The San Diego City Council voted 8-1 Tuesday to prohibit landlords from using algorithms built on private data to set rental prices.
The ordinance proposed by Councilmember Sean Elo-Rivera targets companies such as RealPage, which collects rental market data from landlords and feeds it into a complex math equation that recommends rent increases or occupancy rates.
The U.S. Department of Justice and several state attorneys general sued RealPage, as well as several large landlords that use the software, arguing they are violating antitrust laws meant to facilitate competition and prevent collusion. Elo-Rivera argued that San Diego should ban the practice while that lawsuit plays out in court.
"This is about more than software — it's about standing up for working families," Elo-Rivera said. "It's about making sure that the city we love doesn't become a place where only the wealthy can afford to live. San Diego cannot call itself a world-class city if families are forced out by corporate greed."
The ordinance does not apply to algorithms that rely on public information, such as advertisements or listings on websites like Zillow or apartments.com. It also does not apply to industry groups that publish reports on trends in rental markets but do not recommend rental prices to specific landlords.
Several renters spoke in support of the ordinance, saying they live in fear of rent hikes that could force them out on the streets. But representatives of landlords argued the ordinance was too vague and would hurt the development of new housing.
"A local approach is ill-suited for this nuanced and technically complex issue," said Melanie Woods, vice president of local affairs for the California Apartment Association. "More work is needed to define what constitutes algorithmic pricing software."
Councilmember Raul Campillo voted against the ordinance after trying unsuccessfully to amend it with new language. Campillo said he supported the intent but feared the law could prevent landlords from doing routine assessments of their business's strength against competitors — a claim Elo-Rivera said was untrue.
Once the ordinance goes into effect, tenants will have the right to sue their landlords for violations.
