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FARMERS REVOLT
An unexpected casualty of Toronto’s building boom is the sleepy southern Ontario township of Melancthon, where an American hedge fund plans to excavate $6 billion worth of limestone. How a small group of farmers, with the help of powerful, wealthy weekenders, made the mega-quarry protest a cause célèbre
BY SASHA CHAPMAN
Published in upcoming Toronto Life Magazine, August edition
MELANCTHON’S WINDSWEPT highlands spread out like a grand table underneath the sky. At 1,700 feet above sea level, southern Ontario’s highest point, the air is different: cool and often foggy, it’s a world away from smog-suffocated Toronto, which lies 100 kilometres to the southeast. The climate is ideal for raising crops, and tens of millions of kilos of potatoes are grown each year in the township’s rich, silty loam. The karst, or fractured limestone, that lies beneath the soil delivers an almost perfect drainage system—no matter how much it rains, crops never flood.
In the last half of the 20th century, though, many Melancthon farmers consolidated into larger operations or got out of farming altogether. The township of 3,000 inhabitants is one of the least populated in the province. Toronto weekenders in search of their own private idyll snapped up farms in Melancthon and its neighbouring townships. William Thorsell, the former CEO of the ROM, bought a property, as did Globe and Mail columnist Margaret Wente and former Metro Morning host Andy Barrie. Rosedale came, too: the former CEO of the Royal Agricultural Winter Fair Bill Duron and the prominent land-use lawyer and Women’s College Hospital chair Jane Pepino. The musicians Jim Cuddy and Leslie Feist each bought a farmhouse. It was a mostly happy invasion. The weekenders devoted themselves to preserving Melancthon’s hillside views and lanes of majestic maples. They mingled with the old families at the Honeywood Arena, the area’s community centre, for summer barbecues, and bought produce at their neighbours’ farm gates.
Then, in 2006, a moustachioed engineer from Oakville named John Lowndes began quietly buying up farmland. Lowndes said his company, Highland, wanted to build a large potato-growing and-processing operation. His offers of up to $20,000 a hectare, even for unworkable land, were well above market value. His tactics were sometimes aggressive. Farmers claim he’d arrive unannounced with a cheque already written and an offer that would expire in 24 hours; he’d return again and again to badger those who refused to sell. (A Highland spokesperson denies the claims.) In three years, he bought 2,630 hectares for $50 million.
Lowndes initially made good on his potato-farming plans. Highland built new processing facilities and consolidated two of the township’s potato-farming operations to become one of the largest growers in the province. It now pays over 20 per cent of the municipality’s taxes, which gives Highland considerable clout at town council.
One day, Highland began to bulldoze maples and tear down dozens of the Victorian farmhouses on its properties. Town councillors were inundated with questions about Highland’s intentions. Some farmers asked why the company was digging wells in the wrong places for irrigation. As if in answer, rows of archaeologists fanned out across the fields, heads bowed, scouring the earth for arrowheads—a practice that would be required only if Highland were planning to develop the land.
But Lowndes refused to answer specific questions. One farmer drove to Hamilton in an attempt to contact Highland, only to discover that the company address was just a post office box. Highland, it turned out, was registered in Nova Scotia and bankrolled by a powerful Boston-based hedge fund named Baupost Group. In July 2009, Highland held an open house at a Melancthon community centre and revealed its true scheme: it was after the precious reserve of limestone aggregate that lay beneath the farms. If the company had its way, much of Melancthon’s farmland would be replaced by a massive open-pit quarry.
TORONTO IS PARTLY TO BLAME for Highland’s interest in Melancthon. The city’s building boom—250 condos are currently in development—is eating up aggregate (the industry term for crushed stone, gravel and sand) at an unprecedented rate. Cheap aggregate drives construction; construction helps drive the economy. Because aggregate is heavy and thus expensive to transport, the province has generally favoured close-to-market sources—a 2009 industry report recommended that GTA-bound aggregate travel no more than 75 kilometres to market. This puts the GTA in a peculiar position: as demand for development rises, there is less land available to quarry the materials needed for that development. According to one 2010 provincial report, the GTA’s licensed sources for high-quality stone could be depleted in 10 years.
