New Orleans officials again are taking bids to oversee and manage a long-awaited grant program for grocers serving low-income communities. Known as the Fresh Food Retail Initiative, the $7 million federally funded program was stalled last month when U.S. Housing and Urban Development officials, who are providing the money, balked at the city’s bidding process.

The program was one of four projects worth a total of $35 million that HUD asked the city to rebid. The others are the Lafitte Greenway; a neighborhood commercial investment program; and an urban gardening initiative.

Funding for the four programs come from the $411 million pool of HUD Disaster Community Development Block Grants the city is eligible to receive.

The federal agency’s complaints centered on the mayor’s policy of favoring bids that include minority businesses that operate an office in Orleans Parish.

“HUD didn’t feel that the local-office provision should be there,” Dubravka Gilic, the city’s director of strategic planning said in an interview.

The state’s Office of Community Development approved the recovery program in July, allowing the city to get started on the bidding process. That approval came 13 months after the state approved the city’s recovery plan and opened the tap on the $411 million federal fund.

When Mayor Ray Nagin opted to listen to HUD concerns and rebid the contracts, he also shifted oversight of the Lafitte Greenway project to the administration’s own Office of Community Development. That office became the city’s chief recovery agency after Recovery Czar Ed Blakely left New Orleans last summer. The powerful office is run by longtime Nagin aide, Kenya Smith. The original request for bids issued at the end of 2008 was managed by the Department of Public Works and City Planning, departments with fewer ties to the administration.

Proposals to run the fresh-food initiative must be turned in by Feb. 16. To be eligible for the $7 million grant, an entity must commit to contributing at least another  $3.5 million to the initiative, which it also must promise to operate for at least three years. The city is seeking a partnership of a community-development lender to handle the finances, and a non-profit group with experience improving access to healthful foods.

Of the $35 million worth of programming delayed by HUD concerns, $25 million is earmarked for a Neighborhood Commercial Investment Fund. The $25 million grant program was also put out to bid at the end of last month and are due Feb. 22.

A note at the top of both solicitations warns potential bidders that the process will be expedited.

Fresh food request for proposals

Neighborhood Commercial Investment Program request for proposals