A History of Exclusion

How African Americans were blocked from living in most East Bay neighborhoods: an excerpt from the 2017 book "The Color of Law."


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(page 3 of 3)

When Frank Stevenson and his carpoolers needed housing near the new Ford plant, FHA- and VA-insured subdivisions were rapidly filling the area between Milpitas and the African-American communities of Richmond and Oakland. The most active developer was David Bohannon, who had built the whites-only Rollingwood subdivision just outside Richmond in 1943. The following year, he created the massive whites-only San Lorenzo Village about five miles south of the Oakland border.

With more than 5,000 units and 17,000 residents, San Lorenzo Village was the nation’s largest wartime government-insured project, intended for workers at naval shipyards and support factories. Like the homes in Rollingwood, each house included a bedroom with a separate entrance, so the owner could rent it to another war worker.

The development was financed by a $7 million FHA-authorized loan from Bank of America and the American Trust Company. As was the case with other FHA developments, houses were sold at relatively low prices so as to be within reach of war workers, and the deeds included restrictive covenants to prevent future resales to African Americans.

Within easy commuting distance of Milpitas, San Lorenzo Village was an ideal location for Ford workers. Sales brochures in the early to mid-1950s, when Ford workers would have been seeking housing in the area, assured prospective buyers that the village was “a safe investment” because “farsighted protective restrictions ... permanently safeguard your investment.”

In 1955, Bohannon began developing Sunnyhills, a project in Milpitas itself. After Western Pacific announced plans to create its new industrial zone, other builders had also obtained FHA guarantees to construct whites-only, single-family subdivisions in the area. One, Milford Village, a development of 1,500 units on unincorporated land just outside the town boundaries, was guaranteed by the Veteran’s Administration and required little or no down payment for veterans and low monthly payments.

When it became apparent that no existing Milpitas-area development would sell or rent to black workers, the American Friends Service Committee (AFSC), a Quaker group committed to racial integration, offered to assist Ben Gross—the chair of the Ford plant’s union housing committee—by finding a developer who would agree to build an interracial subdivision. The AFSC had an existing campaign to press (unsuccessfully) Richmond to desegregate its public housing and find adequate, integrated residences for its African-American population being displaced by the demolition of federal war projects. The group also operated a settlement house in North Richmond with after-school tutoring, dances, and other youth recreational opportunities, a well-baby clinic for mothers, a day care program for children of working parents, a small play- ground for toddlers, and a meeting room for community organizations. Ford workers were involved in all these activities.

The rapid growth of the Milpitas area had resulted in some overbuilding, and several new subdivisions had unsold units that were affordable to Ford workers. Despite this excess inventory, the AFSC was unsuccessful in persuading any existing developer to sell to African Americans.

The first builder recruited by the AFSC selected a plot in an unincorporated area south of Mountain View, a Santa Clara County community about 10 miles west of Milpitas and accessible to other growing industrial areas in Silicon Valley. The AFSC, however, could not find a financial institution in the San Francisco Bay Area willing to provide funds for a development that would permit sales to African Americans. After a few months, an AFSC official flew to New York to meet with a Quaker vice-president of the Metropolitan Life Insurance Company who, despite his skepticism about the feasibility of integrated suburban development, agreed to issue a loan for initial construction. Only as a result of this Quaker connection was the AFSC able to obtain a financial commitment.

But when the builder’s intent to sell both to blacks and whites became known, the Santa Clara County Board of Supervisors rezoned the site from residential to industrial use. When he found a second plot, Mountain View officials told him that they would never grant the necessary approvals. He next identified a third tract of land in another town near the Ford plant; when officials discovered that the project would not be segregated, the town adopted a new zoning law increasing the minimum lot size from 6,000 to 8,000 square feet, making the project unfeasible for working-class buyers. After he attempted to develop a fourth site on which he had an option, the seller of the land canceled the option upon learning that the project would be integrated. At that point, the builder gave up.

