Executive Order May be a Threat to the Rural Development Service

On March 13, 2017, the President signed Executive Order 13781. This order instructs the Director of the Office of Management and Budget (OMB) to propose a plan to reorganize government functions and eliminate unnecessary agencies, components of agencies, and agency programs.

No later than September 9, 2017, the head of each federal agency must submit to the OMB director a proposed reorganization plan, if appropriate, in order to improve the efficiency, effectiveness, and accountability of that agency. The public will also be invited to make recommendations for federal government improvements.

By March 8, 2018, the OMB director will submit to the President a proposed plan of reorganization for the executive branch. The proposed plan will include:

• Recommendations to eliminate unnecessary agencies, components of agencies, and agency programs; and
• Recommendations on merging programs.

Among the factors to be considered in recommending actions will be:

• Whether some or all the functions of an agency or program can be better administered by state or local governments or the private sector;
• Whether certain agency functions are redundant and duplicate those of another agency;
• Whether the cost of continuing to operate an agency are justified by the public benefit provided; and
• The cost of shutting down or merging agencies.

There has been discussion for at least the last 20-years regarding the possibility of merging the housing functions of the Rural Development Service (which administers the Section 515 multifamily housing program, as well as other housing related programs) into the Department of Housing & Urban Development. This Executive Order to a certain extent “formalizes” that effort and increases the possibility that at some point in the future, the housing programs of the Department of Agriculture will be placed under HUD purview.

We should get our first indication of the likelihood of such a move by this fall, and if it does become a recommended course of action, we will examine potential impact on owners and operators of RD housing.