Community Development Agency
www.santa-ana.org/community-development
Item # 16
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
February 17, 2026
TOPIC: Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing
AGENDA TITLE
Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing
RECOMMENDED ACTION
Adopt an ordinance of the City Council prohibiting anti-competitive automated rent price fixing software.
ORDINANCE NO. NS-XXXX entitled AN ORDINANCE OF THE CITY COUNCIL OF
THE CITY OF SANTA ANA PROHIBITING ANTI-COMPETITIVE AUTOMATED RENT
PRICE FIXING
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
The use of algorithmic devices to set rental rates in the private rental market has contributed to the nationwide housing affordability crisis. These tools utilize nonpublic competitor data, including real time rents, lease renewals, and occupancy levels to generate coordinated pricing recommendations that inflate rental rates beyond competitive market levels. National analyses and federal lawsuits suggest that such tools may contribute to double-digit rent increases, increased rates of eviction, and artificial housing scarcity. The purpose of this ordinance is therefore to protect renters in the City of Santa Ana (City) from artificially inflated rents and unfair rent-setting practices.
The City’s renters are subjected to the affordability pressures created by these algorithmic devices. According to the U.S. Census Bureau’s 2023 5-Year American Community Survey (ACS), the City has 79,691 occupied housing units, of which 44,151 are renter- occupied households accounting for over 55% of the total occupied housing units.
Approximately 53% of these households are considered cost-burdened with housing expenses exceeding 30% of overall household income. The City’s median household income has not kept pace with the growth in rental housing costs, placing disproportionate pressure on low-income and working-class families. The City’s review of current rental market conditions, together with findings from federal investigations and national research, indicates that algorithmic rent setting tools pose a risk to housing affordability in Santa Ana. In a 2024 study by the White House, it was reported that renters nationally
Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing February 17, 2026
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spent an extra $3.8 billion in rent in 2023; Los Angeles renters in units managed with algorithms paid an average of $408 more annually, compared to renters in units not managed with algorithms.
Overview of Legislation Addressing Algorithmic Pricing and Antitrust AB 325 Cartwright Act: Violations
Assembly Bill 325, enacted on October 6, 2025 and effective January 1, 2026, amends the Cartwright Act to further expand the scope of conduct prohibited under California antitrust law. The bill clarifies that the use of a “common pricing algorithm” may constitute unlawful price fixing when used as part of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce. AB 325 addresses concerns that pricing software and algorithmic tools can function as mechanisms for coordinating prices, rental rates, or supply levels. By amending the Cartwright Act, AB 325 clarifies that the use of shared or common pricing algorithms may be treated as evidence of a concerted practice when the effect of such use is to artificially influence prices in the real estate market. AB 325 does not impose an outright ban on pricing software, instead the bill operates primarily as a clarification of liability standards within the existing antitrust law framework.
Enforcement of the Act continues to rely on state or local prosecutors or private parties bringing antitrust actions.
Proposed bill - SB 384 Preventing Algorithmic Price Fixing Act Senate Bill 384, the Preventing Algorithmic Price Fixing Act, would make it unlawful for a person to sell, license, provide, or use a “price-setting algorithm” with the intent or reasonable expectation that it will be used by two or more competitors in the same market, when the person knows or should know that the algorithm relies on nonpublic data to determine either: 1) the price or supply of a good or service, or 2) the rent or occupancy level of rental property.
Unlike AB 325, SB 384 creates a standalone prohibition on a “price-setting algorithm” when it is intended or can be reasonably expected to be used by two or more competitors in the same market and processes nonpublic data. SB 384 would allow a user of such an algorithm to claim an affirmative defense if they exercised specified reasonable due diligence. It would also authorize the State Attorney General, as well as certain local prosecutors, to bring civil actions for violations, including seeking civil penalties of up to $1,000 per violation. As of February 2026, SB 384 has advanced through the Senate floor and various committees; and is currently undergoing Second Committee Review.
Federal and State Antitrust Litigation
Antitrust lawsuits have been filed against third-party revenue management companies, including RealPage, Inc. and Yardi Systems, Inc., as well as landlords who are using alleged rent-fixing conspiracies. The lawsuits allege that these companies are enabling unlawful rent-fixing. In August 2024, the United States Department of Justice (DOJ) filed an antitrust lawsuit against RealPage accusing the company of unlawfully reducing market competition and artificially raising rents. Eight state Attorneys General, including Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing February 17, 2026
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California Attorney General Rob Bonta, joined the action. In January 2025, the DOJ updated the lawsuit to include two additional Attorneys General and to identify landlords as defendants. The case is still underway, though several defendants have already settled with the Department of Justice and participating state attorneys general. Greystar, one of the major defendants, agreed to pay $7 million to the DOJ and another $7 million to the state attorneys general, and to discontinue its use of RealPage’s algorithmic pricing tool. However, RealPage and several other landlords continue to litigate the matter, with RealPage seeking dismissal of the claims and the remaining defendants also contesting the lawsuit.
Proposed Santa Ana Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing
The proposed ordinance would prohibit the sale, licensing, provision, and use of certain algorithmic rent-setting tools within the City. A citywide ban on providing or using an “Algorithmic Device” that uses nonpublic competitor data to recommend rents and occupancy levels for residential rental property in the City. The ordinance is limited in scope to residential rental property and does not apply to pricing software that relies solely on publicly available data, aggregate historical data, or tools used to comply with affordable housing program requirements.
The proposed ordinance establishes a local prohibition on algorithmic devices that facilitate coordinated rent-setting practices; the ordinance also establishes a tenant- focused enforcement mechanism. A tenant affected by a violation of this ordinance may seek injunctive relief, damages, or civil penalties up to $1,000 per violation, plus attorney’s fees. Each residential unit and each month of continued use of algorithmic devices constitutes a separate violation. These enforcement provisions are intended to provide tenants with a direct and accessible remedy, independent of state or federal enforcement actions.
The proposed ordinance is designed to operate alongside existing and proposed state antitrust laws while providing greater protections to tenants by:
- defining a more limited scope (residential rental property within Santa Ana city limits),
- providing direct enforcement abilities (tenants may seek relief via civil action), and
- easing the burden of proof (tenants need to show that the landlord used an algorithmic device and the device relied on nonpublic competitor data).
Existing state law does not expressly preempt local regulation of algorithmic rent- setting practices. AB 325 clarifies the application of antitrust principles of algorithmic pricing under the Cartwright Act, but does not establish an exclusive regulatory framework. If SB 384 is enacted, the bill would supplement rather than displace existing antitrust law.
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FISCAL IMPACT
There is no fiscal impact associated with this item.
EXHIBIT(S)
1. Ordinance
Submitted By: Michael L. Garcia, Executive Director of Community Development Approved By: Alvaro Nuñez, City Manager