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East Palo Alto: Life on the other side of Silicon Valley's tracks

Wedged between techie territories like Palo Alto and Menlo Park, this once down-and-out California town is trying to turn itself around while still keeping its identity. We paid a visit on Road Trip 2015.

East Palo Alto is a small town that's far different than its Silicon Valley neighbors.

Dara Kerr/CNET

EAST PALO ALTO, California -- How great is the divide between rich and poor in Silicon Valley? Fifty feet.

The defining border separating Palo Alto -- home to tech billionaires such as Facebook's Mark Zuckerberg and Google's Larry Page, as well as the family of Apple's late co-founder, Steve Jobs -- and East Palo Alto, a small town known for murder, gangs and poverty, is a creek named San Francisquito.

This now-dry creek is roughly 50 feet across. It's nothing more than a messy tangle of trees, bushes and vines.

"This creek comes from the Santa Cruz Mountains," said Carlos Martinez, East Palo Alto's city manager, as he looked across the divide toward Palo Alto. "These are two different worlds on each side of the creek."

East Palo Alto serves as a stark illustration of the growing divide caused by the tech boom. The Palo Alto side of the creek is flush with tech money -- and it's not unusual for people to throw down millions for a single-family home -- while nearly a fifth of East Palo Alto residents live below the poverty line. With the tech industry raising the cost of living and pushing folks out of other cities, East Palo Alto is one of the latest communities to attempt the balance between gentrification and preserving its roots.

Those roots are, admittedly, short. East Palo Alto is one of the youngest cities in California. Incorporated in 1983, the town was established with high hopes that its own local government could bring the area's residents the same things that its prosperous neighbor Palo Alto already had: jobs, homes, health care and safety. And it's been working ever since to achieve those goals.

Check out all the places we've been on CNET's Road Trip 2015.

The town has seen some progress. It's gone from being the per capita murder capital of the US in 1992, with 42 homicides, to having just 5 murders last year. It's erected sprawling shopping centers to bring in revenue and jobs, cleaned up toxic waste sites, built dozens of new homes and converted the old county dump into a shoreline park on the edge of the San Francisco Bay. Now East Palo Alto is dealing with another problem: the expanding reach of the world's top tech companies and the influx of their employees.

"Residents are worried about being displaced from the community that they've grown up in," said East Palo Alto Mayor Lisa Yarbrough-Gauthier, who was raised in the town. "How do we preserve our community and stay relevant?"

East Palo Alto's beginnings

East Palo Alto is a small town. It covers only 2.5 square miles and has roughly 30,000 residents. Two central streets run through the city, and at their crossroads is a nondescript three-story beige building with darkened windows. Inside are the police headquarters, library and city hall. Next door is a McDonald's.

When East Palo Alto was founded it was abysmally poor. Previously an unincorporated area of San Mateo County, it was a place mostly forgotten. It was the location of the county dump, a hazardous materials recycler, a pesticide plant, a smattering of shops and not much else -- except the McDonald's.

"When East Palo Alto incorporated, it didn't have enough revenue to survive. The largest revenue generator was McDonald's," Martinez said. "The city had to do something about that."

East Palo Alto City Manager Carlos Martinez had to make some hard decisions in trying to make the city financially viable.

Dara Kerr/CNET

What followed was an explosion of development. The city tore down a rough-and-tumble area called Whiskey Gulch that was filled with local stores and watering holes, and in its place built a Four Seasons luxury hotel and office complex.

"That enabled the city to survive," Martinez said. "Still, it wasn't enough."

Next, East Palo Alto built a massive big-box shopping mall. Today, one can find Home Depot, Ikea, Sports Authority, Taco Bell, Nordstrom Rack and many more stores here. Beforehand, this area was the location of a high school and a residential neighborhood. The city had to relocate thousands of people to build this commercial center.

"The community went through a lot of disruption," said Martinez, who at the time worked as director of East Palo Alto's Redevelopment Agency and was in charge of these projects. "But that was the price for cityhood and to be financially viable."

In the process of dislocation, many residents were forced to leave East Palo Alto. But the city also built new residential subdivisions within the town's borders. In one area, behind the Ikea shopping complex, rows of similar looking two-story homes in various shades of brown line the streets of several blocks. Twenty percent of these homes are designated for low-income housing. But those without that designation are being bought for as much as $800,000, said Martinez.

