MONTCALM TOWNSHIP – Meeting with his fellow planning commissioners for the first time in seven months, Richard Karnatz wasted little time addressing concerns and allegations of some township residents.
As the chairman of the Montcalm Township Planning Commission, Karnatz began Wednesday’s virtual meeting by issuing a statement focused on allegations that he has a conflict of interest regarding the Planning Commission’s effort to amend the township’s wind energy ordinance and should, in turn, recuse himself from certain discussions and votes on the matter.
“We’re going to get something out of the way, right away,” Karnatz said. “There’s been a lot of stuff out there on Facebook, the newspaper – you name it – primarily about wind energy and conflicts of interest. Just to set the record straight, yes, I did sign a lease.”
On Aug. 5, 2020, the Planning Commission voted unanimously to review and amend the township’s wind ordinance after Apex Clean Energy, a wind energy company based in Charlottesville, Virginia, expressed interest in Montcalm County as the host of its next potential commercial wind farm.
Earlier that year, Karnatz signed a development-phase lease agreement with Apex, which pays property owners an unspecified amount per acre annually.
Upon hearing this revelation during the Nov. 11, 2020 meeting of the Montcalm Township Board, some residents expressed their disappointment in the situation, speaking at previous meetings and emailing Karnatz to allege a conflict of interest.
On Wednesday, Karnatz reiterated his stance that he does not believe he has a conflict of interest at this time.
‘We should give this company a chance’
Karnatz said his decision to sign a lease with Apex dates back to March 2019 during a meeting at Montcalm Community College when representatives from Consumers Energy and Gratiot County held a forum on wind energy.
Karnatz said that meeting made it clear to him that due to federal mandates and a growing reliance on renewable energy, wind turbines may eventually make their way to Montcalm County.
Shortly after, Karnatz said he was contacted by NextEra Energy Inc., a wind energy company based in Juno Beach, Florida, which he said was looking at Montcalm County as a potential location for wind turbines.
“I went to one other meeting, and to be honest with you, those people were not that credible or reliable,” Karnatz said of NextEra. “They decided to pull up and leave. At that point in time, my opinion was in Montcalm County, wind energy would never happen based on the size and topography of the county.”
However, Karnatz said his decision changed after he, his son and “several other farmers” were contacted by Apex in the fall of 2019.
“We looked at it (their proposal) and knowing what’s going on in this township for finances, we decided that we should give this company a chance to make it work,” he said. “If it works, that’s fine. If it doesn’t, that’s fine too, from my viewpoint.”
Karnatz said his decision to sign is not about himself, but about a desire to potentially see additional tax revenues come to the township and Montcalm County through a commercial wind farm.
“The long story short is the county and townships can bring some money into their coffers and help pay some bills,” he said.
Karnatz pointed to the fire that destroyed LKQ’s Keystone Automotive factory and storage facility in December 2019, describing it as a significant loss for the township as a source of tax revenue that will likely not be replaced.
“That was a lot of tax dollars that’s now gone,” he said. “It’s not going to be rebuilt. It’s for sale … the property.”
With upcoming township projects including a need to reconstruct the deteriorating bridge on W. Dickerson Lake Road over the Flat River – estimated to cost around $100,000 or more in township funds – and a millage in place used to help fund the fire department’s needed expenditures of a fire engine and expanded fire barn, Karnatz said he believes residents are already taxed enough by the township.
“Another company coming in and adding to the tax rolls can help pay for some of this stuff,” he said. “Then we don’t have to add a millage and put more taxes on some lower-income people that maybe have a hard time paying their taxes.
“But I’m not here to sell you on turbines, that’s not my job, I’m just telling you why we signed a lease, to put that out in front of everybody,” he continued. “If other people can tell me how we can bring in that kind of money to the county and the townships, I’m all for it, but I haven’t heard anybody offer any suggestions.”
‘I have no conflict of interest to this point’
Karnatz then moved to the first item on the meeting agenda under new business – a review of the Planning Commission’s bylaws.
Karnatz said the item was placed on the agenda because of the allegations against him.
“There’s been talk that I should recuse myself from being a part of this because of a conflict of interest,” he said. “Legally, I have no conflict of interest to this point.”
Montcalm Township Supervisor Doug Crowley previously asked township attorney Jeffrey Sluggett of Bloom Sluggett PC in Grand Rapids to weigh in on the matter, and Karnatz cited Sluggett’s opinion directly.
“You’ve all seen the response that’s come back from him and he supports my interpretation as well,” Karnatz said to his fellow commissioners.
According to the email sent from Sluggett to Crowley, Karnatz has yet to place himself into a situation he would describe as a conflict of interest.
Sluggett said the issue comes down to handling a legislative matter versus an administrative manner.
“For a legislative matter (law-making) the courts do not require that an official avoid participating based on having a financial interest alone, but in an administrative matter (law applying), then the official must avoid participating if they have a financial interest,” Sluggett said. “Here, amending a zoning ordinance is legislative in nature; as such, having a financial interest in a matter will not necessarily mean the person needs to recuse himself or herself; instead, the question where a legislative matter is involved is whether the official can fulfill his fiduciary duty to put the Township’s interests ahead of his or her own personal interests. If he or she can, then the person is not legally prohibited from participating or voting.”
Sluggett went on to say that if the issue progresses to an administrative matter, Karnatz should recuse himself.
If a proposed wind ordinance amendment is eventually approved by the Planning Commission and subsequently the Township Board, Karnatz said he would recuse himself in the event a company which he has signed a lease with comes forward with a request to build wind turbines in the township.
‘I still have concerns’
During public comment, township resident Richelle Lentz said while she appreciated Karnatz’s explanation, she still took issue with what occurred last summer, when the Planning Commission received feedback via email from Apex as it reviewed the wind ordinance.
“While I appreciate today that you have addressed this, I still have concerns that it (lease agreement) wasn’t brought to the Planning (Commission’s) attention prior to the recommendations that were brought via Apex’s email in August,” she said. “Is there a reason that wasn’t addressed or brought to the attention of the Planning (Commission)? Because the bylaws clearly state it’s the Planning (Commission’s) responsibility to review any potential conflict of interest and have a discussion.”
Lentz speculated that had the lease-agreement information been made available, more questions may have been asked regarding Apex’s involvement.
Karnatz defended his decision to not disclose his lease agreement with his fellow commissioners at that time.
“Number one, it was not a legal conflict of interest,” he said. “If you read the (meeting) minutes, I did not say a word one way or the other about any of the stuff that went into the (ordinance) amendment. If anyone else on the Planning Commission has a different opinion of that, please tell me, because I didn’t think I said anything.”
No other commissioners expressed any points of concern one way or the other Wednesday.
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