II 

118TH CONGRESS 

1ST SESSION S. 554 

To reform the inspection process of housing assisted by the Department 

of Housing and Urban Development, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 28, 2023 

Mr. RUBIO (for himself and Mr. SCOTT of Florida) introduced the following 

bill; which was read twice and referred to the Committee on Banking, 

Housing, and Urban Affairs 

A BILL 

To reform the inspection process of housing assisted by the 

Department of Housing and Urban Development, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘HUD Inspection Re5 form and Capital Improvement Act of 2023’’. 

6 SEC. 2. DEFINITION. 

7 In this Act, the term ‘‘Secretary’’ means the Sec8 retary of Housing and Urban Development. 


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1 SEC. 3. REDUCTION IN GRADE OR PAY OR REMOVAL FOR 

2 MISCONDUCT OR PERFORMANCE OF EM3 PLOYEES OF THE DEPARTMENT OF HOUSING 

4 AND URBAN DEVELOPMENT. 

5 (a) IN GENERAL.—Section 7(c) of the Department 

6 of Housing and Urban Development Act (42 U.S.C. 

7 3535(c)) is amended— 

8 (1) by striking ‘‘The Secretary is authorized’’ 

9 and inserting the following: ‘‘EMPLOYMENT, COM10 PENSATION, AUTHORITY, AND DUTIES OF PER11 SONNEL.— 

12 ‘‘(1) IN GENERAL.—The Secretary is author13 ized’’; and 

14 (2) by adding at the end the following: 

15 ‘‘(2) REDUCTION IN GRADE OR PAY OR RE16 MOVAL FOR MISCONDUCT OR PERFORMANCE OF EM17 PLOYEES.— 

18 ‘‘(A) DEFINITIONS.—For purposes of this 

19 paragraph— 

20 ‘‘(i) the term ‘covered employee’— 

21 ‘‘(I) means an individual holding 

22 a position in the civil service in the 

23 Department; and 

24 ‘‘(II) does not include any indi25 vidual— 


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1 ‘‘(aa) holding in a position 

2 described under sections 5312 

3 through 5316 of title 5, United 

4 States Code (relating to the Ex5 ecutive Schedule); 

6 ‘‘(bb) holding a position as a 

7 limited term appointee, limited 

8 emergency appointee, or non9 career appointee in the Senior 

10 Executive Service, as defined 

11 under paragraphs (5), (6), and 

12 (7), respectively, of section 

13 3132(a) of title 5, United States 

14 Code; or 

15 ‘‘(cc) holding a position of a 

16 confidential or policy-determining 

17 character under schedule C of 

18 subpart C of part 213 of title 5, 

19 Code of Federal Regulations; 

20 ‘‘(ii) the term ‘grade’ means a level of 

21 classification under a position classification 

22 system; 

23 ‘‘(iii) the term ‘misconduct’ includes 

24 neglect of duty, malfeasance, or failure to 

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1 company a position in a transfer of func2 tion; and 

3 ‘‘(iv) the term ‘pay’ means the rate of 

4 basic pay fixed by law or administrative 

5 action for the position held by a covered 

6 employee. 

7 ‘‘(B) ACTIONS COVERED.—This para8 graph— 

9 ‘‘(i) applies to a reduction in grade or 

10 pay or removal; and 

11 ‘‘(ii) does not apply to— 

12 ‘‘(I) a reduction in grade or pay 

13 or removal under section 7512 of title 

14 5, United States Code; 

15 ‘‘(II) a reduction in grade or pay 

16 or removal under section 7521 of title 

17 5, United States Code; 

18 ‘‘(III) a removal under section 

19 7532 of title 5, United States Code; 

20 or 

21 ‘‘(IV) a removal under section 

22 3592, 3595, or 7543 of title 5, United 

23 States Code. 

24 ‘‘(C) CAUSE AND PROCEDURE.— 


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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 any other provision of law, under regula3 tions prescribed by the Office of Personnel 

4 Management, the Secretary may, if the 

5 Secretary determines that the misconduct 

6 or performance of a covered employee war7 rants such action— 

8 ‘‘(I) remove the covered employee 

9 from the civil service; 

10 ‘‘(II) reduce the grade of the cov11 ered employee; or 

12 ‘‘(III) reduce the pay of the cov13 ered employee. 

