Public expenditures on a project, and the requisite public taxation, may be economically justified if the benefits from the project outweigh the costs. Most public projects, such as parks, roads, and police, have public good or external benefits that are difficult to quantify, making the evaluation of individual projects difficult. Eventually, however, the net benefits of the accumulated projects arc represented in the cost of admission to the community in the form of housing prices or rents. Positive net benefit projects raise house prices in aggregate, while negative net benefit projects lower house prices in aggregate. We measure the net benefits from the public consideration of a large discrete project, a professional sports stadium funded by a local sale tax increase.
The public expenditure on sports stadiums has long been controversial, and there is an extensive empirical literature investigating the impacts of new stadiums on local economies. The overwhelming majority of studies found either no net benefits of net benefits that are considerably smaller than the costs of either a new stadium or hosting a professional sports franchise (see Siefried and Zimbalist  and Rappaporto and Wilkereson  for thorough reviews). These empirical results contradict the arguments proposed by advocates of stadium studies: that a new stadium will provide the catalyst for an improvement in the community'sattributes. Nevertheless, new stadiums continue to be built with public funds.(1)
We contribute to a small but growing literature focusing on the impact of professional sports venues on residential property values. Specifically, we investigate two sets of stadium announcements concerning the National Football League's (NFL) Dallas Cowboys' search for a host city in the Dallas-Fort Worth Metroplex. These announcements provide a quasi-natural experiment to test whether the announcement that a stadium might be built in a particular area has any immediate impact on the sale prices of residential properties. Because a stadium is costly to relocate, we treat the announcements of potential stadium relocation as changing the probability of a large discrete event and test for accumulated and differential impacts of stadium announcements on contemporaneous residential property values.
We find that property values increased in the city of Dallas after the announcement that the Cowboys might move from the city of Irving to a new stadium in downtown Dallas, which would have replaced the aging Cotton Bowl. However, in Dallas County, which would have paid for the stadium with new taxes, residential property values decreased after the announcement of the Fair Park stadium proposal. Consistent with these results, when the Fair Park stadium proposal was abandoned, properties in the city of Dallas declined in value, while the property values in Dallas County rebounded. In the end, the accumulated net effect of the stadium announcements for both Dallas City and Dallas County was zero, consistent with a return to the status quo ante. When analyzing three announcements concerning a potential new stadium in Arlington, we find that the accumulated impacts of the stadium announcements reflected between 1.3 and 1.5 percent reduction in residential property sales prices in Arlington, ceteris paribus. In other words, at each point in which it became more certain that Arlington would contribute local tax dollars to a new stadium for the Cowboys, properity values in Arlington fell. While the reduction in property values reflects the combination of an expected localized amenity effect and an expected tax effect, we cannot reject the null hypothesis that the expected amenity effect was equal to zero before stadium construction commenced.(2)
II. A NEW DALLAS COWBOYS STADIUM: WHERE AND WHEN?
In April 2001, the Dallas Cowboys announced that they were interested in obtaining a new publicly subsidized stadium to replace the aging Texas Stadium. …