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  Chevron Declines Long-term Leases of Richmond Commercial Space, Could Shift More Resources outside City
September 7, 2012

Chevron declines long-term leases of Richmond commercial space, could shift more resources outside city
By Robert Rogers
Contra Costa Times
Posted:   09/07/2012 03:09:30 PM PDT
Updated:   09/07/2012 03:09:31 PM PDT

RICHMOND -- With its refinery upgrade project still in limbo, Chevron seems poised to shed additional commercial space in the city's Marina Bay district, a move that a developer says would deal a further blow to the local economy after last month's refinery fire.
Richard Poe, owner of Virtual Development Corp., said he met with officials from Chevron's Richmond refinery Thursday to discuss the potential for greater investment in Richmond's Marina Bay district and potential partnerships with the Lawrence Berkeley National Lab's Richmond site and other green tech firms.
Instead, Chevron seemed intent on taking a different direction.
With a major refinery retrofit project still hung up in court, Chevron confirmed it was unwilling to commit beyond the February 2013 lease terms for 64,000 square feet of waterfront commercial space.
Poe called the news that Chevron may shed more space -- in February it vacated 50,000 square feet and moved employees to San Ramon -- a "double whammy" to the local economy. Poe said the recent refinery fire has depressed demand for nearby real estate, and will continue to be a drag on the local economy until Chevron upgrades its facilities and restores confidence in its safety systems.
The Aug. 6 fire was triggered when a pipe failed in a key refining unit, injuring six workers and sending black smoke over the East Bay.
"We anticipate a struggle for the next couple of years to find tenants in the wake of the Chevron fire to backfill the space Chevron is abandoning," Poe said.
Chevron officials said the fire is unrelated to its leasing decisions at Marina Bay.
Chevron spokeswoman Melissa Ritchie said the company remained open to the possibility of reinvesting in office space and other facilities in the city.
"We are always willing to discuss our long-term needs and to seek solutions that make business sense for all parties," Ritchie wrote in an email.
Ritchie noted that Chevron found the commercial space at Marina Bay desirable before its planned modernization project was halted by a Superior Court judge in 2008 The California First District Court of Appeal in San Francisco affirmed the decision in 2010, finding that the expansion violated California environmental law.
Chevron plans to resubmit a revised modernization and expansion plan this year that the company hopes will be approved.
"Once that project was held up, we needed to re-evaluate our office space needs," Ritchie said. "Stopping our modernization project affected more than 1,000 jobs, it hurt the local economy. We are hopeful that this will be turned around sometime soon."
But for now, any Chevron investments are on hold, while other forces seem to be on the upswing in Marina Bay and for the surrounding city.
Lawrence Berkeley's new lab, which could start construction next year, is expected to generate millions in new economic activity and possibly lead Richmond's emergence as a green tech hotspot.
The San Francisco Bay Water Emergency Transportation Authority plans to establish regular commuter ferry service linking Marina Bay with San Francisco, and high-tech firms have already begun sprouting up in the old Ford assembly plant.
Poe said he owns 25 acres of land and 230,000 square feet of Class A office space on the waterfront, about half of which is currently under lease.
A $30 million underpass beneath the railroads that divide Marina Bay from the city is in the works, but funding is tied up in a dispute with the state's finance department. If the project is a go, a vital vein for growth will be opened in Marina Bay, Poe said.
But Thursday's meeting with top Chevron officials was like a splash of cold water, Poe said.
"We got the opposite of what we expected," Poe said. "They weren't interested in the synergisms we were talking about."
Days after the fire, Poe and architect Andrew Butt put together an ambitious 10-page development plan for Marina Bay.
Titled "A Vision for Marina Bay .... How Chevron can help support a long-term, sustainable future in Richmond while improving both the image of the company and the city," the proposal explicitly calls on Chevron to join the city and leaders at the Lawrence Berkeley Laboratory's Richmond campus -- set to open in 2017 -- to work together to develop a premier commercial and research district in the city's Marina Bay area.
"This is a huge opportunity," the report reads. "Having a major corporate campus of a global energy giant in the East Bay next to LBNL's second campus at the field station would present a natural synergistic opportunity for collaboration."
Butt, the son of Councilman Tom Butt, said all the pieces are in place.
"What we envision is the investment by Chevron into the creation of a major corporate technology campus on the west shore of Marina Bay," Butt said Thursday. "This is an opportune time."
Much hinges on the modernization plan for the refinery, which is supposed to be resubmitted this fall. Poe is hopeful that if approved, the near-term prospects for major investments in Marina Bay may still have life.
"Until the business community sees a refinery upgrade using the best available technology, it will be difficult to attract businesses here," Poe said.
Contact Robert Rogers at 510-262-2726 or rrogers@bayareanewsgroup.com. Follow him at Twitter.com/roberthrogers