The Minneapolis City Council on Thursday approved an ordinance that would prohibit landlords from employing algorithms to set rent and vacancy rates.

The proposed ordinance would specifically ban the use of algorithms that use “non-public competitor data.” It passed by an 11-2 vote.

Supporters argued AI-driven algorithms are essentially a proxy for monopolistic practices among rental property owners.

“If all the top landlords of these companies were to get in a room together and collude on what the rent should be, that would be against the law. That would be [an] anti-trust violation,” said Council Member Jeremiah Ellison, who co-authored the measure. “So why is it all of a sudden legal to have an algorithm break the law on their behalf?”

Council Member Robin Wonsley, one of the ordinance’s authors, said 1 in 7 renters in Minneapolis live in units owned by landlords who use these algorithms. Tenants in those properties pay roughly $300 more per year in rent compared to units that don’t use algorithms, she said, and face higher eviction rates.

Wonsley said many of the corporate property management companies that use this technology operate student housing complexes around the University of Minnesota. College students are “particularly vulnerable to exploitation,” she said, because they’re often first-time renters who are constrained to living near campus.

And while the practice may be concentrated among corporate student housing complexes now, City Council President Elliott Payne argued algorithms could soon be used to manage smaller rental properties like duplexes.

“You don’t need to wait and see to see that it is not going to be feasible to manage a rental property without having this type of technology in the future,” Payne said. “And you also don’t need to do a lot of guesswork to realize that the existence of mom and pop landlords will go away under this paradigm.”

Council Member Linea Palmisano, one of two members voting against the ordinance, questioned whether it was the city’s place to tackle an issue that is being challenged by state attorneys general — Minnesota included — on a national stage. She also said implementing a ban on this technology could eventually disadvantage small-portfolio landlords who don’t have large sets of data to inform their rates.

Palmisano was concerned the city lacked the mechanisms to enforce a ban on AI algorithms because it relies on “good-faith compliance,” and she was “skeptical that renters or their advocates will really be able to tell when or if algorithms are being used.”

On the issue of enforcement, Ellison argued that the ordinance won’t “come right out the gate as arm-twisting.” Rather, by asking property owners to state when renewing their license whether they use these algorithms, the city would collect information over time to build an enforcement infrastructure.

“Self-attestation might sound like nothing until a landlord lies, and then that lie, once discovered, strengthens a private right of action,” Ellison said.

If Mayor Jacob Frey signs off, Minneapolis will become the third city in the country to pass such an ordinance, joining Philadelphia and San Francisco. A spokesperson for the mayor’s office said Frey is still reviewing the measure and did not immediately indicate whether he would approve it.