The Portland City Council on Wednesday appeared ready to ban corporate landlords from using algorithmic rent-fixing software, waging a battle playing out across the nation.

Councilors added an amendment specifying the proposed ban would not apply to owners of five or fewer units. The proposal will return before the council for a second reading later this month.

The potential ordinance would apply to “at least 32,000 units in Portland that have been using this algorithmic rent-fixing software,” said Councilor Angelita Morillo, who has championed the legislation.

“We have a responsibility to chip away at that market and make sure that we are doing what we can to make the rent more affordable in Portland,” Morillo said.

Critics charge that software from companies such as RealPage acts collusively to allow large-scale landlords to coordinate rents for thousands of units. The software can recommend rent increases, and prod landlords to bring their rents up if they’re below those charged by competitors. Use of the software has been challenged by lawsuits and local bans in some cities.

Portland’s proposed ordinance would ban “agreement among two or more persons or entities, to set, raise, lower, maintain or stabilize rental prices, fees or occupancy levels for dwelling units with different beneficial owners.”

The law would not apply to publicly subsidized affordable housing.

Rent software has been challenged across the nation. Greystar, the nation’s largest landlord, in August reached a settlement with the Justice Department that bans the company from using any algorithm that generates pricing recommendations using competitors’ data.

RealPage settled a consent judgment with Nevada in September. RealPage did not admit wrongdoing but agreed to pay $200,000 to housing nonprofit groups and to maintain an antitrust compliance program.

Joe Gardner, a lobbyist representing RealPage, said Wednesday that the company’s software had been subjected to a “mix of conspiracy theories and false allegations, none of which had held up in a courtroom.”

Morillo said she had worked with Sen. Ron Wyden’s office in devising Portland’s proposal.

“It’s not going to resolve the entire housing crisis that we have in Portland, but it will address part of the problems that we’re seeing here,” she said.

The proposed ordinance is focused on “competitive, sensitive information being shared through an algorithm,” Morillo said.

The Portland proposal is “carefully crafted to outlaw anticompetitive trade practices,” said Michael Abrams, policy counsel for the American Civil Liberties Union of Oregon.

The potential ordinance would create a private right of action for tenants to sue landlords for price fixing as well as allow the city attorney’s office to issue subpoenas and bring the matter to a code hearing.

Landlords and development groups objected to the proposal, saying it would add to housing providers’ regulatory burden in Portland.

“We cannot continually squeeze available supply with more regulations that make it riskier and more expensive to manage housing,” said Cassidy Bolger, director of development at Killian Pacific and an Oregon Smart Growth board member. “This is a disincentive to producers to provide more supply, and I urge you to reject it.”

Developer Brian Owendoff called the proposal “a solution in search of a problem.”

“Portland landlords are not price-fixing,” he said. “Developers and property owners have long used both public and private data through software and market analysis to understand demand and competitive rents.”

Councilors did not vote on the proposal on Wednesday, but most said they were supportive. Councilors Olivia Clark and Dan Ryan were among those critical of it.

“I believe we are sending the wrong message at a time when we need more housing,” Clark said. “We need more housing investment in the city. I also don’t want to risk incentivizing lawsuits against the city.”

Morillo sought to dispel concerns that the potential ordinance would ban Microsoft software commonly used by mom-and-pop landlords.

“I cannot emphasize enough how this policy does not ban Excel,” she said, drawing laughs in the council chambers. “It bans price-fixing coordination.”

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SEATTLE (AP) – A Seattle policy intended to reduce evictions after the end of the city’s eviction moratorium has been struck down by the Washington State Court of Appeals.

The Seattle Times reports an ordinance the City Council passed in May 2020 said tenants who fell behind on rent and faced eviction could, for six months following the end of the moratorium, assert a defense in court if they self-certified that they suffered financial hardship and couldn’t pay their rent.

City leaders pointed to the rule as one key to the city’s emergence from a nearly two-year ban on almost all evictions. As they allowed the eviction moratorium to expire Feb. 28, Mayor Bruce Harrell and Seattle City Council members cited a suite of city tenant protections including the six-month rule as ways of helping vulnerable tenants stay housed as evictions resumed.

In a written decision issued March 21, the Court of Appeals upheld other city protections, but said the six-month eviction defense “deprives the landlords of their property interest without due process by not affording them the opportunity to test the veracity of a tenant’s self-certification of financial hardship.”

The lawsuit filed by the Rental Housing Association of Washington also challenged the city’s ban on evictions during winter months and a law allowing tenants to repay pandemic debt in installments. A King County Superior Court judge last year upheld all but one small portion of the laws. The Court of Appeals affirmed that lower court ruling but added the decision against the six-month rule.

The Rental Housing Association, which represents landlords, stated: “We are grateful for the Court’s decision, which stops the cycle of debt for housing providers and residents trapped in Seattle’s ongoing COVID-19 eviction ban.”

The city attorney’s office did not immediately say whether it plans to seek a review of the case from the state’s highest court.

The Rental Housing Association stated it would “continue to examine our issues with Seattle’s winter eviction ban.”

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The Portland City Council moved closer Wednesday to ending an exemption to the city’s relocation ordinance for small-scale landlords.

The council’s measure would also make permanent the relocation ordinance, which took effect in February 2017. Without council action, the ordinance is set to expire April 6.

Commissioners also would require the Housing Bureau to collect data on relocation payments. That would be the first step in creating a rental registration database that could eventually include citywide data on rents, evictions and lease agreements.

Commissioners are poised to allocate $394,700 to develop the system and pay for two new Housing Bureau staff positions to administer it.

