Inequality and Housing

Other side of the tracks: the racial divisions shaping the Bay Area’s housing crisis

28th June 2020

In the cities of Palo Alto and East Palo Alto over the past 70 years, racial divisions have evolved into economic inequalities. Now local policymakers are struggling to agree a solution that can unite neighbouring communities and prevent low-income families and ethnic minorities from leaving California.

East Palo Alto (bottom left) and Palo Alto (bottom right) have been divided by the 101 Freeway for decades.

Photo Credit: vaalaa /

By Andrew Hillman

Why do Palo Alto and East Palo Alto have such different demographic and economic makeups?

In May 2019, the city of East Palo Alto completed construction on the long-awaited 101 pedestrian and cyclist overpass. For decades, crossing the 101 Freeway meant squeezing onto the narrow sidewalk on the north of University Avenue, a busy road that runs from Stanford University to Facebook’s headquarters on the western shore of the bay.

It could have been different. In the 1960s, when expansion of the Bayshore highway was earmarked as a potential solution to traffic congestion between San Jose and San Francisco, residents of East Palo Alto fought the project.

The campaigners believed that any expansion would isolate the city from neighbouring Palo Alto, intensifying social and racial divisions that had begun with the post-war migration of African Americans to California. But their campaign lacked political clout. When construction began, fifty East Palo Alto businesses were forced to move.

Divided by the freeway, Palo Alto and East Palo Alto have travelled different paths.

Data Source:
US Census Data, Trulia

Demographic blocks are approximately based on present day housing locations and coloured to represent the share of the population of each race/ethnicity living throughout the city.

How has the housing crisis affected people in East Palo Alto and neighbouring cities?

East Palo Alto has already experienced two distinct phases of demographic revolution in its short history. Now the city is changing again as low- and even middle-income households struggle to keep up with soaring rental costs.

According to the Bay Area Equity Atlas, 30% of tenants in East Palo Alto spent more than half of their income on rent in 2015, up from 21% in 2000. Other families have been forced out of their homes by unaffordable housing costs, leaving them with the unenviable choice between relocating, moving into a motorhome or doubling up in accommodation with other families.

That was the case for Marbella, a wife and mother of three who was interviewed by local tv station KTVU Fox 2 as part of an in-depth look at the Bay Area housing crisis in 2018. The family were forced out of their East Palo Alto home after their monthly rent increased from $2,900 to $6,200 in less than four years. Unable to find an alternative property, they chose to share a one-bedroom, one-bathroom apartment with another family of three.

Marbella told KTVU, “In a few years there will no longer be people in East Palo Alto who've been here for 20, 30 years. They won't be able to afford it.”

The housing crisis is not limited to East Palo Alto, or even to the Bay Area. Last year, the number of homeless people living in California (as measured by a point-in-time count conducted by volunteers in January) was 151,278. This was a 28% increase on the same count conducted only three years earlier.

Rising house prices have made it difficult for young Californians to take their first steps onto the property ladder. When rental site Abodo looked at data from the 2015 American Community Survey, it found that out of the seven metro areas in the US with the lowest homeownership rates for millennials, five of them were in California. One of those areas was the San Jose-Sunnyvale-Santa Clara region which contains Palo Alto, where homeownership rates for 18- to 35-year-olds had fallen from 31% in 2005 to 20% in 2015.

In response to a housing market which is increasingly unaccommodating of young and low-income families, many are relocating to states with a lower cost of living. Analysis by the Sacramento Bee found that between 2005 and 2015, 1.7 million people living close to the official poverty level left California. In contrast, only 800,000 people in the same income range moved to California from out of state.

How have policymakers responded to California’s housing crisis?

In response to the housing crisis, state legislators have put forward a number of policies designed to boost the supply of housing and limit rent increases. In 2018, ‘Proposition 10’, a ballot measure which would have allowed cities to impose rent controls on single-family homes, was rejected by voters.

That same year, state senator Scott Wiener introduced ‘Senate Bill 827’, legislation that aimed to increase the housing supply by circumventing local planning authority. The bill would have allowed developers to build multi-unit residential properties near railways stations and busy bus routes, overriding local decisions to reserve the land for single-family homes.

When SB 827 was rejected in its first committee hearing, Wiener regrouped and returned with a sequel, SB 50. The new bill focused on the same principle: facilitate greater residential development near transit hubs by limiting the power of local governments. However, SB 50 also included a transitionary period for “sensitive communities” at risk of gentrification such as East Palo Alto, and a provision that placed additional burden for house building on “jobs rich” cities like Palo Alto. Despite the revisions and the bill receiving nation-wide attention, SB 50 was voted down on the senate floor in January.

