42 U.S.C. § 1437w

The Secretary may transfer the responsibility and authority for management of specified housing (as such term is defined in subsection (h)) from a public housing agency to an eligible management entity, in accordance with the requirements of this section, if—

a request for transfer of management of such housing is made and approved in accordance with subsection (b); and

the Secretary or the public housing agency, as appropriate pursuant to subsection (b), determines that—

due to the mismanagement of the agency, such housing has deferred maintenance, physical deterioration, or obsolescence of major systems and other deficiencies in the physical plant of the project;

such housing is located in an area such that the housing is subject to recurrent vandalism and criminal activity (including drug-related criminal activity); and

the residents can demonstrate that the elements of distress for such housing specified in subparagraphs (A) and (B) can be remedied by an entity or entities, identified by the residents, that has or have a demonstrated capacity to manage, with reasonable expenses for modernization.

The responsibility and authority for managing specified housing may be transferred only pursuant to a request made by a majority vote of the residents for the specified housing that—

in the case of specified housing that is owned by a public housing agency that is designated as a troubled agency under —

is made to the public housing agency or the Secretary; and

is approved by the agency or the Secretary; or

in the case of specified housing that is owned by a public housing agency that is not designated as a troubled agency under —

is made to and approved by the public housing agency; or

if a request is made to the agency pursuant to subparagraph (A) and is not approved, is subsequently made to and approved by the Secretary.

Pursuant to a contract under subsection (d), the Secretary shall require the public housing agency for specified housing to provide to the manager for the housing, from any assistance from the Capital and Operating Funds under  for the agency, fair and reasonable amounts for the housing for eligible capital and operating activities under subsection (d)(1) and (e)(1) of . The amount made available under this subsection to a manager shall be determined by the Secretary based on the share for the specified housing of the aggregate amount of assistance from such Funds for the public housing agency transferring the housing, taking into consideration the operating and capital improvement needs of the specified housing, the operating and capital improvement needs of the remaining public housing units managed by the public housing agency, and the public housing agency plan of such agency.

Pursuant to the approval of a request under this section for transfer of the management of specified housing, the Secretary shall enter into a contract with the eligible management entity.

A contract under this subsection shall contain provisions establishing the rights and responsibilities of the manager with respect to the specified housing and the Secretary and shall be consistent with the requirements of this chapter applicable to public housing projects.

A manager of specified housing under this section shall comply with the approved public housing agency plan applicable to the housing and shall submit such information to the public housing agency from which management was transferred as may be necessary for such agency to prepare and update its public housing agency plan.

A manager under this section may demolish or dispose of specified housing only if, and in the manner, provided for in the public housing agency plan for the agency transferring management of the housing.

A public housing agency that is not a manager for specified housing shall not be liable for any act or failure to act by a manager or resident council for the specified housing.

For purposes of this section, the following definitions shall apply:

The term “eligible management entity” means, with respect to any public housing project, any of the following entities:

A public or private nonprofit organization, which may—

include a resident management corporation; and

not include the public housing agency that owns or operates the project.

A for-profit entity that has demonstrated experience in providing low-income housing.

A State or local government, including an agency or instrumentality thereof.

A public housing agency (other than the public housing agency that owns or operates the project).

The term “manager” means any eligible management entity that has entered into a contract under this section with the Secretary for the management of specified housing.

The term “nonprofit” means, with respect to an organization, association, corporation, or other entity, that no part of the net earnings of the entity inures to the benefit of any member, founder, contributor, or individual.

The term “private nonprofit organization” means any private organization (including a State or locally chartered organization) that—

is incorporated under State or local law;

is nonprofit in character;

complies with standards of financial accountability acceptable to the Secretary; and

has among its purposes significant activities related to the provision of decent housing that is affordable to low-income families.

The term “public nonprofit organization” means any public entity that is nonprofit in character.

The term “specified housing” means a public housing project or projects, or a portion of a project or projects, for which the transfer of management is requested under this section. The term includes one or more contiguous buildings and an area of contiguous row houses, but in the case of a single building, the building shall be sufficiently separable from the remainder of the project of which it is part to make transfer of the management of the building feasible for purposes of this section.