American Institute of Certified Planners (AICP) Practice Exam

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What is the primary use of fiscal impact analysis?

To assess overall city growth
To evaluate environmental effects
To determine revenues and expenses for a single development project
To analyze neighborhood demographics

The correct answer is: To determine revenues and expenses for a single development project

The primary use of fiscal impact analysis is to determine revenues and expenses for a single development project. This analytical tool helps local governments and planners understand how a specific project will affect the public budget, including potential tax revenue increases, changes in service demands, and associated costs. Conducting a fiscal impact analysis provides insights into the financial implications of a proposed development, guiding decision-makers in assessing whether the project will contribute positively or negatively to the municipality's fiscal health. This analysis is integral for ensuring that local infrastructure can support the anticipated population and activity resulting from the development, ultimately influencing approval processes and planning strategies for future growth. By focusing on the financial aspects, stakeholders can make informed decisions that align future developments with the economic goals of the community.