Richman, who also is HUD's chief operating officer, said her replacement could be named by the end of the month. The candidate, she added, most likely will come from within the ranks of HUD.
She said she would stay involved with the recovery plan for PHA. "I'll still be watching," said Richman, a former member of Gov. Ed Rendell's cabinet and former Philadelphia health commissioner.
Kelly, an expert in turning around troubled public housing authorities, had been on loan from the New York City Housing Authority, where he was general manager.
His decision was greeted by applause and cheers from staff and public housing residents at the meeting.
Kelly told the crowd he felt he was "meant to be here right now." He will earn $225,000 a year - about $100,000 less than his predecessor.
He arrived at PHA in December during a period of extreme upheaval for the $400 million public housing agency, which provides homes for 80,000 low-income people.
He replaced Carl R. Greene, PHA's longtime executive director, who was fired after the board of directors discovered that PHA had secretly settled for $648,000 three sexual-harassment complaints against him. Afterward, the board was pressured by HUD to resign, and federal investigators launched multiple probes of Greene's use of federal funding.
In the last seven months, Kelly has gotten high marks from city officials, residents, and nonprofit community developers for restoring order.
The selection of a permanent leader for PHA was a key component to the agency's recovery.
Richman said Kelly "immediately focused on creating an atmosphere of mutual respect, getting back to basics in property management and resident services, and making PHA accountable and transparent in business practices."
Those who have worked with Kelly said he has effectively built bridges between the housing authority and different stakeholder groups.
Mayor Nutter called Kelly "a great leader with a wealth of experience who is very, very focused."
Unlike Greene, who managed PHA with little input from City Hall, Kelly has taken an opposite approach and now participates in regular meetings of Nutter's economic-development team.
"He's making PHA a true partner with the city," Nutter said in an interview.
Peggy Jones, a resident leader for public-housing tenants in the Mantua section of West Philadelphia, said Kelly has brought a more open atmosphere to PHA. "He's made himself accessible," she said.
Kelly has had the difficult job of trying to rebuild PHA while at the same time dealing with the demands of various sets of investigators who are poring over PHA's books and records.
Kelly was general manager at the New York City Housing Authority. Before that, he ran public housing in Washington, New Orleans, and San Francisco.
PHA "is a fundamentally sound organization with well-trained employees," Kelly said. "We have worked to assess and then address problem areas and are well on the way to regaining our reputation as a great housing authority."
In recent months, Kelly has mapped out a recovery plan for PHA and has made tough calls. He slashed PHA's financial support of a tenant-services nonprofit run by Asia Coney, a veteran resident leader and close ally of Greene. She later resigned.
Under Kelly's reorganization, too, three senior aides to Greene were pressured to retire, while a fourth was fired.
Contact staff writer Jennifer Lin
at 215-854-5659, firstname.lastname@example.org,
or @j_linq on Twitter.