Sidewalk Labs announces US$980M investment in Toronto development
Sidewalk Labs LLC., the urban innovation unit of Alphabet Inc., is proposing to team up with local partners to invest $1.3 billion (US$980 million) to get its vision for a high-tech city in Toronto off the ground.
Part of that would be a $900 million equity investment to finance the $3.9 billion development of a five-hectare neighborhood on Lake Ontario that will include tall-timber housing, adjustable curbs and heated bike lanes. It will also include the Canadian headquarters for sister company Google, Sidewalk said in its development plan released Monday.
“Our plan puts the public sector in the driver’s seat in ways that’s not the norm for a lot of tech companies in the world,” Dan Doctoroff, the company’s chief executive officer said at media briefing. “Sidewalk aims to partner with the government in order to create the conditions for real estate developers, civic organizations, tech companies, and residents, workers and visitors to build a great community in the decades to come.”
The proposal comes 20 months after Sidewalk won the mandate to build the community with Waterfront Toronto, a public corporation created to revitalize a scrappy expanse of old industrial lands along Lake Ontario. Kicked off with much fanfare by Prime Minister Justin Trudeau and former Alphabet Chairman Eric Schmidt, the project has since become mired in controversy over how data from the site will be used, how it will be financed and just how much control a giant tech company should have over public lands.
Doctoroff, who was previously CEO of Bloomberg LP and deputy mayor of New York City under Michael Bloomberg, Bloomberg’s founder, has been waging a public relations battle to win over a skeptical public ever since. Sidewalk Labs said it consulted more than 21,000 Torontonians and invested more than US$50 million to develop the 1,500-plus-page draft.
New York-based Sidewalk advocated the creation of an independent, government-sanctioned Urban Data Trust to oversee all collection and use of data from the region.
“We understood that we were going to have to be held at a higher standard,” Doctoroff said. “The approach we’re proposing vests complete control of urban data in government-sanctioned independent data trusts. It would be consistent with and in addition to existing and future privacy laws in Ontario and Canada.”
It reiterated it wouldn’t sell or use any personal information for ads, or share it with any of Alphabet’s companies, including Google, without consent. Like any other company, it would apply to use data collected to improve infrastructure or technology. For example, to create an advanced power grid they would apply to collect data on temperatures in apartments.
The company is also proposing an optional “credit enhancement” of as much as $400 million to help fund the development of infrastructure and a $1.2 billion, 6.5-kilometer light-rail link to the Toronto development. This would accelerate completion and save the government $1.8 billion, according to Sidewalk which wouldn’t take a stake in the line or operate it.
Sidewalk said the transit link project could include the establishment of a government-sponsored special purpose vehicle to issue debt with proceeds going to construct the infrastructure. The resulting tax revenue growth will then go back to repay the bonds.
The entire eastern waterfront project, if successful, would be one of Canada’s biggest developments and has a project value of close to $23 billion over a 20-year time frame. Sidewalk will only lead the development of Quayside and Villiers Island, the proposed area for Google’s headquarters, which makes up less than 7 per cent of the area.
The company hasn’t yet established who its local partners would be, but said it has been talking to many parties including developers and investors.
To address housing affordability, Sidewalk said half of all its housing units would be purpose-built rentals, with 40 per cent catered to larger apartments with two-bedrooms or more. The plan includes below-market rates for 40 per cent of all housing units with half of those dedicated to affordable ones. This could generate more than 1,700 units that are cheaper than market-rate ones, Sidewalk said.
Quayside will be the first neighborhood built entirely of mass timber, engineered material that is as strong and fire-resistant as concrete or steel but more sustainable and easier to manufacture, Sidewalk said. With its partners, it plans to invest up to $80 million in a mass-timber factory in Ontario to jump start the industry.
It also plans to spend $20 million in seed funding to create a new urban innovation institute and a new venture fund for local startups, anchored by the Google HQ.
The firm has said the project would be a test-bed for technological development and proposed a 10 per cent profit sharing plan with the Canadian government for 20 years regarding certain technology first deployed in the district.
Outside of market-rate returns from the rents and sales from its property development and returns from its support for the transit infrastructure, Sidewalk is also proposing to receive compensation at the end of the project tied to economic activity, government revenues and success in the development. It did not specify what type of compensation it expects to receive.