“That neighborhood is going to the dogs” means that it’s deteriorating. It doesn’t have anything to do with real dogs; it’s the equivalent of saying “that neighborhood is going to rack and ruin,” which, again, doesn’t have anything to do with an actual rack.
In the case of “rack and ruin,” though, “rack” is really “wrack,” which comes from an Old English word.Which Old English word it comes from isn’t entirely obvious, though. It might be “wrǽc,” which meant vengeance or retribution. Or it might be “wracu,” which meant persecution; sort of “wrǽc” from the other side. It could even be from “wrecan,” which meant “to drive,” and from which we got the word “wreak,” as in “wreaking havoc.” Wreaking havoc could also result in “rack and ruin.” On the other hand, “rack” might not be Old English at all; it might be from “wrec”, the Anglo-Norman ancestor of “wreck.”
It all depends on what you think “rack and ruin” is really supposed to mean. If it’s just repeating two synonyms for something falling apart, “rack” is probably related to “wreck.” But if the two words are different, and the phrase is about a process where something is damaged and then abandoned, then “rack” is probably related to “wreak.” But then again, if the phrase has anything to do with the intentions of people involved, then “rack” is more likely to mean something about either persecution or retribution. Of course, it might just be a little alliteration that’s fun to say.
In any case, none of this explains anything about dogs. People have been saying “going to the dogs” for centuries. “One is coloured, another is foxt, a third is gone to the dogs” is from the early 1600s, and Shakespeare has MacBeth say “Throw physic to the dogs, I’ll none of it.”
Medieval dinners featured both humans and dogs, who got all the scraps. So maybe that’s where the expression comes from. Except that when dinner scraps and a dog come together, slow deterioration isn’t really involved. There used to be another expression, though: “cast to the dogs” — which is more likely to mean “discarding something you don’t want.” That seems to be what happened to the explanation for why “going to the dogs” means deteriorating, because nobody seems to be able to find it.