Article Update - as of 11/6/2024:
Interest in revenue management ban legislation continues to spread on both coasts.
Following up on the National Apartment Association’s (NAA) reporting on legislative activity in Philadelphia, the City Council unanimously approved Bill No. 240823 by a vote of 17 to 0. This ordinance defines prohibited “anti-competitive rental practices” (including what conduct constitutes as illegal price coordination), creates a private right of action for renters to sue their housing provider in civil court and imposes stiff penalties for noncompliance. NAA appreciates the tireless efforts of the Pennsylvania Apartment Association for its efforts to stand up for the rental housing industry in local policy conversations and mitigate the unintended consequences of this law. The ordinance awaits Mayor Cherelle Parker’s signature and will take effect 90 days from final enactment.
In nearby New Jersey, the state legislature is considering Bill A. 4872, making the use of revenue management tools unlawful under the New Jersey Antitrust Act. Violations associated with this legislation will be enforced under the existing provisions of the New Jersey Antitrust Act. The bill continues to make its way through the state’s legislative process. It was reported out of the Assembly Housing Committee and referred to the Assembly Appropriations Committee; with companion legislation introduced in the state senate. NAA is thankful for the New Jersey Apartment Association’s ongoing work with sponsors in an effort to address outstanding concerns.
By a 4 to 1 vote, the City Council of San Diego’s Rules Committee approved a request for the City Attorney to draft an ordinance banning the sale and use of price fixing software, including proposed enforcement mechanisms and remedies for violations. Once drafted, the City Attorney is also required to present the ordinance to the committee at a later date.
Given the makeup of the Council and their past support for resident protections, the proposal is likely to pass once presented to the full City Council. NAA applauds the efforts of the Southern California Rental Housing Association for its work to educate policymakers and continuing to defend the industry against this damaging, policy approach.
As previously reported, San Jose councilmembers had proposed an ordinance to ban the use of revenue management tools. At a recent meeting of the San Jose City Council’s Rules and Open Government Committee and Committee of the Whole voted 5-0 to defer action on this proposed ordinance until at least January 2025 when a report on federal and state actions can be presented. NAA will continue to work with our affiliate partners as they defend against these aggressive policies and will provide an update of future developments.
Article Update - as of 9/30/2024:
In the wake of San Francisco’s recent action against revenue management tools, two more cities have proposed laws that would impact rental housing operations:
San Jose councilmembers proposed an ordinance that would ban the use of revenue management and occupancy setting tools. This ordinance follows in the footsteps of San Francisco, which recently passed similar legislation that prohibits the use of algorithmic devices by housing providers to set rents. The proposed San Jose ordinance would allow civil action against housing providers who use revenue management software.
Additionally, the City Council of Philadelphia also proposed an ordinance that would prohibit the use of algorithm-driven revenue management tool for rental housing decision making. The proposal would further enable the City to file suit on behalf of residents as well as establishing a private right of action with three times the value of actual damages or $2,000 per violation at stake. If the City prevails against a housing provider, penalties of up to $2,000 per violation for each day the violation occurs may be imposed.
Original Article
Rental housing providers should remain vigilant of ongoing efforts to regulate or ban the use of revenue management tools. Efforts are ramping up at the state and local levels, continuing a trend on the heels of efforts to promote pro-consumer competition policy through the federal courts and Congress.
Most recently, San Francisco Mayor London Breed signed the first local ordinance prohibiting the sale or use of any algorithmic devices that set, recommend or advise on rents or manage occupancy levels. This applies to the use of nonpublic competitor data in rental housing units in the City and County of San Francisco (See File 240766). The law becomes effective October 13, 2024. This follows passage of Colorado Senate Bill 24-205 which requires high-risk AI systems to use reasonable care to protect consumers from potential algorithmic discrimination and became effective in May earlier this year.
In Illinois, House Bill 5871 was recently introduced to prohibit the use of an algorithmic device that uses, incorporates or was trained with nonpublic competitor data to determine any change in rent. This legislation appears to be unlikely to move in 2024 while the Illinois state legislature is out of session, but NAA will be monitoring closely for reintroduction in 2025.
Additionally, legislative scrutiny of the use of algorithms in rental housing a- and algorithms more generally - have arisen in New Hampshire (House Bill 1368), California (AB 2230 and AB 2930); Colorado (HB 24-1057); Connecticut (SB 2); New Jersey (Housing Cmte. Hearing focused on this topic); New York (AB 9473); Oklahoma (HB 3453) and Rhode Island (HB 8058 & Senate companion). While these efforts were unsuccessful in 2024, NAA anticipates the introduction of future proposals in many of these jurisdictions and more.
NAA continues to support its affiliate partners’ advocacy efforts to defeat adverse housing policies at the state and local levels. NAA is committed to being the leading voice of the industry in D.C. and opposing federal efforts that would upend operations and ultimately worsen housing affordability and availability.
To learn more about technology policy, please contact Joe Riter, NAA’s Senior Manager, Public Policy.