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Denton uses tools various economic development and financial districts to improve and enhance infrastructure and encourage private investment in specific areas of the city. These development districts support development and revitalization and are commonly known as public improvement districts, tax increment reinvestment zones, or municipal management districts. Denton currently has two active development districts: the Downtown Denton Tax Increment Reinvestment Zone No. 1 and the Westpark Tax Increment Reinvestment Zone No. 2.
A tax increment reinvestment Zone (TIRZ) is a tool used to fund public improvements, stimulate development or redevelopment, and enhance infrastructure within a defined area. A TIRZ operates by capturing increases in tax revenue from the defined area and using the revenue on projects within the same area. When a TIRZ is created, a base taxable value of the property in the zone is established. In following years, the increment of increased valuation between the base year and the following years goes to the TIRZ fund for use in the development district. This is a process known as tax increment financing (TIF). The length of time a TIRZ exists can vary, but they typically last for a period of 20 to 30 years. Chapter 311 of the Texas Tax Code statute, the section of state law that regulates TIRZ creation and operation, is also known as the Tax Increment Financing Act.

Each TIRZ has a board of directors, appointed by the City Council. The boards adopt the TIRZ finance and project plans, review projects, and make recommendations to the City Council. In addition, each TIRZ is required to submit an annual report to the Texas Comptroller of Public Accounts detailing the previous years activities and financial performance.