STAFF REPORT

Operations Committee, December 6, 2007

Sale of Rain Barrels (PWUT08-10)

Consideration of mid-year additional appropriation of funds for purchase of rain barrels and recognition of offsetting revenue from resale

Speaker:  Ms. Marie Cefalo

From:  Mike Bajorek, Interim Director of Public Works and Utilities

Prepared by:  Marie Cefalo, Water Conservation Coordinator

Approved by:  William B. Coleman, Jr., Town Manager

Approved by:  Benjamin T. Shivar, Assistant Town Manager

As part of the Town’s Water Conservation Program we have made rain barrels available for purchase by our customers at cost since FY03.  The Town has provided over 1,250 rain barrels to customers in the past 6 years:

The Town works directly with Rain Water Solutions, Inc. (RWS) to make rain barrels available to our citizens.  In FY07 $16,125 was budgeted for 189 barrels.  We estimated that we would sell 225 rain barrels in FY08.  Five months into FY08 we have sold all 225 barrels.

Given the current drought and the overwhelming demand for this product, staff recommends a mid-year budget amendment to allow purchase of 500 additional barrels for the remainder of the fiscal year.  The rain barrels have been sold for $82.00 each – a significant discount to their $149.00 retail value.  While the Town does not pay sales tax to RWS, we must charge 7.5% tax to purchasers of the rain barrels and remit the sales tax to the state.  RWS is increasing their price slightly (from $75 to $80).  Staff propose to sell the rain barrels for $86.00 ($80.00 for the barrel plus 7.5% tax = $86.00).

Fiscal Impact:  Using $80 as the purchase price and $86 as the sale price, proposed sales to Cary and Morrisville customers of 500 more rain barrels for the remainder of FY08 will incur expenses of $40,000.  An additional amount of $3,000 will be collected as sales tax and remitted to the state.

Staff Recommendation:  Staff recommends approval of an appropriation amount of $40,000 to the Water Conservation Division, Items for Resale account, for the purchase of rain barrels, with the recognition of off-setting revenues of $40,000 to the Miscellaneous Revenue account.