Magnaville’s unfinished dream

Buffeted between local boosters and Southern politics,
Frank Stronach’s model community grasps for a future.

 

If you build it, they will come. That idea worked great in Field of Dreams, the Kevin Costner flick in which a mysterious voice tells an Iowa corn farmer to build a baseball diamond among his crops. After taking a leap of faith, the farmer in question watches in awe as the ghosts of Shoeless Joe Jackson and other professional players materialize to play ball. Unfortunately, Hollywood endings don’t always fulfil real-life dreams, especially not for Magna International’s founding chairman Frank Stronach.

In August, after years of fighting activist investors, who don’t like financing Stronach’s frequent side adventures in capitalism, the auto-parts mogul reluctantly agreed to a Magna restructuring that reduced his former super-voting shares to common stock. In return, Stronach was handed an $800-million-plus payout. But the Austrian-born industrialist was already a billionaire. And money didn’t conjure the expected conclusion to his personal field of dreams.

Remember Canadaville, the planned community in central Louisiana that Stronach ordered his companies to plant in a remote sugar cane field five years ago? It made headlines around the world as the rent-free home for a select group of Hurricane Katrina refugees, most from New Orleans’ impoverished Lower Ninth Ward. This, of course, was after the Magna group upstaged U.S. authorities by launching an astonishing private-sector rescue mission. One Stronach phone call was all it took to pull a few hundred people out of harm’s way and place them in Florida dorms, owned by the now bankrupt Magna Entertainment gambling venture. Before Stronach’s chosen people were moved into new homes in Louisiana, Palm Springs residents joined the Magna relief effort and showered them with aid and designer clothes.

Canadaville — which once boasted a population around 200 — was supposed to grow into a self-sustaining farming community. But that isn’t the case as Stronach’s five-year commitment to the project comes to an end. An expected deal with nearby Simmesport to annex and service the community also remains unsigned. As a result, remaining residents (about 50 individuals) are now gently being encouraged to move on.

This story, however, is far from over. Project managers are currently scrambling to find a sustainable way to prevent the property from becoming a ghost town. And according to sources, Stronach, 78, might just take investors on another wild, but potentially lucrative, ride.

Forget farming, cars and horses. Think Magna Oil.

Dennis Mills, the former Liberal MP who now works as an executive in the Magna empire, points out that the primary goal of Canadaville was to help people in need. And by that measure, it was a resounding success, providing a significant number of grateful Americans with a cheap and safe place to live while they got back on their feet. “Thinking about leaving just makes me sad,” says resident Tonya Nelson, who credits Stronach with the fact that she has just sent two kids off to college. “I can’t believe the five years is almost over. Whatever happens, it was a gift of a lifetime that my family will never forget. I don’t know what is next. But I got peace out of it.”

Mills admits a few residents would like Stronach to keep supporting them. But he calls that unreasonable. “If you got a five-year break on your living expenses,” he asks, “would you come back and ask for five more? I say, ‘Nice try.’ But no other businessman in North America that I know about has ever made a contribution like this after a natural disaster.”

True enough. Then again, Stronach’s people were not encouraged to think short-term when initially relocated to Canadaville, about three hours north of New Orleans. Like Henry Ford, who tried to build a utopian industrial community called Fordlandia in the Amazon, Magna’s founder set out to teach the world a thing or two about social planning, entrepreneurial style.

Five years ago, in a tent filled with the smells of gumbo and roast pig, Stronach described his vision for what has been called an African-American version of Green Acres. With a gospel choir providing backup, silver-haired Stronach outlined plans to transform poor urbanites from New Orleans into micro farmers. Canadaville was supposed to spur regional economic development by becoming the largest organic farming operation in the South. Residents, Stronach said, would defeat poverty by distributing Canadaville products to America under the “Freshstart” brand. “You know the old saying,” he preached, “if you give someone a fish, you feed them for a day. Teach them to fish, and you feed them for a lifetime.”

To help integrate Canadaville and Simmesport, Magna companies planted a baseball diamond and basketball courts next to Canadaville’s immaculate, tree-lined streets. A community centre was to follow. But things rarely go as planned in Louisiana, where Congressman Billy Tauzin once said, one half of the state “is under water and the other half is under indictment.” In Canadaville’s case, not enough of the locals accepted the opportunity to play ball, at least not until it was too late. Simply put, they were scared off by James Fontenot, a former Simmesport mayor appropriately nicknamed Boo (picture TV’s Boss Hog in a wheelchair). Welcoming at first, Fontenot proved to be as fierce a Stronach foe as any New York shareholder activist or Canadian pension fund.

