American Institute of Certified Planners (AICP) Practice Exam

What aspects does a fiscal impact analysis evaluate?

1. Only land values

2. Revenues, expenditures, land values and development characteristics

3. Only expenditures of governmental units

4. The political implications of land use changes

The correct answer is: Revenues, expenditures, land values and development characteristics

A fiscal impact analysis is a comprehensive evaluation that assesses various financial aspects associated with land use changes and development projects. The correct focus includes revenues that a new project might generate for local governments, such as property taxes, sales taxes, and impact fees. It also examines expenditures, quantifying the costs that municipalities may incur due to increased demand for public services such as schools, police, fire services, and infrastructure improvements. In addition to revenues and expenditures, the analysis incorporates land values, which provide insight into how development can affect property values in the area, creating broader economic implications for both the municipality and its residents. The characteristics of the development itself—such as size, type, density, and intended use—are crucial in predicting potential fiscal outcomes, as these factors directly influence both the revenue generation and service provision needs. This multifaceted approach ensures that planners have a thorough understanding of the economic implications of proposed developments, facilitating informed decision-making that balances growth with financial sustainability for the community.