At the corner of Cannon and Mary streets in downtown Hamilton stands a forlorn building that, to this day, wouldn't look out of place in a Charles Dickens novel.

Once upon a time, it was known as Cannon Knitting Mills, a former textile manufacturing plant, parts of which were built before Canada was even a country.

Now, it's an empty shell with an uncertain future. What was touted as a potential success story for the city four years ago still seems to be a long way from its happy ending.

The purchase of the Cannon Knitting Mills property in 2011 has been the one and only transaction completed in the past nine years by the Hamilton Realty Capital Corporation (HRCC), a somewhat mysterious creation of the city that has operated with little fanfare for nearly a decade.

The city likes to refer to HRCC as a joint venture, but the company is, in fact, a privately owned, for-profit subsidiary of Forum Equity Partners, a Toronto-based investment and development firm.

So far, the city's role in this public-private marriage has been limited to writing cheques and approving grants and loans to Forum, its private-sector partner, with little to show for the millions of dollars that have been spent or promised by the city since HRCC's formation in 2006.

The city paid half of the $200,000 purchase price for the Cannon Knitting Mills as part of the agreement, which sees HRCC's costs split down the middle with Forum. The property, however, is owned 100 per cent by Forum through a subsidiary.

On top of that, the city has agreed to pay Forum 15 per cent annually in interest for its share of any money injected into HRCC once a project is completed as well as a full return of all of Forum's principal. After that, the city gets its portion repaid with anything left over going completely to Forum.

When it was created nearly a decade ago, Hamilton Realty Capital Corporation was supposed to spur tens of millions of dollars in downtown redevelopment and generate hundreds of thousands more in new tax revenue by bringing neglected properties back to life.

It hasn't happened, and likely never will.

The Cannon Knitting Mills project at 134 Cannon St. E. sits stalled, a contaminated property now searching for a purpose that will suit a tenant, or tenants. Until that happens, remediation of the site is on hold.

In the meantime, the city is now collecting fewer tax dollars from HRCC's one and only property than when it was purchased in 2011. This is despite nearly $2 million in taxpayer-funded grants and loans promised at one time or another for the rehabilitation of the Cannon Knitting Mills site. And because of the 50-50 funding arrangement with HRCC, the city is now paying half of the property taxes.

More disturbingly, most of the uses proposed for the property at the time it was purchased appear to have been shot down as either impractical or unworkable.

Two weeks ago, a couple of youths were charged with arson after a suspicious fire caused damage to the vacant building.

A spokesperson for the planning and economic development department said the city remains "very excited about the future for this site and what it will bring to the downtown renewal story.

"There is still an expectation that the property will be redeveloped and viable," said Ann Lamanes, the city's spokesperson.

"The worst-case scenario is that the building is saved from being demolished, the land is remediated and the property is sold at a cost that would cover the city's investment."

A spokesperson for Forum Equity Partners said his company remains optimistic about the site's future.

"It is a very interesting property," stated Rupesh Amin, Forum's managing partner for infrastructure development. "Its effective and optimal redevelopment should have a very positive effect on the Beasley neighbourhood."

Maybe so, says a past president of the Beasley Neighbourhood Association, but the community's optimism for the property is waning.

"It's kind of sad that it's just sitting there," said Sylvia Nickerson. "I think the community has kind of moved on.

"We didn't find a partner there willing to work with us.

"In the past few years, there's really been no communication, as far as I can say," Nickerson added. "It was never clear to us whose responsibility it is."

The genesis of HRCC dates back to 2002 when city council agreed to use $2.3 million from the Hamilton Future Fund to create what was then called an urban development bank.

The idea was to start a corporation with a private-sector partner, then leverage money from both sides to purchase and rehabilitate difficult properties in a pre-established development zone downtown that might not otherwise attract any interest from developers.

In 2006, the city struck a 10-year agreement with Forum Equity Partners to create the Hamilton Realty Capital Corporation.

HRCC is a wholly owned subsidiary of Forum and the city is neither a shareholder of the company nor a director, although the city says it has been provided with access to HRCC's books and records by Forum when requested.

The city's one direct link to the company is Glen Norton, manager of urban renewal in the planning and economic development department.

In addition to his city role, Norton is the designated manager for Hamilton Realty Capital Corporation.

