San Diego Pricing Algorithm Ordinance: A Detailed Explanation

Written by Donald Davidoff | 8/20/25 7:54 PM

(Second in a series of detailed explanations of state and local laws on pricing algorithms)

Back in May, San Diego joined the ranks of municipalities that passed new laws regulating rental pricing algorithms—Ordinance Number O-21955. To their credit, and unlike most other legislative actions, they titled the law rather accurately—calling it an ordinance “relating to prohibiting anti-competitive automated rent-fixing.”

As with the first in our series (Seattle) and in the interest of both completeness and avoiding biased curation, the entire ordinance is included in this blog; and in the interest of focusing reader attention on the most important elements, you can focus on the yellow highlighted text if you don’t want to take the time to read the entire ordinance (and if you trust my curation).

Ordinance text (bold titles added for readability)	Implications and Commentary
Title AN ORDINANCE amending Chapter 9, article 8 of the San Diego Municipal Code by adding new Division 11, Sections 98.1101, 98.1102, 98.1102 and 98.1104 relating to prohibiting anti-competitive automated price-fixing	Note that this title says it “prohibits anti-competitive price-fixing.” It does not prevent algorithmic rent pricing.
Preamble The high cost of living and housing shortage in the City of San Diego (City) have contributed to the City’s unaffordability. According to a March 2024 Zillow report, a family must earn $275,000 a year to afford a home mortgage. According to an August 4, 2024, Times of San Diego article, the average rental rate for a two bedroom-residential dwelling unit in the City is $2,489, almost 65% higher than the national median Landlords’ use of algorithmic devices, which perform calculations on nonpublic competitor data concerning rental rates, occupancy levels and other information to set rental rates and occupancy levels has resulted in inflated rates and unfair rent increases and contributed to the City’s unaffordability for families In response to the use of algorithmic devices to set rental rates and occupancy levels, in August 2024, the United States Department of Justice (DOJ filed a lawsuit against RealPage, Inc., Eight Attorneys General, including the California Attorney General Rob Bonta, joined the DOJ’s lawsuit. The DOJ amended the lawsuit in January 2025 to add two Attorneys General and name landlords as defendants. While the litigation is pending, software companies such as RealPage, Inc., continue providing algorithmic devices to landlords in the City. City families cannot wait for the DOJ lawsuit to run its course and, if successful, provide relief from inflated rental and unfair rent increases. The Council wishes to provide immediate relief to City families by prohibiting the sale, licensing and use of algorithmic devices that use or incorporate nonpublic competitor data or two or more landlords to advise a landlord on, or recommend to a landlord, rental rates or occupancy levels that may be achieved for residential property in the City. On October 30, 2024, the Council’s Rules Committee requested the City Attorney’s Office work with Council District 9 staff to draft this Ordinance and for Council District 9 staff to bring this Ordinance to Council for adoption San Diego Municipal Code section 11.0205 titled “Validity of Code – Severability” shall apply to this Ordinance The provisions of Chapter 1, Article 2 of the San Diego Municipal Code, including the enforcement of judicial and administrative remedies, shall apply to this Ordinance The Office of the City Attorney prepared this Ordinance based on information provide by Council staff, including information provided by affected third parties and verified by Council staff, with the understanding that this information is complete and accurate.	Generic comment with no real implication. Note the focus on using nonpublic information. An assertion of facts without evidence. Another example of “blaming the messenger”—pricing algorithms don’t raise rents, they just efficiently respond to demand and supply. Generic band wagoning rhetorical flourish with no real implication. A lot to unpack here: 1) the City’s motivation is to declare using non-public data to be illegal independent of whether it is found to be collusive, 2) again presumes without evidence that the software creates “inflated” and “unfair” rent increases and 3) note again the focus on and (limitation to) the use of nonpublic information. Appears to be generic boilerplate. Appears to be generic boilerplate. Appears to be generic boilerplate. Appears to be generic boilerplate, though without seeing the information provided, we cannot assess whether it is truly accurate (and we suspect some of it is not).
Action Items Be it ordained by the Council of the City of San Diego: Section 1. Chapter 9, Article 8 of the San Diego Municipal Code is amended by adding new Division 11, sections 98.1101, 98.1102, 98.1102 and 98.1104, to read as follows”	Boilerplate
