The Paddock Arcade may become another case of Neighbors of Watertown coming to the rescue.

John P. and Roxanne M. Burns, owners of the Paddock Arcade, have reached their financial limit for making major repairs to the 151-year-old mall. They had hoped to restructure their debt and obtain a loan from the Watertown Local Development Corp. to cover the costs, but were turned down by the agency's review committee.

But as an upshot of the rejection, the Burnses were referred to Gary C. Beasley, executive director of Neighbors of Watertown.

"We are looking at options to find a way to bring in some redevelopment money for the arcade," Mr. Beasley said. "It's difficult to support repairs and upgrades to any of those old, large downtown buildings with the rents that can be charged downtown."

Mrs. Burns, a member of the Watertown City Council, rattled off a laundry list of repairs and improvements that are needed, including big-ticket items such as replacing the leaking roof, fixing the glass atrium, repairing the boiler heating system, renovating the facade and installing an elevator to open up the second floor to more tenants.

"There are a lot of cosmetics that could make the inside nicer," Mrs. Burns said. "New lighting in there is another priority."

The Burnses have been patching the roof, replacing pieces of glass and making other smaller repairs since they bought the building in 1997. "I think it goes without saying we have invested a significant amount in the building to bring the building to where it is now," Mrs. Burns said, estimating they have spent $70,000 to $75,000 on improvements.

Rents generate enough to pay the monthly bills, but not to pay for big renovations, she said.

One option being investigated is a limited liability partnership among the Burnses, Neighbors of Watertown and investors who would purchase tax credits.

The building's age and significance as the oldest continuously operating arcade in the United States make it eligible for historic tax credits to raise money for renovations.

Two buildings at the front of the arcade are owned by Mr. Burns's mother, Rosemary G., and have 12 apartments, opening up an opportunity for the selling of residential tax credits to help finance the project, Mr. Beasley said.

"It certainly adds some economies of scale and a different source of funding," he said. "The residential tax credits are better. They raise a little bit more than the historic by itself."

NOW is looking at using a similar mix of tax credits to restore the Emerson Place apartments off State Street and revitalize the surrounding neighborhood. There is no limit to the number of tax credits a community can use, Mr. Beasley said.

The only limit is how many projects NOW can juggle - it's already managing the Burdick, Brighton and Buck apartment buildings and the Marcy Building, it administers housing rehab and first-time homeowner programs, it is doing a downtown facade program, and it is pursuing the Emerson project.

"There is a limit to what we can do; we haven't reached that yet," Mr. Beasley said.

He is collecting quotes on how much it would cost to do architectural design work, an appraisal and a market study. If they are affordable, Mr. Beasley would have them done and then could determine how much money needs to be raised.

"We are trying to, at this point, get our arms around what all the scenarios are," Mr. Beasley said. "I don't want to excite everybody that there is some solution around the corner. There may not be."

The Burnses are still reviewing their options, Mrs. Burns said. A limited liability partnership would take away some of the couple's control over their building.