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Report on Business Amid smart-city tumult, Tory intervened to prevent another Waterfront Toronto resignation

Mayor John Tory stepped in to save Waterfront Toronto’s board from losing yet another member earlier this month, shortly after the Ontario government fired its three appointees over concerns about the agency’s proposed smart-city development with Google affiliate Sidewalk Labs.

Stephen Diamond, president and chief executive of developer DiamondCorp, said he told the city a number of weeks ago that he planned to resign at the end of 2018 due to work commitments. But in early December, in the wake of a critical report from the Ontario Auditor-General prompted Doug Ford’s Progressive Conservatives to remove their three board members, Mr. Diamond received a phone call from Mr. Tory trying to persuade him to stay until the end of his term in March to help stabilize the organization.

“He did ask that in light of everything going on, and where we are, and important decisions to be made, and that I have had history with the organization, if I would agree to stay until the end of my term at the end of March,” Mr. Diamond said in an interview.

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He agreed to remain. “I felt that it was a public responsibility that I should continue to take."

Each level of government can appoint a third of Waterfront Toronto’s 12-member board. In the first week of December, the development agency had only seven members – a slim majority of the usual 12 – after Ontario announced its three firings, without immediately naming replacements. At that point, the board had already had two vacancies: developer Julie Di Lorenzo had quit the board over concerns about the agreement with Sidewalk Labs, while the term of Toronto councillor Denzil Minnan-Wong, the only political appointee, had ended.

Last year, Waterfront Toronto partnered with Sidewalk Labs, a subsidiary of Google parent Alphabet Inc., to explore a digitally connected smart-city on the city’s eastern lakeshore. Critics including Canadian tech leaders and Auditor-General Bonnie Lysyk have since raised concerns about the partner selection process and how data and intellectual property will be handled in the 12-acre neighbourhood called Quayside.

Ontario’s move to fire Waterfront Toronto directors appointed by the previous Liberal government − former chair Helen Burstyn, acting CEO Michael Nobrega and University of Toronto president Meric Gertler − was the first major political intervention in the project. (While he was removed from his board seat, Mr. Nobrega remains acting CEO, a position he took up after former CEO William Fleissig stepped down in July.)

Mr. Tory’s previously unreported subsequent intervention to persuade Mr. Diamond was a move to ensure “stability” at Waterfront Toronto, his office said. In October, before his re-election, he told The Globe and Mail that that he had concerns over the smart-city project, including that the process of bringing Sidewalk Labs to Toronto “was not handled the best way.”

“The mayor believes we need stability on the Waterfront Toronto board,” spokesperson Don Peat said in an e-mailed statement, confirming that he asked Mr. Diamond to remain on the board. “Mr. Diamond is a highly respected community leader and is a board member who understands all aspects of Waterfront Toronto’s work. Mayor Tory has a great deal of confidence in Mr. Diamond and his ability to provide stability at the board.”

At a board meeting in early December, just hours before Ontario moved to fire its appointees, Waterfront Toronto directors discussed ramping up the search for new directors; the majority of three-year terms were due to come to a close in 2019, and Ms. Di Lorenzo had not yet been replaced. This month, Mr. Tory has asked Councillor Joe Cressy to be the city’s new political appointee to the board, replacing Mr. Minnan-Wong, whose term ended Nov. 30.

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Mr. Diamond said he would stay the course until his term expires and “unless circumstances change from what they are today,” he expects to step down in March.

While acknowledging that the Sidewalk Labs partnership is “very complex,” Mr. Diamond cautioned that it was not a firm agreement to proceed, and that Waterfront Toronto would need to be satisfied with a final proposal after consultation with its government partners and the public. A board vote is expected by September, 2019.

He said that he has confidence in the board going forward, and that he understood the Ford government would want to have directors that aligned with its point of view.

Waterfront Toronto spokesperson Andrew Tumilty said that "while we were unaware of Mr. Diamond’s correspondence with the city, we certainly appreciate all of his efforts for Waterfront Toronto.” Sidewalk Labs declined to comment.

Since the summer, the Quayside project has seen four high-profile resignations, including Ms. Lorenzo, two digital-strategy advisors, and Sidewalk consultant Ann Cavoukian, one of the world’s foremost privacy experts.

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