10th December 2018
As a prime real estate area, regeneration of Toronto’s 2000-acre waterfront is a unique case of urban regeneration. With longstanding contamination, flooding risks, complex jurisdictional claims and limited resources amongst public bodies, the empty Port Lands offer 800 acres of opportunity for Toronto’s economy but is also surrounded by complexity. Faced with uncertainty from issues like climate risks and technology adoption, the city’s development organization, Waterfront Toronto (WT) is one amongst multiple private and public actors, whose interests are different but also interdependent.
The following report, “Coordination Capacities in a Multistakeholder Settings” speaks to key decision-makers, particularly regulators, faced with the development of this new and uncertain funding and innovation partnership called Sidewalk Toronto. Particularly, the focus in on the recent private-public partnership between WT and urban technology company as well as Google’s corporate sibling, Sidewalk Labs, for the development of the Port Lands. Overall, the report finds the following:
The institutional setting in the waterfront area creates a wicked problem with multiple layers of complexity.
The current partnership between Sidewalk Labs and Waterfront Toronto is framed against a background of learning, in which 3 previous policy cycles adapted to their outputs between 1986 and 2017.
Toronto’s waterfront involves multiple stakeholders with different resources, and often competing powers and interests, that make coordination challenging.
Viewed together, these findings suggest that issue of coordinating different capacities and interests falls within a very complex setting of multiple stakeholders. In meeting these challenges, policy makers can use digital platforms to take an experimental approach that informs future decisions and enable oversight regarding regulations. Given technological uncertainty and the early stages of this partnership, quick feedback cycles will ensure that the partnership is adaptive and responsive to key public concerns, such as protection from data-based surveillance.
Since its inception in 2001, WT’s mandate has been to redevelop the waterfront. Following market principles of supply and demand, a Request for Proposals for a “funding and innovation” partnership was won by Sidewalk Labs, with the partnership commencing in October 2017. The focus of the partnership is on technology innovation and funding in Quayside, a small part of the Port Lands’ 800 acres of fallow, contaminated and mostly publicly owned land along the Waterfront (see Appendix 1).
Public details about the project include Sidewalk Labs’ commitment of $50 million on a year-long pilot project in Quayside, without details on further scaling or feasibility. Here space is dedicated to experimental technology such as robotic garbage collection and autonomous vehicles. The partnership promises public consultations through its pilot period and engaged Ontario’s Information and Privacy Commissioner Anne Cavoukian, yet details of the contract remain confidential. With the centrality of data gathering and optimisation, public concerns include questions about transparency, profitability and privacy (Lorinc 2017a).
Though WT has engaged in multiple private partnerships (e.g. consultation contracts with KPMG and Arup in the Port Lands), this one is unique in its allocation of such a large area of unused land as a test-bed for a data-centric, profit-making company. Further, the creation of a separate joint entity “Sidewalk Toronto” is suggestive of the institutional rather than contractual nature of the partnership, that limits the role of private entities to knowledge-based consultation rather extending it to joint funding and pubic data gathering authority. Amongst public concerns that depict conflicting interests is private profit interests and affordability of housing, however the system framing these concerns is far more complex as suggested in Figure 1. In response, Sidewalk Labs proposes to meet through building modular spaces that reduces the cost of construction and enables flexible use of space through assembling capabilities.
Public value concerns are legitimate given concerns about surveillance through data collection for Sidewalk Labs, undisclosed details of the partnership contract, or the right to hold closed door consultations between WT and Sidewalk Labs. However, both funding and legislative authority rests largely with the government (to which WT is answerable).
Further investment is conditional on successful milestones and WT’s board approval, who reserve the right to terminate the partnership and impose regulations on development. Also, WT is leveraging $1.25 billion of public funds aimed at flood protection and decontamination of the lands as a precondition for further development. From a knowledge perspective, WT’s mandate to revitalise the waterfront has a 16- year track record of policy learnings through mixed-use development in other areas along the waterfront, that range from initiatives like successfully completing the first phase of development for West Don Lands, to under-budgeting investment in Queensquay.
With investment, employment opportunities and technology growth that make Toronto an attractive city, Sidewalk Labs and WT’s partnership takes a public value narrative. Prime Minister Trudeau reportedly said it will result in a “smarter, greener, more inclusive city” (Sidewalk Labs 2017a). However, uncertainties, bureaucratic inertia and competing actor interests create a complex institutional setting with multiple stakeholders. The following analysis frames public values of inclusion, sustainability, accessibility and affordability.
