American Institute of Certified Planners (AICP) Practice Exam

In a fiscal impact analysis, what does it assess?

1. The financial return of a project alone

2. The impact of a proposed project on community resources

3. The environmental implications of development

4. The historical significance of land use

The correct answer is: The impact of a proposed project on community resources

A fiscal impact analysis evaluates how a proposed project affects the financial resources and budgetary commitments of a community. It looks at various factors, including changes in revenues from taxes and fees, as well as expenditures resulting from the project, such as increased demand for public services like police, fire, schools, and infrastructure. This assessment is crucial for local governments to determine whether the expected benefits of a project will outweigh the costs in terms of services and infrastructure requirements. By focusing on the broader implications for the community’s economy and public services, the analysis helps planners and policymakers make informed decisions about land use proposals and development projects. This understanding enables communities to prepare for potential future financial obligations related to a project and gauge whether it aligns with their long-term planning and budgetary goals. The other options focus on different aspects of planning and development but do not encapsulate the comprehensive financial evaluation that a fiscal impact analysis provides.