The real reason Sidewalk Labs failed in Toronto

Yes, Toronto’s politics can be obstructive, and its NIMBYs are a powerful force — but that’s not what killed the smart-city development
By John Michael McGrath - Published on May 08, 2020
Sidewalk Labs announced Thursday that it would not proceed with the Quayside development in Toronto’s Port Lands. (Andrew Lahodynskyi/CP)

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The tale of Sidewalk Toronto ends not with a bang, but with a whimper. Thursday morning saw the Google-backed company Sidewalk Labs announce that it would no longer go forward with its planned development (tentatively named Quayside) in Toronto’s Port Lands. For all the fanfare the company elicited when it first announced its intentions less than three years ago, the vision is now vanishing in a puff of smoke, Sidewalk perhaps having (correctly) surmised that this will be at best the fourth or fifth item on the news.

The final straw for Sidewalk Labs is alleged to have been the financial distress caused by COVID-19. In a blog post, CEO Dan Doctoroff writes that “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” as laid out with Waterfront Toronto, the provincial agency tasked with reviving the city’s moribund post-industrial shoreline (with federal and municipal participation).

On the one hand, it’s a plausible story: Google is an advertising company. Advertising spending has fallen off a cliff in the pandemic, and Google is, reasonably enough, looking for costs to cut. But looking for costs to cut is one thing; choosing which cuts to make is another, and there’s far more than just global macroeconomics at play here. If Sidewalk Toronto had seemed like a promising near-term development for Google, the tech goliath might have been willing to eat the costs of keeping it alive during these lean times.

The problem for Sidewalk Toronto is that COVID-19 was just the latest in a series of obstacles that had pushed the potential payoff for the “smart city” well into the distant future. The problems go back to the beginning, when Sidewalk “won” a bidding process through Waterfront Toronto that the auditor general found deeply flawed, leading the Ontario government to turf all its appointees to the Waterfront board and replace them with far more skeptical ones.

Sidewalk’s initial proposal to cost-share infrastructure expansion in the Port Lands in exchange for long-term tax revenue was categorically ruled out by the premier’s office, forcing it to go back to the drawing board again.

And, finally, the company’s bid to build an urban empire across a vast swath of the waterfront was reduced to the small pocket neighbourhood of Quayside. All these defeats came before the pandemic, and they’re all far more important to the story of how Sidewalk failed in this city than the disease itself.

Some will no doubt say that this is a story of Toronto’s knee-jerk NIMBYism killing a promising development. Indeed, the Toronto Star’s editorial board endorsed that view this morning. I have myself, as recently as last week, been critical of this city’s hostility to building. And there was a lot about Sidewalk’s vision that I was inclined to view charitably. But the sad story of Sidewalk Toronto is, I think, far more about the hubris and foolishness of a global company that didn’t do its homework than it is about Toronto’s reactionary bent.

To put it bluntly, Sidewalk’s leadership is dominated by people with experience in U.S. cities (Doctoroff himself worked for Mike Bloomberg back when the failed presidential candidate was just the mayor of New York City). There were plenty of Canadians on staff in the Toronto offices, but the upper echelons were always U.S.-based. This matters, because Toronto’s politics are fundamentally different from those in American cities such as New York or Chicago, where the mayors have enormous formal and informal power concentrated in their offices. In Toronto, the mayor is just another vote on council and, while his power involves more than just that, nothing gets done with just the mayor onside.

What this means in practical terms is that Sidewalk’s PR offensive in Toronto was always aimed at winning the argument in boardrooms and behind closed doors — winning the support of the business community, much of the media ownership, and some narrow slice of political leadership, such as the patronage appointments at Waterfront Toronto — and it seemed totally unprepared to make the case to the general public. When it tried, its efforts were often patronizing or ham-handed. Any one of a half-dozen large developers with experience in Canadian cities could have shepherded this project with more acumen.

More than once in the last year and a half, seasoned Toronto observers have said to me privately, “How are they so bad at this?”

It’s also clear that Sidewalk failed to understand how the provincial 2018 election had changed their fortunes. The Tories (and Doug Ford, specifically) were already skeptical of Waterfront Toronto, and the shenanigans around the Quayside process gave them all the ammunition they needed to derail the process — and Sidewalk never really had a Plan B.

Even with the bumbling execution, it still could have worked. This city’s business leaders aren’t exactly committed to local democracy as an inherent virtue, and they’re all too easily suckered into chasing the newest shiny bauble they think will make Toronto a real city. (They are, as a class, largely deaf to the interests of those of us who merely live here, but they’re happy to spend our cash when the airport needs a money-losing train for their consultants.) If Sidewalk had done the work of trying to learn how politics works in Toronto instead of importing a U.S. strategy into alien terrain, if it had demonstrated even a modest amount of care or competence, it could still have pulled this off.

Instead, it’s accomplished the impressive task of lighting millions (tens of millions? hundreds of millions?) of Google’s dollars on fire to no purpose. It will, no doubt — off-the-record and behind closed doors — blame Toronto for the waste, but the failure here is ultimately Sidewalk Labs’ and nobody else’s.

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