Case Study

What Works: How Zoning and Resident Engagement Have Kept San Francisco’s Tenderloin Affordable

Major Participants: Tenderloin Housing Clinic, the City of San Francisco, the Central City SRO Collaborative, local residents

Background: For the first half of the 21st century, San Francisco’s Tenderloin District was a hub for art, culture and entertainment. Residents and visitors flocked to the area to shop and dine locally. Yet the neighborhood’s underground gambling industry eventually took its toll on the Tenderloin, with bribery and crime starting to run rampant. At the same time, the film industry, one of the Tenderloin’s largest industries, began to decline, and the trend toward suburbanization began to take hold – leaving an abundance of vacant real estate downtown. In the decades since, the Tenderloin has struggled to regain its vibrancy even as surrounding neighborhoods have become among the most highly desired in the nation. Today, the Tenderloin is working toward economic growth while keeping gentrification at bay.

How it Happened: In the 1980s, there was an effort to establish a historic district to preserve the neighborhood’s history and architecture. At the time, community members feared that the creation of a historic district would lead to gentrification. Instead, in 1985 the community decided to enact zoning that all but restricted new commercial or hotel development. Building demolition also became more difficult, helping to prevent speculative development. In the meantime, the Tenderloin Housing Clinic (THC) began leasing underperforming hotels, converting those into Single Room Occupancy (SRO) units for low-income and homeless residents. THC complemented these efforts by providing housing, legal and other support services for inner city residents to prevent their displacement – services that continue today. With few homeownership opportunities in the Tenderloin, wealthier San Francisco residents opted instead for nearby neighborhoods like Union Square and the Mission District. The restrictive zoning prevented new development even during the height of the Dot-Com bubble in the 1990s.

As the technology economy continued to strengthen in the 2000s, neighborhood groups and community members realized they needed to create a new vision for the Tenderloin. In 2007, a working group began to look at the community’s strengths in an effort to identify opportunities to build upon. They revisited the idea of creating a historic district, which this time around gained widespread support.

The next step was creating a reason for people to visit the Tenderloin, a neighborhood that still faced stigma. In 2008, the community conceived of the Tenderloin Museum, which would celebrate the neighborhood’s rich history and impact on the art, cultural and entertainment industries. Fundraising for the museum began in earnest in 2009 and the museum opened in 2015.

Meanwhile, new city leadership in 2011 ushered in a wave of badly-needed infrastructure improvements in the Tenderloin. New streetlights, traffic signals and other streetscape improvements continue to be made. The City’s DPW has given the Tenderloin additional attention to make sure trash is regularly picked up, and the Police Department has gone to lengths to improve safety. The fact that the city is investing in the neighborhood has given residents a renewed sense of pride in their community, and has drawn interest from the private sector for the first time in decades. A handful of newer property owners have been particularly invested in the Tenderloin’s future, and are working closely with THC to identify opportunities for new retail and restaurant development. Residents, including those in the SRO rental units, have been incredible stewards for the Tenderloin by building awareness of the community’s vision for the future.

Results for Local Economy: In the past three years, there has been more investment in the Tenderloin District than the last 40 years combined. New cultural institutions have opened, including the Tenderloin Museum and the nearby ACT-Strand Theater. Space 236, a gallery at 236 Leavenworth will open in early 2016 and will market the work of Tenderloin artists. CounterPulse, a community arts, dance and cultural facility is slated to open in March of this year. Many other art galleries, performing arts studios and a dance studio have all opened over the past few years.

What’s more, the public perception of the neighborhood has begun to change. As recently as 2011, the Tenderloin’s Lower Turk Street was hampered by violent crime rates 35 times higher than the city average. Today the block has been transformed. CounterPulse was one of the first to commit to opening along Turk Street. In 2014, the Warfield Hotel was purchased by a new operator who is making extensive renovations and restoring the historic façade. Across the street, the Grand Apartments and a local restaurant have both been renovated. Local landlords have shown willingness to offer below-market rents to get high-quality tenants, like Piano Flight, a restaurant and improv club, and Bulldog Bath, a high-end pet “resort”.

Laying the groundwork will lead to several pivotal groundbreakings in 2016, too. Author Dave Eggers is expanding 826 Valencia and opening a new space at the corner of Golden Gate and Leavenworth, a prominent corner in the Tenderloin District. A new retail store, King Carl’s Emporium, will also open on that block. A number of other bars and restaurants are slated to open this spring and summer. Restoration of the Hibernia Bank, one of San Francisco’s most noteworthy pieces of architecture, is nearing completion and will begin leasing this year.

Despite these investments, the Tenderloin District has remained an affordable place for low-income residents because of its restrictive zoning as well as THC’s commitment to preserving SRO housing and advocating for policies that protect residents at risk of displacement.

Remaining Challenges: The Tenderloin District still struggles to attract private investment. Despite recent successes, most projects require a subsidy of some sort – whether via a benevolent landlord or through direct city support. The team at THC is hopeful that the openings in the first half of 2016 will serve as a proof of concept to highlight the opportunities the Tenderloin offers. Moreover, the community still has a negative reputation compared to the surrounding neighborhoods. “Actions speak louder than words,” one stakeholder told us. The reality is that many people from outside the Tenderloin are hesitant to visit; the community needs to make a concerted effort to promote its assets to increase foot traffic. The opening of the museum, art galleries and new performing arts spaces should prove beneficial to that end.

Lessons Learned: For a long time, many people in the neighborhood supported bringing a convention center to the Tenderloin as a means of revitalization. THC and others argued that a single “big box” project was not necessarily the best option for long-term vitality; instead, they pushed the community to create a vision for its future. This way, even as some felt frustrated, desperate or impatient, the community would have a guide for rejecting development projects that fell outside of that vision.

Related, patience and perseverance proved essential to the Tenderloin’s renaissance. For instance, the Tenderloin Museum was conceptualized almost a decade ago and the doors only opened last year.  Real estate markets ebb and flow; to achieve long-term results, the community must be patient even during economic downturns, and commit to seeing their vision through.

Finally, the involvement of the local community cannot be overstated enough. Resident-driven efforts have been critical to the Tenderloin’s revitalization. Because of the protections that THC has been able to secure for low-income and homeless residents, these community members were willing to be champions for the neighborhood—they did not fear that investments would later push them out. The active resident base has proven the Tenderloin’s strongest champion, pushing the private and public sectors alike to make investments that continue to transform their community—without widespread gentrification taking root.

Learn more about the Tenderloin revitalization strategy and THC’s efforts to preserve housing affordability.


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