In Seattle, a city of distinct neighborhoods, Yesler Terrace is almost forgotten.

Just south of Harborview Medical Center, Yesler Terrace overlooks downtown, Elliott Bay, and the Olympics. It's a public housing community of 1,500 people who live in two-story apartments on 30 acres.

Sixty-eight years ago, a man named Jesse Epstein made Yesler Terrace a celebrated symbol of liberal values. It was the nation's first racially integrated public housing.

Today, Yesler Terrace is a test of those values. The agency founded by Epstein, the Seattle Housing Authority (SHA), wants to redevelop the site and make it a blend of incomes as well as races, much like High Point, the SHA's award-winning new re-development in West Seattle. The issue is a tricky balance of city politics, economics, and competing interests. An advisory group led by former Mayor Norm Rice will give "guiding principles" to SHA's board on Dec. 6. Construction would begin in 2010 at the earliest.

To some, there may be no dilemma at all. That's prime acreage, centrally located, with million-dollar views. Move out the poor, sell the land to the "highest and best use," and use the proceeds to fund replacement housing for the poor at cheaper locations and for other SHA programs. That argument is fueled by the erosion of federal support for subsidized housing.

But at least some Yesler residents and community advocates argue that every resident displaced by re-development should be provided a home, not elsewhere but back on site. SHA says it embraces that goal but wants flexibility to provide housing in the nearby community, if not exactly within the original footprint.

"Our mission isn't to hang on to dirt," says Virginia Felton, SHA's director of communications. "It's to house people. So the issue at Yesler is how can we replace the community and take advantage of the value of the asset and still respect the integrity of that community."

Says John Fox, coordinator of the Seattle Displacement Coalition, an advocacy group: "They're licking their chops to do high-end development."

I've driven through the neighborhood hundreds of times, driving on Yesler Street, which bisects the community. I once visited the old gym, which was shockingly dilapidated, perhaps the worst in the city. (It's since been replaced by a handsome community center.) I also learned my parents lived there shortly after World War II, and my eldest brother was born there. Among other past residents: former Gov. Gary Locke.

In 2005, when I ran for City Council, I doorbelled the neighborhood and met many residents, some longtimers, even one second-generation resident whose mother lived with her, and others recently arrived from Asia and Africa. The largest populations come from Somalia and Vietnam. SHA puts out documents in nine languages.

Intrigued, I started a project with my wife, photographer Sally Tonkin, to go back and document the community, not as a definitive record but as a beginning. Frankly, one of our goals was to help make sure the residents aren't overlooked. The work was supported by a grant from the city's Office of Arts and Cultural Affairs. (The exhibition opens with a reception Wednesday, Nov. 28, at 6 p.m. at Yesler Community Center, 917 East Yesler Way. Through Dec. 27.)

Yesler Terrace is not only a policy problem but a neighborhood for people like Martin Reyes, 74, who says he's been there longer than anyone else. Reyes arrived with his mother and seven siblings in 1947. A gang of whites used to harass his family and break windows until about the time Reyes became state champion in boxing in a very lightweight division. (He's 5-5 and then weighed 97 pounds.)

Reyes has worked in different jobs, longest at the county juvenile detention center. He's volunteered at the nearby St. Francis House for the homeless for 34 years. Today, he lives on a fixed income as a retiree and has no desire to move but assumes he will within five years, never to return. Despite assurances from SHA, he figures the property on the hill is just too valuable to set aside sufficient space for residents to return. "We call it the billion-dollar hill," he says. "Not million. Billion."

It's like he's living on a gold mine, only it's not his.