Alphabet’s ‘City of the Future’ to Move Forward in Toronto
The Sidewalk Labs office in Toronto. (Photographer: Brent Lewin/Bloomberg)

Alphabet’s ‘City of the Future’ to Move Forward in Toronto

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(Bloomberg) -- Alphabet Inc.’s plan to create a “city of the future” on Toronto’s waterfront has cleared a major hurdle, though it will be much smaller than once envisioned.

Sidewalk Labs LLC, Alphabet’s urban innovation unit and sister to Google, won approval to move forward with the project on Thursday after acquiescing to several contentious issues. Those included sticking to its original 12-acre plan rather than a 190-acre project it proposed in June. Waterfront Toronto, the public corporation in charge of the development, will take the lead on all data and privacy matters and Sidewalk has agreed to push ahead without financing from the city for transit.

Alphabet’s ‘City of the Future’ to Move Forward in Toronto

“There has been significant movement from Sidewalk Labs on those areas of concern as well as other issues,” Stephen Diamond, chairman of the Waterfront Board, said in a press conference in Toronto. “This is not yet a done deal: there is still further work to be done before a final decision is made.”

The deal strikes a promising chord for big tech’s role in city-building while highlighting the importance of compromising with public entities. That’s in stark contrast to Amazon.com Inc. which withdrew plans for a second headquarters in New York after a backlash from the neighborhood and local and regional politicians.

‘Own Terms’

Sidewalk had proposed investing C$1.3 billion ($990 million) alongside local partners to kick off the development, meant to showcase Alphabet CEO Larry Page’s vision for a modern city powered by sensors and data. Ideas included everything from underground garbage disposal to heated bike lanes, along with offices and thousands of residential units, including below-market and affordable units.

“We want to engage big tech, but on our own terms,” said Alex Ryan, vice president of the Solutions Lab at MaRS, a tech hub in Canada’s biggest city, which has been involved in consultations with Sidewalk and the waterfront agency. “Toronto has figured out the middle ground. Rather than be bullied or pushed over, and rather than run them out of town like with Amazon HQ2, Toronto is coming at this as equals.”

Alphabet’s ‘City of the Future’ to Move Forward in Toronto

The development has much further to go. Waterfront’s board will begin public consultations to evaluate the rest of Sidewalk’s proposal and will decide on March 31 whether to pursue implementation agreements with a deadline for finalizing a deal by Dec 31, 2020.

“I do give them credit, I think it was hard for them to move but I think they recognized that they had to, if they wanted to move forward with the project,” Diamond said of Sidewalk Labs. “They have also made it abundantly clear that they need to make sure the economics of the project will work for them as well.”

Further Concessions

Under the plan, Waterfront Toronto will receive fair market value for the land when it’s sold, with the current appraised value at about C$590 million. The public agency will then make investments in affordable housing and sustainability for the region.

Additionally, Sidewalk Labs has agreed that personal info will be stored and processed in Canada and will work toward storing and processing non-personal data in the country. It is also pledging that Canadian companies will be able to use any patents that Sidewalk Labs generates from digital innovations on the project. The public will be entitled to a revenue stream on products and services piloted in Waterfront Toronto-facilitated test-beds, based on global net revenues.

Part of Sidewalk’s success was its pivot to engage more with local stakeholders compared with last year, when many Torontonians didn’t feel like they were being heard by the tech conglomerate, Ryan said. “It’s been a really messy and tough process for people to go through, but we’re getting to a point where we might end up with a really good outcome of this,” he said.

©2019 Bloomberg L.P.

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