Planned Special Events: Cost Management and Cost Recovery Primer
Chapter 1: The Current State of the Practice
Many aspects comprise sound planned special event (PSE) management. These aspects include management of direct and indirect costs, clarity of permitting process, and interagency coordination, as depicted in Exhibit 1.1.3 Because PSE management is often highly fragmented, for most jurisdictions a high level in one category does not correlate with a high level in another category. Each aspect is generally independent from the others and can be thought of as a separate dimension of PSE management, as Exhibit 1.1 reflects. Cities must consider all of these dimensions in evaluating their current PSE management plan.
Exhibit 1.1: Dimensions of PSE Management
One of the difficulties with cost management and recovery for planned special events is that the costs incurred in permitting, planning, and operations for each event are split among multiple departments and even divisions within departments. An example of how costs typically may be split among departments is pictured in Exhibit 1.2. Several agencies, generally including the police, city department of transportation (DOT), and public transit authority, are responsible for different aspects of transportation management for events. Other departments are involved in PSE planning and operations, such as the fire department and licensing agency, but these are not involved in transportation. This disaggregation can make assembling a single cost estimate for PSEs very difficult; yet the benefits of PSEs accrue to the city and its population as a whole in the form of greater economic activity, city revenue, and increased civic participation in the case of those events considered to be first amendment rights. Many cities may find that one department or agency is already implementing a comprehensive approach to PSE cost management, but that the practice is isolated and knowledge is not transferred among departments.
Exhibit 1.2 Dispersion of PSE Costs
Interdepartmental discussion and knowledge transfer, therefore, may be a good place to begin implementation of cost management and cost recovery. Looking at the practices of other cities of similar size is also beneficial. PSE management is challenging because it is often split across multiple departments and PSEs often cross jurisdictional lines. Large planned special events cross jurisdictional bounds between state, city, and county and accrue regional, rather than jurisdictional, benefits. State authorities may have different incentives than authorities in individual cities, which are often willing to absorb the costs in exchange for greater name recognition and a positive change for city residents.
The disaggregation of PSE management can make assembling a single cost estimate for PSEs very difficult; yet the benefits of PSEs accrue to the city and its population as a whole in the form of greater economic activity and city revenue.
Cost recovery will be most comprehensive when instituted as a collaborative, focused effort among relevant departments and jurisdictions. However, this holistic approach must conform to practical considerations as well. Implementation of sound cost recovery practices at the level of large departments in a city may be much easier to achieve than a city-wide cost recovery effort. Different departments — such as the Mayor's Office, the City Council, and the DOT — may all have different viewpoints and their own concerns to address. Cost recovery for events often is a political issue. City council members must address their constituents' concerns about the effect of events, and there can be considerable public support for both small events, such as farmer's markets, and large events that help to define the city, such as professional sports teams. Public opposition to certain direct charges (for example, ticket fees and taxes) can be strong. Each governmental office has its own mission and concerns, so agreeing on a city-wide policy or the amount of a line item can be difficult. These may be surmounted through an effort to build consensus and focus on the need to work toward a common goal.
A previous research study conducted in 2006 examined the management of costs for planned special events.4 The author conducted a scan of cities that included Baltimore, Boston, Los Angeles, New York, Philadelphia, Phoenix and Seattle. The methodology included a review of public material, policies, fee schedules and conversations with agency personnel. Exhibit 1.3 summarizes the results of the study.
|City||Budget Line Item||Cost Estimates||Cost Recovery and/or Cost Management|
|Baltimore||No||Generally||Cost Recovery is case-by-case for personnel & equipment; The city makes an effort to minimize overtime|
|Boston||No||Sometimes||The city recovers lost parking meter revenue; The city makes an effort to minimize overtime|
|Los Angeles||Yes||Yes||Cost recovery is estimated at approximately five percent; Special Operations Division reviews, approves & monitors PSE costs|
|New York||No||No||Occasional cost recovery|
|Philadelphia||No||PD lead on costs||Occasional cost recovery|
|Phoenix||No||Yes||Most costs are recovered|
|Seattle||No||Yes||Most costs are recovered|
|Adapted from: Managing Costs for Planned Special Events, Paper for the 2nd National Conference on Managing Travel for Planned Special Events, Prepared by David Kuehn, FHWA, Draft revised November 27, 2006, p. 7.|
The study concluded that the Los Angeles Department of Transportation is the "gold standard" for cost management. The Department has a Special Traffic Operations Division with nine positions dedicated to special events, full authority for the planning and operations of special events, routine procedures for different event scenarios, and a well-trained cadre of traffic control officers with experience deploying procedures in the field. Los Angeles also has considerable experience with "on-the-fly adaptations" to the traffic system to relieve or lessen congestion. The Division develops cost estimates for events then reviews and approves actual costs after the event. However, the Department recovers very little, less than five percent according to the Division Chief, of the costs from event organizers.
