Ending an era, Chevron abandons S.F. headquarters / Exodus to San Ramon complete

Chevron Corp., a San Francisco institution that traces its roots in the city back to 1879, is moving its headquarters to a San Ramon business park.

The giant oil company's rationale was businesslike. It was inefficient, yesterday's announcement said, to keep only 200 people at headquarters at 575 Market St. when its Chevron Park campus and other nearby buildings at Bishop Ranch in San Ramon house most of its Bay Area operations and some 3,500 employees.

Chevron's move is the latest in a long line of corporate disappointments in San Francisco, where closings, mergers and moves have greatly reduced the number of firms for which San Francisco is headquarters.

Bank of America, founded in San Francisco in 1904, moved to Charlotte, N.C.,

after it was taken over by NationsBank in 1998. Transamerica was bought by Aegon, of the Netherlands, in 1999. AirTouch was bought by Vodafone of England,

also in 1999.

For its part, Chevron said it was logistically difficult to arrange meetings that involved people in offices in downtown San Francisco and at Chevron Park 32 miles to the east.

"We have enjoyed important and positive relationships in San Francisco for nearly a century, and we'll miss being part of a community that has been our corporate home for so long," Dave O'Reilly, Chevron's CEO and chairman, said yesterday.

He added, "While San Francisco is a great location, we need to bring all of our people together. We've found over the past couple of years that it just isn't efficient to operate our headquarters from San Francisco," he said.

UNRELATED TO MERGER

The real estate decision is unrelated to Chevron's proposed merger with Texaco, which still requires approval of the Federal Trade Commission, said Chevron spokesman Fred Gorell. "It's all about the time problem and transportation and parking concerns, and it's very inefficient to conduct meetings with those kinds of challenges," he said.

Still, there is a practical reason the announcement was made yesterday: to give advance notice to Texaco employees now based in White Plains, N.Y., and about to be transferred here, so they can make decisions about where to move, company sources said.

Chevron has had a Market Street presence since 1965, when it built 555 Market St., and then the company erected a second headquarters building next door at 575 Market St. Over the years, the company also leased space at 595 and 525 Market St. and other locations.

The corporation built its previous headquarters building -- the Standard Oil of California building -- at 225 Bush St. in 1922 and sold it in 1994 to Pacific Resources Development Inc.

MARKET STREET BUILDINGS SOLD

On Dec. 19, 1999, taking advantage of climbing commercial real estate rates,

Chevron sold its two Market Street buildings to Tishman Speyer/Travelers Real Estate Ventures for $189.1 million. Since then it has leased space for the staff of 200 from the new owner.

But Chevron had plotted its real estate future back in the early 1980s when its developed Chevron Park: 92 acres and 13 buildings with 1.4 million square feet, with shuttle service between the Walnut Creek and Dublin BART stations and other points along Interstate 680. Some Chevron employees are in offices at Bishop Ranch.

A Chevron official telephoned San Francisco Mayor Willie Brown yesterday to advise him of the announcement, said Brown's press secretary, P.J. Johnston. "They made a commitment to remaining a good corporate citizen," said Johnston.

He added, "We don't like to see any business leave and we're determined to maintain a strong business climate. We added 75,000 jobs in the past five years and we don't want to lose any of them."

It hasn't been a a perfect marriage between company and city, however. Chevron was among a group of corporations (including the Hearst Corp., which publishes The Chronicle) that sued San Francisco last year, contending that their tax burden was too great. The case was settled out of court in April, said Board of Supervisors President Tom Ammiano, "because the cost of litigation would have been tremendous and the forecast for winning was slim."

The city paid Chevron and others $66 million in the settlement, and this still leaves a bad taste in Ammiano's mouth. "I'm sorry to see people go, but at the same time people should not foul their own nest. . . . It would be nice if Chevron would return their part of the settlement. We have an account set up just in case," he said.

The remaining employees in San Francisco, including O'Reilly and other senior executives, will begin relocating to San Ramon during the second quarter of 2002. The company expects the moves to be completed by the end of 2002.

Chevron's history in San Francisco began in 1879, when the Pacific Coast Oil Co. was incorporated in the city. It was acquired in 1900 by the West Coast operations of John D. Rockefeller's original Standard Oil Co. In 1911, the company emerged as an autonomous entity -- Standard Oil Company (California) -- after a U.S. Supreme Court ruling that divided Standard Oil into 34 independent companies.

In 1926 came the merger with Pacific Oil Com., creating Standard Oil Company of California. In 1984, after acquiring Gulf Corp., the company changed its name to Chevron Corp. to identify with the name under which most of its products were marketed.

Chevron had record net income of $5.2 billion in 2000. It closed up 5 cents yesterday, at $91.40, on the New York Stock Exchange.