Where Gentrification Was Held at Bay—Can It Last?

By Don Falk Chief Executive Officer, Tenderloin Neighborhood Development Corporation

The San Francisco housing market strains credulity. The median home price has reached $1.5 million.[1] In order to afford a two bedroom apartment at the median rent, a family must earn a whopping $216,000 annually.[2]

If families with six-figure incomes cannot afford to live in San Francisco, then how can low income residents make it here? In many cases, they can’t. They have been squeezed out and have moved to other cities or the exurbs.  Or worse, have ended up on the streets. San Francisco is becoming a city for the wealthy.

Yet it doesn’t have to be this way. San Francisco’s Tenderloin is a neighborhood that many low-income people still call home. This central city neighborhood, which abuts Toney Union Square, has remained a haven for low-income people for more than 100 years — even as other neighborhoods in San Francisco have gentrified, displacing the poor and more recently, the middle class.

Today, one-third of the housing units in the Tenderloin are preserved in perpetuity as affordable housing, mostly owned by nonprofits. No other neighborhood in the San Francisco, and few anywhere in the country, comes even close.

So, how did the Tenderloin do it? And, is it too late for other neighborhoods — in San Francisco or elsewhere—to slow gentrification, like the Tenderloin?

Let’s pick up the story in 1980. The Tenderloin, historically populated by working class and low-income residents, and with the highest number and proportion of Single Room Occupancy Hotels (SROs) in the city, was under siege. With the support of the administration of San Francisco Mayor Dianne Feinstein, three national hotel chains saw an opportunity to build in the Tenderloin. Civic leaders had long seen an opportunity to expand Union Square south and west into the Tenderloin.

But to the distress of the hotels, community activists in the Tenderloin banded together — among them, residents of a fledgling organization, Tenderloin Neighborhood Development Corporation (TNDC), founded in 1981.These neighborhood activists forced the hotels to contribute significant funding to build low-income housing units and to sponsor a $4 million federal grant to buy and renovate four Tenderloin SROs for low-income residents.  These were unprecedented concessions at the time, representing arguably the first “community benefit agreement” in the country.

Throughout the 1980s, TNDC and other neighborhood organizations fought a series of land-use battles to stem the gentrification of the Tenderloin. Their persistence, strategic alliances and ingenuity won extraordinary measures: rezoning the Tenderloin as residential and discouraging the conversion of SRO hotels from residential to tourist uses. Their work ultimately removed hundreds of millions of dollars of real estate from the private market to create permanently affordable housing.

TNDC was in the center of that fight, not only as activists, but also as property owners.  TNDC resolved that the best way to ensure affordability forever, immune to changing political winds and capricious zoning policy, was to buy as much property as it could, as fast as it could.

Today, TNDC houses more than 4,000 San Franciscans in 40 buildings across the city, two-thirds in the Tenderloin. It is reminiscent of the American melting pot—10% African-American, 20% Latino, 35% Asian, 6% multi-racial and 29% white. Nearly half of the Tenderloin’s residents over the age of 5 were born in foreign countries; the majority of residents speak languages other than English. Three thousand young people call this neighborhood home, and nearly one-third of its residents are seniors. The Tenderloin represents the kind of diversity San Franciscans want to retain.

Amid San Francisco’s increasing wealth, the Tenderloin remained a predominantly low income neighborhood because of the foresight and commitment of neighborhood activists, public officials and nonprofit organizations who aggressively acquired property continuously over 35 years. As real estate values have skyrocketed and public funding shrunk, it has become much more difficult for nonprofits to secure public funding to acquire property to build or convert into affordable housing. And even today, the Tenderloin itself remains vulnerable to gentrification: its privately-owned housing, comprising 2/3rd of the neighborhood’s stock and the City’s most affordable market-rate housing, is subject to those same economic forces.

It will be challenging for many neighborhoods to replicate this experience. In the face of escalating real estate prices and a retreating Federal government, activists must find new policies and new resources to create permanently affordable housing. While the private real estate market and mechanisms like rent control and eviction protections play essential roles, subsidized housing controlled by the public via nonprofit ownership or other means assures truly long-term affordability.

With political will and a vision of the future that spans decades, it can be done, here in San Francisco and in other cities. Community development organizations, activists and citizens alike will need to continue to pressure city halls, states and the federal government to dedicate funds for affordable housing. Land is forever, so our strategic time horizon must be commensurately long. The Tenderloin has provided the roadmap.


Don Falk is CEO of TNDC. TNDC recently published an organizational history detailing the battle to prevent gentrification and displacement in the Tenderloin. http://www.tndc.org/tndc-at-35-book/

[1] https://www.paragon-re.com/trend/june-2017-crazy-hot-san-francisco-market-again

[2] https://smartasset.com/mortgage/the-income-needed-to-pay-rent-in-the-largest-cities, 2016

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: