Sidewalk Labs’ controversial proposal to build a high-tech district on Toronto’s waterfront is moving forward but major changes will be incorporated by Waterfront Toronto as it moves to assert more control over the project.

The development has been criticized by Ontario’s premier, privacy advocates and those suspicious of Big Tech.

In a significant climb down, Google sister firm Sidewalk Labs has agreed to a “realignment” of its original master plan, one that had called for broad development in Toronto’s Port Lands area and a public commitment from Waterfront Toronto to secure funding and deliver the extension of Light Rail Transit on the eastern waterfront.

The agreement, approved Thursday morning by the board of Waterfront Toronto, sees the scope of Sidewalk Labs’ proposal to build a city of the future complete with self-driving cars, buildings made of wood, and sensors that collect data on everything from weather to people’s movements and activities, confined, for now, to a 12-acre plot of land at Queens Quay E. and Parliament called Quayside.

Sidewalk Labs had argued that, for its innovations to achieve their maximum potential and be financially feasible, the company needed a much larger “scale,” which included expanding into a portion of a 190-acre parcel of land in the Port Lands.

Sidewalk Labs has also agreed that partner Waterfront Toronto, not an independent “civic data trust,” will lead all digital governance and privacy matters on data collected at Quayside.

Sidewalk Labs has now conceded that Waterfront Toronto doesn’t have the jurisdiction over approving capital funding for projects such as an LRT extension, although in an interview Thursday Sidewalk CEO Dan Doctoroff said Waterfront Toronto, governments and his firm are “aligned on the need to find mass transit solutions.”

Waterfront Toronto had been criticized from several quarters for being too “weak” on Sidewalk Lab’s proposal and allowing a big U.S. tech firm to call all the important shots.

The new agreement is a reset, with Waterfront Toronto asserting itself and addressing the criticisms.

The agreement means Waterfront Toronto’s evaluation of the Sidewalk Labs project will continue. The deadline to approve it moves to March 31, 2020.

“This is strictly a Quayside project, period, end of story,” Steve Diamond, chair of Waterfront Toronto’s board and a key negotiator with Sidewalk Labs told reporters Thursday after the board vote.

Sidewalk had also proposed being the lead developer on the Quayside project. Under the agreed upon “realignment,” Waterfront Toronto would lead a competitive public procurement for a developer, and Sidewalk Labs would partner with one or more of those developers on Quayside.

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“If is successful with the initial stage and they (Sidewalk Labs) want(s) to proceed (beyond Quayside), approval of any additional public lands … will be subject to a competitive procurement process,” Diamond added.

The land issue was key.

Documents, including Waterfront Toronto’s initial request for proposals, which brought Sidewalk Labs on board in the first place, talked about the possibility of the Quayside project expanding beyond 12 acres.

But the conversation changed in February when the Star published a story about Sidewalk’s plans to develop its innovations within 190 acres in the Port Lands.

The proposal caught everyone by surprise.

Diamond, who was appointed chair of the Waterfront Toronto board a few weeks after the story ran, said in an interview Thursday that Sidewalk had indicated before his appointment that it wanted the opportunity to expand Quayside’s “scale,” but Diamond says no one really understood what those words meant.

After the meaning became apparent, it was clear there was a public concern about the scale Sidewalk had in mind, Diamond says.

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After consulting with staff when he was made chair, a determination was made that there was a “risk” of proceeding at scale with Sidewalk Labs, a company that is new and has a limited track record, Diamond says.

“We all felt that maybe it was time to take a deep breath and reevaluate where we were going,” Diamond told the Star.

Other aspects agreed upon in the realignment between Sidewalk Labs and Waterfront Toronto:

Sidewalk Labs proposed roles for itself in designing and implementing infrastructure, but under the new agreement Waterfront Toronto will lead “planning, design and delivery of traditional municipal infrastructure, including parks, promenades, streets and sidewalks, water and sewer (mains).”

Sidewalk Labs proposed a “patent pledge” that it would not assert its digital innovation hardware or software patents issued in Canada only.

Under the new terms, Sidewalk has agreed to a global patent pledge for Canadian innovators to use all of Sidewalk Labs’ Canadian and foreign patents covering hardware and software digital innovations.

Waterfront Toronto will get fair market value for the Quayside property at the time of sale if the project goes through.

On its website, Sidewalk Labs said “the project will begin at Quayside and we believe we can achieve many of our shared objectives with Waterfront Toronto at this scale. Our alignment with Waterfront Toronto recognizes the potential for expanding our ideas to a larger geography such as Villiers West if the Quayside project is successful.”

Toronto Mayor John Tory welcomed Thursday’s news, saying “I believe this process has led to an exciting proposal for Quayside that has the potential to create new jobs and economic development opportunities, a carbon-neutral neighbourhood, and more affordable housing units. It is a real opportunity for Toronto.”

Ontario Premier Doug Ford said that by focusing Sidewalk’s plan only on the Quayside site “ensuring that the land was valued at a fair market price and that the privacy of data collected on the site is protected, the right balance has been struck between protecting the interests of the people of Ontario and encouraging investment, innovation and economic development.”

In a statement, the Toronto Region Board of Trade also praised the latest news with CEO, Jan De Silva, saying months of negotiations between Waterfront Toronto and Sidewalk Labs “have resulted in a stronger proposal that brings Toronto one step closer to innovating and showcasing an urban model for the future.”

The Sidewalk saga demonstrates that modern cities “can’t go it alone” on big projects such as this, said Shauna Brail, an expert on tech and innovation and an associate professor in University of Toronto’s urban studies program.

“A wide variety of partners are needed, and this includes partnerships with the private sector and big tech,” said Brail, who added these partnerships take a “lot of work.”

#Blocksidewalk, a Toronto citizens group opposed to the project called the scaling back to 12 acres a “step in the right direction,” but also a “missed opportunity to finally rid ourselves of a company (Sidewalk Labs) that is not a trustworthy partner for Toronto or any other city.”

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