Magna’s chairman — who famously arrived in Canada armed with just $200, some tool-and-die experience and a mountain of confidence — isn’t sure what comes next. “The problem in life is that you cannot spoon-feed everyone,” he says. “We gave something different a try and hopefully something will emerge for the future. If not, such is life.”

Mills insists the town of 49 high-end pre-fab homes (designed by Giffels, a Toronto-based architecture firm) will never go the way of Ford’s overgrown jungle town. At the very least, he says, the property will always be available to the Red Cross to use during times of crisis. According to insiders, Magna has been contemplating creating a company retreat or executive training school.

But Tommy Maddie — a gregarious Simmesport businessman who hands out Cajun sausage like candy — has something else in mind. After watching Stronach’s efficient army put his neck of the woods on the map, by systematically acquiring all the permits and supplies required to build a new housing complex during a state of emergency, Maddie and a group of like-minded community leaders are determined to keep Magna people around. For months, they have hunted high and low, seeking out an opportunity big enough to interest Stronach and stimulate the local economy. And the hard work might soon pay off.

According to documents obtained by this magazine, MI Developments, the Magna spinoff responsible for managing the Canadaville site, has put forward a proposal developed by Maddie’s group to build what could turn out to be the first new American oil refinery in about 30 years on the Canadaville site.

As corporate Canada’s self-styled philosopher king, Stronach has always been a larger-than-life entrepreneur that some people just can’t help kicking around. Even a few Magna loyalists joke that the boss is a “visionary with an attention-span disorder.”

When not focused on expanding his $20-plus-billion auto-parts conglomerate or breeding one of the world’s largest stables of thoroughbreds, Stronach has tried his hand at a wide range of ventures. Over the years, he has opened a disco, run a restaurant, published an alternative business magazine, launched an energy drink, tried building a massive amusement park in Vienna, proposed an airline for the rich, tried transforming prestigious racetracks into entertainment destinations for the masses and attempted to beat Magna’s carmaking customers at their own game. The man’s non-business activities range from managing the Austrian soccer league to running for a seat in Ottawa (where he planned to push for radical parliamentary reforms).

For obvious reasons, some people found it easy to mock Canadaville, which Stronach had renamed Magnaville (despite the participation of many non-Magna partners). The nice critics noted the region’s uncooperative climate. The nasty ones insisted Stronach was looking to score PR points in America, where his ventures benefit from political support. And they had a field day with the image of poor African-Americans forced to work for accommodations on a tract of southern land owned by a filthy rich white man.

Reuben Walker, a professor of agricultural sciences at Southern University in Baton Rouge, and Earnest Freeman, a former agricultural expert with Louisiana State University, insist history will dismiss “the ignorant idiots” who compared Canadaville to a slave plantation. These two, both black, note Canadaville’s early settlers lost everything in a disaster that killed over 1,000. In some cases, they add, sick and elderly individuals reported being abandoned by health-care workers and nuns. Stronach did more than most to help “restore the region’s faith in humanity.”

Furthermore, after working on the Canadaville project for five years, while watching it teach residents like Nelson new skills, these two agricultural experts insist the communal organic farm was an economically viable concept. “We are the modern-day Joshua and Caleb,” says Walker. “We believe that the land site has a vast potential for economic development ventures. If Frank Stronach and Dennis Mills still support the organic farm vision, we stand ready to help.” Whatever happens, he adds, organic farming will grow in Louisiana, and Canadaville will be credited as “a key catalyst.”

When Shane Carmichael was a student at the University of Waterloo, he never imagined working as a professional camp counsellor, rancher, motivational speaker, dog catcher or national ambassador. But after accepting the job of making Canadaville live up to its utopian agenda, which insiders say was written “on the back of a Magna envelope,” the 47-year-old project manager from Toronto wore those hats and many more. By all accounts, Carmichael — who helped Mills organize Toronto’s SARStock festival in 2003 — put in a herculean effort. But challenges became obvious early on.

Canadaville residents were never offered a free ride. The goal was to help them start over in an entrepreneurial community driven by Stronach’s work ethic. Homes had to be maintained. Lawns regularly cut. Unlike in Fordlandia, controlled alcohol consumption was tolerated, but illegal drugs and public intoxication were grounds for the boot. Residents were expected to attend school, work or at least look for jobs. They also had to perform eight hours of community service a week, doing whatever they realistically felt would add value to the community.