Forum certainly anticipated the joint venture would lead to a hefty infusion of cash into the city's core.

"The initiative's objective, through co-investment and shared resources between Forum and the City of Hamilton, is to invest approximately $40 million in renewal and development in downtown Hamilton throughout the initial term of the partnership," according to information about HRCC that was posted on Forum's website as recently as a month ago but now appears to have been deleted.

That amount — $40 million — far exceeds the city's current commitments to the partnership. It also far exceeds HRCC's actual investment in the downtown over the first nine years of the deal.

To date, Forum's investment in HRCC has been $184,313, which includes Forum's $100,000 share of the Cannon Knitting Mills purchase.

Meanwhile, the city spent more to establish HRCC than the company has spent to acquire property in nine years.

The city laid out almost $300,000 to create HRCC, develop a business plan and conduct analysis on potential properties for redevelopment. Those expenses were absorbed solely by the city and not shared with Forum.

Before purchasing the Cannon Knitting Mills, HRCC had come close to acquiring another property at 14 Mary St., behind the former notorious Sandbar Tavern on King Street East.

With the Mary Street site, the old tavern property and a third adjoining property, HRCC was going to develop a multi-level parking garage and a multi-use building, anchored by the city's public health unit.

But the plan fell apart and HRCC forfeited a $25,000 non-refundable deposit on the Mary Street property.

In February 2011, nearly five years after it was created, HRCC bought the Cannon Knitting Mills, a 110,000-square-foot building which is actually a collection of five structures built between 1854 and 1950.

The purchase price was $200,000, split evenly between the city and Forum.

Another $50,000 has been spent to clean the building of debris, such as pigeon droppings and lead paint flakes.

According to information posted on the HRCC website concerning the Cannon Knitting Mills, "design and development planning work is underway and Forum anticipates that the project will be under construction through 2012."

The project hasn't even commenced, let alone concluded.

The city has certainly done its part in trying to entice its private partner to get started. Council has approved two grants and one loan to Forum for remediation at the site.

In fall 2012, the city decided to give HRCC a $1.5-million redevelopment grant for the Cannon Knitting Mills property through Hamilton's Environmental Remediation and Site Enhancement (ERASE) program.

The site is contaminated with the chemical byproducts of the dyes used when it was a knitting mill.

The financial rationale for the grant approval was based on the expectation of dramatically increased tax revenues that would flow from the property once it was renovated.

By the city's calculation, the municipal portion of property taxes for the Cannon Knitting Mills would rise to $205,074 per year from $6,904 per year by either 2018 or 2019.

This sharp anticipated rise in property taxes was used to calculate the value of the grant to be given to HRCC. The idea was that the city's grant would be recouped through much higher tax assessments on the property.

Since the Cannon Knitting Mills site was purchased on Feb. 18, 2011, the municipal portion of taxes for the property have actually decreased — $6,671 in 2014 from $6,904 in 2012.

According to the city's tax roll information, the assessed value of the property has not changed since the property was purchased in 2011 — it's still valued at $200,000.

On top of that, nearly $165,000 was paid by the city to consultants as part of the grant process.

Ironically, the city ended up paying more to consultants to assess the remediation grant for the Cannon Knitting Mills property than the city paid for its ownership portion of the entire building.

The city's spokesperson said the grant gets paid to HRCC only if the remediation is completed within a seven-year deadline. The company has until October 2019 to finish the work.

"The HRCC is prepared to remediate the property once a tenant is finalized," Lamanes said.

In October 2012, the city also approved a $400,000 rehabilitation loan for Cannon Knitting Mills through the Harbourfront Remediation Loan Pilot Program.

The city never had to extend the loan, however, because to qualify, the work had to be carried out within two years.

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"Remediation did not proceed, as the standard to which the property has to be remediated is dependent upon the end use, which is still not determined," said Lamanes.

City council came close to lending another $5 million to HRCC, to be matched by Forum, but the proposal was dropped during 2013 budget deliberations and hasn't been raised since.

In October 2011 — months after the purchase of the Cannon Knitting Mills site — Forum's founder and president Richard Abboud sent the city a letter, asking for the boundaries of the development zone to be expanded.

"As you know, one of the challenges HRCC has faced in finding projects to action has been the size of the physical geography HRCC is limited by," Abboud wrote. "Should HRCC be given a larger area to work within, we are confident that additional projects could be found."

