Reac impossible i 032714 webinar final

Presents

REAC IMPOSSIBLE I

Presented by

Hank Vanderbeek, MPA, CMI

Wednesday, March 27, 2014, 1:00 PM EST

www.REAC1.com

603-867-REAC (7322)

1Copyright 2013, REAC Property Consultants, LLC

Training Agenda

1:00 PM – 1:05 PM Mission, Goal, Conduct

1:05 PM – 1:30 PM Inspection Protocol

2

1:30 PM – 1:35 PM Important Deficiencies

1:35 PM – 1:45 PM Scoring Overview

603-867-7322, www.REAC1.com

1:55 PM – 2:00 PM Questions

1:45 PM – 1:55 PM New Rules Impact

The Real Estate Assessment Center's (REAC) mission is to:

• Help ensure that subsidized housing is decent, safe and sanitary & in good repair

• Provide and promote the effective use of accurate, timely and reliable information for assessing property condition

The Mission

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The Goal

The goal is assign a score to the property condition based on the data collected by the

Inspector by:

Accurately measuring physical

condition

Being objective & consistent –

“snapshot in time”

Following the UPCS protocol

4603-867-7322, www.REAC1.com

The Uniform Physical Condition Standards (UPCS) are the foundation of REAC’s Inspection Program.

o Creates the structure for the inspection.

o Establishes standardized definitions for inspectable items.

o Provides a uniform, objective protocol for training inspectors on all property types.

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The Goal (Cont.)

Maintains professional conduct and demeanor – no “gotcha on that.”

Displays the HUD-issued photo

Dresses appropriately

Aware of cultural differences

Does not make promises about results

CODE OF CONDUCT

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Defers resident to the property rep.

No conflicts of interest

Opinions about the property – No! No!

Does not bring weapons

Does not invade a resident’s privacy

CODE OF CONDUCT (Cont.)

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Does not disclose any information to a third party about the inspection results

Does not utilize property offices to conduct personal business

Subjectivity, negligence and gaming

CODE OF CONDUCT (Cont.)

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SUBJECTIVITY

Making personal judgments about the condition of a property or allow their personal biases to affect how they inspect, e.g.:

• Allowing bad property management to affect the assessment

• Allowing bad housekeeping to affect the assessment

• Allowing negative opinions about the property affect the assessment

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CODE OF CONDUCT (Cont.)

NEGLIGENCE

Does not follow the Protocol to reduce the time/effort required to inspect a property

• Not thoroughly inspecting items to truly determine their condition

GAMING

When inspectors perform illicit activities in an attempt to cheat the system

• Accepting bribes or favors

10603-867-7322, www.REAC1.com

CODE OF CONDUCT (Cont.)

Decent, safe, sanitary and in good repair

UPCS - Objective & Subjective, Consistent, Comprehensive

Professional and well organized

Take charge of the inspection and set the tone

Summary

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PHYSICAL INSPECTION PROTOCOL

1Inspector

recv’s inspection

1Inspector

recv’s inspection

Downloads propertyprofile

Downloads propertyprofile

2Confirms

inspection Confirms

inspection

3

Meets with property representative

Meets with property representative

4 5Verify/updates property

profile info

5Verify/updates property

profile info

6Visually verify/

Updatesbuilding info

6Visually verify/

Updatesbuilding info

Samplegenerated Sample

generated

7Property InspectedProperty Inspected

8

8 STEP INSPECTION PROTOCOL

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Inspection is awarded to winning bidder via Reverse Auction Program, or

Contractor/servicing mortgagee assigns inspection to inspector, or

REAC employee (Quality Assurance Specialist) is assigned the inspection

STEP 1: Inspector Receives InspectionIN

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Inspector downloads Property Profile from the REAC Web site to the UPCS software on their laptop.

The Property Profile information is verified while on site.

STEP 2: Property Profile Downloaded

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REAC Inspector contacts the property rep

o Must contact property within 20 days of getting inspection

o Gives property an inspection date & 3 alternate dates for inspection

o Inspections must complete inspection within 120 days of winning the inspection

STEP 3: Confirms Inspection – Date & Time

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Inspector sends notification letter to have available for inspection:

Copy of document notifying residents Total buildings and units in each building and BRs Applicable certificates (elevators, boilers, etc) Occupancy rate Rent roll by building Site map or plot of property (if available) Area measures for parking lots/driveways/roads and

walkways/steps (fences) Bed bugs list

STEP 3: Confirm Inspection (Cont.)