The rules were enough to make some residents want to leave as soon as possible. Others simply couldn’t stand sharing accommodations or living in a remote area with no public transportation. Boredom was another problem. “If you ask me,” says resident Charles Mason, a former New Orleans cab driver, “building a pool hall would have made a world of difference.” Mason’s wife, Angela, says giving residents raised plots of land with individual names attached wasn’t a great way to start learning to farm. “We folks from New Orleans are a superstitious lot,” she says, noting “some people felt like we were tending our own graves.”

Carmichael eventually got more than a few residents out farming by blasting music in the fields and turning it into a social event. But he won’t say for sure that he could have turned Canadaville into a sustainable farm. He simply points out his chances would have been better if Fontenot hadn’t launched a guerrilla-style NIMBY campaign to save Simmesport from being turned into “Evacuee, U.S.A.” during the critical early days.

In the documentary Welcome to Canadaville, one Simmesport resident describes sitting out at night, armed with a gun, so he can “get me one” if any Canadaville resident touches his property. But community leaders insist racism wasn’t the fatal problem. “It’s always an issue in the South,” says a local sawmill owner who declined to be named. “My industry still has a machine part that people call the nigger, because it does a job you wouldn’t want to do. But racism didn’t kill Canadaville. It was Boo.”

When Magna’s people first arrived on the scene in the fall of 2005, they were under strict orders to find a suitable site as soon as possible. And Fontenot recognized an opportunity to milk what he called the “Magna cow.” In return for his support, he demanded new police cars, a police substation, community and sporting facilities and US$250,000. Stronach’s people agreed, and Canadaville officially opened in December. A few local rednecks objected by stealing the Canadian flag and subjecting the town to drive-by racial slurs. But Fontenot made things dramatically worse when he declared war in April 2006, after Magna joined with the Red Cross and the Royal Bank to expand the community centre into a massive dual-purpose facility capable of feeding 2,500 people during state emergencies.

Before Fontenot died from a heart attack in 2008, he accused Canadaville of increasing crime (a false claim, according to police), which dramatically increased local hostilities and sparked violence in schools, where Stronach’s young tenants were labelled “Canadaville motherf—ers.” And that convinced more than a few residents to pack it in.

Fontenot also made Carmichael’s life hell. After blocking permits Canadaville needed to deliver on its promises, he gleefully sued Stronach’s companies for breach of contract — effectively, as one local columnist put it, biting the corporate hand that was trying to feed his community. He also threatened to turn off Canadaville’s water over a minor water-meter issue.

Ironically, when Hurricane Gustav hit in 2008, it woke up many of Fontenot’s followers to the need for emergency facilities by destroying local homes and knocking out utilities. Canadaville — which had backup power — delivered aid, food and water to the town. “That was a turning point,” Carmichael says. “The negativity generated by Boo was destroyed.” But by then, the utopian dream was essentially dead, thanks to Canadaville’s dramatic decline in population, growing frustrations with the project inside Magna and the global financial crisis, which sideswiped Stronach’s companies.

What about the community centre? Eric Rusk, the new Simmesport mayor, has no major issue with Canadaville. But he insists his town — which recently called in the Red Cross to help with flooding — can’t afford to cover maintenance costs that would come with the proposed state-of-the-art facility. He wants Stronach to simply fix up a beat-up garage surrounded by junk that sits behind his office. Insiders say Magna has no real interest in that embarrassing idea since the whole point of Canadaville was to help evacuees and assist Simmesport to the point where it can support a meeting place that isn’t “just a storage shack.” But Magna is considering renovating Simmesport’s shed to sign off the relationship on a positive note.

If squirrel hunting isn’t your cup of tea, then Avoyelles Parish, where Canadaville is located, isn’t the retirement spot for you. This is Cajun country, where most connected people rely on land lines, not smartphones. When locals want to buy or sell something, they don’t use Craigslist. Instead, they call a local radio station, which fills airtime by reading classified ads.

