While more luxury apartments for students and young professionals are rising downtown, Madison is still short on housing options for residents who cannot afford to pay high cost rents.

However, city officials said they are looking to address the issue with the creation of the new Affordable Housing Fund.

The fund is part of Mayor Paul Soglin’s 2015 Capital Budget and contains $4.25 million that will be distributed to two to four new development projects each year. These developments will be focused on creating 750 to 1,000 new units of housing for low to moderate income families over the next five years, Jim O’Keefe, director of the city’s Community Development Division, said.

O’Keefe said the city already asked for requests for proposals from area developers earlier in the year, for which they have received six proposals so far. It is a good way to begin, he said, but the change will take a long-term commitment from the city.

“We’re certainly encouraged by the first response,” O’Keefe said. “But housing projects just don’t happen overnight … it’s going to take awhile to really make a dent.”

O’Keefe said the program is a lot like something Madison has tried before, the similarly-named Affordable Housing Trust Fund. The setup was not much different, he said, but the city was giving out seven to 10-year loans for development projects that actually required 20 to 30 years to repay the city.

O’Keefe said this created a conflict between the goals of the Affordable Housing Trust Fund program and the needs of the projects it was designed to help in the first place.

“It wasn’t very useful,” O’Keefe said. “As an end result, the program just didn’t get used very much, the trust fund didn’t get used very much and it wasn’t an effective tool to support affordable housing projects.”

The developers’ proposals will be evaluated on criteria such as how close the units will be to grocery stores, parks and schools, among other things, and how affordable the rent will be for the tenants.

O’Keefe said there are about 27,000 households in Madison that are considered to be housing-cost burdened, meaning more than 30 percent of the residents’ income goes toward their rent payments. The goal for these projects is to keep rent between 30 and 40 percent of the tenants’ income, he said.

Ald. Marsha Rummel, District 6, said the Affordable Housing Fund is a good way to show area developers that the city is willing to help make these projects a reality.

“They are always looking for money,” Rummel said. “It’s hard to provide affordable housing without a subsidy, so this would send a message that the city is interested in those kinds of projects.”

The budget allocates $4.25 million for the fund in 2015 and $24.25 million total between 2015 and 2020. Voting on the capital budget will take place during the week of Nov. 10, Rummel said, when the Board of Estimates will review it and finalize it for next year.

With the low vacancy rate downtown and the continuing addition of market-rate apartments for young professionals, O’Keefe said he is glad the city is stepping in to help with affordable housing.

“We’re in a period of acute need for affordable housing, and so this is really sort of striking out in a new direction to provide some relief,” O’Keefe said.