Dan Gould. THE TOP TEN MISTAKES!

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1 Dan Gould Director-Southeast Region PRESENTS THE TOP TEN MISTAKES! EVERYBODY MAKES REGARDING REAC INSPECTIONS "Learn from the mistakes of others. You can't live long enough to make them all yourself." "A mistake not corrected is another mistake."

2 10. Misplaced Optimism: Expecting that since you ve always had good scores you always will; expecting the inspection to make sense; and expecting to be treated fairly If you believe this, you ve got an unpleasant surprise in store you.

3 9. Misplaced Blame: Thinking that when you get a bad score, it is the inspector s fault Wrong! it s usually either yours or REAC s.

4 8. Inadequate Reaction: Failing to keep records, effectively analyze results when things go wrong, to mount effective appeals, to share your grievances with HUD and other government officials, and to consult an expert when needed. Failing to understand how much trouble you are in when a property fails, and to act very aggressively.

5 7. Not Networking: Failing to have established relationships with outside experts such as consultants, UPCS training organizations, attorneys, your counterparts at other companies and to consult with them on REAC issues regularly- You should do this even if you think you have the situation well in hand.

6 6. Not Planning at the Highest Level of Management: Not having a defined master plan for dealing with REAC inspections, with the policies, procedures and key personnel in charge of the details You should be anticipating dates, tracking scores, retaining and studying scored reports. All inspections should be scheduled, prepared for, attended, monitored and appealed by one internal or external expert.

7 5. Not Preparing Well: Not observing a consistent discipline of pre-inspecting, analyzing, setting strategies, and executing the strategies fully. You can never inspect TO-MUCH Don t have a novice employee escort the REAC inspector.

8 4. Throwing money at the problem: Believing that the more you spend and the quicker you spend it, the better your score will be.

9 3. Getting Your Priorities a Little Backwards: Concentrating on the Worst Units instead of the Best Units in apparently good condition can EASILY lose just as many points as units in atrocious condition, but they are much easier to repair and save a lot of time and points.

10 2. Getting Your Priorities a Lot Backwards: Concentrating on Units and ignoring Site, Exteriors, Systems, and Common Areas. Your Units are going to be worth 33 to 43 % of your total score and are often more difficult to control. If you spend 100% of your effort on the Units and ignore other elements of the property, you re ignoring 57 to 67% of your total possible score.

11 1. Getting Your Priorities COMPLETELY Backwards: Attacking the HIGHEST COST / LOWEST VALUE issues first instead of LOWEST COST / HIGHEST VALUE issues.

12 NOT doing temporary, quick and dirty cosmetic repairs on high value issues to satisfy the letter of the UPCS/REAC inspection when permanent, high quality repairs are impractical or impossible.

13 Being distracted by the frustrating issues instead of understanding the big picture on scoring issues and concentrating on the high impact issues.

14 Concentrating on the most frequently found issues, the so-called Health and Safety issues and Life Threatening issues without regard to their scoring impact.

15 Of course, it is ALWAYS important to address dangerous conditions and legal liability issues immediately, but do not let these distract you from considering scoring values as you set priorities for other items.

16 What is REAC and the UPCS? The U.S. Dept. of HUD s Real Estate Assessment Center (REAC) was formed in June 1997 AND created the *Uniform Physical Conditions Standards (UPCS) which are the defect definitions used in HUD REAC/ PASS inspections for properties including: All public housing; Section-8 project based properties; FHA/HUD insured & assisted properties * Adopted by the IRS in 2001, for tax-credit compliance requirements; FEMA and Dept. of Agriculture (USDA), and the Army Corp. of Engineers. Under consideration by others; such as, the U.S. Dept. of Interior and the D.O.D.

