Google's Sidewalk Labs has been selected as the top candidate to turn part of Toronto's waterfront into a smart neighbourhood designed to integrate new technology and advance sustainable architecture and urban design, The Globe and Mail has learned.

The project, known as Quayside, aims to turn 4.9 hectares (12 acres) of waterfront land near Parliament Street and Queens Quay East into a mixed-use community that Waterfront Toronto says will use advanced technology, innovative building techniques and funding to encourage "climate-positive urban development."

Waterfront staff selected Sidewalk Labs LLC, a unit of Google's parent company Alphabet Inc. that imagines, designs, tests and builds urban innovations, pending approval from the agency's board in the coming weeks, according to a source close to the negotiations.

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The project would allow the tech company to work toward its stated goal of "reimagining cities from the Internet up," by integrating technology and urban design to create a 21st century neighbourhood that uses innovation to address common city problems, such as traffic congestion and a shortage of affordable housing.

According to a request for proposals issued by Waterfront Toronto, 20 per cent of the residential units built must be designated as affordable, and the development is meant to accommodate a range of income and age groups.

A spokesman for Google Canada declined to comment, as did Toronto Mayor John Tory. Waterfront Toronto spokeswoman Carol Webb declined to comment on Sidewalk's potential involvement.

"Our process includes a blackout period that must be observed … until our board of directors has approved the recommended proponent and the formal announcement is made," she said. "We expect to make that announcement later this fall."

Waterfront Toronto, the agency set up in 2001 by federal, provincial and city governments to transform 800 hectares in and around Toronto's port lands, issued an unusual request for proposals in March: It asked for an "innovation and funding partner" for the project. The particular form of development on the site was not fully determined. The project is intended to generate a financial return but also "use the waterfront as a test bed for how we construct the future city," Waterfront Toronto CEO Will Fleissig said in an interview in March.

The development, Mr. Fleissig suggested, could help make Toronto a global leader in addressing climate resiliency and the "smart city."

The Quayside land, currently home to low-rise industrial or office buildings surrounded by parking lots, is made up of tracts owned either by the city or Waterfront Toronto itself, plus one that is privately owned. Its development would carry forward to projects on nearby land, some of which is made possible because of the June announcement of a $1.185-billion flood protection plan.

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"Our objective with Quayside is to advance new models for addressing pressing urban challenges, such as the increasing disparity in housing affordability, congestion on our roads and the imperative to address climate change," said Waterfront Toronto's Ms. Webb. "Beginning with Quayside, we aim to design a new kind of mixed-use, complete community that will combine forward-thinking urban design and new technologies to create people-first neighbourhoods that help address these challenges."

Sidewalk Labs develops what are often referred to as "smart cities" systems. It aims to use data collection and new technologies to solve urban problems. For example, it says it is working on an adaptive traffic light system that could "detect pedestrians, cyclists, cars, and transit vehicles to facilitate safe, seamless movement through congested urban intersections."

But the first project it mentions on its website is called "Building a District." Toronto is not mentioned by name but the site says Sidewalk is "pursuing a large-scale district that can serve as a living laboratory for urban technology – a testbed for co-ordinated solutions, a foundation for people to build on, and a vision for other cities to follow."

Bloomberg News reported earlier this year that Sidewalk CEO Dan Doctoroff – a former Bloomberg LP CEO who was the deputy mayor of New York under Michael Bloomberg – laid out the concept in a speech at a New York conference.

"I'm sure many of you are thinking this is a crazy idea," Mr. Doctoroff was quoted as saying in remarks first reported by a website called StateScoop. "We don't think it's crazy at all. People thought it was crazy when Google decided to connect all the world's information. People thought it was crazy to think about the concept of a self-driving car."

Sidewalk, which is about two years old, says its aim is to spin off any urban technologies or systems it creates into separate companies. Its most visible project to make that jump is called LinkNYC, a network of Wi-Fi kiosks to replace New York's payphones run by a Sidewalk-supported company called Intersection.