MONTREAL - A proposed bailout plan for the horse racing industry in Quebec has ignited a grassroots backlash because it threatens to derail a new social housing project in Montreal.

Even before the provincial government transferred control of the racehorse industry to Attractions Hippiques - owned by Liberal-appointed Senator Paul Massicote - in 2006, the municipality had plans to develop mixed-income housing on the 550,000 square metres of prime Montreal real estate.

Attractions Hippiques, which runs the province's four horse-racing tracks, is currently under bankruptcy protection and all live horse racing has been indefinitely suspended at the Montreal racetrack since summer 2008.

The province's tentative bailout, which includes tax refunds and VLT revenues totalling $28 million a year for 25 years to help the company continue to provide live horse racing, could save up to 3,000 jobs in the industry.

But part of the proposal includes turning Montreal racetrack - a fixture of the city's west end since 1907 - into a massive gambling complex with upwards of 300 VLTs.

Longtime city councillor Marvin Rotrand said the land has been zoned residential for five years, ever since the government promised to move the racetrack and all gambling-related activity off the site, though the city was never given a fixed timeline.

"Our plans for housing would act as a hedge to urban sprawl," he said in an interview.

"It would not only give young families the opportunity to remain in the city, it would attract suburbanites back in the city. It's nonsense for a valuable piece of land of this size and scope so close to downtown, so close to the airport, across from the metro, near to several autoroutes to lie empty year after year."

The racetrack is right in the heart of the diverse, vibrant but economically depressed Cote-des-Neiges neighbourhood. The proposed mixed-housing plan would add between 2,000 and 10,000 new housing units close to the city's centre.

And even though the casino complex would leave space for some new housing, "we don't think anyone will want to build a housing project next to the casino," Rotrand said.

The proposal also runs against anti-gambling bylaws established by the borough.

"The government would have to impose this on us," Rotrand said.

The local council and a number of community organizations have been unanimous in their criticism and a coalition of social, anti-poverty and health-advocacy groups are calling a news conference Monday to officially oppose the tentative bailout package floated by the government.

The local borough council has also voiced their opposition in letters to local MNAs and Raymond Bachand, the provincial minister of economic development.

But the bailout package is on shaky ground.

The province may pull the plug because the current plan isn't supported by horsemen and breeders, who are upset the province could permanently close the Montreal race track without obliging Attractions Hippiques to build a replacement track in the area.

It would also allow the company to keep the revenues from any VLTs housed in the new complex, sparking claims the bailout will do more to help a Liberal-appointed senator than the industry itself.