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Committee delays approval of two downtown parking garage leases after questions on $2M transfer and nonprofit oversight
Summary
Chair Carmen Chu continued two 10‑year parking‑garage leases (Japan Center and Sutter Stockton) to Feb. 13 after questioning a proposed $2,000,000 transfer to MTA operations and the inconsistent use of nonprofit intermediary structures flagged in a Controller audit.
The Budget and Finance Committee on Jan. 29 continued two proposed 10‑year leases — for the Japan Center Public Parking Garage and the Sutter Stockton Garage — after members sought more information about a reported $2,000,000 capital balance and the role of nonprofit garage corporations.
Chair Carmen Chu said she had become "less comfortable with the 2 items and supporting them at this time" and asked for a date‑certain return so the committee could evaluate the transfer of funds and the MTA's rationale for treating similar nonprofit arrangements differently (Carmen Chu, Chair, Budget and Finance Committee). The committee continued the items to Feb. 13 without objection.
Steve Lee of the San Francisco Municipal Transportation Agency described the proposed leases as 10‑year agreements with two 5‑year options, $1 initial rent, 90‑day termination for convenience and a shift from percentage‑based capital set‑asides to a fixed annual amount beginning in year four of the leases. Lee said the Japan Center garage totals about 920 spaces and "generates $4,200,000 annually," while the Sutter Stockton garage totals about 1,865 spaces and generates roughly $12.1–$12.3 million annually (Steve Lee, SFMTA).
The Controller's Office warned the committee that the nonprofit intermediary structure used in some city garages is "unusual in the state" and estimated the arrangement adds about $550,000 in administrative costs across garages. Controller Ben Rosenfield said his office recommended a cost‑benefit review to assess whether these nonprofit entities continue to add value after the bonds that financed construction were paid off.
Several downtown business and nonprofit representatives urged the committee to approve the leases, saying the garage corporations provide local marketing and business outreach that support neighborhood merchants. "These garages at these locations really serve a diverse amount... management oversight is very vital for the community," said Anson Lee, corporate manager for Uptown Parking Corporation, during public comment.
Budget staff reported that under the proposed lease the Japan Center Garage's $2,000,000 capital balance would transfer to the MTA and be used to support operating costs; the analyst described the approval as a policy decision for the Board and highlighted that Japan Center's management fees have historically been a higher share of its budget compared with other garages.
The committee directed the MTA to return in roughly 30 days with additional analysis and a clearer cost‑benefit rationale for continuing the leases rather than unwinding them or converting oversight to advisory bodies. The items were continued to Feb. 13.