Ben Gross then recruited another builder who proposed to the union that he create two projects, one integrated and the other all white. Because white buyers would be directed to the all-white project, it was apparent that the plan for a nominally integrated project would result in an all-black one. The builder proposed to construct the white project in a suburban area and the integrated one in a less desirable environment—a plot sandwiched between the Ford plant and two tracts zoned for heavy industry.

Workers at Ford, members of the United Auto Workers (UAW), were divided over whether to accept this proposal, and at the next local union election, candidates who opposed the two-project concept challenged those who were in favor. It was a difficult decision, because the union was faced with choosing between segregated housing and no new housing for any union members, black or white. Although the membership was overwhelmingly white, the union adopted a policy that it would support only developers who would commit to integrated housing.

A San Jose businessman in the meatpacking business, with no previous experience as a developer, obtained a tract adjoining David Bohannon’s all-white Sunnyhills project and proposed an all-black development. When the UAW and AFSC became aware of these plans, they persuaded the developer to construct an integrated project instead, and the union promised to promote the project to its white as well as to its African-American members. For six months, the businessman sought financing, but every bank or thrift institution he approached, knowing that FHA backing would be unavailable, either refused to lend money for a project that was open to African Americans or agreed to lend only if he paid higher interest, a premium for integration ranging from an additional 5½ percent to an additional 9 percent. Such a payment would have greatly increased project costs and made the houses unaffordable to union members. The businessman advised the UAW that he would have to drop his plans. The union was able to persuade him to continue only by promising that the union itself would take responsibility for finding a lender. UAW and AFSC representatives again went to New York to ask Metropolitan Life to provide construction financing, which the insurance company agreed to do.

In January 1955, more than a year after Ford notified its Richmond workers that their jobs were going to Milpitas, and only a month and a half before the scheduled transfer of automobile assembly, the UAW was able to advise its black members in Richmond that a nondiscriminatory housing development, called Agua Caliente, was going to be available in the Milpitas area. By this time, many white workers had already found housing in racially restricted Santa Clara County neighborhoods.

David Bohannon’s company, however, remained fiercely opposed to an integrated project adjoining Sunnyhills, and after a San Francisco newspaper article revealed the plan to establish “the first sub-division in the Bay Area where Negro families will be sold homes without discrimination,” the company began to pressure the newly formed Milpitas City Council to prevent the construction of Agua Caliente by denying it access to sewer lines.

The sanitary district for Milpitas, whose chair was a member of the Santa Clara County Board of Supervisors and whose other members were the Milpitas mayor and a Milpitas city councilman, had advised the Agua Caliente builder that its fee for sewer access would be $100 an acre, based on the project’s anticipated use of about 3 percent of the sewer line’s capacity. The union and its builder estimated project costs and set sale prices using this figure; Metropolitan Life had extended its financing based on it. Under pressure from David Bohannon’s company, the sanitary district board held an emergency meeting and adopted an ordinance that increased the sewer connection fee by more than 10 times the $100 figure.

The new charge caused the builder to suspend work. He attempted unsuccessfully to negotiate a compromise with the sanitary district and the Bohannon organization, whose representatives acknowledged that the purpose of the ordinance was to prevent minorities from living close to Sunnyhills. The mayor of Milpitas, however, denied that his motive in voting to increase the sewer fee was discriminatory but added that he did not think it would be a great loss if the subdivision never got developed because, he asserted, the Ford workers’ tract would depress property values in Milpitas. A real estate agent himself, the mayor claimed that Negroes inquiring about housing had told him that they did not want to go where they weren’t wanted. He was only deferring to these customers’ wishes, he said, in declining to show them properties in the city.