An estimated one billion tonnes of limestone lies beneath Highland’s farmland, a haul that is worth as much as $6 billion. Its extraction, says Highland, will be good for Melancthon’s economy as well as the company’s bottom line. The planned pit is 73 metres deep and covers 937 of Highland’s 2,630 hectares—big enough to be visible from outer space.
The dig could run for as long as 100 years, though the company claims that no more than a few hundred acres will be actively mined at a time. Highland will divide up the land into cells that will be developed one after the other. As the company digs each section, topsoil will be removed and placed at the bottom of the preceding section so farmland can be reclaimed in stages. (Whether anything can be farmed in the dust and dynamite of an active quarry is up for debate.)
Melancthon’s town council is afraid they’ll be left to pay for—and manage—the after-effects of the quarry. The quarry’s neighbours fear Highland will transform the sleepy community into a hub of resource extraction, choking the country air with dust, carried for miles by the prevailing winds. Blasting would echo through the valleys six days a week. The convoys of rumbling trucks would clog up the regional roads as they carried their dug-up spoils south to Toronto. Property values would plummet.
The quarry would go far below the water table, into the heart of Melancthon’s aquifer—which supplies the headwaters of five major river systems in southern Ontario. Most defunct quarries that delve below the water table are typically left, after all the aggregate has been extracted, to become lakes. Highland promises to rehabilitate its land for agricultural use by pumping out the water—hundreds of millions of litres per day—in perpetuity. The company presents this plan as forward-thinking and more sustainable than leaving it to become a lake, but it downplays what is an expensive and potentially risky feat of engineering, comparing the operation to a sump pump in a basement. If the system fails, local wells could run dry or suffer contamination.
AT PEAK PRODUCTION, THE QUARRY WILL SEND 150 TRUCKS AN HOUR TO SUPPLY THE GTA’S BUILDING SITES
A group of Melancthon residents formed the North Dufferin Agricultural and Community Taskforce, or NDACT, in the hopes that they could find a way to stop the project. One of its founders is Ralph Armstrong, a cheerful, apple-cheeked 70-year-old farmer whose 81-hectare property, which abuts the quarry land, has been in the family since before Confederation. He and his wife, a retired librarian named Mary Lynne, grow grain and raise livestock. Lowndes made seven offers to buy them out. The price—approximately $1.6 million—was tempting, especially because none of their five adult daughters had expressed an interest in taking over the farm. But they didn’t want to be remembered by their descendants as the ones who sold the family farm to make way for a hole in the ground.
Armstrong now spends much of his time squiring media, activists and politicians around his home township—traipsing through neighbours’ backyards to show off waterfalls and babbling brooks. The task force’s farmers have become minor celebrities in Toronto, appearing in newspaper articles and on television reports. It helps that the group works closely with an umbrella protest organization named Citizens’ Alliance United for a Sustainable Environment. If NDACT members are the foot soldiers, CAUSE’s board of directors, primarily composed of Melancthon weekenders, are the military generals in charge of strategy. NDACT meets over coffee in the church basement in Honeywood; CAUSE’s directors meet over merlot in Bay Street boardrooms and midtown living rooms.
To drum up support in the city, both groups began holding fundraisers. Each has also drawn up a plan to hire a team of experts and lawyers. Jane Pepino, who serves as one of CAUSE’s directors, estimates they need to raise $300,000 a year to fight Highland’s application. (Residents of Caledon recently spent $1.8 million over 13 years to stop a quarry there.) As part of their PR campaign, the task force began to sell red and white Stop the Mega-Quarry signs and buttons at three Toronto depots: the Rotate This record store on Queen West, Birdwatch on Avenue Road and the Wychwood Barns. The signs began popping up like dandelions on Toronto’s front lawns.