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Inspector must be on time to conduct the inspection - r e s p e c t !

If the weather prevents the inspector from arriving at the property, they request approval from REAC to declare the inspection “unsuccessful.”

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STEP 3: Confirm Inspection (Cont.)

Severe Weather Advisory in effect – cancel inspectionINS

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o The inspector should:

Explain the purpose of the inspection To objectively record the condition of the property

Verify that residents were given notice

Explain sampling process Generates random sample of units to inspect.

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STEP 4: Inspector Meets with Property Rep

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o The Inspector must:

Verify/update before the inspection begins

Verify rent roll to confirm proper building/unit count

Verify list of units relative to disability (504/FHA/ADA)

Verify occupancy rate

STEP 4: Meet with Property Rep (Cont.)

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o The Inspector must:

Obtain area measures

Ask if scattered site • 1 to 4 Unit Bldg• View all pre-inspection • View only location with sample unit/bldg at inspn

Tell you needs to be accompanied by property representative at all times.

STEP 5: Verify/Update Property Profile

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o The Inspector must obtain:

Participant name = individuals or organizations

Participant role (e.g., site manager, owner, etc.)

Participant address, telephone, fax, email

3 participants• PHA - must include Executive Director.• MF - must include Owner and the Mgt Agent

STEP 5: Verify/Update Property Profile (Cont.)

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o The Inspector must:

Verify the existence of applicable certificates.• Checks expiration date to ensure it is current

Inspect Lead-Based Paint Disclosure Form and Lead-Based Paint Inspection Report

• Prior to 1978 construction • Checks 5 resident rent folders• No point deduction if no/expired certificate

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STEP 5: Verify/Update Property Profile (Cont.) P

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o Inspectors must visually verify:

Building name and address Building type Building construction year (year built) Total number of units in each building

o Failure to validate building information accurately could result in an inaccurate count of buildings and units

Building and unit counts are used to generate the inspection sample

STEP 6: Visually Verify Building Info

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STEP 6: Visually Verify Building Info (Cont.)

Building Definition - A building is defined as any structure that has a:

1. permanent foundation

2. enclosed on all sides

3. one utility such as electric, gas, water or sewer.

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Common Building – A detached non-residential structure.

Duplex – A detached residential structure with two units.

Low-Rise/Garden Apt – A structure with 2.5 or less floors with a common hall entrance.

Mid/High-Rise Apartments – A structure with 3 or more floors with or without elevators.

Row/Town House – A single unit structure connected to a similar structure by a common sidewall with individual exterior entrance.

Single Family House – A detached structure with 1 unit.

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STEP 6: Visually Verify Building Info (Cont.)P

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UPCS software generates sample Statistically valid random sample

Produces a sample that reflects what would have been recorded if all buildings/units were inspected

Error rate projected to all buildings/units

Incorrect sampling invalidates the inspection

STEP 7: Sample Generation

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STEP 7: Sample Generation (Cont.)

Inspector can’t let property owner alter sample units or alternate selection order.

Property cannot provide a list of samples prior to inspection.

Inspector cannot deviate from inspection protocol.

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SITEFencing/GatesGroundsMailboxes/Project SignsMarket AppealParking Lots/Driveways/RoadsEtc.

SITEFencing/GatesGroundsMailboxes/Project SignsMarket AppealParking Lots/Driveways/RoadsEtc.

BUILDINGEXTERIORDoorsFire EscapesFoundationsLightingRoofsWallsEtc.

BUILDINGEXTERIORDoorsFire EscapesFoundationsLightingRoofsWallsEtc.

BUILDINGSYSTEMSDomestic WaterElectrical SystemElevatorsEmergency PowerFire ProtectionHVACEtc.

BUILDINGSYSTEMSDomestic WaterElectrical SystemElevatorsEmergency PowerFire ProtectionHVACEtc.

COMMON AREASBasement/ Garage/CarportCommunity RoomDay CareHalls/Corridors/ StairsEtc.

COMMON AREASBasement/ Garage/CarportCommunity RoomDay CareHalls/Corridors/ StairsEtc.

