Dive Brief:
- The San Francisco Board of Supervisors has passed an ordinance banning the sale or use of revenue management software for the city’s rental housing.
- The ordinance, which passed on July 30 and still needs Mayor London Breed’s signature, asserts that the software allows residential landlords to indirectly coordinate with one another, raising rents, lowering occupancy rates and increasing evictions. It cites lawsuits filed against two apartment revenue management vendors, RealPage and Yardi.
- If the ordinance is enacted, multifamily owners, operators or vendors that sell or use revenue management software in San Francisco could face penalties of up to $1,000 per violation, plus damages, restitution and attorneys’ fees. Usage violations would be counted per unit and month of use.
Dive Insight:
The ordinance will move to Breed for her signature following another read for final approval on Sept. 3, according to SFGATE. The ban would be effective 30 days after enactment, which would occur when the mayor signs the ordinance, returns it unsigned or the board overrides the mayor’s veto.
The ordinance does not set any limits on rents, nor does it ban the use or sale of property management software or of products that use public data. “This ordinance takes aim only at the use of algorithmic devices that analyze and share non-public data,” the text reads.
An estimated 70% of San Francisco’s rental housing owners use some type of revenue-management software, the ordinance claims.
“Let’s be clear: RealPage has exacerbated our rent crisis and empowered corporate landlords to intentionally keep units vacant,” San Francisco Board of Supervisors President Aaron Peskin said in a July news release. “So we’re taking action locally to ensure our working renters can afford to live here.”
At $2,849 per month, average rents in San Francisco are 85% higher than the national average of $1,536, according to data from Apartment List.
In a statement, RealPage told Multifamily Dive that the ordinance would not make housing any more affordable in the city. It said that its revenue management software only serves 10% of the rental market in San Francisco, and that its products can be reconfigured to comply with the ordinance, should it be signed into law.
“The ordinance’s misplaced focus on non-public information is a distraction that will only make San Francisco’s historical problems worse by banning an important component of pricing technology that RealPage uses responsibly and that benefits residents, property managers and the rental housing ecosystem as a whole,” the company said. “RealPage is proud of the solutions we provide to the San Francisco community, and we encourage the board of supervisors to identify real solutions to increase the supply of rental housing and access to affordable housing.”
This statement follows an earlier RealPage response to what it called “false accusations” related to its revenue management software. In that response, RealPage reported that its clients accepted floor-plan level price recommendations through its YieldStar and AIRM software less than 50% of the time. Clients in San Francisco had the lowest acceptance rate out of any of the top 20 rental markets at 40.4%.
Yardi did not respond to Multifamily Dive’s request for comment on the San Francisco legislation.
Years in the making
San Francisco’s new ordinance is the latest in a series of legal actions against revenue management software providers and customers following a ProPublica report about the products in late 2022.
Following an investigation, the Justice Department is reportedly preparing to file a civil suit against RealPage for alleged collusion in the housing market, and has also reportedly opened a criminal probe into the company, according to Politico.
Bills similar to the one passed in San Francisco were considered in the Colorado and New York state legislatures earlier this year but did not pass.
