms, closets, utility
rooms, mechanical rooms, community
rooms, day care rooms, halls, corridors,
stairs, shared kitchens, laundry rooms,
offices, enclosed porches, enclosed
patios, enclosed balconies, and trash
collection areas. Examples of building
systems include those components that
provide domestic water, electricity,
elevators, emergency power, fire
protection, HVAC, and sanitary services.
(c) Outside. Outside of HUD housing
(or ‘‘outside areas’’) refers to the
building site, building exterior
components, and any building systems
located outside of the building or unit.
Examples of ‘‘outside’’ components 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. Components found on the
exterior of the building are also
considered outside areas, and examples
may include doors, attached porches,
attached patios, balconies, car ports, fire
escapes, foundations, lighting, roofs,
walls, and windows.
(d) Units. A unit (or ‘‘dwelling unit’’)
of HUD housing refers to the interior

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components of an individual unit.
Examples of components included in
the interior of a unit may include the
bathroom, call-for-aid (if applicable),
ceiling, doors, electrical systems, floors,
water heater, HVAC (where individual
units are provided), kitchen, lighting,
outlets, switches, smoke detectors,
stairs, walls, and windows. The unit
must also meet the following affirmative
requirements:
(1) The unit must have hot and cold
running water, including an adequate
source of safe and potable water;
(2) The unit must include its own
sanitary facility, it must be in proper
operating condition, usable in privacy,
and adequate for personal hygiene and
the disposal of human waste;
(3) The unit must include at least one
battery-operated or hard-wired smoke
detector, in proper working condition,
on each level of the unit installed as
specified in National Fire Protection
Association Standard (NFPA) 72 or
successor standards. If the unit is
occupied by any hearing-impaired
person, smoke detectors must have an
alarm system, designed for hearingimpaired persons;
(4) The unit must have a living room
and a kitchen area;
(5) 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. Children of
opposite sex, other than very young
children, may not be required to occupy
the same bedroom or living/sleeping
room.
(e) Health and safety concerns—(1)
General. The inside, outside and unit
must be free of health and safety
hazards that pose a danger to residents.
Types of health and safety concerns
include, but are not limited to carbon
monoxide, mold, flammable materials or
other fire hazards, electrical hazards,
garbage and debris, handrail hazards,
infestation, and lead-based paint.
(2) Lead-Based Paint. HUD housing
must comply with all requirements
related to the evaluation and control of
lead-based paint hazards and have
available proper documentation of such
(see part 35 of this title). The Lead-based
Paint Poisoning Prevention Act (42
U.S.C. 4821–4846), the Residential
Lead-based Paint Hazard Reduction Act
of 1992 (42 U.S.C. 4851–4856), and the
applicable regulations at part 35 of this
title apply.
(f) Compliance with State and local
codes. (1) The standards for the
condition of HUD housing in this
section do not supersede State and local
housing codes (such as fire, mechanical,
plumbing, property maintenance, or
residential code requirements).

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(2) All HUD housing other than units
assisted under the HCV and PBV
programs must comply with State or
local housing code in order to comply
with this subpart.
(3) State and local code compliance is
not part of the determination whether a
unit passes the standards for the
condition of HUD housing under this
section for the HCV and PBV programs
(except in accordance with
§ 5.705(a)(3)).
(g) Use of an alternative or additional
standard for HCV and PBV programs. A
PHA is not subject to the standards set
by this section when the PHA is
approved by HUD to use an alternative
standard in accordance with § 982.406
of this title. PHAs may also elect to
establish additional requirements for
quality, architecture, or design of PBV
housing, and any such additional
requirements must be specified in the
Agreement to Enter into a HAP Contract
(‘‘Agreement’’) as provided in
§ 983.152(d)(2) of this title.
(h) Special housing types in the HCV,
PBV, and Moderate Rehabilitation
programs. part 982, subpart M of this
title identifies special housing types
which require standards unique to
special types of housing. Unless
modified by program-specific
regulations, NSPIRE Standards will
apply for these special housing types.
§ 5.705

Inspection requirements.

(a) Procedures—(1) General. Any
entity responsible for conducting an
inspection of HUD housing, to
determine compliance with this subpart,
must inspect such HUD housing in
accordance with the standards and
procedures for identifying safe,
habitable housing set out by the
Secretary and published in the Federal
Register as described in § 5.711.
(2) Inspection Scope. The inspection
requirement for HUD housing generally
requires the inside, outside and unit to
be inspected, in accordance with
§ 5.703. The inspection requirement for
the tenant-based HCV program and the
unit inspection for the PBV program
only applies to units occupied or to be
occupied by HCV and PBV participants,
and common areas and exterior areas
which either service or are associated
with such units.
(3) HCV and PBV Variant inspection
standards. (i) HUD may approve
inspection criteria variations for the
following purposes:
(A) Variations which apply standards
in local housing codes or other codes
adopted by the PHA; or
(B) Variations because of local
climatic or geographic conditions.

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(ii) Acceptability criteria variations
may only be approved by HUD pursuant
to paragraph (a)(3)(i) if such variations
either:
(A) Meet or exceed the performance
requirements; or
(B) Significantly expand affordable
housing opportunities for families
assisted under the program.
(iii) HUD will not approve any
inspection criteria variation if HUD
believes that such variation is likely to
adversely affect the health or safety of
participant families, or severely restrict
housing choice.
(b) Entity Conducting Inspections.
HUD housing must be inspected by the
appropriate entity as described in
paragraph (b)(1) of this section, except
as described in paragraph (b)(2) of this
section.
(1) General. The owner, lender,
contract administrator, or HUD is the
entity responsible for performing
inspections of HUD housing as provided
in this title, or a regulatory agreement or
contract. For properties with more than
one HUD-insured loan, only the first
mortgage lender is required to conduct
the inspection. The second mortgage
lender will be provided a copy of the
physical inspection report by the first
mortgage lender.
(2) Exception. Under the HCV and
PBV programs, the Public Housing
Agency is responsible for inspecting
HUD housing under those programs,
unless another entity is assigned the
inspection by the program regulations
governing the housing, regulatory
agreements or contracts. A PHA-owned
unit receiving assistance under section
8(o) of the 1937 act must be inspected
by an independent entity as specified in
§ 982.352(b)(iv) of this title. Under the
Moderate Rehabilitation Program, the
PHA is responsible for inspecting the
HUD housing unless the PHA is
managing units on which it is also
administering the HAP Contract in
accordance with § 882.412, in which
case HUD is responsible for the
inspections in accordance with
§ 882.516(d) of this title.
(c) Timing of inspections—(1)
Generally. A property must be inspected
before the property is approved for
participation in any of the HUD housing
programs under this part unless the
property is already a participant in
another of the HUD programs under this
part. An entity responsible for
conducting an inspection of HUD
housing to determine compliance with
this subpart must inspect such housing
annually unless specified otherwise
below. An inspection shall be
conducted no earlier than 3 months
before and no later than 3 months after

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the date marking the anniversary of the
previous inspection in the year that the
inspection is due; however, an
inspection must be completed before the
end of the calendar year that the
inspection is due.
(2) Extended Inspection cycle. HUD
housing other than HCV, PBV, and
Moderate Rehabilitation housing shall
be subject to annual inspection as
described in paragraph (c)(1) of this
section, except that the Secretary, based
on appropriate evaluation of risk, may
extend the inspection cycles of certain
qualifying properties for a period
between two and five years, through
publication in the Federal Register,
following notice and the opportunity to
comment.
(3) Triennial cycle for small rural
PHAs. Small rural PHAs as defined in
§ 902.101 of this title shall be assessed
in accordance with part 902, subpart H
of this title.
(4) Housing Choice Vouchers. PHAs
must inspect units subject to part 982 of
this title in accordance with the
frequency described in § 982.405 of this
title.
(5) Project Based Vouchers. PHAs
must inspect units subject to part 983 of
this title in accordance with the
frequency described in § 983.103 of this
title.
(6) FHA insured mortgages section
232 facilities. HUD may exempt
assisted-living facilities, board and care
facilities, and intermediate care
facilities from physical inspections
under this part if HUD determines that
the State or local government has a
reliable and adequate inspection system
in place, with the results of the
inspection being readily and timely
available to HUD. For any other Section
232 facilities, the inspection will be
conducted only when and if HUD
determines, on the basis of information
received, such as through a complaint,
site inspection, or referral by a State
agency, on a case-by-case basis, that
inspection of a particular facility is
needed to assure protection of the
residents or the adequate preservation of
the project.
(d) Inspection Costs. The cost of an
inspection shall be the responsibility of
the entity responsible for the inspection
as identified in paragraph (a) of this
section, except that a reasonable fee may
be required of the owner of a property
for a reinspection if an owner notifies
the entity responsible for the inspection
that a repair has been made or the
allotted time for repairs has elapsed and
a reinspection reveals that any
deficiency cited in the previous
inspection that the owner is responsible
for repairing was not corrected. No fee

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may be passed along to the household
residing in the unit or units.
(e) Access to property for inspection—
(1) HUD Inspections. Nothing in this
subpart shall restrict the right of HUD,
or an entity contracted by HUD, to
inspect HUD housing.
(2) Public housing projects. All PHAs
are required to provide HUD or its
representative with full and free access
to all facilities in its projects. All PHAs
are required to provide HUD or its
representative with access to its projects
and to all units and appurtenances in
order to permit physical inspections,
monitoring reviews, and quality
assurance reviews under this part.
Access to the units shall be provided
whether or not the resident is home or
has installed additional locks for which
the PHA did not obtain keys. In the
event that the PHA fails to provide
access as required by HUD or its
representative, the PHA shall be given a
physical condition score of zero for the
project or projects involved. This score
of zero shall be used to calculate the
physical condition indicator score and
the overall assessment score for that
PHA.
§ 5.707 Uniform self-inspection
requirement and report.

