Item - 2018.EX30.9

The Executive Committee referred the item to the Director, Waterfront Secretariat with the request that he:

1. Add the Chief Information Officer and the Chief Transformation Officer to the list of City of Toronto staff assisting in the development of the Waterfront Toronto and Sidewalk Labs Master Innovation and Development Plan.

2. Initiate discussions with the Chief Information Officer to ensure that Waterfront Toronto's Sidewalk Toronto initiative aligns with the City's digital infrastructure and data policy, and report findings and lessons learned to the Government Management Committee.

3. Investigate the feasibility of establishing a democratically representative residents' advisory group with a fiduciary responsibility to look after residents' digital interests with the following goals:  

a. All data collection should be anonymous by default;

b. All data handling must comply with Ontario's municipal privacy law and federal commercial privacy law;

c. All software which accesses Quayside data should be available under a free open source license in a public repository;

d. Basic digital services should be universally accessible and affordable to all Quayside Residents; and

e. The security of the data, software, and physical infrastructure should be maintained by sufficiently robust means.

The purpose of this report is to describe the partnership initiated by Waterfront Toronto's Quayside Request for Proposals (RFP), which has been named "Sidewalk Toronto" by Waterfront Toronto and their selected partner, Sidewalk Labs.  The report outlines the "Framework Agreement" between Waterfront Toronto and Sidewalk Labs, as well as City Council approval requirements and other key issues.

On October 17, 2017, Waterfront Toronto announced that Sidewalk Labs (a subsidiary of Alphabet Inc., which is also the parent company of Google) had been selected as its "Innovation and Funding Partner" for the Quayside district along Toronto's waterfront. There has been substantial media coverage of, and public interest in, this announcement. The announcement followed a Request for Proposals process initiated by Waterfront Toronto in March 2017, seeking an Innovation and Funding Partner for Quayside. Quayside is a 12 acre parcel of land along Queens Quay East near Parliament Street that is largely owned by Waterfront Toronto (see Attachment 1). 

There is an extensive economic development component to the project. Waterfront Toronto and Sidewalk Labs are proposing that Quayside become a hub for innovation-related companies, institutions and entrepreneurs. The initiative reflects confidence in the city's economy, including the city's growing technology industry and related talent pool. The project is an opportunity for the city to be involved in the development of emerging technologies, and for City Divisions to influence how public concerns related to data privacy and related issues can be addressed.

Waterfront Toronto and Sidewalk Labs entered into a partnership Framework Agreement on October 16, 2017. Waterfront Toronto released a summary of this agreement on November 1, 2017 (see Attachment 2). The Framework Agreement is a confidential legal document, although it was shared with staff of the three levels of government on a confidential basis after it was approved by the Waterfront Toronto Board of Directors.

The Deputy City Manager, Cluster B will report back when Waterfront Toronto and Sidewalk Labs have come to terms on a proposed business relationship, to be articulated in a “Master Innovation and Development Plan” (MIDP). The Framework Agreement establishes a provisional process and schedule for reaching agreement on fundamental matters regarding planning and implementation; many of these will be of importance to the City. The Framework Agreement sets out the scope of the relationship which the parties will negotiate in various future agreements, including the Master Innovation and Development Plan. It does not finalize the commercial terms, conditions (including governmental approvals), representations, warranties, covenants or other provisions that would be contained in all of the future documentation. The Framework Agreement does not confer upon Sidewalk Labs, or any other entity, the right to develop any land or to avoid applicable government approvals and consents, nor does it obligate any private sector or government land owners to work with Sidewalk Labs.

The Framework Agreement anticipates three stages of work over the next 12 months. The parties may agree to extend this schedule should additional time be required. Any future agreements to be negotiated between Waterfront Toronto and Sidewalk Labs are likely to have significant implications for the City on a number of scales: from the site-specific level (the City owns approximately 1.5 acres in Quayside); to the strategic policy level (the City's current waterfront revitalization relationship is with its government partners and Waterfront Toronto). A next step for Waterfront Toronto and Sidewalk Labs is the development of a work plan and budget for the 2018 activity that will lead to the Master Innovation and Development Plan. Upon completion, the Master Innovation and Development Plan will be presented for approval to the Waterfront Toronto and Sidewalk Labs Boards. If approved, the Master Innovation and Development Plan would be subject to numerous government approvals. Examples of required City approvals include planning, building and environmental approvals, right-of-way permits, road closings, real estate transactions, and affordable housing requirements.

