This rule amends the regulations of the Public Housing Operating Fund Program (Operating Fund Program) to provide a new formula for distributing operating subsidy to public housing agencies (PHAs) and to establish requirements for PHAs to convert to asset management. HUD developed the final rule with the active participation of PHAs, public housing residents, and other relevant parties using the procedures of the Negotiated Rulemaking Act of 1990. These regulatory changes improve and clarify the current regulations governing the Operating Fund Program and take into consideration the recommendations of the congressionally funded study by the Harvard University Graduate School of Design on the cost of operating well-run public housing. The final rule follows publication of an April 14, 2005, proposed rule, and takes into consideration the public comments received.