69–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2nd Session 110–521 

PUBLIC HOUSING ASSET MANAGEMENT IMPROVEMENT 

ACT OF 2007 

JANUARY 29, 2008.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

[To accompany H.R. 3521] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 3521) to improve the Operating Fund for public housing 

of the Department of Housing and Urban Development, having considered the same, report favorably thereon with an amendment and 

recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 2 

Background and Need for Legislation .................................................................... 3 

Hearings ................................................................................................................... 5 

Committee Consideration ........................................................................................ 6 

Committee Votes ...................................................................................................... 6 

Committee Oversight Findings ............................................................................... 6 

Performance Goals and Objectives ......................................................................... 6 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 6 

Committee Cost Estimate ....................................................................................... 7 

Congressional Budget Office Estimate ................................................................... 7 

Federal Mandates Statement ................................................................................. 8 

Advisory Committee Statement .............................................................................. 8 

Constitutional Authority Statement ...................................................................... 8 

Applicability to Legislative Branch ........................................................................ 8 

Earmark Identification ............................................................................................ 8 

Section-by-Section Analysis of the Legislation ...................................................... 8 


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AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Public Housing Asset Management Improvement 

Act of 2007’’. 

SEC. 2. REVISIONS TO ASSET MANAGEMENT RULES AND RELATED FEES. 

(a) MANAGEMENT AND RELATED FEES.—The Secretary shall not impose any restriction or limitation on the amount of management and related fees with respect 

to a public housing project if the fee is determined to be reasonable by the public 

housing agency, unless such restriction or limitation imposed by the Secretary on 

such fees—

(1) is determined pursuant to a negotiated rulemaking which is convened 

by the Secretary no earlier than April 1, 2009, and in accordance with subchapter III of chapter 5 of title 5, United States Code, with representatives from 

interested parties; and 

(2) is effective only on or after January 1, 2011. 

(b) INCREASE OF THRESHOLD FOR EXEMPTION FROM ASSET MANAGEMENT REQUIREMENTS.—Any public housing agency that owns or operates fewer than 500 

public housing units under title I of the United States Housing Act of 1937 may 

elect to be exempt from any asset management requirement imposed by the Secretary. 

SEC. 3. PROHIBITION ON RESTRICTION OF FUNGIBILITY OF CAPITAL FUND AMOUNTS. 

The Secretary of Housing and Urban Development shall not impose any requirement, regulation, or guideline relating to asset management that restricts or 

limits in any way the use by public housing agencies of amounts for Capital Fund 

assistance under section 9(d) of such Act, pursuant to paragraph (1) or (2) of section 

9(g) of the United States Housing Act of 1937 (42 U.S.C. 1437g(g)), for costs of any 

central office of a public housing agency. 

SEC. 4. TENANT PARTICIPATION. 

(a) RULE OF CONSTRUCTION.—Neither the requirements of this Act, nor any 

other requirement, regulation, guideline, or other policy or action of the Department 

of Housing and Urban Development relating to public housing asset management 

may be construed to repeal or waive any provision of part 964 of title 24 of the Code 

of Federal Regulations, regarding tenant participation and tenant opportunities in 

public housing. The Secretary of Housing and Urban Development shall ensure that 

public housing agencies encourage the reasonable efforts of resident tenant organizations to represent their members or the reasonable efforts of tenants to organize. 

(b) GUIDANCE.—Guidance issued by the Secretary of Housing and Urban Development shall encourage participation by residents in the implementation of asset 

management and the development of local policies for such purposes. 

PURPOSE AND SUMMARY

The purpose of H.R. 3521, the ‘‘Public Housing Asset Management Improvement Act of 2007,’’ is to ease the regulatory burden 

on public housing agencies of complying with the Department of 

Housing and Urban Development (HUD) regulations requiring certain public housing agencies to convert to asset management. The 

bill includes the following regulatory relief reforms: (1) ensure that 

the management and related fees established by HUD are reasonable and that such fees become effective on or after January 1, 

2011, the date by which public housing authorities are required 

under the Public Housing Operating Fund Final Rule to demonstrate conversion to asset management; (2) restate provisions of 

current law that permit public housing authorities to use a portion 

of their capital fund grant for operating expenses; (3) increase the 

number of public housing authorities that are exempt from mandatory conversion to asset management; and (4) encourage the parVerDate Aug 31 2005 06:37 Jan 30, 2008 Jkt 069006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR521.XXX HR521

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ticipation of public housing residents in the implementation of 

asset management. 