17 Five Inspectable Areas within a property Property Site Building Health & Safety Building Exterior Building Systems Common Areas Dwelling Units Inspectable Areas

18 Inspectable Items within an Inspectable Area SITE Fencing/Gates Grounds Mailboxes/Signs Market Appeal Parking Lots Driveways/Roads Play Areas Refuse Disposal Retaining Walls Storm Drainage Walkways BUILDING EXTERIOR Doors Fire Escapes Foundations Lighting Roofs Walls Windows BUILDING SYSTEMS Domestic Water Electrical System Elevators Emergency Power Fire Protection HVAC Sanitary System COMMON AREAS Basement/Garage Mechanical Room Community Room Day Care Halls/Stairs Kitchen Laundry Offices Pools Restrooms Storage UNITS Bathroom Call-for-Aid Ceiling, Doors Electrical, Floors Hot Water Heater Kitchen, HVAC Laundry, Lighting Outlets/Switches Smoke Detector Stairs, Walls Windows HEALTH & SAFETY Air Quality Elevator Emergency/Fire Exits Flammable Materials Electrical Hazards Garbage & Debris Hazards Infestations

19 Inspectable Item entries No Observed Deficiency (NOD) Level 1 Inspectable Area Inspectable Item Observed Deficiency (OD) Level 2 Not Applicable (NA) Level 3 Example: Building Systems Elevators (OD) Does not function

20 Life Threatening - Health & Safety Hazards Requires repairs within 24 hours of inspection; Requires repair statement sent to HUD; Life Threatening Health and Safety items include: Missing outlet/switch covers Open panel slots Missing electrical panel covers Misaligned flues Missing/damaged/expired fire Blocked egress extinguishers routes. Missing/inoperable smoke detectors

21 Inspectable Area Scoring Inspectable Areas: Site Building Exterior Building Systems Common Areas (CA) Dwelling Units Health & Safety With CA: 15% 15% 20% 15% 35%? Without CA: 17.6% 17.6% 23.5% 0% 41.2%? If a common area (CA) is not present, the 15% points possible are redistributed to the other four inspectable areas. Health & Safety defects can cause an unlimited amount of additional point deductions, only if they exist

22 Suggested Inspection Guidelines Management should direct specific resident discussion & complaints away from the ear-shot of the inspector; Instruct residents to follow established process for entering work orders; Rectify important health and safety issues as soon as possible (i.e.: misaligned furnace flues, smoke detectors, missing outlet/switch covers, etc ); Assess items inside the property: Do not inspect physical structures that are not under the control of the property (e.g., city streets and sidewalks).

23 Suggested Inspection Guidelines REAC PASS inspectors are required to notify you of all defects they are entering make sure they do! Be prepared to understand the defects they call out (understand the UPCS!) Record the defects they call out. Once the inspection results are posted, you will have only 30 days for Technical Review Appeal & 45 days for a Database Adjustment Appeal to be submitted. *Suggest you take pictures of defects for documentation.

24 Suggested Inspection Guidelines Have a maintenance person on hand to check smoke detectors and stoves for the inspector. Gas stove pilot lights can be quickly relit and bathroom fans can quickly be reconnected Have a handful of batteries, sink/tub stoppers, and door knob patches; Make sure property personnel are able to inform the inspector which physical structures are not under the ownership of the property (i.e.: city streets and sidewalks, neighboring fences).

25 Suggested Inspection Guidelines Be prepared Educate your staff on not only what the UPCS defects are, but which ones to take care of first for the greatest score impact; >>>> The Inspection Group s UPCS Flip-Field Guide could help here, big-time Take the blinders off - Create an organizational culture that encourages all employees to report observed defects throughout the property.

26 Suggested Inspection Guidelines Perform regular inspections stay on top of developing situations and reduce chances of surprises during the REAC inspections (i.e. quarterly or even monthly, if needed) Consider changing lease agreements if personal appliances, carpets, etc. are to be allowed in a unit, then the resident must keep them to the same cleanliness and operational standard as those provided. Add damage clauses resulting in eviction.

27 Unit sample size in a REAC inspection: This is ALWAYS the same Number of Units at Property: units and over Minimum Unit Sample Size: All

28 Principles to Remember Units are NOT Your Only Concern There are FIVE Inspectable Areas UNITS Account for Only 30-45% of Your Score

29 Preparing Units for Inspection Don t Chase the Bad Units Units are 30 to 45% of Total Score Each Unit is Worth 1.6 to 2.8 Points* *Except in Unusual Case of Very Small Samples; Divide Total Score by Number of Units to Determine

30 Don t Chase Bad Units You Do NOT Pass or Fail the Inspection based on any Individual Units You Cannot be Sure Any Particular Unit Will BE Inspected A Sample of Units is Inspected

