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Not Quite Sustainable

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Not Quite Sustainable

Sidewalk Labs’ abandoned Toronto project serves as a cautionary tale as cities navigate an uncertain future. May 13, 2020
Covid-19
Economy, finance, and budgets

Last week, Sidewalk Labs, Alphabet’s urban-innovation company, announced that it was shelving its Quayside project, a “sustainable and affordable” neighborhood on the Toronto waterfront. “Unprecedented economic uncertainty” as a result of the Covid-19 crisis, said CEO Dan Doctoroff, has made it “too difficult to make the 12-acre project financially viable.”

Launched by Google in 2015, Sidewalk Labs has pursued technologies to improve urban life. It soon partnered with Waterfront Toronto, a government-backed agency developing a former industrial parcel along Lake Ontario. In 2017, the agency gave Sidewalk the chance to develop this small slip of land. Two years of community engagement culminated in a 1,524-page master plan, released last June, that envisioned timbered buildings, robotic garbage systems, heated pavement, and more. Though the plan called for “inclusive growth” and a hands-off approach to data, Sidewalk confronted well-publicized fears that it was building a privatized surveillance state.

The first signs of trouble for the firm’s Quayside plan emerged in 2018, when Ontario’s governing Liberals—who spearheaded the startup’s deal—lost the general election to the Progressive Conservatives. The province’s newly elected premier, Doug Ford, soon fired or pushed out those in Waterfront Toronto viewed as friendly to Sidewalk, including the organization’s CEO. Meantime, tech billionaire Jim Balsillie, the force behind the Blackberry smartphone, criticized Sidewalk and its parent company for “playing us like a bunch of colonial supplicants and suckers.” (Balsillie is a supporter of the Cigi think tank, where anti-project advocate Bianca Wylie, who proclaimed that “a city is not a business,” works as a senior fellow.)* Still, public opinion was consistently in Sidewalk Labs’ favor throughout, with opposition polling in the teens.

Before the pandemic, Sidewalk’s deal with Waterfront Toronto had already become precarious. The Waterfront board’s decisive vote on the arrangement was scheduled for June 25. The agency reportedly asked Sidewalk to confirm whether its parent company would financially backstop the Quayside project—a tough sell after the startup’s main champion at Alphabet, Larry Page, stepped down as CEO last year. In addition, as its master plan details, Sidewalk’s investment in Quayside anticipated “subpar returns” absent a dramatic expansion of its footprint along the waterfront and the relocation of Google’s Canadian headquarters to nearby Villiers Island. In recent months, though, Sidewalk—in response to opposition—shelved these plans and scaled down many its proposed innovations. When the economy tanked, so, too, did what was left of Sidewalk’s deal for Quayside.

Yet the technology and companies that Sidewalk Labs has incubated remain valuable. Doctoroff noted that plans remain for producing factory-made mass timber—fire-resistant and strong as steel—together with “a digital master-planning tool” and a “new approach to all-electric neighborhoods,” while the firm’s infrastructure-investment spinoff recently raised $400 million. Sidewalk’s Quayside master plan remains full of good ideas that could serve as a blueprint for cities beyond Toronto, such as more flexible outcome-based zoning, which permits a wide range of building types while regulating nuisance. Sidewalk’s technology for flexible walls in adaptable storefronts and heated, modular sidewalk tiles would surely prove useful elsewhere.

Before Sidewalk, Doctoroff’s story was one of comebacks. His failed 2012 Olympics bid, for example, became the catalyst for the development of New York’s Hudson Yards and the High Line. After 9/11, he spearheaded New York’s economic-development revival as its deputy mayor. A similar rebound, however, may prove difficult in Toronto. Ontario expects its economy to shrink by a record 9 percent this year, while debt and deficits will reach historic highs. Home sales are already down by 67 percent year-on-year in the Greater Toronto area. In losing Sidewalk’s project, the city forgoes nearly $1 billion in foreign direct investment, along with the resulting tax revenues and jobs over the long term. In short, Toronto is left with an empty waterfront and few immediate prospects for development, let alone on the scale or creativity Sidewalk was offering.

Toronto’s aborted project also suggests a growing gap in cities between private ambitions and public capacity to support them. While smart-cities firms like Sidewalk can create underground garbage chutes and “building raincoats,” cities such as New York still allow trash to pile up on sidewalks while scaffolding sits for long periods. Too often, governments preside over lengthy permitting and review processes that stifle new development. In the case of Toronto’s waterfront, it took a private company to offer 40 percent of its new housing at below-market rates and spend more than $50 million designing a master plan—sums that would be hard for most profit-driven enterprises to sustain, absent Alphabet’s largesse. Sidewalk Labs’ Quayside failure is ultimately a loss for Toronto.

*An earlier version of this article incorrectly stated that Mr. Balsillie directly funded the anti-Sidewalk Labs campaign.

Photo: georgeclerk/iStock

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