Denton's Data Centers Cut the City Tax Rate. The Utility Bill Is the Bigger Number.

"I think the lion's share of that is from the data centers."

Antonio Puente, general manager of Denton Municipal Electric, said that to the City Council when he was asked why DME's revenue for fiscal year 2025-26 was on track to fall more than $200 million below projection. The utility had projected $526.6 million and was on track to collect an estimated $310.5 million for the fiscal year ending Sept. 30, according to the Denton Record-Chronicle.

Weeks later, the same council cut the city property tax rate to its lowest point since 2004. The city's chief strategic officer said nearly all of the jump in assessed value that made the cut possible came from data center development.

So the same two facilities are pushing a Denton homeowner's costs in opposite directions. They lowered the tax rate, and they're part of why utility rates are forecast to climb for the next five years. For a buyer comparing Denton with nearby Denton County cities, the more important fact is which of those two bills is larger.

The city bill most buyers never compare

The FY 2026-27 budget, adopted Sept. 22, 2026, lets you put both numbers side by side. City staff said the average Denton homestead will pay $2,099.78 in city property taxes for 2027, down from $2,302.48 for 2026. That's about $203 less.

Now look at the utility bill. City staff priced an average residential customer's month using these usage assumptions: 1,000 kilowatt-hours of electricity, 9,000 gallons of water, 6,000 gallons of wastewater, 1,500 gallons for drainage and one trash cart.

At last year's rates, that comes to about $3,214 a year. Electric alone is $1,680 a year, which is most of what the average homestead pays in city property tax. The full utility bill runs roughly $1,100 more than the city tax bill.

That makes the tax rate the smaller of the two recurring city charges on a typical Denton home. It's also the one buyers check first, because every listing shows it. And while the rate went down this year, the larger bill is the one with five years of increases already penciled in.

Two buildings on Jim Christal Road

Two large data centers in Denton sit behind both numbers, and both are on city-leased land in the southwest part of town.

Core Scientific leases 78.85 acres on Jim Christal Road near DME's Denton Energy Center. Community Impact reported that the council agreed to raise its power access to 394 megawatts. At the Aug. 4, 2026 council meeting, staff described the site as having up to 391 megawatts of electric capacity. The city said Core Scientific requested no City of Denton tax incentives, and it projected $194 million in city property tax revenue over the first 10 years after final buildout. At an Aug. 4, 2026 council discussion, the facility was described as nearing completion.

QumulusAI sits near Western Boulevard and Jim Christal Road, next to DME's RD Wells substation, on city-leased land. City staff described it in August as a modular data center on four acres using 20 megawatts. Its power-purchase agreement requires it to pay 100% of all costs, including power and transportation. It was starting construction in August, and DME had no other data center projects in its queue at that point. Operations are expected to begin in 2028.

On the tax side, the effect has already arrived. Denton's certified assessed value rose from about $22.8 billion to $26.7 billion. Aimee Kaslik, the city's chief strategic officer, told the council that "nearly all of the increase in value is due to the data center." When a big piece of new property joins the tax roll, the city can collect more revenue at a lower rate. The new rate is $0.548485 per $100 of valuation, down from $0.595420.

On the utility side, the effect is still a projection. DME's budget counts on load the data centers haven't fully drawn yet. Staff cited growth and projected data center power use among the reasons for the proposed rate increases. Mayor Chris Watts said publicly that the data centers "will require as much electricity, in the end, potentially as the entire city." DME says rate increases are needed to rebuild the fund balance it uses as a cushion.

What rebuilding the cushion costs

Puente called the fund balance a "self-funded line of credit." It's money DME draws on in emergencies like the February 2021 winter storm. He told the council that rate increases are needed to bring the balance back to its minimum by 2031, and that falling short of the minimum could affect DME's credit rating.

