Port of Olympia’s fuel dock falls well short of first-year financial projections

A decade ago, 800 boaters petitioned the Port of Olympia to build a fuel dock.

The dock, which sells gasoline and diesel, ultimately became a reality last year when the $3 million operation opened at the north end of the public dock at Swantown Marina.

But first-year operations fell well short of projections, and some might be asking: Did any of those 800 boaters actually use it?

Volume of fuel sold, revenue and expenses all missed the mark, compared to port projections.

The numbers show the port sold 113,000 gallons of fuel between August 2017 and August 2018, only about a third of the amount projected by the port in 2016. That year, former port finance director Jeff Smith forecast first-year sales of 336,000 gallons.

But first-year sales also missed the more conservative forecast of about 246,000 gallons, said the port’s Jeri Sevier, who now oversees the finance department.

The fuel dock also fell short of sales before expenses — $81,000, compared to an earlier projection of $240,000 — and operations and maintenance expenses were $10,000 more than expected — $101,000 versus $90,600.

Still, port officials are defending the decision to put in a fuel dock, saying they never expected the fuel dock to pay for itself in the first year. And with greater awareness, they expect sales volume to grow.

“I’m not pushing the panic button on this thing,” said port Commissioner Joe Downing after the first-year fuel dock numbers were recently disclosed to the commission.

“All of them have to stand on their own and I stand behind this one,” Downing said. “It was a great piece of work and we will get our money out of it.”

Commissioner Bill McGregor raised concerns about the competition from a city-run marina north of Olympia, while Commissioner E.J. Zita voted against approving the fuel dock. Among her concerns was whether it would pay for itself.

“Are you going to buy 100 percent of your fuel from our dock?” Zita asked a port commission audience in September 2016.

Mike Zittel, co-owner of Zittel’s Marina at the end of Johnson Point, said Wednesday he is not surprised by the port’s first-year fuel dock results.

“They weren’t realistic, I don’t think,” he said.

Zittel’s, which is home to about 150 boats, has its own fuel dock, but selling fuel in the area is very seasonal, he said. Once the summer boating season is over, Zittel’s cuts its fuel dock hours. It is closed Sundays and operates half-days on Saturdays, he said.

He also said that demand isn’t much to begin with. “They don’t go through that much fuel in a year,” he said.

Still, Zittel defended the port’s operation, saying it was needed. He rents boats and is glad that renters who go into Olympia can get fuel.

The port now uses a financial consultant, Alan Dashen of Northwest Municipal Advisors. Dashen mentioned the secondary benefits of the fuel dock because it brings boaters into the area who will spend money. But he also delivered some sobering news: Based on the first year data, the fuel dock is not expected to break even for the next 25 years, unless fuel sales increase significantly.

He also said he talked to the operators of an undisclosed fuel dock in the area and was told the following:

“Fuel docks always struggle to break even,” he said.

This story was originally published October 3, 2018 at 4:21 PM.