Alphabet Inc.’s Sidewalk Labs unit has won a key approval for its proposed $3.9 billion smart city project in Canada that brings the initiative a step closer to reality.

Waterfront Toronto, a government-funded urban development body to which Sidewalk Labs must report, said today that its board has given the group a conditional green light. The smart city proposal will now move to a formal evaluation and public consultations. If everything goes according to schedule, Waterfront Toronto will bring the project before a final vote at the end of next March.

Sidewalk Labs wants to turn a plot of abandoned industrial land in Toronto’s east end, on the shore of Lake Ontario, into a futuristic neighborhood with a carbon-neutral footprint and high-tech amenities. The Alphabet unit shared its plans with regulators in a 1,500-plus-page draft submitted earlier this year. The development would feature a thermal energy grid, wooden high-rises and underground tunnels for freight delivery, among other innovations.

Sidewalk Labs has set high expectations for the project. The hope is that the neighborhood will provide an example for urban planners worldwide on how to improve quality of life in cities, shorten commute times and lower housing prices.

But the plan has raised privacy concerns because it would see Sidewalk Labs collect massive amounts of data about residents for urban management purposes. The 1,500-page draft proposal that the group published this year furthermore included demands that, according to Waterfront Toronto, would have required legislative changes to meet. As a result, the regulatory body made its approval conditional on Sidewalk Labs agreeing to a number of concessions.

The Alphabet unit will be limited to building the neighborhood on 12 acres instead of the 190 it had hoped for and will have to share technology patents with local firms. Additionally, the data Sidewalk Labs collects about residents won’t be allowed to leave Canada. There are several other caveats too, most of which pertain to the construction phase of the project. 

Sidewalk Labs head Dan Doctoroff said in a statement that “we are encouraged by today’s decision by the Waterfront Toronto board and are pleased to have reached alignment on critical issues.” But the Alphabet unit and regulators don’t yet see eye to eye on everything.  

“Let me be clear: this is not a done deal,” Waterfront Canada chairman Stephen Diamond stressed in a letter to the public. “There is still much work to do before a final decision.”

Alphabet’s strategy of making risky, long-term bets on emerging technology trends has served it fairly well. The company’s recent claim to achieving quantum supremacy built on more than 13 years of research, while its Waymo autonomous vehicle subsidiary was born from an internal project started in 2009.

Image: Sidewalk Labs