14 ‘‘(ii) REDUCTION IN GRADE.—A cov15 ered employee subject to a reduction in 

16 grade under clause (i)(II) shall, beginning 

17 on the date on which the reduction takes 

18 effect, receive the annual rate of pay appli19 cable to the reduced grade. 

20 ‘‘(iii) APPEAL PROCEDURES.— 

21 ‘‘(I) IN GENERAL.—Subject to 

22 subclause (II) and clause (iv), any re23 duction in grade or pay or removal 

24 under this paragraph may be appealed 

25 to the Merit Systems Protection 


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1 Board under section 7701 of title 5, 

2 United States Code. 

3 ‘‘(II) TIME FOR APPEAL.—An 

4 appeal under subclause (I) may only 

5 be made if such appeal is made not 

6 later than 7 days after the date of 

7 such reduction in grade or pay or re8 moval. 

9 ‘‘(iv) REVIEW ON APPEAL.— 

10 ‘‘(I) IN GENERAL.—Upon receipt 

11 of an appeal under clause (iii), the 

12 Merit Systems Protection Board shall 

13 refer the appeal to an administrative 

14 law judge pursuant to section 

15 7701(b)(1) of title 5, United States 

16 Code. The administrative law judge 

17 shall expedite any such appeal under 

18 such section and, in any such case, 

19 shall issue a decision not later than 

20 45 days after the date on which the 

21 Board receives the appeal. 

22 ‘‘(II) INFORMATION AND ASSIST23 ANCE.—To the maximum extent prac24 ticable, the Secretary shall provide to 

25 the Merit Systems Protection Board, 


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1 and to any administrative law judge 

2 to whom an appeal under this para3 graph is referred, such information 

4 and assistance as may be necessary to 

5 ensure an appeal under this para6 graph is expedited. 

7 ‘‘(III) FINALITY.—Notwithstand8 ing any other provision of law, includ9 ing section 7703 of title 5, United 

10 States Code, the decision of an admin11 istrative law judge under subclause (I) 

12 shall be final and shall not be subject 

13 to any further appeal. 

14 ‘‘(IV) DELAYED DECISION.— 

15 ‘‘(aa) IN GENERAL.—In any 

16 case in which the administrative 

17 law judge cannot issue a decision 

18 in accordance with the 45-day re19 quirement under subclause (I), 

20 the reduction in grade or pay or 

21 removal shall be final. 

22 ‘‘(bb) EXPLANATION.—In a 

23 case described in item (aa), the 

24 Merit Systems Protection Board 

25 shall, not later than 14 days 


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1 after the date on which the re2 duction in grade or pay or re3 moval becomes final, submit to 

4 Congress a report that explains 

5 the reasons why a decision was 

6 not issued in accordance with 

7 that requirement. 

8 ‘‘(V) NO STAYS.—The Merit Sys9 tems Protection Board or administra10 tive law judge may not stay any re11 duction in grade or pay or removal ac12 tion under this paragraph. 

13 ‘‘(VI) EFFECT OF APPEAL OF

14 REMOVAL.—During the period begin15 ning on the date on which a covered 

16 employee appeals a removal from the 

17 civil service under this paragraph and 

18 ending on the date on which the ad19 ministrative law judge issues a final 

20 decision on such appeal, the covered 

21 employee may not receive any pay, 

22 awards, bonuses, incentives, allow23 ances, differentials, student loan re24 payments, special payments, or bene25 fits. 