The study reported that Los Angeles appeared to be the only city with a separate budget line item for special events. In 2005, the Council approved a $2.7 million budget, which they increased to $4.1 million at the mid-year budget review to cover Department costs for special events. The author noted, "Providing cost information to the council and mayor, though, does lead to a political desire for cost recovery."5 The paper asserted that two cities that are most aggressive at recovering costs are Phoenix and Seattle. In both cities, this is a relatively recent policy and both cities have reviewed past costs to set fee schedules. Still, in both cities, the Departments do not recover costs for some types of events including City-sponsored events and first amendment demonstrations and marches. The author also discovered information on how peer cities manage and minimize the costs of supporting special events. New York and Philadelphia rely more on the police department to plan for and manage special events. Having workers on a shift schedule allows cities to perform more of the duties associated with special events while personnel are on their normal tours of duty. A large department staff can also be helpful. The author found that Baltimore, which has close to 700 positions in their Maintenance Division, provides enough depth to staff larger events without disrupting regularly scheduled activities.
Study staff contacted a large number of cities and other jurisdictions as part of the development of this primer. The purpose of these contacts was to develop information on the current state of the practice for cost management and cost recovery for planned special events.
Exhibit 1.4 summarizes cost management and cost recovery activities for five large cities, all with populations greater than 500,000. In general, these cities engage in some cost tracking activities, require permits for special events, and require some reimbursement for services. There is less similarity across cities in terms of DOT involvement in planning, whether permits are issued on a flat or variable rate, the existence of a traffic specific fee and whether traffic mitigation plans are developed by government or by event sponsors.
|City||Cost Tracking Methods In Use||DOT Involvement In PSE planning||PSE Permit Required||PSE Permit Flat Fee or Variable Fee||City Reimbursement for Services||Traffic-Specific Fee||Traffic Mitigation Plan Developed Privately|
|Los Angeles||Yes||Yes||Yes||Variable||For self promotional activities||Reimbursement basis||Not usually; but city contracts developed individually|
|Phoenix||Yes||No DOT||Yes||None for Application, variable for city parks||Yes||No||Yes|
The following sections provide case studies for a selection of jurisdictions. These case studies describe how these jurisdictions manage plan special events and their methods of cost management and cost recovery. The case studies included in this section are:
- Washington D.C.
- Phoenix, AZ
- Los Angeles, CA
- Ithaca, NY
The Mayor's Special Events Task Group (MSETG) coordinates the city's planning efforts for special events and is responsible for providing an interagency review and assessment of the operational, public safety, and logistical components of special event proposals. The MSETG is composed of membership from District of Columbia government agencies, Federal government agencies, and private sector emergency service organizations. Event proposals must be submitted in writing (a minimum of 120 days prior to the event) and then presented in person (a minimum of 90 days prior to the event) to the MSETG. The concurrence of the task group is required prior to the issuance of permits or licenses by the permit-granting agencies.
Exhibit 1.5: D.C. Mayor's Special Events Task Group Member Agencies
The First Amendment to the United States Constitution protects activities such as assemblies organized for public address, protest, and the exercise of worship or religion. These activities do not require the approval of the MSETG. The Special Operations Division of the Metropolitan Police Department handles these types of events.
Events such as parades, walks, runs, bike rides, require both approval from the MSETG and an additional permit from the Special Operations Division of the Metropolitan Police Department. The requirements of the Metropolitan Police Department for the issuance of parade permits include route approval, with a Traffic Control Plan from the District Department of Transportation (DDOT). The police department develops the Traffic Control Plan. The police department does not charge for such planning (although they do charge for officers during the event--see rate in Exhibit 1.6). Costs incurred in developing a Traffic Control Plan include driving through the route to ascertain traffic needs. No cost tracking efforts are in effect.