All owners of HUD housing, other
than owners participating in the HCV,
PBV, and Moderate Rehabilitation
Programs, are required to annually
inspect their properties, including all
units, to ensure the units are maintained
in accordance with the standards in
§ 5.703 and electronically report results
to HUD, in accordance with the
procedures set out by the Secretary and
published in the Federal Register,
following notice and the opportunity to
comment. This self-inspection is
independent of other HUD inspections
discussed in § 5.705.
§ 5.709 Administrative Process for
Defining and Revising Inspection Criteria.

(a) Inspection standards and scoring
methodology. The Secretary will
publish in the Federal Register,
following notice and the opportunity to
comment, a list of deficiencies and
methodologies to use for scoring and
ranking HUD housing. The Federal
Register notice will include the factors
for determining if an HCV unit passes or
fails the inspection in addition to the
scoring and ranking of other HUD
housing. After considering the public
comments received on the Federal
Register notice, HUD will publish a
notice announcing the new inspections
procedures, and the date on which the
new procedures becomes effective.

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(1) Revisions. HUD will issue a notice
in the Federal Register published for 30
days of public comment making any
revisions to the inspection procedures
HUD deems necessary, every three
years, or three years after the most
recent revision, whichever is later.
(2) Emergency Revisions. The
Secretary may publish a final notice
without 30 days of public comment in
the case of an emergency to protect
Federal financial resources or the health
or safety of residents of public housing
projects, after HUD makes a
documented determination that such
action is warranted due to:
(i) A Severe Health or Safety
deficiencies and other significant risks
to safety as outlined in § 5.703;
(ii) A new safety concern due to
changing construction technology; or
(iii) Other events as determined by the
Secretary.
§ 5.711 Scoring, Ranking Criteria, and
Appeals.

(a) Applicability. Administrative
process for scoring and ranking the
physical condition of HUD housing
properties under this section does not
apply to the HCV or PBV program.
PHAs administering HCV and PBV
programs will be assessed under the
Section 8 Management Assessment
Program (‘‘SEMAP’’) or the small rural
PHA assessment in accordance part 985
of this title.
(b) Scoring and ranking of HUD
housing—(1) General. HUD’s Real Estate
Assessment Center (REAC), or the
appropriate entity either as described in
§ 5.705(b), or as identified in the
regulator agreement or contract for the
property as described in § 5.705(b)(1),
will score and rank the physical
condition of HUD housing properties in
accordance with the procedures set out
by the Secretary in § 5.709.
(2) Public Housing programs. PHAs
operating Public Housing will be scored
and ranked under the Public Housing
Assessment System (‘‘PHAS’’) outlined
in part 902 of this title.
(c) Inspection report requirements—
(1) Severe health or safety deficiencies.
Upon completion of an inspection, or at
the end of each day on a multiple-day
inspection, REAC, or the appropriate
party as described in § 5.705(b), will
provide the owner or PHA or owner’s
representative, a notice of any items
classified as Severe Health or Safety
(SHS) deficiencies. All SHS items must
be mitigated within 24 contiguous hours
of receipt of notice of these items, and
the owner or PHA or owner’s
representative must electronically
certify and provide supporting evidence
within 3 business days after the end of

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the inspection that the SHS items have
been resolved or sufficiently abated
such that they no longer pose a severe
health or safety risk to residents of the
property. SHS deficiencies (together
with other types of deficiencies) will be
fully described in a future Federal
Register notice.
(2) Post-report inspection. The owner
or PHA must carefully review the
inspection report and is responsible for
conducting its own survey of the total
property based on the inspecting
entity’s inspection findings. Non-severe
health or safety deficiencies must be
corrected expeditiously, and electronic
evidence provided of correction.
(3) Identification of material errors or
adverse conditions. If, after reviewing
the inspection results, the owner or
PHA reasonably believes that either an
objectively verifiable and material error
occurred in the inspection or that
adverse conditions beyond the owner’s
or PHA’s control negatively impacted
the score, and that the error or adverse
condition, if corrected or accounted for,
would result in a significant
improvement in the property’s overall
score, the owner or PHA may
electronically submit a request for a
technical review.
(d) Technical review of inspection
results—(1) Timing. A request for a
technical review of inspection results
must be submitted electronically and
must be received by the inspecting
entity no later than the 45th calendar
day following the release of the
inspection report.
(2) Request for technical review. The
request must be accompanied by the
owner’s or PHA’s relevant evidence that
an objectively verifiable and material
error occurred or adverse conditions
beyond the owner or PHA’s control
occurred, which if corrected will result
in a significant improvement in the
overall score of the owner’s property. A
technical review of the inspection
results will not be conducted based on
conditions that were corrected
subsequent to the inspection. Upon
receipt of this request from the owner or
PHA, the REAC will review the
inspection and the evidence. If the
REAC review determines that an
objectively verifiable and material error
(or errors) or adverse condition(s)
beyond the owner or PHA’s control has
been documented and that it is likely to
result in a significant improvement in
the property’s overall score, the REAC
will take one or a combination of the
following actions:
(i) Undertake a new inspection;
(ii) Correct the original inspection; or
(iii) Issue a new physical condition
score.

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(3) Burden of proof that error or
adverse conditions occurred rests with
owner. The burden of proof rests with
the owner to demonstrate that an
objectively verifiable and material error
(or errors) or adverse conditions
occurred in the REAC’s inspection
through submission of evidence, which
if corrected will result in a significant
improvement in the property’s overall
score. The REAC will apply a rebuttable
presumption that the inspection was
conducted accurately. To support its
request for a technical review of the
physical inspection results, the owner
may submit photographic evidence,
written material from an objective
source with subject matter expertise that
pertains to the item being reviewed such
as a local fire marshal, building code
official, registered architect, or
professional engineer, or other similar
evidence.
(4) Basis for Technical Review. There
are four sources of error that are
associated with an inspection score.
After review of each type of error, the
property’s score may be adjusted or
other action taken.
(i) Material errors. An objectively
verifiable material error must be present
to allow for a technical review of
inspection results. Material errors are
those that were not due to the fault of
the owner and exhibit specific
characteristics and meet specific
thresholds. The three types of material
errors are as follows.
(ii) Building data error. A building
data error occurs if the inspector
inspected the wrong building or a
building that was not owned by the
property, including common or site
areas that were not a part of the
property. Incorrect data due to the
failure of an owner to ensure HUD’s
systems of records are updated cannot
form the basis of a review. Incorrect
building data that does not affect the
score, such as the address, building
name, year built, etc., would not be
considered material.
(iii) Unit count error. A unit count
error occurs if the total number of units
considered in scoring is incorrect due to
the fault of HUD. Since scoring uses
total units, REAC will examine
instances where the participant can
provide evidence that the total units
used was incorrect and that the results
were not representative of the condition
of the property.
(iv) A non-existent deficiency error. A
non-existent deficiency error occurs if
the inspection records an observed
deficiency that does not satisfy or does
not meet a reasonable interpretation of
the definition of that deficiency as
defined by inspection procedures.

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(5) Significant improvement.
Significant improvement in the project’s
overall score refers to an increase in a
score for the owner or PHA such that
the new score crosses an
administratively significant threshold.
(6) Reinspection. If HUD determines
that a reinspection is appropriate, it will
arrange for a complete reinspection of
the project(s) in question, not just the
deficiencies previously identified. The
reinspection will constitute the final
inspection for the project, and HUD will
issue a new inspection report (the final
inspection report).
(7) Deficiencies. If any of the
previously identified SHS deficiencies
that the owner certified were corrected,
remedied, or acted upon to abate are
found during the reinspection not to
have been corrected, remedied, or acted
upon to abate, the score in the final
inspection report will reflect a point
deduction of triple the value of the
original deduction, up to the maximum
possible points for the unit or area, and
the owner must reimburse HUD for the
cost of the reinspection.
(e) Independent HUD review. Under
certain circumstances, HUD may find it
appropriate absent a PHA request for
technical review to review the results of
an inspection which are anomalous or
have an incorrect result due to facts and
circumstances affecting the inspected
property which are not reflected in the
inspection or reflected inappropriately
in the inspection. These circumstances
include, but are not necessarily limited
to, inconsistencies between local code
requirements and the inspection
standards in paragraph (a); conditions
which are permitted by variance or
license or which are preexisting
physical features non-conformities and
are inconsistent with the inspection
standards in paragraph (a); or cases
where the owner has been scored for
elements (e.g., roads, sidewalks, mail
boxes, resident owned appliances, etc.)
that it does not own and is not
responsible for maintaining.
(f) Responsibility for the cost of a new
inspection. If a new inspection is
undertaken by the inspecting party and
the new inspection score results in a
significant improvement in the
property’s overall score, then the entity
responsible for the inspection shall bear
the expense of the new inspection. If no
significant improvement occurs, then
the owner or PHA responsible for the
property must bear the expense of the
new inspection. The inspection cost of
a new inspection, if paid by the owner,
is not a valid project operating expense.
The new inspection score will be
considered the final score.