SB 50’s demise was disappointing news for East Palo Alto. In April 2019, the city had become the first in San Mateo County to support the bill. Two weeks later, at a summit meeting including council leaders from neighbouring cities, East Palo Alto councilman Larry Moody asked a question that is especially pertinent with SB 50 now off the table:

“If they're not going to be supporting SB 50, tell us what you're doing. What's the plan in Menlo Park? What's the plan in Burlingame? What's the plan in San Carlos? East Palo Alto can't be the dormitory of the tech industry and for the job growth taking place. We can't and we shouldn't have to be the only city that has an active strategy around affordable housing.”

Why did many local councils and citizens oppose SB 50?

Opposition to SB 50 centred around three issues. Firstly, critics argued that unless a significant portion of new homes were affordable, additional residential developments would push market prices even higher. In an op-ed for Palo Alto Online, Paul Burt, a former Palo Alto mayor, said:

“New market-rate housing does not create affordable housing for low- or moderate-income people, and building dense, luxury apartments in single-family neighborhoods will not have trickle-down benefits for those most in need. Rather than being a panacea for our housing crisis, it is a Trojan horse for big developers' profits.”

Others, including former Palo Alto councilman Greg Schmid, argue that policymakers should instead focus on restricting commercial developments. In April 2019, Schmid told the LA Times that the region has too many jobs, saying, “The aggressive expansion of big business does not have any sensitivity to the need for a sustainable community.”

According to 2017 analysis by non-profit ‘Silicon Valley at Home’, Palo Alto has 3.5 jobs for every housing unit. Although East Palo Alto was not included in that study, research by the UC Davis Center for Regional Change found that in 2011, the city had 0.98 low-income jobs for each affordable housing unit. All other cities in San Mateo County had a ratio over 3.5.

Former Palo Alto mayor Eric Filseth has argued that the region’s tech companies should be required to build housing as a condition of office expansion. He also opposed SB 50, claiming that the bill would have seized control from councils who are best placed to make local planning decisions. During his state of the city speech last April, Filseth said, “You’re telling me that some guy with Google Maps in a basement in Sacramento [California's state capital] is going to do that?”

The previous month, Susan Kirsch, the founder of local advocacy group ‘Liveable California’, spoke to a crowd of over 200 people in Palo Alto. Kirsch said of SB 50, “It's top-down mandates. It's one-size-fits-all instead of uniqueness.” She added that, “It is the unelected regional bodies pushing much of this and moving us toward being an autocracy.”

Without SB 50, how can Palo Alto build its fair share of housing?

But to many supporters of the bill, this argument falls flat given the inability of cities to develop badly needed housing of their own accord. The Stanford Daily recently reported that since 2015, Palo Alto had built just 6.2% of its quota for very low-income housing.

The city has an annual target of developing 300 new housing units but in recent years the number actually built has fallen way short – at between 50 and 60 homes. In 2013, the non-profit organisation ‘Palo Alto Housing Corp’ was granted approval to build 60 low-income apartments in the city but that plan was thwarted by a city referendum. Ultimately, the site was developed into 16 single-family homes with sales prices in excess of $5 million.

These experiences have led current Palo Alto mayor Adrian Fine to the conclusion that external mandates are necessary to solve the area’s housing crisis. In January, Fine wrote an opinion piece in The Mercury News, arguing that “municipalities like Palo Alto are incapable of solving the housing crisis. We have too many rules, too much process, and too little progress.”

Last year, 25-year-old Karen Camacho, who grew up in East Palo Alto and studied on the other side of the highway at Stanford University, told Palo Alto Online that, “There are other cities in our region that need to play a more active role in helping fix these problems. Their refusal to build more affordable housing is placing gentrification pressures on East Palo Alto.” Camacho also said, “Our history of segregation and redlining and predatory lending has had a lot of rippling effects even today.”

When the pedestrian bridge connecting the two cities opened last year, East Palo Alto mayor Lisa Gauthier said it “brings us together physically and is symbolic of joining and sharing resources.” And yet, when it comes to housing policy, Palo Alto and East Palo Alto still act as two separate cities with competing interests, rather than one interconnected community.

The differences between the two cities, which began with racial segregation and evolved into vast economic inequalities, should serve as a warning for local politicians: if they cannot work together to agree upon a fair and proactive solution to the housing problem, the scarring effects on the community are likely to still be visible many decades down the line.

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