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1 ‘‘(v) WHISTLEBLOWER PROTEC2 TION.—In the case of a covered employee 

3 seeking corrective action (or on behalf of 

4 whom corrective action is sought) from the 

5 Office of Special Counsel based on an al6 leged prohibited personnel practice de7 scribed in section 2302(b) of title 5, 

8 United States Code, the Secretary may not 

9 reduce the grade or pay or remove the cov10 ered employee under this paragraph with11 out the approval of the Special Counsel 

12 under section 1214(f) of title 5, United 

13 States Code.’’. 

14 (b) APPLICATION.—The authority under paragraph 

15 (2) of section 7(c) of the Department of Housing and 

16 Urban Development Act, as added by subsection (a), shall 

17 apply to any covered employee (as defined in such para18 graph) appointed before, on, or after the date of enact19 ment of this Act. 

20 (c) CONFORMING AMENDMENTS.—Title 5, United 

21 States Code, is amended— 

22 (1) in section 4303(f)— 

23 (A) in paragraph (3), by striking ‘‘or’’ at 

24 the end; 


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1 (B) in paragraph (4), by striking the pe2 riod at the end and inserting ‘‘, or’’; and 

3 (C) by adding at the end the following: 

4 ‘‘(5) the reduction in grade or removal of an 

5 employee under section 7(c)(2) of the Department of 

6 Housing and Urban Development Act (42 U.S.C. 

7 3535(c)(2)).’’; 

8 (2) in section 7512— 

9 (A) in subparagraph (E), by striking ‘‘, 

10 or’’ and inserting a comma; 

11 (B) in subparagraph (F), by striking the 

12 period at the end and inserting ‘‘, or’’; and 

13 (C) by adding at the end the following: 

14 ‘‘(G) a reduction in grade or pay or removal 

15 under section 7(c)(2) of the Department of Housing 

16 and Urban Development Act (42 U.S.C. 

17 3535(c)(2)).’’; 

18 (3) in section 7521(b), in the matter following 

19 paragraph (5)— 

20 (A) in subparagraph (B), by striking ‘‘or’’ 

21 at the end; 

22 (B) in subparagraph (C), by striking the 

23 period at the end and inserting ‘‘; or’’; and 

24 (C) by adding at the end the following: 


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1 ‘‘(D) a reduction in grade or pay or removal 

2 under section 7(c)(2) of the Department of Housing 

3 and Urban Development Act (42 U.S.C. 

4 3535(c)(2)).’’; and 

5 (4) in section 7542, by striking ‘‘or to a re6 moval under section 3592 or 3595 of this title’’ and 

7 inserting ‘‘to a removal under section 3592 or 3595 

8 of this title, to an action under section 713 of title 

9 38, or to a reduction in grade or pay or removal 

10 under section 7(c)(2) of the Department of Housing 

11 and Urban Development Act (42 U.S.C. 

12 3535(c)(2))’’. 

13 SEC. 4. ENFORCEMENT OF PHYSICAL CONDITION STAND14 ARDS AND TENANT PROTECTION. 

15 Section 8(o) of the United States Housing Act of 

16 1937 (42 U.S.C. 1437f(o)), as amended by section 

17 101(b)(2)(B) of division Q of the Consolidated Appropria18 tions Act, 2021 (Public Law 116–260; 134 Stat. 2163), 

19 is amended by adding at the end the following: 

20 ‘‘(22) MAINTENANCE OF PROPERTY.—Any enti21 ty receiving housing assistance payments with re22 spect to dwelling units covered by a housing assist23 ance payments contract shall— 


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1 ‘‘(A) maintain decent, safe, and sanitary 

2 conditions at those dwelling units, as deter3 mined by the Secretary; and 

4 ‘‘(B) comply with any standards under ap5 plicable State or local laws, rules, ordinances, or 

6 regulations relating to the physical condition of 

7 those dwelling units. 

