Providence Special Committee on HOPE-Wednesday, April 23, 2025-UTR of the 5:30 URRP Meeting

Good evening, everyone. I'd like to call the special committee of health opportunity for expanding and education. Also known as hope. For Wednesday, April 23, madam clerk, would you please hold the roll?

Sharon Mankichaba?

Present.

Vice chair one and Fred Peterson? Present. Consular Sue Anderbwa, she's absent. Consular Justin Perez? Present.

Consular Miguel Sanchez?

Present.

We have four questions, one absent. We had a time.

So before us, we have the agenda, and we're going to first make a motion to substitute on the first item. Second. Second. And the motion has been made by councilwoman Peterson, second by councilwoman Sanchez. Is there any discussion?

Seeing none of those in favor? Aye. Any abstention in nays? The motion carries. Before us is the the item, which is an ordinance amending chapter 13, quick housing vote of the promise code of ordinance to add article 10 provision of algorithmic red setting devices.

Before us, the sponsor of the ordinance would not be with us, and that was president, Richard Miller. But we have our staff present to speak and present the the ordinance before us.

You may? Good evening, everybody. Jim Rose, chief of staff for the city council. Council president introduced the ordinance as chair stated, wishes she could be here this evening. Unfortunately, she's dealing with a family emergency out of town, and so Erin and I, my deputy chief of staff of policy, will present it on her behalf.

I'll kind of set the scene while we're talking about how we got here, and then Erin will be here to answer policy specifics. Let's see which policy is the problem. Red sign software algorithms like RealPage, which is the predominant one controlling over 80% of the market, exists for one singular reason. That is to boost profits by polluting to artificially increase your rents. Of course, higher rent means more evictions, more displacement.

Rent setting algorithms have this purpose according to the people who create them. This is their stated purpose, their selling point to land. It's in their materials, on their websites, how they promote it at conventions to their clients. Their own website, RealPage, RealPage's own website, hosts find out how YieldStar, which is the name of the software, can help you outperform the market by three to 7%. In Nashville, a RealPage executive was asked whether their rent sending algorithm had any effects on the 14% point 5% rent increases that people were seeing.

And that executive responded by saying, I think it's driving me quite honestly. As a property manager, he continued, very few of us would be willing to actually raise rents double digit within a single month by doing it manually. So how does this work? They use a mix of sensitive proprietary datasets and publicly available information to formulaically make working people, renters, pay more. Private information.

Because landlords share data regarding their properties with RealPage. That's how they sign up. They share their data, the rents, their occupancy levels, their vacancy levels, details about their square footage of the properties they manage, things that we wouldn't know. And then RealGage, through their software, compiles that information from all the landlords in the area who are clients, and they combine that with publicly available data. And then they recommend rent levels and occupancy levels that maximize profits, not for that one person who's plugging it in, but that maximize the profits for all the landlords in the region who are clients.

I mentioned occupancy rates. So sometimes what the software will recommend is artificial vacancy. Otherwise, letting available units sit open. If the algorithm finds that driving down the available supply will drive up the revenue, then it'll give that recommendation. This obviously comes in a housing crisis where supply is a big part

of the problem, something that we

talk

about constantly. We already have extremely high demand and limited supply, and that's the context with which they're both artificially driving up rents and sometimes vacancies. There's a term for this. Sure that everyone is familiar with. It's price fixing, which is already illegal.

There's lots of law on this. But what's happening here is instead of getting all in a room together and deciding on what rent prices they should set, which it would be clearly illegal, I think everyone would agree that's illegal, use an algorithm which sits in the center and work it's a workaround Rather than getting together, an algorithm that takes all their information, spits back out what Rendtich had said. This has led senators like Amy Klobuchar, Nick Durbin, Ron Wyden, Cory Booker, and other Democrats but from across the ideological spectrum to call this a cartel. It has led to the Biden Justice Department by a lawsuit, an antitrust lawsuit against. Among the landlords that were named in that lawsuit are Cushman and Wakefield and Willowbridge, both of which own property in Providence.

This ordinance would close that loophole, prohibiting the use of algorithmic devices for the purpose of setting and raising rents on residential dwelling units in Providence.

Let's see.

Yeah. I think you did a, you know, a marvelous job of breaking down the background. That's how we got

And just for the right that

you're doing this. You can't reach yourself.

Yeah. Absolutely. Sorry. Aaron used to guard the deputy chief of staff for a policy for the conference. So, yeah, as I mentioned, Jean did a great job breaking this down.

There was just a few snippets of things that I did wanna add. So I'm sure all of you are probably familiar with the report from Redfin. I think that it's from February of this year, and it showed that, you know, they surveyed the 44 largest metro areas in the country. Probably, it's usually is around, like, know, the thirty fifth or the fortieth depending on, like, you know, what census it is. And, you know, basically, they found that Providence is the least affordable, you know, market for, you know, renters.

