By Lisa Lambert

WASHINGTON (Reuters) - Retailers moving into old downtown buildings, an abundance of freshly planted greenspaces, and a stream of new jobs in Knoxville, Tennessee, are all signs to Mayor Madeline Rogero that for the last year prosperity has been blooming in her city.

"We feel very good about how we're coming out of this recession," Rogero said. "We see new interest. We see new development that's occurring. We're optimistic that this recovery is going to continue."

Knoxville is a member of a very small club. Three and a half years since the 2007-09 economic recession ended, only three major U.S. metropolitan areas are experiencing an economic recovery, according to the Brookings Institution.

The Washington-based research group has also deemed Dallas and Pittsburgh in recovery after analyzing their employment levels and gross domestic product per capita.

The United States has the most major metropolitan economies of all countries - 76 - according to an annual report on the 300 largest metropolitan economies worldwide that Brookings released on Friday.

"It was still better than last year when the U.S. had no metro recoveries," Brookings Associate Fellow Emilia Istrate said.

Istrate said the three cities had two features in common: strong local services such as healthcare, and business and financial services that cater to specific industries.

The recession came late to many city budgets. Their primary revenue source - property taxes - took time to fall because of lags in real estate valuations. By the time they dropped, cities were also contending with falling sales and income taxes resulting from job losses.

Many of the splinters the downturn drove into their budgets remain deeply lodged, and cities of all sizes worry about federal spending cuts that are part of the "fiscal cliff."

"Cities are emerging slowly from the Great Recession," said Robert Zahradnik at Pew's American Cities Project, which tracks fiscal conditions and budgets. "In many cities revenues are gradually recovering but there are still some risks out there."

SEEKING TO REPLICATE A RECIPE FOR SUCCESS

Rogero has only been in office for a year. But she remembers, as a resident and as director of the city's community development office, when the recession hit. Sales tax revenues fell. The building inspections department that had always funded itself from fees had to tap the city budget.

"People were losing their jobs. People were losing their homes," she said.

Nonetheless, the city continued investing in infrastructure and fostering private investment, often using funds from the 2009 federal stimulus plan. The goals were to attract businesses and to keep people working on construction jobs such as a housing project for the elderly.

The Pittsburgh skyline partly tells the city's economic story, said Mayor Luke Ravenstahl. A major bank just finished building one skyscraper and started construction on another.

"In my mind, it's already recovered. We employ more people in Pittsburgh than we ever have," he said.

Pittsburgh built up industries before the recession, mostly in what Ravenstahl calls "eds and meds" - universities and healthcare. Then the shale gas boom put its business services in high demand. Continued...