The Framework Agreement between Waterfront Toronto and Sidewalk Labs was not shared with governments prior to the Sidewalk Toronto announcement. For timely approvals to be realized, it will be important that all future documents, from the project work plan and budget through to the Master Innovation and Development Plan, be reviewed by City staff in advance, and with sufficient time provided for thorough review. Given Waterfront Toronto's tri-government mandate, staff of the Federal and Provincial governments should also be consulted.

The Master Innovation and Development Plan will address the 12-acre Quayside site. Quayside is prime development land. Given the pace of redevelopment in the East Bayfront and nearby, market demand related to redevelopment opportunities in Quayside is only a few years off. The Waterfront Toronto and Sidewalk Labs proposal for mixed-use redevelopment is consistent with the approved plans for the East Bayfront and Keating Channel precincts (Quayside is envisioned as a mixed-use medium-density district in the Central Waterfront Secondary Plan, City Council endorsed Precinct Plans, and in-force Zoning By-laws). The realignment of Parliament Street, extension of Queens Quay East to Cherry Street, and the normalization of the Queens Quay-Parliament Street intersection are key precursors to the redevelopment of the three parcels of land east of Quayside, over to Cherry Street. The redevelopment of Quayside will require a number of land use planning approvals. In addition, Waterfront Toronto, working with a number of City Divisions and Agencies, will prepare a Business and Implementation Plan for Council's consideration, a requirement of the 2006 Memorandum of Understanding (2006 MOU) among the City, Waterfront Toronto, and the Toronto Economic Development Corporation (controlled by the Toronto Realty Agency).

The Sidewalk Toronto team has proposed to explore new technologies and innovations that can be implemented at scale. Data privacy, intellectual property, and the procurement process have emerged as key issues to be addressed through the 12 month Master Innovation and Development Plan planning process, so that parameters for implementation can be established in line with City of Toronto objectives and the larger public interest. As technologies continue to evolve, it is likely that many of these issues will arise in other developments, so having the opportunity to develop appropriate approval mechanisms will be useful in the longer term. Opportunities to implement new technologies and innovations at scale will also be explored, particularly for infrastructure that must be implemented at a district-level scale in order to be viable (district energy is an example of this).

It is premature for City Council to be making decisions about implementation related to the redevelopment of the Port Lands. The Port Lands Planning Framework was approved and the Villiers Island Precinct Plan was endorsed by Council on December 5, 2017. A fundamental next step for the Port Lands is the preparation of a Business and Implementation Plan for Villiers Island, to be prepared by Waterfront Toronto working in consultation with City Divisions and Agencies.  

An important component of the Sidewalk Labs response to Waterfront Toronto's Request for Proposals is the proposal to pursue pilot projects in Quayside. City staff are supportive of this idea, and are of the view that pilot projects could be undertaken in other parts of the City as well. Pilot projects should be characterized by a commitment to open data. Also, pilot projects should build on, and not duplicate, relevant City initiatives. The evaluation of any successful pilots would include evaluation of opportunities to implement at scale. Given that City has no contractual relationship with Sidewalk Labs, and given that the City must be fair to other potential partners/vendors, City staff prefer that pilot projects be implemented on a non-exclusive basis, meaning that these pilots would not preclude any other technology company from pursuing a pilot initiative with the City of Toronto. There may also be opportunities to invite other technology companies to participate in pilots led by Sidewalk Labs and Waterfront Toronto.

In conclusion, City staff will engage in the year-long process that has been established by Waterfront Toronto and Sidewalk Labs, and report back when the two partners have come to terms on a proposed business plan and relationship, as documented in the proposed Master Innovation and Development Plan. City involvement will be facilitated by the Waterfront Secretariat. Many Divisions and Agencies will be involved including, but not limited to, the City Manager's Office, City Legal, City Planning, Corporate Finance, Financial Planning, Real Estate Services and the Toronto Realty Agency. Waterfront Toronto, as a tri-government agency, will consult with Federal and Provincial governments via the Waterfront Revitalization Initiative Intergovernmental Steering Committee (IGSC), as will City staff. Also, staff will undertake due diligence on emerging proposals and investigate the key issues that are described below (data privacy, procurement, etc.). In addition, staff will assist Waterfront Toronto and Sidewalk Labs in developing their plans for Quayside and refining candidate pilot projects.

The extent of City staff involvement in this project is unknown at this time. There may be an opportunity to recover funds related to the City's due diligence review of the project. Staff will report through the Budget Committee should recovery funding from Sidewalk Labs be available and necessary.