31 Don t Chase Bad Units Preparing a Bad Unit Takes Much Longer If You Don t Fix Everything, You Might Still Lose the Entire Value on a Few Items Abusive Residents May Undo Repairs Before Inspection

32 Units ZERO OUT Each UNIT has a MAXIMUM Value Maximum Value is Reached at: 1 GFI + 1 live Roach + Sink Stopper Mold (> 1 sq.ft.) + Missing Breaker 2 Gas Range Burners Don t Light + Sharp Edges on a Broken Window

33 Inspect and Repair Perfect Units First Many Easy-to-Fix Defects are HIGH SCORING Bad GFI = One Third the Value Mold = Half the Value (or more) Electrical Problems = Half the Value

34 Some Units are Uninspectable There is NO Penalty for Uninspectable No Keys Hazardous Conditions- i.e.;big Dog Occupant Refusal Crime Scene tape

35 Some Units are Uninspectable Not Officially Uninspectable, but Most Inspectors Will Not Enter Units with: Death in Family Reported Serious Illness Under Eviction Process and Other Legal Issues

36 High Value Unit Items Bad GFIs and ANY kind of electrical hazards, like Missing switch or outlet covers, and missing breakers or exposed wires

37 High Value Unit Items Evidence of infestations even just two dead roaches; roach parts; one mouse dropping

38 High Value Unit Items Mold and mildew But it must cover more than ONE SQUARE FOOT But, what s MOLD? Is it just dirt?

39 High Value Unit Items Blocked fire exits an AC unit in the only bedroom window, a window or door screwed shut, a large piece of furniture in front of a window, etc. significantly MORE than half the unit value

40 High Value Unit Items Sharp edges on broken glass or a radiator, more than half the unit value, and NOTE that a broken window is only worth about 2 tenths of a point while the safety defect for sharp edges is FIVE TIMES the value of the window itself. If you have a broken window that you cannot fix before the inspection, cover the sharp edges with cardboard or heavy duct tape to eliminate the hazard.

41 High Value Unit Items Problems with a temperature/pressure relief valve on a water heater the extension tube is missing or does not extend to within 18 inches of the floor

42 High Value Unit Items Clogged drains or any problem with a toilet, and any water leak that puts water outside the sink or tub Some items are very LOW scoring

43 Low Value Unit Items Smoke detectors (Note: that although smoke detector problems are still serious safety issues that require immediate address, they DO NOT SCORE. Draw your own conclusions based on your conscience and company policy, but do not consider them a high point value priority as they do not score at all zero deductions), but... they are a high liability item and a human safety concern.

44 Low Value Unit Items Trip hazards in UNITS do not score at all zero deduction, none, nada, zip, zilch... Site trip hazards DO score

45 Low Value Unit Items Missing closet doors are low scoring, and you are better off to remove a damaged closet door than to leave it damaged if it is the only damaged door in the unit a missing closet door has less scoring impact than a damaged closet door

46 Low Value Unit Items All Paint issues are low scoring (floor, ceiling, walls) Flooring issues are low scoring, relative to effort and cost to repair/replace Window screens are not scored for units, they are scored for the Building Exterior as a whole. As long as window screens do not create a hazard (like Sharp Edges,) they are not worth repairing for the REAC inspection. If a unit s screen looks like it poses a hazard, remove it completely.

47 Low Value Unit Items Window cracks (small hairline cracks) that do not have sharp edges are very low scoring. If a window has a tiny crack, ignore it for REAC, but if it looks like it could easily break further, replace it or cover the crack so no sharp edges are present.