BACKGROUND AND NEED FOR LEGISLATION

The nation’s public housing system is in the process of a major 

administrative transformation as public housing agencies (PHAs) 

move from managing their portfolios on an agency-wide basis to a 

system in which they administer each development on a projectlevel basis. It is the largest change to the way public housing is operated in more than 30 years. Known as ‘‘asset management,’’ this 

system of project-level administration is based on the Federal 

Housing Administration (FHA) multi-family model and is required 

for public housing by the Public Housing Operating Fund Final 

Rule. The Final Rule was developed via negotiated rulemaking between HUD, representatives from key industry groups, and several 

PHAs. The Final Rule, which became effective on November 18, 

2005, required PHAs that administer more than 250 units of public 

housing to restructure their organizations, retrain their staffs, and 

reorganize their physical assets as part of the conversion. 

While there is general consensus that asset management is desirable, housing agency groups have been critical of several components of the negotiated rule, specifically with respect to how PHAs’

management fees are set and how much flexibility they will have 

to retain some centralized operations. The Final Rule states that 

PHAs must be in full compliance with asset management by 2011. 

It is important to note that two of the provisions in H.R. 3521 

were included as part of H.R. 2764, the Consolidated Appropriations Act of 2008 (Public Law 110–161) which was signed into law 

on December 26, 2007. Specifically, the Consolidated Appropriations Act included the provision exempting small PHAs of 400 or 

less from asset management and the provision to reinstate 

fungibility of capital funds as operating assistance. 

Finally, the Congressional Budget Office estimates that H.R. 

3521 would have no significant impact on the federal budget. Enacting the bill would not affect direct spending or revenues. 

ESTABLISHMENT OF REASONABLE MANAGEMENT FEES AND FEE

SCHEDULE IMPLEMENTATION DATE

While the Final Rule addressed the operating fund formula, it 

did not establish specific criteria for fees nor require that fees be 

made effective prior to January 1, 2011. Instead, the Final Rule 

stated that the fees must be reasonable. Subsequent to the Final 

Rule, HUD issued Interim Guidance on September 7, 2006 that 

outlined three types of fees: property management fees, asset management fees and bookkeeping fees. This guidance effectively required PHAs to begin implementing asset management prior to implementation of the Final Rule. In the absence of data on the actual costs of managing public housing, subsequent HUD Guidance 

stated that the fees would be based on the FHA multi-family inventory and that PHAs must be in compliance with those fees by the 

second year of project-based budgeting and project-based accounting (e.g. between July 1, 2008 and April 1, 2009). 

PHAs have questioned both the methodology and adequacy of the 

fees and contend that using FHA properties as a model is not an 


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appropriate comparison because of significant statutory and regulatory differences in the way public housing and privately-owned 

and managed housing operate. In addition, PHAs contend that significant shortfalls in the annual appropriations for the public housing operating and capital funds make conversion to asset management even more challenging. Given these challenges, PHAs contend 

that some regulatory relief is needed in order for agencies to successfully convert to asset management by 2011. As such, PHAs 

have requested that the method of establishing a reasonable management fee be developed through a negotiated rulemaking. The 

Final Rule already requires HUD to convene a meeting of stakeholders in 2009 in accordance with the Federal Advisory Committee Act to evaluate subsidy levels based on actual cost data. 

PHAs contend that expanding the scope of the meeting in 2009 to 

include management fees would provide time for PHAs to track 

their management costs under the new system and gather data, 

which in turn could be used by the negotiated rulemaking committee to establish fees. PHAs also contend that the fees should not 

be established at the beginning of the process of conversion to asset management, but should be developed with deliberation based 

on actual cost data over a period of time. They have therefore requested that the effective date of the fee schedule coincide with the 

effective date by which PHAs are required to demonstrate full compliance with asset management. 