Since Highland submitted its formal application, almost 6,000 letters of objection—some of them pages long and full of expert opinion alleging a number of inconsistencies and inaccuracies in the plan—arrived at the Ministry of Natural Resources. Members of the influential Suzuki Foundation, as well as engineering professors, scientists and business school academics from Waterloo, Guelph, York and the University of Toronto, lodged complaints. Some scientists claimed that pumping water out of the quarry pit and back into the aquifer will raise the water temperature and could destroy colonies of fish in the region’s Noisy, Mad, Pine and Nottawasaga rivers.
Opposition to the quarry began to gain momentum, but the task force’s brain trust knew that if anyone could afford to wait a few years longer, or to hire experts to argue the case for developing the quarry, it was Baupost.
SETH KLARMAN, THE FOUNDER OF BAUPOST, HAS A REPUTATION in investor circles as a shrewd bargain hunter and an iconoclast. He once told Charlie Rose that, unlike his friend Warren Buffett (to whom he is often compared), he never progressed beyond buying “cigar butts”—i.e., the junk no one else wants. You could say this strategy has worked well for Klarman. His hedge fund is now worth $24 billion, and Bloomberg ranks it 11th largest in the world.
For many years, Ontario aggregate has been cheap and undervalued—significantly cheaper than in many other markets—so when Lowndes brought his idea for the Melancthon quarry to Baupost, Klarman quickly recognized the potential in his proposal. Not only is Melancthon’s limestone deposit vast, it’s high in quality and unencumbered by environmental protections. The township’s sprawling farm properties made assembling land easy, since some of the parcels were already in the hundreds of hectares.
After Highland filed its proposal (and after a number of skeptical newspaper articles were published), Lowndes stopped giving interviews. Instead, Highland is now represented by two Baupost employees: Joe Izhakoff, a mergers and acquisitions lawyer based in Miami, and John Scherer, a venture capitalist from Columbus, Ohio. Izhakoff and Scherer fly up to Melancthon a few times a month to help protect Baupost’s investment. “It’s a complicated land development, so you need a large company with resources behind it to make it all happen,” Scherer told me. With Lowndes, they made two visits to Melancthon town council early this year in an effort to assuage fears and convince the mayor and his constituents that Highland’s proposal can offer major economic benefits to the community.
Izhakoff believes the protest over the quarry is mostly about its size. Given how hotly contested new applications are, he says, a mega proposal is more efficient from a business perspective. If the fight for even a 40-hectare quarry takes 13 years (as it did in Caledon), it makes sense to propose something much larger, so the payoff—after all those expensive lawyer fees—is big enough to make the development worthwhile.
Just who would develop Highland’s properties remains to be seen. Lowndes, Izhakoff and Scherer have never before developed a large quarry. The members of the protest task force suspect Baupost plans to secure the quarry application and then sell it, ready to develop, to the highest bidder.
ON JUNE 28,2011, 100 PEOPLE GATHERED AT MARBEN RESTAURANT on Wellington Street. The dining room was packed with chefs, food writers and social activists. The members of the task force hoped they could make the quarry a hot-button issue in the city by highlighting the importance of Melancthon’s potatoes to the Toronto market. Even as our city’s farmers’ markets have multiplied over the last decade, our province’s farmland has declined steeply. Between 2006 and 2011, we lost 243,000 hectares.
One of those in attendance was Michael Stadtländer, the chef and owner of Eigensinn Farm, near Collingwood. He is famous for preparing dinners made from ingredients foraged in the forest, and, along with the chef Jamie Kennedy, has been an outspoken local food advocate since the 1980s. Stadtländer was already committed to the anti-quarry cause (he’d delivered his own letters of objection to the Ministry of Natural Resources in person, and had enlisted help from the Suzuki Foundation), but he surprised the room when he stood up and announced that his lobby group, the Canadian Chefs’ Congress, wanted to host a fundraiser for the task force on one of the holdout potato farms. It could be a huge food event with music, he said. He expected they could play host to as many as 20,000 people. They’d call it Foodstock, and it would be timed to make the quarry a provincial election issue. The congress would stage the event and cover costs, which meant there was no risk for the task force.
