How the downfall of a Toronto ‘smart city’ plan began long before COVID-19

Toronto Sidewalk

The Quayside site is shown at bottom middle along Toronto’s waterfront in 2019, next to the Gardiner Expressway and some dark grey silos. Sidewalk Labs cited the coronavirus pandemic as a key reason for the project’s cancellation a year later.

The coronavirus crisis has prompted governments everywhere to launch major technological initiatives at a frenetic pace. Many of the world’s most powerful tech companies have already chimed in.

Yet earlier this month, Google affiliate Sidewalk Labs abandoned one of the most ambitious smart-city projects on the continent when it withdrew from a proposed 12-acre, technology-laced community to be built on old industrial land on Toronto’s waterfront.

After 2½ years of courting support and generating controversy, the urban-planning subsidiary of Mountain View, Calif.-based Alphabet Inc. said May 7 that the pandemic’s economic fallout had killed the business case for its calling-card project.

Outfitted with robotic garbage sorters, adaptive streetlights, heated pavement tiles and – potentially – reams of data-collecting sensors, the project, called Quayside, was supposed to be a showpiece for the city and the company. Three levels of government had signed on to support creating something far grander than the generic condo towers that line much of the rest of Toronto’s downtown waterfront.

But the death of Quayside was part of a pattern of internal and external clashes and disappointments that stretches back nearly to Sidewalk’s inception. What began with a blank canvas to reimagine cities often became defined by a tug-of-war between competing interests: first between urbanists and technologists, then between Sidewalk, its government partners and the city it hoped to build in.

The Globe and Mail has spoken with more than a dozen sources close to Sidewalk and its Toronto project for this story, including people familiar with its earliest days, people close to its management and people close to significant decisions made by its government partner, Waterfront Toronto. (The Globe is not identifying the sources because of potential professional repercussions.)​

Sidewalk Labs declined to comment on the details of this story, including regarding whether there was a pattern of clashes and disappointments. But the ideas it established in Toronto “represent a meaningful contribution to Sidewalk Labs’ future work of tackling big urban problems, particularly in the areas of affordability and sustainability,”​ spokeswoman Keerthana Rang said in an e-mail.

Torontonians are now left with the same empty half-billion-dollar plot of land they started with, and Sidewalk’s future is unclear.

“Sidewalk has produced remarkably little – a handful of struggling startups and an exhibition centre for a failed real estate project,” says Anthony Townsend, author of the 2013 book Smart Cities, who subsequently did paid contract work for Sidewalk. “I suspect that a lot of important people in Mountain View are wondering whether it has a future.”

Orange plastic people stand on display in a model of of Quayside at Sidewalk Lab’s Toronto office in 2019. The proposed project was going to span 12 acres of former industrial land on the waterfront.

Quayside’s developers envisioned a community where sensors would measure people’s movements to improve urban design. But that raised concerns among privacy advocates about who could access the data.

Years before Sidewalk Labs tried to reinvent Toronto’s shoreline the way Google changed how people navigate the internet, Google co-founder Larry Page and his executive chair, Eric Schmidt, reached out to former New York deputy mayor Dan Doctoroff in November, 2014.

Mr. Doctoroff, now 61, was winding down his time running information giant Bloomberg LP, with founder Michael Bloomberg set to return as CEO. Within Google, Mr. Page had developed a secretive group – called Javelin – for side projects and he was thinking about how technology could improve cities. With experience in business and politics, Mr. Doctoroff signed on as CEO of the company that became Sidewalk.

He and Google recruited a cadre of technologists and urban-affairs experts, and sold them on a vision of making city life easier. But some of them quickly soured on the dream. People close to the company say many came to see those ambitions as a glossy veneer masking a real estate play.

A source close to current management disagreed with this characterization, pointing out that Sidewalk at this time was also investing in tech firms such as Cityblock Health, a digital health care company.

Sidewalk has said in marketing materials that urbanists and technologists have a natural difference of viewpoints that can create “powerful outcomes,” but the company’s first two years were marked by a clash of visions between the two worlds. Sources say Google-style technologists wanted to get some kind of product to market quickly – possibly in a standalone community – while urbanists treaded more slowly, cautioning about the slow pace of city building. It could be a difficult place to work, and some clashes turned into angry blowups.

The source close to the company’s management said many of the tensions were natural for a startup with growing pains, enhanced by the desire to bridge these disparate perspectives.

In the early days, Mr. Doctoroff was also in the midst of merging an ad company and an urban-tech firm into a new business called Intersection, which he now chairs. That company went on to join a consortium that installed LinkNYC-branded WiFi kiosks across New York City. Those kiosks have created controversy over the user data they collect and because municipal officials revealed last March that Intersection hadn’t paid millions of dollars it owed to the city. (Sidewalk and LinkNYC declined to comment on this.)

In his 2017 memoir about his time as deputy mayor, Greater than Ever, Mr. Doctoroff describes a strong interest in dense Olympic Games bid books dating back to the 1990s and his involvement in bids to bring the Games to New York.

