How does one reference a conference paper in a cover letter?
Unless the application instructions require you to provide references in a particular format (unlikely but not impossible), your key objectives should be (a) to convey sufficient information to allow the reader to find the work that you're citing and (b) to be consistent in your referencing. Within those constraints, you are probably safe to provide the reference in whatever format best suits your needs.

You may want to: 


provide the reference as a footnote (e.g. "… I leveraged a paper¹ …" and then details of the reference in the footnote) or 
use an inline numeric or author-date citation (as in your question) and then at the very bottom of the page (after your signature etc) put "Reference: " and the details of the paper.


In choosing a format, you should also pay attention to the norms of citation formats in your discipline. So, for example, if it is normal in your discipline to use author-date citations then do that, but if it's more normal to refer to papers using numeric references (e.g. '[1]') then you should prefer that.