Thirty-five cities will receive $111.9 million in federal grants for 39 projects designed to help create new businesses and jobs, the Department of Housing and Urban Development announced yesterday.

HUD Secretary Patricia Roberts Harris said the funds were designed to attract private money for development projects and will "inspire new and creative partnerships between government and the private sector."

The funds come from the department's $400 million urban development action grant program. Three months ago in the first round of such grants, HUD awarded cities $150 million, with $71 million of it to be used for luxury hotels.

Neighborhood groups charged that HUD was neglecting low and middle-income families to develop projects that could be developed without federal money. HUD replied that attracting more businesses to cities would increase cities' tax bases and, in turn, revitalize neighborhoods.

Harris said yesterday that, in the current round of grants, $48.4 million - the largest single share - will go to neighborhood projects. Commercial and industrial projects will receive the balance.

he heads of two neighborhood groups who were dissatisfied with the previous HUD allocations - Gale Cincotta of the Chicago-based National People's Action and Joseph Timilty of the National Commission on Neighborhoods - said they had not had time to analyze the latest round to determine how neighborhood projects had fared.

To be eligible for a grant, a city must show commitments of private money for proposed projects. Harris said projects that were awarded grants will attract $465.1 million in private money.

Eighty-five cities that had applied for grants were not funded, including the District of Columbia, most of them because they lacked commitments of private money.

he largest award, $13.5 million, went to Denver for a neighborhood revitalization project in its Hispanic area, Pico Rivera, Calif., was awarded the smallest grant - $100,000 - for construction of a street to facilitate a 13,000 new jobs, save 11,600 others and generate 12,300 construction jobs.

Earlier in the day, Harris urged a Senate committee to approve three bills that would give federal money to states and neighborhood groups to revitalize cities.

"This program reiterates the federal commitment to cities and underscores this administration'c commitment to a federal system in which each level of government shares a responsibility for meeting those needs," Harris told the Senate Banking, Housing and Urban Affairs Committee.

The three bills are the State Community Conservation and Development Act, which would give $400 million to states to develop their own urban policies; the Neighborhood Self-Help Development Bill, which would giver $30 million to neighborhood groups for development programs; and the Livable Cities Bill, which would give $40 million during two years to nonprofit organizations for artistic or cultural programs.