SFO seeks rent relief for struggling airport food vendors; committee forwards reset for 18 leases
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Summary
San Francisco International Airport proposed a program to reset minimum annual guarantees for 18 food & beverage leases, lower percentage rent for seven pre‑security leases, and change the annual MAG adjustment methodology; the Budget & Finance Committee forwarded the resolution with a positive recommendation after BLA analysis of fiscal impact.
San Francisco International Airport told the Budget & Finance Committee on Jan. 7 it is seeking authority to implement a food‑and‑beverage rent relief program that would reset minimum annual guarantees (MAGs) for 18 of 69 airport leases, reduce percentage rent for seven pre‑security locations and change how MAGs are adjusted annually.
An unidentified airport representative said the package would support approximately 25 tenants and preserve locally owned concepts and employment at the airport. Under the proposal, post‑security MAGs would be set at 12% of 2024 sales and pre‑security MAGs at 6% of last year’s sales for qualifying leases; seven pre‑security leases would move to a flat 6% percentage rent instead of tiered percentages. The airport also asked to change annual MAG adjustments from a CPI‑based method to an industry standard calculated as 85% of prior‑year base rent.
Nick Menard of the Budget & Legislative Analyst (BLA) told the committee the combined revenue impact of the adjustments would be about $1.8 million in lost airport revenue in the calendar year, which translates to an approximate $275,000 reduction to the General Fund (the city receives 15% of non‑airline revenues). BLA recommended amending the resolution’s attachment to list which leases opted out and to correct some terms; staff circulated those amendments to the committee.
Chair Supervisor Connie Chan asked why some tenants opted out; Cheryl Brennan, Director of Revenue Development and Management at SFO, said opt‑outs were typically older leases with lower MAGs or high‑performing businesses that would otherwise see MAGs rise under the new method. Brennan said the change creates modest additional administrative work because two adjustment methods would exist until legacy leases expire (many leases cohort‑expire Oct. 31, 2027).
There was no public comment. The committee accepted the department’s amendment to Attachment A to identify opt‑outs and voted to forward the resolution to the full Board with a positive recommendation (Dorsey/Chen/Chan — 3 ayes).
The item is scheduled for Board consideration on Jan. 13; the BLA asked departments to provide the updated attachment showing opt‑outs and corrections prior to final Board action.