“We’re trying to make sure that we’re collecting good data and are tracking our policies going forward,” said Shannon Callahan, interim director of the Housing Bureau.

The current relocation policy exempts landlords who rent only one housing unit from paying relocation costs. Ending that exemption has prompted backlash from some small-time landlords who said regulatory requirements would be a burden.

Landlords are required to pay their tenants $2,900 to $4,500, depending on the unit’s size, when evicting tenants without cause or prompting them to move with a rent increase of 10 percent or more in any 12-month period. Removing the single-unit exemption would affect an estimated 20,000 dwellings.

Mayor Ted Wheeler defended commissioners’ drive to end the exemption.

“On the margin, I believe it is possible that some landlords could remove their units from the market,” he said. “However, the broader stability provided to the overall market, in my opinion, outweighs the concerns of the loss of some units in the near term.”

Commissioner Chloe Eudaly said the policy is the result of compromise among the five commissioners.

“I want to acknowledge this policy would look very different if it was left up to any single commissioner,” she said. “But this is a group effort requiring compromise from all of us, and while I have some concerns – I’ll call them yellow flags – that I’ve raised, and which I’ll be watching closely, I want to acknowledge that we are taking a huge step forward today in the right direction, and that is something to celebrate even if it’s not perfect.”

Commissioners heard more than three hours of testimony by renters, landlords and city staffers. A second and final reading is likely to be held next week.

Tenant advocates turned out in force to support removing the exemption.

“Involuntary displacement affects us all as a community, especially when it leads to homelessness,” said Katrina Holland, executive director of the Community Alliance of Tenants and a member of the city’s Rental Services Commission advisory board. “We’ve all experienced the externalities created by a business decision between one person and another, and we don’t believe it has to continue to fall on the rest of the population to make up that burden.”

Commissioner Amanda Fritz offered an amendment that would exempt landlords who establish a fixed term of tenancy and notify the tenant prior to occupancy of the landlord’s intent to sell or permanently convert the unit to another use.

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The Portland City Council voted Wednesday to extend a housing emergency that would have expired otherwise.

The council first declared a housing emergency on Oct. 7, 2015. It was kept in place with two annual extensions. This week’s action marks the third.

During the housing emergency, the city has passed inclusionary housing rules that require multifamily developers to include affordable units or pay a hefty fee, created an inter-bureau process to speed approvals of affordable housing and instituted mandatory relocation assistance for tenants who are evicted without cause.

The city also replaced Type II design review with a speedier, staff-driven process, Type IIx, for affordable housing projects.

The council on Wednesday also extended the relocation assistance program, which was set to expire on Oct. 6, until April 6, 2018. The relocation assistance program requires landlords to pay a fee to tenants when evicting them without cause or imposing rent increases of 10 percent or more that force their relocation.

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Commissioner Chloe Eudaly‘s office is crafting a policy that would give tenants, and then the city of Portland, first right of refusal on the sale of any rental units.

The intent is to give low-income renters the chance to own a home. Details remain to be fleshed out by an informal committee of advisers, and written into code language by city attorneys.

The policy proposal may advance to hearings in two to three months, said Jamey Duhamel, Eudaly’s policy director.

“It really made sense to us,” Duhamel said. “We recognize that achieving homeownership for low-income tenants is even more difficult than it’s ever been historically.”

Under the policy, any seller of a rental property would need to give the city 90 days’ notice of intent to sell. Tenants would have 60 days make an offer. If the tenant or tenants decline, the city would have 30 days to weigh acquiring the property.

As currently envisioned, the policy would apply to all types of housing, from single-family homes to large apartment complexes.

City officials are under pressure to meet a goal of translating $258.4 million approved by voters in last November’s housing bond into 1,300 affordable housing units.

“We wanted to be able to give that bond as much bang for the buck as possible,” Duhamel said.

After the 90-day period ends, tenants and the city would have 72 additional hours to match any offer made on the open market.

Duhamel said the policy would give the city more time to consider purchasing affordable housing. As it is now, the city often learns of available properties only after a buyer is in place, she said.

“The city was learning about potential opportunities way too late in the game,” she said. “Sometimes the deals had already been made.”

Multifamily brokers were aghast at news of the under-discussion policy, which was first reported by the Portland Mercury.

“It’s another thing that will end up doing more harm than good, but it’s kind of true to form,” said Greg Frick, a partner at HFO Investment Real Estate.

Eudaly, who was elected in 2016 after a campaign in which she pledged to protect tenants and bolster affordable housing, has earned the ire of developers, brokers and others in Portland’s for-profit housing sector. Eudaly championed the city’s relocation policy, which requires landlords to pay tenants when issuing a no-cause eviction.

Frick said there’s a misperception that institutional investors are to blame for Portland’s housing crisis.

“They’re not driving rents,” he said. “What’s driving rents is demand for rentals, not demand for investments.”

The policy is inspired by a similar ordinance in Washington, D.C., Duhamel said. It was first advanced by Living Cully, a coalition of Northeast Portland community groups, and taken up by Eudaly’s advisory committee.

It’s likely to meet fierce opposition.

“Our attitude is it’s another one of her proposals that’s not founded in any real knowledge of the market,” said John McIsaac, spokesman for Multifamily Northwest, a trade group for landlords. “It’s a dream. It doesn’t make any sense. It might sound cool or romantic, but it’s not practical.”

Tom Brenneke, president of Guardian Real Estate Services, said a right of first refusal provision on any property makes it less attractive to potential buyers.

“Frankly, even talk of this kind of thing impacts markets,” he said.

Adding controls on the housing market is not the answer, Brenneke said.

“(Eudaly’s) borrowing pages out of the San Francisco playbook, and none of it works,” he said.

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