Board continues vote on city towing contract after lengthy debate over fees, cost recovery

The San Francisco Board of Supervisors on March 9 continued a vote on a proposed multi‑year contract for towing, storage and disposal services after supervisors raised concerns about high administrative fees and cost recovery methodology.

The contract on the agenda (item 17) is described in the meeting as an agreement with TEGSCO for towing, storage and disposal of abandoned and illegally parked vehicles in an amount not to exceed $65,400,000 through March 31, 2021, with options to extend. Supervisor John Avalos moved to continue the item one week to March 15 to allow the San Francisco Municipal Transportation Agency (SFMTA) and the MTA board time to provide additional detail about administrative and auto‑return fees; Supervisor Kim seconded the motion. The roll call to continue passed with 11 ayes.

Multiple supervisors criticized what they described as high administrative fees charged to vehicle owners whose cars are towed. Supervisor Katy Tang and Supervisor Jane Kim recounted constituent harms from $600+ tow bills and urged the city to consider hardship programs, lower administrative fees, reduced storage fees, and additional time for vehicle owners to reclaim cars. Supervisor Aaron Peskin noted administrative fees had risen dramatically over years and called an 87% administrative fee "usurious."

Supervisor Scott Wiener proposed a supplemental appropriation request to the Controller and City Attorney to make Muni whole if the board required fee reductions. Wiener said the high end of estimates for revenue loss to Muni could be about $3.2 million per year and asked staff to draft a $3.2 million general fund supplemental appropriation to compensate Muni for any revenue reduction resulting from towing fee reductions.

A representative from SFMTA, identified as Steve Lee, described the agency's cost‑recovery methodology and provided a program cost breakdown. Lee said the total program cost is approximately $24.1 million, and he gave a breakdown stated in the meeting as: contractor fees about $12.3 million, MTA direct costs about $9.1 million, and rent about $2.7 million. Lee also said the overhead/recovery rate applied was a consistent percentage used across cost‑recovery programs; he cited an administrative overhead percentage around 86.7%.

Speakers requested more detailed line‑item information. Supervisor David Chiu (Yi in roll call) and others asked for staff to provide the specific line items that comprise the overhead allocation.

Outcome: The board continued the item one week to March 15 to allow the MTA and SFMTA to provide more detailed financial line items and to consider options such as hardship programs and lowered administrative fees before final action on the contract.

Why this matters: The towing contract and related fee structure affect low‑income vehicle owners who may face large one‑time expenses, and any change in fees has revenue implications for Muni operations. Supervisors emphasized balancing hardship protections for residents against preserving transit revenue needed for operations.