8 ‘‘(23) ENFORCEMENT OF PHYSICAL CONDITION

9 STANDARDS.— 

10 ‘‘(A) IN GENERAL.—The Secretary shall 

11 take action under subparagraph (C) against an 

12 entity with a housing assistance payments con13 tract for project-based assistance with respect 

14 to a multifamily housing project if— 

15 ‘‘(i) the project receives a Uniform 

16 Physical Condition Standards (in this 

17 paragraph referred to as ‘UPCS’) inspec18 tion score of not more than 45; 

19 ‘‘(ii) the entity fails to certify in writ20 ing to the Secretary within 3 days of re21 ceiving the score under clause (i) that all 

22 exigent health and safety deficiencies iden23 tified by the inspector at the project have 

24 been corrected; or 


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1 ‘‘(iii) the project receives a UPCS in2 spection score of more than 45 and less 

3 than 59 and has received consecutive 

4 scores of less than 60 on UPCS inspec5 tions. 

6 ‘‘(B) APPLICABILITY.—Subparagraph (A) 

7 shall— 

8 ‘‘(i) apply with respect to insured and 

9 noninsured projects with dwelling units re10 ceiving assistance under this section other 

11 than under paragraph (13); and 

12 ‘‘(ii) not apply to dwelling units re13 ceiving assistance with capital or operating 

14 funds under section 9. 

15 ‘‘(C) NOTIFICATION AND ENFORCE16 MENT.— 

17 ‘‘(i) IN GENERAL.—If an entity vio18 lates clause (i), (ii), or (iii) of subpara19 graph (A), the Secretary shall notify the 

20 entity and provide an opportunity for re21 sponse not later than 15 days after the 

22 date on which the results of the UPCS in23 spection are issued. 

24 ‘‘(ii) PLAN AND NOTICE OF DE25 FAULT.—If violations remain at a project 


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1 after the 15-day period described in clause 

2 (i), the Secretary shall— 

3 ‘‘(I) develop a plan to bring the 

4 project into compliance not later than 

5 30 days after the date on which the 

6 results of the UPCS inspection are 

7 issued; and 

8 ‘‘(II) provide the owner, the ten9 ants of the property, the local govern10 ment, any mortgagees, and any con11 tract administrator of the project with 

12 a Notice of Default with a specified 

13 timetable, determined by the Sec14 retary, for correcting all deficiencies. 

15 ‘‘(iii) WITHDRAWAL OF NOTICE OF

16 DEFAULT.—If an appeal submitted by the 

17 entity results in a UPCS inspection score 

18 of not less than 60, the Secretary may 

19 withdraw a Notice of Default issued under 

20 clause (ii)(II). 

21 ‘‘(iv) PENALTIES.—If, at the end of 

22 the timetable described in clause (ii)(II), 

23 the entity fails to fully correct all defi24 ciencies in the project, the Secretary 

25 may— 


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1 ‘‘(I) require immediate replace2 ment of project management with a 

3 management agent approved by the 

4 Secretary; 

5 ‘‘(II) impose civil money pen6 alties, which— 

7 ‘‘(aa) shall be used solely for 

8 the purpose of supporting safe 

9 and sanitary conditions at the 

10 property, as designated by the 

11 Secretary, with priority given to 

12 the tenants of the property af13 fected by the penalty; and 

14 ‘‘(bb) shall not be payable 

15 out of project income; 

16 ‘‘(III) abate the housing assist17 ance payments contract under this 

18 section, including partial abatement, 

19 as determined by the Secretary, until 

20 all deficiencies have been corrected; 

21 ‘‘(IV) pursue transfer of the 

22 project to an owner, approved by the 

23 Secretary under established proce24 dures, which will be obligated to 

25 promptly make all required repairs 


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1 and to accept renewal of the housing 

2 assistance payments contract as long 

3 as such renewal is offered; 

4 ‘‘(V) transfer the existing hous5 ing assistance payments contract 

6 under this section to another project 

7 or projects and owner or owners; 

8 ‘‘(VI) pursue exclusionary sanc9 tions, including suspensions or debar10 ments from Federal programs; 

11 ‘‘(VII) seek judicial appointment 

12 of a receiver to manage the property 

13 and cure all project deficiencies or 

14 seek a judicial order of specific per15 formance requiring the owner to cure 

16 all project deficiencies; 

17 ‘‘(VIII) work with the owner, 

18 lender, or other related party to sta19 bilize the property in an attempt to 

20 preserve the property through compli21 ance, transfer of ownership, or an in22 fusion of capital provided by a third 

23 party that requires time to effectuate; 

24 or 


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1 ‘‘(IX) take any other regulatory 

2 or contractual remedies available as 

3 deemed necessary and appropriate by 

4 the Secretary. 

