Hoping to cut San Francisco rents, supervisors to ban tech tool

The San Francisco Board of Supervisors unanimously approved a ban on software for suggesting rent prices and occupancy levels on Tuesday, in a first-in-the-nation move that proponents hope will lower rental costs in the city.

Introduced by Aaron Peskin, the board’s president and a mayoral candidate, the ordinance prohibits price-suggesting “algorithmic devices” that advise individual landlords on how to price their rentals based on data collected from landlords across a city. Though it’s not named in the legislation, Texas-based RealPage is the company best known for this controversial software. The company says it serves 10% of San Francisco’s rental market with its “revenue management” products.

Once the ordinance is read again for final approval by the 11-member board on Sept. 3, it will pass to Mayor London Breed. If she signs it, the ordinance goes into effect 30 days later. The ordinance sets up dual enforcement: Both tenants and the city could sue software providers and landlords employing the tech to set their rents or keep units vacant. (In a statement published on its site, RealPage denied that it ever recommends vacancies and pointed out that landlords ultimately decide rent prices.)

Peskin told SFGATE that he learned about RealPage and its algorithms from a 2022 ProPublica investigation of the company. The piece quoted two RealPage executives as saying the company’s software helped landlords push up rents by as much as 14.5%. ProPublica also obtained some RealPage promotional materials featuring Greystar, a corporate landlord with holdings in San Francisco, that said the buildings using RealPage software “outperformed their markets by 4.8%.”

Since the investigation, RealPage has faced a wave of lawsuits from tenants and a probe from the Department of Justice. (In a June 18 statement, the company played down its scale and denied wrongdoing.) Though Peskin isn’t sure about the extent of RealPage’s impact on San Francisco, he said that after the city’s post-pandemic population drop, rents should be far lower. (As SFGATE reported last September, they have dropped some.)

RealPage’s tech, in Peskin’s mind, amounts to “good old-fashioned price fixing.” Banning it, he said, is “something that we can do right now to make San Francisco more affordable.”

At a Board of Supervisors meeting on Tuesday, Peskin said a ban on algorithmic price gouging is “pro-housing policy.”

“It’s entirely consistent with our shared goal of a functioning housing market that meets our real housing needs,” he said at the meeting. “Let’s build housing for renters, not for real estate investors.”

RealPage spokesperson Jennifer Bowcock gave a scathing response to the ordinance’s approval to SFGATE. She called the focus on nonpublic data use a “distraction that will only make San Francisco’s historical problems worse” and said the ordinance would “do nothing to make housing more affordable in the city.”

“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,” Bowcock wrote.

Peskin told SFGATE that he worked with the nonprofit American Economic Liberties Project to craft the ordinance. Lee Hepner, a lawyer for the organization, sees a ban on the algorithms as a huge win, and he hopes the market will now become fairer and more competitive.

The “bottom line,” Hepner said, is that RealPage helps landlords increase rents. And though he also isn’t sure about the company’s scope in the city, he said he’s heard from tenants about big rent increases at properties run by companies rumored to use the software.

“For a long time, people have understood that something is wrong and distorted about our housing market,” Hepner said. “RealPage just really puts a name to that long-standing suspicion.”

Hear of anything happening at a Bay Area tech company? Contact tech reporter Stephen Council securely at stephen.council@sfgate.com or on Signal at 628-204-5452.