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(g) Issuance of final score and
publication of score. (1) The score of the
property is the final score if the owner
or PHA files no request for technical
review, as provided in paragraph (d) of
this section, or for other adjustment of
the physical condition score, as
provided in paragraph (c) of this
section. If the owner or PHA files a
request for technical review or score
adjustments in accordance with
paragraphs (c) and (d) of this section,
the final inspection score is the score
issued by HUD after any adjustments are
determined necessary and made by
HUD at the conclusion of these
processes.
(2) HUD will make public the final
scores of the owners through posting on
HUD’s internet site, or other appropriate
means.
(h) Responsibility to notify residents
of inspection; and availability of
documents to residents—(1) Notification
to residents. An owner must notify its
residents of any planned inspections of
their units or the housing development
generally.
(2) Availability of documents for
review. (i) Once a final score has been
issued the owner must make the
physical inspection report and all
related documents available to residents
during regular business hours upon
reasonable request for review and
copying. Related documents include the
owner’s survey plan, plan of correction,
certification, and related
correspondence.
(ii) Once the owner’s final inspection
score is issued and published, the
owner must make any additional
information, such as the results of any
reinspection, appeal requests, available
for review and copying by its residents
upon reasonable request during regular
business hours.
(iii) The owner must maintain the
documents related to the inspection of
the property, as described paragraphs (i)
and (ii) above, for review by residents
for a period of 60 days from the date of
submission to the owner of the
inspection score for the property in
which the residents reside.
(3) The owner must post a notice to
the residents in the owner’s
management office and on any bulletin
boards in all common areas that advises
residents of the availability of the
materials described in this section. The
notice should include, where
applicable, the name, address, and
telephone number of the HUD Project
Manager.
(4) Residents are encouraged to
comment on this information provided
by the owner and submit any comments
directly to the applicable HUD Field

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Office or responsible entity. Should
residents discover the owner provided
HUD with a false certification during
the review they are encouraged to notify
the applicable HUD Field Office where
appropriate inquiry and action will be
taken.
(i) Administrative review of
properties. The file of a property that
receives a score of 30 points or less on
its inspection will be referred to HUD’s
Departmental Enforcement Center (DEC)
for evaluation.
(1) Notification to owner of
submission of property file to the DEC.
The Department will provide for
notification to the owner that the file on
the owner’s property is being submitted
to the DEC for evaluation. The
notification will be provided at the time
the REAC issues the inspection report to
the owner or at such other time as a
referral occurs.
(2) Evaluation of the property. During
the evaluation period, the DEC will
perform an analysis of the property,
which may include input from tenants,
HUD officials, elected officials, and
others as may be appropriate. Although
program offices will assist with the
evaluation, the DEC will have primary
responsibility for the conclusion of the
evaluation of the property after taking
into consideration the input of
interested parties as described in this
paragraph (h)(2). The DEC’s evaluation
may include a site visit to the owner’s
property.
(3) Continuing responsibilities of
Housing Program Offices and
Mortgagee. During the period of DEC
evaluation, HUD’s Housing offices
continue to be responsible for routine
asset management tasks on properties
and all servicing actions (e.g., rent
increase decisions, releases from reserve
account approvals). In addition, during
this period of evaluation, the mortgagee
shall continue to carry out its duties and
responsibilities with respect to the
mortgage.
(4) Enforcement action. Except as
otherwise provided by statute, if, based
on the DEC’s evaluation and in
consultation with Housing, the DEC
determines that enforcement actions are
appropriate, it may take those actions
for which the DEC has delegated
authority and/or make
recommendations to Housing with
respect to resolving identified physical
deficiencies and owner noncompliance.
(j) No limitation on existing
enforcement authority. The
administrative process provided in this
section does not prohibit HUD, to take
whatever action may be necessary when
necessary (notwithstanding the
commencement of this process), as

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
authorized under existing statutes,
regulations, contracts or other
documents, to protect HUD’s financial
interests in HUD housing properties and
to protect the residents of these
properties.
§ 5.713

Second- and Third-Party Rights.

Nothing in this subpart is intended to
create any right of the family residing in
HUD Housing or any party, other than
HUD or a Public Housing Authority, to
require enforcement of the standards
required by this subpart or to assert any
claim against HUD or the Public
Housing Authority for damages,
injunction, or other relief for alleged
failure to enforce the standards.
PART 92—HOME INVESTMENT
PARTNERSHIPS PROGRAM
3. The authority for 24 CFR part 92
continues to read as follows:

■

Authority: 42 U.S.C. 3535(d), 12 U.S.C.
1701x and 4568.
§ 92.2

[Amended]

4. Amend § 92.2 by removing the
definition of ‘‘Uniform Physical
Condition Standards’’.
■ 5. In § 92.209, revise paragraph (i) to
read as follows:
■

§ 92.209 Tenant-based rental assistance:
Eligible costs and requirements.

*

*
*
*
*
(i) Housing quality standards.
Housing occupied by a family receiving
tenant-based assistance under this
section must meet the participating
jurisdiction’s property standards under
§ 92.251. The participating jurisdiction
must inspect the housing initially and
re-inspect it annually.
*
*
*
*
*
■ 6. Revise § 92.251 by:
■ a. Revising paragraphs (b)(1)(viii) and
(c)(3);
■ b. Removing and reserving paragraph
(d); and
■ c. Revising paragraph (f)(1)
introductory text, and paragraph
(f)(1)(i).
The revisions read as follows:
§ 92.251

Property standards.

*

*
*
*
*
(b) * * *
(1) * * *
(viii) HUD housing standards. The
standards of the participating
jurisdiction must be such that, upon
completion, the HOME-assisted project
and units will be decent, safe, sanitary,
as referenced in 24 CFR 5.703. The
requirements of 24 CFR 5.705–5.713 do
not apply. At minimum, the specific
deficiencies proscribed by HUD and
published in the Federal Register must

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be corrected under the participating
jurisdiction’s rehabilitation standards.
HUD will establish the minimum
deficiencies based on the applicable
standards for the condition of HUD
housing set out by the Secretary and
published in the Federal Register
pursuant to 24 CFR 5.705.
*
*
*
*
*
(c) * * *
(3) Existing housing that is acquired
for homeownership (e.g., downpayment
assistance) must be decent, safe,
sanitary, and in good repair as
referenced in 24 CFR 5.703. The
participating jurisdiction must establish
standards to determine that the housing
is decent, safe, sanitary, and in good
repair. At minimum, the standards must
provide that the housing meets all
applicable State and local housing
quality standards and code
requirements and the housing does not
contain the specific deficiencies
proscribed by HUD and published in the
Federal Register. HUD will establish the
minimum deficiencies based on the
applicable standards for the condition of
HUD housing (National Standards for
the Physical Inspection of Real Estate
(NSPIRE)) set out by the Secretary and
published in the Federal Register
pursuant to 24 CFR 5.705. The
participating jurisdiction must inspect
the housing and document this
compliance based upon an inspection
that is conducted no earlier than 90
days before the commitment of HOME
assistance. If the housing does not meet
these standards, the housing must be
rehabilitated to meet the standards of
this paragraph (c)(3) or it cannot be
acquired with HOME funds.
*
*
*
*
*
(f) Ongoing property condition
standards: Rental housing and housing
occupied by tenants receiving HOME
tenant-based rental assistance—(1)
Ongoing property standards. The
participating jurisdiction must establish
property standards for rental housing
(including manufactured housing) that
apply throughout the affordability
period and for housing occupied by
tenants receiving HOME tenant-based
rental assistance. The standards must
ensure that owners maintain the
housing as decent, safe, and sanitary
housing in good repair. The
participating jurisdiction’s description
of its property standards must be in
sufficient detail to establish the basis for
a uniform inspection of HOME rental
projects and housing occupied by
tenants receiving HOME tenant-based
rental assistance. The participating
jurisdiction’s ongoing property

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2599

standards must address each of the
following:
(i) Compliance with State and local
codes, ordinances, and requirements.
The participating jurisdiction’s
standards must require the housing to
meet all applicable State and local code
requirements and ordinances. In the
absence of existing applicable State or
local code requirements and ordinances,
at a minimum, the participating
jurisdiction’s ongoing property
standards must provide that the
property does not contain the specific
minimum deficiencies proscribed by
HUD and published in the Federal
Register for rental housing (including
manufactured housing) and housing
occupied by tenants receiving HOME
tenant-based rental assistance. HUD will
establish the minimum deficiencies
based on the applicable standards for
the condition of HUD housing set out by
the Secretary and published in the
Federal Register pursuant to 24 CFR
5.705. The participating jurisdiction’s
property standards are not required to
use any inspection procedures,
including scoring, item weight, or level
of criticality required in 24 CFR 5.705–
5.713.
*
*
*
*
*
■ 7. In § 92.504, revise paragraph
(d)(1)(iii) to read as follows:
§ 92.504 Participating jurisdiction
responsibilities; written agreements; on-site
inspections.

*

*
*
*
*
(d) * * *
(1) * * *
(iii) Annual inspections. Tenantbased rental assistance (TBRA). All
housing occupied by tenants receiving
HOME tenant-based rental assistance
must meet the property standards of
§ 92.251. The participating jurisdiction
must perform annual on-site inspections
of rental housing occupied by tenants
receiving HOME-assisted TBRA to
determine compliance with these
standards.
*
*
*
*
*
PART 93—HOUSING TRUST FUND
8. The authority for 24 CFR part 93
continues to read as follows:

■

Authority: 42 U.S.C. 3535(d), 12 U.S.C.
4568.

9. In § 93.301, revise paragraphs
(b)(1)(viii), (c)(3), and (e)(1)(i) to read as
follows:

■

§ 93.301

*

Property standards.

