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Portland City Councilor Angelita Morillo has crafted an ordinance that would ban the use of AI software by landlords to set rents using what’s called “algorithmic pricing.”
Morillo said in a Feb. 25 meeting of the Homelessness and Housing Committee that the ordinance could “help bring the price of rent down in Portland,” and that she felt a strong responsibility, as one of two renters on the 12-member council, to “represent renters and their needs.”
“Portland can set a national example in taking bold action to protect renters and ensure fair competition in the housing market,“ Morillo told her colleagues.
The proposal by Morillo, the youngest and one of the most progressive members of the new council, is the first ordinance to make meaningful progress in working its way through the city’s new legislative body. To pass, it must make it out of committee with a majority vote, and then be approved by a majority of the full City Council.
While the ordinance awaits a second hearing in front of the Homelessness and Housing Committee on March 25, Morillo’s policy has already rankled landlord and homebuilding groups that have historically held great sway in City Hall.
A series of letters sent by developers and housing guilds, obtained by WW, and by a prominent lobbying firm that represents them, lays bare the debate over renter protections and whether they hurt or help a city’s housing landscape.
But the letters also reveal the City Council’s ongoing struggle to determine how exactly an idea becomes law under the nascent form of government. After all, Morillo’s ordinance is the guinea pig for the City Council to test out its new legislative process.
Morillo first introduced her ordinance to the Homelessness and Housing Committee on Feb. 25. In a short presentation, she explained how some large landlord companies are using AI software to fix prices across the country.
“AI software is being used to remove competitive pricing from the market…and allows landlords to manipulate rent prices unfairly," Morillo explained.
The U.S. Department of Justice, alongside nine state attorneys general, including Oregon’s, sued the company RealPage in August 2024 for allegedly using “algorithmic pricing software.“ The lawsuit, according to the feds, alleges that RealPage ”contracts with competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates and other lease terms to train and run RealPage’s algorithmic pricing software. This software then generates recommendations, including on apartment rental pricing and other terms, for participating landlords based on their and their rivals’ competitively sensitive information.” The lawsuit remains ongoing.
Morillo wants to ban local landlords from participating in and using algorithmic software to set rents, and wants to set a $10,000 penalty for each rental period—or three times the amount in total damages—for landlords found in violation. Morillo’s ordinance would also allow tenants to privately sue landlords if they suspect the use of algorithmic price fixing.
“This is one thread in an entire web we have to create to ensure that all Portlanders, especially the most marginalized and the ones on fixed incomes, have access to safe, affordable and stable housing,” Morillo said during the Feb. 25 hearing. “This is going to have very minimal impacts on small mom-and-pop landlords….This is going to be impacting corporate landlords and larger groups."
The previous day, Feb. 24, a group of housing industry groups, including the Portland Metro Chamber, Oregon Smart Growth, Multifamily NW, and the Portland Metropolitan Association of Realtors, penned a letter to councilors on the committee laying out their displeasure with Morillo’s ordinance.
“We certainly cannot afford to adopt new landlord-tenant regulations that may make it even harder to attract needed investment in housing production,” the groups wrote in the joint letter, “when we don’t know the impact of existing local landlord-tenant regulations on our housing supply or affordability.”
The industry groups asked the council to table the policy until results of a planned study by the Portland Housing Bureau of the impacts of the city’s existing renter protections is released.
That study will be undertaken sometime this year, and comes in response to increasing concerns about how renter protections championed by former City Commissioner Chloe Eudaly, and passed in 2019 by the former City Council, have impacted the city’s housing supply, if at all.
The industry groups also complained that Morillo’s office hadn’t spoken to them adequately about the ordinance and how it would affect landlords, alleging engagement was “severely limited.”
“Simply put, we expect better from Portland’s policymakers—particularly when considering proposals that may have unintended consequences on our shared housing production goals," the industry groups wrote.
Swift Public Affairs, a consulting group that lobbies on behalf of a number of the signatories of the Feb. 24 letter, wrote in a March 21 letter to the Governance and Homelessness and Housing committees that they had concerns about process and transparency.
Specifically, consultants and lobbyists Kari Chisholm and Amy Ruiz wrote, they were concerned that an updated version of Morillo’s ordinance, which tweaked some aspects of her original proposal presented Feb. 25, would be heard and potentially voted on at a March 25 committee meeting without the opportunity for public testimony.
Ruiz and Chisholm appeared to imply that the new ordinance, altered and re-posted publicly after going through a code review process, was a bait-and-switch.
“Given this significant change in the proposed base ordinance, as well as the proposed amendments, we are very concerned that there does not appear to be any opportunity for members of the public to testify,” Swift Affairs wrote. “With a meaningfully different proposal before the committee members, it would seem that they would want to hear from stakeholders—to learn if the revisions make the proposal better or worse, or to learn about additional impacts.”