UNITBathroomCall-for-AidCeilingDoorsElectrical SystemFloorsHot Water HeaterKitchenEtc.

UNITBathroomCall-for-AidCeilingDoorsElectrical SystemFloorsHot Water HeaterKitchenEtc.

UPCS INSPECTABLE ITEMS

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STEP 8: Property Inspection PhaseIN

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InspectableItem

ObservedDeficiency (OD)

No Observed Deficiency (NOD)

Not Applicable(NA)

Level 1

Level 2

Level 3

- or -

- or -

Deficiency DefinitionsDeficiency Definitions

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STEP 8: Property Inspection Phase (Cont.)IN

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Site is the area surrounding the building(s)• Fencing and Gates, Grounds, Mailboxes, etc.

Each defect is worth a LOT of points

Inspected at any time during the inspection

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STEP 8: Property Inspection Phase (Cont.)

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SITE

1. Building Exteriors – walls, roof, foundation, fire escapes, lighting

2. Building Systems - domestic water, HVAC

3. Common Areas - areas within each building that are used by more than one resident or property administration.INS

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BUILDINGS

STEP 8: Property Inspection Phase (Cont.)

A sample unit is declared uninspectable: Occupant refusal Bedbugs Offline Altered Vacant units

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STEP 8: Property Inspection Phase (Cont.)

UNITS

Multifamily housing properties:• Vacant units at properties

with 15% or more total vacant units (85% occ) are inspected

• Vacant units at properties with less than a 15% vacancy rate are not inspected

• All vacant units are verified

Public housing properties:• Vacant units are not be

inspected.

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VACANT UNITS

STEP 8: Property Inspection Phase (Cont.)

For nursing homes, group homes, and assisted living facilities, any room with a bed(s) is a client room.

• Client rooms are inspected as dwelling units.

• Kitchens, dining areas, community areas, etc., inspected as common areas.

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CLIENT ROOMS/UNITS

STEP 8: Property Inspection Phase (Cont.)

• Air Quality• Electrical Hazards• Elevator • Flammables• Garbage & Debris• Trip Hazards• Infestation

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STEP 8: Property Inspection Phase (Cont.)

H&S HAZARDS

Two Types: Fix later

1) Propane, natural, or methane gas

2) Exposed wires or open electrical panels

3) Water leaks on or near electrical equipment

4) Blocked or unusable emergency or fire exits

5) Blocked fire escapes or ladders

6) Missing or misaligned chimney for gas-fired water heater/HVAC

7) Window security bars preventing exit

8) Expired fire extinguishers

9) Inoperative/missing smoke detectors

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STEP 8: Property Inspection Phase (Cont.)

EXIGENT H&S HAZARDS

Fix Now

For Public Housing properties, life-threatening deficiencies must be corrected and/or abated within 24 hours and reported to the HUD field office within 3 business days.

For Multifamily Housing properties, life-threatening deficiencies must be mitigated immediately and reported to the HUD field office within 3 business days.

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STEP 8: Exigent CorrectionsIN

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Notification of Exigent and Fire Safety Hazards Observed form.

Property can refuse to sign

A copy of the form, signed by the inspector, is left with property representative.

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STEP 8: Property Inspection Phase (Cont.)

EXIGENT H&S HAZARDS

Fix Now

Inspector MUST CALL OUT all deficiencies & the severity level

• Might inspect neighbor’s fence, city sidewalk or city roads

• Can’t ask questions

• Can’t get clarification

• Can’t note location of defects

• Can’t take pictures of “defects”

• Not using Professional Common Sense40603-867-7322, www.REAC1.com

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STEP 8: Property Inspection Phase (Cont.)

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REAC Compilation Bulletin:

G. Professional Common Sense

Professional common sense is to be applied in conjunction with REAC guidance. This is a common sense approach that inspectors are to use when conducting inspections. It means exercising sound, practical, and prudent judgment based on the REAC inspection training and the inspector’s experience.

STEP 8: Property Inspection Phase (Cont.)

