Sidewalk Labs, Waterfront leaders sidestep negotiation tensions as Toronto smart-city deadline looms

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Waterfront Toronto chair Stephen Diamond is still expressing caution about proceeding with a Google-affiliated smart-city community on the edge of Lake Ontario, even as he appeared at an event on Monday to promote the project.

The leading public-sector executive behind the proposed Quayside neighbourhood appeared with Sidewalk Labs chief executive officer Dan Doctoroff at a Toronto Region Board of Trade lunch meeting, where they played down any tensions that could derail the project. Both sidestepped discussing the separate efforts their organizations are taking to shape the project at the foot of Parliament Street in their best interests. “I’m sure there will still be some arm wrestling on some financial issues,” Mr. Diamond told the Bay Street crowd, adding that he has to defend taxpayers’ interests.

The project would involve urban-planning innovations from remote garbage-sorting technologies to efficient heating systems powered by artificial intelligence. It faces a final vote by tripartite Waterfront Toronto’s board of directors on March 31 before individual project components would be submitted for government approvals.

Mr. Diamond and Mr. Doctoroff focused their Board of Trade discussion on how Toronto and Canada could become what Mr. Doctoroff called “the global hub of urban innovations.” But behind the scenes, publicly run Waterfront Toronto is seeking financial terms and a stake in the project’s innovations that would provide the best benefits for Canadians. And Sidewalk – the urban-planning subsidiary of Google parent Alphabet Inc. – is determining if it can make a financial case for developing and deploying new technologies on a site that is just 12 acres. Either party could walk away in the coming weeks.

Mr. Doctoroff, a former New York City deputy mayor, was optimistic the project will be approved – saying that “we need to achieve reasonable financial returns” – while Mr. Diamond took several opportunities to point out that nothing was confirmed. “We’re not sure yet we will be” successful in partnering with Sidewalk, Mr. Diamond said.

The lawyer and veteran Toronto developer echoed a point he has made since becoming Waterfront’s chair last year – that Quayside has started conversations that governments and the public need to have “to come to grips” with the future of technology in cities.

The two leaders had not appeared in public together before. They have largely communicated through letters amid tense negotiations about the project. Soon after Mr. Diamond was appointed as Waterfront Toronto’s chair by all three levels of government in early 2019, he began privately expressing dissatisfaction that Mr. Doctoroff and his company were making project details public before sharing them with Waterfront. At the start of the Board of Trade lunch, he acknowledged their history: “People asked whether Dan and I were going to arm-wrestle today,” he said.

Mr. Diamond’s frustrations came to a peak in June, when Sidewalk published a master plan that asked for powers over a slice of land more than 16 times larger than the original site, but did not answer some questions about its proposed technologies. Calling the plan “aggressive,” Mr. Diamond began a four-month campaign to rein in the plan.

Sidewalk gradually accepted several of Waterfront Toronto’s demands, including much more favourable intellectual-property terms for Canadians and public stewardship of collected data. Sidewalk agreed to return to the project’s initial 12 acres only a day before a crucial vote for the project on Oct. 31 by Waterfront’s board of directors. The board then voted unanimously to review the project’s new terms.

Sidewalk’s expanded June plan included a new Canadian headquarters for Google on a slice of land southeast of Quayside. Mr. Doctoroff told the Board of Trade crowd that Sidewalk is exploring opportunities to include it in the Quayside lands. But he also hinted at continued ambitions to build more broadly than the 12 acres it is allowed – calling it the “initial scope.”

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