Under the bill, HUD and PHAs would commence negotiated rulemaking with interested stakeholders on or after April 1, 2009 to establish reasonable management and related fees. This provision is 

consistent with information provided to the Committee by HUD in 

which the Department stated that a formal rule-making process to 

specifically focus on the matter of fees under asset management be 

initiated to allow for broad public input. In addition, the bill provides that the management and related fees shall become effective 

on or after January 1, 2011, consistent with the dates set forth in 

the Final Rule. 

INCREASE OF ASSET MANAGEMENT EXEMPTION THRESHOLD TO PROVIDE REGULATORY RELIEF FOR MEDIUM-SIZED PUBLIC HOUSING

AGENCIES THAT MANAGE BETWEEN 250 AND 500 UNITS

The Public Housing Operating Fund Final Rule exempts housing 

authorities with fewer than 250 public housing units from an asset 

management model. PHAs contend that housing authorities with 

fewer than 500 units of public housing should have local discretion 

in deciding whether to convert to asset management. According to 

public housing authorities, these small agencies generally have few 

properties, few staff and few financial resources. Furthermore, 

these agencies generally operate in rural areas, small towns and 

suburbs, so they are easily managed as a single entity geographically. 

Under the bill, agencies that manage 500 or fewer units of public 

housing would not be subject to asset management. Increasing the 

exemption threshold from 250 to 500 would affect 441 agencies or 

about 14 percent of all housing authorities. As a result, approximately 2,292 PHAs out of 3,087 PHAs would be exempt. In terms 

of the number of public housing units that would remain subject 

to asset management under this provision, more than 751,000 


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units (or 68 percent of all public housing units) would still be required to transition to asset management. 

The Committee notes that current HUD guidance requires agencies that have more than one asset management project in their 

portfolio to comply with asset management regardless of whether 

an agency falls within the exemption threshold. Under the bill, the 

exemption shall apply to all PHAs that administer fewer than 500 

units of public housing, regardless of the number of asset management projects a PHA has designated with respect to its public 

housing inventory. 

FUNGIBILITY OF CAPITAL FUNDS PROVIDED BY THE QUALITY HOUSING

AND WORK RESPONSIBILITY ACT

The Quality Housing and Work Responsibility Act of 1998 

(QHWRA) allows PHAs to transfer up to 20 percent of their capital 

fund grant to fund operations with no further restrictions [See Section 9(g) of the U.S. Housing Act of 1937, as amended]. HUD has 

issued Guidance that allows up to 20 percent of the capital fund 

to be transferred for direct project expenses, but prohibits the use 

of these funds on central office overhead. In addition, the Guidance 

does not allow more than 10 percent of an agency’s capital funds 

for central office costs. PHAs contend that the costs of transition 

to asset management will be significant. Furthermore, housing authorities are in their fifth consecutive year of underfunding of the 

Operating Fund and contend that the flexibility provided by 

QHWRA is crucial to the successful conversion to asset management and to the successful operation of public housing. A HUDcommissioned study by the Harvard Graduate School of Design 

concluded that the federal government has been under-funding the 

operating costs of PHAs. 

The bill would prohibit HUD from preventing PHAs from 

transitioning up to 20 percent of their capital fund grant to fund 

operations as provided for under QHWRA. 

TENANT PARTICIPATION

On March 1, 2007, HUD issued a Notice [FR–5128–N–01] providing for an expedited waiver process for HUD regulations as they 

transition to asset management. Included in the Notice are several 

examples of HUD regulations for which HUD would consider expedited requests. Among those regulations is a provision providing for 

tenant participation that is set forth at 24 CFR 964 (Tenant Participation). While the authority to seek waivers from certain HUD 

regulations, including tenant participation, is not new, tenant advocates contend that tenants should be involved in the discussions 

on asset management and that the limited rights tenants have 

should not be further eroded. 

Under the bill, HUD would be required to ensure that PHAs involve tenants in the local decisions that affect their housing. 

HEARINGS

The Committee did not hold any hearings on H.R. 3521 in the 

110th Congress. 


