This question asks us to add a piece of information that would solve a problem, so this is most nearly like questions that ask us to resolve a discrepancy.

We need to keep true all of the given information, while solving the problem that these roads will "cost far more than the city could gain from the increased tax revenue." Thus, we want an answer choice that outlines either a) another source of revenue, or b) another way to offset the costs described.


(A) Funding construction of new roads to the waterfront with a system of tolls on the new roads to the waterfront
Tolls = new source of revenue, directly related to the roads. This would help.

(B) Allowing residential development along the waterfront so that there will be waterfront residents who can walk to the commercial development
This does not necessarily offset costs. These new residents are not necessarily the same people who would have been driving to the waterfront, so this doesn not necessarily represent a traffic decrease. We have to assume that the given premises - the fact that we need to build new roads - will still be true, so additional residential development will not drive down this cost. In fact, it's likely to drive up other costs.

(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
Tax break = loss of revenue for the city. That's the opposite of helpful in fixing this problem.

(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
Irrelevant to the problem we're trying to solve. "What fixes the problem of costs outweighing revenue?" "Think about things other than money." Nope, not a solution!

(E) Allowing commercial development in other city neighborhoods whose roads are not seriously congested with traffic
That doesn't fix THIS problem. Keep as a given that we're going to build along this waterfront, and we need roads to it. This doesn't provide a solution to the cost problem with the waterfront.

The answer is A.