5 ‘‘(D) CONTRACTS.— 

6 ‘‘(i) IN GENERAL.—The Secretary 

7 shall take appropriate steps to ensure that 

8 project-based contracts remain in effect, 

9 subject to the exercise of contractual 

10 abatement remedies to assist relocation of 

11 tenants for major threats to health and 

12 safety after written notice to and informed 

13 consent of the affected tenants and use of 

14 other remedies under this paragraph. 

15 ‘‘(ii) OTHER ASSISTANCE.—To the ex16 tent the Secretary determines, in consulta17 tion with the tenants and the local govern18 ment, that a property is not feasible for 

19 continued rental assistance payments 

20 under this section or other housing pro21 grams, based on consideration of the costs 

22 of rehabilitating and operating the prop23 erty and all available Federal, State, and 

24 local resources, including rent adjustments 

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1 sisted Housing Reform and Affordability 

2 Act of 1997 (42 U.S.C. 1437f note; title V 

3 of Public Law 105–65) and environmental 

4 conditions that cannot be remedied in a 

5 cost-effective fashion, the Secretary may, 

6 in consultation with the tenants of the 

7 property, contract for project-based rental 

8 assistance payments with an owner or own9 ers of other existing housing properties, or 

10 provide other rental assistance. 

11 ‘‘(E) REPORT.— 

12 ‘‘(i) IN GENERAL.—The Secretary 

13 shall, on a quarterly basis, issue a publicly 

14 available report on all properties covered 

15 by this paragraph that— 

16 ‘‘(I) are assessed through UPCS 

17 inspections; and 

18 ‘‘(II)(aa) have a UPCS inspec19 tion score of less than 60; or 

20 ‘‘(bb) received an unsatisfactory 

21 management and occupancy review 

22 during the 36-month period preceding 

23 the report. 

24 ‘‘(ii) CONTENTS.—Each report issued 

25 under clause (i) shall— 


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1 ‘‘(I) include, for each property 

2 covered by the report— 

3 ‘‘(aa) the UPCS inspection 

4 score and date of inspection; and 

5 ‘‘(bb) the ownership interest 

6 and management of the property; 

7 ‘‘(II) identify— 

8 ‘‘(aa) the enforcement ac9 tions being taken to address the 

10 physical conditions of the prop11 erties covered by the report, in12 cluding imposition of civil mone13 tary penalties and termination of 

14 subsidies; and 

15 ‘‘(bb) properties that have 

16 been identified multiple times as 

17 having the physical conditions de18 scribed in item (aa); 

19 ‘‘(III) identify actions that the 

20 Secretary is taking to— 

21 ‘‘(aa) remediate all health 

22 and safety concerns; and 

23 ‘‘(bb) protect tenants of the 

24 properties covered by the report; 

25 and 


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1 ‘‘(IV) include any administrative 

2 or legislative recommendations to fur3 ther improve the living conditions at 

4 each property covered under a hous5 ing assistance payments contract. 

6 ‘‘(24) TENANT PROTECTION.— 

7 ‘‘(A) IN GENERAL.—The Secretary may 

8 provide tenant-based assistance for dwelling 

9 units covered under a project-based assistance 

10 subsidy contract if— 

11 ‘‘(i) the owner of the dwelling units 

12 has received a Notice of Default; and 

13 ‘‘(ii) the dwelling units pose an immi14 nent health and safety risk to the tenants 

15 of the dwelling units. 

