American Institute of Certified Planners (AICP) Practice Exam

What aspect of urban development is specifically analyzed through Fiscal Impact Analysis?

1. Environmental impacts

2. Social dynamics

3. Costs and revenues

4. Transportation effects

The correct answer is: Costs and revenues

Fiscal Impact Analysis specifically focuses on assessing the costs and revenues associated with urban development projects. This analysis is crucial for understanding how a proposed development will affect the financial health of a local government or municipality over time. When a new development is proposed, it can lead to increased demand for public services such as schools, roads, and emergency services. Fiscal impact analysis examines whether the revenues generated from the development, typically through property taxes, sales taxes, and other fees, will exceed the costs incurred by the public sector to provide necessary services and infrastructure improvements. Understanding this relationship enables planners and decision-makers to gauge the overall economic viability of a development project. This analysis often includes calculating the long-term implications of both direct and indirect fiscal impacts, ensuring that communities can maintain their fiscal responsibilities while supporting growth. In contrast, other elements like environmental impacts, social dynamics, and transportation effects are essential considerations in urban planning but do not specifically pertain to the financial implications of a development project as fiscal impact analysis does.