Mayor Edwin Lee tells supervisors major conventions are cost‑recovery events; warns of federal sequestration impacts

Mayor Edwin Lee answered two policy questions from the Board of Supervisors during a special 2 p.m. session on Nov. 20, saying that large conventions operating in San Francisco are billed on a full cost‑recovery basis and warning that federal sequestration could cut tens of millions from city programs.

Lee told the board that events like Salesforce’s Dreamforce and Oracle’s OpenWorld “are full cost recovery events. This includes costs incurred by our MTA, our police and fire departments, public works and entertainment commission.” He said cost recovery covers not only staff time and permits but “administrative and facilities costs as well as extensive planning costs.”

The mayor described examples of reimbursable work: “the MTA recoups costs associated with traffic engineering, road striping, the removal and reinstallation of overhead wires and enforcement services,” and he cited past recoupment totals, saying his office’s records showed “in 2011, this totaled over $53,000 for OpenWorld and over $38,000 for Dreamforce.”

On pedestrian and bicycle accommodation, Lee said the city requires advanced detour signage and that, for Howard Street between Third and Fourth streets, “we require that the south sidewalk be open at all times for pedestrians and cyclists.” He described interdepartmental public hearings through the city’s traffic committee—referred to in the meeting as ISSCOT—and said event sponsors pay all associated city costs.

Lee also highlighted the economic scale of those conventions, citing occupancy and tax figures: he said Dreamforce produced a 94 percent hotel occupancy in San Francisco and Oracle OpenWorld a 92 percent rate, and estimated OpenWorld’s economic impact at about $120 million for the week, generating “over $3,400,000 in tax revenue.”

On a second question from Supervisor Malia Cohen about federal sequestration, Mayor Lee said the city was closely monitoring possible cuts and lobbying federal leaders. He summarized his office’s estimate that sequestration could reduce direct federal funding to San Francisco “by at least $26,500,000 a year.” He listed program‑level impacts his office projected: “over $5,000,000 of cut to education and almost $3,000,000 of cuts from public housing…a $2,000,000 cut to Medicare allocation…almost $5,000,000 loss for WIC and workforce programs…$1,000,000 to housing services for people with HIV/AIDS and more than $1,000,000 to the Community Development Block Grant program.”

Lee urged continued advocacy with the city’s federal delegation, saying the scale of potential cuts would strain the safety net and that “we all need to focus very closely on the fiscal cliff and the sequestration cuts.”

The mayor’s remarks were delivered in response to questions from Supervisor Kim (District 6) on event closures and from Supervisor Cohen (District 10) on federal budget cuts. No formal vote was required for the Q&A session.

Looking ahead, Lee said the city will continue to require event sponsors to pay city costs and that his office and department partners would pursue mitigations for traffic impacts while promoting the economic benefits of large conferences.