Supervisors hold Mission Street affordable housing loan over nonprofit's finances

The Budget and Finance committee left a Mission Street affordable housing deal without a recommendation on Wednesday, continuing a loan package of up to $22,157,500.

The item was a loan purchase agreement with MEDA Small Properties, LLC for 2059-2065 Mission Street, covering acquisition, rehabilitation and permanent financing for a building the city wants kept as 100% affordable housing.

Members did not dispute that goal. Their questions went to the sponsor's finances. Newly reported financial-management problems at the nonprofit and its placement on the city's highest-risk monitoring tier drew most of the discussion, and members wanted more information before the city committed money.

City staff told the committee the loan carries added reporting requirements and conditions tied to the developer fee. Staff also said the schedule for rehabilitation and leasing was already tight, so the timing of an approval matters.

Members asked to see the additional reporting the loan would require before the financing advanced, and said they wanted answers within a few weeks. The item was continued to the call of the chair. That keeps it on the committee's file with no date set for its return, and it means the package does not reach the full Board of Supervisors yet.

Continuing an item is not the same as rejecting it. The sponsor can still get the financing if the committee is satisfied with what it hears, and nothing in Wednesday's action changed the terms the city negotiated. The delay is the cost, since staff tied the financing to rehabilitation and leasing dates.

The committee did send a federal emergency alert grant to the full board. The award is $238,480 from the Federal Emergency Management Agency, passed through the California Governor's Office of Emergency Services under the 2025 Next Generation Warning System Grant Program, and it needs no General Fund match.

The grant would connect FEMA's alert system to the transit agency's digital signs so that wireless emergency alerts appear on them automatically. The department said that would reach people who are not carrying a phone or who have limited service.

The department asked the committee to accept the money retroactively. It said the grant period began before the board acted because notification from the state arrived late, and that the state made disbursement conditional on board approval by November 1. No one spoke on the item in public comment, and it went to the full board with a positive recommendation.

A new lease for the San Francisco Wholesale Produce Market also advanced. The amended and restated lease for the San Francisco Market Corporation covers the market at Jerrold Avenue and Toland Street. It replaces performance schedules with a development-plan approach and streamlines how the market's projects are reviewed and approved.

Staff said the change would let the nonprofit market use private financing for its next warehouse and distribution building. The lease keeps below-market rent in place, which staff described as the public benefit the city gets from the arrangement. Public comment was supportive, describing the market's role for local food businesses and its food recovery work. The committee forwarded the lease with a positive recommendation, and one supervisor asked to be added as a co-sponsor.

Ten airport concession lease amendments went to the full board together with a positive recommendation. The tenants are AirSun JV, doing business as Sunglass Hut, at the Terminal 3 Boarding Area E retail specialty store; L'Occitane Airport Venture, LLC at Terminal 1 retail concession lease 4; The Marshall Retail Group, LLC at Boarding Area C retail concession lease 2 and at Terminal 1 retail concession lease 5; Park Café Group, Inc. at the Terminal 1 Boarding Area C food and beverage kiosk, a Small Business Enterprise set-aside; Lady Luck Gourmet, LLC at Terminal 1 food and beverage concession lease 7; Andalé Management Group, Inc. at International Terminal food and beverage concession lease 1; High Flying Foods SFO, LLC at International Terminal food and beverage concession lease 2; Sidewalk Juice SFO, LLC at the Terminal 3 Boarding Area F food and beverage kiosk, also a Small Business Enterprise set-aside; and Rylo Management, LLC at the Terminal 3 Boarding Area F café lease, also a Small Business Enterprise set-aside.

Staff said the term extensions respond to tenant improvement costs that ran above the original assumptions. The board's budget analyst recommended approval of all ten. No member of the public spoke on any of them.

One changed before it left the committee. The Marshall Retail Group lease at Terminal 1, lease 18-0206, was amended to state that the extension applies only to the post-security retail location in the Departures area and does not extend to the pre-security location near baggage claim. The committee forwarded that item as amended.

The airport leases and the produce market lease now go to the full Board of Supervisors. The Mission Street financing stays behind until the committee gets the answers it asked for.