Figure 1. Stakeholders at the Waterfront
Political
Funding constraints
Multi-governance (3 levels) of land & water
Electoral cycle influencing policy outcomes
Multiple jurisdictional claims (e.g. City Council power vetoed by federal govt)
Economic
Affordable Housing crisis
Pubic funding constraints
Crowding out of local businesses through potential expansion of project
Climate change dictating investments (41% emissions from transportation & 11% from waste, Emission Targets)
Social
Public values tradeoffs (e.g. accountability for efficiency in closed door meetings between WT and Sidewalk Labs)
Uncertainty over geographical mobility (size of project, nature of technologies) and occupational mobility (impact on opportunities)
Technological
Uncertainty over new technology usage (e.g. sensors)
Information asymmetry (Google’s monopoly in data)
Infrastructure investments (e.g. failed flood protection in Port Lands, sustainability, modular housing)
Legal
Adapting existing legal regulations (e.g. building codes, garbage disposal regulations)
Long process of passing new laws to ensure public values, particularly with regard to data protection and privacy.
As an independent organization managing multiple interests, yet answerable to government, WT’s coordination capacities are essential to its mandate in this complex urban space. Before 2001, more than 20 public institutions had jurisdictional claims over different areas of the waterfront. Fragmented power across municipal, federal and provincial bodies made coordination difficult, leading to opportunity costs in the form of time, finance and switching costs for change.
Figure 2. Policy Cycles
The Toronto Waterfront Revitalization Corporation (or WT) was established as a “small, efficient action oriented” independent organization (Toronto Waterfront Revitalisation Task Force 2000: 4). Its mandate is characterised by the following policy aims to meet coordination challenges and produce key public value outcomes based on the following assumptions of New Public Management.
Assumption 1. Improve efficiency and economy in resource-sharing through shared knowledge and oversight capacities through a horizontal governance structure.
Assumption 2. Improve the effectiveness of service delivery and risk management through shared finance and coproduction with the private sector.
With 3 members from Canada’s tripartite government levels on the board, each level has equal decision-making authority in WT (see Appendix 5). Members include the Government of Canada (federal), the Government of Ontario (provincial) and the City of Toronto (municipal). After its partnership with Sidewalk Labs in 2017, further policy iteration meant the Mayor of Toronto was included on its board though City Council remains excluded from the partnership and WT.
At its core, the organization is framed by a history of governance challenges based on resource constraints and capacity issues such as multiple private and public stakeholders in the Port Lands. Interdependence between actors also indicated inefficiencies in areas like long approval processes. Against the backdrop of New Public Management, new organizational models like the quasi public urban development corporation, Toronto Economic Development Corporation (TEDCO) was created in 1986.
Policy iterations based on outcomes aimed to mandate policy issues like failures in resource distribution while achieving cost effectiveness of private sector delivery models through self financing (see Figure 2). Another iteration resulted in the creation of Toronto Port Lands Company (TPLC) which is owned by the City of Toronto, operates at arms length and possess about 400 acres of port lands and protected from public transparency laws under the Ontario Business Corp Act. By 2009, TEDCO was dissolved and the City developed two sister organizations, Build Toronto and Invest Toronto under the City Council’s authority, with the mandate to increase Toronto’s competitiveness via property investments, sales and sharing in city dividends (Toronto Port Lands Company 2014). However, very limited evidence exists on the establishment of working financial models and relationships with other semi-private, government and private stakeholders.
Thus, multiple cycles of policy learnings through gauging outcomes, indicated the need for more information sharing to prevent asymmetries between stakeholders (see Appendix 5). While policy has been relatively adaptive to changes, higher information asymmetries between external consultations (engaged in issues like contamination) and public bodies suggest zero-sum games between the two, leading to lower outcome efficiency than expected. Furthermore, private sector involvement has fluctuated since 1986, implying the need to transferring funding risks but also coordinate public stakeholder interests in the Port Lands. Competing values such as private profit incentivization, public budgetary trade-offs and electoral-cycle based motivations suggest that compromised public interests in the past and inefficiency resulted in the dissolution of TEDCO.
Ultimately, the creation of WT suggests a consolidation of resource capacities like decision making, funding allocation and legislation into one structure. Taken in the context of the learning cycles identified in Figure 2, WT’s operational independence currently appears to be based on the premise of higher efficiency in the delivery of services through a large-scale public-private partnership. Yet, the organization is still characterised by a wide range of public stakeholders with competing power and interests, within a highly complex system as outlined above. Hence, the following section will analyse the role of competing stakeholder interests and how policy instruments are not enough on their own but are essentially contingent upon the strategic management and coordination of stakeholder objectives. These objectives may be aligned or then competing, as suggested through trade-offs between public values like affordability of housing and private values like profitability through pricing.
