A proposal that was shaping up as the Portland City Council’s first major policy enactment experienced a setback when the lead sponsor pulled it from consideration at the last minute.
In a unanimous vote, the 12-member council on Wednesday sent back to committee a proposed ban on the use of algorithms to set residential rents.
Councilor Angelita Morillo, the ordinance’s main sponsor, moved to refer it back to committee, citing ongoing litigation outside of Portland but related to the algorithms.
The council member’s statement was an apparent reference to real estate firm RealPage’s recent lawsuit against Berkeley, California, which has attempted to stop landlords from using its software to set rents.
“It’s kind of with a heavy heart that I have to say this,” Morillo said while introducing her motion.
Subscribing to real estate data services like RealPage has become more and more common among landlords, but critics like Morillo argue the practice amounts to collusion that drives up rents for tenants because landlords effectively work in concert with one another.
A federal antitrust lawsuit filed last year accused RealPage of scheming to drive down competition among landlords.
Oregon and several other states joined the civil lawsuit, which was updated in January to add six landlords.
Some municipalities have weighed or formalized measures to stop the use of the algorithms locally, but RealPage fired back with its federal lawsuit against Berkeley in April.
A similar proposed ban in the Oregon Legislature died in the Senate Committee on Housing and Development.
Senate Bill 722 got two public hearings and robust testimony but failed to advance before the cutoff date for lawmakers to vote it out of committee.
Landlord lobbyists argue property managers have used the software simply to understand the market and establish competitive rents.
The broader economic and development impacts of the ordinance would be difficult to quantify without more data on how many property managers used such software, according to an analysis from Prosper Portland that accompanied the proposal.
Morillo’s policy adviser, Suzy Deuster, previously contended that landlords for more than 32,000 units were price fixing by using the software.
According to the Prosper analysis, it was reasonable to assume that even with a ban, landlords could still access and compare rent data through published market reports and set their rents from there, like they had before the algorithmic software was widely available.
City and state leaders have been trying to encourage new homebuilding to contain escalating housing prices for residents.
However, Prosper wrote, the regulation could introduce additional risk for Portland’s housing market by “amplifying already existing reputational concerns while negatively impacting Portland’s delivery of market rate (and related inclusionary housing) unit production.”
“Real estate investors considering investing in housing development, fearing increased risk and potential legal liability, may continue to be discouraged from investing in the city,” Prosper staff wrote.
The Prosper analysis was published after The Oregonian/OregonLive reported that the critical take on the proposal had been omitted from two committee meetings that ultimately advanced the measure to the full council.
The drive to ban the use of software to set prices in Portland was championed by Morillo, who had won enough support to advance it out of the Homelessness and Housing Committee in March only to say Wednesday that it made sense to send the item back to committee for further discussion in light of the pending litigation.
“I want to assert that the litigation is not determinative of what’s going to happen here,” she said, “but it’s worth us keeping an eye on and being responsible stewards of policy and maintaining good conversations with stakeholders as we look into it.”
Shane Dixon Kavanaugh contributed to this report.
— Jonathan Bach covers housing and real estate. Reach him by email at [email protected] or by phone at 503-221-4303.
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