How Waterfront Toronto’s Stephen Diamond went up against Sidewalk Labs and won

After more than two years of hand wringing, public outcry and protest, Sidewalk Labs’ lofty vision for a futuristic smart city on Toronto’s waterfront was brought down to earth Thursday, when the sister firm of American tech giant Google signed off on a radically reduced footprint, abandoned several preconditions and made concessions on data governance and technology sharing.

And this was due, in no small part, to one man who arm-wrestled the technology behemoth and won.

Stephen Diamond, who was appointed chair of Waterfront Toronto in March — 18 months after Sidewalk Labs won the bid to plan a parcel of land called Quayside, said when he started the company’s attitude was that Toronto needed them to kick-start development on the waterfront.

Now, the feeling is more that they need Toronto.

“The city of Toronto could get by without Sidewalk Labs, to be quite frank,” Diamond said in an interview after Thursday’s board meeting to approve the new framework. “I believe that they are fortunate to be able to develop here — if we can make it all work.”

Diamond said this shift in thinking came about amid intense public scrutiny and the realization that Sidewalk Labs didn’t have a track record of successful projects.

“I think it’s important for Sidewalk, which is a new company, to be able to find a project to move forward with,” he said. “Having the opportunity to develop an innovative project in the city of Toronto, one of the best cities in the world … they had to work with us and not be adversarial if they were going to be successful.

“I do give them credit, because I think it was hard for them to move,” he said.

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The details of the new framework, revealed by the Star on Wednesday, include restricting development to the 12-acre Quayside plot, acknowledging that an outside developer will have to be chosen to build the infrastructure, abandoning a transit line as a precondition and handing over governance of all data collection to Waterfront Toronto.

The deal is a promising counterpoint to what has happened in other cities, such as Midlothian, Texas, where Google hid its identity to secure real estate and tax breaks; or Berlin, where the company faced strong public resistance and was forced to abandon its plans for a large office complex. In Louisville, Kentucky, earlier this year, Google bailed on plans to bring ultra-high speed internet to depressed neighbourhoods after its cables weren’t buried deep enough and started working their way to the surface.

How Diamond convinced Sidewalk Labs to remain in Toronto while walking back so many of its ambitious plans has a lot to do with his decades of experience in difficult negotiations — first as a lawyer, then as a developer — and the mandate he secured from all three levels of government when he took over as chair of the board.

But it is also due to a charm that wins over everyone around the table, said former colleagues.

“He’s someone who prefers to move through the world gently, but can be tough when he needs to be,” said Cynthia MacDougall, a lawyer who worked closely with Diamond for over a decade in private practice. “He has a very high emotional I.Q. and is able to understand people whose perspectives are different than his own.”

Even Sidewalk Labs’ CEO Dan Doctoroff had positive things to say about Diamond.

“He is very tough,” Doctoroff said. “I do think that, like all good negotiators, he has empathy for what the other side is trying to do.”

Doctoroff had lengthy exchanges with Diamond in which each was able to express what they were trying to achieve and the constraints they were under.

“When you’ve got someone on the other side who takes that point of view, the odds are your chances of success are going to be greater,” he said.

Diamond has sat on Waterfront Toronto’s board since 2016, but was disillusioned and considered quitting. It was Mayor John Tory who convinced him to stay and suggested he take over as chair. But Diamond had seen his predecessors struggle and wanted a stronger mandate to move forward into what was promising to be a difficult and heavily scrutinized negotiation with Sidewalk Labs.

“I said, ‘Look, I won’t do this unless I have the support of all three levels of government because I want to be able to approach it with a sense of confidence,’” he said.

After consulting with Queen’s Park and Ottawa, Diamond became Waterfront Toronto’s first chair with the backing of every level of government. He then took that strong mandate and ran with it.

Last June, the same day Sidewalk Labs’ Master Innovation and Development Plan (MIDP) was made public, Diamond issued an open letter to the people of Toronto stating he had “very different perspectives” than the company on some of its proposals including geographic size, government regulation, data security and privacy.

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How did Sidewalk react?

“I don’t think they stood up and cheered me. Put it that way,” he said.

Kristina Verner, vice-president of innovation, sustainability and prosperity at Waterfront Toronto, said Diamond’s letter had an immediate effect on how the two sides worked together.

“After they received the letter, they clearly directed their staff to look for ways to make it work on a smaller level,” she said. “We were both very committed to finding that path forward.”

That set the tone for a summer of tough negotiations that came to a head in August when both sides set a Halloween deadline to resolve their differences over certain fundamental stumbling blocks where Waterfront Toronto believed the MIDP went beyond the work envisioned in the original public tender Sidewalk Labs won in 2017.

Only if they could resolve four “threshold issues,” as they came to be known, could Waterfront Toronto consider evaluating the rest of Sidewalk Labs’ proposals. That deal was negotiated right up until the last minute, and formalized with a unanimous vote of approval at Waterfront Toronto’s board meeting Thursday morning.

Like many of parent company Alphabet’s forays into new businesses, Sidewalk Labs was conceived to be a game changer, radically rethinking how people could live in an urban context. Moving from a brainstorming exercise to a development proposal was always going to involve compromise and concession.

“We’ve learned a lot in two years here,” Doctoroff said. “We heard pretty much everybody say: ‘We are excited about a lot of the ideas, but you’ll basically have to prove it.’ And we’re prepared to do that.”

Doctoroff hopes that settling these issues will open the way for Quayside to move forward, which will in turn convince the city to allow it to build elsewhere — notably neighbouring Villiers Island.

“I think one of the things that we came to the realization of is that standard of having to prove ourselves is fair,” he said.

While Diamond can be proud of landing this deal, his work is far from over. Waterfront Toronto will now embark on a new round of public consultations and spend the next five months evaluating the details of Sidewalk Labs’ MIDP. If both sides agree to move forward, there will be a final vote by Waterfront Toronto’s board on March 31, 2020.

“I said to Steve at the beginning of this process if anyone can do this and come to a favourable conclusion, it would be him,” said Bob Blazevski, president and CEO of Diamond’s development firm, DiamondCorp. “He is one of the few people that could have got us to the finish line. He did, and I had all the faith that he would.”

“He’s always trying to reach a win-win. It’s never a one-sided approach,” Blazevski said. “I would call him a master of conflict resolution.”

Diamond is quick to caution that this is far from over.

“Now there’s an opportunity for us to use Sidewalk Labs to our benefit to act as a catalyst for legislative change and climate-positive development in the city,” he said. “I think there will be roadblocks. I’m sure there’ll be the odd mistake — because we’re all human beings — but I’m optimistic that if both sides and the public all rally around this, we can’t lose.”

With files from Sahar Fatima

Marco Chown Oved

TORONTO STAR

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