Many NDACT members were initially skeptical that Stadtländer would be able to attract such a large number of people to the event, but they grew more confident when he signed up prominent chefs such as Kennedy, Anthony Walsh, Donna Dooher and Chris McDonald. Jane Pepino’s 32-year-old daughter, Blaine van Bruggen, and her husband, Jason, volunteered to run the event’s media campaign. Nancy Malek, a Melancthon councillor and a former NDACT board member who also works as a publicist and event producer in the music industry, took charge of the entertainment. She landed the Barenaked Ladies, Sarah Harmer, Jim Cuddy, Ron Sexsmith and more than a dozen other acts to play Foodstock’s main stage.
A month before Foodstock and just weeks before the provincial election, the task force scored a major victory when John Wilkinson, the provincial environment minister, ordered an environmental assessment—the first time a quarry has ever been subject to one in Canada. Although the assessment won’t quash Highland’s application, it will delay it substantially.
The day of Foodstock, October 16, 2011, was wet and blustery. The organizers spread hay across muddy fields, and some 100 chefs from all over southern Ontario set up stations to serve smoked sturgeon, pulled pork sliders, beef liver, vegan stews and a whole lot of potatoes. And still, it wasn’t close to enough to feed the 28,000 people who congregated that day. Not that they seemed to mind: the mood was optimistic and resolutely good-natured.
The event earned the task force a windfall of $107,000. It was also a major public relations coup. More than 130,000 people signed a stop-the-quarry petition on the grassroots protest portal Avaaz.org, and the Foodstock hash tag went crazy on Twitter.
ON GROUNDHOG DAY THIS YEAR, Lowndes, Izhakoff and Scherer arrived in Melancthon to once again make their case to the township’s councillors, this time with a PowerPoint presentation. The Highland executives spoke in folksy tones, Lowndes displaying a fondness for the phrase “our township,” even though he lives in Oakville. They pointed to a semi-annual well-monitoring program that Highland is offering as a service for residents and alluded to events they’ve sponsored in the community—contributing to food bank drives and even donating the scoreboard clock that sits above the ice at Honeywood’s hockey arena. They presented traffic studies and promised that the quarry would create 465 local jobs. Nancy Malek, still on a high from the success of Foodstock, rolled her eyes as she listened to Highland’s presentation.
Though only Queen’s Park or the Ontario Municipal Board can decide whether or not Highland’s proposal is in the interest of the town and the province, the councillors are keenly aware that if Highland succeeds in winning over the community, it will go a long way to convincing the province to green-light the application. So far, however, the community remains skeptical. Even the development’s economic benefits aren’t obvious. Lowndes had promised the town roughly $1.2 million in annual revenue. Melancthon’s mayor, Bill Hill, corrected him: Highland’s number was based on the provincially mandated levy licence of 11.5 cents per tonne of aggregate, and Melancthon itself would receive only six cents of that levy; the rest would go to the county and the province. Lowndes then tried another calculation, basing the number on the higher Quebec levy of 50 cents a tonne because Highland would like to pay more levy fees in the future (though for the moment, he admitted, they’ll pay only what the Ontario legislation dictates).
Hill and his councillors aren’t sure the new tax revenue would even cover the infrastructure costs attendant to such a large-scale quarry development. Although Highland has vowed to pay for road upkeep, it continues to argue that the two-lane county road its trucks will travel will not need improvement, even though there will be 300 per hour at peak production. In addition to infrastructure costs, councillors want to know who will pay the operating costs on the 600-million-litre-per-day pumping system after the quarrying is finished—and who will pay for it if it breaks down. And they worry about the adverse effect of the quarry on the $1.5-million tourism industry in and around Melancthon.
