Toronto's city hall is considering a plan to put a new homeless shelter in the middle of the city's entertainment district, according to a report in the Toronto Star.

If the plan gets approved, an old club at the corner of Richmond and Peter Streets will be transformed into a 24-hour assessment and referral centre by the end of the summer. The facility will also have a 40-bed shelter.

The new facility is needed because a centre at 110 Edward Street is set to close at the end of April.  It will be replaced with a 300-unit affordable housing complex, the city's general manager of the shelter, support and housing administration division, Phil Brown, told the Star.

Brown told the newspaper that the old Fez Batik club is a good choice because it has space, high ceilings and a commercial kitchen.

"These are the kinds of things we look for," Brown told the Star.

But nightclub owners and area residents are surprised by the idea.

Liz Sauter of the King Spadina Residents Association wonders why the city would choose to offer shelter for homeless people, some battling addictions, in the centre of the city's nightclub district, known for its drinking and access to drugs.

Sauter says she will take Brown on a tour of the area.

"I want to show him what takes place between 12 and 4 in the morning," Sauter told the Star.

Adam Vaughan, city councillor for the area, says he has met with business and residents association on the proposal. He says they have generally been supportive.

A meeting is planned for next Wednesday at Metro Hall to discuss the proposal.