1 City Council Meeting: June 24, 2025 Santa Monica, California ORDINANCE NUMBER _____ (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
PROHIBITING THE SALE AND USE OF RENTAL PRICE-FIXING ALGORITHIMIC
SOFTWARE
WHEREAS, Santa Monica faces a housing affordability crisis, with approximately
41.5% of households paying more than 30% of income toward rent, 20.6% of households paying more than 50% of income toward rent, and median initial rent-controlled rents increasing each year since 2022; and
WHEREAS, the January 2025 Los Angeles County fires displaced thousands of residents, which has increased the demand for rental housing in Santa Monica; and WHEREAS, in recent years, algorithmic rental pricing software programs have been developed to help landlords maximize revenues by recommending how much rent to charge for a unit and whether to leave a unit vacant, based on nonpublic data from competing landlords; and
WHEREAS, such algorithmic rental pricing software can facilitate price coordination or price fixing among competing landlords, driving up rental prices; and WHEREAS, the White House Council of Economic Advisors found that algorithmic rental pricing software cost tenants whose landlords who used the software $70 per month on average nationally, and $34 per month—or $408 per year—on average in the Los Angeles metropolitan area; and
WHEREAS, the White House Council on Economic Advisors also found that even tenants of landlords who do not use algorithmic rental pricing software are likely to 2 experience higher rents because demand for those lower priced units increase as other landlords in the same market use the software; and
WHEREAS, algorithmic rental pricing software can also lead to greater displacement when tenants cannot sustain the rental rates the algorithms recommend and when algorithms favor maximizing revenue over maximizing occupancy; and WHEREAS, anti-competitive coordination, typically among larger corporate landlords, also harms those landlords that play by the rules and do not attempt to coordinate prices with competitors; and
WHEREAS, over 35 class action lawsuits have been filed related to algorithmic rental pricing software, including against software providers and landlords that use the software; and
WHEREAS, in August 2024, the US Department of Justice and eight state attorneys general filed an antitrust lawsuit against the leading provider of algorithmic rental pricing software, RealPage, which lawsuit was amended in January 2025 to also include as defendants six of the country’s largest corporate landlords who use RealPage’s revenue management software; and
WHEREAS, three of the defendants named in the Department of Justice lawsuit manage multi-family units in Santa Monica, as do other large corporate landlords; and WHEREAS, the pending litigation may take months or years to resolve, and in the meantime renters are disadvantaged if landlords continue to use such software to make coordinated pricing and leasing decisions; and
WHEREAS, the City wishes to protect against anti-competitive behavior that harms consumers by banning the sale and use of algorithmic rental pricing software that 3 recommends to landlords rental prices and occupancy rates based on nonpublic rental data.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Chapter 4.58 of the Santa Monica Municipal Code is hereby added to read as follows:
Chapter 4.58 Algorithmic Rental Price Fixing
§ 4.58.010 Definitions.
The following words and phrases as used in this chapter shall have the following meanings.
Algorithmic device. A software or product that uses or incorporates one or more algorithms to perform calculations of nonpublic competitor data concerning local or statewide rental prices or occupancy levels to advise a landlord on, or recommend to a landlord, rent to charge for a rental housing unit, or whether to leave a rental housing unit vacant. “Algorithmic device” does not include either of the following: (a) A software or product used by a person to generate or publish reports regarding existing residential rental rates or residential rental occupancy levels in an aggregated manner but does not recommend rent prices or fees for future residential tenancies or occupancy levels for rental housing units; (b) A software or product used by a person to establish residential rental rates or income limits in accordance with any local, state, or federal affordable housing program requirement.
Rental housing unit. A housing unit in the City that constitutes either a controlled rental unit pursuant to City Charter Section 1800 et seq., (including a room in a single-family 4 home, hotel or motel, rooming house or apartment, single-family home, mobile home or mobile home space, trailer or trailer space); or a rental unit pursuant to City Charter Section 2300 et seq.
Landlord. An owner, lessor, sublessor, or any other person entitled to receive rent for the use and occupancy of any rental housing unit, or an agent, representative or successor of any of the foregoing.
Nonpublic competitor data. Information that is not available to the general public about actual residential rental rates, residential rental rate changes, residential rental property supply levels, occupancy levels, or lease start and end dates, whether the information is attributable to a specific competitor or anonymized or whether the information is derived from or otherwise provided by another person that competes in the same market or a related market.
§ 4.58.020 Prohibition on Sale and Use of Algorithmic Device (a) It shall be unlawful to sell, license, or otherwise provide to any landlord of any rental housing unit in the City any algorithmic device that sets, recommends, or advises on rental rates, rates for non-rent fees, or occupancy levels that may be achieved for rental housing units in the City.
(b) It shall be unlawful for a landlord to use an algorithmic device when setting rents or occupancy levels for rental housing units in the City. Each separate month that a landlord charges rent at an amount set in violation of this subsection, and each separate residential rental housing unit for which the landlord used the algorithmic device, shall constitute a separate and distinct violation.
§ 4.58.030 Civil Remedies.
5 (a) Civil Action. Any person aggrieved by a violation of this Chapter, including the City, may enforce the provisions of this Chapter by means of a civil action. The burden of proof in such cases shall be preponderance of the evidence. A violation of this Chapter may be asserted as an affirmative defense in an unlawful detainer action against a tenant whose rent was set after the effective date of this ordinance by the landlord’s use of an algorithmic device in violation of Section 4.58.020(b). (b) Injunction. Any person who commits an act, proposes to commit an act, or engages in any pattern and practice which violates Section 4.58.020 may be enjoined therefor by any court of competent jurisdiction. An action for injunction under this subsection may be brought by any aggrieved person, by the City Attorney, or by any person or entity who will fairly and adequately represent the interest of the protected class. (c) Penalties and Other Monetary Awards. Any person who violates or aids or incites another person to violate the provisions of this Chapter is liable for each and every such offense for the actual damages suffered by an aggrieved party or for statutory damages of one thousand dollars per violation, whichever is greater, and shall be liable for such attorneys' fees and costs as may be determined by the court in addition thereto.
A lease provision that limits a prevailing tenant from obtaining attorneys’ fees shall not be enforceable against a tenant’s claim for attorneys’ fees that arises under this subsection. (d) Nonexclusive Remedies and Penalties. The remedies provided in this Chapter are not exclusive, and nothing in this Chapter shall preclude any person from seeking any other remedies, penalties, or procedures provided by law.
SECTION 2. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such 6 inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance.
SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.
SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective 30 days from its adoption.
APPROVED AS TO FORM:
_________________________
Douglas Sloan, City Attorney