FOODSTOCK USED CELEBRITY CHEFS AND MUSICIANS TO CONVERT TORONTONIANS TO THE CAUSE — A MAJOR PUBLIC RELATIONS COUP
Town council knows it can’t afford a misstep, though only Nancy Malek and one other councillor, deputy mayor Darren White, have publicly condemned the quarry. If the town does object to the quarry, Highland will likely demand an OMB hearing—which could take months. The township has diverted $50,000 this year to fund costs for reviewing (and possibly fighting) the quarry application. Council has also relied on handouts from Highland to hire experts to review the company’s application—$260,000 so far. Such arrangements are routine and come with strings attached: if Highland doesn’t like what town council is saying, it will pull its financial support. And it could take Melancthon to court if it believes council isn’t giving its application a fair review.
Quarry applications have never been popular, but in recent years, opposition has grown significantly. “Every piece of land in southern Ontario is under greater land use pressure than it was 15 years ago,” says Moreen Miller, the president of the Ontario Stone, Sand and Gravel Association, a non-profit association of the province’s aggregate producers. We are also much more aware of the environmental risks and costs associated with development than we were when the aggregate resources act was first written over 40 years ago.
The aggregate industry is also aiming to recycle more of its products. At the moment, Ontario recycles only seven per cent, which is much lower than many other jurisdictions. In the U.K., about 23 per cent is recycled, and in parts of Europe the rate is even higher. Here in Ontario, municipalities prefer virgin rock, and sometimes for no good reason. In Toronto, there are dozens of construction waste dumps with a few million tonnes of used aggregate just waiting to be repurposed. For too long, it’s been too cheap and too easy to extract virgin rock.
TWO DAYS AFTER HIGHLAND’S PRESENTATION TO THE TOWNSHIP council, NDACT held a community meeting in the large gallery that overlooks the ice rink of Melancthon’s Honeywood Arena. Hundreds of people came, filling every chair and lining the sides and back of the room. The mood was upbeat with neighbours’ chatter. It was impossible to tell the farmers from the weekenders, or even from the town councillors. Only Mayor Bill Hill wore a suit. The deputy mayor, like many of the attendees, had pinned a No Mega-Quarry button to his denim jacket.
There were rousing speeches, including one by Ralph Armstrong’s 13-year-old great-niece Mackenzie Rutledge. She had recently won a competition at her school for a speech about the mega-quarry. “What happens when our streams dry up?” she asked. “Are rocks more important than food?” She wondered why there were so many ads on TV promoting Ontario food if the government wasn’t going to protect its farmland. “Aren’t we contradicting ourselves?” As she spoke, the gathering began to resemble a church social, in part because organ music could be heard from the adjacent hockey arena. After the speech, Armstrong loped up to the front of the room, thanked her, then turned to the audience: “Remember, this is the generation we are making decisions for, so we have a lot of responsibility.”
Through the glass, the Highland-funded scoreboard clock flickered at the congregation as if to say, “Time is running out.”
The protesters can’t do much more than marshal support and gather evidence, so they’ll be ready to respond when Highland submits a detailed quarry plan to the province for the next step of the application process. NDACT has been busily organizing more fundraisers for 2012: bake sales, golf tournaments and art shows. This summer, they held a walking tour and community barbecue called Stomp the Quarry. Stadtländer has announced a follow-up event for foodies, Soupstock, which will be held in Toronto on October 21.
If not from Melancthon, where will Toronto get its aggregate? The NIMBYists say anywhere but here; several have suggested farther north, where communities are in greater need of jobs and industry, rock is still plentiful and the land unfarmable. But the mega-quarry—like the Keystone and Northern Gateway pipeline proposals—has become a lightning rod. The real issue isn’t whether or not Highland is allowed to build its proposed quarry, or even whether or not it’s possible to execute its application safely. At issue is the way we want to live and the future we want for ourselves and our land. NIMBY, Pepino told me, has a new meaning now: “Next It Might Be You.”