Owners of the aging Northgate Apartments — one- and two-story wooden buildings scattered across eight acres of neatly trimmed lawns — want to redevelop the property. Just north of the mall next to Interstate 5, it's a prime location for a hotel, office buildings and shops, and just a 10-minute walk to the Northgate Transit Center and the future light-rail station.

But a proposal to rezone the land is being opposed by advocates who fear the loss of the existing 207 apartments that are home to many low-income and immigrant families.

City land-use rules adopted in 2010 give incentives to developers who replace or create low-income housing by allowing them to build taller and bigger buildings.

But the Mullally family, which owns the Northgate Apartments, has applied for neighborhood commercial zoning that doesn't require any replacement of the existing apartments.

The family, Seattle natives who have owned the complex since 1988, is now in talks with housing advocates to address the potential loss of affordable housing. Both sides say the talks have been productive.

But how much housing will be built and whether it will be affordable to low-income people is still unknown.

"The affordable-housing component will be addressed," said John Mullally, managing member of the family-owned business, MDC. But he also notes that under the neighborhood commercial zoning for which MDC has applied, it is not required to replace any housing at all.

"If we're at zero, what plus zero is fair and equitable?" Mullally asked.

John Fox, director of the Seattle Displacement Coalition, a low-income-housing advocacy group, and David Miller, president of the Maple Leaf Community Council, the neighborhood south of Northgate Mall, are involved in the ongoing negotiations with the Mullallys and have agreed not to publicly discuss the talks.

But Fox did speak generally about the loss of affordable housing in the city as apartment buildings are bought and sold, as rents increase and as older buildings like the Northgate Apartments are demolished.

Fox estimates that 3,000 to 4,000 low-income units a year are lost in Seattle while, under the city's 2009 housing levy, 300-400 are built.

"We can't afford to replace all the housing developers are destroying. Developers should share in the cost of replacing those units," Fox said.

Neighbors of the Northgate Apartments give the Mullally family high praise for running a quiet and well-maintained complex.

The owners provide 24-hour emergency maintenance for their tenants and regular repairs to roofs, plumbing and boilers. One-bedroom apartments go for about $800 and two-bedrooms for just under $1,000.

The apartment property is currently zoned MR, or midrise multifamily. If the Mullallys took advantage of the city's incentive zoning provisions, they could build up to 2,216 units on the site, according to a calculation prepared by the Department of Planning and Land Use.

They would also be required to replace all 207 of the existing affordable units and build an additional 96 to get the maximum building capacity.

But if they kept the current midrise zoning and didn't ask for additional height, they wouldn't have to replace any of the housing units.

In March, the Planning Department approved the rezone to neighborhood commercial but set five conditions, including that the developers add 3 to 5 percent of each new building's floor area as affordable housing. The 33-page ruling notes that the alternative — a less dense development at the existing zoning, and no new affordable housing — "would fall short of what is envisioned for urban centers."

Housing advocates say 3 to 5 percent is too little housing for such a big site. And they worry that it won't be truly affordable to retail workers who want to live in the neighborhood.

"This transit-, employment- and amenity-rich neighborhood will experience a dramatic loss of affordable housing without a city requirement to replace the affordable units," said Emily Alvarado, policy director of the Housing Development Consortium, an organization of low-income-housing providers.

The Displacement Coalition and the Maple Leaf Community Council appealed the department's approval of the rezone request. The Mullallys also appealed three of the conditions, including those requiring it to build affordable housing.

The appeal on the housing issue will be heard by a city hearing examiner Friday. The Seattle City Council ultimately will decide whether to approve the rezone.

At the Northgate Apartments earlier this week, children played on front porches as their parents and other residents discussed the potential loss of their homes if the property is redeveloped.

Freddie Cante worked on his car with his son, Alberto, in front of his family's two-bedroom unit. He said the apartment owners have been good about keeping residents informed about the rezone request and have reassured them that demolition could still be years away.

"We're waiting for what happens," said Cante, who works at the California Pizza Kitchen across the street at Northgate Mall. He said the owners have said they would help them find a new place if the redevelopment goes forward.

"This has been our home for nine years," he said.

John Nketiah, 35 and single, said he could relocate if he found a place that wasn't too expensive.

But, gesturing to the other apartments in the complex, he said, "It's going to be hard for a lot of people if they have to move."

Lynn Thompson: 206-464-8305 or lthompson@seattletimes.com. On Twitter @lthompsontimes.