And, you know, they also reported that in order so HUD guidelines say that folks shouldn't be spending any more than 30% of their income on, you know, housing. But, basically, you you need to earn $85,000 as a single person to afford the average rent prices that are here in the city, and that's, the you know, somewhat of a wild number. And then from February from so another thing from rent.com, and this was, like, you know, from March 23 to March 24, like, the rents here in Providence rose about 16%. I think the only municipality around the country that was fired was Cincinnati. That's something that needs to, you know, put out there.

And, you know, while this isn't an orb this is, like, you know, by no means, like, a silver bullet that's gonna solve the affordable housing prices. But the housing prices, again, probably it's just one, you know, tool in the future that we can use to address it. So I wanna say that. And then there is a slight amendment that's in front of you from from the original work that you can see this one that you see. The only changes that you see that very simple and straightforward.

One of these is to clearly, you know, outline the use of these devices as being part of the prohibited conduct conduct. Indeed, we just wanted to make that extremely clear. Also, one change that came as a recommendation from the law department when and you'll see that's in section. I'll talk about this a little bit more in a second, but the enforcement part, thirteen seventy one, you know, originally, we wanted the submissions that were posted the solicitor's office, which may be transferred to the attorney general's office to be confidential. But we took that language out because we recognize that it's just kind of impossible to even confidential from coming to the city, you know, to the attorney general's office if they decide to, you know, move on the on the issue.

And then also after discussing with some of the state courts and with the law department, we just decided to pull out the language that spoke to a specific private action that an individual would bring to the courts because we thought it was, you know, better for it to be something that was controlled entirely within the city. So with that said, I'll just say that this ordinance ultimately, you know, has two parts to consider. So one is that it allows, you know, the city, through our solicitor, to receive these submissions regarding these alleged violations, and the solicitor may, at his or her discretion, you know, forward these to the attorney general. And it should be known that this activity is already, you know, unlawful under, like, state law. It's, you know, the unfair trade practice and consumer protection act.

It actually outlines, you know, all of these issues in price fixing. And but it's just specifically in state law. It's the attorney general who can move these actions. No one else can be the attorney general. One piece was for us to signal to the attorney general that we have this information.

Please move on this to be deemed as actionable. And then the second piece is, you know, we see language that speaks to the solicitor may move action in a court of competent jurisdiction. And, basically, what that's going to do is gives the city, you know, the authority to move forward. But this is gonna take a lot of the, you know, discussion and collaboration with the law department to decide exactly, you know, how we can move forward with this because we do have concerns with, you know, staffing. Does the law department have the prosecutors that can do so?

That's something that we need to work on, like, moving forward. But this allows the city to potentially bring these claims to the court of office and jurisdiction. And after discussion, we see that as likely being a municipal court, but there is state law that speaks to district courts, you know, enforcing municipal ordinances, and there's also the law of court to consider. That's a third. Don't think that's likely, but we still need to figure that part out the next step.

So I think those are the main things that I did wanna share, except for I'll say one last thing is, like, when it does come with the potential for our solicitor to bring this in, you know, court compensation jurisdiction, we've also added languages which allows the city to basically prosecute to the, you know, highest level of law in the state law. And we all know that to be $500 a day per a day per violation. And that's and, again, it is differential to the solicitor how they wanna move forward. But that is the background in terms of, like, the structure of what this will be for us.

Great. Do you have any questions? Ask now. And then, also, just to let everyone know, as I said, that this committee, the chair, I will take test testimony from the. Alright?

If you have any questions now, feel free. Thank

you. I appreciate you guys putting this in front of us. I actually do have a question in terms of do we have any idea if this is already currently being used in the city of Providence?

Yeah. I I don't have direct evidence of this actually being used here in the city of Providence. There is direct evidence that this has been being used in other states, especially in the West Coast. Yeah. We do?

Okay. Perfect.

Yeah. Alright.

And if we do, then I would if it's okay, councilman, let the deputy director of policy to join.

Yes. That's great. I can just quickly join.

Deputy director of policy. Hi, everyone. Nice revelation. Brandon and I had a video doing some research just today as we found embedded in a sort of fact sheet within a RealPage website, a

link that you can search

for properties that use RealPages. It's, albeit, potentially just cursory. But within it, we put in Providence or Ireland, and I think counties by some recognizable names here. This is on the RealBeach site. We've got 125 Wiggingham, 257 Bair, Beneficient House, Center Place, The Nightingale, 4 Seasons.

It's about 26 or so properties. We can do a much deeper sort of analysis, break this down, share this table. But just looking at this, in my understanding of the city, these are all big properties with a lot

of units. Yeah.

So at the end, they're using it. This is actually influencing a

lot of units all at once. I'd be I'd be curious to see it as we expand into the different awards kind of, know, we, I think, all know who the larger developments are or the developers are in our areas, and I'd be really curious to see if some of that is applied because I know what my median rent is in my particular ward, but it's not necessarily it's it's unaffordable. That's just too heavy. The other question that I have is, if you