Where street closures are required, the Metropolitan Police Department requires that all event organizers completely barricade roadways with barriers capable of stopping an oncoming vehicle (e.g., water-filled barriers). The event organizer is fully responsible for renting, insuring, transporting, installing, and removing the barriers.
Organizers of events requiring street closures are also required to submit a traffic control plan to the Department of Transportation that conforms to the Manual on Uniform Traffic Control Devices (MUTCD). The Department of Transportation will then determine whether the event organizer is responsible for the acquisition, installation and maintenance of traffic control devices. The event organizer must remove all traffic control devices within two hours following completion of the special event.
Large events involving many buses require active liaison efforts with the police department and the Washington Metropolitan Area Transit Authority to ensure that adequate parking areas, bus identification, and drop-off/pick-up points are well planned and coordinated. These liaison efforts may also involve the need for re-routing of Metro buses or supplementation of Metrorail service to facilitate certain events. The newly enacted Federal Charter Service Rule improves upon several aspects of the old law. In particular, the new rule includes several exemptions under which public transit agencies may provide charter services for special events. When doing so, the transit authorities must follow reporting requirements outlined by the rule. For a complete list of exemptions and requirements see http://www.fta.dot.gov/laws/leg_reg_8391.html.
Neighborhood block parties require a Neighborhood Block Party Temporary Street Closing Permit from the Homeland Security and Emergency Management Agency and are subject to different rules and regulations than those listed above. Approval is required from the Department of Transportation, Department of Fire and EMS, Metropolitan Police Department, and Washington Metropolitan Area Transit Authority.
All sponsors of special events, regardless of non-profit status, are required to pay District of Columbia taxes on items sold. Tax-exempt organizations are not required to pay income taxes, but are required to pay all sales taxes. The Office of Tax and Revenue and the Department of Consumer and Regulatory Affairs cooperate in providing registration services.
The City of Washington, D.C. posts rates for most of the services associated with special events and clearly states that event organizers are responsible for "the costs of services, as determined by the agencies, incurred by the city for administering the special event." The rates, listed in Exhibit 1.6, are to be paid in full by event organizers fifteen business days prior to the event. Such transparency leads to greater ease of planning for event organizers and shows that the city is attempting cost recovery and maintaining communication with each department. This type of information is not readily available in many cities.
Exhibit 1.6: Reimbursement Rates for Washington, D.C. City Services
Department of Consumer and Regulatory Affairs
Department of Transportation
Department of Public Works
Metropolitan Police Department
Department of Fire and Emergency Medical Services
Department Of Health/Emergency Health and Medical Services Administration
The District appears to recover a large majority of their expenses and has made an effort to unify the application and planning process. The District has one agency with the authority to oversee all aspects of special event planning and provides detailed cost structures for many of the direct services associated with special events.
Although DDOT is a part of the Mayor's Special Events Task Group, multiple departments and offices within DDOT coordinate different efforts and initiatives associated with special events. Not all of these departments are in close contact with the MSETG. While the city charges rather comprehensively for direct services, such as police traffic control during an event, many costs are being quietly absorbed behind those services that are listed. For example, traffic control during a parade would be the responsibility of event organizers, but there is no charge for the development of a traffic control plan for that same event. However, in some cases the city does require event organizers to submit a traffic control plan themselves.
It is difficult to determine the extent of costs that remain unaccounted as they are spread between multiple agencies and among departments within those agencies. While departments which have a history of charging for their services are surprised by the notion of not being reimbursed, staff in similar roles at other departments view their contributions as part of the department's mission and are surprised at the idea of asking for reimbursement.
The City of Phoenix Parks and Recreation Department handles special event applications, regardless of whether the event will be held on park property. However, public assemblies do not require applications and are coordinated by the Phoenix Police Community and Patrol Services. The City of Phoenix requires the applicant to be responsible for almost all issues associated with the event. Applicants must provide, at their own expense, services that include the following:
- Neighborhood notification
- Additional trash receptacles and clean up following the event. The city will bill event organizers for any sanitation services.
- Appropriate security and medical response, as deemed necessary by the City. Off-duty police officers are available for approximately $50 an hour.