The forecast city staff presented runs past this year's proposal:

• Electric: 7% in FY 2027-28 and 2028-29, then 4% and 3%
• Wastewater: 8% in FY 2027-28, 7% in 2028-29, then 5% in each of the next two years
• Water: 6% in FY 2027-28 and 2028-29, then 5% in each of the next two years
• Drainage: 5% every year

There's one detail that cuts the other way. Puente said the 3% electric increase proposed for this year would work out to about a 1.5% increase on a customer's total bill, because it applies only to the base rate, which makes up about 45% of the bill. He also said the most common customer complaint after DME's large increases in 2024 was the request to spread increases out, and that the utility is trying to avoid that kind of "rate shock" again.

Even this year's timing isn't settled. Community Impact reported that the council suspended the 3% electric increase until Jan. 1, pending an Oct. 27 work session on energy fund balances, pricing and utility rates. It said the average homeowner's monthly increase starting Oct. 1 dropped from $8.15 to $5.94, which works out to about $273.76 a month. The Record-Chronicle's budget story described the increases for water, wastewater, drainage and electric as deferred until January, pending that same conversation. The two outlets differ on whether part of the increase took effect Oct. 1. Either way, the Oct. 27 meeting is the next date that decides what the bill looks like.

Not every Denton address gets this bill

All of this applies to homes on DME. Not every Denton home is.

DME's line extension policy says its certified area covers the city limits plus some nearby areas outside them. Some of that area is single-certified, meaning DME is the only provider, and some is multi-certified, meaning other providers are also certified there. The Record-Chronicle's newcomer guide notes that most utilities in Denton can be set up through the city, but that CoServ provides electric service "in a few parts." Robson Ranch is one example. The community's utility guide lists CoServ for electricity and gas, and City of Denton for water, sewer and solid waste.

So two homes inside the same city limits can share the lower city tax rate while only one of them is exposed to DME's electric forecast. A home on CoServ electric would still pay city water and wastewater rates, which have the steepest increases in the forecast. To check a specific address:

1. Find the property on the city's Electric Certification Map, which marks single-, dual- and triple-certified areas.
2. Ask the seller which provider sends the electric bill and which sends water and sewer, since they can be different.
3. Ask for recent utility bills, so you can compare actual usage with the city's 1,000-kilowatt-hour assumption.
4. Note how the bill gets paid. Since Oct. 1, the city has charged a 1.55% fee on credit and debit card payments made online or by phone, including utilities and taxes. Bank draft, PayPal and Venmo are among the alternatives council members mentioned.

A slower September leaves time to ask

The resale market gives buyers room to do this homework. In September 2026, Denton's single-family median sale price was $381,990, almost unchanged from $381,000 in September 2025. Median days on market rose from 57 to 69, and active listings went from 578 to 616. Months of inventory reached 4.8, and the sold-to-list ratio held at 94.3%. Those figures come from the NTREIS monthly summary produced by the Texas Real Estate Research Center at Texas A&M. The same report puts the Denton County median at $420,990 for September, down 4% from a year earlier. The report covers MLS sales only, so builder sales outside NTREIS aren't in these numbers.

When a typical listing spends more than two months on the market, a buyer usually has time to ask for a year of utility bills and check the provider map before making an offer. In Denton, that's the bill that will change most over the next five years.

FAQ

Did Denton raise or lower its property tax rate? It lowered it. The official motion still had to describe the new rate as a 6.3% increase, because Texas law measures it against the no-new-revenue rate, not against last year's $0.595420. Mayor Watts called the wording "legislative." The city's adopted budget presentation lists that rate as $0.515958 per $100.

Does the lower city rate mean the whole tax bill is lower? The $203 figure covers only the city's share of the average homestead's taxes. School district, county and any special district charges are set separately.

Did Core Scientific get a city tax break? According to the city's November 2024 announcement, Core Scientific requested no City of Denton tax incentives. The company did apply for incentives from the state.

If you're comparing Denton with nearby cities, Make Your Move Group can help you get the provider map, utility history and city tax figures for each address you're considering before you write an offer, so you're comparing full costs and not just tax rates. Move with Purpose. Make Your Move Today.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.