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Small Business Resource Guide -
Chapter 7-
Contracting Opportunities Generated by HUD Grantees

- -
 Information by State
 Print version
 -   Go back to the Small Business Resource Guide Main Index
 -   Marketing Tip
 -   Office of Community Planning and Development
 -   Community Development Block Grant (CDBG) Program
 -   Section 108 Loan Guarantees
 -   Community Renewal Initiative for Renewal
Communities, Urban Empowerment Zones and
Enterprise Communities (RC/EZ/EC)
 -   Brownfields Redevelopment Initiative (BRI)
 -   The Office of Public and Indian Housing
 -   The Office of Housing
 -   The Office of Healthy Homes and Lead Hazard Control

Marketing Tip

HUD provides approximately $10 billion in funds annually to state and local governments and public housing authorities. Approximately one-half of the funds is subsequently used for contracted products and services. Review the following funding program descriptions, lists of eligible activities and contracting opportunities generated by these funds to determine how you can identify contracting opportunities for your business.

In addition to direct contracting opportunities with HUD, substantial contracting opportunities exist with HUD grantees and funding recipients. These contracting opportunities are not advertised by HUD. You must contact either the grantees or funding recipients directly. Keep in mind that Federal requirements and programs associated with the Section 8(a) program, SDB certification, etc., do not apply to these contracts. The Federal requirements and programs are only applicable at the Federal level. State, local and private sector procurements are regulated by and must conform to their own state and local procurement rules. However, Part 85 of HUD's Code of Federal Regulations which promotes contracting with small businesses is included in each of HUD's grant and funding documents. Part 85 encourages HUD grantees and funding recipients to take necessary affirmative steps to ensure that small, minority-owned and women-owned businesses are solicited and used when ever possible when contracting opportunities arise. To assist you in identifying potential contracting opportunities generated by HUD's grant and funding recipients, please review the following web page:


Summaries of HUD's major grant programs including the Offices of Community Planning and Development, Public and Indian Housing, Housing and Lead Hazard Control are provided in the following pages. Each funding program, its purpose, eligible activities and examples of contracting opportunities are discussed in detail.

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Office of Community Planning and Development

The following paragraphs provide a summary of HUD's Office of Community Planning and Development's (CPD) major grant programs including Community Development Block Grant programs, Empowerment Zone/Enterprise Communities programs and Brownfields redevelopment. For more information on these programs, please visit CPD's web page at http://www.hud.gov/offices/cpd/index.cfm.

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Community Development Block Grant (CDBG) Program

CDBG is one of HUD's most important programs. This program has had a tremendous impact on Urban America since its inception. Cities and counties have used CDBG funds to rebuild and revitalize their communities for the past 25 years. Countless projects have been financed with these funds including acquisition of land for housing construction and neighborhood parks. CDBG provides states, eligible metropolitan cities and urban counties with annual direct grants that they can use to revitalize neighborhoods, expand affordable housing and economic opportunities, and/or improve community facilities and services, principally to benefit low- and moderate-income persons.

Since 1974, CDBG has been the backbone of improvement efforts in many communities, providing a flexible source of annual grant funds for local governments nationwide-funds that they, with the participation of local citizens, can devote to the activities that best serve their own particular development priorities, provided that these projects either (1) benefit low- and moderate-income persons; (2) prevent or eliminate slums or blight; or (3) meet other urgent community development need.

As one of the Nation's largest Federal grant programs, the impact of CDBG-funded projects can be seen in the housing stock, the business environment, the streets and the public facilities of these entitlement communities. Although the rehabilitation of affordable housing has traditionally been the largest single use of CDBG funds, the program is also an increasingly important catalyst for economic development activities that expand job and business opportunities for lower income persons and neighborhoods.

Grantees may use CDBG funds for activities that include (but are not limited to):

  • Acquiring real property (primarily land, buildings, and other permanent improvements to the property) for public purposes. This type of activity might include, for example, buying abandoned houses for rehabilitation or an old industrial site in a distressed neighborhood for redevelopment. CDBG also helps communities demolish property and clear sites to prepare the land for other uses.
  • Reconstructing or rehabilitating housing and other property. From homeless shelters to single-family homes and from playgrounds to shopping centers, CDBG enables communities to improve properties that have become less usable, whether due to age, neglect, natural disaster, or changing needs. New construction of housing is allowed only in certain circumstances.
  • Building public facilities and improvements, such as streets, sidewalks, sewers, water systems, community and senior citizen centers and recreational facilities.
  • Helping people prepare for and obtain employment through education and job training, welfare-to-work activities, and other services.
  • Providing public services for youths, seniors or the disabled. These might include day care centers, youth services and meals on wheels for the elderly, health care facilities, transportation, or counseling.
  • Carrying out crime reduction initiatives such as establishing neighborhood watch programs, providing extra police patrols, rehabilitating or constructing police substations, and clearing abandoned buildings used for illegal activities.
  • Assisting low-income homebuyers directly through, for example, downpayment assistance, subsidizing interest rates or helping with closing costs for first-time buyers.
  • Enforcing local building codes to reverse housing deterioration and other signs of blight.
  • Paying for planning and administrative expenses.

