The following case study, prepared by the National Park Service, illustrates how the Historic Rehabilitation Tax Credit (HRTC) and Low-Income Housing Tax Credit (LIHTC) can be combined to create a powerful subsidy for affordable rehab. Seattle's Plymouth Housing Group (PHG) acquired the Pacific Hotel, located in the downtown area. Built in 1916, the property traditionally provided transient housing; it closed by the 1980s. PHG, a homeless-advocacy group, acquired the abandoned hotel and rehabilitated it to provide 112 units. All of the units served low-income residents; there were 75 SRO units in one wing, and 37 studio and one-bedroom apartments in another.

The Pacific Hotel's total project cost was $8,534,694 ($2,113,092 acquisition and $6,421,602 rehabilitation), or about $76,000 per unit. PHG's clientele could not afford the rents to amortize a $76,000 unit, but rents were brought down to an affordable level through multiple sources. The $8,534,694 project expense was met through $3,656,085 in equity—raised from combining the LIHTC and HRTC—and $4,878,609 in debt financing. The debt's cost was reduced by subsidies received from the Federal Home Loan Bank, the Washington State Housing Trust Fund, and the City of Seattle. The project's operating costs were further subsidized by the U.S. Department of Housing and Urban Development's McKinney SRO MOD REHAB program.

For a detailed analysis of this case, please refer to the National Park Service's Web site at www.cr.nps.gov.