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COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

September 25, 2007, and ordered H.R. 3521, Public Housing Asset 

Management Improvement Act of 2007, as amended, reported by a 

voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. No record votes were 

taken in conjunction with the consideration of this legislation. A 

motion by Mr. Frank to report the bill, as amended, to the House 

with a favorable recommendation was agreed to by a voice vote. 

During the consideration of the bill, the following amendments 

were considered: 

An amendment by Mr. Sires, No. 1, a manager’s amendment 

making various technical and substantive changes, was agreed to 

by a voice vote. 

An amendment by Ms. Vela ́zquez, No. 2, striking prevention of 

certain PHAs from participation in negotiations, was agreed to by 

a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

The goal of H.R. 3521 is to ease the regulatory burden on public 

housing agencies of complying with the Department of Housing and 

Urban Development (HUD) regulations requiring certain public 

housing agencies to convert to asset management through the inclusion of important regulatory relief reforms. These reforms 

would: (1) ensure that the management and related fees established by HUD are reasonable and that such fees become effective 

on or after January 1, 2011, the date by which public housing authorities are required under the Public Housing Operating Fund 

Final Rule to demonstrate conversion to asset management; (2) restate provisions of current law that permit public housing authorities to use a portion of their capital fund grant for operating expenses; (3) increase the number of public housing authorities that 

are exempt from mandatory conversion to asset management; and 

(4) encourage the participation of public housing residents in the 

implementation of asset management. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax exVerDate Aug 31 2005 06:37 Jan 30, 2008 Jkt 069006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR521.XXX HR521

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penditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, October 2, 2007. 

Hon. BARNEY FRANK, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3521, the Public Housing 

Asset Management Improvement Act of 2007. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Chad Chirico. 

Sincerely, 

ROBERT A. SUNSHINE

(For Peter R. Orszag, Director). 

Enclosure. 

H.R. 3521—Public Housing Asset Management Improvement Act of 

2007 

CBO estimates that H.R. 3521 would have no significant impact 

on the federal budget. Enacting the bill would not affect direct 

spending or revenues. 

H.R. 3521 would alter the Department of Housing and Urban Development’s (HUD’s) implementation of a new system for allocating 

operating subsidies to public housing authorities (PHAs). Historically, HUD has provided funding to PHAs in an aggregate amount 

for each authority. Under the agency’s new operating fund formula, 

PHAs will receive a separate subsidy for each housing project 

under their control. The bill would prevent HUD from imposing a 

limit on the amount of funding that can be used for management 

fees, increase the unit threshold under which smaller PHAs are exempt from asset management requirements, and prevent HUD 

from limiting the use of Public Housing Capital Fund assistance for 

PHAs’ central office costs. 

H.R. 3521 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. State, 

local, and tribal governments that participate in housing assistance 

programs would benefit from management activities authorized in 

the bill. 


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The CBO staff contact for this estimate is Chad Chirico. The estimate was approved by Keith J. Fontenot, Deputy Assistant Director for Health and Human Resources, Budget Analysis Division. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 3521 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section establishes the short title of the bill, the ‘‘Public 

Housing Asset Management Improvement Act of 2007.’’

Section 2. Revisions to asset management rules and related fees 

Prohibits HUD from establishing restrictions or limits on the 

amount of management and related fees with respect to a public 

housing project if the fee is determined reasonable by the PHA before January 1, 2011. Requires HUD to establish fees pursuant to 

negotiated rulemaking that would commence on or after April 1, 

2009 and would include interested stakeholders. This prohibition is 

also applicable to public housing agencies that are seeking a discontinuance of the reduction in their operating fund reductions. 

Increases the threshold for exemption from asset management 

requirements for medium-sized public housing authorities. Thus, 

agencies that own or operate fewer than 500 public housing units 

may elect to be exempt from asset management requirements. 


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Section 3. Prohibition on restriction of fungibility of capital fund 

amounts 

Clarifies that notwithstanding HUD guidance, public housing 

agencies are permitted the flexibility allowed by the Qualify Housing and Work Responsibility Act to transfer up to twenty percent 

of their capital funds for operations with no further restrictions. 

Section 4. Tenant participation 

Encourages HUD to ensure that public housing agencies encourage the reasonable efforts of resident tenant organizations to represent their members and the reasonable efforts of tenants to organize. 

Æ 


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