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The Trouble with Facebook’s Neighbor

A look at gentrification in East Palo Alto

By Steven Perez

It’s hard to miss Facebook’s new headquarters. The infuriating stop-and-go traffic on the Bayfront Expressway in Menlo Park gives drivers plenty of time to ogle the shiny, angular mass of glass and concrete overlooking muddy marshlands. Rainbow art installations are visible behind multi-story glass walls, and pine saplings rise from the rooftop park.

In 2015, over 2,000 Facebook employees moved into this Frank Gehry-designed building, the newest addition to the tech giant’s campus near the bottom of the San Francisco Bay. These offices and the first Menlo Park complex at 1 Hacker Way sit less than half a mile from East Palo Alto, the poorest and most dangerous city in Silicon Valley.

East Palo Alto is separated by Highway 101 from the bounty of the Stanford-Palo Alto machine, and its 30,000 residents today are mostly black, Latino, and Polynesian. Since Facebook moved into its nearby headquarters in 2011, East Palo Alto has experienced rapid change in the form of increased property values, displacement of lower-income people, and diminished crime — gentrification.

Gentrification has famously become an acute problem in the Bay Area. San Francisco is in the middle of what to some comes dangerously close to class warfare. East Palo Alto is the newest battleground; until Facebook’s move, the city managed to remain relatively affordable despite being located in the heart of Silicon Valley.

When the post World War II economic boom brought southern blacks to the Bay Area, redlining practices concentrated the poorest in East Palo Alto, among other areas. The U.S. crack epidemic hit the city particularly hard. In 1992, East Palo Alto was the per capita murder capital of the United States. The chaotic excess of the dot-com bubble largely passed over East Palo Alto.

Gang violence has only very recently abated, according to some residents. “A lot of people I went to school with, played Pop Warner with… all of them are either doing life or dead,” said 23-year-old East Palo Alto resident David, whose real name has been removed from this piece. “There’s probably only like six of us that are still here.”

David’s situation is likely to become much rarer in the next decade, as Facebook continues to expand its facilities. Nearly 5,000 employees now work at the social network’s Menlo Park headquarters. Ultimately, Facebook figures to seek approval from Menlo Park to host double that figure, according to the San Jose Mercury News.

In 2013, Facebook announced the building of the 394-unit Anton Menlo apartment complex to house employees down the road from the Menlo Park campus. Just 15 of those units are offered at below-market rates, far below the mandated portion. Instead, Facebook paid a $4.5 million fee to Menlo Park. The project is slated to be completed summer 2016.

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Top left: The Anton Menlo apartments; Top right: Facebook HQ; East Palo Alto in red

The majority of Facebook employees, however, are moving into the surrounding areas. The company even offers its workers $10,000 to move within 10 miles of its offices to escape the severe Bay Area traffic and to try to increase productivity. East Palo Alto continues to look more and more attractive as Silicon Valley rents soar.

The result of all this demand, of course, is that landlords and rental companies are jacking up rates and evicting lower-income tenants. “A lot of people are getting taken advantage of out here, people think they’re smarter than everybody,” said David. “These people are money hungry right now.”

Longtime East Palo Alto residents are being forced to relocate to cheaper East Bay cities like Stockton, Modesto and Hayward. So many people have moved to Stockton, the largest U.S. city to file for bankruptcy, that a community of former East Palo Alto residents has developed there.

Higher-income people are indeed moving into East Palo Alto, where new housing now comes at a premium. “I ain’t a racist or nothing like that, but we got white people on our block now,” said David. “White people walking down the street. A few years ago, I hadn’t seen nothing like that in my life.”

“White people walking down the street. A few years ago, I hadn’t seen nothing like that in my life.”

David, a father of three, says his job at Facebook’s dining commons is the only reason he and his family are still in East Palo Alto. “If I wasn’t a Facebook employee I wouldn’t be staying out here,” he said. “Facebook really treats you that well.”

David raves about Facebook’s treatment of its employees, a staple of Silicon Valley tech companies. But “if you lose your job, you done man,” he said. “You might as well go to the shelter. And they wonder why shelters are so overbooked around here.”

The city of East Palo Alto has its hands full trying to slow the gentrification process many consider to be the destruction of the community. In the past, the focus has been on providing affordable housing and protecting current residents from unfair rent hikes and evictions. In 2010, the city passed a rent stabilization ordinance, but a 2015 review of that program conducted by housing policy expert Stephen Barton for the city, found it severely lacking and ineffective. It called for a new business tax to help fund and staff the program, among other recommendations.