Problems persisted even after the UAW’s builder indicated he would proceed with the Agua Caliente project, despite the higher sewer connection fees. The Bohannon group next filed suit to prevent the project from using a drainage ditch alongside its tract. This was purely a nuisance suit because the drainage ditch belonged to the county, not to Bohannon. The UAW then mounted a public campaign against the Sunnyhills project. Not only did union members refrain from purchasing the houses, but they flooded open houses to disrupt sales to white buyers. Meanwhile the UAW and the AFSC contacted California Attorney General Edmund C. (Pat) Brown, who sent an assistant to Milpitas to investigate the sewer fee controversy. Brown promised help “in overcoming any racial discrimination by governmental units which might be disclosed.”

The Agua Caliente builder could no longer sustain the delays; nor could he afford the legal bills that would be incurred if he persisted. The Bohannon company, perhaps influenced by the attorney general’s implicit threat, also tired of the fight. The union’s boycott had been responsible, or partly responsible, for the company’s being stuck with finished but unsold homes. In November 1955, both the Agua Caliente builder and Bohannon sold out to a new developer recruited by the UAW, making the sewer connection controversy moot, and a combined project was finally constructed.

The combined development took the name of the original Bohannon project, Sunnyhills. California banks and thrift institutions continued to refuse, without an exorbitant interest rate surcharge, to issue individual mortgages, without FHA insurance, to borrowers living in an integrated project. At first, the UAW’s own pension fund offered to guarantee the African-American workers’ loan repayments. Eventually, the FHA agreed to guarantee mortgages with a favorable rate only if the subdivision were converted to a cooperative, in which the owners would possess shares of the overall project rather than their individual houses. The union and its member-buyers agreed, and on this basis 20 of the project’s first 500 units were sold to African-American families.

By this time, however, the Milpitas Ford plant had been operational for nearly a year, and almost all white workers who wanted to move to the area had done so. The delays, legal fees, and financing problems had raised the cost of the combined Sunnyhills project to a level that was unaffordable to all but the most highly skilled and highly paid Ford workers. Many of the African-American workers had become so discouraged about housing opportunities in the Milpitas area that, like Frank Stevenson, they had formed carpools to share the 100-mile daily round trip from Richmond. As a last alternative, the UAW and other area unions pressed for a public authority to create rental housing, but the idea was met with strong resistance from the local finance and real estate industry—the local association of savings and loan institutions called it “dangerous to our American way of life”—and the county refused to act.

In the ensuing years, African-American residence in Milpitas continued to be confined to Sunnyhills and a relatively undesirable project, built in the 1960s between two freeways and a heavily trafficked main shopping thoroughfare. The Ford plant closed in 1984. Milpitas is no longer all white—it now has many Hispanic and Asian families—but the effects of its earlier segregation remain visible: African Americans make up only 2 percent of the population.

As the Milpitas area developed, other plants transferred there from the Oakland-Richmond corridor. One was a Trailmobile factory that relocated from Berkeley in 1955. Soon after, the plant manager announced a change in hiring policy: the company would accept only new workers who lived in the vicinity, and they, of course, were almost exclusively white. Black workers, he said, attempting to commute from the Oakland area, were too likely to have car accidents from the long drives, leading to excessive absenteeism. Before Trailmobile moved from Berkeley, its workforce was 16 percent African American. By 1967, it had dropped to 6 percent, mostly carryovers from before the new hiring policy was adopted.

Author’s Postscript: Nationwide every metropolitan area is residentially segregated, but we are hobbled in our ability to reverse it by the myth of the de facto segregation, the idea that this all happened by accident. Only by recognizing that the federal, state, and local governments, as in the East Bay, pursued unconstitutional policies designed to segregate the nation by race can we develop the remedies necessary to demolish the racial boundaries we’ve inherited. 

The Color of Law: A Forgotten History of How Our Government Segregated America by Richard Rothstein (Liveright Publishing Corporation, a division of W. W. Norton & Company, 2017, 345 pp., 27.95.)

Richard Rothstein is a research associate at the Economic Policy Institute and a fellow at the Thurgood Marshall Institute of the NAACP Legal Defense Fund and at the Haas Institute at UC Berkeley. He’s formerly a national education columnist for The New York Times.

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