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Firefighters work to extinguish the remains of a fire at a heritage building located at Yonge and Gould Streets in Toronto.Fernando Morales/The Globe and Mail

Arson was the cause of the fire that gutted a historic red-brick building at Yonge and Gould Streets in early January, police have confirmed.

Once known as the Empress Hotel, the three-storey structure partly collapsed last year, forcing the city to close part of Yonge north of Dundas Street.

Toronto Police are investigating, but no arrests have been made and a man spotted in a surveillance photograph leaving the scene has not yet been identified.

Describing the arson investigation as "alarming," local Councillor Kristyn Wong-Tam (Toronto Centre-Rosedale) on Monday called on Thornhill's Lalani family, which has owned the 122-year-old building at 335 Yonge St. for years, to speak publicly about the incident.

"They will, I'm sure, be questioned," she said. "It's not a bad day for them to step forward and lay out their position."

A privately financed planning effort was recently launched to kick-start development in that part of Yonge.

Ms. Wong-Tam retained urban planner Ken Greenberg and architect Marianne McKenna to conduct a planning study of the stretch of Yonge Street between Dundas and Gerrard, using funds donated by Ryerson University and a handful of local property owners, including Arron Barberian of Barberian's Steakhouse on Elm Street, and Ken Rutherford, who owns the commercial building that once housed Toronto Camera.

The properties directly north and south of Gould Street on the east side of Yonge are both vacant. The now-demolished Sam the Record man site belongs to Ryerson, which wants to build a student centre there. Snohetta, a Norwegian architectural firm, will unveil its design in March.

At an invitation-only meeting for area stakeholders in late January, Ms. Wong-Tam set up a working group to steer redevelopment. She said the group includes a member of the Lalani family.

The $40,000 study is expected to be complete by April. Ms. Wong-Tam said she's decided against accepting cash contributions for the study from the Lalanis to avoid any perception that they're skewing the planning process.

Special to The Globe and Mail, with a report from Adrian Morrow

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