American Institute of Certified Planners (AICP) Practice Exam

What defines an 'Enterprise Zone' in urban planning?

1. An area designated for commercial development

2. An urban area facing economic challenges eligible for tax incentives

3. A residential area with low density

4. A zone for environmental protection initiatives

The correct answer is: An urban area facing economic challenges eligible for tax incentives

An 'Enterprise Zone' in urban planning is specifically defined as an urban area that faces economic challenges and is designated to receive various forms of assistance, including tax incentives, to stimulate growth and development. The purpose of establishing an enterprise zone is to encourage job creation, attract businesses, and revitalize distressed areas by providing financial incentives such as tax breaks, grants, and reduced regulations for businesses that locate or expand there. These zones are often targeted towards regions experiencing high unemployment rates, declining industries, or significant poverty, with the goal of promoting economic activity, increasing employment opportunities, and improving the overall quality of life for residents. The incentives offered can significantly lower the barriers for businesses looking to invest in these areas, making it a strategic tool in urban economic development. In contrast, the other choices reflect different concepts: a commercial development zone lacks the specific focus on economic distress and incentives; a low-density residential area does not necessarily entail economic challenges or the provision of incentives; and an environmental protection initiative zone does not align with the economic development focus of enterprise zones. Each of these alternatives describes different aspects of urban planning that do not capture the essence of what defines an enterprise zone.