The Big Read

After three high-profile resignations, Waterfront Toronto and Sidewalk Labs attempt to regain control of Quayside project

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Sidewalk Toronto has garnered international headlines for its plan to build the smart city of the future, billed as an historic partnership between Waterfront Toronto and Sidewalk Labs, a subsidiary of Alphabet Inc., one of the world’s largest tech companies.

It was launched last fall with much fanfare, including a photo-op with the prime minister and Sidewalk Labs CEO Dan Doctoroff. However, since then, the project has faced public criticism and internal tensions. Three high-profile figures have resigned in the past month alone, including the CEO and a board member of Waterfront Toronto. The project’s planning process was also given a six-month extension to develop the high-tech neighbourhood on the lakeshore of Canada’s largest city. All this has led to quiet speculation about whether Sidewalk Labs would abandon the project altogether.

Sidewalk Toronto has been saved for now, thanks to a new agreement signed on Tuesday.

Officials framed the move as the next step in a process that began with the signing of an initial framework agreement last October. But months of reporting and analysis show how the project began to unravel before it even got off the ground.

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THE PROCESS

The new agreement provides clarity on some of the more contentious issues, but also raises new questions about the process moving forward, which both Sidewalk Labs and Waterfront Toronto have acknowledged need to be addressed ahead of a final agreement.

Like the project at large, the planning process thus far has been complex and at times difficult for the public to dissect. Critics have accused the process of lacking transparency, pointing to a controversial confidentiality agreement, unresolved concerns around data and privacy, and calls—unanswered until recently—to release the initial framework agreement.

“The first round of public consultation should be centred on making clear connections to how Sidewalk Toronto’s business models will achieve these ends,” wrote Bianca Wylie, co-founder of Tech Reset Canada and open government advocate, in February. “We don’t need a grand all-ages inclusive tour of global urban planning approaches. What we need right now is clarity on the anatomy of this deal.”

Those criticisms seem to have informed a new approach.

Talking Point

Waterfront Toronto signed an agreement with Sidewalk Labs Tuesday, a crucial next step in the process toward making plans for a smart city on Toronto’s waterfront a reality. The agreement, which supersedes the previous one, provides some clarity but also raises new questions.

“We are big believers that this project can only succeed if it involves enormous transparency,” said Micah Lasher, Sidewalk Labs’ head of policy and communications, on Tuesday following the announced agreement.

The rushed timeline on the framework agreement last October led to a flurry of activity within Toronto’s City Hall, and seemed to get the project off on the wrong foot with the same folks tasked with seeing the initiative through.

In emails obtained by The Logic, city staff outlined communications that took place on Oct. 12, 2017—the Thursday before the project was announced by all three levels of government—during which it was made clear they did not want the proposal document released before it was properly reviewed by city staff. Sidewalk Labs and Waterfront Toronto released it anyway.

“We were very clear with WT and Sidewalk Labs Thursday that we did not want the proposal document to be released this week and that it needs a thorough review by City staff,” wrote David Stonehouse, director of the City of Toronto’s Waterfront Secretariat, in an email thread to his colleagues.

That email thread included tensions over whether the announcement would mention Sidewalk’s plans to potentially expand their development into the Port Lands, even though they were not part of the original agreement. Michael Williams, general manager of the City of Toronto’s Economic Development and Culture department, wrote that a graphic of the proposed development including the Port Lands should never be made public.

“Just to reiterate, it is ‘not now, not ever’ because of how different it is from the City’s vision of what is to happen in the Port Lands,” wrote Williams.

Meanwhile, on Waterfront Toronto’s board, Julie Di Lorenzo was the only member to vote against the framework agreement. According to recorded minutes from that meeting, she noted that the committee had just four business days to review the document, and that she had been unable to complete her due diligence on the transaction; thus, she could not support a resolution to approve the agreement.

While the 29-page framework agreement was not released until it had been made essentially null and void by the newer one, the 58-page plan development agreement was made available to media under embargo hours after the board approved it. It was released to the public shortly thereafter.

This time, Waterfront Toronto provided the new agreement for review over three weeks before the vote—long enough for the city to review it through their own departments and provide feedback, which was taken into account for the final document, said Meg Davis, Waterfront Toronto’s chief development officer.

Prime Minister Justin Trudeau and Sidewalk Labs CEO Dan Doctoroff shake hands at the announcement of the intiial framework agreement between Waterfront Toronto and Sidewalk Labs, in Toronto on Tuesday, October 17, 2017. THE CANADIAN PRESS/Frank Gunn

THE DOCUMENTS

The organization made both the old and new agreements public in full on their website on Tuesday afternoon in a significant change in approach since former CEO Will Fleissig had been pressured out by the board of Waterfront Toronto,

The earlier framework agreement became a contentious document that was not made public while it was in effect, despite backlash and calls for its release.

Waterfront Toronto and Sidewalk officials insist the agreement was never intended to be binding. “It was really an agreement to have a discussion,” said Davis. “We knew we had to negotiate the plan development agreement.”

The newly-signed plan development agreement reiterates the US$50-million commitment from Sidewalk made in the initial announcement last October.

The most striking difference between the two documents is that the earlier framework agreement would have allowed Sidewalk to expand its smart-city footprint across as much as 880 acres along Toronto’s eastern lakeshore, as opposed to just the 12 acres Sidewalk was mandated in the Quayside, as the land came under Waterfront’s direction for revitalization purposes.