As staff sought to get Mr. Page’s blessing to find a partner city to develop a technology-infused community, Sidewalk’s first major project was a bid book of its own. Sheathed in a lemon-colored cover, the 437-page 2016 document became known as the “Yellow Book.” It was the source of much internal frustration and caused an uproar among surveillance experts when The Globe revealed its contents in 2019.

Sidewalk brought in dozens of urban-affairs experts to consult for the book, but did not incorporate many of their suggestions in the book’s final text, sources said, even as the book highlighted their involvement. Sidewalk declined to comment on this.

The process was also disorganized, sources said. The experts were supposed to be given American Express gift cards worth thousands of dollars as thanks for their contributions, but sources said more than $100,000 worth of these cards were forgotten in a drawer for months.

Some staff was uncomfortable with the book’s data-use proposals: A “Project Sidewalk” community might not just track individuals’ movements, but could try to predict them. Other ideas were considered bizarre, if not infeasible, such as putting a dome on top of the community. It also suggested Sidewalk get the power to levy its own property taxes and control some public services.

Sidewalk last year said the book’s ideas were the result of a “wide-ranging brainstorming process” and they were not under consideration by the time it was working on the Toronto project.

Mr. Page regularly beamed into the New York office from California for video conferences, sometimes while walking on a treadmill, said people who witnessed these calls. But when Sidewalk executives brought the Yellow Book to Mr. Page in Mountain View in the spring of 2016, people familiar with the meeting said he described different expectations than the ones outlined in the book. Through Alphabet, a representative for Mr. Page did not respond to requests for comment, while the source close to Sidewalk Labs management said Mr. Page approved a majority of the book’s proposals, encouraging the company to seek out a partner city.

Sources familiar with the meeting’s result, however, said the Google co-founder asked if a city could be built in as little as five years, and wanted it to be primarily low-rise, despite urbanists’ natural push for density.

Location was another issue, those sources said. Mr. Page wanted to build across San Francisco Bay in Alameda, while some Sidewalk executives and staff preferred Denver or Detroit; one person involved in the Yellow Book thought Sidewalk might even try to buy a Detroit automaker to help with driverless vehicles.

The sources described the period after the meeting as a long hangover, as Sidewalk tried to align Mr. Page’s expectations with what was possible in today’s cities, while the company put more focus on launching urban-tech startups.

The hangover didn’t last long

In June 2016, a Waterfront Toronto manager who’d worked on New York’s Olympic bid with Mr. Doctoroff in the early 2000s sent him an e-mail. “My new CEO and I are very interested in what you are doing at Google and would like to talk to you about a potential pilot in Toronto,” he wrote, according to a later report by Ontario’s Auditor-General, Bonnie Lysyk.

That CEO, Will Fleissig, wanted to do something innovative with the 12-acre parcel of land at the foot of Parliament Street called Quayside. Waterfront Toronto is a partnership created by the federal, provincial, and municipal governments in 2001 to help revitalize the city’s lakeshore. Developing Quayside was a crucial part of that, and Waterfront was reaching out to a handful of suitors to gauge their interest – although Ms. Lysyk later found Sidewalk had received more information than others.

While Sidewalk developed a bid for the site, sources close to the bid say people inside the company spoke about it as though it had already won. Waterfront Toronto opened the project for bids in March 2017. Sidewalk won the following October and it has always maintained, including in response to Ms. Lysyk’s report, that it had no influence over the bidding process.

During its 2½ years in Toronto, Sidewalk became embroiled in controversies about the privacy and data implications of the Quayside project, and – eventually – its extensive plans to have influence over a much wider portion of Toronto’s lakeshore. The Waterfront board’s vote to partner with Sidewalk was later described as rushed, with little time to study the proposal.

As the project advanced, several people who shepherded it early on quit or were fired. They included Mr. Fleissig, who resigned from Waterfront in the summer of 2018 – a natural step, he said, as Quayside went from theory to reality. But several sources told The Globe last year that the board had been dissatisfied with his leadership.

Many Quayside critics said data governance was their foremost concern. The project’s many sensors could collect massive amounts of information about people.

Sidewalk promised to respect privacy and to share some royalties from new tech built with the data Canadians generated. But opponents, including the Canadian Civil Liberties Association, feared that such mass data collection could, accidentally or otherwise, set an example of a high-surveillance future. Several expert advisers left in 2018 over such concerns, including former Ontario privacy commissioner Ann Cavoukian.

That December, the Auditor-General published a highly critical report on the project. Ontario Premier Doug Ford’s cabinet soon fired the three Waterfront directors it had appointed, including chair Helen Burstyn.

Later that winter, media obtained an internal Sidewalk Labs document showing the company hoped to get a cut of property taxes and other fees in exchange for its investment on the lakeshore, including in transit infrastructure. This prompted a renewed outcry from critics – although a person close to Sidewalk said that people in the office described it as a tentative idea meant to keep Alphabet satisfied that the project could eventually be profitable. The source close to Sidewalk management disagreed with this characterization, echoing earlier Sidewalk comments that it was a serious attempt to fund transit to make the community more accessible.

