Plans for a high-tech neighbourhood on Toronto’s waterfront took a major hit on May 7 when proposed partner and Google affiliate Sidewalk Labs announced its intention to abandon the project.

The news came in the form of a blog post from Sidewalk CEO Dan Doctoroff in which he indicated that “unprecedented economic uncertainty” due to the COVID-19 pandemic had made it, “too difficult to make the 12-acre project financially viable without sacrificing core parts of the plan.”

Doctoroff indicated that Sidewalk Labs had informed Waterfront Toronto, the agency responsible for approving Sidewalk’s vision for the plan, on May 6.

“While this is not the outcome we had hoped for, Waterfront Toronto offers thanks Sidewalk Labs for its vision, effort, and the many commitments that both the company and its employees have made to the future of Toronto,” Waterfront chairman Stephen Diamond said in a statement.

He added that the site remains “an excellent opportunity to explore innovative solutions for affordable housing, improved mobility, climate change, and several other pressing urban challenges that Toronto—and cities around the world—must address in order to continue to grow and succeed.”

The decision to pull out signals the end of a back-and-forth relationship between Sidewalk and Waterfront Toronto. Although all sides agreed that the plot of lakefront land was widely underdeveloped and underserved by transit, Sidewalk’s initial proposal to invest more than $1.3 billion on the property was met with criticism.

Some argued about the appropriateness of allowing an American corporation to develop prime downtown Toronto land. Others questioned how data from the proposed development’s many devices and sensors would be collected, stored and used.

In the end, Sidewalk agreed to scale back its proposal from 77 hectares to just five to prove its concept. Waterfront Toronto was originally intended to reach a decision on that proposal in March, but pushed that timing back until June when the COVID-19 pandemic broke.

“In view of the COVID-19 pandemic, the Waterfront Toronto board of directors passed a motion to extend the date for a decision on moving forward with the Quayside project with Sidewalk Labs to June 25,” Waterfront Toronto said on Twitter at the time.

With Sidewalk now officially out of the Waterfront Toronto picture, Diamond says the group will pursue other options to develop the property.

“Today is not the end of Quayside, but the first day of its future,” he wrote. “Waterfront Toronto will continue to seek public and expert input as we make a next generation community at Quayside a reality.”