Why did Simon choose New York in January 1882 instead of San Francisco in 1894 for his past in the project?

The action of the story takes place entirely within the borders of New York City - specifically, the island of Manhattan. The city's physical character, its buildings and style and atmosphere, are strongly defined through extensive use of detail. This intense specificity carries through in both past and present, as the action moves back and forth through time between two specific periods - the winter of 1882 and the winter of the present. The year of that "present" is never specifically defined. Given that the novel was copyrighted in 1970, it's reasonable to assume that, for the author, the "present" is the late 1960s.

However, the culture of the "present" (as opposed to its physicality, which is defined with incredible particularity) is defined in broad enough generalities that it's possible for the "present" to exist at any point in contemporary history. Important physical locations for the story, most of which are actual structures in New York and many of which continue to exist today, include the Dakota Hotel, the Statue of Liberty, Washington Square, and Fifth Avenue. Aside from the important narrative and thematic functions of the city's buildings and structures, setting the action in New York City also provides a spiritual, emotional and moral context for the action. New York has a romantic and almost mythic reputation for being a city where any ambition can be realized - for financial success, for career and/or intellectual advancement, and even for love. Setting the story within this kind of environment provides an appropriate atmosphere and context for the ambitions of the novel's characters for those very things - the social ambitions of the Carmodys and Jake Pickering, the romantic ambitions of Si and Julia, Esterhazy's ambitions for influence and control, and Danziger's ambition for knowledge and understanding.