Brown Bear migrating off of 305

Poulsbo’s Brown Bear Chevron will be closed by the end of February. Bainbridge Island's location will close by the end of March.

POULSBO — Two Brown Bear gas stations will shut off their pumps before the end of March.

Poulsbo’s Brown Bear Chevron, on the corner of Highway 305 and Hostmark Street, will be closed by the end of February.

“The last day will be (February) 26th,” said Steven Palmer, Brown Bear chief financial officer.

“We will try to sell through as much as we can and then we will try to move products to other locations,” he said. “We are trying to manage the (gas) inventory to sell through as much as possible.”

Palmer said any residual gas left in the station’s underground tanks will be pumped back out and removed.

Brown Bear is also closing one of its Chevron gas stations on Bainbridge Island, located on the corner of Highway 305 and High School Road, in the Bainbridge Village shopping center. That gas station will close by the end of March, according to Palmer.

The company also owns a station across the street on High School Road that will remain open. It was purchased after the previous company — a 76 Gas Station franchise — went bankrupt in 2013. Palmer noted that the company, which is primarily a car wash business, hopes to open a Brown Bear car wash on the island in the future. But for now, the decrease in gas customers will leave the island with a single location.

“With the volume, it just makes more sense to consolidate to one location,” Palmer said.

Palmer said that ever since Brown Bear took over the Poulsbo and Bainbridge Island Chevron locations in 2003, it has failed to compete with neighboring gas stations on Tribal reservations, which are not taxed the same as non-Tribal gas stations.

“They have such a significant cost advantage,” Palmer said. “People are really price sensitive about fuel. They’ll cross the street for a few cents.”

Islanders and Poulsbo residents were crossing over to the reservation, Palmer said, for gas prices up to 28 cents lower than non-Tribal locations.

When a Safeway opened in Poulsbo in 2013 with its own gas station, down the street from the Brown Bear location, it made matters worse.

“That has exasperated the issue,” Palmer said about Safeway’s gas station, which offers lower prices than other nearby stations. “It was already tough with the Tribal situation.”

“We were kind of crushed between those two entities,” he said.

Palmer noted that grocery store gas stations can offset their low gas prices because the stations will often draw customers into the store, increasing profits there.

In the 11 years since taking on the Poulsbo gas station, it has experienced a 68 percent decrease in customer volume, and a 33 percent decrease in volume at the island location, according to Palmer, who believes the drop is primarily due to Tribal competition.

Gas taxes are structured differently for gas stations operated on 18 Tribal-reservations within the state. Tribal governments have agreed to be fully taxed when purchasing gas from state-licensed distributors. The state then refunds 75 percent of those taxes, and retains 25 percent; commonly referred to as a “75/25 agreement.” The Port Gamble S’Klallam  Tribe and the Suquamish Tribe are among the 18 Tribes in the agreement.

In 2013, a total of $9,968,893 was refunded to the 18 Tribes under the 75/25 agreement, according to a 2014 report from the Washington State Department of Licensing.

Palmer said that the greatest dip in profits came in 2008, following changes in state regulations. The 2007 Legislature granted the governor the authority to negotiate gas tax deals with Tribes in Washington State.

Contracts with Tribes for gas taxes, however, go back further than 2007. In 1995, the state began making deals with Tribal governments which challenged the state’s authority to levy taxes on reservations. Other Tribal governments have waged similar arguments since. The 75/25 tax deal is one such remedy to those challenges.

Palmer said that the company has found it difficult to relocate employees of its closed gas stations, but tries to offer a decent severance package.

Brown Bear opened its first car wash in 1957, and now has 48 locations in the region, often identified by signature bear sculptures in front of its businesses. It also operates Brown Bear markets at its locations, and operates Chevron, 76, and Texaco gas stations.