WASHINGTON — The mayor of Tucson has urged the Treasury Department to revise its criteria for determining what areas can use recovery zone bond financing, complaining that the current allocation method overlooks his city even though it has one of the highest unemployment rates in Arizona.

Mayor Robert Walkup told the Treasury in a letter dated Feb. 24 that new criteria should include unemployment rates, poverty rates and median incomes, which would "take into account the breadth of the impact of the economic downturn."

"If the city were allocated recovery zone bonds, we could fund projects that would revitalize our downtown area," he said, noting that the latest Tucson-area unemployment rate was 8.4%.

The $15 billion of recovery zone economic development bonds and $10 billion of recovery zone exempt facility bonds authorized by the American Recovery and Reinvestment Act were first allocated to areas hard hit by the recession in June. But Tucson and surrounding Pima County did not receive any of them, despite experiencing increased home foreclosure rates, significant poverty and general distress, Walkup said. Tucson was overlooked because the Treasury's allocation method looked at net job losses rather than the overall unemployment rate.

Walkup's complaint echoes one aired in June by seven congressional Democrats who said that despite facing a number of tough economic issues, their districts were not allocated any RZ bonds because they experienced increases in both employment and unemployment, possibly because of a rapid increase in population. Those spikes led to low net unemployment, which rendered them ineligible for the allocations.

The two Arizona Democrats who signed onto the letter — Reps. Gabrielle Giffords and Raul Grijalva — also received copies of Walkup's letter to the Treasury.

Although the department has not yet responded to the letter, it told the other lawmakers last August that it lacked the authority to change the allocation method and that only Congress could do so.

The House approved a second jobs bill last month that would allocate another $10 billion and $15 billion to each of the RZ bond programs and extend them through the end of 2011 to ensure each local municipality receives an allocation equal to at least its share of national unemployment as of December 2009. That legislation is now pending before the Senate.

Recovery zone economic development bonds are effectively "super-Build America Bonds" that allow issuers to receive direct payments from the federal government equal to 45% of their interest costs. Recovery zone exempt facility bonds are private-activity bonds.

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