When Gail Smith moved to Midway Village, a tidy public housing development near the Cow Palace in Daly City, she felt lucky to pay a reasonable rent for a great place.

Midway Village's Frankie Rankins protests in the neighborhood. Some residents aren't satisfied it's safe, despite cleanups. (Mike Kepka / The Chronicle) She didn't know that toxic waste scraped from Pacific Gas and Electric Co.'s former gas-manufacturing plant next door - a site on the state's hazardous-waste cleanup program - had been used as fill under the complex's buildings and parks.

In the past 20 years, longtime residents like Smith and some newcomers to the housing complex have seen foul-smelling chemicals oozing up in their backyards, cataloged their health problems and weathered major cleanups.

"We're like a Katrina without the flood," Smith said.

But their pleas to be relocated have not succeeded, leaving Smith and dozens of other residents feeling stuck. Despite assurances from the state Department of Toxic Substances Control that the chemicals buried beneath their buildings and playgrounds no longer threaten their health, they don't feel well and want to start anew elsewhere.

Two years ago, Linda Adams, California Environmental Protection Agency secretary, heard residents' pleas and asked the San Mateo County Housing Department to help relocate those concerned about their health, many of them minorities.

"All we want to do is get out of here for our health's sake," Smith said recently. "We want to have some good days." Last month, a small group of residents demonstrated at the housing authority's office at Midway Village.

County housing director Duane Bay has declined to grant them a spot on the waiting list for Section 8 housing, the program that subsidizes rentals and purchases for qualified applicants.

Bay says he's offered to put the residents on waiting lists for other public housing, but not on the Section 8 open-market program. He placed 69 Midway Village residents who wanted open-market housing in a lottery with 23,000 people; 12 of them won a place on a waiting list of 3,600.

"There's not an unsafe situation at Midway Village," he said last week. "While some of the residents have health issues, they haven't been able to demonstrate that those health issues are related to living at Midway Village."

Years of health problems

Over the years, residents have reported breathing difficulties, headaches, skin sores and rashes, and neurological and reproductive problems. But unless the disease is rare mesothelioma from asbestos, proving a link between exposure to toxic chemicals and individual illness is almost impossible, health experts say.

Since the presence of toxic waste was first disclosed 20 years ago, there have been no epidemiologic studies conducted at the 150-unit subdivision. Many of the 500 residents moved away or died.

During World War II, the U.S. Navy took Daly City land to build military housing, with workers moving contaminated soil to the site from the adjacent PG&E plant, which produced gas for lighting, cooking and heating for residences and businesses and to power electricity generators. Wastes included tars, powdered carbon and lampblack, which contain carcinogens.

In the 1950s, the Navy turned over the property to San Mateo County, which tore down the original housing and built 35 multi-family townhouses for public housing in the 1970s. PG&E found the toxic waste on its property and the Midway Village boundary at least by 1980.

Midway Village residents found out about the contamination in 1990, when space-suited investigators arrived to test their yards, parks and playgrounds.

Studies found that soil in at least three dozen front yards and patios - as well as in public play yards and part of 3.8-acre Bayshore Park and the Bayshore Child Care center - was contaminated with 51 chemicals, some at high levels and some of them linked to bladder, esophagus, larynx, lung, mouth, skin and stomach cancers in lab animals and in workers in some occupations.

Lawsuit dismissed

In 1997, a San Mateo County Superior Court judge dismissed a lawsuit filed by 195 residents and former residents who claimed they deserved compensation from PG&E and the county housing department. The court accepted PG&E's argument that the plaintiffs hadn't established that exposure caused their illnesses.

A five-year review completed last year evaluated the remedy at the site, which was removal of soil and capping the ground. Last August, scientists "determined that there was no exposure pathway, and (the remedy) was protective to human health," Cynthia Gomez, Cal/EPA assistant secretary for environmental justice, said last week.

New residents moving to Midway Village must sign a county form acknowledging that they have been informed that the development was filled with dangerous residues from the gas plant.

But old-timers like Juliette Arterberry, who moved into Midway Village 28 years ago, said, "They didn't say anything about any toxins" then.

Arterberry, who has a license to care for six children in her home, paid to have the soil in her backyard covered with concrete, one of the state's cleanup methods, because she didn't want the children playing in the grass. Now she wants to move to a complex for seniors.

"I've been in the protests over the years," said Arterberry, who is African American. "If it was a white community, we would be out of here. No one really cares."

A toxic legacy in Daly City

1906-1916: Businesses make gas out of oil at 731 Schwerin St. Pacific Gas and Electric Co. acquires gas-making company in 1908. Wastes contain lampblack, a finely powdered carbon, and thick, sticky tars containing cancer-causing compounds.

1944: U.S. Navy takes the land to build military housing. Workers take soil from the adjacent PG&E site to use as fill.

1955: Navy turns over the property to San Mateo County.

1976: County tears down original housing, builds 35 multi-family townhouses for public housing.

1980: PG&E finds residues at its site. Three years later, state adds site to Superfund cleanup list.

1990: State tells Midway Village residents that toxic wastes have been found in about one of every four of the buildings.

1990-2003: Cleanups occur at Midway Village and the adjacent park and child care center.

2006: California EPA chief asks county Housing Department to help relocate concerned residents.

2008: California Department of Toxic Substances Control says Midway Village residents don't face harm from buried toxic chemicals. Two consultants disagree.