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Section 108 Loan Guarantees

NOTE: Of particular interest to small businesses is the fact that the Section 108 Loan Program may be used for assisting for-profit businesses for special economic development activities. Such projects might include micro-enterprise loans to low-income entrepreneurs, assembling land to attract new industry, or business expansion loans to help retain existing businesses that employ low-income workers.

To support economic development projects, local governments can use HUD's Section Loan Guarantee Program. Section 108 is the loan guarantee provision of the CDBG program. It provides communities with a source of financing for economic development, housing rehabilitation, public facilities and large scale development projects. Guaranteed loans can be made to local businesses who repay the loans from the cash flow generated by their enterprises. The loans have terms of up to 20 years and have fixed interest rates competitive in today's financial markets. The business opportunities under this program most often are direct assistance to small businesses under revolving loan programs as well as assistance to large businesses through the provisions of gap financing.

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Community Renewal Initiative for Renewal Communities, Urban Empowerment Zones and Enterprise Communities (RC/EZ/EC)

The HUD Inititative for RC/EZ/EC is important to development within distressed urban and rural areas nationwide. The RC/EZEC through federal grants, tax incentives, and partnerships with government, for-profit and non-profit entities, has opened businesses and created jobs, housing, and educational and healthcare opportunities afording thousands of Americans economic opportuinties.

Economic Opportunity is a key principal of the RC/EZ/EC and includes creating jobs in communities; providing entrepreneurs with technical assistance; providing greater access to capital and credit for businesses to expand and create job opportunities for residents; and providing residents with access to job training and job placement services. Adding the principles – Strategic Vision for Change, Communitiy-Based Partnerships, and, Sustainable Community Development – the RC/EZ/EC Initiative affords communities real opportunities for growth and revitalization. The Initiative offers residents and businesses opportunites and resources through business and employment opportunities, as well as expanded support services including childcare, education and healthcare. This ten-year effort has resulted in visible change in neighborhoods in the form of business start-up and expansions, new jobs, commercial and housing development, improved services for community residents.

Encouraging and assisting business development is a driving force of the RC/EZ/EC Initiative. For more information about the Initiative vist the website available at http://www.hud.gov/offices/cpd/economicdevelopment/programs/rc/index.cfm. The resources provided are part of the effort to spur bisiness development in the Rc/EZ/Ecs. Links at the web site describe sources of capital for RC/EZ/EC businesses, contains informative publications on tax incentives, and describes programs that pair small and large businesses in mentoring relationships. The resources provide communities and individual businesses with ideas to help you develop to your full potential.

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Brownfields Redevelopment Initiative (BRI)

The Brownfields Economic Development Initiative (BEDI) is one of the key competitive grant programs that HUD administers to stimulate and promote economic and community development activities under Section 108(q) of the Housing and Community Development Act of 1974, as amended. A brownfield is an abandoned, idled, or underused property where expansion or redevelopment is complicated by real or perceived contaminations. Brownfields sites include abandoned factories and other industrial facilities, gasoline stations, oil storage facilities, dry cleaning stores and other businesses that dealt with polluting substances. BEDI funds are primarily targeted and used for economic redevelopment of brownfield sites to increase economic opportunities for low-and moderate-income persons to stimulate or retain businesses or jobs or that would otherwise lead to economic revitalizations.

Brownfields redevelopment can benefit both private investors and the communities in which they are located. For the private sector, brownfields redevelopment can mean new business opportunities, the potential for profit on unused or under-utilized properties, improved community and environmental stewardship, and access to untapped urban markets. The public sector can benefit from an increased number of employment opportunities; increased local and state tax revenues, improvements in the community’s quality of life, and a reduction in urban sprawl.

In addition to the BEDI brownfields redevelopment can be financed by: Community Development Block Grants (CDBG); Section 108 Loan Guarantees; Economic Development Initiative (EDI) grants; and, Empowerment Zone/ Enterprise Communities. More information about how HUD invests in communities by restoring brownfields is available at web site address: www.hud.gov/offices/cpd/economicdevelopment/programs/bedi.

