Rapid residential growth in rural areas or on the fringes of urban areas brings both costs and benefits. Seven factors determine whether new homes and subdivisions generate more revenues than expenditures. Local governments can substantially influence four of these seven factors in order to reduce the public costs of residential growth. Less controllable factors include number of children in new homes, assessed value of new homes, and excess capacity in public facilities. The more controllable factors are the type and level of public services; location, density, and design of residential developments; subdivider-installed improvements; and connection and systems development charges. Communities can reduce public costs of residential development through municipal and county ordinances and planning. Local governments can influence the location of residential development in a community through comprehensive planning, zoning, capital improvement programming, and urban growth boundaries. However, policy decisions which reduce public costs of residential development directly and indirectly increase land and housing prices in the community, thus generating new taxable assessed valuation. This provides the community with the potential to increase property tax revenues without increasing tax rate. Therefore, in making choices about residential growth and local policies to influence growth, communities must balance these costs and benefits. (NQA)