A new type of public-private partnership

In 2017, Waterfront Toronto issued a Request for Proposals (RFP) that identified the need for “new and innovative partnerships, funding and investment models” in an era of “constrained” government resources. It called for an Innovation and Funding Partner that would be more than a developer, but a partner to work alongside Waterfront Toronto — and the three levels of government it represents — to conceive and execute a forward-looking vision for the eastern waterfront.

Combined with an innovative approach to development, this new type of partnership would not only help exceed Waterfront Toronto’s priority outcomes, it could create more than 44,000 direct jobs (and 93,000 total jobs) across a variety of income bands and generate $14.2 billion in annual revenue to government by 2040 — helping to show the way forward for inclusive growth.

The project’s proposed finances and transactional framework between Waterfront Toronto and Sidewalk Labs are designed to ensure that all project participants are treated fairly, and that the public interest is protected.

Transaction Principles. The following transaction principles aim to harmonize the priorities of Sidewalk Labs with those of Waterfront Toronto and the public at-large:

  • Devise a transaction that would achieve Waterfront Toronto’s priority outcomes.
  • Scale the project so the outcomes are met and the project can be commercially viable.
  • Phase development: Sidewalk Labs must hit milestones to prove itself and mitigate risk.
  • Establish strong public-sector oversight, including through the creation of a public administrator.
  • Take on roles that leverage Sidewalk Labs’ strengths; avoid roles where Sidewalk Labs does not add special value.
  • Use proven approaches and rely on local precedents whenever possible.
  • Align financial interests; ensure Sidewalk Labs is successful only when the public sector is, too.
  • Commitments. Sidewalk Labs proposes a transaction to accelerate the development of the eastern waterfront, accomplish Waterfront Toronto’s priority outcomes, and spur economic growth.

    Sidewalk Labs would make the following commitments:

    • Act as lead developer (with partners) of Quayside as a model for using design and technology to improve urban life
    • Develop (with partners) the Villers West Urban Innovation Campus to further prove out the innovations initiated in Quayside and spur an urban innovation cluster, after successfully achieving Quayside milestones
    • Develop certain advanced systems (such as infrastructure) in Quayside and Villers West
    • Offer the government optional financing for certain infrastructure, including for advanced systems, municipal infrastructure, or the Waterfront East LRT extension
    • Make major economic development investments, including establishing a new Canadian Google headquarters on Villers West, supporting (with partners) the creation of an Ontario-based mass timber factory, providing $10 million in seed funding for an Urban Innovation Institute, and committing $10 million to a new venture fund focused on Canadian startups
    • Make additional payments to Waterfront Toronto in the event that the real estate development in Quayside and Villiers West outperforms expectations
    • Enter into a 15-year commercial agreement to provide ongoing technical, advisory, and management services for the eastern waterfront

    Sidewalk Labs would not:

    • Seek special tax subsidies
    • Control urban data
    • Sell personal information or use it for advertising
    • Develop the entire eastern waterfront

    To proceed, Sidewalk Labs proposes certain commitments from the public sector:

    • Partner with Sidewalk Labs to implement a comprehensive innovation and development strategy
    • Establish the IDEA District with a public administrator
    • Provide disposition of land for Quayside and Villiers West at a price that accounts for additional Waterfront Toronto requirements
    • Source a limited number of Sidewalk Labs’ products to enable prototyping and deployment at scale
    • Provide performance payments upon Sidewalk Labs achieving a series of negotiated growth and performance targets
    • Make public infrastructure commitments, most notably related to transit

    Business Model. Sidewalk Labs would shoulder a disproportionate share of the cost of upfront innovation — and receive its compensation in later stages. Sidewalk Labs’ sources of revenue include:

    • Real estate development. Sidewalk Labs expects to serve as lead developer (with local partners) of Quayside and the western portion of Villiers Islands and receive rental revenue, income from the sale of condominiums, and income from the sale of individual buildings. Sidewalk Labs would pay the public sector a share of the value if development proves more profitable than expected.
    • Charges on optional financing. If government elects to utilize Sidewalk Labs’ optional LRT, municipal infrastructure, or advanced infrastructure system financing, Sidewalk Labs would receive revenue that reflects a market return.
    • A performance payment. Sidewalk Labs would receive this payment if (and only if) it meets performance and growth targets tied to Waterfront Toronto’s priority outcomes.
    • Deployment of its technology. Sidewalk Labs would develop and deploy a limited number of its technology products at cost. For certain technologies, Sidewalk Labs would share 10 percent of the profits with the public sector for 10 years when that product is sold in other cities.

    Download the Partnership proposal.