Plans to knock down the Hotel Waverly and Silver Dollar have been dealt a serious setback after Toronto and East York Community Council rejected the proposal in its current form. The concept "does not promote a harmonious fit with the existing neighbourhood context," a staff report adopted yesterday said.

Examination by planning staff criticized the plans for their excessive height in relation to the surrounding neighbourhood as well as the scale, massing, floor plates, and setback from the front of the lot.

Local councillor Adam Vaughan called the tower a "terrible idea" in June, likening it to "a high-rise rooming house."

Owner Paul Wynn hoped to knock down the decrepit flophouse and adjoining music venue to make way for a 22-storey student housing complex. The Silver Dollar would have been granted a new space on the ground floor of the building, he told us last summer.

A branch of Wynn Fitness was planned for the second floor with the rest of the building earmarked for 202 student units. The Comfort Zone club in the basement didn't appear to be part of the plans.

Despite its current appearance, the Hotel Waverly - occasionally "Waverley" - is one of the city's oldest continuously operating hotels. The original timber frame building opened in 1900 offering "pleasant, homelike accommodation" but has been in a state of decay ever since.

Poet Milton Acorn called it home, though a persistent rumour that fugitive assassin James Earl Ray rented a room while on the run from cops in America has since proven to be false.

Wynn told the Toronto Star he plans to appeal the decision at the Ontario Municipal Board. A separate student complex proposed by Knightstone Capital Management is awaiting a decision from the OMB regarding a 25-storey residence on College east of Spadina.

Chris Bateman is a staff writer at blogTO. Follow him on Twitter at @chrisbateman.

Image: Jenny Rotten