Alphabet's Sidewalk Labs wants a cut of Toronto taxes to build a smart city there

Key Points
  • Alphabet's Sidewalk Labs reportedly proposed receiving a cut of property taxes, development fees and increased land value for its work in Toronto.
  • The company is planning to make Toronto's eastern waterfront into a smart city that will be more affordable and sustainable.
  • Like with Amazon's HQ2 project, Sidewalk Labs has received backlash from locals who are worried about the company's perceived lack of transparency.
Thomas Dagg | National Geographic

Alphabet's Sidewalk Labs proposed taking a portion of Toronto property taxes, development fees and increased land value to build a smart city on the eastern waterfront, The Toronto Star reported.

According to internal documents obtained by the Star, Sidewalks Labs plans to argue it is "entitled to … a share in the uptick in land value on the entire geography ... a share of developer charges and incremental tax revenue on all land."

This money, which would amount to an estimated $6 billion over 30 years, would otherwise go to the city, according to the Star.

Sidewalk Labs, which aims to create more sustainable and affordable cities through technology, has received significant push back to its project in Toronto after initially being heralded as a catalyst for innovation. Similar to the push back Amazon received in New York City that ultimately led the company to decide to abandon its plans there, local leaders have questioned the company's intentions and pressured it to make concessions.

After locals became concerned about how Sidewalk Labs would use the the data it collects on their public spaces, the company promised it won't control the data collected there, the Star reported in October 2018. Even after that promise, a prominent privacy expert on the project's advisory committee stepped down from her role, calling the proposal, "not acceptable," the Star reported.

In an interview with the Star about the company's proposed funding, Sidewalk Labs CEO Dan Doctoroff said the company wants to take a fair cut of revenues once Toronto itself is prospering from the impact of its work.

"We're going to be spending a lot of money in advancing the infrastructure," Doctoroff told the Star. "And where we do that and there are new property tax revenues or developer charges, we only want to get paid back a reasonable return for our investment in that infrastructure."

Reached for comment by CNBC, a spokesperson for Sidewalk Labs pointed to a blog post by Doctoroff clarifying the company's plans following the Star report.

In the Star interview, Doctoroff said Sidewalk Labs is pursuing projects that will benefit the public and are not otherwise being developed.

"This is a way of actually enabling critical infrastructure that isn't happening. What we hope to do is accelerate the development of this whole area by years and years," Doctoroff told the Star. He said Sidewalk Labs plans to finance projects that will further encourage development, like an expansion of Toronto's light rail and waste removal. He assured The Star that when Sidewalk Labs finances the light rail expansion, it would still remain a public entity.

Read the full report on The Star's website.

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