Resolution approving a Commercial Lease Agreement between the City and County of San Francisco and San Francisco C&C, doing business as Mel’s Drive-In, for the retail space located at 801 Mission Street in the Fifth and Mission Garage, for an initial five-year term that will result in an estimated $1,908,684 in revenue, and one five-year option to extend the lease, effective upon approval of this Resolution.

The San Francisco Board of Supervisors is considering a resolution to retroactively approve a Commercial Lease Agreement between the City and County of San Francisco, through its Municipal Transportation Agency (SFMTA), and San Francisco C&C, doing business as Mel’s Drive-In. This agreement is for the 5,720 square feet retail space located at 801 Mission Street in the Fifth and Mission Garage (833 Mission Street). The lease has an initial five-year term, effective September 1, 2025, and includes one five-year option to extend, making the total potential occupancy 10 years. The initial term is projected to generate an estimated $1,908,684 in revenue for the SFMTA, which will support transit operations.

The rent structure for the initial term is 8% of monthly gross revenues. If the option to extend is exercised and the lease is assigned or sublet, the rent will be a base of $20,020 per month (adjusted annually by 4%) plus 4% of monthly gross revenues. Mel's Drive-In, a historic San Francisco establishment and anchor tenant in the garage since 2000, was the sole respondent to the SFMTA's public advertisement for the space. The SFMTA Board of Directors approved the lease on October 7, 2025, and the California Environmental Quality Act (CEQA) determined it is not a "project" as it involves no expansion or change in service levels. The Budget and Legislative Analyst (BLA) report highlights concerns regarding the SFMTA's lease management practices, including verbally amended leases during the pandemic and a lack of formal RFP processes for this location, recommending the SFMTA develop written policies for real estate transactions.

This lease ensures the continued operation of Mel's Drive-In, a well-known and historic restaurant at 801 Mission Street, providing a dining option in the SOMA/Yerba Buena District. The estimated $1,908,684 in revenue over the initial five-year term will directly contribute to funding SFMTA's transit operations, indirectly benefiting public transportation users. However, the BLA report raises concerns about the SFMTA's lease management transparency and potential missed revenue opportunities due to informal processes, which could affect public funds in the long term.

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