Screen Shot 2014-07-08 at 11.45.25 AMPinterest’s dreams of establishing a flagship San Francisco office in a historical building in Potrero Hill ended abruptly Monday afternoon.

At City Hall, Supervisors Malia Cohen, Scott Wiener and Jane Kim of the Land Use and Economic Development committee voted unanimously to reject a bill that would have granted historic landmark status to the Design Center building, where Pinterest had arranged a lease for 311,000 square feet of office space.

“This decision has to do with landmarks and not with Pinterest,” said Sup. Cohen.

Many cried foul last month when building owners Bay West Group announced their plan to vacate tenants and bring in Pinterest. The plan hinged on being able to changed the designation of the  building, which is currently zoned for production, distribution and repair (PDR).

By obtaining Historical Landmark status for the building, Bay West would have been permitted  to convert the building to a mixed use zoning designation, opening the doors to Pinterest.

Despite the fact that the San Francisco Historical Preservation Commission had already approved the new designation, existing tenants — interior designers, upholsterers, wholesalers of fixtures, flooring, fabric and the like –  banded together to bring their concerns to the supervisors, leading to Monday’s hearing.

Many of those tenants joined the standing-room-only crowd in the committee chamber, and several spoke during public comment. They were joined in opposition by former San Francisco Mayor Art Agnos, who called the plan “the commercial version of the Ellis Act.”

The case for denying the designation had little to do with the building’s historical character. The primary contention was that the process represented the exploitation of a loophole in the city’s Planning Code.

“The words ‘circumvent’ and ‘loophole’ aren’t really appropriate when discussing this process. Zoning and land use incentives are provided to Landmark buildings to encourage their preservation and rehabilitation,” says Gina Simi, communications manager at the Planning Department.

Still, the word loophole was on everyone’s lips, including Sup. Cohen’s.

“I look forward to closing this loophole,” Cohen said. “Today’s decision represents an important precedent.”

The incentive becomes a loophole in this case because the Showplace building is extremely well maintained, a fact no one disputed. Moreover, the building is 90 percent occupied and, along with the Galleria, represents the largest concentration of  PDR space in a city with one of the lowest PDR inventories among major cities in the US.

The nearby Airbnb headquarters at 888 Brannan St. were similarly converted under the Historical Landmark rules, though in that case the historical designation was granted well before Airbnb stepped into view, and the building had been less than 60 percent occupied.

Talking with tenants, it’s clear that things got ugly over the past month as both sides ramped up campaigns to sway the three supervisors. There are allegations of bullying and intimidation and covert lobbying.

Still, despite the high stakes and hard feelings, the meeting was civil on both sides. Many opponents of the designation spoke well of Pinterest and attested to using it for business. Many even spoke warmly of decades-long relationships with the Bay West managers trying to move them out. A handful of tenants came out in support of the Pinterest plan, without arousing boos and hisses from their neighbors. The atmosphere was tense but tempered.

In the end, a few dozen small business owners, along with a venerable former mayor, were able to undo the designs of a $5 billion company against the wishes of their landlord. The decision also marks a twist in a narrative of San Francisco as a city in which “real San Franciscans” are pit against “techies” and where it’s often taken for granted that City Hall has abandoned the former in favor of the latter.

A Pinterest representative told Pando the company is still interested in moving into the design district, as interior design is a key to their product and they consider themselves part of the design community. For now, that community will continue to enjoy the Design Center cluster effect, with Pinterest providing technical support.

[Image: Google Street View]