Marie McKenzie, the administrative services director for the City of East Palo Alto, thought the city has done all it can for housing. She attributed East Palo Alto’s 20 percent unemployment rate to an equitable distribution problem and lack of education. She said the real goal should be to educate the population and create jobs.

According to the California Department of Housing and Community Development, state law dictates that developers create between 15 and 30 percent affordable units for new developments larger than 20 units, depending on the type of project. It is up to cities to enforce those laws. “None of our surrounding cities subscribe to that rule,” said McKenzie. “East Palo Alto cannot be the sole support of all affordable housing… why is it that it should be all people of color and the disadvantaged in East Palo Alto? That’s not very a popular opinion.”

If East Palo Alto enforces affordable housing requirements, developers would opt to build in the more lucrative nearby towns of Menlo Park, Palo Alto or Mountain View, where below-market rate units are scarcer. So with housing, the city has arrived at somewhat of a dead end.

Another issue is that East Palo Alto is almost entirely residential. People have to leave the city to find work. “In order to stay solvent, we have to build jobs. We don’t need more housing,” said McKenzie. “If you didn’t go to college, and you’re not making 50 dollars an hour… you’re probably not going to be able to stay here. There’s not much we can do about it.”

“If you didn’t go to college, and you’re not making 50 dollars an hour… you’re probably not going to be able to stay here. There’s not much we can do about it.”

Since the city has limited options, many ask what Facebook can do to support the troubled community next door. And Facebook has been active in that regard, though to mixed reviews.

“It’s a weird thing,” said Shannon Pekary, longtime East Palo Alto resident and non-profit youth sports league founder. “Zuckerberg is the only person who is talking about what we can do for the poor communities near us. I don’t think he’s necessarily doing the right things, but at least he’s asking to the greater Bay Area, what can we do? None of the other big companies around here do that, as far as I know.”

Facebook has felt the resentment and heard the complaints of the community, and has responded with some programs. But whether for public relations purposes, genuine concern, or some mix of the two, many consider Zuckerberg’s charitable efforts in the area to be somewhat misguided. “They’re not tuned in to the community. I think someone has to help them,” said McKenzie.

In 2013, Facebook announced a series of community grants and set aside $600,000 to give to local non-profits in $2,500 to $5,000 installments. They did give to several dozen organizations in East Palo Alto and Menlo Park that year, but the program did not continue. “They did one round of grants… and then nothing,” said Pekary. “It almost seemed like it was all for show. There has been no follow-through.”

Last year, Mark Zuckerberg’s wife Priscilla Chan announced she would be founding a private K-8 school to serve under resourced children in East Palo Alto. The Primary School, which is not associated with Facebook, would select its own students from the area and also provide them health services and resources.

The city has had a difficult back-and-forth with Chan over the planning of The Primary School. “It feels like you’re going to come here, you’re going to bring your staff, you’re going to have your own school, and then you’re going to have your own housing,” said McKenzie. “You’re going to turn East Palo Alto into Facebook-town.”

Those worries, along with general skepticism among the population, have halted The Primary School in its application process with the city.

Both the school and Facebook’s 2013 round of community grants, though well intentioned, are not the most effective use of resources, according to McKenzie. “What we don’t need is another non-profit,” she said. “And the school is another non-profit.”

East Palo Alto has 41 churches and a high number of non-profit organizations, none of which pay taxes. Without tax-paying businesses, McKenzie stressed, the city has trouble effectively implementing its programs. East Palo Alto has few businesses and even fewer retailers, many of which have only just been drawn to the city in the last decade or so.

Facebook has launched programs such as quarterly job training events and nonprofit fairs where employees can sign up to volunteer or tutor. Its most enduring program includes providing internships to local teens.

For a number of years now, Facebook has been running a summer internship program for high-performing high schoolers from East Palo Alto and Menlo Park neighborhoods. Each teen is assigned a mentor and introduced to various areas of the company, with special attention to the IT department. Students work full time for six weeks and receive a stipend for their time.

The program appears to have been successful and a wonderful inspiration for the young participants, but the reach is short. Some feel Facebook’s philanthropy has been limited by the Silicon Valley mindset that holds selective, private endeavors in high esteem.

Facebook is by default the leader among tech firms in local outreach. But some residents contest the transformation of East Palo Alto suits the company’s interests, despite Zuckerberg’s charitable efforts. “You know, it seems like they’re trying to care enough,” said Pekary. “Unfortunately, you wonder if they’re really that interested in being good neighbors.”

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