Winnipeg's Royal Albert Arms, a heritage property located one block from Portage and Main, is up for a mortgage auction next month in what downtown development officials hope will be a prelude to its redevelopment.

The 53-room property, completed in 1913, currently serves as low-income housing, even though it's only zoned for use as a hotel.

Winnipeg's Royal Albert Arms, a heritage property located one block from Portage and Main, is up for a mortgage auction next month in what downtown development officials hope will be a prelude to its redevelopment. 2:03

Downtown development agency CentreVenture expects a number of developers to bid on the property at a Nov. 15 mortgage auction.​ CentreVenture president and CEO Angela Mathieson said it's her hope the Exchange District property will be renovated into a residential building or boutique hotel.

"This is an important building in a national historic site and it has been neglected for quite a number of years," Mathieson said Thursday in an interview.

"Really, the only way to ensure this building is properly preserved and has another 100 years left in it [is] that it get into a higher economic use and that it be well-cared for by somebody."​

CentreVenture plans to help the venue's existing residents transition into other housing, said Mathieson, warning prospective bidders they should not bank on the city continuing to allow the building to operate in contravention of its zoning.

"We think it would be high-risk for somebody to purchase the hotel for that purpose," she said.

CentreVenture president and CEO Angela Mathieson says she's aware of a number potential buyers for the Albert, which she sees as ripe for redevelopment as a residential building or boutique hotel. (Jeff Stapleton/CBC) City of Winnipeg property officials declined a CBC News request for an interview about the Albert, which is best known for the main-floor indie-rock venue that operated from the 1980s into the early 2000s.

Performances by bands such as Husker Du and Green Day lent the Albert legendary status in music circles. But the hotel also became infamous for violent crimes, including a grisly homicide scene where jewellery stolen from actor Susan Sarandon turned up.

In 2007, pharmacist Daren Jorgenson purchased the Albert and declared his intention to convert the property into a boutique hotel. But the hotel was shuttered in 2011 by a water leak, leading Jorgenson to partner with the late Ray Rybachuk in order to reopen the building.

Rybachuk, who had ties to organized crime, died while snowmobiling in 2013. Jorgenson now says he regrets the partnership and expressed hope the hotel will be redeveloped.

"The property currently brings in more than $30,000 monthly from room rentals on a monthly basis to low-income citizens. This could be dramatically increased if this property was eventually converted to a boutique hotel and rented out on a nightly basis," Jorgenson said via email, adding the Albert would also be an ideal venue for student housing, as well as live music.

"I am hopeful that someone with the capacity and time will come out of the auction with the winning bid and will then set out to revive the long history of live music at this venue."

Heritage Winnipeg executive director Cindy Tugwell said properly regulated affordable housing would be an acceptable use for the building.

"That's clearly not how this hotel is being run," she said in an interview. "The wrong people are owning heritage buildings and if the right people can own them, they're feasible and they're a great asset to our downtown."

Ken Zaifman, who owns the nearby St. Charles Hotel, said he's eager to see the Albert redeveloped. (Jeff Stapleton/CBC) One of the potential buyers for the Albert is immigration lawyer Kenneth Zaifman, who owns the St. Charles Hotel further south on Albert Street and also controls the vacant lot where the Albert Street Business Block burned down in 2012.

Zaifman said Thursday he is not certain whether he will bid for the Albert at auction.

"From my perspective, whether I own it or someone else owns it and they redevelop it, it gets me to same place, where I want to be," he said, adding the southernmost block of Albert Street is important to downtown.

"It's a block form Portage and Main. There's a lot of development going on. I think this would be a catalyst for further and future growth."

Zaifman, who announced plans to convert the vacant St. Charles Hotel into a boutique property in 2008, said he is still working on that plan, which he said would cost more than $5 million.

Mathieson said she, too, looks forward to the revitalization of the block of Albert Street between McDermot Avenue and Notre Dame Avenue.