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The potential expansion would have dramatically altered the scale of the project, and could have run into roadblocks as the greater land is owned by multiple stakeholders, including the City of Toronto.

When Sidewalk Labs registered to lobby the City of Toronto in October 2017, they included the Port Lands as well as Quayside on Toronto’s eastern waterfront.

The new agreement is limited to aspects directly related to the Quayside development. Any additional lands to be included in the project will need to be justified with a “business case” and obtain government approvals.

According to Davis, the environmental, transit and infrastructure aspects of the project may require scale beyond the Quayside area.  

“That is the context area within which Sidewalk and Waterfront Toronto can look, because that matches our act,” she said, referring to the legislation mandating Toronto’s waterfront.

Waterfront Toronto and Sidewalk Labs officials couldn’t provide further details on how the approval process for access to other areas will unfold, saying they plan to tackle the specifics in a to-be-negotiated master innovation development plan (MIDP).

“If approved by our board and their board, and if government partners are okay with it, we would then move into an implementation set of agreements that we would negotiate,” said Davis.

The new plan development agreement laid bare that the nuts and bolts of the Quayside project are still in need of fine-tuning.

For example, while Waterfront and Sidewalk will maintain ownership of their respective pre-existing intellectual property, the two will have to decide whether jointly-created IP will be shared or be handed over to one or the other based on “relative contributions.”

“All this remains to be decided,” said Chantal Bernier, a lawyer at Dentons and counsel to Waterfront Toronto.

Another area that remains unclear is the extent to which other Sidewalk and Google-affiliated companies will play a role in the project.

The new plan development agreement, for example, allows Sidewalk the right to contract work out to its subsidiaries without any approvals, potentially giving a leg-up to Alphabet-owned companies to get in on the Quayside development at this early stage.

Officials insist that the latest document only covers the period before the final agreement is reached. But a lot can happen in the intervening period.

In June, The Logic reported that three Sidewalk affiliates—urban health initiative Cityblock Health Inc., urban transit systems company Coord and digital infrastructure company Intersection Parent Inc.—have already registered to lobby the City of Toronto.

Several of the ambitions for the futuristic smart city that Sidewalk has said it wants to pursue could align with the business of its subsidiaries. For example, Sidewalk has discussed using sensors at traffic lights to monitor pedestrian and vehicle traffic, and Coord runs a platform through which it collects and sells data on urban traffic and parking.

“It has been a stated aspiration of ours that this project be one that attracts innovators, entrepreneurs and Canadian tech startups to Toronto’s waterfront,” said Lasher, adding that the MIDP will be negotiated with that in mind.

The new agreement does feature one significant nod to critics: Waterfront acknowledged in materials given to the media on Tuesday that the initial framework was “mostly silent on issues of privacy and data-sharing.”

Data advocates and urban activists have raised questions about what kind of information will be collected through the Quayside project, what entities will have access to it, who they might share it with and whether the data will be stored in Canada or at Sidewalk Labs’ U.S. base. While the new agreement offers no specifics, it now outlines a set of values that Waterfront says will consider personal privacy and civil liberties as it works towards a final agreement.

An illustrated map showing the 12-acre area involved in the Quayside development project along with the larger 800-acre eastern waterfront. Waterfront Toronto

THE RESIGNATIONS

The resignations from Waterfront Toronto over the last month have all been linked to the Sidewalk Toronto project.

After Fleissig resigned from his post as CEO of Waterfront Toronto on July 4, sources told The Logic it was due to internal tensions surrounding his communications with the board and his oversight of Sidewalk Toronto. Waterfront Toronto cited a shift in strategy for the organization and denied that any pressure had been put on Fleissig to resign.

That same day, John Ruffolo, head of OMERS Ventures, resigned from the Digital Strategy Advisory Panel, citing his concerns surrounding the confidentiality agreement the panel was required to sign. The Logic reported that Waterfront Toronto faced pushback from numerous panel members on that agreement. As of last week, several members of the voluntary committee had yet to sign off on it.

And, on July 30, the evening before the board was to vote on this new agreement, Di Lorenzo resigned with less than four months left in her provincially-appointed term. Di Lorenzo, who is president of Diamante Urban Corp. and one of the city’s most prominent real estate developers, was the board’s only member to vote against the initial framework agreement.

“I think she was uncomfortable with the nature of the agreement to begin with, or the nature of the people with whom we’re negotiating with,” said Helen Burstyn, board chair.

NEXT STEPS

With the first phase of the project and some high-profile departures now behind them, Waterfront Toronto and Sidewalk Labs are in a sprint toward their spring 2019 deadline to complete the final agreement.

The remaining items may be the hardest for everyone to agree on. If Tuesday’s rollout was any indication, there will be more questions raised along the way, but for now, Waterfront Toronto and Sidewalk Labs are back on course.

“This was never a simple project, but from the start we have received extraordinary levels of cooperation from all three levels of government and from our partners at Waterfront Toronto,” said Lasher.

Noticeably absent from Tuesday’s big announcement was Dan Doctoroff, the man from New York City who had become the face of the project in downtown Toronto.  

Instead, Sidewalk Labs stayed in the background, giving Waterfront Toronto a chance to reassert itself in a project that, just months ago, it had appeared to be losing its grip on.

 

With files from Sean Craig

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