Arizona Attorney General Chris Mays is suing software company RealPage for violating state law by entering into “price-fixing agreements” involving at least nine residential apartment landlords in Arizona, including two in Tucson. There is.
Defendants include locally-based HSL Properties, Inc.;
“Why is rent so high?” Mays said on Twitter. “RealPage and landlords allegedly conspired to illegally fix rents for hundreds of thousands of renters in the Phoenix and Tucson metropolitan areas.”
inside 51 page complaint In a statement Wednesday, the attorney general's office alleged that the landlords “unlawfully colluded with RealPage to artificially increase rents and concealed the collusion from the public.” These actions “artificially inflated prices and caused Phoenix and Tucson area residents to pay millions of dollars in additional rent.”
Texas-based RealPage created the algorithm in 2002, and in the following years the company has “since perfected it by adding more private data and more participants. “We acquired a competing platform that set up a platform,” Mays claimed. Lawsuit.
“They tricked tenants into paying more rent than they normally would,” the elected Democratic congressman said at a news conference in Phoenix Wednesday afternoon. “The defendants knew what they were doing. They knew they could use technology to advance their own interests at the expense of Arizonans.”
Read more about RealPage reports
“The alleged conspiracy involving RealPage and these landlords harmed Arizonans and directly contributed to Arizona's affordable housing crisis,” Mays said in a statement Wednesday. “Over the past two years, housing rents in Phoenix and Tucson have increased by at least 30 percent, largely due to this conspiracy that stifled fair competition and established a virtual rental monopoly in the state's two metropolitan areas. .”
“RealPage and its co-defendants must be held accountable for their role in the astronomical rent increases forced on Arizonans,” she said.
Mays' firm named nine companies, including seven in Phoenix: Apartment Management Consultants, LLC, Avenue5 Residential, LLC, BH Management Services, LLC, Camden Property Trust, Crow Holdings, LP/Trammell Crow Residential, and RPM Living. , LLC, Weidner Property Management LLC
She also named two Tucson companies: Charleston, S.C.-based Greystar Management Services, LP and Tucson-based HSL Properties.
HSL manages 26 apartment communities spread throughout Tucson. Greystar manages apartments in Flagstaff, Phoenix and Tucson, including his three buildings dedicated to student housing near the University of Arizona.
The companies did not respond to requests for comment from the Tucson Sentinel on Wednesday.
In a lawsuit filed in state court, Mays' office said apartment rents have increased nearly 76 percent since 2016, with the Phoenix area leading the nation in rent increases. . Approximately 36 percent of households in the Phoenix area live in apartments, and in recent years many residents have paid between 50 and 100 percent of their income on rent. In Tucson, renters have experienced “historic rent increases” including 30% in the past two years.
“One of the reasons renters in the Phoenix and Tucson metropolitan areas are paying such high rates is that RealPage is facilitating a price-fixing conspiracy among most multifamily rental companies in Arizona. “For the sake of it,” she wrote.
Mays' office says, “Price negotiations used to take place behind closed doors, smoke-filled, and in secret meetings with formal handshakes. But as technology evolves, there are ways to curb competition. has also evolved.” “Yet, regardless of what technology is used to enter into pricing agreements, competitors can mobilize decision-making power to raise, lower, fix, or stabilize prices. That remains illegal.”
He said about 70% of Phoenix's multifamily properties are managed by companies that use RealPage's “yield management” model. In Tucson, more than half of the apartment complexes were linked to his RealPage management software.
“By providing highly detailed, confidential and non-public rental data to RealPage, defendant landlords departed from normal competitive practices and engaged in a price-fixing conspiracy,” Mays' office said in a statement. Stated. RealPage then used revenue management algorithms to “illegally set prices for all participants.”
She said this violates both the Arizona Uniform Antitrust Act and the Arizona Consumer Fraud Act.
“Arizona's antitrust laws prohibit collusion in restraint of trade and attempts to establish monopolies to control or fix prices,” Mays said. “State consumer fraud laws make it illegal for businesses to engage in deceptive or unfair acts or practices, or to conceal or conceal material facts in connection with sales, in this case apartment rentals. ”
In the lawsuit, Mays argued that RealPage “prides itself on its ability to increase rents regardless of actual market conditions, including economic downturns and outright recessions.” RealPage emphasizes to customers and prospective customers that by working together, “there's always money.” This includes quotes from his RealPage statement published on the website.
In 2022, the Department of Justice announced that RealPage's We have started an investigation.
Mays alleged that these companies used RealPage to manipulate prices and form a cartel to “artificially inflate rental prices for multifamily housing in the Phoenix and Tucson metropolitan areas.”
RealPage collects and shares price and occupancy information for hundreds of multifamily properties in Arizona and feeds it into a common algorithm that tells participating landlords what prices to charge based on all this data. Did. “Competitors therefore stopped setting prices on their own and began collaborating,” Mays wrote.
“The software also allows companies to stop focusing on occupancy and sales and instead drive rent increases, even if it means leaving some units vacant. “I encouraged them to do so,” she wrote. She said one company experienced an increase in turnover even as sales increased, forcing tenants to look for new apartments. As Mays wrote, her CEO at one company observed the effectiveness of RealPage software as “adding '$10 million in revenue' by 'getting people out.'”
Mays is suing for a jury trial and a ruling that would prevent the companies from “continuing their anticompetitive conduct and adopting similar plans and programs in the future.” She also called for the creation of a corporate watchdog to investigate companies and issue civil penalties to the state.
