American Institute of Certified Planners (AICP) Practice Exam

What is the primary use of fiscal impact analysis?

1. Assessing multiple developments simultaneously

2. Determining revenues and expenses for a single project

3. Evaluating environmental consequences

4. Analyzing workforce housing needs

The correct answer is: Determining revenues and expenses for a single project

The primary use of fiscal impact analysis is to determine the revenues and expenses associated with a single development project. This analysis focuses on understanding how a specific project will impact the financial resources of a local government or municipality. By assessing factors such as property taxes, sales taxes, and the costs of services required by the new development (like police, fire, schools, and infrastructure), planners can provide valuable insights into whether the project will be financially beneficial or burdensome. This type of analysis is crucial in decision-making processes as local governments often rely on these assessments to make informed choices about zoning, permits, and overall development strategies. Understanding the financial implications of a project helps ensure that future growth is sustainable and supports the long-term fiscal health of the community. The other options focus on broader or different scopes of analysis that are not the primary aim of fiscal impact analysis. For example, assessing multiple developments simultaneously involves comparing various projects, which goes beyond the focus on individual projects. Evaluating environmental consequences and analyzing workforce housing needs pertain to different aspects of planning and do not directly relate to the financial analysis of a single project.