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STEP 8: Property Inspection Phase (Cont.)IN

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Seek clarification

Take pictures & notes

Ask questions

Remain calm

“STAR”

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STEP 8: Property Inspection Phase (Cont.)IN

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Problems/Issues with REAC Inspector

REAC Technical Assistance Center (TAC) 1-888-245-4860

[email protected]

Clover Rivers-Smith202-475-8559

[email protected]

7:00AM – 8:30PM EST

Inspection protocol is designed to:

• Standardize the inspection process• Provide consistent, objective/factual inspection data

Adherence to the protocol is critical for:

• Accurate physical assessments• Generating a valid sample

Remember “S T A R”

Problems with REAC Inspector – call REAC immediately

REAC INSPECTION PROTOCOL SUMMARY

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TOP 10 Deficiencies

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Top 10 Deficiencies

Items If Corrected Significantly Affects Score – Varies property to property

1. Water Heater/Boilers 2. Hot Water Heater Chimneys 3. Baseboard Covers4. Mold/Mildew5. Electrical Covers6. Breaker Panel Ports7. Door Seals8. Door Hardware9. Egress Doors & Windows10. Trip Hazards - Exterior

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Definition: Missing Pressure Relief Valve (Domestic Water) - L3

1. Water Heater/Boilers – Water heater Pressure Relief Valve discharge pipes do not extend to within 18 inches of the floor, or are missing.

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Definition: Misaligned Chimney/Ventilation Systems (Domestic Water) - L3

2. Hot Water Heater Chimney – Vent stacks on gas operated water heaters or furnaces are loose or missing.

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3. Baseboard Covers – Covers on baseboard heaters are missing

Definition: Convection/Radiant Heat System Covers Missing/Damaged (HVAC) - L3 Health and Safety - Hazards/Sharp Edges – L3 Health and Safety - Other/Possible Burn Hazard – L3 No points deducted

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Definition: Evidence of Mold/Mildew – L1 4 sq”- 1 sq’ and L3 > 1 sq’

4. Mold/Mildew – Evidence of Mold/Mildew in Bathroom Tub Area

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Definition: Missing Covers (Electrical System) - L3

5. Electrical Covers – Electrical components covers are missing or loose exposing electrical connections

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Definition: Missing Breakers/Fuses (Electrical System) - L3

6. Breaker Panel Ports – Open breaker ports

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7. Door Seals – Factory-installed seals on exterior doors, building or unit, are missing or damaged

Definition: Deteriorated/Missing Seals (Entry Only) Unit & Common Areas – L3

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8. Door Hardware & Surface Damage– Exterior door hardware locks, latches, closures are not operating as designed & holes, paint missing pealing, etc

Damaged Hardware/Locks – L3Damaged Surface – Missing Paint – L3

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Definition: Blocked Door Egress – L3

9. Egress Doors & Windows – Egress doors have dual-side key locks, inside locks, hasps, etc & windows are blocked

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Definition: Blocked Window Egress – L3

10. Trip Hazards – Walkways, Roads, Driveways

Definition: Trip hazard on walkway over 3/4” offset/high/gap – L3

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Top 10 Deficiencies Summary

1. Water Heater/Boilers – Missing or not within 18 inches

2. Hot Water Heater Chimneys – Loose or missing

3. Baseboard Covers – Covers missing

4. Mold/Mildew – Bathroom tub area

5. Electrical Covers – Covers are missing or loose

6. Breaker Panel Ports – Open breaker ports

7. Door Seals – Exterior door seals missing or damaged

8. Door Hardware & Surface – Exterior door hardware not operating

9. Egress Doors & Windows – Egress doors have blocking locks & windows blocked by furniture

10. Trip hazards - Exterior

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SCORING

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Industry stakeholder input

• Multifamily Housing (Owners / Agents)• Public Housing Authorities• Trade groups• PHA industry groups

HUD information

Trade professionals’ experience

Scoring Development

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The inspector records the existence and the severity of deficiencies according to objective & subjective criteria

Scoring Based on Objective & Subjective Data

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• Relative importance (“weights”) were assignedto each physical area, item, and deficiency

• Weights are appliedto the inspection data to compute the score

• The score is based on a 100 point scale

The Scoring Approach

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Wgt 15% 15% 20% 35% 15% 100%

Property Physical

Condition

Inspection Areas

Site Health & Safety

Deductions

Whole Point DeductionsFrom Final

Score

Building Exterior

Building Systems

DwellingUnits

Common Areas

Building

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The Scoring Approach (Cont.)

