Ban on “rent algorithms” dies after Senate Democrats force a major change

Kevin J. Beaty/Denverite
A mural by Alexandrea Pangburn, Sandra Fettingis and Becca Reitz on an apartment building at 3033 W. 71st Ave. in Westminster, part of Babe Walls 2020. Aug. 19, 2020.

Colorado landlords can continue to use controversial software products to share data with their competitors and determine rent prices.

Statehouse Democrats attempted to regulate these “rent algorithms” with a bill this year, but it failed on Wednesday amid stark disagreements between party members and lobbying from real-estate technology companies.

The original bill would have strictly limited landlords’ ability to use products like RealPage, which critics argue amounts to “collusion” because the programs allow landlords to exchange internal information and work together to set prices.

But several Senate Democrats joined with Republicans to add an exception that would have allowed the companies to continue operating here, with some adjustments. The House refused to accept that change, killing the bill.

“I didn't think we'd have to fight about whether or not we could agree that collusion is bad. But that's a conversation I'm absolutely willing to continue,” said Sen. Julie Gonzales, a sponsor.

The software platforms collect internal data from landlords throughout the metro area — and then use those vast troves of information about vacancies, rent prices and more to recommend rent prices. And at least one of the platforms, RealPage, allegedly puts pressure on landlords to comply with the prices determined by the software, according to a lawsuit filed by the District of Columbia.

The software platforms, and some landlords, have defended the use of the algorithms, saying that they’re a useful tool that can minimize vacancies, ensuring that landlords don’t leave housing empty by overpricing it.

“Banning the use of non-public information could have negative and unintended consequences for consumers. Further, removing a housing provider’s ability to use normal technology and tools, and accurate data, to aid its business decision-making will not improve housing affordability or availability,” RealPage said in a statement.

The company’s lobbyists worked to convince senators to weaken or kill the bill, according to Gonzales. She said a lobbyist asked her to run an amendment that would allow landlords to continue to use nonpublic data — as long as companies also offered a rent recommendation product to the public, too.

Gonzales refused. But Sen. Joann Ginal, a Democrat of Fort Collins, ultimately offered such an amendment. 

“I talked with a lot of the small landlord groups and the larger apartment groups and they wanted that opportunity,” she said in an interview.

The amendment — passed by the Senate last month — said that if landlords wanted to use the nonpublic data, they’d have to also use that same data to power a tool that would tell consumers “a range of average rent prices” for rentals in an area. (The companies would be allowed to charge a “reasonable” fee for the new product.)

“Let’s let everybody have access to the data that they otherwise wouldn’t have,” Ginal said.

Gonzales said the change would have gutted the bill and offered no substantial gain for consumers — the proposed dashboard for consumers would have been nothing more than “the algorithmic version of ‘Don’t worry, it’s good, just trust us,’” she said.

“It is simply not transparency. If we were actually talking about opening the books, and making all of the data that is available to the public, that's something we could have absolutely continued discussions [on],” Gonzales added in an interview.

A lawsuit filed by the District of Columbia last year alleges that RealPage doesn’t just suggest price levels, but strongly pressures landlords to automatically set rent prices at the levels determined by RealPage, a practice the suit compares to a “cartel”

The suit alleges that landlords illegally entered “into an agreement to exchange sensitive non-public data among competitors and delegate to RealPage price-setting responsibility for multifamily housing units in the District, instead of competing on the basis of price.”

Ginal’s amendment also would have banned companies like RealPage from incentivizing or requiring landlords to follow its recommendations.

RealPage maintains that it helps set “competitive and unbiased rental pricing and offers.”

Gonzales said she was just one vote short of defeating the amendment on the floor and maintaining the original bill’s strength. She even drew support in a floor speech by Republican Sen. Jim Smallwood — but to no avail.

After the Senate passed its amendment, the bill returned to the House. Lawmakers there rejected the Senate’s changes.

The Senate sponsors had one more chance to revive their original vision for the bill on Wednesday. But several of the chamber’s more moderate Democratic senators — Ginal, Kyle Mullica, Chris Hansen, Dylan Roberts, Kevin Priola and Rachel Zenzinger — joined with Republicans to block that final effort, The Denver Post reported

With the two chambers unable to agree, the bill is dead. It was cosponsored by Rep. Javier Mabrey, Rep. Steven Woodrow and Sen. Nick Hinrichsen, all Democrats.