From the inside, there's no evidence Valaria Hernandez's apartment is an artifact of the old West. Equipped with modern appliances, light fixtures, and wall-to-wall carpets, it passes easily for a 1980s condo.
The exterior, however, tells a different story: The ornate, red-brick-and-sandstone faade of northwest Denver's Tallmadge & Boyer building evokes an era when trolley cars rattled past the saloon that once filled one of the structure's first-story store fronts.
"I love it - it has its problems, but I love it," the mother of two says of her new home.
To Ms. Hernandez, the building's age shows in its quirks: an uneven floor beam here, a winter draft there. More important, Hernandez says, the three-story, three-bedroom apartment rents for $650 a month, a steal for an otherwise top-line apartment.
The century-old structure is a showpiece for a small but growing movement in the housing world: Using a mix of funding options, a rising number of developers tout historic preservation as a way to provide quality affordable housing.
The Tallmadge & Boyer Building, for example, was renovated by a local nonprofit group, Del Norte Neighborhood Development Corp., which used a combination of tax credits for historic preservation and low-income housing tax incentives to rehab the once-vacant structure.
Because of those incentives, rents here are roughly $200 below market rate. What that proves, proponents say, is that by creatively using tax incentives, the task of providing affordable shelter can work peaceably alongside the often pricey effort of rehabilitating antique architecture.
Take, for example, Los Angeles's Dunbar Hotel, built in 1928. Using federal low-income rental assistance, community development block grants, and tax credits, the building has been refurbished into 73 low-income apartments for senior citizens.
In the Midwest, MetroPlains Development Inc. has rehabbed dozens of architectural sites in cities and small prairie towns via a variety of sources, from the Federal Home Loan Bank Board to the Farmers Home Administration, which gives low-interest loans for housing in communities with fewer than 20,000 residents.
Elsewhere around the country, more and more developers are carving a niche for themselves by providing reasonable rentals in key neighborhood landmarks.
Such fixer-upper projects are not easy or cheap, however. Compliance with state and federal historic standards can be expensive and developers must contend with risks such as lead paint, asbestos, and rotten beams.
"This kind of work is not for the faint of heart," says Pam Gleichman, president of Landmark America, a Portland, Maine, firm that specializes in historic restoration and affordable housing.
In one of Landmark's most recent renovations, Gleichman's team built 202 apartments in the once-abandoned Memphis Exchange building featured in the 1993 Tom Cruise movie, "The Firm." The building now features a mix of affordable to top-line apartments that range from $400 to $1,500 per month in order to encourage a mix of income levels.
In general, developers rely on tax credits in two key areas: low-income housing and historic preservation. By agreeing to keep their units "affordable," developers can write off up to 20 percent of the project's total cost.
If a building qualifies as a historic site, developers can get further tax savings from local, state, and federal governments. These savings are used as a form of equity, on which developers borrow the extra capital needed to build.
These fiscal strategies were born of necessity. In the mid-1980s, Congress killed some key tax incentives for low-income housing. Developers and homeowners got creative, taking advantage of everything from energy grants for insulation to federal grants that allow homeowners to bring old homes up to code.
These subsidies are often matched by large lenders, and by the sweat equity of individual homeowners. In the Highland neighborhood of northwest Denver, for example, journalist and self-described "tinkerer" John McMillin has applied for funds that will shore up the foundation and structural problems in his 110-year-old Victorian house.
"A lot of the work being funded is not the glamorous finishing work you think of when you think of historic preservation," Mr. McMillin says. "But in 100 years, it'll be the most important thing we did."
STILL, obtaining home-improvement and historic-preservation grants can be time-consuming, one reason there aren't more developers in this field.
To help change that, two conferences last month (in Pittsburgh and Boulder, Colo.) were aimed at taking the mystery out of the process. Further, preservationists say they are trying to bridge the gaps between housing advocates and history buffs.
Architects, for example, often complain when low-income housing agencies have razed historic neighborhoods in order to build huge, charmless apartment buildings or "projects."
Preservationists, meanwhile, are accused of caring more about a neighborhood's architecture than its people. But that's changing, says Richard Moe, president of the National Historic Trust. The organization, he notes, has awarded more than $4 million to inner-city housing groups and, by 1993, one-third of all housing units fixed up with federal rehabilitation tax credits went to low- to moderate-income housing.
To historians, these efforts are important because many of America's architectural jewels are found in deteriorating urban centers in need of low-cost housing.
Still, even some preservation advocates have some concerns. "There's some fear in this neighborhood that historic preservation is going to lead to gentrification," says Shelly Garcia, a housing specialist for Del Norte.
That's already happening. Del Norte's rehab of the Tallmadge building, for example, encouraged another developer to refurbish the next block. But those new apartments rent for $650 to $800, more than most Highland residents can afford.
Some Highland residents say that historic preservation won't solve the neighborhood problems of drug abuse or gang violence.
Others note that preservation is a step in that direction. "[The rehabilitation] gives hope," says Tim Boers, the chairman of Highland United Neighbors, a neighborhood group. "The hope is that there will be more improvements and that developers will see that there's potential here."