- A parking/shuttle plan and detailed Traffic Control Plan from a professional barricade company for any events involving street closures. This plan must then be approved by the Street Transportation Department.
Phoenix's Steele Indian School Park, a city park, handles many large special events (events attracting more than 10,000 people) per year. The City's fees for personnel charged to special event organizers have recently risen from about $15/hour to $40/hour for set-up, event, and tear-down staff and $51/hr. for maintenance staff. This change was made when the City realized that employees were mainly called upon to work during holidays and evenings, when they receive overtime pay (time and a half). The prior fees fell extremely short of the true cost to the department.
Steele Indian School Park collects three fees, each calculated separately, from event organizers. The park charges a user fee that is dependent upon the section(s) of the park in which the event will be held. And whether the sponsoring organization is a commercial enterprise, a private entity, or a non-profit organization (the fees schedule is on a sliding scale). There is an additional charge per staff hour, with staffing needs being determined by the park. The park also requires a security deposit, ranging from $500 for an expected attendance of 300 participants to $2,000 for an expected attendance of 5,000 or more.
Costs incurred in connection with the licensing process for activities such as liquor sales and mechanical rides/games are tracked and the associated fees set to achieve full cost recovery. The city's licensing department implements this cost recovery system and has carefully tracked staff time, overhead, and all costs associated with regulatory licensing. An application is followed through its "lifespan" with attention to who handles the application, the handlers' pay-scale, how many hours of labor are required, and additional external costs that exist. Costs are updated annually. No special software or training is required for this tracking process, which would likely require the efforts of one employee for a few weeks each year.
Virtually all special events fall under the jurisdiction of the Phoenix Department of Parks and Recreation, which does not charge for the permit itself but does charge for almost all direct city services associated with the event. Despite the uniformity in creating one governing body for all events, event organizers still need additional permits and services for requirements including but not limited to emergency medical services, police services, sanitation services, food/beverage services, and tent/canopy permits. Each department involved with these services sets its own fees, and these fees are not published or made available by the Department of Parks and Recreation, which does not act as a coordinating agency.
The City of Phoenix has set a clear objective of full cost recovery for PSEs. While many departments have internalized this advice and charge for the use of all direct services, cost tracking efforts are not part of the normal procedure. Several departments are still under-charging or are unaware of the difference between their true costs and the prices they set. Most city officials do not seem to know who would be in charge of cost tracking and where such efforts do occur, there is no system in place to assure unit costs are regularly updated. In spite of these shortcomings, the city's comprehensive billing system likely results in the recovery of the majority of expenses.
Los Angeles, CA
Approvals for special events come from different agencies within the city: the Los Angeles Department of Building and Safety (LADBS), the Department of Public Works (DPW), and the Los Angeles Police Department (LAPD). The appropriate governing body is determined by the type of event, as outlined in Exhibit 1.7.
Exhibit 1.7: Agency Responsible for Issuance of Special Event Permits for the City of Los Angeles and Types of Events / Activities / Equipment Covered by Agency
Los Angeles Department of Building and Safety (LADBS)*
Bureau of Street Services (DPW)
Special Events Planning Unit (LAPD)
*Must have maximum duration of 5 Days to qualify as Temporary Special Events
The Los Angeles Department of Transportation (LADOT) receives notifications from the three approval bodies and conducts preliminary screenings to determine the appropriate level of transportation response. LADOT is responsible for preparing and implementing special traffic management plans to regulate excess traffic and mitigate the effect of street closures for special events. These activities may include posting temporary parking restrictions at the event location or preparing a detailed Special Event Traffic Management Plan. Notifications of large upcoming special events and accompanying street closures are posted on the Department of Transportation's Automated Traffic Surveillance and Control website.
Those events falling under the jurisdiction of LADBS are required to be inspected and approved by the department prior to holding the event. Applicants must file applications and pay fees at least two days before the event, and inspections are conducted prior to event. The fee is $130 for tents up to 5,000 square feet, with an additional fee for large tents of $130 for each additional 5,000 square feet. An additional fee is imposed for off-hour inspections made after 3:30 p.m. and before 7:00 a.m., or on declared city holidays. There is also systems fee of 6 percent on all permits.