*
*
(b) * * *
(1) * * *

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*

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules

(viii) HUD housing standards. The
standards of the grantee must be such
that, upon completion, the HTF-assisted
project and units will be decent, safe,
sanitary, and in good repair and meet
the standards in 24 CFR 5.703. The
requirements of 24 CFR 5.705–5.713 do
not apply. At minimum, the specific
deficiencies proscribed by HUD and
published in the Federal Register must
be corrected under the grantee’s
rehabilitation standards. HUD will
establish the minimum deficiencies
based on the applicable standards for
the condition of HUD housing set out by
the Secretary and published in the
Federal Register pursuant to 24 CFR
5.705.
*
*
*
*
*
(c) * * *
(3) Existing housing that is acquired
for homeownership (e.g., down payment
assistance) must be decent, safe,
sanitary, and in good repair. The grantee
must establish standards to determine
that the housing is decent, safe, sanitary,
and in good repair. At minimum, the
standards must provide that the housing
meets all applicable State and local
standards and code requirements, and
the housing does not contain the
specific deficiencies proscribed by HUD
and published in the Federal Register.
HUD will establish the minimum
deficiencies based on the applicable
standards for the condition of HUD
housing set out by the Secretary and
published in the Federal Register
pursuant to 24 CFR 5.705. The grantee
must inspect the housing and document
this compliance based upon an
inspection that is conducted no earlier
than 90 calendar days before the date of
commitment of HTF assistance. If the
housing does not meet these standards,
the housing must be rehabilitated to
meet the standards of this paragraph or
it cannot be assisted with HTF funds.
*
*
*
*
*
(e) * * *
(1) * * *
(i) At a minimum, the grantee’s
ongoing property standards must
provide that the property does not
contain the specific minimum
deficiencies proscribed by HUD and
published in the Federal Register. HUD
will establish the minimum deficiencies
based on the applicable standards for
the condition of HUD housing set out by
the Secretary and published in the
Federal Register pursuant to § 5.705 of
this title. The grantee’s property
standards are not required to use any
inspection procedures, including
scoring, item weight, or level of

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criticality required in §§ 5.705–5.713 of
this title.
*
*
*
*
*

11. Revise § 200.850 to read as
follows:

common features related to the
residential use of the building (e.g., the
laundry room, community room, mail
room).
(ii) Housing that continues to meet the
HOPWA housing quality standards that
applied when the eligible person(s)
moved into that housing shall not be
required to meet new or different
standards under 24 CFR 5.703.
(3) The requirements of 24 CFR
5.705–5.713 do not apply.
*
*
*
*
*

§ 200.850 Physical condition standards
and physical inspection requirements.

PART 576—EMERGENCY SOLUTIONS
GRANTS PROGRAM

PART 200—INTRODUCTION TO FHA
PROGRAMS
10. The authority for 24 CFR part 200
continues to read as follows:

■

Authority: 12 U.S.C. 1702–1715z–21; 42
U.S.C. 3535(d).
■

The requirements in part 5, subpart G
of this title are applicable to the
multifamily properties assisted or
insured that are listed in § 5.701 of this
title.

PART 574—HOUSING
OPPORTUNITIES FOR PERSONS WITH
AIDS, SUBPART D—USES OF GRANT
FUNDS
13. The authority for 24 CFR part 574
continues to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701x–1; 42
U.S.C. 3535(d) and 5301–5320.

14. In § 574.310, revise paragraph (b)
introductory text and paragraph (b)(2),
and add paragraph (b)(3) to read as
follows:

■

§ 574.310 General standards for eligible
housing activities.

*
*
*
*
(b) * * *. The following standards
apply for all housing for which HOPWA
funds that are used under
§ 574.300(b)(3), (4), (5), and (8), and
when HOPWA funds are used under
§ 574.300(b)(7) to pay an eligible
person’s security deposit, utility hookup
and processing costs, or other move-in
costs, except rental application and
credit check fees.
*
*
*
*
*
(2) HUD housing standards. Except
for such variations as are proposed by
the grantee and approved by HUD, the
housing must meet the standards for
HUD housing in 24 CFR 5.703, except
that:
(i) As applied to HOPWA, ‘‘HUD
housing’’ in 24 CFR 5.703 means the
units eligible persons occupy or will
occupy, systems equipment that directly
services those units, items and
components within the primary and
secondary means of egress from those
units’ doors to the public way, and

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16. In § 576.403, revise paragraph (c)
and add paragraphs (d) through (f) to
read as follows:

■

12. Remove and reserve §§ 200.853,
200.855, and 200.857.

■

PO 00000

Authority: 12 U.S.C. 1701x, 1701x–1; 42
U.S.C. 11371 et seq., 42 U.S.C. 3535(d).

Subpart E—Program Requirements

§§ 200.853, 200.855, and 200.857
[Removed and Reserved]

*

15. The authority for 24 CFR part 576
continues to read as follows:

■

§ 576.403

Shelter and housing standards.

*

*
*
*
*
(c) Minimum standards for permanent
housing. When ESG funds are used for
permanent housing under 24 CFR
576.105 or 576.106, the minimum
standards in 24 CFR 5.703 apply to the
program participant’s unit, systems
equipment that directly services those
units, items and components within the
primary and secondary means of egress
from those units’ doors to the public
way, and common features related to the
program participant’s use of the
building (e.g., the laundry room,
community room, mail room). The
recipient may also add standards that
exceed these minimum standards. The
requirements in 24 CFR 5.705–5.713 do
not apply.
(d) Housing inspections. 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)
to help the program participant remain
in their unit without inspecting the unit
or determining it meets the requirement
in this section. Before otherwise using
ESG funds under 24 CFR 576.105 or
576.106 to help a program participant
remain in or move into specific housing,
however, the recipient or subrecipient
must inspect that housing to confirm
that it meets the requirements in this
section. In addition, recipient or
subrecipient must inspect the housing at
least once every 12 months during the
period of assistance to confirm the
housing continues to meet the minimum
standards in paragraph (c) of this
section.

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
(e) Correction of deficiencies. If an
inspection reveals one or more
deficiencies that prevent the housing
from meeting the requirements in this
section, ESG funds must not be used
under 24 CFR 576.105 or 576.106 with
respect to that housing unless the owner
corrects the deficiencies within 30 days
from the date of the initial inspection
and the recipient or subrecipient
verifies that all deficiencies have been
corrected.
(f) Rental arrears. Housing for which
rental arrears are paid is only subject to
the requirements in this section, if a
program participant is seeking to stay in
that housing.

any deficiencies within 30 days from
the date of the initial inspection and the
recipient or subrecipient verifies that all
deficiencies have been corrected.
(2) Recipients or subrecipients must
inspect all units at least annually during
the grant period to ensure that the units
continue to meet 24 CFR 5.703.
(3) The requirements in 24 CFR
5.705–5.713 do not apply.
*
*
*
*
*
PART 880—SECTION 8 HOUSING
ASSISTANCE PAYMENTS PROGRAM
FOR NEW CONSTRUCTION
19. The authority for 24 CFR part 880
continues to read as follows:

■

PART 578—PROGRAM
REQUIREMENTS

Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), 12701, and 13611–13619.

■

17. The authority for 24 CFR part 578
continues to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701x–1; 42
U.S.C. 11381 et seq., 42 U.S.C. 3535(d).

§ 880.612
period.

18. In § 578.75, revise paragraph (b) to
read as follows:

■

§ 578.75

General operations.

*

*
*
*
*
(b) Housing standards. Housing
leased with Continuum of Care program
funds, or for which rental assistance
payments are made with Continuum of
Care program funds, must meet the
applicable standards under 5.703 of this
title. For housing that is occupied by
program participants receiving tenantbased rental assistance, 24 CFR part 35,
subparts A, B, M, and R apply. For
housing rehabilitated with funds under
this part, the lead-based paint
requirements in 24 CFR part 35,
subparts A, B, J, and R apply. For
housing that receives project-based or
sponsor-based rental assistance, 24 CFR
part 35, subparts A, B, H, and R apply.
For residential property for which funds
under this part are used for acquisition,
leasing, services, or operating costs, 24
CFR part 35, subparts A, B, K, and R
apply. Additionally, for tenant-based
rental assistance, for leasing of
individual units, and for sponsor based
rental assistance where not all units in
a structure are or will be assisted, the
standards apply only to the unit itself,
and to the means of ingress and egress
from the unit to the public way and to
the building’s common areas.
(1) Before any assistance will be
provided on behalf of a program
participant, the recipient, or
subrecipient, must physically inspect
each unit to assure that the unit meets
24 CFR 5.703. Assistance will not be
provided for units that fail to meet 24
CFR 5.703, unless the owner corrects

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20. In § 880.612, revise paragraph (a)
to read as follows:
Reviews during management

(a) After the effective date of the
Contract, the contract administrator will
inspect the project and review its
operation at least annually to determine
whether the owner is in compliance
with the Contract and the assisted units
comply with the standards under part 5,
subpart G of this title.
*
*
*
*
*
PART 882—SECTION 8 MODERATE
REHABILITATION PROGRAMS
21. The authority for 24 CFR part 882
continues to read as follows:

■

Authority: 42 U.S.C. 1437f and 3535(d).
§ 882.404

[Amended]

22. In § 882.404, remove paragraph
(d).
■ 23. In § 882.516, revise paragraphs (b),
(c) and (e) to read as follows:
■

§ 882.516 Maintenance, operation and
inspections.

