Following nine months of negotiations, the New Haven Housing Authority and the U.S. Department of Housing and Urban Development agreed on a new contract designated “Moving to Work.”

The seven-year contract will take effect by November and provide the Housing Authority with greater flexibility over funds, offering the agency an opportunity to progress beyond its troubled past.

“The contract’s execution will give us a great deal of flexibility and other regulations that will allow the Housing Authority to solve its own challenges,” Mayor John DeStefano Jr. said.

Moving to Work began as a HUD pilot program in 1997 to reduce funding restrictions for housing authorities. Only 32 housing authorities nationwide have Moving to Work status.

New Haven received the designation in January, but the city and HUD are just now agreeing to the contract.

Connecticut HUD press officials declined to respond to inquiries Monday.

Under the new contract, the Housing Authority can treat all funding sources as a single pool.

“In the past, if we didn’t use all Section 8 money, we had to return it,” said Robert Solomon, the Housing Authority’s interim executive director. “But now we can use that money for other things.”

The Section 8 program provides government subsidies for low-income housing projects.

Solomon said the Housing Authority could transfer Section 8 funds to the capital fund or public housing fund to revitalize housing units, increase security, and pay Section 8 landlords differently.

Section 8 renters will gain the most from the new contract. The Housing Authority handles one of every six New Haven rentals.

But the contract’s impact on homeowners who qualify under a new Section 8 program would be minimal, said Jim Paley, the director of Neighborhood Housing Services.

The additional flexibility would allow the authority to provide higher quality housing and additional mixed-income housing, Solomon said.

New Haven officials view the Moving to Work designation as a step forward in the Housing Authority’s turnaround.

“It’s the most important thing that has happened to the agency in decades,” Solomon said.

HUD removed New Haven from the federal “troubled list” last spring when the Housing Authority ended a six-year streak of falling public housing ratings. Federal officials considered a takeover of the Housing Authority after $1.1 million of the agency’s money disappeared without explanation several years ago.

But additional funds must match the increased flexibility established in the contract in order for the Housing Authority to improve housing significantly.

“Fundamentally, there is a problem in that the federal government does not support housing authorities so they can provide the public housing that was intended with the housing authority program,” DeStefano said.

The New Haven authority will learn by early November whether it will receive a $35 million HOPE VI grant to revitalize the West Rock district.

The Moving to Work contract would allow the Housing Authority to better combine its efforts with New Haven’s comprehensive housing program, Solomon said.