Prior to obtaining approval from a LADBS field inspector, a safety plan showing the layout of the event is required to be approved by the Los Angeles Fire Department. The approved safety plan must be made available to the Department of Building and Safety inspector at the time of the site inspection. Events that exceed five days, or do not qualify as Temporary Special Events, such as the change of use of a building or Christmas tree and pumpkin lot sales, require a building permit from LADBS. Dances require specialized Dance Permits from the LAPD, which are processed by the Office of Finance.
The LADBS application for a special event permit makes little mention of additional required permits or fees and contains no information regarding responsibility for traffic or parking plans or payment for police services.
Permits for events involving street closures are issued by either the Department of Public Works, Bureau of Street Services, Street Services Investigation and Enforcement Division, Street Closure/Special Event Unit or the Los Angeles Police Department, Emergency Operations Section, Special Events Planning Unit (SEPU).
The permit fee for those events falling under the jurisdiction of the Bureau of Street Services and requiring street closure is $312. There is no fee if the event occurs on a city sidewalk, although a permit is still required. A fee of $216 is charged for events that include temporary selling activities. It is possible to both apply for and check the status of an application online. The Bureau inspects the area after each event and bills for any required cleaning. In the case of large events, a refundable cash deposit may be required to assure proper cleaning after the event.
The city does charge for police officers to control traffic during the event. Event organizers also are required to install and maintain barricades with flashers during the entire period of the street closure. These may be rented from the city free of charge. However, the applicant is charged for damaged or lost equipment.
Prior to processing a request for any street closure or event, the Street Services Investigation and Enforcement Division notifies a number of agencies of the time, place, location and nature of the event. These agencies include, but are not limited to the appropriate Council Office, Los Angeles Fire Department, Los Angeles Police Department, Los Angeles Department of Transportation and the Metropolitan Transit Authority (MTA). In the event that a protest of the closure is received from one or more of these agencies, the request for closure will be scheduled for a public hearing before the Board of Public Works.
For those events requiring a permit from SEPU, a statement from the Los Angeles Department of Transportation of the estimated traffic control costs is required. However, this requirement is waived for non-commercial events.
The City of Los Angeles tracks all costs associated with planned special events, including planning and operations costs. A project number is assigned to each event, and staff time (including overtime and overhead) as well as equipment costs are tracked. Many large event organizers, rather than applying to one of the three agencies involved in planning, address the City Council and contract with them directly for event support. The City Council often waives reimbursement in these cases. Many permanent venues, such as Dodger Stadium, the Los Angeles Coliseum, Staples Center, the Hollywood Bowl, and the Greek Theatre have contracts with the city that do not require them to reimburse the city for any traffic management costs. The city does require some reimbursement for movie premieres.
While the DOT has a line item for overtime, which includes emergency response, it does not have a line item for planned special events.6 The cost of planned special events to the city as a whole is more than $10 million annually. However, this analysis of fiscal impact does not consider the economic and social benefit the city receives from these events. Most departments simply absorb the costs by leaving vacant positions unfilled and delaying planned equipment purchases. The DOT does try to trim costs where possible and engages in resource management. Strategies include shortening routes or creating routes that loop and holding events on days that do not conflict with other events in the nearby area to lessen congestion and expense.
Sometimes departments conflict in their goals. For example, the DOT focuses on trimming costs, while other departments feel that publicity for the city is important. The DOT generally begins planning events only after the City Council has waived fees and approved the event's time, date, and location, which makes resource management very difficult. Approximately half of PSE transportation costs come from permanent venues.
Cost recovery activities in the City of Los Angeles appear to be minimal. While some flat permit fees are relatively high and may cover some of the costs associated with processing the application, notification that the applicant is responsible for the reimbursement of city activities during PSE facilitation is largely absent from the information provided to event organizers by all three departments responsible for permit issuance.
Ithaca has a centralized application process for large events. Events requiring three or more permits (Noise, Assembly or Parade, Street Closure, Use of a Park or Public Property, Alcohol, or Vending) are handled by the City Clerk's Office and must be received at least one month prior to the event. Upon receipt of an application, the city assigns a liaison to be a single point of contact and guide applicants through the process. The city forwards copies of the application to all involved departments for review and approval. It also informs applicants if any additional information, permits, licenses, or certificates are required. The Ithaca Police Department, Fire Department, Office of the Mayor, Office of the City Clerk, Department of Parks and Recreation and occasionally the Deputy Director of Economic Development all meet for events requiring three or more permits.