*

*
*
*
*
(b) Periodic inspection. In addition to
the inspections required prior to
execution of the Contract, the PHA must
inspect or cause to be inspected each
unit under Contract in accordance with
the standards under part 5, subpart G of
this title at least annually and at such
other times as may be necessary to
assure that the Owner is meeting the
obligations to maintain the units so they
are compliant with part 5, subpart G of
this title, and to provide the agreed
upon utilities and other services. The
PHA must take into account complaints
and any other information coming to its
attention in scheduling inspections.
(c) Units with health and safety
hazards. If the PHA notifies the Owner

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2601

that the unit(s) under Contract are not
being maintained in compliance with
the standards under part 5, subpart G of
this title and the Owner fails to take
corrective action (including corrective
action with respect to the Family where
the condition of the unit is the fault of
the Family) within the time prescribed
in the notice, the PHA may exercise any
of its rights or remedies under the
Contract, including abatement of
housing assistance payments (even if
the Family continues in occupancy),
termination of the Contract on the
affected unit(s) and assistance to the
Family in accordance with § 882.514(e).
*
*
*
*
*
(e) Periodic reviews. Periodic PHA
audits must be conducted as required by
HUD, in accordance with 2 CFR part
200, subpart F.
PART 884—SECTION 8 HOUSING
ASSISTANCE PAYMENTS PROGRAM,
NEW CONSTRUCTION SET-ASIDE FOR
SECTION 515 RURAL RENTAL
HOUSING PROJECTS
24. The authority for 24 CFR part 884
continues to read as follows:

■

Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), and 13611–13619.

25. Revise § 884.217 to read as
follows:

■

§ 884.217 Maintenance, operation and
inspections.

(a) Maintenance and operation. The
Owner shall maintain and operate the
project consistent with part 5, subpart G
of this title, and shall provide all the
services, maintenance and utilities
which the Owner agrees to provide
under the Contract, subject to abatement
of housing assistance payments or other
applicable remedies if he fails to meet
these obligations.
(b) Inspection prior to occupancy.
Prior to occupancy of any unit by a
Family, the Owner and the Family shall
inspect the unit and both shall certify,
on forms prescribed by HUD, that they
have inspected the unit and have
determined it to be compliant with part
5, subpart G of this title and the criteria
provided in the prescribed forms.
Copies of these reports shall be kept on
file by the Owner for at least 3 years,
and may be required to be electronically
submitted to HUD.
(c) Periodic inspections. HUD (or the
PHA, as appropriate) will inspect or
cause to be inspected each Contract unit
and related facilities in accordance with
the physical inspection requirements in
part 5, subpart G of this title, and at
such other times (including prior to
initial occupancy and renting of any
unit) as HUD (or the PHA) may

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determine to be necessary to assure that
the Owner is meeting his obligation to
maintain the units in accordance with
part 5, subpart G of this title and to
provide the agreed upon utilities and
other services.
(d) Units with health and safety
hazards. If HUD (or the PHA, as
appropriate) notifies the Owner that the
Owner has failed to maintain a unit that
in accordance with part 5, subpart G of
this title and the Owner fails to take
corrective action within the time
prescribed by notice, HUD (or the PHA)
may exercise any of its rights or
remedies under the Contract, including
abatement of housing assistance
payments, even if the Family continues
to occupy the unit. If, however, the
Family wishes to be rehoused in another
unit with Section 8 assistance and HUD
(or the PHA) does not have other
Section 8 funds for such purposes, HUD
(or the PHA) may use the abated
housing assistance payments for the
purpose of rehousing the Family in
another unit. Where this is done, the
Owner shall be notified that the Owner
will be entitled to resumption of
housing assistance payments for the
vacated unit if:
(1) The unit is restored to in
accordance with part 5, subpart G of this
title;
(2) The Family is willing to and does
move back to the restored dwelling unit;
and
(3) A deduction is made for the
expenses incurred by the Family for
both moves.
PART 886—SECTION 8 HOUSING
ASSISTANCE PAYMENTS
PROGRAM—SPECIAL ALLOCATIONS
26. The authority for 24 CFR part 886
continues to read as follows:

■

Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), and 13611–13619.
§ 886.113

[Amended]

27. In § 886.113, remove and reserve
paragraphs (b) and (i).
■ 28. Revise § 886.123 to read as
follows:
■

§ 886.123 Maintenance, operation, and
inspections.

(a) Maintenance and operation. The
Owner shall maintain and operate the
project so as to provide housing that is
compliant with part 5, subpart G of this
title, and the Owner shall provide all
the services, maintenance and utilities
which the Owner agrees to provide
under the Contract, subject to abatement
of housing assistance payments or other
applicable remedies if the Owner fails to
meet these obligations.

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(b) Inspection prior to occupancy.
Prior to occupancy of any unit by a
Family, the Owner and the Family shall
inspect the unit and both shall certify,
on forms prescribed by HUD that they
have inspected the unit and have
determined it to be compliant with part
5, subpart G of this title and with the
criteria provided in the prescribed
forms. Copies of these reports shall be
kept on file by the Owner for at least
three years.
(c) Periodic inspections. HUD will
inspect or cause to be inspected a
reasonable sample of contract units
according to the requirements in part 5,
subpart G of this title and at such other
times as may be necessary to assure that
the owner is meeting contractual
obligations.
(d) Units not free of health and safety
hazards. If HUD notifies the Owner that
the Owner has failed to maintain a unit
that is compliant with the requirements
in part 5, subpart G of this title and the
Owner fails to take corrective action
within the time prescribed by notice,
HUD may exercise any of its rights or
remedies under the Contract, including
abatement of housing assistance
payments, even if the Family continues
to occupy the unit.
§ 886.307

[Amended].

29. In § 886.307, remove and reserve
paragraphs (b), (i), and (m).
■ 30. Revise § 886.323 to read as
follows:
■

(d) Periodic inspections. HUD will
inspect the project (or cause it to be
inspected) in accordance with the
requirements in part 5, subpart G of this
title and at such other times as HUD
may determine to be necessary to assure
that the owner is meeting the Owner’s
obligation to maintain the units and the
related facilities in accordance with part
5, subpart G of this title and to provide
the agreed-upon utilities and other
services.
(e) Failure to maintain housing. If
HUD notifies the owner that he/she has
failed to maintain a unit that is
compliant with part 5, subpart G of this
title, and the owner fails to take
corrective action within the time
prescribed in the notice, HUD may
exercise any of its rights or remedies
under the contract, or Regulatory
Agreement, if any, including abatement
of housing assistance payments (even if
the family continues to occupy the unit)
and rescission of the sale. If the family
wishes to be rehoused in another unit,
HUD shall provide assistance in finding
such a unit for the family.
PART 902—PUBLIC HOUSING
ASSESSMENT SYSTEM
31. The authority for 24 CFR part 902
is revised to read as follows:

■

Authority: 42 U.S.C. 1437d(j), 42 U.S.C.
3535(d), 1437z–10.

32. Amend § 902.3 by:
a. Removing the definition of
‘‘Criticality’’;
■ b. Revising the definitions of
‘‘Dictionary of Deficiency Definitions’’
and ‘‘Inspectable areas (or area)’’; and
■ c. Removing the definitions of ‘‘Item
Weights and Criticality Levels
document’’, ‘‘Normalized weights’’,
‘‘Score’’, ‘‘Severity’’, ‘‘Statistically valid
sample’’, and ‘‘Unit-weighted average’’.
The revisions read as follows:
■
■

§ 886.323 Maintenance, operation, and
inspections.

(a) Maintain housing free of health
and safety hazards. The owner shall
maintain and operate the project so as
to be compliant with part 5, subpart G
of this title, and the owner shall provide
all the services, maintenance, and
utilities which the Owner agrees to
provide under the contract and the
lease. Failure to do so shall be
considered a material default under the
contract and Regulatory Agreement, if
any.
(b) HUD inspection. Prior to execution
of the contract, HUD shall inspect (or
cause to be inspected) each proposed
contract unit and related facilities to
ensure that they comply with the
requirements at part 5, subpart G of this
title.
(c) Owner and family inspection. Prior
to occupancy of any vacant unit by a
family, the owner and the family shall
inspect the unit, and both shall certify
that they have inspected the unit and
have determined it to be compliant with
part 5, subpart G of this title. Copies of
these reports shall be kept on file by the
owner for at least 3 years.

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§ 902.3

Definitions.

*

*
*
*
*
Dictionary of Deficiency Definitions
means the document published in the
Federal Register that contains the
inspection standards and scoring values
pursuant to part 5, subpart G of this
title.
*
*
*
*
*
Inspectable areas (or area) mean any
of the three major components of public
housing that are inspected, which are:
Inside, outside, unit.
*
*
*
*
*
§ 902.20
■
■

[Removed and Reserved]

33. Remove and reserve § 902.20.
34. Revise § 902.21 to read as follows:

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§ 902.21 Physical condition standards for
public housing.

Public housing must be maintained in
a manner that meets the physical
condition standards set forth in part 5,
subpart G of this title.
■ 35. Revise § 902.22 to read as follows:
§ 902.22

Inspection of PHA projects.

The PHA’s score for the physical
condition indicator is based on an
independent inspection of a PHA’s
project(s) provided by HUD and using
the requirements and timelines laid out
in part 5, subpart G of this title, to
ensure projects meet acceptable basic
housing conditions. Mixed-finance
projects will be subject to the physical
condition inspections.
§§ 902.24, 902.26, and 902.68
AND RESERVED]

[REMOVED

36. Remove and reserve §§ 902.24,
902.26, and 902.68.
■ 37. Add subpart H to read as follows:
■

Subpart H—Assessment of small rural
Public Housing Agencies
Sec.
902.101 Definitions of small rural PHAs.
902.103 Public Housing assessment of small
rural PHAs.
902.105 Troubled Small rural PHAs.
902.107 Withholding, denying, and
rescinding troubled designation.
902.109 Right to petition and appeal
troubled designation.
902.111 Sanctions for troubled small rural
PHAs.
902.113 Incentives for small rural PHAs
high-performers.
Authority: 42 U.S.C. 1437d(j), 42 U.S.C.
3535(d), 1437z–10.
§ 902.101

Definition of small rural PHAs.

