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The Portland City Council got an earful Wednesday regarding its proposal to ban algorithmic rent-setting software.

Councilors received public testimony on a proposed ordinance that would prohibit the use and sale of 鈥渁lgorithmic devices鈥� to set apartment rents or manage occupancy levels.

Testimony was split between tenants who said they鈥檙e struggling with repeated rent increases and landlords and other real estate professionals who cast the ordinance as unworkable and harmful to a stricken real estate industry.

Software tools 鈥� most prominently products from RealPage Inc. 鈥� enable landlords to compare their rent levels to those of other such landlords, and the software offers recommendations on raising or lowering rents to meet the market.

Critics maintain the practice amounts to collusion and 21st-century price-fixing. The Justice Department and eight states sued RealPage in August, alleging the software aids anticompetitive conduct. That suit is still pending.

鈥淭he issue is that antitrust law hasn鈥檛 really been enforced for 150 years, so people have gotten into pretty sloppy practices about how this works,鈥� said Councilor Angelita Morillo, who introduced Portland鈥檚 ordinance. 鈥淏ut you鈥檙e not allowed to share competitively sensitive data with each other, whether you鈥檙e doing that through an Excel sheet, an algorithm or in a smoky back room.鈥�

Institutional landlords identified in court cases as using RealPage, including Greystar and Avenue5 Residential, own at least 32,000 housing units in Portland, Amarillo said Wednesday.

Marcel Gesmundo, a lawyer representing Multifamily NW, said the ordinance could prohibit landlords from using internal and publicly available data to set rents.

鈥淵ou鈥檙e essentially asking them to put on blinders while setting rents,鈥� he said.

Gesmundo added that the ordinance would sully Portland鈥檚 reputation among investors, saying the rules 鈥渨ill inadvertently add to Portland鈥檚 reputation as a hostile place to build.鈥�

Some outside experts who testified said the rent-increasing effect of rent-fixing software is real and quantifiable.

鈥淭he empirical evidence strongly suggests the algorithms currently in use in housing markets do in fact drive rents higher, and not lower,鈥� said Brian Callaci, chief economist for the Open Markets Institute, a Washington, D.C.-based think tank dedicated to fighting monopolies.

The collusion effect adds up to $25 per month in higher rents, Callaci said.

Joe Gardner, a Lake Oswego lobbyist representing RealPage, said the company鈥檚 data indicated that use of RealPage is associated with rent levels 1.5 percent to 6.3 percent below publicly posted rent levels. He added that RealPage 鈥渄oes not pressure customers to adopt this rent value estimate.鈥�

Gardner also warned of litigation, saying the ordinance 鈥渨ill result in lengthy, expensive court cases for the city.鈥�

The council heard from a parade of renters who said they have little choice but to pay escalating rents. A local nursing assistant, John Harris Knight, said he had moved 10 times since 2019 because of rent increases.

The ordinance would be backed with fines that could be imposed for each month algorithmic rent software is used. Critics said that could lead to large penalties.

Greg Frick, a partner at Portland multifamily broker HFO Real Estate, said the ordinance attacks the wrong problem.

鈥淭echnology鈥檚 not a key driver of rising rents,鈥� he said in an interview.

Frick said the city should provide a welcome environment to outside investors, who are needed to fund housing projects.

鈥淎t the end of the day, are we doing things to incentivize housing, or are we going to blame things like technology?鈥� he said.

The council is due to accept more public testimony Thursday before returning to the matter on April 16.