There are, of course, pockets of sophistication. City folk lucky enough to visit the Red River Grill, for example, might think about settling down. Located in Marksville, about 30 minutes from Stronach’s town, the establishment is run by Al and Tanya Mahfouz, a hospitable couple who serve fine wine and spectacular food (try the spicy crawfish rolls) in an classy atmosphere. In fact, the only thing about the Red River Grill that indicates you are not in Toronto or New York are the occasional patrons who express a total lack of hope for the region — whether you ask for their opinion or not.

“Excuse the interruption,” says a 20-something from one of the few prominent local families, “but I overheard you talking about that man from Canada. And I must say he doesn’t deserve respect. What’s worthy about taking a bunch of struggling people from New Orleans and plunking them down in Simmesport, where there is no reason to expect them to find work. That’s not commendable. It’s nuts.”

Calling this kid “a local Holden Caulfield,” other regulars politely requested that his views be kept quiet. But he made a decent point. When hope exists in Simmesport, which is 47% black, it is typically bought a dollar at a time at one-armed bandits. More than a third of the town’s population of 2,200 lives below the poverty line. Only 3.5% have a university education, while 50% didn’t finish high school. In 2008, the median value of a home was US$58,000, while median household income sat at US$21,500 — less than the price of a decent pickup.

But Maddie, who volunteers as the regional economic development officer, insists things can change. Long ago, he had a vision, one reinforced every time a local fisherman pulls a shark out of the three rivers (Atchafalaya, Red and Mississippi) that meet at Simmesport. “We’re a sleeping giant,” Maddie says. “We have deep water and can put ocean-going barges all the way to Central and South America with no locking systems.” For decades, Maddie had been trying to attract investors to finance what would be the state’s northernmost inland port. Government funds were eventually offered, but Katrina washed them away. After Stronach’s gang arrived, the ball got rolling again. Expecting Canadaville to become a thriving business, locals raised millions to initiate the port project’s first stage. But the farm business failed, and it sits on land that is key to Maddie’s development plans.

And that’s why local community leaders have been tirelessly working on industrial business plans that will keep the Magna folks around. Mills says Stronach’s real estate development company is seriously interested in the refinery idea, but won’t go into detail until all pros and cons are weighed.

According to an initial feasibility study, a decent business case for the project could be made due to aging U.S. refineries. The proposed facility, which would refine more than 200,000 barrels per day and meet “clean fuel” standards set by California, has already won the support of Louisiana Governor Bobby Jindal. And a group of Japanese oil companies have offered hundreds of millions of dollars to get in on the action.

After building Magna into one of the most respected automotive ventures on the planet, Stronach doesn’t need to worry about a legacy. But he has always seen himself as more than a one-trick pony. Recent events haven’t helped shake that reputation.

In the past year, Stronach watched his horse-racing and gaming operations collapse, while his lifelong goal of creating a Canadian-based automaker was dashed by General Motors’ last-minute decision to keep its European division. And thanks to Magna’s costly restructuring, which threatens the corporate constitution created by Stronach to reflect his unique management philosophy, recent media coverage of the company has focused on critics who bill Stronach as the poster boy for corporate greed — despite his belief in forcing companies to dedicate a fixed portion of profits to charity and social programs.

Meanwhile, in New Orleans, it isn’t easy finding someone who can remember Stronach’s name. “I’ve never heard of Frank Whatever or Canadaville,” says Russ Murphy, chief concierge at the Royal Sonesta Hotel on Bourbon Street. “But if you want to know about Katrina projects, you should check out the homes Brad Pitt is building in the Lower Ninth.” At The Times-Picayune, which once called Stronach the highest-flying angel to spread wings over the disaster zone, editors didn’t even return requests for comment on this story.

In central Louisiana, of course, Magna’s main man is still widely seen as a demigod, especially by Maddie’s crowd. But while members of Stronach’s Simmesport fan club don’t say it, they will be disappointed if efforts fail to make Canadaville part of a game-changing economic engine. “Magna people came here to give people a hand up,” says one community leader. “Well, Tommy Maddie has jumped through hoops supporting Mr. Frank’s dream. And it will be a damn shame if Chapter 2 of this story isn’t about one great visionary from Canada giving a hand up to one from Simmesport.”

At MI Developments, it could be difficult to get board members to back another project in Louisiana. But Stronach recently used his personal fortune to save a Magna Entertainment racetrack in Austria, so he might be willing to dig into his own pockets to reinvest in his field of dreams. And that would be a fitting way to silence the critics who note America has incorrectly handed credit to Stronach, instead of his shareholders, for financing his grand gesture to the South.

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