The city was founded by Henry Flagler in 1894, as a community to house the servants working in the two grand hotels on the neighboring island of Palm Beach, across Lake Worth. The original spelling was "Westpalmbeach", but it was feared that the 13-letter word would be an ominous omen for the fledgling community. During the 1920s, the city boomed and was a rival to Miami, leaving it with many historic structures and neighborhoods. The city quickly declined thereafter, however, due to hurricanes, the Great Depression and rampant suburbanization.

In the 1960s, Palm Beach County’s first enclosed shopping mall, the Palm Beach Mall, and indoor arena were completed. These projects then led to another "prime-time" for the city. However, West Palm Beach then declined again a decade later. Crime was a serious issue due to racism and vacancy rates. But following the 1970s to the new millennium, the city had undergone a tremendous renaissance as newcomers have rediscovered the city's historic areas, graceful new high-rises including Donald Trump's elegant "Trump Plaza," and a resurgent downtown entertainment and shopping district called, "CityPlace". But, Clematis Street, West Palm Beach's historic shopping venue feared it would lose popularity. To keep that from happening, the Clematis Street district was extensively renovated and refurbished. It is now home to Clematis by Night, an outdoor event held on the street with live music and food. It is also home to West Palm Beach's nightlife, along with CityPlace.

In 1993, West Palm Beach was featured in a 60 Minutes segment on urban decay. At the time, 80% of downtown properties were vacant. Since then, the city has done much to improve its image, at least in the physical sense. Occupancy is high, and housing prices have risen rapidly. However, crime remains a serious issue. Annual crime rates are always more than three times the national average and West Palm Beach consistently ranks as one of the nation's 100 most dangerous cities. However, as of 2006, the city's crime average has been gradually decreasing.

West Palm Beach was the focal point of a controversy regarding voting irregularities that some claim may have affected the outcome of the 2000 Presidential Election.

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