The proposed development, which would consist of eight buildings holding 932 units, was slated for the old ministry of transportation garages on Henri-Bourassa Boulevard, next door to the Tanguay Detention Centre.
The city received more than 100 submissions from the public on the proposed development by Musto Construction.
"They want to build a ghetto, so we fought hard," said area resident Claude Landry, one of dozens of people who showed up at the public consultations held by the city.
Residents argued that the project wasn't a good fit for the area. On Wednesday, the city officially rejected Musto's plan.
"It is very clear that it does not integrate into the area and the office de consultation want to re-look at the number of units," said Michael Applebaum, president of the city's executive committee.
Musto says it spent four years trying to get the project off the ground. Throughout that time, it has been paying taxes on the property – money it now wants the city to reimburse.
"We respected and followed all the steps outlined by municipal authorities... It's time to know what to expect regarding the future of this property," the company's president Marco Musto, said in a statement.
Richard Bergeron of the opposition Projet Montréal said the architecture and scale of the project wasn't a good fit for the area and future growth.
"It has to be launched correctly with a quality of design and architecture and a density that is acceptable for the neighbourhood," he said.
"If you do that, you will have a project that will be accepted by the authorities and the population and you will have the first step for the future of a beautiful neighbourhood."
Property tax refund denied
Musto Construction now wants to recuperate $1 million it paid in property taxes since buying the land and waiting for the project to go through the public consulations office. The city has rejected any notion of a refund.
"There's no return on taxes on this property. This property was purchased," Applebaum said.
Since the site is officially zoned industrial, the company will have to keep working with the city and continue the public consultation process if they want to present a revised project in the future, he said.