Great question! Without a photo I can't be sure but I'll make an educated guess and say that it is probably a Cooper's Hawk. Cooper's are 15-20 inches compared with 9-12 of the merlins but they look much bigger to my eye and they do have a clearly visible banded (striped) tail as well as a speckled breast (some more/darker, some less). If the bird were closer to the size of a merlin, I would have said sharp-shinned hawk as they are almost identical to Coopers. There are alot of Coopers nesting in the city over the last couple of years - had 8 calls last year about peregrine falcons (too big for merlins) nesting in trees, only to find happy & healthy Cooper's Hawks. Did you happen to see the colour of it's eyes? Young Cooper's have yellow eyes, adults have red/orange - very cool actually. And yes, they build nests and they like large deciduous trees for their nests.
Northern Goshawks are even larger - actually they are classified as large hawks - and though there are bands on their tail, they are very indistinct, i.e., you mostly don't see them. Prairie Falcons, although we like to think of ourselves as prairie, from the Prairie Falcon's perspective, we really aren't. We get may two sightings a year and since they live/hunt/breed in open areas (dry grasslands and prairies, locally alpine tundra) not in urban/suburban areas, the likelihood of seeing one is actually pretty slim even during migration.
