For the second consecutive year, Gov. Jared Polis has vetoed a bill that would have prohibited landlords from using specific algorithms to determine rent prices and occupancy levels.

House Bill 1004, sponsored by Reps. Steven Woodrow, D-Denver, and Javier Mabrey, D-Denver, and Sens. Julie Gonzales, D-Denver, and Nick Hinrichsen, D-Pueblo, also prohibit the sale or distribution of algorithmic devices to be used by two or more landlords in the same market to collude on rent prices or occupancy levels.

A December 2024 report by the Biden Administration found rental pricing algorithms increase rent by an average of $70 a month.

“Algorithmic pricing weakens competition because it can facilitate price coordination among landlords who would otherwise be competing,” the report stated. “Our analysis indicates that if price coordination was eliminated, there would be an economically meaningful decrease in price mark-ups for rental units using pricing algorithms.”

Last summer, Colorado Attorney General Phil Weiser joined the Justice Department and other state Attorneys General in a lawsuit against the rental algorithm software RealPage for allegedly using illegal agreements with landlords to carry out a price-fixing scheme. While that suit is still pending, Weiser’s office announced last month that it had settled with the property management company Cortland Management, restricting the kinds of rent-setting software it can use. According to Weiser’s office, the company will not be allowed to use non-public data from other property management companies to set rents, combine non-public data from its properties with different owners, or share non-public data with other property management companies.

In his veto letter, Polis stated that he agrees with the sponsors of HB 1004 that landlords shouldn’t be allowed to collude to constrain rental supply and artificially increase rent. However, he said, any landlord or property management company doing that would already be committing a crime under the Colorado Antitrust Act.

“While I understand the intent of this bill, I have grave concerns about prohibiting companies using algorithmic pricing software derived from multiple data sources from doing business in Colorado,” Polis said. “Reducing market friction through legitimate means that do not entail collusion is good for both renters and landlords. We should not inadvertently take a tool off the table that could identify vacancies and provide consumers with meaningful data to help efficiently manage residential real estate to ensure people can access housing. If signed today, this bill may have unintended consequences of creating a hostile environment for providers of rental housing and could result in further diminished supply of rental housing based on inadequate data. The cost of rent is already too high.”

Polis added that he is “potentially open to” supporting a bill in the future that makes a distinction between collusive and non-collusive uses of non-public competitor data, and he “enthusiastically” offers to partner on improving enforcement of the Colorado Antitrust Act.