Cracks in the Sidewalk | GMR2 Services Inc.

Cracks in the Sidewalk: Looking Back at the Future of the Smart City

When I was last in Toronto, Canada, I drove past Quayside, home of the (formerly) paradigm-bursting, technology-integrating, networked “smart city” real estate project, Sidewalk Toronto. Promoted by an offshoot of Alphabet/Google, Sidewalk Labs, it was to be a district “built from the internet up,” destined to upend current models of urbanization by leveraging the power of big data and omnipresent computing to curate one’s urban life. This urban revolution was to be undertaken in partnership with Waterfront Toronto, a special-purpose planning and development agency supported by all three levels of government in Canada (municipal, provincial and federal) with a mandate to oversee the redevelopment of some 2,000 hectares of land along the shores of Lake Ontario in downtown Toronto.

Until it wasn’t. Instead of taking the world by storm, Sidewalk Toronto struggled to gain traction from its announcement in 2017 until being ultimately canceled by Sidewalk Labs in May 2020. The official coup de gras was the COVID economic downturn, but to all accounts except its own, Sidewalk was unable to reach agreement with domestic authorities on a number of fundamental issues including an overall data use model, a financially and technologically feasible project size, a governance model, and a project financing model. As I drove by the site, I got to thinking about what can be learned about smart cities by looking back at this cautionary tale.

Technology marches ever on and cities must pursue efforts at digital advancement and integration, but they would be wise to avoid high-glam “silver bullet” projects. A situation like Toronto’s seems to demonstrate once again that there is no idea so good that it cannot be derailed by an energetic application of hubris and overreach. As an urban planning advisor specializing in very large development projects and regenerations, I have a history of channeling hubris and overreach into fantastical plans…only to then watch them either shrink back to their natural scale after a few harsh reality checks, fail entirely, or, often enough, turn into zombie projects that are never quite dead but never fully alive either. For its part, Quayside, in its Sidewalk guise, is as dead as doornail, with the company itself, Sidewalk Labs, having been reabsorbed into the mothership. For Waterfront Toronto, it was back to the drawing board in their search for a “complete community,” with a February 2022 announcement of a leafy green, but less avant-garde, version of urban utopia.

There is no shortage of pundits who have told their version of what went wrong in Toronto in all its gory detail, and we aren’t here to dunk on the unfortunates after the fact, but rather to look ahead to the next great experiment.

From many accounts, the project landed in Toronto using a tried-and-true approach from the mega-corporation playbook when dealing with local affairs in the establishment of large facilities: identify a willing target; unveil grand dreams of radical positive transformation; create a media buzz and convert key local luminaries to the cause with enough reflected glory to make them feel special; extract initial concessions during the honeymoon phase while “the locals” are star struck; then, try to power through subsequent negotiations using accumulated momentum and leverage, hopefully molding the world to their own advantage in the process. Nothing new or strange here. Unfortunately for Sidewalk, they seem to have misjudged the diffuse nature of political power in Canada and the limits of their ability to influence the decision-making process, finding it ultimately impossible to wade through this particular quagmire.

Sidewalk Labs had all rhetorical guns blazing in its 2019 Master Innovation and Development Plan, heralding a multi-faceted assault on old and out-moded ways of building cities. This may have come, at least in part, in response to the outsized ambitions of Waterfront Toronto, but they certainly didn’t follow the old maxim of “under promise and over deliver.” Among other things, the project was going to:

Develop a new paradigm for data management by creating an “Urban Data Trust,” an independent entity specifically mandated to manage the unprecedented inflow of technical and behavioral data lying at the heart of the smart city. The trust would establish clear standards to centralize and secure data in ways that allowed access in real-time to researchers, the public, and, of course, but more quietly, the project promoters themselves
Fight climate change by reducing emissions by 87% through a combination of new building techniques (see below), geothermal energy, heat recovery, and smart home/smart office building management technologies
Revolutionize the office and multi-family construction sectors by promoting, at a scale hitherto unseen, “mass timber” construction (building large buildings such as offices and apartments using manufactured wood structural elements)
Tackle the affordable housing crisis by doubling to 40% the proportion of affordable units by…well it seems mostly by changing the way that affordability is calculated in a way that reflects the very real cost crisis faced by not just lower but also middle-income residents (success through recalibration?)
Disrupt the transportation sector by pioneering “dynamic streets,” roadways that adjust the space allocated to different modes of transport in real-time throughout the day (automobiles [autonomous and otherwise], bicycles, scooters, pedestrians, etc.)
Modernize property development regulations by creating a new type of “outcome-based” zoning and building code addressing both structural and behavioral issues
Introduce a land value capture model for financing public transit. Land value capture is a way of providing upfront finance to infrastructure improvements by borrowing against the future increases in land values attributable to the improvement, most often using the property tax stream from the improved land to service the debt. For example, land may have a current value of 1X without light rail transit, but 3X with it. Money is borrowed to build the transit, and then the property tax stream generated by the created value on the site goes toward paying down the debt. Often known as TIF, or tax increment finance.
Improve livability by creating a central logistics hub with an underground network of distribution corridors; installing a pneumatic trash collection system; and, pioneering heated sidewalks (the latter being no trivial matter in a winter city where the local environment is annually poisoned through the heavy use of salt to melt snow and ice buildup)