(a) Definition. A PHA is a small rural
PHA if it administers 550 or fewer
combined public housing units and
vouchers under section 8(o), and either:
(1) Has a primary administrative
building as determined with a physical
address in a rural area as described in
12 CFR § 1026.35(b)(2)(iv)(A); or
(2) More than 50 percent of its
combined public housing units and
voucher units under section 8(o) are in
rural areas as described in 12 CFR
§ 1026.35(b)(2)(iv)(A).
(b) Determination. (1) HUD will make
the initial determination of PHAs that
qualify as small rural as defined in
§ 902.101 of this title no later than
[insert 120 days after the effective date
of the final rule].
(2) HUD will determine if a PHA
qualifies as a small rural PHA under
paragraph (a) every 3 years.
(c) Appeals. A PHA may challenge
HUD’s determination concerning
whether the PHA qualifies as small rural

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PHA by presenting an objectively
verifiable material error which resulted
in the incorrect determination, or by
presenting information showing that the
status of the PHA has changed to justify
a redetermination.
§ 902.103 Public housing assessment of
small rural PHAs.

(a) Small rural Public Housing
Assessment. The public housing
program of small rural PHAs as defined
in § 902.101 shall be assessed and
scored based only on the physical
condition of their public housing
properties in accordance with part 5,
subpart G of this title. Such agencies
shall not be subject to PHAS except as
noted below.
(b) Triennial assessment. Public
Housing programs operated by small
rural Public Housing Authorities will be
assessed no more than once every three
years, except that a small rural Public
Housing Authority shall be subject to
annual inspection if it is designated by
the Secretary as troubled as defined in
§ 902.105.
(c) Initial Public Housing assessment.
(1) For PHAs subject to small PHA
deregulation, the first assessment and
inspections will be determined based on
the PHA’s next scheduled PHAS
assessment (e.g., a higher performing
PHA would receive the first inspection
3 years after the most recent PHAS
assessment, a standard or substandard
performer would receive the first
inspection 2 years after the most recent
PHAS assessment, etc.).
(2) For PHAs not subject to small PHA
deregulation, the first inspection is
based on the PHA’s overall weighted
project PASS score (e.g., a PHA with a
PASS score of 90 or greater would
receive the first inspection three years
after most recent PHAS assessment, a
PHA with a PASS score of 80–89 would
receive the first inspection two years
after most recent PHAS assessment,
etc.).
§ 902.105

Troubled small rural PHAs.

(a) Definition of Troubled Small rural
PHA. A small rural PHA will be
determined to be troubled under the
public housing program if the weighted
average score of all property inspections
is below 70 percent of the total available
points, or if a small rural PHA has a
weighted average score of between 70
and 80 percent of the total available
points, and has at least one property
that receives fewer than 70 percent of
the total available points.
(b) Referral to the Local Field Office.
Upon a PHA’s designation as a troubled
performer HUD must notify the PHA
and shall refer the troubled performer

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2603

PHA to the PHA’s field office, or other
designated office(s) at HUD, for
remedial action, oversight, and
monitoring. The actions to be taken by
HUD and the PHA will include
statutorily required actions, and such
other actions as may be determined
appropriate by HUD.
(c) Corrective Action Agreement
(CAA). Within 30 days of notification of
a PHA’s designation as a troubled
performer, HUD will initiate activities to
negotiate and develop an CAA. A CAA
is required for a troubled performer. The
final CAA is a binding contractual
agreement between HUD and a PHA.
The scope of the CAA may vary
depending upon the extent of the
problems present in the PHA. The term
of the CAA will not exceed one year,
and is subject to renewal at the
discretion of HUD if HUD determines
that the circumstances requiring the
CAA still exist at the expiration of the
term of the CAA based on the annual
assessment frequency as included in
§ 902.103. It shall include, but not be
limited to:
(1) Baseline data, which should be
data without adjustments or weighting
but may be the PHA’s score identified
as a deficiency;
(2) Performance targets for such
periods specified by HUD (e.g., annual,
semiannual, quarterly, monthly), which
may be the attainment of a higher score
or the description of a goal to be
achieved; however, safety, health, and
environmental performance targets and
deadlines otherwise specified by
regulation, including the lead safety
regulations at 24 CFR 35, are not
superseded by the CAA performance
targets;
(3) Strategies to be used by the PHA
in achieving the performance targets
within the time period of the CAA,
including the identification of the party
responsible for the completion of each
task and for reporting progress;
(4) Technical assistance to the PHA
provided or facilitated by HUD;
(5) The PHA’s commitment to take all
actions within its control to achieve the
targets;
(6) The consequences of failing to
meet the targets; and
(7) A description of the involvement
of local public and private entities,
including PHA resident leaders, in
carrying out the agreement and
rectifying the PHA’s problems. A PHA
shall have primary responsibility for
obtaining active local public and private
entity participation, including the
involvement of public housing resident
leaders, in assisting PHA improvement
efforts. Local public and private entity
participation should be premised upon

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the participant’s knowledge of the PHA,
ability to contribute technical expertise
with regard to the PHA’s specific
problem areas, and authority to make
preliminary commitments of support,
financial or otherwise.
(d) PHA review of the CAA. The PHA
will have 10 days to review the CAA.
During this 10-day period, the PHA
shall resolve any claimed discrepancies
in the CAA with HUD, and discuss any
recommended changes and target dates
for improvement to be incorporated in
the final CAA. Unless the time period is
extended by HUD, the CAA is to be
executed 30 days following issuance of
the draft CAA.
(e) Maximum recovery period. (1)
Upon the expiration of the one-year
period that started on the date on which
the PHA receives initial notice of a
troubled performer designation, the
PHA shall improve its performance in
order to no longer be considered
troubled under the assessment.
(2) [Reserved].
(f) Parties to the CAA. A CAA shall be
executed by:
(1) The PHA Board Chairperson
(supported by a Board resolution), or a
receiver (pursuant to a court-ordered
receivership agreement, if applicable) or
other AME acting in lieu of the PHA
Board;
(2) The PHA Executive Director, or a
designated receiver (pursuant to a courtordered receivership agreement, if
applicable), or other AME-designated
Chief Executive Officer; and
(3) The field office.
(g) Involvement of resident leadership
in the CAA. HUD encourages the
inclusion of the resident leadership in
the execution of the CAA.
(h) Failure to execute CAA or make
substantial improvement under CAA.
(1) If a troubled performer PHA fails or
refuses to execute an CAA within the
period provided in paragraph (d) of this
section, or a troubled performer PHA
operating under an executed CAA does
not achieve a passing physical
inspection score, as provided in
paragraph (e) of this section, the field
office shall refer the PHA to the
Assistant Secretary to determine such
remedial actions, consistent with the
provisions of the ACC and other HUD
regulations, including, but not limited
to, remedies available for substantial
default.
(i) Continuation of services to
residents. To the extent feasible, while
a PHA is in a troubled performer status,
all services to residents will continue
uninterrupted.

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§ 902.107 Withholding, denying, and
rescinding troubled designation.

(a) Withholding designation. In
exceptional circumstances, even though
a PHA has satisfied the requirements for
high performer or non-troubled
designations, HUD may conduct any
review as it may determine necessary,
and may deny or rescind incentives or
high performer designation or nontroubled performer designation, in the
case of a PHA that:
(1) Is operating under a special
agreement with HUD (e.g., a civil rights
compliance agreement);
(2) Is involved in litigation that bears
directly upon the physical performance
of a PHA;
(3) Is operating under a court order;
(4) Demonstrates substantial evidence
of fraud or misconduct, including
evidence that the PHA’s certifications,
submitted in accordance with this part,
are not supported by the facts, as
evidenced by such sources as a HUD
review, routine reports, an Office of
Inspector General investigation/audit,
an independent auditor’s audit, or an
investigation by any appropriate legal
authority; or
(5) Demonstrates substantial
noncompliance in one or more areas of
a PHA’s required compliance with
applicable laws and regulations,
including areas not assessed under the
small rural assessment. Areas of
substantial noncompliance include, but
are not limited to, noncompliance with
civil rights, nondiscrimination and fair
housing laws and regulations, or the
ACC. Substantial noncompliance casts
doubt on the capacity of a PHA to
preserve and protect its public housing
projects and operate them consistent
with federal laws and regulations.
(b) High performer and standard
designations. If a high performer
designation is denied or rescinded, the
PHA shall be designated either a nontroubled performer, or troubled
performer, depending on the nature and
seriousness of the matter or matters
constituting the basis for HUD’s action.
If a non-troubled performer designation
is denied or rescinded, the PHA shall be
designated as a troubled performer.
(c) Effect on score. The denial or
rescission of a designation of high
performer or non-troubled performer
shall not affect the PHA’s numerical
small rural assessment score, except
where the denial or rescission is under
paragraph (a)(4) of this section.
§ 902.109 Right to petition and appeal
troubled designation.

