Construction is now underway at the old Merchants Hotel.

The historic three-storey building, which was previously a magnet for trouble and violence, is being converted into an affordable housing complex, and the first sledgehammer was swung Wednesday afternoon.

The Province of Manitoba has committed more than $13 million to the project, which will include 30 affordable and low-income housing units for students enrolled in educational programs, a high-school completion program and a café.

The exterior of the building will be restored, and the hotel's bar and restaurant area will be demolished.


The first sledgehammer went into the old Merchants Hotel on Wednesday afternoon. (CBC)

Jim Silver, chair of the University of Winnipeg's Institute of Urban Studies, said the 100-year-old building was a hardware store before it became a hotel and the businesses thrived for about 70 years.

"Then the North End fell on hard times, began to decline and as it did, most businesses left," he said. "The Merchants Hotel stayed and it became a magnet for all manner of problems – criminal activity, fights, stabbings, shootings."

The hotel was closed in April 2012.

"Crime rates have dropped precipitously ever since that time," Silver said. "We still have people in the neighbourhood say, 'Wow, what a positive difference it's made. It's so quiet and peaceful around here.' "

The redevelopment is the next step for the building, Silver said. Plans include the creation of three classrooms.

"[The] University of Winnipeg will be here and offer classes during the day," said Silver, and at 4 p.m. the high school completion program will take over the spaces.

The Merchants Hotel  construction

The exterior of the Merchants Hotel will be restored, and the hotel's bar and restaurant area will be demolished. (Gary Solilak/CBC)

"We think what this is going to do is normalize the idea of attendance at university. At the moment, in these North End neighbourhoods, about 25 per cent of young people are graduating high school on time," said Silver. "It's really, really rock-bottom low."

Silver hopes the Merchants Hotel remodelling will change that.

"Young people are going to be doing their after-school programming in a university space. The university is in their own neighbourhood," he said. "I think it has huge potential."

TRC recommendations becoming reality

The project has been in the works since 2011, when a coalition announced it hoped to purchase the troubled hotel.

Rev. Stan McKay, an elder who has lived and worked in the community for years, has been involved from the beginning.

"[It] has taken a long time to get to this point of starting the project, the actual digging in the ground," said McKay. "But through the whole process there has been good involvement of community and, I think, a strong vision of what can happen here."

McKay was the first aboriginal moderator of the United Church, and he's been involved heavily in Truth and Reconciliation Commission activities.

A number of the commission's recommendations centre on education.

"I think this is an example of how activity in the community, real activity of building from the ground up with people in the community, is liberating," he said. "It helps us to look again at how we see ourselves and how we see our community and the level of trust that can be developed."