Considering previous policy cycles, Toronto’s waterfront is still characterised by high uncertainty regarding the impact of new policies like its recent partnership. Based on the previous assumptions, key coordination issues are analysed below:
Assumption 1. Improve efficiency and economy in resource-sharing through shared knowledge and oversight capacities through a horizontal governance structure.
There is an implicit assumption that WT’s board will act in the interest of citizens, but as it is protected by Ontario’s Business Corporation Act, it is under no obligations for transparency. Additionally, public interest is assumed to be fairly represented through Town Hall meetings but there is no evidence that accounts for segments of the public that are either underrepresented or unaware of such on goings (e.g. low income housing residents). As a tripartite and self-financing organization, the organisation is susceptible to electoral changes that may undermine its policies.
The Port Lands are administered by all 3 levels of government but with no clear delineation of responsibilities (e.g. environmental affairs) and no legislative or financial decision-making authority as its borrowing capacity is limited by regulations (Waterfront Toronto 2017e). Ultimately, authority rests with the Intergovernmental Steering Committee (ISC), compromising of non-WT members like the City Manager, Provincial and Financial Deputy Ministers. WT may be shut out of the ISC’s proceedings, must submit its mandate extension until 2028 to ISC, and is subject to ISC’s discretionary financial powers (e.g. $1.5 billion is only about 35% of the total amount dedicated to regeneration of the Port Lands that has been released by ISC). This also implies that WT’s coordinating capacity is limited by resources that are released based on governmental change.
Although 80% of the Port District is publically owned, 20% is still privately owned and the remaining public ownership is fragmented across different agencies like Canada Lands Company and the Liquor Control Board of Ontario. This has implications on the interest of different bodies in the development of land, as the prospect of land-value and profitability compete with immediate development. Furthermore, strong sustainability specifications, WT is also likely to subsidize part of land prices in areas where private sector develop is being encouraged for growth and revenue generation (Waterfront Toronto 2017e).
Assumption 2. Improve the effectiveness of service delivery and risk management through shared finance and coproduction with the private sector.
Given public funding constraints, WT’s partnership with Sidewalk Labs indicates increases in resource sharing through funding partnerships that may manage risks and align coordinating capacities. Furthermore, by entering into a partnership that thus far maintains WT’s unilateral right to terminate the agreement and retain public land ownership, concerns over information asymmetry can be minimised. Instead, since Google already has a global monopoly on information and technology, knowledge sharing through the pilot project may decrease information asymmetry and increase coordinative capacities for both WT and the government.
On the other hand, the partnership leaves many questions unanswered regarding future financing from Sidewalk Labs, the terms of the agreement and how (fast) regulations will react to this unusual form of urban development. Moreover, the framework appears to indicate no protection from urban gentrification or monopolisation of spaces by Sidewalk Labs considering Google is thus far the only committed headquarter in the Quayside area. Although in open consultation with the public, WT and Sidewalk Labs are under no obligation to share information for public scrutiny and have already established a closed-door policy for some meetings. Thus public value concerns such as inclusivity and accountability are high considering WT has explicit commitments to openness, accountability and transparency (Waterfront Toronto, 2014). Additional uncertainties surrounding privacy and data ownership are central to whether the partnership is really a form of coproduction that is effective in representing the public values held amongst Toronto’s citizenship.
Considering some of the coordination challenges outlined in the previous section, the following analysis focuses on key institutions and actors who have a stake within the waterfront developments (see Appendix 6). Amongst key players in WT’s partnership, Figure 3 illustrates two of their capacities and how their respective bases of power affect their direction of interest.
Figure 3. Levels of power
To further represent the complexity associated with the number of actors in the system underlying the Port Lands, Figure 4 is indicative of the various interests held at different levels of power beyond the simplified diagram in Figure 3.
Given the context of their interests and power to influence development, Figure 4 uses an interest-power diagram for a deeper analysis of the public and private stakeholders in the area. The diagram emphasizes multi-actor independence and how working relationships between them have implications on successfully achieving WT’s mandate for the area. For example, the knowledge-based power held by external consultants working on contamination may result in zero-sum games with public bodies.