Ruiz and Chisholm said their clients pored over and submitted testimony on the original ordinance, not the updated version that the committee may vote on March 25.
Morillo responded to Swift’s letter in a March 24 letter sent to the chairs of the Housing and Homelessness and the Governance committees.
In it, Morillo defended herself and her office, saying they had done their due diligence in inviting testimony and had met with industry groups, and even RealPage, to hear their concerns—even tweaking her original ordinance to address misunderstandings from the opposition.
“The proposed amendment to the ordinance is the direct result of that process of receiving and integrating feedback from organizations like Swift Public Affairs. In fact, of the amendments included in the proposed amendment document, most are an effort to address misunderstandings of the ordinance articulated by Swift Public Affairs,” Morillo wrote. “It is the burden of the lobbyists paid by corporations to do their due diligence to engage in the democratic process.”
Councilor Dan Ryan, a fellow member of the Homelessness and Housing Committee, emailed Morillo on March 21, echoing Swift’s issues.
“I am not comfortable that we are not offering public testimony from the housing provider professionals that are closest to this issue being discussed,“ Ryan wrote. ”I know the first day we heard this ordinance almost all the housing provider groups were in Salem for a lobbying day, and I think it would be wise to include their voice in the public facing process this council values. Could we add some public testimony time for this agenda item?“
Morillo responded to Ryan the following day: “We simply do not have enough time if we want to be able to provide robust policy discussion on the record.”
Morillo said she’d declined testimony requests from renter protection advocates, too, due to time constraints. “Our team met with RealPage and landlord groups and got some helpful feedback on the policy, and we made amendments due to their feedback,” Morillo wrote.
Councilor Candace Avalos chairs the Homelessness and Housing Committee. Her chief of staff, Jamey Evenstar, says the committee is “doing our very best to be stewards of good governance while navigating a new environment.”
“There is no rule we are aware of that requires us to hold public testimony again every time it is heard in committee,” Evenstar says. “However, once it is passed by committee to the full council agenda, it must follow established code and receive first and second hearings and public testimony. We are confident that Swift Affairs and anyone else interested in testifying on this ordinance will have every opportunity to do so before it receives a final vote.”
In a separate letter sent to Avalos, the Portland Metropolitan Association of Realtors wrote March 24: “As we have noted previously, price fixing is already illegal. Portland simply doesn’t need a new ordinance to address illegal price fixing and collusion. Portland is in the midst of a housing crisis. Any regulation that creates additional costs or financial and legal risks will only serve to disincentivize housing investment and production, making our housing supply and affordability crisis worse.”
Michele Gila, director of realtor advocacy for the group, wrote that a $10,000 penalty per rental period “threatens to generate a tidal wave of demand letters to landlords, without any evidence at all. The resulting hundreds—perhaps thousands—of settlements will have catastrophic consequences. It is inconceivable that any investor would want to invest in housing in Portland given the high likelihood of facing lawsuits under this ordinance."
Gila alleged that Morillo’s ordinance could make it illegal for a landlord—even a ma-and-pa landlord—to use public information to analyze rents.
“A price-setting tool that simply aggregates public rental prices is likely in violation,” Gila wrote. “In other words, a landlord could be in violation merely because a price-setting tool on the other side of the world scraped their rent prices off the internet, even if they never used the software themselves.”
(Morillo says that’s not accurate.)
Morillo, during her election campaign last year, made renter protections one of her top priorities.
The last time renter protections took center stage with the Portland City Council was during former Commissioner Chloe Eudaly’s single term. She championed a slew of renter protections in what was called the FAIR ordinance in 2019, passing some of the most aggressive protections in the nation. Naturally, the rules upset landlords. Along the way, Eudaly made enough enemies—both in the housing industry and among neighborhood associations—to lose her reelection bid in 2020.
During the Feb. 25 hearing, Councilor Dan Ryan recalled that time.
“Chloe Eudaly had great intentions with the passage of renters' rights, and I’m not the only one that’s heard from countless landlords who used to be ma-and-pa landlords that got out of that business because of those unintended consequences,” Ryan said. “So I’m always a little careful when we pass something that could have those unintended consequences.”
Morillo assured Ryan her ordinance would only impact big landlords, not landlords with just a few units.
“If you have four or five units, you’re not going to purchase expensive software,” Morillo explained. “This is to address corporate landlords in the city.”
Other councilors on the committee asked questions about how violations would be determined and how cases around use of AI software would be adjudicated under Morillo’s ordinance.
Many of those questions, Morillo said, would be answered at the March 25 hearing.
“Most of the objections we’ve come across from landlords are misunderstandings of the ordinance,” Morillo tells WW. “We hope that a robust presentation from experts on how algorithms work, how price fixing is defined, and how this will materialize will alleviate those concerns.”