Wgt 15% 15% 20% 35% 15% 100%

Property Physical

Condition

Inspection Areas

Site Health & Safety

Deductions

Whole Point DeductionsFrom Final

Score

Building Exterior

Building Systems

DwellingUnits

Common Areas

Building

Wgt 15% 15% 20% 35% 15% 100%

Wgt 18% 18% 23% 41% 0% 100%

No Common Areas

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The Scoring Approach (Cont.)

Area Pts x Item Weight x Criticality x Level

Site = 15 Dmgd Ceiling = 4.5% 1 - Slight = 0.5 1 - Least = 0.25Bldg Sys = 20 Chimney = 15.5% 2 - Contrib = 1.25 2 - Severe = 0.50Units = 35 Smoke Det = 0.0% 3 - Imp = 2.25 3 - Most = 1.0Bldg Ext = 15 Trip Haz = 12.5% 4 - Very Imp = 3.0Cmn Areas = 15 Elect Wires = 12.5% 5 - Critical = 5.0

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The Scoring Approach (Cont.)

Examples

Site, Trip Hazard,- Level 3

Site Scoring

Area Points x Item Weight x Criticality x Level 3 = Points

15 x 12.5% x 2.25 x 1.0 = 4.2

Point Deduction = 4.2

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Unit, Living Room,Ceiling hole - Level 3

Unit Scoring

Area Points x Item Weight x Criticality x Level 3 = Tot/# Units = Points

35 x 4.5% x 2.25 x 1.0 = 3.5/18 = 0.19

Point Deduction = 0.19

Assuming 18 Sample Units

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Building Systems, domestic water,misaligned vent - Level 3

System Scoring

Assuming 2 Buildings

Area Points x Item Weight x Criticality x Level 3 = Tot/# Bldgs = Points 20 x 15.5% x 5.0 x 1.0 = 15.5 / 2 = 7.75

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Point deduction = 7.75

Utility Room, Junction Box, Missing Cover - Level 3

Common Area Scoring

Assuming 1 Building

Area Points x Item Weight x Criticality x Level 3 = Tot/# Bldgs = Points 15 x 10% x 5.0 x 1.0 = 7.5/ 1 = 7.5

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Point deduction = 7.5

Roof, Membrane Damage,- Level 3

Building Exterior Scoring

Assuming 1 Building

Area Points x Item Weight x Criticality x Level 3 = Tot/# Bldgs = Points 15 x 18.4% x 5.0 x 1.0 = 13.8/ 1 = 13.8

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Point deduction = 10.0

Units: Smoke Detector,Missing/Inoperable - Level 3

Unit Scoring

Area Points x Item Weight x Criticality x Level 3 = Total /# Units = Points

35 x 0% x 5.0 x 1.0 = 0 / 24 = 0.0

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Assuming 24 Sample Units

Point Deduction = 0.0

SCORING SUMMARY

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Industry Stakeholder Input

Scoring is objective and subjective

Area Pts x Item Weight x Criticality x Level = Point Deduction for site or /unit or buildings

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NEW RULES

The standards by which REAC inspections are conducted and scored have changed

significantly. Federal Register Vol. 77, No. 154, August 9, 2012,

changed the UPCS.

• September 10, 2012 - Public Housing• January 1, 2013 - Multi-Family

The top eleven (11)

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#1 CAPPED POINTS20

12 &

201

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Point loss caps are set at the five (5) inspectable areas:

Site 7.5 points Building Exterior 10 points Common Areas 10 pointsSystems 10 pointsUnits 5 points

Impact - Significant

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#2 SITE – FENCES & GATES 20

12 &

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ES

Was three deficiencies:

1) Damaged/Falling/Leaning - Level 2 or 32) Holes - Level 1 or 33) Missing Sections - Level 1 or 3

Now two deficiencies:

4) Non-Security Fence/Gate – Level 2

2) Security Fence/Gate – Level 1, 2, 3

Impact - Significant

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#3 SITE – PARKING LOTS/DRIVEWAYS/ROADS20

12 &

201

3 C

HA

NG

ES

Impact - Significant

Old Rule – 5% of area affected:

Cracks - Level 2 only Potholes/Loose Materials - Level 2 or 3 Settlement/Heaving - Level 1 or 3

New Rule – 10% of area affected:

Cracks/Settlement/Heaving/Potholes/Loose Material

Level 2: Damage >10%. Level 3: Unusable/ impassable or unsafe for pedestrians and vehicles.