48 Low Value Unit Items Window balances (window doesn t stay up by itself) is low scoring. Blinds and curtains absolutely do not count at all. NOTE: Some inspectors are now calling a bad Window Balance an EGRESS HAZARD, watch for this and APPEAL

49 Low Value Unit Items Towel bars and toilet paper holders do not count at all They are not even part of the inspection protocol Peep Holes in the Entry Doors are not required, but if missing the HOLE counts

50 Low Value Unit Items Window and Door Screens are low scoring Some Items score moderately, but occur OFTEN

51 Moderate Value, but Occur Frequently Missing Sink Stopper (provide rubber stoppers when inspecting prior to REAC)

52 Moderate Value, but Occur Frequently Missing Closet Doors or Off the Tracks Closet Doors Not Required Sometimes Better Missing than Damaged

53 Moderate Value, but Occur Frequently Fogged Thermopane Windows (low value relative to cost of repair)

54 Moderate Value, but Occur Frequently Many Kinds of WINDOW Issues - Doesn t Lock Doesn t Open Doesn t Stay Up Blocked Egress is SERIOUS

55 Moderate Value, but Occur Frequently Many Kinds of DOOR Problems Surface Damage Hardware Issues Missing Doors Seals/Weatherstripping

56 SITE ISSUES SITE Accounts for 15 to 18% of Score ALL Level 3 Defects are High Scoring Most are Very Unexpected

57 Unexpected SITE ISSUES Level 3 on Playground Due to Hazardous Condition SIX points Any damage to playground equipment that could pose a hazard HANGING CHAIN SHARP EDGES TRIP HAZARDS

58 Unexpected SITE ISSUES SHARP EDGES for GLASS on SITE minus ~ SIX points Name a property in the U.S. that you couldn t find a piece of broken glass?

59 Unexpected SITE ISSUES TRIP HAZARDS 5 to 8 Points

60 Unexpected SITE ISSUES ELECTRICAL HAZARDS 8 to 10 Points

61 Unexpected SITE ISSUES Missing Hand Rails 5 to 8 Points Any Stairs with 4 or more Steps

62 Other SITE ISSUES Fences Vegetation Ruts and Erosion

63 Other SITE ISSUES Graffiti Paint Over is Adequate Be There Early to Check the Morning of Inspection, and Cover Graffiti Overflowing Dumpsters Be There Early to Check the Morning of Inspection, and Clean Up - Don t schedule a REAC inspection after a long Holiday weekend DUH!

64 Other SITE ISSUES Parking Lot Issues Low Value Relative to Cost of Repairs

65 Other SITE ISSUES Storm Drainage A final word on often forgotten site defects check all your storm drains for signs of blockage. A lot of loose debris gets washed down to your storm drains when you have heavy rains.

66 Building Exteriors Exteriors are Worth 15 to 20% of Score Divide by Number of Buildings Inspected Exterior Issues Severe Scoring with ONE or FEW Buildings Inspected Certain Issues High Scoring, Low Scoring, and Moderate but Frequent

67 Building Exteriors Electrical hazards Splash blocks and gutters/downspouts Holes in Walls and Foundations Lighting Doors, Windows, and other elements

68 Building Systems Most Critical and Most Overlooked Items for High Rises and Single Building Properties FIRST Priority on Such Properties

69 SYSTEMS Chimney and Flue Issues Pressure Relief Valve Defects Fire Extinguishers Sanitary Systems Missing Drain Covers Open Clean-Out Drains Sewer Pipe Leaks

70 SYSTEMS Roof Exhaust Systems Any and All Electrical Problems Missing Breakers Missing Covers Inside Boxes Exposed Wires Water Supply Supply Line Leaks (including Hose-bibs) Watch for Condensation Being Called a Leak

71 Common Areas Most Variable Scoring Value of All Areas More Buildings, Fewer Points Each More Common Areas, Higher Values No Common Areas, No Value Remember that SYSTEMS Items Still Count for VERY HIGH VALUES, they Score Separate from Common Areas

72 Specific Common Items Trash Chutes Make sure that all trash chute doors open, close, and latch firmly when released.

73 Specific Common Items Mailboxes Make sure that clustered mailboxes indoors all function properly. Doors must open, close, latch, and lock

74 Specific Common Items Graffiti Indoor graffiti only counts in corridors, hallways, and stairs. Point value is not real high, but be aware that graffiti does count in Common areas and try to address it.

75 Specific Common Items Abandoned Areas Even if an area is abandoned or off line, it may be inspected. Look for questionable old wiring and plumbing defects like small leaks in supplies and sewage. Clean up the remains of any old sewage leaks, etc.

76 toll-free (866) PASS-REAC ( ) on the web: THANK YOU!! THE INSPECTION GROUP