On Wednesday, Ontario’s Auditor General (AG) released her annual report in which she highlighted a series of serious internal governance issues facing Waterfront Toronto (link to PDF). Most crucially for the future of the Quayside smart city development, the report concluded that Waterfront Toronto (WT) entered into an agreement with Sidewalk Labs “without sufficient due diligence and provincial involvement”. This included board members being kept in the dark or given insufficient time to meaningfully contribute or provide input to the framework agreement signed with Sidewalk Labs. The report kicked off another storm in the ongoing debate - statements by WT itself, residents groups, stakeholders such as the Canadian Civil Liberties Association, and perhaps most dramatically, the firing of three board members(including the Chair and CEO). Here are some considerations for what this may mean for the future of the project.
It is important, first, to acknowledge that the AG also highlights negligence on the part of governments. One can say that WT was given too much autonomy without a strong accountability structure - but too little power. They were placed in a difficult position from the very beginning, having very little authority to to fulfill its own mandate. The report notes that “Waterfront Toronto was given ownership and control of 1% of the land it was tasked to revitalize.” WT also has fewer legal and financial powers than other broader public sector entities. For example, almost all universities in Ontario can float bonds to raise funds for capital projects; WT can't. Universities can expropriate. WT can't - which could be one of the reasons why so many condos go right to the water's edge, and why Torontonians and visitors lack the wide continuous promenades one finds in countless cities.
So the problems are not all of WT’s making - though they have failed signally to be up front with citizens about their limited powers, even suppressing, in the flood of picture-heavy communications, that it has always had a limited mandate and that it is supposed to go out of existence in 2028. WT’s annual financial statements are both uninformative and misleading - a point not mentioned by the auditor since hers was a value for money audit not a governance review.
What are the options now?
Option 1 would be to strengthen WT's legal and financial powers and grant it more direct ownership of land. Years ago that might have been the best option. However, now, given all the problems in accountability and governance, that is both unrealistic and undesirable. Further politicizing this issue by replacing board members on the basis of partisan affiliations (link to globe story this morning) would be going from the frying pan into the fire.
Option 2, the one the AG seems to favour, is to have the province take more direct control, maybe even abolishing the board, as was done recently at Ontario Place. The province obviously has great powers and can wreck local institutions in a moment, as happened to Toronto City Council halfway through the recent municipal election. But the AG herself points out that province has no policy framework for "smart cities", and no obvious ministry or bureau with the capacity and relevant experience, as well as legal jurisdiction.
We also concluded that the Province lacks a policy framework to guide the development of a mixed-use smart city such as the one being contemplated for Quayside. (p. 6)
The province guides planning and development at a big-picture level (through mechanisms such as the Planning Act, Growth Plan, and Greenbelt), and carries out major infrastructure projects, but has no experience and insufficient legal tools to work directly with developers and contractors in urban developments.
The city of Toronto, by contrast, has ample power and experience in working with the private sector on residential and commercial developments. So far, as the auditor points out, the city has not shown much leadership on the waterfront, since it is the city and not WT that has restricted zoning and approved huge condo developments that block access to the water and mainly serve to house the rich. But the province would have great difficulty, legally as well as well as practically, if it chose to take direct control of the Quayside project.
Option 3 is to start from scratch. The agreement between WT and Sidewalk is not a legal contract, and there is no penalty for ripping it up: “If Waterfront Toronto, including its Board of Directors, is not satisfied with the content of the MIDP and the accompanying business case, it may terminate the Plan Development Agreement at any time without penalty.”
So it is quite possible to rethink this project by scrapping the existing, fatally flawed, agreement. WT can treat Sidewalk as just one of many possible providers of services and goods that have been chosen in a transparent and accountable manner by public authorities.
Citizens should note that no one really asked for a smart city. There never was a proper process by which some public authority decided that Quayside would be a technological utopia (or dystopia, depending on your point of view). Waterfront Toronto’s original RFP does not mention the term anywhere, apart from a few mentions of smart technologies. It was Sidewalk Labs vision from the very beginning, which they have steadily dialed back over the past year.
One thing is clear: none of these are great options. Certainly none of them seem likely to produce the outcomes that citizens expect, neither from a value for money nor a quality of life perspective. It is important to take the time to investigate these further and even explore other iterations.
Equally, we should consider that the scope of Sidewalk’s original vision far exceeds other smart city developments around the world. Data and privacy are far from the only issues at stake - here, we are rethinking the nature of public space and the processes of municipal service delivery, to name just two big buckets. The AG helpfully identified the following policy areas that are could potentially be affected by the plan:
It might be a good idea to disaggregate and identify the various goods and services that Sidewalk and its subsidiaries have been promising, or just pondering, and establish a proper process by which a public entity, whether WT or a successor, or the city, would then issue requests for proposals for goods and services chosen by public entities. A democratic reset, in which city-wide groups representing tenants, environmentalists, and racialized communities would play a leading role. Such a process might decide that what we need is not a technological petri dish but a neighbourhood that is inclusive and pleasant, with or without data sensors.
Additional comments from the Toronto Open Smart Cities Forum:
Melissa Goldstein: "The other oversight was not questioning how an RFP to develop a plan for a 12 acre parcel, do research into future partners, and provide funding, became an agreement to create a plan and then *implement* it [in terms of Sidewalk and WT jointly issuing RFPs for developers]...both for the 12 acre parcel & the entire port lands. The fact that (as noted in the auditor's report) all 3 levels of government will only be invited to review and comment on the RFP and will have no opportunity to weigh in or intervene beyond that is hugely problematic.
AG: “Currently, Waterfront Toronto has the authority, through the Toronto Waterfront Revitalization Corporation Act, to enter into these and other agreements without any stakeholders’ and government approval.” (p. 691)
I think what we need on the waterfront is to revisit the plans that were developed more than a decade ago for the port lands and Quayside. The old plan was produced with quite a lot of community engagement (I participated in it), and that plan could be updated and that process (still better than Sidewalk's) could be improved upon."
Mariette Pilon: "What was the content of Sidewalk Labs LCC's answer to the [original Waterfront Toronto] RFP and what type of financial documents were annexed to that submission? I suggest that it is important to underline that the AG has not addressed that point. After all, this is the very beginning of that history."