“It’s really gone, wow, La Ocho,” they say, referring to the old, wretched jail where drunk Americans and hardened Mexican criminals huddled behind bars amid the stench of vomit and corruption. But was the demolition, which took place last month, good or bad for Tijuana? Few cities would even ask, in the face of such civic filth. La Ocho, after all, was a holding pen where American teenagers who were caught with a joint or had too much to drink often had to pay a $2,000 bribe for freedom. It was prison on prime downtown property, where gang leaders roamed free on the top floor as peons suffered below in tiny cells with useless toilets. Mayor Carlos Bustamante is unapologetic about the decision to tear it down, insisting that La Ocho represented “the darkest side of Tijuana history.” But here in a city without the ancient roots found throughout much of Mexico, history of any kind holds its value. Many longtime residents are fuming about the prison’s demise. After several failed protests, some have even sued to compel the city to rebuild the complex — which included police and fire stations — exactly as it was, arguing that it was illegally demolished. “We don’t have too many historical references that can fortify our identity as Tijuanenses,” said Victor Clark Alfaro, a human rights advocate and lifelong resident. “Maybe in terms of architecture, they’re not extraordinary, but they represent the history of the city.” Preservation disputes are rarely about bricks or design alone, and in the case of La Ocho the argument has become a proxy for this city’s larger struggle over identity, and how much of Tijuana’s sordid past should shape its future. Now, perhaps more than ever, this sprawling border city of 1.6 million people is at a turning point. Illegal emigration to the United States is down and the tsunami of American tourists that defined Tijuana, starting with Prohibition in the 1920s, has receded as fears of crime and dread over the time it takes to cross the border back into California have increased. Many of the bars that once catered to American students coming here to party are now closed with steel gates. Some say it will be a decade before the flow of young Americans returns. In the meantime, Tijuana is safer than it has been in years — even drug-related killings are down — and new restaurants, clubs and cafes catering to Mexicans and sophisticated visitors are popping up all over the city. Residents describe this as a moment of energy and rekindled pride, which can be felt among the crowds that gather at popular taco trucks and in clubs playing Latin music, not rock ’n’ roll. Nearly everyone here seems to agree that this shift should continue — that Tijuana needs to repackage itself and present a new, more upscale image to the world. But the question is how. Mr. Bustamante, who is also a real estate developer, has said that Tijuana needs to modernize and become more like San Diego. This is an old idea; it got a lot of airtime under former Mayor Jorge Hank Rhon, who like Mr. Bustamante, is a member of the Institutional Revolutionary Party, which governed Mexico with a corrupt, heavy hand for 71 years. In this case, Mr. Bustamante wants to finance a downtown redevelopment zone with money from the sale of the Ocho land. He says it will be a catalyst for broader change. And some business owners agree. Those with a view of the prison site are especially open to new construction. “We need to renovate,” said Ana Lilia Quintero, 34, who owns Ana’s Salon on Eighth Street. “This could bring new jobs, and new businesses. That’s what we’re hoping.” To others, however, the demolition reflects shortsighted leadership. A new building? The look of San Diego? These, the critics say, are boring ideas that ignore how Tijuana’s history could become a big, lucrative part of its future appeal. This was a city where Hollywood stars came to frolic and gamble — like Las Vegas and Havana. Many Tijuanenses who have been trying to revive their hometown by promoting its art, music and food say the prison (which had not been used since 2002) should have been turned into a museum that captured Tijuana’s history of vice. Or a community center for nonprofits or arts groups that could show off the city’s creative side. “I wanted to have an event in there,” said Javier Plascencia, a renowned chef who owns several popular restaurants in Tijuana. At the time, during an interview last month, he was sitting at Caesar’s, one of his restaurants, where the Caesar salad was said to have been invented in the 1920s. Mr. Plascencia renovated the restaurant a few years ago, fearing that it would be torn down, and he said its regular clientele proved that using the past to move forward could work. Even a stinking prison, Mr. Plascencia said, deserved a second chance. “It was ugly,” he said. “But it was ours.”