Figure 4. Power-interest map
Further building on the above analysis, the following stakeholder-issue relationships illustrates key private and public stakeholders within the Port Land area and how one issue like affordable housing may affect multiple stakeholders. Based on the core public values identified in the complex system around the development and through identifying stakeholders (see Figure 1), key issues have been identified in the diagram below. Given the difficulty around quantifying the base of power for institutions and for those acting within them, the circles in Figure 5 represent the size of each stakeholder’s power based on the analysis in Figure 4.
Additionally, the map is not intended to be representative of all the stakeholders involved in the project as huge uncertainties still exist around the project’s details and information on all stakeholders is not available. The analysis aims to demonstrate a simplified version of the complexity around issues in the waterfront and how the centrality of coordination capacities amongst multiple stakeholders is imperative.
Figure 4. Power network map for stakeholders
Based on the findings above, there has been clear shifts in policy concerning the development of Toronto’s waterfront since the area’s revitalization began in the 1980s (Bunce 2011). As a vital economic and urban space, investment and interest is unsurprising. Yet, given the many factors affecting social, economic, technological and legal areas in and around the largely publically-owned space, a complex web of issues has contextualized this space. These range from contamination, climate change pressures and data ownership, to unpredictable technological change and its implications on city spaces. Thus, it seems reasonable to assume the need for development partners with technological foresight in the development and promotion of competitive urban projects like the Port Lands, facing “wicked problems”. Yet, as technology progresses faster than governance, critical to this is the requirement to meet new developments with sufficient resource capacities in terms of funding, human expertise and knowledge and to ensure the protection of public values (see Appendix 7).
Equally significant and perhaps more observable then, is the complexity around multiple stakeholders at different levels of governance, legislation, operations and sectors as illustrated in the previous section. Waterfront Toronto’s mandate and delivery model appears to be reactive to three previous cycles of adaptive policymaking, however competing values, interests and levels of authority make coordination challenging as illustrated above. Each cycle depicts movements towards private sector delivery models to improve city branding, cost and experimentation, and bureaucratic inefficiencies, and funding availability. Unique to these cycles is the current partnership between Sidewalk Labs and Waterfront Toronto, as the emphasis has moved from a contractual relationship to the active commitment of shared funding and technology development in Quayside.
Given long policy feedback cycles, incremental changes in policy appear are an inescapable feature to ensure learning takes place as noted in this paper. However, implicit to the partnership with between Sidewalk Labs and WT is the opportunity that technology provides for experimentation, including public consultation in the pilot stage, since there is uncertainty risk beyond this period. To ensure both public and private values are protected, the role of regulations must be quick to respond to impending changes. Thus, the nature of the project’s pilot phase in an essentially non-residential or commercial area is opportunistic as it provides more flexibility for testing both technology and its limits while considering public value concerns. The following recommendation considers a form of experimentation with in-built feedback cycles for quick learning and adaption.
As a form of experimentation, digital platforms may reduce long feedback cycles seen in the past and conduct controlled, live experiments with citizens. By setting up virtual experiments, policy-makers could measure how citizens respond to more efficient energy-trading grids within Quayside through direct coordination with one another as seen by Ofgem (2017). Based on Figure 6, WT has considerable digital outreach as opposed to Sidewalk Labs at this point (though the figure may not be a reliable representation of digital outreach). Furthermore, Waterfront Toronto already has a strong track record for transparency and accountability, and encourages virtual participation in public stakeholder meetings; like the one held in the Town Hall on November 1st 2017 (Waterfront Toronto 2017c). Through leveraging this, WT can reduce public value concerns over transparency, reduce information asymmetry for regulators and stakeholders, and ensure that regulators are quick to react to new insights regarding Quayside’s project in the short term.
In terms of the project’s duration, a year can be divided into quarterly feedback cycles to ensure a robust learning mechanism is in place to measure key performance indicators and outcomes from previous policy cycles. This would also enable regulators to be quick in their response to new mechanisms such as data-sharing through sensory technology and trust-building, and streamline coordination capacities by ensuring knowledge is both shared and recorded in a central place for future reference. This would not just benefit multiple stakeholders but enable shared input without time and space constraints, improve the adaptability of regulation and be scaled beyond 1 year if successful. Apart from low costs in terms of finance and time, digital design experiments are reflective of public interest in development issues (as seen in Figure 6).
However, many factors would have to be considered in such a project, some of which are:
In-built flexibility of experimentation due to uncertainty around technology adoption.
Coordination with authorities for streamlined bureaucratic processes in testing areas.
Representative participation in feedback processes (e.g. low housing communities).