City wants to sell notorious James St. N. alley to developer

An alley notorious for the stench of bodily fluids will finally be cleaned up if a city proposal to sell it to a developer is approved Monday.

City staff are proposing selling a stretch of the alley that runs next to the shuttered Sirloin Cellar restaurant on James StreetNorth near King William Street.

A report to be discussed at Monday's Public Works meeting recommends selling the portion of the alleyway to developer Core Urban Inc. The developer would pay $2 and assume all of the liability for fixing the alley, which has been leaking into the underground portion of the building for years.

Core Urban wants to convert the alley to an elevator to service the top floors of the buildings on either side, turning them into commercial office space, said Steve Kulakowsky, a partner at the company. The ground floor spaces would be redeveloped to house a restaurant and retail.

The alley has been temporarily closed for three years to cars and has been the focus of a long-running dispute between the Sirloin Cellar and the city over leaks and subterranean damage.

• Paul Wilson: It's stress, not sizzle, at the Sirloin Cellar

'One of the most screwed-up pieces of property in Hamilton'

"It's one of the most screwed-up pieces of property in Hamilton," Kulakowsky said. "The buildings are gorgeous but they're really under-utilized. People don't appreciate the architecture because of the state that they're in right now."

Core Urban has a history of taking on and restoring historic properties. Kulakowsy and partners Dave and Maureen Sauve developed the Herkimer Apartments, the Empire Times building and the Witton Lofts.

"We love taking on the ones that are the worst," Kulakowsky said. "It's a complex project in many different ways."

The alley is the fulcrum for Core Urban's plans to develop the space between 10 and 14 James Street North. Renovating the alley would allow Core Urban to install an elevator to serve the top floors of the adjacent buildings, currently accessible only by stairs. The company has plans to buy the buildings as long as the alley deal goes through.

The three floors above "haven't been swept in 60 years." For decades they sat empty alongside and above the Hamilton staple, the Sirloin Cellar, Kulakowsky said.

The proposal would allow the city to resolve the litigation with the Sirloin Cellar for less than it would cost to fix the entire alley, Kulakowsky said. He added he cannot speak to the specifics of the deal as they are between the city and the restaurant owners.

City staff did not return calls for information about any planned resolution of the litigationSunday. Anattorney did not return requests for comment who representsthe owners of the Sirloin Cellar, Bill and Anna Villeneuve. Theytold CBC Hamilton in 2013 they had to sell their house after the structural issues forced them to close their restaurant.

'Anytime you're buying something for $2'

The city paints the deal was a win in its report. It would allow the city to satisfy several of its goals about incentivizing downtown development and avoiding expensive repairs to the alley. The city would require Core Urban to provide a 1.5-metre pedestrian walkway so the alley can still be accessed on foot.

Kulakowsky said the dollar figure formality involved in transactions like these raise eyebrows unnecessarily.

"Anytime you're buying something for $2 it seems like there's something underhanded going on," he said. "Actually, it's a huge liability and we have to fix the whole alleyway. The city's had estimates that are in the 7-figure range to fix the alleyway."

The owner of a parking lot on the corner of James and King William is contesting the sale of the alley. Closing the alley permanently to vehicular traffic would encourage delivery trucks and vehicles to use the parking lotproperty to turn around, said attorney Scott Snider, representing the DeSantis Group, in a letter filed with the city.

"It was and remains a vacant site used currently as a parking lot; however, our client fully intends to redevelop the site at some point in the future," Snider wrote.

Kulakowsky said his group has tried since taking the project on in December 2013 to make the proposal attractive to everyone on the block. Core Urban has been working with a realtor to help the pharmacy currently located in one of the buildings in question to find a new place to rent in the area. Kulakowsky was surprised to hear of DeSantis's objections. "It's the property in the whole block that is least affected by [the proposal]," he said.

"We worked really hard to make sure that nobody was affected adversely," he added. "We're taking a serious eyesore and turning it into something special."