Alphabet Calls It Quits on Toronto’s Smart Future

After two and a half years of development and less than a year after unveiling a $2.8 billion (US) master plan, the New York-based Google affiliate Sidewalk Labs has cut its losses and put Toronto’s smart-city project in limbo.

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An aerial view of buildings in downtown Toronto.
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Sidewalk Labs, a subsidiary of Google’s parent company Alphabet that works with municipal governments to solve urban problems, is walking away from a controversial, multi-billion-dollar smart city project in Toronto after two and a half years of work.

In a blog post today, the company’s founder and CEO, Daniel Doctoroff, attributed the decision to COVID-19’s toll on global economies and real estate markets.

“As unprecedented economic uncertainty has set in around the world and in the Toronto real estate market, it has become too difficult to make the 12-acre project financially viable without sacrificing core parts of the plan we had developed together with Waterfront Toronto to build a truly inclusive, sustainable community,” he wrote. “The Quayside project was important to us, and this decision was a difficult one. We are grateful to the countless Torontonians who contributed to the project, and for the support we received from community groups, civic leaders and local residents.”

Quayside is the name of the 12-acre waterfront district on Lake Ontario that was scheduled to be redeveloped by Sidewalk Labs and government-appointed nonprofit Waterfront Toronto, which is overseeing several other projects still in the works.

Originally dubbed “Sidewalk Toronto” in October 2017, after Sidewalk Labs’ proposal won the bid, the project went through several iterations and public controversies before current economic circumstances, apparently, did it in.

Alphabet, which launched Sidewalk Labs in 2015, pledged $50 million in 2017 toward an initial planning phase with Waterfront Toronto. It’s unclear how much of that money was spent, but by June 2019 Sidewalk Labs unveiled a three-volume, 1,524-page master plan for the site. Estimating the cost at $2.8 billion (U.S.) with a $6.4 million (U.S.) investment from Sidewalk Labs, the plan called for new housing and smart city tech such as sensor-based traffic signals, dynamic curbs, underground delivery routes for trucks, self-financing light rail transit, heated pavement and pneumatic waste collection.

Some of the chief public concerns about the project had to do with data privacy and the collection of information from citizens, which were part and parcel of many promised smart-city features. In April 2019, the Canadian Civil Liberties Association sued all three levels of the Canadian government in an effort to stop the project.

Sidewalk Labs also came under fire after word got out in May 2019 that the company was planning developments beyond the Quayside parcel, although the company maintained Quayside was always supposed to be a foundation for future phases.

In any case, the city of Toronto may be back to square one with the project. Waterfront Toronto has yet to announce its next move, although Board Chair Stephen Diamond sounded hopeful in a public statement that some version of a futuristic Quayside district will see the light of day.

“While this is not the outcome we had hoped for … Waterfront Toronto has confidence in the city’s economic future, and will take the long view when making real estate and development decisions on Toronto’s Waterfront,” he said. “Quayside remains an excellent opportunity to explore innovative solutions for affordable housing, improved mobility, climate change and several other pressing urban challenges that Toronto — and cities around the world — must address in order to continue to grow and succeed. Today is not the end of Quayside, but the first day of its future. Waterfront Toronto will continue to seek public and expert input as we make a next generation community at Quayside a reality.”

Andrew Tumilty, a spokesperson for Waterfront Toronto, reiterated to Government Technology today that his organization is still committed to building a “next-generation community” on the Quayside parcel in the long term. But having only just learned about Sidewalk Labs’ decision yesterday afternoon, he said a lot of conversations need to happen before the public can get a definitive update.

“Short-term, we’re going to have to have some internal review and reach out to the public and our government partners and determine what we think the very next steps should be, whether that’s consultations first, whether that’s (a) new RFP first — those are some of the finer details we’re going to have to work out,” he said. “In the coming weeks, we’ll probably have the first in a series of announcements about what our next steps should be.”

Government Technology is a sister site to Governing. Both are divisions of e.Republic.

Government Technology is Governing's sister e.Republic publication, offering in-depth coverage of IT case studies, emerging technologies and the implications of digital technology on the policies and management of public sector organizations.
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