Division 11: Prohibition of Anti-Competitive Automated Rent Price-Fixing Section 98.1101, Purpose and Intent. The purpose and intent of this Division is to protect San Diegans from artificially inflated rental rates and unfair rent increase by prohibiting the sale, licensing and use of algorithmic devices. This Division also provides tenants with remedies for violations of this Division.	Repeats the assertion without evidence that the software creates “inflated” and “unfair” rent increases and says it prohibits algorithmic devices (spoiler alert: the key is how they define “algorithmic devices”).
Section 98.1102 Definitions For purposes of this Division, defined terms appear in italics. The following definitions apply in this Division. Algorithmic device means a software or product that uses or incorporates one or more algorithms to perform calculations of nonpublic competitor data of two or more landlords on, or recommend to a landlord, rental rates or occupancy levels that may be achieved for a residential rental property in the City of San Diego. Algorithmic device does not include the following: A software or product used by a person to publish reports regarding rental rates or occupancy levels from aggregated historical nonpublic competitor data that is more than 90 days old, or from information available to the general public, and does not recommend rental rates or occupancy levels for future residential rental property leases or renewals A software or product used by a person to establish rental rates or income limits in accordance with local, state or federal affordable housing guidelines A software or product used by a person conducting an appraisal that does not recommend rental rates during the runtime operation of the software or product Landlord has the same meaning as in the San Diego Municipal Code section 98.0702 as may be amended Lease has the same meaning as in the San Diego Municipal Code section 98.0702 as may be amended Nonpublic competitor data means information that is not available to the general public, whether the information is attributable to a specific competitor or anonymized or whether the information is derived from or otherwise provided by another person. Nonpublic competitor data includes information about actual rental rates, rental rate changes, residential rental property supply levels, occupancy levels or lease start and end dates. Person has the same meaning as in the San Diego Municipal Code section 11.0210 as may be amended Residential rental property has the same meaning as in the San Diego Municipal Code section 98.0702 as may be amended Tenant has the same meaning as in the San Diego Municipal Code section 98.0702 as may be amended	Consistent with the preamble and purpose, the definition of algorithmic device is limited to those using nonpublic competitor data. Standard language we’re seeing to exclude certain existing data collection vehicles that don’t lead to pricing recommendations. Standard language we’re seeing to exclude things used to implement affordable housing laws/rules. Standard language we’re seeing to exclude valuation appraisals. Broad definition that includes owners and any person acting as principal or through an agent, who has the right to offer residential rental property for rent. Standard definition with no material impact. Specifies what nonpublic competitor data is…no surprises here. No surprises here. No surprises here. No surprises here.
Section 98.1103 Use and Sale of Algorithmic Devices Prohibited It is unlawful for a person to sell, license or otherwise provide an algorithmic device to a landlord It is unlawful for a landlord to use an algorithmic device to set rental rates or occupancy levels for residential rental property. For each month a violation of section 98.1103(b) exists or continues, and for each residential rental property a landlord uses an algorithmic device, it shall constitute a separate and distinct violation	Simply defines what is prohibited…refer to earlier text to see it is limited to algorithms using nonpublic competitor data.
Section 98.1104 Remedies A tenant may seek injunctive relief, damages or civil penalties of up to $1,000 per violation of this Division, in a civil action against a landlord. In an action brought under this Division, a prevailing landlord or tenant shall recover costs and reasonable attorney’s fees. A prevailing tenant includes a tenant granted an order for injunctive relief. A lease provision that limits a landlord or tenant from recovering attorney’s fees shall not be enforceable against a landlord’s or tenant’s claim for attorney’s fees that arise under this Division The remedies under section 98.1104 are cumulative and are in addition to any other remedies in this Division or at law, statute or ordinance The City may enforce this Division under Chapter 1, Article 2 of this Code, including civil and criminal penalties.	Simply establishes the penalties.
Section 2. The Council dispenses with a full reading of this Ordinance before its passage because a written copy of this Ordinance was made available to the Council and the public before the date of its passage	Boilerplate
Section 3. This Ordinance will take effect and be in force on the thirtieth day from and after its final passage	Boilerplate

In conclusion, the ordinance is not materially different than many others that ban a specific type of algorithmic pricing. A careful reading shows clearly that software that does not use nonpublic competitor data is legal.

View full post