A legislative proposal that aimed to regulate the use of artificial intelligence-based decision tools in rental housing has been halted for the remainder of 2023, following opposition from the California Apartment Association.

Assemblywoman Rebecca Bauer-Kahan

The legislation, also known as the Automated Decision Systems Accountability Act, was introduced by Assemblywoman Rebecca Bauer-Kahan, D-Orinda. AB 331 sought to require landlords and property management companies to conduct annual impact assessments of any AI-based decision tools they use and to submit detailed reports to the California Civil Rights Department.

On Thursday, May 18, the bill was held in the Assembly Appropriations Committee, rendering it dead for the year 2023.

Many of these AI tools targeted in the legislation analyze data like rental history, employment, and income to predict a tenant’s ability to pay rent or assess potential risk. The bill also would have allowed tenants to opt out of decisions made solely by AI if it was technically feasible, an aspect to which the CAA was particularly opposed.

“These ‘decision tools’ are not used to illegally discriminate and instead are necessary business tools,” Debra Carlton, CAA’s executive vice president of state public affairs, said in a letter to Bauer-Kahan. “Giving a tenant-applicant the ability to opt out of such a decision-making tool is not logical. The owner would have no objective way to make a decision about the applicant nor the bandwidth to institute an alternative process in the event of an opt out.”

The association argued that these regulations could potentially hinder housing providers from making informed decisions about tenant applicants.

This bill came to light at a time when a growing number of AI tools have hit the market, raising questions about how to ensure they are used ethically and without bias. These tools, while providing potential efficiencies and insights, also bring concerns about privacy, transparency, and potential discriminatory practices, leading to calls for regulatory measures.