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The City of Denton does not participate in Type A or Type B sales tax collection, which is generally used to fund a variety of economic development projects. Instead, Denton uses other tools offered by the State to municipalities to publicly finance needed improvements and enhance infrastructure to stimulate private development and redevelopment. State law allows for several different types of development districts. Currently, Denton has two Tax Increment Reinvestment Zone development districts.

A Tax Increment Reinvestment Zone (TIRZ) is a tool that local governments can use to publicly finance needed structural improvements and enhance infrastructure within a defined area in order to stimulate private development and redevelopment. An ad valorem valuation base is established in the first year, and the revenue from the increased valuation from subsequent years is allocated to TIRZ development. The statutes that regulate Tax Increment Financing are located in Chapter 311 of the Texas Tax Code, also known as the Tax Increment Financing Act.

Once a TIRZ is established, a board is appointed. Its first tasks are to create the feasibility, finance, and project plans for the TIRZ. Each year, the TIRZ Board approves an annual report covering the activity of the TIRZ, which is presented to the governing body for approval and submittal to the State.