Google’s Sidewalk Labs plans massive expansion to waterfront vision

TheStar.com
Feb. 15, 2019
Marco Chown Oved

Google’s futuristic development on the eastern waterfront, Quayside, is only the first step in an expansive and ambitious plan to build new neighbourhoods -- and new transit -- throughout the entire Port Lands, the Star has learned.

In return for its investment in this vision, Sidewalk Labs wants a share of the property taxes, development fees and increased value of city land that would normally go to city coffers.

Internal documents obtained by the Star show Sidewalk Labs plans to make the case that it is “entitled to a share in the uptick in land value on the entire geography ... a share of developer charges and incremental tax revenue on all land.”

These future revenues, based on the anticipated increase in land value once homes and offices are built on the derelict Port Lands, are estimated to be $6 billion over the next 30 years. Even a small portion of this could amount to a large, recurring revenue stream diverted from the city into private hands.

Slides from a presentation given to parent company Alphabet in November, marked “proprietary and confidential,” show Sidewalk Labs does not intend to construct buildings on the majority of the Port Lands, but wants to benefit from its increased value once other developers build there.

The California-based tech giant envisions redevelopment on 350 acres in the Port Lands area -- an area almost 30 times larger than Quayside -- by financing underground infrastructure and a light rail line. The slides also indicate Google’s Canadian headquarters will be built on Villiers Island.

When the Star asked Sidewalk Labs for comment, the company confirmed the slides were authentic and provided an updated presentation that walked back the scale of what was presented internally.

In an interview, Sidewalk Labs CEO Dan Doctoroff told the Star that Quayside will demonstrate what’s possible, but the company aspires to far greater “urban innovation.”

“We don’t think that 12 acres on Quayside has the scale to actually have the impact on affordability and economic opportunity and transit that everyone aspires to,” Doctoroff said.

“We’re going to be spending a lot of money in advancing the infrastructure. And where we do that and there are new property tax revenues or developer charges, we only want to get paid back a reasonable return for our investment in that infrastructure.”

“This land is stubbornly resistant to development,” Doctoroff said, and Sidewalk will be financing “mass transit and affordable housing in an era in which there is not enough money.”

“We’re prepared to take the risk up front of developing a model to help make that happen, and we’re prepared to essentially get paid back when we’ve demonstrated that it can be successful,” he said.

To encourage development, Sidewalk will finance an LRT expansion through the area and fund the construction of “horizontal infrastructure” such as “the power and thermal grid, and waste removal.”

“This is something that is on nobody’s realistic drawing board. We would ensure it gets financed and all we want to do is get paid back out of the increase in value in terms of property taxes and developer charges that are only possible when that LRT gets extended,” said Doctoroff.

“To be clear,” Doctoroff said. “We would not own the LRT. It would remain public.”

A map included in the leaked presentation shows Sidewalk Labs plans to build 6 million sq. ft. of “vertical development” on 20 acres in the Quayside and Villiers West areas, leaving additional areas to the east and south for others to build on after “horizontal infrastructure” is installed.

The same map indicates Sidewalk Labs expects to “receive incremental land value, incremental tax revenue and share of development charges” for lands where it financed infrastructure.

Sidewalk Labs provided an update to this plan, showing an optional phase three where the LRT and underground infrastructure would be extended across the shipping channel, preparing another 160 acres for development.

“This is a way of actually enabling critical infrastructure that isn’t happening. What we hope to do is accelerate the development of this whole area by years and years,” Doctoroff told the Star.

The presentation raises questions about the transparency of the waterfront planning process as it appears Google’s sister company is already having talks with public officials about lands beyond what they’ve been publicly invited to plan for.

One slide states there have been “weekly briefings with officials from the three levels of government,” and “regulatory dispensations,” have been drafted to allow the plan to go ahead.

Sidewalk Labs will not purchase very much land to build on. Instead it will “incorporate a capital light, asset manager-like approach to be good stewards of Alphabet’s capital,” the presentation states.

The federal, provincial and city governments are spending a combined $2.5 billion to protect the Port Lands from flooding. This public investment was a prerequisite to any development in the area.

The vast majority of the Port Lands -- 78 per cent -- is owned by the city, according to a staff report from March 2018. Only 11 per cent is privately held, while another 11 per cent is owned by the province.

Doctoroff explained that the company is negotiating benchmark values for the city owned land. In the future, when the city sells that land to developers, Sidewalk would be entitled to a portion of the increase in the land’s value.

“What we’re really trying to be is a catalyst, and have our interests completely aligned with the public and the public sector because we don’t actually benefit until they do through successful development,” he said.

Sidewalk Labs, which won a competition to design a futuristic neighbourhood at Quayside on the city’s eastern waterfront in October 2017, has made very little about its plans public.

What started out as excitement when Google was selected to develop a master plan for the former industrial lands erupted into controversy last fall, when a slew of consultants and advisory board members resigned in quick succession, citing concerns over how personal data would be collected and used, as well as the secrecy surrounding the project.

Sidewalk then pledged that it would not take ownership of all the data collected in the high-tech development, and proposed a public data trust to manage privacy concerns.

There is no guarantee City Council will approve Sidewalk Labs’ master plan, originally due last fall, and now slated to be unveiled this spring. But in an effort to prepare public opinion, the company has hired former city councillor Mary-Margaret McMahon to be the “Toronto face” of the company.

Internally, one slide in the presentation, titled “Shaping Public Opinion,” shows the company remains concerned about public perceptions.

“Despite a steady beat of negative press, our key government, community, and waterfront advocates remain cautiously supportive -- and public opinion polling is mostly unchanged from six months ago,” it states. “The majority of the negative press coverage is rooted in an anti-global tech giant narrative being spun by former RIM co-founder Jim Balsillie and disseminated through the Canadian Council of Innovators.”

“This underscore (sic) the need for us to provide more positive and concrete examples about the project’s benefits for Torontonians’ quality of life and economic opportunities so the negative narratives do not go unanswered,” it states.

The slide includes two polls showing public support for the Quayside project has risen from 52 to 53 per cent between April and November 2018.
Another two polls show 68 per cent of respondents support the project to “improve quality of life and develop innovations to address the challenges facing Toronto,” and 74 per cent support the project to “create thousands of new jobs and billions in new economic investment in the city.”