The San Diego City Council voted 8-1 Tuesday to ban software that opponents say enables landlords to coordinate rent prices.
The law bars the use, sale or licensing of software that allows price fixing based on proprietary data, according to Councilmember Sean Elo-Rivera’s office. The practice is under investigation by the U.S. Department of Justice, along with California and eight other states.
Elo-Rivera, in introducing the ordinance, sought to protect renters who already live in a city with one of the highest costs of living in the nation.
“Housing is a human right – and no one should be pushed out of their community because of a profit-hungry algorithm,” Elo-Rivera said in a news release. “Today’s vote sends a clear message: San Diego needs to work for San Diegans, not out-of-town tech firms and corporate landlords rigging the system at the expense of working families. This is a win for renters, for transparency, and for everyone in our city who is committed to putting people before profits.”
Elo-Rivera’s office cited RealPage’s YieldStar as one of the software programs. His aides also quoted marketing materials from software companies to argue that San Diego renters may be paying up to $185 more per month – or over $2,200 per year – because of algorithmic pricing using artificial intelligence.
“Blocking software that illegally allows the manipulation of rents across entire neighborhoods will make way for fairer competition and restore balance to the housing market,” said City Attorney Heather Ferbert, who cited the federal and state investigations in asserting that the software violates U.S. antitrust laws and California’s Unfair Competition Law.
She noted, though, that “local action is critical – our residents need relief now, not years down the road when a lawsuit can produce results.”
Mike Semko, associate general counsel for RealPage, appeared at the council meeting and defended the company, saying that it performs “market analysis with a pricing suggestion attached to it.”
He also took aim at San Diego’s ordinance, calling it “overly vague.”
“I believe that it invites scrutiny,” he told the council. “I think It goes far beyond what any regulator is asking RealPage to do and I believe it prohibits certain types of software that have nothing to do with pricing software.”
Elo-Rivera made the motion in favor of the ordinance, seconded by Council President Joe LaCava. Councilmember Raul Campillo cast the lone dissenting vote.
RealPage has begun to strike back. The Texas-based firm filed a federal lawsuit this month against Berkeley, which also has tried to block landlords from using algorithms when deciding rents.
RealPage said Berkeley’s ordinance violates the company’s free speech rights. Officials also cited an “intentional campaign of misinformation and often-repeated false claims” about its products.
With the vote, San Diego joins other cities, including San Francisco and Philadelphia, in passing legislation to curb the use of algorithmic rent-setting software.
The policy, according to Elo-RIvera’s office, allows for the continued use of public market data tools and affordable housing compliance software, which officials called “ethical data practices.”
The Associated Press contributed to this report.
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