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Portland City Councilor Angelita Morillo last week pulled back a proposed ban on the use of AI software to set rents, after one of the companies most often accused of price-fixing sued the city of Berkeley, California over a similar ban.
RealPage sued the city of Berkeley, California in federal court earlier this month over legislation it passed in March banning AI software to set rents. The lawsuit alleges that Berkley’s ordinance, which is set to go into effect later this month and imposes a $1,000 fee per violation, violates the company’s free speech rights. (Meanwhile, the San Diego City Council last week approved its own ban on rent-setting software.)
During an April 16 meeting of the Portland City Council, Morillo said she had decided to pull back her ordinance to wait and see how the lawsuit plays out in Berkley.
“It’s kind of with a heavy heart that I say this,” Morillo said. “There’s some new litigation elsewhere that touches on similar issues with algorithmic price fixing ordinance, and I want to assert that the litigation is not determinative of what’s going to happen here, but it’s worth us keeping an eye on and being responsible stewards of policy and maintaining conversations with stakeholders as we look into it.”
The City Council unanimously voted to send the ordinance back to the Homelessness and Housing Committee for further discussion.
The pause was an anti-climactic outcome for an ordinance that generated intense discussion and disagreement in recent weeks, both between city councilors and between stakeholders.
Landlord, development groups and housing guilds have argued the ban is overly punitive and would hamstring even smaller landlords from setting rents using publicly available data and simple math. Morillo has replied that the opposition has mischaracterized her policy and that the ordinance would simply keep the largest landlords from manipulating rents to squash the competition.
“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 a Feb. 25 hearing on the policy. “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 policy has also generated lots of public interest, with dozens of people signing up to testify on it. The Portland chapter of the Democratic Socialists of America, a group whose influence at City Hall has grown with the new 12-person council, even held a rally in front of City Hall prior to the council meeting on April 16 to advocate for the passage of Morillo’s ordinance.
Concerns around the issue of using AI to set rents have gained traction in recent years, and a handful of cities have passed similar ordinances to that proposed by Morillo.
The U.S. Department of Justice last fall filed a lawsuit against RealPage over its rent-setting practices. Attorneys general for several states, including Oregon, joined the lawsuit.
In the lawsuit, the feds allege 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."
That lawsuit remains ongoing.