The original zone extended from Victoria Avenue to Queen Street and from Hunter Street to Cannon Street with bump-outs along James Street North and South.

In 2013, city council decided to expand the so-called Downtown Hamilton Community Improvement Project Area, nearly doubling its size and adding in both sides of King and Main streets from Kenilworth Avenue to Dundurn Street.

Even with the expanded boundaries, there have been no further purchases made by the Hamilton Realty Capital Corporation.

"We have made numerous attempts but have not found investments that were appropriate in our view," said Amin, Forum's spokesperson.

"We are always open to new investment opportunities and have a very favourable view of Hamilton.

"When this initiative was launched, we all expected it to lead to more than it has to date," Amin added. "It hasn't been for lack of effort."

At the time Cannon Knitting Mills was purchased, a number of possibilities were floated for the property, including "residential, retail, office space, artists' studios, museum space, a post-secondary campus or maybe a mix of all of that," according to a Spectator article announcing the acquisition. Even the idea of a microbrewery was floated.

Eleven months after it was purchased, the city's Glen Norton toured the property with contractors who estimated that the renovation would cost $8 million to $12 million. "That's fairly discouraging," Norton told a Spectator reporter at the time.

His comment raises serious questions about the due diligence conducted by the city and its partner before purchasing the Cannon Knitting Mills and what was known about the costs of rehabilitating the property.

If the renovation estimates are accurate, the city's share of those costs would wipe out all of the money that was committed to the Hamilton Realty Capital Corporation, and then some.

"There was very little time to carry out a full business case analysis on the building, as the previous owner was planning to demolish it since he could not sell it," said Lamanes, the city's spokesperson.

"HRCC stepped in to prevent the demolition and buy time to arrive at an economically viable new purpose," she added. "It still remains to be seen if such a use can be found, and there is still the possibility that the building could be demolished."

Lamanes said Cannon Knitting Mills is on the registry of historically significant buildings and is on the priority list for provincial designation.

"We believe it was, and still is, worth the effort to find a viable reuse for it," Lamanes said.

By the summer of 2012, commercial and office space aimed at technology companies and researchers were being touted as uses for the Cannon Knitting Mills.

Yet less than a year later, Norton told CBC Hamilton that "low-cost office space downtown makes the Knitting Mills project a tough sell."

"We're competing with a downtown office vacancy rate of 12.8 per cent right now," he said in March 2013. "The rent on this is not going to be as cheap as someone can get in an office tower right now. Once that high vacancy rate goes away, this looks more attractive."

Parking was also raised as a potential obstacle for the first time. It was noted that parking for 100 cars would have to be sorted out before the site could be fully developed.

Again, it raises questions about the choice of the Cannon Knitting Mills as an HRCC project and the plan for its future.

"What was unknown at the time, and still is not known, is how fast the office vacancy surplus will be absorbed by the market," said Lamanes, who indicated the downtown vacancy rate hasn't changed much in the past two years.

Lamanes said that HRCC is trying to address the parking issue.

"HRCC hired a real estate firm for the purposes of completing a property search and they confirmed that property could be purchased in walking distance of 134 Cannon Street East for parking purposes," she said.

"The number of parking spaces required for the development of the property will be identified once a use for the property is confirmed."

Lamanes said the latest idea for the Cannon Knitting Mills site is an affordable housing project.

A proposal was made to a not-for-profit organization in October and "HRCC is still awaiting a decision on the proposal by the organization," which the city declined to identify.

"In the meantime, other potential tenants continue to be shown the property," Lamanes said.

The next opportunity for the city to either renew or scrap the HRCC partnership comes on the 10th anniversary of the deal in July 2016.

"That decision will be made at the time based on the then current circumstances and interest level from the city and the private-sector partner," Lamanes said.

After nine years in existence with just one stalled project to its credit, does the city consider the Hamilton Realty Capital Corporation a success?

"That depends on the definition of 'success' and when you measure it," said Lamanes.

"Remember that the objective was not to make money for the city, but to use the (partnership) as a catalyst to make things happen, which will enhance some areas of the downtown that need a level of stimulation that the private sector will not do on its own.

"The ultimate success of the creation and operation of the HRCC will be determined at the end of the project," she added.

"We went into the initiative with our eyes wide open."