Inadvertent

There don't seem to be any rules about what causes a squatter colony, or what circumstances will encourage them. Writing about Brooklyn and New York City gave me the conviction that inattentive landlords were a major cause of the large settlements characterizing those places. Now I am not so sure. It may be that the classic shantytown metastasizes where landlords aren't in residence, but opportunity knocks in many ways. Back to San Pedro for an example:

Long Beach beat out San Pedro in laying first claim to Terminal, but for Long Beach this was just the first hurdle to cross because their high-handed manner set off a storm of opposition that San Pedro could use to over throw the annexation.
San Pedro was quick off the block, setting up an East San Pedro postal office and police force in the early spring of 1906 that operated throughout the summer in competition with the West Long Beach post office and police force. One factor that Long Beach had in its favor that San Pedro didn't was an alliance with the Salt Lake RR who held the deeds to all of Terminal Island.
And the Salt Lake RR was hardly an inattentive landlord. They prevented squatting on Terminal Island proper with rigor, and did their best to motivate the local Army Corps of Engineers to evict the breakwater squatters through direct appeals and a lot of fencing across the end of the island. From the perspective of the SLRR, the greatest advantage to annexation by Long Beach is that it would finally give them an active and sympathetic partner in patrolling their island and evicting squatters. This population that they could not control was the only real challenge to the Long Beach annexation and the Salt Lake continued to apply pressure to force them out.
San Pedro officials were wide awake to this aspect of the Salt Lake RR/Long Beach alliance and when they visited the island in preparation of the annexation vote they made a point of tearing down fences blocking access to the breakwater, a fact noted approvingly by the squatter colony. As the lawsuits challenging the Long Beach vote moved toward a hearing San Pedro put in motion plans to win back partial control of the bay if the legal route failed, plans that exploited the presence of the fisherman colony.
In early-April news leaks out that the city of San Pedro is offering to buy squatter claims on the breakwater. The East San Pedro buyout can be read as both a canny attempt to prevent the Salt Lake RR or Long Beach from buying the claims first, but also a prequel to dividing the wholly man-made lands of the breakwater from Terminal Island to which the Salt Lake RR held a clear claim purchased from the Sepulvida heirs.
The response to the news changed the political and demographic situation on the island completely. Before the annexation the breakwater colony was composed of a few fishermen and their families, many of which were prepared to move to another location or sell out cheap as they always had before.
The prospect of a buyout attracted hoards of new squatters. These new breakwater residents were speculators attracted to East San Pedro with the promise of low risk and a quick profit. One settler was reportedly holding out for $20,000 on his section of the breakwater. With things at such a fever pitch San Pedro backed off of its offer to buy out claims, but the damage was done. A rumor in early May fingered one mysterious buyer that people feared would prove to be a front for the Salt Lake RR or its ally the Crescent Warehouse Company. Instead it turned out to be the tenacious Mrs Hamilton who purchased nineteen separate claims in short order while also filing a preemption claim upon the entire breakwater using Valentine Script as payment.
Although the colony at East San Pedro predates the Long Beach annexation, East San Pedro became a community in the following six months and grew exponentially in population and permanence. Thus, ironically, the East San Pedro squatter colony was born of the numerous attempts to stamp it out.