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Mirvish Village is dead. Long live Mirvish Village. In the area near Honest Ed's this week, workers had put up fences around a string of Victorian houses on Markham Street, preparing to gut them, while creatives assembled an "Art Maze" inside the old Honest Ed's store for a festival and sendoff, An Honest Farewell, this weekend.

It's the end of an age at Bloor and Bathurst Streets: the loveable shambles of Honest Ed's is gone forever. But as this weekend's events suggest, the past will continue to have a presence on the site.

The new development at Mirvish Village, after two years of conversation between developers Westbank, locals and the city, is inching closer to approval, with a new proposal submitted in January to the city. Westbank paid $72-million for the site, a big number, and yet the result is as good as private development gets in Toronto. It features meaningful preservation of heritage buildings, a serious sustainability agenda, and affordable housing – not to mention an architectural and leasing strategy geared at making the place as lively as possible, even a bit weird.

That's all because the developers have been ready to engage in meaningful discussion: The city and the community have made this proposal better through talking and listening.

When the first Westbank proposal emerged in early 2015, "I think [the City of Toronto] were surprised by how much we were offering," the main architect, Vancouver's Gregory Henriquez, told me last week. "That's how we deal in Vancouver: We come with our best offer."

But while many Torontonians embraced the proposal, others hated it. And planning in Toronto "is more of an iterative process," Mr. Henriquez says. Really, it's a haggle: Every aspect of a large-scale development is negotiated between developers and planners. Or between lawyers at the Ontario Municipal Board.

To Westbank's credit, they didn't go that route; they dealt earnestly with city planner Graig Uens and a raft of city staff, and engaged in a parallel process with members of four neighbourhood associations – including my own in Seaton Village, which extends to my house half a kilometre away. It's a big tent. "I don't know of a more robust city-led and public process than the one that got us to this point, in Toronto or in Canada," local city councillor Mike Layton says.

Mr. Henriquez counters, "I think it's been really fruitful. And what's come out of it is an honest effort to make a better project from our point of view."

No doubt, it has gotten better. It retains the architectural strategy of breaking up the apartment buildings into "micro-towers," most with small retail spaces at ground level to retain the rhythm of the streetscape. It is still all rental housing, many of the units two- or three-bedroom. It retains a commitment to the LEED Platinum sustainability standard.

But the latest Westbank proposal includes a park; a sizable child-care centre; and an unspecified number of affordable housing units, which Westbank hopes will be funded through a partnership with the Canada Mortgage and Housing Corp. That's a high priority for councillors Layton and Joe Cressy. And, Mr. Cressy says, "The degree to which this will succeed depends on the degree to which it feels like a neighbourhood."

That's a high ambition for big development in Toronto. The largest master-planned projects in the city, such as Concord CityPlace downtown and Concord Park Place in North York, have provided some degree of community benefits, but wind up as relatively grim places. The design of the streetscape at Mirvish Village, by Janet Rosenberg and Associates and Urban Strategies, is the best Toronto has seen from a private developer. The strategy toward heritage retention is likewise first-class – Westbank's latest offer is to retain 23 of 27 designated buildings on the site, with thoughtful stewardship from ERA Architects and signage that echoes the punny greatness of Ed's slogans.

Still, the project has been a litmus test for Torontonians' attitudes toward change. Honest Ed's represented the best of Toronto, a place where people from all backgrounds and homelands could afford to shop and feel welcome. It's amazing that a discount retailer could have that much impact. The Mirvish family changed the city for the better.

The idea that Toronto has kept changing, even here, is harder for some people to take. Many Torontonians remember arriving in Toronto, or in Canada, and being wowed by the kitschy splendour of Ed's. My father had that experience after landing here from Italy in 1963.

But that was a long time ago. The Mirvishes' long-time ownership of this site, with the houses in Mirvish Village rented out cheaply to a selection of artists, artisans and retailers, made the place feel like a time capsule. But you can make all sorts of sentimental choices when you're sitting on $70-million in real estate. That was never going to last.

The real question, as central Toronto gets ever denser and more expensive, is what kinds of growth will make room for more people – even those who can't afford a $1.4-million semi. That means rentals, with a meaningful share of affordable housing, alongside room for culture and employment, and with architecture that makes varied and soulful streets. If any Toronto development will pull it off, it's the new Mirvish Village. There's no place like this place – anyplace! – but there ought to be.

How have we done after a decade of the Places to Grow Act? The present day shows what life is like not only in Toronto, but also suburban municipalities like Mississauga, Brampton and Oakville that are quickly outgrowing their satellite reputations. There have been victories, but just as many challenges still left to tackle.

The Globe and Mail