16 ‘‘(B) REIMBURSEMENTS.—To the extent 

17 that the Secretary determines that dwelling 

18 units described in subparagraph (A) are not 

19 feasible for continued rental assistance pay20 ments or transfer of the project-based assist21 ance subsidy contract associated with those 

22 dwelling units to another project or projects 

23 and owner or owners, any remaining amounts 

24 associated with those dwelling units shall be re25 captured and used to reimburse amounts used 


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1 for tenant-based assistance under subparagraph 

2 (A).’’. 

3 SEC. 5. REPORTS ON REAL ESTATE ASSESSMENT CENTER 

4 INSPECTIONS. 

5 (a) ANNUAL HUD REPORT.—Not later than 90 days 

6 after the date of enactment of this Act, and annually 

7 thereafter, the Secretary shall issue a publicly available 

8 report on the website of the Department of Housing and 

9 Urban Development (in this section referred to as the 

10 ‘‘Department’’) regarding Real Estate Assessment Center 

11 (in this section referred to as ‘‘REAC’’) inspections of all 

12 properties assisted, insured, or both, under a program of 

13 the Department, which shall include— 

14 (1) the percentage of all inspected properties 

15 that received a REAC-inspected score of less than 

16 65 during the 48-month period preceding the report; 

17 (2) the number of properties in which the most 

18 recent REAC-inspected score represented a decline 

19 relative to the previous REAC-inspected score; 

20 (3) a list of the 10 metropolitan statistical 

21 areas with the lowest average REAC-inspected 

22 scores for all inspected properties; and 

23 (4) a list of the 10 States with the lowest aver24 age REAC-inspected scores for all inspected prop25 erties. 


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1 (b) GAO REPORT.—The Comptroller General of the 

2 United States shall issue a publicly available report on the 

3 website of the Government Accountability Office with rec4 ommendations for how REAC inspections of all properties 

5 assisted, insured, or both, under a program of the Depart6 ment should be reformed and improved. 

7 SEC. 6. BUDGET-BASED RENTAL ADJUSTMENTS FOR CER8 TAIN PROPERTIES RECEIVING PROJECT9 BASED RENTAL ASSISTANCE THAT UNDER10 WENT MARK-TO-MARKET. 

11 (a) DEFINITION.—In this section, the term ‘‘eligible 

12 property’’ means a property that— 

13 (1) receives project-based rental assistance 

14 under section 8 of the United States Housing Act of 

15 1937 (42 U.S.C. 1437f); 

16 (2) underwent a mortgage restructuring under 

17 subtitle A of the Multifamily Assisted Housing Re18 form and Affordability Act of 1997 (42 U.S.C. 

19 1437f note; title V of Public Law 105–65); and 

20 (3)(A) has been transferred to a different owner 

21 due to the failure of a prior owner to meet Uniform 

22 Physical Condition Standards; 

23 (B) received a failing Uniform Physical Condi24 tion Standard score under a prior owner; or 


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1 (C) requires substantial rehabilitation, including 

2 the replacement of major systems, in order to ensure 

3 the long term sustainability of the property, as de4 termined by a capital needs assessment and as ap5 proved by the Secretary. 

6 (b) AUTHORITY.—The Secretary may, at the request 

7 of the owner of the property, approve the adjustment of 

8 rent on a budget basis (within the meaning of section 

9 401.412(b) of title 24, Code of Federal Regulations, or 

10 any successor regulation) for an eligible property if the 

11 owner— 

12 (1) demonstrates that— 

13 (A) the available operating revenue is in14 sufficient to operate and maintain the property; 

15 and 

16 (B) a rent adjustment is necessary to sup17 port financing for rehabilitation; and 

18 (2) submits a rehabilitation plan to extend the 

19 useful life of the property for not less than 25 years, 

20 including remediation of all existing health, sanita21 tion, and safety concerns. 