(a) Appeal of troubled performer
designation and petition for removal of

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troubled performer designation. A PHA
may take any of the following actions:
(1) Appeal its troubled performer
designation;
(2) Petition for removal of troubled
performer designation; and
(3) Appeal any refusal of a petition to
remove troubled performer designation.
(b) Appeal of small rural Assessment
score. (1) If a PHA believes that an
objectively verifiable and material
error(s) exists in its small rural
assessment score, which, if corrected,
will result in a significant change in the
PHA’s score and its designation, the
PHA may appeal its score in accordance
with the procedures of paragraphs (c),
(d), and (e) of this section. A significant
change in a score is a change that would
cause the PHA’s score to increase,
resulting in a higher designation for the
PHA (i.e., from troubled performer to
non-troubled performer, or from nontroubled to high performer).
(2) A PHA may not appeal its score or
designation based on the subsequent
correction of deficiencies identified as a
result of a project’s physical inspection.
(c) Appeal and petition procedures.
(1) To appeal a troubled performer
designation or petition for the removal
of a troubled performer designation, a
PHA must submit a request in writing
to the Deputy Assistant Secretary of the
Real Estate Assessment Center, which
must be received by HUD no later than
30 days following the issuance of the
score to the PHA.
(2) To appeal the denial of a petition
to remove a troubled performer
designation, a PHA must submit a
written request to the Deputy Assistant
Secretary of the Real Estate Assessment
Center, which must be received by HUD
no later than 30 days after HUD’s
decision to refuse to remove the PHA’s
troubled performer designation.
(3) An appeal of a troubled performer
designation or an appeal of the denial of
a petition for removal of a troubled
performer designation must include the
PHA’s supporting documentation and
reasons for the appeal or petition. An
appeal of an assessment score must be
accompanied by the PHA’s evidence
that a material error occurred. An
appeal or petition submitted to HUD
without supporting documentation will
not be considered and will be returned
to the PHA.
(d) Denial, withholding, or rescission.
A PHA that disagrees with the basis for
denial, withholding, or rescission of its
designation under § 902.66 may make a
written request for reinstatement within
30 days of notification by HUD of the
denial or rescission of the designation to
the Assistant Secretary, and the request

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shall include reasons for the
reinstatement.
(e) Consideration of petitions and
appeals. (1) Consideration of a petition
or the appeal of a final overall
assessment score, of a troubled
performer designation, or of a petition to
remove troubled performer designation.
Upon receipt of such an appeal or a
petition from a PHA, HUD will evaluate
the appeal and its merits for purposes of
determining whether a reassessment of
the PHA is warranted. HUD will review
the PHA’s file and the evidence
submitted by the PHA to determine
whether an error occurred.
(2) Consideration of an appeal of
refusal to remove a troubled performer
designation. Upon receipt of an appeal
of refusal to remove a troubled
performer designation, HUD will
evaluate the appeal and its merits for
the purposes of determining whether a
reassessment of the PHA is warranted.
The HUD staff initially evaluating an
appeal of refusal to remove a troubled
performer designation will not be the
same HUD staff who evaluated the
PHA’s petition to remove the troubled
performer designation. The Assistant
Secretary will render the final
determination of such an appeal.
(f) Notice and finality of decisions. (1)
If HUD determines that one or more
objectively verifiable and material error
has occurred, HUD will undertake a
new inspection of the project, adjust the
PHA’s score, or perform other
reexamination of information, as
appropriate in light of the nature of the
error that occurred. A new score will be
issued and an appropriate performance
designation made by HUD. HUD’s
decision on appeal of an assessment
score, issuance of a troubled performer
designation, or refusal to remove a
troubled performer designation will be
final agency action. No reconsideration
will be given by HUD of such decisions.
(2) HUD will issue a written decision
on all appeals and petitions made under
this section.
§ 902.111 Sanctions for troubled small
rural PHAs.

The sanctions for small rural PHAs
with troubled public housing programs
that remain troubled as required by
§ 902.108 will be the same as those
sanctions for PHAs assessed under
PHAs as described in § 902.83.
§ 902.113 Incentives for small rural PHAs
high performers.

(a) High performer. PHAs with a
weighted average score for all
inspections of at least 90 percent of all
available points will be considered high
performers and will be eligible for

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benefits as described in § 902.110(b) and
§ 905.400(l) of this title.
(b) Incentives. High performer small
rural PHAs under the public housing
program will be eligible for the same
incentives as high performer PHAs
under PHAS as described in § 902.71.
PART 982—SECTION 8 TENANTBASED ASSISTANCE: HOUSING
CHOICE VOUCHER PROGRAM
38. The authority for 24 CFR part 982
continues to read as follows:

■

Authority: 42 U.S.C. 1437f and 3535(d).

39. In § 982.4, amend paragraph (b) by
revising the definition of ‘‘Housing
quality standards (HQS)’’ to read as
follows:

■

§ 982.4

Definitions.

*

*
*
*
*
(b) * * *
Housing quality standards (HQS).
‘‘The minimum quality standards
developed by HUD in accordance with
§ 5.703 of this title for the PBV program
or the HUD approved alternative
standard for the PHA under § 5.703(g) of
this title.’’
*
*
*
*
*
■ 40. In § 982.352, revise paragraph
(b)(1)(iv)(A)(3) to read as follows:
§ 982.352

Eligible housing.

*

*
*
*
*
(b) * * *
(1) * * *
(iv) * * *
(A) * * *
(3) To inspect the unit for compliance
with the HQS in accordance with
§ 982.305(a) and § 982.405. The
independent agency shall communicate
the results of each such inspection to
the family and the PHA.
*
*
*
*
*
■ 41. Revise § 982.401 to read as
follows:
§ 982.401

Housing quality standards.

As defined in § 982.4, housing quality
standards (HQS) refers to the minimum
quality standards developed by HUD in
accordance with § 5.703 of this title for
housing assisted under the HCV
program or a HUD approved alternative
standard for the PHA under § 5.703(g).
■ 42. In § 982.405, revise paragraph (a)
to read as follows:
§ 982.405 PHA initial and periodic unit
inspection.

(a)(1) General Requirements. The PHA
must inspect the unit leased to a family
prior to the initial term of the lease, at
least biennially during assisted
occupancy, and at other times as
needed, to determine if the unit meets

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2605

the HQS. (See § 982.305(b)(2)
concerning timing of initial inspection
by the PHA.)
(2) Small rural PHAs. Instead of
biennially, a small rural PHA as defined
in § 902.101 of this chapter must inspect
a unit during occupancy at least once
every three years.
*
*
*
*
*
PART 983—PROJECT-BASED
VOUCHER (PBV) PROGRAM
43. The authority for 24 CFR part 983
continues to read as follows:

■

Authority: 42 U.S.C. 1437f and 3535(d).

44. In § 983.3, amend paragraph (b) by
revising the definition of ‘‘Housing
Quality Standards (HQS)’’ to read as
follows:

■

§ 983.3

PBV definitions.

*

*
*
*
*
(b) * * *
Housing quality standards (HQS).
‘‘The minimum quality standards
developed by HUD in accordance with
§ 5.703 of this title for the PBV program
or the HUD approved alternative
standard for the PHA under § 5.703(g) of
this title.’’
*
*
*
*
*
■ 45. In § 983.10, revise paragraph
(b)(2)(ii) to read as follows:
§ 983.10 Project-based certificate (PBC)
program.

*

*
*
*
*
(b) * * *
(2) * * *
(ii) Lead-based paint requirements.
The Lead-based Paint Poisoning
Prevention Act (42 U.S.C. 4821–4846),
the Residential Lead-based Paint Hazard
Reduction Act of 1992 (42 U.S.C. 4851–
4856), and implementing regulations at
part 35, subparts A, B, H, and R of this
title, apply to the PBC program.
*
*
*
*
*
■ 46. Revise § 983.101 to read as
follows:
§ 983.101

Housing quality standards.

As defined in § 983.3, housing quality
standards (HQS) refers to the minimum
quality standards developed by HUD in
accordance with § 5.703 of this title for
housing assisted under the HCV
program or a HUD approved alternative
standard for the PHA under § 5.703(g) of
this title.
■ 47. In § 983.103, revise the heading of
paragraph (d) and add paragraph (d)(4)
to read as follows:
§ 983.103

Inspecting units.

*

*
*
*
*
(d) Periodic inspections. * * *
(4) Instead of biennially, a small rural
PHA as defined in § 902.101 of this title

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must inspect the random sample of
units in accordance with paragraph
(d)(1) at least once every three years.
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PART 985—SECTION 8 MANAGEMENT
ASSESSMENT PROGRAM (SEMAP)
AND SMALL RURAL PHA
ASSESSMENTS
48. The authority citation for 24 CFR
part 985 is revised to read as follows:

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Authority: 42 U.S.C. 1437a, 1437c, 1437f,
1437z–10, and 3535(d).

49. Revise the heading of Part 985 to
read as set forth above.
■ 50. In § 985.1, revise paragraph (b) and
add paragraph (c) to read as follows:
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§ 985.1

Purpose and applicability.

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(b) Applicability. This rule applies to
PHA administration of the tenant-based
Section 8 rental program (part 982 of
this title), the project-based voucher
program (part 983 of this title) to the
extent that PBV family and unit data are
reported and measured under the stated
HUD verification method, and
enrollment levels and contributions to
escrow accounts for Section 8
participants under the family selfsufficiency program (FSS) (part 984 of
this title).
(c) Small rural PHA assessments.
Subpart D covers the HCV and PBV
assessment for a small rural PHA as
defined in § 902.101 of this title. Section
985.3 and subparts B and C of this part
do not apply to small rural PHAs.
■ 51. Add subpart D to read as follows:
Subpart D—Small rural PHA
Assessment
Sec.
985.201 Applicability.
985.203 Assessment indicators and HUD
verification methods.
985.205 Determination of assessment rating.
985.207 Frequency of assessments.
985.209 Troubled small rural PHAs.
985.211 Small rural PHAs assessment
records.
Authority: 42 U.S.C. 1437a, 1437c, 1437f,
1437z–10, and 3535(d).
§ 985.201

Applicability.

(a) This subpart applies to small rural
PHAs as defined in § 902.101 of this
title.
(b) Small rural PHAs shall be assessed
and rated on the indicators and
methodology of this subpart and shall
not be subject to the SEMAP
requirements.
§ 985.203 Assessment indicators and HUD
verification methods.

