Liveblogging Sidewalk Labs’ Master Innovation and Development Plan, Entry 41: The MIDP Volume 3, Partnership Overview: Chapter 2: Innovation and Funding Partnership Proposal, Roles 2-4

The roles being:

  • Innovation Planning, Design, and Implementation;
  • Technology Deployment; and
  • Optional Infrastructure Financing (includes municipal infrastructure and LRT financing, and advanced systems)

Previous Master Innovation and Development Plan liveblog entries and relevant documents available here

Role 2: Innovation Planning, Design, and Implementation (pp. 114-119)

Sidewalk Labs would provide advisory services and management services in connection with planning, devising, constructing, integrating, delivering, and operating project-specific infrastructure and advanced systems for the IDEA District. (p. 85)

Planning services for municipal and advanced systems. Sidewalk Labs would partner with the public administrator in preparing the IDEA District Infrastructure and Transportation Master Plan (ITMP) documents, with special emphasis on the technical specifications and related considerations attendant to advanced systems and their integration with traditional municipal infrastructure. (p. 115)

Technical specifications and content development for the Innovation Framework. Sidewalk Labs would partner with the public administrator in developing the requirements and technical specifications for development… This would include the IDSG. (p. 115)

Sidewalk Labs would have the lead on the IDSG, including updating it “from time to time, in partnership with the public administrator” (WMOMNBWT). It would eventually apply to the entire IDEA District if adopted by the administrator (WMO…).

Page 115 also has a table of Sidewalk Labs’ public administration roles.

Payment for services

About $3 million annually for the first 15 years. (p. 115)

Implementation and operation phases

Sidewalk Labs would design municipal infrastructure in Quayside and Villiers West. Outside of these areas, Sidewalk Labs “would serve an integration role to coordinate municipal infrastructure designs prepared by the administrator with buildings and advanced systems infrastructure.”

For advanced systems outside of these two areas,

Sidewalk Labs would provide support in procuring operators and partners; work with the operators to integrate the systems in the IDEA District to achieve the envisioned technologically enabled outcomes; and work alongside the public administrator to ensure that the operators achieve and maintain acceptable performance levels. (p. 116)

Sidewalk Labs would not develop or manage the procurement of the Super-PON digital communications network proposed for the IDEA District. Instead, Sidewalk Labs would provide technical advice to the public administrator and Waterfront Toronto’s broadband internet partner, which is expected to deliver the digital communications network. (p. 116)

What technology Waterfront Toronto (or whatever ends up running this area) chooses for the communications network will reveal a significant amount about the nature of the power relationship between Sidewalk Labs/Google and the public administrator (WMO…). It’s kind of hard to believe that Waterfront Toronto would lure Google to town and not use its standard.

More fundamentally, given the tight relationship between Sidewalk Labs and Google, Sidewalk Labs should either have presented a few network options in the MIDP, or not presented the Super-PON network at all. It’s a pretty blatant conflict of interest that makes this late offer not to be involved in its selection appear weaker than was probably intended.

Support for management entities: Sidewalk Labs would provide technical assistance and advice to them. Nothing on what Sidewalk labs would do when it would be placed in a conflict of interest regarding procurement outside of Quayside and Villiers West. (p. 117)

Technical advisory services related to vertical development: It would provide these, e.g., as they relate to evaluation. No mention of potential conflicts of interest regarding plan evaluation. (p. 117)

Payment for services

  • 8% fee for design management of certain municipal infrastructure (Quayside, Villiers West)
  • 2% related costs for support in integrating municipal infrastructure with advanced systems infrastructure.
  • “Third- party operators would compensate Sidewalk Labs directly for its responsibilities as lead developer of advanced systems at Quayside and Villiers West. When the public administrator assumes the role of lead developer of advanced systems in later phases, the operator would similarly compensate the public administrator for its work.” (p. 117)

Role 3: Technology Deployment (pp. 120-127)

Sidewalk Labs would source or create key technological solutions needed to deliver on the MIDP targets. These would include a number of new technologies where no suitable alternative exists, including for mobility and digital innovation, that qualify as “purposeful solutions.” In addition, as part of this role, Sidewalk Labs would share profits of certain technologies deployed in connection with the project. (p. 85, emphasis added)

It’s kind of weird that the one example Sidewalk Labs uses to illustrate the development of a “necessary innovation if none exists” is Google’s Super-PON internet network” (p. 121), a digital system which it says it will not have a role in procuring. Although actually procuring something is less important than setting the standard, which may be what’s going on here.

Statements like this are also very misleading:

Sidewalk Labs anticipates that the total number of solutions it would develop itself represents a tiny fraction of the thousands of products to be deployed in connection with the project. (p.121)

Sidewalk Labs uses a similar argument throughout the MIDP in noting how small the parcels of land it is asking for in Villiers West and Quayside are in the context of the Eastern Waterfront. In both cases, the answer is the same: size is irrelevant. It’s the type and foundational nature of the tech that matters; in the case of land, it’s the fact that Sidewalk Labs is going beyond Quayside to demand Villiers West that matters. Sidewalk Labs’ framing is very misleading.

Sidewalk Labs’ four principles on digital tech (p. 122)

I’ve covered these elsewhere. I will note this on patents, however:

As a further means of advancing openness and innovation by third parties, Sidewalk Labs is making a “patent pledge,” that it would not assert its digital innovation hardware or software patents issued in Canada against any third party who develops and sells an innovation relying on those patents, with narrow exceptions (see Page 127).

This commitment would be a lot more powerful if it were made with reference to the world, as opposed to the tiny Canadian market.