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#4 SITE – PONDING PARKING LOTS/DRIVEWAYS/ROADS20

12 &

201

3 C

HA

NG

ES

Old Rule

Level 2 – Water up to 3” on over 5%

Level 3 – Water over 3” over more than 5%

New Rule

Level 2 – Water 1” to 3” > 5%

Level 3 – Water over 3” > 5%

Impact – Minor

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#5 SITE – PONDING/DRAINAGE20

12 &

201

3 C

HA

NG

ES

Old Rule

Level 2 – Water up to 3” to 5”

Level 3 – Water over 5”

New Rule

Level 2 – Water 3” to 5” > 100 sq’

Level 3 – Water over 5” > 100 sq’ or 20% impassable

Impact – Minor

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#6 SITE – RETAINING WALLS 20

12 &

201

3 C

HA

NG

ES

Retaining Walls –Damaged/Falling/Leaning Level 2 has been downgraded to Level 1.

Redefined Level 2 as a Level 1

Missed opportunity

Defect cited same frequency

About 2.5 points to 1.25 points

Impact - Significant

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#7 MOLD/MILDEW – AIR QUALITY 20

12 &

201

3 C

HA

NG

ES

Old Rule

Evidence of mold/mildew, such as a darkened area, regardless of the amount = Level 3

New Rule

Evidence of mold or mildew that is 4 sq” to 1 sq’ = Level 1

Evidence of mold/mildew over 1 sq’ = Level 3

Applies to all areas equally - walls, ceilings, & floors

Cited less often

Impact - Significant

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#8 WINDOW SCREEN DEFECTS 20

12 &

201

3 C

HA

NG

ES

Now, instead of about .7 points, lose up to 3 points.

Now, windows screens are non-scoring as a Building Exterior defect and a scored item for Common Areas and Units.

Now, missing or deteriorated caulk, seals and/or glazing compound is a Level 1 instead of Level 2.

Impact - Significant

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#9 FLOOR COVERING DAMAGE20

12 &

201

3 C

HA

NG

ES Old Rule - Missing/damaged floor covering

included all types of flooring: hardwood, sheet goods, carpet, et cetera.

New Rule - Divided into hard flooring and soft flooring:

• Hard Floor Covering - Missing/Damaged

• Soft Floor Covering - Missing/Damaged

Impact - Minimal

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#10 SHARP EDGES - UNIT 20

12 &

201

3 C

HA

NG

ES

Old rule - Points deducted for a sharp edge defect in the Unit for resident owned items, like broken mirrors, picture glass, missing fan covers, et cetera.

New rule - No longer results in point deduction.

Equaled about 35% of the total Unit points

Impact - Significant

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#11 RESIDENT FIRE EXTINGUISHERS 20

12 &

201

3 C

HA

NG

ES

Impact - Significant

Old rule - Points deducted for resident fire extinguishers issues: missing or expired, et cetera.

New rule - No longer result in a point deduction.

The point deductions impact was oftentimes significant.

New Rules Summary

84603-867-7322, www.REAC1.com

1) Capped Points – 7.5, 10, 10, 10, 5

2) Fences & Gates – Combined defect

3) Pkng Lots/Driveways/Rds – Combined 10%

4) Ponding Pkng Lots/Driveways/Rds – 1” to 3”

5) Site Ponding/Drainage – Over 100 sq’

6) Retaining Walls – Level 1

7) Mold/Mildew – Level 1

8) Window Screen Defects - 0.7 to 3.0

9) Floor Covering Damage – Soft vs Hard

10) Resident Sharp Edges – No points

11) Resident Fire Extinguishers – No points

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HUD REAC CONTACT

REAC Inspection Questions/Concerns

REAC Technical Assistance Center (TAC)

[email protected]

1-888-245-4860

7:00AM – 8:30PM EST

www.REAC1.com

603-867-REAC (7322)

[email protected]

87

Hank Vanderbeek

Copyright 2013, REAC Property Consultants, LLC