American Institute of Certified Planners (AICP) Practice Exam

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What is the purpose of a Fiscal Impact Study?

To analyze overall community satisfaction
To determine project revenue sufficiency
To assess environmental impact
To evaluate community input

The correct answer is: To determine project revenue sufficiency

The purpose of a Fiscal Impact Study is primarily to determine the revenue sufficiency generated by a proposed development or project in relation to the costs it may impose on a community. This involves analyzing the expected financial outcomes, such as tax revenues versus the expenses required for public services, infrastructure, and other community needs that might arise from the project. By assessing these financial dynamics, planners can make informed decisions about whether a project will be beneficial or burdensome to the community's fiscal health. While community satisfaction, environmental impacts, and community input are all significant aspects of the planning process, they do not specifically address the direct financial implications of a proposed development. These latter considerations may influence the overall planning strategy but do not focus on the fiscal dimensions that a Fiscal Impact Study specifically targets. The emphasis is on understanding how the project will affect the local economy, including potential changes in tax bases and service demands, which is crucial for effective long-term planning.