On a recent afternoon, I strolled the worn brick sidewalk of American Street in Northern Liberties. Amid horse chestnuts and morning glories, alongside the ruins of Ortlieb's brewery and bottling plant, this is one of the busiest construction zones in the city. It is also an architectural free-for-all. On blocks freed from much of their historic fabric by arson in the 1980s, the architectural impulse - from William Strickland to Winka Dubbeldam - covers three centuries.

Just beyond the muscular scale of Ortlieb's is the Walter Moleski-designed modernist home of photographer Ray Metzger and a set of wonderful little glass and metal houses facing Liberty Lands Park. "When I have guests in town," says Tom Sugrue, the University of Pennsylvania historian and former vice chair of the city's Historical Commission, "I bring them to Northern Liberties because of the architectural energy."

But on American Street, the contemporary record is mixed. "So much of what we build now is going into the dustbin of architectural history," Sugrue laments. And that is why American Street rather instructively points up this moment in Philadelphia's evolution: While we are still devoting too few resources to preserving our inherited fabric, we're also not reliably producing strong contemporary architecture.

Meanwhile, advocates for contemporary design and champions of historic preservation, at odds over the character of the Philadelphia street, have split further apart. "Over the years, the line between designers and preservationists has hardened," explains Randall Mason, chair of the graduate program in historic preservation at Penn's School of Design and author of The Once and Future New York: Historic Preservation and the Modern City.

Given a political climate that demands development by any means, Mason says, preservationists are often forced to see themselves as defenders of the existing city against mawkish developers. This conservative position has diminished their influence over the larger urban future.

Now, says Mason, "it's time to change that. We want to erase the line."

Mason was one of the original participants in "Gray Area," a fledgling project initiated by Bill Adair, who directs the Heritage Philadelphia Program at the Pew Center for Arts & Heritage. The idea is to bring designers and preservationists together to give both fields new life. "Gray Area is a chance to launch a two-way exchange," Mason says. "And really, any city worth its salt rigorously protects its inheritance just as it rigorously pursues good new design. It's best to connect them."

"Preservationists need to be part of the conversation about the future of the city or they're going to be left out," adds Adair. Seeking a vehicle for the conversation, he recruited Hilary Jay, the founder of DesignPhiladelphia, who organized the Gray Area team and conceived a panel discussion, which will take place Oct. 19 at 5:30 p.m. at the Center for Architecture (free, register at http://grayarea.eventbrite.com).

The panel - with Mason, landscape architect Carol Franklin, policy analyst Mark Alan Hughes, architect Tod Williams, Metropolis writer Susan Szenasy, and builder/inventor Lloyd Alter - and an accompanying catalog "of projects and provocations" are meant to elicit further exchange. "We really want to explode the conversation about preservation," says Gray Area organizer Elise Vider, a longtime advocate for preservation and design.

"What we're asking," says Jay, "is how can we use preservation as a catalyst, as opposed to using it to embalm our city."

The Gray Area protagonists think designers can reignite preservationists' charge by expanding the ways of reinterpreting old buildings and landscapes, using them as platforms for new development. "What if the conversation were therefore more about design" rather than protection or restoration?, asks architect Brian Phillips.

Mason, of Penn's School of Design, says preservationists are ready to answer. "We have a lot of things to say about the world. Regulation is not the only tool in our tool kit."

I asked John Gallery, the longtime director of the Preservation Alliance of Greater Philadelphia, what he thought of all this. Gallery wasn't invited to participate in the panel discussion and his staff has had little to do with organizing the catalog or the event (though Mason is a board member of the Preservation Alliance, as is Sugrue). "I think it's healthy for people with different points of view to broaden the conversation and I'm looking forward to hearing what these different viewpoints might be," he says. But it's clear Gallery sees safeguarding and restoring significant buildings as the mainstay of his organization's work. "And given that," he wonders, "what different approaches would you come up with? Take the Victory Building" at 10th and Chestnut Streets. "What would be the variations? Is it apartments, offices? The basic preservation of buildings is really narrowly limited."

And, as Sugrue notes, the alliance, as well as the city's Historical Commission, is woefully underfunded. The commission, which is charged with reviewing proposed new development in the city's 12 historic districts and beyond, and with protecting historic sites, survives on about $400,000 a year. Sugrue says that's a pittance compared with cities like Boston, New York, and Chicago: "It's amazing they get done what they get done given the few resources."

Gallery reminds me that the Preservation Alliance has been criticized for thinking beyond the protection of significant buildings in historic neighborhoods. But Gallery, who has also been the city's housing director, is one of the most careful Philadelphia observers, and he thinks broadly about the urban landscape. "I guess it's the question of what it is you think will make Philadelphia a distinctive city in the future," he says. "To say that the future is dependent on building new as opposed to fixing the old is a questionable assumption."

But, he says, new architecture can be successful in a historic setting if it takes its cues from the existing fabric. "Look, you can do both" - meaning promote strong contemporary architecture and preserve the historic streetscape - "but everything should be contributing to the overall environment."

This philosophy, which says a city's distinctiveness is derived from the coherence of its urban fabric, is disquieting to contemporary architects such as Phillips and Dave McHenry, who seek a more dynamic relationship between the new and the old.

And that means turning historic preservation on its head. "We think one way to prove an old building's value is to see how hard it can work for us today," says McHenry, whose firm, Erdy-McHenry Architecture, designed the Piazza at Schmidts, a half-block from American Street, one of a handful of assiduously contemporary projects around the city. "We want to make preservation a future proposition. If our generation doesn't build enough that's physically and intellectually strong, there's going to be a gap in history."

Sugrue says that's the point of an initiative like Gray Area. "Advocates of good design and historic preservation can find a lot of common ground in imagining buildings that will be worth preserving 50 or 100 years from now."