The U.S. Treasury Department this morning announced the allocation of $25 billion in bond-issuing authority available under the Recovery Zone Bonds program, including $225 million available for use by Iowa municipalities and businesses.

Created by the American Recovery and Reinvestment Act (ARRA), Recovery Zone Bonds are targeted to areas particularly affected by job losses, and are designed to help local governments obtain financing for economic development projects.

“Creating the conditions for economic recovery requires addressing the challenges facing state and local governments,” Treasury Secretary Tim Geithner said in a press release. “State budgets have been scaled back and local services cut at a time when they are most needed. Turning things around requires innovative strategies, which is what the Recovery Act has provided in the form of the Recovery Zone Bonds. The new financing tools provided by Recovery Zone Bonds will help state and local governments obtain the funds needed to revitalize our communities.”

The ARRA provided funding for two types of bonds:

— $10 billion for Recovery Zone Economic Development Bonds, which provide direct federal subsidies of 45 percent of the interest, to finance a broad range of projects such as job training and educational programs, and;

— $15 billion for Recovery Zone Facility Bonds, a type of traditional tax-exempt private activity bond that may be used by private businesses in designated recovery zones to finance a broad range of depreciable capital projects.

The Treasury Department has allocated $90 million for Recovery Zone Economic Development Bonds in Iowa, including issuance caps of $5.57 million to the city of Des Moines and $6.99 million to Polk County. Additionally, $135 million in Recovery Zone Facility Bonds have been authorized for Iowa, including $8.36 million for Des Moines and $2.96 million for Polk County.

Des Moines city officials are not familiar with this latest program, Deputy City Manager Merrill Stanley said.

“These kinds of announcements for stimulus money are nearly a daily occurrence,” he said. “I’m sure we’ll get our arms around this program fairly quickly.”

Under a similar federal program, the city last week issued $19.6 million in Build America Bonds. The bonds issued were 20-year taxable general obligation bonds, on which it will receive a rebate of 35 percent of its interest costs.

“There was a real savings there,” Stanley said, noting the interest cost to the city on the issue, net of the federal rebate, was 3.59 percent.

To view a list of allocations for all Iowa counties, click here.