This non-exhaustive, but exhausting-to-read, list is an impressive collection of laudable activities. I mean, who wouldn’t want to do any (or at least most) of these things? But it also brings to mind the fact that the need to “prioritize innovation” can be interpreted in several different ways. The most popular of these ways, and the path taken here, is to promote innovation wherever one sees the potential to do so - and, if you look hard enough, every sector has the potential to improve. Another interpretation, far less exciting but more pragmatic, is to prioritize innovations by selecting only those innovations that are most critical and feasible, saving the rest of the revolution for another day.

So, with this as the setup, here are four takeaways that aspiring smart city developers should consider when developing their program:

Understand Your Market: The real estate industry is intensely local, highly regulated, and idiosyncratic. Approaches that work in one location may easily fail in another. Projects that demand complex changes to local laws, norms, and existing systems work best where power is centralized and agreement is needed from only a small number of elite power brokers to succeed (or at least to proceed). Trying to do so in a decentralized environment with a bubbling cauldron of local voices, public, private and governmental, each with its own say and degree of sway, is asking for trouble. In Toronto there are many short paths to “no” but only a few long and tortured trails to “yes” for a project of this ambition and complexity.
Scale Your Ambitions: As a for-profit enterprise, if you are going to start an expensive urban development revolution, you need to have enough profitable elements in your project to offset the inevitable additional costs of implementing your stated ambitions. If not, then dial back the ambition to fit the ability to execute profitably. The size of the Quayside project was 4.8 hectares (12 acres), basically the size of a large multi-tower apartment complex, perfectly adequate to develop a future-forward development but hardly enough space to pioneer, and pay for, the above grab bag of new, and often untested, ideas. As a simple example, in order to pioneer a new model of multi-modal mobility and smart streets, it is important to first have enough streets upon which to experiment. To this end, Sidewalk Toronto made an entirely understandable, but unsuccessful, proposal for a more reasonably sized project area of 77 hectares called the IDEA district; the fact that this wasn’t an explicit part of an original partnership agreement makes you wonder about the basis of the initial vision, and if signing up for the relatively small Quayside site was simply a foot in the door tactic.
Avoid Overreach: In the smart city business, there is an overwhelming fixation on paradigm-busting transformations, on translating the leapfrogging innovations seen along the digital frontier to the hard physical space of cities. Within existing cities you can’t just “move fast and break things,” in fact you can rarely move fast and it is only almost never a good idea to break things. Innovation is critical but innovation’s Siamese twin is disruption, disruption is risk, and risk must be managed very tightly in the context of urban services. Residents want their urban services to work all the time, and incumbent providers must be able to confidently plan across the full life-cycle of any particular piece of kit (performance, maintenance, upgrade, repair, retirement). What utility providers particularly don’t react well to is having novel innovations foisted upon them by promoters eager to “try something new” but unwilling or unable to manage these changes through their full life cycle. Nobody wants to be left holding the bag on somebody else’s failed experiment. It is not that urban service providers don’t pursue advanced technological change, they do, it is simply that the pace and nature of change are more measured and incremental.
Sort out the Data: Now we come to the crux of the smart city issue, data. Without data there is no smart city, and the data in question for Sidewalk ran the gamut from the benign (current weather conditions, electrical power usage) to the intrusive (personal location and activity tracking). How this data is collected, stored, accessed, utilized, owned, and anonymized or not, is at the heart of it. The model of exchanging personal data for personal convenience that has worked so well for tech companies in North America and elsewhere in the world doesn’t translate into the quasi-governmental space of a public-private smart-city urban development - at least not in an open society like Canada. To its credit, Sidewalk was very conscious of this and came up with a structure anchored by a third-party managed data trust which would have enabled many of the technological advances being proposed. Ultimately, however, they failed to disclose to the satisfaction of the good burghers of Toronto what was in it for Sidewalk. There simply had to be a commercial data payoff, and a big one, particularly as the traditional real-estate return looked questionable with all the added complexity and expense. But, how this payoff would work wasn’t explicitly recognized. Resolving this conundrum will be necessary for any project with this level of ambition to work in an open society.

Conclusion: With the benefit of hindsight, it seems apparent that the smart-city project in Toronto was doomed for several basic reasons: it was undersized, unfocused, and overly ambitious. I would posit that it was ill-conceived from the start. Turning an existing city into a “smart city” is a long, incremental, and decentralized process involving a large number of stakeholders each focusing primarily on “smartening” their own specific areas in ways, and at a pace, best suited for themselves, with only one eye on cross-sector integration, much more than it is a set-piece petri dish trophy project. The limits of progress are related less to the notional capabilities of current technology in laboratory settings and more to the messy complexities of real-world environments.

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