Letter:
Plan: Allow commercial development at waterfront.
Goal: Increase tax revenue
Problem: Will cause traffic congestion for which roads will need to be constructed which will cost more than the increase in tax.

What should be "added" to the plan to help resolve the problem (the expense of roads eating up the increase in revenue)

(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront

Correct. Roads can pay for themselves through toll instead of using tax collection from other sources.

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development

This doesn't mean the traffic congestion will not occur. If residential development is allowed at waterfront, there would be some people who can walk to the commercial area (whether they will or not we don't know) but the rest fo the city will still drive down. It may decrease the congestion by a bit but is unlikely to have any major impact. (A) is far better in which everyone who uses the road mandatorily pays for it.

(C) Giving tax breaks to developers of businesses along the waterfront to offset any tax levied on them for construction of roads or public recreation

Our problem is that tax we collect from businesses will be used to construct roads and we will have nothing left. The plan doesn't talk about levying road tax on businesses. Also, we need to increase the overall tax collection. Giving tax breaks to anyone doesn't help us.

(D) Evaluating the net benefits that the commercial development would bring to the city in terms of improved quality of life for the city’s residents rather than its financial terms

Anything other than finances is irrelevant.

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic

We are focusing on increasing tax revenue of this city.

Answer (A)