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The Office of Public and Indian Housing

The following paragraphs provide a summary of the Office of Public and Indian Housing (PIH) major grant programs. For a listing of Public Housing Authorities and additional information on the Public Housing Capital Funds program, visit PIH's web site at http://www.hud.gov/offices/pih/index.cfm.

  • Capital Fund Program
    The Capital Fund Program provides funds to Public Housing Agencies (PHA) to improve the physical condition, upgrade the management and operation, and carry out other activities for Public Housing developments. The Capital Funds provided to the PHAs are calculated by an established Capital Fund formula.

    PIH Headquarters designates a percentage of Capital Funds to be provided to each Office of Native American Programs, funding Indian Housing and any Public Housing owned and operated by Indian Housing Authorities.

    Examples of eligible Capital Fund activities include but are not limited to: the redesign, reconstruction, and reconfiguration of public housing sites and buildings; management improvements which upgrade the operation of the PHA’s developments, sustain physical improvements and correct management deficiencies; management costs such as financial and accounting control systems; economic development costs such as job training for residents; resident management costs such as technical assistance; preventive maintenance for regular building structures, systems and units; physical improvements to enhance security, etc.

    To review a housing authority’s comprehensive plan, visit PIH’s web site at: http://www.hud.gov/offices/pih/pha/

    The HOPE VI program was designed to eradicate severely distressed public housing with a focus on three general areas: physical improvements, management improvements, and social and community services to address resident needs.

    HOPE IV permits expenditures for the capital costs of demolition, construction, rehabilitation and other physical improvements, development of replacement housing, and community and supportive services. It encourages PHAs to seek new partnerships with private entities to create mixed-finance and mixed-income affordable housing that is radically different from traditional public housing “projects.” PHAs administer the program, and can use the grants in conjunction with modernization funds or other HUD funds, as well as municipal and state contributions, public and private loans, and low-income tax credit equity. While most of the funds are to be used for capital costs, a limited amount may be used for community and supportive services.

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The Office of Housing

The following paragraphs provide a summary of the Office of Housing’s Supportive Housing for the elderly and persons with disabilities.

  • Section 202 Supportive Housing For The Elderly Program
    Section 202 provides capital advances to non-profit organizations to finance the construction and rehabilitation of structures that will serve as supportive housing for very low-income elderly persons and provides rent subsidies for the projects to help make them affordable.

    This program helps expand the supply of affordable housing with supportive services for the elderly. It provides low-income elderly with options that allow them to live independently but in an environment that provides support activities such as cleaning, cooking, transportation, etc.

    This program provides capital advances to finance property acquisition, site improvements, conversion, demolition, relocation, and other expenses associated with supportive housing for the elderly.

  • Section 811 Supportive Housing For Persons With Disabilities
    The Section 811 program provides grants to nonprofit organizations to develop, construct or rehabilitate rental housing with supportive services for very low-income persons with disabilities.

    The companion Mainstream Program awards funding for Section 8 rental vouchers and certificates to very low-income families whose head, spouse, or sole member is a person with a disability.

    The Section 811 program allows persons with disabilities to live independently by increasing the supply of rental housing with supportive services and related facilities. The program also allows the sponsor to get project rental assistance, which can cover any part of the HUD-approved operating costs of the facility that is not met from project income.

    The Section 811 program grants interest-free capital advances for nonprofit sponsors to help them finance the development of rental housing with supportive services for persons with disabilities. The capital advance can finance the construction or rehabilitation of supportive housing.

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The Office of Healthy Homes and Lead Hazard Control

The following paragraphs provide a summary of the Office of Healthy Homes and Lead Hazard Control programs.

  • Lead Hazard Control Grant Program
    The Lead Hazard Control Program funds a broad range of activities to reduce dangers from lead-contaminated dust, soil, and paint in private homes and apartments built before 1978 that are owned or rented by low-income families. The primary source of such poisoning is the dust that comes from peeling or chipping lead-based paint or dust that is created during repainting or remodeling projects.

    HUD's Lead Hazard Control Program provides competitive grants to states and local governments. It provides two kinds of grants: funds for privately owned housing and funds for housing units on Superfund/Brownfield sites.

    Eligible activities include inspection and testing of homes for lead-based paint and lead-contaminated dust and soil; removal, enclosure, encapsulation, or replacement of lead hazards; engineering and architectural costs that support lead hazard reduction; liability insurance; blood testing of young children; temporary relocation of families during hazard control; community education and outreach; data collection, analysis, and evaluation of hazards; and pre- and post-hazard reduction testing. The program also funds up to 10 percent of the administrative costs incurred by the grantee and program planning and management costs for subgrantees.

    For additional information on these programs and listing of state and local government grantees, visit the office's web site at http://www.hud.gov/offices/lead/index.cfm.

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