Pacific Heights and the Tenderloin are two neighborhoods in San Francisco that practically touch, separated by mere blocks. Yet, Pacific Heights is regarded by anyone familiar with San Francisco as an affluent and exclusive enclave in the city, an assumption supported by the median household income of $190,518. Right next door sits the Tenderloin, a neighborhood infamous nationwide for its homeless population and illicit drug market, with an annual median income of $32,000. Over half of Tenderloin residents are below the federal poverty line, whereas Pacific Heights residents boast a median income in the 99th percentile nationally.
Median income isn’t the only distinction between the two neighborhoods. Almost two-thirds of San Francisco’s 100 percent affordable housing developments since 2015 have been established in Districts 6 and 10. Compared to a 2023 estimate, placing San Francisco’s annual median income at $141,446, the disparities present in the Tenderloin become clear. Pacific Heights, located in San Francisco’s District 2, provides a stark contrast. Out of eleven districts, District 2 is the only one that has abstained from developing project housing in the past decade.
The unbalanced relationship between adjacent neighborhoods in San Francisco isn’t unique to this particular case: the Mission and Noe Valley, Hunters Point and the Dogpatch, South of Market and Hayes Valley, and even housing projects, such as the Potrero Hill Projects, that are segregated within or adjacent to relatively well-off neighborhoods. How can a tiny seven-square-mile city contain such economically segregated neighborhoods?
The city’s income segregation showcased by proximity of upper and lower-income neighborhoods | Image Source: Nick Conway
One explanation lies in the efforts of residents of Pacific Heights and similarly well-off neighborhoods to block the construction of new housing in their own “backyard.” The prevalence of the Not In My Backyard (NIMBY) movement in San Francisco originated with the passage of California’s Proposition 13 in 1978. The controversial law rolled property taxes back to 1976 and severely limited the extent to which they could rise. This created a dilemma for metropolitan centers, like San Francisco, as it restricted the amount of property tax revenue they could collect, even as property values rose significantly. The proposition also incentivized established homeowners to remain in their homes, where property values rapidly ascended and taxes remained low. In order to protect and maintain these high property values, many residents of affluent neighborhoods adopted NIMBY attitudes, acknowledging that affordable housing developments would lower the value of their neighborhood’s homes.
In theory, wealthy homeowners support affordable housing, acknowledging all the positive benefits that they bring to cities. Pacific Heights mirrors the rest of San Francisco politically, with a narrow majority supporting Proposition 5 in the 2024 elections, a ballot measure that would have lowered the approval threshold for local bond measures to construct affordable housing.
In practice, residents in neighborhoods like Pacific Heights actively block affordable housing plans in their neighborhood, effectively shielding themselves from contributing their fair share in spreading out the city’s housing projects. This is enabled by San Francisco’s unique housing approval process, so slow and complex that it takes a median timeframe of two years to get official approval for housing developments, even with plans intended to streamline excessive environmental review.
The city’s local rules and application of the California Environmental Quality Act (CEQA) have made it relatively easy for NIMBY opponents of a certain housing development to appeal construction and lengthen approval times. Appeals are costly in terms of both time and money. A report released by California’s Department of Housing and Community Development (HCD) highlights that “an administrative appeal of just one entitlement in our dataset required 374 additional staff hours and $52,204 to prepare the appeal — even though the appeal was withdrawn.”
On the ground, homeowners in wealthy areas in San Francisco use tremendous effort and persistence when appealing developments in their neighborhoods. One resident in Pacific Heights has held up a 24-unit housing project since 2023, using the CEQA to claim the city didn’t use the proper project-specific environmental review necessary to sign off on the project.
Enabling wealthy homeowners to block housing developments is detrimental, as it exacerbates residential inequality by concentrating affordable housing in already impoverished and under-resourced areas like the Tenderloin.
Renderings on the Sacramento Street side of the proposed project | Image Source: SFist
The Tenderloin encapsulates these issues, acting as a “containment zone” for all of San Francisco’s economic and social problems, including high rates of homelessness, drug usage, less educational opportunities, and more. In 2022, 85 percent of SFPD’s drug arrests occurred in the Tenderloin. At least 60 percent of the city’s homeless population resides in this six by six block radius. These are just a few results of concentrated poverty that the Tenderloin and other low-income neighborhoods experience.
Spreading out affordable housing would benefit the entire city by diminishing income segregation and the dire wealth gap, granting low-income residents better access to resources. Mixed-income neighborhoods give lower income families and individuals a chance at upward mobility, opportunities less prevalent in the Tenderloin and other extremely impoverished areas.
NIMBYism, enabled by policies like the CEQA and incentivized by Proposition 13, is just one explanation for why the city is so economically segregated. What can be done to increase diversity in the areas of development for San Francisco’s affordable housing?
In June 2025, San Francisco Mayor Daniel Lurie introduced the Family Zoning Plan in an attempt to address the concentration of affordable housing in the city’s poorest neighborhoods. It aims to expand affordable housing options in San Francisco, especially near adequate public transit and commercial areas. The rezoning plan would create the capacity for 36,000 new homes on the city’s north and west sides, alleviating the historical burden that has been placed on the east side of the city.
Zoning in Pacific Heights and areas of similar economic status on the north and west sides of the city primarily allows for the development of single-family housing, which are much less affordable than the multi-unit buildings offered in other areas of the city. The Family Zoning Plan intends to target these discriminatory practices, allowing for taller and denser housing units in well-resourced neighborhoods, like Pacific Heights. The aim is to increase opportunity and access to the numerous benefits associated with living in these areas, like high-performing public schools, parks, and other resources.
Last month, the plan received preliminary approval from HCD, confirming its compliance with California’s housing mandates. However, Mayor Lurie has faced strong opposition from constituents in areas of the city that are unaccustomed to new housing developments. According to the SF Standard, even residents who voted for the mayor feel betrayed.
Mayor Lurie is now faced with the difficult task of maintaining political support and, ideally, support for his rezoning plan, which is currently under review by the San Francisco Board of Supervisors. It must be passed by the board and signed into law by Lurie himself by January 31, 2026, otherwise the city will cede local control over housing policy to the state. The Board of Supervisors has a unique level of power, as showcased in 2024, when they overrode a veto by Mayor London Breed, which she used to oppose restoring height restrictions on development in waterfront neighborhoods. To implement the Family Rezoning Plan, Lurie must maintain enough public support from his city-wide constituents to ensure that they don’t begin pressuring their representative supervisor to take action.
To alleviate high levels of poverty in the Tenderloin, Lurie will have to maintain the trust and support of voters in Pacific Heights and similarly prosperous neighborhoods in the city. This relationship places him in a politically difficult position, in which he must appeal to San Francisco’s wealthiest residents to uplift and support its poorest.
Featured Image Source: SF Chronicle
