Guy Span

Astonishingly enough, the San Francisco Mayor’s Office of Protocol did indeed call back to put to rest speculation by Bay Crossings that the Mayor had not been involved with Fleet Week activities. While it was true that the Mayor did not attend the “Friends of the Fleet” MVP Lunch for Sailors and selected Boy Scouts held downstairs and outside of his office on Sunday, October 10, and even though he was right outside City Hall, he indeed did not attend the formal dinner held that evening to honor senior naval officers.

Staff of the Office of Protocol told Bay Crossings that these events were not “Official” Fleet Week events, as they were not sponsored by the “Official” San Francisco Fleet Week Committee, Inc., a registered nonprofit 501(c) 4 corporation. Thus, as unofficial events, paid by his community to honor sailors visiting his town, it was somehow inappropriate for the Mayor to attend.

Bay Crossings learned that the Mayor did enjoy the “Official” pavilion where he watched the air show and later visited a disaster relief display. That, and confirmation that he was late to a meeting to honor the remaining Captains (many had sailed with the conclusion of Fleet Week activities) was the sum total of his involvement.

And this is where it gets complicated. You see, according to the City’s own Grant for the Arts, Fleet Week is not an officially sponsored event. “Official” events are those that are managed in part or completely by the City, according to a spokesperson for the department. Since the unofficially “Official” Fleet Week Committee handles all the event management, the City considers it an unofficial event, although it does contribute some $30,000 through two of its agencies.

It then gets more interesting. Somehow, the “Official” three-person board, Edward Leonard, Dwayne Oslund,and Joseph Zaccone, put on an event that costs over $400,000, which brings a gigantic air show to town along with lots of Navy ships and more than a million people. They do this by contracting out most of the work to a company that specializes in putting on air shows, Air Show Network.
According to the Fleet Week Committee’s filings with the Registrar of Charitable Trusts obtained by Bay Crossings, Air Show Network (ASN) is also a fund-raiser, earning some $44,000 in fund-raising costs paid by the Fleet Week Committee in 2003 alone. And, according to the filing, some $298,000 was raised by leased chalets (tents), displays, seating, attractions, and sponsors, which in 2003 included AT&T.

So the fund-raising costs of 16.5% look pretty modest, given the overall income. Yet according to Edward Leonard, president of the Fleet Week Committee, most of the expenses are paid to Air Show Network. Thus, with the exception of the City’s $30,000 contribution, apparently most of the income and expenses are derived from and end up in one place–Air Show Network.

Untangling the expense side of this equation would be a lot simpler if the Fleet Week Committee filed the required Schedule A (to Form 990) with the Registrar of Charitable Trusts, since in this schedule, nonprofits are required to report a payment to a contractor of over $50,000. According to the Registrar, this schedule should have been filed for both 2002 and 2003, but the agency did note that there were some limited exemptions to this requirement. Based on Edward Leonard’s observation that ASN basically managed the show, we can total up payments to them in the neighborhood of $220,000 or more.

Thus, the nonprofit, Mayor-approved unofficial “Official” Fleet Week Committee earns the majority of it funds through its contract with ASN and in turn, pays the majority of its expenses to the same entity, including a $44,000 fund-raising fee. This, according to a charitable trust CPA, who asked not to be identified, should raise some red flags with both the IRS and the Registrar of Charitable Trusts as it creates the appearance of a private company sheltering income through the nonprofit (particularly with no Schedule A provided). Bay Crossings did ask the Fleet Week Committee for a copy of the Schedule A on the assumption it was provided to the IRS and was told the Treasurer was away on holiday and thus it would be unavailable for a while.

Income sheltering could happen, explains the CPA, when there is income, for example, for Chalets (tents) of $40,000 and rental cost for tents of $14,000, with the difference being the profit, theoretically donated to the nonprofit Fleet Week Committee. Presumably, ASN provides the tents, rents the tents, collects the money that is then paid to ASN for other services, such as the General Production Management Fee of $62,500, $26,000 for sanitation and cleaning, $44,000 for fund-raising, and other costs. But to ASN, assuming the $26,000 “profit” was a charitable donation to Fleet Week, then it would pay no state taxes on money paid to itself.

Bay Crossings tried to reach ASN using the contact information on Fleet Week’s 2003 Form 990, but the phone had been disconnected and the address was listed as “unknown.” However, ASN has an active web site with two phone numbers. One is an 800 number for buying tickets and it hangs up on the caller, simply saying “good bye.” The second is for the offices, but despite repeated attempts, no combination of the phone tree would deliver either a live person or a place to leave a message. E-mail went unanswered.

ASN is apparently patient about being paid, as in 2003 there was an $86,000 deficit for the full operation of Fleet Week, added to a $15,000 shortfall from 2002. Edward Leonard said that some creditors, such as ASN, were understanding and that some income arrives after the end of the reporting period so that things weren’t as bad as they looked, from a cash-flow perspective.

Our own Fleet Week Committee can be compared with our neighbor down south in San Diego, where they run a $680,000 Fleet Week with 18 board members (compared to our three) and manage to file a Schedule A, showing no payments to any contractor in excess of $50,000. According to several sailors, who asked not to be identified, Fleet Week is a big deal in San Diego, with lots of events especially designed for the sailors. Here in San Francisco, the San Francisco Fleet Week Committee funds only one event during the week and that is a “meet and greet” with the aviators where usually paid public attendance is required.

Citizen volunteers, who on their own sponsor various activities for the sailors, fill that rather large hole for sailor events. There are usually events by the Oakland and Marin Navy Leagues, Alameda Sheriff’s Department Bar-B-Que (led by the largely unheralded Lou Lozano), and Fior D’Italia’s generous dinners. This year, the somewhat snubbed Friends of the Fleet provided the Marine Corps Band to play for San Francisco and also for veterans at the Home of the Brave, transportation so that sailors could volunteer to visit sick children in San Francisco and a school in Alameda, and the previously mentioned hosted lunch and dinner to honor the sailors, held at City Hall.

Bay Crossings called Mrs. Anna Falche, a driving force behind Friends of the Fleet, and asked about the level of support the group had received from the City. She pointed out that two of her events were held at City Hall and said her group had always gotten the full support Mrs. Charlotte Schultz, the head of the Mayor’s Office of Protocol. When asked about rumors of problems with the young staff members, she had no comment and when asked about being snubbed by the Mayor, she laughed.

She pointed out that many members of Friends of the Fleet were strong supporters of the Mayor in the last election and that in no way would they have been intentionally ignored. “The Mayor couldn’t attend,” she said, “because he obviously had other duties to handle.” She went on to say that the important thing was that Fleet Week continues to be a success and that Friends of the Fleet was there to support the Navy and the Armed Forces.