San Francisco’s City Council has decided to deal with the problem of soaring housing costs by banning websites that allow landlords to determine their rents using rental market data.
Other than indicating that local authorities in San Francisco have chosen to hide their head in the sand rather than deal with the crisis, the ban could also violate the First Amendment.
What critics likely see as the Council’s fairly irrational move, where the city caved to activists’ arguments and “embraced” them, implies that access to this information – on sites such as RealPage and Yardi – is the actual reason behind the big rise in rents.
An ordinance issued by the Council bans “algorithmic devices performing calculations of non-public competitor data concerning local or statewide rents or occupancy levels” when these “devices” are there to help landlords decide on the rent, or whether to rent their property at all.
We obtained a copy of this ordinance for you here.
Comparing prices and knowing what the competition is up to has been a well-established, and legal practice in real estate in general and beyond, in many businesses. But it seems that in San Francisco, this is now considered a form of price fixing.
Banning information (rather than some practice) is where things get into the First Amendment territory. Since the decision was made by a local authority, it means that a government entity is engaged in withholding information from people out of fear of their reaction – and that is something that runs afoul of that constitutional amendment.
As proof to this effect, reports critical of San Francisco Council’s ideas now cite rulings, notably the Supreme Court decision in 1976 Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council.
The 1976 Supreme Court case, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., marked a significant moment in the evolution of First Amendment jurisprudence, particularly concerning commercial speech.
In this case, the Virginia State Board of Pharmacy had enforced a Virginia statute that prohibited the advertising of prescription drug prices. Virginia Citizens Consumer Council, representing consumers, challenged the law, arguing that the prohibition of advertising drug prices was an infringement on their First Amendment rights, as it restricted the free flow of information.
The Supreme Court ruled in favor of the Consumer Council. The Court held that the First Amendment protects the right to receive information just as much as it protects the right to speak. The Court reasoned that the free flow of commercial information is important to enable consumers to make informed choices in the marketplace. The justices concluded that the Virginia statute was unconstitutional because it restricted truthful, non-misleading commercial speech without a sufficient justification, thus violating the First Amendment.
This ruling was pivotal as it extended First Amendment protections to commercial speech, which had previously been given less protection under the law. This decision laid the groundwork for later decisions that further developed the concept of commercial speech and its protections.
Instead of pandering to what appear to be simplistic, activist-driven conclusions about the core causes of the housing crisis, those same reports recommend that the Council “looks in the mirror” and accepts what it sees: that behind the mess are its own policies such as zoning, permit issuing process, rent-control, and other rules.