Purposeful Solutions (pp. 123-125)

It looks like this is a term that Sidewalk Labs invented or is using in a novel way for this project. These are:

A limited set of innovations that are necessary to achieve agreed-upon project goals and for which there is no suitable alternative on the market. (p. 123)

These would be developed in-house by Sidewalk Labs and produced without competitive bidding. (p. 123)

Key to this process would be who decides when this can happen, and the review process. Otherwise, it would be open to enormous abuse for the installation of foundational systems and de facto standards.

While the MIDP spells out a couple of possibilities for adjudicating whether a no-competitive bidding, “purposeful solution” should be undertaken, the actual criteria would be left for the post-MIDP world.

One huge issue is that Sidewalk Labs’ involvement in the running of this whole area places it in a conflict of internet when it comes to the evaluation of these proposals. It does not seem like the MIDP fully considers this in this section. And at any rate, it just gives us some ideas, not an actual proposal that we can evaluate.

There’s also the question of how much Waterfront Toronto would have to change in order to develop the capacity to actually evaluate these proposals (I’m pretty certain they don’t currently have this capacity). And just hiring an independent evaluator won’t cut it; you still have to be knowledgeable to evaluate the evaluator’s report.

Profit-sharing for Waterfront Toronto from Testbed-Enabled Technology (pp. 126-127)

This is the intellectual property section.

“Sidewalk Labs is committed to sharing with the public sector proceeds from certain products or other solutions that would not have been developed but for the opportunity created by the project,” which they refer to as “Testbed-Enabled Technology” (p. 126). Whether a particular technology fit this description would be jointly determined following to-be-determined (of course) criteria. The general take for the administrator (WMO…) would be 10%.

Question: Is this a sufficient return on Canadians’ investment? Let the debate begin!

Role 4: Optional Infrastructure Financing (pp. 128-147)

Sidewalk Labs is prepared to arrange or enable front-end financing for the accelerated construction and support of certain critical infrastructure and advanced systems. (p. 85)

There is a useful list of definitions on page 129.

Role 4A: LRT financing (pp. 130-134)

TTC owned and operated (p. 128)

Total cost: $1.5 billion to $2 billion. (p. 132)

Sidewalk Labs would provide financing support, recommending borrowing against future increase in property value. (p. 133) Or public funds could be used (p. 134), which of course raises the question of what the best use of taxpayers’ money is. This question is not dealt with in the MIDP.

One big caution here: The economic payoffs to the city (e.g., tax revenue, economic output) all assume that everything goes off without a hitch. However, several proposals in this report depend on things that are outside of Sidewalk Labs’ control. The number of failures (and in a project like this, which is all about experimentation, things are going to fail) will almost certainly affect future revenues, and thus the viability of Sidewalk Labs’ financing proposal.

Role 4B: Municipal infrastructure (pp. 135-138)

city owned and operated (p. 128)

Total costs (p. 135): $240 million for Quayside; Villiers West: $180 million; IDEA District: $1.8 billion).

Sidewalk Labs proposes, among other things, a “local infrastructure contribution” that would be equivalent to “avoided costs” that would be realized due to the advanced nature of the neighbourhood.  (p. 137)

The same caveat regarding actual versus projected outcomes applies here. Also, I’m not sure that Sidewalk Labs took into account businesses’ propensity to react differently to taxes than to costs that they never paid.

This is all a bit out my depth – you can check out the table on page 138 for more information.

Questions: Is front-end financing – financing something before developers move in – a usual practice? Maybe, if Google wants to be an owner here, they should pay a special developer’s fee?

Role 4C: Advanced systems (pp. 139-147)

privately owned and operated (except dynamic streets, which is city owned and WTMA operated) (p. 128)

This section is a reminder of just how much privately operated infrastructure would be present in this neighbourhood.

For me, it’s also a reminder that I may understand economics (more or less), but financing schemes are a bit beyond me. So, everyone else, have at it. It may be because I’m just over 100 pages from the end, but I’ll have to leave this section to others to figure out if it represents a smart plan. All I’ve got is the common-sensical points that:

  • Nobody rides for free; someone always ends up paying;
  • At least a part of business fees get passed onto the consumer/user;
  • If you’re borrowing against the future, and the future doesn’t pan out, then you’re in trouble; and
  • Public finding leaves the public on the hook when things go wrong.

Page 140 has a table of cost estimates for the advanced systems infrastructure proposed by Sidewalk Labs. Total cost: $2.1 billion)

User charges and the rest of Toronto

This was helpful to know: In charging for utilities:

Sidewalk Labs assumed that aggregate utility bills for end users could not exceed BAU rates by more than 5 to 10 percent.

And here:

Sidewalk Labs commissioned a preliminary cost-of-living analysis to determine how utility costs in the IDEA District would compare with other neighbourhoods in Toronto. This analysis

found that, depending on household composition and unit size, average utility costs in the IDEA District would be between 1.4 percent lower and 4.9 percent higher than standard rates. This is despite delivering a level of sustainability unavailable in other areas of the city. (p. 142)

As I think I’ve indicated throughout these posts, I’d been wondering if Sidewalk Labs had been thinking about how the costs of living in Quayside versus the rest of the city would affect things like apartment rentals and condo purchases. These lines suggest that they have, although I still wonder about whether other user charges have been factored into their analysis.

Additional expenses (p. 146)

Sidewalk Labs would receive some preliminary design fees, advanced system development fees (paid by third-party operators).

There would also be public administrator sustainability fees, the amount of which “would vary depending on the costs incurred and the nature and extent of the operations.”

Is it churlish to ask how much these fees might be, so we could judge whether they were reasonable?

Optional financing from Sidewalk Infrastructure Partners (pp. 146-147)

SIP would not privatize or operate Toronto’s existing traditional infrastructure, or affect expansions of traditional infrastructure systems (such as roads, highways, and transit) by the public or private sector. (p. 147)

One more post, and we’ll be at the end of our journey! Sort of.

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