Overview of Temple Tax Increment Reinvestment Zone No. 1

Despite being the largest in Texas by acreage, the Temple Tax Increment Reinvestment Zone (TIRZ) No. 1 remains a mystery to many residents, so the Telegram set out to demystify it. A TIRZ lets cities and counties finance improvements in a designated area using tax revenue generated by rising property values. Officials set a baseline taxable value when creating a zone. The city continues to collect taxes on that base, plus taxes on personal property within the boundaries, to cover maintenance and operations (M&O). Revenue from increases above the baseline — the tax increment — is dedicated to eligible zone projects. While the zone can reimburse Temple for eligible municipal services, Temple cannot simply transfer TIRZ balances to the general fund to lower property tax rates. State law restricts TIRZ funds based on the zone’s project and financing plans, contracts and outstanding debt. Created Sept. 16, 1982, TIRZ No. 1 originally covered about 1,943 acres in northwest Temple and portions of Bell County. The Zone has undergone several expansions, including a 9,484.8-acre expansion in 1999 and approximately 2,221 acres in 2010, which incorporated the Temple Medical and Education District. The city review of expansion ordinances puts the zone at 14,863 acres, while the state comptroller website lists 15,014 acres. City spokesperson Nohely Mackowiak said staff will reconcile the figures with the city geographic information system and submit any necessary corrections to the comptroller. The zone’s original taxable baseline was $97.8 million, but because it has grown so much, it now has two tax increment funds (TIF). In fiscal year 2026, TIF I had a taxable value of about $1.2 billion and TIF II about $360.6 million, totaling $1.56 billion, nearly 16 times the original base. City Council also recently extended the zone’s life from 2051 to 2062, giving it an 80-year lifespan. The zone has received $64.7 million in city tax increment revenue over the past 20 years, with $11 million last fiscal year alone. When adding $38.4 million for M&O and $29 million for debt payments (interest and sinking, or I&S), city property tax revenue exceeded $78.4 million. As of June 30, the zone fund balance slightly exceeded $4 million, compared to the city general fund of nearly $55.8 million. The zone’s 10 largest taxpayers — BKV-BPP Power LLC (Panda I), Panda Temple Power II, H-E-B, Velocis Temple SPE LP, East Penn, McLane Co., Cypressbrook Temple LP, Tanglefoot Properties, FedEx Distribution Center and Pactiv Corp. — accounted for $25.6 million, or 60.45%, of the $42.3 million levy last year. Major employers include Baylor Scott & White Health, the U.S. Department of Veterans Affairs, McLane Co., Temple Independent School District, H-E-B retail distribution center, BNSF Railway Co. and Wilsonart International. Master plans prioritize infrastructure and other eligible improvements, incorporated into the TIRZ Project and Financing Plan. “The city continually evaluates the zone’s financing plan to balance those long-term commitments with the needs of the broader community,” Mackowiak emailed. Of course, zones don’t have needs and goals; people do. The 15-member Temple TIRZ board helps shape projects and recommends expenditures, but City Council retains final approval of project and financing plans. Bell County, Temple ISD, Belton ISD, Troy ISD, Temple College and Elm Creek Watershed each appoint a member to the TIRZ board while City Council appoints the remaining nine. Of the 14 current TIRZ board members, five — Tyler Johnson, Gary Schmidt, Bob Browder, Mathew “Bo” Harvey and Brian Reinhardt — also serve on the Temple Economic Development Corporation board. Temple policy limits service on Council-appointed boards and commissions to two at a time. Two Council members, Mayor Tim Davis and Mayor pro tem Jessica Walker, are ex officio (nonvoting) members, while City Manager Brynn Myers acts as liaison. Residents may comment during TIRZ board meetings through the usual public-comment process, although meetings historically start at 7 a.m. For those who want a seat at the table, one seat is currently vacant. The TIRZ board reviews expenditures exceeding $100,000 and recommends action to Council. The December 2022 Boards and Commissions Policy references a $50,000 threshold for boards and commissions, including TIRZ No. 1 Board, but Mackowiak explained the city currently follows state law in practice for the $100,000 threshold for board consideration. She added the city is considering updating the policy to align with state law. The city audits the zone as part of its own audit. The TIRZ annual report and current project and financing plan are on the city website. Mackowiak explained the final budget document should be available within a month or two following Council’s Aug. 28 adoption. So what does all this mean for the average Temple taxpayer? While a TIRZ does not add a new tax or automatically change a property’s tax rate, it directs some revenue from rising property values toward eligible zone projects instead of general budgets to spur development and economic growth. Residents must weigh those potential benefits against dedicating revenue to the zone through 2062.