A Sunset Hills committee charged with formulating a five-year plan outlining the city’s capital-improvement needs has established a June 29 target to complete its work.

Members of the Capital Improvement Committee last week agreed on the June 29 target — roughly one month before voters will consider a permanent extension of the city’s existing half-cent, capital-improvement sales tax in the Aug. 7 election.

Aldermen voted 6-2 last month to adopt an ordinance placing the proposition on the ballot. Ward 2 Aldermen Scott Haggerty and Thomas Musich were opposed.

The ballot language asks voters if the city should continue to impose the half-cent sales tax for the purpose of funding capital improvements and paying the costs of operation and maintenance of those capital improvements.

The half-cent, capital-improvement sales tax was approved by voters in 1994 to fund a more than $5.7 million bond issue for City Hall repairs, a new police station, a new public works building and street improvements, among other items.

Because the sales tax is tied to a bond issue, restrictions exist on how revenue from it can be used. For example, for every dollar the city wants to spend from the capital-improvement tax for street improvements, 57 cents must be appropriated from general revenue.

The bonds were issued in 1996, refunded in 2004 and are set to be retired in 2016. If the bonds are retired, the tax would end unless voters elect to extend it.

If the bonds are redeemed after the August election, the city would save an estimated $41,000 in net interest expense. In addition, the tax will continue to generate $875,000 per year for capital improvements. Redeeming the bonds will eliminate the requirement that capital-improvement funds be matched with general revenues.

The ordinance placing the sales-tax extension on the ballot established the Capital Improvement Committee, which is comprised of four aldermen who are on the city’s Public Works Committee — Chairman Stephen Webb of Ward 3, Richard Gau of Ward 1, Musich and Pat Fribis of Ward 4 — and six residents — Diane Stolzer, Robert Flynn, Bruce Studer, Michael Fitzgerald, Thomas Lynch and Greg Zveitel.

At the June 4 meeting, committee members continued to discuss the definition of capital improvements.

As proposed, capital improvements would be defined as “assets owned or leased by the city of Sunset Hills for which the city has the authority to acquire, pay the costs of, maintain, operate or to contract with other persons to have the same done, including but not limited to, roads, streets, land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, infrastructure and all other tangible or intangible assets that are used in operations, having initial useful lives extending beyond a single reporting period and having a unit cost greater than $5,000.”

Committee members discussed at length whether to retain the $5,000 threshold, but made no decision.

Fitzgerald said, “… I think being consistent with the (annual city) audit and what our internal policy is for capitalization, the $5,000, I think … we need to really, really consider that … We talk about capital and this is a conceptual argument — we talk about capital improvements, we’re not talking janitorial (services). We’re not talking landscaping or any of that …”

Given the number of capital projects identified by city officials and the cost of those potential projects over the next five years, “there’s no room in that for flowers or anything else, and I don’t think that it would be any kind of stumbling block having a $5,000 threshold number …,” he said.

Gau advocated removing the $5,000 threshold, noting that sales-tax revenue currently is used to fund maintenance of the facilities constructed under the bond issue.

“… I don’t disagree with what you’re saying, but if the (state) statute allows that, why would we want to preclude ourselves from doing that?” he said. “The statute allows us to pay for those maintenance things — again for the building that we did — to pay for the maintenance for that. Again, just to give us that flexibility.”

Gau later noted that the city’s public works budget includes roughly $19,000 for snow removal that comes from the capital-improvement sales tax.

“Where would that go under everyone’s view moving forward?” he asked. “Is that capital?”

Fitzgerald said, “No — operating expense.”

That would result in the city’s general fund having $19,000 less than it currently does, Gau said.

Committee members said they wanted to see how shifting maintenance costs now funded by sales-tax revenue to the general fund would impact the city’s 2012 budget.

At one point, Musich advocated keeping the $5,000 threshold, noting it would be continuation of the city’s existing accounting procedures.

“… It indicates that we are trying to track our money and use it wisely,” he said. “When we talk about presenting it to the citizens of Sunset Hills, I think — I don’t know if the $5,000 limit is going to really make a whole lot of difference to the people going into a voting booth. I asked the question personally to (Police) Chief (William) LaGrand, (City Engineer/Director of Public Works) Anne Lamitola and (Parks Director) Gerald Brown and said: Given what you have to work with now, would you be able to continue our present service to the citizens of Sunset (Hills) without our current capital-improvement tax revenue?

“Every one of them said: No. I think it would behoove all of us to continue the tax the way it is now to get the same service that we’re getting and support the extension — or I don’t know how you want to phrase that. I don’t know if it’s an extension or you put the old one to rest and the new one immediately comes into being. Whichever way you want to phrase that, I think it’s important that we continue getting that tax revenue of the half cent, just like we have been in order to continue with the same services that we’ve been receiving from those three main departments …,” he added.

Fribis later said, “I think we should have a dollar figure in there for accounting reasons. It’s always been $5,000 as long as I’ve been involved with the city …”

The committee was scheduled to meet again Monday — after the Call went to press.