Legislation coming to ban alleged rental price-fixing in Philadelphia

PHILADELPHIA (WPVI) -- Philadelphia City Council is set to introduce legislation aimed at banning an alleged price-fixing scheme to drive up rental prices.

The bill targets a company that has already been sued by the Department of Justice.

RealPage is a software management company that's being called a "housing cartel" by its critics. It's facing several lawsuits, accused of using algorithms to help landlords collectively raise rents.

Now, some Philadelphia City Council members are trying to ban it from operating in the city.

"I'm on a limited income. So I had to take the year lease, which leaves you in here," said Lori Peterson.

Peterson pays $900 a month for a one-bedroom in the West Oak Lane section of the city. She says she can't afford to move or even go month to month, so she feels stuck.

"I feel that way because it's not worth it. I'm dealing with pests continuously," Peterson said. "It is unbearable."

This week, Peterson will speak at a news conference about a bill being introduced in Philadelphia City Council.

"We need to be heard. We need quality, affordable housing," she said.

The bill is designed to prohibit rental price-fixing by landlords who allegedly coordinate using personal networks and the algorithms provided by software services like RealPage.

RealPage is being sued by the Department of Justice, which alleges the company "replaces competition with coordination" and engages in a "scheme" that allows "landlords to share sensitive data" to "artificially keep prices high."

"These groups are working together. This is why we say that we're trying to ban the fixing, not just algorithmically, but within professional networks as they're communicating with a number of property managers and owners to try to keep these prices where they are," said Councilmember Nicolas O'Rourke.

O'Rourke will introduce the bill on Thursday to ban price-fixing for rental housing in Philadelphia. A similar ban is already in place in San Francisco.

"We only want what's fair. That's it. And that's what we're fighting for," said Peterson.

The CEO of Odin Properties, which owns Peterson's apartment, says the company can't comment on individual residents, but adds Odin does not use RealPage for rental apartment pricing.

The CEO also said while he believes RealPage is one of its vendors, "We are aware of the litigation and will make future decisions about which vendors to use accordingly."

RealPage sent Action News a lengthy statement, which reads in part, "We believe the claims brought by DOJ are devoid of merit and will do nothing to make housing more affordable. We intend to vigorously defend ourselves against these accusations."

Full Odin Properties Statement:

"We do not use RealPage for rental apartment pricing, and our utility billing and leasing processes are equitable, in compliance with all applicable law, and consistent with the terms of resident leases. While I cannot comment on an individual residents or pending litigation, in order to comply with Federal Fair Housing Law, it is important that we treat all residents equitably. It is also important to note that our portfolio is free and clear of all City of Philadelphia L&I violations, and we address resident work order requests promptly. We recognize that there is a need for additional deeply affordable housing throughout the US and are working hard every day to meet that need.

Unlike some other larger apartment owners and managers, we do not have a 'fee management' process internally or via any 3rd party provider. Our focus is on delivering the best value and resident experience, which is central to our mission and a point of pride for our team members.

We use numerous vendors for various 3rd party services throughout our organization, all of which we understand comply with all applicable laws, and have not been accused of any wrongdoing relating to the services we utilize. I believe RealPage is one of those vendors, but we do not use them to set rental rates or other fees relating to resident rents. We are aware of the litigation involving RealPage and will make future decisions about which vendors to use accordingly."

Full RealPage Statement:

"We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years. It is merely a distraction from the fundamental economic and political issues driving inflation throughout our economy - and housing affordability in particular - which should be the focus of policymakers in Washington, D.C.

RealPage's revenue management software is purposely built to be legally compliant, and we have a long history of working constructively with the DOJ to show that. In fact, in 2017 when the DOJ granted antitrust clearance for our acquisition of LRO, the DOJ also analyzed extensive information about our revenue management products without objecting to them in any way. We believe the claims brought by the DOJ are devoid of merit and will do nothing to make housing more affordable. We intend to vigorously defend ourselves against these accusations."