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Diving certificate:
- The San Francisco Board of Supervisors has issue a regulation Prohibit the sale or use of revenue management software for the city’s rental housing projects.
- The ordinance, which passed July 30 and still requires Mayor London Breed’s signature, says the programs allow apartment owners to indirectly coordinate with each other to raise rents, lower occupancy rates and increase evictions, citing lawsuits against two apartment revenue management providers, RealPage and Yardi.
- If the ordinance goes into effect, multifamily property owners, operators or sellers who sell or use revenue management software in San Francisco would face penalties of up to $1,000 per violation, plus damages, restitution and attorneys’ fees. Usage violations would be counted per unit per month of use.
Diving insight:
The order will be submitted to Breed for signature after being reviewed again for final approval on September 3. according to SFGATEThe ban would take effect 30 days after it goes into effect, i.e. if the mayor signs the ordinance, returns it unsigned, or the board overrides the mayor’s veto.
The regulation does not set rent caps, nor does it prohibit the use or sale of property management software or products that use public data. “This regulation only targets the use of algorithmic devices that analyze and share non-public data,” the text states.
An estimated 70 percent of rental property owners in San Francisco use some type of revenue management software, the ordinance says.
“To be clear, RealPage has exacerbated our rental crisis and enabled corporate landlords to intentionally leave apartments vacant,” said Aaron Peskin, president of the San Francisco Board of Supervisors. in a press release from July“That’s why we are taking local measures to ensure that our working tenants 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 Apartment List.
RealPage told Multifamily Dive in a statement that the ordinance will not make housing in the city more affordable. The company said its revenue management software only covers 10% of the San Francisco rental market and that its products can be configured to comply with the ordinance should it go into effect.
“The ordinance’s misguided focus on non-public information is a distraction that will only exacerbate San Francisco’s historic problems by prohibiting a critical component of the pricing technology that RealPage uses responsibly and that benefits residents, property managers and the entire rental housing market ecosystem,” the company said. “RealPage is proud of the solutions we provide to the San Francisco community, and we encourage the Board of Supervisors to find real solutions to increase rental housing supply and access to affordable housing.”
This statement follows an earlier RealPage response to “false allegations” related to its revenue management software. In that response, RealPage stated that its clients accepted floor plan-level pricing recommendations through YieldStar and AIRM software less than 50% of the time. Clients in San Francisco had the lowest acceptance rate of all 20 largest rental markets at 40.4%.
Yardi did not respond to Multifamily Dive’s request for comment on the San Francisco legislation.
Years of work
San Francisco’s new regulation is the latest in a series of lawsuits against providers and customers of revenue management software according to a report by ProPublica about the products at the end of 2022.
Following an investigation, the Justice Department is reportedly Preparing to file a civil lawsuit against RealPage for alleged collusion in the real estate market and has reportedly also a criminal investigation into the companyaccording to Politico.
Bills similar to the one in San Francisco were in Colorado considered And Legislatures of the State of New York At the beginning of the year, however, it was not passed.