The Ithaca Department of Public Works does most of the traffic planning for special events, as Ithaca does not have a city DOT. Events necessitating street closures may be required to obtain traffic safety equipment, such as barricades, traffic cones, sign, and parking meter bags, from the Department of Public Works and may be required to place the equipment. Event organizers are also responsible for posting advisory and/or directional signage if the event affects a major-use roadway. If sufficient parking is not available, the event organizer may be required to submit a shuttle plan. Event organizers are also required to submit a plan for all concessionaires, including security, fire lane and fire code compliances, evacuation plans in case of an emergency, and trash and grease clean up and disposal.
The city has a general philosophy that special events are a positive contribution to the community and therefore does not currently charge event organizers for its services. However, there has been some interest in increased cost recovery, and recently the city made its first attempt to recoup a small part of their expenses through a special events parking fee. Parking in city garages, usually free on evenings and weekends, is now $3 per day during special events.
At this time, the city does not have an estimate of the amount of revenue generated through special events, though they are believed to generate economic activity and tax revenue. Each department associated with special event planning and operations tracks its costs; however, for the most part only direct costs, such as personnel hours, are included in this calculation. The city frequently requires event organizers to hire private security to supplement police presence, rent port-a-johns, and secure first aid services such as an ambulance to remain stationed at the event for its duration.
As with many other cities, Ithaca also requires that vendors specify the City of Ithaca as the origin of sales and obtain a New York State Sales Tax Certificate. Ithaca requires event organizers to keep all such certificates on file for inspection and review by the city. This ensures that the city receives tax revenue associated with sales.
The City of Ithaca, New York, is a noteworthy example of PSE organization. The special event permit application is very clear about what constitutes a special event: Any event occurring within the City of Ithaca that requires three or more of the following permits is subject to the provisions of a Special Event Permit: Noise,Assembly or Parade, Street Closures, Use of a Park or Public Property, Alcohol,Vending. All permit applications are required to be completed and submitted to the City Clerk's Office.
The organization of the permitting system allows smaller or simpler events to avoid the process of a special event application while at the same time allowing for greater coordination of very large events. The guide is very specific about what additional permits, such as for large tents, are required and always provides appropriate contact information. The application is also very clear about what items event organizers will be responsible for and encourages communication with city staff on a variety of issues, rather than simply requiring permits. For example, under "Crowd, Control, and Security" the application states: "Event organizers are required to provide a safe and secure environment for their event. This is accomplished through sound preplanning by anticipating potential problems and concerns. The size, type, time of day, and location of the event, as well as the overall activities, are all areas that need to be analyzed in depth. Events having the potential to draw a large crowd are of particular concern, and should be discussed with the City event planning staff. Some events will require the services of a professional licensed security company."
One challenge with city-level PSE handbooks in general is that they are often complicated and difficult for first-time event organizers to understand. By contrast, the Ithaca handbook provides general guidelines to assist new event holders.7 For example, the handbook notes, "The City of Ithaca recommends one toilet for every one thousand people. This figure is based upon the maximum number of anticipated attendees at your event during peak time. In cases where portable toilet facilities are required, at least 10% of the total toilets shall meet accessibility guidelines for people with disabilities. The total number of toilets required will be determined on a case-by-case basis." The City of Ithaca has proven that the process of providing guidance on planned special events can be both simple and comprehensive.
3 Cost recovery as well as direct and indirect costs appear in the glossary at the end of this handbook and are discussed in detail in Chapter 2.
4 Managing Costs for Planned Special Events, Paper for the 2nd National Conference on Managing Travel for Planned Special Events, Prepared by David Kuehn, FHWA, Draft revised November 27, 2006.
5 Managing Costs for Planned Special Events, Paper for the 2nd National Conference on Managing Travel for Planned Special Events, Prepared by David Kuehn, FHWA, Draft revised November 27, 2006, p. 7.
6 Managing Costs for Planned Special Events, Paper for the 2nd National Conference on Managing Travel for Planned Special Events, Prepared by David Kuehn, FHWA, Draft revised November 27, 2006.
7 The handbook is available on the city's website, http://www.ci.ithaca.ny.us.