After a behind-the-scenes campaign led by Toronto Mayor John Tory, veteran developer Stephen Diamond was appointed Waterfront’s chair in early 2019. That June, Sidewalk published its long-delayed master plan for Toronto. In another massive, Olympic-bid-style document, Sidewalk said it wanted rights to plan and put technology across 190 acres – a site 16 times larger than Quayside.

Sidewalk had hinted at such ambitions in its original bid and had discussed the need for a larger site inside the company. But the move struck opponents and governments as a massive overreach. Mr. Diamond began a four-month campaign to make Sidewalk come to Waterfront’s terms.

On Oct. 31, Sidewalk acquiesced, returning to 12 acres and granting more favourable terms for Canadian data and intellectual-property rights. Though not fully detailed, the latter shift appeased critics such as BlackBerry pioneer Jim Balsillie, who had warned Alphabet, but not necessarily Canadians, could be further enriched by intellectual property generated with Canadians’ data at the site. The new deal also marked a shift in tone: Mr. Doctoroff became cautious in public, regularly noting that Sidewalk had to make a financial case for the reduced size.

Waterfront and Sidewalk spent the first few months of 2020 negotiating terms ahead of a final June 25 Waterfront board vote on whether to proceed. While Waterfront was satisfied with the most recent negotiations, it wanted guarantees that Alphabet would financially backstop the project, a source said.

But by that point, Mr. Page had stepped down as Alphabet’s CEO and the company began cutting back on side projects. Then COVID-19 hit.

The world’s economy was thrown into tatters and commercial real estate started looking far less lucrative. Alphabet reportedly began pulling back on real estate investments in California. Sidewalk was largely silent – though Mr. Doctoroff did pen a New York Times op-ed about how the city could weather the crisis.

The article did not mention Toronto – but did seem to acknowledge lessons learned there, calling for a “robust framework for data governance, ensuring that people don’t have to choose between their health and their privacy.”

In the late afternoon of May 6, Mr. Diamond and Waterfront’s government partners, including Mr. Ford, found out from Sidewalk that it was walking away. They spent the evening figuring out how to deal with the news.

The next morning, Sidewalk e-mailed the media: It was abandoning Quayside, citing the pandemic’s economic devastation for its decision to shift away from its city-building vision for Toronto; the company said it was going back to its earlier focus on startups and individual city-related technologies.

Joe Cressy, a Toronto councillor who represents the city on Waterfront’s board, says that Sidewalk launched important conversations about how Toronto should plan for its future – but that the project was undercut by two “original sins.”

He believes that Sidewalk overpromised and under-delivered: that the partnership was announced with great excitement but unclear details about its execution, while Sidewalk was far too confident it would get the extra land beyond Quayside that it sought.

“The scope, and lack of specificity, contributed both to the public debate but also, ultimately, the financial-viability [argument]” for Sidewalk walking away, Mr. Cressy says.

Waterfront still plans to build a “next-generation community” on Lake Ontario, but as it examines how life will change after the pandemic, “we will take the time necessary to determine what our next steps will be to bring this valuable asset to market,” spokesman Andrew Tumilty said.

Sidewalk says it will keep a presence in Toronto, redeploying as many of its 30 local staff as possible to other initiatives. A second source close to Sidewalk management said that the company is talking with other cities they declined to name, noting that it often has such talks with potential partners. The company is willing to deploy individual technologies or package them in ways similar to the Quayside project, the source said.

The company says it will keep investing in urban tech, including in-house projects around efficient-energy usage; automation of building-design processes to accommodate local needs; and sustainable construction of wood-structured buildings. “Tall timber” wood buildings were to be a key part of Quayside, which would have included a component factory in Ontario. While Sidewalk will still pursue a factory, it will no longer guarantee it will be in the province.

Mr. Doctoroff is also a director of Sidewalk Infrastructure Partners, a partnership with Ontario Teachers’ Pension Plan announced last year, which will invest in technology-infused infrastructure across North America – building on Mr. Doctoroff’s long experience financing projects in New York.

“The current health emergency makes us feel even more strongly about the importance of reimagining cities for the future,” the CEO wrote in a blog post the day of the cancellation. Sidewalk has yet to announce any specific initiatives connected to the pandemic.

Shannon Mattern, a professor at New York’s New School for Social Research who studies urban technology, said she thinks public pushback played a large role in the cancellation, but the company has framed itself as ready and able to help other cities and could soon appear elsewhere.

“History tells us that there’s something very appealing to administrations about the solution-in-a-box model of addressing multiple urban concerns simultaneously,” Prof. Mattern says.

People who’ve been on the inside, however, wonder if cities will examine Sidewalk’s track record.

“Sidewalk came out of the gate promising to reinvent the city,” says Mr. Townsend, the smart-city expert who consulted for the company. “What it has produced are a handful of slow-growing startups and an untested scheme for tall timber that’s years behind Europe’s leaders.”

The Globa and Mail

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