22 (c) REPORTING REQUIREMENT.—During the period 

23 during which a property for which a budget-based rental 

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1 bilitated, the owner of the property shall submit to the 

2 Secretary a quarterly report that includes— 

3 (1) a description of the progress made on, and 

4 expenses incurred for, capital improvements and 

5 debt service; 

6 (2) a detailed list of outstanding improvements; 

7 (3) the expected completion date for each out8 standing improvement described in paragraph (2); 

9 and 

10 (4) any other information required by the Sec11 retary. 

12 SEC. 7. CODIFICATION OF UNIFORM PHYSICAL CONDITION 

13 STANDARDS INSPECTION TIMELINES FOR 

14 UNITS RECEIVING PROJECT-BASED RENTAL 

15 ASSISTANCE. 

16 (a) DEFINITION.—In this section, the term ‘‘covered 

17 property’’ means a property that receives project-based 

18 rental assistance under section 8 of the United States 

19 Housing Act of 1937 (42 U.S.C. 1437f). 

20 (b) SCORING AND RANKING OF PHYSICAL CONDI21 TION.—The Secretary shall score and rank the physical 

22 condition of covered properties in accordance with this sec23 tion. 

24 (c) METHODOLOGY FOR RANKING.— 


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1 (1) IN GENERAL.—The Secretary shall score 

2 each covered property on the basis of a 100-point 

3 scale. 

4 (2) FRACTIONS.—In scoring a covered property 

5 under paragraph (1), the Secretary shall round— 

6 (A) a score that includes a fraction below 

7 one half point to the next lower full point; and 

8 (B) a score that includes a fraction of one 

9 half point or higher to the next higher full 

10 point. 

11 (d) DESIGNATIONS AND FREQUENCY OF INSPEC12 TIONS.— 

13 (1) STANDARD 1 PERFORMING PROPERTY.— 

14 The Secretary shall— 

15 (A) designate a covered property that re16 ceives a score of not less than 90 points on its 

17 physical condition inspection as a standard 1 

18 performing property; and 

19 (B) conduct a physical inspection of a 

20 standard 1 performing property once every 3 

21 years. 

22 (2) STANDARD 2 PERFORMING PROPERTY.— 

23 The Secretary shall— 

24 (A) designate a covered property that re25 ceives a score of not less than 80 points and 


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1 less than 90 points on its physical condition in2 spection as a standard 2 performing property; 

3 and 

4 (B) conduct a physical inspection of a 

5 standard 2 performing property once every 2 

6 years. 

7 (3) STANDARD 3 PERFORMING PROPERTY.— 

8 The Secretary shall— 

9 (A) designate a covered property that re10 ceives a score of less than 80 points on its 

11 physical condition inspection as a standard 3 

12 performing property; and 

13 (B) conduct a physical inspection of a 

14 standard 3 performing property every year. 

15 (e) SPECIAL REQUIREMENTS.—If a covered property 

16 receives a score in the range of a standard 1 performing 

17 property or standard 2 performing property on its physical 

18 condition inspection and has been cited by the Secretary 

19 as having an exigent health and safety deficiency, the 

20 property— 

21 (1) shall only shall be designated as a standard 

22 1 performing property or standard 2 performing 

23 property, respectively, if the owner resolves the defi24 ciency; and 


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1 (2) shall be designated as a standard 3 per2 forming property if the owner does not resolve the 

3 deficiency. 

4 (f) AUTHORITY TO DELAY INSPECTIONS.— 

5 (1) IN GENERAL.—Notwithstanding subsection 

6 (d), the Secretary may delay the physical inspection 

7 of a covered property that is undergoing a substan8 tial rehabilitation. 

9 (2) DEFINITION.—For purposes of this sub10 section, the term ‘‘substantial rehabilitation’’, with 

11 respect to a covered property, means a physical re12 habilitation for the long-term sustainability of the 

13 property where the costs of the rehabilitation exceed 

14 25 percent of the property’s replacement cost (cal15 culated based on fair market value) after completion 

16 of all required repairs, replacements, and improve17 ments. 

Æ 


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