(a) This section describes the
performance indicators used to assess a

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PHA’s designation as troubled resulting
from the small rural PHA assessment.
HUD will use the verification method
identified for each indicator. The four
indicators are determined on a pass or
fail basis.
(b)(1) Inspection standards. This
indicator shows whether the PHA
applies the correct inspection standards
to HCV and PBV unit inspections
(2) HUD verification method. The
PHA’s assessment certification and onsite HUD review when applicable.
(3) Rating. The PHA passes the
indicator if it applied the correct
inspection standards for all unit HCV
and PBV unit inspections conducted
during the assessment period. If the
PHA applied the incorrect inspection
standards for any HCV or PBV unit
inspection during the assessment
period, the PHA fails the indicator.
(c)(1) Initial unit inspections. This
indicator determines if the PHA
conducted the initial HQS inspections
within the required time period.
(2) HUD verification method. HUD
systems show percent of newly leased
units where the beginning date of the
assistance contract is before the date the
unit passed the initial unit inspection
or, if the PHA employed the PHA initial
inspection option for non-life
threatening deficiencies or alternative
inspections, the timing requirements for
the applicable PHA initial inspection
option.
(3) Rating. The PHA passes the
indicator if at least 98 percent of units
placed under HAP contract during the
assessment period passed the initial
PHA HQS inspection within the
required time period. If fewer than 98
percent of units placed under HAP
contract during the assessment period
passed the HQS inspection within the
required time periods, the PHA fails the
indicator.
(d)(1) Frequency of HQS inspections.
This indicator determines, for units that
have been under HAP contract for at
least three years, whether the PHA reinspected tenant-based units under HAP
contract and the required sample of PBV
units at least once during the three year
period from the last PHA inspection.
(2) HUD verification method. HUD
systems show that the percentage of
units above that have been re-inspected
within the required three-year period
from the last inspection.
(3) Rating. The PHA passes the
indicator if at least 98 percent of the
units described above have been reinspected within the required three-year
period from the last inspection. The
PHA fails the indicator if fewer than 98
percent of the units described above

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have been re-inspected within the
required three-year period.
(e)(1) Unit condition enforcement.
This indicator shows whether, following
the inspection of a unit under contract
where the unit fails to meet the required
standards, any cited life-threatening and
non-life threatening deficiencies are
corrected within the required cure
period in accordance with §§ 982.404
and 983.103 of this title. In addition, if
HQS deficiencies are not corrected
timely, the indicator shows whether the
PHA stops (abates) housing assistance
payments beginning no later than the
first of the month following the
specified correction period or
terminates the HAP contract or, for
family-caused defects, takes prompt and
vigorous action to enforce the family
obligations. (§ 982.404 of this title)
(2) HUD verification method. The
PHA certification and on-site HUD
review (if performed), and HUD system
data.
(3) Rating. In order to pass the
indicator, the applicable verification
method, which may include sampling,
determines that the PHA took corrective
action within the required timeframes
for at least 98% of inspections with
identified life-threatening or other HQS
deficiencies.
(f)(1) PHA submission of
certifications. The PHA must submit its
certifications for the applicable
indicators within the designated
timeframe required by HUD, and in the
form and manner as required by HUD.
HUD will issue instructions on the
submission of PHA certifications by
Federal Register notice, which will be
subject to public comment.
(2) Failure to submit. Failure of the
PHA to submit any certification in
accordance with this paragraph will
result in the PHA failing the indicator
and the PHA will be designated as
troubled under the small rural PHA
assessment.
§ 985.205
rating.

Determination of assessment

(a) High performer designation. (1) A
PHA is designated a high performer
under the small rural PHA assessment if
the PHA has passed all four indicators
identified in § 985.203 and the PHA has:
(i) Utilized at least 98 percent of its
HCV budget authority based on the most
recent calendar year data or the percent
of HCV units leased by renters or
occupied by homeowners for the most
recent calendar year was at least 98
percent;
(ii) Did not end that calendar year
with excess HAP reserves; and

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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Proposed Rules
(iii) Did not end that calendar year in
a funding shortfall or receive shortfall
prevention funding from HUD.
(2) HUD shall publish the calculation
for determining excess HAP reserve in
the Federal Register, and such notice
shall provide for public comment before
becoming effective.
(b) Standard performer designation. A
PHA that passed all for indicators but
did not meet the funding utilization
criteria for a high performer designation
in paragraph (a) is designated as a
standard performer.
(c) Troubled PHA designation. A PHA
that failed any of the four indicators
under § 985.201 is designated as
troubled PHA under the small rural
PHA assessment.
§ 985.207

Frequency of assessments.

(a) Frequency of small rural PHA
assessments. (1) Initial Assessment. The
initial small rural PHA assessment will
be effective when the PHA’s next
SEMAP assessment would have been
applied. For PHAs that under SEMAP
qualify for biennial review as a small
PHA (less than 250 assisted units), the
transition to the small rural PHA
assessment will occur when the PHA’s
next biennial SEMAP assessment is
required.
(2) Triennial assessments. HUD shall
assess small rural PHAs no more than
once every three years, except that a
troubled small rural PHA shall be
subject to an annual assessment in
accordance with § 985.204.
§ 985.209

Troubled small rural PHAs.

(a) Appeals—(1) HUD action. HUD
must review, consider, and provide a
final written determination to a small
rural PHA that appeals its designation
as a troubled PHA.
(2) Deciding HUD official. The HUD
decision on the PHA appeal shall be
made by a HUD official who has not
been involved in and is not subordinate
to any person who has been involved in
the original determination to designate
the PHA as a troubled PHA under the
small rural PHA assessment.
(b) Corrective action agreement. No
later than 60 days after the date on
which the PHA is designated a troubled
PHA, the PHA and HUD will enter into
a corrective action agreement (CAA)
under which he PHA shall take actions
to correct the deficiencies upon which
the troubled PHA designation is based.
The PHA must comply with HUD
requirements for the submission of the
CAA, including but not limited to the
date by which the CAA must be
submitted to HUD. The CAA must:
(1) Have a term of one year, and shall
be renewable at the option of HUD;

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(2) Specify goals to be achieved;
(3) Identify obstacles to goal
achievement and ways to eliminate or
avoid them;
(4) Identify resources that will be used
or sought to achieve goals;
(5) Provide, where feasible, for
technical assistance to assist the PHA in
curing its deficiencies;
(6) Identify an PHA staff person with
lead responsibility for completing each
goal;
(7) Identify key tasks to reach each
goal;
(8) Specify time frames for
achievement of each goal, including
intermediate time frames to complete
each key task;
(9) Provide for regular evaluation of
progress toward improvement;
(10) Provide for the reconsideration of
the PHA’s designation as a troubled
PHA no less than annually, and provide
for the termination of the agreement
when HUD determines the PHA is no
longer troubled;
(11) Provide that in the event of
substantial noncompliance by the PHA
under the agreement, HUD may (i)
contract with another PHA or a private
entity to administer the HCV program;
and (ii) withhold funds otherwise
distributable to the troubled PHA;
(12) Be signed by the PHA board of
commissioners chairperson and by the
PHA executive director. If the PHA is a
unit of local government or a state, the
corrective action plan must be signed by
the Section 8 program director and by
the chief executive officer of the unit of
government or his or her designee.
(c) Monitoring. The PHA and HUD
must monitor the PHA’s
implementation of its CAA to ensure
performance targets are met.
(d) Annual small rural assessment. A
troubled PHA shall be subject to the
small rural assessment on an annual
basis.
(e) Use of administrative fee reserve
prohibited. Any PHA assigned
designated troubled may not use any
part of the administrative fee reserve for
other housing purposes (see § 982.155(b)
of this title).
(f) Upgrading poor performance
rating. HUD shall change an PHA’s
overall performance rating from
troubled to standard or high performer
if HUD determines that a change in the
rating is warranted because of improved
PHA performance and a standard or
high designation on a subsequent small
rural PHA assessment.
(g) Default under the Annual
Contributions Contract (ACC). HUD may
determine that a PHA’s failure to correct
identified deficiencies resulting from its
small rural PHA assessment or to

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2607

execute and implement a corrective
action agreement as required by HUD
constitutes a default under the ACC.
§ 985.211
records.

Small rural PHA assessment

HUD shall maintain small rural PHA
assessment files, including designations,
notifications, appeals, corrective action
agreements, and related correspondence
for at least 3 years.
Brian D. Montgomery,
Deputy Secretary.
[FR Doc. 2021–00098 Filed 1–12–21; 8:45 am]
BILLING CODE 4210–67–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
[REG–115057–20]
RIN 1545–BP98

Mandatory 60-Day Postponement of
Certain Tax-Related Deadlines by
Reason of a Federally Declared
Disaster
Internal Revenue Service (IRS),
Treasury.
ACTIONS: Notice of proposed
rulemaking.
AGENCY:

This document contains
proposed regulations relating to the new
mandatory 60-day postponement of
certain time-sensitive tax-related
deadlines by reason of a Federally
declared disaster. This document also
contains proposed regulations clarifying
the definition of ‘‘Federally declared
disaster.’’ These proposed regulations
affect individuals who reside in or were
killed or injured in a disaster area,
businesses that have a principal place of
business in a disaster area, relief
workers who provide assistance in a
disaster area, or any taxpayer whose tax
records necessary to meet a tax deadline
are located in a disaster area. This
document invites comments from the
public regarding these proposed
regulations.

SUMMARY:

Written or electronic comments
and requests for a public hearing must
be received by March 15, 2021. Requests
for a public hearing must be submitted
as prescribed in the ‘‘Comments and
Requests for a Public Hearing’’ section.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic
submissions via the Federal
eRulemaking Portal at
www.regulations.gov (indicate IRS and
DATES:

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