Prime location

Buyers are snapping up East Palo Alto's homes for a reason: It happens to be strategically placed right in the middle of Silicon Valley, one of the wealthiest and most expensive regions on Earth. Home prices in San Mateo County hit an all-time high this year, with the average sale price for a single-family house costing $1.3 million, according to the California Association of Realtors.

"There are many people who want to buy in this area," Martinez said. "Because you have Google, you have Facebook."

East Palo Alto's eastern border abuts the San Francisco Bay. From that windy edge of town, one can see miles of wetlands where snowy egrets search for fish, and the outline of the Diablo Mountain Range hazily looms in the distance. Here, people bike and jog along a wide dirt path that hugs the shoreline.

Standing on the spit of land, Martinez pointed to a cluster of buildings a few miles south. That's NASA's Ames Research Center, he said. And nearby is Google's campus. Then, turning 180 degrees, he pointed to the north and said Facebook is right over there.

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East Palo Alto has a jogging trail on the edge of the San Francisco Bay wetlands, which affords views of NASA's Ames Research Center and Google's campus. Dara Kerr/CNET

But this strategically attractive location poses a dilemma for its residents. While the average price for an East Palo Alto home is lower than the average for the rest of Silicon Valley -- at around $574,600, according to real estate site Zillow -- it's still far beyond the means of most of the city's population. Eighteen percent of East Palo Alto residents live below the poverty line and the average yearly income per person is $18,385, according to the US Census. For comparison, the average yearly income for all Californians is $29,527.

"Many of our residents are a paycheck away from missing rent," Martinez said. If they have to spend extra money for a broken-down car or sick child, "that's enough for them to be evicted."

As home prices and rents rise in other parts of Silicon Valley, more people are moving to East Palo Alto or buying houses there as investments. The main reason for this is the city's proximity to tech companies and Stanford University, which is just four miles away.

"If you can't afford a million-dollar home, you're going to move to where you can afford, so that you can be closer to work," said Mayor Yarbrough-Gauthier.

A just city

A far cry from your typical frilly Silicon Valley eatery is Taqueria La Cazuela, a popular Mexican restaurant located in one of the older residential neighborhoods of East Palo Alto. It's in a bright green hut that has black metal bars over the windows and is surrounded by an elbow-high chain-link fence. Inside, owners Gabriel Sanchez and Mayra Rivera sling home-cooked fare, like enchiladas michoacanas, chicken mole and pork carnitas tacos.

"This is a family restaurant," Sanchez said. "We are trying to make a difference here in East Palo Alto."

Oftentimes during lunch, the line runs out the door. The scene inside feels much like being transported to Mexico, with the crowd speaking mostly in Spanish. Roughly 61 percent of East Palo Alto's population is Latino, according to the US Census, while 15 percent is black, 7 percent is Asian and 7 percent is white.

East Palo Alto's Taqueria La Cazuela serves up traditional Mexican fare in a residential neighborhood.

Dara Kerr/CNET

Given its racial and income diversity, East Palo Alto has a different feel from the neighboring white-majority towns such as Palo Alto, Menlo Park and Mountain View. Some people fear that as East Palo Alto gets more expensive, with longtime residents leaving and new people moving in, what's unique to East Palo Alto could be lost.

"Being surrounded by the top five-star dot-com companies gives us so many possibilities for tomorrow," said Albert Macklin, pastor of New Sweet Home Church, who has spent his entire life in East Palo Alto. "At the same time, we still don't want to lose the foundation of what East Palo Alto is and who we were and become a city that we're not."

To combat gentrification, the city has instituted some of the strictest rent control laws in the state of California and also designated a good portion of housing stock to low-income housing. Additionally, it's looking to create more jobs where East Palo Alto residents can work. Along with courting chain retail stores, the city has zoned one portion of the town for light industrial businesses, like carpentry shops, bakeries and small manufacturers. And in May, the city's Ravenswood Family Health Center began seeing patients without health insurance at its new state-of-the-art facility.

"Our overall goal is to create a city that is a just city," Martinez said. "A city that is diverse in terms of income and ethnic composition, that is financially stable and that provides a good level of services for its residents."

But East Palo Alto has its work cut out for it. Along with gentrification, it continues to play catch-up with neighboring cities, as well as fight a high crime rate and poverty.

So that 50-foot creek between it and Palo Alto? It might as well be a gulf.