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When workers are smashing up a building on a Sunday morning, it suggests some kind of skulduggery. But last weekend at Yonge and Bloor, the rules largely weren't being broken; The crew attacking the façade of the Stollery's building at 1 Bloor West had a demolition permit.

Should we mourn the end of this building, site of a venerable and long-crumbling apparel shop? Personally, I'm not convinced. It is a mess: a modestly scaled shoebox with a 1984 gold-glass addition placed on top like a mullet. It's located at Yonge and Bloor, one of Canada's busiest corners and fertile ground for some very dense development. It is an anachronism.

But you might disagree, and say that it is a relic: a rare Toronto building with Art Deco details, home of the same family business for a century and part of a historic neighbourhood.

Now there's not much of it left to argue about. And that is why the weekend's hasty demolition is a problem. We didn't get to discuss how to reconcile history and new development, a kind of conversation that Toronto is very good at. And, with half of downtown seemingly under construction, it's a talk we need to have more often.

This was the point I heard from Mary MacDonald, who heads the city's Heritage Preservation Services department, this week. "What we would object to is the lack of an ability to have that conversation, and to find a solution that reflects a complex public interest," she said.

It can be done. Just down the street from Stollerys is 5 St. Joseph St., a 48-storey tower set behind a row of Victorian storefronts that are remaining in place. It's half a block of old Yonge Street being dolled up under the direction of ERA Architects, with a strong, contemporary building by Hariri Pontarini. In this May-December romance, both partners look fabulous.

Toronto architects have been working on this sort of pairing since the 1960s. In those days, "urban renewal" meant levelling blocks and building isolated new towers; local urbanists and activists, including Jane Jacobs herself, developed a different approach that preserved older buildings and, especially, streetscapes. Take York Square, a retail complex on Avenue Road in Yorkville. In 1968, young architects Jack Diamond and Barton Myers preserved a pair of Victorian houses, stashing new money-making floor space behind and beside them.

And it established a dialogue between Victoriana, modernist forms and the visual provocations of early postmodernism.

It looked good then, when it had a coat of white paint and cheeky graphic art, and it looks good now.

But, in a deeply ironic twist, York Square is itself under threat. This week, the city held a community meeting to discuss a redevelopment of the site that would add a 40-storey tower. The current proposal, with a design led by Zeidler Partnership Architects, would retain the façades of those two Victorian houses (and their sixties facades) and obliterate the rest of the site. A smallish covered plaza would be the only concession to the public realm.

A working group of local stakeholders will talk this over, and it should evolve. Right now, the tower scheme utterly misses the point. York Square is important precisely because it is an anti-tower. The complex created a beautiful courtyard – the sort of secretive pedestrian space that came to define post-hippie Yorkville – and achieved, to use Mr. Diamond's phrase, "density without height." It was praised by the leading architectural journals of the time and by Ms. Jacobs herself. The theme was carried on by Mr. Diamond and Mr. Myers in two highly influential housing projects at Dundas and Sherbourne and near College and Beverley.

And, through the reform council years of the 1970s, Toronto's architects used this kind of thinking to set an example for the world: how to build a modern city without throwing out the logic, or the bricks and mortar, of past generations. "Context" was a crucial word then, and it still is today. You can see this sensitivity in the work of Diamond Schmitt Architects and of KPMB Architects, who came out of Mr. Myers's office.

York Square is a crucial chapter in that story. And what will happen to it? Mr. Diamond told me this week that he's not fussed to see the building go down, so long as its ideas are carried on. "And the principle we established will not be honoured if they plaster on a piece of it to a new building," he says. "That's not what's at stake."

The developers, Empire Communities, should find a way to work with the owners of Hazelton Lanes, which is under renovation next door, on a creative solution that generates some fine-grained urbanism and public space. If they do not, then the city should listen to the advice of its heritage staff, which is to preserve the building, period. It is a designated heritage site: This is the place to show whether that actually means something.

At the Stollery's site, however, a tower is clearly coming. Mizrahi Developments, reportedly with partners, is shooting for a large, mixed-use redevelopment, and they've reportedly hired the coolly competent modernists Foster + Partners to design it. That's good news. On the other hand, the planning will take years. Meanwhile, there could be a dead building, or a vacant lot, at Yonge and Bloor.

This shouldn't have been legal. As preservationist Catherine Nasmith pointed out to me this week, the process would have been more complicated if there had been a tree, not a building, at Yonge and Bloor. For such requests, the city will make you fill out a long form, pay as much as $300, and wait for an arborist's report. If like Mizrahi you own a commercial building, on the other hand, then request a demolition permit and you will be ready to wreck almost immediately. According to councillor Kristyn Wong-Tam, Mizrahi's workers did break some rules by occupying the sidewalk and working on Sunday, but tearing the building down would otherwise have been fine. It's a strange quirk of the system.

The exception: If the building is on the city's inventory of heritage properties, the city has 60 days to get the building officially designated – a tough hurdle that demands serious research and a vote by City Council. And the research has to be robust enough to stand up to appeal and the oversight of the Ontario Municipal Board.

In effect, to be firmly protected, a building has to already be on the radar of the city's Heritage Preservation Services, which has only two full-time researchers covering the entire city. Two. Usually, this system works passably well. But the Stollery's site had fallen through the cracks; it wasn't listed. In such cases, it all comes down to the goodwill and PR instincts of the developer. That often works. Not this time.

The likely result would have been to place a piece of the Stollery's façade on the new building – the type of cut-and-paste job that has too often sufficed for heritage preservation in Toronto. But who knows? The city these days has more power to enforce heritage than it did a decade ago, and the results are getting much better.

Meanwhile, it's time to fix a broken system. Why doesn't the city put the onus on developers to prove a building is expendable before letting it be torn down? Why not give buildings the same protection we give to trees? Our civic institutions, and our tradition of smart stewardship, should be able to stop a few crowbars.

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