Catching up with Rentberry

It’s been several months since we’ve heard anything about the ongoing spat between the City of Seattle and Rentberry, which offers an online platform to facilitate rent-bidding. But since April, the city has extended its moratorium on rent-bidding platforms and finished its study of the impacts of rent-bidding, and Rentberry has appealed its first-round loss of its legal challenge to the moratorium.

Let’s catch up on where things stand.

First, let’s look at the effort to complete the study; records obtained by SCC Insight through a Public Document Request shine some light on what’s been happening in City Hall since the original moratorium was put in place by Council member Mosqueda in March 2018. Here’s what the ordinance asked the Office of Housing to study:

The City Council requests that the Office of Housing coordinate with the Seattle Office for Civil Rights and the Seattle Department of Construction and Inspections to determine whether rental housing bidding platforms comply with The City of Seattle’s fair housing and rental regulation laws and conduct a study of the current or potential impacts rental housing bidding platforms have and could have on equitable access to Seattle’s rental housing market. The Office of Housing shall submit the study, which should include compliance determinations by the Office for Civil Rights and the Department of Construction and Inspections, to the Chair of the Housing, Health, Energy, and Worker’s Rights Committee of City Council within twelve months of enactment of the ordinance introduced as Council Bill 119198.

After initially estimating that the study would take about 80 hours, the work was assigned to Laura Hewitt Walker, Strategic Advisor for Housing Policy in the Office of Housing. From June into September she gathered information, including compiling a list of “rent bidding cities,” reaching out to a tenants’ organization in Victoria, Australia and inquiring with the Mayor’s Office in San Francisco. But then in September the effort went quiet; according to Office of Housing internal emails, the person assigned to lead the study was reassigned to finish work on the Ft. Lawton redevelopment plan. The Office of Housing informed Councilmember Mosqueda’s office in January that the study would not be completed until June.

The delay completing the study wasn’t the only sign that Rentberry and the rent-bidding study wasn’t a priority for the city. Despite being informed that it wouldn’t receive its report until June, the City Council let the original one-year moratorium lapse in April and then scrambled to re-establish it in May. And then, when the Office of Housing finally delivered its report in mid-July, it did it so quietly that it took another month before Council member Mosqueda’s office took notice.

So what did the study say? Not much of substance — perhaps explaining why it was published so quietly (the Office of Housing still has not posted the report on its web site). It admits that because of the city’s own moratorium, there is no data on the impact of rent-bidding sites in Seattle, and it provides no data on its impact in others. There is a fair amount of concern-trolling about potential negative impacts, without supporting evidence.

It does mention that as Rentberry and its competitor Biddwell have entered other cities, they were often met by fierce opposition from tenant rights organizations. However, the report fails to mention that the Mayor’s Office in San Francisco told the Office of Housing that Rentberry is “not a big problem here” even after being in the market for two years.

The study does raise some legal issues — on both sides. It notes that rent-bidding is incompatible with the city’s “First in Time” ordinance, though that law has been thrown out by the courts and is currently awaiting a final ruling from the state Supreme Court. If the Court upholds the ordinance, then Rentberry’s rent-bidding functionality is definitely illegal. It also points out that Rentberry might require a broker’s license and an auctioneer’s license, and if allowed to operate would need to comply with existing federal, state and local fair housing regulations. On the flip side, the study also identifies that a prohibition on rent-bidding might violate the state ban on rent control, since it would be imposing limits on a landlord’s ability to set rental prices.

In the end, the Office of Housing declined to recommend whether the city should prohibit rent-bidding sites, in part because the First in Time case is still pending. It does provide recommendations for a range of potential regulatory responses, including requiring Rentberry to affirmatively provide compliance with all applicable laws before being allowed to operate its service in Seattle. This approach to the study changed over the time it was being developed; communications show that early on the Office of Housing intended to produce a study that provided support for banning rent-bidding sites, but a discussion with city attorneys redirected it “to identify potential issues or areas for further analysis if rent bidding platforms were to be reinstated in Seattle, rather than to make a firm recommendation as to whether or not to allow the technology altogether.”

The study report’s lack of evidence in support of the moratorium (or a permanent ban) has become fodder for Rentberry as it pursues its appeal of the dismissal of its lawsuit challenging the moratorium. To date, the city has prevailed in the case by arguing that neither Rentberry nor its co-plaintiff, a landlord who wishes to use Rentberry’s service, have standing to sue. Rentberry, perhaps as an oversight, seems to have given up on arguing for its own standing, but continues to fight to establish the landlord’s right to sue — and the city’s argument for denying that right is largely based on a technicality and has a good chance of being overturned. The larger legal issue still remains whether auction-style bidding is a form of commercial speech, or an act of commerce; if the former, then it is protected by the First Amendment and the city must reach a high bar to restrict it. If it is commerce, then it is much easier for the city to justify regulating or even prohibiting it. There is plenty of federal case law saying that communicating prices is commercial speech, but little to no federal case law directly addressing the question of bidding. The Florida Supreme Court, however, has ruled  that within its jurisdiction bidding is commercial speech protected by the First Amendment. Both Rentberry and the city have filed their final briefs with the Court of Appeals and are waiting for the appeals court to schedule oral arguments.

In the meantime, the City Council seems to be in no hurry to decide what to do with Rentberry, despite having their report in-hand for several months now. A spokesperson for the City Council told SCC Insight last month, “We aren’t expecting the litigation to be resolved until early next year. CM Mosqueda plans on reviewing the court findings in conjunction with the report and evaluating next steps when she’s back from parental leave.” The renewed moratorium expires in June.

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