CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org
Councilmember-Requested Item Report
DATE
October 7, 2025
TOPIC
Algorithmic Price Fixing
COUNCILMEMBER-REQUESTED ITEM TITLE
Discuss and Consider Providing Direction to the City Manager and City Attorney to direct staff to prepare an ordinance prohibiting the use of algorithmic pricing tools
DISCUSSION
The increasing use of algorithmic pricing software by landlords has raised concerns about its impact on rental affordability and market competition. Third-party services like RealPage offer rent-setting recommendations based on proprietary and publicly available data, effectively allowing landlords to coordinate pricing strategies. This practice has been linked to significant rent increases, reduced housing affordability, and increased tenant displacement.
How Algorithmic Price Fixing Works
Landlords share private rental data with third-party software providers like RealPage, which use algorithms to estimate supply and demand, then recommend rental pricing strategies. These recommendations maximize revenue not just for individual landlords but for all landlords using the software in a given market. This adversely affects housing for the following reasons:
• Drives up rents by enabling collusion-like behavior without direct communication among landlords.
• Contributes to double-digit rent increases in some metropolitan areas. • Increases tenant displacement—some RealPage clients reported a 15% rise in turnover rates after adopting the software’s recommendations. • Reduces renter mobility and affordability, limiting access to housing.
Legal and Policy Considerations
The use of algorithmic rent-setting has faced legal challenges and regulatory scrutiny:
• Ongoing Litigation:
o The District of Columbia Attorney General sued RealPage and major landlords in 2023.
o The Arizona Attorney General filed a similar lawsuit in 2024. o More than 20 federal antitrust lawsuits have been consolidated in Tennessee, with the Department of Justice supporting plaintiffs.
CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org
• Legislative Action:
o Senator Ron Wyden introduced the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act in 2024 to ban algorithmic rent-setting nationwide.
o San Francisco: In July 2024, San Francisco enacted a first-in-the-nation ban on the sale or use of algorithmic devices to set rents or manage occupancy levels for residential properties.
o San Diego: The San Diego City Council President has proposed a similar ban.
o Santa Monica: In March 2025 the Santa Monica City Council will consider a proposal to ban the use of algorithmic rental price-fixing software in Santa Monica and which includes enforceable penalties for noncompliance.
o Other cities have adopted bans.
RECOMMENDATION
I recommend that the City Council direct the City Manager and City Attorney to direct staff to draft an ordinance that:
1. Prohibits the Use of Algorithmic Pricing Tools: Makes it unlawful for landlords within Santa Ana to utilize algorithmic devices or software that recommend rental rates or occupancy levels for residential properties.
2. Bans the Provision of Such Tools: Prohibits any entity from selling, licensing, or providing algorithmic pricing software to landlords operating residential properties within Santa Ana.
3. Defines Key Terms: Clearly defines "algorithmic device" as any software or tool that uses algorithms to process data, including nonpublic competitor data, to advise on rental pricing or occupancy strategies.
4. Establishes Enforcement Mechanisms: Empowers the City to enforce these provisions through appropriate penalties and remedies for violations.
Implementing this ordinance aims to promote fair rental practices, prevent potential anti- competitive behaviors, and ensure housing affordability for Santa Ana residents. By addressing the use of algorithmic pricing tools, the City seeks to maintain a competitive and transparent rental market.
By considering such an ordinance, Santa Ana would join other forward-thinking California cities in safeguarding renters from potential exploitative practices associated with algorithmic pricing tools. This action aligns with the City's commitment to ensuring fair and affordable housing for all residents, alongside a competitive and transparent rental market.
SUBMITTED BY
Councilmember Jessie Lopez
EXHIBIT(S)
1. City of San Francisco Ordinance
2. Sample Ordinance (for discussion only)