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Committee sends Mel’s Drive‑In lease to full Board without recommendation as SFMTA works to correct pandemic-era lease amendments
Summary
Committee members advanced a retroactive lease for Mel’s Drive‑In at 5th & Mission to the full Board without recommendation and pressed SFMTA to formalize 17 other pandemic-era verbal rent-abatement agreements by April 2026, citing internal-control weaknesses.
The Budget & Finance Committee on Nov. 5 considered a retroactive commercial lease between the city and San Francisco CNC (doing business as Mel’s Drive‑In) for retail space at 5th & Mission Garage. Kasaya Tang of SFMTA’s Real Estate Division presented the lease terms (an initial five-year term with a five-year extension option; projected revenue roughly $1.9 million over five years under an 8% gross-receipts rent structure) and disclosed that staff recently discovered a series of COVID-era, primarily verbal rent-forgiveness agreements that were not memorialized.
Tang said the agency found two other leases with similar structures and 15 additional leases that lack formal written amendments; she proposed a timeline to bring TADS and the remaining leases to the Board — aiming to return in January 2026 for TADS and by April 2026 for the rest. The Budget & Legislative Analyst noted internal-control weaknesses in historical lease administration (missing documentation and absent standard policies). Committee members pressed SFMTA on the count of outstanding leases (SFMTA corrected an earlier figure and stated the total as 17 unformalized agreements), asked how many total commercial leases SFMTA holds (about 40), and sought contingency plans for vacancies.
Mel’s counsel Matt Worth introduced owner Gabriel Mendez, who spoke in support of the lease; no public opposition was recorded. Given the agency’s disclosure and BLA findings, Chair Chan moved to send the lease to the full Board without recommendation to signal the need for SFMTA to correct processes; the committee voted 3–0 to refer the item without recommendation. Chair Chan said she will vote in support of the lease at full Board.
Ending: The lease moves to the full Board without recommendation; SFMTA committed to returning with TADS and additional amendments and to working with the City Attorney to memorialize prior rent-relief agreements.
