PHOENIX — Arizona Attorney General Kris Mayes is suing several owners of apartment complexes throughout the Valley for allegedly engaging in illegal "price-fixing" and creating a mechanism that's exacerbated Arizona's housing crisis.
The state's top legal official announced Wednesday her office had filed a lawsuit against nine major residential apartment landlords in Arizona and RealPage Inc. for allegedly conspiring to inflate rental rates and eliminate competition in the market.
"One reason renters in the Phoenix and Tucson metropolitan areas are paying more is because RealPage has facilitated a price-fixing conspiracy among a large share of multifamily apartment lessors in Arizona," the lawsuit states.
At a time when Valley cities have reported significant rent increases, the landlords in the lawsuit are accused of working together to set prices rather than independently assess what to charge their tenants.
According to the AG's lawsuit, 70% of apartment units in Phoenix are owned by companies that contract with RealPage to provide "revenue management."
Mayes said this alleged scheme started in 2016 and has impacted hundreds of thousands of renters across the Valley.
“You cannot throw a rock in Phoenix without hitting a building that was jacking up rents on their customers,” Mayes said.
The landlords supply their data to RealPage and the software company instructs the property owners on how to set rental prices. The lawsuit accuses RealPage of aiming "to push prices beyond competitive levels."
Once a landlord starts using the RealPage software, "there is not much to do beyond checking the software to ensure that it is continuing to push prices higher."
“This was not a fair market at work," Mayes said. "It was a fixed market that harmed renters, while driving up the profit margins for this housing cartel.”
Maricopa County has been grappling with rising housing costs for the last few years and the courts have started to notice a rise in eviction filings.
The attorney general blames landlords for "stifling" fair competition by handing over their non-public data to RealPage and artificially raising rents.
“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable housing crisis,” Mayes said in a statement.
The landlords named in the lawsuit are Apartment Management Consultants, Avenue5 Residential, BH Management Services, Camden Property Trust, Crow Holdings, L.P./Trammell Crow Residential, Greystar Management Services, L.P., HSL Properties, Inc., RPM Living and Weidner Property Management.
Apartment Management Consultants strongly denies the allegations in the lawsuit and will seek an immediate dismissal due to the fact only one of the company's properties uses the RealPage software.
A spokesperson with the company provided 12News a statement that wrote in part:
AMC has neither promoted nor encouraged any client/property owner on its managed property portfolio to use Real Page RM software. AMC manages approximately 85 apartment properties consisting of over 18,000 apartment homes in Arizona. Of those, only one property (comprised of 160 dwelling units, which is less than 1% of the AMC Arizona managed portfolio) uses Real Page RM software.
"The decision to use the Real Page RM software on that one AMC-managed property was solely made by the property owner, who worked directly with the RealPage sales team. The property owner signed a contract with Real Page directly. AMC is not a party to that contract," AMC wrote in a statement.
Mayes' lawsuit is asking the courts to stop the defendants "from continuing to engage in any anti-competitive conduct" and obtain civil penalties on behalf of the state.
The attorney general's office said the defendants need to be held accountable for allegedly creating a monopoly that's "corrupted rental markets."
"RealPage boasts about its ability to increase rents regardless of true market conditions, including economic downturns or an all-out recession," the lawsuit states.
12News has reached out to RealPage for comment and has not yet gotten a response.